ANNUAL REPORT
2019
For personal use only
NOVONIX LIMITED
ABN 54 157 690 830
Annual Report – 30 June 2019
Corporate directory
Review of operations and activities
Directors’ report
Directors and Company Secretary
Principal activities
Dividends
Review of operations
Significant changes in the state of affairs
Events since the end of the financial year
Likely developments and expected results of operations
Environmental regulation
Information on Directors
Meetings of Directors
Remuneration report
Shares under option
Insurance of officers and indemnities
Proceedings on behalf of the Company
Non-audit services
Auditor’s independence declaration
Corporate governance statement
Financial report
Directors’ declaration
Independent auditor’s report to the members
Shareholder information
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Corporate directory
Directors
A Bellas B.Econ, DipEd, MBA, FAICD, FCPA, FGS
G A J Baynton M.Econ St, MBA, B.Bus, FGS
P M St Baker B.Eng
R Cooper BE (Mining), MEngSc, MAusIMM, MAICD
Admiral R J Natter, US Navy (Ret.)
Andrew N. Liveris AO, BE (Hons) Doctor of Science
(honoris causa)
Secretary
S M Yeates CA, B.Bus
Registered office in Australia
Principal place of business
Share register
Auditor
Solicitors
Bankers
McCullough Robertson
Level 11, Central Plaza Two
66 Eagle Street
Brisbane QLD 4000
Level 8, 46 Edward Street
Brisbane QLD 4000
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
www.linkmarketservices.com.au
PricewaterhouseCoopers
480 Queen Street
Brisbane QLD 4000
www.pwc.com.au
Atkinson Corporate Lawyers
99 St George’s Terrace
Perth WA 6000
Commonwealth Bank of Australia
Stock exchange listing
NOVONIX Limited shares are listed on the Australian
Securities Exchange (ASX)
Website address
www.novonixgroup.com
Competent Person’s Statement
The information in this Annual Report that relates to the JORC Mineral Resource for NOVONIX
Limited’s Mt Dromedary Project has been based on information compiled by Mr Robert Dennis who
is a Member of Australian Institute of Geoscientists and a full time employee of RPM Limited. Mr
Dennis has sufficient experience relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a Competent Person as defined
in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves. Mr Dennis has consented to the inclusion of the matters based on his information
in the form and context in which it appears.
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Review of operations and activities
NOVONIX – Summary
FY2019 has been a year focused on the implementation of our business plan to become a world
leading battery materials and technology company.
NOVONIX is comprised of two key businesses: PUREgraphite (manufacturer of battery anode
material), and NOVONIX Battery Technology Solutions (provider of battery R&D services and a
manufacturer of battery test equipment)
• Premium high capacity and long-life graphite anode
material
• US manufactured - plant located in Chattanooga,
Tennessee
• Phase 1 commercial production-ready during 2019
• Targeting the electric vehicle and energy storage
markets
• Battery test equipment accelerates R&D from years to
weeks
• Battery test equipment used by leading battery
makers
• Full pilot line for battery assembly supporting R&D
• Based in Canada with sales in fourteen countries
NOVONIX’s business plan to enter the battery technology and materials space continues to be
validated by market growth and demand. The Lithium Ion Battery Market is forecasted to grow from
US$36.20 billion in 2018 to US$109.72 billion by 2026, at a CAGR of 13.4%, during the forecast period.
Lithium-ion batteries are increasingly being used as a hybrid and full-battery electric vehicle (BEV)
power source, along with energy storage systems (ESS)1.
1 Reports and Data, “Lithium Ion Battery Market To Reach USD 109.72 Billion By 2026“, 18 March,
2019, New York.
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In FY2019, based on this market validation, NOVONIX made several strategic decisions to increase the
company’s opportunity for future growth in the battery technology and materials space. These
strategic decisions and investments included: NOVONIX exercising its “call option” to increase
NOVONIX ownership of PUREgraphite from 50% to 75%, PUREgraphite relocated to a new premises
with 3,700 square meters and rights of first offer to lease additional 11,150 square meters, NOVONIX
BTS moved into a new facility in Bedford and expanding staffing to 20 employees, NOVONIX BTS
entered into strategic R&D partnerships with Dalhousie University, NOVONIX BTS commenced a
patent development pipeline, and NOVONIX BTS began offering new expert advisory and
development services and product options.
NOVONIX – Highlights for FY2019
Corporate
• Exercised “call option” to increase NVX ownership of
PUREgraphite from 50% to 75% and production rights to
100% above 1,000tpa (Q3) with the remaining 25% being
acquired in Q4
PUREgraphite
• Commenced hand-over of PUREgraphite CEO and CFO
roles to NOVONIX executives and appointment of COO
(Q3)
• Conducted further follow-up technical and business
development meetings with international battery-makers,
providing additional samples of our anode material for evaluation (Q4)
• Began relocation of existing plant equipment and personnel from the Duncan Street,
Chattanooga facility to its new premises located in Corporate Place, Chattanooga. Lease
executed on new facility has 3,700 square meters with rights of first offer to lease additional
11,150 square meters (Q4)
NOVONIX BTS
• Commenced strategic battery R&D partnership with Dalhousie University (Q1)
• Filed several patent applications including a provisional patent for a silicon infused graphite
material and manufacturing process and a provisional patent for cathode material processing
methods aimed at increasing life & reducing cost (Q2 and Q3)
• Cell building sales accelerated with contracts for multiple large customers to build custom
cells and evaluate materials (Q4)
Mount Dromedary
• Main activities included maintaining the tenements in good standing, finalising land holder
and native tile agreements, and reassessing next steps with permitting on the project
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PUREgraphite – Overview
Photo: PUREgraphite’s new home in Chattanooga Tennessee USA.
PUREgraphite was established in March 2017 as a 50:50 joint venture between NOVONIX and
Coulometrics to develop and commercialize ultra-high purity high performance graphite anode
material for the lithium-ion battery market focused on electric vehicles, energy storage and specialty
applications.
PUREgraphite commenced operations from within the Coulometrics Battery Development Facility in
Duncan St, Chattanooga, Tennessee, USA. The combined facility included capabilities for materials
processing, electrode and battery cell making and battery testing – allowing PUREgraphite to rapidly
advance is materials development and to benchmark and demonstrate performance of its materials
in commercial-standard batteries. As of FY2019, based on customer interest, the Company decided to
expand into commercial-scale premises, and PUREgraphite began relocation of existing plant,
equipment and personnel from the Coulometrics facility to its new premises located in Corporate
Place, Chattanooga.
Of the US$10 million originally invested by NOVONIX, US$5 million was used by PUREgraphite to fund
the exclusive acquisition of all graphite-related intellectual property from Coulometrics and ongoing
exclusivity from Coulometrics and CEO of Coulometrics, Dr. Edward Buiel, for development of graphite
products and battery anode materials using that technology.
The Coulometrics graphite IP includes innovative high-performance graphite anode materials
(demonstrated to outperform leading materials currently in the market) and production methods
expected to deliver production costs significantly lower than existing producers. NOVONIX also
contributed US$5 million to fund operations of the JV to cover anticipated capital and operating costs
in the first two to three years of operation (2017, 2018, 2019).
As part of this arrangement, Coulometrics provided facilities, plant, equipment and labour under a
predefined service arrangement which enabled the joint venture to transition directly into operation
with a facility and staff immediately in place.
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PUREgraphite – Progress
The PUREgraphite business development workstream is focused on
two categories of potential customers. The first group are niche
battery producers in the USA, and the second are the large-scale
electric vehicle and energy storage battery manufacturers.
To serve these customers, significant progress has been made in
in product development, process optimization, plant
FY2019
engineering, and customer trials and testing.
To accelerate our readiness to serve the second group, large-scale
electric vehicle and energy storage battery manufacturers, in FY2019 PUREgraphite commenced
relocation to its new premises in Corporate Place, Chattanooga. Large-scale battery manufacturers
have signed non-disclosure and/or confidentiality agreements, advised volume requirements and
have engaged in testing programs with us.
To be ready to serve these potential customers, PUREgraphite is actively engaged in large-scale
production planning to 25,000 tpa and beyond.
As part of R&D, PUREgraphite also continues to investigate technologies that have potential to
optimize or accelerate large-scale production.
PUREgraphite’s sourcing program for precursor materials is well advanced leveraging in-house
processing, purification, coating, blending, and cell building capabilities. These capabilities allow
PUREgraphite to rapidly screen and qualify precursor materials and optimise performance and cost in
sourcing.
Milestones achieved by PUREgraphite during the year in review include:
Executive
• Conducted due diligence on PUREgraphite progress and the market opportunity ahead of
ownership increase (Q1 and Q2)
• Exercised “call option” to increase NVX ownership from 50% to 75% and production rights to
100% above 1,000tpa (Q3), with the remaining 25% being acquired in Q4
• Commenced hand-over of CEO and CFO roles to NOVONIX executives and appointment of
COO (Q3)
Business Development
• Continued product trials with beachhead customers (Q1)
• Planned product trials with multiple global battery makers (Commenced Q2)
• Expanded product trials and technical review with both domestic and international customers
prospects (Q3)
• Conducted further follow-up technical and business development meetings with international
battery-makers, providing additional samples of our anode material for evaluation (Q4)
Operations - Equipment
• Finalized decisions on all production scale equipment (Q1)
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• Purchased first round of production scale equipment (Q1)
• Completed manufacturing first round of production scale equipment (Q2)
•
• Competed equipment trials and order specifications for remaining process equipment (Q2)
• Completed pre-shipment acceptance testing for primary commercial processing equipment
Installed first round of production equipment (Q3)
(Q3)
Operations - Location
• Evaluated and short-listed industrial properties suitable for scaling the business above
1,000tpa (Q3)
• PUREgraphite announces decision to relocate to new premises based on conversations with
international battery-makers, confirming that there is a strong growing market for the anode
material product that PUREgraphite has focused upon, and genuine customer interest to
support the Company’s decision to expand into its new commercial scale premises (Q4)
• Commenced relocation of existing plant equipment and personnel from the Duncan Street,
Chattanooga facility to its new premises located in Corporate Place, Chattanooga. Lease
executed on new facility has 3,700 square meters with rights of first offer to lease additional
11,150 square meters. (Q4)
• Engineering, procurement and construction planning activities for first 1,000tpa well
advanced at Corporate Place facility (Q4)
PUREgraphite – Next Steps for FY2020 and Beyond
FY2020:
• Expand product trials and technical interchange with domestic US & global battery makers
• Commission first set of production equipment for ~500tpa capacity by Q2
• First customer acquisition targeted for Q3
• Expansion of manufacturing capacity based on anticipated customer requirements
• Ongoing product development leveraging our expanded R&D capabilities in Halifax and our
partnership with Dalhousie University
NOVONIX BTS – Overview
Photo: NOVONIX Battery Technology Centre located in Bedford (near Halifax) Nova Scotia Canada.
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NOVONIX Battery Testing Services Inc was acquired by the Company on 1 June 2017 for C$5m, with
the founders (Dr Chris Burns and Dr David Stevens) receiving partial payment in the form of shares in
NOVONIX and both continuing as CEO and CTO respectively under executive employment contracts
incorporating equity-based incentive plans.
As the new parent company, GRAPHITECORP Limited changed its name in July 2017 to NOVONIX
Limited, adopting the name of the established business to leverage the strong brand that has been
developed within the lithium-ion battery sector and to better represent the operations and future
direction of the company
NOVONIX BTS is based in Bedford (near Halifax), Nova Scotia, Canada and makes the most accurate
lithium-ion battery cell test equipment in the world now used by leading battery makers and
researchers and equipment manufacturers including Panasonic, CATL, BOSCH, Dyson, 3M and Alcatel-
Lucent.
The primary drivers for the acquisition of the NOVONIX BTS business were to acquire the market-
leading HPC Testing technology which provides battery researchers with substantial competitive
advantage by reducing R&D cycle timing from years to weeks, to leverage the strong brand name and
customer relationships in the lithium-ion battery industry, and to leverage the NOVONIX founders’
skills in developing both battery materials and testing technologies.
In less than four years, NOVONIX BTS has deployed HPC testing units in more than 14 countries.
NOVONIX BTS – Progress
Photo: Professor Jeff Dahn and NOVONIX’s COO Dr Chris Burns inspecting battery assembly at the NOVONIX
pilot cell manufacturing line in Bedford (near Halifax) Nova Scotia Canada.
FY2019 not only marked a successful year of growth for NOVONIX BTS, but also has well positioned
NOVONIX BTS for future growth. In its fourth year of operations, NOVONIX BTS launched a new set of
expert consulting and testing services which is in high demand. Coupling contract cell making,
materials analysis and testing with continued equipment sales leverages further growth possibility for
BTS. This sales growth has been and will continue to be supported by several factors including strong
industry reputation, repeat business with large growing customers, and new business from new
products and services offered.
As part of positioning NOVONIX BTS for future growth, investments were made this this year such as
moving into a new facility in Bedford and expanding staffing to 20 employees, entering into strategic
R&D partnerships with Dalhousie University, beginning a patent development pipeline, and offering
the new services and products options.
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Milestones achieved by PUREgraphite during the year in review include:
Sales
• Strong Q1 and Q2 sales (Q1-Q2)
• Due to slippage of a large “customized” order into next year (due to customer order change),
BTS sales revenue growth projected for 10% year on year vs 30% previously forecast (Q3)
• Strong fourth quarter for sales and service (Q4)
• Scoped large Differential Thermal Analysis (DTA) and cell testing projects with large customers
to start in Q1 2020 (Q4)
• Cell building and consulting services have multiple large customer contracts to build custom
cells and evaluate materials for customers (Q4)
• Year ends with growth in services (external battery testing and R&D) outstripping equipment
sales (Q3/Q4)
Partnerships and Patents
• October 1st, commenced strategic battery R&D partnership with Dalhousie University (Q1)
• Battery R&D partnership with Dalhousie University filed first patent application in December
(Q2)
• Filed US provisional patent application for a silicon infused graphite material and
manufacturing process, publication pending (Q2)
• Filed US provisional patent application for cathode material processing methods aimed at
increasing life & reducing cost (Q3)
Funding and growth
• Government of Canada (NRC IRAP) provided a C$487,693 R&D support grant (Q1)
Expanded staffing to 20 to support increased activity in cell building and expanded infrastructure to
1,000+ circuits for cell and pack testing (Q4)
NOVONIX BTS – Next Steps for FY2020 and Beyond
FY2020:
• Continue to grow equipment sales with focus
on specialized equipment and custom
solutions
• Deliver large customized order to customer
• Secure DTA patent and publish white papers
on DTA and HPC experiments to demonstrate
importance of equipment
Large growth in cell building, expert consulting and testing services
•
• Begin several new long-term customer research projects for cell design and material
evaluation including programs demonstrating PUREgraphite material to potential customers
• Develop and file on new materials IP with Dalhousie University research partnership
• Develop, and file patent(s), on new electrolyte IP from internal research programs
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Mount Dromedary – Overview
The Mount Dromedary Graphite Project is world-class, high-grade (18%+) natural graphite deposit
outcropping at surface over a 3km strike length and located in an established mining region in Australia
next to quality transport infrastructure and international ports.
From drilling approximately 30% of
the known mapped deposit, the
project has a total JORC Mineral
Resource Estimate to 1.908 Million
tonnes of contained graphite and a
Measured and Indicated Resource
containing 1.316 Million tonnes of
graphite.
bulk
The natural graphite deposit
is
adjacent (<1km) to sealed highway
connecting to multiple export ports
with
containerized
and
options. The project has access to
attractive back-haul and container
transport
and
ocean).
capacity
(road
suitability
export
Extensive metallurgical testing has
determined
for
producing
grade
concentrate. A preliminary design
for a concentrator has been
completed.
Image: Map of the Mount Dromedary Graphite Project
Given the lithium ion battery market is one of the most prospective markets for natural graphite
concentrate NOVONIX has completed extensive trails upgrading its concentrate to anode grade
material, building full commercial size lithium ion battery cells and undertaking extensive performance
testing and benchmarking.
These trials have included chemical and thermal purification, shaping and coating of particles, physical
characterisation of the materials, battery cell construction and comprehensive electrochemical
testing. The trials have involved independent laboratories in Europe, USA and our own battery
technology centre in Halifax Nova Scotia Canada.
Physical examination of anode materials made from Mount Dromedary concentrate shows the
material has good purity levels and can be shaped and coated to the desired standard with reasonable
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yields. The electrochemical tests on the battery cells made with anode materials based on Mount
Dromedary concentrate have performed very well when compared with other reference materials
including commercial grade anode materials. The test battery cells had high reversible capacity, good
first cycle efficiency and good cycling performance and has confirmed the Mount Dromedary
concentrate is well suited as a precursor for anode materials for lithium ion batteries.
Despite the favourable characteristics of this natural graphite deposit and the suitability of the
concentrate for the lithium ion battery market the company has decided to put a hold on advancing
the project at this time.
The primary reasons behind this decision are:
• Medium term oversupply conditions with the broader natural graphite concentrate market;
• Substantially more favourable investment opportunities for the company manufacturing
advanced battery anode materials in the Chattanooga Tennessee USA and providing battery
technologies and services at our battery technology centre in Canada
The company continues to hold the project in good standing while monitoring the state of the global
natural graphite market and will maintain a state of readiness to advance the project should the right
market condition emerge or transact with the project.
Mount Dromedary – Progress
During FY2019, given the strategic decision to put the natural graphite project on hold, the company
did not undertake much activity this year and sought to minimise expenditure on the project.
Main activities included keeping the tenements in good standing, finalising land holder and native tile
agreements which were already well advanced and reassessing next steps with permitting on the
project.
After consultation with the Queensland Government Department of Environment and Science and our
environmental consultants the company is now reviewing options to apply for a standard
environmental authority suitable for a small scale operation and defer incurring the significant
additional costs associated with a larger scale operation to a later time when the company has decided
to advance that level of project.
Copper (Cu) at Mount Dromedary
As reported last year the Company identified high-grade Copper (Cu) ore hosted in Malachite during
surface sampling. During this year the Company undertook further sampling and field-work to assess
the extent of these Copper occurrences. Unfortunately, while more surface copper was identified it
was not found with sufficient concentration and grade to motivate further exploration by NOVONIX
at this time. NOVONIX may consider farming out the exploration opportunity on the copper in the
future.
NOVONIX – Outlook
NOVONIX is well positioned to participate in the rapidly growing electric vehicle and battery energy
storage markets from its operations in North America. As mentioned previously, market dynamics are
strongly favourable with the Lithium Ion Battery Market expected to grow from US$36.20 billion in
2018 to US$109.72 billion by 2026, at a CAGR of 13.4%, during the forecast period.
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NOVONIX BTS expects to have continued strong sales in existing HPC products and also further
strengthen sales with new products and services such as DTA and battery cell design. Expert
consulting and development services are also expected to grow rapidly, from a low base commencing
in FY2019. This new area of business is attracting some of the leading international battery companies
to utilize the services of our world-class team of experts. Continued R&D, strategic partnerships, and
a growing patent pipeline well position NOVONIX to be at the forefront of battery technology of the
future.
PUREgraphite, now in its expanded premises, is nearing commercial production capability and expects
to be the first successful North American company producing and selling commercial quantities of EV-
grade anode battery materials.
The Company’s Board and management are excited by the immediate opportunities ahead for growth
and sales, as well as NOVONIX’s positioning to participate in the broader long-term growth of the
international battery market.
TENEMENT LIST
Tenement
Permit Holder
Grant date
EPM 26025
Exco Resources Limited
14/12/2015
EPM 17323
EPM 17246
MD South Tenements Pty
Ltd (Subsidiary of NOVONIX
Limited)
MD South Tenements Pty
Ltd
20/10/2010
NVX
Rights
100%
(Sub-Blocks
Normanton 3123
D, J, N, O and S)
100%
Expiry date
13/12/2020
19/10/2021
26/10/2010
100%
25/10/2020
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Directors’ report
Your Directors present their report on the consolidated entity consisting of NOVONIX Limited and the
entities it controlled at the end of, or during, the year ended 30 June 2019. Throughout the report,
the consolidated entity is referred to as the Group.
Directors and Company Secretary
The following persons were Directors of NOVONIX Limited during the whole of the financial year and
up to the date of this report:
G A J Baynton
A G Bellas
P M St Baker
R Cooper
A N Liveris
R J Natter
D Price (alternate for R Cooper)
The Company Secretary is Mrs S Yeates. Mrs Yeates was appointed to the position of Company
Secretary on 18 September 2015. She is a Chartered Accountant, Founder and Principal of Outsourced
Accounting Solutions Pty Ltd. She holds similar positions with other public and private companies.
Principal activities
During the year, the principal activities of the Group included the development and implementation
of a downstream integration strategy transforming the business into a supplier of advanced battery
materials, equipment and services to the global Lithium-ion Battery (LIB) market.
Dividends
The Directors do not recommend the payment of a dividend. No dividend was paid during the year.
Review of operations
Information on the operations and financial position of the Group and its business strategies and
prospects is set out in the review of operations and activities on pages 3 – 12 of this annual report.
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Significant changes in the state of affairs
Significant changes in the state of affairs of the group during the financial year were as follows:
(a)
(b)
(c)
(d)
9,166,667 convertible loan notes were issued to sophisticated investors to raise $5,500,000 in
August 2018.
15,000,000 convertible loan notes were issued to the St Baker Energy Innovation Fund (a
related party of Philip St Baker) and 2,250,000 convertible loan notes to another leading
Australian institutional investor to raise a total of $6,900,000, following Shareholder approval
on 8 March 2019 (refer note 19 for key terms of the loan notes).
$4,000,000 short-term loan from St Baker Energy Innovation Fund was received in June 2019
which converted to 10,000,000 convertible loan notes, following shareholder approval on 31
July 2019. The loan notes will be issued on the same terms noted above at (b) above.
Exercised its option under the terms of the Joint Venture Agreement of February 2017, to
purchase an additional 25% interest in the USA-based PUREgraphite battery anode material
business for USD $5,000,000. The increase in ownership of PUREgraphite provided NOVONIX
Limited with control of the business and significant commercial benefits, including the right
to 100% of PUREgraphite anode material production exceeding 1,000 tonnes per annum. The
remaining 25% of PUREgraphite was acquired in Q4 and as at 30 June 2019 NOVONIX Limited
holds a 100% equity interest in PUREgraphite.
(e)
Impairment of goodwill and identifiable intangibles – Novonix Battery Testing Services (BTS)
For FY2019, the Company has recognised an impairment loss of $5,251,028 relating to the
goodwill and intangibles of BTS. At the time it was acquired in FY2017, BTS was primarily a
producer of battery testing equipment. Consulting services to the energy storage industry
began as an adjunct service supporting the equipment supply business operation. The
consulting services operation which yields much higher margins, has now become a business
line on its own and has grown rapidly over the course of this financial year and, in particular,
over the past six months. In the context of this rapid growth and the forward pipeline of
consulting work, the consulting services business has become a core operation and is
considered to be BTS’s strongest growth opportunity. Given the slowing in the rate of growth
of sales of testing equipment and the increased relative importance of consulting services, the
directors have taken the opportunity to write down the value of the testing equipment supply
business.
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Significant changes in the state of affairs (continued)
(f)
Impairment of Mt Dromedary
For FY2019, the Company has recognised an impairment loss of $10,667,897 relating to the
Mt Dromedary graphite mining project. The future development of the Mt Dromedary mine
will not occur in the short to medium term given the tonnages of natural graphite required by
the PUREgraphite business is unlikely to be sufficient to warrant the development of the mine
in that timeframe. As well, a significant portion of graphite used by PUREgraphite will be
synthetic graphite, and the natural graphite required at this time can be more cost effectively
sourced from other natural graphite producers.
The Mt Dromedary asset remains a strategic asset for the Group, however the Directors have
determined that it is appropriate for the carrying value of the Mt Dromedary asset to reflect
the exploration and evaluation expenditure incurred since acquisition, and to write off all
acquisition related costs which relate to the minority interest acquired by the Group on 29
August 2016 in return for shares in the Company (i.e. scrip-based consideration).
There were no other significant changes in the state of affairs of the Group during the financial year.
Likely developments and expected results of operations
Comments on likely developments and expected results of operations are included in the review of
operations and activities on pages 3 – 12.
Events since the end of the financial year
Since the end of the financial year the NOVONIX Limited has:
(a) issued 10,000,000 unsecured convertible loan notes to the St Baker Energy Innovation Fund
at $0.40 each on the conversion of a short-term loan of $4,000,000 which was unsecured and
interest bearing at a rate of 10%. The loan notes have a coupon interest rate of 10% per
annum capitalised over a term of 36 months;
(b) granted 2,500,000 options to an employee on the same terms as those set out in note 26(f);
and
(c) following shareholder approval on 31 July 2019, granted 15,000,000 options to directors;
Environmental regulation
The Group is subject to significant environmental regulation in respect of its mining, exploration and
development activities in Australia and is committed to undertaking all its operations in an
environmentally responsible manner.
To the best of the Directors’ knowledge, the Group has adequate systems in place to ensure
compliance with the requirements of all environmental legislation and are not aware of any breach of
those requirements during the financial year and up to the date of the Directors’ report.
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Information on Directors
The following information is current as at the date of this report.
A G Bellas. Chair – non-executive
Experience and expertise
Tony was appointed as Chair of the Company on 11 August 2015. He brings
almost 30 years of experience in the public and private sectors. Tony was
previously CEO of the Seymour Group, one of Queensland’s largest private
investment and development companies. Prior to joining the Seymour
Group, Tony held the position of CEO of Ergon Energy, a Queensland
Government-owned corporation involved in electricity distribution and
retailing. Before that, he was CEO of CS Energy, also a Queensland
Government-owned corporation and the State’s
largest electricity
generation company, operating over 3,500 MW of gas-fired and coal-fired
plant at four locations.
Tony had a long career with Queensland Treasury, achieving the position of
Deputy Under Treasurer.
Tony is a director of the listed companies shown below and is also a director
of Loch Exploration Pty Ltd, Colonial Goldfields Pty Ltd and West Bengal
Resources (Australia) Pty Ltd.
Other current directorships Chairman of Shine Limited and intelliHR Limited, Deputy Chairman of State
Gas Limited. Chairman of the Endeavour Foundation.
Former listed directorships
in last 3 years
Chairman of Corporate Travel Management Ltd (ceased 2019).
Chairman of ERM Power Ltd (ceased 2019).
Special responsibilities
Chairman of the Board
Member of the Audit Committee
Interests in shares and
options
1,179,354 ordinary shares
1,750,000 options
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P M St Baker. Managing Director
Experience and expertise
Mr St Baker was previously the Managing Director and CEO of ERM Power
Limited for eight years until October 2014 during which time the company
transformed from a private power development company into one of
Australia’s fastest growing diversified energy companies with an annual
turnover growing from $10 million to over $2 billion. Mr St Baker oversaw
the development of ERM Power’s retail sales and gas exploration business
and the expansion of its power generation business. Prior to joining ERM
Power, Mr St Baker had a 16 year career with BHP Billiton. His focus there
was on delivering improved operational performance.
Other current directorships Non-executive Director of ERM Power Limited.
Former listed directorships
in last 3 years
None.
Special responsibilities
Managing Director
Interests in shares and
options
14,976,903 ordinary shares
1,895,833 performance rights
2,000,000 options
G A J Baynton. Executive Director
Experience and expertise
Mr Baynton founded Graphitecorp in April 2012. He has been a Director of
Australian exploration companies for over 19 years. He is founder and
Executive Director of investment and advisory firm, Orbit Capital. Mr
Baynton has experience
investment banking, merchant banking,
infrastructure investment, IPOs, public company directorships, Queensland
Treasury and the Department of Mines and Energy. He is a Fellow of the
Geological Society of London.
in
Other current directorships Non-executive Director of Superloop Limited (ASX: SLC), Non-executive
Director of intelliHR Limited (ASX: IHR), and Executive Director of State Gas
Limited.
Former listed directorships
in last 3 years
None.
Special responsibilities
Member of the Audit Committee
Executive Director.
Interests in shares and
options
29,561,827 ordinary shares
500,000 performance rights
1,000,000 options
17
For personal use only
R Cooper. Non-Executive Director
Experience and expertise
Mr Cooper is a mining engineer with more than 25 years' industry
experience, having held leadership roles across a diverse range of
commodities, both in Australia and overseas. He has a broad foundation
of operating and technical experience in both operations and project
development. Mr Cooper has previously held leadership positions with
BHP Billiton as General Manager of Leinster Nickel Operations within
Nickel West, and as Asset President of Ekati Diamonds in Canada. He more
recently held positions with Discovery Metals as General Manager-
Operations in Botswana and as General Manager-Development in their
Brisbane office. Robert is currently the CEO of Round Oak Minerals Pty
Limited (formerly CopperChem Pty Limited), a 100% owned subsidiary of
the Washington H Soul Pattinson Group of companies.
Other current directorships Non-executive Director of Syndicated Metals Limited.
Former listed directorships
in last 3 years
Non-executive Director of Verdant Minerals Limited (ceased 2019).
Special responsibilities
Chairman of the Audit Committee.
Interests in shares and
options
200,000 ordinary shares
200,000 options
D Price. Alternative Non-Executive Director
Experience and expertise
Dean has over 17 years of corporate finance experience practising in
the areas of mergers & acquisitions, capital raising and restructuring.
Dean is currently an executive director of Pitt Capital Partners, a
wholly owned subsidiary of Washington H Soul Pattinson & Company
Limited and is responsible for generating investment ideas, sourcing
new investment opportunities and working with portfolio companies
to grow those businesses.
Other current directorships
None.
Former listed directorships in
last 3 years
None.
Special responsibilities
None.
Interests in shares and options None.
18
For personal use only
Admiral R J Natter. Non-Executive Director
Experience and expertise
Robert Natter retired from active military service a decade ago and now has
more than 10 years of experience in both the government and private
sectors in the North American market.
In his Navy career, Robert Natter served as the Commander of the U.S.
Seventh Fleet operating throughout Asia and the Indian Ocean; Commander
in Chief of the U.S Atlantic Fleet; and the first Commander of U.S. Fleet
Forces, overseeing all Continental U.S. Navy bases, facilities and training
operations. For six years until 2018, Natter was Chairman of the US Naval
Academy Alumni Association Board of Trustees, representing about 60,000
living graduates. He currently serves on the Board of the Naval Academy
Foundation, and also served on the Boards of the National Navy SEAL
Museum and the Yellow Ribbon Fund.
He serves on the Board of Directors of Allied Universal Security Company
with over 200,000 employees and Corporate Travel Management (CTM),
specializing in corporate employee travel throughout Australia, New
Zealand, Asia, Europe, and the United States. He also serves on the Board
of Physical Optics Corp (POC) in Torrance, CA.
Other current directorships Non-executive Director of Corporate Travel Management Limited.
Former listed directorships
in last 3 years
None.
Special responsibilities
None.
Interests in shares and
options
750,000 ordinary shares
3,750,000 options
19
For personal use only
Andrew N. Liveris. Non-Executive Director
Experience and expertise
A recognized global business leader with more than 40 years at the Dow
Chemical Company, Mr Liveris' career has spanned roles in manufacturing,
engineering, sales, marketing, and business and general management
around the world.
During more than a decade as Dow’s CEO, Liveris has led the Company’s
transformation from a cyclical commodity chemicals manufacturing
company into a global specialty chemical, advanced materials, agro-
sciences and plastics company.
Other current directorships Non-executive director of Saudi Arabian Oil Company (Saudi Aramco) and
Worley Parsons Limited (ASX: WOR).
Non-executive director of
Corporation (NYSE: IBM).
International Business Machines
(IBM)
Former listed directorships
in last 3 years
Executive Chairman of DowDuPont Inc (NYSE: DEDO).
Special responsibilities
None.
Interests in shares and
options
2,007,574 ordinary shares
14,000,000 options
Meetings of Directors
The number of meetings of the Company’s Board of Directors and of each board committee held
during the year ended 30 June 2019, and the number of meetings attended by each Director were:
Full meetings of Directors
Meetings of Audit Committee
A Bellas
G A J Baynton
P M St Baker
R Cooper
Admiral R J Natter
A Liveris
D Price
A
8
8
8
6
7
4
-
B
8
8
8
8
8
8
-
A
2
2
-
1
-
-
-
A =
B =
Number of meetings attended
Number of meetings held during the time the director held office or was a member of the committee during the year
B
2
2
-
2
-
-
-
20
For personal use only
Remuneration report (Audited)
The Directors present the NOVONIX Limited 2019 remuneration report, outlining key aspects of our
remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Key management personnel (KMP) covered in this report
Remuneration policy and link to performance
Elements of remuneration
Link between remuneration and performance
Remuneration expenses for executive KMP
Contractual arrangements for executive KMP
Non-executive Director arrangements
Additional statutory information
(a)
Key management personnel covered in this report
Non-executive and Executive Directors (see pages 16 to 20 for details about each Director)
A Bellas (Non-executive Chairman)
G A J Baynton (Executive Director)
P M St Baker (Managing Director)
R Cooper (Non-executive Director)
A Liveris (Non-executive Director)
R Natter (Non-executive Director)
D Price (Alternate non-executive Director)
Other key management personnel
Name
J C Burns
D A Stevens
N Liveris
Position
Group COO and CEO of NOVONIX Battery
Testing Services Inc and PUREgraphite LLC.
Group CTO
Group
Business
President
Development and CFO of NOVONIX Battery
Testing Services Inc and PUREgraphite LLC.
Vice
–
Changes since the end of the reporting period
There have been no changes to key management personnel since the end of the reporting period.
(b)
Remuneration policy and link to performance
The role of a remuneration committee is performed by the full Board of Directors. The board reviews
and determines the remuneration policy and structure annually to ensure it remains aligned to
business needs, and conforms with our remuneration principles. In particular, the board aims to
ensure that remuneration practices are:
•
•
•
•
competitive and reasonable, enabling the Company to attract and retain key talent
aligned to the Company’s strategic and business objectives and the creation of shareholder
value
transparent and easily understood, and
align with shareholder interests and are acceptable to shareholders
21
For personal use only
Performance
metrics
Nil
Potential value
Positioned at
median market
rate
for FY
Changes
2019
None.
Remuneration report (continued)
Element
Purpose
Fixed
remuneration
(FR)
STI
LTI
Provide
competitive market
salary including
superannuation
and non-monetary
benefits
Reward for in-year
performance
Based on individual
KPI’s.
Alignment to long-
term shareholder
value
Market price and
performance
vesting conditions
100% of base
salary (if bonus
paid in cash)
150% of base
salary (if bonus
paid in shares)
Variable subject
to share price.
None.
None.
Balancing short-term and long-term performance
Annual incentives are set at a maximum of 100% of base salary (150% if paid in shares) in order to
drive performance.
Long term incentives are assessed periodically and are designed to promote long-term stability in
shareholder returns.
Assessing performance
The board of directors is responsible for assessing performance against KPIs and determining the STI
and LTI to be paid.
(c)
(i)
Elements of remuneration
Fixed annual remuneration (FR)
Executives receive their fixed remuneration as cash. FR is reviewed annually and is benchmarked
against market data for comparable roles in companies in a similar industry and with similar market
capitalisation. The board has the flexibility to take into account capability, experience, value to the
organisation and performance of the individual. The Group has not engaged an external remuneration
consultant during FY2019.
Superannuation is included in FR for executives. In FY 2019, fixed remuneration was not increased.
(ii)
Short term incentives
Short term incentives for all key management personnel have been in place for FY2019. All KMP are
eligible to receive a cash bonus of up to 100% of their base salary at the end of the financial year
subject to the executive achieving the KPIs set for them during the financial year.
22
For personal use only
Remuneration report (continued)
The Company reserves the right to pay any STI cash bonus by way of an issue of fully paid ordinary
shares at the board of director’s sole discretion. If the Company determines that the cash bonus is to
be paid in shares, the value of the shares the executive shall receive will be calculated at 150% of the
cash bonus amount. For the purpose of calculating the number of shares to be issued to the executive,
the issue price of the shares shall be based on the 10 day volume weighted average price of shares.
If an executive does not achieve each of the KPIs during the financial year, the Managing Director shall
determine the appropriate pro rate STI cash bonus to be received by the Executive. The Board of
Directors shall make this determination for both the Managing Director and the Executive Director.
Structure of the short-term incentive plan
Feature
Max opportunity
Performance
metrics
Delivery of STI
Board discretion
25%
June 2019
Target
June 2019
Weighting
25%
Reason for selection
Focus of the groups
growth strategy.
Focus of the groups
growth strategy.
Description
KMP executives: 100% of fixed remuneration if paid in cash; 150% of fixed
remuneration if paid in shares.
The STI metrics align with our strategic priorities.
Metric
PUREgraphite production
and expansion targets
Battery Technology
Services business
expansion and product
development targets
Execution of business
strategy, and management
of operations, including
investor communications.
STI awarded in cash will be paid after the end of the financial year. STI awarded in
shares will be awarded as soon as practical after the end of the financial year, and
where subject to shareholder approval, after shareholder approval is received.
The Board has discretion to adjust remuneration outcomes up or down to avoid
any inappropriate reward outcomes, including reducing (down to zero, if
appropriate) any deferred STI award.
Focus on the groups
growth strategy and
shareholder value.
Ongoing
50%
Long-term incentives
(iii)
Executive KMP participate, at the board’s discretion, in the Long Term Incentive Program (“LTIP”)
comprising one off grants of options or performance rights, with varying vesting conditions. The
company does not have a formal LTIP, rather incentives are awarded at the discretion of the Board.
Performance Rights
1,750,000 performance rights were granted to Directors and Executives, following shareholder
approval at the November 2018 AGM (1,000,000 to Philip St Baker, 500,000 to Greg Baynton, and
250,000 to Nick Liveris). These performance rights were awarded in the prior financial year. A share
based payment expense was recognised for the related services performed based on an estimate of
the grant date fair value, as well as an estimate of the number of performance rights expected to vest.
Following shareholder approval, revised valuations were performed, which can be seen in the table
on page 28. The performance rights expire on 1 January 2025. These performance rights vest on 1
January 2020 subject to the following performance related vesting conditions:
23
For personal use only
Remuneration report (continued)
•
•
•
•
The executive remains employed in the capacity of an executive as at the vesting date;
1,000 tonnes of sales contracts for PUREgraphite anode material;
Production capability of 1,000 tonnes per annum at PUREgraphite;
Expansion to 10,000 tonnes per annum planned and costed ready for final investment decision
with funding plan;
• Maintained or exercised rights to increase the Group’s interest in PUREgraphite by 25%;
•
Sales revenue for NOVONIX Battery Testing Services, Inc. exceeding CAD$3 million in any 12
month period; and
The 10 day VWAP of NOVONIX’s shares exceeds $1.575 at the vesting date.
•
In the event that not all vesting conditions are satisfied, but the overall performance of the Company
and the Executive has been high, the board can award a portion of the long-term incentive on a
discretionary basis.
Options
During FY2019, 34,200,000 options were granted to Directors and Executives. 15,000,000 of the
options awarded during FY 2019 were subject to shareholder approval which was received at the
General Meeting of shareholders held on 31 July 2019. A further 2,500,000 options are subject to
shareholder approval which will be sought at the 2019 AGM.
2,450,000 options were granted to Directors and Executives, following shareholder approval at the
November 2018 AGM (1,500,000 to Nick Liveris, 750,000 to Tony Bellas and 200,000 to Robert
Cooper). These options were awarded in the prior financial year. A share based payment expense
was recognised for the related services performed based on an estimate of the grant date fair value.
Following shareholder approval, revised valuations were performed, which can be seen in the table
on page 28.
(d)
Link between remuneration and performance
During the year, the Group has generated losses from its principal activities supplying advanced
battery materials, equipment and services to the global LIB battery market. As the Company is still
growing the business, the link between remuneration, Company performance and shareholder wealth
is difficult to define. Share prices are subject to the influence of fluctuation in the world market price
for graphite and general market sentiment towards the sector, and, as such, increases or decreases
may occur quite independently of Executive performance.
Given the nature of the Group’s activities and the consequential operating results, no dividends have
been paid. There have been no returns of capital in the current or previous financial periods. The
details of market price movements are as follows:
24
For personal use only
Remuneration report (continued)
Year end 30 June 2019
Year end 30 June 2018
Year end 30 June 2017
Year end 30 June 2016
IPO price - 2 December 2015
Share price
$0.44
$0.61
$0.75
$0.35
$0.20
(e)
Remuneration expenses for executive KMP
The following table shows details of the remuneration expense recognised for the Group’s executive
key management personnel for the current and previous financial year measured in accordance with
the requirements of the accounting standards.
25
For personal use only
Remuneration report (continued)
Name
Executive Directors
G A J Baynton
P M St Baker
Other key management personnel (group)
C Burns
D Stevens
N Liveris
Year
Cash salary
Fixed remuneration
Post- employment
benefits
Variable remuneration
Sign-on
bonus
STI
Performance
rights*
Options*
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
91,324
91,324
122,318
122,318
227,572
203,249
215,664
203,249
224,204
178,451
8,676
8,676
11,620
11,620
-
-
-
-
14,895
16,167
-
-
-
-
-
-
-
-
-
9,406
-
-
-
-
95,335
79,337
51,865
79,337
52,832
38,875
(7,420)
16,572
(14,840)
34,101
43,832
16,572
21,916
8,286
(4,463)
9,039
21,608
-
943,216
517,757
1,262,918
922,413
851,653
922,413
134,323
394,349
114,188
116,572
1,062,314
685,796
1,629,657
1,221,571
1,141,098
1,213,285
421,791
646,287
Non-executive Director
A Bellas
R Natter
R Cooper
93,888
4,750
151,216
4,750
37,525
2,850
58,574
2,850
426,631
-
589,145
-
2,485,567
2,850
-
-
7,412,659
45,641
4,682,446
44,063
* Performance rights and options are expensed over the performance period, including for options that have been awarded to individuals but have not yet formally been granted, which includes the year in which the rights and
options are awarded / granted and the subsequent vesting period.
D Price did not receive any remuneration in FY2019 or FY2018.
39,138
96,466
4,675
25,724
396,631
559,145
2,452,717
-
6,106,879
3,438,267
50,000
50,000
30,000
30,000
30,000
30,000
30,000
-
1,021,082
908,591
-
-
-
-
-
-
-
-
200,032
197,549
-
-
-
-
-
-
-
-
-
9,406
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
-
-
-
-
39,025
84,570
Total KMP remuneration expensed
A Liveris (from 1/07/18)
-
-
-
26
For personal use only
Remuneration report (continued)
(f)
Contractual arrangements with executive KMP’s
Component
Fixed
remuneration
Contract
duration
Notice by
individual
company
the
/
Philip St Baker Greg Baynton
$100,000 (part-
$150,000 (part-
time)
time)
Inclusive of
Inclusive of
superannuation
superannuation.
Ongoing
Ongoing
contract
contract
6 months
6 months
Chris Burns
$264,618
(CAD$250,000)^
David Stevens Nick Liveris
$221,056
(CAD$205,000)
$234,751
(USD$165,000)^
Ongoing
contract
12 months
Ongoing
contract
12 months
Ongoing
contract
12 months
^Chris Burns and Nick Liveris remuneration was revised with effect from 1 April 2019. Chris Burns
increased from CAD$200,000 pa to CAD$250,000 and Nick Liveris increased from USD$150,000 pa to
USD$165,000 pa.
(g)
Non-executive Director arrangements
The non-executive chairman receives fees of $50,000 per annum plus superannuation. Other non-
executive directors receive $30,000 per annum plus superannuation. Fees are reviewed annually by
the board taking into account comparable roles. The current base fees were reviewed with effect
from 1 December 2015.
The maximum annual aggregate non-executive Directors’ fee pool limit is $250,000 (excluding share
based payments) and was set out in the 2015 Prospectus.
All Non-executive Directors enter into a service agreement with the company in the form of a letter
of appointment. The letter summarises the board policies and terms, including remuneration relevant
to the office of Director.
(h)
Additional statutory information
Performance based remuneration granted and forfeited during the year
(i)
The table below shows for each KMP how much of their STI cash bonus was awarded and how much
was forfeited. It also shows the value of options and performance rights that were granted, exercised
and forfeited during FY 2019. The number of options and performance rights and percentages
vested/forfeited for each grant are disclosed in section (iv) on pages 31 to 32 below.
Philip St Baker and Greg Baynton were both awarded STI’s relating to FY 2019 of 25%, however both
have decided to forfeit their awarded STI.
27
For personal use only
Remuneration report (continued)
Total STI bonus
Total opportunity
LTI performance rights
If paid in
cash
If paid in
shares
Awarded
%
Forfeited
%
Value
granted*
$
Value
awarded
$
Value
exercised
$
Value
granted*
$
LTI Options
Value
awarded
***
$
Value
awarded
^
$
Value
exercised
**
$
2019
P M St Baker
G A J Baynton
A Bellas
R Cooper
A Liveris
R Natter
C Burns
D Stevens
N Liveris
150,000
100,000
-
-
-
-
224,925
211,694
215,640
225,000
150,000
-
-
-
-
337,388
317,541
323,460
-
-
-
-
-
-
42%
25%
25%
100%
100%
-
-
-
-
58%
75%
75%
25,000~
12,500~
-
-
-
-
-
-
6,250~
-
-
-
-
-
-
-
-
-
-
-
-
-
126,975~
-
33,860~
-
-
-
-
390,050
- 5,976,400
-
-
425,100~
-
684,400
342,200
342,200
-
3,079,800
342,200
-
-
-
-
-
-
-
-
-
-
342,200 1,412,575
475,000
-
-
-
-
-
-
-
-
*
**
***
^
~
The value at grant date calculated in accordance with AASB 2 Share-based Payment of options and performance rights granted during the year as part of remuneration. For the performance rights, the value granted is
based on an estimate of the number of performance rights expected to vest.
The value at the exercise date of options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date.
The options were awarded to KMP during FY2019 and granted following shareholder approval on 31 July 2019. The value has been calculated as the fair value of the options as at 31 July 2019.
The value awarded represents an estimate of the fair value of the options as the options will not be formally granted until shareholder approval is obtained at the 2019 Annual General Meeting of shareholders.
Options and performance rights were awarded in the prior financial year and subsequently granted following shareholder approval at the 2018 AGM. The value represents the fair value of the options and performance
rights at the date shareholder approval was received.
(iii)
Terms and conditions of the share-based payment arrangements
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are as follows:
28
For personal use only
Remuneration report (continued)
Grant date
Vesting and
exercise date
Expiry date
Exercise
price
Value per
option at
grant date
$0.59
Performance
achieved
% vested
100%
100%
27/6/2017
02/06/2019
21/11/2017
21/11/2017
21/11/2017
21/11/2017
22/11/2018
22/11/2018
22/11/2018
22/11/2018
22/11/2018
22/11/2018
22/11/2018
22/11/2018
24/05/2019
24/05/2019
31/07/2019
31/07/2019
13/03/2019
30/06/2019
30/06/2020
14/07/2018
14/07/2019
22/11/2018
06/03/2019
06/03/2020
28/07/2019
22/11/2018
29/08/2019
29/08/2020
29/08/2021
30/06/2020~
30/06/2022~
30/06/2020~
30/06/2022~
30/06/2021~
13/03/2019
30/06/2022~
13/03/2019
31/03/2023~
13/03/2019
30/06/2023~
13/03/2019
28/02/2024~
13/03/2019
31/03/2024~
13/03/2019
31/05/2024~
13/03/2019
30/06/2024~
13/03/2019
31/01/2025~
13/03/2019
28/02/2025~
21/11/2019*
30/06/2021~
21/11/2019*
30/06/2022~
21/11/2019*
31/03/2023~
21/11/2019*
30/06/2023~
21/11/2019*
28/02/2024~
Cessation of
employment
01/07/2021
01/07/2021
14/07/2020
14/07/2020
06/03/2023
06/03/2023
06/03/2023
Cessation of
employment
29/08/2023
29/08/2023
29/08/2023
29/08/2023
05/08/2024
05/08/2024
05/08/2024
05/08/2024
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
$0.74
$0.66
$0.66
$0.95
$1.10
$0.90
$1.20
$1.40
$0.80
$0.70
$0.90
$1.20
$1.40
$0.50
$0.50
$0.50
$0.50
$0.50
$1.11
$1.14
$0.91
$0.90
$0.19
$0.17
$0.15
$0.28
$0.23
$0.20
$0.18
$0.17
$0.32
$0.34
$0.33
$0.35
$0.54
$0.50
$0.55
$0.50
$0.56
$0.50
$0.56
$0.50
$0.57
$0.50
$0.57
$0.50
$0.57
$0.50
$0.57
$0.50
$0.58
$0.50
$0.58
$0.50
$0.54^
$0.50
$0.55^
$0.50
$0.56^
$0.50
$0.56^
$0.50
$0.57^
100%
-
100%
-
100%
100%
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100%
-
100%
-
100%
100%
-
-
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
29
For personal use only 21/11/2019*
31/03/2024~
21/11/2019*
31/05/2024~
21/11/2019*
30/06/2024~
21/11/2019*
31/01/2025~
21/11/2019*
28/02/2025~
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
Cessation of
employment
$0.50
$0.57^
$0.50
$0.57^
$0.50
$0.57^
$0.50
$0.58^
$0.50
$0.58^
-
-
-
-
-
-
-
-
-
-
^ The value per option at grant date represents an estimate of the fair value of the options as they will not be formally granted until
shareholder approval is obtained at the 2019 Annual General Meeting of shareholders.
* Subject to shareholder approval at the Annual General Meeting of Shareholders scheduled for 21 November 2019
~ Vesting is subject to satisfaction of performance related vesting conditions. The vesting date shown represents an estimate of when
vesting conditions will be satisfied.
The number of options over ordinary shares in the Company provided as remuneration to key
management personnel is shown in the table below on page 31. The options carry no dividend or
voting rights. When exercisable, each option is convertible into one ordinary share of NOVONIX
Limited.
On 17 June 2019 the Company entered into a loan agreement for $1,500,000 with Mr St Baker for the
purpose of funding the exercise of 5,000,000 options (exercise price $0.30, expiring 30 June 2019).
The loan is limited in recourse over the shares issued on exercise of the options, and the Company has
placed a holding lock over the shares to secure repayment. The loan is interest free and has a term of
5 years, with early repayment if Mr St Baker ceases to be a director or employee of the Company. For
accounting purposes, the granting of the loan has been treated as a modification of the original option
terms to extend the expiry date of the options by 5 years, to the repayment date of the loan. A share
based payment expense of $900,000 was recognised which reflects the incremental fair value of the
modified option.
Performance rights
The terms and conditions of each grant of performance rights affecting remuneration in the current
or a future reporting period are as follows:
P M St Baker
G A J Baynton
C Burns
D Stevens
N Liveris
Grant date
22/11/2018
22/11/2018
13/02/2018
13/02/2018
22/11/2018
Vesting date
01/01/2020
01/01/2020
01/01/2020
01/01/2020
01/01/2020
Grant date value
$0.05
$0.05
$0.33
$0.33
$0.05
The number of performance rights over ordinary shares in the Company provided as remuneration to
key management personnel is shown on page 32. The performance rights carry no dividend or voting
rights. See page 28 above for conditions that must be satisfied for the performance rights to vest.
When exercisable, each performance right is convertible into one ordinary share of NOVONIX Limited.
If an executive ceases employment before the rights vest, the rights will be forfeited, except in limited
circumstances that are approved by the board on a case-by-case basis.
30
For personal use only
Remuneration report (continued)
(iv)
Reconciliation of options, performance rights, ordinary shares and loan notes held by KMP
The table below shows a reconciliation of options held by each KMP from the beginning to the end of FY2019. No options were forfeited during the year.
Options
2019
Name & Grant dates
R Natter
21 Nov 2017
22 Nov 2018
P M St Baker
21 October 2016
A Bellas
22 Nov 2018
R Cooper
22 Nov 2018
A Liveris
21 Nov 2017
C Burns
27 June 2017
13 March 2019
24 May 2019
D Stevens
27 June 2017
N Liveris
22 Nov 2018
Balance at the start of the
year
Unvested
Vested
Vested
Granted as
compensation
Number
%
Exercised
Balance at the end of the year
Vested and
exercisable
Unvested
500,000
-
250,000
-
-
2,000,000
250,000
500,000
33%
25%
-
-
500,000
500,000
250,000
1,500,000
5,000,000
-
-
-
(5,000,000)
-
-
-
-
-
-
-
750,000
500,000
67%
200,000
133,333
67%
4,000,000
1,000,000
- 2,000,000
40%
3,000,000
-
-
3,000,000
-
-
-
-
-
-
-
10,000,000
1,000,000
3,000,000
-
-
100%
-
-
- 3,000,000 100%
1,500,000
-
-
-
-
-
-
-
-
-
-
500,000
250,000
133,333
66,667
3,000,000
2,000,000
3,000,000
-
-
-
10,000,000
1,000,000
3,000,000
-
-
1,500,000
31
For personal use only Remuneration report (continued)
The amounts paid per ordinary share on the exercise of options at the date of exercise (24 June 2019) was $0.30 per share. The Company entered into a loan agreement
for $1,500,000 with Mr St Baker for the purpose of funding the exercise of 5,000,000 options (exercise price $0.30, expiring 30 June 2019) (as detailed on page 91).
Exercise date
24/06/2019
Amount paid per share
$0.30
The table below shows how many performance rights were granted and vested during the year. No performance rights were forfeited during the year.
Performance rights
Balance at the start of
the year
Unvested
Vested
Balance at the end of
the year
Unvested
Vested
Maximum
value yet
to vest*
$
Name
P M St Baker
-
6,696
3,348
22,096
11,048
1,674
The maximum value of the performance rights yet to vest has been determined as the amount of the grant date fair value of the rights that are yet to be expensed. The minimum value of deferred shares yet to vest is nil, as
the shares will be forfeited if the vesting conditions are not met.
-
1,000,000
500,000
500,000
250,000
250,000
895,833
-
-
-
-
-
895,833
-
-
-
-
-
-
500,000
250,000
-
G Baynton
C Burns
D Stevens
N Liveris
-
-
-
-
-
*
Exercised
during the
year
Vested
during
the year
-
-
-
-
-
-
Granted as
compensation
-
1,000,000
500,000
-
-
250,000
Year
granted
2016
2019
2019
2018
2018
2019
32
For personal use only Remuneration report (continued)
Shareholdings
2019
Name
Ordinary shares
A Bellas
G A J Baynton
P M St Baker
R Cooper
R Natter
A Liveris
D Price
C Burns
D Stevens
N Liveris
Balance at the
start of the year
Received on the
exercise of
options
Other changes
during the year
Balance at the
end of the year
3,929,354
29,561,827
9,976,903
200,000
750,000
2,007,574^
-
1,765,968
2,609,948
-
-
-
5,000,000**
-
-
-
-
-
-
-
(2,750,000)*
-
-
-
-
-
-
-
-
1,179,354
29,561,827
14,976,903
200,000
750,000
2,007,574
-
1,765,968
2,609,948
-
^ Represents A Liveris shareholding at the time of his appointment being 1 July 2018.
* Represents an off market transfer to M Bellas
** Exercise of options funded by way of a loan agreement (refer page 91).
(v)
Other transactions with key management personnel
During the financial year, Philip St Baker was paid rent totalling $76,896 (USD$52,000), for the use of
property owned by Mr St Baker in Colorado, USA. Mr St Baker’s salary has been adjusted to reflect
the additional benefit Mr St Baker is receiving.
There have been no other transactions with key management personnel.
End of remuneration report (audited)
33
For personal use only Shares under option and performance rights
Unissued ordinary shares
Unissued ordinary shares of NOVONIX Limited under option at the date of this report are as follow:
Date options granted
Expiry date
Exercise price
Number under option
23 February 2017
27 June 2017
14 July 2017
20 December 2017
21 November 2017
21 November 2017
21 November 2017
21 November 2017
7 February 2018
2 November 2018
6 December 2018
22 November 2018
22 November 2018
22 November 2018
22 November 2018
22 November 2018
22 November 2018
22 November 2018
22 November 2018
14 March 2019
5 August 2019
13 March 2019
5 August 2019
14 March 2019
24 May 2019
31 July 2019
7 April 2020
Cessation of
employment
14 July 2022
1 September 2019
14 July 2020
14 July 2020
14 July 2020
1 July 2021
7 February 2023
2 November 2023
6 December 2023
Cessation of
employment
6 March 2023
6 March 2023
6 March 2023
29 August 2023
29 August 2023
29 August 2023
29 August 2023
12 March 2022
5 August 2022
Cessation of
employment
Cessation of
employment
Cessation of
employment
5 August 2024
5 August 2024
$0.60
$0.74
$0.90
$0.60
$0.80
$0.95
$1.10
$0.66
$0.785
$0.55
$0.55
$0.80
$0.90
$1.20
$1.40
$0.70
$0.90
$1.20
$1.40
$0.80
$0.80
$0.50
$0.50
$0.50
$0.50
$0.50
450,000
6,000,000
450,000
560,000
250,000
250,000
250,000
5,000,000
200,000
160,000
40,000
1,500,000
316,666
316,667
316,667
500,000
500,000
500,000
500,000
17,250,000
10,000,000
12,500,000
2,500,000
750,000
1,000,000
15,000,000
Unissued ordinary shares of NOVONIX Limited under performance right at the date of this report total
3,395,833. 895,833 of these performance rights were the performance rights granted as
remuneration to Mr St Baker during previous years. The remaining 2,500,000 performance rights
were granted to KMP during the prior financial year. Of these, shareholder approval for 1,750,000
performance rights was required and obtained at the 2018 AGM held on 22 November 2018. Details
of the performance rights granted to key management personnel are disclosed on page 32 above.
No performance right holder or option holder has any right to participate in any other share issue of
the Company or any other entity.
34
For personal use only
Insurance of officers and indemnities
Insurance of officers
During the financial year, NOVONIX Limited paid a premium of $58,099 to insure the Directors and
secretaries of the Company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings
that may be brought against the officers in their capacity as officers of entities in the Group, and any
other payments arising from liabilities incurred by the officers in connection with such proceedings.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other
liabilities.
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.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court
under section 237 of the Corporations Act 2001.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit
duties where the auditor’s expertise and experience with the Company and/or the Group are
important.
Details of the amounts paid or payable to the auditor (PricewaterhouseCoopers) for non-audit services
provided during the year are set out below.
The Board of Directors has considered the position and, in accordance with advice received from the
audit committee, is satisfied that the provision of the non-audit services is compatible with the
general standard of independence for auditors imposed by the Corporations Act 2001. The Directors
are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following
reasons:
•
•
all non-audit services have been reviewed by the audit committee to ensure they do not
impact the impartiality and objectivity of the auditor
none of the services undermine the general principles relating to auditor independence as set
out in APES 110 Code of Ethics for Professional Accountants.
35
For personal use only During the year there were no fees were paid or payable for non-audit services provided by the auditor
of the parent entity (2018: Nil).
Auditor’s independence declaration
A copy of the auditors independence declaration as required under section 307C of the Corporations
Act 2001 is set out on page 37.
This report is made in accordance with a resolution of Directors.
A Bellas
Chairman
Brisbane
30 September 2019
36
For personal use only Auditor’s Independence Declaration
As lead auditor for the audit of Novonix Limited for the year ended 30 June 2019, I declare that to the
best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Novonix Limited and the entities it controlled during the period.
Michael Shewan
Partner
PricewaterhouseCoopers
Brisbane
30 September 2019
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
37
For personal use only Corporate governance statement
NOVONIX Limited and the board are committed to achieving and demonstrating the highest standards
of corporate governance. NOVONIX Limited has reviewed its corporate governance practices against
the Corporate Governance Principles and Recommendations (3rd edition) published by the ASX
Corporate Governance Council.
The 2019 corporate governance statement is dated as at 30 June 2019 and reflects the corporate
governance practices in place throughout the 2019 financial year. The 2019 corporate governance
statement was approved by the board on 30 September 2019. A description of the Group's current
corporate governance practices is set out in the Group's corporate governance statement which can
be viewed at https://www.novonixgroup.com/governance/.
38
For personal use only NOVONIX LIMITED
ABN 54 157 690 830
Annual financial report – 30 June 2019
Financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors’ declaration
40
41
42
43
44
97
These financial statements are consolidated financial statements for the Group consisting of NOVONIX
Limited and its subsidiaries. A list of major subsidiaries is included in note 24.
The financial statements are presented in the Australian currency.
NOVONIX Limited is a Company limited by shares, incorporated and domiciled in Australia.
All press releases, financial reports and other
www.novonixgroup.com.
information are available at our website:
39
For personal use only
Consolidated statement of profit or loss and other comprehensive
income for the year ended 30 June 2019
Continuing operations
Revenue from contracts with customers
Other income
Cost of goods sold
Administrative and other expenses
Borrowing costs
Impairment losses
Depreciation and amortisation expenses
Marketing and project development costs
Share based compensation
Employee benefits expense
Share of net losses of joint ventures
Loss before income tax expense
Income tax (expense) benefit
Loss from continuing operations
Other comprehensive income for the year, net of tax
Items that may be reclassified to profit or loss
Foreign exchange differences on translation of foreign
operations
Consolidated
2019
$
2018
$
Notes
3
3
4
4
17
5
1,817,049
3,024,684
(741,280)
(1,536,897)
(1,565,032)
(15,918,925)
(494,948)
(1,560,551)
(6,673,510)
(2,104,176)
(751,981)
2,171,895
231,522
(957,832)
(1,169,031)
(662,693)
-
(154,251)
(354,312)
(6,315,899)
(1,656,613)
(1,442,770)
(26,505,567)
383,655
(10,309,984)
(13,398)
(26,121,912)
(10,323,382)
809,396
140,644
Total comprehensive loss for the year
(25,312,516)
(10,182,738)
Earnings per share for loss from continuing operations
attributable to the ordinary equity holders of the
Company:
Basic earnings per share
Diluted earnings per share
Cents
Cents
8
8
(21.2 cents)
(21.2 cents)
(8.9 cents)
(8.9 cents)
The above consolidated statement of profit or loss and other comprehensive income should be read
in conjunction with the accompanying notes.
40
For personal use only
Consolidated balance sheet
As at 30 June 2019
ASSETS
Current assets
Cash and cash equivalents (excluding bank overdrafts)
Trade and other receivables
Inventory
Total current assets
Non-current assets
Property, plant and equipment
Exploration and evaluation assets
Investment in Joint Venture
Intangible assets
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Consolidated
2019
$
2018
$
Notes
11
12
13
14
15
9
16
6,054,664
683,103
1,116,991
396,224
811,217
646,143
7,854,758
1,853,584
5,984,517
2,838,749
-
18,233,245
8,630
2,441,418
13,253,083
11,643,550
5,027,964
8,040
27,065,141
32,374,055
34,919,899
34,227,639
17
18
19
1,404,366
580,845
4,145,069
676,866
209,278
86,886
6,130,280
973,030
19
13,016,841
1,645,776
Total non-current liabilities
13,016,841
1,645,776
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
19,147,121
2,618,806
15,772,778
31,608,833
20
21
38,163,405
21,438,031
(43,828,658)
38,163,405
11,152,174
(17,706,746)
Total equity
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
15,772,778
31,608,833
41
For personal use only
Consolidated statement of changes in equity
For the year ended 30 June 2019
Consolidated Group
Balance at 1 July 2017
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Share-based payments
Contributed
equity
$
22,208,494
-
-
-
15,954,911
-
Accumulated
losses
$
(7,383,364)
(10,323,382)
-
(10,323,382)
-
-
Share based
payments
reserve
$
3,589,547
-
-
-
-
4,995,899
Reserves
Foreign
currency
translation
reserve
$
(36)
-
140,644
140,644
-
-
Convertible
loan note
reserve
$
2,426,120
-
-
-
Total
$
20,840,761
(10,323,382)
140,644
(10,182,738)
-
-
15,954,911
4,995,899
Balance at 30 June 2018
38,163,405
(17,706,746)
8,585,446
140,608
2,426,120
31,608,833
Loss for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as owners:
Contributions of equity, net of transaction costs
Equity component of convertible notes, net of
transaction costs
Share-based payments
-
-
-
-
-
-
(26,121,912)
-
(26,121,912)
-
-
-
-
-
-
-
-
6,673,510
-
809,396
809,396
-
-
-
-
-
-
-
(26,121,912)
809,396
(25,312,516)
-
2,802,951
-
2,802,951
6,673,510
Balance at 30 June 2019
38,163,405
(43,828,658)
15,258,956
950,004
5,229,071
15,772,778
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
42
For personal use only
Consolidated statement of cash flows
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (GST inclusive)
Payments to suppliers and employees (GST inclusive)
Interest received
Income taxes paid
Payment of borrowing costs
Consolidated
2019
$
2018
$
Notes
2,613,477
(6,464,050)
4,533
-
(154,047)
2,433,227
(6,250,532)
6,734
(18,673)
(48,311)
Net cash outflow from operating activities
24
(4,000,087)
(3,877,555)
Cash flows from investing activities
Payments for exploration assets
Net outflow from the acquisition of PUREgraphite LLC
Payments for investments in joint ventures
Payments / refunds of security deposits
Payments for property, plant and equipment
(270,027)
(5,195,171)
-
(500)
(1,888,231)
(565,280)
-
(2,561,858)
4,476
(2,231,602)
Net cash outflow from investing activities
(7,353,929)
(5,354,264)
Cash flows from financing activities
Proceeds on issue of shares
Proceeds on issue of loan notes (net of expenses)
Payment of capital raising costs
Proceeds from borrowings
Repayment of borrowings
-
12,334,899
-
4,582,160
(56,319)
5,580,939
-
(166,834)
1,826,854
(31,339)
Net cash inflow from financing activities
16,860,740
7,209,620
Net increase (decrease) in cash and cash equivalents
5,506,724
(2,022,199)
Effects of foreign currency
Cash and cash equivalents at the beginning of the year
182,348
365,592
(27,333)
2,415,124
Cash and cash equivalents at the end of the year
11
6,054,664
365,592
The above consolidated statement of cash flows should be read in conjunction with the accompanying
notes.
43
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies
Basis of preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act
2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board
and International Financial Reporting Standards as issued by the International Accounting Standards
Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting
Standards. Material accounting policies adopted in the preparation of these financial statements are
presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and
are based on historical costs, modified, where applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
Going concern
The financial report has been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and settlement of liabilities in the normal course
of business.
As disclosed in the financial report, the consolidated entity achieved a net loss of $26,037,121 (2018:
$10,323,382) and net operating cash outflows of $4,000,087 (2018: $3,877,555) for the year ended 30
June 2019. As at 30 June 2019, the consolidated entity has net current assets of $1,724,478 (2018:
$880,554). In July 2019, current borrowings of $4,000,000 were converted to non-current borrowings
and equity in the form of convertible loan notes.
The ability of the consolidated entity to continue as a going concern is principally dependent upon one or
more of the following:
•
•
•
the ability of the consolidated entity to meet its cashflow forecasts;
the ability of the consolidated entity to raise capital as and when necessary; and
the successful and profitable growth of the battery materials, battery consulting and battery
technology businesses.
These conditions give rise to material uncertainty which may cast significant doubt over the consolidated
entity’s ability to continue as a going concern.
The directors believe that the going concern basis of preparation is appropriate due to the following
reasons:
•
the consolidated entity has a proven history of successfully raising funds which included Loan
Note issuances raising a total of $12.4 million during the year;
• The directors believe there is sufficient cash available for the consolidated entity to continue
operating until it can raise sufficient further capital to fund its ongoing activities.
Should the consolidated entity be unable to continue as a going concern, it may be required to realise its
assets and extinguish its liabilities other than in the ordinary course of business, and at amounts that
differ from those stated in the financial report.
44
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
This financial report does not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts or classification of liabilities and appropriate disclosures that
may be necessary should the consolidated entity be unable to continue as a going concern.
The financial statements were authorised for issue by the Directors on 30 September 2019. The Directors
have the power to amend and reissue the financial statements.
a.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of
NOVONIX Limited (‘Company’ or ‘Parent Entity’) as at 30 June 2019 and the results of all subsidiaries
for the year then ended. NOVONIX Limited and its subsidiaries together are referred to in these
financial statements as the ‘Group’.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the
Group are eliminated. Unrealised losses are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Where equity instruments are issued in a business combination, the fair value of the instruments
is their published market price as at the date of exchange. Transaction costs arising on the issue of
equity instruments are recognised directly in equity. The consideration transferred also includes
the fair value of any asset or liability resulting from a contingent consideration arrangement.
With limited exceptions, all identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date.
The excess of the consideration transferred, amount of any non-controlling interest in the acquired
entity, over the net fair value of the Group's share of the identifiable net assets acquired is
recognised as goodwill. If the consideration transferred of the acquisition is less than the Group's
share of the net fair value of the identifiable net assets of the subsidiary, the difference is
recognised as a gain in the profit and loss in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income, but only after a reassessment of the identification and measurement of
the net assets acquired.
Where settlement of any part of the cash consideration is deferred, the amounts payable in the
future are discounted to their present value, as at the date of exchange. The discount rate used is
the entity's incremental borrowing rate, being the rate at which a similar borrowing could be
obtained from an independent financier under comparable terms and conditions.
45
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
b.
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.
46
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
c.
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration
received or receivable.
Sales of Goods
Revenue for the hardware is recognised at a point in time when the hardware is delivered, the legal
title has passed and the customer has accepted the hardware.
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.
Grant revenue
Grants from the government are recognised at their fair value where there is a reasonable
assurance that the grant will be received and the group will comply with all attached conditions.
Consulting services
under
The consulting division provides battery cell design, implementation and support services
fixed-price and variable price contracts. Revenue from providing services is recognised in the
accounting period in which the services are rendered. For fixed-price contracts, revenue is
recognised based on the actual service provided to the end of the reporting period as a
proportion of the total services to be provided because the customer receives and uses the benefits
simultaneously. This is determined based on the actual labour hours spent relative to the total
expected labour hours.
Where the contracts include multiple performance obligations, the transaction price will be
allocated to each performance obligation based on the stand-alone selling prices. Where these are
not directly observable, they are estimated based on expected cost plus margin.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
47
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
d. 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.
e.
Current and non-current classification
Assets and liabilities are presented in the balance sheet 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.
f.
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 balance sheet.
g.
Other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
48
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
h.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured
products includes direct materials, direct labour and an appropriate proportion of variable and
fixed overheads. Costs are assigned to individual items of inventory on the basis of weighted
average costs.
i.
Exploration and evaluation assets
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area
of interest. Such expenditures comprise net direct costs and an appropriate portion of related
overhead expenditure but do not include overheads or administration expenditure not having a
specific nexus with a particular area of interest. These costs are only carried forward to the extent
that they are expected to be recouped through the successful development of the area or where
activities in the area have not yet reached a stage which permits reasonable assessment of the
existence of economically recoverable reserves and active or significant operations in relation to
the area are continuing.
A regular review has been undertaken on each area of interest to determine the appropriateness
of continuing to carry forward costs in relation to that area of interest.
An impairment charge is recognised when the Directors are of the opinion that the carried forward
net cost may not be recoverable or the right of tenure in the area lapses.
When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
j.
Loan notes
Loan notes are initially measured at fair value less transaction costs.
Amortised cost is calculated as the amount at which the loan note is measured at initial recognition
less principal repayments, and adjusted for any cumulative amortisation of the difference between
that initial amount and the maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments over the expected life of the
financial instrument to the net carrying amount of the financial liability.
Non-derivative financial liabilities, other than financial guarantees, are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process
and when then financial liability is derecognised.
49
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
k.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property,
plant and equipment (excluding land) over their expected useful lives as follows:
Buildings
Plant and equipment
25 years
2 - 10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if
appropriate, at each reporting date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic
benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are
taken to profit or loss.
l.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group 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.
m. 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.
Other long-term employee benefits
The liability for long service leave not expected to be settled within 12 months of the reporting date
are measured as the present value of expected future payments to be made in respect of services
provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee
departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely
as possible, the estimated future cash outflows.
50
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
Share-based payments
Equity-settled share-based compensation benefits are provided to employees. Equity-settled
transactions are awards of shares, options or performance rights over shares, that are provided to
employees in exchange for the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is
determined using various valuation methods including Black Scholes, Binomial and the Monte Carlo
Simulation method that takes into account the exercise price, the term of the performance right,
the impact of dilution, the share price at grant date and expect price volatility of the underlying
share, the expected dividend yield and the risk-free interest rate for the term of the performance
right.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase
in equity over 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.
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.
Share-based payment expenses are recognised over the period during which the employee
provides the relevant services. This period may commence prior to the grant date. In this situation,
the entity estimates the grant date fair value of the equity instruments for the purposes of
recognising the services received during the period between service commencement date and
grant date. Once the grant date has been established, the earlier estimate is revised so that the
amount recognised for services received is ultimately based on the grant date fair value of the
equity instruments.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition is not within the control of the Group 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.
51
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
n.
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.
o.
Investments in Joint Venture
Interests in joint ventures are accounting for using the equity method, after initially being
recognised at cost (including transaction costs) and adjusted thereafter for the post-acquisition
change in the Group’s share of net assets of the joint venture. In addition, the Group’s share of the
profit or loss of the joint venture is included in the Group’s profit or loss.
The carrying amount of the investment includes, when applicable, goodwill relating to the joint
venture. Any discount on acquisition, whereby the Group’s share of the net fair value of the joint
venture exceeds the cost of investment, is recognised in profit or loss in the period in which the
investment is acquired.
Profits and losses resulting from transactions between the Group and the joint venture are
eliminated to the extent of the Group’s interest in the joint venture.
When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint
venture, the Group discontinues recognising its share of further losses unless it has incurred legal
or constructive obligations or made payments on behalf of the joint venture. When the joint
venture subsequently makes profits, the Group will resume recognising its share of those profits
once its share of the profits equals the share of the losses not recognised.
p.
Impairment of Non-Financial Assets
At the end of each reporting period, the Group assesses whether there is any indication that an
asset may be impaired. The assessment will include the consideration of external and internal
sources of information, including dividends received from subsidiaries, associates or joint ventures
deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is
carried out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs of disposal and value in use, to the asset’s carrying amount. Any excess
of the assets carrying amount over its recoverable amount is recognised immediately in profit or
loss, unless the asset is carried at a revalued amount in accordance with another Standard. Any
impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that
other Standard.
52
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and
intangible assets not yet available for use.
q.
Intangible Assets Other than Goodwill
Brand Name
Brand names are recognised at fair value on the date of acquisition. They have a finite life and are
subsequently carried at cost less any accumulated amortisation and any impairment losses. Brand
names are amortised over their useful life of 10 years.
Technology
Technology is recognised at fair value on the date of acquisition. It has a finite life and is
subsequently carried at cost less any accumulated amortisation and any impairment losses.
Technology is amortised over its useful life of 5 years.
r.
Goodwill
Goodwill acquired on a business combination is initially measured at cost, being the excess of the
consideration transferred for the business combination over the Group’s interest in the net fair
value of the acquiree’s identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is reviewed for impairment, annually, or more frequently, if events or changes in
circumstances indicate that the carrying value may be impaired (refer note 10).
As at the acquisition date, any goodwill acquired is allocated to each of the cash-generating units
that are expected to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to
which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an
impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is
disposed, the goodwill associated with the disposed operation is included in the carrying amount
of the operation when determining the gain or loss on disposal of the operation.
Disposed goodwill in this circumstance is measured on the basis of the relative values of the
disposed operation and the portion of the cash-generating unit retained.
53
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
s.
Borrowing costs
Borrowing costs are recognised in the profit or loss in the period in which they are incurred.
t.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the
primary economic environment in which that entity operates. The consolidated financial
statements are presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Non-monetary items measure at historical cost continue to be carried at
the exchange rate at the date of the transaction. Non-monetary items measured at fair value are
reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from
the Group’s presentation currency, are translated as follows:
- Assets and liabilities are translated at exchange rates prevailing at the end of the reporting
period;
Income and expenses are translated at the average exchange rates for the period; and
-
- Accumulated losses are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations with functional currencies other
than Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the balance sheet. The cumulative amount of these differences is
reclassified into profit or loss in the period in which the operation is disposed of.
54
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
u.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of NOVONIX
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.
v.
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 balance sheet.
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.
w. New and Amended Accounting Policies Adopted by the Group
The Group has adopted all of the new, revised or amending Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory
for the current reporting period. There has been no material impact on the financial statements
by their adoption.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory
have not been early adopted.
55
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
x.
New standards and interpretations not yet adopted
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the
balance sheet, as the distinction between operating and finance leases is removed. Under the new
standard, an asset (the right to use the leased item) and a financial liability to pay rentals are
recognised. The only exceptions are short-term and low-value leases.
The accounting for lessors will not significantly change.
Management has assessed the effects of applying the new standard and it will affect the accounting
for the group’s operating leases.
As at the reporting date, the group has non-cancellable operating lease commitments of
$1,286,391, see note 29. For these lease commitments the group expects to recognise right-of-
use assets of approximately $1,446,000 on 1 July 2019 and lease liabilities of $1,446,000. The
overall impact on net assets will be nil, and net current assets will be $170,433 lower due to the
presentation of a portion of the liability as a current liability.
The group expects that net profit after tax will decrease by approximately $56,759 for 2020 as a
result of adopting the new rules. Adjusted EBITDA used to measure segment results is expected to
increase by approximately $170,433, as the operating lease payments were included in EBITDA, but
the amortisation of the right-of-use assets and interest on the lease liability are excluded from this
measure.
Operating cash flows will increase and financing cash flows decrease by approximately $40,201 as
repayment of the principal portion of the lease liabilities will be classified as cash flows from
financing activities.
The group does not have any activities as a lessor.
The group will apply the standard from its mandatory adoption date of 1 July 2019. The group
intends to apply the simplified transition approach and will not restate comparative amounts for
the year prior to first adoption. Right-of-use assets for property leases will be measured on
transition as if the new rules had always been applied.
There are no other standards that are not yet effective and that would be expected to have a
material impact on the entity in the current or future reporting periods and on foreseeable future
transactions.
56
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
y.
Critical accounting estimates and judgements
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
Group’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
below.
Exploration and evaluation costs
Exploration and evaluation costs have been capitalised on the basis that the Group intend to
commence commercial production in the future, from which time the costs will be amortised in
proportion to the depletion of the mineral resources. Key judgements are applied in considering
costs to be capitalised which includes determining expenditures directly related to these activities
and allocating overheads between those that are expensed and capitalised.
In addition, costs are only capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. Factors that could impact the future
commercial production at the mine include the level of reserves and resources, future technology
changes, which could impact the cost of mining, future legal changes and changes in commodity
prices. To the extent that capitalised costs are determined not to be recoverable in the future,
they will be written off in the period in which this determination is made.
For FY2019, the Company has recognised an impairment loss of $10,667,897 relating to the Mt
Dromedary graphite mining project. The future development of the Mt Dromedary mine will not
occur in the short to medium term given the tonnages of natural graphite required by the
PUREgraphite business is unlikely to be sufficient to warrant the development of the mine in that
timeframe. As well, a significant portion of graphite used by PUREgraphite will be synthetic
graphite, and the natural graphite required at this time can be more cost effectively sourced from
other natural graphite producers.
The Mt Dromedary asset remains a strategic asset for the Group, however the Directors have
determined that it is appropriate for the carrying value of the Mt Dromedary asset to reflect the
exploration and evaluation expenditure incurred since acquisition, and to write off all acquisition
related costs which relate to the minority interest acquired by the Group on 29 August 2016 in
return for shares in the Company (i.e. scrip-based consideration).
Value of intangible assets relating to acquisitions
The Group has allocated portions of the cost of acquisitions to technology intangibles, valued using
the relief from royalty method. These calculations require the use of assumptions including future
revenue forecasts and a royalty rate. Technology is amortised over its useful life of 5 years.
57
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Note 1
Summary of significant accounting policies (continued)
y.
Critical accounting estimates and judgements (continued)
Impairment of goodwill and identifiable intangible assets
The Group determines whether goodwill is impaired on an annual basis. This assessment requires
an estimation of the recoverable amount of the cash-generating units to which the goodwill is
allocated.
For FY2019, the Company has recognised an impairment loss of $5,251,028 relating to the goodwill
and intangible assets of BTS. At the time it was acquired in FY2017, BTS was primarily a producer
of battery testing equipment. Consulting services to the energy storage industry began as an
adjunct service supporting the equipment supply business operation. The consulting services
operation which yields much higher margins, has now become a business line on its own and has
grown rapidly over the course of this financial year and, in particular, over the past six months. In
the context of this rapid growth and the forward pipeline of consulting work, the consulting services
business has become a core operation and is considered to be BTS’s strongest growth
opportunity. Given the slowing in the rate of growth of sales of testing equipment and the
increased relative importance of consulting services, the directors have taken the opportunity to
write down the value of the goodwill and identifiable intangible assets relating to the testing
equipment supply business.
Share based payment transactions
The Group measures the cost of equity settled transactions with employees by reference to the fair
value of the equity instruments at the date at which they are granted. The fair value is determined
by using either a binomial or Monte Carlo option pricing model taking into account the terms and
conditions upon which the instruments were granted. The accounting estimates and assumptions,
including share price volatility, interest rates and vesting periods would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact
the profit or loss and equity.
Revision of Share based payment transactions
During the prior financial year, share options and performance rights were awarded to certain key
management personnel, which were subject to shareholder approval at the 2018 Annual General
Meeting (AGM) of shareholders on 22 November 2018.
Per the requirements of AASB 2, a share based payment expense was recognised from the date
that the associated services commenced for the respective individuals. This expense was based on
the original estimate of the fair value of the share options or performance rights expected to vest.
58
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Notes to the financial statements for the year ended 30 June 2019
Note 1
Summary of significant accounting policies (continued)
y.
Critical accounting estimates and judgements (continued)
Following formal approval by shareholders at the AGM, updated valuations were performed, and
the fair value of the share options and performance rights were revised. To ensure the cumulative
expense at 31 December 2018 was based on the revised fair value of the share options and
performance rights, adjusting entries were recorded to the share based payment expense. As a
result of the revised valuations being lower than the original estimates, it resulted in a total net
credit of $127,637 being recorded to share based payments expense for the 6 months ended 31
December 2018, in respect of the particular share options and performance rights.
In the second half of the year, the share based payment expense in respect of these share options
and performance rights has been based on the revised valuations, and an expense will continue
to be recognised over the remaining vesting period.
59
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Notes to the financial statements for the year ended 30 June 2019
Note 2 Parent information
The following information has been extracted from the books and records of the parent and has been
prepared in accordance with Australian Accounting Standards.
Balance sheet
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Other receivables
Plant and equipment
Exploration and evaluation assets
Investments
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Borrowings
Total current liabilities
Non-current liabilities
Borrowings
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulates losses
Total equity
2019
$
2018
$
5,240,110
73,952
386,272
102,221
5,314,062
488,493
709,194
5,042
2,838,749
21,938,847
7,000
1,907,132
9,015
13,253,083
16,257,530
6,500
25,498,832
31,433,260
30,812,894
31,921,753
134,586
4,000,000
312,920
-
4,134,586
312,920
10,905,530
10,905,530
-
-
15,040,116
312,920
15,772,778
31,608,833
38,163,405
20,488,027
(42,878,654)
38,163,405
11,011,566
(17,566,138)
15,772,778
31,608,833
Statement of Profit or Loss and Other Comprehensive Income
Total loss and total comprehensive loss
(25,312,516)
(10,159,327)
60
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Notes to the financial statements for the year ended 30 June 2019
Note 2 Parent information (continued)
Guarantees
NOVONIX Limited has not entered into any guarantees, in the current or previous reporting period, in
relation to the debts of its subsidiaries.
Contingent liabilities
At 30 June 2019, NOVONIX Limited did not have any contingent liabilities (2018: Nil).
Contractual commitments
At 30 June 2019 , NOVONIX Limited did not have any contractual commitments (2018: Nil).
Note 3 Revenue
(a)
Revenue from contracts with customers
The group derives revenue from the transfer of goods and services over time and at a point in time in
the following major product lines and geographical regions:
2019
Graphite
Mining and
exploration
$
Hardware sales
Consulting sales
Revenue from external customers
Timing of revenue recognition
At a point in time
Over time
2018
Hardware sales
Consulting sales
Revenue from external customers
Timing of revenue recognition
At a point in time
Over time
-
-
-
-
-
-
Graphite
Mining and
exploration
$
-
-
-
-
-
-
Battery
Technology
$
1,461,266
355,783
1,817,049
1,461,266
355,783
1,817,049
Battery
Technology
$
2,142,679
29,216
2,171,895
2,142,679
29,216
2,171,895
Battery
Materials
$
Battery
Materials
$
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
1,461,266
355,783
1,817,049
1,461,266
355,783
1,817,049
Total
$
2,142,679
29,216
2,171,895
2,142,679
29,216
2,171,895
Revenues from external customers come from the sale of battery testing hardware equipment and the
provision of battery testing and development consulting services.
61
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 3 Revenue (continued)
(i)
Assets and liabilities related to contracts with customers
The group has recognised the following assets and liabilities related to contracts with customers:
Notes
2019
$
2018
$
Contract liabilities – Hardware sales
Total current contract liabilities
580,845
580,845
209,278
209,278
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period relates
to carried-forward contract liabilities and how much relates to performance obligations that were
satisfied in a prior year.
Revenue recognised that was included in the contract
liability balance at the beginning of the period
Hardware sales
(b)
Other income
Interest received from unrelated parties
Grant funding
Fair value gain on borrowings
Gain on revaluation of equity accounted investment
(refer note 9)
Other
2019
$
2018
$
-
-
2019
$
4,533
329,573
114,106
2,576,131
341
3,024,684
2018
$
6,734
122,985
100,152
-
1,651
231,522
62
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 4 Loss for the year
Loss before income tax from continuing operations includes the following specific expenses:
Consolidated
2019
$
2018
$
Share based payments expense^
Performance rights granted
Options granted
39,025
6,634,485
84,570
6,231,329
Total share based compensation expense
6,673,510
6,315,899
Borrowing costs
Interest accrued on loan notes
Unwinding of fair value gain
Interest accrued on borrowings
Total borrowing costs
^ Refer to note 25 for further information regarding share-based payments.
1,373,581
30,113
161,338
1,565,032
604,183
7,279
51,231
662,693
Impairment losses
Exploration and evaluation assets
Goodwill
Identified intangibles – Brand Name
Identified intangibles - Technology
Total impairment losses
10,667,897
4,812,127
374,126
64,775
15,918,925
-
-
-
-
63
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Income tax expense
Note 5
This note provides an analysis of the Group’s income tax expense, shows what amounts are recognised
directly in equity and how the tax expense is affected by non-assessable and non-deductible items. It also
explains significant estimates made in relation to the Group’s tax position.
Consolidated
2019
$
2018
$
Numerical reconciliation of income tax expense
(a)
to prima facie tax payable
Profit/(loss) before income tax expense
(26,505,567)
(10,309,984)
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Impairment of goodwill
Share based payments
Gain on acquisition of PUREgraphite LLC (Note 9)
Share of results of joint venture
Borrowing costs
Other non-deductible amounts
Difference in overseas tax rate
Adjustments for current tax of prior periods
Adjustment to deferred tax assets and liabilities for tax
losses and temporary differences not recognised
(7,289,031)
(2,835,246)
1,323,335
1,835,215
(540,987)
206,795
377,735
(24,234)
(90,888)
(93,052)
-
1,571,872
-
396,762
-
(23,137)
(28,636)
75,329
3,911,457
856,454
Income tax expense / (benefit)
(383,655)
13,398
Tax losses
(b)
Unused tax losses for which no deferred tax asset has
been recognised
Potential tax benefit
Tax expense (income) recognised directly in
(c)
equity
Aggregate current and deferred tax arising in the
reporting period and not recognised in net profit or loss
or other comprehensive income but directly debited or
credited to equity:
Deferred tax: Share issue costs
15,128,752
4,971,560
4,122,864
1,407,910
-
-
64
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 5
Income tax expense
temporary differences
Deferred tax assets
(d)
The balance comprises
attributable to:
Tax losses
Exploration and evaluation assets
Business capital costs
Accrued expenses
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off
provisions
Deferred tax assets not recognised
Net deferred tax assets
temporary differences
comprises
Deferred tax liabilities
(e)
The balance
attributable to:
Exploration and evaluation assets
Intangibles
Property plant and equipment
Prepayments
Unrealised exchange on borrowings
Consolidated
2019
$
2018
$
4,351,897
1,433,506
49,212
17,067
2,737,891
-
70,747
16,571
5,851,682
2,825,209
(558,061)
(5,293,621)
(1,417,299)
(1,407,910)
-
-
-
328,885
186,851
143
42,182
1,236,560
132,115
48,366
258
-
Total deferred tax liabilities
558,061
1,417,299
Set-off of deferred tax liabilities pursuant to set-off
provisions
Net deferred tax liabilities
(558,061)
(1,417,299)
-
-
Unused losses which have not been recognised as an asset, will only be obtained if:
(i)
the group derives future assessable income of a nature and of an amount sufficient to enable the
losses to be realised;
the group continues to comply with the conditions for deductibility imposed by the law; and
no changes in tax legislation adversely affect the group in realising the losses.
(ii)
(iii)
Offsetting within tax consolidated entity
NOVONIX Limited and its wholly-owned Australian subsidiaries have applied the tax consolidation
legislation which means that these entities are taxed as a single entity. As a consequence, the deferred
tax assets and deferred tax liabilities of these entities have been offset in the consolidated financial
statements.
65
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 6 Key Management Personnel Compensation
Refer to the remuneration report contained in the Directors’ report for details of the remuneration paid
or payable to each member of the Group’s key management personnel (KMP) for the year ended 30
June 2019.
The totals of remuneration paid to KMP of the Company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Share-based compensation
Total KMP compensation
Short-term employee benefits
Consolidated
2019
$
1,221,114
45,641
6,145,904
2018
$
1,115,546
44,063
3,522,837
7,412,659
4,682,446
These amounts include fees and benefits paid to the non-executive Chairman as well as all salary, paid
leave benefits and fringe benefits paid to Executive Directors.
Post-employment benefits
These amounts are the current-year’s superannuation contributions made during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the options, performance rights and shares granted on grant
date.
Further information in relation to KMP remuneration can be found in the Directors report.
Note 7 Auditor’s Remuneration
Remuneration of the auditor for:
- Auditing or reviewing the financial report
Consolidated
2019
$
148,200
148,200
2018
$
129,492
129,492
66
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 8 Earnings per share
Basic earnings per share
(a)
Total basic earnings per share attributable to the
ordinary equity holders of the Company
(b) Diluted earnings per share
Total diluted earnings per share attributable to the
ordinary equity holders of the Company
2019
Cents
2018
Cents
(21.2 cents)
(8.9 cents)
(21.2 cents)
(8.9 cents)
(c)
Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
Profit / (loss) attributable to the ordinary equity holders
of the Company used in calculating basic earnings per
share
Diluted earnings per share
Profit / (loss) attributable to the ordinary equity holders
of the Company used in calculating diluted earnings per
share
2019
$
2018
$
(26,121,912)
(10,323,382)
(26,121,912)
(10,323,382)
(d) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as
in calculating basic and diluted
the denominator
earnings per share
(e)
Information concerning the classification of securities
Options and rights
2019
Number
2018
Number
123,219,872
115,901,777
Options and rights on issue during the year are not included in the calculation of diluted earnings per
share because they are antidilutive for the year ended 30 June 2019. These options and rights could
potentially dilute basic earnings per share in the future. Details relating to options and rights are set out
in note 25.
Note 9 Business Combination
On 2 February 2017, Novonix Limited entered into a binding term sheet with Coulometrics LLC
(“Coulometrics”) to form an incorporated joint venture (PUREgraphite) to develop and commercialise
high purity battery grade graphite material for the electric vehicle and other energy storage markets.
Novonix contributed USD$10million for a 50% interest while Coulometrics contributed the equivalent in
“Intellectual Property” which is recognised as the rights and exclusivity to the technical process and
knowledge of Edward Buiel, founder of Coulometrics, relating to the unique development and
commercialisation of high purity battery grade graphite material.
67
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 9 Business Combination (continued)
In the binding term sheet between Novonix and Coulometrics, Novonix had a call option which gave
them the option to acquire an additional 25% of PUREgraphite for USD$5million exercisable at any time
within two years. This option was exercised on 31 January 2019 and a further USD$5million was paid
to Coulometrics.
On 30 May 2019, Coulometrics conceded its remaining 25% interest in PUREgraphite to Novonix for no
consideration. The reason was that it was not commercially viable for Coulometrics to contribute further
funds to PUREgraphite, due to terms of the agreement allowing Novonix to profit from all revenue
generated by the company in excess of 1,000 tonnes per annum. The result of this ownership transfer has
had no bearing or implications on the exclusivity of Coulometrics technology and know-how in relation to
the development and commercialisation of high purity battery grade graphite material.
The transaction has been accounted for as a step-up acquisition, being a disposal of the Group’s existing
50% equity accounted investment in PUREgraphite at its fair value in exchange for the acquisition of
100% interest in PUREgraphite. As a result, a gain of $2,576,131 was recognised at the time of the
business combination which represented the difference between the fair value of the 50% equity
interest and the carrying value of the equity accounted investment.
The details of the business combination are as follows:
Fair value of consideration transferred
Amount settled in cash
Cash consideration (USD$10,000,000)
Cash consideration – 31 January 2019 (additional 25%) (USD$5,000,000)
Total purchase consideration
$
13,291,330
7,075,279
20,366,609
The fair values of the assets and liabilities of the PUREgraphite LLC, acquired as at
the date of acquisition, are as follows:
$
Cash and cash equivalents
Inventories
Plant and equipment
Intangible assets: Technology
Deferred tax liabilities
Identifiable net assets acquired
Goodwill on acquisition
Net asset acquired
1,880,108
1,649
913,821
1,268,785
(266,445)
3,797,918
16,568,691
20,366,609
68
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 9 Business Combination (continued)
The consideration payable for the combination effectively included a premium for the right of exclusive
use of any excess capacity of the company to the production of graphite anode material greater than
1,000 tonnes per annum and to exploit the company’s intellectual property and know-how in so doing
which has resulted in goodwill of $16,568,691. The full value of goodwill and client intangibles is not
expected to be tax deductible for tax purposes.
Acquisition costs
Acquisition-related costs amounting to $129,345 are not included as part of consideration transferred and
have been recognised as an expense in the consolidated statement of profit or loss and other
comprehensive income, as part of administrative and other expenses.
Revenue and profit / (loss) contribution
The acquired business contributed net loss after tax of $1,541,643 (USD $1,085,511) to the Group for the
period 1 February 2019 to 30 June 2019. If the acquisition had occurred on 1 July 2018, PUREgraphites
contribution to consolidated loss for the year ended 30 June 2019 would have been $3,318,584 (USD
$2,336,700).
Purchase consideration – cash outflow:
Outflow of cash to acquire subsidiary, net of cash acquired:
Purchase consideration
Cash consideration
Less: cash consideration in prior periods
Less: cash balances acquired
Outflow of cash in FY2019 – investing activities
$
20,366,609
(13,291,330)
(1,880,108)
5,195,171
69
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 10
Impairment testing of goodwill
For the purposes of impairment testing, the cash generating unit has been defined as the business to
which the goodwill relates where individual cash flows can be ascertained for the purposes of discounting
future cash flows.
The carrying amount of goodwill allocated to the cash
generating unit
NOVONIX Battery Testing Services Inc
PUREgraphite LLC
Total carrying amount of goodwill
Consolidated
2019
$
-
17,122,101
17,122,101
2018
$
4,547,547
-
4,547,547
The Company has recognised an impairment loss of $4,812,127 (refer note 16) relating to the goodwill
of NOVONIX Battery Testing Services Inc. The carrying amount of the CGU was considered to be in
excess of its recoverable amount and therefore an impairment loss has been recognised. This loss is
included in Impairment losses in the statement of profit or loss.
The recoverable amount of the PUREgraphite LLC cash generating unit is based on Fair Value Less Costs
to Sell, with this being determined with reference to the recent purchase price. The directors do not
believe there has been an event that would adversely impact the fair value since the acquisition.
Note 11
Cash and cash equivalents
Cash at bank
Reconciliation to cash flow statement
Consolidated
2019
$
6,054,664
6,054,664
2018
$
396,224
396,224
The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of
the financial year as follows:
Balances as above
Bank overdrafts (see note 19 below)
Balance per statement of cash flows
2019
$
6,054,664
-
6,054,664
2018
$
396,224
(30,632)
365,592
70
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 12
Trade and other receivables
Trade debtors
Other receivables
Consolidated
2019
$
556,937
126,166
2018
$
560,231
250,986
Total current trade and other receivables
683,103
811,217
Credit risk
The Group has no significant concentration of credit risk with respect to any counterparties or on a
geographical basis. Amounts are considered as “past due” when the debt has not been settled, with the
terms and conditions agreed between the Group and the customer to the transaction.
From 1 July 2018 the Group now assess impairment on trade and other receivables using the simplified
approach of the expected credit loss (ECL) model under AASB 9. Due to the minimal history of bad debt
write-offs and strong credit approval processes, the Group have determined that the incorporation of the
ECL model will not have a material effect on impairment as at 30 June 2019.
The balance of receivables that remain within initial trade terms are considered to be of high credit
quality.
Note 13 Inventory
Components and stores
Finished goods – at cost
Consolidated
2019
$
641,080
475,911
2018
$
335,413
310,730
1,116,991
646,143
Amounts recognised in profit or loss
Inventories recognised as an expense during the year ended 30 June 2019 amounts to $741,280 (2018:
$957,832). These were included in cost of sales.
71
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 14 Property, plant and equipment
At 30 July 2017
Cost
Accumulated depreciation
Net book amount
Year ended 30 June 2018
Opening net book amount
Additions
Exchange differences
Depreciation charge
Land
$
Buildings
$
Plant and
equipment
$
Total
$
-
-
-
-
-
-
206,528
(56,146)
206,528
(56,146)
150,382
150,382
-
359,344
-
-
-
1,197,162
(234)
(22,729)
150,382
825,184
(1,148)
(66,543)
150,382
2,381,690
(1,382)
(89,272)
Closing book amount
359,344
1,174,199
907,875
2,441,418
At 30 June 2018
Cost
Accumulated depreciation
359,344
-
1,197,162
(22,963)
1,036,480
(128,605)
2,592,986
(151,568)
Net book amount
359,344
1,174,199
907,875
2,441,418
Year ended 30 June 2019
Opening net book amount
Additions
Acquisition of subsidiary
Exchange differences
Assets written off
Depreciation charge
359,344
-
-
20,907
-
-
1,174,199
495,206
-
66,695
-
(61,380)
907,875
2,241,257
913,821
218,466
(90,540)
(261,333)
2,441,418
2,736,463
913,821
302,095
(90,540)
(318,740)
Closing book amount
380,251
1,674,720
3,929,546
5,984,517
At 30 June 2019
Cost
Accumulated depreciation
380,251
-
1,762,019
(87,299)
4,437,493
(507,947)
6,579,763
(595,246)
Net book amount
380,251
1,674,720
3,929,546
5,984,517
72
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 15 Exploration and evaluation assets
Consolidated
2019
$
2018
$
Exploration and evaluation assets – at cost
2,838,749
13,253,083
The capitalised exploration and evaluation assets carried forward
above have been determined as follows:
Balance at the beginning of the year
Expenditure incurred during the year
Impairment losses
13,253,083
253,563
(10,667,897)
12,663,397
589,686
-
Balance at the end of the year
2,838,749
13,253,083
For FY2019, the Company has recognised an impairment loss of $10,667,897 relating to the Mt
Dromedary graphite mining project. The future development of the Mt Dromedary mine will not occur
in the short to medium term given the tonnages of natural graphite required by the PUREgraphite
business is unlikely to be sufficient to warrant the development of the mine in that timeframe. As well, a
significant portion of graphite used by PUREgraphite will be synthetic graphite, and the natural graphite
required at this time can be more cost effectively sourced from other natural graphite producers.
The Mt Dromedary asset remains a strategic asset for the Group, however the Directors have determined
that it is appropriate for the carrying value of the Mt Dromedary asset to reflect the exploration and
evaluation expenditure incurred since acquisition, and to write off all acquisition related costs which
relate to the minority interest acquired by the Group on 29 August 2016 in return for shares in the
Company (i.e. scrip-based consideration).
The Directors have assessed that for the exploration and evaluation assets remaining recognised at 30
June 2019, the facts and circumstances do not suggest that the carrying amount of an asset may exceed
its recoverable amount.
73
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 16 Intangible assets
Goodwill
Brand name
Technology
Consolidated
2019
$
17,037,297
-
1,195,948
18,233,245
2018
$
4,547,547
398,216
82,201
5,027,964
Balance at the beginning of the year
Acquisition of subsidiary
Impairments
Exchange differences
Amortisation
Goodwill
$
4,547,547
16,568,691
(4,812,127)
733,186
-
Brand name
$
398,216
-
(374,126)
21,952
(46,042)
Technology
$
82,201
Total
$
5,027,964
1,268,785 17,837,476
(5,251,028)
795,041
(176,208)
(64,775)
39,903
(130,166)
Balance at the end of the year
17,037,297
-
1,195,948
18,233,245
For FY2019, the Company has recognised an impairment loss of $5,251,028 relating to the goodwill and
intangibles of BTS. At the time it was acquired in FY2017, BTS was primarily a producer of battery testing
equipment. Consulting services to the energy storage industry began as an adjunct service supporting the
equipment supply business operation. The consulting services operation which yields much higher
margins, has now become a business line on its own and has grown rapidly over the course of this financial
year and, in particular, over the past six months. In the context of this rapid growth and the forward
pipeline of consulting work, the consulting services business has become a core operation and is
considered to be BTS’s strongest growth opportunity. Given the slowing in the rate of growth of sales of
testing equipment and the increased relative importance of consulting services, the directors have taken
the opportunity to write down the value of the goodwill and identifiable intangible assets relating to the
testing equipment supply business.
Intangible assets, other than goodwill have finite useful lives. The current amortisation charges for
intangible assets are included under depreciation and amortisation expense in the statement of profit or
loss. Goodwill has an indefinite useful life.
74
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 17
Trade and other payables
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
Note 18
Contract liabilities
Contract liabilities – Hardware sale contracts
Note 19 Borrowings
Consolidated
2019
$
1,307,707
96,659
1,404,366
Consolidated
2019
$
580,845
580,845
2018
$
331,794
554,350
886,144
2018
$
209,278
209,278
2019
Non-
Current
$
Current
$
Total
$
Current
$
2018
Non-
Current
$
Total
$
-
57,807
-
1,295,835
-
1,353,642
30,632
30,632
56,254 1,277,591 1,333,845
-
57,807
1,295,835
1,353,642
86,886
1,277,591
1,364,477
- 10,905,530 10,905,530
4,087,262
4,902,738
815,476
4,087,262 11,721,006 15,808,268
4,145,069 13,016,841 17,161,910
-
-
-
368,185
-
368,185
-
368,185
368,185
86,886 1,645,776 1,732,662
Secured
Bank overdrafts
Bank loans (i)
Total secured
borrowings
Unsecured
Loan notes (ii)
Other loans (iii)
Total unsecured
borrowings
Total borrowings
(i) Secured liabilities and assets pledged as security
In December 2017, the group entered into a loan facility to purchase commercial land and buildings in
Nova Scotia from which the Battery Testing Services business will operate. The total available amount
under the facility is CAD $1,330,000 and it has been fully drawn down as at 30 June 2019. The full facility
is repayable in monthly instalments, commencing 15 December 2017 and ending 15 November 2042.
The bank loan is secured by first mortgages over the group’s freehold land and buildings.
The carrying amounts of non-financial assets pledged as security for current and non-current borrowings
is $2,054,971 (2018: $1,540,675) (refer note 14).
75
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 19 Borrowings (continued)
(ii) Loan notes
During the financial year 26,416,667 convertible loan notes were issued to sophisticated investors.
17,250,000 loan notes were issued on 12 March 2019 at $0.40 each and 9,166,667 loan notes were issued
on 10 August 2018 at $0.60 each, raising a total of $12,400,000. At 30 June 2019 there are 26,416,667
Loan Notes outstanding.
Since year end, a further 10,000,000 loan notes have been issues at $0.40 each.
The initial fair value of the convertible loan note portion of the bond was determined using a market
interest rate for an equivalent non-convertible bond at the issue date.
The liability is subsequently recognised on an amortised cost basis until extinguished on conversion or
maturity of the bonds. The remainder of the proceeds is allocated to the conversion option and
recognised in shareholders’ equity, net of income tax, and not subsequently remeasured.
Loan notes converted during the year have been recognised at the carrying value for the proportion of
the debt converted as at the date of conversion.
Key Loan Note Terms - $0.40 face value
• Number of loan notes issued: 17,250,000
• Allowing for early conversion;
• Unsecured loan note issued at AUD$0.40 per note;
• Coupon 10% per annum capitalised over a term of 36 months;
• Convertible at the option of the holder on 1 for 1 basis;
• Redeemable by NOVONIX at any time (with 10 business days notice), subject to payment of
interest on full term;
• Maturity date of 36 months after the date of issue; and
• The notes are not listed or tradeable.
• 1 for 1 attaching option, exercisable at $0.80 per share with three years to expiry.
Key Loan Note Terms - $0.60 face value
• Number of loan notes issued: 9,166,667
• Allowing for early conversion;
• Unsecured loan note issued at AUD$0.60 per note;
• Coupon 10% per annum capitalised over a term of 24 months;
• Convertible at the option of the holder on 1 for 1 basis;
• Redeemable by NOVONIX at any time (with 5 business days notice), subject to payment of the
first 13 months interest plus accrued interest if redeemed after 13 months
• Maturity date of 24 months after the date of issue; and
• The notes are not listed or tradeable.
76
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 19 Borrowings (continued)
Reconciliation of movements in loan note liability:
Balance at the beginning of the year
Present value of liability component
Loan note issue costs
Interest accrued for the year
Loan notes converted during the year
2019
$
-
9,582,684
(50,735)
1,373,581
-
2018
$
9,216,621
-
-
604,183
(9,820,804)
20
Balance at the end of the year
10,905,530
-
(iii) Other loans
In June 2019, the group entered into a short term loan agreement with the St Baker Energy Innovation
Fund for $4,000,000 at an interest rate of 10% per annum. The loan funds converted into 10,000,000
loan notes following shareholder approval, which was obtained on 31 July 2019.
In December 2017, the group also entered into a contribution agreement with Atlantic Canada
Opportunities Agency (ACOA), for CAD$500,000. As at 30 June 2019, CAD$450,000 of the facility has been
drawn down. The funding is to assist with expanding the market to reach new customers through
marketing and product improvements. The facility is repayable in monthly instalments commencing 1
September 2019.
In October 2018, the group entered into another contribution agreement with Atlantic Canada
Opportunities Agency (ACOA), for CAD$500,000. As at 30 June 2019, CAD$500,000 of the facility has been
drawn down. The funding is to assist in establishing a battery cell manufacturing facility. The facility is
repayable in monthly instalments commencing 1 April 2020.
(iv) Fair value
For all borrowings, other than the ACOA loan noted at (iii) above, the fair values are not materially
different to their carrying amounts, since the interest payable on those borrowings is either close to
current market rates or the borrowings are of a short-term nature.
The ACOA loans are interest free. The initial fair value of the ACOA loans were determined using a market
interest rate for equivalent borrowings at the issue date. This has resulted in a day 1 gain of $100,152 in
FY2018 (December 2017 loan) and a day 1 gain of $114,106 in FY2019 (October 2018 loan).
77
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 20 Contributed equity
(a)
Share capital
Ordinary shares
Fully paid
(b) Ordinary share capital
2019
Shares
2018
Shares
2019
$
2018
$
128,137,680
123,137,680
38,163,405
38,163,405
Date
1 July 2017
July to Nov
2017
4 July 2017
6 Nov 2017
20 Dec 2017
29 Dec 2017
30 June 2018
24 June 2019
30 June 2019
Details
Balance
Conversion of convertible
notes
Sign on bonus payment
Placement shares
Placement shares
Exercise of options
Share issue costs
Balance
Exercise of options
Balance
(c)
Convertible loan notes
Note
Number of
Shares
98,636,031
Issue
Price
(c)
(d)
(e)
(f)
(g)
(g)
17,139,788
1,000,000
2,854,286
1,507,575
2,000,000
-
123,137,680
5,000,000
128,137,680
$0.72
$1.40
$0.66
$0.30
-
$
22,208,494
9,820,804
720,000
3,996,000
995,000
600,000
(176,893)
38,163,405
-
38,163,405
2019
2018
Number
Number
Balance at the beginning of the reporting period
-
17,139,788
Issue of convertible loan notes - $0.40 each
Issue of convertible loan notes - $0.60 each
17,250,000
9,166,667
-
Convertible loan notes converted
-
(17,139,788)
Balance at the end of the year
26,416,667
-
The key terms of the loan notes are set out in note 19(ii).
Convertible loan notes are compound financial instruments. The present value of the liability
component at initial recognition was $9,531,949 (Loan notes $0.40: $5,170,660; Loan notes $0.60:
$4,361,289). The balance of $2,802,951 was recognised in equity (Loan notes $0.40: $1,702,340;
Loan notes $0.60: $1,100,611).
78
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 20 Contributed equity (continued)
(d)
Sign-on bonus
C Burns and D Stevens were both paid sign-on bonuses per their contracts. The sign-on bonuses
consisted of cash payments of CAD$500,000 to each of them and the issue of 500,000 ordinary
shares in NOVONIX Limited to each of them.
(e)
Issue to sophisticated investors
The issue of 2,854,286 fully paid ordinary shares to sophisticated investors at an issue price of $1.40
cash.
(f)
Issue to director and future director
The issue of 1,507,575 fully paid ordinary shares to Admiral Robert Natter and Mr Andrew Liveris
at an issue price of $0.66 cash.
(g)
Exercise of options
On 29 December 2017, Philip St Baker exercised 2,000,000 options at an exercise price of $0.30
each.
On 24 June 2019, Philip St Baker exercised 5,000,000 options at an exercise price of $0.30 each.
The Company provided a loan of $1,500,000 to Mr St Baker for the purpose of funding the
exercise of 5,000,000 options (refer note 28). The loan is limited in recourse over the shares
issued on exercise of the options, and the Company has placed a holding lock over the shares to
secure repayment. These shares have been treated as treasury shares, and the limited recourse
loan has been accounted for as a modification to a share based payment, by way of extension of
the expiry date of the options. Share capital will be increased when the loan is repaid.
(h)
Capital Management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so that it can continue to provide returns for shareholders, benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital.
The capital structure of the Group includes equity attributable to equity holders, comprising of
issued capital, reserves and accumulated losses. In order to maintain or adjust the capital structure,
the Company may issue new shares, sell assets to reduce debt or adjust the level of activities
undertaken by the company.
The Group monitors capital on the basis of cash flow requirements for operational, and exploration
and evaluation expenditure. The Group will continue to use capital market issues and joint venture
participant funding contributions to satisfy anticipated funding requirements.
The Group has no externally imposed capital requirements. The Group’s strategy for capital risk
management is unchanged from prior years.
79
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 21 Reserves
Share-based payment reserve
Foreign currency translation reserve
Convertible loan note reserve
(a)
Share-based payment reserve
Consolidated
2019
$
2018
$
15,258,956
950,004
5,229,071
21,438,031
8,585,446
140,608
2,426,120
11,152,174
Consolidated
2019
$
2018
$
Share-based payment reserve
15,258,956
8,585,446
Movements:
Balance 1 July 2018
Cash settled share-based payments*
Equity settled sign-on bonus (note 20(d))
Equity settled share-based payments
8,585,446
-
-
6,673,510
3,589,547
(600,000)
(750,000)
6,345,899
Balance 30 June 2019
15,258,956
8,585,446
* During the prior financial year, the directors exercised their discretion and settled 666,667 vested
performance rights in cash instead of shares.
The share-based payment reserve records items recognised as expenses on valuation of director,
employee and contractor options and performance rights.
(b)
Foreign currency translation reserve
Consolidated
2019
$
2018
$
Foreign currency translation reserve
950,004
140,608
Movements:
Balance 1 July 2018
Exchange differences on
operations
Balance 30 June 2019
translation of
foreign
140,608
(36)
809,396
140,644
950,004
140,608
The foreign currency translation reserve records exchange differences arising on translation of a foreign
controlled subsidiary.
80
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 21 Reserves (continued)
(c)
Convertible loan note reserve
Consolidated
2019
$
2018
$
Convertible loan note reserve
5,229,071
2,426,120
Movements:
Balance 1 July 2018
Equity component of loan notes issued during the year
(note 19)
Loan note issue costs
Balance 30 June 2019
2,426,120
2,817,316
(14,365)
2,426,120
-
-
5,229,071
2,426,120
Convertible loan notes are compound financial instruments.
The present value of the liability component of the loan notes issued in March 2019, at initial recognition,
was $5,170,660. The balance of $1,702,340 was recognised in the convertible note reserve. In
discounting the loan notes to present value to determine the equity proportion of the compound financial
instrument, NOVONIX adopted an effective interest rate of 24.5% pa.
The present value of the liability component of the loan notes issued in August 2018, at initial recognition,
was $4,361,289. The balance of $1,100,611 was recognised in the convertible note reserve. In
discounting the loan notes to present value to determine the equity proportion of the compound financial
instrument, NOVONIX adopted an effective interest rate of 25.6% pa.
81
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 22 Operating segments
The Group 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 is managed primarily on an operational basis. Operating
segments are determined on the basis of financial information reported to the Board.
The board has identified three operating segments being Graphite Exploration and Mining, Battery
Technology and Battery Materials. The Battery Materials segment develops and manufactures battery
anode materials and the Battery Technology segment develops battery cell testing equipment and carried
out research and development in battery development. In the prior year the Battery Technology segment
was named Battery Testing.
Basis of accounting for purposes of reporting by operating segments
a. Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating
decision makers with respect to operating segments, are determined in accordance with
accounting policies that are consistent with those adopted in the annual financial statements of
the Group.
b. Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that
receives the majority of the economic value from the asset. In most instances, segment assets
are clearly identifiable on the basis of their nature and physical location.
c. Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the
liability and the operations of the segment. Borrowings and tax liabilities are generally considered
to relate to the Group as a whole and are not allocated. Segment liabilities include trade and
other payables.
d. Unallocated items
The following items for revenue, expenses, assets and liabilities are not allocated to operating
segments as they are not considered part of the core operations of any segment:
Interest income
-
- Corporate administrative and other expenses
-
- Corporate share-based payments
- Corporate marketing and project development expenses
Income tax expense
82
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 22 Operating segments (continued)
e. Segment information
Segment performance
Graphite
Exploration
and Mining
$
-
-
-
-
Battery
Technology
$
1,817,049
Battery
Materials
$
Unallocated
$
Total
$
-
-
1,817,049
443,679
2,576,131
341
3,020,151
-
-
2,260,728
2,576,131
4,533
4,874
4,533
4,841,733
(10,667,897)
(9,109,713)
(470,476)
(6,257,481)
(26,505,567)
Graphite
Exploration
and Mining
$
-
-
-
-
Battery
Technology
$
2,171,895
224,788
221
2,396,904
Battery
Materials
$
Unallocated
$
-
-
-
-
-
-
6,513
6,513
Total
$
2,171,895
224,788
6,734
2,403,417
-
(2,880,961)
(2,046,262)
(5,382,761)
(10,309,984)
2019
Segment revenue
Other income
Interest revenue
Total income
Segment net profit / (loss)
from continuing
operations before tax
2018
Segment revenue
Other income
Interest revenue
Total income
Segment net profit / (loss)
from continuing
operations before tax
Segment assets
Graphite
Exploration
and Mining
$
Battery
Technology
$
Battery
Materials
$
Unallocated
$
Total
$
2019
Segment assets
2,850,794
5,354,006
21,386,941
5,328,158
34,919,899
83
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 22 Operating segments (continued)
Graphite
Exploration
and Mining
$
Battery
Technology
$
Battery
Materials
$
Unallocated
$
Total
$
2018
Segment assets
13,268,598
8,826,997
11,643,550
488,494
34,227,639
Segment liabilities
Graphite
Exploration
and Mining
$
Battery
Technology
$
Battery
Materials
$
Unallocated
$
Total
$
2019
Segment liabilities
-
2,809,998
1,279,125
15,057,999
19,147,121
Graphite
Exploration
and Mining
$
Battery
Testing
$
Battery
Materials
$
Unallocated
$
Total
$
2018
Segment liabilities
-
2,292,265
-
326,541
2,618,806
Geographical Segments
For the purposes of segment reporting, all segment activities relating to Graphite Exploration and
Mining is carried out in Australia and all segment activities relating to Battery Materials and
Testing is carried out in North America.
84
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 23 Cash flow information
Reconciliation of profit / (loss) after income tax to net cash outflow from operating activities
Profit / (loss) for the period
Adjustments for
Share based payments
Share based payments settled in cash
Borrowing costs
Fixed assets written off
Foreign exchange gain / loss
Gain on acquisition of subsidiary
Share of net loss of joint venture
Fair value gain on borrowings
Impairment losses
Amortisation expense
Income tax expense
Change in operating assets and liabilities:
(Increase)/decrease in other operating assets
Increase in trade creditors
Increase in other operating liabilities
Net cash outflow from operating activities
Consolidated
2019
$
(26,121,912)
2018
$
(10,323,382)
6,673,510
-
1,405,456
90,477
(174,990)
(2,576,131)
751,981
(114,106)
15,918,925
494,948
(273,939)
(672,354)
288,424
309,624
(4,000,087)
6,345,899
(600,000)
611,462
(50,069)
1,442,770
(100,152)
-
154,251
(3,911)
(739,487)
(124,515)
(490,421)
(3,877,555)
85
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 23 Cash flow information (continued)
(a) Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each period presented.
Net debt
2019
$
2018
$
6,054,664
396,224
Cash and cash equivalents
Borrowings – repayable within one year (including
overdraft)
Borrowings – repayable after one year
Net debt
Cash and cash equivalents
Gross debt – fixed interest rates
Gross debt – variable interest rates
Net debt
(4,145,069)
(13,016,841)
(11,107,246)
6,054,664
(15,808,268)
(1,353,642)
(11,107,246)
(86,886)
(1,645,776)
(1,336,438)
396,224
(368,185)
(1,364,477)
(1,336,438)
Total
$
(6,801,497)
(3,851,714)
9,216,621
100,152
(1,336,438)
1,149,342
(10,905,530)
Cash/bank
overdraft
$
2,415,124
(2,049,532)
-
-
365,592
5,689,072
-
Liabilities from financing activities
Borrowings due
within 1 year
Borrowing due
after 1 year
$
-
(1,745,928)
-
100,152
(1,645,776)
(574,917)
(10,905,530)
(9,216,621)
(56,254)
9,216,621
-
(56,254)
(3,964,813)
-
-
6,054,664
(124,002)
(4,145,069)
109,382
(13,016,841)
(14,620)
(11,107,246)
86
Net debt as at 1 July 2017
Cashflows
Conversion of loan notes
Other non-cash movements
Net debt as at 30 June 2018
Cashflows
Conversion/proceeds of loan
notes
Other non-cash movements
Net debt as at 30 June 2019
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 24
Interests in subsidiaries
Information about Principal Subsidiaries
The Group’s material subsidiaries at 30 June 2019 are set out in the following table. Unless otherwise
stated, each entity has share capital consisting solely of ordinary shares that are held by the Group, and
the proportion of ownership interest held equals the voting rights held by the Group. The country of
incorporation or registration is also their principal place of business.
Place of business
/ country of
incorporation
Australia
Ownership interest
held of the group
2018
2019
%
%
100%
100%
Canada
100%
100%
Name of entity
MD South Tenements Pty Ltd
Novonix Battery Testing Services
Inc
Novonix Corp
PUREgraphite LLC
USA
USA
100%
100%
100%
50%
Principal
activities
Graphite
exploration
Battery testing
services.
Investment
Battery materials
development
Note 25 Share-based payments
OPTIONS
A summary of movements of all options issued is as follows:
Options outstanding as at 1 July 2017
Granted
Granted – Subject to shareholder approval
Exercised
Options outstanding as at 30 June 2018
Granted
Granted – Subject to shareholder approval
Forfeited
Exercised
Options outstanding as at 30 June 2019
Number
Weighted
Average
Exercise Price
13,450,000
7,275,000
2,450,000
(2,000,000)
21,175,000
33,710,000
17,500,000
(365,000)
(5,000,000)
67,020,000
$0.51
$0.70
$0.94
$0.30
$0.64
$0.69
$0.50
$0.65
$0.30
$0.65
The weighted average remaining contractual life of options outstanding at year end was 5.5 years (2018:
4.00 years).
87
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 25 Share-based payments (continued)
Details of options awarded during the financial year are as follows:
a.
On 24 May 2019, 16,000,000 share options were awarded to directors and executives to take up
ordinary shares at an exercise price of $0.50 each. 15,000,000 of these options were subject to
shareholder approval which was received on 31 July 2019. The options vest in two equal tranches
on achievement of PUREgraphite customer engagement milestones. The vesting dates in the table
below represent the current estimate of when the vesting conditions will be met. The options hold
no voting or dividend rights and are not transferable.
The fair value of these was calculated using a binomial option pricing model applying the following
inputs:
Number
Exercise price
Award date
Grant date
Exercise date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Total fair value of options granted
Shareholder approval
required
Tranche 2
7,500,000
$0.50
24/05/2019
31/07/2019
01/07/2022
30/07/2024
30/06/2022
86.0%
0%
1.0%
$0.3509
$2,631,750
Tranche 1
7,500,000
$0.50
24/05/2019
31/07/2019
01/07/2020
30/07/2024
30/06/2020
86.0%
0%
1.0%
$0.3335
$2,501,250
Tranche 1
500,000
$0.50
Shareholder approval not
required
Tranche 2
500,000
$0.50
24/05/2019 24/05/2019
24/05/2019 24/05/2019
01/07/2020 01/07/2022
30/07/2024 30/07/2024
30/06/2020 30/06/2022
85.0%
0%
1.87%
$0.3368
$168,400
85.0%
0%
1.87%
$0.3154
$157,700
b.
On 28 September 2018, 2,000,000 share options were awarded to Robert Natter. These options
were subject to shareholder approval which was obtained at the 2018 Annual General Meeting of
shareholders on 22 November 2018. The terms of the options are set out in the table below. The
options hold no voting or dividend rights and are not transferable.
The fair value of these options was $390,050. This value was calculated using a binomial option
pricing model applying the following inputs:
Number of options
Exercise price
Award date
Grant date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Tranche 1
500,000
$0.70
28/09/2018
22/11/2018
29/08/2023
22/11/2018
77.1%
0%
3.25%
$0.2250
Tranche 2
500,000
$0.90
28/09/2018
22/11/2018
29/08/2023
29/08/2019
77.1%
0%
3.25%
$0.2046
Tranche 3
500,000
$1.20
28/09/2018
22/11/2018
29/08/2023
29/08/2020
77.1%
0%
3.25%
$0.1810
Tranche 4
500,000
$1.40
28/09/2018
22/11/2018
29/08/2023
29/08/2021
77.1%
0%
3.25%
$0.1695
88
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 25 Share-based payments (continued)
c.
On 13 March 2019, 750,000 share options were granted to employees and contractors of the group.
The terms of the options are set out in the table below. The options hold no voting or dividend
rights and are not transferable. The fair value of these options was $394,475. This value was
calculated using a binomial option pricing model applying the following inputs:
Number of options
Exercise price
Grant date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Tranche 1
250,000
$0.50
13/03/2019
13/03/2029
31/12/2019
81.03%
0%
1.96%
$0.5081
Tranche 2
250,000
$0.50
13/03/2019
13/03/2029
31/12/2020
81.03%
0%
1.96%
$0.5265
Tranche 3
250,000
$0.50
13/03/2019
13/03/2029
31/12/2021
81.03%
0%
1.96%
$0.5433
d.
On 2 November 2018, 210,000 share options were granted to employees to take up ordinary shares
at an exercise price of $0.55 each. All options vest on 18 October 2020 and expire on 2 November
2023. The options hold no voting or dividend rights and are not transferable. The fair value of
these options was $70,875. This value was calculated using a binomial option pricing model
applying the following inputs:
Exercise price
Grant date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
$0.55
02/11/2018
02/11/2023
18/10/2020
79.23%
0%
3.25%
$0.3375
e.
On 6 December 2018, 40,000 share options were granted to employees to take up ordinary shares
at an exercise price of $0.55 each. All options vest on 5 December 2020 and expire on 6 December
2023. The options hold no voting or dividend rights and are not transferable. The fair value of
these options was $9,244. This value was calculated using a binomial option pricing model applying
the following inputs:
Exercise price
Grant date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
$0.55
06/12/2018
06/12/2023
05/12/2020
78.90%
0%
3.04%
$0.2311
89
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 25 Share-based payments (continued)
f.
On 13 March 2019, 15,000,000 share options were awarded to employees of the group, 2,500,000 of these are subject to shareholder approval which will be
sought at the 2019 Annual General Meeting of Shareholders. The terms of the options are set out in the table below. The options hold no voting or dividend
rights and are not transferable. The options vest in 10 tranches on achievement of progressive PUREgraphite sales milestones. The vesting dates in the table
below represent the current estimate of when the vesting conditions will be met.
The fair value of these options was $8,475,450. This value was calculated using a binomial option pricing model applying the following inputs:
Number of options
Exercise price
Award date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free
rate
Fair value at grant
date
interest
Tranche 4
1,500,000
$0.50
Tranche 3
1,500,000
$0.50
Tranche 2
1,500,000
$0.50
Tranche 1
1,500,000
$0.50
Tranche 10
1,500,000
$0.50
13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019 13/03/2019
13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029 13/03/2029
30/06/2021 30/06/2022 31/03/2023 30/06/2023 28/02/2024 31/03/2024 31/05/2024 30/06/2024 31/01/2025 28/02/2025
81.03%
0%
1.96%
Tranche 7
1,500,000
$0.50
Tranche 6
1,500,000
$0.50
Tranche 9
1,500,000
$0.50
Tranche 5
1,500,000
$0.50
Tranche 8
1,500,000
$0.50
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
81.03%
0%
1.96%
$0.5353
$0.5502
$0.5598
$0.5629
$0.5700
$0.5706
$0.5722
$0.5728
$0.5780
$0.5785
1,250,000 options in each tranche had a grant date of 13 March 2019 (12,500,000 in total). The remaining 250,000 options from each tranche (2,500,000 in total)
are subject to shareholder approval which will be sought at the 2019 AGM. The share based payment expense recognised in relation to the 2,500,000 options is
based on an estimate of the fair value of the options at the award date. A revised revaluation of the 2,500,000 options will be obtained following receipt of
shareholder approval.
90
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 25 Share-based payments (continued)
g.
On 17 June 2019 the Company entered into a loan agreement for $1,500,000 with Mr St Baker for
the purpose of funding the exercise of 5,000,000 options (exercise price $0.30, expiring 30 June
2019). The loan is limited in recourse over the shares issued on exercise of the options, and the
Company has placed a holding lock over the shares to secure repayment. The loan is interest free
and has a term of 5 years, with early repayment if Mr St Baker ceases to be a director or employee
of the Company. For accounting purposes, the granting of the loan has been treated as a
modification of the original option terms to extend the expiry date of the options by 5 years, to the
repayment date of the loan.
The fair value of the modification of these options was calculated to be $900,000 using a binomial
option pricing model and represents the difference between the value of option at the date of
modification (17 June 2019) with an expiry date of 30 June 2019, and the value of the option at the
date of modification with an expiry date of 30 June 2024.
This value was calculated using a binomial option pricing model applying the following inputs:
Exercise price
Grant date
Expiry date
Vesting date
Volatility
Dividend yield
Risk-free interest rate
Fair value at grant date
Existing option at
modification date
$0.30
17/06/2019
30/06/2019
17/06/2019
63.4%
0%
1.46%
$0.1102
Modified option
at modification
date
$0.30
17/06/2019
17/06/2024
17/06/2019
82.5%
0%
1.07%
$0.2902
91
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 25
Share-based payments (continued)
PERFORMANCE RIGHTS
A summary of movements of all performance rights issued is as follows:
Performance rights outstanding as at 1 July 2017
Granted
Exercised
Expired
Performance rights outstanding as at 30 June 2018
Granted
Performance rights outstanding as at 30 June 2019
Note 26
Events after the reporting date
Since the end of the financial year the NOVONIX Limited has:
Number
1,562,500
750,000
(666,667)
-
1,645,833
1,750,000
3,395,833
(a) issued 10,000,000 unsecured convertible loan notes to the St Baker Energy Innovation Fund
at $0.40 each on the conversion of a short-term loan of $4,000,000 which was unsecured and
interest bearing at a rate of 10%. The loan notes have a coupon interest rate of 10% per
annum capitalised over a term of 36 months;
(b) granted 2,500,000 options to an employee on the same terms as those set out in note 26(f);
and
(c) following shareholder approval on 31 July 2019, granted 15,000,000 options to directors;
Note 27
Related party transactions
During the financial year:
(a) Philip St Baker was paid rent totalling $76,896 (USD$52,000), for the use of property owned
by Mr St Baker in Colorado, USA. Mr St Baker’s salary has been adjusted to reflect the
additional benefit Mr St Baker is receiving.
(b) 15,000,000 unsecured loan notes with a face value of $0.40 were issued to the St Baker
Energy Innovation Fund, a related party of Mr St Baker, on the terms set out in note 19.
Prior to issue of the loan notes, the St Baker Energy Innovation Fund provided the Company
with a $6,000,000 short-term unsecured loan bearing interest at a rate of 10%. Following
shareholder approval on 8 March 2019 for the loan notes, the short-term loan was
converted to loan notes.
(c) In June 2019, a $4,000,000 short term loan was provided to the Company by the St Baker
Energy Innovation Fund (refer note 27).
(d) On 17 June 2019 the Company entered into a loan agreement for $1,500,000 with Mr St Baker
for the purpose of funding the exercise of 5,000,000 options (exercise price $0.30, expiring 30
June 2019). The loan is limited in recourse over the shares issued on exercise of the options,
92
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 27
Related party transactions (continued)
and the Company has placed a holding lock over the shares to secure repayment. The loan is
interest free and has a term of 5 years, with early repayment if Mr St Baker ceases to be a
director or employee of the Company. For accounting purposes, the granting of the loan has
been treated as a modification of the original option terms to extend the expiry date of the
options by 5 years, to the repayment date of the loan. A share based payment expense of
$900,000 was recognised which reflects the incremental fair value of the modified option.
There were no other related party transactions during the financial year. For details of disclosures
relating to key management personnel, refer to Note 6.
Note 28 Commitments
(a)
Exploration commitments
Commitments for payments under exploration permits
in existence at the reporting date but not recognised as
liabilities payable
Consolidated
2019
$
2018
$
5,000
10,000
So as to maintain current rights to tenure of various exploration tenements, the Group will be required
to outlay amounts in respect of tenement exploration expenditure commitments. These outlays,
which arise in relation to granted tenements are noted above. The outlays may be varied from time
to time, subject to approval of the relevant government departments, and may be relieved if a
tenement is relinquished.
Exploration commitments are calculated on the assumption that each of these tenements will be held
for its full term. But, in fact, commitments will decrease materially as exploration advances and
ground that is shown to be unprospective is progressively surrendered. Expenditure commitments on
prospective ground will be met out of existing funds, joint ventures, farm-outs, and new capital
raisings.
(b) Non-cancellable operating leases
The group leases a warehouse under a non-cancellable operating lease.
Commitments for minimum lease payments in relation
to non-cancellable operating leases are payable as
follows:
Within one year
Later than one year but not later than five years
Later than five years
Consolidated
2019
$
2018
$
242,481
1,043,910
-
1,286,391
-
-
-
-
93
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 29 Financial risk management
This note explains the group’s exposure to financial risks and how these risks could affect the group’s
future financial performance. Current year profit and loss information has been included where
relevant to add further context.
The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and
payable.
The totals for each category of financial instruments, measured in accordance with AASB 139:
Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these
financial statements, are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Consolidated
2019
$
2018
$
Notes
6,054,664
601,778
6,656,442
1,341,827
17,161,910
18,503,737
396,224
766,757
1,162,981
626,896
1,732,662
2,359,558
The Board has overall responsibility for the determination of the Group’s risk management objectives
and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as
possible without unduly affecting the Group’s competitiveness and flexibility.
Market risk
Market risk is the risk that the change in market prices, such as foreign exchange rates, interest rates
and equity prices will affect the Group’s income or the value of its holdings of financial instruments.
The Group is not exposed to market risks other than interest rate risk.
Foreign currency risk
Exposure to foreign currency risk may result in the fair value or future cash flows of a financial
instrument fluctuating due to movement in foreign exchange rates of currencies in which the Group
holds financial instruments which are other than the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar and the Canadian
dollar may impact on the Group’s financial results.
94
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 30 Financial risk management (continued)
The following table shows the foreign currency risk as on the financial assets and liabilities of the
Group’s operations denominated in currencies other than the functional currency of the operations.
The group’s exposure to foreign currency risk at the end of the reporting period, expressed in
Australian dollars, was as follows:
Cash at bank
Trade receivables
Borrowings
Trade payables
2019
USD
$
559,305
232,417
-
919,415
2018
USD
$
22,838
556,972
12,913
133,343
Cash flow and fair value interest rate risk
The group’s main interest rate risk arises from long-term borrowings with variable rates, which expose
the group to cash flow interest rate risk. During 2019, the group’s borrowings at variable rates were
denominated in Canadian dollars.
As the Group has interest-bearing cash assets, the Company’s income and operating cash flows are
exposed to changes in market interest rates. The Company manages its exposure to changes in
interest rates by using fixed term deposits.
At 30 June 2019, if interest rates had changed by -/+ 100 basis points from the year-end rates with all
other variables held constant, post-tax profit / (loss) for the year would have been $60,547 (2018:
$3,656) lower/higher, as a result of higher/lower interest income from cash and cash equivalents.
Credit risk
Credit risk is managed on a Group basis. Credit risk arises primarily from cash and cash equivalents
and deposits with banks and financial institutions. For bank and financial institutions, only
independently rated parties with a minimum rating of ‘AAA’ are accepted.
The credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to external credit ratings (if available).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities to
meet obligations when due.
95
For personal use only
Notes to the financial statements for the year ended 30 June 2019
Note 30 Financial risk management (continued)
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows. No
finance facilities were available to the Group at the end of the reporting period.
All financial assets and financial liabilities mature within one year.
Financing arrangements
The group has no undrawn borrowing facilities as at 30 June 2019.
Maturities of financial liabilities
As at 30 June 2019, the contractual maturities of the group’s non-derivative financial liabilities were
as follows:
Contractual
maturities of
financial
liabilities
At 30
2019
Trade and
other payables
Borrowings
June
Total non-
derivatives
Less than
6 months
6 - 12
months
Between
1 and 2
years
Between 2
and 5
years
Over 5
years
Total
contractual
cash flows
Carrying
amount
1,341,827
-
-
-
-
1,341,827
1,341,827
4,134,574 124,438
291,861 16,977,549 1,903,439 23,431,861 17,161,910
5,476,401
124,438
291,861
16,977,549
1,903,439
24,773,688
18,503,737
96
For personal use only
Directors’ declaration
In the Directors’ opinion:
(a)
the financial statements and notes set out on pages 39 to 96 are in accordance with the
Corporations Act 2001, including:
(I)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements, and
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2019 and of its performance for the financial year ended on that date, and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
Note 1 confirms that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Managing Director and Chief Financial Officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
A Bellas
Director
Brisbane, 30 September 2019
97
For personal use only
Independent auditor’s report
To the members of Novonix Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Novonix Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2019 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
the consolidated balance sheet as at 30 June 2019
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the financial statements, which include a summary of significant accounting policies
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group 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 (including Independence
Standards) (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.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
98
For personal use only Material uncertainty related to going concern
We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss
of $26.1m and net operating cash outflows of $4.0m during the year ended 30 June 2019. The ability
of the Group to continue as a going concern depends upon a number of matters including the ability of
the consolidated entity to raise capital as and when necessary, and the successful and profitable growth
of the battery materials and battery technology businesses. These conditions, along with other matters
set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the
Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group is an integrated developer and supplier of materials, equipment and services for the global
lithium-ion battery industry with operations in the USA and Canada. The Group also owns a natural
graphite deposit in Queensland, Australia. The regional finance functions report to the Group finance
function in Brisbane, Australia, where consolidation is performed.
Materiality
For the purpose of our audit we used overall Group materiality of $0.35m, which represents
approximately 1% of the Group’s total assets.
We applied this threshold, together with qualitative considerations, to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
We chose total assets as the benchmark because, whilst the Group is profit oriented, the Group has
significant assets relating to the investments made in North America and the graphite deposit, and
the Group has yet to reach a level of commercial production whereby a profit based metric would
be deemed most appropriate.
99
For personal use only We utilised a 1% threshold based on our professional judgement, noting it is within the range of
commonly acceptable asset related thresholds.
Audit Scope
Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
The accounting processes are structured around the Group finance function located in Brisbane.
Our audit procedures were mostly performed at the head office in Brisbane, and we also conducted
a site visit to the PUREgraphite facility in Chattanooga, Tennessee and attended an inventory
count at the Group’s facility in Nova Scotia, Canada.
Where necessary, we involved experts to assist us with certain aspects of our audit, including from
our valuations team.
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 for the current period. The key audit 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. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
In addition to the matters described in the Material uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be communicated in our
report.
Key audit matter
How our audit addressed the key audit matter
Accounting for the PUREgraphite business
combination
(Refer to note 9)
On 31 January 2019, the Group gained control of the
entity PUREgraphite LLC (“PUREgraphite”).
We determined that the accounting for the business
combination was a key audit matter due to the material
value of the transaction, the nature of the net assets
acquired, the goodwill arising on the acquisition, and
the level of judgement involved in the Purchase Price
Allocation (“PPA”) calculations.
Our procedures in relation to the accounting for the
business combination included, amongst others:
Comparing the consideration paid to bank
statements and purchase agreements
Obtaining purchase agreements to assess the
acquisition date
Testing, on a sampling basis, acquired
tangible asset balances to supporting
documents, including bank statements and
purchase invoices
Assessing, in conjunction with our valuations
experts, the valuation methodology for the
recognition of identifiable assets, including
100
For personal use only Key audit matter
How our audit addressed the key audit matter
technology intangible assets
Assessing the mathematical accuracy of the
Group’s calculation of the resulting goodwill
arising on the PPA calculation
Assessing the accuracy and completeness of
business combination disclosures in the
financial statements.
Our procedures in relation to the impairment
assessment of goodwill included, amongst others:
Assessing the appropriateness of the Group’s
determination of its CGUs
Testing the mathematical accuracy of the
underlying calculations in the Group’s
discounted cash flow valuation models
Comparing the cash flow forecasts used in the
models to the Board approved forecasts
Evaluating the key assumptions in the cash
flow models, including long term growth rates
and discount rates
Performing sensitivity analysis to assess the
impact of reasonably possible changes in the
assumptions in the valuation models,
including the discount rate and growth rates
Considering indicators of fair value less costs
to sell.
We also compared the Group’s net assets as at 30
June 2019 of $15.8m to its market capitalisation of
$56.4m at 30 June 2019, and noted the $40.6m of
implied headroom in the comparison.
Impairment assessment of the Group’s
goodwill
(Refer to note 10)
At 30 June 2019, the Group recognised $17.1m of
goodwill, relating to the acquisition of PUREgraphite.
As required by Australian Accounting Standards, at 30
June 2019, the Group performed an impairment
assessment over the goodwill balances by using
discounted cash flow models.
The result was that the goodwill associated with the
acquisition of Novonix Battery Testing Services Inc.
(“BTS”) was fully impaired, resulting in an impairment
of $4.8m being recognised.
No impairment charge was recorded by the Group in
relation to the PUREgraphite goodwill.
Given the level of judgement involved in estimating the
key assumptions in the valuation model (including
forecast performance, growth rates and discount rates),
the materiality of the goodwill recognised on the
Group’s balance sheet, and the quantum of the
impairment loss recognised, we determined that this
was a key audit matter.
Carrying value of exploration and evaluation
assets
(Refer to note 15)
Our procedures in relation to assessing the carrying
value of exploration and evaluation assets included,
amongst others:
At 30 June 2019, the Group holds capitalised
exploration and evaluation assets of $2.8m relating to
the Mount Dromedary natural graphite deposit. During
the year, an impairment loss of $10.7m was recognised.
As required by Australian Accounting Standards, the
Evaluating the Group’s assessment of
impairment indicators, including enquiries
with key operational, finance and
management personnel to develop an
understanding of the current status of the
101
For personal use only Key audit matter
How our audit addressed the key audit matter
Group assessed whether there were any indicators of
impairment. Per AASB 6 Exploration for and
Evaluation of Mineral Resources, relevant indicators of
impairment of exploration and evaluation assets
include, amongst others:
Rights to explore have expired;
Unsuccessful exploration activities;
The carrying amount of the asset is unlikely to
be recovered in full from successful
development or by sale.
The impairment was considered a key audit matter due
to the financial significance of the exploration and
evaluation asset, and the judgment required in
assessing the impairment recognised.
project and future exploration intentions
Testing whether the Group retained right of
tenure for its exploration licence areas by
obtaining licence status maintained by the
relevant government authority
Evaluating external reports prepared in
relation to exploration licence areas, which
included the results of exploration activities
Assessing other available information, such as
press releases made by the Group regarding
the status of the development project and
future plans
Assessing the reasonableness of the
methodology and value of the impairment loss
recognised during the year.
Measurement and recognition of share based
payment transactions
(Refer to note 25)
Our procedures in relation to the measurement and
recognition of share based payment transactions
included, amongst others:
For the year ended 30 June 2019, the Group recognised
share based payment expenses totalling $6.7m.
Accounting for share based payment transactions
requires judgement in determining the fair value of the
equity instruments on grant date and assessing the
vesting period over which the share based payment
expense should be recognised. There is also judgement
in assessing the likelihood and timing of specific
performance hurdles being met.
The measurement and recognition of share based
payment transactions was deemed to be a key audit
matter due to the level of judgement involved, the
magnitude of the share based payment expenses and
the contribution of share based payment expenses to
the overall remuneration received by key management
personnel.
For grants of new options during the year:
o Obtaining formal documents
detailing the relevant terms and
conditions of the grants
o
o
Assessing the calculation of the fair
value of the options on grant date
Assessing whether the assumption
that any applicable performance
conditions will be met is consistent
with management forecasts
Recalculating the expense for the year ended
30 June 2019 based on the grant date fair
value, the Group’s assumptions for the
expected number of options or performance
rights to vest, and the vesting period, with
reference to the terms and conditions stated in
the relevant documentation
Assessing the accuracy and completeness of
related disclosures in the financial statements
as at 30 June 2019.
102
For personal use only Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2019, but does not include the
financial report and our 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 on the other information that we obtained prior to the date of
this auditor’s report, 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.
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 Group 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 Group 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 the 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/ar1.pdf. This description forms part of our
auditor's report.
103
For personal use only Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 21 to 33 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the remuneration report of Novonix Limited for the year ended 30 June 2019 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.
PricewaterhouseCoopers
Michael Shewan
Partner
Brisbane
30 September 2019
104
For personal use only Shareholder information
The shareholder information set out below was applicable as at 20 September 2019.
A Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1 - 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Class of equity security
Ordinary shares
348
635
311
446
107
1,847
There were 367 holders of less than a marketable parcel of ordinary shares.
B
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Ordinary shares
Name
Allegro Capital Nominees Pty Ltd
Washington H Soul Pattinson and Company Limited
Philip St Baker & Peta St Baker
Philip St Baker
Carpe Diem Asset Management Pty Ltd
Maria Bellas
David Andrew Stevens
George Chapman
Mutual Trust Pty Ltd
Apollan Pty Ltd
John Christopher Burns
HSBC Custody Nominees (Australia) Limited – A/c 2
Argo Investments Limited
Jamie Pherous
J P Morgan Nominees Australia Limited
Loch Explorations Pty Ltd
Starline Rentals Pty Ltd
W.A. Halpin Investments Pty Ltd
Halpin Family Super Pty Ltd
Madgrund Pty Ltd
Total
Number held
29,395,160
16,028,818
9,976,903
5,000,000
4,523,811
2,750,000
2,609,948
2,083,335
2,007,574
1,824,499
1,765,968
1,708,332
1,250,000
1,249,999
1,216,154
1,169,354
1,169,354
930,068
783,871
730,496
88,174,644
% of issued shares
22.94
12.51
7.79
3.90
3.53
2.15
2.04
1.63
1.57
1.42
1.38
1.33
0.98
0.98
0.95
0.91
0.79
0.73
0.61
0.57
68.71
105
For personal use only Unquoted equity securities
Performance rights
Share options
Loan notes
* No person holds 20% of more of these securities.
Number of issue
3,395,833
77,060,000
36,416,667
Number of holders
5
33
15
Holders of more than 20% of unquoted share options on issue
St Baker Energy Innovation Fund
Number held
25,000,000
% of total on issue
32.4%
Holders of more than 20% of unquoted performance rights on issue
Philip St Baker
Number held
1,895,833
% of total on issue
55.8%
Holders of more than 20% of unquoted loan notes on issue
St Baker Energy Innovation Fund
C
Substantial holders
Substantial holders in the company are set out below:
Ordinary shares
Allegro Capital Nominees Pty Ltd
Philip St Baker & Peta St Baker
Brickworks and its subsidiaries Washington
H. Soul Pattinson and Company Limited and
Exco Resources Limited.
D Voting rights
Number held
25,000,000
% of total on issue
68.6%
Number held
Percentage
29,395,160
14,976,903
16,028,818
22.94%
11.69%
12.51%
The voting rights attaching to each class of equity securities are set out below:
(a)
(b)
(c)
(d)
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.
Performance rights: No voting rights
Share options: No voting rights
Loan notes: No voting rights
106
For personal use only