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SCIDEV LTD Interim / Quarterly Report 2010
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Interim / Quarterly Report
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ABN 25 001 150 849
Level 3 2 Elizabeth Plaza North Sydney NSW 2060 Australia PO Box 1507 North Sydney NSW 2059 Australia
Phone: 02-9925-8170 Fax: 02-9925-8110 Email: [email protected] Website: www.intec.com.au ASX code: INL
Companies Announcements Office 25 February 2010 Australian Securities Exchange
2009 Half Yearly Report and Accounts
The Board of Intec (ASX code: INL) is pleased to announce an after tax accounting profit of \$281,000 for the six months ended 31 December 2009, compared to an after tax loss of \$19,229,000 in the same period in 2008.
The profit was principally due to the recognition at a discounted value (\$2,756,319) of the \$5,000,000 Hellyer Mill processing royalty, which forms part of the consideration payable by Bass Metals Ltd (ASX code: BSM) for the purchase of the Hellyer assets, for which final settlement occurred in August 2009.
After receiving modest revenues during the half-year from the ongoing recycling operations at Burnie, interest from Intec's environmental bonds and sale of inventory, Intec incurred net cash outflows from operations of \$2,012,000.
Intec's Financial Controller David Clark will be interviewed today on Boardroom Radio, and the interview will be available by tomorrow on Intec's web site: http://www.intec.com.au/public_panel/video_gallery.php
Yours faithfully Intec Ltd
Philip R Wood Managing Director and Chief Executive Officer
About Intec Ltd
Intec Ltd is listed on the Australian Securities Exchange, the Deutsche Boerse in Germany and the OTCQX in the USA.
The Intec Process comprises a set of patented chloride-based hydrometallurgical processes that have been demonstrated to produce high purity base and precious metals from concentrates of sulphide and oxide ores, tailings and industrial wastes. The Intec Process has substantial environmental and cost advantages over both the widely used conventional smelting and refining processes and other known hydrometallurgical and inorganic waste treatment processes.
Intec has current deals and plans in place for the development of projects for the clean production of high grade products from secondary mineral resources, and for the recycling of metals from industrial wastes, both in Australia and overseas, including China.
ABN 25 001 150 849
P.O. Box 1507 North Sydney NSW 2059 Level 3, 2 Elizabeth Plaza North Sydney NSW 2060 Australia
Phone: 02-9925-8170 Fax: 02-9925-8110 Email: [email protected] Website: www.intec.com.au ASX code: INL
HALF-YEARLY REPORT
31 DECEMBER 2009
ABN 25 001 150 849
Corporate directory
Directors
Trevor A Jones (Non-executive Chairman) Philip R Wood (Managing Director & Chief Executive Officer) James R G Bell (Non-executive Director) A John Moyes (Non-executive Director) Kieran G Rodgers (Finance Director & Chief Financial Officer)
Group Company Secretaries
Robert J Waring David W Clark
Senior Management
Brian A Banister (Chief Operating Officer) David W Clark (Financial Controller) Dave L Sammut (Corporate Development Manager) Andrew R Tong (Senior Research Metallurgist & Laboratory Manager)
Principal Registered Office
P.O. Box 1507 Level 3, 2 Elizabeth Plaza North Sydney NSW 2060 Australia Telephone: (+61 2) 9925 8170 Facsimile: (+61 2) 9925 8110 Email: [email protected] Website: www.intec.com.au
Tasmanian Office
P.O. Box 666 10-12 River Road Burnie TAS 7320 Australia Telephone: (+61 3) 6431 9867 Facsimile: (+61 3) 6431 3629
Burnie Research Facility
20 River Road Burnie TAS 7320 Australia Telephone: (+61 3) 6431 9867 Facsimile: (+61 3) 6431 3629
Chinese Agency Guangzhou Greeneer Chemical Technology Co., Ltd
Mr Joe Lam Suite 1310, The Hub 1068 East XingGang Road Guangzhou, China Telephone: (+86 (0) 20) 8923-6813 Facsimile: (+86 (0) 20) 8923-6040
ABN 25 001 150 849
Corporate directory
Share Registry
Registries Limited Level 7, 207 Kent Street Sydney NSW 2000 Australia
PO Box 3993 Sydney NSW 2001 Australia Telephone: (+61 2) 9290 9600 Facsimile: (+61 2) 9279 0664 Email: [email protected] Website: www.registriesltd.com.au
Patent Attorney
Griffith Hack 100 Miller Street North Sydney NSW 2060 Australia
Stock Exchange Listings
Intec Ltd shares are listed on the Australian Securities Exchange (Code: INL), the Deutsche Börse (Code: INF) and the OTCQX/Pink Sheets LLC (Code: ICLJY).
Auditor
WHK Horwath Sydney Level 15 309 Kent Street Sydney NSW 2000 Australia
Legal Adviser
Allens Arthur Robinson Level 28, Deutsche Bank Place Corner of Hunter and Phillip Streets Sydney NSW 2000 Australia
ABN 25 001 150 849
Contents
| Directors' report | 1 |
|---|---|
| Consolidated statement of comprehensive income | 4 |
| Consolidated statement of financial position | 5 |
| Consolidated statement of changes in equity | 6 |
| Consolidated statement of cash flow | 7 |
| Notes to the financial statements | 8 |
| Directors' declaration | 17 |
| Independent review report | 18 |
| Auditor's independence declaration | 20 |
| Additional shareholder information | 21 |
Intec Ltd Directors' report
Your Directors present their report on the consolidated entity consisting of Intec Ltd (Intec or the Company) and the entities it controlled (the Group) for the half-year ended 31 December 2009.
Directors
The names of the Company's Directors in office during the half-year and until the date of this report are set out below.
Trevor A Jones (Chairman and Non-executive Director) Philip R Wood (Managing Director and Chief Executive Officer) James R G Bell (Non-executive Director) A John Moyes (Non-executive Director) Kieran G Rodgers (Finance Director and Chief Financial Officer)
Review of operations
The Group earned a profit after providing for income tax for the half-year to 31 December 2009 of \$281,000 (2008 – loss \$19,229,000).
The profit was principally due to the recognition of the value of the Hellyer royalty, which forms part of the consideration payable by Bass Metals Ltd (BSM) for the purchase of the Hellyer assets, for which settlement occurred in August, 2009.
The Hellyer royalty is a unit-base royalty payable at the rate of \$2.50 per tonne of ore processed through the Hellyer Mill to a cumulative maximum payment amount of \$5,000,000. BSM has publicly announced its intention to restart the Hellyer Mill during 2010. In its June 30, 2009 financial statements, BSM adopted a valuation of \$2,756,319 for the Hellyer royalty. BSM's valuation of the Hellyer royalty has been adopted by the Directors and accounted for as a profit from discontinued operations and a non-current asset.
Revenues from continuing operations were generated from the ongoing recycling operations at Burnie, interest from Intec's environmental bonds for the EAF dust stockpile and other minor sources.
Proceeds from the sale of the Hellyer assets were principally applied to the repayment of the Macquarie Bank debt facility and the replacement of the \$3,647,500 environmental bond in Victoria (which had been supplied by the Macquarie Bank facility) with an interest-bearing cash deposit.
The Group incurred net cash outflows from operations of \$2,012,000 for the half-year ended 31 December 2009. As of balance date, the Group had net assets of \$5,715,000 and cash balances of \$212,000.
Operational Activities
During the half-year, Intec generated revenue from the provision of recycling services for heavy metals removal from inorganic industrial wastes. At the end of December 2009, Intec received approval for further testwork and engineering services from a third party, and additional revenues are expected from this source in 2010, as part of normal project-oriented business.
Intec's primary recycling service client, the ACL Group, was placed into administration on 25 August 2009. Intec has written-off \$218,353 as a bad debt for services provided to the ACL Group up to that date. However, the Company continues to provide service to the Receivers and Managers of the ACL Group and all current and future revenues from this work will be paid in the ordinary course of business.
Intec Ltd Directors' report (continued)
Victorian Spent Pickle Liquor Recycling Project
During the half-year to 31 December 2009, Intec commenced the first phase of trials for the spent pickle liquor recycling project in Victoria. This first phase commenced the accrual of billable project work in anticipation of the final funding agreement, which was subsequently formalised in January 2010. The bulk of work associated with the \$780,000 funding by EPA Victoria's HazWaste Fund will be conducted in the first half of calendar 2010, with payment to be spread over calendar 2010.
EAF Dust Recycling Project in South Australia
Intec concluded its due diligence with respect to the Whyalla project option, but primarily as a result of a lack of feedstock supply security, the Company elected to discontinue discussions relating to a potential transaction.
Chinese Project Opportunities
During the half-year to 31 December 2009, the Company made appreciable progress towards the development of projects in China using the Intec Process technology. Most importantly, the Company entered into a multi-part subscription agreement with Green Resources (Asia Pacific) Holding Limited (Green Resources) for the licensing of the Intec Process technology in China, and for cross investment between Intec and Green Resources.
Completion of Stage 1 of the subscription agreement occurred in January 2010 at which point Intec held 7% of the issued capital in Green Resources, which is advancing the Liuzhou Project for the Intec Process recycling of steel industry waste. The first of four concurrent development projects, the Liuzhou Project is currently undergoing feasibility study, with feedstock supply and financing arrangements already in place subject to the outcomes of this study.
In a separate agreement, the Company has signed a memorandum of understanding with Guandong GuangYe Asset Management Co., Ltd, for the formation of a joint venture to identify and develop project opportunities based on the processing of secondary resources in China and Australia.
La Jolla Cove Investors Funding Agreement
On 16 November 2009, Intec signed a convertible note facility with La Jolla Cove Investors, Inc. (La Jolla), that provides up to a total of US\$3 million in working capital in two equal tranches of US\$1.5 million. If the facility is fully utilized it will substantially meet Intec's working capital requirements during 2010, while the Company develops its Australian, Chinese and other international projects.
Events occurring after the reporting date
As noted above, the formal EPA Victoria HazWaste funding agreement was finalised in mid-January 2010.
The Company issued the following shares after the reporting date: 21,659,436 shares to entities associated with Green Resources relating to Stage 1 of the subscription agreement ; 81,701 shares from the exercise of 8 cent options expiring on 31 December 2009; 45,038,734 shares in accordance with the terms of the Convertible Note issued to La Jolla; and 9,074,502 shares as consideration for services provided by Merriman Curhan Ford Inc., whilst acting as Principal American Liaison in connection with the listing and trading of Intec Ltd securities on the International OTCQX.
No other events have occurred subsequent to 31 December 2009 requiring disclosure in, or amendment to, these interim financial statements.
Intec Ltd Directors' report (continued)
Auditor's Independence Declaration
An independence declaration from INL's auditor, WHK Horwath Sydney is included on page 20 of the financial report.
This report is made in accordance with a resolution of the Company's Directors.
Philip R Wood Managing Director & Chief Executive Officer
Sydney 24 February 2010
Intec Ltd Consolidated statement of comprehensive income For the half-year ended 31 December 2009
| Half-year | |||
|---|---|---|---|
| 31 December 2009 |
31 December 2008 |
||
| \$'000 | \$'000 | ||
| Revenue from continuing operations | 487 | 620 | |
| Administration expense | (403) | (535) | |
| Bad and Doubtful Debts expense | (218) | (239) | |
| Demonstration plant expenses | (110) | (77) | |
| Depreciation and amortisation expense | (409) | (296) | |
| Diminution in Value of Environmental Bonds | - | (4,404) | |
| Employee benefits expense | (1,151) | (1,723) | |
| Engineering and other consultants expenses | (107) | (154) | |
| Finance costs | (27) | (135) | |
| Impairments expense | (121) | (2,856) | |
| Occupancy expense | (211) | (442) | |
| Prepayments expense | - | (300) | |
| Research and development expenses | (56) | (51) | |
| Other expenses | (105) | (437) | |
| Share of net profits/(losses) of associates accounted for using the equity method |
- | 813 | |
| Profit/(Loss) before income tax | (2,431) | (10,216) | |
| Income tax expense | (44) | - | |
| (Loss) from continuing operations | (2,475) | (10,216) | |
| Profit/(Loss) from discontinued operations | 2,756 | (9,013) | |
| Profit/(Loss) for the half-year | 281 | (19,229) | |
| Other comprehensive income | - | - | |
| Income tax relating to components of other comprehensive income |
- | - | |
| Other comprehensive income for the period net of income tax |
- | - | |
| Total comprehensive income for the period | 281 | (19,229) | |
| Basic Earnings/(Loss) per share (cents per share) | 0.03 | (2.86) | |
| Diluted Earnings/(Loss) per share (cents per share) | 0.03 | (2.31) |
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Intec Ltd Consolidated statement of financial position As at 31 December 2009
| Note | 31 December | 30 June | |
|---|---|---|---|
| 2009 | 2009 | ||
| Current assets | \$'000 | \$'000 | |
| Cash and cash equivalents | 212 | 1,990 | |
| Trade and other receivables | 242 | 326 | |
| Inventories | 38 | 23 | |
| Non-current assets classified as held for sale | 8 | - | 3,715 |
| Total current assets | 492 | 6,054 | |
| Non-current assets | |||
| Receivables | 121 | 877 | |
| Other financial assets | 5 | 2,782 | 26 |
| Plant and equipment | 6 | 3,792 | 4,199 |
| Environmental bonds | 7 | 4,404 | - |
| Intangible assets | 10 | 10 | |
| Total non-current assets | 11,109 | 5,112 | |
| Total assets | 11,601 | 11,166 | |
| Current liabilities | |||
| Trade and other payables | 294 | 1,086 | |
| Borrowings | 54 | 42 | |
| Interest Bearing Convertible Notes | 412 | - | |
| Refundable deposit | - | 500 | |
| Provisions | 7 | 4,997 | 3,648 |
| Total current liabilities | 5,757 | 5,276 | |
| Non-current liabilities | |||
| Provisions | 129 | 860 | |
| Total non-current liabilities | 129 | 860 | |
| Total liabilities | 5,886 | 6,136 | |
| Net assets | 5,715 | 5,030 | |
| Equity | |||
| Contributed equity | 67,157 | 66,753 | |
| Reserves | 2,577 | 2,577 | |
| Accumulated losses | (64,019) | (64,300) | |
| Total equity | 5,715 | 5,030 |
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Intec Ltd Consolidated statement of changes in equity For the half-year ended 31 December 2009
| Half-year | ||
|---|---|---|
| 31 December 2009 |
31 December 2008 |
|
| \$'000 | \$'000 | |
| Total equity at the beginning of the half-year | 5,030 | 37,050 |
| Current year expenses recognised directly in equity | ||
| Share of associates reserves accounted for using the equity method |
- | 25 |
| Net expenses recognised directly in equity | - | 25 |
| Profit/(Loss) for the half-year | 281 | (19,229) |
| Total recognised income and (expense) for the year | 281 | (19,204) |
| Transactions with equity holders in their capacity as equity holders |
||
| Contributions of equity, net of transaction costs | 404 | 138 |
| Transfer to asset revaluation reserve on revaluation of assets available for sale |
- | 61 |
| Transfer from asset revaluation reserve on recognition of impairment expense of assets available for sale |
- | (13,639) |
| 404 | (13,440) | |
| Total equity at the end of the half-year | 5,715 | 35,644 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Intec Ltd Consolidated statement of cash flow For the half-year ended 31 December 2009
| Half-year | |||
|---|---|---|---|
| 31 December 2009 \$'000 |
31 December 2008 \$'000 |
||
| Cash flows from operating activities | |||
| Receipts from customers | 280 | 5,727 | |
| Payment to suppliers and employees | (2,389) | (11,192) | |
| Interest paid | (27) | (196) | |
| Interest received | 71 | 102 | |
| Sale of inventory | - | 248 | |
| Other income | 53 | 596 | |
| Net cash (outflows)/inflows from operating activities | (2,012) | (4,715) | |
| Cash flows from investing activities | |||
| Acquisition of plant and equipment | (2) | (301) | |
| Proceeds from the disposal of plant & equipment | - | 14 | |
| Proceeds from the sale of plant & equipment | 3,510 | 500 | |
| Cost of sale of plant & equipment | (295) | - | |
| Proceeds from the sale of investment in associate | - | 1,846 | |
| Proceeds from borrowings | 409 | - | |
| Non refundable deposit paid | - | (300) | |
| Foreign exchange call option | (46) | - | |
| Loans to other entities | - | (22) | |
| Security deposits paid | (3,647) | (756) | |
| Security deposits refunded | - | 20 | |
| Net cash (outflows)/inflows from investing activities | (71) | 1,001 | |
| Cash flows from financing activities | |||
| Proceeds from issue of shares | 422 | 81 | |
| Repayment of borrowings | (60) | (523) | |
| Share issue costs | (57) | (341) | |
| Net cash inflows/(outflows) from financing activities | 305 | (783) | |
| Net increase (decrease) in cash held | (1,778) | (4,497) | |
| Cash at the beginning of the financial period | 1,990 | 5,215 | |
| Cash at the end of the financial period | 212 | 718 | |
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Notes to the financial statements (continued)
Note 1. Basis of preparation of the half-year financial report
This half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standard AASB 134 "Interim Financial Reporting" and other mandatory professional reporting requirements.
For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period.
The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Company as the full financial report.
The half-year financial report should be read in conjunction with the Annual Financial Report of Intec as at 30 June 2009. It is also recommended that the half-year financial report be considered together with any public announcements made by Intec during the half-year ended 31 December 2009 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.
Revenue from continuing operations of \$487,000 are shown in the following table:
| Revenue from continuing operations | 31 December | 31 December |
|---|---|---|
| 2009 | 2008 | |
| \$'000 | \$'000 | |
| Technical Income | 354 | 394 |
| Interest received | 73 | 101 |
| Transportation of Electric Arc Furnace Dust | - | 154 |
| Loss on sale of shares in Bass Metals Ltd | - | (41) |
| Other income | 60 | 12 |
| Total Revenue from continuing operations | 487 | 620 |
Revenues were generated from the ongoing recycling operations at Burnie, interest from Intec's environmental bonds for the EAF dust stockpile, and other minor sources.
Going Concern Basis
The accounts have been prepared on a going concern basis. On 16 November 2009, Intec signed a convertible note facility with La Jolla, which provides up to a total of US\$3 million in working capital in two equal tranches of US\$1.5 million. If the facility is fully utilised it will substantially meet Intec's working capital requirements during 2010. However, if the second tranche of US\$1.5 million were not to be available to the Group, then significant uncertainty would exist as to whether or not the Group would be able to continue as a going concern and the Group would require additional capital in order to continue meeting its obligations as they become due and payable. If additional capital was required, the Company's Directors would consider a number of alternatives, including raising further equity, realisation of non-current assets and seeking entities to partner with the Group in its core business activities relating to the Intec Process. The Directors consider it likely that the Group would be successful in its pursuit of alternative means of raising capital and therefore no adjustments have been made to the financial report that might be necessary should the Group not continue as a going concern.
Significant accounting policies adopted during the half-year
No significant accounting policies have been adopted in the current half year.
The accounting policies are consistent with those of the previous financial year.
Note 2. Equity securities issued
| Half-year | Half-year | ||||||
|---|---|---|---|---|---|---|---|
| 2009 | 2008 | 2009 | 2008 | ||||
| Shares | Shares | \$'000 | \$'000 | ||||
| Issue of ordinary shares during the half-year: |
|||||||
| Payment of Consulting Services to Carling Capital Partners |
- | 2,767,000 | - | 55 | |||
| Exercise of options | 7,747 | - | 1 | - | |||
| Issue of ordinary shares | 19,241,681 | - | 276 | - | |||
| Issue of ordinary shares from the conversion of the La Jolla Cove Investors Inc. Convertible Note |
11,729,042 | - | 145 | - | |||
| Transaction costs relating to share issues |
- | - | (18) | - | |||
| 30,978,470 | 2,767,000 | 404 | 55 |
Note 3. Segment information
The segment Metals Recovery – Operational Activities was previously named Research & Development. Revenues from Metals Recovery are being received under commercial contracts and the change of segment name reflects this.
(a) Business segments
The Group operates in the following industries:
(i) Metal in concentrate – Discontinued Operations
Production of metal in concentrate from tailings at the Hellyer Minesite ceased in September 2008 and the Hellyer assets were subsequently sold with final settlement occurring in August 2009.
(ii) Metals Recovery – Operational Activities
During the half year, Intec generated revenue from the provision of recycling services for heavy metal removal from inorganic industrial wastes. At the end of December 2009, Intec received approval for further testwork and engineering services from a third party, and additional revenues are expected from this source in 2010, as part of normal project-oriented business.
(b) Geographical segments
The Group operates in one geographical segment, namely Australia.
Note 3. Segment information (continued)
(a) Segment reporting – business segments
2009
(i) Segment Revenue
| Discontinued Operations \$'000 |
Metals Recovery \$'000 |
Consolidated \$'000 |
|
|---|---|---|---|
| Sales to external customers | - | 354 | 354 |
| Intersegment sales | - | - | - |
| Total sales revenue | - | 354 | 354 |
| Other revenue | 2,756 | - | 2,756 |
| Total segment revenue | 2,756 | 354 | 3,110 |
| Intersegment elimination Unallocated revenue |
- 133 |
||
| Consolidated revenue | 3,243 | ||
| (ii) Segment Result | |||
| Segment Profit (Loss) | 2,756 | (906) | 1,850 |
| Intersegment elimination | - | ||
| Unallocated Profit (Loss) | (1,525) | ||
| Profit before income tax | 325 | ||
| Income tax expense | 44 | ||
| Profit for the year | 281 | ||
| (iii) Segment assets and liabilities | |||
| Segment assets | 2,756 | 8,736 | 11,492 |
| Intersegment elimination | - | ||
| Unallocated assets | 109 | ||
| Total assets | 11,601 | ||
| Segment liabilities | - | 5,081 | 5,081 |
| Intersegment elimination | - | ||
| Unallocated liabilities | 805 | ||
| Total liabilities | 5,886 | ||
Note 3. Segment information (continued)
(iv) Other segment information
| Discontinued Operations \$'000 |
Metals Recovery \$'000 |
Consolidated \$'000 |
|
|---|---|---|---|
| Acquisition of plant and equipment | - | - | - |
| Unallocated | - | 2 | |
| Total acquisition | - | 2 | |
| Depreciation expense | - | 409 | 409 |
| Less capitalised into inventory | - | - | - |
| Less transferred to cost of goods sold | - | - | - |
| Depreciation expense | - | 409 | 409 |
| (v) Cash flow information | |||
| Net cash outflows from operating activities | (241) | (323) | (564) |
| Unallocated | - | - | (1,448) |
| Total cash outflows from operating activities | (2,012) | ||
| Net cash inflows from investing activities | 3,215 | (3,647) | (432) |
| Unallocated | - | - | 361 |
| Total cash inflows from investing activities | - | (71) | |
| Net cash flow from financing activities | - | - | - |
| Unallocated | - | 305 | |
| Total cash inflows from financing activities | - | 305 | |
| Net cash outflows | 2,974 | (3,970) | (996) |
| Unallocated | - | (782) | |
| Total net cash outflows | - | (1,778) |
Note 3. Segment information (continued)
(a) Segment reporting – business segments
2008
(i) Segment Revenue
| Sales to external customers 7,572 394 Intersegment sales - - |
7,966 - |
|---|---|
| 7,572 394 Total sales revenue |
7,966 |
| Other revenue - - |
- |
| Total segment revenue 7,572 394 |
7,966 |
| Intersegment elimination Unallocated revenue |
- 1,039 |
| Consolidated revenue | 9,005 |
| (ii) Segment Result | |
| Segment (loss) (9,013) (5,936) |
(14,949) |
| Intersegment elimination | - |
| Unallocated (loss) | (4,280) |
| Loss before income tax | (19,229) |
| Income tax benefit | - |
| Loss for the year | (19,229) |
| (iii) Segment assets and liabilities | |
| Segment assets 6,297 5,470 |
11,767 |
| Intersegment elimination | - |
| Unallocated assets | 694 |
| Total assets | 12,461 |
| Segment liabilities 1,652 4,568 |
6,220 |
| Intersegment elimination | - |
| Unallocated liabilities | 1,835 |
| Total liabilities | 8,055 |
Note 3. Segment information (continued)
(iv) Other segment information
| Discontinued Operations \$'000 |
Metals Recovery \$'000 |
Consolidated \$'000 |
|
|---|---|---|---|
| Acquisition of plant and equipment | 299 | - | 299 |
| Unallocated | 2 | ||
| Total acquisition | 301 | ||
| Depreciation expense | 1,309 | 297 | 1,606 |
| Less capitalised into inventory | (420) | - | (420) |
| Less transferred to cost of goods sold | - | - | - |
| Depreciation expense | 889 | 297 | 1,186 |
| (v) Cash flow information | |||
| Net cash outflows from operating activities | (2,327) | (381) | (2,708) |
| Unallocated | (2,007) | ||
| Total cash outflows from operating activities | (4,715) | ||
| Net cash inflows from investing activities | 213 | - | 213 |
| Unallocated | 788 | ||
| Total cash inflows from investing activities | 1,001 | ||
| Net cash flow from financing activities | - | - | - |
| Unallocated | (783) | ||
| Total cash inflows from financing activities | (783) | ||
| Net cash outflows | (2,114) | (381) | (2,495) |
| Unallocated | (2,002) | ||
| Total net cash outflows | (4,497) |
Notes to the financial statements (continued)
Note 4. Contingent liabilities
Since the last annual reporting date, there has been no change in any contingent liabilities or contingent assets.
Note 5. Hellyer Mill Processing Royalty
The Group holds a 100% interest in the Hellyer Mill processing royalty, which is a unit-based royalty payable at the rate of \$2.50 per tonne of ore processed through the Hellyer Mill to a cumulative maximum payment amount of \$5,000,000. The non-current assets of the Group include an amount of \$2,756,319 representing a valuation of the contingent Hellyer Mill processing royalty. BSM, which purchased the Hellyer assets, has publicly announced its intention to restart the Hellyer Mill during 2010. In its June 30 2009 financial statements, BSM adopted a valuation of \$2,756,319 for the Hellyer Mill processing royalty and this has been adopted by the Directors.
Note 6. Burnie Research Facility
The carrying value of the Burnie Research Facility is \$3,483,158 at 31 December 2009. Intec generated revenue through the Burnie Research Facility from the provision of testwork and engineering services to third parties for the half year to 31 December 2009 and will continue to do so in the short to medium term. The Directors consider it reasonably likely that the Group will be successful in its pursuit of these and other programs, and based on this assessment, no adjustments have been made to the carrying value of the Burnie Research Facility at 31 December 2009.
Note 7. Electric Arc Furnace Dust (EAF dust)
The Group has significant stockpiles of EAF dust in two locations; the Hellyer Minesite and the Footscray, Victoria storage facility.
The Group has lodged cash backed environmental bonds amounting to \$4,404,000 in relation to these stockpiles and the total bond amount is listed as a non-current asset in the balance sheet.
The Directors are investigating a range of options for the treatment and/or disposal of the EAF dust stockpiles, either by the Group itself or by external parties. At the current time the Group has not determined the most advantageous treatment and/or disposal option. In view of this uncertainty, the Directors have provided for a current provision of \$3,647,500 in respect to stockpile at Footscray and \$756,000 in respect to stockpile at the Hellyer Minesite. The total provision is equivalent to the full amount of environmental bonds lodged in relation to the EAF dust stockpiles.
Note 8. Sale of Hellyer assets
Proceeds from the sale of the Hellyer assets of \$3,715,000, which was completed in August 2009, were principally applied to the repayment of the Macquarie Bank debt facility and the replacement of the \$3,647,500 environmental bond in Victoria (which had been supplied by the Macquarie facility) with an interest-bearing cash deposit.
Note 9. Events occurring after reporting date
The formal EPA Victoria HazWaste funding agreement was finalised in mid-January 2010.
The Company issued the following shares after the reporting date: 21,659,436 shares to entities associated with Green Resources relating to Stage 1 of the subscription agreement ; 81,701 shares from the exercise of 8 cent options expiring on 31 December 2009; 45,038,734 shares in accordance with the terms of the Convertible Note issued to La Jolla; and 9,074,502 shares as consideration for services provided by Merriman Curhan Ford Inc., whilst acting as Principal American Liaison in connection with the listing and trading of Intec Ltd securities on the International OTCQX.
Notes to the financial statements (continued)
No other events have occurred subsequent to 31 December 2009 requiring disclosure in, or amendment to, these interim financial statements.
Note 10. Accounting standards not previously applied
The Group has adopted the following new and revised Australian Accounting Standards issued by the AASB which are mandatory to apply to the current interim period. Disclosures required by these Standards that are deemed material have been included in this financial report on the basis that they represent a significant change in information from that previously made available.
Presentation of Financial Statements
AASB 101 prescribes the contents and structure of the financial statements. Changes reflected in this financial report include:
- The replacement of income statement with statement of comprehensive income. Items of income and expense not recognised in profit and loss are now disclosed as components of 'other comprehensive income'. In this regard, such items are no longer reflected as equity movements in the statement of changes in equity;
- The adoption of the single statement approach to the presentation of the statement of comprehensive income; and
- Other financial statements are renamed in accordance with the Standard.
Operating Segments
From 1 July 2009, operating segments are identified and segment information disclosed on the basis of internal reports that are regularly provided to, or reviewed by, the Group's chief operating decision maker which, for the Group, is the Board of Directors. In this regard, such information is provided using different measures to those used in preparing the statement of comprehensive income and statement of financial position. Reconciliations of such management information to the statutory information contained in the interim financial report have been included.
As a result of the adoption of the revised AASB 8, certain cash-generating units have been redefined having regard to the requirements in AASB 138: Impairment of Assets.
Business Combination and Consolidation Procedures
Revised AASB 3 is applicable prospectively from 1 July 2009. Changes introduced by this Standard, or as a consequence of amendments to other Standards relating to business combinations which are expected to affect the Group, include the following:
• All business combinations, including those involving entities under common control, are accounted for by applying the acquisition method which prohibits the recognition of contingent liabilities of the acquiree at acquisition date that do not meet the definition of a liability. Costs incurred that relate to the business combination are expensed instead of comprising part of the goodwill acquired on consolidation. Changes in the fair value of contingent consideration payable are not regarded as measurement period adjustments and are recognized through profit and loss unless the change relates to circumstances which existed at acquisition date.
Notes to the financial statements (continued)
- Unrecognised deferred tax assets of the acquiree may be subsequently realised within 12 months of acquisition date on the basis of facts and circumstances existing at acquisition date with a consequential reduction in goodwill. All other deferred tax assets subsequently recognized are accounted through profit or loss.
- The proportionate interest in losses attributable to non-controlling interests is assigned to non-controlling interests irrespective of whether this results in a deficit balance. Previously, losses causing a deficit to non-controlling interests were allocated to the parent entity.
- If the Group holds less than 100% of the equity interests in an acquiree and the business combination results in goodwill being recognized, the Group can elect to measure the noncontrolling interest in the acquiree either at fair value ("full goodwill method") or at the non-controlling interest's proportionate share of the subsidiary's identifiable net assets ("proportionate interest method"). The Group elects which method to adopt for each adoption.
- Where control of a subsidiary is lost, the balance of the remaining investment account shall be re-measured to fair value at the date that control is lost.
Intec Ltd Directors' Declaration
In the Directors' opinion:
- (a) the financial statements and notes set out on pages 4 to 16 are in accordance with the Corporations Act 2001, including:
- (i) complying with Accounting Standards AASB 134: Interim Financial Reporting, and
- (ii) giving a true and fair view of the Group's financial position as at 31 December 2009 and of its performance, as represented by the results of their operations and their cash flows, for the half-year ended on that date; and
- (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Directors of Intec Ltd.
On behalf of the Board
Philip R Wood Managing Director Chief Executive Officer
Sydney
24 February 2010
Intec Ltd Additional shareholder information
The top 20 shareholders as at 18 February 2010 are as follows:
| Name | Shares Held | Percentage |
|---|---|---|
| ANZ NOMINEES LIMITED | 41,926,653 | 4.528 |
| ORIAN HOLDING CORP | 41,174,840 | 4.446 |
| LA JOLLA COVE INVESTORS INC | 33,579,182 | 3.626 |
| HENIAN ZOU | 12,995,663 | 1.403 |
| DR LEON EUGENE PRETORIUS | 12,505,000 | 1.350 |
| MR STEPHEN SCANLAN | 10,550,000 | 1.139 |
| AD CHRISTIE PTY LTD | 10,000,000 | 1.080 |
| OREGON NOMINEES PTY LTD <oregon nomineesSUPER A/C> |
9,985,000 | 1.078 |
| HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED | 9,689,082 | 1.046 |
| ALLIANCES RESOURCES LIMITED | 9,542,640 | 1.031 |
| NICE WEALTH INVESTMENT LIMITED | 7,219,740 | 0.780 |
| BONES AUSTRALIA PTY LTD | 6,200,000 | 0.670 |
| IE PROPERTIES PTY LTD | 6,136,666 | 0.663 |
| MR WILLIAM E CONWAY | 6,055,714 | 0.654 |
| MR MICHAEL JOHN MCKENZIE | 6,045,455 | 0.653 |
| BRYAN WELCH PTY LTD | 6,000,000 | 0.648 |
| PLYMOUTH HOLDINGS INC | 5,771,808 | 0.623 |
| REACH OUT PTY LTD | 5,572,460 | 0.602 |
| BATROSA CONCRETE PRODUCTS PTY LTD |
5,500,000 | 0.594 |
| CLASSIC ROOFING PTY LTD | 5,500,000 | 0.594 |