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REVETEC HOLDINGS LIMITED

AND ITS CONTROLLED ENTITIES

ABN 39 115621317

Financial Report

for the Year Ended 30 June 2011

REVETEC HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

ABN 39115 621317

Contents

Directors' Report

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors' Declaration

Independent Auditor's Report to the Members

Auditor's Independent Declaration

Page

3

10

11

12

13

,. 38

39

.,

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ABN 39115 621317

DIRECTORS' REPORT

For the year ended 30 June 2011

The directors of the company present their report together with the financial report of Revetec Holdings limited (the Company) and of the Group, being the Company and its controlled entities, for the financial year ended 30 June 2011 and the auditor's report Ihereon.

Index to Directors' report

1 Directors

2 Company secretary

3 Directors' meeting

4 Principal activities

5 Operating and financial review

6 Dividends

7 Events subsequent 10 reporting date

8 likely developments

9 Directors' interesls

10 Indemnification and insurance of officers and auditors

11 Non·audit seNices

12 Audi tor's independence declaration

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4

4

5

5

7

7

7

8

8

8

9

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ABN 39115621 317

1. Directors

DIRECTORS' REPORT

(continued)


The directors in office at any time during, or since the end of, the year are:

Name and position Appointed Experience, special responsibilities and other directorships

Bradley David HoweU-Smith 4 August 2005 Inventor of the CCE concept, designer and builder of the first prototype engine . Executive Director, Chairperson ,

and Company Secretary.

Bradley Hawell-Smith resigned as Executive Director on 29 March 2012

lan Wai Lee Director

Lan Wai Lee resigned as Director on 21 January 2011 .

Sleven Valtas Director

Peter Lawrence Borthwick Ketty

Rajamurugan Rathinam

2. Company secretary

19 years experience in the automotive industry.

Automotive Mechanical Engineering certificates

7 September 2007 9 years experience in accountancy Member of CPA Australia

1 December 2008 28 years experience as a commercial property lawyer including over 16 years as a partner in a 7 partners practice employing more than 20 people.

14 February 2011 Certified Electrical Engineers Over 10 years experience in Project Management Over 13 years experience in Mortgage Finance

16 October 2011 Founder and Director of Galaxy Renewal Energy. India Promoter of Revetec Technologies India Private Limited. Entrepreneur with extensive contacts in Indian Auto Industry.

Bradley David HoweU-Smith was appointed to the position of Company Secretary in September 2007. Over the years Bradley has acquired the necessary experience to act as Company Secretary. When appropriate, BradJey seeks the advice of the Company's solicitors and/or accountants.

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ABN 39 115621317

3. Directors ' meetings

DIRECTORS' REPORT

(continued)

For the year ended 30 June 201 1

The number of directors' meetings and number of meetings attended by each of the directors of the Company during the financial year are:

Director

Bradley David Howell-Smith

Sleven Vallas

Peter Lawrence Borthwick Kelly

A - Number of meeting attended

Board Meetings

A

12

'2

'2

8

'2

'2

'2

B - Number of meetings held during the time the director held office during the year.

4. Principal activities

The Group's principal activities are the research, design , development and commercialisation of combustion

engines, known as the CCE design technology. The major activities during the year were continued testing and

developing of the CCE technology.

The entity's focus since the directors' report of the previous financial year, has been:

Licensing agreement with Alalan Makine in Turkey: In July 2010 the Company entered into a development agreement with Atalan Makine in Tur1<.ey. This agreement was intended to combine the resources of Atalan, with

Reveiec's engine technology and expertise and knowledge of combustion engines for the development and

production of the Developed Products. Both parties agreed to conduct a development program for the purpose of

developing , optimizing and certifying of the Developed Products for commercial sale.

Joint venture with Indian p romoters - On 19 June 2011 the Company entered in to a Joint Venture with a group of Indian promoters who are to provide wor1<.ing capital of $2.Sm USD towards commercialisation, patent renewals and listing expenses in consideration of Revelec Holdings limited granting to Revetec Technologies India Private limited a Global Master licence Agreement. One of the conditions of the agreement was that all pre-existing licences which were granted were to be terminated.

Licensing agreement with Revetec Technologies India Private Limited - In June 2011 , the Company entered

into a global master licence agreement with Revetec Technologies India Private Limited, a company incorporated

in India with Managing Director Mr. Raja Murugan.

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ABN 39115621317

4. Principal activities (cont)

Further licensing:

DIRECTORS' REPORT

(continued)


1) Testing of the proof of Concept look place in Gaggenau Germany at Peus Testing in July 2011 . Unfortunately due to a mechanical breakdown testing was not fully completed.

2) In November 2011 both the Atalan Makine licence and Peu5 Testing Ucence have been terminated at the insistence of Ashok Leyland as a precondition 10 licensing.

3) Ashok Leyland has requested and received from Revetec detailed budgets for the cuslomisalion of a number of its engines.

4) Ashok leyland has embarked on an assessment of the manufacturabilily and durability of the current design.

5) Revelec Technologies India Private Limited has provided funding sporadically. Consequently the board has raised worXing capital by issuing shares to existing shareholders.

6) Atatan Makine has remained supportive of Revetec and has raised its own funds to manufacture a diesel engine prototype with a view to assisting Revetec to market its technotogy to the diesel engine marXet. Completion of this engine is imminent.

7) Revetec proposes to grant 10 Hakan Atalan a national licence for the Turkish and Middle Eastern Market conditionaUy upon successfut testing of the diesel prototype either through Revetec Technologies India Private Limited or directly in the event that the Global Master Licence Agreement currently held by Revelec Technologies India Private Limited is terminated for non-performance.

8) Revetec Technologies India Private Limited has been unable 10 provide the Company with the investment funding which it promised.

9) Revetec Technologies India Private limited engaged Mr. A Subramanian, India's leading engine designer to evaluate the commercial potential of designing a diesel engine using Revetec Technology.

10) Revetec Technologies India Private limited is willing to pay for the design of a serial production diesel or petrol engine provided Mr. Subramanian endorses Ihe technology. However, it is not willing to fund the Company patent as agreed.

11) Hakan AIIan, our Turkish partner, has managed to design and manufacture a diesel engine using Revetec Technology. Revelec Holdings Limited has provided limited funding recently to enable final parts to be ordered. These parts have been received and the assembly is in progress with testing to follow.

Financial Activities: The Company made an offer 10 existing Revetec shareholders to invest further into the Company. The Company's operation was limited due to the lack of capital.

Business development During this period we continued to market our technology to companies overseas.

6


5. Operating and financial review

Overview of the Group

During the year ended 30 June 2011 :

ABN 39115621 317

DIRECTORS' REPORT

(continued)

For the year ended 30 June 201 1

• The Group incurred a loss for the year of $248,134 (2010: $313,581 loss)

• The Group obtained significant funding from the following source

Income tax research and development concession

Shares issued

Sales of plant & equipment

Interest received

Significant Changes in the State of Affairs

GST exclusive

$153,545

$1 10,868

S9.091

$2,328

$275,832

In the opinion of the directors, other than outlined above, there were no significant changes in the stale of affairs of the Group that occurred during the financial year.

6. Dividends

No dividends have been paid or declared by the Company since the start of the financial year. No recommendation for payment of dividends has been made during the financial year.

7. Events subsequent to reporting date

There have been a number of material events that have significantly changed the state of affairs of the Group since the end of the 2011 financial year.

They are as follows:

1) Testing of the proof of Concept took place in Gaggenau Germany at Peus Testing in July 201 1. Unfortunately due to a mechanical breakdown testing was not fully completed.

2) In November 2011 both the Alalan Makine licence and Peus Tesling licence have been terminated at the insistence of Ashok leyland as a precondition to licensing.

3) Ashok l eyland has requested and received from Revetec detailed budgets for the customisation of a number of its engines.

4) Ashok leyland has embarked on an assessment of the manufacturability and durability of the current design.

5) Revetec Technologies India Privale limited has provided funding sporadically. Consequently the board has raised working capital by issuing shares 10 existing shareholders.

6) Atalan Makine has remained supportive of Revetec and has raised its own funds to manufacture a diesel engine prototype with a view to assisting Revetec to mar1tet its technology to the diesel engine mar1<.et. Completion of this engine is imminent.

7) Revetec proposes to grant to Hakan Alalan a national licence for the Turkish and Middle Eastem Mar1tet conditionally upon successful testing ofthe diesel prototype either through Revetec Technologies India Private limited or directly in the event that the Global Master licence Agreement currently held by Revetec Technologies India Private limited is terminated for non-performance.

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ABN 39115 621317

DIRECTORS' REPORT

(continued)


7. Events subsequent to reporting date (cont)

8) Revetec Technologies India Private limited has been unable to provide the Company with the investment funding which it promised.

9) Revelee Technologies India Private limited engaged Mr. A Subramanian, India's leading engine designer 10 evaluate the commercial potential of designing a diesel engine using Revelee Technology.

10) Revelee Technologies India Private Limited is willing to pay for the design of a serial production diesel or petrol engine provided Mr. Subramanian endorses the technology. However, it is not willing to fund the Company patent as agreed.

11) Hakan Atlan Turkey has managed to design and manufacture a diesel engine using Revetec Technology. Revetec Holdings Limited has provided limited funding recently to enable final parts to be ordered and the assembly is now in progress with testing to follow.

8. Likely Developments

See summary in section 4 above.

9. Directors ' interests

The relevant interest of each director in the share capital of the Group as at the date of this report is as follows:

Directors

Bradley David Howell-Smith

Lan Wai Lee

Steven Valtas

Peter Lawrence Borthwick Kelly

10. Indemnification and insurance of officers and auditors

Indemnification

Ordinary shares

32.235,987

30,000

6,322,943

1,562,750

The Group has not indemnified or made a relevant agreement for indemnifying against a liability any person who is or has been an officer of the Company.

The Company has entered into an agreement with its current auditor W Wen & Co, indemnifying them against claims by third parties arising from their report on the Annual Financial Report, except where the liability arises out of conduct involving a lack of good faith.

Insurance premium s

During the financial period. Ihe Company has not paid premiums in respect of directors or executive officers for professional indemnity or other liabilities.

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ABN 39 115 621 317

11 . Non-audit services

DIRECTORS' REPORT

(continued)


During the year W Wen & Co, the Company's auditor, has performed certain other services in addition to their statutory duties. The board has considered the non-audit services provided during the year by the auditor and is satisfied that the provision of those non·audit services during the year by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services were subject 10 the corporate governance procedures adopted by the Company and have been reviewed by the board to ensure they do not impact the integrity and objectivity of the auditor; and

• the non-audit services provided do not undennioe the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did nol involve reviewing or auditing Ihe auditor's own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

12. Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under s 307C of the Corporations Act 2001 is set oul on page 41 .

Signed in accordance with a resolution of the Board of Directors:

Chairperson

IIt~, U 1j

Sydney

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ABN 39 115621 317

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011

Consolidated

Revenue

Other income

Depreciation expenses

Directors fees

Management fees

Employee benefits

Materials and engine testing expenses

Other expenses

Loss from operating activities

Financial income

Financial expenses

Net financial income

(Loss) before income tax

Income lax benefit

(Loss) for the year

Other comprehensive income for the year

Total comprehensive (loss) for the year attributable to equity holders of the company

Loss per share

Basic loss per share

Diluted loss per share

Note

6

7

9

10

10

2011

$

9,091

(1 )

(105.772)

(181,044)

(378)

(125,577)

(403,681)

2,328

(326)

2,002

(401 ,679)

153,545

(248,1 34)

(248,134)

(0.0010)

(0.0010)

2010

$

95,918

(4 ,676)

(112,380)

(18,000)

(190,100)

(53,352)

(1 62.136)

(464.726)

1,915

(2)

1,913

(462,81 3)

149,232

(313,581 )

(313,581)

(0.0014)

(0.0014)

The consolidated statement of comprehensive income should be read in conjundion with the notes to the financial statements.

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ABN 39115 621317

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

ASSETS

CURRENT ASSETS

Cash and cash equivalents

Prepayments and deposits

TOTAL CURRENT ASSETS

NON-CURRENT ASSETS

Property, plant and equipment

TOTAL NON-CURRENT ASSETS

TOTAL ASSETS

LIABILITIES

CURRENT LIABILITIES

Trade and other payables

TOTAL CURRENT LIABILITIES

TOTAL LIABILIT IES

NET ASSETS

EQUITY

Issued capital

Accumulated losses

TOTAL EQUITY/(DEFICIENCY)

Note

11

12

13

14

14

14

2011

$

Consolidated

362

7,620

7,982

7,982

225,675

225,675

225,675

(217,693)

15,226,340

(15,444 ,033)

(217,693)

2010

$

83,289

6,520

89,809

1

1

89,810

220,237

220,237

220,237

(130,427)

15,065.472

(15,195,899)

(130,427)

The consolidated statement of financial position should be read in conjunction with the notes to the financial

statements.

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ABN39115621317

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 201 1

Balance at 1 July 2009

Total comprehensive loss for the year

Transactions with owners, recognised directly in equity

Contributions by and distributions to owners

Shares issued 10 convertible note holder

Shares issued 10 directors and consultants as share-based payments

Shares issued 10 shareholders - right issue

Shares issued to shareholders

Balance at 30 June 2010

l oss

Total other comprehensive income

Total comprehensive loss for the year

Transactions with owners, recog nised directly in equity

Contributions by and distributions to owners

Shares issued to directors and consultants as share-based payments

Shares issued to shareholder

Balance at 30 June 2011

Share capital

$

14,790,222

25,000

66,000

8 ,750

175,500

15,065,472

50,000

110,868

15,226,340

Accumulated tosses

$

(14,882,318)

(313,581)

(1 5 ,195,899)

(248 ,134)

(248.134)

(15,444 ,033)

Total

$

(92 ,096)

(313,581)

25,000

66,000

8,750

175,500

(130,427)

(248,134)

(248,134)

50,000

110,868

(217,693)

The consolidated statement of changes in equity should be read in conjunction with the notes to the financial

statements

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ABN 39 115621317

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2011

Consolidated

CASH FLOWS FROM OPERATING ACTIVITIES

Commercial Ready Grant funds received

Cash paid to suppliers and employees

Income tax - R & D concession refund received

Interest received

Interest paid

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of property, plant & equipment

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issue of share capital

Net cash provided by (used in) used in financing activities

Net (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of financial year

Cash and cash equivalents at end of financial year

Note

9

18

14

11

2011

$

(358.433)

153,545

2,328

(326)

(202,886)

9,091

9,091

11 0,868

110,868

(82,927)

83,289

362

2010

S

56,106

(512,579)

149,232

1,915

(305,326)

188,750

188,750

(116,576)

199,865

83,289

The consolidated statement of cash flows should be read in conjunction with the notes to the financia l statements.


ABN 39115621317

1. Reporting entity

NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS


Revetec Holdings Limited (the "Company") is a company domiciled in Australia. The address of the Company's registered office is Level 4, 13-15 Moore Street, Liverpool , New South Wales, Australia. The consolidated financial report of the Company as at and for the year ended 30 June 2011 comprises the Company and its subsidiaries (together referred 10 as the ~Group") .

The Group primarily is involved in the research, design and development of combustion engines for various fuel applications, known as the CCE design technology.

2. Basis of preparation

(a) Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the COfporations Act 2001 .

The consotidated financial report of the Group complies with International Financial Reporting Standards (IFRSs) adopted by the International Accounting Standards Board (lASS).

The consolidated financial report were authorised for issue by the Board of Directors on 30 March 2013.

(b) Bas is of measurement

The consolidated financial statements have been prepared on the historical cost basis.

(c) Going concern

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business operations and the realisation of assets and settlement of liabilities in the ordinary course of business.

For the year ended 30 June 2011 , the Group:

• Sourced additional funding of $110,868 from share issues, and $153,545 from the research and development tax concession; and

• Incurred an operating loss of $248.134 and had negative cash flows from operations of $202 ,886. At 30 June 2011 the Group had trade and other payables of $225,675, net liabilities of $217,693 and had minimal cash reserves of $362. Included in the trade and other payables are statutory obligations which were overdue at 30 June 2011 in the amount of $57,308 superannuation payable with a potential GST liability of $86,425 which was incurred by a related deregistered entity.

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ABN39115621317

NOTES TO THE CONSOLIDATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

2. Basis of preparation (continued)

(c) Going concern (continued)

The directors have prepared cash flow projections that support the Group's ability to meet its obligations, incorporating the key assumptions above. To continue as a going concern, it will be necessary for the Group 10:

Complete verification testing in Turkey to enable "proof of concept" that Revetec technology is not fuel specific and is in fact purely a mechanical advantage system; Recover from Revelec Technologies India Private Limited pursuant to our commercial agreement approximately $300,000 in August 2013; Receive approximately $99,000 in respect of the research and development tax incentive and continue to receive the research and development tax concessions in the next financial year;

In the event that the Group cannot continue as a going concern, they may not realise their assets or settle their liabilities in the normal course of operations and at the amounts stated in the financial report.

(d) Functional and presentation currency

These consolidated financial statements are presented in Australian doJlars, which is the Company's functional currency and the functional currency of the Group.

le) Use of estimate and judgements

The preparation of consolidated financia l statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets , liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most Significant effect on the amount recognised in the consolidated financial statements are included in the following notes:

• Note 2(c) Going concern

(f) Changes in accounti ng po licies

Presentation o( transactions recognised in other comprehensive income

From 1 July 2012 the Group applied amendments to AASB 101 Presentation of Financial Statements outlined in AASB 2011-9 Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income. The change in accounting policy ooly relates to disclosures and has had no impact on consolidated earnings per share or net income. The changes have been applied retrospectively and require the Group to separately present those items of other comprehensive income that may be reclassified to profit or loss in the future from those that will never be reclassified to profit or loss. These changes are included in the statement of profi t or loss and other comprehensive income.

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ABN 39115621317


3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

(a) Basis of consolidation

(i) Subsidiaries

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until lhe date that control ceases.

(il) Transactions eliminated on consolidation Inlra-group balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-gfoup transactions, are eliminated in preparing the consolidated financial statements.

(b) Property, plant and equipment

m Recognmon and measu'emen'

Items of property, plant and equipment are measured at cost or deemed cost less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Any gain and loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

(ii) Depreciation

Depreciation is charged 10 the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.

The estimated useful lives in Ihe current and prior periods are as follows:

leasehold improvements

plant and equipment

fixtures and fittings

motor vehicles

15 years

4 years

4 years

5 years

The residual value, the useful life and the depreciation melhod applied to an asset are reviewed at each reporting date

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ABN 39 115621 317



3. Significa nt accounting policies (continued)

(c) Intangible assets

(11 Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical

knowledge and understanding , is recognised in the profit or loss as incurred.

Development activities involve a plan or design for the production of new or substantially improved products

and processes. Development expenditure is capitalised only if development costs can be measured reliably,

the product or process is technically and commerdally feasible , future economic benefits are probable. and

the Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overheads that are directly

attributable to preparing the asset for its intended use and capitalised borrowing costs. Other development expenditure is recognised in the profit or loss as incurred.

Capitalised development expenditure is measured at cost less accumulated amortisation and accumulated

impairment losses (see accounting policy (d».

(d ) Impairment

(i) Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence

that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one

or more events that occurred after the initial recognition of the asset, and that the loss event(s) had an

impact on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference

between its carrying amount, and the present value of the estimated future cash flows discounted at the Original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining

financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the

impairment loss was recognised . For financial assets measured at amortised cost and available-far-sale financia l assets that are debt securities, the reversal is recognised in profit or loss.


ABN 39115 621 317

NOTES TO THE CONSOUOATE FINANCIAL STATEMENTS


3. Significant accounting policies (continued)

(d) lmpainnent (continued)

(ii) Non·financial assets

The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-Iax discount rate that refleds current mar1<et assessments of the time value of money and the risks specific to the asset. For Impairment testing. assets are grouped together into the smallest group of assets that generate cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the -cash generating unit").

An impainnentloss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash

flows that largely are independent from other assets and groups. Impainnent losses are recognised in profit or loss. Impainnent losses recognised in respect of cash-generating units are allocated first to reduce the

carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.

In respect of other assets, impainnent losses recognised in prior periods are assessed at each reporting

date for any indications that the loss has decreased or no longer exists. An impainnent loss is reversed if there has been a change in the estimates used to delennine the recoverable amount. An impainnent loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that 'NOUld have been detennined, net of depreciation, if no impainnent loss had been recognised.

(e) Financial instruments

(I) Non-derivative financial Instruments

Non-derivative finandal instruments comprise investments in equity securities. trade and other receivabl~ .

cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognised initially at fair value plus. for instruments not at fair value through profit Of loss, any directly attributable transaction costs. Subsequent to initial recognition nonderivative financial instruments are measured as desaibed below.

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognlsed if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control Of substantially all risks and rewards of the asset.

Regular way purchases and sales of financial assets are accounted for at trade date, i.e ., the date that the Group commits itself to purchase or sett the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.

"


ABN 39115 621317



ee) Financial iO$truments (continued)

(I) Non-derivative financial instruments (continued)

Cash and cash equivalents comprise cash balances and eaU deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are induded as a component of cash and cash equiva!ents for the purpose of the statement of cash flows.

Other financial instruments

Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

(ii) Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

Dividends

Dividends are recognised as a liability in the period in which they are declared.

Convertible note

Convertible note arrangements that will be settled by the Company delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash is recognised as an equity instrument. The equity instrument is measured as the amount received under the arrangement. Changes in the fair value of an equity instrument are not recognised in the financial statements.

Share based payments

Goods or services received or acquired in a share-based payment transaction are recognised when the Group obtains the goods or as the services are received. The Group recognises a corresponding increase in equity if the goods or services were received in an equity-settled share-based payment transaction or a liability if the goods 0( services were acquired in a cash-settled share-based payment transaction.

For equity-settled share-based paymenltransactions, the Group measures the goods or services received, and the corresponding increase in equity, directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity cannot estimate reliably the fair value of the goods or services received, the entity shall measure their value, and the corresponding increase in equity, indirectly. by reference to the fair value of the equity instruments granted.

"


ABN 39115 621317



(f) Revenue

(i) Goods sold and services rendered

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of retums, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred 10 the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is I'lO continuing management involvement with the goods, and the amount of revenue can be measured reliably.

Revenue from services rendered is recognised in the income statement in proportion to the stage of

completion of the transaction at the reporting date. The stage of oompletion is assessed by reference to surveys of work perfonned.

(ii) Govemment grants

Government grants are recognised in the balance sheet initially as deferred income when there is reasonable assurance that they will be received and that the Group will comply with the conditions associated with the grant.

Grants that compensate the Group fOf expenses incurred are recognised as other income in the income statement on a systematic basis in the same periods in whiCh the expenses are Incurred. Grants that compensate the Group for the cost of an asset are recognised in the income statement as other income on a systematic basis over the useful life of the asset

(g) Leases

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the lolallease expense and spread over the lease term.

(hi Finance Income and c:osts

Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance expenses comprise interest expense on borrowings. All borrowing costs are recognised in profit or loss using the effective interest method.

Foreign currency gains and losses are reported on a net basis.

20

REVETEC HOLDiNGS LIMITED AND ITS CONTROLLED ENTITIES

ABN 39115 621317



(i) Income tax

Income tax expense comprises current and deferred tax. Income lax is recognised in the income statement exceptio the extent that it relates 10 items recognised directly in equity, in which case it is recognised in equity.

The current income tax benefit in the form of research and development tax concessions are recognised on receipt and relate to research and development expenses incurred in the previous financial year. Income tax benefits are not recognised as a receivable at the end of each financial year, as they are not considered recoverable until assessed and paid by the Commissioner of Taxation. Rather they are disclosed as an unrecognised deferred tax asset.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to Investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on laws that have been enacted or substantivelyenacted by the reporting date. Deferred lax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profils will be

available against whidl the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised.

The Company and ils wholly owned Australian resident subsidiaries have not elected 10 form a tax Group.

(j) Good and services tax

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the assel or as part of the expense.

Receivables and payables are staled with the amount of GST included. The net amount of GST recoverable from, or payable 10, the ATD is induded as a current asset or liability in the balance sheet. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from , or payable to, the ATD are classified as operating cash flows.

"


ABN 39115 621317



(k) Eamings per share

The Group presents basic and diluted eamings per share (EPS) data for its ordinary shares. Basic EP$ is

calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profrt or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilulive potential ordinary shares, which comprise convertible notes and share options granted 10 employees.

(I) Foreign currency transactions

Transactions in foreign currencies are translated to the respedive functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional rurrency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period. Foreign currency differences arising on retranslation are recognised in profrt or loss.

(m) New standard and interpretations not yet adopted The following standards, amendments 10 standards and interpretations are effective for annual periods beginning after 1 July 2011, and have not been applied in preparing these consolidated financial statements:

Contingent consideration

The fair value of contingent consideration is calculated using the income approach based on the expected payment amounts and their associated probabilities. When appropriate, it is disclosed to present value.

22


A6N 39 115621 317



4. Determination of fair values

A number of the Group's accounting policies and disclosures require the determination of fair value, for both

financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or

disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific 10 that asset or liability.

(i) Trade and other receivables The fair value of trade al'\d other receivables is estimated as the present value of Mure caSh flows , discounted at the market rale of interest at the balance dale.

Ili) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows , discounted at the maJ1(et rate of interest at the balance date.

(iil) Share-based payments

The fair value of share based payments are measured by reference to the fair value of the services

provided.

5. Segment reporting

The Group comprises one main business segment being engine development. This incorporates the

research and design of petrol and diesel application engines.

The Group'S business segment typically operates in Australia. During the year ended 30 June 2011 there were no revenues, assets or significant capital expenditure In this geographical segment.

23


ABN 39115 621317

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


Consolidated

Note 2011

$

2010

$

6. Other income

Commercial ready grant income

Gain on sale of plant & equipment

Total revenue

7. Other expenses

lease payments

Fees and charges

Patents and trade maf1(s

Repairs and maintenance

Consultants fees

Other

8. Auditors' remuneration

Audit services

auditing or reviewing the financial report

Other audit services

9,091

9,091

35,750

1,832

30,460

57,535

125,577

95,918

95,918

39,000

35,849

30,268

183

11 ,000

65,836

182,136

20,500

6,700

27,200

24


ABN 39115 621317

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2011

Consolidated

9. Income tax expense/(benefit)

Recognised in the income statement

Current tax (benefit)

Current year

Total income tax (benefit) in the income statement

Numerical reconciliation between tax benefits and pre-tax net loss

Loss before tax

Income tax using the domestic corporation tax rate of 30% (2010: 30%)

Increase in Income tax expense due to:

Effect of tax losses and temporary differences not recognised

Decrease in income tax expense due to:

Research and development tax concession received

Income tax (benefit) on pre-Iax nelloss

Unrecognised deferred tax assets

2011

$

(153,545)

(153,545)

(401 ,679)

(120,504)

120.504

(153,545)

(153,545)

Deferred tax assets have not been recognised in respect of the following items:

Tax losses

Deductible temporary differences

1,531,714

37,658

1,569.3n

2010

$

(149,232)

(149,232)

(464,813)

(139,444)

139.444

(1 49.232)

(149,232)

1,411 ,210

37,658

1.448.868

The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits from.

"

REVETEC HOLDiNGS LIMITED AND ITS CONTROLLED ENTITIES

ABN 3911 5 621317



Consolidated

10. Loss per share

Basic loss per share

2011

$

2010

$

The calculated of basic loss per share at 30 June 2011 was based on the loss attributable to ordinary

shareholders of $248,134 (2010: $313,581) and a weighted average number of ordinary shares

outstanding of 241 ,983,233 (2010: 237,624,935), calculated as follows:

Loss attributable to ordinary shareholders

Weighted average number of ordinary shares

Issued ordinary shares at 1 July

Effect of shares issued during the year

Weighted average number of ordinary shares at 30 June

Diluted loss per share

(248 ,134)

Number

241 ,089.972

893,261

241 ,983.233

(3l3,58l)

Number

234.1 11 ,757

3,513,178

237,624,935

The calculated of diluted loss per share at 30 June 2011 was based on loss attributable to ordinary

shareholding (diluted) of$248,l34 (2010: $313,581 ) and a weighted average number of ordinary shares

(diluted) outstanding during the financial year ended 30 June 2011 of 241,983,233 (2010: 237,624,935),

calculated as follows:

Loss attributable to ordinary shareholders (diluted)

Weighted average number of ordinary shares (diluted)

Weighted average number of ordinary shares at 30 June

Weighted average number of ordinary shares (diluted) at 30

June

(248 ,134)

241 ,983,233

241 ,983,233

(313,581)

237,624.935

237,624.935

26


ABN 39 11 5 621 317

NOTES TO TH E CONSOLIDATED FINANCIAL STATEMENTS


Consolidated

11 . Cash and cash equivalents

Cash at bank and in hand

Reconciliation of cash

Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of financial position as follows:


12. Property, plant & equipment

leasehold improvements

At cost

Accumulated depreciation

Plant and equipment

At cost


Fixtures and frttings

At cost


Motor vehicles

Alcosl


201 1

$

362

362

362

362

7,048

(7,048)

59,577

(59,577)

37,414

(37.414)

34,398

(34,398)

2010

$

83,289

83,289

83,289

83,289

7,048

(7,048)

59,577

(59,576)

1

37,414

(37.414)

34,398

(34,398)

27


ABN 39 115 621317



CONSOUDATEO

12. Property, plant & equipment (continued)

a. Movements in carrying amounts

2011

$

2010

$

Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year.

Leasehold improvement

Opening balance all July

Depreciation expense

Carrying amount at 30 June

Plant & equipment

Opening balance at 1 July



Fixtures & fittings




Motor vehicles


Depredation expense

Carrying amount al 30 June

13. Trade and other payables

Trade payables

Other accruals & payable

Superannuation payable

PAYG payable

GST payable

Total current trade and other receivables

(1 )

36,705

25,985

57,308

19,251

86,426

225,675

2,345

(2,344)

44,318

21 ,581

42,408

23,334

88,596

220,237

"


ABN 39 115 621 317


14. Capital and reserve

Share capital

Ordinary shares

On issue 1 July - fully paid

Issued 10 convertible note holder

Issued to directors and consultants as share-based payments

Issued to shareholders - rights issue

Issued to shareholders - other

On issue at 30 June - fully paid

2011

Number

241,089,972

416,667

923,900

242,430,539

2010

Number

234,111 ,757

1,035.715

2,380,000

350,000

3,212,500

241 ,089,972

Effective 1 July 1998, the Company Law Review Act abolished the concept of par value shares and the concept of authorised capital. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. In the event of winding up of the Group, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds of liquidation.

Convertible notes

On 10 February 2009, the Group executed a deed of variation to the amended convertible loan facility

dated 27 July 2006. The new terms of the loan facility provided that $122 ,036 of funds was able to be drawn down over 6 months to July 2009, with specific terms of receipt including $32 ,026 in February 2009, and $15,000 per month February inclusive and for the 5 months thereafter. The deed of variat ion also provided that the note holder will be released from obligations under the convertible note instrument dated 9 November 2005, and all subsequent variations and addendums, upon the Company receiving all advances of funds within the periods stipulated above.

29


ABN 39115 621317


14. Capital and reserve (continued)

Convertible notes (continued)

Amounts received and ordinary shares issued, under the terms of this 10 February 2009 variation to the

amended convertible nole facility, during the years ended 30 June 2009 and 30 June 2010:

Date amount received Date share issued

14 May 2009

29 March 2010

22 July 2009

4 April 2010

$

2011 2010

Amount $

15,000

10,000

25,000

At 30 June 2010 there is still $50,000 outstanding from this facility (2010: $50,(I()O)

Share·based payments

Amount

750,000

285,715

1,035,715

During the year, compensation by way of ordinary shares issued were provided to director, Sleven Valtas, in recognition of directorship service for the period. The fa ir value of the share based payment was measured by reference to the fair value of the services provided , being $50,000 made up of 416,667 issued at 12 cents per share on 3 February 2011 . The share-based payment was recognised as an expense of $50,000 over the period the services were provided.

Amounts recognised as share capital and ordinary shares issued under these agreements, during the years ended 30 June 2010 and 30 June 2011 :

Share based payments to directors

Share based payments to consultants

Shares issued to other shareholders

2011

$

50,000

Number

41 6,667

2010

$

55,000

11,000

Number

2,000,000

380,000

During the year, the Group issued 923,900 shares each at 12 cents per share to investors as part of capital raisings.

Date shares issued $ Number

30 July 2010 79,800

27 August 2010 4 ,992

3 February 201 1 20,016

27 Apri l 2011 45,000

2 June 2011 660

Dividends

No dividends were paid during the year to 30 June 201 1 (2010: $nil) and no dividends are currently proposed.

665,000

41 ,600

166,800

5,400

5,500


ABN 39115 621 317


15. Financial instruments

Overview

The Group have exposure to the following risks from its use of financial instruments:

• credit risk • liquidity risk • market risk

This note presents infannalion about the Group's exposure to each of the above risks, their objectives and policies and processes for measuring and managing risk. Further quantitative disclosures are included throughout this financial report

The Board of Oirectors has overall responsibility for the establishment and oversight of the risk management framework. Risk management policies are established 10 identify and analyse the risks faced by the Group, to sel appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regular1y to reflect changes in market conditions and the Group's activities. The Group, through their training, management standards and procedures, aim to develop a disciplined and constructive COf"Itrol environment in which all employees understand their roles and obligations.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group's exposure to credit risk relates to holdings of cash and cash equivalents.

Liquidity risk

Liquidity risk is the risk that the Group will nol be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation.

Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses as they fall due; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. Refer to note 2 Cc) Going concem, for further discussion with respect to how the Group are planning to manage liquidity risk over the next t 2 months.

Market risk The Group's exposure to market risk relates to holdings of cash and cash equivalents.


ABN 39115 621317


15. Financial instruments (continued)

(ii) Financial instruments disclosures

Credit risk

Exposure to credit risk

The canying amount of the Group's financial assets represents the maximum credit exposure. The Group's

maximum exposure to credit risk at the balance date was:


Liquidity risk

Consolidated

Carrying amount

2011

$

362

362

2010

$

83,289

83,289

The following are the contractual malurities of financJal liabilities, including estimated interest payments and excluding the impact of netting arrangements:

Consolidated

Non-derivative financial Carrying Contractual 6mths or 6 to 12 ' ·2 2 to 5 More than liabilities amount cash flow less mths years y .. 5y ..

30 J une 2011

Trade and other payables (225,675) (225,675) (225,675)

(225,675) (225,675) (225.675)

30 June 201 0

Trade and other payables (220,237) (220,237) (220,237)

(220,233) (220,233) (220,233)

32


ABN 39115621317


15. Financial instruments (continued)

(ii) Financial instruments disclosures (continued)

Interest rate risk

At the balance date the interest rale profile of the Group's interest-bearing financial instruments was:

Variable rate instruments

Financial assets

Fair values

Fair values versus carrying amounts

Consolidated

Carrying amount

2011

$

362

362

2010

$

83,289

83,289

The Directors consider that the fai r value of the financial assets and liabilities of the Group are represented by their carrying amount.

16. Operating leases

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year

Between one and five years

More than five years

Consolidated

2011

$

3,250

3,250

2010

$

39,000

3,250

42,250

33


ABN 39115621317



16. Operating leases (continued)

The Group leases business premises under an operating lease. On 4 August 2008, the Group (the lease is under the personal name of Bradley Howell·Smith) signed and entered a lease agreement for new business premises. The lease is for a period of 3 years, with an option 10 renew the lease after that dale.

During the year ended 30 June 2011, $35,750 was recognised as an expense in the income statement in respect of operating leases (2010: $39,000) .

17. Group entities

Parent entity

Revelec Holdings Limited

Subsidiaries

Revetec International Pty Ltd

Revolution Engine Technologies Pty Ltd

Country of Incorporation

Australia

Australia

Austral ia

18, Reconciliation of cash flow from operations with profit after income tax

l oss for the period after income tax

Adjustments for.

Depreciation

Share based payments to directors and consultants

Interest income

Gain on sale of property, plant and equipment

Interest expense

Income tax expense/(benefit)

Operating profit before ChangH In wor1dng capital

Changes in prepayments and deposits

Change in trade and other payables

Shares monies received in 2009 but issued in 2010

Change in deferred income

Interest paid

Interest income

Income tax refund - R&O concessions received

Net cash from operating activities

Ownership Interest

2011

100%

100%

2010

100%

100%

Consolidated

2011 2010

$ $

(248, 134) (313,581)

1 4 ,676

50,000 66,000

(2,328) (1,915)

(9,091)

326

(153,545) (149,232)

(362,771) (394,052)

(1,100) 4 ,444

5,438 (42,452)

20,500

(44,913)

(358 ,433) (456.473)

(326)

2,328 1,915

153,545 149,232

(202,886) (305,326)

34


ABN 39115 621317



19. Key management personnel disclosures

Key management personnel compensation The key management personnel compensation included in 'directors fees', 'employee benefits' and 'management fees' are as follows:

Consolidated

2011 2010

Short-term employee benefits

Individual directors and executives compensation disclosures

$

286,816

286,816

$

302,480

83,289

Apart from the details disclosed in this note, no director has entered into a material contract with the Group since the end of the previous financial year and there were no malerial contracts involving directors' interests existing at year-end.

Loans to and from key management personnel and their related parties (consolidated) There were no loans made , guaranteed or secured by any enlity in the Group 10 key management personnel and Iheir related parties.

Other key management personnel transactions with the Company or its controlled entities A number of key management persons, or their relaled parties, hold positions in olher entities that result in Ihem having conlrol or signifteant innuence over the financial or operating policies of those entities.

A number of these entities transacted with the Company or its subsidiaries in the reporting period. The terms and conditions of the transactions with management persons and their related parties were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-direc1or related entities on an ann's length basis.

The aggregate amounts recognised during the year relating to key management personnel and their related parties were as follows:

Key management persons Transactions

Mr CCK Chan (resigned 7

September 2007)

Legal fees

Bookkeeping and

Consol idated

Note 2011 2010

(i)

administration services (I) 17,999

(i) Transactions between the Company or its controlled entities and entities related to Mr CCK Chan have not been disclosed for the year ended 30 June 2010 because Mr CCK Chan resigned as a director of Revetec Holdings Umiled on 7 September 2007.

There were no amounts receivable from and payable to other key management personnel at balance date (2010: nil).


ABN 39115 621317


19. Key management personnel disclosures (continued)

Movements in shares

The movement during the reporting period in the number of ordinary shares in Revetec Holdings limited held, directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:

Directors

Mt BD HoweU-Smith

Mr LW Lee

Mr SN Varlas

Mr Pl B Kelly (apPointed 14 February 2011)

Mr BD Howell-Smith

Mr LW l ee

Mr SN Valtas(appoinled 1 December 2008)

Held at

1 July 2010

32,380,987

30,000

5,906,276

1,557,250

Held at

1 July 2009

32,380,987

30,000

3,906.276

(1) Includes share based payments

20, Non-key management personnel disclosures

Identity of related parties

2011

Number

Purchases (1)

416,667

2010

Number

Purchases (1)

2,000,000

Sales

Sales

Held at

30 June 2011

32 ,380,987

30,000

6,322,943

1,557,250

Held at

30 June 2010

32,380,987

30,000

5,906,276

The Group has a related party relationship w ith its subsidiaries (see note 17) and with its key management personnel (see note 19).

Other related party transactions

The Group had no other related party transactions for the financial year ended 30 June 201 1.

36

=

- 21 .

~

~

0

22.

(;)

~

(i i)

~


ABN 39 115 621 317


Parent entity disclosures

As at, and Ihroughoullhe financial year ending 30 June 2011 the parent entity of the Group was Revetec

Holdings limited .

Consolidated

2011 2010

$ $

Result of the parent entity

Nelloss (248.1 34) (313.581)

Other comprehensive income

Total comprehensive loss (248.134) (313,581)

Financial position of the parent entity at year end

Current assets 7,982 89,809

Non-current asset 2 3

Total assets 7,984 89,812

Current liabilities 225,675 220,239

Totalliabililies 225,675 220,239

Total assets (217,691) (1 30,427)

Equity

Issued capital 2,355,560 2,194,692

Accumulated losses (2,573,253) (2,325.119)

(217,693) (130,427)

Subsequent events

In the period since the balance date an additional 610,659 ordinary shares have been issued in the company, In addition to this, an offer was made in April 2012 and remains current whereby existing shareholders can acquire shares at 12 cents per share with one free option attached. $73,279 has been raised with 610,659 shares issued by 6 February 2013 and 158,999 options exercisable by 30 April 2014 at 12 cents per share.

On 23 Apri l 2012 a shareholder advanced the sum of $15,000 by way of unsecured loan which is returnable upon demand to assist the company to meet Patent renewal expenses.

37

W Wen & CO. Chartered Accountants & Business Advisors Wen Wen, Chartered Accountant, Registered Tax Agent & Registered Company Auditor

INDEPENDENT AUDITOR' S REPORT

TO THE MEMBERS OF REVETEC HOLDINGS LIMITED

Report on the Financial Report

PO Box 4621 North Rocks NSW 21 51

355 North Rocks Road North Rocks t. (02) 9871 3429 f. (02) 8079 6952

e. [email protected]

We have audited the accompanying financial report of Revetec Holdings limited (the company), which comprises the consolidated statement of financial position as at 30 June 2011 , and consolidated statement of comprehensive income, consol idated statement of changes in equity and consolidated statement of cash flows

for the year ended on that date, notes 1 to 22 comprising a summary of significant accounting policies and other explanatory information. and the directors' declaration of the Group comprising the company and the entities it

controlled at the year's end or from lime to time during the financial year.

Directors ' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement whether due to fraud or error. In note 2 (a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements of

the Group comply with International Financial Reporting Standards.

Auditor's Responsibility

Our responsibil ity is to express an opinion on the financial report based on our audit. We conduded our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves perfonning procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement. including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that

gives a true and fair view in order to design audit procedures that are appropnate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's intemal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the Group's financial position and of its performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our modified audit opinion.

Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation

www.wwenandco.com.au

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

Basis (or Adverse Opinion

As described in Note 2(e) to the consolidated financial statements, the consolidated financial statements have been prepared on a going concern basis thal assumes the Group will continue 10 operate in the foreseeable future.

The Group is in a net liability position at the balance sheet date. and as at the date of this report, much of the liabilities outstanding at30 June 2011 remain unpaid, and the Group has been unable to negotiate or secure additional funding in order 10 settle its liabilities as they fall due. As a result. in our opinion it is highly improbable the Group can be considered to be a going concern and thus the preparation of its financial statements on a going concern basis is inappropriate.

In our opinion the financial statements should have been prepared on a liquidation basis as opposed to a going concern basis, to reflect adjustments to reduce the value of assets to their recoverable amount and to ensure completeness of liabilities to reflect that the Group may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. We are unable to determine the total of the required adjustments and provisions with a reasonable degree of accuracy given the Oirectors have not performed this assessment.

Adverse Auditor's Opinion

In our opinion:

a. because of the significance of the matter described in the Basis for Adverse Opinion paragraph. the consolidated financial statements of Revetec Holdings Limited are not in accordance with the Corporations Act 2001. including:

(;) giving a true and fa;, view of Ihe company's financial pos;l;on as al 30 June 2011 and of lis performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a).

WWen&Co.

Wen Wen

Principal

Dale: I, I ' /3 /"lo, c , ~o

40

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W Wen & CO. Chartered Accountants & Business Advisors Wen Wen, Chartered Accountant, Registered Tax Agent & Registered Company Auditor

AUDITOR'S INDEPENDENCE DECLARATION UNDER S307C OF THE CORPORATIONS ACT 2001

TO THE DIRECTORS OF

PO Box 4621 North Rocks NSW 2151

355 North Rocks Road North Rocks t. (02) 98713429 f. (02) 8079 6952

e. [email protected]


I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2011, there have been:

i. no contraventions of the auditor independence requirements as sel out in the Corporations Act 2001 in

relation 10 the audit; and

it no contraventions of any applicable code of professional conduct in relation to the audil.

WWen & Co Chartered Accountants

Wen Wen

Sydney

Date: .;lie-reI, 20/3

Chartered Accountants

Liability llmited by a scheme approved under Professional Standards Legislation

www.wwenandco.com.au

Date post:	16-Mar-2018
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