Hazer Group Limited
Appendix 4E
Final report
1. Company details
Name of entity:
ABN:
Reporting period:
Previous period:
Hazer Group Limited
40 144 044 600
For the year ended 30 June 2017
For the year ended 30 June 2016
2. Results for announcement to the market
Revenues from ordinary activities
Loss from ordinary activities after tax attributable to the owners of Hazer
Group Limited
Loss for the year attributable to the owners of Hazer Group Limited
up
up
up
Dividends
Final dividend for the year ended 30 June 2017
Interim dividend for the year ended 30 June 2017
No dividend has been declared.
Comments
The loss for the company amounted to $3,877,507 (30 June 2016: $1,844,358).
$
304% to
337,785
110%
to
3,877,507
110% to
3,877,507
Amount per
security
Cents
Franked
amount per
security
Cents
0.0
0.0
0.0
0.0
Losses after income tax increased by 110% on the prior year as the Company increased research and development activities
to commercialise the Hazer Process. Research and development paths undertaken included process scale-up work, graphite
product development / functionalisation and graphite commercialisation work. Operating expenses during the period
principally related to consulting fees, employee expenses, general corporate overhead and research and development
expenses.
The Company’s cash and cash equivalents were $8,144,451 at 30 June 2017 (30 June 2016: $4,677,919) and net assets at
30 June 2017 were $8,880,690 (30 June 2016: $4,420,770). Parts and engineering services associated with the construction
of a pre-pilot plant facility totalling $1,081,114 were capitalised during the year.
The operating cash outflow for the year increased by 77% to $2,582,193 (30 June 2016: $1,455,137) largely as a result of
increased research and development activities. Investing cash outflows of $1,078,171 (30 June 2016: $0) related to the
procurement of parts and engineering services associated with the construction of a pre-pilot plant facility. Financing cash
inflows increased by 28% to $7,126,896 (30 June 2016: $5,570,129).
The main capital raising transactions during the year were (i) a $5,000,000 strategic placement to existing shareholder
Mineral Resources Limited (ASX:MIN) via the issue of 8,333,333 new fully paid ordinary shares at an issue price of $0.60
per share and 4,166,167 unlisted options, each option giving the right to subscribe for one additional share at an exercise
price of $0.70 per share, with an expiry date of 31 December 2019 and (ii) $2,133,860 was raised via a Share Purchase Plan
under which eligible shareholders could apply for up to $15,000 of shares at $0.60 each.
The Company confirms in the period from admission to the official list of the ASX to 30 June 2017, that it used its cash and
assets in a form readily convertible to cash, in a manner consistent with its business objectives.
As an early stage company, the Company’s business model is highly dependent on the achievement of continued technical
development success as well as future funding, customer engagement and general financial and economic factors.
For personal use only
Reporting
period
Cents
Previous
period
Cents
10.19
6.85
Hazer Group Limited
Appendix 4E
Preliminary final report
3. Net tangible assets
Net tangible assets per ordinary security
4. Control gained over entities
Not applicable
5. Loss of control over entities
Not applicable.
6. Details of associates and joint venture entities
Not applicable
7. Audit qualification or review
The financial statements have been audited and an unqualified opinion has been issued.
8. Attachments
The Annual Report of Hazer Group Limited for the year ended 30 June 2017 is attached.
9. Signed
Signed ______________________________
Date: 31 August 2017
Geoff Pocock
Director
For personal use only
Hazer Group Limited
ABN 40 144 044 600
Annual Report – 30 June 2017
For personal use only
CORPORATE DIRECTORY
Directors
Geoff Pocock (Managing Director)
Tim Goldsmith (Non-Executive Chairman)
Danielle Lee (Non-Executive Director)
Andrew Harris (Non-Executive Director)
Terry Walsh (Non-Executive Director)
Company secretary
Emma Waldon
Registered office
Principal place of business
Share register
Auditor
Solicitors
Bankers
7/29 The Avenue
Nedlands
Western Australia 6009
Phone: 08 9389 7050
7/29 The Avenue
Nedlands
Western Australia 6009
Phone: 08 9389 7050
Link Market Services Limited
Central Park Level 4,
152 St Georges Terrace
Perth WA 6000
Phone: 1300 554 474
RSM Australia Partners
8 St Georges Terrace
Perth Western Australia 6000
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe WA 6011
Commonwealth Bank of Australia
150 St Georges Terrace
Perth WA 6000
Stock exchange listing
Hazer Group Limited shares are listed on the Australian Securities Exchange (ASX
code: HZR)
Website
www.hazergroup.com.au
Corporate Governance Statement
http://www.hazergroup.com.au/about/corporate-governance
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
CHAIRMAN’S LETTER
Dear Shareholder
On behalf of the Board I am pleased to present the 2017 Annual Report to shareholders.
During the past year the Company made significant progress towards the commercialisation of the Hazer Process including
the commissioning of a Pre Pilot Plant, representing the transition of the Hazer Process from laboratory based equipment.
The Company’s balance sheet was also strengthened via the successful completion of fund raisings totalling $7.1m (before
costs).
The successful commissioning of the Company’s Pre Pilot Plant, located in St Marys in Western Sydney, demonstrates the
potential operation of the Hazer Process beyond laboratory based equipment, and brings Hazer closer to its goal of supplying
global markets with economically competitive, clean hydrogen and synthetic graphite. The pre-pilot plant will now be used to
illustrate the impact of scale-up on process performance and graphite product quality, and demonstrate the de-risking design
and optimisation requirements of the technology.
With hydrogen tipped to become an important clean energy fuel, Hazer remains focused on advancing the scale of the Hazer
Process to suit this market and take advantage of major trends occurring globally, including:
• Governments prioritising a push towards lower vehicle emissions
• Major automotive manufacturers pursuing fuel cell vehicles
•
• Significant refueling infrastructure being developed across Europe, Asia and the US
• The increasing focus on small scale distributed hydrogen production
• Newly created ‘Hydrogen Council’ to invest $10.7B euros in projects within 5 years
Increased consumer adoption of fuel cell vehicles
Graphite is the other key market opportunity for the Hazer Process and as part of a $5.0m strategic placement from Mineral
Resources Limited (ASX: MIN) during the year, Hazer and MIN have agreed to enter into formal discussions towards the
establishment of a commercial partnership to develop an industrial scale synthetic graphite plant.
I am very excited to join Hazer at this inflection point in the company's commercialisation trajectory and to work with the
management team as we evolve further into an industrial technology business. I look forward to executing our vision of
supplying global markets with hydrogen and high quality graphite – both critical ingredients in the clean energy industry, and
playing a role in prioritising and converting any potential commercial opportunities.
Finally, I would like to take the opportunity to acknowledge the contribution of former Director, Rick Hopkins, who stepped
down as Chairman in July. Rick has been an investor in, and board member of, Hazer since its founding in 2010, and has
been a key supporter of the technology and driver of the growth in the company over that time.
I look forward to your continued support as a shareholder as the Company continues its commercialisation activities.
Yours faithfully
Mr Tim Goldsmith
Non-Executive Chairman
Hazer Group Limited
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
MANAGING DIRECTOR’S REPORT
ABOUT HAZER GROUP
Hazer Group Limited (“Hazer” or the “Company”) is the commercialisation entity for the Hazer Process – a potential low cost,
low emission novel hydrogen and graphite production technology, originally developed at the University of Western Australia.
The Hazer Process allows the production of hydrogen from methane in an environmentally friendly process together with the
production of high purity graphite. Distinguishing features of the Hazer Process from existing commercial hydrogen production
technologies include the use of low cost iron ore as a low cost catalyst for the process, and the co-production of high purity
graphite, avoiding a significant proportion of the CO2 emissions associated with traditional hydrogen production systems.
During the course of the 2016-2017 year, the Company has made significant progress on both technical, commercial and
corporate development necessary to see the commercialisation of the Hazer Process.
SIGNIFICANT PROCESS AND SCALE-UP MILESTONES ACHIEVED
During the year, the Company has made significant progress in the technical development and scale up of the Hazer Process.
Laboratory Test Program
Laboratory test work, undertaken in collaboration with the University of Sydney’s School of Chemical and Biomolecular
Engineering, saw substantial progress on key aspects of the Company’s technical development program. The Company
successfully demonstrated the Hazer Process at significantly greater scale, producing over 1kg of graphite, and also made
substantial steps in improving the purity of the graphite produced, both at the initial reaction stage and also through subsequent
chemical processing. Hazer has now shown the production of graphite at up to 95% purity as an immediate, raw product, as
well as demonstrating the ability to further purify the raw graphite up to 99.95% tgc, the purity levels required for high value
graphite uses, including use in batteries.
Pre-Pilot Plant
In late 2016, construction of Hazer’s pre-pilot plant facility began as the Company moved forward into the next phase of
commercialisation and scale-up. The Pre Pilot Plant is a key milestone in the commercialisation process, representing the
transition of the Hazer Process from laboratory based equipment.
In April 2017, Hazer successfully produced hydrogen and graphite from the facility, demonstrating the basic reaction
functionality for the facility. Hazer completed commissioning of the Pre Pilot Plant in July 2017, cementing the transition from
laboratory based operations to a larger custom designed plant.
This commissioning marked a significant inflection point in Hazer’s development trajectory, with the pre-pilot plant currently
commencing its key operational experimentation phase, to enable the determination of key operating parameters for the Hazer
process’ ongoing scale up and development, as well as identifying engineering requirements for the balance of plant (BOP)
aspects for further scale up. A range of process design and operational optimisation opportunities identified during the
commissioning phase are also being progressed as part of ongoing operations of the pre-pilot plant
COMMERCIAL DEVELOPMENT EXPERTISE SECURED
As Hazer transitioned from laboratory based technical work to more substantial non-laboratory operations, the Company was
pleased to add further commercial development expertise to the Board and management team.
Mr Cobus Malherbe was appointed as General Manger – Process Development in April 2017. With over 20 years commercial
engineering experience, Cobus has brought a wealth of commercial and technical expertise, and substantial project
management experience, to the Hazer technical team.
Most recently, the Company was pleased to secure ex-PwC Global Mining leader Tim Goldsmith as Chairman. Tim was
previously a partner at global professional services firm PricewaterhouseCoopers (PwC) for over 20 years, where he was
head of PwC’s Global Mining Practice as well as leading PwC’s operations in China. Tim comes with decades of leadership
experience across mining and industrial sectors, and the Company is excited to have secured a Chairman with such significant
global experience. Tim’s relationships across international corporate clients and capital markets, in particular those in China,
will be invaluable to Hazer going forward.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
MANAGING DIRECTOR’S REPORT
CORPORATE & FINANCING
The Company completed a $7.1m capital raising in March 2017, significantly increasing its balance sheet and cash reserves.
The capital raising was underpinned by a $5m cornerstone investment by existing shareholder Mineral Resources Limited
(ASX: MIN), a leading and highly innovative full-service provider of mining infrastructure services in Australia with a market
capitalisation of over $2 billion. This investment makes MIN the Company’s largest shareholder, with a 13% holding in the
Company. Alongside the investment by Mineral Resources, the Company also raised an additional $2.1m from existing
shareholders via a Share Purchase Plan (“Plan). The Company thanks Mineral Resources Limited and all shareholders who
participated in the Plan for their continued support of the Company.
As part of the strategic placement from Mineral Resources Limited, Hazer and MIN also agreed to enter into formal discussions
towards the establishment of a commercial partnership to develop an industrial scale synthetic graphite plant.
The Company also undertook a number of marketing activities during the year, with significant media interest in the potential
for Hazer to become the world’s cheapest means of supplying global markets with hydrogen and high quality graphite - both
critical ingredients in the clean energy industry. Following on from these marketing activities and promotion, in early 2017
Hazer was selected to be one of 30 companies globally to present at the 2017 CleanEquity® Conference held in Monaco.
During the Monaco conference, and subsequent trips to the key clean energy markets of Europe and the US, Hazer has built
strong relationships with a range of international partners who could assist the Company in realising the enormous potential
of the core Hazer technology.
Mr Geoff Pocock
Managing Director
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
H
The directors present their report, together with the financial statements, on the company (referred to hereafter as the
'company') consisting of Hazer Group Limited (referred to hereafter as the 'company' or 'parent entity') for the year ended
30 June 2017.
Directors
The following persons were directors of Hazer Group Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Geoff Pocock
Rick Hopkins (resigned 24 July 2017)
Bryant McLarty (resigned 7 February 2017)
Danielle Lee
Andrew Harris
Terry Walsh (appointed 7 February 2017)
Tim Goldsmith (appointed 24 July 2017)
Principal activities
During the financial year the principal continuing activities of the company consisted of research and development of novel
graphite and hydrogen production technology.
The Company has intellectual property rights to a technology which allows the production of hydrogen gas from methane
(natural gas) with negligible carbon dioxide emissions and the co-production of a high purity graphite product (the ‘Hazer
Process’).
Dividends
There were no dividends paid during the year.
Review of operations
The loss for the company amounted to $3,877,507 (30 June 2016: $1,844,358).
Losses after income tax increased by 110% on the prior year as the Company increased research and development activities
to commercialise the Hazer Process. Research and development paths undertaken included process scale-up work, graphite
product development / functionalisation and graphite commercialisation work. Operating expenses during the period
principally related to consulting fees, employee expenses, general corporate overhead and research and development
expenses.
The Company’s cash and cash equivalents were $8,144,451 at 30 June 2017 (30 June 2016: $4,677,919) and net assets at
30 June 2017 were $8,880,690 (30 June 2016: $4,420,770). Parts and engineering services associated with the construction
of a pre-pilot plant facility totalling $1,081,114 were capitalised during the year.
The operating cash outflow for the year increased by 77% to $2,582,193 (30 June 2016: $1,455,137) largely as a result of
increased research and development activities. Investing cash outflows of $1,078,171 (30 June 2016: $0) related to the
procurement of parts and engineering services associated with the construction of a pre-pilot plant facility. Financing cash
inflows increased by 28% to $7,126,896 (30 June 2016: $5,570,129).
The main capital raising transactions during the year were (i) a $5,000,000 strategic placement to existing shareholder
Mineral Resources Limited (ASX:MIN) via the issue of 8,333,333 new fully paid ordinary shares at an issue price of $0.60
per share and 4,166,167 unlisted options, each option giving the right to subscribe for one additional share at an exercise
price of $0.70 per share, with an expiry date of 31 December 2019 and (ii) $2,133,860 was raised via a Share Purchase Plan
under which eligible shareholders could apply for up to $15,000 of shares at $0.60 each.
The Company confirms in the period from admission to the official list of the ASX to 30 June 2017, that it used its cash and
assets in a form readily convertible to cash, in a manner consistent with its business objectives.
As an early stage company, the Company’s business model is highly dependent on the achievement of continued technical
development success as well as future funding, customer engagement and general financial and economic factors.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the company during the financial year.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Matters subsequent to the end of the financial year
On 6 July 2017, it was announced that the company had successfully commissioned it’s pre-pilot plant located in St Mary’s
in Western Sydney. This marked a significant inflection point in Hazer’s development trajectory with the pre-pilot plant now
ready to commence the operational experimentation phase. The commissioning demonstrated the potential operation of the
Hazer process beyond laboratory based equipment and brings Hazer closer to its goal of supplying global markets with
economically competitive, clean hydrogen and synthetic graphite.
On 24 July 2017, Tim Goldsmith was appointed as Non-Executive Chairman and Rick Hopkins resigned as Non-Executive
Chairman.
On 24 July 2017, it was announced on the ASX that a Chairman’s fee of $60,000 per annum and the following options are
proposed to be issued to Tim Goldsmith as a term of his engagement as a Non-Executive Chairman, subject to shareholder
approval at the next annual general meeting of the Company (i) 1,000,000 options exercisable at $0.75 each and expiring
30 June 2020 which vest 6 months after appointment provided the holder has continued to be engaged as a Director and
employee of the Company prior to the vesting date, (ii) 1,250,000 options exercisable at $0.95 each and expiring 31
December 2020 which vest 12 months after appointment provided the holder has continued to be engaged as a Director and
employee of the Company prior to the vesting date and (iii) 1,500,000 options exercisable at $1.20 each and expiring 31
December 2021 which vest 18 months after appointment provided the holder has continued to be engaged as a Director and
employee of the Company prior to the vesting date.
On 24 July 2017, the following material variations to the Executive Services Agreement of Geoff Pocock (Managing Director)
were announced on the ASX, (a) pay a cash bonus of $120,000 as satisfaction of any discretionary bonus entitlement up to
31 December 2016; and (b) subject to obtaining shareholder approval at the next general meeting of the Company, the
Company will issue Geoff Pocock (or his nominee) the following options (i) 750,000 options with an exercise price of $0.75
and expiry date of 30 June 2020, vesting 6 months from the date of the announcement provided that the holder has continued
to be engaged as a Director and employee of the Company prior to and at the vesting date, (ii) 1,000,000 options with an
exercise price of $0.95 and expiry date of 31 December 2020, vesting 12 months from the date of the announcement provided
that the holder has continued to be engaged as a Director and employee of the Company prior to and at the vesting date
and (iii) 1,500,000 options with an exercise price of $1.20 and expiry date of 31 December 2021, vesting 18 months from the
date of the announcement provided that the holder has continued to be engaged as a Director and employee of the Company
prior to and at the vesting date.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the
company's operations, the results of those operations, or the company's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the company and the expected results of operations have not been
included in this report because the directors believe it would be likely to result in unreasonable prejudice to the company.
Environmental regulation
The company is not subject to any significant environmental regulation under Australian Commonwealth or State law.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Geoff Pocock
Managing Director
Bachelor of Science (first class honours) from University of Western Australia; Bachelor
of Laws (University of Western Australia) and Post Graduate Diploma in Applied
Finance and Investment from Securities Institute of Australia.
is an experienced strategy consultant and commercialisation
Geoff Pocock
professional, with over 20 years’ experience across the commercialisation process.
Geoff’s experience has covered technical roles, executive management as well as
significant corporate finance and strategy roles with a number of technology
commercialisation ventures.
Geoff is the Principal of Polaris Consulting (WA) Pty Ltd, a specialist boutique
commercialisation strategy and corporate advisory business based in Western
Australia. Prior to founding Hazer, he was a founder and Managing Director of Dynamic
Microbials Limited, an unlisted public drug discovery company working on the
identification and development of novel antibiotics for specialist human health
application. Geoff was an Executive Director/Managing Director of Dynamic Microbials
Limited from the Company’s inception until the Company was acquired by its parent
Phylogica Ltd in an all-scrip merger in 2008.
Geoff has extensive strategy consulting and corporate advisory experience, through a
number of boutique Western Australian corporate/advisory firms, and he was a
Founder and executive of a mid-tier strategy consulting firm, overseeing the growth of
the firm from its formation and initial operations to it becoming the largest strategy
consulting firm in Western Australia with over 20 professional staff, with a concomitant
increase in revenue and profitability.
Director since 6 August 2010
Length of service:
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Interests in shares:
Interest in options:
Contractual rights to shares:
Chief Executive Officer
4,200,000
1,050,000 (Listed options) and 7,000,000 (Unlisted options)
3,250,000 (Unlisted options) subject to shareholder approval
Experience and expertise:
Name:
Title:
Qualifications:
Tim Goldsmith
Non-Executive Chairman (Independent Director)
Bachelor of Commerce from the Polytechnic of North London (now North London
University). Member of the Institute of Chartered Accountants Australia and New
Zealand.
Tim was previously a partner at global professional
firm
PricewaterhouseCoopers (PwC) for over 20 years. Tim held multiple roles during his
PwC career and is best known for leading PwC’s global mining team with more than
2,000 partners and staff in more than 100 mining countries. During his tenure as Global
Mining Leader, Tim was also responsible for PwC’s thought leadership on the future of
the mining industry and was a well-known presenter at mining conferences around the
globe. Tim was an early participator in the China growth story and initiated a China
focus in 2002 that lead to PwC’s Australia China desk, which is known throughout
China today. As National China Desk Leader, Tim worked extremely closely with many
state-owned and private Chinese investors and companies to facilitate Chinese foreign
investment in Australian mining and other assets.
Director since 24 July 2017
Length of service:
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
services
Member of the Audit and Risk Committee and Member of Remuneration and
Nomination Committee
358,422
62,500 (Listed options)
3,750,000 (Unlisted options) subject to shareholder approval
Interests in shares:
Interests in options:
Contractual rights to shares:
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Experience and expertise:
Name:
Title:
Qualifications:
Terry Walsh
Non-Executive Director
Bachelor of Laws from Charles Darwin University and Master of Laws from The
University of Sydney
Mr Walsh is a senior commercial lawyer and manager with more than 20 years’
experience in project development and general commercial law, including roles as a
Corporate Counsel with Rio Tinto Ltd and as General Counsel of Hancock Prospecting
Pty Ltd. In these roles he was involved with the legal and commercial aspects
associated with the development, funding and operation of major mining and
engineering projects. Mr Walsh has provided business development consulting
services to the Company since 14 April 2016.
Director since 7 February 2017
Length of service:
Other current directorships:
None
Former directorships (last 3 years): None
None
Special responsibilities:
50,000
Interests in shares:
140,000 (Listed options)
Interests in options:
900,000 (Unlisted options) subject to shareholder approval
Contractual rights to shares:
Experience and expertise:
Name:
Title:
Qualifications:
Danielle Lee
Non-Executive Director (Independent Director)
Bachelor of Economics from the University of Western Australia, Bachelor of Laws from
the University of Western Australia (first class honours); Post Graduate Diploma in
Applied Finance and Investment from the Securities Institute of Australia.
Danielle is an experienced corporate lawyer more than 23 years’ experience shared
between private law firms and the Australian Securities Exchange. She has a broad
range of skills and legal experience in the areas of corporate advisory, governance and
equity capital markets. She has advised a range of Australian public and private
companies in a range of industries on corporate transactions including capital raisings,
ASX listings, business and share acquisitions, shareholder agreements and joint
venture arrangements.
Director since 16 September 2015
Length of service:
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
Chair of Audit and Risk Committee and Member of Remuneration and Nomination
Committee
None
950,000 (Unlisted options)
None
Interests in shares:
Interests in options:
Contractual rights to shares:
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Experience and expertise:
Name:
Title:
Qualifications:
Andrew Harris
Non-Executive Director (Independent Director)
PhD in engineering from the University of Cambridge and undergraduate degrees in
engineering and science from the University of Queensland. A Fellow of the Institution
of Chemical Engineers and Engineers Australia and a member of the Australian
Institute of Company Directors
Dr Andrew Harris is highly experienced in renewable energy, sustainability, biomimicry,
nanotechnology, process engineering and the hydrogen energy economy. He is the
lead Director of the Engineering Excellence Group within Laing O’Rourke’s internal
engineering and innovation team. Laing O’Rourke is one of the world’s largest privately
owned engineering and construction companies, with annual revenues of $8 billion,
15,000 staff and operations in Europe, North America, the Middle East, Asia and
Australia. The Engineering Excellence Group was established to be a global centre of
excellence, to transform Laing O’Rourke’s capabilities through strategic innovation,
research and development, and enhanced technical performance.
Dr Harris is also Professor of Chemical and Bimolecular Engineering at the University
of Sydney and co- director of the Laboratory for Sustainable Technology, the state of
art laboratory where Hazer has established its core development activities for the Hazer
Process. Dr Harris was the youngest ever professor of Chemical Engineering appointed
at the University of Sydney.
Dr Harris was also previously the Chief Technology O
cer of Zenogen Pty Ltd, a
Sydney-based hydrogen production technology company, and was a co-founder of Oak
Nano, a University of Sydney start-up commercialising novel carbon nanotube
technology. Oak Nano designed and built the largest carbon nanotube production
facility in the southern hemisphere.
Director since 21 June 2016
Length of service:
Other current directorships:
None
Former directorships (last 3 years): None
Special responsibilities:
ffi
Chair of Remuneration and Nomination Committee and Member of the Audit and Risk
Committee
None
1,150,000 (Unlisted options)
None
Interests in shares:
Interests in options:
Contractual rights to shares:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Company secretary
Emma Waldon has held the role of Company Secretary since 10 August 2015. Emma has diverse global corporate advisory,
capital markets and corporate governance experience having held roles in accounting and debt and equity capital markets
in Australia and the United Kingdom.
Emma Waldon qualified as a Chartered Accountant with Ernst & Young in Perth, worked as an Equities Analyst with Euroz
Securities and spent 9 years in London with Bank of Scotland and Lloyds Bank originating and re-structuring debt finance
for private equity leveraged buy-outs of businesses across Europe. On returning to Perth in 2012, Emma was a Director
within Deloitte’s financial advisory services division and is currently Company Secretary of numerous unlisted public
companies.
Emma Waldon completed a Bachelor of Commerce at UWA, is a member of the Institute of Chartered Accountants of
Australia and New Zealand and a Certificated Member of the Governance Institute of Australia.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Meetings of directors
The number of meetings of directors (including meetings of committees of directors) held during the year ended 30 June
2017, and the number of meetings attended by each director were:
Geoff Pocock
Rick Hopkins
Bryant McLarty
Danielle Lee
Andrew Harris
Terry Walsh
Full board
Audit & Risk
Committee
Remuneration &
Nomination Committee
Attended
Held
Attended
Held
Attended
Held
5
5
2
5
5
3
5
5
2
5
5
3
-
1
-
1
-
1
-
1
-
1
-
1
-
2
-
1
1
1
-
2
-
1
1
1
Held: represents the number of meetings held during the time the director held office.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the company, in accordance
with the requirements of the Corporations Act 2001 and its regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
● Principles used to determine the nature and amount of remuneration
● Details of remuneration
● Service agreements
● Share-based compensation
● Additional information
● Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the company’s executive reward framework is to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and conforms to the market best practice for the delivery of reward. The Board of
Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:
● competitiveness and reasonableness
● acceptability to shareholders
● performance linkage / alignment of executive compensation
● transparency
● capital management
The Remuneration and Nomination Committee is responsible for determining and reviewing remuneration arrangements for
its directors and executives. The performance of the company depends on the quality of its directors and executives. The
remuneration philosophy is to attract, motivate and retain high performance and high quality personnel and is based on the
following factors:
Alignment to shareholders' interests:
● focuses on sustained growth in shareholder wealth, including growth in the share price, as well as focusing the executive
on key non-financial drivers of value
● attracts and retains high calibre executives
Alignment to program participants' interests:
● rewards capability and experience
● reflects competitive reward for contribution to growth in shareholder wealth
● provides a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive directors and executive remunerations
are separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors'
fees and payments are reviewed annually by the Nomination and Remuneration Committee. The Nomination and
Remuneration Committee may, from time to time, receive advice from independent remuneration consultants to ensure non-
executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined
independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman
is not present at any discussions relating to the determination of his own remuneration.
Non-executive directors do not receive any retirement benefits, other than statutory superannuation.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
ASX listing rules require the aggregate non-executive director’s remuneration be determined periodically by a general
meeting. Aggregate fixed remuneration for all non-executive directors as determined by the Board is not to exceed $300,000
per annum. Directors’ fees cover all main board and committee activities.
The level of non-executive director fixed fees as at the reporting date are as follows:
Tim Goldsmith $60,000 plus statutory superannuation per annum
Danielle Lee $25,000 plus statutory superannuation per annum
Andrew Harris $25,000 plus statutory superannuation per annum
Terry Walsh $25,000 plus statutory superannuation per annum
Non-executive directors may also receive performance related compensation via options following receipt of shareholder
approval. The issue of share based payments as part of non-executive director remuneration ensures that director
remuneration is competitive with market standards as well as providing an incentive to pursue longer term success for the
Company. It also reduces the demand on the cash resources of the Company, and assists in ensuring the continuity of
service of directors who have extensive knowledge of the Company, its business activities and assets and the industry in
which it operates. Details of share-based compensation is contained in this report.
Executive remuneration
The company aims to reward executives with a level and mix of remuneration based on their position and responsibility,
which has both fixed and variable components.
The executive remuneration and reward framework has four components:
● base pay and non-monetary benefits
● short-term performance incentives
● share-based payments
● other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually based on
individual and business unit performance, the overall performance of the company and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the company and provides additional value to the executive.
Performance based short-term incentives ('STI') may be provided to executives to align the targets of the business with the
targets of those executives responsible for meeting those targets.
The long-term incentives ('LTI') include long service leave and share-based payments. Shares and options may be awarded
to executives based on long-term incentive measures including increasing shareholder value. Share based LTIs issued to
the Managing Director are subject to shareholder approval. The Nomination and Remuneration Committee reviewed the
long-term equity-linked performance incentives specifically for executives during the year ended 30 June 2017.
Use of remuneration consultants
During the financial year ended 30 June 2017, the Company did not engage the services of independent remuneration
consultants to review its existing remuneration policies and provide recommendations on how to improve both the STI and
LTI programs.
Voting and comments made at the company's Annual General Meeting ('AGM')
The Company received 87% of “for” votes on its Remuneration Report for the year ended 30 June 2016. The Company did
not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the company are set out in the following tables.
The key management personnel of the company consisted of the following directors of Hazer Group Limited:
● Geoff Pocock – Managing Director
● Rick Hopkins – Non- Executive Chairman
● Bryant McLarty – Non- Executive Director (resigned 7 February 2017)
● Danielle Lee - Non- Executive Director
● Andrew Harris – Non- Executive Director
● Terry Walsh – Non- Executive Director (appointed 7 February 2017)
Changes since the end of the reporting period:
● Tim Goldsmith – Non-Executive Chairman (appointed 24 July 2017)
● Rick Hopkins – Non- Executive Chairman (resigned 24 July 2017)
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
Cash
salary
and fees
$
35,000
14,583
25,000
25,000
10,167
2017
Non-Executive
Directors:
Rick Hopkins 3
Bryant
McLarty1,3,4
Danielle Lee
Andrew Harris
Terry Walsh 2
Executive
Directors:
Geoff Pocock
Cash
Non-
bonus monetary
$
$
Super-
annuation
$
Long service
leave
$
Equity-
settled
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
3,325
792
2,375
2,375
966
22,800
32,633
-
-
-
-
-
-
-
8,192
46,517
(7,231)
8,144
5,958 33,333
271,469 298,844
17,183 28,316
29,789 412,589
325,360 827,743
240,000
120,000
349,750
120,000
1
2
3
4
Represents remuneration from 1 July 2016 to 7 February 2017
Represents remuneration from 7 February 2017 to 30 June 2017
Payments above are only those made in capacity as Director. They do not include amounts for
other services paid. Related party payments have been disclosed in Note 18.
These include the forfeiture of series D options as a result of not meeting the service condition.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-based
payments
2016
Cash salary
and fees
$
Non-Executive
Directors:
Rick Hopkins1
Bryant McLarty2,5
Danielle Lee1
Andrew Harris3
Executive
Directors:
Geoff Pocock4
29,167
4,167
20,833
2,083
140,000
196,250
Cash
Non-
bonus monetary
$
$
Super- Long service
leave
$
annuation
$
Equity-
settled
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
2,771
396
1,979
198
13,300
18,644
-
-
-
-
-
-
21,375
13,979
15,594
-
53,313
18,542
38,406
2,281
69,894
120,842
223,194
335,736
1
2
3
4
5
Represents remuneration from 1 September 2015 to 30 June 2016
Represents remuneration from 1 May 2015 to 30 June 2016
Represents remuneration from 1 June 2015 to 30 June 2016
Represents remuneration from 1 December 2015 to 30 June 2016
The share based payments above are only those made in capacity as Director. They do not include amounts for
other services paid. Related party payments have been disclosed in Note 18.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Rick Hopkins
Bryant McLarty
Danielle Lee
Andrew Harris
Terry Walsh
Executive Directors:
Geoff Pocock
Fixed remuneration
2017
2016
At risk - STI
2017
2016
At risk - LTI
2017
2016
83%
#
83%
-
60%
-
25%
-
59%
10% 100%
-
40% - -
-
-
-
-
-
17%
#
17%
90%
60%
40%
75%
41%
-
-
64%
69%
29%
-
7%
31%
# Percentage of relative proportion linked to performance not disclosed as the total amount of LTI remuneration expense
was negative for the period.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Geoff Pocock
Managing Director and Chief Executive Officer
1 December 2015
Open
Base salary $240,000 plus statutory superannuation, to be reviewed by the
Remuneration and Nomination Committee 12 months from commencement and every
12 months thereafter or as otherwise agreed. 6 month termination notice by either
party. 6 month non-solicitation clause after termination. The Company may terminate
without notice in certain circumstances such as misconduct.
Terry Walsh
Non-Executive Director
14 March 2016
Open
Consulting agreement with Walsh Consulting (WA) Pty Ltd, a company controlled by
Terry Walsh. Compensation: (i) a monthly retainer of $8,500 plus GST as at 14 March
2016, reduced to $6,500 plus GST as at 1 January 2017 and increased to $8,500 plus
GST as at 1 July 2017, (ii) 100,000 ordinary shares and (iii) 250,000 Series E Options
($0.30 exercise price, expiring 31 December 2018) issued upon appointment for no
consideration. Working hours: The Consultant to provide the services of Terry Walsh
for 18 working hours per week, plus excess travel commitments when required.
Agreement to continue until terminated by Walsh Consulting (WA) Pty Ltd on 28 days
written notice or on 56 days written notice by Hazer Group Limited.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Share-based compensation
Options
The terms and conditions of each grant of options over ordinary shares during this financial year affecting remuneration of
directors and other key management personnel in this financial year or future reporting years are as follows:
Option
series
Series F
Series G
Total
Number of
options
issued
Grant date
Vesting date and
exercisable date Expiry date
Exercise
price
per option
at grant date
Fair value
575,000 1 July 2016
575,000 1 July 2016
1,150,000
31 December 2016 30 June 2019
31 December 2017 30 June 2020
$0.55
$0.75
$0.29
$0.30
The options vest if the holder has continued to be engaged as an employee, contractor, consultant or Board member of the
Company prior to the vesting date.
Options granted carry no dividend or voting rights.
In addition, on 7 February 2017 the Company agreed to issue Terry Walsh (i) 450,000 options over ordinary shares with an
exercise price of $0.75 and expiry date of 30 June 2020 vesting 6 months after his appointment as a Director (7 August 2017)
and (ii) 450,000 options over ordinary shares with an exercise price of $0.90 and expiry date of 31 December 2020 vesting
18 months after his appointment as a Director (7 August 2018), subject to shareholder approval which will be sought at the
next general meeting of shareholders.
On 24 July 2017, it was announced on the ASX that the following options are proposed to be issued to Tim Goldsmith as a
term of his engagement as a Non-Executive Chairman, subject to shareholder approval at the next annual general meeting
of the Company (i) 1,000,000 options exercisable at $0.75 each and expiring 30 June 2020 which vest 6 months after
appointment provided the holder has continued to be engaged as a Director and employee of the Company prior to the vesting
date, (ii) 1,250,000 options exercisable at $0.95 each and expiring 31 December 2020 which vest 12 months after appointment
provided the holder has continued to be engaged as a Director and employee of the Company prior to the vesting date and
(iii) 1,500,000 options exercisable at $1.20 each and expiring 31 December 2021 which vest 18 months after appointment
provided the holder has continued to be engaged as a Director and employee of the Company prior to the vesting date.
On 24 July 2017, the following material variation to the Executive Services Agreement of Geoff Pocock (Managing Director)
was announced on the ASX, subject to obtaining shareholder approval at the next general meeting of the Company, the
Company will issue Geoff Pocock (or his nominee) the following options (i) 750,000 options with an exercise price of $0.75
and expiry date of 30 June 2020, vesting 6 months from the date of the announcement provided that the holder has continued
to be engaged as a Director and employee of the Company prior to and at the vesting date, (ii) 1,000,000 options with an
exercise price of $0.95 and expiry date of 31 December 2020, vesting 12 months from the date of the announcement provided
that the holder has continued to be engaged as a Director and employee of the Company prior to and at the vesting date and
(iii) 1,500,000 options with an exercise price of $1.20 and expiry date of 31 December 2021, vesting 18 months from the date
of the announcement provided that the holder has continued to be engaged as a Director and employee of the Company prior
to and at the vesting date.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
The number of options over ordinary shares granted to and vested by directors and other key management personnel as part
of compensation during the year ended 30 June 2017 are set out below:
Name
Geoff Pocock
Rick Hopkins
Bryant McLarty
Danielle Lee
Andrew Harris
Terry Walsh
Total
options
granted
Number of Number of Number of Number of
options
vested
during the during the during the during the
year
2016
options
granted
options
vested
year
2016
year
2017
year
2017
-
-
-
-
1,150,000
-
1,150,000
4,000,000
1,300,000
800,000
950,000
-
-
7,050,000
2,000,000
550,000
-
400,000
575,000
250,000
3,775,000
2,000,000
750,000
400,000
550,000
-
-
3,700,000
Values of options over ordinary shares granted, exercised and lapsed for directors and other key management personnel as
part of compensation during the year ended 30 June 2017 are set out below:
Name
Geoff Pocock
Rick Hopkins
Bryant McLarty
Danielle Lee
Andrew Harris
Terry Walsh
Value of
options
granted
Value of Remuneration
Value of
options consisting of
options
options
lapsed
exercised
for the
during the during the during the
year
year
%
$
year
$
year
$
-
-
-
-
386,558
-
386,558
-
-
-
-
-
-
-
-
-
(7,231)
-
-
-
(7,231)
-
-
-
-
93%
-
93%
Additional information
The earnings of the entity for the five years to 30 June 2017 are summarised below:
2017
$
2016
$
2015
$
2014
$
2013
$
Revenues from ordinary activities
Loss after income tax
Net Assets
337,785
3,877,507
8,880,690
83,552
1,844,358
4,420,770
6,632
522,493
545,091
2,596
166,214
69,477
4,060
1,045
20,741
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2017
2016
2015
2014
2013
Share price at financial year end ($) 1
Total dividends declared (cents per share)
Basic loss per share (cents per share)
0.49
0.00
5.74
0.45
0.00
3.57
n/a
0.00
2.24
n/a
0.00
1.09
n/a
0.00
0.01
1 The company was admitted to the official list of the ASX on 30 November 2015 hence N/A for periods before admission.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the company, including their personally related parties, is set out below:
Balance at
the start of
the year
Received
as part of
remuneration
Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares
Geoff Pocock
Rick Hopkins
Bryant McLarty1
Danielle Lee
Andrew Harris
Terry Walsh2
4,200,000
800,010
2,193,979
-
-
50,000
7,243,989
-
-
-
-
-
-
-
-
-
258,346
-
-
-
258,346
4,200,000
800,010
2,452,325
-
-
-
-
-
-
-
-
50,000
7,502,335
-
1
2
Closing balance represents ordinary shares held on resignation (7 February 2017)
Opening balance represents ordinary shares held on appointment (7 February 2017)
Option holding
The number of options over ordinary shares in the company held during the financial year by each director and other
members of key management personnel of the company, including their personally related parties, is set out below:
Options over ordinary shares
Geoff Pocock
Rick Hopkins
Bryant McLarty 1,3
Danielle Lee
Andrew Harris
Terry Walsh 2,4
Balance at
the start of
the year
Expired/
forfeited/
Granted
Exercised
Other
Balance at
the end of
the year
8,050,000
1,500,003
6,095,995
950,000
-
140,000
16,735,998
-
-
-
-
1,150,000
-
1,150,000
-
-
-
-
-
-
-
-
-
(400,000)
-
-
-
(400,000)
8,050,000
1,500,003
5,695,995
950,000
1,150,000
140,000
17,485,998
1
2
3
4
Closing balance represents options over ordinary shares held on resignation (7 February 2017)
Opening balance represents options over ordinary shares held on appointment (7 February 2017)
Options lapsed on resignation due to vesting conditions not being met
In addition, on 7 February 2017 the Company agreed to issue Terry Walsh (i) 450,000 options over ordinary shares
with an exercise price of $0.75 and expiry date of 30 June 2020 vesting 6 months after his appointment as a Director
(7 August 2017) and (ii) 450,000 options over ordinary shares with an exercise price of $0.90 and expiry date of 31
December 2020 vesting 18 months after his appointment as a Director (7 August 2018), subject to shareholder
approval which will be sought at the next general meeting of shareholders.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Other transactions with key management personnel and their related parties
During the financial year, the following payments were made to key management personnel and their related parties:
- Mac Equity Partners (International) Pty Ltd a company of which Bryant McLarty and Geoff Pocock are directors and
shareholders received $156,000 pursuant to a corporate services agreement to provide office space, internet, telephone,
company secretarial and accounting services to the Company.
- Walsh Consulting (WA) Pty Ltd, a company controlled by Terry Walsh received fees totalling $83,500 pursuant to a
consulting agreement to provide the services of Terry Walsh for 18 working hours per week, plus excess travel
commitments when required.
- PKF International Pty Ltd, a company of which Rick Hopkins is a partner, received $7,851 for the provision of accounting
services.
All transactions were made on normal commercial terms and conditions and at market rates.
This concludes the remuneration report, which has been audited.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Shares under option
Unissued ordinary shares of Hazer Group Limited under option at the date of this report are as follows:
Option series
Grant date
Expiry date
Exercise
price
Number
under option
Series A
Series A
Series A
Series C
Series D
Series E
Listed options
Series F
Series G
Series G
Series G
Series F
Series G
Series H
Series G
Series J
Series K
Series G
30 January 2015
9 February 2015
16 September 2015
16 September 2015
16 September 2015
2 December 2015
28 April 2016
1 July 2016
1 July 2016
22 August 2016
31 October 2016
15 November 2016
15 November 2016
20 March 2017
20 March 2017
6 April 2017
6 April 2017
13 June 2017
31 December 2017
31 December 2017
31 December 2017
31 December 2018
31 December 2019
31 December 2018
31 December 2018
30 June 2019
30 June 2020
30 June 2020
30 June 2020
30 June 2019
30 June 2020
31 December 2019
30 June 2020
31 December 2020
31 December 2021
30 June 2020
Total
30 June 2017
$0.25
$0.25
$0.25
$0.25
$0.40
$0.30
$0.30
$0.55
$0.75
$0.75
$0.75
$0.55
$0.75
$0.70
$0.75
$0.95
$1.20
$0.75
8,000,000
3,000,000
500,000
5,250,000
4,850,000
10,000,000
15,221,088
575,000
575,000
100,000
600,000
575,000
575,000
4,166,667
350,000
750,000
1,000,000
1,300,000
57,387,755
The Series A are primary Options which upon exercise result in the issue of one Share and one Series B Option (a secondary
option), are exercisable at $0.40 each and expire 31 December 2020.
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
company or of any other body corporate.
Shares issued on the exercise of options
The following ordinary shares of Hazer Group Limited were issued during the year ended 30 June 2017 and up to the date
of this report on the exercise of options granted:
Date options granted
Date shares issued
28 April 2016
28 April 2016
28 April 2016
28 April 2016
28 April 2016
28 April 2016
Total
29 July 2016
1 September 2016
9 November 2016
21 March 2017
27 April 2017
14 June 2017
Exercise
price
Number of
shares issued
$0.30
$0.30
$0.30
$0.30
$0.30
$0.30
33,632
11,132
13,000
6,250
11,962
44,500
120,476
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director
or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the
company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ REPORT
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company
or any related entity.
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility
on behalf of the company for all or part of those proceedings.
Non-audit services
There were no amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor.
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on
the following page.
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
______________________________
Geoff Pocock
Managing Director
31 August 2017
Perth
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Hazer Group Limited for the year ended 30 June 2017, I
declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2017
TUTU PHONG
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each memb er of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not i tself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
CONTENTS
Contents
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of Hazer Group Limited
Shareholder information
General information
The financial statements cover Hazer Group Limited as a single entity. The financial statements are presented in Australian
dollars, which is Hazer Group Limited's functional and presentation currency.
Hazer Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business are:
Registered office
7/29 The Avenue
Nedlands WA 6009
Principal place of business
7/29 The Avenue
Nedlands WA 6009
A description of the nature of the company’s operations and its principal activities are included in the directors' report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 31 August 2017. The
directors have the power to amend and reissue the financial statements.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
Revenue
Interest received
Other income
Expenses
Administration expenses
Consulting and research expenses
Share based payments
Finance costs
Employee benefits expense
Loss before income tax expense
Income tax expense
Note
2017
$
2016
$
56,414
281,371
59,606
23,946
(951,299)
(642,946)
(1,210,531)
(1,369)
(1,409,147)
(712,929)
(601,992)
(149,908)
(181)
(462,900)
(3,877,507)
(1,844,358)
10
-
-
Loss after income tax expense for the year
(3,877,507)
(1,844,358)
Other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Basic loss per share
Diluted loss per share
-
-
(3,877,507)
(1,844,358)
Cents
Cents
22
22
5.74
5.74
3.57
3.57
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
STATEMENT OF FINANCIAL POSITION
Assets
Current assets
Cash and cash equivalents
Other current assets
Total current assets
Non-current assets
Capitalised development costs (pre-pilot plant)
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2017
$
2016
$
5
6
7
8
9
8,144,451
95,450
8,239,901
4,677,919
75,768
4,753,687
1,081,114
1,081,114
-
-
9,321,015
4,753,687
274,067
166,258
440,325
114,276
218,641
332,917
440,325
332,917
8,880,690
4,420,770
11
12
13
13,120,578
2,649,225
(6,889,113)
5,993,682
1,438,694
(3,011,606)
8,880,690
4,420,770
The above statement of financial position should be read in conjunction with the accompanying notes
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
STATEMENT OF CHANGES IN EQUITY
2016
Issued
capital
$
Reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2015
1,582,945
129,394
(1,167,248)
545,091
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 11)
Share- based payments (note 21)
-
-
-
-
(1,844,358)
(1,844,358)
-
-
-
-
(1,844,358)
(1,844,358)
4,368,737
42,000
-
1,309,300
-
-
4,368,737
1,351,300
Balance at 30 June 2016
5,993,682
1,438,694
(3,011,606)
4,420,770
2017
Issued
capital
$
Reserves
$
Accumulated
Losses
$
Total
equity
$
Balance at 1 July 2016
5,993,682
1,438,694
(3,011,606)
4,420,770
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive loss for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs
(note 11)
Share-based payments (note 21)
-
-
-
-
(3,877,507)
(3,877,507)
-
-
(3,877,507)
(3,877,507)
7,126,896
-
-
1,210,531
-
-
7,126,896
1,210,531
Balance at 30 June 2017
13,120,578
2,649,225
(6,889,113)
8,880,690
The above statement of changes in equity should be read in conjunction with the accompanying notes
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
STATEMENT OF CASH FLOWS
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest and other finance costs paid
Research and development tax rebate received
Note
2017
$
2016
$
-
(2,929,224)
-
(1,527,891)
(2,929,224)
(1,527,891)
67,030
(1,369)
281,371
48,990
(181)
23,945
Net cash used in operating activities
20
(2,582,193)
(1,455,137)
Cash flows from investing activities
Payments for pre-pilot plant
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Share issue transaction costs
Proceeds from exercise of share options
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
(1,078,171)
(1,078,171)
-
-
7,133,882
(43,129)
36,143
6,045,053
(476,049)
1,125
7,126,896
5,570,129
3,466,532
4,677,919
4,114,992
562,927
Cash and cash equivalents at the end of the financial year
5
8,144,451
4,667,919
The above statement of cash flows should be read in conjunction with the accompanying notes
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The company has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board 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.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001, as appropriate for for-
profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment
properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the company’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same basis
as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation
of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Hazer Group Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies (Cont’d)
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the company and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate,
which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the
net carrying amount of the financial asset.
Other income
Other income is primarily the research and development tax refund received for a claim under the Commonwealth
Government’s Research and Development Tax Incentive Regime. Revenue is recorded once it is probable that the company
will receive the benefit.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable
income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or 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 nor
taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held primarily for the
purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer
the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies (Cont’d)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
Trade and other payables
These amounts represent liabilities for goods and services provided to the company prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are
settled.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Issued capital
Ordinary 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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Hazer Group Limited, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of
the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies (Cont’d)
Share-based payments
The company provides benefits in the form of share-based payments, whereby persons render services in exchange for
shares or rights over shares (‘equity settled transactions’). The company does not provide cash settled share-based
payments.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
an option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest
rate for the term of the option, together with non-vesting conditions that do not determine whether the company receives the
services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the period
in which the service conditions are fulfilled, ending on the date on which the relevant persons become fully entitled to the
award (the ‘vesting period’). The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts
already recognised in previous periods.
All changes in the liability are recognised in profit or loss. Market conditions are taken into consideration in determining fair
value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market
condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the company or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the company or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Research and development
Research costs are expensed in the period in which they are incurred.
Capitalised Development cost (Pre-pilot plant)
Costs directly attributable to create, produce and prepare the pre-pilot plant to be capable of operating in the manner
intended by management are recognised as an intangible asset when the following criteria are met:
It is technically feasible to complete the pre-pilot plant so that it will be available for use;
•
• Management intends to complete the pre-pilot plant and use it;
• There is an ability to use the pre-pilot plant;
•
• Adequate technical, financial and other resources to complete the development and to use the pre-pilot plant; and
• The expenditure attributable to the pre-pilot plant during its development can be reliably measured.
It can be demonstrated how the pre-pilot plant will generate probable future economic benefits;
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 will begin when the development is complete
and the asset is available for use. It will be amortised over the period of expected future benefit. Amortisation will be
recorded in the profit and loss.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies (Cont’d)
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
New Accounting Standards and Interpretations not yet mandatory or early adopted
A number of Australian Accounting Standards that have been issued or amended but are not yet effective have not been
adopted by the Company for the annual reporting period ended 30 June 2017. The effect of these new or amended Accounting
Standards is expected to give rise to additional disclosures and new policies being adopted. Refer below for the Standards
relevant to the Company that are not yet effective and have not been early adopted.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income
('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own
credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk management activities of the entity.
New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since
initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The
entity has made an assessment and determined that this standard will have little to no impact on the entity as it does not
have any financial instruments.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied)
to be identified, together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial
position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgments made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The entity has made an assessment and
determined that this standard will have little to no impact on the entity as it currently does not earn revenue.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Significant accounting policies (Cont’d)
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable
future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and
leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists
whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability
corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received,
initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating
lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and
an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the
expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117.
However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the
statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either
operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor
accounts for leases. The entity has made an assessment and determined that this standard will have little to no impact on
the entity only had short term leases of 12 months or less for the period ended 30 June 2017.
Note 2: Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The company 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. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and
liabilities within the next annual reporting period but may impact profit or loss and equity.
Capitalised development costs (pre-pilot plant)
The company capitalises developments costs for the pre-pilot plant in accordance with the accounting policy. Initial
capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually
when the project moves from the research phase into the development phase. In determining the amounts to be capitalised,
management makes assumptions in relation to what costs relate to the development stage.
Impairment of capitalised development costs (pre-pilot plant)
The company has assessed the capitalised development costs at the reporting date. This requires determining the
recoverable amount of the asset either using the fair value less costs of disposal or a value-in-use calculation, which require
management to use a number of key estimates and assumptions.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 3. Operating segments
The Company has considered the requirements of AASB8 – Operating Segments and has identified its operating segments
based on the internal reports that are reviewed and used by the board of directors (chief operating decision makers) in
assessing performance and determining the allocation of resources.
The company operates as a single segment being research and development of novel graphite and hydrogen production
technology. There is no difference between the audited financial report and the internal reports generated for review. The
company is domiciled in Australia and is currently in the development phase and hence has not begun to generate revenue
from operations. All the assets are located in Australia.
Note 4. Financial risk management objectives and policies
The company’s principal financial instruments comprise cash and short term deposits.
The company manages its exposure to key financial risks, including interest rate and liquidity risk in accordance with its
financial risk management policy. The objective of the policy is to support the delivery of its financial targets whilst protecting
future financial security.
The company uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate risk and assessments of market forecasts for interest rates. Liquidity risk is
monitored through the development of future rolling cash flow forecasts.
Primary responsibility for identification and control of financial risks rests with the Board. The Board reviews and agrees
policies for managing each of the risks identified below.
Interest rate risk
At reporting date, the entity had $8,144,451 (2016: $4,677,919) in cash and cash equivalents exposed to interest rate risk.
The entity’s exposure to market interest rates relates primarily to cash and short-term deposits.
At reporting date, if interest rates had moved, as illustrated in the table below, with all other variables held constant, net loss
and equity would have been affected as follows:
Net loss
Higher / (lower)
2017
$
2016
$
Equity
Higher / (lower)
2017
$
2016
$
+1% (100 basis points)
(81,444)
(46,779)
81,444
46,779
-1% (100 basis points)
81,444
46,799
(81,444)
(46,799)
The movements are due to higher / lower interest revenue from cash balances.
Liquidity Risk
Liquidity risk is managed through the entity’s objective to maintain adequate funding to meet its needs, currently represented
by cash and short term deposits sufficient to meet the consolidated entity’s current cash requirements.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 4. Financial risk management objectives and policies (Cont’d)
Capital management
The primary objective of the entity’s capital management is to ensure that it maintains a strong credit rating and healthy
capital ratios in order to support its business and maximise shareholder value.
The entity manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To
maintain or adjust the capital structure, the entity may return capital to shareholders or issue new shares. No changes
were made in the objectives, policies or processes during the years ended 30 June 2017 and 30 June 2016.
The entity monitors capital with reference to the net debt position. The entity’s current policy is to keep the net debt
position negative, such that cash and cash equivalents exceeds debt.
Note 5. Cash and cash equivalents
Cash at bank
Cash on deposit
Note 6. Other current assets
Prepayments
GST refundable
Other receivables
Accrued interest
Note 7. Capitalised development costs (Pre-Pilot Plant)
Capitalised development cost (Pre-Pilot Plant)
2017
$
2016
$
8,094,197
50,254
1,177,919
3,500,000
8,144,451
4,677,919
2017
$
-
87,330
8,120
-
2016
$
22,500
42,652
-
10,616
95,450
75,768
2017
$
1,081,114
1,081,114
2016
$
-
-
The pre-pilot plant is a key stage in the development of the Hazer process and the first stage in Hazers transition from
laboratory based standard equipment to customer-designed constructed plant. Development costs directly attributable to
create, produce and prepare the pre-pilot plant for the purpose intended by management is recognised as an intangible asset
when the criteria under AASB 138 are satisfied.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 7. Capitalised development cost (Pre-Pilot plant) (Cont’d)
Capitalised development costs are recognised as an intangible asset and amortised from the point at which the asset is ready
for use. Commissioning of the pre-pilot plant occurred subsequent to reporting date (Note 19) on 6 July 2017. Prior to this, the
asset was not available for use nor was it in a condition necessary for it to be capable of operating in the manner intended by
management. Therefore, no amortisation has been recognised for during the year ended 30 June 2017.
The company performed its annual impairment test as at reporting date. 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 of disposal and its value
in use. Management have determined that, at reporting date the pre-pilot plant’s fair value less costs of disposal was in excess
of its carrying value.
Note 8. Trade and other payables
Trade payables
Other payables
Note 9. Provisions
Employee benefits
Research agreement
Note 10. Income Tax
2017
$
2016
$
61,937
212,130
41,478
72,798
274,067
114,276
2017
$
2016
$
66,258
100,000
18,641
200,000
166,258
218,641
The prima facie tax receivable on loss before income tax is reconciled to the income tax expense as follows:
Prima facie benefit on operating loss at 28.5% (2016: 28.5%)
Tax losses not brought to account
Income tax benefit attributable to operating loss
2017
$
2016
$
1,105,089
(1,105,089)
525,642
(525,642)
-
-
A potential deferred tax asset, attributable to tax losses carried forward, amounts to approximately $1,853,182 (2016:
$748,092) and has not been brought to account at reporting date because the directors do not believe it is appropriate to
regard realisation of the deferred tax asset as probable at this point in time. This benefit will only be obtained if:
•
•
•
the company derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the loss and research and development expenditure to be realised;
the company continues to comply with the conditions for deductibility imposed by law; and
no changes in tax legislation adversely affect the company in realising the benefit from the deductions for the
loss and research and development expenditure.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Equity - issued capital
Ordinary shares
Listed options
Ordinary share capital
Movements in ordinary share capital
2017
Shares
2016
Shares
2017
$
2016
$
76,550,995 64,540,752 12,973,415
5,845,279
15,221,088 15,041,564
147,163
148,403
Details
Date
No of shares
Issue price
$
Balance
Issue of shares
Share issue transaction costs, net of tax
Issue of shares
Share issue transaction costs, net of tax
Issue of shares to contractors
Issue of shares on exercise of options1
Balance
Balance
Issue of shares1
Issue of shares1
Issue of shares1
Issue of shares
Share issue transaction costs, net of tax
Issue of shares1
Issue of shares
Share issue transaction costs, net of tax
Issue of shares1
Issue of shares1
Transfer from listed options1
Balance
1 July 2015
2 December 2015
2 December 2015
18 March 2016
18 March 2016
18 March 2016
30 June 2016
30 June 2016
29 July 2016
1 September 2016
9 November 2016
20 March 2017
20 March 2017
21 March 2017
27 April 2017
27 April 2017
27 April 2017
14 June 2017
30 June 2017
30 June 2017
36,192,002
25,000,000
-
3,195,000
-
150,000
3,750
64,540,752
33,632
11,132
13,000
8,333,333
-
6,250
3,556,434
-
11,962
44,500
-
76,550,995
$0.20
$0.28
$0.28
$0.30
$0.30
$0.30
$0.30
$0.60
$0.30
$0.60
$0.30
$0.30
$0.01
1,582,945
5,000,000
(1,611,416)
894,600
(63,975)
42,000
1,125
5,845,279
10,090
3,339
3,900
5,000,000
(13,250)
1,875
2,133,882
(29,879)
3,589
13,350
1,240
12,973,415
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Equity - issued capital (Cont’d)
Listed options
Movements in listed options
Balance
Issue of entitlement options
Option issue transaction costs, net of tax
Balance
28 April 2016
28 April 2016
30 June 2016
15,045,314
-
15,041,564
$0.01
150,453
(2,050)
148,403
Balance
Issue of shares
Issue of shares
Issue of shares
Quotation of unlisted Series E options
Issue of shares
Issue of shares
Issue of shares
Transfer to ordinary shares1
Balance
29 July 2016
1 September 2016
9 November 2016
9 November 2016
21 March 2017
27 April 2017
14 June 2017
30 June 2017
30 June 2017
(33,362)
(11,132)
(13,000)
300,000
(6,250)
(11,962)
(44,500)
-
15,221,088
-
-
-
-
-
-
-
(1,240)
147,163
$0.01
Total issued capital
30 June 2017
13,120,578
1 Relate to the issue of shares upon the exercise of listed options.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion
to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company
does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back scheme in place.
Capital risk management
The company’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders,
return capital to shareholders, issue new shares or sell assets to reduce debt.
The company would look to raise capital when an opportunity to invest in a business or company was seen as value adding
relative to the current company's share price at the time of the investment. The company is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk management policy remains unchanged from the previous financial reporting year.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 12. Equity - reserves
Option reserve
2017
$
2016
$
2,649,225
1,438,694
2,649,225
1,438,694
Option reserve
The option reserve records items recognised as expenses on the valuation of share options.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at 30 June 2016
1 July 2016
Options issued during the year vesting over multiple periods
Previously issued options vesting over multiple periods
Existing options quoted as listed options during the year
Forfeiture
Balance at 30 June 2017
Note 13. Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Loss after income tax expense for the year
Accumulated losses at the end of the financial year
Note 14. Key management personnel disclosures
No of
Options
Value
$
32,300,000
1,438,694
10,566,667
-
(300,000)
(400,000)
1,145,973
71,789
-
(7,231)
42,166,667
2,649,225
2017
$
2016
$
3,011,606
3,877,507
1,167,248
1,844,358
6,889,113
3,011,606
Compensation
The aggregate compensation made to key management personnel of the company is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
2017
$
2016
$
469,750
32,633
-
325,360
196,250
18,644
-
120,842
827,743
335,736
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 15. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners, the auditor
of the company, its network firms and unrelated firms:
Audit services
Audit or review of the financial statements
Note 16. Contingent assets and liabilities
The company does not have any contingent assets or contingent liabilities at 30 June 2017.
Note 17. Commitments
Corporate services – including lease of Perth office space, company and secretarial
services, lease of office space and warehouse space in Sydney and lease of equipment
committed at the reporting date but not recognised as liabilities, payable:
Within one year
Total
Note 18. Related party transactions
Key management personnel
2017
$
2016
$
37,500
39,000
2017
$
2016
$
64,457
64,457
13,000
13,000
Disclosures relating to key management personnel are set out in note 14 and the remuneration report in the directors' report.
Transactions with related parties
During the financial year, the following payments were made to key management personnel and their related parties:
- Mac Equity Partners (International) Pty Ltd a company of which Bryant McLarty and Geoff Pocock are directors and
shareholders received $156,000 pursuant to a corporate services agreement to provide office space, internet,
telephone, company secretarial and accounting services to the Company.
- Walsh Consulting (WA) Pty Ltd, a company controlled by Terry Walsh received fees totalling $83,500 pursuant to a
consulting agreement to provide the services of Terry Walsh for 18 working hours per week, plus excess travel
commitments when required.
- PKF International Pty Ltd, a company of which Rick Hopkins is a partner, received $7,851 for the provision of
accounting services.
All transactions were made on normal commercial terms and conditions and at market rates.
Receivable from and payable to related parties
There was $6,417 owing to PKF International Pty Ltd at 30 June 2017 which related to Director fees for Rick Hopkins. There
was $12,777 owing to PKF International Pty Ltd at 30 June 2016.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 19. Events after the reporting period
On 6 July 2017, it was announced that the company had successfully commissioned it’s pre-pilot plant located in St Mary’s in
Western Sydney. This marked a significant inflection point in Hazer’s development trajectory with the pre-pilot plant now ready
to commence the operational experimentation phase. The commissioning demonstrated the potential operation of the Hazer
process beyond laboratory based equipment and brings Hazer closer to its goal of supplying global markets with economically
competitive, clean hydrogen and synthetic graphite.
On 24 July 2017, Tim Goldsmith was appointed as Non-Executive Chairman and Rick Hopkins resigned as Non-Executive
Chairman.
On 24 July 2017, it was announced on the ASX that a Chairman’s fee of $60,000 per annum and the following options are
proposed to be issued to Tim Goldsmith as a term of his engagement as a Non-Executive Chairman, subject to shareholder
approval at the next annual general meeting of the Company (i) 1,000,000 options exercisable at $0.75 each and expiring 30
June 2020 which vest 6 months after appointment provided the holder has continued to be engaged as an employee or
contractor of the Company prior to the vesting date, (ii) 1,250,000 options exercisable at $0.95 each and expiring 31 December
2020 which vest 12 months after appointment provided the holder has continued to be engaged as an employee or contractor
of the Company prior to the vesting date and (iii) 1,500,000 options exercisable at $1.20 each and expiring 31 December 2021
which vest 18 months after appointment provided the holder has continued to be engaged as an employee or contractor of
the Company prior to the vesting date.
Note 19. Events after the reporting period (Cont’d)
On 24 July 2017, the following material variations to the Executive Services Agreement of Geoff Pocock (Managing Director)
were announced on the ASX, (a) pay a cash bonus of $120,000 as satisfaction of any discretionary bonus entitlement up to
31 December 2016; and (b) subject to obtaining shareholder approval at the next general meeting of the Company, the
Company will issue Geoff Pocock (or his nominee) the following options (i) 750,000 options with an exercise price of $0.75
and expiry date of 30 June 2020, vesting 6 months from the date of the announcement provided that the holder has continued
to be engaged as a Director and employee of the Company prior to and at the vesting date, (ii) 1,000,000 options with an
exercise price of $0.95 and expiry date of 31 December 2020, vesting 12 months from the date of the announcement provided
that the holder has continued to be engaged as a Director and employee of the Company prior to and at the vesting date and
(iii) 1,500,000 options with an exercise price of $1.20 and expiry date of 31 December 2021, vesting 18 months from the date
of the announcement provided that the holder has continued to be engaged as a Director and employee of the Company prior
to and at the vesting date.
No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the
company’s operations, the results of those operations, or the company’s state of affairs in future financial years.
Note 20. Reconciliation of profit after income tax to net cash from operating activities
Loss after income tax expense for the year
Adjustments for:
Share-based payments
Change in operating assets and liabilities:
trade and other receivables
trade and other payables
employee benefits
other provisions
-
-
-
-
Net cash used in operating activities
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
2017
$
2016
$
(3,877,507) (1,844,358)
1,210,531
149,908
(19,682)
156,848
47,617
(100,000)
(47,380)
68,052
18,641
200,000
(2,582,193) (1,455,137)
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Share based payments
For the year ended 30 June 2017:
Set out below are summaries of the movements of options granted to key management personnel, employees and
contractors of the company:
2017
Grant date
Expiry date
30/01/2015
09/02/2015
16/09/2015
16/09/2015
16/09/2015
25/11/2015
14/03/2016
01/07/2016
01/07/2016
22/8/2016
31/10/2016
15/11/2016
15/11/2016
20/03/2017
06/04/2017
06/04/2017
13/06/2017
31/12/2017
31/12/2017
31/12/2017
31/12/2018
31/12/2019
31/12/2018
31/12/2018
31/12/2016
31/12/2017
22/02/2017
01/05/2017
15/05/2017
15/05/2018
31/12/2019
31/12/2020
31/12/2021
31/12/2020
Exercise
price
Balance at
the start of
the year
Exercised/
Quoted as
Granted Listed options
Expired/
forfeited/
other
Balance at
the end of
the year
8,000,000
$0.25
3,000,000
$0.25
500,000
$0.25
5,250,000
$0.25
$0.40
5,250,000
$0.30 10,000,000
300,000
$0.30
-
$0.55
-
$0.75
-
$0.75
-
$0.75
-
$0.55
-
$0.75
-
$0.75
-
$0.95
-
$1.20
-
$0.75
-
-
575,000
575,000
100,000
600,000
575,000
575,000
350,000
750,000
1,000,000
1,300,000
-
-
-
-
-
-
(300,000) 1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(400,000)
8,000,000
3,000,000
500,000
5,250,000
4,850,000
- 10,000,000
-
-
575,000
-
575,000
-
100,000
-
600,000
-
575,000
-
575,000
-
350,000
-
750,000
-
1,000,000
-
1,300,000
-
32,300,000
6,400,000
(300,000)
(400,000) 38,000,000
Weighted average exercise price
$0.25
$0.81
$0.30
$0.40
$0.50
1
300,000 unlisted options were quoted as listed options during the period.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Share based payments (Cont.)
For the year ended 30 June 2016:
On 18 March 2016, 150,000 shares were issued to contractors at an issue price of $0.28 per share with a total value of
$42,000.
Set out below are summaries of the movements of options granted to key management personnel, employees and
contractors of the company:
2016
Grant date
Expiry date
30/01/2015
09/02/2015
16/09/2015
16/09/2015
16/09/2015
25/11/2015
14/03/2016
31/12/2017
31/12/2017
31/12/2017
31/12/2018
31/12/2019
31/12/2018
31/12/2018
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.25
$0.25
$0.25
$0.25
$0.40
$0.30
$0.30
-
8,000,000
-
3,000,000
500,000
-
5,250,000
-
-
5,250,000
- 10,000,000
300,000
-
11,000,000 21,300,000
-
-
-
-
-
-
-
-
8,000,000
-
3,000,000
-
500,000
-
5,250,000
-
-
5,250,000
- 10,000,000
-
300,000
- 32,300,000
Weighted average exercise price
$0.25
$0.31
$0.00
$0.00
$0.29
Set out below are the options exercisable at the end of the financial year:
Option series Grant date
Expiry date
Series A
Series A
Series A
Series C
Series D
Series E
Series E
Series F-1
Series F-2
Series G-2
Series G-4
Series H
Series G-5
30/01/2015
09/02/2015
16/09/2015
16/09/2015
16/09/2015
25/11/2015
14/03/2016
01/06/2017
15/11/2016
22/08/2016
31/10/2016
20/03/2017
20/03/2017
31/12/2017
31/12/2017
31/12/2017
31/12/2018
31/12/2019
31/12/2018
31/12/2018
30/06/2019
30/06/2019
30/06/2020
30/06/2020
30/06/2019
30/06/2020
2017
Number
2016
Number
3,000,000
500,000
5,250,000
4,850,000
8,000,000 8,000,000
3,000,000
500,000
5,250,000
-
10,000,000 10,000,000
-
-
-
-
-
-
-
300,000
575,000
575,000
100,000
600,000
4,166,667
350,000
The Series A Options are primary Options which upon the exercise of each Series A Option result in the issue of one Share
and one Series B Option (a secondary Option). Series B Options have an exercise price of 40 cents and an expiry date of
31 December 2020.
38,266,667 26,750,000
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Share based payments (cont)
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.23 years (2016:
2.31 years).
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
Fair value
interest rate at grant date
1-Jul-16
1-Jul-16
22-Aug-16
31-Oct-16
15-Nov-16
15-Nov-16
20-Mar-17
6-Apr-17
6-Apr-17
13-Jun-17
30-Jun-19
30-Jun-20
30-Jun-20
30-Jun-20
30-Jun-19
30-Jun-20
30-Jun-20
31-Dec-20
31-Dec-21
30-Jun-20
0.48
0.48
0.67
0.50
0.56
0.56
0.64
0.65
0.65
0.49
0.55
0.75
0.75
0.75
0.55
0.75
0.75
0.95
1.20
0.75
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
1.52%
1.52%
1.42%
1.70%
1.77%
1.84%
1.96%
1.85%
1.82%
1.73%
0.29
0.30
0.45
0.30
0.33
0.34
0.40
0.40
0.42
0.27
Expenses arising from share based payment transactions
Total expenses arising from share based payment transactions recognised during the period were as follows:
Options issued to KMP
Options issued to employees/consultants
Shares issued to employees/consultants
Less:
Forfeiture – options granted to KMP
Options issued as part of capital raising
Total
2017
$
2016
$
332,591
120,842
885,171 1,156,099
42,000
-
(7,231)
-
- (1,169,033)
1,210,531
149,908
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
NOTES TO THE FINANCIAL STATEMENTS
Note 22. Earnings per share
Loss after income tax
Non-controlling interest
2017
$
2016
$
3,877,507
-
1,844,358
-
Loss after income tax attributable to the owners of Hazer Group Limited
3,877,507
1,844,358
Weighted average number of ordinary shares used in calculating basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Number
Number
67,524,529 51,633,810
57,387,755 32,300,000
Weighted average number of ordinary shares used in calculating diluted earnings per share 124,912,284 83,933,810
Basic loss per share
Diluted loss per share
Cents
Cents
5.74
5.74
3.57
3.57
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
DIRECTORS’ DECLARATION
In the directors' opinion:
● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
● the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
● the attached financial statements and notes give a true and fair view of the company’s financial position as at 30 June
2017 and of its performance for the financial year ended on that date;
● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
______________________________
Geoff Pocock
Managing Director
31 August 2017
Perth
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
HAZER GROUP LIMITED
Opinion
We have audited the financial report of Hazer Group Limited (the Company) which comprises the statement of
financial position as at 30 June 2017, the statement of profit or loss and other comprehensive income, the
statement of changes in equity and the statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the Company's financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section of
our report. We are independent of the Company in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each memb er of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not i tself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed this matter
Intangible assets - Capitalised development costs
Refer to note 7 in the financial statements
During the year, in accordance with AASB 138, the
Company capitalised development costs in relation
to their pre-pilot plant. The amount of the capitalised
development costs at the reporting date was
$1,081,114. Management have concluded that at
the reporting date, the pre-pilot plant had not
reached practical completion.
We have determined this to be a key audit matter as
significant judgements are required to determine the
appropriate carrying value of the development costs
at the reporting date. In particular, the Company is
required to;
demonstrate that the costs incurred in the
construction of
the pre-pilot plant are
development costs in accordance with AASB
138; and
in accordance with AASB 136, the amount
capitalised
for
impairment as the pre-pilot plant was not yet
available for use at the reporting date.
required
to be
tested
is
Our audit procedures included:
Reviewing the Company’s accounting policy in relation
to the capitalisation of development costs to ensure it
is in accordance with Accounting Standards;
Obtaining a detailed understanding of the project;
Agreeing a sample of additions
to capitalised
development costs during the year to supporting
documentation and ensuring that the amounts were
directly attributable and necessary to create, produce
and prepare the pre-pilot plant to be capable of
operating in the manner intended by management;
Confirming with management that at the reporting date,
the pre-pilot plant was not yet available for use;
Challenging the reasonableness of key assumptions
included in management’s annual impairment test; and
Assessing the appropriateness of the Company’s
disclosures in the financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Company's annual report for the year ended 30 June 2017, but does not include the financial report and
the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
For personal use only
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Company to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2017.
In our opinion, the Remuneration Report of Hazer Group Limited, for the year ended 30 June 2017, complies with
section 300A of the Corporations Act 2001.
Responsibilities
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.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2017
TUTU PHONG
Partner
For personal use only
SHAREHOLDER INFORMATION
ASX Additional Information
The Company’s ordinary shares are quoted as ‘HZR’ on ASX. The Company’s listed options are quoted as ‘HZRO’ on
ASX.
The shareholder information set out below was applicable as at 4 August 2017
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Holding less than a marketable parcel
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Holding less than a marketable parcel
Number
of ordinary
Number
of holders
shares of ordinary
shares
54,047,328
18,842,248
2,319,301
1,282,976
59,142
118
550
278
442
146
76,550,995
1,534
-
-
Number
of listed
options
Number
of holders
of listed
options
7,058,499
7,142,078
498,891
474,982
46,638
15,221,088
130,170
30
192
64
170
66
522
117
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only
SHAREHOLDER INFORMATION
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of each class of quoted equity securities are listed below:
MINERAL RESOURCES LIMITED
OOFY PROSSER PTY LTD
POINT AT INFINITY PTY LTD
THE UNIVERSITY OF WESTERN AUSTRALIA
MR BRYANT JAMES MCLARTY
MR PAUL HARTLEY WATTS
JAKANA PTY LTD
KINETIC TRADE PTY LTD
MR NICHOLAS STUART BEATON DUNCAN
MR JASON PAUL SKINNER
MR JOHN OAKLEY CLINTON & MRS LILIAN ACHIENG CLINTON
CITICORP NOMINEES PTY LIMITED
MR PETER HOWELLS
MRS CLAIRE ELIZABETH ALLEN
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
TILPA PTY LTD
SPRINGBOK CAPITAL PTY LTD
CL SEWARD & CO PROPRIETARY LTD
BOND STREET CUSTODIANS LIMITED
GRANT STREET PTY LTD
POINT AT INFINITY PTY LTD
OOFY PROSSER PTY LTD
MINERAL RESOURCES LIMITED
MR BRYANT JAMES MCLARTY
MR MICHAEL JAMES BROWNE & MRS ANGELA MARGARET BROWNE
MRS JENNIFER LOUISE WILLIAMS
KINETIC TRADE PTY LTD
MRS CARLY ELIZABETH WILLIAMS
MR JOHN OAKLEY CLINTON
MR MICHAEL PETER DAVID JOBLIN
JAKANA PTY LTD
MR GLENN HUTTON
MR COLIN ALISTER ROGER JOBLIN
MR ANDREW JOHN STANBURY
MR PETER HOWELLS
MRS JOANNE ROSEMARY LLOYD
MR JOHN COLIN LOOSEMORE & MRS SUSAN MARJORY LOOSEMORE
MR TERENCE WILLIAM JOSEPH WALSH
DARYA PTY LTD
5150 CAPITAL PTY LTD
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
Ordinary shares
Number held
% of total
shares
issued
10,333,333
3,700,000
3,548,583
1,516,567
1,350,000
1,190,000
1,175,000
1,100,000
1,083,731
808,744
724,178
670,516
625,000
615,000
575,000
541,902
540,000
540,000
533,351
500,000
13.50
4.83
4.64
1.98
1.76
1.55
1.53
1.44
1.42
1.06
0.95
0.88
0.82
0.80
0.75
0.71
0.71
0.71
0.70
0.65
31,670,905
41.37
Listed options
Number held
% of total
shares
issued
937,146
925,000
500,000
337,500
303,000
300,000
268,750
265,706
235,455
210,000
203,750
187,500
187,190
171,155
162,500
150,000
150,000
140,000
138,750
125,000
6.16
6.08
3.28
2.22
1.99
1.97
1.77
1.75
1.55
1.38
1.34
1.23
1.23
1.12
1.07
0.99
0.99
0.92
0.91
0.82
5,898,402
38.75
For personal use only
SHAREHOLDER INFORMATION
Unquoted equity securities
Options over ordinary shares – Series A
Options over ordinary shares – Series C
Options over ordinary shares – Series D
Options over ordinary shares – Series E
Options over ordinary shares – Series F
Options over ordinary shares – Series G
Options over ordinary shares – Series H
Options over ordinary shares – Series J
Options over ordinary shares – Series K
Total
Number
on issue
Number
of holders
11,500,000
5,250,000
4,850,000
10,000,000
1,150,000
3,500,000
4,166,667
750,000
1,000,000
42,166,667
7
6
5
7
2
19
1
1
1
Mineral Resources Limited holds 4,166,667 Series H options. The remaining unquoted equity securities were issued under
an employee incentive scheme.
Restricted securities
Securities subject to ASX imposed restrictions on trading are set out below:
Ordinary shares
Options over ordinary shares – Series A
Options over ordinary shares – Series C
Options over ordinary shares – Series D
Options over ordinary shares – Series E
Substantial holders
Substantial holders in the company are set out below:
Geoff Pocock
Mineral Resources Limited
Voting rights
The voting rights attached to ordinary shares are set out below:
Number Restricted
until
restricted
10,219,837 2 Dec 2017
11,350,000 2 Dec 2017
4,850,000 2 Dec 2017
4,850,000 2 Dec 2017
10,000,000 2 Dec 2017
Ordinary shares
Number held
% of total
shares
issued
4,200,000
10,333,333
5.49
13.50
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
On-market Buy-back
There is no current on-market buy-back of the Company’s securities in place.
HAZER GROUP LIMITED FOR THE YEAR ENDED 30 JUNE 2017
For personal use only