Virotec International PLC
31 October 2006
VIROTEC INTERNATIONAL PLC
FINANCIAL RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2006
The audited Annual Financial Report of the Virotec Group has been lodged with
the Australian Securities and Investments Commission today.
The Financial Report has been prepared by Virotec International plc's wholly
owned subsidiary, Virotec International Ltd, which was the head company of the
Virotec Group at 30 June 2006 (ie. prior to the implementation of a Scheme of
Arrangement in August 2006). The next financial report to be prepared by the
Virotec Group will be prepared by Virotec International plc for the period
ending 31 December 2006.
The complete Annual Financial Report is available on request from Virotec and is
also available from Virotec's website at www.virotec.com. Virotec's 2006 Annual
Report, which includes this Financial Report, will be sent to shareholders in
An extract from the Annual Financial Report follows:
During the year Virotec continued commercialisation of its world-class
technologies for the remediation of water and soils namely, ViroFlowTM
Technology, ViroMineTM Technology, ViroSoilTM Technology and ViroSewageTM
Technology. Virotec is a leader in meeting the demand for effective, sustainable
solutions to deal with serious environmental problems. The patented
state-of-the-art technologies developed by Virotec enable companies and public
utilities to meet government regulatory standards, reduce future liabilities,
and help safeguard the environment. These technologies are benefiting many
different industries, including mining, electroplating, sewage treatment and
timber preservation, and have gained regulatory approval in the USA, Korea,
Europe and Australia.
EXPANSION OF INFRASTRUCTURE
In July 2005, Virotec completed a capital raising to provide additional capital
to expand its infrastructure in terms of product manufacturing and sales and
marketing throughout its main markets in the Northern Hemisphere.
During the year Virotec has expanded its product manufacturing capabilities in
1. USA - To service the expected demand for its ViroFlowTM Technologies, a plant
was constructed in Walterboro, South Carolina. The plant has sufficient
capacity to meet the expected demand for Radium ProActivTM, ViroPhosTM and
other reagents for the next two years, and has the ability to be easily
expanded to cater for any growth in this demand.
2. Europe - The existing product manufacturing facilities in Italy have been
expanded and a site for a large production facility has been secured and
paid for this year. Virotec has also obtained a grant from the Sardinian
Regional Government of approximately €954,000 towards the cost of the
construction of a new production facility.
To expand the sales and marketing capacity of the group:
1. Virotec established a support base for the Virotec-AquaSolve joint venture
in South Carolina. Now that the joint venture is in place and has achieved
its first sales, it is responsible for all sales and marketing in its region.
2. Virotec has focused additional resources on the UK market. After the
successful trial with the Water Research Council in 2005, Virotec is
confident that this will lead to significant contracts in the ensuing years.
3. Virotec has established the ImperativePlus business. ImperativePlus
provides companies with a full suite of sustainability services, helping them
identify how to become a 'Sustainable Enterprise'. This company will provide
a link to Virotec's sustainable remediation and waste treatment solutions.
VIROTEC AQUASOLVE LLC
During the year Virotec entered into an agreement with CW Partners, part of the
Wade Craven Group, based in Walterboro, South Carolina USA, for the formation of
Virotec AquaSolve LLC ('AquaSolve').
AquaSolve is 66.7% owned by Virotec, and has been licensed in South Carolina,
North Carolina, Virginia, and Georgia by Virotec to market ViroFlowTM Technology
and systems using Radium ProActivTM, Arsenic ProActivTM and ViroPhosTM reagents
for removal of radium, arsenic, and phosphate, respectively. The AquaSolve team
is also assisting with the development of new systems to address other
environmental problems in the region.
The initial focus of the joint venture has been on marketing the Radium
ProActivTM reagent, and during the year AquaSolve has:
• Achieved National Sanitation Foundation ('NSF') certification in the
USA (allowing the products to be used in the treatment of drinking water).
• Received approval from Department of Health and Environmental Control
('DHEC') for the treatment of drinking water in South Carolina. At a public
meeting sponsored by DHEC, a representative of DHEC told the meeting that
Virotec's technology 'is a simple, effective, and efficient process for
reducing and maintaining radium concentrations in drinking water below
regulatory Maximum Contamination Levels', and that it is 'the best alternative
• Entered into two contracts to license its ViroFlowTM Technology, to
treat drinking water. The systems are specifically designed and use Virotec's
Radium ProActivTM reagents to remove radium contamination in drinking water.
AquaSolve has also completed extensive trials demonstrating the effectiveness of
ViroPhosTM reagents for the removal of phosphate in water, and has successfully
demonstrated the effectiveness of the treatment at a number of customer sites
since the end of the financial year.
GROWTH IN REVENUE
Virotec's Australian operations have continued to grow during the year above
expectations and since the end of June 2006 this trend has continued resulting
in the region becoming profitable. Some of the key achievements in Australia
this year include:
• Received Queensland Environmental Protection Agency ('EPA') approval
to treat all forms of hazardous solids (including sludges, soil and dry
solids) contaminated with heavy metals using its ViroFlowTM Technology.
Virotec has been operating for many years with EPA approval on a
'project-by-project' basis, but this is the first time the EPA has provided a
company in Queensland with 'blanket approval' for its technology in the state.
• Established a relationship with a waste treatment group to receive a
variety of hazardous waste solids at their landfill site that will be treated
with ViroFlowTM Technology and safely disposed. This has allowed Virotec to
complete the treatment of many hazardous solids, including copper chrome
arsenate ('CCA') waste.
• Signed a two-year contract with a company treating marine sediments
for the conversion of low-level contaminated marine dredge spoil into
commercial topsoil using its ViroSoilTM Technology. The contract is expected
to generate a minimum of approximately AUD $250,000 in revenue.
Since the end of the year, Virotec has entered into a contract to upgrade an
Australian Federal Government site through the implementation of ViroSewageTM
Technology. This contract is valued at approximately AUD$300,000.
In addition to the above, the revenue base has also continued to grow
underpinning the future operations of Virotec in the region.
Virotec was formed to develop and commercialise a range of environmental
technologies. These technologies are largely platform in nature (i.e. with the
potential for broad and multiple applications), and require significant capital
and other resources to be successfully commercialised.
Virotec decided to focus on delivering solutions relating to the treatment of
contaminated water and soils and has over the past few years implemented a
strategy to rationalise its business by licensing and/or selling technologies
and other assets considered outside this core business.
As the technologies to be licensed and or sold are at an early stage of
development, they are difficult to accurately value. Virotec has therefore
sought to retain an ongoing interest in the technologies by way of an equity
position in the purchaser and the right to ongoing royalties from revenue earned
by these technologies. To date sales include:
• The sale of the Hydrodec Technology for AUD$20 Million in December 2004 to
Hydrodec Group plc ('Hydrodec'). The sale provided sufficient resources (both
in terms of personnel and capital) for the technology to be commercialised in
an effective manner. The strategy has worked well and the market value of
Virotec's investment in Hydrodec has grown to in excess of AUD$40 Million and
royalties have begun to flow to Virotec.
• The sale and licensing in June 2006 of its other non-core
technologies to Greenhouse Fund plc for approximately AUD$12 Million (see
In relation to non-technology assets in Australia:
• In 2004, the sale of its organic testing laboratory in Melbourne;
• Over the past three years the sale and the relinquishment of its
mining tenements in Queensland; and
• In 2003 granting an option to Cazaly Resources Limited (since
assigned to Drake Resources Limited) over the Company's highly prospective
mining assets at Mt Carrington in New South Wales.
Virotec now believes it is well placed to focus on its core business and support
its key partners in bringing its core technologies to market.
SALE AND LICENSE TO THE GREENHOUSE FUND
In June 2006 Virotec sold and licensed a number of its non-core technologies to
the Greenhouse Fund Limited ('Greenhouse').
Virotec recognises the great potential of these technologies and structured the
consideration so as to participate in their potential upside whilst eliminating
the risk associated in investing in new technologies. The consideration received
was approximately £5 Million (AUD$12.4 million) and was satisfied by the issue
of 30,000,000 new shares in Greenhouse (representing 19% of Greenhouse) and £0.5
million (AUD$1.24M) in cash. In addition to the consideration received, Virotec
is also entitled to an ongoing royalty from any revenue earned from exploitation
of the technologies and, if any of the technologies are subsequently sold by
Greenhouse, any sale will include the obligation to continue to pay royalties to
Virotec and for Virotec to retain up to 19% interest in the technologies for
zero consideration. I have been appointed to the board of Greenhouse to oversee
commercialisation of these technologies.
This sale allows Virotec to continue to focus on the commercialisation of its
existing technologies around the world whilst retaining an interest in these
non-core technologies. Greenhouse will be able to direct both funding and
manpower to further develop these technologies into market-ready commercial
applications. This transaction reaffirms Virotec's ability to develop
technologies where a market need is identified and then maximise the potential
for Virotec, and its shareholders by structuring its future development in
association with a third party while maintaining a significant interest in the
The technologies being sub-licensed to Greenhouse are derived from the BauxsolTM
Technology platform developed by Virotec and they include:
(a) ViroConcreteTM Technology - specialty cement products with applications in
shotcreting, grouting, high-density concrete, acid-exposed concrete or
concretes that are exposed to water or wet environments, particularly salt
(b) ViroAirFilterTM Technology - designed to remove mercury, CO2 and other
polluting metals from industrial flue gases by 'gas scrubbing' such
environmentally hazardous compounds from waste gases prior to their release
into the atmosphere;
(c) ViroFertiliserTM Technology - aims to allow the control of phosphate
pollution and the increase of crop yields via the slow release of
phosphate from super-phosphate fertilisers;
(d) Veterinarian applications - aims to relieve gastric problems and diseases
within animals; and
(e) Any further new commercial applications developed from BauxsolTM Technology;
In addition to the above technologies, Virotec also sold to Greenhouse the
concepts and development work carried out to date by Virotec on establishing a
regional treatment centre for the treatment of high strength organic waste
streams. Greenhouse has also been granted an option to acquire the
ImperativePlus business and assets, which is exercisable by Greenhouse at any
time during the next 12 months.
SCHEME OF ARRANGEMENT
Since the end of the period, Virotec has completed a Scheme of Arrangement under
the Australian Corporations Act which in effect interposes a new holding company
incorporated in England, Virotec International plc, as the head company of the
Virotec group. Each shareholder has been issued with one new share in Virotec
International plc for each share that they held in Virotec International Ltd in
This move reflects Virotec's shareholding base and growing international
operations. Virotec International plc was admitted to trading on the AIM on
30 August 2006 and trades under the code VTI.
Virotec International plc has adopted a financial year end of 31 December. It's
first Annual General Meeting is expected to be held in May 2007.
PROSPECTS FOR THE FUTURE
We expect the demand for Virotec's technologies to continue to grow and we are
particularly excited by the prospects for the treatment of drinking water, and
phosphate in the USA and treatment of soils and other solids in Australia. We
are also excited by the interest shown in Virotec's technologies in other
regions, including the Middle East and parts of Asia, and expect these areas
will underpin the future success of the Virotec group.
Chairman & CEO
The directors present their report together with the financial statements of
Virotec International Ltd (the 'Company') and the consolidated financial
statements of the consolidated entity, being the Company and its controlled
entities, for the year ended 30 June 2006.
The directors of the Company at any time during or since the end of the
financial year are:
Name, position Age Qualifications, experience, special responsibilities
and other directorships
Mr Brian Sheeran 57 Mr Sheeran is a member of the Australian Institute of
Executive Company Directors. He started his career in mechanical
Chairman engineering and gained further experience as a
successful owner/operator in the marine and road
transport industries. He has been a director of various
companies, covering mining, timber, farming ventures,
earthmoving and haulage. He is a highly respected and
successful businessman. Mr. Sheeran has been a Director
since 1997, and was appointed Chairman in 1999. Mr
Sheeran was appointed as a director of HydroDec Group
plc, in December 2004 and The Greenhouse Fund Limited
in August 2006.
Mr Bruno Bamonte 48 Mr Bamonte is a Chartered Accountant and a member of
Chief Financial the Australian Institute of Company Directors. He has
Officer consulted to a number of public companies on a range of
Director areas including preparation of prospectuses, assistance
to gain admission to the official list of the
Australian Stock Exchange, assistance to seek
re-quotation of shares for suspended companies,
corporate governance, and other financial areas.
Mr Bamonte has been aDirector since 1997 and was
re-appointed to the auditcommittee in March 2006. He
was appointed as a director of HydroDec Group plc in
Mr John Glynn 55 Mr Glynn is a practising lawyer with his own firm in
Non-Executive Tamworth, NSW. He was admitted as a Solicitor in 1980.
Director He practised in partnership in regional NSW for 10
years before establishing his own practice, as well as
being admitted to practice in Queensland. He has
appeared in the Land and Environment Court and has a
particular interest in environmental, company and
aviation law. Mr Glynn was appointed as a Director in
March 2000 and is chairman of the audit committee and
Dr David McConchie 57 Dr David McConchie is a Professor of Engineering and
Executive Environmental Geochemistry in the Centre for Coastal
Director Management at Southern Cross University and a
co-founder of the Centre for Research on Acid Sulphate
Soils. He gained his MSc in geology (with distinction)
in 1978 from the University of Canterbury, New Zealand
and was awarded a PhD in 1985 by the University of
Western Australia. He has published over 60 research
papers and 5 books. Dr David McConchie was appointed
as a Director in July 2000.
DIRECTOR WHO RESIGNED DURING THE YEAR
Mr Neil Bardach 58 Mr Bardach is a Certified Public Accountant and has
Non-Executive significant experience at executive and Board level
Director with NYSE and NASDAQ listed entities, particularly in
the chemical and product manufacturing sector.
Mr Bardach is a Bachelor of Arts in Accounting and an
MBA. Mr Bardach was appointed as a Director in
December 2003 and resigned as a director in September
2005. During his term as a director Mr Bardach was a
member of the audit and remuneration committees.
Mr Angus Craig 35 Mr Craig has a Bachelor of Commerce and is graduate
member of both the Australian Institute of Company
Directors and the Securities Institute of Australia. He
has extensive experience in the areas of stock exchange
listing rules, corporate governance and the corporate
activities of public companies. He previously held the
role of Senior Companies Advisor with the Australian
Stock Exchange and prior to that worked for a major
accounting firm. Mr Craig was appointed company
secretary in March 2001.
The principal activities of the consolidated entity during the financial year
• providing environmental services through sustainable solutions for water
and solids treatment and environmental remediation;
• conducting research of environmental remediation technologies; and
• holding interests in a number of mining leases. The mining activities
have been scaled down significantly in recent years.
REVIEW OF OPERATIONS
> Environmental Services
Environmental services are provided through its two divisions:
• ViroMineTM Technology - applications developed for the mining industry.
This range of products have been successfully trialled by the US EPA over the
past four years and have been used to remediate a number of sites around the
world. There are a number of trials underway and submissions are being
considered by potential clients.
• ViroSoilTM Technology - applications developed for the agricultural,
fertiliser and aquaculture industries. The products have been and are being used
by a number of clients in Australia.
WASTEWATER AND SOLIDS TREATMENT
• ViroFlowTM Technology - applications developed for the treatment of
wastewater from industrial sites. In Australia the products are currently being
provided to a number of clients in a number of industries with great success.
During the year an electroplating company in the USA has installed a ViroFlowTM
Technology system in their plant and a number of trials are underway in Europe.
• ViroSewageTM Technology - applications developed for the sewage industry.
Extensive trialling of this technology has occurred or is occurring around the
world with a small number of commercial contracts being entered into for the
ongoing supply of the Technology at this stage.
• Alumina Services - services to the alumina industry relating to the
treatment of their refinery residue. Trials for the use of the BaseconTM
Technology at a number of refineries are underway.
The strategic plan provides for each of the applications to be trialled to
demonstrate the capacity and viability of the technologies on a commercial
basis. These trials are important steps in the commercialisation process. Once
the trials are completed the products are then rolled out to industry to
demonstrate their customer acceptance. The consolidated entity's strategy is to
use the results of these trials to make initial commercial sales in the industry
and then attract the appropriate strategic partners in the relevant industries
to market the technologies throughout the world. These operations are conducted
in three geographic areas.
Australia, Asia and the Middle East
Sales in this region have continued to increase this year over the previous year
and the main projects undertaken during the financial year included:
• a large-scale remediation project at the former Ulsan Iron Mine
located in South Korea
• the supply of ViroMineTM Technology at the Sepon Gold Mine in
Savannakhet Province, Laos.
The consolidated entity expanded its activities into the Middle East during the
year and in July 2005, the consolidated entity entered into a strategic alliance
agreement with the Al-Othman Group. The agreement grants an exclusive right to
Al-Othman to market and sell Virotec's environmental services throughout the
Kingdom of Saudi Arabia for a renewable period of eighteen months. The
agreement includes a revenue performance target of $5.0 million in the first 18
months of operations and in the event the target is not met, a Licensing Fee of
$200,000 will be payable. All costs associated with the alliance and the
implementation of projects is to be borne by the Al-Othman Group, and Virotec
has commenced supplying expertise and training to Al-Othman staff during the
During the period, the consolidated entity completed work on a pilot project for
the Pennsylvania Department of Transport for the treatment of pyritic rock at
Interstate 99, Skytop Mountain, Pennsylvania. The consolidated entity has
invoiced $965,605 during the year.
During the period the consolidated entity achieved regulatory approval for
Radium ProActivTM, a product approved by the National Sanitation Foundation
(NSF) for removal of radioactive radium from drinking water to meet stringent
statutory requirements and Arsenic ProActivTM - a product approved by NSF for
removal of arsenic from drinking water. Arsenic ProActivTM can reduce the level
of arsenic in drinking water to meet the new standards introduced in the USA.
To assist in the marketing of these technologies, the consolidated entity
established Virotec AquaSolve LLC. ('AquaSolve'), a joint venture company of
which Virotec owns two thirds with one third owned by the Wade Craven Group.
AquaSolve is licensed to market and distribute these technologies in the states
of South Carolina, North Carolina, Georgia and Virginia. Since the end of the
year, AquaSolve was awarded its first contract for utilising the technology for
the removal of radium from drinking water.
A 6 month demonstration trial conducted by the Water Research Council ('WRc')
has provided an independent review and evaluation of the ViroSewageTM Technology
for phosphate removal which confirmed the performance and the longevity of the
ViroSewageTM Technology on a larger scale and reviewed options for system design
and configuration on future installations for the UK Water Companies. A filter
bed incorporating ViroSewageTM reagents can now be integrated at the back end of
a waste water treatment plant, providing passive flow-through treatment for
phosphate removal and final effluent polishing.
During the period there has been an increase in the number of revenue earning
projects, level of enquiry and awareness, particularly in Australia, with the
technologies gaining market acceptance. It is expected that this trend will
continue in the coming year.
During the period total revenue earned by the Environmental Services segment was
$2,777,498 and the net result for this segment was a loss of $304,497.
The consolidated entity continued its commitment to research, develop and
commercialise its technologies.
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 continues to focus on researching and refining products and procedures
related to the range of BauxsolTM Reagents, which are then commercially
exploited by the Environmental Remediation division.
Research continued into a number of technologies related to the BauxsolTM
Technology including concrete, fertiliser, air filters and the treatment of
drinking water including the removal of arsenic and radium. In addition, effort
has been directed to product enhancement and ongoing research into production
and application methods.
Research and commercialisation of the consolidated entity's technologies are
expected to be ongoing. Expenditure incurred for research and development
(including commercialisation activities) during the period was $1,734,169, which
was expensed in accordance with the consolidated entity's accounting policy.
As noted last year, as a result of the consolidated entity's ongoing research
and development activities, it holds the intellectual property for a number of
technologies that are in the early stage of development. The consolidated entity
having considered its options for the structuring of its non-core technologies
has entered into agreements with The Greenhouse Fund Limited ('Greenhouse') for
the sub-license and sale of technologies in June 2006. The transaction involved
the sub-license of five technologies and the sale of the assets of Sterling
Environmental Solutions Limited, formerly a wholly owned subsidiary of the
Company, to Greenhouse. In addition, after the end of the period Greenhouse
entered into an option to acquire the business and assets of ImperativePlus Pty
Ltd, a wholly owned subsidiary of Virotec. All the technologies sub-licensed or
sold are outside of Virotec's core operational focus and will not impact on its
Consideration for the transaction was the issue of 30,000,000 new shares in
Greenhouse at a price of 15p and £0.5 million in cash giving a total of £5
million (AUD $12.2 million). As a result of the issue of the Shares, Virotec
has a 19% holding in the voting share capital of Greenhouse. Virotec is also
entitled to an ongoing royalty from any revenue earned from exploitation of the
technologies and, if any of the technologies are subsequently sold by
Greenhouse, any sale will include the obligation to continue to pay royalties to
Virotec and for Virotec to retain its 19% interest in the technologies for zero
> Mining and exploration
In 2004, the Company granted an option to acquire its mining leases in the Drake
region of Northern New South Wales to Cazaly Resources Limited. The option,
which is subject to a number of conditions, has been assigned to Drake Resources
Limited, who are currently conducting a detailed assessment of the leases
including an exploration drilling program. The Company has agreed to extend the
option until June 2008.
The consolidated entity also holds a number of mining leases in North
Queensland. 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 whilst the tenements are sold
and or relinquished where they are considered to have little or no value.
The Company is actively seeking to divest of these interests as they fall
outside of its core business. During the financial period a loss was generated
by the mining interests division of $196,025.
> Other Activities
In July 2005, the Company raised $21.4 million (GBP£9.3 million) in a share
placement with institutions in the United Kingdom. The placement involved the
issue of 31,000,000 new ordinary shares in the Company at a price of GBP£0.30
per share. The proceeds from the placing are being used for the following
• Expanding sales and marketing infrastructures in Europe;
• Expanding sales and marketing infrastructures in USA;
• Streamlining and expanding product distribution in the USA, Europe and
• General working capital.
The consolidated entity maintained its investment in HydroDec Group plc arising
from the sale of the HydroDecTM Technology in December 2004. Due to the size of
its holding in the company of 34%, Virotec is required to equity account for
this investment and this has lead to a charge in the Profit and Loss statement
of $4.2 million for the period, being the consolidated entity's share of
HydroDec's loss for the year as reported under IFRS. Virotec is confident that
no further significant write-downs will be necessary as it is expected that
HydroDec will start to derive profits in future years. As a result of this
equity accounting entry, the carrying value of the investment in the Balance
Sheet as at 30 June 2006 has been reduced to $6.7 million, which compares to the
market value of Virotec's investment at the same date of in excess of $41
In addition, as a result of the sub-licence and sale of technologies to
Greenhouse in June 2006 noted above, the consolidated entity also holds a 19.9%
stake in Greenhouse which is valued at $11 million at 30 June 2006. It is
currently recorded at $11 million in the Balance Sheet.
In November 2005, shareholders approved the delisting of the Company from the
Australian Stock Exchange Limited. The Company remains listed on the
Alternative Investment Market of the London Stock Exchange.
The directors do not recommend the payment of a dividend, and no amount has been
paid or declared by way of dividend since the end of the previous financial year
and up to the date of this report.
EVENTS SUBSEQUENT TO BALANCE DATE
In August 2006, the Company implemented a scheme of arrangement under the
Australian Corporations Act 2001 involving a share-for-share exchange on a one
for one basis, with Virotec International plc ('Virotec UK'), a company newly
incorporated in England and Wales (the 'Scheme') to effect the change of
domicile of the Virotec Group from Australia to England. Implementation of the
Scheme furthers the Company's evolution into a truly international company and
reflects the move of Company's shareholder base away from Australia. Currently,
approximately 79% of the issued share capital of Virotec (Aus) is held by
shareholders resident in the UK and Europe. The Scheme was subject to
satisfaction of a number of conditions, including the approval of the Company's
shareholders and of the Supreme Court of Queensland.
On implementation of the Scheme, all shareholders in the Company exchanged their
existing shares in the Company for shares in Virotec (UK), on a one for one
basis. The Company and all of its subsidiaries are now wholly owned by Virotec
Other than the matters noted above, there has not arisen in the interval between
the end of the financial year and the date of this report any other item,
transaction or event of a material or unusual nature likely, in the opinion of
the directors of the Company, to effect significantly the operations of the
consolidated entity, the results of those operations, or the state of affairs of
the consolidated entity.
The consolidated entity plans to expand sales and marketing infrastructures in
Europe, expand sales and marketing infrastructures in USA, streamline and expand
product distribution in the USA, Europe and Australia.
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 continue its development of applications of its
BauxsolTM Technology, BaseconTM Technology and other technologies related to
environmental management and remediation. The consolidated entity will continue
to investigate the most appropriate way to obtain value for its environmental
technologies not considered part of its core business, which may include sale,
partial sale or sub-licensing of these technologies.
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 where possible retaining an interest by way
of royalty income. Where the mining tenements are not able to be sold, the
Company plans to complete all rehabilitation work and relinquish the leases.
The relevant interest of each director in the share capital of the Company, as
notified by the directors is as follows:
Ordinary shares Options
B. Sheeran 7,063,129 -
B. Bamonte 5,623,914 -
J. Glynn 56,300 -
D. McConchie 500,000 -
Total 13,243,343 -
During the financial year, the Company has granted the following options over
unissued ordinary shares to directors or executives or their associates,
pursuant to the Virotec Option Incentive Scheme ('VOIS'). These options are
subject to the terms of the VOIS which are further explained in Note 16 to the
financial statements. These options will only vest once the executive achieves
certain performance guidelines.
Executive Number of Options granted Exercise price Expiry date
L.Fergusson 1,000,000 $1.00 30 September 2011
1,000,000 $1.00 30 September 2012
1,000,000 $1.00 30 September 2013
1,000,000 $1.00 30 September 2014
1,000,000 $1.00 30 September 2015
N. Bardach 1,000,000 $1.00 30 September 2010
2,000,000 $1.00 30 September 2011
2,000,000 $1.00 30 September 2012
J. Catling (1) 2,400,000 $1.00 30 September 2011
2,400,000 $1.00 30 September 2012
2,400,000 $1.00 30 September 2013
2,400,000 $1.00 30 September 2014
2,400,000 $1.00 30 September 2015
A. Craig 160,000 $0.70 31 March 2009
(1) all options issued to John Catling were cancelled prior to the end of the
During the financial year the Company issued ordinary shares as a result of the
exercise of options as follows:
Number of options Amount paid on each share Option expiry date
400,000 $0.61 31 October 2005
300,000 $0.50 31 October 2005
750,000 $0.50 31 March 2006
395,000 $0.50 30 September 2006
60,000 $0.50 31 March 2007
242,500 $0.50 30 September 2007
Since the end of the financial year, the Company has not issued any options or
ordinary shares as a result of the exercise of options. At 30 June 2006,
unissued ordinary shares of the Company under option are:
Options Number Number
The following share options are on issue at 30 June
Exercisable on or before 31 July 2005 at $1.00 - 1,100,000
Exercisable on or before 31 October 2005 at $0.61 - 400,000
Exercisable on or before 31 October 2005 at $0.21 - 300,000
Exercisable on or before 31 March 2006 at $0.50 - 750,000
Exercisable on or before 30 September 2006 at $0.50 150,000 685,000
Exercisable on or before 31 March 2007 at $0.50 10,000 72,500
Exercisable on or before 30 September 2007 at $0.50 440,000 1,005,000
Exercisable on or before 31 March 2009 at $0.70 860,000 -
Exercisable on or before 30 September 2010 at $1.00 1,000,000 -
Exercisable on or before 30 September 2011 at $1.00 3,000,000 -
Exercisable on or before 30 September 2012 at $1.00 3,000,000 -
Exercisable on or before 30 September 2013 at $1.00 1,000,000 -
Exercisable on or before 30 September 2014 at $1.00 1,000,000 -
Exercisable on or before 30 September 2015 at $1.00 1,000,000 -
TOTAL 11,460,000 4,312,500
Subject to performance hurdles where applicable, the options may be exercised at
any time up until the date of expiry, and do not entitle the holder to
participate in any share issue of any other body corporate.
All option holders entered into agreements whereby they agreed to the
cancellation of options issued to them in the event the Scheme of Arrangement
proceeded, on condition that holders be issued with replacement options in the
new holdings company of the consolidated entity, Virotec International plc. The
Scheme of Arrangement was implemented in August 2006, and as a result, at the
date of this report, there are no options on issue over unissued ordinary shares
of the Company. Virotec International plc has issued replacement options on
substantially the same terms as those above to employees of the consolidated
The statements of recognised income and expense are to be read in conjunction
with the notes to the financial statements available from the Company.
For the year ended 30 June 2006
Revenue from rendering of 14,975,287 1,657,781
services and supply of
Cost of rendering (3,004,975) (1,394,568)
services -------- --------
Gross profit 11,970,312 263,213
Interest income 879,731 299,778
Other income 619,129 23,231,451
Administrative and (3,921,858) (3,135,912)
Depreciation (375,921) (321,526)
Directors remuneration (3,490,040) (5,919,671)
Interest expense (2,623) -
Impairment loss - - -
investment in controlled
Impairment loss - plant (125,724) -
Impairment loss - (1,053,306) -
Mining interests (189,479) (136,830)
Other expense (5,515,092) (1,659,347)
Research expense (1,734,169) (1,321,259)
Share of loss of (4,191,089) (10,912,678)
associate -------- --------
Profit/(loss) before (7,130,129) 387,219
tax -------- --------
Income tax benefit - -
Profit/(loss) for the (7,130,129) 387,219
year -------- --------
Equity holders of the (6,857,078) 387,219
Minority interest (273,051) -
Profit/(loss) for the year (7,130,129) 387,219
Earnings per share for
profit attributable to
the ordinary equity
holders of the Company:
Basic earnings/(loss) per 8 (0.029) 0.001
share -------- --------
Diluted earnings/(loss) 8 (0.029) 0.001
per share -------- --------
The income statements are to be read in conjunction with the notes to the
financial statements available from the Company.
As at 30 June 2006
Cash and cash 10,812,460 2,411,999
Trade and other 440,169 225,180
Inventories 1,359,496 1,492,049
Total current assets 12,612,125 4,129,228
Receivables 520,982 473,448
Investments 10,978,287 78,750
Investments accounted 6,719,395 10,843,004
for using the equity
Property, plant and 4,160,467 1,732,886
equipment -------- --------
Total non-current 22,379,131 13,128,088
assets -------- --------
Total assets 34,991,256 17,257,316
Trade and other 1,086,119 3,886,739
Employee benefits 160,726 92,120
Provisions 50,000 50,000
Total current 1,296,845 4,028,859
liabilities -------- --------
Provisions 670,000 670,000
Deferred tax - -
liability -------- --------
Total non-current 670,000 670,000
liabilities -------- --------
Total liabilities 1,966,845 4,698,859
Net assets 33,024,411 12,558,457
Issued capital 102,375,869 78,750,480
Reserves 7,750,138 4,099,906
Accumulated losses (77,149,007) (70,291,929)
Total equity 32,977,000 12,558,457
attributable to equity
holders of the parent
Minority interest 47,411 -
Total equity 33,024,411 12,558,457
The balance sheets are to be read in conjunction with the notes to the financial
statements available from the Company.
STATEMENT OF CASH FLOWS
For the year ended 30 June 2006
Cash flows from
Cash receipts in the 3,004,369 1,592,113
course of operations
Cash payments in the (12,816,798) (7,638,013)
course of operations --------- ----------
Cash generated from (9,812,429) (6,045,900)
Interest received 863,824 299,778
Interest paid (2,623) -
Net cash from (8,951,228) (5,746,122)
operating activities --------- ----------
Cash flows from
Proceeds from sale of 11,455 370,000
property, plant and
Proceeds from sale of 502,512 -
Payments for mining (189,479) (136,830)
Proceeds from sale of - 1,243,345
Payments for research (1,734,169) (1,321,259)
Acquisition of (2,907,110) (1,249,102)
property, plant and
Repayment of - 1,243,345
Investment in - -
Loans to controlled - -
Refund/(payment) of (47,534) 33,923
security deposits --------- ----------
Net cash from (4,364,325) 183,422
investing activities --------- ----------
Cash flows from
Proceeds from the 22,444,730 308,000
issue of share
Share issue costs (728,717) -
Net cash from 21,716,013 308,000
financing activities --------- ----------
Net increase/ 8,400,461 (5,254,700)
(decrease) in cash and
Cash and cash 2,411,999 7,666,699
equivalents at 1 --------- ----------
Cash and cash 10,812,460 2,411,999
equivalents at 30 --------- ----------
The statements of cash flows are to be read in conjunction with the notes to the
financial statements available from the Company.
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