RNS Number:3658I
Virotec International Ld
06 March 2003
VIROTEC INTERNATIONAL LTD AND ITS CONTROLLED ENTITIES
HALF-YEAR FINANCIAL REPORTS
31 DECEMBER 2002
Index to Financial Reports
Directors' Report 2
Statement of Financial Performance for the half year ended 31 December 2002 5
Statement of Financial Position as at 31 December 2002 6
Statement of Cash Flows for the half year ended 31 December 2002 7
Notes to and forming part of the Financial Statements 8
Directors' Declaration 10
Independent Review Report 11
DIRECTORS' REPORT
The directors present their report and the consolidated financial report of the
consolidated entity, being Virotec International Ltd (the "Company") and its
controlled entities for the six months ended 31 December 2002 and the
independent review report thereon.
DIRECTORS
The directors of the Company in office at the date of this report or who held
office during or since the financial period are:
Name Position Period of directorship
Brian Sheeran Chairman and Chief Executive Officer Director since July 1997,
appointed chairman July 1999
Bruno Bamonte Director and Chief Financial Officer Director since December 1997
John Glynn Non executive director Director since March 2000
Prof. David McConchie Non executive director Director since July 2000
Dr Michael Nissen Non executive director Director since March 2000
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the financial period
were the research, development and commercialisation of environmental
technologies, and the provision of environmental services. The consolidated
entity also owns certain mining and mineral exploration tenements.
REVIEW OF OPERATIONS
Significant achievements of the consolidated entity during the financial period
were as follows: -
Research and development
The consolidated entity continued its commitment to further research, develop
and commercialise the new applications of the BauxsolTM Technology and the
development of the BaseconTM Technology.
The BauxsolTM Technology is able to bind trace metals and reduce acidity in
water and soils and is platform in nature as it applies to industries where
contamination by trace metals occurs and/or acidity is a concern. Work in the
period has focussed on developing products and procedures related to industries
outside of the mining industry, including agriculture, sewerage, aquaculture and
tanneries.
During the half year new patent applications were lodged in relation to the
ViroSewageTM Technology (Sewage Industry), and ViroPhosphateTM Technology
(Agricultural Industry).
The BaseconTM Technology was developed and a patent application was lodged
during the period. The technology describes a process for the treatment of
residues, by-products and waste materials arising from alumina refineries.
Research, development and commercialisation of the BauxsolTM Technology and
BaseconTM Technology and their various applications (the "Technologies") will be
ongoing.
The total expenditure incurred for research and development (including
commercialisation activities) during the period was $1,277,907, which was
expensed in accordance with the consolidated entity's accounting policy.
Environmental services
With the successful development of a number of applications for the
Technologies, environmental services will be provided broadly in accordance with
the following product range and/or services:-
a) ViroMine Products - product range developed for the mining industry
b) ViroFlow Products - product range developed for the treatment of
wastewater from industrial sites including tanneries and electroplating.
c) ViroSoils Products - product range developed for the agricultural,
fertiliser and aquaculture industries
d) ViroSewage Products - product range developed for the sewage industry
e) Laboratory and Analytical Services - analytical service provided to
industry testing organic contaminants.
f) Alumina Services - service to the alumina industry relating to the
treatment of their residue.
The consolidated entity has completed, or is in the process of completing,
funded trials of the Technologies in the sewage, tannery, alumina and mining
industries in Australia. These trials are intended to demonstrate the capacity
and viability of the Technologies on a commercial basis and are important steps
in the commercialisation process. The consolidated entity's strategy is to use
the results of these trials to attract the appropriate strategic partners in the
relevant industries to market the Technologies throughout the world.
During the half year the consolidated entity entered into a contract to treat an
acid mine water body at Agua Forte, near Aljustrel, Portugal for EXMIN
(Companhia de Industrie e Servicos Minieiros e Ambinetais SA). EXMIN is the
principal company responsible for rehabilitating abandoned minesites in
Portugal. This project was secured by our strategic partner in the region,
TerraPlus Engenharia Do Ambiente E Fiscalizacao LDA. It is expected that this
project will be completed during this financial year. During the period, the
consolidated entity also completed a front end engineering design study of
aspects of a proposed waste water treatment plant for the Port of Rotterdam in
conjunction with our partner in that region, Montgomery Watson Harza sa/nv.
During the half year total revenue earned by this segment was $626,501 and the
net result for this segment was a loss of $45,014.
Mining and exploration
The consolidated entity holds a number of mining leases and exploration permits
on tenements in North Queensland and in the Drake area in New South Wales.
These areas are at different stages of evaluation and planning. Work on these
areas has been, and is planned to remain at the minimum required to protect the
Company's interest in the leases.
The consolidated entity buys tin concentrates from small local miners and is
utilising its infrastructure in North Queensland to prepare the concentrates for
sale to a smelter. It is expected that this operation will cease during this
financial year. During the financial period these operations have generated
revenue of $480. The net result for mining and exploration was a loss of
$138,849.
Looking forward
The consolidated entity will continue its research and development of further
applications of its BauxsolTM Technology, BaseconTM Technology and other
technologies related to environmental management and remediation.
The consolidated entity plans to expand its network of strategic alliances
throughout the world to allow for the marketing of its Technologies in the most
efficient and cost effective manner.
The consolidated entity will seek to retain a passive interest in its mining
assets by finding joint venture partners to assist in the exploitation of the
assets or by selling the assets and retaining an interest by way of royalty
income.
Dated at Gold Coast this: 6th day of March 2003.
Signed in accordance with a resolution of the directors:
B. SHEERAN B. BAMONTE
Chairman Director
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE HALF YEAR ENDED 31 DECEMBER 2002
Consolidated
Notes 2002 2001
$ $
Revenue from sale of goods 9,600 97,918
Revenue from rendering of services 617,381 453,376
Other revenues from operating activities 323,581 223,849
Total Revenue 950,562 775,143
Depreciation and amortisation expenses (153,002) (129,359)
Research and development expense (1,227,907) (573,990)
Mining Interests Expenses (137,695) (214,212)
Employee costs and directors remuneration (719,683) (608,767)
Cost of rendering services (619,684) (317,648)
Professional, consulting and advisors fees (347,323) (505,461)
Other Administration and Corporate expenses (577,018) (399,300)
Loss from ordinary activities before income tax (2,834,748) (1,973,594)
Income tax related to operating loss - -
Net loss (2,834,748) (1,973,594)
Basic loss per share (cents) (1.7) (1.4)
Diluted loss per share (cents) (1.7) (1.4)
The statement of financial performance is to be read in conjunction with the notes to and forming part of the
financial statements, as set out on pages 8 to 9.
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2002
Consolidated
31 December 2002 30 June 2002
Current Assets $ $
Cash 8,771,071 11,896,720
Receivables 287,332 178,435
Inventory 16,884 16,884
Other 51,350 107,267
Total Current Assets 9,126,636 12,199,306
Non-Current Assets
Receivables 555,585 555,781
Property, plant and equipment 1,282,945 1,266,714
Intangible asset 798,143 849,635
Total Non-Current Assets 2,636,673 2,672,130
Total Assets 11,763,309 14,871,436
Current Liabilities
Payables 503,610 780,348
Provisions 113,190 109,831
Total Current Liabilities 616,800 890,179
Non-Current Liabilities
Provisions 790,000 790,000
Total Non-Current Liabilities 790,000 790,000
Total Liabilities 1,406,800 1,680,179
Net Assets 10,356,509 13,191,258
Equity
Share capital 63,678,284 63,678,284
Accumulated losses (53,321,775) (50,487,026)
Total Equity 10,356,509 13,191,258
This statement of financial position is to be read in conjunction with the notes to and forming part of the financial
statements, as set on pages 8 to 9.
STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2002
Consolidated
31 December 2002 31 December 2001
Cash Flows From Operating Activities $ $
Cash receipts in the course of operations 518,084 637,839
Cash payments in the course of operations (2,414,631) (1,843,643)
Interest received 263,560 196,634
Net cash used in operating activities (1,632,987) (1,009,170)
Cash Flows From Investing Activities
Proceeds from sale of property, plant and equipment 64,198 -
Payments for property, plant and equipment (191,454) (288,321)
Payments for research & development (1,227,907) (573,990)
Payments for mining interests (137,695) (214,212)
Security deposits refunded/ (Payments for security deposits) 196 (2,377)
Net cash used in investing activities (1,492,662) (1,078,900)
Cash Flows From Financing Activities
Proceeds from issues of shares - 16,047,491
Share issue costs - (1,146,618)
Net cash provided by financing activities - 14,900,873
Net increase/(decrease) in cash held (3,125,649) 12,812,803
Cash at the beginning of the financial period 11,896,720 578,056
Cash at the end of the financial period 8,771,071 13,390,859
The statement of cash flows is to be read in conjunction with the notes to and
forming part of the financial statements, as set out on pages 8 to 9.
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED 31 DECEMBER 2002
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The significant policies, which have been adopted in the preparation of these financial statements, are:
Basis of preparation
The half year consolidated financial report is a general-purpose financial report, which has been prepared in
accordance with the Corporations Act 2001, Accounting Standard AASB1029 "Interim Financial Reporting", the
recognition and measurement requirements of applicable AASB standards, other authoritative pronouncements of the
Australian Accounting Standards Board and Urgent Issues Group Consensus Views. This half-year financial report is to
be read in conjunction with the 30 June 2002 Annual Financial Report and any public announcements by the Company
during the half-year in accordance with continuous disclosure obligations arising under the Corporations Act 2001.
It has been prepared on the basis of historical costs and does not take into account changing money values nor,
except where stated, current valuations of non-current assets. These accounting policies have been consistently
applied by each entity in the consolidated entity and, except where there is a change in accounting policy, are
consistent with those applied in the 30 June 2002 Annual Financial Report.
The half-year report does not include full note disclosures of the type normally included in an annual financial
report.
2. SHARE CAPITAL
31 December 30 June
2002 2002
(a) Issued And Paid Up Capital $ $
Opening balance 168,193,841 ordinary shares (1 July 2001: 109,950,709 ordinary 63,678,284 48,140,623
shares)
Add the following share issues: -
27,514,400 ordinary shares issued in July 2001 at GBP#0.14 ($0.384) per share - 10,570,861
Exercise of options
Options exercisable at $0.20 resulting in the issue of 26,509,919 ordinary shares - 5,301,984
Options exercisable at $0.30 resulting in the issue of 4,218,773 ordinary shares - 1,265,632
Less share issue costs - AIM listing - (1,600,816)
Closing balance 163,193,841 ordinary shares (30 June 2002: 168,193,841 ordinary 63,678,284 63,678,284
shares)
(b) Options 31 December 2002 30 June 2002
Number Number
The following share options were on issue at 31 December 2001: -
Exercisable on or before 30 November 2002 at $0.75 each - 1,000,000
Exercisable on or before 28 February 2003 at $0.20 each 10,000,000 10,000,000
Exercisable on or before 31 August 2003 at $1.00 each 2,700,000 2,700,000
Exercisable on or before 30 November 2003 at $1.00 each 900,000 900,000
Exercisable on or before 30 November 2003 at $0.56 each 700,000 850,000
Exercisable on or before 28 February 2004 at $0.47 each 200,000 200,000
Exercisable on or before 30 July 2005 at $1.00 each 1,100,000 1,100,000
Exercisable on or before 30 July 2005 at $0.47 each 150,000 150,000
Exercisable on or before 31 October 2005 at $0.61 each 400,000 400,000
Exercisable on or before 31 March 2005 at $0.30 each . 100,000 -
16,250,000 17,300,000
3. SEGMENTS
Environmental Mining and Research and Unallocated Consolidated
Consulting exploration development of
Environmental
Technologies
31 December 2002 $ $ $ $ $
Total revenue 626,501 480 - 323,581 950,562
Segment (45,014) (138,849) (1,227,907) (1,422,978) (2,834,748)
operating
results
Segment assets 1,845,502 69,772 - 9,848,035 11,763,309
31 December 2001
Total revenue 453,376 101,162 - 220,605 775,143
Segment 66,172 (242,622) (573,990) (1,223,154) (1,973,594)
operating
results
Segment assets 1,881,342 212,183 - 14,303,438 16,396,963
4. CONTINGENT LIABILITIES
There were no changes in contingent liabilities since 30 June 2002.
DIRECTORS' DECLARATION
In the opinion of the directors of Virotec International Ltd: -
(a) The financial statements and notes, set out on pages 5 to 9, are in accordance with the Corporations Act
2001, including
(i) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2002 and
of its performance, as represented by the results of its operations and its cash flows, for the half-year ended on
that date; and
(ii) complying with Australian Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations
Regulations 2001; and
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
Dated at Gold Coast this 6th day of March 2003.
Signed in accordance with a resolution of the directors:
Brian Sheeran Bruno Bamonte
Chairman Director
INDEPENDENT REVIEW REPORT
TO THE MEMBERS OF VIROTEC INTERNATIONAL LTD
Scope
We have reviewed the financial report of Virotec International Ltd for the half-year ended 31 December 2002,
consisting of the statement of financial performance, statement of financial position, statement of cash flows,
accompanying notes and the directors' declaration set out on pages 5 to 10. The financial report includes the
consolidated financial statements of the consolidated entity, comprising the Company and the entities it controlled
at the end of the half year or from time to time during the half year. The Company's directors are responsible for
the financial report.
We have performed an independent review of the financial report in order to state whether on the basis of the
procedures described, anything has come to our attention that would indicate that the financial report is not
presented fairly in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory
professional reporting requirements in Australia and statutory requirements so as to present a view which is
consistent with our understanding of the consolidated entity's financial position, and performance as represented by
the results of its operations and its cash flows in order for the Company to lodge the financial report with the
Australian Securities and Investments Commission.
Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements. The
review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial
data. Our review has not involved a study and evaluation of internal accounting controls, test of accounting records
or tests of responses to enquiries by obtaining corroborative evidence from inspection, observation or confirmation.
The procedures do not provide all the evidence that would be required in an audit, thus the level of assurance given
is less than given in an audit. We have not performed an audit and accordingly we do not express an audit opinion.
Statement
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the
half-year financial report of Virotec International Ltd is not in accordance with:
(a) the Corporations Act 2001, including:
(i) giving a true and fair view of consolidated entity's financial position as at 31 December 2002 and of
its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations
Regulations 2001; and
(b) other mandatory professional reporting requirements in Australia.
KPMG
P G Steer
Partner
Gold Coast
6 March 2003
Note:
Copies of these financial reports are available free of charge from:
The Company Secretary
Virotec International Ltd
(ABN 81 004 801 398)
Building 50B Pinewood Drive
Sanctuary Cove QLD 4212
Australia
Telephone: +617 5530 8014
Email: mail@virotec.com
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