TIDMWAS

RNS Number : 2097P

Wasabi Energy Limited

30 September 2013

30 September 2013

Wasabi Energy Limited

("Wasabi," "the Group" or "the Company")

Audited Final Results

Wasabi Energy (ASX: WAS, AIM: WAS, OTCQX: WSBLY) is pleased to provide the financial report of the Company and its subsidiaries for the year ended 30 June 2013. A full copy of the financial report incorporating the audit report and notes to the accounts is available on the Company's website (www.wasabienergy.com) and on the ASX website.

Highlights:

-- Establishment of Wasabi New Energy Asia Limited and the purchase of 50.5% of Shanghai Shenghe New Energy Resources Science and Technology (SSNE), the Chinese license holder for the Kalina Cycle(R) .

-- Ongoing development of Imparator Green Energy Plc and in particular enhanced resource studies and pre-feasibility study for the Tuzla Geothermal project.

-- Four (4) Kalina Cycle(R) plants in various stages of construction and commissioning in petrochemical, geothermal and cement industry by the Kalina Cycle(R) license holders.

-- Completed issue of Convertible Loan note and Rights Issue to raise approximately $14m during the period for the ongoing development of the subsidiaries.

The Group loss for the year to 30 June 2013 is AUD$11.9m (2012 - Loss AUD$7.45m)

For further information contact

Australian Enquiries

Mr. John Byrne / Diane Bettess

Wasabi Energy Limited

Ph: +61 (0)3 9663 7132

U.K. Investor Enquiries

Ivonne Cantu / Neil McDonald

Cenkos Securities plc

Ph: +44 (0)207 397 8900 / +44 (0) 131 220 9778

U.K. Media Enquiries

Mr. Josh Royston / Ms. Hilary Millar

Newgate Threadneedle

Ph: +44 (0) 207 653 9850

Chairman's Letter

Wasabi Energy has continued to make solid progress in its development as an International Independent Power Producer.

Wasabi's expansion program is now progressing. The Company incurred a consolidated loss of $11,933,583 (2012: Loss of $7,448,777) for the year which was higher than expected due to a $2.8m goodwill write off against the carrying value of our investment in Aqua Guardian Group. As we proceed with the establishment of subsidiaries and joint ventures to commercialise the Kalina Cycle(R) technology worldwide your board expects a significant reduction in losses in the new year. Since balance date current liabilities of $9.4m were reduced by $5.2m by the issue of Wasabi shares at 1.8cents. The strategy of Wasabi Energy is to use the regional subsidiaries to finance, develop, own and operate 25 MWe of power production under construction or in operation by 2015. We aim to maintain annual growth at this rate concentrating on high margin opportunities as compared with traditional low margin base load producers.

The establishment of Wasabi New Energy Asia (WNEA) and the purchase of 50.5% of Shanghai Shenghe New Energy Resources Science and Technology (SSNE) the Kalina Cycle(R) licensee for Greater China (completed post year end) is a major achievement. Asia offers a significant number of opportunities for power generation using both the Kalina Cycle(R) and the SSNE patented Enhanced Rankine Cycle. SSNE are completing two pivotal projects, a 7.5 MWe Enhanced Rankine Cycle at the Guizhou cement plant for China Building Materials Group and a 4 MWe Kalina Cycle(R) power plant at the Hainan petrochemical facility for Sinopec. These are leading Chinese companies with a large number of potential sites for power generation. A Pre-IPO capital raising of up to $15 million is currently underway and a leading international financier has been mandated to lead the fundraising. Wasabi aims to retain at least 50% of the equity of WNEA post listing on the Singapore stock exchange. An experienced operational power team will be appointed to manage WNEA, which on listing will be well funded and a have a strong pipeline of projects.

Our Turkish subsidiary, Imparator Green Energy Plc, is expected to complete a pre feasibility study on the expansion of the Tuzla Geothermal Power Project in the near future. Recent geological work has significantly expanded the potential geothermal resource of the Tuzla field. Preliminary indications are that a second stage build-out of 30 MWe (gross) can be undertaken over the next two years.

On completion of the pre-feasibility study, a decision will be taken on the most appropriate method for funding the growth of Imparator. Wasabi currently holds 100 per cent of the equity of Imparator which not only has the Tuzla Geothermal Power Project but also the Kalina Cycle(R) license for Turkey where there are many potential applications. Wasabi has invested approximately $9 million into Imparator and under the terms of the option agreement for the purchase of Tuzla is required to pay approximately $4 million at the end of 2013. There are a number of options for funding this but the most likely is to sell down equity in Imparator through the introduction of private or public equity partners.

In Africa, AAP Carbon has taken on the business development activities within Sub Saharan Africa. It is well advanced on a number of projects in the cement and ferro-alloy markets. As these projects come to fruition we will commence the IPO process.

Within the financial year we also conducted a number of capital raising activities to provide funding for the acquisition and development of these regional subsidiaries. The strong support of our shareholders is much appreciated and shows confidence in our business strategy. During and subsequent to the yearend we raised over $12.9 million to fund the purchase of the 50% option of the Tuzla Geothermal Power Project and the purchase of the 50.5% of SSNE, which is in the form of a loan to WNEA.

A key focus for the Group is the finalization of the commissioning with FL Smidth of the 8.6 MWe DG Khan Kalina Cycle(R) plant in Pakistan in the coming weeks and the 4.5 MWe Star Cement Kalina Cycle(R) power plant in the United Arab Emirates.

Our business development and engineering teams are working on a number of prospects that offer exciting opportunities, including installing Kalina Cycle(R) systems for waste heat recovery on large scale diesel generators, gas pipeline compressor stations and solar thermal plants. In all cases significant power advantages appear achievable and our aim will be to develop reference sites for marketing these applications.

Wasabi Energy is on track for the divestment of our non-core assets. In August 2012 we announced the sale of our shareholding in Australian Renewable Fuels to Lignol Energy Company (TSXV:LEC). Lignol have continued to consolidate its position in the global biodiesel market through further ownership in Australian Renewable Fuels as well as the purchase of a major stake in Territory Biofuels.

Aqua Guardian Group continues to develop its market for its water conservation modules, AquaArmour(TM) with a sale to the prominent miner, AngloGold Ashanti and to other water authorities. We are continuing with our international expansion and there are a number of well advanced opportunities.

Wasabi Energy also holds a number of shares in Clean TeQ (ASX:CLQ), an environmental solution provider in water, air quality and mineral recovery. Clean TeQ has been performing well and has attracted Robert Friedland as a major shareholder in the company. This is a strong endorsement for the business.

With the range of company building activities this year, the Wasabi Energy team has spent a lot of time in many different parts of the world. Our team have been focused on the delivery of our strategy and worked relentlessly throughout the year, including extended durations away from their families and friends. My thanks to you all for your ongoing commitment and dedication to making Wasabi Energy a success.

Yours Faithfully

John Byrne

Executive Chairman

Review of Operations

Over the financial year Wasabi Energy continued to make solid progress in achieving its plan of becoming an International Independent Power Producer. The focus for the Group over the past year has been on two objectives, firstly, the continued integration of Kalina Cycle technology within the cement industry and secondly, the establishment of regional subsidiaries in Turkey, Asia and Africa with each developing a portfolio of Kalina Cycle(R) power projects.

These regional subsidiaries are being established as separate entities in which Wasabi intends to hold a majority shareholding. The individual entities will be responsible for their own capital and Wasabi shareholders will benefit from the value added from these subsidiaries without dilution of the company equity.

Asia

Wasabi New Energy Asia (WNEA) was established in late 2012 to capitalise on the strong mandates for Energy Efficiency and Renewable Energy in the Asian region. WNEA will become a separately listed entity. WNEA is currently acquiring 50.5% of Shanghai Shenghe New Energy Resources Science and Technology (SSNE), the Kalina Cycle(R) licensee for China, Taiwan, Hong Kong and Macau. In addition WNEA has a Kalina Cycle(R) license for Asia inclusive of Japan, Myanmar, Mongolia, Thailand, Malaysia, Cambodia, Laos, Vietnam, Philippines, Indonesia, North Korea, South Korea, Singapore and Brunei.

SSNE has been a Kalina Cycle(R) licensee since 2008 and has been building the foundations of the business. This has culminated in a contract for a 4 MWe Kalina Cycle(R) power plant with Sinopec at their Hainan petrochemical refinery. Sinopec Corporation is one of the largest integrated energy and chemical companies within China and operates globally with over US$9.92B in net profits and a market capitalisation of over US$90B.

SSNE, are also in the final stages of commissioning of a 7.5 MWe Enhanced Rankine Cycle power plant for China Building Materials Group at their Guizhou cement plant. China Building Materials Group is a major cement producer in China and operates over 35 cement lines in China.

A number of business development opportunities are well advanced including further potential contracts with Sinopec and CBMG as well as geothermal opportunities in Taiwan.

WNEA through Wasabi's wholly owned subsidiary, Recurrent Engineering, is progressing with a new engineering contract in Japan with the Geothermal Energy Research and Development group, GERD. This follows from the installation and operation of the 50 kWe EcoGen Kalina Cycle(R) micro power plant at the Matsunoyama onsen northwest of Tokyo. These units have been specifically designed for application in the hot spring market that has vast potential within Japan and the rest of Asia.

On 15th August 2013 Wasabi announced that WNEA had made a further payment for the purchase of 50.5% of SSNE for an approximate total price of US$30 million. To date US$22 million has been paid (US$8.2 million in cash, and WNEA has issued 30 million shares at US50c each). The balance of US$8.30 million is due on 30 November 2013. WNEA has appointed an international brokerage house in Hong Kong to complete a pre-IPO fundraising within this timeframe. It is planned to list WNEA on the Singapore stock exchange in the first half of 2014.

Turkey

Imparator Enerji, the Turkish subsidiary, has been established to co-pursue power generation opportunities using Kalina Cycle(R) technology. The company has been working towards the exercise of the option over the Tuzla Geothermal Project in Turkey. Tuzla has an operating 7.5 MWe geothermal power plant on approximately 29 square kilometres of geothermal leases. Imparator has been working with Enda, the project owner and operator on plans to upgrade the existing plant as well asthe first stage build out of the project by up to 25 MWe utilising a Kalina Cycle(R) power plant. The Tuzla Geothermal Power Project has the build out potential based on studies and historical reports of up to 80 MWe of power generation capacity. We are currently finalising plans for the exercise of the option prior to the end of December 2013.

Alongside the development of the Tuzla Geothermal Project, Imparator Enerji is also in discussions with major energy intensive industries for the use of Kalina Cycle(R) technology.

Africa

AAP Carbon is an established entity in Sub Sahara Africa. Progress within the group continues on a Kalina Cycle(R) opportunity on a build, own, operate with a leading cement group in Southern Africa and an integrated cogeneration project with Hernic Ferrochrome. In addition the group is still in discussions with ArcelorMittal, TATA Steel, Mogale Alloys and a range of other industrial and geothermal groups in Sub Saharan Africa. As the group secures projects we are progressing our plans for a separate listing of AAP Carbon. Africa remains a very attractive market with increasing power prices and intermittent supply resulting in a strong demand for self generated power.

Licensees

The 8.6 MWe Kalina Cycle(R) power plant at DG Khan in Pakistan is in its final stages of commissioning. The duration of this commissioning has been extended due to the remoteness of the site and the training of local operators on the operation of the plant. The final acceptance tests are expected to be completed before the end of the year.

FLSmidth the Kalina Cycle(R) licensee for the global cement and lime industry (excluding China, Taiwan, Macau and Hong Kong) is also undergoing commissioning of the 4.75 MWe Kalina Cycle(R) power plant at Star Cement in Ras Al Khaimah in the United Arab Emirates. FLSmidth have a number of opportunities that they are pursuing including build, own, operate contracts in conjunction with Wasabi Energy.

Exorka, the German Kalina Cycle(R) licensee for geothermal developments has commenced construction of its 4.3 MWe Kalina Cycle(R) power plant and district heating project with Geothermie Taufkirchen. The project is expected to come on line in 2014.

The refurbishment of the Husavik power plant has been delayed due to delivery issues of various components. Wasabi Energy is working with the City of Husavik in relation to the ongoing refurbishment of the plant.

Non Core Assets

Wasabi Energy has a clear strategy to focus on the power business and to divest non core assets which consist of Aqua Guardian Group, Clean TeQ and Lignol.

Aqua Guardian Group (AGG)

Aqua Guardian Group (AGG) owns the innovative modular evaporation and algae control product AquaArmour(TM) . AquaArmour(TM) is a self ballasting module that has been designed for large scale deployment on water storages and dams. We announced in late 2012 that AGG had deployed at the AngloGold Ashanti Tropicana gold mine site in Western Australia. AquaArmour(TM) was deployed on a water storage reserve at the reverse osmosis water plant at Tropicana, which is the main supply of water to the site.

AGG continues with deployments for local councils and water authorities in Australia including repeat sales to existing customers. Internationally there has been a large amount of interest from South America and Spain which is being pursued.

Wasabi Energy is working with AGG to evaluate a number of scenarios to realise the value of this asset.

Clean TeQ

In late 2012 AGG paid down a loan to Wasabi using their shares in Clean TeQ (ASX:CLQ) resulting in Wasabi owning 22.5 million shares directly. Clean TeQ (CLQ) is a provider of advanced clean technology solutions for air and water treatment and mineral extraction.

In May 2013, CLQ announced that Mr Robert Friedland, a well-known and highly successful investor in both mining and technology-related ventures, made an investment in Clean TeQ of approximately $1.84 million in unsecured convertible notes and a further investment of $1.73 million following his due diligence and shareholder approval. Mr Friedland owns approximately 19.9% of CLQ on a converted basis. As a new substantial shareholder in CLQ and with the market potential and business activities of CLQ, Wasabi sees upside potential for CLQ.

Lignol

Wasabi announced on 15 August 2012 that it had sold 275 million ordinary share in Australian Renewable Fuels (ARFuels) to Lignol Energy Corporation (TSXV: LEC), a Canadian-based advanced biofuels company for consideration of $4,129.096 and currently holds 36.6m shares in Lignol.

Lignol is an emerging producer of biofuels, biochemicals and renewable materials from waste biomass. It owns a Canadian biorefining company with an integrated pilot plant demonstrating its technology for the production of cellulosic ethanol, high value cellulose and high performance lignin. During the year Lignol has also secured its stake in the Australian biodiesel market through its 56% controlling interest in Territory Biofuels Limited and 21% of ARFuels.

Territory Biofuels is the largest single biodiesel plant in Australia with a capacity of 140 million litres per annum, which includes the largest glycerine refinery in the country. ARFuels is currently the largest biodiesel producer in Australia with three plants having a combined capacity of 150 million litres per annum.

Corporate Activity

During and subsequent to year end Wasabi Energy has raised over $12.9m with the funds used to accelerate growth through the regional subsidiaries.

Through placements and rights issues Wasabi raised over $6.8m and a further $7.4m through the issue of a secured loan note in December 2012. The capital raisings attracted two new shareholders from Canada, Difference Capital and Salida Accelerator Fund.

The funds were used for the initial payment for SSNE and is by way of a loan provided by Wasabi to WNEA. This loan will be converted into additional shares in WNEA at the time of the IPO at US50c per share. The funds have also been used for the purchase of the 50% option over the Tuzla Geothermal Power Project.

Wasabi Energy continues to execute its strategy of becoming an Independent Power Producer. We are delivering on our strategy of regional based subsidiaries and will continue to roll out key regional companies to accelerate the market penetration of the Kalina Cycle(R). Our focus in the year ahead for the power business will also see the realisation of our non-core assets.

Key activities for the coming year are the finalisation of the commissioning of DG Khan and providing assistance on the commissioning of the other four Kalina Cycle(R) power plants. The realisation of business development activities in both build, own, operate projects and engineering projects is core to our strategy, including the exercising of the 50% option in Turkey, and key projects in Sub Saharan Africa, China, Taiwan and Japan.

The market for Wasabi Energy continues to grow with increasing focus on energy efficiency and renewable power solutions together with growing demand for reliable power supply. Through the foundations of the regional subsidiaries and our plans for continued growth, through the delivery of 25 MWe of build, own, operate power plants, we are confident that Wasabi Energy will deliver our goal of being a profitable independent power provider.

The Board of Directors and the Wasabi Energy team have provided strong support during a very busy year for which I thank them. The year ahead will see further delivery of our strategy and the development of our power business.

Diane Bettess

Chief Operating Officer

Directors' report

The directors of Wasabi Energy Limited present their annual financial report of the Company for the year ended 30 June 2013. The directors report as follows:

The names and particulars of the directors of the Company during or since the end of the financial year are:

 
 Name, qualifications          Particulars 
 Mr. John Byrne                Mr. Byrne has over 30 years' experience in the natural resources industry as an 
                               investor and 
                               resource business developer. During the past 10 years Mr. Byrne has founded and built a 
                               number 
                               of companies from the ground up, including from development through to production. In 
                               this 
                               period he has been instrumental as either CEO or Executive Chairman in overseeing the 
                               building 
                               of 6 coal mines (in Canada, the US and the UK) along with 3 wash plants, totaling in 
                               excess 
                               of $500 million of expenditure. Until May 2010 Mr. Byrne was Chairman of Western Coal 
                               Corporation, 
                               a global coal producer. Since retiring from Western Coal Corporation, Mr. Byrne is now 
                               concentrated 
                               on identifying projects in and solutions to a number of sustainability issues that 
                               exist in 
                               the world today. 
 
                               Appointed 8 May 2009. 
 Mr. Stephen Morris            Mr Morris has more than 20 years' experience in international investment and management 
                               in 
                               a wide range of industries. Mr Morris is founder and Chief Executive of Fifth Avenue 
                               Capital 
                               Inc (a venture capital company) and a founder and director of FAC Smaller Strategic 
                               Opportunities 
                               Inc. as an early stage resource investor. 
 
 
                               Appointed 13 November 2006. 
 Mr. Robert Reynolds,          Mr. Reynolds is a mining engineer with more than 30 years experience in Australia and 
  Master Eng.(Mining)          overseas 
                               in coal marketing as well as coal mining management and engineering. Mr. Reynolds is a 
                               consultant 
                               providing marketing advice and services to a number of national and international coal 
                               producers. 
                               Mr. Reynolds past experience was with Southland Coal, Oceanic Coal and BHP. 
 
                               Appointed 10 August 2005. 
 Mr. Robert Vallender,         Mr. Vallender has over 30 years of management and new technology product development 
  B Comm.                      experience 
                               in Australia and North America. Mr. Vallender is a consultant providing independent 
                               marketing 
                               and capital project sales advice to the Australian and European iron and steel and 
                               primary 
                               metals industries. He has dealt with major manufacturers and producers including Alcoa, 
                               U.S. 
                               Steel and General Motors. 
 
                               Appointed 10 August 2005. 
 Dr. Malcolm Jacques,          Dr Jacques is an independent energy consultant, focusing on the Renewable and Clean 
  Ph.D. Chemical Engineering   Energy 
                               sectors, with special emphasis on technical and regulatory issues associated with the 
                               integration 
                               of distributed and renewable energy sources into existing power grids. Dr Jacques 
                               maintains 
                               close working relationships with policy makers, regulators, financial organizations and 
                               consultants 
                               in the energy sectors in Europe and the USA. 
 
                               Dr Jacques' international career has embraced research, development and implementation 
                               of 
                               numerous energy technologies in both the public and private sectors. He has worked with 
                               several 
                               well-known companies and organizations including BP Ventures (UK), The Energy 
                               Laboratory, 
                               MIT (Cambridge, USA), Strategic Research Foundation (Australia) and has played key 
                               roles in 
                               the establishment and management of public and private energy technology companies in 
                               Australia 
                               and North America. 
 
                               Appointed 2 March 2010 
 

The above named directors held office during the whole of the financial year and since the end of the financial year except for:

   --      Mr Stephen Morris - resigned on 28 August 2012 
 
 
 

Directorships of other listed companies

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

 
 Name         Company                      Period of 
                                            directorship 
 
 John Byrne   Mandalay Resources Limited   2009 - 2011 
               (Canada) 
              East Coal Inc (Canada)       2008 - current 
 
 Stephen      Sallies Ltd (South Africa)   2009 - 2011 
  Morris 
 (Resigned 
  28 August 
  2012) 
 

Shareholdings

The following table sets out key management personnel's relevant interests in shares and options of the Company as at the date of this report.

During and since the end of the financial year no options (2012: nil) were granted as part of their remuneration.

Each option when exercised entitles the holder to one ordinary share.

 
                                    Fully paid ordinary 
                                                 shares      Options 
 Directors and senior management                 Number       Number 
 Directors 
 John Byrne                                 351,731,620   23,688,746 
 Robert Reynolds                             33,273,691    3,669,299 
 Robert Vallender                            20,256,438            - 
 Malcolm Jacques                             15,150,000            - 
 
 
 Senior Management 
 Diane Bettess                                6,435,000      715,000 
 Nico Bleijendaal                                     - 
 Bruce Levy                                   8,500,000            - 
 Alwyn Davey                                  8,230,017            - 
 Kesh Thurairasa                              1,957,065      217,452 
 
 
 

During and since the end of the financial year no share options were granted to Directors and officers of the company as part of their remuneration.

Directors' meetings

The number of Directors' meetings (including meetings of Committees of Directors) and the number of meetings attended by each of the Directors of the Company held during the financial year. During the financial year, 9 Board meetings and 2 Audit Committee meetings were held during the period.

 
                      Board of Directors     Audit and Finance 
                                                 Committee 
                    ---------------------  -------------------- 
 Name                 Held     Attended      Held     Attended 
                    -------  ------------  -------  ----------- 
 John Byrne            9           9          2          2 
                    -------  ------------  -------  ----------- 
 Stephen Morris        3           3          -          - 
                    -------  ------------  -------  ----------- 
 Robert Reynolds       9           9          2          2 
                    -------  ------------  -------  ----------- 
 Robert Vallender      9           9          -          - 
                    -------  ------------  -------  ----------- 
 Malcolm Jacques       9           9          -          - 
                    -------  ------------  -------  ----------- 
 

Company secretary

The name(s) and particulars of the Company secretary during or since the end of the financial year are:

 
 Name 
 Alwyn Davey   Mr Alwyn Davey was appointed to the position of Company Secretary on 9 July 2009. Mr Davey 
                has experience in cross border mergers, acquisitions and investments as well as formally being 
                a member of the Executive committee of Cambrian Mining Plc, a diversified mining group. He 
                was a non-executive director for Energybuild Group Plc, a UK listed coal company and has been 
                company secretary of a number of UK listed companies which were predominately part of the 
                Cambrian Mining Plc group. Mr Davey holds an LLB degree from Waikato University, NZ. 
 

Principal activities

The principal activity of the consolidated entity during the year was the continued management of its projects and investments.

Review of operations

The consolidated loss for the year amounted to $11,933,583 (2012: $7,448,077 loss).

The Review of Operations is set out above.

Significant Risks

The Company monitors risks and uncertainties on an ongoing basis in relation to its business objectives and operating environment. The following are deemed material risks to the business:

Future capital requirements: The Company's strategy of becoming an independent power operator will require significant amounts of funding in the future. The Company will seek to meet its funding requirements through the creation of subsidiary companies that will raise capital on their own account through a combination of equity and debt. There is a risk that the subsidiaries and the Company will not be able to secure the capital or to achieve attractive terms at the time.

Subsidiary Business Model: The Company has currently or intends in the future to establish regional subsidiaries to further the business of the Group. Regulatory, commercial, environmental or political risks may impact on the ability of the Company to establish and/or continue to operate subsidiaries in various global jurisdictions. These factors may also impact on the ability of the subsidiary companies to raise capital on their own account. While the Company will seek to continue to operate existing subsidiaries and to form new subsidiaries, there is a risk that the business and operating structure of the Group will be different in the future.

Dependence on Proprietary Technology: The Group relies on a combination of patents, copyrights, trade secrets and non-disclosure agreements to protect its Kalina Cycle technology. The Group enters into confidentiality or licence agreements with its employees, licensees and others and limits access to its documentation, software and other proprietary information. There can be no assurance that steps taken by the Company and KCT Power Limited, formerly Global Geothermal Limited (KCT) in this regard will be adequate to prevent misappropriation of its technology or that KCT's competitors will not independently develop technologies that are substantially equivalent or superior to KCT's technology. In addition, the laws of some foreign countries may not protect KCT's proprietary rights against others.

Foreign Exchange: Foreign exchange risk is relatively high due to the global nature of the Company's core business. Foreign exchange risk arises as it is likely to receive payment for services in currencies other that the Company's functional currency. In addition the value of its investments, assets and liabilities in foreign jurisdictions will be affected by currency movements.

Changes in state of affairs

There was no significant change in the state of affairs of the consolidated entity during or since the year end.

Subsequent events

Except as noted below, there has not been any matter or circumstance that has arisen since the end of the financial period, that has significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the company in future financial periods

(i) On 15 July 2013 the company raised $2,036,757 from a placement of the shortfall from the June Rights issues of 254,594,679 million fully paid ordinary together with a free attaching options of 254,594,679 exercisable at 0.8 cent before 31 March 2014.

(ii) On 13 August 2013 the company issued 288,001,844 fully paid ordinary shares at 1.8 cents to acquire 10 million Wasabi New energy Asia Limited shares

.

(iii) On 14 August 2013, WNEA borrowed A$3,133,175 to complete the second payment due. As a result of this payment Newmont Assets ltd a wholly owned subsidiary of WNEA took 50.5% control of SSNE business. Final payment of A$9,207,287 is due to vendors of SSNE on or before 30 November 2013. Refer note 38 for further information.

Future developments

Disclosure of information regarding likely developments in the operations of the consolidated entity in future years and the expected results of those operations may result in unreasonable prejudice to the consolidated entity and therefore have not been disclosed in this report.

Environmental regulations

The consolidated entity's operations are subject to environmental regulation under both Commonwealth and State legislation. There have been no significant known breaches of these regulations by the consolidated entity.

Dividends

No dividends have been paid or declared since the start of the year.

Shares under option or issued on exercise of options

Details of unissued shares or interest under option as at the date of this report:

 
                       Number of                  Exercise 
                    shares under     Class of     price of     Expiry date 
 Issuing Entity           option       shares       option      of options 
 
   Wasabi Energy       6,500,000     Ordinary     2.8 cent     17 December 
   Limited                                                            2013 
                  --------------  -----------  -----------  -------------- 
 Wasabi Energy       380,833,402     Ordinary     0.8 cent        31 March 
  Limited                                                             2014 
                  --------------  -----------  -----------  -------------- 
 Wasabi Energy        10,000,000     Ordinary     3.4 cent    1 April 2014 
  Limited 
                  --------------  -----------  -----------  -------------- 
 

Details of shares or interest issued during or since the end of the financial year as a result of exercise of an option are:

 
                           Number of                 Amount   Amount unpaid 
                   Options converted   Class of    paid for 
 Issuing Entity            to shares     shares      shares 
                 -------------------  ---------  ----------  -------------- 
 

Wasabi Energy Limited 18,002,750 Ordinary $320,000 NIL

Shares under warrants or issued on exercise of warrants

Details of unissued shares or interest under warrants as at the date of this report:

 
                       Number of                  Exercise 
                    shares under     Class of     price of     Expiry date 
 Issuing Entity           option       shares       option      of options 
 
   Wasabi Energy     362,500,000     Ordinary     2.0 cent     14 December 
   Limited                                                            2013 
                  --------------  -----------  -----------  -------------- 
 Wasabi Energy        18,750,000     Ordinary     0.8 cent     14 December 
  Limited                                                             2013 
                  --------------  -----------  -----------  -------------- 
 

Details of shares or interest issued during or since the end of the financial year as a result of exercise of an option are:

 
                           Number of                 Amount 
                   Options converted   Class of    paid for   Amount un 
 Issuing Entity            to shares     shares      shares        paid 
                 -------------------  ---------  ----------  ---------- 
 

Wasabi Energy Limited NIL Ordinary NIL NIL

Indemnification of officers and auditors

The Company has entered into agreements to indemnify all the Directors and Officers named in this report against all liabilities to persons (other than the Company), which arise out of the Directors and Officers conduct unless the liability relates to conduct involving a lack of good faith or is otherwise prohibited by law. The Company has agreed to indemnify the Directors and Officers against all costs and expenses incurred in defending an action that falls within the scope of the indemnity and any resulting payments.

In accordance with common commercial practice, the insurance policy prohibits disclosure of the nature of the liability insured against and the amount of the premium.

Non-audit services

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in note 34 to the financial statements.

The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or firm on the auditor's behalf) is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 34 to the financial statements do not compromise theexternal auditor's independence, for the following reasons:

-- all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor, and

-- none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

Auditor's independence declaration

The auditors' independence declaration is included on page 60 of the annual report.

Remuneration report - audited

This remuneration report, which forms part of the directors' report, sets out information about the remuneration of Wasabi Energy Limited's directors and its senior management for the financial year ended 30 June 2013. The prescribed details for each person covered by this report are detailed below under the following headings:

   --    directors and senior management personnel details 
   --    remuneration policy 
   --    relationship between the remuneration policy and Company performance 
   --    remuneration of directors and senior management 
   --    key terms of employment contracts. 

Directors and senior management personnel

The following persons acted as directors of the Company during or since the end of the financial year:

Executive Directors

John Byrne

Stephen Morris (resigned 28 August 2012)

Malcolm Jacques (until 31 August 2012)

Non-executive directors

Robert Vallender

Robert Reynolds

Malcolm Jacques (from 1 September 2012)

The term 'senior management' is used in this remuneration report to refer to the following key management personnel. Except as noted, the named key management personnel held their current position during or since the end of the financial year:

Diane Bettess (Chief Operating Officer - Wasabi Energy Limited)

Nico Bleijendaal (President - International - Wasabi Energy Limited)

Bruce Levy (Managing Director - KCT Power Limited)

Alwyn Davey (Company Secretary - Wasabi Energy Limited)

Kesh Thurairasa (Financial Controller - Wasabi Energy Limited)

Remuneration policy

The Board policy for determining the nature and amount of key management personnel and other remuneration is agreed by the Board of Directors.

The terms 'remuneration' and 'compensation' are used interchangeably throughout this report.

Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company. Key management personnel comprise the directors of the Company and senior management of the Company.

Compensation levels for key management personnel and other employees of the Company are competitively set to attract and retain appropriately qualified and experienced directors and senior management.

The compensation structures explained below are designed to attract and retain suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The compensation structures take into account:

   --      the capability and experience of key management personnel and other employees; and 

-- the ability of key management personnel and other employees to control areas of their respective responsibilities

Senior Executive Remuneration

Compensation packages for the Executive Directors and senior management include a mix of fixed and incentive based compensation.

The Board regularly reviews the policy regarding the appropriate mix of fixed and incentive based compensation for senior executives, having regard to industry practice to ensure the Company attracts and retains the best people.

Fixed compensation

Fixed compensation consists of base compensation (which is calculated on a total cost basis and includes any FBT charges related to employee benefits including motor vehicles if any), as well as employer contributions to superannuation funds.

Fixed compensation levels are reviewed annually by the Board through a process that considers individual contributions and overall performance of the Group, as well as market relativity. A senior executive's compensation is also reviewed on promotion.

Incentive based compensation

The Company does not currently operate a short-term incentive scheme and, in 2013, no cash awards were made to the executives except for B Levy as disclosed in the remuneration report. The Board did not operate a short-term incentive scheme for the 2013 financial year, however will review this in the context of the formal review of the Company's broader executive remuneration policy to be undertaken during the 2014 financial year.

In the 2013 financial year, no options were issued to Directors and senior executives. However in 2011 and 2010, the Company issued options to Directors and senior executives. The current approach of not having time based vesting is considered appropriate. The Board will continue to review the appropriateness of the time based vesting conditions for future grants of options. There is no condition other than period of service for granting of options. The company considers the issue of options sufficiently aligns the interest of the entity with the incentive given to key management personnel.

All options expire on the earlier of their expiry date or termination of the individual's employment.

Non-Executive Director Remuneration

Non-Executive Director fees are paid within an aggregate limit which must not exceed $250,000 (excluding mandatory superannuation) per annum or such other maximum as determined by the Company in a general meeting.

The cash fees paid to Independent Non-executive Directors for the 2013 financial year were $25,000 (2012:$25,000) per annum, plus statutory superannuation.

All Non-Executive Directors are eligible to participate in the options granted.

All Non-Executive Directors are also entitled to be reimbursed for all reasonable travel, accommodation and other expenses incurred in attending meetings of the Board, committees or shareholders or while engaged on other Wasabi Energy Limited business.

Relationship between the remuneration policy and Company performance

The achievement of Company strategic objectives is the key focus of the efforts of the Company, and it is the leadership of the directors and senior management which makes the achievement of this aim possible. As indicated above, over the course of the 2014 financial year, the Board will review the Company's executive remuneration policy to ensure the remuneration framework remains focused on driving and rewarding executive performance, while being closely aligned to the achievement of Company strategic objectives and the creation of shareholder value.

Shareholder returns are primarily measured by the movement in share price from the start to the end of each financial year. No dividends have been declared in the past four financial years or the current financial year. As the Company remains in the growth phase of its life cycle, shareholder returns do not correlate with revenues and losses reported in any of the recent financial years. Shareholder returns are more dependent on the future expectation of Company performance rather than Company earnings.

The table below set out summary information about the consolidated entity's earnings and movement in shareholder wealth for the five years to 30 June 2013.

 
                            30 June       30 June     30 June       30 June        30 June 
                               2013          2012        2011          2010           2009 
 Revenue                  1,467,591     4,876,720   4,047,090       756,532      2,674,183 
                      -------------  ------------  ----------  ------------  ------------- 
 Net (loss) /profit 
  before tax           (11,818,333)   (7,448,777)   (547,288)   (8,482,739)   (14,772,581) 
                      -------------  ------------  ----------  ------------  ------------- 
 Net (loss) after 
  tax                  (11,933,585)   (7,448,777)   (547,288)   (8,482,739)   (13,110,680) 
                      -------------  ------------  ----------  ------------  ------------- 
 Share price 
  at start of 
  year (cents)                  1.7           3.2         1.2           1.5            2.6 
                      -------------  ------------  ----------  ------------  ------------- 
 Share price 
  at end of year 
  (cents)                       0.6           1.7         3.2           1.2            1.5 
                      -------------  ------------  ----------  ------------  ------------- 
 Dividends paid                   -             -           -             -              - 
  (cents 
                      -------------  ------------  ----------  ------------  ------------- 
 Basic and diluted 
  (loss) per share 
  (cents)                    (0.39)        (0.31)      (0.02)        (0.65)         (1.59) 
                      -------------  ------------  ----------  ------------  ------------- 
 

Remuneration of directors and senior management - audited

 
                                         Short-term employment          Post-employment          Equity (Long-term) 
                                                benefits 
-----------------------  ------  ------------------------------------  ----------------  ----------------------------------  ---------- 
                                   Salary      Other     Non-monetary   Superannuation    Options     Share      S300A(1)       Total 
                                    & Fees    payments                                    Expensed    based      (e)(vi) 
                                                                                          in Year    payment      Value 
                                                                                            (1)                 of options 
                                                                                                                    as 
                                                                                                                proportion 
                                                                                                                 of total 
                                                                                                               remuneration 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Executive                            $          $            $                $             $          $           %             $ 
  Director 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 John Byrne               2013      140,000          -         17,774                 -          -         -              -     157,774 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      140,000          -         17,252                 -          -         -              -     157,252 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Stephen Morris           2013            -          -              -                 -          -         -              -           - 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      251,830          -              -                 -          -         -              -     251,830 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 
 Non-executive 
  directors 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Robert Reynolds          2013       25,000          -              -             2,250          -         -              -      27,250 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012       25,000          -              -             2,250          -         -              -      27,250 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Robert Vallender         2013       81,000          -              -             2,250          -         -              -      83,250 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012       25,000          -              -             2,250          -         -              -      27,250 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Malcolm Jacques          2013       25,000          -              -                 -          -         -              -      25,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      120,000          -              -                 -          -         -              -     120,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 
 Senior Management 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Diane Bettess            2013      300,000          -              -            27,000          -         -              -     327,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      300,000          -              -            27,000          -         -              -     327,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Nico Bleijendaal         2013      240,000          -              -                 -          -         -              -     240,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      240,000          -              -                 -          -         -              -     240,000 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Bruce Levy               2013      298,248     97,387         20,757                 -          -         -              -     416,392 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      290,557     96,852         16,825                 -          -         -              -     404,234 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Alwyn Davey              2013      180,000          -         11,413            16,200          -         -              -     207,613 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      180,000          -         11,273            16,200          -         -              -     207,473 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 Kesh Thurairasa          2013      150,000          -              -            13,500          -         -              -     163,500 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
                          2012      137,500          -              -            12,375          -         -              -     149,875 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 
 TOTALS                   2013    1,439,248     97,387         49,944            61,200          -         -              -   1,647,779 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 TOTALS                   2012    1,709,887     96,852         45,350            60,075          -         -              -   1,912,164 
-----------------------  ------  ----------  ---------  -------------  ----------------  ---------  --------  -------------  ---------- 
 
 
 

1. Determined using Black Scholes valuation method. Expensing of grant date fair value options on a straight-line basis over vesting period and includes value of options lapsed during the period due to the failure to exercise options before the expiry date.

Notes

-- No cash awards were paid during the 2013 financial year (2012: Nil). All awards were made in the form of options.

   --      During the year no options were issued to directors and senior management. 

Equity instruments

Options

During the financial year no options were issued to directors and the Board of Directors did not approve and the company did not issue options to employees and consultants.

Modification of terms of equity-settled share-based payment transactions

No terms of equity-settled share-based payment transactions (including options granted as compensation to key management personnel) have been altered or modified by the issuing entity during the reporting period or prior period.

Analysis of options over equity instruments granted as compensation

No options were granted as remuneration to any key management person of the Group and Group executives.

During the financial year there were no share-based payment arrangements in existence.

There are no further services or performance criteria that need to be met in relation to options granted under series (i) - (v) before interests vests in the recipient, except that options are forfeited upon termination of employment.

During the year 10,000,000 options were exercised @ 1.6cts and 8,000,000 options @ 2.0cts were exercised by Directors or senior management.

Key terms of employment contracts

The remuneration and other terms of employment for the Executive Directors and Senior Management are set out in service letters. These letters makes provision for a fixed remuneration component, and options as a long-term incentive. The material terms of the service letters are set out below.

 
          Term                     Conditions                       Position 
-----------------------  ------------------------------  ----------------------------- 
 Duration of contract     Ongoing until notice            Executive Directors/Company 
                           is given by either party        Secretary/Senior Management 
-----------------------  ------------------------------  ----------------------------- 
 Voluntary termination    6 months' notice                Executive Directors/Company 
  (i.e. termination by                                     Secretary/Senior Management 
  executive by giving 
  notice) 
-----------------------  ------------------------------  ----------------------------- 
 Termination by Company   6 months' fixed compensation    Executive Directors/Company 
  without cause            or                              Secretary/Senior Management 
                           payment in lieu 
-----------------------  ------------------------------  ----------------------------- 
 Termination by Company   Employment may be terminated    Executive Directors/Company 
  for cause                immediately without             Secretary/Senior Management 
                           notice if the executive 
                           commits any act or omission 
                           justifying summary dismissal 
                           at common law. 
-----------------------  ------------------------------  ----------------------------- 
 

Signed in accordance with a resolution of the directors made pursuant to section 298(2) of the Corporations Act 2001.

On behalf of the Directors

signed

John Byrne

Executive Director

Melbourne, 30 September 2013

CORPORATE GOVERANCE STATEMENT

Statement

Wasabi Energy Limited ("Company") continues to seek improvements to its systems of control and accountability as the basis for the administration of corporate governance. This Corporate Governance Statement sets out the company's current compliance with the Australian Stock Exchange ("ASX") Corporate Governance Council's Principles and Recommendations ("Recommendations"). The Company is currently considering, implementing or has followed each Recommendation where the Board has considered the Recommendation to be an appropriate benchmark for corporate governance practices, and is taking into account factors such as the size of the company and the Board, resources available and activities of the company. The board has established a corporate governance committee in order to implement and review on an ongoing basis the development of the company's corporate governance systems.

Recommendations

   1.     Lay solid foundations for management and oversight 

1.1 Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions. The company refers all major investment decisions to the Board for consideration and approval. Day to day operations of the Company is the responsibility of the Executive Director and Senior Management.

1.2 Companies should disclose the process for evaluating the performance of senior executives. The performance of key executives is reviewed regularly by reference to ongoing performance of the company and its investments. The Board has formed a Remuneration Committee who will perform this review going forward. During the period, no formal evaluations were undertaken.

1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1. All of the information identified in the 'Guide to Reporting on Principle 1' has been satisfied either in the Corporate Governance Statement or the Directors' Report in the Annual Report. The skills, expertise and experience of directors relevant to their positions and their term in office are disclosed in the Directors' Report. The company's corporate governance policy, including the charters for its various Board committees, is available on the company's website.

   2.     Structure the Board to add value 

2.1 A majority of the Board should be independent directors. Directors of Wasabi Energy Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with - or could reasonably be perceived to materially interfere with - the exercise of their unfettered and independent judgement.

In the context of director independence, 'materiality' is considered from both the company and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the company's loyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Wasabi Energy Limited are considered to be independent:

   Name                                      Position 
   Robert Reynolds                      Non-Executive Director 
   Robert Vallender                     Non-Executive Director 
   Malcolm Jacques                     Non-Executive Director 

The company's Board comprises 4 directors. Therefore, there is a majority of independent directors on the Board. The directors consider that the balance of independent and non-independent directors is appropriate given the size of the Board and the company.

There are procedures in place, agreed by the Board, to enable directors in the furtherance of their duties to seek independent professional advice at the company's expense.

2.2 The chair should be an independent director. The Chairman, John Byrne, is not considered as an independent director. Due to the size of the company and the board this is deemed acceptable to the directors of the company. Should the company increase in size then the company will consider, and if thought appropriate, appoint an independent director as chairman.

2.3 The roles of chair and Chief Executive Officer should not be exercised by the same individual. The chair and the Chief Executive Officer are both considered to be John Byrne. Due to the size of the company and the board this is deemed acceptable to the directors of the company. Should the company increase in size then the company will consider, and if thought appropriate, appoint a separate person to the role of Chief Executive Officer. The company has a Chief Operating Officer who assists the chairman in the management of the company.

2.4 The Board should establish a nomination committee. There is no specific nomination committee. Currently all members of the Board are part of this process to ensure the Board continues to operate within the established guidelines including when necessary, selecting candidates for the position of director. When a vacancy occurs, through whatever cause, or where it is considered that the company would benefit from the skills of an additional Director with particular skills, the Board will consider candidates with the appropriate expertise and experience. The directors consider that this is appropriate given the size of the Board and the company.

2.5 Companies should disclose the process for evaluating the performance of the Board. The performance of the Board is not currently reviewed annually. This performance is reviewed on an ad hoc basis by the board and directors are assessed based on the financial and non-financial objectives and results of the company. Directors whose performance is consistently unsatisfactory may be asked to retire. During the reporting period, the Board did not meet to specifically evaluate the performance of Board members, which was considered appropriate given the given the size of the Board and the company.

2.6 Companies should provide the information indicated in 'Guide to Reporting on Principle 2'. All of the information identified in the 'Guide to Reporting on Principle 2' has been satisfied either in the Corporate Governance Statement or the Directors' Report in the Annual Report. The skills, expertise and experience of directors relevant to their positions and their term in office are disclosed in the Directors' Report. The company's corporate governance policy, including the charters for its various Board committees, is available on the company's website.

   3.     Promote ethical and responsible decision-making 
   3.1   Establish a code of conduct and disclose the code or a summary of the code as to: 
   (a)    the practices necessary to maintain confidence in the company's integrity; 

(b) the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and

(c) the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.

The company has not yet established a formal written code of conduct. The board is currently reviewing this aspect of the corporate governance guidelines and will establish an appropriate code of conduct relative to the size of the company. Currently each of the directors is aware of the investment and corporate objectives of the company and is conscious of the expectations of the shareholders, investee companies and their stakeholders. Any activities of the company are undertaken in consideration of all legal and regulatory requirements as well as with consideration of the underlying value of the activity to shareholders and other stakeholders. The Company Secretary is primarily tasked with maintaining a high level of compliance on all aspects of the business and has the support of the board to achieve this outcome.

3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them. The Board has not yet established a formal written policy concerning diversity. The board is reviewing this aspect of the corporate governance guidelines. Currently the Company includes both women and men in senior management positions. Due to the size of the company and the board this is deemed acceptable to the directors of the company.

3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress to achieving them. As the Board has not yet established a formal written policy concerning diversity there are no measurable objectives set. The Board is reviewing this aspect of the corporate governance guidelines with a view to implement a policy that is appropriate to the size and development of the Company.

3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior positions and women on the board. The Company does not have any women on the Board. The Chief Operating Officer (Senior Management) is a women. Overall there are 20% (2012:20%) of the Company's employees who are women operating in 3 countries, across engineering, finance and administration.

3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3. All of the information identified in the 'Guide to Reporting on Principle 3' has been satisfied either in the Corporate Governance Statement or the Directors' Report in the Annual Report.

   4.     Safeguard integrity in financial reporting 

4.1 The Board should establish an audit committee. The Board has established an audit committee which operates under a charter approved by the Board. It is the audit committee's responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operations key performance indicators. The Committee will also provide the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports.

   4.2   The audit committee should be structured so that it: 
   (a)    consists of only non-executive directors; 
   (b)    consists of a majority of independent directors; 
   (c)     is chaired by an independent chair who is not chair of the Board; and 
   (d)    has at least three members. 

The audit committee was appointed on 9 July 2009 and comprises:

Name Qualifications

John Byrne Nil

Robert Reynolds (Chairman) Master Eng. (Mining)

In accordance with the definition of independence described in Recommendation 2.1 above, and the materiality thresholds set, Robert Reynolds is considered to be independent and is a non-executive director. John Byrne is not considered independent and is an executive director.

The committee is currently chaired by Mr Robert Reynolds who is not chair of the Board.

The committee has two members, only one of which is independent, which is less than the recommended minimum of three and a majority of independent directors, but given the size and nature of the Board, the directors consider that this is appropriate.

4.3 The audit committee should have a formal charter. The committee has a formal charter which is disclosed on the company's website

.

4.4 Companies should provide the information indicated in 'Guide to Reporting on Principle 4'. The information identified in the 'Guide to Reporting on Principle 4' has been satisfied either in the Corporate Governance Statement or the Directors' Report in the Annual Report.

   5.     Make timely and balanced disclosure 

5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance. The company has made the directors and the senior management of its subsidiaries and associates aware of the requirement for continuous and periodic disclosure to ensure the factual presentation of the company's financial position and market-sensitive information is maintained in an orderly and timely fashion. At present the company does not have a written policy due to the size of the company and the limited number of people and activities of the company. The board consider this is appropriate for the size of the company however it is currently reviewing its policies in regard to this Recommendation.

5.2 Companies should provide the information indicated in 'Guide to Reporting on Principle 5'. A summary of the company's continuous disclosure policy is set out above and if appropriate will be disclosed on the company's website.

   6.     Respect the rights of shareholders 

6.1 Companies should design a communication policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy. The company has a shareholders communication policy which aims to ensure that the shareholders are informed of all major developments affecting the company. All shareholders are able to receive the company's annual report. The company also encourages full participation of shareholders at its annual general meeting and at extraordinary general meetings when called. The company makes available a telephone and email address for shareholders to make enquiries of the company.

6.2 Companies should provide the information indicated in 'Guide to Reporting on Principle 6'. The company maintains a website on which it makes available: company announcements; shareholder meeting notices and explanatory materials; financial information and annual reports. The company is currently reviewing its website and where necessary will enhance the information available on that site.

   7.     Recognise and manage risk 

7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies. The identification and effective management of risk is viewed as an essential part of the company's approach to creating long-term shareholder value. In recognition of this, the Board has determined to form a Risk Committee to better determine the company's risk profile and this committee will be responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. This process is ongoing and will continue to be a focus of the committee and the board.

7.2 The Board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The company will be establishing a risk management policy within which will be set out a framework for a system of risk management and internal compliance and control. Senior management as required will have responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on these risks and the extent to which it believes they are being adequately managed. They Senior Management have been proactively undertaking risk management processes in order to report to the board the outcomes.

7.3 The Board should disclose whether it has received assurances from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295 of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks. The Board has received a declaration from the Company Secretary, being an officer with primary responsibility as defined by section 295 of the Corporations Act, assuring that the declaration provided in accordance with section 295 of the Corporations Act is founded on a sound system of risk management and internal control and that the system, to the extent that they relate to financial reporting, is operating effectively in all material respects.

7.4 Companies should provide the information indicated in 'Guide to Reporting on Principle 7'. A summary of the company's risk management policy is disclosed on the company's website.

   8.     Remunerate fairly and responsibly 

8.1 The Board should establish a remuneration committee. The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the executive officers and executive team. The Board has established a remuneration committee, which comprises of the chairman and two non-executive directors. Given the size and nature of the Board, the directors consider that this is appropriate that the Chairman, while not independent is a member of the remuneration committee. The remuneration committee has not yet met. The terms of reference for the remuneration committee include review and recommendation to the board on the company's remuneration, recruitment and termination for senior executives, review of executives' performance and a framework for directors' compensation.

8.2 Companies should clearly distinguish the structure of non-executive directors' remuneration from that of executives. The Directors are paid $25,000 per annum. Executive directors receive additional remuneration as set out in the 'Remuneration Report (audited)' section of the Directors Report. Further information regarding the executive and non-executive remuneration framework and payments is detailed in the 'Remuneration Report (audited)' section of the Directors Report.

8.3 Companies should provide the information indicated in 'Guide to Reporting on Principle 8'. There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors. The formal charter is disclosed on the company's website. The company has not yet adopted a formal policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes. All of the other information identified in the 'Guide to Reporting on Principle 8' has been satisfied either in the Corporate Governance Statement or the Directors' Report in the Annual Report.

Statement of profit or loss and other comprehensive income

for the financial year ended 30 June 2013

 
                                                                                                Consolidated 
                                                                                        ---------------------------- 
                                                                                             2013           2012 
                                                      Note                                     $              $ 
                                                     -----                              -------------  ------------- 
 
 Revenue                                               4                                    1,467,591      4,876,720 
 Cost of Sales                                                                            (1,261,039)    (4,216,183) 
                                                                                        -------------  ------------- 
 Gross profit/(loss)                                                                          206,552        660,537 
 Other revenue                                                                              1,297,168        977,040 
 Finance income                                        6                                       60,621        177,118 
 Employee benefits expenses                                                               (4,050,999)    (2,920,290) 
 Administration expenses                                                                  (1,838,731)    (1,339,742) 
 Depreciation and amortisation expenses                6                                    (262,502)      (207,281) 
 Travel expenses                                                                          (1,038,312)    (1,097,443) 
 Fair value gain/(loss) on held for trading 
  investments                                                                                 132,295      (148,500) 
 Gain on derecognition of an associate                                                              -      1,323,700 
 Impairment of investments classified as held for 
  sale                                                                                      (158,478)    (3,761,539) 
 Fair value of other investments                                                            (447,988)              - 
 Legal and professional fees                                                              (1,422,466)    (1,602,482) 
 Patent costs                                                                               (203,242)      (252,602) 
 Exchange variation                                    6                                     (17,321)        374,445 
 Fair value gain/(loss) on options                                                            (5,361)       (24,318) 
 Finance costs                                         5                                    (676,896)       (67,420) 
 Provision for capitalised development                 16                                   (567,999)              - 
 Goodwill written off                                                                     (2,824,674)              - 
 Profit/(loss) from equity accounted investments       14                                           -        460,000 
 
 Loss before tax                                                                         (11,818,333)    (7,448,777) 
 Income tax expense                                    7                                    (115,250)              - 
                                                                                        -------------  ------------- 
 
 Loss for the year                                                                       (11,933,583)    (7,448,777) 
                                                                                        -------------  ------------- 
 
 Attributed to: 
 Owners of the parent                                                                    (11,678,777)    (7,319,039) 
 Non-controlling interest                                                                   (254,806)      (129,738) 
 
                                                                                         (11,933,583)    (7,448,777) 
                                                                                        -------------  ------------- 
 
 Other comprehensive income 
 
  Items that may be reclassified subsequently to 
  profit or loss: 
 Exchange reserve arising on translation of foreign 
  operations                                                                                (652,011)      (213,957) 
 Gain/(loss) on available-for-sale investments 
  taken to equity                                                                         (1,132,261)        667,603 
 Other comprehensive income for the period net of 
  tax                                                                                     (1,784,272)        453,646 
                                                                                        -------------  ------------- 
 
 Total comprehensive income for the period                                               (13,717,855)    (6,995,131) 
                                                                                        -------------  ------------- 
 
 Total comprehensive income attributable to: 
 Owners of the parent                                                                    (13,282,218)    (6,833,074) 
 Non controlling interest                                                                   (435,637)        162,057 
                                                                                        -------------  ------------- 
                                                                                         (13,717,855)    (6,995,131) 
                                                                                        -------------  ------------- 
 
 Loss per share 
 From continuing and discontinued operations: 
 Basic (cents per share)                               35                                (0.39) cents   (0.31) cents 
 Diluted (cents per share)                             35                                (0.39) cents   (0.31) cents 
 
 

Notes to the financial statements are included on pages 22 to 58 of the annual report.

 
 Statement of financial position 
  as at 30 June 2013 
                                                                Consolidated 
                                                        ---------------------------- 
                                                             2013           2012 
                                  Note                         $              $ 
                                 -----                  -------------  ------------- 
 Current assets 
 Cash and cash equivalents         30                         222,261         72,105 
 Trade and other receivables       8                        1,310,574      1,721,046 
 Inventory                                                          -          2,960 
 Other financial assets            9                        3,658,025        100,336 
 Assets classified as 
  available for sale               10                       3,442,023              - 
 Non current assets 
  held for sale                    11                               -      3,695,118 
 Total current assets                                       8,632,883      5,591,565 
                                                        -------------  ------------- 
 
 Non-current assets 
 Trade and other receivables       12                         507,581         57,617 
 Assets classified as 
  available-for-sale               13                       1,000,000      5,242,770 
 Investments accounted 
  for using the equity 
  method                           14                           9,200          9,200 
 Property, plant and 
  equipment                        15                         510,341        532,484 
 Capital work-in-progress          16                          40,313        377,962 
 Other assets                      17                      29,431,361        957,033 
 Goodwill                          18                               -      2,824,674 
 Intangible assets                 19                       1,646,342      1,192,176 
                                                        -------------  ------------- 
 Total non-current assets                                  33,145,138     11,193,916 
                                                        -------------  ------------- 
 Total assets                                              41,778,021     16,785,481 
                                                        -------------  ------------- 
 
 Current liabilities 
 Trade and other payables          20                       9,475,470      2,607,590 
 Borrowings                        21                       8,282,037      3,024,426 
 Provisions                        22                         268,784        172,585 
                                                        -------------  ------------- 
 Total current liabilities                                 18,026,291      5,804,601 
                                                        -------------  ------------- 
 
 Non-current liabilities 
 Trade and other payables          23                         772,145        302,589 
 Borrowings                        21                       4,927,185              - 
 Total non-current liabilities                              5,699,330        302,589 
                                                        -------------  ------------- 
 Total liabilities                                         23,725,621      6,107,190 
                                                        -------------  ------------- 
 Net assets                                                18,052,400     10,678,291 
                                                        -------------  ------------- 
 
 Equity 
 Issued capital                    24                      61,873,709     51,404,080 
 Reserves                          26                     (1,387,348)         39,883 
 Accumulated losses                27                    (53,179,661)   (41,500,884) 
                                                        -------------  ------------- 
 Total equity attributable 
  to equity holders of 
  the company                                               7,306,700      9,943,079 
 Non-controlling interest         26.6                     10,745,700        735,212 
                                                        -------------  ------------- 
 Total equity                                              18,052,400     10,678,291 
                                                        -------------  ------------- 
 

Notes to the financial statements are included on pages 22 to 58 of the annual report.

Statement of changes in equity

for the financial year ended 30 June 2013

 
 Consolidated 
                    Issued      Investment      Foreign       Share         Other                   Accumulated    Attributable    Non-controlling      Total 
                  capital and   revaluation    currency       based       reserves       Treasury      losses      to owners of       interest 
                  contributed     reserve     translation   payments                      Shares                    the parent 
                    equity                      reserve      reserve 
                       $             $             $            $             $             $            $               $                $               $ 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 
 Balance at 1 
  July 2011        48,362,897       690,692       121,379   3,658,341     (3,171,993)           -   (34,181,845)      15,479,471         (129,787)     15,349,684 
 Loss for the 
  year                      -             -             -           -               -           -    (7,319,039)     (7,319,039)         (129,738)    (7,448,777) 
 Movement in 
  foreign 
  exchange 
  values                    -             -     (213,957)           -               -           -              -       (213,957)                 -      (213,957) 
 Gain/(loss) in 
  AFS 
  investments 
  (note 26.2)               -       667,603             -           -               -           -              -         667,603           291,795        959,398 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 Total 
  comprehensive 
  income for 
  the period                -       667,603     (213,957)           -               -           -    (7,319,039)     (6,865,393)           162,057    (6,703,336) 
 Forfeiture of 
  employee 
  options (note 
  26.4)                     -             -             -   (101,388)               -           -              -       (101,388)                 -      (101,388) 
 Issue of 
  shares            1,000,000             -             -           -               -           -              -       1,000,000                 -      1,000,000 
 Share issue 
  cost (note 
  24.1)              (36,818)             -             -           -               -           -              -        (36,818)           (6,486)       (43,304) 
 Exercise of 
  options (note 
  24.1)             2,078,001             -             -           -               -           -              -       2,078,001                 -      2,078,001 
 Recognition of 
  minority 
  interest                  -             -             -           -               -           -              -               -           579,641        579,641 
 Treasury 
  shares held 
  by associate              -             -             -           -               -   (450,800)              -       (450,800)                 -      (450,800) 
 Difference 
  arising on 
  increased 
  control of 
  subsidiary                -             -             -           -     (1,159,994)           -              -     (1,159,994)           129,787    (1,030,207) 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 Balance at 30 
  June 2012        51,404,080     1,358,295      (92,578)   3,556,953     (4,331,987)   (450,800)   (41,500,884)       9,943,079           735,212     10,678,291 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 
 Balance at 1 
  July 2012        51,404,080     1,358,295      (92,578)   3,556,953     (4,331,987)   (450,800)   (41,500,884)       9,943,079           735,212     10,678,291 
 Loss for the 
  year                      -             -             -           -               -           -   (11,678,777)    (11,678,777)         (254,806)   (11,933,583) 
 Movement in 
  foreign 
  exchange 
  values                    -             -     (764,462)           -               -           -              -       (764,462)           112,451      (652,011) 
 Gain/(loss) in 
  AFS 
  investments 
  (note 26.2)               -     (838,979)             -           -               -           -              -       (838,979)         (293,282)    (1,132,261) 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 Total 
  comprehensive 
  income for 
  the period                -     (838,979)     (764,462)           -               -           -   (11,678,777)    (13,282,218)         (435,637)   (13,717,855) 
 Employee 
  options 
  exercised 
  (note 26.4)         191,959             -             -   (191,959)               -           -              -               -                 -              - 
 Issue of 
  shares (note 
  24.1)            10,615,841                                                                                         10,615,841                 -     10,615,841 
 Cost of 
  options 
  issued (note 
  26.4)                     -             -             -     220,169               -           -              -         220,169                 -        220,169 
 Share issue 
  cost (note 
  24.1)             (658,171)             -             -           -               -           -              -       (658,171)                 -      (658,171) 
 Exercise of 
  options (note 
  24.1)               320,000             -             -           -               -           -              -         320,000                 -        320,000 
 Recognition of 
  minority 
  interest 
  (note 26.6)               -             -             -           -               -           -              -               -        10,446,125     10,446,125 
 Issue of 
  warrants 
  (note 26.4)               -             -             -     148,000               -           -              -         148,000                 -        148,000 
 Balance at 30 
  June 2013        61,873,709       519,316     (857,040)   3,733,163     (4,331,987)   (450,800)   (53,179,661)       7,306,700        10,745,700     18,052,400 
                 ------------  ------------  ------------  ----------  --------------  ----------  -------------  --------------  ----------------  ------------- 
 

Notes to the financial statements are included on pages 22 to 58 of the annual report.

Cash flow statement

for the financial year ended 30 June 2013

 
                                                                       Consolidated 
                                                               --------------------------- 
                                                                   2013           2012 
                                        Note                         $              $ 
                                       ------                  ------------  ------------- 
 Cash flows from operating 
  activities 
 Receipts from customers                                          2,268,660      3,857,751 
 Interest and finance costs 
  paid                                                            (242,686)       (19,005) 
 Payments to suppliers and 
  employees                                                     (8,454,145)   (11,152,859) 
 Sundry Income                                                       49,723        349,172 
 
 Net cash used in operating 
  activities                            30(i)                   (6,378,448)    (6,964,941) 
 
 
 Cash flows from investing 
  activities 
 Interest received                                                   51,637         35,521 
 Payment for plant and equipment                                  (157,131)      (237,302) 
 Payments for equity investments                                  (643,916)      (784,035) 
 Payments for options to acquire 
  new ventures                                                  (7,286,696)      (840,344) 
 Payment for capitalised development                              (212,919)       (76,431) 
 Proceeds from sale of plant 
  and equipment                                                         545          1,127 
 Proceeds from sale of equity 
  investments                                                       776,599        778,574 
 Loans to related party                                             (9,580)    (1,957,513) 
 Receipts/(payment) for deposits                                    (1,341)         17,219 
 Net cash inflow on acquisition 
  of subsidiary                                                      14,245         26,988 
 Loan repaid by related party                                             -        104,242 
 
 Net cash used in investing 
  activities                                                    (7,468,557)    (2,931,954) 
 
 
 Cash flows from financing 
  activities 
 Proceeds from issue of shares                                    9,851,855      2,078,001 
 Proceeds from borrowings                                         8,438,000      2,976,011 
 Repayment of borrowings                                        (3,820,842)      (519,207) 
 Capital raising costs                                            (472,697)              - 
 
 Net cash provided by financing 
  activities                                                     13,996,316      4,534,805 
 
 
 Net (decrease) / increase 
  in cash and cash equivalents                                      149,311    (5,362,090) 
 Cash and cash equivalents 
  at the beginning of the 
  financial year                                                     72,105      5,223,011 
 Effect of movement in exchange 
  rates on cash balances                                                845        211,184 
 
 Cash and cash equivalents 
  at the end of the financial 
  year                                   30                         222,261         72,105 
 
 

Notes to the financial statements are included on pages 22 to 58 of the annual report.

This information is provided by RNS

The company news service from the London Stock Exchange

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