Electrometals Audit

For personal use only
ELECTROMETALS TECHNOLOGIES LIMITED

ABN 25 000 751 093
ANNUAL REPORT
YEAR ENDED 31 DECEMBER 2012
CONTENTS
Chairmans review
Review of operations
Directors report
Remuneration report
Corporate governance statement
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 audit report to the members
ASX additional information
Corporate directory
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Electrometals Technologies Limited

Annual report for the year ended 31 December 2012
CHAIRMANS REVIEW
Electrometals continues in its quest to enhance and commercialise its patented electrowinning process which we call
emew. This process is particularly applicable in recovering high purity metal from low concentration, polymetallic and
contaminated solutions.
Last year I referred to the range of strategies Electrometals has employed in its attempt to achieve this commercialisation.
This year we have been focusing attention on building our Customer Care packages which are intended to improve our
customers ability to benefit from emew. This strategy also has the advantage of boosting recurring revenues, which
should over time reduce our vulnerability to uncertain large projects. Shareholders will recall the 2 years in 2006 and 2007
when the business briefly enjoyed profitability as a result of two large projects, only to return to significant losses when
this could not be sustained. We are determined to develop a more robust business model and have had some limited
success in building recurring revenue this during the year. We hope that this will continue.
Although still loss making, 2012 was an improvement over 2011. Sales revenue increased 67% to $1.8million. This
revenue achievement is disappointing and is significantly less than in earlier years. However, we have also seen a
reduction in after tax losses by $1million to $1.9million. Perhaps even more important for a company in Electrometals'
position is that our cash position is only $0.3million worse than a year ago, although this is largely due to some significant
prepayments on projects.
There have been further significant management changes during the year. Kevin Powell has been appointed to the board as
Commercial Director and Company Secretary. Colin Barker has resigned as Chief Financial Officer and Company
Secretary. The board wishes to record its appreciation for the significant contribution made by Mr Barker. Dean Foster has
been appointed as Chief Financial Officer. On behalf of the board I would also like to record our thanks to our staff around
the world who continue to drive through the improvements in our business model with energy and determination.
Last year, I expressed the hope that I would be in a position to give a more optimistic review this year. Although
Electrometals is still loss making, I believe we have made a number of improvements throughout the year. I remain
hopeful that this trend will continue.
R Gregory Melgaard
Chairman

REVIEW OF OPERATIONS
The full year results have improved over the same period in 2011. The significantly increased order book at the end of the
year is encouraging; however we have yet to report profits.
Our Customer Care efforts are showing signs of improved performance at some sites. We have installed online
performance monitoring to some of our existing sites and now include this package with all new plants delivered, in order
to assist our customers maximize performance and achieve a greater return on their investment in our technology.
Our focused efforts on key market segments have resulted in some recent sales, which we expect to grow as a normal part
of our business. In particular, we have developed our silver technology and depth of knowledge into what we believe is a
revolutionary and world leading technology bundle a paradigm shift for the silver refining industry.
We have recently installed additional silver plant capacity with new and existing customers and offering Silver as a
Service in order to provide our valuable know-how to our silver customers on an ongoing basis. We plan to continue
developing and delivering world class metals recovery technologies for our key target metals silver, copper and nickel along with the supporting technologies such as ion exchange, evaporation, and gas scrubbing.
We are continuing to work on our strategic plan developed in the first half of 2012 to develop, commercialize and expand
beyond our core emew electrowinning technology. In order to support this expansion, we have hired several key
technical and operations personnel in various parts of the world to strengthen our team.
We have also opened branches in India, UK and Mexico to complement our existing operations in Australia, USA, and
Canada. This has enabled us to be more responsive to our customers needs an essential part of our culture. In order to
showcase our new technologies and applications, built on a stronger emew technology base, we have rebranded and set
up a new website.
While we are now beginning to see the positive effects of our plan on the financial performance of the company we remain
cautious until profitable results are achieved on a sustainable basis.
Ian Ewart
CEO

DIRECTORS REPORT
Your directors present their report on the group consisting of Electrometals Technologies Limited (the company) and
the entities it controlled at the end of, or during, the year ended 31 December 2012.
Directors
The names and details of the companys directors in office during the financial year and until the date of this report are as
follows, including their qualifications, experience and special responsibilities, as well as details of other listed company
directorships held in the last three years. Unless stated, directors were in office for this entire period.
R G Melgaard BSc BEc MBA Chairman
Appointed 20 December 2004.
Chairman of the remuneration and nominations committee and member of the audit committee.
Mr Melgaard was appointed Deputy Chairman on 23 April 2007 and Chairman on 16 February 2012. He is an advisor to
Waverton Capital Limited which holds the private equity interests of the Melgaard family. Waverton has investments in
resources, capital equipment and technology.
Other directorships: Octopus Eclipse Venture Capital Trust 3 Plc
Appointed 21.8.2005 Resigned 1.11.2012
R J H Mills MSc(Business) MA(Economics) Non-executive director
Appointed 2 September 2009
Member of the audit committee and remuneration and nominations committee.
Mr Mills joined the group in February 2008 as chairman of the companys then subsidiary, Kurion Technologies, and was
subsequently appointed to the board of the parent company in 2009. He has over 35 years experience at chief executive
and board level in several large publicly quoted companies, with operating experience both in domestic and export
markets in Europe, USA and Asia.
Other directorships: Octopus Eclipse Venture Capital Trust 4 Plc
Appointed 2.9.2010 Resigned 1.11.2012
M R Nugent FCPA, FAICD Non-executive director
Appointed 26 November 2010
Chairman of the audit committee, member of the remuneration and nominations committee.
Mr Nugent is the former CEO of a large ASX company, Goodman Fielder Limited, with wide experience in a variety of
industries including food, agriculture, engineering and infrastructure. In addition to his industry, management and director
experience, he brings a wide variety of skills to the company, including international business, marketing and finance that
will complement the boards expertise.
Other directorships:
Transgrid
Appointed 26 August 2008
Murrumbidgee Irrigation Limited
Appointed 28 November 2011
I D Ewart P.Eng CEO
Appointed 31 May 2011
Mr Ewart is qualified as a Professional Engineer, specialising in metallurgical process development. He is based in
Vancouver, Canada, and for many years ran the groups activities in North and South America (as well as further afield, as
required), before being appointed Acting CEO on 31 May 2011 and then CEO on 16 February 2012.
Nil
K G Powell MA (Laws), MAICD Commercial Director and Company Secretary
Appointed 21 June 2012
Mr Powell has worked with the group since 2003. He has extensive experience in Europe, Asia and North America with
large multinational public companies, and was formally a Vice President with Honeywell International based in Europe.
Nil
R E Keevers BSc FAusIMM(CP) Non Executive Chairman
Appointed 13 June 2002.
Resigned 15 February 2012
Appointed Chairman 1 February 2004, acting CEO from 22 June 2004 and CEO from 3 August 2005, reverted to nonexecutive Chairman from 31 May 2011. A qualified and experienced geologist, Mr Keevers is an independent company
director and has been a consultant to public companies on technical and financial matters. He previously spent over 10
years as executive director of an Australian share brokerage firm and was for many years an exploration manager with
Newmont in Australia.
Cerro Resources NL
Appointed 13 December 2007

DIRECTORS REPORT continued
Interests in the shares and options of the company
At the date of this report, interests of the directors in the shares and options of Electrometals Technologies Limited were:
R G Melgaard
R J H Mills
M R Nugent
I D Ewart
K G Powell
Ordinary shares
3,885,428
4,600,000
5,106,625
-
Preference shares
-
Unlisted options
5,000,000
1,500,000
Company secretary
Colin Barker BCom ACIS
Appointed 3 August 2005, Mr Barker is a Chartered Secretary and holds a Bachelor of Commerce degree. He has 20
years experience in the role of company secretary with companies listed on the Australian Securities Exchange. Mr
Barker resigned his position as Company Secretary on 6 December 2012 and Mr Kevin Powell has been appointed in the
role.
Dividends
No dividends were declared or paid since the end of the previous year. Directors do not recommend payment of a
dividend.
Principal Activities
The principal activities of the group during the year comprised the design, manufacture and sale of the companys
proprietary emew electrowinning equipment.
Operating and financial review
A review of the operations of the group is set out in the preceding section of this annual report. This review, together with
the Chairmans Review and the sections Significant changes in the state of affairs and Events subsequent to the end of
the financial year, provide a review of activities. Summarised operating results are as follows:
2012
$
1,797,616
(1,123,260)
674,356
67,088
741,444
(2,642,802)
(1,901,358)
50,373
(1,850,985)
Sales
Less: Cost of sales and consumables
Other income
Less: Expenses
Loss from continuing operations before income tax
Income tax benefit
Loss from continuing operations after income tax
2011
$
1,076,964
(1,459,704)
(382,740)
139,892
(242,848)
(2,658,327)
(2,901,175)
(2,901,175)
Change
%
66.9
(23.0)
276.2
(52.0)
405.3
(0.6)
34.5
100.0
36.2
Operating segments
During the year, the groups activities consisted solely of the design, manufacture and sale of electrowinning equipment
for the metals processing industry.

Shareholder returns
In 2011, the company experienced a severe decline in sales which resulted in a significant loss for that period. Throughout
2012, the company generated improved sales results as well as improved gross margins which helped reduce the loss from
2011 levels.
Share price
Shares on issue
Capitalisation $m
Earnings per share
31.12.2012
31.12.2011
31.12.2010
31.12.2009
31.12.2008
0.8c
444,970,735
3.56
(0.42)c
0.9c
441,970,735
3.98
(0.77)c
3.0c
204,357,579
6.13
(1.21)c
2.0c
204,357,579
4.09
(0.79)
1.9c
204,357,579
3.88
(1.13)c
Review of financial condition

Liquidity and capital resources
The consolidated cash flow statement illustrates that there has been a decrease in cash and cash equivalents in the year
ended 31 December 2012 of $265,426 (2011: increase of $1,157,101). The main component of this was asset purchases of
$171,618.
Assets and capital structure
2012
$
Debts:
Trade and other payables
Redeemable preference shares
Cash and short-term deposits
Net debt
Total equity
Total capital employed
449,053
133,333
(1,782,186)
(1,199,800)
1,652,214
452,414
2011
$
419,205
133,333
(2,047,612)
(1,495,074)
3,418,896
1,923,822
The group has cash on hand and no debt. The board has no plans at present to gear the group through accessing loan
funds.
Share issues
In May 2012, 3,000,000 shares and 5,000,000 options were issued to the CEO, Mr Ian Ewart, pursuant to shareholder
approval at the Annual General Meeting on 8 May, 2012. Also in May 2012, a further 6,000,000 options were issued to
senior staff within the business.
2012
$
133,333
133,333
* Cumulative convertible redeemable preference shares are treated as equity for accounting purposes.
Profile of debts
Cumulative convertible redeemable preference shares*
2011
$
133,333
133,333
Capital expenditure
There has been an increase in capital expenditure in 2012 compared to 2011 ($182,631 in 2012 versus $79,501 in 2011).
The difference is not considered material and, in both years, the expenditure reflected the normal replacement of obsolete
items, additions to the capital equipment for components production and additions to the equipment for pilot testing the
companys electrowinning technology.
Treasury policy
The groups treasury function is managed primarily by the Chief Financial Officer in conjunction with the Chief Executive
Officer. The treasury function operates within the overall supervision of the board of directors, who review current cash
flow forecasts at each board meeting. Forward currency hedging is undertaken wherever considered advantageous on
certain large-scale imports of components.

Risk management
The group takes a proactive approach to risk management. The board is responsible for ensuring that risks and
opportunities are identified on a timely basis and that the groups objectives and activities are aligned with the risks and
opportunities identified by the board. The group believes that it is crucial for all board members to be part of this process
and, as such, the board has not established a separate risk management committee. The board as a whole examines issues
and risks identified.
The board has a number of mechanisms in place to ensure that managements objectives and activities are aligned with the
risks identified by the board. These include:
Strategy meetings involving board members and executives, designed to evaluate alternatives and formulate the
overall company strategy.
Implementation of operating plans, budgets and cash flow forecasts approved by the board and the monitoring of
progress against budget.
The review at each board meeting of specific business risks, including overall insurance matters and occupational
health and safety.
Statement of compliance
This operating and financial review is based on the guidelines in The Group of 100 Incorporated publication Guide to the
Review of Operations and Financial Condition.
Significant changes in the state of affairs
In the opinion of the directors, all other significant changes in the state of affairs of the group that occurred during the
financial year under review have been disclosed elsewhere in this report.
Significant events after the balance date
The company announced on 6 February 2013 that it has instituted a buy-back of ordinary shares for holders of
unmarketable parcels of shares in the company.
Likely developments and expected results
The Electrometals group continues to actively market its products both directly and through agents and partners, as
referred to in the review of operations. The group continues to streamline the commercialisation of its emew
electrowinning technology. The group saw improved results throughout 2012 and is hopeful that it will continue to
achieve improved sales of its patented electrowinning plants.
Environmental regulation and performance
There have been no known environmental breaches by the group. Prior to 2011, the group was not subject to any specific
environmental licensing requirements in relation to its operations, apart from government regulations for the use and
storage of certain chemicals at our laboratories at the Gold Coast, Queensland and in the USA. During 2012, the group
completed its plans for demonstration production at its facility at OFallon, Missouri, USA and, as part of this, was
required to submit applications to the state environmental protection agency detailing the proposed method and process of
extracting metals from industrial waste processes and the intended disposal method for any residue. The group does not
envisage any problem in complying with the relevant environmental laws.
Share options
At the date of this report, there are 11,000,000 unlisted options on issue. All the 1,970,000 unlisted options on issue as at
31 December 2011 expired or were forfeited during 2012.
Exercise of options
No options were exercised during the year.

Indemnification and insurance of directors and officers
During the financial year, the company paid premiums amounting to $17,990 in respect of a contract insuring all directors
and officers against costs incurred in defending civil or criminal proceedings that may be brought against them in their
capacity as a representative of the company. The liability cover is $10,000,000.
Meetings of directors
The number of meetings of the directors (including meetings of board committees) held during the year ended
31 December 2012, and the number of meetings attended by each director, are as follows:
Board meetings
Attendance:
R G Melgaard
R J H Mills
M R Nugent
I D Ewart
K G Powell**
R E Keevers
*
**
Eligible
13
13
13
13
9
0
Audit committee
Attended
13
13
13
13
8
0
Eligible
2
2
2
*
*
*
Attended
2
2
2
*
*
*
Remuneration and
nominations committee
Eligible
Attended
1
1
1
1
1
1
*
*
*
*
*
*
Not a member of the relevant committee during the year

Appointed 21 June 2012
Committee membership
At the date of this report, the company has two board committees, an audit committee and a remuneration and nominations
committee. Members acting on the committees of the board during the year were:
Audit
M R Nugent (Chairman)
R G Melgaard
R J H Mills
Remuneration and nominations

R G Melgaard (Chairman)
R J H Mills
M R Nugent
Retirement, election and continuation in office of directors

Mr Melgaard continues in office.
Mr Mills continues in office.
Mr Nugent retires in rotation and, being eligible, will offer himself for re-election.
Mr Ewart, as CEO, continues in office.
Mr Powell, having been appointed since the last Annual General Meeting, will offer himself for re-election.
Mr Keevers resigned from office in February 2012.
Auditor independence and non-audit services

Ernst and Young continue in office in accordance with section 327 of the Corporations Act. No non-audit services were
provided by Ernst & Young during the financial year. We have obtained the following independence declaration from our
auditors:
Auditors Independence Declaration to the Directors of Electrometals

Technologies Limited
As lead audit partner for the audit of the financial statements of Electrometals Technologies Limited for
the financial year ended 31 December 2012, I declare that to the best of my knowledge and belief, other
than the matter set out below, there has been no contravention of the:
(a) auditor independence requirements of the Corporations Act 2001 (the Act) in relation to the
audit; and
(b) any applicable code of professional conduct in relation to the audit.
The review partner for the review for the half year ended 30 June 2012 and year ended 31 December
2011 inadvertently exceeded the period they are permitted to be involved in the audit of the company,
only because of their involvement in those engagements.
Having considered the circumstances indentified above I do not believe that the independence of Ernst &
Young in relation to the audit for the financial year ended 31 December 2012 has been impaired.
Ernst & Young
Brad Tozer
Partner
Brisbane
19 March 2013
Liability limited by a scheme approved

under Professional Standards Legislation

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. Key management personnel (KMP)
are defined as those persons having authority and responsibility for planning, directing and controlling the major activities
of the company and the group, directly and indirectly, including any director (whether executive or otherwise) of the
parent company.
1.
Key management personnel
Directors
Executives
R G Melgaard
R J H Mills
M R Nugent
I D Ewart
K G Powell
R E Keevers
Chairman
Non-executive director
CEO Appointed CEO 16 February 2012
Commercial Director Appointed Director 21 June 2012, Company Secretary 6
December 2012
Former Chairman Resigned 15 February 2012
D J Foster
T Bergfeldt
C C Barker
J C Robinson
R Jain
Chief Financial Officer

Vice President, Sales and Marketing
Company Secretary and Financial Controller Resigned 6 December 2012
Operations Manager
Senior Project Manager
2.
Personnel changes
On 16 February 2012, Mr Melgaard became Chairman of the company, following the resignation from the board of Mr
Keevers, and Mr Ewart was confirmed as CEO, having been Acting CEO since mid-2011.
Mr Powell was appointed a director on 21 June 2012 and took on the role of Company Secretary on 6 December 2012.
Neither Mr Ewart, Mr Keevers nor Mr Powell were paid directors fees, however Mr Ewarts and Mr Powells salaries
were adjusted to reflect their increased responsibilities.
3.
Remuneration philosophy
The key principle of Electrometals remuneration policy is to ensure that remuneration is set at levels that will attract,
motivate, reward and retain personnel to improve business results and thereby maximise stakeholder benefit.
Remuneration is reviewed annually to ensure executive pay is competitive with the market. The expected outcomes of the
remuneration structure are:
(a)
Attraction of high quality management to the group
(b)
Retention and motivation of key personnel
(c)
Performance incentives that allow executives to share in the success of the group.
4.
Remuneration and nominations committee
The company has a remuneration and nominations committee which undertakes the role of reviewing and determining the
remuneration of executive directors and key management personnel. The remuneration of non-executive directors is also
determined by the committee, within the maximum amount approved by the shareholders from time to time. The
committee assesses the appropriateness of the nature and amount of executive remuneration on a periodic basis, by
reference to relevant employment market conditions, with the overall objective of ensuring maximum stakeholder benefit
by the retention of a high-quality, high-performing director and executive team.
5.
Executive remuneration
Remuneration levels and mix

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 for group and individual performance
Align the interests of executives with those of shareholders
Ensure total remuneration is competitive by market standards
10

In determining the level and make-up of executive remuneration, the remuneration committee reviews market conditions
and remuneration levels at comparable companies. Recently, the majority of executive remuneration has been fixed, with
any bonuses being paid at year-end, based on an assessment by the CEO and remuneration committee of the individuals
contribution and a general consideration of the groups revenue and results. During 2010, the group began to implement a
more formal structure, instituting a bonus scheme consisting of (a) a quantitative element based on the groups annual
results and (b) a qualitative element based on an assessment of individual performance and contribution during the year.
Structure
Remuneration consists of the following key elements:
Fixed remuneration - Base salary, superannuation and non-monetary benefits;
Variable remuneration
short-term incentive (STI)
long-term incentive (LTI)
The proportion of fixed remuneration and variable remuneration (potential short-term and long-term incentives) for each
executive is set out in tables 1 and 2 on page 13.
Fixed remuneration
Currently, all executive fixed remuneration is by salary package only, with an election to apportion this between salary
and superannuation in the form of salary sacrifice. It is intended that the structure should be optimal for the recipient
without creating undue cost for the group. There are no guaranteed base salary increases fixed in the contract of any
executive. The fixed remuneration component of executives is detailed in tables 1 and 2.
Variable remuneration short-term incentive (STI).
The group operates an annual STI program that is available to executives and awards a cash bonus subject to a
combination of achieving corporate budget targets and other non-financial key measures specific for each executive. The
total potential STI available is set at a level so as to provide sufficient incentive to executives to achieve the operational
targets but also to ensure that the cost to the group is reasonable in the circumstances. However, the STI program is solely
discretionary and is considered on an ongoing basis by the Remunerations Committee.
STI awards for 2012 and 2011 financial years
No bonuses were paid during 2012 or 2011.
Variable remuneration long-term incentive (LTI)
The objectives of the LTI plan are to (a) reward executives and other staff in a manner that aligns remuneration with the
creation of shareholder wealth and (b) reward staff for their continued loyalty. As such, LTI grants delivered in the form
of share options issued under the companys employee share option plan are made to (a) executives who are able to
influence the generation of shareholder wealth and thus have an impact on the groups performance in the long-term and
(b) staff who remain with the company for an extended period of time.
LTI share options
LTI grants to staff in the form of share options are decided by the remuneration and nominations committee. There is no
qualifying period, no performance hurdle and there are no specific conditions as to the length of option or vesting period.
Options are typically granted for five years at a specific exercise price, vesting in four annual equal tranches, with the first
tranche vesting up to 12 months after the date of grant. If an option holder ceases employment prior to the options vesting,
the options are forfeited. If the options are vested at the time of cessation of employment, the option holder has 30 days
after the last day of employment to exercise the options, unless the cessation of employment is due to death or disability.
LTI awards
11,000,000 share options were issued in 2012. There were no share options issued in 2011.
Hedging of equity awards
The conditions of the companys employee share option plan and the companys trading policy provide that a recipient of
options may not transfer them, encumber them or otherwise deal with them.
11

6.
Company performance and its link to remuneration
The following table sets out company performance figures for the years 2008-2012.
Revenue
Net profit / (loss)
Share price
Earnings per share
2012
2011
2010
2009
2008
1,797,616
(1,850,985)
0.8c
(0.42)c
1,076,964
(2,901,175)
0.9c
(0.77)c
3,947,935
(2,441,524)
3.0c
(1.21)c
3,446,070
(1,582,993)
2.0c
(0.79)
6,721,817
(2,296,452)
1.9c
(1.13)c
Company performance and its link to short-term incentives

The financial performance measures driving STI payment outcomes are revenue and net profit. Due to the losses in recent
years, short-term incentive rewards were last paid in 2008 in relation to the 2007 year.
Company performance and its link to long-term incentives
The performance measure driving LTI vesting is the companys profitability and its resultant share price. Due to losses in
recent years, the share price has usually been below exercise price and vested options have not been exercised.
7.
Employment contracts
All key management personnel have rolling contracts.

Standard key management personnel termination provisions are as follows:
Resignation
1 month
Payment in lieu of
notice
1 month
Termination for cause
None
None
Termination in cases
of death, disablement,
redundancy or notice
without cause
As per local
legislation
As per local
legislation
8.
Notice period
Treatment of any
STI on termination
Unvested awards
forfeited.
Unvested awards
forfeited.
Board discretion
Treatment of any
LTI on termination
Unvested awards
forfeited.
Unvested awards
forfeited.
Board discretion
Non-executive director remuneration
Objective
The board seeks to aggregate remuneration at a level that enables the company to attract and retain directors of the highest
calibre, while incurring a cost that is acceptable to shareholders.
Structure
The constitution of Electrometals and the ASX listing rules specify that the aggregate fees payable to non-executive
directors for their service as board members are set by shareholders in general meeting. The fees were last set at $120,000
at the AGM on 30 May 2006. The figure is reviewed annually, to determine the apportionment between directors and
whether shareholder approval should be sought for the level to be increased, and the board of directors is guided by the
level of fees paid to non-executive directors of comparable companies. Each non-executive director received an
annualised fee of $32,700 during 2012 (2011: $32,700), and there are no additional fees for serving on board committees.
Additional remuneration
Under clause 13.16 of the companys constitution, non-executive directors may also be paid for extra duties performed,
separate from their duties as a board member, and Mr Melgaard received additional fees in both 2012 and 2011. There are
no arrangements put in place by the company to facilitate non-executive directors acquiring shares in the company and
they do not receive retirement benefits or participate in any incentive programs. The remuneration of non-executive
directors for the 2012 and 2011 years is detailed in tables 1 and 2 of this report.
12

Table 1: Remuneration for the year ended 31 December 2012
Short-term
Name
Salary and
fees
$
Non-executive directors
R G Melgaard*
43,600
R J H Mills
32,700
M R Nugent
30,000
106,300
Sub-total
Post employment
Long-term
Cash
bonus
Other
Superannuation
Retirement
benefits
Long
service
leave
Executive directors
I D Ewart**
190,087
K G Powell***
129,052
R E Keevers****
Other key management personnel
T Bergfeldt
48,123
D J Foster
13,077
C C Barker
108,165
J C Robinson
107,831
R Jain
63,505
659,840
Sub-total
766,140
Total
Sharebased
Options
Total
Percentage
performance
related
2,700
2,700
43,600
32,700
32,700
109,000
45,000
-
11,615
5,000
27,498
8,250
-
262,585
148,917
5,000
27.61%
5.54%
0.00%
8,657
53,657
53,657
1,177
9,735
5,085
5,715
38,327
41,027
5,499
8,250
3,300
52,797
52,797
48,123
14,254
123,399
129,823
72,520
804,621
913,621
0.00%
0.00%
4.46%
6.35%
4.55%
* Mr RG Melgaard had some additional fees for executive work undertaken.

** Mr ID Ewart was awarded 3,000,000 shares during 2012.
*** Mr KG Powell was appointed as a director on 21 June 2012.
**** Mr RE Keevers resigned on 15 February 2012
Table 2: Remuneration for the year ended 31 December 2011
Name
Short-term
Post employment
Salary and
fees
Cash
bonus
Other
benefits
Superannuation
Retirement
benefits
Non-executive directors
R G Melgaard*
81,725
R J H Mills
32,690
M R Nugent
32,959
147,374
Sub-total
Executive directors
I D Ewart **
177,789
R E Keevers
210,225
Other key management personnel
K G Powell
122,936
R J Neve
100,880
C C Barker
103,998
J C Robinson
30,247
GJ Davis***
39,650
785,725
Sub-total
933,099
Total
Longterm
Long
service
leave
Sharebased
Options
Total
Percentage
performance
related
2,966
2,966
81,725
32,690
35,925
150,340
20,240
549
1,561
178,338
230,026
<1
<1
2,314
9,744
12,058
12,058
11,064
9,360
40,664
43,630
110
88
2,308
2,308
134,110
100,880
113,446
32,561
49,394
840,755
991,095
<1
<1
-
*
This includes additional fees of $49,050 for executive work undertaken.
** Mr I D Ewart was appointed as a director on 31 May 2011.
*** Mr GJ Davis is no longer included in other key management personnel.
13

Equity instruments
Table 3: Number of options awarded, vested, and lapsed during the year
Opening
Executive Directors
Ian Ewart
Awarded Award date Fair value

per option
5,000,000
9.5.2012
0.96c
500,000
Vesting
date
9.5.2012
31.3.2013
31.3.2014
31.3.2015
30.6.2008
30.6.2009
30.6.2010
30.6.2011
Number
1,250,000
1,250,000
1,250,000
1,250,000
125,000
125,000
125,000
125,000
Exercise
price
1.5c
1.5c
1.5c
1.5c
12c
12c
12c
12c
Expiry
Vested
Expired
date during year during year
8.5.2017
1,250,000
0
8.5.2017
0
0
8.5.2017
0
0
8.5.2017
0
0
31.8.2012
0
125,000
31.8.2012
0
125,000
31.8.2012
0
125,000
31.8.2012
0
125,000
Closing
9.5.2012
31.3.2013
31.3.2014
31.3.2015
30.6.2008
30.6.2009
30.6.2010
30.6.2011
375,000
375,000
375,000
375,000
25,000
25,000
25,000
25,000
1.5c
1.5c
1.5c
1.5c
12c
12c
12c
12c
8.5.2017
8.5.2017
8.5.2017
8.5.2017
31.8.2012
31.8.2012
31.8.2012
31.8.2012
375,000
0
0
0
0
0
0
0
0
0
0
0
25,000
25,000
25,000
25,000
375,000
375,000
375,000
375,000
0
0
0
0
1,250,000
1,250,000
1,250,000
1,250,000
0
0
0
0
5.9.2007
3.38c
9.5.2012
0.96c
100,000
5.9.2007
3.38c
300,000
800,000
21.6.2006
12.6.2008
2.40c
4.80c
15.9.2008
30.6.2008
30.6.2009
30.6.2010
30.6.2011
300,000
200,000
200,000
200,000
200,000
5c
12c
12c
12c
12c
15.9.2012
31.8.2012
31.8.2012
31.8.2012
31.8.2012
0
0
0
0
0
300,000
200,000
200,000
200,000
200,000
0
0
0
0
0
600,000
9.5.2012
0.96c
9.5.2012
31.3.2013
31.3.2014
31.3.2015
150,000
150,000
150,000
150,000
1.5c
1.5c
1.5c
1.5c
8.5.2017
8.5.2017
8.5.2017
8.5.2017
150,000
0
0
0
0
0
0
0
150,000
150,000
150,000
150,000
Jeremy Robinson
1,500,000
9.5.2012
0.96c
9.5.2012
31.3.2013
31.3.2014
31.3.2015
375,000
375,000
375,000
375,000
1.5c
1.5c
1.5c
1.5c
8.5.2017
8.5.2017
8.5.2017
8.5.2017
375,000
0
0
0
0
0
0
0
375,000
375,000
375,000
375,000
Colin Barker
1,000,000
9.5.2012
0.96c
5.9.2007
3.38c
9.5.2012
31.3.2013
31.3.2014
31.3.2015
30.6.2008
30.6.2009
30.6.2010
30.6.2011
250,000
250,000
250,000
250,000
20,000
20,000
20,000
20,000
1.5c
1.5c
1.5c
1.5c
12c
12c
12c
12c
8.5.2017
8.5.2017
8.5.2017
8.5.2017
31.8.2012
31.8.2012
31.8.2012
31.8.2012
250,000
0
0
0
0
0
0
0
0
0
0
0
20,000
20,000
20,000
20,000
250,000
250,000
250,000
250,000
0
0
0
0
Kevin Powell
Dick Keevers
1,500,000
Key Management Personnel

Ravi Jain
80,000
14

DIRECTORS REPORT - continued

Table 4: Value of options awarded, vested, exercised and lapsed during the year
Remuneration
consisting of
share options
%
Executive directors
I D Ewart
KG Powell
R E Keevers
48,000
14,400
-
16,900
3,380
45,600
13.54%
5.54%
-

JC Robinson
CC Barker
R Jain
14,400
9,600
5,760
2,704
-
6.35%
4.46%
4.55%
Name
Value of options
granted
Value of options
exercised
Value of options
lapsed
This report is made in accordance with a resolution of the directors.
R G Melgaard
Chairman
ID Ewart
Director
Ashmore, Gold Coast

19th March, 2013
15

CORPORATE GOVERNANCE STATEMENT
The board of directors of Electrometals Technologies Limited is responsible for establishing the corporate governance
framework of the group, having regard to the ASX Corporate Governance Council (CGC) published guidelines, as well as
its corporate governance principles and recommendations. The board guides and monitors the business and affairs of
Electrometals Technologies Limited on behalf of the shareholders, by whom they are elected and to whom they are
accountable. The table below summarises the companys compliance with the CGC recommendations.
Recommendation
Principle 1 Lay solid foundations for management and oversight

1.1
Formalise and disclose the functions reserved to the board and those delegated to
management.
1.2
Disclose the process for evaluating the performance of senior executives
1.3
Provide the information indicated in the guide to reporting on Principle 1
Principle 2 Structure the board to add value
2.1
A majority of the board should be independent directors.
2.2
The chairperson should be an independent director.
2.3
The roles of chairperson and CEO should not be exercised by the same individual.
2.4
The board should establish a nomination committee
2.5
Disclose the process for evaluating the performance of the board, its committees and
individual directors
2.6
Principle 3 Promote ethical and responsible decision-making
3.1
Establish a code of conduct to guide directors, the chief executive officer (or equivalent),
the chief financial officer (or equivalent) and any other key executives as to:
the practices necessary to maintain confidence in the companys integrity
the practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders
the responsibility and accountability of individuals for reporting and
investigating reports of unethical practices.
3.2
Establish a policy concerning diversity and disclose the policy and objectives
3.3
Disclose the policy concerning trading in company securities by directors, officers and
employees.
3.4
Principle 4 Safeguard integrity in financial reporting
4.1
The board should establish an audit committee.
4.2
Structure the audit committee so that it consists of:
only non-executive directors;
a majority of independent directors;
an independent chairperson, who is not chairperson of the board;
at least three members.
4.3
The audit committee should have a formal charter.
4.4
Principle 5 Make timely and balanced disclosure
5.1
Establish written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior executive
level for that compliance, and disclose those policies or a summary of those policies.
5.2
Principle 6 Respect the rights of shareholders
6.1
Design a communications policy to promote effective communication with shareholders
and encourage effective participation at general meetings, and disclose that policy or a
summary of that policy.
16
Comply
Yes / No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes

6.2
Yes
CORPORATE GOVERNANCE STATEMENT - continued

Recommendation
Principle 7 Recognise and manage risk

7.1
Establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
7.2
Management is required to design and implement and manage the risk management and
internal control system to manage the companys material business risks and report on
whether those risks are being managed effectively.
The board should disclose that management has reported as to the effectiveness of the
management of those risks.
7.3
Disclose whether the board has received assurance from the CEO (or equivalent) and the
CFO (or equivalent) that the declaration provided in accordance with section 295A of the
Corporations Act is founded on a sound system of risk management and internal control
and that the system is operating effectively in all material aspects in relation to financial
reporting risks
7.4
Principle 8 Remunerate fairly and responsibly
8.1
The board should establish a remuneration committee.
8.2
Structure the remuneration committee so that it:
consists of a majority of independent directors
is chaired by an independent chair
has at least three members
8.3
Clearly distinguish the structure of non-executive directors remuneration from that of
executive directors and senior executives.
8.4
Note 1
Comply
Yes / No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
Refer to the section headed Structure of the board below
Electrometals Technologies corporate governance practices were in place throughout the year ended 31 December 2012.
The Board currently does not have a diversity policy, however will consider this in a future period.
Board functions
The board seeks to identify the shareholder expectations, as well as regulatory and ethical expectations and obligations. In
addition, the board is responsible for identifying areas of significant business risk and ensuring arrangements are in place
to adequately manage those risks. To ensure the board is well equipped to discharge its responsibilities, it has established
guidelines for the nomination and selection of directors and for the operation of the board.
The responsibility for the operation and administration of the group is delegated by the board to the CEO and the
executive management team. The board ensures that these personnel are appropriately qualified and experienced to
discharge their responsibilities and that there are procedures in place to assess their performance. Whilst the board retains
full responsibility at all times for guiding and monitoring the group, it also makes use of two committees. Specialist
committees are able to focus on a particular responsibility and provide informed feedback to the board; to this end, the
board has established the following committees:
Audit
Remuneration and nominations
The roles and responsibilities of these committees are discussed in this corporate governance statement.
The board is responsible for ensuring that managements objectives and activities are aligned with the expectations and
risks identified by the board. The board has a number of mechanisms in place to ensure this is achieved, including:
Board approval of a strategic plan designed to meet stakeholders needs and manage business risk
Ongoing development of the strategic plan, plus approving initiatives and strategies designed to ensure the
continued growth and success of the group
Implementation of budgets by management and monitoring progress against budget, via the establishment and
reporting of both financial and non-financial key performance indicators.
17

Other functions reserved to the board include:

Approving the annual and half-yearly financial reports
Approving and monitoring the progress of major capital expenditure, capital management and acquisitions /
divestitures
Ensuring that any significant business risks arising are identified, assessed, appropriately managed and monitored
Reporting to shareholders.
Structure of the board
The skills, experience and expertise relevant to the position of director held by each director in office at the date of this
annual report are set out in the Directors Report. Directors of Electrometals are considered to be independent when they
are independent of management and free of any business or other relationship that could materially interfere with (or could
reasonably be perceived to materially interfere with) the exercise of their unfettered and independent judgement. In the
context of director independence, materiality is considered from both the group and individual director perspective, and
involves a determination of both quantitative and qualitative measurements. In accordance with the definition of
independence above, and the materiality thresholds set, the following directors of Electrometals are considered to be
independent:
Name
R G Melgaard
R J H Mills
M R Nugent
Position
Chairman
The board recognises the Corporate Governance Councils recommendation that the chairman should be an independent
director. The board further recognises that, given Mr Melgaards prior role as Deputy Chairman of the group, and current
position as Chairman, with some executive responsibilities, together with his number of years service as a director, it can
be argued he does not meet the definition of independence. However, the board considers he is able to provide an insight
and independent judgement to all relevant issues falling within the scope of his role as chairman and hence he is
considered to be independent.
There are procedures in place, agreed by the board, to enable directors in furtherance of their duties to seek independent
professional advice at the companys expense.
The term in office held by each director at the date of this report is as follows:
Name
R G Melgaard
R J H Mills
M R Nugent `
I D Ewart
K G Powell
Term in office
8 years
3 years
2 years
18 months
6 months
Performance
The performance of the board and key executives is reviewed regularly against both measurable and qualitative indicators.
During the reporting period, the remuneration and nominations committee conducted performance evaluations that
involved an assessment of each key executives performance against specific and measurable qualitative and quantitative
performance criteria. The performance criteria against which executives are assessed are aligned with the financial and
non-financial objectives of Electrometals.
Securities trading policy
Under the companys securities trading policy, a director or staff member must not trade in any securities of the company
at any time when they are in possession of unpublished, price-sensitive information or, specifically, in the closed period
between the end of a financial reporting period and the announcement to the Australian Securities Exchange of the results
for that period. Before any trading, the Chairman must be consulted. As required by the ASX listing rules, the company
notifies the ASX of any transaction in the companys securities conducted by directors.
18

Employee share options
The conditions of the companys employee share option plan dated 1 June 2012 provide that an employee receiving
options may not transfer them, encumber them or otherwise deal with them. The share registry has been instructed to refer
any potential transfer of these holdings to the company.
Remuneration and nominations committee

The board is responsible for determining and reviewing compensation arrangements for the directors themselves, the CEO
and the executive team. It is the companys objective to provide maximum stakeholder benefit from the retention of a
high-quality board and executive team, by remunerating directors and key executives fairly and appropriately with
reference to relevant employment market conditions. To assist in achieving this objective, the remuneration and
nominations committee links the nature and amount of executive directors and officers remuneration to the companys
financial and operational performance. The expected outcomes of the remuneration structure are:
Retention and motivation of key executives
Attraction of high-quality management to the company, and
Performance incentives that allow executives to share in the companys success.
For a full discussion of the companys remuneration philosophy and framework and the remuneration received by
directors and executives in the current year, refer to the Remuneration Report, contained within the Directors Report.
There is no scheme to provide retirement benefits to non-executive directors.
At the date of this statement, the remuneration and nominations committee comprises the following directors:
R G Melgaard (Chairman)
R J H Mills
M R Nugent
Audit committee
The board has established an audit committee, which operates under a charter approved by the board. It is the
responsibility of the board to ensure that an effective internal control framework exists within the group. This includes
internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of
assets, the maintenance of proper accounting records and the reliability of financial information, as well as non-financial
considerations such as the benchmarking of operational key performance indicators. The board has delegated to the audit
committee the responsibility for establishing and maintaining a framework of internal control and ethical standards. The
committee also provides the board with additional assurance regarding the reliability of financial information for inclusion
on the financial reports. All members of the audit committee are non-executive directors.
The members of the audit committee during the year were:
M R Nugent (Chairman)
R G Melgaard
R J H Mills
Qualifications of the audit committee members
Messrs Melgaard, Mills and Nugent all have extensive experience at board level, as chairman, managing director and nonexecutive director.
For details on the number of meetings of the audit committee held during the year and the attendees at those meetings,
refer to the Directors Report.
Risk
The board has primary responsibility for determining the companys risk profile and for overseeing and approving risk
management strategy and policies, internal compliance and internal control. The identification and effective management
of risk, including calculated risk-taking, is viewed as an essential part of the company's approach to creating long-term
19

shareholder value. The board has taken the view that it is crucial for all board members to be a part of this process and as
such, has not established a separate risk management committee. The tasks of undertaking and assessing risk management
and internal control effectiveness are delegated to management through the CEO, including responsibility for the day to
day design and implementation of the company's risk management and internal control system. The companys process of
risk management and internal compliance and control includes:
Establishing the companys goals and objectives in a strategic plan, then implementing and monitoring strategies
and policies to achieve them
Identifying and measuring risks that might impact upon the achievement of the companys goals and objectives,
and monitoring the environment for emerging factors and trends that affect those risks, by specifically addressing
risk areas at each board meeting
Formulating risk management strategies to manage identified risks, and designing and implementing appropriate
risk management policies and internal controls
Monitoring the performance of, and continuously improving the effectiveness of, risk management systems and
internal compliance and controls, including an annual assessment of the effectiveness of risk management and
internal compliance and control.
Management reports to the directors at monthly board meetings on the effectiveness of the companys management of its
material business risks. These are seen as:
Sales revenue development and maintenance
Cost factors
Fluctuations in commodity prices
Political instability or sovereign risk in target markets
Other changing operating, market or regulatory environments
CEO and CFO certification
The Chief Executive Officer and the Chief Financial Officer have each provided a written statement to the board that:
Their view provided on the companys financial report is founded on a sound system of risk management and
internal compliance and control, which implements the financial policies adopted by the board, and
The companys risk management and internal compliance and control system is operating effectively in all
material respects.
The board agrees with the views of the Australian Securities Exchange on this matter that, due to its nature, internal
control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the
need for judgement, the use of testing on a sample basis, the inherent limitations on internal control and because much of
the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all
weaknesses in control procedures.
Remuneration
An explanation of the companys remuneration policy is contained within the remuneration report.
20

FINANCIAL STATEMENTS
21

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2012
Notes
Plant sales
Spare parts sales
Laboratory and engineering fees
Royalties
Other sales income
Total sales
Cost of sales
Gross profit
Other income
Interest
Foreign exchange gain
Miscellaneous income
Expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Other expenses
Loss from continuing operations before income tax
Income tax benefit
Loss from continuing operations after income tax
5(a)
6
Other comprehensive income items that may be

subsequently reclassified through profit and loss
Foreign currency translation
Other comprehensive loss for the year, net of income tax
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD
2012
$
1,202,441
268,509
257,544
68,153
969
1,797,616
(1,123,260)
674,356
2011
$
308,219
593,763
154,180
18,796
2,006
1,076,964
(1,459,704)
(382,740)
48,576
18,512
67,088
110,944
12,764
16,184
139,892
(150,419)
(186,913)
(2,123,853)
(181,617)
(1,901,358)
50,373
(1,850,985)
(93,093)
(272,716)
(1,469,240)
(823,278)
(2,901,175)
(2,901,175)
(21,192)
(21,192)
(13,453)
(13,453)
(1,872,177)
(2,914,628)
Earnings per share

Earnings per share for loss from continuing operations attributable
to the ordinary equity holders of the parent
Basic and diluted earnings per share
(0.42)c
(0.77)c
Earnings per share for loss attributable to the ordinary equity

holders of the parent
Basic and diluted earnings per share
(0.42)c
(0.77)c
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
22

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2012
Notes
2012
$
2011
0
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
TOTAL CURRENT ASSETS
9
10
11
1,782,186
670,774
328,781
122,974
2,904,715
2,047,612
552,553
595,638
165,202
3,361,005
12
13
14
228,068
751,822
7,796
987,686
101,427
782,317
8,446
892,190
3,892,401
4,253,195
15
16
17
449,053
1,608,613
158,962
2,216,628
419,205
251,870
111,952
783,027
18
23,559
23,559
51,272
51,272
TOTAL LIABILITIES
2,240,187
834,299
NET ASSETS
1,652,214
3,418,896
37,251,790
84,523
(35,684,099)
1,652,214
37,206,790
45,220
(33,833,114)
3,418,896
NON-CURRENT ASSETS
Receivables
Plant & equipment
Goodwill and other intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES

Deferred income
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
20
21
21
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
23

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2012
Ordinary
shares
At 1 January 2012
Foreign
currency
reserve
Equity
benefits
reserve
Accumulated
losses
$
Total
$
37,073,457
133,333
(123,967)
169,187
(33,833,114)
3,418,896
(1,850,985)
(1,850,985)
(21,192)
(21,192)
(21,192)
(1,850,985)
(1,872,177)
Profit / (loss) for the period

Other comprehensive
income
Total comprehensive
income for the period
Issue of share capital
Preference
shares
45,000
45,000
Share-based payments
60,495
60,495
At 31 December 2012
37,118,457
133,333
(145,159)
229,682
(35,684,099)
1,652,214
Preference
shares
Foreign
currency
reserve
Equity
benefits
reserve
Accumulated
losses
Total
At 1 January 2011
Ordinary
shares
$
33,187,455
133,333
(110,514)
168,877
(30,931,939)
2,447,212
(2,901,175)
(2,901,175)
(13,453)
(13,453)
(13,453)
(2,901,175)
(2,914,628)
Issue of share capital
4,277,037
4,277,037
Share issue expenses
(391,035)
(391,035)
Profit / (loss) for the period

Other comprehensive
income
Total comprehensive
income for the period
310
310
At 31 December 2011
37,073,457
133,333
(123,967)
169,187
(33,833,114)
3,418,896
The above consolidated statements of changes in equity should be read in conjunction with the accompanying notes.
24

CONSOLIDATED STATEMENT OF CASH FLOWS

Note
2012
2011
Cash flows from operating activities

Receipts from customers (including GST)
2,898,165
1,462,959
(3,051,230)
(4,225,166)
16,184
(153,065)
(2,746,023)
55,091
106,266
910
(171,618)
(82,272)
(1,153)
(9,902)
(116,770)
14,092
3,876,471
Loan repayments received
6,777
12,000
Net financing cash inflow (outflow)
6,777
3,888,471
(263,058)
1,156,540
(2,368)
561
2,047,612
890,511
1,782,186
2,047,612
Payments to suppliers and employees (including GST)

Other miscellaneous income
9
Net operating cash outflow
Cash flows from investing activities

Interest received
Sale of assets
Payment for plant and equipment
Payment for patents
Net investing cash inflow (outflow)
Cash flows from financing activities

Proceeds of share issue - net of costs
Net increase / (decrease) in cash held

Net foreign exchange differences
Cash at the beginning of the financial year
9
Cash at the end of the financial year
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
25

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1.
CORPORATE INFORMATION
The consolidated financial report of Electrometals Technologies Limited (the company) for the year ended 31
December 2012 was authorised for issue in accordance with a resolution of directors on 19 March, 2013.
2.
Electrometals Technologies is a company limited by shares, incorporated and domiciled in Australia, having its
registered office and principal office at 28 Commercial Drive, Ashmore 4214, Queensland.
The companys ordinary shares are publicly traded on the Australian Securities Exchange. The nature of the
operations and principal activities of the group are described in note 4.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
(a)
Compliance with IFRS
(b)
New accounting standards and interpretations
(c)
Basis of consolidation
(d)
Business combinations
(e)
Goodwill
(f)
(g)
Revenue recognition
(h)
Income tax and other taxes
(i)
Property, plant and equipment
(j)
Leases
(k)
Intangible assets
(l)
Financial instruments initial recognition and subsequent measurement
(m) Inventories
(n)
Impairment of non-financial assets
(o)
(p)
Convertible preference shares
(q)
Provisions
(r)
Pensions and post-employment benefits
(s)
Share-based payment transactions
(t)
(u)
Contributed equity and preference shares
(v)
Earnings per share
26

Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of
the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian
Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for any
derivatives. The financial report is presented in Australian dollars.
The consolidated entity had a net loss for the 12 months period ending 31 December 2012 of $1,850,985 (year ended 31
December 2011 $2,901,175) and cash outflows from operating activities of $153,065 (year ended 31 December 2011 $2,746,023). The directors continue to seek new contracts for sale of emew technology. The directors believe that
there are reasonable grounds to believe that the company will be able to achieve sufficient sales and related cash inflows
and reduce operating expenditure where necessary to enable them to maintain sufficient cash balances. This belief is
based on the entitys increased order book at the end of the year and its proven technology. No adjustments have been
made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that
might be necessary should the consolidated entity not continue as going concern.
(a)
Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board.
(b)
New accounting standards and interpretations
(i)
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year, except as follows:
The group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of
1 January 2012:
AASB 1054 Australian Additional Disclosures

AASB 1048 Interpretation of Standards
The adoption of the standards or interpretations is described below:

AASB 1054 Australian Additional Disclosures
This standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB.
This standard, with AASB 2011-1 relocates all Australian specific disclosures from other standards to one place and
revises disclosures in the following areas:
(a)
Compliance with Australian Accounting Standards
(b)
The statutory basis or reporting framework for financial statements
(c)
Whether the entity is a for-profit or not-for-profit entity
(d)
Whether the financial statements are general purpose or special purpose
(e)
Audit fees
(f)
Imputation credits.
The adoption of the amendment did not have any impact on the financial position or performance of the group.
AASB 1048 Interpretation of Standards
AASB 1048 identifies the Australian interpretations and classifies them into two groups: those that correspond to an IASB
interpretation and those that do not. Entities are required to apply each relevant Australian interpretation in preparing
financial statements that are within the scope of the standard. The revised version of AASB 1048 updates the lists of
Interpretations for new and amended interpretations issued since the June 2010 version of AASB 1048.
The adoption of the interpretation did not have any impact on the financial position or performance of the group.
27

(ii)
Accounting standards and interpretations issued but not yet effective.
Australian accounting standards and interpretations that have recently been issued but are not yet effective, and have not
been adopted by the group for the annual reporting period ending 31 December 2012, are outlined in the table below.
Title
Summary
Application
date of
standard
Impact
on Group
financial
report
Application
date for
Group
AASB
2011-9
Amendments to
Australian Accounting
Standards -Presentation of
Other Comprehensive
Income
[AASB 1, 5, 7, 101, 112,
120, 121, 132, 133, 134,
1039 & 1049]
This standard requires entities to group items

presented in other comprehensive income on the
basis of whether they might be reclassified
subsequently to profit or loss and those that will
not.
1 July 2012
The
adoption
will result
in the
change of
disclosure
s only
1 January
2013
AASB10
Consolidated Financial
Statements
AASB 10 establishes a new control model that

applies to all entities. It replaces parts of AASB
127 Consolidated and Separate Financial
Statements dealing with the accounting for
consolidated financial statements and UIG-112
Consolidation - Special Purpose Entities.
The new control model broadens the situations
when an entity is considered to be controlled by
another entity and includes new guidance for
applying the model to specific situations,
including when acting as a manager may give
control, the impact of potential voting rights and
when holding less than a majority voting rights
may give control.
Consequential amendments were also made to
other standards via AASB 2011-7.
1 January 2013
Nil
1 January
2013
AASB 11
Joint Arrangements
AASB 11 replaces AASB 131 Interests in Joint 1 January 2013

Ventures and UIG-113 Jointly- controlled
Entities - Non-monetary Contributions by
Ventures. AASB 11 uses the principle of control
in AASB 10 to define joint control, and therefore
the determination of whether joint control exists
may change. In addition it removes the option to
account for jointly controlled entities (JCEs)
using proportionate consolidation. Instead,
accounting for a joint arrangement is dependent
on the nature of the rights and obligations arising
from the arrangement. Joint operations that give
the venturers a right to the underlying assets and
obligations themselves is accounted for by
recognising the share of those assets and
obligations. Joint ventures that give the venturers
a right to the net assets is accounted for using the
equity method.
other standards via AASB 2011-7 and
amendments to AASB 128.
Nil
1 January
2013
Reference
28

Title
Summary
Application
date of
standard
Impact
on Group
financial
report
Application
date for
Group
AASB12
Disclosure of Interests in
Other Entities
AASB 12 includes all disclosures relating to an

entity's interests in subsidiaries, joint
arrangements, associates and structures entities.
New disclosures have been introduced about the
judgments made by management to determine
whether control exists, and to require
summarised information about joint
arrangements, associates and structured entities
and subsidiaries with non-controlling interests.
1 January 2013
Disclosure
only
1 January
2013
AASB13
Fair Value Measurement
AASB 13 establishes a single source of guidance 1 January 2013

for determining the fair value of assets and
liabilities. AASB 13 does not change when an
entity is required to use fair value, but rather,
provides guidance on how to determine fair
value when fair value is required or permitted.
Application of this definition may result in
different fair values being determined for the
relevant assets.
AASB 13 also expands the disclosure
requirements for all assets or liabilities carried at
fair value. This includes information about the
assumptions made and the qualitative impact of
those assumptions on the fair value determined.
Disclosure
only
1 January
2013
AASB
119
Employee Benefits
The main change introduced by this standard is

to revise the accounting for defined benefit
plans. The amendment removes the options for
accounting for the liability, and requires that the
liabilities arising from such plans is recognised
in full with actuarial gains and losses being
recognised in other comprehensive income. It
also revised the method of calculating the
return on plan assets.
The revised standard changes the definition of
short-term employee benefits. The distinction
between short-term and other long-term
employee benefits is now based on whether the
benefits are expected to be settled wholly
within 12 months after the reporting date.
Nil
1 January
2013
AASB
2012-2
Amendments to
Standards -Disclosures Offsetting Financial
Assets and Financial
Liabilities
1 January 2013
AASB 2012-2 principally amends AASB 7
Financial Instruments: Disclosures to require
disclosure of information that will enable users
of an entity's financial statements to evaluate the
effect or potential effect of netting arrangements,
including rights of set-off associated with the
entity's recognised financial assets and
recognised financial liabilities, on the entity's
financial position.
Nil
1 January
2013
AASB
2012-5
Amendments to
Standards arising from
Annual Improvements
2009-2011 Cycle
AASB 2012-5 makes amendments resulting from 1 January 2013

the 2009-2011 Annual Improvements Cycle. The
standard addresses a range of improvements,
including the following:
Repeat application of AASB 1 is permitted
(AASB 1)
Nil
1 January
2013
Reference
29
1 January
2013

Reference
Title
Summary
Application
date of
standard
Impact
on Group
financial
report
Application
date for
Group
Clarification of the comparative information

requirements when an entity provides a third
balance sheet (AASB 101 Presentation of
Financial Statements).
Amendments to
Standards Transition
Guidance and Other
Amendments
AASB 2012-10 amends the following standards: 1 January 2013

AASB 10 Consolidation and related
Standards - clarifies the transition guidance,
in particular that the assessment of control is
to be made at the beginning of the period
AASB 10 is adopted rather that prior
periods. .
AASB 10 and related Standards to defer the
mandatory application by not-for-profit
entities to annual reporting periods
beginning on or after 1 January 2014.
Various editorial amendments to a range of
Australian Accounting Standards and to
Interpretation 12 Service Concession
Arrangements, to reflect changes made to
the text of IFRSs by the IASB
Nil
1 January
2013
AASB
2011-4
Amendments to
Standards to Remove
Individual Key
Management Personnel
Disclosure Requirements
[AASB 124]
This amendment deletes from AASB 124

1 July 2013
individual key management personnel disclosure
requirements for disclosing entities that are not
companies.
Disclosure
only
1 January
2014
This Standard establishes a differential financial 1 July 2013

reporting framework consisting of two tiers of
reporting requirements for preparing general
purpose financial statements:
(a) Tier 1: Australian Accounting Standards
(b) Tier 2: Australian Accounting Standards Reduced Disclosure Requirements
Tier 2 comprises the recognition, measurement
and presentation requirements of Tier 1 and
substantially reduced disclosures corresponding
to those requirements.
The following entities apply Tier 1 requirements
in preparing general purpose financial
statements:
(a) For-profit entities in the private sector that
have public accountability (as defined in
this standard)
(b) The Australian Government and State,
Territory and Local governments
The following entities apply either Tier 2 or Tier
1 requirements in preparing general purpose
financial statements:
(a) For-profit private sector entities that do not
have public accountability
(b) All not-for-profit private sector entities
(c) Public sector entities other than the
Australian Government and State, Territory
and Local governments.
Consequential amendments to other standards to
implement the regime were introduced by AASB
Nil
1 January
2014
AASB
2012-10
AASB1053 Application of Tiers of

Standards
30

Reference
Title
Summary
Application
date of
standard
Impact
on Group
financial
report
Application
date for
Group
2010-2, 2011-2, 2011-6, 2011-11, 2012-1 and

2012-7.
AASB
2012-3
AASB 9
Amendments to
Standards -Offsetting
Financial Assets and
Financial Liabilities
AASB 2012-3 adds application guidance to

1 January 2014
AASB 132 Financial Instruments: Presentation
to address inconsistencies identified in applying
some of the offsetting criteria of AASB 132,
including clarifying the meaning of "currently
has a legally enforceable right of set-off" and that
some gross settlement systems may be
considered equivalent to net settlement.
Nil
1 January
2014
Financial Instruments
AASB 9 includes requirements for the

1 Jan 2015
classification and measurement of financial
assets. It was further amended by AASB 20107 to reflect amendments to the accounting for
financial liabilities.
These requirements improve and simplify the
approach for classification and measurement
of financial assets compared with the
requirements of AASB 139. The main
changes are described below.
(a) Financial assets that are debt instruments
will be classified based on (1) the
objective of the entity's business model
for managing the financial assets; (2) the
characteristics of the contractual cash
flows.
(b) Allows an irrevocable election on initial
recognition to present gains and losses on
investments in equity instruments that are
not held for trading in other
comprehensive income. Dividends in
respect of these investments that are a
return on investment can be recognised in
profit or loss and there is no impairment
or recycling on disposal of the instrument.
(c) Financial assets can be designated and
measured at fair value through profit or
loss at initial recognition if doing so
eliminates or significantly reduces a
measurement or recognition
inconsistency that would arise from
measuring assets or liabilities, or
recognising the gains and losses on them,
on different bases.
(d) Where the fair value option is used for
financial liabilities the change in fair
value is to be accounted for as follows:
The change attributable to changes in
credit risk are presented in other
comprehensive income (OCI)
The remaining change is presented in
profit or loss
If this approach creates or enlarges an
accounting mismatch in the profit or loss, the
effect of the changes in credit risk are also
presented in profit or loss.
Further amendments were made by AASB 20126 which amends the mandatory effective date to
annual reporting periods beginning on or after 1
January 2015. AASB 2012-6 also modifies the
Nil
1 Jan 2015
31

Reference
Title
Summary
Application
date of
standard
Impact
on Group
financial
report
Application
date for
Group
relief from restating prior periods by amending

AASB 7 to require additional disclosures on
transition to AASB 9 in some circumstances.
other standards as a result of AASB 9,
introduced by AASB 2009-11 and superseded
by AASB 2010-7 and 2010-10.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS cont

(c)
Basis of consolidation
Subsequent to 1 January 2010

The consolidated financial statements comprise the financial statements of Electrometals Technologies Limited and its
subsidiaries (as outlined in note 23) as at and for the period ended 31 December each year (the group).
Subsidiaries are all those entities over which the group has the power to govern the financial and operating policies so as
to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether a group controls another entity. The financial statements of
subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In
preparing the consolidated financial statements, all intercompany balances, transactions and unrealised gains and losses
resulting from intra-group transactions have been eliminated in full.
Subsidiaries are fully consolidated from the date on which control is obtained by the group and cease to be consolidated
from the date on which control is transferred out of the group. Investments in subsidiaries held by Electrometals
Technologies Limited are accounted for at cost in the separate financial statements of the parent entity, less any
impairment charges.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the
liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities
assumed are measured at their acquisition date fair value (see note 2(d)). The difference between the above items and the
fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a
discount on acquisition.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
groups cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or
liabilities of the acquire are assigned to those units.
Where goodwill forms part of a cash-generating unit, and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain
or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative
values of the operation disposed of and the portion of the cash-generating unit retained.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are
presented within equity in the consolidated statement of financial position, separately from the equity of the owners of
the parent. Total comprehensive income in a subsidiary is attributed to the non-controlling interest even if that results in
a deficit balance. A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted
for as an equity transaction. If the group loses control over a subsidiary, it:
Derecognises the assets (including goodwill) and liabilities of the subsidiary
Derecognises the carrying amount of any non-controlling interest
Derecognises the cumulative translation differences, recorded in equity
Recognises the fair value of the consideration received
32

Recognises the fair value of any investment retained

Recognises any surplus or deficit in profit or loss
Reclassifies the parent's share of components previously recognised in other comprehensive income to profit or
loss, or retained earnings, as appropriate
Prior to 1 January 2010

Certain of the above mentioned requirements were applied on a prospective basis. The following differences, however, are
carried forward in certain instances from the previous basis of consolidation:
Acquisitions of non-controlling interests prior to 1 January 2010 were accounted for using the parent entity
extension method, whereby, the difference between the consideration and the book value of the share of the net
assets acquired was recognised in goodwill.
Losses incurred by the group were attributed to the non-controlling interest until the balance was reduced to
nil. Any further excess losses were attributed to the parent, unless the non-controlling interest had a binding
obligation to cover these. Losses prior to 1 January 2010 were not reallocated between NCI and the parent
shareholders.
Upon loss of control, the group accounted for the investment retained at its proportionate share of net asset value
at the date when control was lost. The carrying values of such investments at 1 January 2010 have not been
restated.
(d)
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at fair value at the acquisition date and the amount of any noncontrolling interest in the acquiree. For each business combination, the group elects whether it measures the noncontrolling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net
assets. Acquisition costs are expensed as incurred, and included in administrative expenses. When the group acquires a
business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the
separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent
consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in
accordance with AASB 139 either in profit or loss or as a change to other comprehensive income. If the contingent
consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity.
In instances where the contingent consideration does not fall within the scope of AASB 139, it is measured in accordance
with the appropriate AASB.
(e)
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount
recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this
consideration transferred is lower than the fair value of the net assets of the subsidiary acquired, the difference is
recognised in profit and loss. After initial recognition, goodwill is measured at cost less any accumulated impairment
losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the groups cash-generating units that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the group are assigned to those units.
When goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or
loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of
the operation disposed of and the portion of the cash-generating unit retained.
(f)
The groups consolidated financial statements are presented in Australian dollars, which is also the parent companys
functional currency. Each entity in the group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. The group has elected to recycle the gain or loss
that results from the direct method of consolidation, which is the method the group uses to complete its consolidation.
33

Transactions and balances

Transactions in foreign currencies are initially recorded in the group entities at their respective functional currency spot
rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the functional currency spot rate of exchange at the reporting date. All differences arising on
settlement or translation of monetary items are taken to the income statement, with the exception of monetary items which
are designated as part of the hedge of the groups net investment of a foreign corporation. These are recognised in other
comprehensive income until the net investment is disposed of, at which time the cumulative amount is reclassified to the
income statement. Tax credits and charges attributable to exchange differences on those monetary items are also recorded
in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value
in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss
arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value
of the item (i.e. translation differences on items whose fair value gain or loss is recognised in other comprehensive income
or profit or loss is also recognised in other comprehensive income or profit or loss, respectively).
Group companies
On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of
exchange prevailing at the reporting date and their income statements are translated at exchange rates prevailing at the
dates of the transactions. The exchange differences arising on translation for consolidation are recognised in other
comprehensive income. On disposal of a foreign operation, the component of other comprehensive income relating to that
particular foreign operation is recognised in the income statement. Any goodwill arising on the acquisition of a foreign
operation subsequent to 1 January 2005 and any fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of
exchange at the reporting date.
(g)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue
can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the
consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or
duty. The group assesses its revenue arrangements against specific criteria to determine if it is acting as principal or agent.
The group has concluded that it is acting as a principal in all of its revenue arrangements. The specific recognition criteria
described below must also be met before revenue is recognised.
Plant and system sales, laboratory testing and on-site pilot programs
Revenue derived by the parent company from contracts for the supply of electrowinning plants, laboratory testing and onsite pilot programs is recognised by reference to the stage of completion, which is measured by reference to labour hours
incurred to date as a percentage of total estimated labour hours for each contract. Where the contract outcome cannot be
measured reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable. In prior years,
the company only recognised 95% of the contract value to take into account any warranty claims. In the current year,
100% of the contract value is recognised with a provision raised for warrant claims.
Sale of spare parts
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the
costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are
considered passed to the buyer at the time of delivery of goods to the customer.
Interest income
For all financial instruments measured at amortised cost and interest bearing financial assets classified as available for
sale, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts
the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period,
where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance
income in the income statement.
(h)
Income tax and other taxes
Current tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid
to the taxation authorities based on the current periods taxable income. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the reporting date. Current income tax relating to items
recognised directly in equity is recognised in equity and not in the income statement. Management periodically evaluates
34

positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation
and establishes provisions where appropriate. Deferred income tax is provided on all temporary differences at the
reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; or
in respect of taxable temporary differences associated with investments in subsidiaries, associates or interests in
joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, the carry-forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax
losses can be utilised, except:
when the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss.
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, deferred tax assets are only recognised only to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become
probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at tax rates expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are
recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date,
would be recognised subsequently if new information about facts and circumstances changed. The adjustment would
either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the
measurement period or in profit or loss.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST, except that:
when GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST is recognised as part of the acquisition cost of the asset or as part of the expense item as applicable;
and
receivables and payables, which are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and
the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to,
the taxation authority, is classified as part of operating cash flows. Commitments and contingencies are disclosed net of
the GST recoverable from, or payable to, the taxation authority.
35

(i)
Property, plant and equipment
Property, plant and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if
any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term
construction projects if the recognition criteria are met. When significant parts of property, plant and equipment are
required to be replaced at intervals, the group recognises such parts as individual assets with specific useful lives and
depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying
amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and
maintenance costs are recognised in the income statement as incurred. The present value of the expected cost for the
decommissioning of an asset after its use is included in the cost of the respective asset if the recognition criteria for a
provision are met.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets as follows:
Computer equipment
40%
Motor vehicles
20%
Other machinery and equipment 20%
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in
the income statement when the asset is derecognised.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year-end and adjusted
prospectively, if appropriate.
(j)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at
inception date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset, even if that right is not explicitly specified in the arrangement.
Group as a lessee
The group has no finance leases in place. Operating lease payments are recognised as an expense in net income on a
straight-line basis over the lease term. The group has received no operating lease incentives.
(k)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible
assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the income statement in
the year in which the expenditure is incurred. The useful lives of intangible assets are assessed as either finite or
indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in
the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates. The amortisation expense on intangible assets with finite lives is recognised in the income statement in the
expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually
or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective
basis. Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is
derecognised.
36

Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an
intangible asset when the group can demonstrate:
The technical feasibility of completing the intangible asset so that it will be available for use or sale
Its intention to complete and its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the
asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of
sales. During the period of development, the asset is tested for impairment annually.
Patents and licences
Annual patent maintenance costs are recognised as an expense as and when they are incurred. Patent application costs are
capitalised and then amortised over the life of the patent.
(l)
Financial instruments - initial recognition and subsequent measurement
Financial assets
Initial recognition and measurement
Financial assets within the scope of AASB 139 are classified as financial assets at fair value through profit or loss, loans
and receivables, held-to-maturity investments, available-for-sale financial assets, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. The group determines the classification of its financial assets at initial
recognition. All financial assets are recognised initially at fair value plus transaction costs, except in the case of financial
assets recorded at fair value through profit or loss.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the group commits
to purchase or sell the asset. The groups financial assets include cash and short-term deposits, trade and other
receivables, loans and other receivables.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as described below:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss includes financial assets held for trading and financial assets designated
upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are
acquired for the purpose of selling or repurchasing in the near-term. Derivatives, including separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments as defined by
AASB 139. Financial assets at fair value through profit and loss are carried in the statement of financial position at fair
value with net changes in fair value recognised in finance costs in the income statement. Financial assets designated upon
initial recognition at fair value through profit and loss are designated at their initial recognition date and only if the criteria
under AASB 139 are satisfied. The group has not designated any financial assets at fair value through profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR
method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income
statement. The losses arising from impairment are recognised in the income statement in finance costs for loans and in cost
of sales or other operating expenses for receivables.
37

Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
The rights to receive cash flows from the asset have expired.
The group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the
received cash flows in full without material delay to a third party under a pass-through arrangement and either (a)
the group has transferred substantially all the risks and rewards of the asset, or (b) the group has neither transferred
nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the
group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it
evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of
the asset, the asset is recognised to the extent of the groups continuing involvement in the asset. In that case, the group
also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the group has retained. Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount
of consideration that the group could be required to repay.
Impairment of financial assets
The group assesses at each reporting date if there is any objective evidence that a financial asset or a group of financial
assets is impaired. A financial asset or a group of financial assets is deemed impaired if, and only if, there is objective
evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an
incurred loss event) and that loss event has an impact on the estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated. Evidence of impairment may include indications the debtors or a
group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments,
the probability of bankruptcy or other financial reorganisation and when observable data indicate there is a measurable
decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the group first assesses whether objective evidence of impairment exists
individually for financial assets that are individually significant, or collectively for financial assets that are not individually
significant. If the group determines that no objective evidence of impairment exists for an individually assessed financial
asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics
and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an
impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment. If there is
objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between
the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses
that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial assets
original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is
the current EIR.
Financial instruments - initial recognition and subsequent measurement continued

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is
recognised in the income statement. Interest income continues to be accrued on the reduced carrying amount and is
accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.
The interest income is recorded as part of finance income in the income statement. Loans together with the associated
allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has
been transferred to the group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases
because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased
or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to finance
costs in the income statement.
38

Financial liabilities
Initial recognition and measurement

Financial liabilities within the scope of AASB 139 are classified as financial liabilities at fair value through profit or loss,
loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The group
determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially
at fair value plus, in the case of loans and borrowings, directly attributable transaction costs. The groups financial
liabilities include trade and other payables, bank overdrafts, loans and borrowings, financial guarantee contracts, and
derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, described as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial
instruments entered into by the group that are not designated as hedging instruments in hedge relationships as defined by
AASB 139. Separated embedded derivatives are also classified as held for trading unless they are designated as effective
hedging instruments.
Gains or losses on liabilities held for trading are recognised in the income statement. Financial liabilities designated upon
initial recognition at fair value through profit and loss so designated at the initial date of recognition, and only if criteria of
AASB 139 are satisfied. The group has not designated any financial liability as at fair value through profit or loss.
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When
an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the
original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in
the income statement.
(m) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and condition is accounted for as follows:
Raw materials: Purchase cost on a first in, first out basis
Finished goods and work in progress: Cost of direct materials and labour and a proportion of manufacturing overheads
based on normal operating capacity but excluding borrowing costs
Initial cost of inventories includes the transfer of gains and losses on qualifying cash flow hedges, recognised in other
comprehensive income, in respect of the purchases of raw materials. Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
(n)
The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists, or when annual impairment testing for an asset is required, the group estimates the assets recoverable amount. An
assets recoverable amount is the higher of an assets or cash-generating units (CGU) fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to
sell, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate
valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly
traded subsidiaries or other available fair value indicators. The group bases its impairment calculation on detailed budgets
and forecast calculations, which are prepared separately for each of the groups CGUs to which the individual assets are
39

allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods, a long-term
growth rate is calculated and applied to project future cash flows after the fifth year. Impairment losses of continuing
operations, including impairment on inventories, are recognised in the income statement in expense categories consistent
with the function of the impaired asset, except for a property previously revalued and the revaluation was taken to other
comprehensive income. In this case, the impairment is also recognised in other comprehensive income up to the amount of
any previous revaluation.
For assets excluding goodwill, an assessment is made at each reporting date whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. If such indication exists, the group estimates
the assets or CGUs recoverable amount. A previously recognised impairment loss is reversed only if there has been a
change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the
asset in prior years. Such reversal is recognised in the income statement unless the asset is carried at a revalued amount, in
which case, the reversal is treated as a revaluation increase. The following assets have specific characteristics for
impairment testing:
Goodwill
Goodwill is tested for impairment every six months and when circumstances indicate that the carrying value may be
impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs)
to which the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment
loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Intangible assets
Intangible assets with indefinite useful lives are tested for impairment annually, either individually or at the CGU level, as
appropriate, and when circumstances indicate that the carrying value may be impaired.
(o)
Cash and short-term deposits in the statement of financial position comprise cash at banks and on hand and short-term
deposits with a maturity of three months or less. For the purpose of the consolidated statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits as defined above, net of outstanding bank overdrafts.
(p)
Convertible preference shares
Convertible preference shares are separated into liability and equity components based on the terms of the contract. On
issuance of the convertible preference shares, the fair value of the liability component is determined using a market rate
for an equivalent non-convertible bond. This amount is classified as a financial liability measured at amortised cost (net of
transaction costs) until it is extinguished on conversion or redemption. The remainder of the proceeds is allocated to the
conversion option that is recognised and included in equity. Transaction costs are deducted from equity, net of associated
income tax. The carrying amount of the conversion option is not remeasured in subsequent years. Transaction costs are
apportioned between the liability and equity components of the convertible preference shares based on the allocation of
proceeds to the liability and equity components when the instruments are initially recognised.
(q)
Provisions
General
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the group expects some or all of a provision to be reimbursed,
for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any
reimbursement.
Warranty provisions
Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition is
based on historical experience. The initial estimate of warranty-related costs is revised annually. If the effect of the time
value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks
40

specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as
a finance cost.
(r)
Pensions and post-employment benefits
The group makes payments to external superannuation funds under the compulsory superannuation contribution scheme,
as required by law and as directed by employees. These contributions are recognised as an expense in the net income as
and when they are incurred.
(s)
Share-based transactions
Employees (including senior executives) of the group receive remuneration in the form of share-based payment
transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions).
Employees working in the business development group are granted share appreciation rights, which can only be settled in
cash (cash-settled transactions).
Equity-settled transactions
The cost of equity-settled transactions is recognised, together with a corresponding increase in other capital reserves in
equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense
recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the
vesting period has expired and the groups best estimate of the number of equity instruments that will ultimately vest. The
income statement expense or credit for a period represents the movement in cumulative expense recognised as at the
beginning and end of that period and is recognised in employee benefits expense.
No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is
conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market
or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied. When the
terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms
had not been modified, if the original terms of the award are met. An additional expense is recognised for any
modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification. When an equity-settled award is cancelled, it is treated as if it vested
on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any
award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new
award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the previous
paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted
earnings per share.
(t)
Trade and other payables are carried at amortised cost and, due to their short term nature, they are not discounted. They
represent liabilities for goods and services provided to the group prior to the end of the financial year that are unpaid and
they arise when the group becomes obliged to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within 30 days of recognition.
(u)
Contributed equity and preference shares
Ordinary and preference shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
(v)
Earnings per share
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of
ordinary shares, adjusted for any bonus element. Diluted earnings per share are calculated as net profit attributable to
members of the parent, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends;
the after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been
recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period that would result from the dilution of
potential ordinary shares;
41

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus
element.
3.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the groups consolidated financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities. However, uncertainty about
these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the
asset or liability affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are described below. The group based its assumptions and estimates on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions about future developments, however, may
change due to market changes or circumstances arising beyond the control of the group. Such changes are reflected in the
assumptions when they occur.
An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is
the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on
available data from binding sales transactions in arms length transactions of similar assets or observable market prices,
less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.
The cash flows are derived from the budget for the next five years and do not include restructuring activities that the group
is not yet committed to or significant future investments that will enhance the assets performance of the CGU being
tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as
the expected future cash-inflows and the growth rate used for extrapolation purposes.
Share-based payment transactions
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. Estimating fair value for share-based payment transactions requires
determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This
estimate also requires determining the most appropriate inputs to the valuation model including the expected life of the
share option, volatility and dividend yield and making assumptions about them.
Taxes
Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income. Given the range of international business relationships and the long-term nature and
complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or
future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded.
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgement is required to determine the amount
of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together
with future tax planning strategies.
Fair value of financial instruments
When the fair value of financial assets and financial liabilities recorded in the statement of financial position cannot be
derived from active markets, their fair value is determined using valuation techniques including the discounted cash flow
model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a
degree of judgement is required in establishing fair values. The judgements include considerations of inputs such as
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of
financial instruments.
Development costs
Development costs are capitalised in accordance with the accounting policy in note 2(k). Initial capitalisation of costs is
based on managements judgement that technological and economic feasibility is confirmed, usually when a product
development project has reached a defined milestone according to an established project management model. In
42

determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation
of the project, discount rates to be applied and the expected period of benefits.
4.
SEGMENT INFORMATION
During the year, the groups activities consisted solely of the manufacturing and sale of electrowinning equipment for
the metals processing industry.
5.
6.
OTHER EXPENSES
2011
$
2012
$
(a)
Other expenses
Net foreign exchange differences
Bad debts written off
Loss on disposal of assets
Research and development written off
Non-revenue test programs and other items written off
Warranty provision
Inventory write down
(b)
Depreciation and amortisation

Depreciation
Amortisation of patents
(c)
Minimum operating lease payments
(d)
Employee benefits expense

Wages and salaries
Superannuation contributions
Share-based payment expense
(9,622)
(4,099)
(33,060)
(15,915)
(23,853)
(43,187)
(51,881)
(181,617)
(3,552)
(40,226)
(42,637)
(84,606)
(647,160)
(5,097)
(823,278)
(165,259)
(1,803)
(167,062)
(174,641)
(10,283)
(184,924)
(201,909)
(311,280)
(1,359,277)
(87,482)
(105,495)
(1,552,254)
(1,474,928)
(79,365)
(310)
(1,554,603)
INCOME TAX
Major components of income tax expense for the years ended 31

December 2012 and 2011 are:
Statement of comprehensive income
Current income tax
Current income tax benefit
2012
$
2011
$
50,373
For the years ended 31 December 2012 and 2011, a reconciliation of income tax expense applicable to accounting loss
before income tax at the statutory income rate as compared to income tax expense at the groups effective income tax rate is
as follows:
Accounting profit loss before tax continuing operations
Income tax at statutory rates 30%
Expenditure not allowable for income tax purposes
Deductions allowed for prior years share issue expenses
Tax losses not brought to account
Research and Development Tax Claim
Income tax benefit in the statement of comprehensive income
43
(1,901,358)
(2,901,175)
570,407
(18,149)
23,462
(575,720)
50,373
50,373
870,353
(93)
54,758
(925,018)
-

The directors estimate that the potential deferred tax asset (net) as at 31 December 2012 not brought to account is
$10,226,364 (2011: $9,717,539) at the income tax rate of 30%. The majority of this benefit comprises unused tax losses
brought forward from previous years, being $10,019,988 (2011: $9,477,527).
The benefit of tax losses available for offset against future taxable income will only be obtainable if:
(i)
The company derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deduction for the losses to be realised;
(ii)
The company continues to comply with the conditions for deductibility imposed by tax legislation; and
(iii) No changes in tax legislation adversely affect the company in realising the benefit from the deduction for the
losses.
7.
DIVIDENDS PAID AND PROPOSED
The company has not declared or paid any dividends. Due to past losses incurred by the company, there are no franking
credits available for the subsequent financial year.
8.
EARNINGS PER SHARE

2011
$
2012
$
(a)
(b)
Earnings used in calculating earnings per share

For basic and diluted earnings per share
Net loss
Adjustment for preference shares
Weighted average number of ordinary shares for basic earnings

per share
Effect of dilution
Share options
Preference shares
Weighted average number of ordinary shares adjusted for the
effect of dilution
(1,850,985)
(21,333)
(1,872,318)
(2,901,175)
(21,333)
(2,922,508)
443,864,178
-
379,475,220
443,864,178
379,475,220
Information on the classification of securities:

(i)
Options
Options granted to employees (including key management personnel) as described in note 24 are considered as potential
ordinary shares but they have not been included in the determination of diluted earnings per share because they are antidilutive due to the losses incurred by the company. These options were not included in the determination of basic earnings
per share.
(ii)
Preference shares
The redeemable preference shares as described in note 19 are considered to be potential ordinary shares, but they have not
been included in the determination of diluted earnings per share because they are anti-dilutive due to the losses incurred by
the company.
9.
CURRENT ASSETS CASH AND CASH EQUIVALENTS

2012
$
1,432,186
350,000
1,782,186
Cash at bank and on hand

Short-term deposits
44
2011
$
47,612
2,000,000
2,047,612

Reconciliation to cash flow statement
The above figures correspond to the cash and cash equivalents shown in the cash flow statement.
Reconciliation of the net profit / (loss) after tax to net operating cash flows:
10.
Net loss after tax

(a) Adjustments for:
Depreciation
Amortisation
Net loss on disposals of plant and equipment
Shares issued for services provided
Share-based payments expense
Interest received
Changes in assets and liabilities
Decrease / (increase) in inventories
Decrease / (increase) in debtors and prepayments
(Decrease) / increase in creditors and provisions
GST on investing and financing cash flows
Foreign exchange movement
Net cash outflow from operating activities
2012
$
(1,850,985)
2011
$
(2,901,175)
165,529
1,803
33,060
45,000
60,495
(55,091)
174,641
10,283
44,910
310
(106,266)
266,857
(207,958)
1,404,435
2,572
(18,512)
(153,065)
(112,930)
144,295
(78)
12,751
(12,764)
(2,746,023)
2012
$
533,234
533,234
97,430
40,110
670,774
2011
$
480,064
480,064
72,489
552,553
CURRENT ASSETS TRADE AND OTHER RECEIVABLES
Trade debtors other persons/corporations

Less: provision for doubtful debts
Unbilled accrued revenue
Other
(a)
Allowance for impairment loss
Trade receivables are not interest-bearing and are generally on 30-60 days terms. A provision for impairment loss is
recognised when there is objective evidence that an individual trade receivable is impaired. An impairment loss of $4,099
arising from non-recoverability of debtors has been recognised by the group in 2012 (2011: $40,266). Movements in the
provision for impairment loss were as follows:
Other persons/corporations 1 January
Opening balance
Charge for the year
Amounts written off
Closing balance
4,099
(4,099)
-
40,226
(40,226)
-
95,755
113,499
7,950
316,030
533,234
92,327
3,455
492
383,790
480,064
At 31 December, the ageing analysis of trade receivables is as follows:

0 30 days
31 60 days
61 90 days past due not impaired
+91 days past due not impaired
45

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that
these other balances will be received when due.
Related party receivables
For terms and conditions of related party receivables, refer to note 23.
(c)
Fair value and credit risk

Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value.
(b)
(d)
Foreign and interest rate risk

Detail regarding foreign exchange and interest rate risk is disclosed in note 28.
11.
CURRENT ASSETS INVENTORIES

Raw materials and stores - at cost
Finished goods
328,781
328,781
595,638
595,638
Inventories recognised as an expense for the year ended 31 December 2012 totalled $641,616 (2011: $429,599). This
expense has been included in the cost of sales line item as a cost of inventories. Inventory writedowns recognised as an
expense totalled $51,881 (2011: $5,097).
12.
(a)
(b)
(c)
NON-CURRENT ASSETS RECEIVABLES

2012
$
4,755
105,625
117,688
228,068
Deposits
Contract retentions
Other
2011
$
1,803
99,624
101,427
The deposits are held in relation to the groups office accommodation, workshop space and power supply. All
amounts are receivable in Australian dollars and are not considered past due or impaired.
The fair values are the same as the carrying values.
The interest rate and credit risks are not material.
13.
NON-CURRENT ASSETS PLANT & EQUIPMENT
(a) Reconciliation of carrying amounts at the beginning and end of the period:
Opening carrying amount, net of accumulated depreciation and
impairment
Additions
Disposals
Impairments
Depreciation expense (note 5(b))
Foreign currency exchange difference
Carrying amount at the end of the year, net of accumulated
depreciation and impairment
782,317
182,631
(47,553)
(165,259)
(314)
912,436
79,501
(33,727)
(174,641)
(1,252)
751,822
782,317
(b) Carrying amounts if plant and equipment were measured at cost less accumulated depreciation and impairment:
Plant & equipment at cost
1,858,012
1,790,724
Plant & equipment under construction
17,138
Less: accumulated depreciation and impairment
(1,106,190)
(1,025,545)
Net carrying amount
751,822
782,317
46

14.
(a)
NON-CURRENT ASSETS GOODWILL AND OTHER INTANGIBLE ASSETS

Reconciliation of carrying amounts at the beginning and end of the year
Development
costs
Year ended 31 December 2012

Opening carrying amount, net of accumulated
amortisation and impairment
Patents acquired
Amortisation
Closing carrying amount, net of accumulated
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount

Opening carrying amount, net of accumulated
Patents acquired
Amortisation
Patent applications discontinued
Closing carrying amount, net of accumulated
Cost (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Patents
Goodwill
Total
8,446
1,153
(1,803)
8,446
1,153
(1,803)
110,854
(110,854)
-
7,796
20,677
(12,881)
7,796
589,975
(589,975)
-
7,796
721,506
(713,710)
7,796
Development
costs
Patents
Goodwill
Total
20,456
9,455
(10,283)
(11,182)
20,456
9,455
(10,283)
(11,182)
110,854
(110,854)
-
8,446
19,525
(11,079)
8,446
589,975
(589,975)
-
8,446
720,354
(711,908)
8,446
(b)
Description of the groups intangible assets and goodwill
(i)
Development costs
Development costs are carried at cost less accumulated amortisation and accumulated impairment losses.
amortisation is recognised in the net income in the line item other expenses.
The
(ii)
Goodwill
After initial recognition, goodwill measured on a business combination is measured at cost less any accumulated
impairment losses. Goodwill is not amortised, but is subject to impairment testing on an annual basis or whenever there is
an indication of impairment.
(iii) Patents
After initial capitalisation of patents acquisition costs, patents are amortised over the life of the patent.
(c)
Impairment tests for goodwill and intangibles with indefinite future lives
(i)
Description of the cash generating units and other information
Goodwill acquired through business combinations is allocated to an individual cash generating unit, which was a
reportable segment (refer to note 4) for impairment testing. Goodwill has been de-recognised on disposal of the relevant
cash generating unit.
47

15.
CURRENT LIABILITIES TRADE AND OTHER PAYABLES
Trade payables
Accruals
2011
$
155,317
263,888
419,205
2012
$
250,026
199,027
449,053
(a)
(b)
Due to the short-term nature of these payables, the carrying value is assumed to approximate fair value.
For terms and conditions applying to related party payables of $Nil (2011: $Nil), refer to note 23.
16.
CURRENT LIABILITIES DEFERRED INCOME

Progress billings for contracts in progress
Less: revenue recognised
2,694,061
(1,085,448)
1,608,613
3,697,412
(3,445,542)
251,870
Revenue in advance represents payments on contracts received in advance of being taken up in the profit and loss on a
percentage completion basis. The carrying amount is assumed to approximate fair value.
17.
CURRENT LIABILITIES PROVISIONS
2012
$
96,959
Employee benefits Annual leave

Movement in provision
Opening balance
Arising during the year
Utilised
Foreign exchange adjustment
111,952
91,659
(106,785)
133
96,959
43,187
18,816
158,962
Provision for warranty

Provision for Long Service Leave
Closing balance
2011
$
111,952
168,057
118,282
(173,915)
(472)
111,952
111,952
Refer to note 2(q) for the relevant accounting policy and a discussion of the significant estimations and assumptions in the
measurement of this provision.
18.
NON-CURRENT LIABILITIES PROVISIONS

Employee benefits Long service leave
Movement in provision
Opening balance
Arising during the year
Reclassified to current
Relinquished
Closing balance
23,559
51,272
51,272
7,903
(18,816)
(16,800)
23,559
48,422
2,850
51,272
19.
CUMULATIVE REDEEMABLE CONVERTIBLE PREFERENCE SHARES
The 8% cumulative redeemable convertible preference shares were issued in 1998. Holders of the preference shares are
entitled to receive a cumulative fixed preferential dividend at the rate of 8% per annum on the issue price (40c), but have
no further right to participate in profits or losses of the company, whether surplus or otherwise.
48

The company shall not redeem the preference shares before June 2008, and has no obligation to do so after that time, and
any redemption shall be from profits that would otherwise be available for dividends, or out of the proceeds of a fresh
issue of shares made for the purpose of the redemption. The preference shareholders do not have the right to have the
shares redeemed; they may convert each preference share into an ordinary share at any time by giving written notice to the
company and, when converted, all unpaid arrears of dividends in respect of the converted shares are deemed to be
cancelled.
The cumulative dividend on preference shares not recognised at 31 December 2012 is $309,859 (2011: $288,526).
2011
$
133,333
2012
$
133,333
Balance
Due to the conditions attaching to the preference shares, their maturity date is uncertain. Their carrying value is therefore
considered to be their fair value.
20.
CONTRIBUTED EQUITY
Issued and paid up capital:
Fully paid ordinary shares
Fully paid 8% cumulative redeemable
convertible preference shares (see note 20)
2012
Shares
444,970,735
2011
Shares
441,970,735
2012
$
37,118,457
2011
$
37,073,457
666,667
445,637,402
666,667
442,637,402
133,333
37,251,790
133,333
37,206,790
Movement in shares on issue
Date
01.01.2012
09.05.2012
Detail
Balance*
Allotment to CEO, Mr Ian Ewart
Number
442,637,402
3,000,000
445,637,402
$
37,206,790
45,000
37,251,790
* Includes 666,667 fully paid 8% cumulative redeemable convertible preference shares.
The ordinary shares do not have a par value. Ordinary shares have the right to receive dividends as declared and, in the
event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the
number of shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
company.
21.
(a)
(b)
2012
$
2011
$
(33,833,114)
(1,850,985)
(35,684,099)
(30,931,939)
(2,901,175)
(33,833,114)
(123,967)
(21,192)
(145,159)
(110,514)
(13,453)
(123,967)
RETAINED EARNINGS AND RESERVES

Movements in retained earnings were as follows:
Balance 1 January
Net loss
Balance 31 December
Movement in foreign currency translation reserve:
Balance 1 January
Decrease
Balance 31 December
49

(c)
(d)
Movement in employee equity benefits reserve

Balance 1 January
Balance 31 December
169,187
60,495
229,682
168,877
310
169,187
Nature and purpose of reserves
Employee equity benefits reserve

The employee equity benefits reserve is used to record the value of share-based payments to employees, including key
management personnel, as part of their remuneration. Refer to note 25 for details.
Foreign currency translation reserve
The foreign currency translation reserve is used to record foreign exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
22.
INFORMATION RELATING TO ELECTROMETAL TECHNOLOGIES LIMITED (the parent entity)
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Accumulated losses
Employee equity benefits reserve
Loss of the parent entity

Total comprehensive income of the parent entity
2012
$
3,674,053
4,501,206
(2,152,581)
(2,175,540)
2011
$
3,557,935
4,403,724
(720,190)
(771,462)
37,251,790
(35,155,806)
229,682
2,325,666
37,206,790
(33,743,715)
169,187
3,632,262
(1,412,091)
(1,412,091)
(2,627,993)
(2,627,993)
Refer to note 26 for commitments and contingencies
23.
RELATED PARTIES INFORMATION

The group consists of Electrometals Technologies Limited and the following subsidiaries:
Name
Electrometals Canada Inc.

lectrometals USA LLC
Materials Research Pty Ltd
Mallonbury Pty Ltd
Incorporated
in
Class of
shares
Holding
%
Holding
%
Canada
USA
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
2012
100
100
100
97.4
2011
100
100
100
97.4
Electrometals Technologies Limited is the parent entity of the group. The subsidiaries Materials Research Pty Ltd and
Mallonbury Pty Ltd are not consolidated because each is dormant and the investment in each is not material.
As the groups parent entity, Electrometals Technologies Limited provides ongoing financial support to its subsidiaries.
The support is reviewed in the annual budget process and also from time to time at board meetings, as the need arises.
Transactions between Electrometals Technologies Limited and companies in the group during the years ended 31
December 2012 and 2011 consisted of:
Loans were advanced by the parent entity to Electrometals Canada Inc ($3,583,180) and Electrometals USA LLC
($794,091) during the current and previous financial years. The advances are interest free, unsecured and with no
fixed repayment terms. During the year the loan advanced to Electrometals Canada Inc was provided for in full.
50

Administration and accounting services were provided to Electrometals Canada Inc and Electrometals USA LLC free
of charge during the current and previous financial years.
Terms and conditions of transactions with related parties

Sales to and purchases from related parties are made in arms length transactions, both at normal market prices and on
normal terms. Outstanding balances at year-end are unsecured and interest-free; settlement occurs in cash.

Details relating to key management personnel, including remuneration paid, are included in note 24.
24.
KEY MANAGEMENT PERSONNEL
(a)
Details of key management personnel
Directors
R G Melgaard
R J H Mills
M R Nugent
I D Ewart
R E Keevers
K G Powell
Chairman
CEO Appointed 16 February, 2012
Former Chairman Resigned 15 February 2012
Commercial Director and Company Secretary Appointed Director 21 June 2012,
Company Secretary 6 December, 2012
Executives
D J Foster
T Bergfeldt
C C Barker
J C Robinson
R Jain
Chief Financial Officer

Vice President, Sales and Marketing
Company Secretary and Financial Controller Resigned 6 December 2012
Operations Manager
Senior Project Manager
(b)
c)
Compensation of key management personnel

2011
$
933,099
43,630
12,058
2,308
991,095
2012
$
766,140
41,027
8,657
97,797
913,621
Salary and Fees

Post-employment benefits
Other benefits
Key management personnel shareholdings

The number of ordinary shares in the company held by key management personnel of the group and their related
parties are set out below. Disposals of shares during the year include those shares which a person was holding at
the time of leaving the company. Key management personnel and their related parties who held no shares during
the year are not included.
2012
Name
Directors
R E Keevers
R J H Mills
M R Nugent
I D Ewart
Total
Balance at start of the year

Directly
Indirectly
4,000,000
3,885,428
2,106,625
9,992,053
487,500
4,119,961
4,607,461
Acquisitions / (disposals)
Directly
Indirectly
(4,000,000)
3,000,000
(1,000,000)
51
(487,500)
480,039
(7,641)
Balance at year-end
Directly
Indirectly
3,885,428
5,106,625
8,992,053
4,600,000
4,600,000

2011
Name
Directors
R E Keevers
R G Melgaard *
R J H Mills
M R Nugent
I D Ewart
Total

Directly
Indirectly
2,294,097
38,286,819
2,485,428
566,625
43,632,969
487,500
487,500
Directly
Indirectly
1,705,903
(38,286,819)
1,400,000
1,540,000
(33,640,916)
Balance at year-end
Directly
Indirectly
4,119,961
4,119,961
4,000,000
3,885,428
2,106,625
9,992,053
487,500
4,119,961
4,607,461
* Mr Melgaards shares were sold to Waverton Holdings Limited, a related party.
(d)
Key management personnel holdings of unlisted options

Options over ordinary shares in the company provided as remuneration to key management personnel during the
year; the numbers held during the year by key management personnel of the group, including their personallyrelated entities, are set out below:
Balance at
the start of
the year
2012
Name
Granted as
remuneration
Options
exercised
Other net
changes
Balance at
the end of
the year
Exercisable
Not
exercisable
Directors
R E Keevers
I D Ewart
K G Powell
1,100,000
500,000
100,000
5,000,000
1,500,000
(1,100,000)
(500,000)
(100,000)
5,000,000
1,500,000
1,250,000
375,000
3,750,000
1,125,000
Executives
J C Robinson
C C Barker
R Jain
Total
80,000
1,780,000
1,500,000
1,000,000
600,000
9,600,000
(80,000)
(1,780,000)
1,500,000
1,000,000
600,000
9,600,000
375,000
250,000
150,000
2,400,000
1,125,000
750,000
450,000
7,200,000
Granted as
remuneration
Options
exercised
Other net
changes
Balance at
the end of
the year
Exercisable
Not
exercisable
1,400,000
1,000,000
(300,000)
(500,000)
1,100,000
500,000
1,100,000
500,000
600,000
620,000
80,000
3,700,000
(500,000)
(620,000)
(1,920,000)
100,000
80,000
1,780,000
100,000
2011
Name
Directors
R E Keevers
I D Ewart
Executives
K G Powell
R A Palmer
C C Barker
Total
(e)
Balance at
the start of
the year
80,000
1,780,000
Key management personnel holdings of listed options

The companys listed options expired on 18 April 2011. Listed options over ordinary shares in the company held
during 2011 by key management personnel of the group, including their personally-related entities, are set out
below. Disposals of options include those shares which a person was holding at the time of leaving the company.
Key management personnel and their related parties who held no options during the year are not included.
2011
Name
Directors
R E Keevers
R G Melgaard
Total

Directly
Indirectly
382,350
3,321,005
3,703,355
81,250
81,250
Directly
Indirectly
(382,350)
(3,321,005)
(3,703,355)
52
(81,250)
(81,250)
Balance at year-end
Directly
Indirectly
-

SHARE-BASED PAYMENT PLANS
(a)
Recognised share-based payment expenses

The amount taken up in the accounts relating to the equity-settled share-based payment for the year ended 31
December 2012 is $105,495 (2011: $310), with $60,495 relating to share options and taken as a separate
component of equity. The share-based payment plan is described below.
(b)
Share option issue methods

Share options are granted to executives and staff under the Employee Share Option Plan, whose introduction was
originally approved by shareholders at the annual general meeting on 30 May 2006. At the annual general meeting
on 8 May 2012, shareholders approved the renewal of the plan for a further three years, beginning on 1 June 2012,
under the same terms and conditions. Under the plan, each option entitles the holder, while employed by the
company and during the option exercise period, to acquire one new listed ordinary share in the company at the
option price. 11,000,000 options have been issued to executives and staff under the plan during the year.
Separately to the Employee Share Option Plan, shareholders in general meeting have also approved the issue of
5,000,000 options to the CEO, Mr Ian Ewart.
(c)
Summary of options granted.

The following table illustrates the number and weighted average exercise price (WAEP) of, and movements in,
share options issued during the year.
25.
Outstanding at the beginning of the year

Granted during the year
Exercised during the year
Expired during the year
Forfeited during the year
Outstanding at the end of the year
2012
Number
1,970,000
11,000,000
(1,890,000)
(80,000)
11,000,000
2012
WAEP
11c
1.5c
10.9c
12c
2011
Number
3,890,000
(1,300,000)
(620,000)
1,970,000
2011
WAEP
9c
5c
8c
11c
Number
2,750,000
2,750,000
2,750,000
2,750,000
11,000,000
Vesting date
09.05.2012
31.03.2013
31.03.2014
31.03.2015
Exercise by
08.05.2017
08.05.2017
08.05.2017
08.05.2017
The outstanding balance at 31 December 2012 is represented by:

Exercise price
1.5c
1.5c
1.5c
1.5c
11,000,000
(d)
Weighted average remaining contractual life

The weighted average remaining contractual life for the share options outstanding as at 31 December 2012 is 4.35
years (2011: 0.67 years).
(e)
The exercise price for all options outstanding at the end of the year was: 1.5c. (2011: 5c 12c).
(f)
The weighted average fair value of options granted during the year was: 0.96c (2011: N/A) and is based on the
Black Scholes Pricing Model.
The BSP Model Inputs Used to Value the Options are as follows;
Share Price:
Exercise Price:
Expected Life:
Risk-free rate:
Volatility:
$0.014
$0.015
3, 4 or 5 years.
3.81%, 3.86% and 3.93%
98.5%
53

26.
COMMITMENTS AND CONTINGENCIES

2012
$
(a)
Operating lease commitments

Payable as follows:
Not later than one year
Later than one year but not later than five years
2,952
3,444
6,396
2011
$
171,937
133,836
305,773
These lease commitments only relate to equipment rentals used in the groups operations.
27.
EVENTS AFTER THE REPORTING DATE
The company announced on 6 February 2013 that it has instituted a buy-back of ordinary shares for holders of
unmarketable parcels of shares in the company.
28.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The groups principal financial liabilities usually comprise trade and other payables, with derivatives occasionally. The
main purpose of these financial liabilities is to assist in managing the day-to-day cash flow associated with the groups
operations. The group has trade and other receivables, cash and short-term deposits that arrive directly from its operations
and from capital-raising.
The group is exposed to market risk, credit risk and liquidity risk. The board of directors reviews and agrees policies for
managing each of these risks which are summarised below. The sensitivity analyses in the following sections relate to the
position as at 31 December in 2012 and 2011.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market prices comprise four types of risk: interest rate risk, currency risk, commodity price risk and other
price risk, such as equity price risk. Financial instruments affected by market risk include deposits.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The groups exposure to the risk of changes in market interest rates relates primarily to
the groups funds on term deposit. The groups policy is to place funds on interest-bearing term deposit that are surplus to
immediate requirements. The groups interest rate exposure is reviewed near the maturity date of term deposits, to assess
whether more attractive interest rates are available without increasing risk. The following sensitivity analysis is based on
the interest rate exposures in existence at balance sheet date:
Interest rate sensitivity
With all other variables held constant, it is anticipated that the groups profit before tax is not affected through the impact
on term deposits to a material extent.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates. The groups exposure to the risk of changes in foreign exchange rates relates primarily
to the groups operating activities (when revenue or expense is denominated in different currency from the groups
functional currency). The groups sales are almost entirely to overseas customers and it also sources components from
overseas. For sales, the contracts are usually denominated in Australian dollars, so the foreign exchange risk is effectively
passed to the customer. For the purchase of overseas components, no forward exchange cover is obtained for small items,
as the cost cannot be justified. For larger purchases, an assessment is made at the time the invoice is received whether to
obtain forward currency cover, having regard to recent and anticipated currency movements.
54

Foreign currency sensitivity
The groups exposure to foreign currency changes for all other currencies is not material.
Commodity price risk
The group is affected by the volatility of certain commodities but makes allowances in its costing to mitigate the risk.
Trade receivables
Customer credit risk is managed according to the groups established policy, procedures and control relating to customer
credit risk management. Outstanding customer receivables are regularly monitored and any shipments to major customers
are generally covered by prepayment. The requirement for impairment is analysed at each reporting date on an individual
basis for each client.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the groups Chief Financial Officer in
accordance with the groups policy. Investments of surplus funds are made only with approved counterparties. The
groups maximum exposure to credit risk for the components of the statement of financial position at 31 December 2012
and 2011 is the carrying amounts as illustrated in Note 9.
Liquidity risk
The groups objective is to maintain sufficient funds to finance its current operations and additional funds to ensure its
long-term survival in the event of a business downturn. Currently, the group is almost entirely dependent on shareholder
funds and surpluses derived from operations, and has no finance facilities in place. The group manages its liquidity risk
by monitoring the total cash inflows and outflows expected on a monthly basis. Where an amount is payable or
receivable, the liability or asset is allocated to the most likely period in which payment is expected.
The table below summarises the maturity profile of the group based on contractual undiscounted payments.
CONSOLIDATED

Liquid financial assets
Net inflow / (outflow)
CONSOLIDATED
Liquid financial assets
Net inflow / (outflow)
< 6 months 6-12 months

$
$
1-5 years
$
> 5 years
$
Total
$
1,782,186
670,774
2,452,960
228,068
228,068
1,782,186
898,842
2,681,028
(449,053)
2,003,907
228,068
(449,053)
2,231,975
101,427
101,427
Total
$
2,047,612
653,980
2,701,592
101,427
(419,205)
2,282,387
< 6 months 6-12 months

$
$
2,047,612
552,553
2,600,165
-
(419,205)
2,180,960
1-5 years
$
> 5 years
$
Capital management
Capital includes convertible preference shares and equity attributable to the equity holders of the parent. The primary
objective of the groups capital management is to ensure that it maintains a strong credit rating and healthy capital ratios to
support its business and maximise shareholder value. The group manages its capital structure and makes adjustments to it
55

in light of changes in conditions. To maintain or adjust the capital structure, the group may issue new shares. No changes
were made in the objectives, policies or processes for managing capital during the years ended 31 December 2012 and 31
December 2011.
29.
REMUNERATION OF AUDITORS
Amounts received, or due and receivable by Ernst & Young for:

Audit or review of the financial reports of the parent company
Additional fees prior years
Amounts received, or due and receivable by non Ernst & Young audit
firms for:
Audit or review of financial reports
56
2012
$
2011
$
74,527
87,065
5,150
79,677
29,824
116,889

Directors Declaration
In accordance with a resolution of the directors of Electrometals Technologies Limited, we state that:
In the opinion of the directors:
(a)
the financial statements, notes and the additional disclosures in the directors report designated as audited, of the
group are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the groups financial position as at 31 December 2012 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
(b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
note 2(a); and
(c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
(d)
this declaration has been made after receiving the declarations required to be made to the directors in accordance
with section 295A of the Corporations Act 2001 for the financial year ending 31 December 2012.
On behalf of the board
R G Melgaard
Chairman
ID Ewart
Director
Ashmore, Gold Coast

19th March, 2013
57
Independent auditor's report to the members of Electrometals

Technologies Limited
Report on the financial report
We have audited the accompanying financial report of Electrometals Technologies Limited, which
comprises the consolidated statement of financial position as at 31 December 2012, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors' declaration of the consolidated
entity comprising the company and the entities it controlled at the year's end or from time 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 controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors
also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that
the financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, 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 controls relevant to the entity's preparation and
fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
Other than the matter set out in the Auditors Independence Declaration we have complied with the
independence requirements of the Corporations Act 2001.
We have given the directors of the company a written Auditors Independence Declaration, a copy of
which is included in the directors report.
Liability limited by a scheme approved

under Professional Standards Legislation
Opinion
In our opinion:
a.
b.
the financial report of Electrometals Technologies Limited is in accordance with the Corporations
Act 2001, including:
i
giving a true and fair view of the consolidated entity's financial position as at 31 December
2012 and of its performance for the year ended on that date; and
ii
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 2.
Report on the remuneration report

We have audited the Remuneration Report included in pages 10 to 15 of the directors' report for the year
ended 31 December 2012. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Electrometals Technologies Limited for the year ended 31
December 2012, complies with section 300A of the Corporations Act 2001.
Ernst & Young
Brad Tozer
Partner
Brisbane
19 March 2013

AUSTRALIAN SECURITIES EXCHANGE (ASX) ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 11 February, 2013.
1.
Distribution of equity securities

(i)
Ordinary share capital
444,970,735 fully paid ordinary shares are held by 1,430 individual holders. All issued ordinary shares
carry one vote per share and carry the right to dividends.
(ii)
2.
Preference share capital

666,667 8% cumulative convertible redeemable preference shares are held by 2 individual shareholders. All
issued cumulative convertible redeemable preference shares are convertible at the option of the shareholder
into ordinary shares at any time, on the basis of one ordinary share for every one preference share held.
Each preference share currently carries one right to vote.
The number of shareholders, by size of holding, in each class are:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 to (max)
Fully paid
ordinary
shares
664
199
133
305
129
1,430
Preference
shares
2
2
1,245
N/A
Holders of less than a marketable parcel

3.
Twenty largest holders of quoted securities ordinary shares
Waverton Holdings Limited

Rhead Investments Pty Ltd
Pegmont Mines Limited
Pathold No.222 Pty Ltd
ID Ewart
R E Keevers
RJH Mills
JP Morgan Nominees Australia Limited
YL Melgaard
NG Melgaard
RS Melgaard
TM Landy
AP Bray & TM Bourne
Torita Pty Ltd
KE & JM Richards <Richards Super Fund>
EL Thomson
Barhill Pty Ltd
GA Ewart
Alexander Gillies Pty Ltd (Staff Super Fund)
D Ogilvy
Total
4.
Shares held
354,486,543
5,595,105
5,250,000
4,600,000
4,026,625
4,000,000
3,885,428
3,028,490
1,959,833
1,800,000
1,800,000
1,698,658
1,620,000
1,450,000
1,250,000
1,235,743
1,200,000
1,080,000
1,000,000
1,000,000
401,966,425
Percentage
79.67
1.26
1.18
1.03
0.90
0.90
0.87
0.68
0.44
0.40
0.40
0.38
0.36
0.33
0.28
0.28
0.27
0.24
0.22
0.22
90.31
Shares held
354,995,043
Percentage
79.66
Substantial shareholders
Name
Waverton Holdings Limited
60

CORPORATE DIRECTORY
Current directors
R G Melgaard
R J H Mills
M R Nugent
I D Ewart
K G Powell
Company Secretary
K G Powell
Principal office and registered office
28 Commercial Drive, Ashmore Qld 4214, Australia
Telephone: +61-7-5526-4663
Facsimile: +61-7-5527-0299
E-mail:
emew@electrometals.com.au
Website:
www.electrometals.com.au
Overseas subsidiaries
Electrometals Canada Inc
#210-201 Bewicke Ave, V7M 3M7
North Vancouver, BC, Canada
Telephone: +1-604-988-0058 Facsimile:
+1-604-988-0068
Electrometals USA LLC

1464 Hoff Industrial Drive,
OFallon, Missouri, USA 63366
Telephone: +1-636-272-7997
Facsimile:
+1-636-272-7998
Auditors
Ernst & Young
111 Eagle Street
Brisbane Qld 4000
Telephone: (07) 3011-3333
Facsimile: (07) 3011-3344
Banker
National Australia Bank
2 Classic Way
Burleigh Waters Qld 4220
Share Registry
Computershare Investor Services Pty Ltd
117 Victoria Street
West End Qld 4101
Telephone: 1300-552-270
Solicitors
Thomsons Lawyers
Level 16, Waterfront Place
1 Eagle Street
Brisbane Qld 4000
Stock Exchange Listing
Electrometals Technologies ordinary shares are listed on the Australian Securities Exchange (ASX Code: EMM)
61

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ELECTROMETALS TECHNOLOGIES LIMITED

For personal use only

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

For personal use only

Review of financial condition

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

For personal use only

Not a member of the relevant committee during the year

Remuneration and nominations

Retirement, election and continuation in office of directors

Auditor independence and non-audit services

For personal use only

Auditors Independence Declaration to the Directors of Electrometals

Ernst & Young

Liability limited by a scheme approved

Electrometals Technologies Limited

For personal use only

Key management personnel

Chief Financial Officer

Remuneration levels and mix

Electrometals Technologies Limited

For personal use only

Electrometals Technologies Limited

Company performance and its link to remuneration

For personal use only

Company performance and its link to short-term incentives

All key management personnel have rolling contracts.

Termination for cause

Non-executive director remuneration

Electrometals Technologies Limited

For personal use only

* Mr RG Melgaard had some additional fees for executive work undertaken.

Electrometals Technologies Limited

For personal use only

Awarded Award date Fair value

Key Management Personnel

Electrometals Technologies Limited

DIRECTORS REPORT - continued

Key management personnel

For personal use only

This report is made in accordance with a resolution of the directors.

Ashmore, Gold Coast

Electrometals Technologies Limited

For personal use only

Principle 1 Lay solid foundations for management and oversight

Electrometals Technologies Limited

CORPORATE GOVERNANCE STATEMENT - continued

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Principle 7 Recognise and manage risk

Refer to the section headed Structure of the board below

Electrometals Technologies Limited

CORPORATE GOVERNANCE STATEMENT - continued

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