PMS 426 PMS 8405 METALLIC
ANNUAL REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011
(ABN 79 009 181 006)
PMS 426 PMS 8405 METALLIC
C O R P O R A T E D I R E C T O R Y
Directors Non-Executive Chairman Mr Patrick O’Connor Managing Director Mr Ian Culbert Finance Director Mr Stephen Belben Company Secretary Mr Stephen BelbenRegistered and Principal Office
Level 9 105 St Georges Terrace Perth Western Australia 6000 Telephone : +61 (0)8 9226 0329 Facsimile : +61 (0)8 9226 0327 South African Office
Midlands Office Park Unit 4, Block B 2 Walter Sisulu Street Middelburg
Mpumalanga 1050
Telephone: +27 (0)13 243 7032 Facsimile: +27 (0)13 243 7031
Share Registry
Security Transfer Registrars 770 Canning Highway Applecross Western Australia 6953 Telephone : (08) 9315 0933 Facsimile : (08) 9315 2233 Auditors
Moore Stephens Perth Level 3
12 St Georges Terrace Perth
Western Australia 6000
Bankers
Australian and New Zealand Banking Group Limited Level 9 77 St Georges Terrace Perth Western Australia 6000 Solicitors Steinepreis Paganin Level 4, The Read Building 16 Milligan Street
Perth
Western Australia 6000
Securities Exchange
Australian Securities Exchange Exchange Plaza 2 The Esplanade Perth Western Australia 6000 Website www.xceedresources.com.au ASX Code XCD
C O N T E N T S
Page
Corporate Directory IFC
Letter from the Chairman 2
Managing Director’s Report 3
Directors’ Report 8
Auditor’s Independence Declaration 20
Corporate Governance Statement 21
Financial Statements 30
Directors’ Declaration 66
Independent Auditor’s Report 67
Shareholder Information 69
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L E T T E R F R O M T H E C H A I R M A N
Dear Shareholders
On behalf of the Board of Xceed Resources Limited (“Xceed”) I am pleased to present this Annual Report for the year ended 30 June 2011.
This year saw the transformation of your company into an exploration, evaluation and development coal company with mineral projects located in South Africa.
During the year, which included two shareholder meetings, the following major transactions were completed: * The sale of a 100% interest in Boron Molecular Pty Limited for $1.5 million in cash;
* The purchase of a 100% interest in Focus Coal Investments Pty Ltd (‘Focus’), which owns 74% of Neosho Trading 86 (Proprietary) Limited (a South African registered company) the holder of the Moabsvelden coal project;
* Focus also holds an option to purchase a 74% interest in the Vogelfontein coal project in the Witbank coalfield in South Africa;
* A capital raising of $9 million to principally fund the development of the Moabsvelden coal project, following a 1:10 consolidation of share capital of the Company;
* The restructuring of the board and management together with a change of company name; and * The securing of rights to purchase up to a 70% interest in two new South African coal projects,
Roodepoort and Bankfontein.
The Company is well positioned to make an application for a Mining Right on the Moabsvelden coal project prior to the end of 2011, and will then undertake a feasibility study. Subject to a successful outcome in respect of both matters, the Company’s objective is to commence mine development at Moabsvelden in 2012/13.
We intend that Moabsvelden will be the first of a number projects to be developed in South Africa. The current portfolio of assets is an exciting start and will be fully assessed, but the Company will remain vigilant to other opportunities in South Africa that meet our investment criteria.
The change in direction of the Company has seen a change in composition of the Board, who all have hands on experience of the acquisition, development and operation of mines in Australia, New Zealand and Africa. It is our intention that the Board will continue to evolve with the appointment of new directors in future as the Company makes the transition to its objective of becoming a multi-mine producer.
I thank past directors and our shareholders for their support and I look forward to the coming year as the Company takes significant steps towards to the achievement of its stated objective.
Yours sincerely
Patrick O’Connor Chairman
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M A N A G I N G D I R E C T O R S ’ R E P O R T
During the past year the Company underwent a significant transformation when it sold its biotechnology business and acquired a new subsidiary, Focus Coal Investments Pty Ltd, the 74% holder of a drill proven thermal coal project located in the Witbank coal field of South Africa. Given the significance of these changes; this report deals predominantly with the new business of mineral exploration and development, and only briefly touches on the former biotechnology business.
On 8 February 2011, shareholders approved the sale of our wholly owned subsidiary, Boron Molecular Pty Limited (‘Boron’), and shortly thereafter an amount of $1,500,000 was received from the purchaser. Boron is engaged in the production of high grade boronic compounds used by the pharmaceutical industry. The sale of Boron concluded the activities of Xceed Capital Limited in the sphere of biotechnology. During the period between 1 July 2010 and the sale of Boron, Xceed Capital incurred a net loss after tax of $878,000.
Shareholders met again on 11 March 2011 and approved a change in the nature and scale of activities, a one for ten consolidation of capital, the acquisition of Focus Coal Investments in exchange for 25m ordinary shares and 50m performance shares, the issue of 45m new shares at 20 cents per share by means of a public offering, the appointment of myself and Stephen Belben to the board of directors and the change on name from Xceed Capital Limited to Xceed Resources Limited.
Despite volatility and uncertainty in the market at the time, the Company’s public offering to raise $9 million was successful and the full amount was raised. Subsequent to the capital raising, this volatility and uncertainty in the markets has increased to a significant extent, and unfortunately, like those of many of our peers, our share price has declined relative to the public offering price. Nevertheless, the Company remains cashed up and has the resources to create substantial shareholder value through the development of its coal projects; the fundamentals of which remain very positive and are likely to remain as such for the foreseeable future.
As this is the first annual report to shareholders following this change of strategic direction, it is worth re-capping why the Company was attracted to firstly getting into the coal mining business, and secondly why it chose to acquire a coal project in South Africa.
Coal plays a vital role in power generation and currently fuels 39% of the world’s electricity, making coal by far the most important source of energy. Significantly, coal’s proportion of world electricity generation is expected to be maintained over the next twenty years during a period when electricity consumption is set to expand in step with the rapid industrialisation of countries such as China, India and Brazil. From a base of around 4 billion tonnes at the turn of the century, global coal production is expected to reach 7 billion tonnes by 2030, with the fastest growth being thermal or steam coal which is expected to account for 5.2 billion tonnes of the total. In addition to strong growth, the market for coal is large and diverse, with many different producers and consumers from every continent; accordingly it is not prone to the degrees of volatility of supply and demand affecting many smaller markets.
Within this large and diverse market, South Africa features amongst the top five countries both as a producer and as a consumer of coal. The fact that South Africa, which is only 33rd in the world in terms of GDP, is a top five consumer of coal is testament to the country’s dependence on coal and the rapid roll out of electrification services to previously under serviced population centres. In addition to having its own substantial domestic market, South Africa has taken advantage of its proximity to Asia, especially India, to become an important player in the fastest growing seaborne thermal coal market in the world. Coupled with good infrastructure, a long established mining culture and a revolutionary change in the mining legislation which opened the door for junior mining companies to form partnerships with local entrepreneurs, South Africa is considered by the directors to be good place to start the process of building up Xceed as a an established and diversified miner.
MOABSVELDEN
The first step in this process has been the acquisition of a 74% stake in the Moabsvelden thermal coal project located in the Witbank coal field. The Company has focussed its attention on initially acquiring coal projects in this coal field because of their relative ease of development. Historically, the Witbank/Ermelo/Highveld coal field has produced 80% of South Africa’s coal and accordingly has excellent road and rail infrastructure as well as hosts most of the thermal power stations. Moabsvelden, which is located only 80kms from the main Johannesburg industrial belt, has main
M A N A G I N G D I R E C T O R S ’ R E P O R T
road and rail links within a 5 km radius as well as several large thermal power stations within a 50km radius. Another attraction to the Moabsvelden project is that the farm on which the project is situated has no improvements on it such as irrigation or buildings nor is there anybody living on the property.
Figure 1 Moabsvelden
The Moabsvelden coal project has a JORC compliant resource of 60.15 million gross in situ tonnes, of which 97% is in the Measured category.
Moabsvelden – GTIS resource tonnage, September 2011
Raw Qualities (Air Dry) Block Name Class Coal Area (m2) Seam
Ply Seam Seam Thickness
(m) Gross Insitu Tonnes RD AS (%) IM (%) CV (MJ/ kg) VM (%) TS (%) DAFV (%) Waste (m 2) MBV pt8 Measured 1370933 SM S4U&S4L 1.57 3,760,962 1.75 42.8 4.4 15.7 21.7 1.05 41.3 60,418,464
MBV pt8 Measured 1189775 SBA S2A 0.63 1,236,137 1.66 33.8 3.3 19.8 26.5 3.04 41.9 38,277,540
MBV pt8 Measured 2090460 SBB S2A 3.26 12,368,115 1.82 49.2 3.7 12.0 16.8 0.45 35.7 1,452,266 MBV pt8 Measured 1916405 SBC S2A 4.36 13,086,910 1.57 27.2 4.4 20.7 21.8 1.04 31.9 2,699,890 MBV pt8 Measured 2138675 SBD S2U 3.22 11,738,817 1.71 40.5 3.5 15.5 19.3 0.57 34.7 1,969,036 MBV pt8 Measured 1975323 SBE S2L 3.86 11,956,028 1.57 27.5 3.9 21.2 22.2 0.85 32.4 1,667,356 MBV pt8 Measured 1828277 SBF S2L 1.4 4,309,380 1.68 38.6 3.2 17.2 19.1 0.75 33.0 890,174 Total Measured 18.3 58,456,349 1.67 36.6 3.8 17.3 20.2 0.80 34.2 107,374,726
Raw Qualities (Air Dry) Block
Name Class Coal Area
(m2)
Seam
Ply Seam Seam Thickness
(m) Gross Insitu Tonnes RD AS (%) IM (%) CV (MJ/ kg) VM (%) TS (%) DAFV (%) Waste (m 2) MBV pt8 Indicated 60513 SBC S2A 4.03 381,944 1.6 27.1 4.0 21.7 20.4 0.91 29.6 73,543 MBV pt8 Indicated 75216 SBD S2U 4.21 551,365 1.7 44.1 3.5 15.1 16.0 0.61 30.5 16,661 MBV pt8 Indicated 77717 SBP3 S2U 1.04 136,450 1.7 39.0 4.2 16.0 18.0 0.46 31.7 1,284 MBV pt8 Indicated 63214 SBE S2L 5.04 480,402 1.5 21.8 5.0 23.4 21.5 0.92 29.3 90,302 MBV pt8 Indicated 79217 SBF S2L 1.09 146,544 1.7 40.4 3.2 16.9 17.8 0.38 31.6 709 Total Indicated 15.41 1,696,705 1.63 33.2 4.1 19.1 18.9 0.73 30.2 182,499 Total Measured & Indicated 60,153,054
The resource has been independently estimated by Gemecs (Pty) Ltd (‘Gemecs’) who was also responsible for borehole logging and sampling. The estimate tabulated above is based on the results of data collected from 39 diamond drill holes of TNW core size drilled in 2010 and 2011. In addition, most boreholes were geophysically logged to verify depths and thicknesses and the entire project area was subjected to an airborne magnetic survey to identify geological structures. All borehole and geophysical data were imported to GBIS, which is an established geological borehole data base, and validated. The verified data set was used by Gemecs to construct the geological model using Gemcom Minex TM geological modelling software.
Coal qualities were determined by washability tests carried out by independent laboratories situated in Witbank and Middelburg, South Africa.
M A N A G I N G D I R E C T O R S ’ R E P O R T
The resource is characterised by its low strip ratio. The resource is contained in two seams, the uppermost 4 seam with an average combined thickness of 1.57m and the lower 2 seam which has an average combined thickness of 16.73m. It is expected that almost all mining will be by means of an open cut, with possibly some underground mining accessed from the pit high wall, thereby avoiding the need for capital intensive underground development.
Our intention is to lodge an application for a mining right with the South African regulators by the end of October 2011. Given that the Moabsvelden project is located between several existing mining operations and is not within a sensitive catchment area, the directors do not anticipate any major obstacles to the granting of the necessary approvals. Subject to the approvals being received within a normal time frame, mine construction could commence by the end of 2012. The Company has appointed Belton Projects & Exploration Pty Ltd, a Witbank based, independent mining consultancy to prepare the necessary technical and financial reports required to accompany an application for a mining right. At the same time, another consultant, EVA Solutions of Johannesburg, is preparing a Social and Labour Plan which details the Company’s human resources commitments and policies as well as our local community initiatives which will be undertaken once mining at Moabsvelden commences.
An environmental impact assessment has commenced at Moabsvelden, including the collection of predevelopment base line data that can be used to monitor the effects of mining in future. Building upon this data, an Environmental Management Plan will be prepared and submitted to the regulatory authorities alongside an application for an integrated water usage licence.
Following submission of a mining right application for Moabsvelden, the Company will build on the initial mine planning and costing through undertaking a detailed feasibility study.
FURTHER PROJECTS
In line with the Company’s strategy to firstly establish itself as a coal producer in the area of South Africa with the least of development obstacles, we have secured options over three other coal prospecting rights in the same coal field as Moabsvelden.
Figure 2 Locality of Projects
M A N A G I N G D I R E C T O R S ’ R E P O R T
Acquisition of these further coal prospecting rights is subject to a number of conditions, in particular the Minister of Minerals and Energy consenting to the transactions in accordance with Section 11 of the Minerals and Petroleum Resources Development Act (2002). At the time of writing this report, Section 11 applications have been submitted in respect of two coal properties, Roodepoort and Bankfontein and we are yet to be advised whether or not the applications have been approved. A Section 11 application has yet to be submitted in respect of the third property, Vogelfontein as other significant conditions precedent remain to be satisfied in regard to this property.
The Roodepoort prospecting right, in which the Company can acquire up to 70%, is located approximately 120kms to the east of Johannesburg and 60kms east of the Company’s Moabsvelden project. The project is located within twenty kilometers of Eskom’s Kreil and Matla coal fired power stations and is approximately three kilometers from Exxaro’s New Clydesdale Colliery.
Historically, a total of 11 boreholes have been drilled within or on the border of the Roodepoort property. The results of this drilling confirm that coal is present over at least half of the property and that these seams may be amenable to open pit extraction. Selected historic holes include:
Hole # Thickness Seam From
205 6.65m 2 25.53m 208 5.61m 4 12.17m 5.99m 2 36.12m 261 4.01m 2 22.42m 419 4.70m 1 38.12m 445 4.39m 2 20.31m
As part of our due diligence, we have drilled three test holes in the property. Our drilling has confirmed the presence of the indicated coal seams but we are awaiting the results of the proximate analysis in order to compare this to the historical data.
Like the Roodepoort property, we have acquired the right, subject to Ministerial consent, to acquire up to 70% of the Bankfontein project. The Bankfontein Prospecting Right is located approximately 40 kms north of the town of Ermelo and is 210 kms east of Johannesburg. Xstrata’s Tselentis colliery is located within five kilometers of Bankfontein, as is a spur rail line connected to the main Richards Bay dedicated coal line at Ermelo. A further benefit arising from the location of the Bankfontein Project is that it is only ten kilometers from the Vogelfontein property, over which Xceed has an option to acquire.
Twenty one bore holes have been drilled either within or on the borders of the Bankfontein property. The drilling has demonstrated that all of the Ermelo coal seams [ A (uppermost) to E (lowermost)] are present in one or other of the holes, and that whilst potential future mining would predominately be by underground means, there is coal which may be amenable to open cut mining.
Open cut mining could potentially allow for low cost access to any underground production through the pit high wall. Examples of these shallower intersections are:
Hole # Thickness Seam Starting
21 3.18m B 20.54m
1.40m CU 25.01m
0.76m CL 29.26m
68 2.89m CU 11.71m
78 3.00m CU 17.60m
M A N A G I N G D I R E C T O R S ’ R E P O R T
We have also drilled three test holes on this property in order to validate the historical data. We are awaiting the laboratory results; however, the coal seams indicated by the historical drilling have been confirmed by our own drilling. Vogelfontein is the subject of an accepted Prospecting Right Application, which is expected to be approved shortly. If and when the prospecting right is granted, we will conduct further due diligence before deciding whether or not to exercise the option to acquire 74% of this property. Any such acquisition is dependent upon Section 11 approval being granted by the Minister.
LOOKING AHEAD
Undoubtedly the Company will face many challenges in its quest to grow from being a junior explorer to becoming an established diversified miner. The volatility in capital markets is likely to continue for the foreseeable future; there are continuing cost pressures in the resources sector as demand for skilled staff and other inputs outstrip supply; and recruitment by the private sector, as well as a sustained increase in mining activity, has severely over stretched the ability of the regulators in South Africa, (as well as elsewhere, no doubt) to deliver their service in a timely fashion. We do not underestimate these challenges, particularly the latter. Nevertheless, with over $10m in the bank, control over a relatively large resource which can be extracted by means of an open pit situated alongside established infrastructure, together with the strong fundamentals for coal prices, the directors believe that a solid base has been established from which to grow the Company.
Ian Culbert Managing Director
Competent Persons Statement:
Information in this Managing Directors’ Report that relates to exploration results, mineral resources or ore reserves in respect of the Moabsvelden Thermal Coal project is based on information compiled by Mr Kobus Dippenaar, Pr.Sci.Nat, B.Sc Hons (Geology), GSSA, who is a senior coal geologist at Gemecs (Pty) Ltd who have consulted to the Company. Gemecs is a recognised Overseas Professional Organisation. Mr Dippenaar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration, Mineral Resources and Ore Reserves’. Mr Dippenaar consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.
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D I R E C T O R S ’ R E P O R T
The directors present their report together with the consolidated financial report of the consolidated entity for the financial year ended 30 June 2011 and the independent auditors’ report thereon.
Current Directors
The name and details of the Company’s directors in office during the financial year and until the date of this report are as follows:
Names, Qualifications and Special Responsibilities Patrick O’Connor BCom, SEP Stanford (USA), FAICD Non-Executive Chairman
Mr O’Connor is the Non-Executive Deputy Chairman of Perilya Limited (ASX: PEM) and Non-Executive Chairman of the Water Corporation and a Non-Executive Director of St George Capital Pty Ltd and SAS Telecom Pty Ltd. Mr O’Connor has held the roles of Chairman and for a period Executive Chairman of Perilya Limited, the operator of the Broken Hill mine in NSW Australia, leading up to the change of control by Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd (China’s third largest zinc producer). Mr O’Connor was previously the Managing Director of Macraes Mining Company Limited during which time he oversaw the development of the Macraes Gold Project and the acquisition of the Reefton Gold Project in New Zealand. Mr O’Connor was the Chief Executive Officer for Oceana Gold Limited at the time of its listing on the ASX and remained for a period as a non-executive director. He has extensive leadership skills and wide experience in communicating with capital markets, shareholders and media.
Other Listed Public Company Directorships in the last 3 years: None
Ian Culbert CA(SA), BAcc, BSc Econ Managing Director
Mr Culbert was previously Managing Director of ASX listed Tritton Resources Limited and in that role oversaw the development and operation of the Tritton Copper Mine in New South Wales.
Prior to this involvement, Mr Culbert was the Managing Director of another ASX listed company, Lafayette Mining Limited involved in the development of a base metal operation in the Philippines.
Mr Culbert has also served as an executive of HSBC Corporate Finance in which role he was responsible for the provision of specialist financial advisory services to domestic and international mining and mining service companies. Mr Culbert has over twenty years experience in the resources industry.
Mr Culbert was appointed as a director on 6 April 2011. Other Listed Public Company Directorships in the last 3 years: None
D I R E C T O R S ’ R E P O R T
Mr Stephen Belben, ACA, BAcc, BCom (Hons) Finance Director and Company Secretary
Mr Belben brings extensive finance, accounting and company secretarial expertise having previously been a partner in the Perth office of Ernst & Young for over 11 years together with considerable experience working with public and private company boards over the past 15 years. Whilst at Ernst & Young he was appointed the national partner in charge of that firm’s Minerals and Energy Industry Group responsible for the development of the firms client base in that sector in Australia.
Mr Belben served as the corporate and finance director of an ASX listed resources company, Auridiam Limited, with an operating mine in Southern Africa and has a good knowledge and background of the region.
Mr Belben is a Director of St George Capital Pty Ltd, SG Corporate Pty Ltd and Fleming SG Capital Pty Ltd, and is the Non Executive Chairman of unlisted public company Discovery Resources Limited.
Mr Belben was appointed as a director on 6 April 2011. Other Listed Public Company Directorships in the last 3 years:
Non Executive Director and Non Executive Chairman of Greencap Limited Director Resignations during the year
George Cameron-Dow, Master of Management (cum laude) Wits, SEP Stanford (USA), FAICD, FAIM Managing Director
Mr Cameron- Dow was appointed in the previous financial year to implement the Board’s new strategy focussed on the realisation of value from existing biotechnology assets and sourcing a new business opportunity along with associated new capital.
Following the sale of Boron Molecular Pty Ltd in December 2010, the acquisition of the coal business of Focus Coal Investments Pty Ltd and the successful $9m capital raising in March 2011 Mr Cameron-Dow achieved the company’s objectives and resigned from the board on 6 April 2011.
Mr Tony Adcock, MBA, BSc (Econ) Hons, FAICD, F.Fin Non-Executive Director
Mr Adcock has had extensive international experience leading teams involved in multi- million dollar, complex transformation projects.
He is a director of Birchman Group, an international management consulting firm and was the Founding Director of Red Pill Performance Consultants Pty Ltd which provides executive coaching, high performing teams and strategic management consulting services to industry. Mr Adcock is also a non executive director of Discovery Resources Limited.
Mr Adcock resigned from the board on 6 April 2011.
D I R E C T O R S ’ R E P O R T
Interests in the Shares and Options of the Company and Related Bodies Corporate
As at the date of this report, the interests of the directors in the ordinary and performance shares of Xceed were:
Directors Ordinary Shares Performance
in Xceed Shares in Xceed
P O’Connor 2,903,598 -
I Culbert 12,500,000 25,000,000
S Belben 4,920,057 7,500,000
There are no options of Xceed outstanding at the date of this report.
Earnings Per Share Cents
2011 Basic and Diluted loss per share in cents (4.92)
2010 Basic and Diluted loss per share in cents (0.55)
Dividends
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way of a dividend to the date of this report.
Corporate Information
Xceed is a company limited by shares that is incorporated in Australia.
Xceed has prepared a consolidated financial report incorporating the entities that it controlled during the financial year.
Nature of Operations and Principal Activities
During the year the company, following two shareholder meetings and a significant capital raising, changed its strategic direction with the disposal of its wholly owned fine chemical manufacturing business (Boron Molecular Pty Ltd) and the acquisition of 100% of Focus Coal Investments Pty Ltd (“FCI”). FCI holds a 74% interest in Neosho Trading 86 Pty Ltd, a company with a thermal coal project in the Witbank coal field in South Africa.
Accordingly the major activity of the group is now the exploration, evaluation and development of mineral projects located in South Africa.
D I R E C T O R S ’ R E P O R T
Specifically the following major activities occurred during the year:
• the sale of a 100% interest in Boron Molecular Pty Limited (“Boron”) for $1,500,000 in cash;
• the purchase of a 100% interest in Focus Coal Investments Pty Ltd, which in turn holds a 74% interest in Neosho Trading 86 (Proprietary) Limited (a South African registered company) which is the holder of the Moabsvelden coal project;
• an option was acquired to purchase a 74% interest in the Vogelfontein coal project in the Witbank coalfield in South Africa;
• a capital raising of $9 million to principally fund the further development of the Moabsvelden coal project was completed, following a 1 : 10 share and option consolidation;
• the board and management were reconstructed, and there was a change of company name; and • the rights to purchase up to a 70% interest in two new South African coal projects, Roodepoort and
Bankfontein, were obtained.
Except as noted above there were no major changes in the state of the consolidated entity’s affairs during the year.
Review and Results of Operations
A detailed review of the Group’s performance and activities is set out in the “Managing Director’s Report”.
Operating Results for the Year
The operating result of the consolidated entity for the year was a loss of $1,866,000 (2010: loss $767,000).
Significant Events after Balance Date
No matter or circumstance has arisen that has significantly affected, or may significantly affect, the operations of Xceed Resources Limited and its controlled entities, the results of those operations or the state of affairs of Xceed Resources Limited and its controlled entities in subsequent years that is not otherwise disclosed in the consolidated financial statements.
D I R E C T O R S ’ R E P O R T
Indemnification and Insurance of Directors and Officers
Xceed has agreed to indemnify all directors and executive officers of the company, against liabilities to another person (other than the company or a related body corporate) that may arise from their position as directors of Xceed, except where the liability arises out of conduct involving a lack of good faith. The agreement stipulates that Xceed will meet the full amount of any such liabilities, including costs and expenses.
During the financial year, the company paid premiums in respect of a contract insuring all the directors of Xceed against costs incurred in defending proceedings for conduct involving:
(a) Wilful breach of duty; or
(b) A contravention of Section 182 or 183 of the Corporations Act, as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance premiums paid for the financial period was $24,615.
Environmental Regulation
The directors are mindful of the regulatory regime in relation to the impact of the organisation’s activities on the environment.
There have been no known breaches of any environmental regulation by the consolidated entity during the financial period.
Likely Developments and Expected Results
In the opinion of Xceed’s directors, it would prejudice the interests of the company to provide additional information, except as reported in the annual report, relating to likely developments in the operations of the company.
Share Options Unissued Shares
As at the date of this report, there were nil (2010: 1,000,000 (adjusted for 1 for 10 share consolidation)) unissued ordinary Xceed Resources Limited shares under options.
No options have been issued in the period since year end to the date of this report.
Performance Shares
As at the date of this report there were 50,000,000 Performance Shares (25,000,000 Class A and 25,000,000 Class B Performance Shares) on issue which convert into Ordinary Shares upon the achievement of defined milestones relating to the development of the Moabsvelden coal project. Should the respective milestones for each of the Classes not be achieved by the designated dates all the Performance Shares (for that Class) will convert into 1 Ordinary Share.
D I R E C T O R S ’ R E P O R T
Remuneration Report (Audited)
This Remuneration Report outlines the director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations.
For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Company and the Group receiving the highest remuneration.
For the purposes of this report, the term ‘executive’ encompasses executive director(s), chief executive, senior executives, general managers and secretaries of the Company and the Group.
Details of key management personnel (including the key most senior executives of the Company and the Group): (i) Directors
P. O’Connor Non-Executive Chairman
I Culbert Managing Director (appointed 6 April 2011) S Belben Finance Director (appointed 6 April 2011) T. Adcock Non-Executive Director (resigned 6 April 2011) G. Cameron-Dow Managing Director (resigned 6 April 2011) (ii) Executives
S. Courtney Managing Director, Boron Molecular Pty Ltd (period to date of sale of Boron in December 2010)
K. Sullivan Sales and Marketing Executive, Boron Molecular Pty Ltd (period to date of sale of Boron in December 2010)
J. Golding Quality & Operations Manager, Boron Molecular Pty Ltd (period to date of sale of Boron in December 2010)
Remuneration Philosophy
The performance of the Company depends upon the quality of its directors and executives. To prosper the Company must attract, motivate and retain highly skilled directors and executives. To this end, Xceed embodies the following principles in its remuneration framework:
• Provide competitive rewards to attract high calibre executives; • Link executive rewards to shareholder value;
• Have a portion of executive remuneration ‘at risk’ dependent upon meeting pre-determined performance benchmarks; and
• Establish appropriate, demanding performance hurdles for variable executive remuneration. Remuneration Committee
Given the small size (three directors) of the Board of Directors, including only one non executive director, it was not considered practical to establish a committee of the Board as a Remuneration Committee. Accordingly the full Board is responsible for determining and reviewing compensation arrangements for the directors and executives. Any Director with a personal interest in a remuneration matter is excused from participating in those discussions and resulting decisions. It is the intention of the Board to establish a Remuneration Committee once the size of the Board increases to four or more Directors.
The Board assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality director and executive team.
D I R E C T O R S ’ R E P O R T
Remuneration Structure
In accordance with best practice, the structure of non-executive director and executive remuneration is separate and distinct.
Non-Executive Director Remuneration Objective
The Board aims to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Company’s Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the directors as agreed.
The latest determination (May 2004) was an aggregate remuneration of $150,000 per year.
The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually.
Each non-executive director receives a fee for being a director of Xceed.
Non-executive directors are encouraged by the Board to hold shares in the Company. Xceed considers it appropriate for directors to have a stake in the Company. Subject to shareholder approval, non-executive directors can be provided incentives through the issue of options in the Company.
The remuneration of non-executive director(s) for the year ending 30 June 2011 is detailed in Table 1.
During the year Xceed made payments to director related entities for services rendered on behalf of the Company. Refer to note 26.
As non-executive director(s) are not expected to be involved in the performance of the Company to the same degree as executive director(s) it is not considered appropriate for their remuneration to be dependent on the satisfaction of performance criteria.
Senior Management and Executive Director Remuneration Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group so as to:
• Reward executives;
• Align the interests of executives with those of shareholders;
• Link reward with strategic goals and performance of the company; and • Ensure total remuneration is competitive by market standards.
Principles of Compensation
Compensation levels for employees of the Company are competitively set to attract and retain appropriately qualified and experienced senior executives. As required, the Board obtains independent advice on the appropriateness of remuneration packages given trends in comparative companies and the objectives of the Company’s remuneration strategy.
D I R E C T O R S ’ R E P O R T
Structure
Remuneration consists of the following key elements:
• Fixed Remuneration (base salary, superannuation and non-monetary benefits); • Variable Remuneration
• Short-term incentives • Long-term incentives
The Board establishes the proportion of fixed and variable remuneration for each senior manager. Fixed Remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the position and is competitive in the market. The board reviews fixed remuneration annually by reviewing the overall performance of the individual and of the Company.
Senior managers may be given the flexibility to receive their remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.
Variable Remuneration – short term incentive
The objective of short term incentives is to link the achievement of the Group’s operational targets with the remuneration received by the executives charged with meeting those targets.
From time to time cash bonuses (short term incentives) are paid where an executive has met a short term objective of the Company. Such bonuses are paid when specific criteria are met which are set by the Board or when an executive has made contributions that are significant and beyond the normal expectations of their role.
Variable Remuneration – long term incentive
Long term incentives are delivered in the form of share options. The strike price of options are determined so as to ensure that the options only have value if there is an increase in shareholder wealth over time. For each option granted, specific hurdles are provided which must be met before the options are vested.
There were no changes during the year to share based payments made in previous financial periods. Employment Agreements
Employment agreements are entered into with the executive director(s) and all other executives.
Mr Ian Culbert is employed under an executive services agreement (ESA) for an indefinite term. The ESA may be terminated by the Company, without reason, by giving 6 months notice.
Mr Stephen Belben was employed as the nominated person under a consultancy agreement with SG Corporate Pty Ltd for an indefinite term. The consultancy agreement was terminated by mutual agreement at 31 August 2011, and effective from 1 September 2011 Mr Belben was employed under an executive services agreement (ESA) for an indefinite term. The ESA may be terminated by the Company, without reason, by giving 6 months notice
Mr Cameron-Dow was employed under a fixed term executive service agreement (ESA) which was due to terminate on 31 December 2011. The ESA may be terminated with twelve months notice or such lesser amount where there is less than twelve months of the term remaining.
Dr Courtney’s employment agreement provides for a termination / notice period of not more than three months.
D I R E C T O R S ’ R E P O R T
Remuneration of key management personnel and the five highest paid executives of the Company and the Group
Table 1: Remuneration for the year ended 30 June 2011
Short Term Benefit Post employment Equity
Non
Perform-Salary & Cash Monetary Super- Termination ance
Fees Bonus Benefits annuation payments Options Total Related
$ $ $ $ $ $ $ %
Non-executive directors
P. O’Connor – Chairman 39,999 - - - 39,999 -
T. Adcock (resigned 6 April 2011) 18,750 - - - 18,750
-Sub-total non-executive directors 58,749 - - - 58,749
-Executive directors
I Culbert1 145,012 - - 13,051 - - 158,063 -
S. Belben2 59,274 - - - 59,274 -
G. Cameron-Dow 3
(resigned 6 April 2011) 122,625 250,000 - - 122,625 30,000 525,250 53.3%
Other key management personnel
S. Courtney2(until December 2010) 98,577 - - 8,872 - - 107,449 -
K. Sullivan4(until December 2010) 60,746 - - - 60,746
J. Golding3(until December 2010) 54,217 - - 4,879 - - 59,096 -
Sub-total executive KMP 540,451 250,000 - 26,802 122,625 30,000 969,878
-Total 599,200 250,000 - 26,802 122,625 30,000 1,028,6274
-1. Mr Ian Culbert was appointed as Managing Director on 6 April 2011, with an effective commencement date of 22 December 2010. Mr Culbert’s remuneration is $300,000 per annum including 9% superannuation.
2. Mr Stephen Belben was appointed as Finance Director on 6 April 2011, with an effective commencement date of 22 December 2010. Mr Belben is the nominated person of the engaged company, SG Corporate Pty Ltd. The consulting fee is $9,375 per month / $112,500 per annum (exclusive of GST) based on Mr Belben initially working on Xceed’s business on a 50% part time basis. Effective from 1 September 2011 Mr Belben has been employed on a full time basis on a remuneration of $225,000 per annum including 9% superannuation.
3. Mr George Cameron-Dow was Managing Director of the company until his resignation on 6 April 2011. Mr Cameron-Dow was the nominated person of the engaged company, SG Corporate Pty Ltd. The consulting fee was $163,500 per annum (exclusive of GST). Upon resignation Mr Cameron-Dow was paid a termination fee of $122,625 being for the period April 2011 to the end of his fixed term contract of 31 December 2011. Mr Cameron-Dow was paid a cash bonus of $150,000 following the Company’s completion of the acquisition of the new business, together with a capital raising of at least $2 million, and a completion bonus of $100,000 on the share price, of the minimum capital raising of $2 million, being equal or greater to $0.02 (pre consolidation) per share ($0.20 post consolidation) with the completion bonus applied to the exercise of options.
D I R E C T O R S ’ R E P O R T
Remuneration of key management personnel and the five highest paid executives of the Company and the Group (continued)
Table 2: Remuneration for the year ended 30 June 2010
Short Term Benefit Post employment Equity
Non
Perform-Salary & Cash Monetary Super- Termination ance
Fees Bonus Benefits annuation payments Options Total Related
$ $ $ $ $ $ $ %
Non-executive directors
P. O’Connor – Chairman 22,500 - - - 22,500 -
T. Adcock 21,250 - - - 21,250
-Sub-total non-executive directors 43,750 - - - 43,750
-Executive directors
G. Cameron-Dow 1 95,833 - - 7,875 - - 103,708 -
Other key management personnel
S. Courtney2 176,757 - - 15,908 - - 192,665 - K. Sullivan4 142,361 19,092 - - - - 161,453 12% J. Golding3 97,293 - - 8,756 - - 106,049 - S. Belben5 - - - - Sub-total executive KMP 512,244 19,092 - 32,539 - - 563,875 -Total 555,994 19,092 - 32,539 - - 607,625
-1. Mr Cameron-Dow was an Executive Director for the period 01/07/2009 – 30/11/2009 and received directors fees of $8,333. He was appointed Managing Director on 01/12/2009 on an annual salary of $150,000 plus superannuation at 9%. For the period 01/12/2009 to 30/06/2010 Mr Cameron-Dow was paid a salary of $87,500 plus 9% superannuation ($7,875).
Mr Cameron-Dow is entitled to a cash bonus of $150,000 payable in the event the company completes a Corporate Transaction being the acquisition of a new asset or business together with a capital raising by the company of at least $2 million by 31 December 2011.
Performance Options and associated Corporate Transaction Completion Bonus: The Company has agreed to issue Mr Cameron-Dow (or his nominee) 10 million Options to acquire shares (Options) on the following terms:
(i) 5 million options with an exercise price of 2 cents per Option and will expire on 31 December 2011 (ii) 5 million options with an exercise price of 3 cents per Option and will expire on 31 December 2011
The exercise of an Option is conditional upon the Executive becoming entitled to a Corporate Transaction Completion Bonus payment on or before 31 December 2011 on the following terms;
(i) Upon the company completing a Corporate transaction and the share price of the issue under the capital raising (of a minimum of $2 million) being equal to or greater than 2 cents per share (pre any consolidation) the company will pay the executive an amount of $100,000
(ii) Upon the company completing a Corporate transaction and the share price of the issue under the capital raising (of a minimum of $2 million) being equal to or greater than 3 cents per share (pre any consolidation) the company will pay the executive an amount of $150,000
The total value of the Options at issue date was $55,000. This amount will be expensed over the vesting period of the Options. The Option expense for the current period is Nil due to high uncertainty of vesting conditions being met.
2. Dr Courtney is the Managing Director for Boron Molecular Pty Ltd. He did not receive any bonus payments under the Boron Molecular Incentive Plan for the reporting period as performance targets related to sales and profitability were not achieved. 3. Dr Golding is the Quality and Manufacturing Manager for Boron Molecular Pty Ltd. He did not receive any bonus payments under the Boron Molecular Incentive Plan for the reporting period as performance targets related to sales and profitability were not achieved.
4. Mr Sullivan is the Sales and Marketing Executive for Boron Molecular Pty Ltd, and is based in the USA. He works under an Agency Employment Agreement. He earned a US$16,250 sales bonus which as at 30 June 10 was equivalent to AU$19,092. 5. In 2010 Mr Belben was a senior executive of the company and provided Company Secretarial and other services as part of the service contract with St George Capital and was not paid directly by Xceed Capital Ltd (now Xceed Resources Ltd).
D I R E C T O R S ’ R E P O R T
Options granted as part of remuneration
No options were granted during the year. During the previous year 10,000,000 options were issued to the Managing Director as part of an Executive Services Agreement on the following terms;
1. 5,000,000 options issued with an exercise price of $0.02 cents per option expiring on 31 December 2011 2. 5,000,000 options issued with an exercise price of $0.03 cents per option expiring on 31 December 2011 The exercising of the options were conditional upon the Company completing a Corporate Transaction, associated with a capital raising of at least $2 million at a price no less than $0.02 per share. With the completion of the FCI transaction and the capital raising of $9 million at a price of $0.20 per share post consolidation ($0.02 per share pre consolidation) 500,000 options (post consolidation) vested and were exercised at a total exercise price of $100,000. Directors’ Meetings
The number of directors’ meetings and the number of meetings attended by each of the directors of the Company for the time the director held office during the financial year are:
Meetings of Committees Director Directors
Meetings Audit & Risk Number of Meetings Held
Number of Meetings Attended
Mr Patrick O’Connor 11 1
Mr Tony Adcock 8 1
Mr George Cameron-Dow 7 n/a
Mr Ian Culbert (appointed 6 April 2011) 3 n/a Mr Stephen Belben (appointed 6 April 2011) 3 n/a
In addition, the Board of Directors approved a total of 3 circular resolutions during the year ended 30 June 2011. The Remuneration Committee dealt with remuneration matters as part of ordinary board meetings during the year so no separate Remuneration Committee meetings were held.
Committee Membership
Given the small size (three directors) of the Board of Directors, including only one non executive director as of 6 April 2011, it was not considered practical to establish a committee of the Board as a Remuneration Committee or an Audit Committee. Accordingly the full Board is responsible for determining and reviewing compensation arrangements for the directors and executives, as well as audit and risk matters. It is the intention of the Board to re-establish a Remuneration Committee and Audit Committee once the size of the Board increases to four or more Directors, including a minimum of two non executive directors.
Audit & Risk Committee to 6 April 2011
A separate Audit and Risk Committee, comprising the two non executive directors, operated during the year up until 6 April 2011. On the resignation of Mr Tony Adcock (Chairperson of the Audit Committee for the period up to date of his resignation on 6 April 2011) the responsibilities of the Audit and Risk Committee were absorbed under the full Board. Rounding
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the class order applies.
D I R E C T O R S ’ R E P O R T
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability the directors of Xceed support and have adhered to the principles of corporate governance except where noted that it is impractical. The Company’s corporate governance statements and policies are included on the company website.
Non Audit Services
The amount of non-audit services provided by the entity’s auditor, Moore Stephens, Perth, was $16,500. Auditor Independence
Section 307C of the Corporations Act 2001 requires our auditors, Moore Stephens Perth to provide the directors of the Company with an Independence Declaration in relation to the audit of the Financial Report. The directors received the Independence Declaration set out on page 20 for the year ended 30 June 2011:
Signed in accordance with a resolution of the directors:
Mr Patrick O’Connor Chairman
Dated: 29 September 2011
PMS 426 PMS 8405 METALLIC
A U D I T O R ’ S I N D E P E N D E N C E D E C L A R A T I O N
!""#$%&'$()$*+%,-.%/0%123%040%435% 6$7$8%19%:4%&'%;$"#<$+%=$##>?$9%@$#')9%A$+'$#*%,B+'#>8C>9%2DDD% =$8$()"*$E%F2:%3%G440%0100%H>?+CIC8$E%F2:%3%G440%2:3:% JI>C8E%($#')KI""#$+'$()$*+L?"IL>B%A$ME%NNNLI""#$+'$()$*+L?"IL>B% Liability limited by a scheme approved under Professional Standards LegislationThe Perth More Stephens firm is not a partner or agent of any other Moore Stephens firm
An independent member of Moore Stephens International Limited – members in principal cities throughout the world
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS
OF XCEED RESOURCES LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2011, there have been:
(a) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review, and
(b) no contraventions of any applicable code of professional conduct in relation to the review.
NEIL PACE MOORE STEPHENS
PARTNER CHARTERED ACCOUNTANTS
Signed at Perth this 30th day of September 2011.
.
PMS 426
PMS 8405 METALLIC
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
The Board of Directors (the “Board”) of Xceed Resources Limited (“Xceed”) is accountable to the shareholders and other stakeholders for the performance of the company. To this end, the Board is committed to maintaining the highest ethical standards and best practice in the area of corporate governance to ensure that the company’s business is conducted in the best interests of all concerned.
A description of Xceed’s main corporate governance practices and policies are set out in this statement and on the company’s web site www.xceedresources.com.au . Except for the departures explained in this statement, the directors believe that the company’s policies and practices have complied in all substantial respects with the objectives of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Second Edition Corporate Governance Guidelines).
On 11 March 2011 Shareholders voted to have Xceed Capital Limited change its name to Xceed Resources Limited and changed the board’s composition to reflect the transition in its business activities. Full details of this change are disclosed in the Company’s prospectus dated 16 February 2011 which is available on the Company’s website www. xceedresources.com.au .
This Corporate Governance Statement is designed to provide investors with updated information with respect to the Company’s corporate governance following the change in the board’s composition and companies activities. The Company is currently in the process of reviewing its corporate governance program and shall provide updated disclosure on its public website as changes are implemented,
Disclosure with respect to the transition between Xceed Capital and Xceed Resources is outlined in this Annual Report. By adopting these Principles, the Board seeks to create value and provide accountability commensurate with the risks involved.
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 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 has a Board Charter which clearly establishes the relationship between the Board and management in order to facilitate Board and management accountability to shareholders. The Board Charter is available on the company’s website.
Complies
1.2 Companies should disclose the process for evaluating the performance of senior executives.
The Board will monitor
management’s performance and implementation of strategies and financial objectives which are set by the Board. This assessment is conducted informally by either the Chairman or Managing Director on an ad hoc basis rather than through a formal evaluation process.
Complies
1.3 Provide related disclosures:
- An explanation of any departures from any Principle 1 Recommendation;
- Whether a performance evaluation for senior executives has taken place during the reporting period under the process disclosed; and - Make publicly available the Board Charter.
The company will explain any departures (if any) from its best practice recommendation 1.1 and 1.2 in its future annual reports.
The company will disclose whether a performance evaluation has been conducted during the financial year in its future annual reports.
The Board Charter is available on the company’s website.
Complies
2. Structure of the Board to add value
2.1 A majority of the Board should be independent directors.
Currently, the company has one independent Director from a total board of three Directors.
The company is in a process of transition and while not meeting this criteria now, the company intends to introduce additional skills as required in the future. Current Directors have been selected to bring specific skills and industry experience relevant to the company.
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 2.2 The Chair should be an independent director. The current Chairman, Mr Patrick
O’Connor is considered to be an independent director.
Complies
2.3 The roles of Chair and Chief Executive Officer should not be exercised by the same individual.
The Chairman is Mr Patrick O’Connor and Managing Director Mr Ian Culbert.
Complies
2.4 The Board should establish a Nomination Committee. The Board has not established a Nomination Committee.
The Board believes that due to its size and composition, a formal Nomination Committee structure would not provide any efficiency to the company at this time. As is normal practice for a small 3 person board, this function is carried out by the full board. 2.5 Companies should disclose the process for evaluating
the performance of the Board, its committees and individual directors.
The Board’s overall performance and its own succession plan is conducted informally by the Chairman and Directors on an ad hoc basis to ensure that the Board is composed of individuals who have a mix of skills and experience necessary for the conduct of the company’s activities.
Complies
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 2.6 Provide related disclosures:
- The skills, experience and expertise relevant to the position of director held by each director in office at the date of the Annual Report;
- The names of the directors considered by the Board to constitute independent directors and the company’s materiality thresholds;
- The existence of any relationships listed in Box 2.1 and an explanation of why the Board considers a director to be independent, notwithstanding the existence of those relationships;
- A statement as to whether there is a procedure agreed by the Board to take independent
professional advice at the expense of the company; - The term of office held by each director in office at
the date of the Annual Report;
- The names of members of the Nomination Committee and their attendance at meetings of the committee, or where a company does not have a Nomination Committee, how the functions of a Nomination Committee are carried out;
- Whether a performance evaluation for the Board, its committee(s) and directors has taken place in the reporting period and whether it was in accordance with the process disclosed;
- An explanation of any departures from any Principle 2 Recommendation;
- Make publicly available:
- A description of the procedure for the selection and appointment of new directors and the re-election of incumbent directors.
- The charter of the Nomination Committee or a summary of the role, rights, responsibilities and membership requirements for that committee. - The Board’s policy for the nomination and
appointment of directors.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed and will be disclosed in future annual reports.
There is no specific Nomination Committee - this function is performed by the entire Board.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed and will be disclosed in future annual reports.
The information has been disclosed in the Board Charter available on the company’s website.
Not applicable – function performed by the Board as a whole
The information is contained in the Board Charter available on the company’s website.
Complies
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 3. Promote ethical and responsible decision -making
3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to:
- The practices necessary to maintain confidence in the company’s integrity;
- The practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and - The responsibility and accountability of
individuals for reporting and investigating reports of unethical practices.
The Board has adopted a Code of Ethics and Conduct, which promotes ethical and responsible decision-making by directors and employees. The Code of Ethics and Conduct can be found on the company’s website. The Code of Ethics and Conduct emphasises the practices necessary to maintain confidence in the company’s integrity and those practices necessary to take into account the company’s legal obligations and the reasonable expectations of the company’s stakeholders.
Complies
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.
A Diversity Policy has only recently been developed and finalised and is now available on the company’s website
With the recent development of the Diversity Policy the Company will now evaluate how this can be met in considering future board and key executive appointments. 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 towards achieving them.
This disclosure has not yet been made. Future annual reports will disclose the measurable objectives for achieving gender diversity set by the board in accordance with the Diversity Policy and progress in achieving them.
The Company will evaluate in future Annual Reports how this can be met in considering future board and key executive appointments 3.4 Companies should disclose in each annual report
the proportion of women employees in the whole organisation, women in senior executive positions and women in the board
This disclosure has not yet been made. Future annual reports will disclose the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress in achieving them.
The Company will evaluate in future Annual Reports how this can be met in considering future board and key executive appointments
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 3.5 Provide related disclosures:
- An explanation of any departure from Recommendation 3
- Posting to the company’s web site any applicable code of conduct or a summary and the diversity policy or a summary of its main provisions
Explanation of departures from Principles and Recommendations 3.1, 3.2, 3.3 and 3.4 (if any) are set out above. The Company will also explain any departures from Principles and Recommendations 3.1, 3.2, 3.3 and 3.4 (if any) in its future annual reports.
The Corporate Governance Plan, which includes the Corporate Code of Conduct is posted on the Company’s website. Diversity Policy is yet to be developed.
The Company will evaluate in future Annual Reports following the recent development of the Diversity Policy
4 Safeguard integrity in financial reporting
4.1 The Board should establish an Audit Committee The Board has had an established Audit Committee for a number of years, however given the transition to a resources company in FY 2011 and the change in board composition with a reduced number of independent / non executive directors, it was agreed that the Audit Committee be suspended until the board has sufficient independent and/or non executive directors to re-establish the committee.
Whilst the company has adopted an Audit Committee Charter the Board believes that due to its size and composition, a formal Audit Committee would not provide any efficiency to the company at this time. As is normal practice for a small 3 person board with 2 executive directors, this function is carried out by the full board.
4.2 The Audit Committee should be structured so that it: - Consists only of non-executive directors; - Consists of a majority of independent directors; - Is chaired by an independent director who is not
chair of the board;
- Has at least three members.
Given the size and composition of the Board (3 members including two executive directors) it is not currently possible to satisfy this criteria.
The Company will continue to evaluate how this can be met in considering future Board appointments.
4.3 The Audit Committee should have a formal charter Although the Company has suspended the Audit Committee, the Audit Committee Charter can be obtained from the company’s website.
Complies
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
Principle No.
Best Practice Recommendation Compliance Reasons for
Non-compliance 4.4 Provide related disclosures:
- The names and qualifications of those appointed to the Audit Committee and their attendance at meetings of the committee, or, where a company does not have an Audit Committee, how the functions of an Audit Committee are carried out; - The number of meetings of the Audit Committee; - Explanation of any departures from any Principle
4 Recommendation;
- The Audit Committee charter;
- Information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners.
Non Compliance as noted in 4.1 Non Compliance as noted in 4.1
5 Make timely and balanced disclosure
5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements to ensure accountability at a senior level for that compliance and disclose those policies or a summary of those policies.
The Board provides shareholders with information using a
comprehensive Continuous Disclosure Policy which includes matters that may have a material effect on the price of the company’s securities, notifying them to the ASX, posting them on the company’s website, and where applicable issuing media releases.
Complies
5.2 Provide related disclosures:
- An explanation of any departure from any Principle 5 Recommendation;
- The policies or a summary of those policies designed to guide compliance with Listing Rule disclosure requirements.
Not applicable.
The Continuous Disclosure Policy can be found on the company’s website.
Complies
6 Respect the rights of shareholders
6.1 Companies should design a communications 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 developed a communication strategy to promote timely communication of information to shareholders. The company is aware of its obligations under the Corporations Act and the listing Rules, to provide the market with information which is not generally available and which may have a material effect on price or value of the company’s securities. Information is communicated to shareholders as follows:
• Notices of all shareholder meetings;
• All documents that are released publicly will be available on the company’s website.
Complies
