UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of September 2014

 

Commission File Number: 001-35022

 

Mission NewEnergy Limited

(Translation of registrant’s name into English)

 

Unit B9, 431 Roberts Rd

Subiaco, Western Australia 6008

Australia

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F þ Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):¨

 

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes ¨ No þ

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Mission NewEnergy Limited
	By:	/s/ Guy Burnett
	Name:	Guy Burnett
	Title:	Chief Financial Officer and Company Secretary
	Date:  September 1, 2014

 

 

EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Appendix 4E – Preliminary final report
99.2		Mission signs Joint Venture and Plant Purchase Agreements

 

 

Exhibit 99.1

 

	Mission NewEnergy Limited
	(ACN: 117 065 719)
	Tempo Offices, Unit B9
	431 Roberts Rd, Subiaco
	Western Australia, 6008
	Tel: +61(0)8 – 6313 3975
ONE MISSION : ONE ENERGY : NEW ENERGY	Fax: +61(0)8 – 6270 6339
	e-mail: info@missionnewenergy.com

 

29^th August 2014

 

The Manager

Company Announcements Office

Australian Securities Exchange

20 Bridge Street

SYDNEY NSW 2000

 

Dear Sir/Madam,

 

Re: Mission NewEnergy Limited Preliminary Final Report (Appendix 4E) for the year ended 30 June 2014 Listing Rule 4.3A

 

The Directors of Mission NewEnergy Limited are pleased to present the Preliminary Final Report/Appendix 4E for the period ended 30 June 2014 (attached).

 

For and on behalf of

MISSION NEWENERGY LIMITED

 

Guy Burnett

Company Secretary

 

 

Preliminary Final Report of

Mission NewEnergy Limited

for the year ended 30 June 2014

 

ABN 63 117 065 719

 

This Preliminary Final report is provided to the Australian Securities Exchange (ASX) under Listing Rule 4.3A.

 

Current Reporting Period:	Year ended 30 June 2014
Previous Corresponding Period:	Year ended 30 June 2013

 

This report should be read in conjunction with the most recent annual report.

 

Source Reference:      ASX Append 4E.1, ASX listing Rules 4.3C.1

 

 

Mission NewEnergy Limited

 

Results for Announcement To The Market

For the Year Ended 30 June 2014

 

		Revenue and Net Profit/(Loss)
						Percentage						Amount
						Change						$
						%
ASX Append. 4E 2.1		Revenue from ordinary activities		Up			15.10	%		to			9,683,586
		EDITDA		Down			71.23	%		to			4,261,143
ASX Append. 4E 2.2		Profit/(loss) from ordinary activities after tax attributable to members		Down			105.66	%		to			(608,917	)
ASX Append. 4E 2.3		Net profit/(loss) attributable to members		Down			110.88	%		to			(1,094,117	)

 

		Dividends (Distributions)
						Franked
				Amount per		amount per
				security		Security
ASX Append. 4E 2.4		Final dividend		Nil		Nil
ASX Append. 4E 2.4		Interim dividend		Nil		Nil
ASX Append. 4E 2.5		Record date for determining entitlements to the dividend:		N/A		N/A

 

		Brief explanation of Revenue, Net Profit/(Loss) and Dividends (Distributions)
ASX Append. 4E 2.6		Summary of results   Operating and Financial Review   Sales revenue amounted to $1,231 (2013: $169,219) and Other Income for the Group amounted to $9,682,355 (2013: $8,244,100). Net cash used in operating activities was $2,945,460 (2013: $3,714,693). The net loss of the Group amounted to $1,077,231 (2013: $10,042,733 profit).   Review of Operations   Biodiesel Refining   In April 2013, Mission entered into an agreement with Felda Global Ventures Downstream Sdn Bhd (FGVD) to sell the 100,000 tpa biodiesel refinery for U$ 11.5 million. The Company successfully completed the sale of the 100,000 tpa refinery in October 2013.   During the period, the Company’s fully owned subsidiary, Mission Biotechnologies Sdn Bhd (MBTSB) successfully defended itself against a suit filed by KNM Process Systems Sdn Bhd (KNM) in the High Court of Kuala Lumpur. In its suit, KNM as Plaintiff, sought to recover a sum of approximately A$130,000 (RM380,000) from MBTSB. However, MBTSB, in its defence acknowledged that only about A$103,000 (RM302,000) was due to KNM and simultaneously filed a counter claim amounting to approximately A$887,000 (RM2.6 million) against KNM. The High Court of Kuala Lumpur in its judgment granted the counter claim and ordered KNM to pay MBTSB the sum of approximately A$785,000 (RM2.3 million), after setting off the RM302,000 due to KNM, with costs. This amount was promptly paid to MBTSB by KNM while submitting an appeal against the decision to the Malaysian Court of Appeal.

 

 

Subsequently in February 2014, in line with the MNEL’s Board decision, MBTSB was put into Voluntary Creditors winding up by MNEL and appointed a liquidator for this purpose. Creditors of the company ratified that the said company be wound up via Creditors Voluntary Winding up.   Mission’s second refinery (250,000 tpa)   The remaining 250,000 tpa refinery remains under care and maintenance. The company continues to re-evaluate its options available from its remaining refinery asset as opportunities present themselves, which may include the sale of the asset.   In November 2013 the Company entered into a Memorandum of Understanding (MoU) with Benefuel Inc., a US based technology provider who have developed and successfully validated a ground breaking and patented technology process that will allow the Company’s 250,000 tpa biodiesel refinery to be commissioned and operated using substantially lower cost feedstock. The MoU with Benefuel Inc. provides for the Parties to explore the possibility of entering into certain transactions including but not limited to licensing agreements, asset sale or a business combination transaction for the Malaysian refinery asset. The parties are looking at opportunities to set up a joint venture company in Malaysia to own and operate the biodiesel refinery together with an integrated palm plantation company.   In the matter of arbitration between Mission Biofuels Sdn Bhd and KNM, the 3 party tribunal has been established and initial preliminary meetings between the tribunal and the solicitors have been held. Both the Claimant and the Respondent have submitted their statement of claims and the hearings are scheduled to commence in February 2015.   Impairment of refinery assets   The Board reviews the carrying value of its refinery assets at each reporting date. At 30 June 2014 the Company continues to impair any additions to the refineries. A further $29,336 has been impaired during the current financial year.   Upstream Feedstock and Wind Farm Business   In April 2013, the Company announced that it had secured a loan facility agreement to meet corporate obligations and windmill operational costs in India. The lenders required that the equity in the Indian Subsidiary, Mission Biofuels India PL, be held as security with the lender to take over general management of the subsidiary during the term of loan. As at the date of this report the loan is in default and the Company is working with the lender on a settlement arrangement. If the Company is unable to negotiate a settlement, the lender has the right to enforce their collateral position being security held over all shares in the Indian subsidiary. If this right is enforced we would have no further business interests in India.   The Indian operations have been deconsolidated from the Group financials with effect from 1 October 2013 due to an effective change in control as a result of the loan default.   Downstream Palm Oil Joint Venture Project   The Companies 85% owned subsidiary, Oleovest Pte Ltd had registered a request for arbitration with the Indonesian Arbitration Board (BANI) to seek compensation from the Indonesian government owned palm plantation company, PT Nusantara III (PTPN111) for breach of its material and non-material obligations under its joint venture agreement (JVA) with Oleovest. The formal hearings under the arbitration proceedings commenced during the current reporting period after the parties failed to come to an amicable settlement during mediation.   As of the date of this report, the Indonesian arbitration panel rejected the claim for compensation of approximately US$85m, in a 2-1 majority decision, awarding Mission’s subsidiary, Oleovest Pte Ltd with US$3,360,000.   The Company can provide no assurances as to the amount or the timing of receipt of this award.

 

 

Capital Markets and Funding   During the period the Company was pleased to settle $7.5 million of the convertible note debt and the working capital loan from SLW International, utilising proceeds from the sale of the 100,000 tpa refinery.   In addition, the Company successfully restructured the Series 3 Convertible Notes into Series 4 Convertible notes. The key benefit being the extension of the maturity date from May 2014 to December 2018. This achievement not only significantly defers the requirement for the group to settle the notes, but also re-classifies the note liability from a current liability to a non-current liability, thereby significantly strengthening the balance sheet. The notes now attract a coupon of 6% per annum, however the first coupon payment (accrued from 1 January 2014) is only due on 31 December 2015.   In March 2014 the Company received approval to place up to 100 million ordinary shares from shareholders. In April the Company placed 15 million ordinary shares.   At the end of April and early May 1,995,009 Warrants expired with Warrant holders electing not to exercise their option to take up ordinary shares.

 

 

CONSOLIDATED GROUP INCOME STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014

 

		Note				2014				2013
						$				$
Sales revenue							1,231				169,219
Other income							9,682,355				8,244,100
Total revenue			2				9,683,586				8,413,319
Changes in Inventory							-				(356,716	)
Cost of materials							-				(10,966	)
Director and Employee benefits expense							(1,376,703	)			(1,618,058	)
Net foreign exchange gains/(losses)							(2,402,664	)			(1,418,624	)
Consultants’ expenses							(1,047	)			(114,533	)
Impairment							(363,232	)			11,493,832
Shareholder expenses							(61,577	)			(108,940	)
Travel expenses							(172,842	)			(93,291	)
Rental expenses							(1,990	)			(81,122	)
Other expenses							(1,042,388	)			(1,295,640	)
Depreciation and amortisation expenses							(7,412	)			(6,822	)
Finance Cost – amortisation							(3,199,884	)			(3,394,324	)
Finance Costs							(1,662,764	)			(654,358	)
Profit/(loss) before income tax							(608,917	)			10,753,757
Income tax (expense)/benefit							-				20,020
Net profit /(loss) before non-controlling interest							(608,917	)			10,773,777
Loss for the year from discontinued and deconsolidated operations							(485,200	)			(716,894	)
Profit/(Loss) for the year							(1,094,117	)			10,056,883
Profit/(Loss) is attributable to:
Owners of Mission NewEnergy Ltd							(1,077,231	)			10,042,733
Non-controlling interests							(16,886	)			14,150
							(1,094,117	)			10,056,883

 

 

CONSOLIDATED GROUP BALANCE SHEETS

AS AT 30 JUNE 2014

 

		Note				2014				2013
						$				$
CURRENT ASSETS
Cash and cash equivalents							451,953				1,419,617
Trade and other receivables							3,549,702				3,833,373
Other financial assets							-				11,686
Other assets							-				221,917
Current tax assets							-				-
Total current assets							4,001,655				5,486,593
Non-current assets held for sale							-				14,573,623
Total current assets							4,001,655				20,060,216
NON-CURRENT ASSETS
Property, plant and equipment							2,821				6,002
Other Assets							44,789				40,364
Total non-current assets							47,610				46,366
TOTAL ASSETS							4,049,265				20,106,582
CURRENT LIABILITIES
Trade and other payables			4				125,765				1,679,897
Financial Liabilities							-				27,404,273
Short-term provisions							149,735				136,181
							275,500				29,220,351
Liabilities included in disposal group held for sale							-				1,832,093
Total current liabilities							275,500				31,052,444
NON-CURRENT LIABILITIES
Financial liabilities							15,124,986				1,558,058
Deferred tax liabilities							-				-
Total non-current liabilities							15,124,986				1,558,058
TOTAL LIABILITIES							15,400,486				32,610,502
NET ASSETS (DEFICIT)							(11,351,221	)			(12,503,920	)
EQUITY
Issued capital							110,523,197				110,415,197
Reserves							19,814,057				13,323,093
(Accumulated losses)			5				(141,617,611	)			(136,188,232	)
Non-controlling Interests							(70,864	)			(53,978	)
Total Equity/(Deficiency)							(11,351,221	)			(12,503,920	)

 

 

CONSOLIDATED GROUP CASH FLOW STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2014

 

		Note				2014 $				2013 $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers							666,081				891,117
Payments to suppliers and employees							(2,500,167	)			(3,860,525	)
Interest received							1,231				2,914
Finance costs							(1,112,595	)			(746,022	)
Income tax paid							(10	)			(2,177	)
Net cash (used in) operating activities			6				(2,945,460	)			(3,714,693	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment							(35,211	)			(21,834	)
Proceeds and deposit from sale of assets							11,024,194				1,860,172
Release of performance bond and deposits							(1,688	)			510,199
Cash balance from deconsolidated operations							(6,517	)			-
Net cash provided investing activities							10,980,778				2,348,537
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue (net of costs)							108,000				94,949
Proceeds from borrowings							303,479				1,612,880
Repayments of borrowings							(9,371,693	)			(358,114	)
Net cash provided / (used by) by financing activities							(8,960,214	)			1,349,715
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS							(924,896	)			(16,441	)
Cash and cash equivalents at beginning of the financial year							1,419,617				1,455,977
Effects of exchange rate fluctuations of cash held in foreign currencies							(42,768	)			(19,919	)
CASH AND CASH EQUIVALENTS AT END OF FINANCIAL YEAR							451,953				1,419,617

 

 

Mission NewEnergy Limited

 

 

Notes to the Preliminary Final Report

For the Year Ended 30 June 2013

 

1.

Basis of Preparation

This preliminary final report has been prepared in accordance with ASX Listing rule 4.3A and the disclosure requirements of ASX Appendix 4E.

The accounting policies adopted in the preparation of the preliminary final report are detailed in Attachment 1.

 

						2014 $				2013 $
		2.		Profit from Ordinary Activities
ASX Append 4E.3				Loss from ordinary activities before income tax includes the following items of revenue and expense:
				Revenue from Operating Activities
				Sale of finished goods			-				159,055
				Sale of assets			-				145,693
				Interest received			1,231				10,164
				Sale of raw materials							349,922
				Gain on settlement of convertible notes			9,671,893				7,748,485
				Sundry Income			10,462				-
							9,683,586				8,413,319

 

3.

Commentary on Results

ASX Append 4E.14

See above from page 1.

 

 

Mission NewEnergy Limited

 

 

Notes to the Preliminary Final Report

For the Year Ended 30 June 2014

 

		4.		Trade and other payables
				CURRENT
				Unsecured liabilities:
				Trade payables			125,765				176,492
				Sundry payables and accrued expenses			-				247,015
				Deposit received on sale of 100,000 tpa refinery			-				1,257,390
							125,765				1,679,897

 

		5.		Retained Earnings/(Accumulated Losses)
						2014 $				2013 $
ASX Append 4E.8				Balance at the beginning of the financial period			(136,188,232	)			(140,376,669	)
				Gain on settlement of Series 1 Convertible Note							(5,854,296	)
				Settlement of $7.5m of series 3 con note debt			1,003,108				-
				Conversion of Con Note Series 3 to Series 4			(5,143,676	)			-
				Deconsolidated operations			(211,580	)			-
				Net Profit (loss) attributable to the members of Mission NewEnergy Ltd			(1,077,231	)			10,042,733
				Balance at the end of the financial period			(141,617,611	)			(136,188,232	)

 

 

Mission NewEnergy Limited

 

 

 

 Notes to the Preliminary Final Report

For the Year Ended 30 June 2014

 

6.

Notes to the Statement of Cash Flows

 

ASX Append 4E.5				Reconciliation of Cash		2014 $				2013 $
				For the purposes of the statement of cash flows, cash includes cash on hand and in banks.  Cash at the end of the financial period as shown in the statement of cash flows is reconciled to the balance sheet as follows:
				Cash			451,953				1,419,617
				Reconciliation of Profit from Ordinary Activities after Related Income Tax to Net Cash Used in Operating Activities
				Profit / (Loss) after income tax before non-controlling interests			(608,917	)			10,773,777
				Non cash flows in profit / (loss)
				Depreciation of plant and equipment – continued operations			7,412				6,822
				Interest accrued			761,514				136,785
				Gain on the settlement/restructure of Convertible Note			(9,671,893	)			(7,748,485	)
				Amortisation of Equity portion of Convertible Note			3,199,884				3,394,324
				Provision for employee benefits			13,555				31,429
				(Impairment reversal)/Impairment of assets			29,336				(12,174,134	)
				Impairment of inventories			-				680,302
				Impairment of receivables and loans			333,896				-
				Net cash provided by / (used in) operating activities before change in assets and liabilities			(5,935,213	)			(4,899,180	)
				Change in assets and liabilities
				- (Increase) decrease in receivables			-				616,608
				- (Increase) decrease in inventories			-				356,716
				- (Increase) decrease in other assets			136,959				(48,926	)
				- (Increase) decrease in deferred tax and current tax			(11	)			24,753
				- Increase (decrease) in creditors and accruals			22,491				(936,036	)
				Foreign Currency Adjustments			2,398,277				1,277,552
							(3,377,497	)			(3,608,513	)
				Cash used by non-controlling interests			432,037				(106,180	)
				Cash (used in) operations			(2,945,460	)			(3,714,693	)

 

 

	7.	Details Relating to Dividends (Distributions)
ASX Append 4E.6 ASX Append 4E.14.2 Source Reference		The company did not declare a dividend during the financial period and has not declared a dividend since the end of the financial period.

 

8.

Earnings Per Share

 

						2014 $ per share				2013 $ per Share
				Basic earnings/(loss) per share (EPS)			(0.08	)			0.96
				Diluted earnings/(loss) per share (EPS)			(0.08	)			0.96

 

ASX Append 4E.14.1		Basic Earnings per Share
		The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:

 

						2014 $				2013 $
				Earnings (a)			(1,077,231	)			10,042,733

 

						2014 Number				2013 Number
				Weighted average number of ordinary shares (b)			13,377,124				10,481,820

 

(a)

Earnings used in the calculation of basic earnings per share reconciles to net profit in the income statement as follows:

 

								2014 $				2013 $
						Operating net profit attributable to the members of Mission NewEnergy Limited			(1,077,231	)			10,042,733
						Earnings used in the calculation of basic EPS			(1,077,231	)			10,042,733

 

(b)

Options are considered to be potential ordinary shares and are therefore excluded from the weighted average number of ordinary shares used in the calculation of basic earnings per share. Where dilutive, potential ordinary shares are included in the calculation of diluted earnings per share (refer below).

 

 

Mission NewEnergy Limited

 

 

Notes to the Preliminary Final Report

For the Year Ended 30 June 2014

 

Source Reference
	9.	Net Tangible Assets Per Security

 

						2014 $ per share				2013 $ per share
ASX Append				Net tangible asset (deficit)/surplus per security			(0.4	)			(1.2	)
4E.9

 

	10.	Details of Entities Over which Control Has Been Gained or Lost
ASX Append 4E.10		Refer to note 13 below.
ASX Append 4E.10.1
ASX Append 4E.10.2
ASX Append 4E.10.3
	11.	Contingent Liabilities and Contingent Assets
		A subsidiary of the company has received various claims for payments from the contractor liable to complete the construction of Missions 250,000 tpa refinery. The subsidiary company disputes these claims and has counter claimed on various matters. In addition the subsidiary company has submitted that all these matters should be heard as part of the arbitration proceedings. In addition to these claims both parties have agreed to move to arbitration to resolve this matter. These may result in an outflow or inflow of cash resources to the company however it is not possible to quantify this value. The same subsidiary of the company is also party to a claim from the technology provider of Missions 250,000 tpa refinery, however the subsidiary contends that this claim should a matter between the technology provider and the contractor liable to complete the construction of Missions 250,000 tpa refinery.   The Group is not aware of any other contingent liabilities or contingent assets as at 30 June 2014.
	12.	Segment Information
ASX Append 4E.14.4		Refer to Attachment 2

 

	13.	Discontinuing Operations
		The Board has previously resolved to sell non-core assets in India being the windmill power generation operation in India and the office complex. As at the date of this report a working capital loan for Mission Biofuels India PL (MBIPL) (the company operating the power and jatropha segment) is in default. The shares of MBIPL are held as security for the loan by the lender. As a result of the loan default, the Indian operations have been deconsolidated from the Group financial statements with effect from 1 October 2013 due to an effective change in control at that date.   In February 2014 Mission Biotechnologies Sdn Bhd went into a process of winding up and appointed a liquidator for this purpose. Creditors of the company ratified that the said company be wound up via Creditors Voluntary Winding up.

 

 

Source Reference
	14.	Other Significant Information
ASX Append 4E.12		Not applicable
	15.	Information on Audit or Review
ASX Append 4E.15		This preliminary final report is based on accounts to which one of the following applies.
		¨	The accounts have been audited	¨	The accounts have been subject to review
		x	The accounts are in the process of being audited or subject to review	¨	The accounts have not yet been audited or reviewed
ASX Append 4E.16		Description of likely dispute or qualification if the accounts have not yet been audited or subjected to review or are in the process of being audited or subjected to review.
		Not applicable
ASX Append 4E.17		Description of dispute or qualification if the accounts have been audited or subjected to review.
		Not applicable

 

 

Attachments

 

Attachment 1: 30 June 2014 Accounting Policies

 

Except where stated, these accounting policies have been consistently applied by each entity in the Group and are consistent with those of the previous year.

 

New, revised or amending Accounting Standards and Interpretations adopted

 

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

 

Any significant impact on the accounting policies of the consolidated entity from the adoption of these Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity.

 

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

 

AASB 10 Consolidated Financial Statements

 

The consolidated entity has applied AASB 10 from 1 July 2013, which has a new definition of 'control'. Control exists when the reporting entity is exposed, or has the rights, to variable returns from its involvement with another entity and has the ability to affect those returns through its 'power' over that other entity. A reporting entity has power when it has rights that give it the current ability to direct the activities that significantly affect the investee's returns. The consolidated entity not only has to consider its holdings and rights but also the holdings and rights of other shareholders in order to determine whether it has the necessary power for consolidation purposes.

 

AASB 11 Joint Arrangements

 

The consolidated entity has applied AASB 11 from 1 July 2013. The standard defines which entities qualify as joint arrangements and removes the option to account for joint ventures using proportional consolidation. Joint ventures, where the parties to the agreement have the rights to the net assets are accounted for using the equity method. Joint operations, where the parties to the agreements have the rights to the assets and obligations for the liabilities, will account for its share of the assets, liabilities, revenues and expenses separately under the appropriate classifications.

 

AASB 12 Disclosure of Interests in Other Entities

 

The consolidated entity has applied AASB 12 from 1 July 2013. The standard contains the entire disclosure requirement associated with other entities, being subsidiaries, associates, joint arrangements (joint operations and joint ventures) and unconsolidated structured entities. The disclosure requirements have been significantly enhanced when compared to the disclosures previously located in AASB 127 'Consolidated and Separate Financial Statements', AASB 128 'Investments in Associates', AASB 131 'Interests in Joint Ventures' and Interpretation 112 'Consolidation - Special Purpose Entities'.

 

AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13

 

The consolidated entity has applied AASB 13 and its consequential amendments from 1 July 2013. The standard provides a single robust measurement framework, with clear measurement objectives, for measuring fair value using the 'exit price' and provides guidance on measuring fair value when a market becomes less active. The 'highest and best use' approach is used to measure non-financial assets whereas liabilities are based on transfer value. The standard requires increased disclosures where fair value is used.

 

AASB 127 Separate Financial Statements (Revised), AASB 128 Investments in Associates and Joint Ventures (Reissued) and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards

 

The consolidated entity has applied AASB 127, AASB 128 and AASB 2011-7 from 1 July 2013. AASB 127 and AASB 128 have been modified to remove specific guidance that is now contained in AASB 10, AASB 11 and AASB 12 and AASB 2011-7 makes numerous consequential changes to a range of Australian Accounting Standards and Interpretations. AASB 128 has also been amended to include the application of the equity method to investments in joint ventures.

 

 

AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011 Cycle

 

The consolidated entity has applied AASB 2012-5 from 1 July 2013. The amendments affect five Australian Accounting Standards as follows: Confirmation that repeat application of AASB 1 'First-time Adoption of Australian Accounting Standards' is permitted; Clarification of borrowing cost exemption in AASB 1; Clarification of the comparative information requirements when an entity provides an optional third column or is required to present a third statement of financial position in accordance with AASB 101 'Presentation of Financial Statements'; Clarification that servicing of equipment is covered by AASB 116 'Property, Plant and Equipment', if such equipment is used for more than one period; clarification that the tax effect of distributions to holders of equity instruments and equity transaction costs in AASB 132 'Financial Instruments: Presentation' should be accounted for in accordance with AASB 112 'Income Taxes'; and clarification of the financial reporting requirements in AASB 134 'Interim Financial Reporting' and the disclosure requirements of segment assets and liabilities.

 

AASB 2012-10 Amendments to Australian Accounting Standards - Transition Guidance and Other Amendments

 

The consolidated entity has applied AASB 2012-10 amendments from 1 July 2013, which amends AASB 10 and related standards for the transition guidance relevant to the initial application of those standards. The amendments clarify the circumstances in which adjustments to an entity's previous accounting for its involvement with other entities are required and the timing of such adjustments.

 

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirement

 

The consolidated entity has applied 2011-4 from 1 July 2013, which amends AASB 124 'Related Party Disclosures' by removing the disclosure requirements for individual key management personnel ('KMP'). Corporations and Related Legislation Amendment Regulations 2013 and Corporations and Australian Securities and Investments Commission Amendment Regulation 2013 (No.1) now specify the KMP disclosure requirements to be included within the directors' report.

 

a.

Principles of Consolidation

 

The consolidated financial statements comprise the financial statements of Mission NewEnergy Limited and its subsidiaries, as defined in Accounting Standard AASB 127 ‘Consolidated and Separate Financial Statements’. These include, Mission Biofuels Sdn Bhd, Mission Agro Energy Limited, and Oleovest PL.

 

Mission Biofuels (India) Pvt Limited has been deconsolidated from the Group financials with effect from 1 October 2013 due to an effective change in control as a result of the loan default (Refer to note 15 for further details). Mission Biotechnologies Sdn Bhd (MBTSB) has been deconsolidated from the Group financials with effect from 1 April 2014 upon placing the then dormant company into creditors voluntary winding up.

 

A list of controlled and jointly controlled entities with details of acquisitions and disposals is contained in Note 15 to the financial statements. All controlled entities have a 30 June financial year-end.

 

All inter-company balances and transactions between entities in the Consolidated Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies applied by the parent entity.

 

Where controlled entities have entered or left the Consolidated Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

 

Non-controlling interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

 

 

b.

Business combinations

 

The Group applies the acquisition method in accounting for business combinations. The consideration transferred by the Group to obtain control of a subsidiary is calculated as the sum of the acquisition-date fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset or liability arising from a contingent consideration arrangement. Acquisition costs are expensed as incurred. The Group recognises identifiable assets acquired and liabilities assumed in a business combination regardless of whether they have been previously recognised in the acquiree's financial statements prior to the acquisition. Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values. Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of a) fair value of consideration transferred, b) the recognised amount of any non-controlling interest in the acquiree and c) acquisition-date fair value of any existing equity interest in the acquiree, over the acquisition-date fair values of identifiable net assets. If the fair values of identifiable net assets exceed the sum calculated above, the excess amount (i.e. gain on a bargain purchase) is recognised in profit or loss immediately.

 

c.

Income Tax

 

The charge for current income tax expense is based on the profit/(loss) for the year adjusted for any non-assessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the reporting date.

 

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

 

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of profit or loss, except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

 

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

 

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

 

d.

Inventories

 

Inventories are measured at the lower of cost and net realisable value.

 

e.

Property, Plant and Equipment

 

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.

 

The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

 

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of profit or loss during the financial period in which they are incurred.

 

 

f.

Depreciation

 

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, is depreciated on a straight-line basis over their useful lives commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

 

Class of Fixed Asset	Depreciation Rate
Buildings	5%
Leasehold improvements	10%
Machinery and equipment	10%
Biodiesel Plant	5%
Computer equipment	20% - 33%
Motor Vehicles	20%
Office equipment	10%
Leased plant and equipment	10%
Windmills	4.75%

 

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

 

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

 

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of profit or loss.

 

g.

Leases

 

Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership that is transferred to entities in the Group, are classified as finance leases.

 

Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

 

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

 

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

 

h.

Financial Instruments

 

Recognition

Financial instruments are initially measured at fair value on trade date, which includes transaction costs(except where the instrument is classified as ‘fair value through profit or loss’ in which case transaction costs are expensed to profit or loss immediately), when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

 

Loans and receivables

 

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

 

Compound financial instruments (Convertible Notes)

 

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

 

 

Interest, dividends, losses and gains relating to the financial liability are recognised in profit or loss. On conversion, the financial liability is reclassified to equity; no gain or loss is recognised on conversion.

 

Held-to-maturity investments

 

These investments have fixed maturities, and it is the Group’s intention to hold these investments to maturity. Any held-to-maturity investments held by the Group are stated at amortised cost using the effective interest rate method.

 

Available-for-sale financial assets

 

Available-for-sale financial assets include any financial assets not included in the above categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to equity.

 

Financial liabilities

 

Non-derivative financial liabilities are recognised at amortised cost.

 

Fair value

 

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Hedge accounting

 

The Group holds derivative financial instruments to hedge its foreign currency exposures. On initial designation of the derivative as the hedging instrument, the Group formally documents the relationship between the hedging instrument and hedged item, including the risk management objectives and strategy in undertaking the hedge transaction and the hedged risk, together with the methods that will be used to assess the effectiveness of the hedging relationship. The Group makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items attributable to hedged risk, and whether the actual results of each hedge are within a range of 80 - 125 percent. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein are accounted for as described below.

 

Cash flow hedges

 

When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. When the hedged item is a non-financial asset, the amount recognised in equity is included in the carrying amount of the asset when the asset is recognised. In other cases the amount accumulated in equity is reclassified to profit or loss in the same period that the hedged item affects profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the balance in equity is reclassified in profit or loss.

 

Impairment of financial assets

 

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the Statement of profit or loss.

 

 

i.

Impairment of non-financial Tangible and Intangible Assets

 

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of profit or loss.

 

Impairment testing is performed at each reporting date for goodwill and intangible assets with indefinite lives.

 

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

 

j.

Intangibles

Goodwill

 

Goodwill on consolidation is initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

 

k.

Research and development

 

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

 

Development costs have a finite life and will be amortised on a systematic basis matched to the future economic benefits over the useful life of the project. As the development phase is still in progress, amortisation has not commenced. The estimated useful life of this asset will be determined when the development stage is complete.

 

l.

Foreign Currency Transactions and Balances

 

Functional and presentation currency

 

The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

 

Transaction and balances

 

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

 

Exchange differences arising on the translation of monetary items are recognised in the Statement of profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge.

 

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the Statement of profit or loss.

 

Group companies

 

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

 

·

assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

 

·

income and expenses are translated at average exchange rates for the period where this is not materially different from the rate at the date of the transaction; and

 

·

retained earnings are translated at the exchange rates prevailing at the date of the transaction.

 

 

Exchange differences arising on translation of foreign operations are transferred directly to the Group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the Statement of profit or loss in the period in which the operation is disposed.

 

m.

Employee Benefits

 

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

 

Equity-settled compensation

 

Equity settled share-based payments are measured at fair value at the date of grant. Fair values of options are measured using the Black Scholes model. Fair value of performance rights are based on the closing share price on the date of grant. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value determined at the grant date of the equity settled share share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

 

n.

Trade and Other Payables

Trade payables and other accounts payable are recognised when the Group becomes obliged to make future payments resulting from the purchase of goods and services.

 

o.

Provisions

 

Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

 

p.

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of 3 months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

 

q.

Revenue Recognition

 

Revenue from the sale of goods is recognised upon the delivery of goods to customers, when reasonable certainty exists that such revenues will be realised and the risks and rewards of ownership have been transferred.

 

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

 

Dividend revenue is recognised when the right to receive a dividend has been established. Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.

 

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers

 

All revenue is stated net of the amount of goods and services tax (GST).

 

r.

Borrowing Costs

 

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is necessary to complete and prepare the asset for its intended use. Other borrowing costs are expensed in the period in which they are incurred.

 

 

s.

Goods and Services Tax (GST)

 

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST

 

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows

 

t.

Government Grants

 

Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis.

 

u.

Non-current assets held for sale

 

Non-current assets held for sale are measured at the lower of cost or fair value less cost to sell when the assets is available for immediate sale and expected to be sold within 12 months. No depreciation is recorded over the assets held for sale.

 

Liabilities are classified as 'held for sale' and presented as such in the statement of financial position if they are directly associated with a disposal group.

 

v.

Earnings per share

 

Basic earnings per share are calculated by dividing the profit attributable to owners of the company, excluding costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.

 

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after tax effect of interest and other financing costs associated with the dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

 

w.

Contributed equity

 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

 

 

Attachment 2: Segment report

 

		Biodiesel Refining (Continuing Operations)				Corporate				Consolidated (Continuing Operations)				Jatropha and Power Generation (India) (Discontinued Operations)				Refining (Malaysia) (Discontinued Operations)				Consolidated (Continuing and Discontinued Operations)
		2014 $				2014 $				2014 $				2014 $				2014 $				2014 $
Revenue
Revenue from external customers			-				-				-				140,021				-				140,021
Interest received			-				1,231				1,231				-				-				1,231
Other revenue			4,942				9,677,413				9,682,355				-				714,411				10,396,766
Total segment revenue			4,942				9,678,644				9,683,586				140,021				714,411				10,538,018
Changes in Inventory			-				-				-				-				-				-
Costs of materials			-				-				-				-				-				-
Employee benefits expense			(175,040	)			(1,201,663	)			(1,376,703	)			-				(168,289	)			(1,544,992	)
Impairment			(255,410	)			(107,822	)			(363,232	)			114,063				204,152				(45,017	)
Depreciation and amortisation			-				(7,412	)			(7,412	)			-				-				(7,412	)
Interest expense			-				(4,862,648	)			(4,862,648	)			(56,044	)			-				(4,918,692	)
Other expenses			(2,748,939	)			(933,569	)			(3,682,508	)			(60,464	)			(1,029,956	)			(4,772,928	)
Segment result before tax			(3,174,447	)			2,565,530				(608,917	)			137,576				(279,682	)			(751,023	)
Profit/loss from ordinary activities before income tax											(608,917	)			137,576				(279,682	)			(751,023	)
Income tax expense											-				-				(13,527	)			(13,527	)
Net profit before accumulated loss from discontinued operations											(608,917	)			137,576				(293,209	)			(764,550	)
Net assets written off from discontinued operations											-				(268,865	)			(60,702	)			(329,567	)
Net profit / (loss) for the year											(608,917	)			(131,289	)			(353,911	)			(1,094,117	)
Non-current Segment assets			633,056				3,368,600				4,001,656				155,441				78,608				4,235,705
Non-current Segment assets – Assets held for sale			-				-				-				1,858,171				-				1,858,171
Total Segment assets			677,845				3,371,421				4,049,266				2,015,009				78,608				6,142,883
Segment liabilities			56,772				15,343,714				15,400,486				1,746,144				17,907				17,164,537
Acquisitions of property, plant and equipment			35,780				4,231				40,011				-								40,011

 

 

		Biodiesel Refining (Continuing Operations)				Corporate				Consolidated (Continuing Operations)				Jatropha and Power Generation (India) (Discontinued Operations)				Refining (Malaysia) (Discontinued Operations				Consolidated (Continuing and Discontinued Operations)
		2013 $				2013 $				2013 $				2013 $				2013 $				2013 $
Revenue
Revenue from external customers			159,055				-				159,055				361,096				-				520,151
Interest received			7,634				2,530				10,164				-				-				10,164
Other revenue			495,394				7,748,706				8,244,100				7,689				-				8,251,789
Total segment revenue			662,083				7,751,236				8,413,319				368,785				-				8,782,104
Changes in Inventory			(356,716	)			-				(356,716	)			-				-				(356,716	)
Costs of materials			(10,966	)			-				(10,966	)			(87,391	)			-				(98,357	)
Employee benefits expense			(445,460	)			(1,172,598	)			(1,618,058	)			(127,509	)			-				(1,745,567	)
Impairment			11,493,832				-				11,493,832				(403,463	)			-				11,090,369
Depreciation and amortisation			(3,366	)			(3,456	)			(6,822	)			(144,068	)			-				(150,890	)
Interest expense			(2,991	)			(4,045,692	)			(4,048,683	)			(232,088	)			-				(4,280,771	)
Other expenses			(1,967,324	)			(1,144,825	)			(3,112,149	)			(91,160	)			-				(3,203,309	)
Segment result before tax			9,369,092				1,384,665				10,753,757				(716,894	)			-				10,036,863
Profit/loss from ordinary activities before income tax											10,753,757				(716,894	)							10,036,863
Income tax expense											20,020				-				-				20,020
Net profit											10,773,777				(716,894	)			-				10,056,883

 

 

		Biodiesel Refining (Continuing Operations)				Corporate				Consolidated (Continuing Operations)				Jatropha and Power Generation (India) (Discontinued Operations)				Refining (Malaysia) (Discontinued Operations				Consolidated (Continuing and Discontinued Operations)
Non-current Segment assets			38,860				6,002				44,862				-								44,862
Non-current Segment assets – Assets held for sale			12,573,901				-				12,573,901				1,999,722				-				14,573,623
Total Segment assets			13,741,623				4,272,965				18,014,588				2,091,994				-				20,106,582
Segment liabilities			1,591,277				29,187,117				30,778,394				1,832,108				-				32,610,502
Acquisitions of property, plant and equipment			17,282				4,552				21,834				-								21,834

 

 

Exhibit 99.2

 

1 September 2014

ASX ANNOUNCEMENT

 

Mission signs Joint Venture and Plant Purchase Agreements

with World’s Largest Palm Oil Producer and

US Technology Provider

 

On 19 November 2013, Mission NewEnergy Limited (ASX:MBT) announced that it had entered into a Memorandum of Understanding with Benefuel Inc., a US based technology provider who have developed and successfully validated a ground breaking and patented technology process that will allow Mission’s 250,000 tpa biodiesel refinery to be commissioned and operated using substantially lower cost feedstock.

 

The announcement also stated that the parties are looking at opportunities to set up a joint venture company in Malaysia to own and operate the biodiesel refinery together with an integrated palm plantation company.

 

Mission NewEnergy Limited (“Mission”) is pleased to announce that its Malaysian subsidiary, M2 Capital Sdn Bhd (M2 Capital) has now entered into a Joint Venture and Shareholders Agreement with Felda Global Ventures Downstream Sdn Bhd (“FGVD”), a subsidiary of Felda Global Ventures Holdings Berhad, and Benefuel International Holdings S.A.R.L (Benefuel) to establish a new joint venture company, to own and operate the 250,000 tpa refinery at Kuantan Port belonging to Mission’s Malaysian subsidiary, Mission Biofuels Sdn Bhd (MBSB) to be retrofitted using Benefuel US proprietary “ENSEL®” technology. This will enable the Joint Venture to produce high quality biodiesel from lower cost feedstock.

 

Pursuant to the joint venture, Mission’s Malaysian subsidiary, Mission Biofuels Sdn Bhd (“MBSB”) simultaneously signed a Plant Purchase Agreement to sell its 250,000 tpa biodiesel refinery to the joint venture company for a sum of US$22.5 million.

 

M2 Capital will re-invest part of the proceeds for a 20% equity stake in the joint venture company, with the balance of the equity held by FGVD (60%) and Benefuel (20%).

  

 

All conditions precedent to the transaction are expected to be completed by the fourth quarter of 2014.

 

MBSB will utilize a significant portion of the proceeds from the sale for debt reduction and will set aside the sum A$4m in a designated account pursuant to a consent order recorded by the High Court in Malaysia pertaining to the ongoing Malaysian arbitration proceedings between MBSB and its contractor for the 250,000 tpa refinery, KNM Process Systems Sdn Bhd. Any remaining funds will be used for general working capital.

 

Among the conditions precedent, the sale of the biodiesel refinery will require an unconditional and full release of:-

 

	1.	the refinery as security for the fully paid SLW International facility, which will be cancelled as a result of the sale.
	2.	the refinery from being the subject matter of the security to the Loan Agreement between MNEL and MBSB

 

Nathan Mahalingam, Group CEO of Mission said “With the sale of the biodiesel refinery to the joint venture company, the restructuring plan embarked by the Company as announced in our announcement dated 27 January 2012 will be completed. The Company’s balance sheet should improve significantly after the disposal with shareholders funds turning positive”.

 

“We are also delighted to retain a 20% equity stake in the refinery through the joint venture. The first 100,000 tpa refinery which Mission sold to FGVD last year is now operating profitability at near full capacity. We have no doubt that the 2^nd refinery will do even better”, Nathan added.

 

The Company is currently reviewing several business opportunities, with its focus mainly on income generating businesses with growth potential in the energy, biomass to energy, oil and gas sectors.

 

We are pleased to attach a copy of Felda Global Ventures Holdings Bhd announcement and media release to the Malaysian Stock Exchange.

 

-     Announcement Ends -

 

For more information and a copy of this announcement, please visit: www.missionnewenergy.com or contact:

 

Company Contact:

James Garton

Phone: +61 8 6313 3975

Email: james@missionnewenergy.com

 

 

About Felda Global Ventures Downstream Sdn Bhd

 

FGVD is a wholly owned subsidiary of Felda Global Ventures Holdings Berhad (FGV), a public company incorporated in Malaysia and listed on the Malaysia Stock Exchange.

 

FGV is a leading globally-integrated, diversified agri-business focused on the whole supply chain of palm oil, rubber,sugar manufacturing and downstream activities in oils & fats and oleo-chemicals. FGV operates globally in more than 10 countries across 4 continents - North America, Europe, Asia, and Australia .

 

On 28 June 2012, the company was listed on the main market of Bursa Malaysia Securities Berhad with a market capitalisation exceeding US$5 billion as at 31 December 2013.

 

FGV as part of FELDA Group, is the world's largest palm oil producer and oil palm plantation operator, based on planted hectarage. FGV is the world's largest Crude Palm Oil (CPO) producer and the second largest Malaysian palm oil refiner.

 

With more than 19,000 people in the group from our subsidiaries as well as joint-venture companies and associates, FGV aspires to be one of the top 10 agri-business conglomerate in the world by 2020

 

For more information, please visit their website at www.feldaglobal.com

 

About Benefuel Inc

 

Benefuel Inc. is a US company who have developed a groundbreaking and first to market refining technology. Benefuel holds the exclusive global license to the ENSEL® technology with 6 patents issued and 50 others in various jurisdictions and stages of prosecution.

 

Benefuel’s ENSEL technology can process low-cost, high free fatty acid (“FFA”) feedstocks into high quality biodiesel with high yields in a single step, affording it lower production costs compared to conventional high FFA conversion processes.

 

For more information on Benefuel Inc, please visit their website at www.benefuel.net

 

 

FELDA GLOBAL VENTURES HOLDINGS BERHAD

 

Type     Announcement

Subject            OTHERS

Description     PROPOSED ACQUISITION OF ASSET VIA A JOINT VENTURE BETWEEN FELDA GLOBAL VENTURES DOWNSTREAM SDN. BHD. (“FGVD”), A SUBSIDIARY OF FGV, M2 CAPITAL SDN. BHD. (“M2 CAPITAL”) AND BENEFUEL INTERNATIONAL HOLDINGS S.À.R.L. (“BENEFUEL”) (“PROPOSED JOINT VENTURE”)

 

1.       INTRODUCTION

 

The Board of Directors (“Board”) of FGV is pleased to announce that Felda Global Ventures Downstream Sdn. Bhd.(“FGVD”), a wholly-owned subsidiary of FGV, had on 29th August 2014 entered into a Joint Venture cum Shareholders Agreement (“JVA”) with M2 Capital Sdn. Bhd. (“M2 CAPITAL") and Benefuel International Holdings S.A.R.L. (“BENEFUEL”) to set up a joint venture through a single-purpose joint venture company (“JV Company”). Pursuant to a conditional agreement to be known as the Plant Purchase Agreement, the JV Company has agreed to acquire a biodiesel plant (“Plant”) located at Kuantan Port, Malaysia from Mission Biofuels Sdn. Bhd. (Company No. 735218-A) (“MBSB”) for USD twenty two million and five hundred thousand (USD 22,500,000.00) (“Plant Acquisition”) and thereafter carry out retrofitting and refurbishment on the Plant for it to operate on the Benefuel ENSEL® technology. The JV Company shall then venture into the business of producing and manufacturing biodiesel using the retrofitted Plant.

 

2.       DETAILS OF THE PROPOSED JOINT VENTURE

 

2.1       Proposed Joint Venture

 

Subject to the fulfilment of the conditions precedent and closing of the JVA and the Plant Purchase Agreement, the initial paid-up capital of the JV Company shall be RM100.00 divided into 100 shares of RM1.00 each.

 

2.2       Shareholding

 

(a)       The shareholding of FGVD, M2 CAPITAL and BENEFUEL(hereinafter referred to collectively as “Parties” and individually as “Party”) in the JV Company and the participation of the Parties in the JV Company shall be in the following proportions:

 

Party				Legal title
FGVD				60	%
M2 CAPITAL				20	%
BENEFUEL				20	%
Total				100	%

 

 

(b)      FGVD shall initially subscribe to 60 issued shares at a nominal value of RM1.00 per share. This is 60% of the total issued shares of 100.

 

(c)       M2 CAPITAL shall initially subscribe to 20 issued shares at a nominal value of RM1.00 per share. This is 20% of the total issued shares of 100.

 

(d)       BENEFUEL shall initially subscribe to 20 issued shares at a nominal value of RM1.00 per share. This is 20% of the total issued shares of 100.

 

3.       SALIENT TERMS OF THE JVA

 

3.1       Conditions Precedent

 

The Proposed Joint Venture is subject to the fulfilment of the conditions precedent as set out in the Plant Purchase Agreement, which include among others the following (“Conditions Precedent”):

 

(i)            The JV Company conducting a Front End Loading-2 (“FEL-2”) study on the Plant with the result of the FEL-2 study demonstrating or proving that the Plant fulfills FEL-2 conditions;

 

(ii)                Negotiation, finalization and execution of other related commercial agreements within ninety (90) days from the date of the JVA.

 

3.2       Details of the Project

 

The Parties acknowledge that the estimated project cost for the Proposed Joint Venture including the Plant Acquisition, licensing costs, purchase of catalyst, refurbishment and retrofit shall be approximately USD47,500,000.00. For the Plant Acquisition, the Parties acknowledge that on the execution of the Plant Purchase Agreement, a refundable deposit of USD225,000.00 representing 1% of the purchase price of the Plant is due and payable by the JV Company to MBSB. A progressive payment of USD11,025,000.00 representing 49% of the purchase price of the Plant to be paid by the JV Company to MBSB on the Unconditional Date (upon fulfillment of the conditions precedent in the Plant Purchase Agreement). The remaining 50% (less retention sum and the judgment deposit) of the purchase price of the Plant shall be paid by the JV Company to MBSB upon closing of the Plant Purchase Agreement. The total consideration for the Plant Acquisition shall be satisfied entirely in cash.

 

 

3.3       Business of the JV Company

 

Subject to the terms of the JVA, the business of the JV Company shall be to engage in the manufacturing and production of biodiesel, and other activities incidental and ancillary thereto and modifications thereof as mutually agreed by the Parties.

 

3.4       Equity Participation

 

FGVD, M2 CAPITAL and BENEFUEL’s equity participation in the JV Company shall be in the following proportions:

 

Party				Legal title
FGVD				60	%
M2 CAPITAL				20	%
BENEFUEL				20	%
Total				100	%

 

4.       RATIONALE FOR THE PROPOSED JOINT VENTURE

 

Through the joint venture, FGVD, M2 CAPITAL and BENEFUEL will be able to collaborate and leverage on each other’s strength and areas of expertise to venture into the manufacturing business of biodiesel production in Malaysia.

 

5.       FINANCIAL EFFECTS OF THE PROPOSED JOINT VENTURE

 

The Proposed Joint Venture is not expected to have a significant effect on the earnings per share, net assets per share, gearing, share capital and substantial shareholders’ shareholdings in FGV for the current year ending 31st December 2014.

 

6.       APPROVALS REQUIRED

 

The Proposed Joint Venture is not subject to approvals from any relevant authorities or parties.

 

7.       DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST

 

None of the Directors and major shareholders of FGV and/or persons connected to them have any interest, direct or indirect, the Proposed Joint Venture.

 

 

8.       ESTIMATED TIMEFRAME FOR CLOSING

 

Barring any unforeseen circumstances, the Proposed Joint Venture is expected to be completed in the 4th quarter of the financial year ending 2014.

 

This announcement is dated 29th August 2014.

 

 

 

MEDIA RELEASE

 

FGV Enters into JV to Acquire Biodiesel Plant for USD 22.5 million (RM71.8 million)

 

•   Joint venture parties include M2 Capital and Benefuel International

•   FGV to take a 60% stake in the joint venture company

•   Biofuel plant will have annual production capacity of 250,000 MT and will cater to both domestic and international markets

 

Kuala Lumpur, 29 August 2014 - Felda Global Ventures Holdings Berhad (FGV) through its subsidiary, Felda Global Ventures Downstream Sdn. Bhd. (FGVD) enters into a joint venture agreement to strengthen its market presence in the biodiesel business.

 

The joint venture parties and their corresponding shareholding are FGVD (60%); M2 Capital Sdn. Bhd. (M2 Capital) (20%), a subsidiary of Australia’s Mission NewEnergy Limited (MNE) and Benefuel International Holdings S.A.R.L (Benefuel) (20%), a subsidiary of US-based technology provider, Benefuel Inc .

 

The joint venture company will acquire a biodiesel plant in Kuantan Port, Malaysia from Mission Biofuels Sdn. Bhd, a subsidiary of MNE and carry out retrofitting and refurbishment to the plant for it to operate on the Benefuel ENSEL® technology. The biodiesel plant will have a production capacity of 250,000 metric tonnes per annum. Through this synergistic collaboration with our partners, there are ready market players throughout their network in North America and Europe who will offtake most of the production.

 

Mohd Emir Mavani Abdullah, Group President and Chief Executive Officer of FGV said: “This is indeed a strategic move for FGV as this collaboration enables all parties to leverage on their strengths and areas of expertise to tap into the growing biodiesel market. With the new plant, our biodiesel capabilities will increase over threefold, resulting in FGV becoming one of the largest exporters of biodiesel in Southeast Asia.”

 

 

The total consideration for the plant acquisition will be funded by cash. Furthermore, the estimated project cost for the proposed joint venture including the plant acquisition, licensing costs, purchase of catalyst, refurbishment and retrofit will be approximately USD 47.5 million (RM 151.6 million).

 

The proposed joint venture is expected to be completed in the fourth quarter of the financial year ending, 31 December 2014.

 

The new plant is located next to FGV’s current biodiesel plant in Kuantan and is expected to be operational in late 2015. It will feature the ENSEL® technology - a technology from Benefuel Inc. that is cost-efficient allowing the use of high free fatty acid (FFA) feedstocks, a by-product of crude palm oil milling and refining to produce palm methyl ester (PME).

 

The plant is very strategically located as it is near to a refinery and oleochemical plant owned by Felda Vegetable Oil products Sdn Bhd and Felda Procter Gamble - both companies within the FGV Group.

 

“We are committed to developing sustainable products of the highest quality. By adopting the latest technology and expertise through this joint venture, our products will exceed all global biodiesel standards and ensure we achieve even greater penetration in international markets including Europe and the US,” said Mohd Emir.

 

*** ends ***

 

 

For enquiries, please contact:
FGV
Raja Zamilia Raja Dato’ Seri Mansur	Ariff Ahmad
+603-26934332	+603-26937000
+6012-7212147	+6016-3288944
rajazamilia.rm@feldaglobal.com	ariff.ahmad@feldaglobal.com

  

 

About Felda Global Ventures Holdings Berhad (FGV)

 

Felda Group is the largest oil palm plantation operator in the world. FELDA manages 500,000 ha of plantation belonging to its settlers while FGV currently operates more than 360,000 hectares of oil palm plantation estates in Malaysia that produced 5.05 million metric tonnes of fresh fruit bunches in 2013.

 

Felda Global Ventures Holdings Berhad (FGV) is a global integrated, diversified agri-commodities company based in Malaysia, with operations in more than 10 countries across four continents and is principally engaged in six main business segments, namely; palm upstream cluster, palm downstream cluster, rubber cluster, sugar cluster, R&D and Agri Services cluster and TLMO (Trading, Logistics, Manufacturing and Others).

 

In its downstream business segment, FGV produces soybean and canola products as well as oleochemicals. FGV has interests in palm oil refineries and downstream processing facilities in Malaysia, Indonesia, China, Turkey and South Africa as well as a facility for other oils and fats in the USA.

 

Through its subsidiary, MSM Holdings, FGV is Malaysia’s largest sugar producer. It produced approximately one million metric tonnes of sugar products in 2013, which represented 57% of domestic refined sugar production.

 

For more information, please visit http://www.feldaglobal.com

 

About Mission NewEnergy Limited

 

Mission NewEnergy is a renewable energy company.

 

Mission NewEnergy Limited is an Australian Securities Exchange (“ASX”) listed company. Mission's asset include a 250,000 tonnes per annum of biodiesel refinery located at Kuantan Port in Malaysia and a joint venture into an oleochemical project in Indonesia.

 

For more information, please visit www.missionnewenergy.com

 

About Benefuel Inc.

 

Benefuel Inc. is a biodiesel process technology and production company based in Irving, Texas. The company has exclusive, global rights to next-generation technology for manufacturing biodiesel and bio-lubricants. The Company holds the exclusive global license to the ENSEL® technology with 6 patents issued and 50 others in various jurisdictions and stages of prosecution.

 

 

Benefuel’s patented ENSEL® process allows the company to produce biodiesel at a substantially lower cost than conventional methods by using lower cost, high free fatty acid feedstocks and converting them efficiently into biodiesel and glycerin.

 

For more information, please visit www.benefuel.net