ANNUAL REPORT
NUHEARA LIMITED ABN 29 125 167 133
//
FOR YEAR ENDED 30 JUNE 2017
NUHEARA LIMITED
ABN 29 125 167 133
CORPORATE DIRECTORY
Principal Place of Business
Suite 5
28 John Street
Northbridge WA 6003
Phone:
Fax:
+61 (8) 6555 9999
+61 (8) 6555 9998
Share Registry
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth WA 6000
Phone:
1300 850 505 (within Australia)
+61 3 9415 4000 (outside Australia)
Auditors
Walker Wayland WA Audit Pty Ltd
Level 2, 129 Melville Parade
Como WA 6152
Phone:
Fax:
+61 (8) 9364 9988
+61 (8) 9367 3444
Directors
Justin Miller
Executive Chairman
Managing Director/Chief Executive Officer
David Cannington
Executive Director/
Executive Vice President of Sales &
Marketing
Dr Michael Ottaviano
Independent Non-Executive Director
Company Secretary
Susan Hunter
ASX Code
NUH
Website and Email
Website: www.nuheara.com
Email: administration@nuheara.com
Registered Office
Suite 5
28 John Street
Northbridge WA 6003
Phone:
Fax:
+61 (8) 6555 9999
+61 (8) 6555 9998
NUHEARA LIMITED
ABN 29 125 167 133
TABLE OF CONTENTS
Page
Message from the Managing Director/Chief Executive Officer .................................. 1
Directors’ Report ........................................................................................................... 2
Remuneration Report .................................................................................................... 7
Auditor’s Independence Declaration ..........................................................................14
Statement of Profit or Loss and Other Comprehensive Income ................................ 15
Statement of Financial Position .................................................................................. 16
Statement of Changes in Equity ................................................................................. 17
Statement of Cash Flows .............................................................................................18
Notes to the Financial Statements ............................................................................. 19
Directors’ Declaration ..................................................................................................41
Independent Audit Report ......................................................................................... 42
ASX Additional Information ........................................................................................ 48
NUHEARA LIMITED
ABN 29 125 167 133
MESSAGE FROM THE MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER
Dear Fellow Shareholders
Nuheara Limited (“Nuheara” or “Company”) is pleased to present its Annual Report for the financial year ended 30 June 2017
(“FY17”).
At this time last year, Nuheara was busily completing its technology development, and in turn, readying itself for mass production of
the Company’s flagship product IQbuds™. We had set ourselves the target of launching the product at CES in Las Vegas in January
2017, and to have had commenced shipping to our pre-order customers. History now shows that we not only achieved this lofty
ambition, but also succeeded in generating $2.46m in sales revenue prior to June 30, 2017.
In the 2017FY (FY17) our target was to establish diversified retail and distribution partnerships. I can happily report that the Company
has made enormous strides in late FY17, with IQbuds™ now available for sale in-store (brick and mortar) and online, with some of
the world’s largest consumer electronics retailers - including Best Buy, Brookstone, Amazon and Target - and supported, in country,
by leading distributors. This has now extended to include major retail brands in Europe and the Middle East. As we continue to build
this retail presence, the Company is positioned well to build its global brand and sales.
Furthermore, global endorsement of IQbuds™ in 2017 has seen Nuheara win 7 major innovation awards, including 5 from the world’s
largest consumer electronics shows in the USA (CES) and Europe (IFA).
As the Company moves into 2018 FY (FY18), its sights are firmly set on the continual improvement and diversification of our product
range, but more critically, the further expansion and consolidation of our brick and mortar retail presence. With approximately 80%
of global consumer electronics still purchased in brick and mortar stores, the other 20% online, the Company is committed to
attracting and on-boarding as many retail outlets as possible in the early part of FY18. Successful achievement of this goal will provide
a solid foundation on which to launch a significant global sales and marketing campaign, particularly in advance of Christmas 2018,
traditionally the largest consumer spending period of the year.
Since producing our first wearable prototype in January 2016, the Company has come a long way in a very short space of time.
Accordingly, I would like to take this opportunity to thank Nuheara’s dedicated staff for all their demanding work over this period.
We all recognise that the rapid development, production and deployment is a must-do for any new products entering the global
technology market and more importantly, that none of this can occur without the capital, trust and support from our loyal
shareholders. Thank you.
I look forward to sharing further progress with you throughout the year.
Yours sincerely
Justin Miller
Managing Director/Chief Executive Officer
1
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
The Directors have the pleasure in presenting their report, together with the financial statements of the Company, being the
Company and its controlled entities, for the year ended 30 June 2017.
1.
Directors
The Directors in office at any time during or since the end of the financial year are:
Justin Miller (Executive Chairman and Managing Director/Chief Executive Officer)
Appointed: 25 February 2016
Mr Miller is a serial entrepreneur who has developed a thorough knowledge of the global technology and innovation
marketplace during his 25-year executive career. Throughout the course of his career, Mr Miller has successfully founded and
managed the aggressive and profitable growth of technology, manufacturing and service related companies. This includes
strategic acquisitions, capital raisings, research & development, product development & onshore/offshore manufacture,
significant staff growth and multi-million dollar sales deals involving both direct & channel sales models.
Mr Miller founded ASX-listed IT services Company Empired Limited and most recently was the founder and CEO of industrial
hearing and communication Company, Sensear Pty Ltd, where he was responsible for growing the global business from the
San Francisco bay area.
Mr Miller did not have any directorships in other listed companies during the past three years.
David Cannington (Executive Director and Executive Vice President of Sales & Marketing)
Appointed: 25 February 2016
Mr Cannington has over 25 years' global sales and marketing experience. He has held senior positions in sales and marketing
for companies spanning consumer packaged goods (Cadbury Schweppes), advertising (McCann Erickson) data analytics
(Neochange) and hearing technology (Sensear Pty Ltd). He has advised many start-ups on go-to-market and growth strategies
and was the founding CEO of ANZA Technology Network, a leading cross-pacific technology entrepreneurs network. Mr
Cannington has been recognised as one of the most influential Australian technology executives in Silicon Valley and brings
a global perspective to technology commercialisation.
Mr Cannington did not have any directorships in other listed companies during the past three years.
Dr Michael Ottaviano B.Eng, MSc, DBA, MAICD, M.I.EngAus(Independent Non-Executive Director)
Appointed: 25 February 2016
Dr Ottaviano has been employed by Carnegie Wave Energy Ltd (Carnegie) since January 2006 and was made Managing
Director in March 2007. Dr Ottaviano oversees all activities that Carnegie undertakes including all commercial and technical
aspects of Carnegie's operations, engineering and design, intellectual property and finance and administration. During his
time as CEO Dr Ottaviano has lead Carnegie's development of its CETO Wave Energy technology from proof of concept,
through a pilot plant phase and into the initial commercial demonstration stages and has been responsible for raising $77m
in equity, $35m in Government grant funding and $20m in a loan facility.
Dr Ottaviano has previously worked in research and development and was a divisional manager for a private Australian
engineering Company. Prior to joining Carnegie, he was a senior manager specialising in technology and innovation consulting
at a global accounting and advisory firm. He has advised companies on new product development, intellectual property,
innovation portfolio management and technology commercialisation across various industries and ranging from start-ups to
ASX-listed companies with market capitalisation in excess of $1 billion. He has also been a board member of the Clean Energy
Council, Australia's clean energy peak industry group, and a member of the Australian Government's Energy White Paper
High Level Consultative Committee.
During the past three years, Dr Ottaviano served as a director of the following listed Company:
•
Carnegie Wave Energy Limited – appointed 16 March 2007*
*Denotes current directorship
2
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
2.
Company Secretaries
Susan Hunter BCom, ACA, F Fin, GAICD, AGIA – Company Secretary
Appointed: 6 June 2016
Ms Hunter has over 20 years' experience in the corporate finance industry and is founder and Managing Director of consulting
firm Hunter Corporate Pty Ltd which specialises in the provision of corporate governance and company secretarial advice to
ASX listed companies. Ms Hunter holds a Bachelor of Commerce degree from the University of Western Australia majoring in
accounting and finance, is a Member of the Australian Institute of Chartered Accountants, a Fellow of the Financial Services
Institute of Australasia, a Member of the Governance Institute of Australia and is a Member of the Australian Institute of
Company Directors.
Jean-Marie Rudd B.Bus, ACA, GAICD – Chief Financial Officer/Company Secretary
Appointed: 30 November 2016
Mrs Rudd has over 20 years' experience in the corporate sector and professional services, including almost 10 years at Chief
Financial Officer and Company Secretary in ASX listed companies. Mrs Rudd holds a Bachelor of Business degree from Curtin
University majoring in accounting, is a Member of the Australian Institute of Chartered Accountants, and a Member of the
Australian Institute of Company Directors.
3.
Principal activities
The principal activity of the Company is the development and commercialisation of its proprietary hearing and wearables
technology platform.
4.
Dividends
No dividend has been declared or paid by the Company since the start of the financial year and the Directors do not
recommend a dividend in relation to the financial year ended 30 June 2017.
5. Operating and financial review
Our business model and objectives
Nuheara is an innovative audio Wearables Company. It is developing proprietary hardware and software to deliver multi-
functional intelligent hearing technology that augments a user’s hearing and facilitates cable free connection to smart
devices. With Nuheara IQbudsTM, it is intended that consumers will be able to augment their hearing according to their
personal hearing preferences and connect hands free with other voice enabled smart devices. Nuheara’s mission is to
improve people’s lives by allowing them to seamlessly listen, communicate and connect to their physical and digital world.
Operating results
The comprehensive loss of the Company after income tax for the financial year amounted to $4,839,623 (2016: loss of
$6,716,807). This represented a 72% improvement on the results reported for the year ended 30 June 2016. The significant
improvement was attributable to the commencement of commercial production of the Company’s first product, IQbudsTM.
Sales revenue was generated from both Australian and international customers, including a very successful crowdfunding
campaign conducted through Indiegogo that raised revenues in excess of $1m. Expenditure incurred relates to cost of
manufacturing, marketing and promotion, research, prototype, design and other associated costs related to the
commercialisation of the Company’s hearing and wearables platform.
Further discussion on the Company’s operations is provided below.
Mining tenements
Whilst the Company recognises that there may be some value in its resources projects, the directors are also cognisant of the
fact that these mining interests lie outside the Company’s core business activities. Accordingly, the Directors have decided to
divest its mining assets. To maximise the return for shareholders, the Directors have commissioned an independent expert’s
report to review and make recommendations to the Board on how best to divest the Company’s mineral related assets in
both Australia and Peru.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
5.
Operating and financial review (continued)
Review of operations
Since listing, the Company now co-located in offices in Perth and San Francisco, has continued to develop its IQbudsTM product
from the successful stage-one working wearable prototype, launched in January 2016 to full-scale commercial production by
the end of the financial year. For the year ended 30 June 2017 the Company produced over 17,000 IQbuds™, fulfilling all pre-
orders and increasing stock levels in warehouses located in Sydney, Los Angeles, London, and Hong Kong to meet ongoing
demand.
The Company expanded its global web store presence from USD and AUD transactions to now include CAD, NZD, and GBP
transactions, and further extended its online presence with the launch of a US Amazon store in June 2017. Prior to year-end
Nuheara announced the first of many planned geographical retail expansions, with the introduction of leading UK distributor
Maxiim and the UK retailer Dixons, and orders from major retailers in the US, including Best Buy, Brookstone, Fry’s, and
Target. Channel expansion into Hearing Care Practitioners also commenced, with IQbuds™ now available at Bloom Hearing
Clinics in Australia.
Revenue from ordinary activities for the year was $2,466,336, compared with nil sales revenue for the year ended 30 June
2016. Significantly, the year-end results do not include any sales related to the Best Buy retail store expansion announced
before year-end, or the geographical expansion into the UK. These orders were received in the first quarter of the 2018
financial year.
Two capital raisings were completed during the year, raising $4.98 million in November 2016 and $4.65 million in April 2017.
Funds raised will be used to further expand global retail sales, and invest in new research and product development. At year-
end, the Company held $3.40 million in cash reserves.
2017 has been an impressive year of growth for Nuheara, after successfully bringing its first proprietary technology product
to market and achieving global retail expansion.
Performance indicators
Management and the Board monitor the Company’s overall performance, from the execution of its strategic plan through to
the performance of the Company against operating plans and financial budgets.
The Board, together with management have identified key performance indicators (KPI’s) that are used to monitor
performance. Directors receive the KPI’s for review prior to each monthly Board meeting allowing all Directors to actively
monitor the Company’s performance.
Shareholder returns
The Company’s return to shareholders is as follows:
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Review of financial condition
Liquidity and Capital Resources
2017
(0.78)
(0.69)
2016
(2.22)
(2.09)
The Statement of Cash Flows illustrates that cash used in operating activities amounted to $4,070,267 (2016: outflow of
$1,287,347). This increase in outgoings in comparison to 2016 is largely due to the payment of suppliers for manufacture of
IQbudsTM and research, prototype, design and other associated costs relating to the commercialisation of the Company’s
hearing and wearables platform. Net outflows of $3,492,880 used in investing activities comprised: $2,640,998 in
development costs that were capitalised as intangible assets and $851,882 as payment for plant and equipment. The net
increase in the cash outflows from operating and investing activities was funded by $8,973,571 cash received from the raising
of funds from the issues of shares, net of share raising costs.
The net tangible asset backing of the Company was 0.620 cents per share (2016: 0.348 per share).
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
6.
Operating and financial review (continued)
Asset and capital structure
Debts:
Trade and other payables
Less: Cash and cash equivalents
Net cash
Total equity
Total capital employed
2017
$
2016
$
1,796,242
(3,404,552)
(1,608,310)
6,517,639
4,909,329
1,510,855
(1,994,128)
(483,273)
1,927,033
1,443,760
The level of gearing in the Company is within acceptable limits set by the Directors.
Share issues during the year
The Company issued 143,667,133 shares during the year:
•
•
•
•
•
27 October 2016 issued 83,073,383 shares under share placement @ $0.06 each
3 April 2017 issued 36,250,000 shares under share placement @ $0.08 each
4 April 2017 issued 18,750,000 shares under share placement @ $0.08 each
5 May 2017 issued 3,093,750 shares under share purchase plan @ 0.08 each
23 June 2017 issued 2,500,000 shares to consultant in consideration of investor relations and corporate advisory services
Risk management
The Company takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and also
opportunities, are identified on a timely basis and that the Company’s objectives and activities are aligned with the risks and
opportunities identified by the Board. The Company believes that it is crucial for all Board members to be part of this process,
and as such the Board has not established a separate risk management committee. Instead sub-committees are convened
as appropriate in response to issues and risks identified by the Board as a whole and the sub-committee further examines
the issue and reports back to the Board.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the
risks identified by the Board. These include the following:
•
•
Implementation of Board approved budget and Board monitoring of progress against budget, including the
establishment and monitoring of financial KPI’s; and
The establishment of committees to report on specific business risks.
7.
Significant changes in the state of affairs
Significant changes in the state of affairs during the year ended 30 June 2017 are as follows:
•
•
•
•
•
•
•
•
27 October 2016 – the Company issued 83,073,383 ordinary shares at $0.06 each under a share placement to provide
funds for ongoing development and promotion of the Company’s IQbudsTM product, including next generation versions,
and to meet general working capital expenses.
29 November 2016 – the Company announces commencement of commercial production of IQbudsTM
3 January 2017 – the Company achieves third party certification of IQbudsTM for Australia and New Zealand
21 February 2017 – the Company launched its IQbudsTM USA retail presence with Best Buy, the leading consumer
electronics retailer in North America with more than 1,400 stores in the USA and a further 200 in Canada and Mexico.
8 March 2017 – the Company announces partnerships with leading retailers Amazon and Brookstone to expand its on-
line and in-store retail presence.
3-4 April 2017 and 5 May 2017– the Company issued 58,093,750 ordinary shares at $0.08 each under a share placement
and share purchase plan to provide funds for ramping up further retail partnership trials and discussions beyond North
America and Australia; supporting traditional and digital marketing initiatives that will help to drive sales in all regions;
expand market access beyond consumer electronics retail by including hearing health programs to diversify sales
channels and potential consumer reach; and increase inventory levels with the Company’s contract manufacturer,
Flextronics, that in turn will ensure adequate product levels are maintained to support the diversification and expansion
of the retail opportunities.
30 May 2017 – the Company completes backorder shipping of approximately 6,000 IQbudsTM to more than 80 countries.
31 May 2017 – the Company announces it has entered into a retail partnership with Widex and Bloom Hearing.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
8.
Likely developments
Consistent with the Company’s business plan, Nuheara will continue to work towards the productisation and
commercialisation of its initial product offering, IQbudsTM, and development of second generation and new product lines.
9.
Significant events after balance date
On 26 July 2017, the Company issued 97,826,082 fully paid ordinary shares at $0.092 per share pursuant to a share placement
announced on 20 July 2017. The share issue will fund the working capital necessary to continue to support the rapid retail
uptake and product development of the current IQbudsTM and further development of the Company’s intellectual property
portfolio.
10.
Environmental regulation
The Company’s operations are not subject to any significant environmental, Commonwealth or State, regulations or laws.
11.
Share options
As at the date of this report, the Company has 107,319,445 options over ordinary shares. These options have been issued on
the following terms.
Number of Unlisted Options
Exercise Price
Expiry Date
8,319,445
500,000
20,000,000
30,000,000
6,000,000
5,500,000
1,000,000
10,000,000
10,000,000
10,500,000
1,500,000
4,000,000
$0.10 each
$0.10 each
$0.03 each
$0.05 each
$0.04 each
$0.06 each
$0.09 each
$0.12 each
$0.078 each
$0.09 each
$0.115 each
$0.09 each
15 September 2017
20 November 2017
25 February 2019 (1)
31 May 2019 (2)
18 April 2019
18 April 2019
20 April 2019
6 June 2019
2 November 2019
30 November 2019
16 February 2020
22 May 2020
TOTAL
107,319,445
(1) ASX escrow for 24 months from quotation of securities
(2) ASX escrow for 24 months from quotation of securities
Option holders do not have any rights to participate in any issues of shares or other interests in the Company or any other
entity.
6
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
12.
Remuneration report (audited)
This report, which forms part of the Directors’ Report, details the amount and nature of remuneration of each Key
Management Personnel of the Company. The following people were identified as Key Management Personnel (KMP) during
the year:
i) Directors
Justin Miller
Executive Chairman
Chief Executive Officer
David Cannington
Executive Director
Executive Vice President of Sales and Marketing
Michael Ottaviano
Non-Executive Director
ii) Executives
Jean-Marie Rudd
Chief Financial Officer/Co-Company Secretary
There were no other changes to KMP after the reporting date and before the date the annual report was authorised for issue.
Remuneration policy
The remuneration policy of the Company has been designed to align KMP objectives with shareholder and business objectives
by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas
affecting the consolidated group’s financial results. The Board believes the remuneration policy to be appropriate and
effective in its ability to attract and retain high-quality KMP to run and manage the consolidated group, as well as create goal
congruence between Directors, executives and shareholders.
The remuneration policy is to provide a fixed remuneration component, performance related bonus and a specific equity
related component. The Board believes that this remuneration policy is appropriate given the stage of development of the
Company and the activities which it undertakes and is appropriate in aligning executives’ objectives with shareholder and
business objectives.
The remuneration policy, in regards to settling terms and conditions for the Executive Directors and executives, has been
developed by the Board, taking into account market conditions and comparable salary levels for companies of similar size
and operating in similar sectors. The Board reviews the remuneration packages of all KMP on an annual basis.
The maximum remuneration of Non-Executive Directors is to be determined by Shareholders in general meeting in
accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. At present the maximum
aggregate remuneration of Non-Executive Directors is $250,000 per annum. The apportionment of Non-Executive Director
Remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the
respective contributions by each Non-Executive Director. Remuneration is not linked to specific performance criteria.
The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment
and responsibilities. The Board determines payment to the Non-Executive Directors and reviews their remuneration on an
individual basis, based on market practices, duties and accountability. Independent external advice is sought when required.
Remuneration is not linked to the performance of the Company.
There are no service or performance criteria on the options granted to Directors as, given the speculative nature of the
Company’s activities and the small management team responsible for its running, it is considered the performance of the
Directors and the performance and value of the Company are closely related. The Board has a policy of granting options to
KMP with exercise prices above the respective share price at the time that the options were agreed to be granted. As such,
options granted to KMP will generally only be of benefit if the KMP’s perform to the level whereby the value of the Company
increases sufficiently to warrant exercising the options granted. Given the stage of development of the Company and the
high-risk nature of its activities, the Board considers that the prospects of the Company and resulting impact on shareholder
wealth are largely linked to the success of this approach, rather than by referring to current or prior year earnings.
Australian-based executives receive a superannuation guarantee contribution required by the Government, currently 9.5%
and do not receive any other retirement benefit. Executives may also choose to sacrifice part of their salary to increase
contributions towards superannuation. Upon retirement, KMP are paid employee benefit entitlements accrued to the date
of retirement.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
11. Remuneration report (audited) (continued)
All remuneration paid to KMP is valued at the cost to the Company and expensed.
KMP are also entitled and encouraged to participate in the employee option arrangements to align Directors’ interests with
shareholders’ interests.
Options granted under the arrangement do not carry dividend or voting rights. Each option is entitled to be converted into
one ordinary share once the interim or final financial report has been disclosed to the public and is measured using the Black-
Scholes methodology.
KMP or closely related parties of KMP are prohibited from entering into hedge arrangements that would have the effect of
limiting the risk exposure relating to their remuneration. In addition, the Board’s remuneration policy prohibits Directors and
KMP from using the Company’s shares as collateral in any financial transaction, including margin loan arrangements.
Performance-based remuneration policy
Key performance indicators (KPI’s) are set annually, with a certain level of consultation with KMP. The measures are
specifically tailored to the area each individual is involved in and has a level of control over. The KPI’s target areas the Board
believes hold greater potential for group expansion and profit, covering financial and non-financial, as well as short and long-
term goals. The level set for each KPI is based on budgeted figures for the Company and respective industry standards.
Performance in relation to the KPI’s is assessed annually, with bonuses being awarded depending on the number and deemed
difficulty of the KPI’s achieved. Following the assessment, the KPI’s are reviewed by the remuneration committee in light of
the desired and actual outcomes, and their efficiency is assessed in relation to the Company’s goals and shareholder wealth,
before the KPI’s are set for the following year.
Relationship between remuneration policy and Company performance
The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives. Two
methods have been applied to achieve this aim, the first being a performance-based bonus based on KPI’s, and the second
being the issue of options to encourage the alignment of personal and shareholder interests.
Performance conditions linked to remuneration
The Company seeks to emphasise reward incentives for results and continued commitment to the Company through the
provision of various cash bonus reward schemes, specifically the incorporation of incentive payments based on the
achievement of financial targets, ratios, and continued employment with the Company.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
11. Remuneration report (audited) (continued)
Details of remuneration provided to Directors and executives during the year are as follows:
Short-Term Employee Benefits
Salary & Consulting Fees
$
Cash Bonus
$
Post-Employment Benefits
Superannuation
$
Share-Based Payments
Shares
$
Options
$
Total
$
Rick Brown
(resigned 25 February 2016)
David Cannington (1)
Justin Miller (1)
Grant Mooney
(resigned 6 June 2016)
Jeffrey Moore
(resigned 25 February 2016)
Michael Ottaviano
Jean-Marie Rudd
(appointed 22 August 2016)
TOTAL
TOTAL
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
-
19,603
243,860
91,302
210,000
79,886
-
30,444
-
19,603
30,000
10,000
146,897
-
630,757
250,838
-
-
663
-
1,000
-
-
-
-
-
-
-
1,000
-
2,663
-
-
-
-
-
20,045
6,606
-
2,850
-
1,862
2,850
950
14,050
-
36,945
12,268
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,000
117,916
49,000
117,916
-
-
-
-
-
-
44,258
-
142,258
235,832
-
19,603
293,522
209,218
280,045
204,408
-
33,294
-
21,465
32,850
10,950
206,206
-
812,623
498,938
Notes:
(1) Justin Miller and David Cannington received 10,000,000 options each as part of the Nuheara Pty Ltd acquisition. As at the date of this report, 100% of these options have vested (2016: 6,666,667).
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
11. Remuneration report (audited) (continued)
Services agreements
Justin Miller – Chief Executive Officer
Mr Miller has been engaged as an Executive Director of the Company pursuant to an employment and services agreement
between the Company and Mr Miller (Miller Agreement).
The total annual remuneration payable to Mr Miller under the Miller Agreement is a salary of USD$240,000 (2016: AUD
$210,000) per annum (inclusive of superannuation). Mr Miller will also be entitled to participate in short-term cash incentives
of up to 30% of the base package and long-term incentives to be defined by the Board.
The Miller Agreement commenced on 2 March 2016 and employment under the Miller Agreement will continue until
terminated in accordance with the Miller Agreement (Term). During the Term, the Miller Agreement may be terminated by
the Company at any time:
• by six months' written notice to Mr Miller, at which time the Company will immediately pay Mr Miller 6 months’ base
salary in lieu;
• by three written months' notice to Mr Miller in cases of prolonged illness or incapacity (mental or physical); or
• by summary notice in circumstances where Mr Miller neglects to perform his duties, or comply with reasonable or proper
direction, or engages in serious misconduct.
Otherwise, the Miller Agreement may be terminated by Mr Miller at any time for any reason by giving not less than three
months' notice in writing to the Company. Mr Miller may also terminate the Miller Agreement immediately by giving notice
if at any time the Company is in breach of a material term of the Miller Agreement.
In the event of a change of control, Mr Miller will receive a bonus payment comprising of a lump sum gross payment of 12
months’ base salary.
Mr Miller is also subject to restrictions in relation to the use of confidential information during and after his employment with
the Company ceases, being directly or indirectly involved in a competing business during the continuance of his employment
with the Company, and for a period of 12 months after his employment with the Company ceases, on terms which are
otherwise considered standard for agreements of this nature.
The Miller Agreement contains additional provisions considered standard for agreements of this nature.
David Cannington – Executive Vice President of Sales and Marketing
Mr David Cannington has been engaged as an Executive Director of the Company pursuant to an employment and services
agreement between the Company and Mr Cannington (Cannington Agreement).
The total annual remuneration payable to Mr Cannington under the Cannington Agreement is a salary of USD$228,000 (2016:
USD$175,000) per annum and a health care allowance of USD$750 (2016: USD $750) per month. Mr Cannington will also be
entitled to participate in short-term cash incentives of up to 30% of the base package and long-term incentives to be defined
by the Board.
The Cannington Agreement commenced on 2 March 2016 and employment under the Cannington Agreement will continue
until terminated in accordance with the Cannington Agreement (Term). During the Term, the Cannington Agreement may
be terminated by the Company at any time:
•
•
•
by six months' written notice to Mr Cannington, at which time the Company will immediately pay Mr Cannington 6
months’ base salary in lieu;
by three months' written notice to Mr Cannington in cases of prolonged illness or incapacity (mental or physical); or
by summary notice in circumstances where Mr Cannington neglects to perform his duties, or comply with reasonable or
proper direction or engages in serious misconduct.
Otherwise, the Cannington Agreement may be terminated by Mr Cannington at any time for any reason by giving not less
than three months' notice in writing to the Company. Mr Cannington may also terminate the Cannington Agreement
immediately by giving notice if at any time the Company is in breach of a material term of the Cannington Agreement.
In the event of a change of control, Mr Cannington will receive a bonus payment comprising of a lump sum gross payment of
12 months’ base salary.
10
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
11. Remuneration report (audited) (continued)
Services agreements (continued)
Mr Cannington is also subject to restrictions in relation to the use of confidential information during and after his employment
with the Company ceases, being directly or indirectly involved in a competing business during the continuance of his
employment with the Company, and for a period of 12 months after his employment with the Company ceases, on terms
which are otherwise considered standard for agreements of this nature.
The Cannington Agreement contains additional provisions considered standard for agreements of this nature.
Jean-Marie Rudd – Chief Financial Officer/Co-Company Secretary
Mrs Jean-Marie Rudd has been engaged as a Chief Financial Officer/Co-Company Secretary of the Company pursuant to an
employment and services agreement between the Company and Mrs Rudd (Rudd Agreement).
The total annual remuneration payable to Mrs Rudd under the Rudd Agreement is a salary of $187,000 per annum (exclusive
of superannuation). Mrs Rudd will also be entitled to participate in short-term cash incentives of up to 20% of the base
package and long-term incentives to be defined by the Board.
The Rudd Agreement commenced on 16 August 2016 and employment under the Rudd Agreement will continue until
terminated in accordance with the Rudd Agreement (Term). During the Term, the Rudd Agreement may be terminated by
the Company at any time:
•
•
•
by three months' written notice to Mrs Rudd, at which time the Company will immediately pay Mrs Rudd 6 months’ base
salary in lieu;
by one months' written notice to Mrs Rudd in cases of prolonged illness or incapacity (mental or physical); or
by summary notice in circumstances where Mrs Rudd neglects to perform her duties, or comply with reasonable or
proper direction or engages in serious misconduct.
Otherwise, the Rudd Agreement may be terminated by Mrs Rudd at any time for any reason by giving not less than three
months' notice in writing to the Company. Mrs Rudd may also terminate the Rudd Agreement immediately by giving notice
if at any time the Company is in breach of a material term of the Rudd Agreement.
Mrs Rudd is also subject to restrictions in relation to the use of confidential information during and after her employment
with the Company ceases, being directly or indirectly involved in a competing business during the continuance of her
employment with the Company, and for a period of six months after her employment with the Company ceases, on terms
which are otherwise considered standard for agreements of this nature.
The Rudd Agreement contains additional provisions considered standard for agreements of this nature.
KMP shareholdings
The number of ordinary shares the Company held by KMP during the financial year is as follows:
Ordinary Shares
Justin Miller(1)
David Cannington
Opening balance
1 July 2016
or balance on
appointment
63,142,857
63,142,857
Issued
during
the year
-
-
Purchased
during
the year
-
-
Closing Balance
30 June 2017
or resignation date
63,142,857
63,142,857
Michael Ottaviano
Jean-Marie Rudd
Total
Notes:
(1) 63,142,857 shares are held by Wasagi Corporation Pty Ltd as trustee for the Wasagi Family Trust of which Justin Miller is a beneficiary.
24,802,321
-
179,978,889
24,802,321
19,279
179,998,168
-
19,279
19,279
-
-
-
11
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
11. Remuneration report (audited) (continued)
KMP shareholdings (continued)
The relevant beneficial interest of KMP in the options over ordinary share capital of the Company is as follows:
Options
Justin Miller(1)
David Cannington
Michael Ottaviano
Jean-Marie Rudd
Opening balance
1 July 2016
or balance on
appointment
10,000,000
10,000,000
-
-
Issued
during
the year
-
-
-
4,500,000
Expired
during
the year
-
-
-
-
Closing Balance
30 June 2017
or resignation date
10,000,000
10,000,000
-
4,500,000
Total
Notes:
(1) 10,000,000 unlisted options are held by Wasagi Corporation Pty Ltd as trustee for the Wasagi Family Trust of which Justin Miller is a
20,000,000
24,500,000
4,500,000
-
beneficiary.
Options granted
Options issued to KMP for the year ended 30 June 2017 (2016: 20,000,000):
2017
Justin Miller
Grant Details
Date
No.(1)
25/02/2016 10,000,000(2) 147,000
Value
$
25/02/2016 10,000,000
David
Cannington
Jean-Marie Rudd 22/08/2016 4,500,000
147,000
177,030
For the financial year ended
30 June 2017
Exercised
No.
Exercised
$
Lapsed
No.
Lapsed
$
-
-
-
-
-
-
-
-
-
-
-
-
Overall
Unvested
%(3)
Vested
No.
3,333,334
Vested
%
100%
3,333,334
100%
1,125,000
25%
75%
-
-
Lapsed
%
-
-
-
Notes:
(1) The options issued to Justin Miller and David Cannington were issued pursuant to the prospectus dated 25 January 2016.
(2) 10,000,000 unlisted options are held by Wasagi Corporation Pty Ltd as trustee for the Wasagi Family Trust of which Justin Miller is a
beneficiary.
Option values at grant date were determined using the Black-Scholes method.
Shares issued
2017:
During the 2017 year, no shares were issued as remuneration.
2016:
During the 2016 year, the following shares were issued to Directors or their nominees, pursuant to the prospectus:
•
•
•
63,142,857 shares were issued to Justin Miller or his nominee
63,142,857 shares were issued to David Cannington or his nominee
24,802,321 shares were issued to Michael Ottaviano or his nominee
Other transactions with KMP and/or their related parties
During the year there were no other transactions with KMP and/or related parties.
END OF REMUNERATION REPORT
12
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS’ REPORT
12.
Directors' meetings
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2017
and the number of meetings attended by each Director:
Director
Justin Miller
David Cannington
Michael Ottaviano
13.
Indemnifying officers or auditor
Number
Attended
7
7
7
Number Eligible
to Attend
7
7
7
The Company has paid premiums to insure all Directors against liabilities for costs and expenses incurred by them in defending
legal proceedings arising from their conduct while acting in the capacity of Director of the Company, other than conduct
involving a wilful breach of duty in relation to the Company. The premiums in total amounted to $33,212.
14.
Proceedings on behalf of the Company
No person has applied for leave of court to bring proceedings on behalf of the Company, or 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 any part of those
proceedings.
The Company was not a party to any such proceedings during the year.
15.
Auditor
Walker Wayland WA Audit Pty Ltd (formerly Hall Chadwick WA Audit Pty Ltd) has been appointed auditor of the Company in
accordance with section 327 of the Corporations Act 2001. The Directors are of the opinion that the auditor has procedures
in place to ensure there will be no deterioration of audit quality as a result of the extension, and the extension will not give
rise to a conflict of interest situation.
16.
Non audit services
The Board of Directors is satisfied that there was no provision of non-audit services during the year.
17.
Auditor’s independence declaration
The auditor’s independence declaration for the year ended 30 June 2017 has been received and can be found on page 14 of
the financial report.
Made and signed in accordance with a resolution of the Directors.
Justin Miller
Managing Director/Chief Executive Officer
Perth, 22 September 2017
13
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenue
Cost of sales
Gross loss
Other income
Salaries and employee benefits
Marketing and promotional
Research and development
General and administrative
Share based payments
Mining activities
Listing fees
Total expenses
Loss before tax from continuing operations
Income tax benefit
Net loss after tax from continuing operations
Profit from discontinued operations
Change in carrying value of disposal group
Profit on disposal group
Total profit from discontinued operations
Total comprehensive loss for the year
Total comprehensive loss attributable to:
Equity holders
Total comprehensive loss
Earnings per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
NOTES
2017
$
2,466,336
(3,118,036)
(651,700)
450,316
(1,270,997)
(1,010,753)
(205,343)
(1,671,000)
(461,508)
(18,638)
2016
$
-
(4,691)
(4,691)
12,431
(454,812)
(310,650)
(987,808)
(766,213)
(31,919)
679,164
22
2
-
(4,969,933)
(4,187,923)
(6,829,740)
(4,839,623)
(6,834,431)
-
-
(4,839,623)
(6,834,431)
-
-
-
(4,839,623)
(2,443)
120,067
117,624
(6,716,807)
(4,839,623)
(4,839,623)
(6,716,807)
(6,716,807)
15
15
(0.78)
(0.69)
(2.22)
(2.09)
The accompanying notes form part of these financial statements.
15
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
NOTES
2017
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Disposal group – mining tenements held for sale
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Security deposits
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share option reserve
Foreign currency translation reserve
Accumulated losses
TOTAL EQUITY
3
4
5
6
7
2016
$
1,994,128
1,058,577
15,147
206,233
3,274,085
160,399
27,706
-
188,105
3,404,552
871,209
1,125,144
206,233
5,607,138
871,245
27,581
2,194,198
3,093,024
8,700,162
3,462,190
1,796,242
386,281
2,182,523
1,510,855
24,302
1,535,157
2,182,523
1,535,157
6,517,639
1,927,033
8
17,402,898
677,427
(4,850)
8,229,327
415,919
-
(11,557,836)
(6,718,213)
6,517,639
1,927,033
The accompanying notes form part of these financial statements.
16
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Share
Option
Reserve
$
Foreign
Currency
Translation
Reserve
$
Balance at 1 July 2015
Comprehensive income
Loss for the year
Total comprehensive loss for the year
Transactions with owners
capacity as owners
in their
Shares issued during the year
Share issue costs
Options issued during the year
Ordinary
Shares
$
Accumulated
Losses
$
100
(1,406)
-
-
(6,716,807)
(6,716,807)
8,825,315
(596,088)
-
8,229,227
-
-
-
-
-
-
-
-
415,919
415,919
Balance at 30 June 2016
8,229,327
(6,718,213)
415,919
Balance at 1 July 2016
Comprehensive income
Loss for the year
Total comprehensive loss for the year
Transactions with owners
capacity as owners
in their
Shares issued during the year
Share issue costs
Options issued during the year
Movement in valuation of options
issued in prior periods
Foreign currency translation
movements
8,229,327
(6,718,213)
415,919
-
-
(4,839,623)
(4,839,623)
9,831,903
(658,332)
-
-
-
9,173,571
-
-
-
-
-
-
-
-
-
99,814
161,694
-
261,508
Total
$
(1,306)
(6,716,807)
(6,716,807)
8,825,315
(596,088)
415,919
8,645,146
1,927,033
1,927,033
(4,839,623)
(4,839,623)
9,831,903
(658,332)
99,814
161,694
(4,850)
9,430,229
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,850)
(4,850)
Balance at 30 June 2017
17,402,898
(11,557,836)
677,427
(4,850)
6,517,639
The accompanying notes form part of these financial statements.
17
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Grants and rebates received
Payments to suppliers and employees
Interest and other costs of finance paid
NET CASH FLOWS USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for plant and equipment
Payment for acquisition of businesses (net of cash acquired)
Proceeds from disposal of investments in associates
Payment for the acquisition of intangibles
NET CASH FLOWS USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share and option issues
Share raising costs
NET CASH FLOWS FROM FINANCING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS HELD
Cash and cash equivalent at beginning of the financial year
NOTES
2017
$
1,898,869
33,382
411,175
2016
$
(5,587)
12,431
-
(6,412,608)
(1,294,147)
(1,085)
(44)
23
(4,070,267)
(1,287,347)
(851,882)
(175,737)
-
-
(2,640,998)
(3,492,880)
37,837
131,364
-
(6,536)
-
9,631,903
(658,332)
3,500,000
(212,089)
8,973,571
3,287,911
1,410,424
1,994,028
1,994,128
100
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
3,404,552
1,994,128
The accompanying notes form part of these financial statements.
18
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
It is important to read the following definitions in order to assist with understanding this report.
For the purposes of this report:
Nuheara IP Pty Ltd or Company refers to the Company purchased by Nuheara Limited on 25 February 2016. As required by
Australian Accounting Standard AASB 3: Business Combinations, Nuheara Limited is deemed to have been acquired by Nuheara IP
Pty Ltd as at 25 February 2016 under the reverse acquisition rules. While the financial statements are headed with the legal
acquirer, Nuheara Limited, the financial statements presented are a continuation of those of the accounting acquirer, Nuheara IP
Pty Ltd.
Nuheara Limited or Listed Entity means only the legal entity of Nuheara Limited, which is listed on the Australian Securities
Exchange (ASX: NUH). Nuheara Limited is the legal parent of Nuheara IP Pty Ltd although Nuheara IP Pty Ltd has been treated as
the acquirer for accounting purposes in the financial statements.
Wild Acre Metals Limited (ASX: WAC) means Nuheara Limited and all its controlled entities prior to the purchase of Nuheara IP
Pty Ltd. On 25 February 2016, the Company’s name was changed from Wild Acre Metals Limited to Nuheara Limited and the ASX
code was subsequently changed from WAC to NUH.
The financial report for Nuheara Limited for the year ended 30 June 2017 was authorised for issue in accordance with a resolution
by the Board of Directors.
Nuheara Limited is incorporated in Australia, and is a listed public Company whose shares are publicly traded on the Australian
Securities Exchange (ASX). Its registered office and principal place of business is located at Suite 5, 28 John Street, Northbridge,
Western Australia.
1.
a)
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards,
interpretations of the Australian Accounting Standards Board (AASB), International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board, and the Corporations Act 2001. The Company is a for-profit
entity for financial reporting purposes under the Australian Accounting Standards.
Material accounting policies adopted in the preparation of these financial statements are presented below and have been
consistently applied unless otherwise stated.
Reporting Basis and Conventions
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 of fair value of selected non-current assets, financial
assets and financial liabilities.
Critical accounting estimates
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to
the financial statements are disclosed in Note 13.
New Accounting Standards for Application in Future Periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Company,
together with an assessment of the potential impact of such pronouncements on the Company when adopted in future
periods, are discussed below:
•
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on
or after 1 January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and
includes revised requirements for the classification and measurement of financial instruments, revised recognition and
derecognition requirements for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Company on initial application include certain simplifications to the classification
of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit
loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held
for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow
greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the
Company elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the
application of such accounting would be largely prospective.
19
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
a)
Basis of preparation (continued)
Although the Directors anticipate that the adoption of AASB 9 may have an impact on the Company’s financial
instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.
•
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January
2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15
will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of
business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
•
•
•
•
•
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior
period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain
practical expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts
on the date of initial application. There are also enhanced disclosure requirements regarding revenue. Although the
Directors anticipate that the adoption of AASB 15 may have an impact on the Company's financial statements, it is
impracticable at this stage to provide a reasonable estimate of such impact.
•
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019)
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases
and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for
leases to be classified as operating or finance leases. The main changes introduced by the new Standard include:
•
•
•
•
•
recognition of a right-to-use asset and liability for all leases (excluding short-term leases with less than 12 months
of tenure and leases relating to low-value assets);
depreciation of right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and
unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial measurement of the lease
liability using the index or rate at the commencement date;
by applying a practical expedient, a lessee is permitted to elect not to separate non-lease components and instead
account for all components as a lease; and
additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line
with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on
the date of initial application.
Although the Directors anticipate that the adoption of AASB 16 will impact the Company's financial statements, it is
impracticable at this stage to provide a reasonable estimate of such impact.
•
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture (applicable to annual reporting periods beginning on or after 1 January 2018, as
deferred by AASB 2015-10: Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB
10 and AASB 128).
20
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
a)
Basis of preparation (continued)
This Standard amends AASB 10: Financial Statements with regards to a parent losing control over a subsidiary that is
not a “business” as defined in AASB 3 to an associate or joint venture, and requires that:
•
•
•
a gain or loss (including any amounts in other comprehensive income (OCI) be recognised only to the extent of the
unrelated investor's interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint
venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be
recognised only to the extent of the unrelated investor's interest in the associate or joint venture. The remaining
gain or loss should be eliminated against the carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of loss of control over
subsidiaries (involving an associate or joint venture) that are businesses per AASB 3, for which gains or losses were
previously recognised only to the extent of the unrelated investor's interest.
The transitional provisions require that the Standard should be applied prospectively to sales or contributions of
subsidiaries to associates or joint ventures occurring on or after 1 January 2018. Although the Directors anticipate that
the adoption of AASB 2014-10 may have an impact on the Company's financial statements, it is impracticable at this stage
to provide a reasonable estimate of such impact.
b)
Business combinations
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities
or businesses under common control. The business combination will be accounted for from the date that control is
attained, whereby the fair value of the identifiable assets acquired and liabilities assumed (including contingent liabilities)
is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a
contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration
classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent
consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change
to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations are recognised as expenses in profit or loss when
incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
c)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to balance
date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected
to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present
value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market
yields on national government bonds with terms to maturity that match the expected timing of cash flows.
d)
Impairment of assets
At the end of each reporting period, the Company 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 jointly controlled entities 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 to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s 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 (e.g. in accordance with the revaluation model in AASB 116: Property, Plant
and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that
other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Company 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.
21
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
e)
Intangible assets
Research and development
(i) Research phase
No intangible asset arising from research (or from the research phase of an internal project) is recognised. Expenditure on
research (or on the research phase of an internal project) is recognised as an expense when incurred.
(ii) Development phase
An intangible asset arising from development (or from the development of an internal project) is recognised if, and only if,
all of the following have been demonstrated:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Development costs include costs directly attributable to the development activities. Development costs not capitalised are
recognised as an expense when incurred.
Following initial recognition, the Company will adopt the cost model. As a result, any development costs carried forward
will be carried forward at its cost less any accumulated amortization and any accumulated impairment losses.
Capitalised development costs have a finite useful life and are amortised on a straight-line basis over 2.5 years.
Patents and trademarks
Patents and Trademarks are recognised at cost of acquisition. They have a finite life and are carried at cost less any
accumulated amortisation and any impairment losses.
Patents and trademarks are amortised on a straight-line basis over 10 years.
f)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand and deposits held at call with financial institutions, which are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
g)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or
sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified
“at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value or amortised cost using the effective interest method, or
cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference
between that initial amount and the maturity amount calculated using the effective interest method.
22
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
g)
Financial instruments (continued)
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and
other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future
net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or
expense item in profit or loss.
The Company does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of Accounting Standards specifically applicable to financial instruments.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through
the amortisation process and when the financial asset is derecognised.
(ii) Financial liabilities
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 the financial liability is derecognised.
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of
impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated future
cash flows of the financial asset(s).
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of
debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications
that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that
correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to
reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of
recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-
off amounts are charged to the allowance account, or the carrying amount of impaired financial assets is reduced directly
if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the
Company recognises the impairment for such financial assets by taking into account the original terms as if the terms have
not been renegotiated so that the loss events that have occurred are duly considered.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled or have expired.
The difference between the carrying amount of the financial liability extinguished or transferred to another party and the
fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or
loss.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at the balance date. The quoted market price used for
financial assets held by the Company is the current bid price; the appropriate quoted market price for financial liabilities is
the current ask price.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the Company for similar financial instruments.
23
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
h)
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Company’s entities is measured using the currency of the primary economic
environment in which that entity operates. The financial statements are presented in Australian dollars, which is the parent
entity’s functional currency.
Transactions and balances
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.
Foreign controlled entities
The financial results and position of foreign operations, whose functional currency is different from the Company’s
presentation currency, are translated as follows:
income and expenses are translated at average exchange rates for the period;
retained earnings are translated at the exchange rates prevailing at the date of the transaction; and
• assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
•
•
• 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
statement of financial position. These differences are recognised in profit or loss in the period when a foreign operation
is disposed.
i)
Issued capital
Ordinary shares and options 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. Incremental costs directly attributable to the issue of new shares or options, for the acquisition of a
business, are not included in the cost of the acquisition as part of the purchase consideration.
j)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as
expenses in the periods in which they are incurred.
k)
Plant and equipment
Plant and equipment and leasehold improvements are stated at cost less accumulated depreciation and impairment. Cost
includes expenditure that is directly attributable to the acquisition of the item.
Depreciation is provided on plant and equipment and is calculated on a straight line basis so as to write off the net cost of each
asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over the period of
the lease or estimated useful life, whichever is the shorter, using the straight line method. The estimated useful lives, residual
values and depreciation method are reviewed, and adjusted if appropriate, at the end of each annual reporting period.
The following depreciation rates that are used in the calculation of depreciation:
• Office equipment - 10% - 25%
• Plant and Equipment - 15%
• Leasehold improvements - 40%
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are
included in the statement of profit or loss and other comprehensive income. When revalued assets are sold, amounts
included in the revaluation surplus relating to that asset are transferred to retained earnings.
24
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
l)
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. Overheads are applied on the basis
of normal operating capacity. Costs are assigned on the basis of weighted average costs.
m)
Principles of consolidation
On 25 February 2016, Nuheara Limited acquired all of the issued shares of Nuheara IP Pty Ltd, resulting in Nuheara IP Pty
Ltd becoming a wholly owned subsidiary of Nuheara Limited. The acquisition resulted in the original shareholders of
Nuheara IP Pty Ltd holding a controlling interest in Nuheara Limited (formerly known as Wild Acre Metals Limited). Pursuant
to AASB 3: Business Combinations, this transaction represents a reverse acquisition with the result that Nuheara IP Pty Ltd
was identified as the acquirer, for accounting purposes, of Nuheara Limited (the “acquiree” and “legal parent”). Wild Acre
Metals Limited was not considered a business as it only held disposal groups in Australia and Peru. Accordingly, in the year
to 30 June 2016 it was treated as an asset purchase and the excess consideration paid was disclosed as listing costs on the
Statement of Profit or Loss and Other Comprehensive Income.
A list of controlled entities is contained in Note 20.
n)
Revenue recognition
Revenue is measured at the value of the consideration received or receivable after taking into account any trade discounts and
volume rebates allowed. For this purpose, deferred consideration is not discounted to present values when recognising
revenue.
Interest revenue is recognised using the effective interest method, which for floating rate financial assets is the rate inherent
in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established.
Revenue recognition relating to the provision of services is determined with reference to the stage of completion of the
transaction at the end of the reporting period and where outcome of the contract can be estimated reliably. Stage of
completion is determined with reference to the services performed to date as a percentage of total anticipated services to be
performed. Where the outcome cannot be estimated reliably, revenue is recognised only to the extent that related expenditure
is recoverable.
Revenue from the sale of tenement interests is recognised at the time of the transfer of the significant risks and rewards of
ownership.
All revenue is stated net of the amount of goods and services tax.
o)
Provisions
Warranty provisions
(i)
Provision is made in respect of the Company’s best estimate of the liability on all products under warranty at the end of the
reporting period. The provision is measured as the present value of future cash flows estimated to be required to settle the
warranty obligation. The future cash flows have been estimated by reference to an industry average of warranty claims.
Long service leave and annual leave
(ii)
The Company expects annual leave benefits to be settled wholly within 12 months of the reporting date. The Group
recognises a liability for long service leave and annual leave measured as the present value of expected future payments to
be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future
wage and salary levels, experience of employee departures, and periods of service.
Employees in Australia are entitled to long service leave in accordance with statutory requirements. International
employees are granted the same annual and long service leave entitlements as those in Australia.
25
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
p)
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of grant. Fair value of options is measured by
use of a Black-Scholes model. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value of
shares is the market value of the shares at the grant date.
The fair value determined at the grant date of options issued as part of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based on the Company’s estimate of shares that will eventually vest.
q)
Taxes
(i) Income Tax
The income tax expense income for the year comprises current income tax expense (income) and deferred tax expense
(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability,
where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled and their measurement also reflects the manner in which management expects to recover
or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities,
where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will
occur in future periods, in which significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
(ii) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except:
• Where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which
case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable;
and
Receivables and payables are stated with the amount of GST included.
•
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables
in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
26
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
r)
New and amended accounting policies adopted by the Company
Standards and Interpretations applicable to 30 June 2017
In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the Company and effective for the current annual reporting period.
As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards
and Interpretations on the Company and, therefore, no material change is necessary to the Company accounting policies.
27
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2.
INCOME TAX
a)
Income tax expense
Current income tax
Deferred income tax
Income tax expense
b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Loss before tax from disposal group
Loss before income tax
Tax credit at the Australian tax rate of 27.5% (2016: 28.5%)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable
income:
Non-deductible expenses
Non assessable-non exempt income related expenditure/(income)
Temporary differences
Tax loss not brought to account as a deferred tax asset
R&D Tax Offset
Income tax expense
c) Unrecognised deferred tax assets/(liabilities)
Unrecognised temporary differences
Unrecognised deferred tax asset/(liability) relates to the following:
Interest receivable
Prepayments
Software
Trade and other payables
Employee benefits
Provisions
Business related costs
Foreign exchange
Tax Losses
2017
$
2016
$
-
-
-
-
-
-
(4,839,623)
-
(4,839,623)
(1,330,896)
(6,688,557)
(28,250)
(6,716,807)
(1,914,290)
128,480
411,176
171,723
732,590
(113,073)
1,194,075
(16,451)
233,339
503,327
-
-
-
2017
$
2016
$
(1,584)
(46,907)
57,279
7,425
24,217
67,824
291,543
9,726
2,311,958
-
-
-
275,370
6,926
-
364,426
-
1,475,488
Potential unrecognised deferred tax asset @ 27.5% (2016: 28.5%)
2,721,481
2,122,210
The tax losses do not expire under current legislation. Deferred tax assets have not been recognised in respect of these
items because it is not probable that future taxable profits will be available against which the Company can utilise the
benefits.
3. TRADE AND OTHER RECEIVABLES
Trade and other receivables
Credit risk – trade and other receivables
The Company has no significant credit risk with respect to any single
counterparty. The class of assets described as trade and other receivables is
considered to be the main source of credit risk related to the Company. The
trade and other receivables as at 30 June are considered to be of medium
credit quality.
2017
$
2016
$
871,209
1,058,577
28
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
4. PLANT AND EQUIPMENT
Plant and equipment – at cost
Less: accumulated depreciation
Total plant and equipment
Opening balance -plant and equipment
Additions
Depreciation
Foreign currency translation movement
Closing balance – plant and equipment
5.
INTANGIBLE ASSETS
Development costs – at cost
Less: accumulated amortisation and impairment losses
Net carrying amount
Patents & Trademarks – at cost
Less: accumulated amortisation and impairment losses
Net carrying amount
Total intangible assets
2017
$
1,036,615
(165,370)
871,245
2017
$
160,399
853,434
(142,309)
(279)
871,245
2017
$
2,544,152
(444,354)
2,099,798
96,846
(2,446)
94,400
2,194,198
Development
Costs
$
Patents &
Trademarks
$
Balance as at 1 July 2015
Balance as at 30 June 2016
Additions – internally developed
Amortisation charge
Balance as at 30 June 2017
-
-
2,544,152
(444,354)
2,099,798
6. TRADE AND OTHER PAYABLES - CURRENT
Trade creditors
Unearned Income
Other creditors and accrued expenses
7. PROVISIONS – CURRENT
Employee provisions
Provision for warranty claims
-
-
96,846
(2,446)
94,400
2017
$
1,081,511
-
714,731
1,796,242
139,647
246,634
386,281
2016
$
184,732
(24,333)
160,399
2016
$
-
184,732
(24,333)
-
160,399
2016
$
-
-
-
-
-
-
Total
$
-
-
2,640,998
(446,800)
2,198,198
2016
$
341,734
939,210
229,911
1,510,855
24,302
-
24,302
29
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
8.
ISSUED CAPITAL
Ordinary shares
(i)
Issued and paid up capital
697,489,746 (2016: 553,822,613) Ordinary shares, fully paid
(ii) Movements during the period number of shares
Opening Balance shares
Issue of 100 shares on incorporation 7 May 2015
Issue of 5 shares on 23 November 2015
Shares transferred to Nuheara Limited on acquisition
Opening balance of Nuheara Limited shares
16 October 2015 issue 12,500,000 shares @ $0.008 each to raise
funds for working capital
29 October 2015 issue 9,375,000 shares @ $0.016 each to raise
funds for working capital
9 December 2015 issue 2,500,000 shares to Teck Resources Limited
in consideration for 100% interest in Salvador Project
25 February 2016 issue 140,000,000 shares pursuant to Prospectus @
$0.025 each
25 February 2016 issue 201,250,000 shares issued to Nuheara
shareholders
25 February 2016 issue 24,802,321 shares to facilitator at $0.025
each
Balance shares at 30 June 2016
Opening balance at 1 July 2016
27 October 2016 issue 83,073,383 shares under share placement
at $0.06 each
3 April 2017 issue 36,250,000 shares under share placement at
$0.08 each
4 April 2017 issue 18,750,000 shares under share placement at
$0.08 each
5 May 2017 issue 3,093,750 shares under share purchase plan at
0.08 each
23 June 2017 issue 2,500,000 shares to consultant in consideration
of investor relations and corporate advisory services provided to
the Company
Less: Share issue costs
Balance shares at 30 June 2017
2017
$
17,402,898
Number of
Shares
2016
100
-
5
(105)
163,395,292
12,500,000
9,375,000
2016
$
8,229,327
2016
$
100
11,000
-
-
-
-
-
2,500,000
3,500,000
140,000,000
5,314,315
201,250,000
24,802,321
553,822,613
Number of
Shares
2017
553,822,613
-
(596,088)
8,229,327
2017
$
8,229,327
83,073,383
4,984,403
36,250,000
2,900,000
18,750,000
1,500,000
3,093,750
247,500
2,500,000
-
697,489,746
200,000
(658,332)
17,402,898
(iii) Holders of ordinary shares
Holders of ordinary shares have the right to receive dividends as declared, and in the event of winding up the Company,
to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held and the
amount paid up. At shareholders’ meetings, each ordinary share is entitled to one vote when a poll is called, otherwise
each shareholder has one vote on a show of hands.
30
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
8.
ISSUED CAPITAL (continued)
Unlisted Options
(i)
Issued unlisted options
107,319,445 (2016: 85,469,445) unlisted options
Description
Number
Grant
Date
Unlisted Options
8,319,445
21/11/2014
Unlisted Options
500,000
21/11/2014
Unlisted Options
20,000,000
25/02/2016
Unlisted Options
30,000,000
25/02/2016
Unlisted Options
6,000,000
18/04/2016
Unlisted Options
5,500,000
18/04/2016
Unlisted Options
1,000,000
24/05/2016
Unlisted Options
10,000,000
23/06/2017
Unlisted Options
10,000,000
23/06/2017
Unlisted Options
10,500,000
19/12/2016
Unlisted Options
1,500,000
16/02/2017
Unlisted Options
4,000,000
22/05/2017
Total Unlisted Options
107,319,445
Exercise
Price
$0.10
$0.10
$0.03
$0.05
$0.04
$0.06
$0.09
$0.12
$0.078
$0.09
$0.115
$0.09
2017
$
677,427
2016
$
415,919
Weighted
Average
time until
expiry
2017
3 months
5 months
Expiry
Date
15/09/2017
20/11/2017
23/02/2019
20 months
31/05/2019
23 months
18/04/2019
22 months
18/04/2019
22 months
20/04/2019
22 months
06/06/2019
24 months
02/11/2019
29 months
30/11/2019
29 months
16/02/2020
32 months
22/05/2020
35 months
For information relating to share options issued to KMP and consultants including details of options issued, exercised and
lapsed during the financial year, refer to Note 21 Share Based Payments.
(ii) Movements during the period for number of options
Balance unlisted options at 30 June 2015
Opening balance of Nuheara Ltd unlisted options
Issue of management options in Nuheara acquisition
Issue of underwriter options pursuant to Prospectus dated 25 January 2016
Issue of employee options @ $0.04 each on 18 April 2016
Issue of employee options @ $0.06 each on 18 April 2016
Issue of employee options @ $0.09 each on 18 April 2016
Balance unlisted options at 30 June 2016
Balance unlisted options at 30 June 2016
Issue of employee options @ $0.09 each on 19 December 2016
Issue of employee options @ $0.115 each on 16 February 2017
Issue of employee options @ $0.09 each on 22 May 2017
Issue of options @ $0.078 each on 23 June 2017
Issue of options @ $0.12 each on 23 June 2017
Less: options forfeited
Movement in valuation of options issued in prior reporting periods
Balance unlisted options at 30 June 2017
31
Unlisted Options
2016
No.
Unlisted Options
2016
$
-
20,719,445
20,000,000
30,000,000
6,000,000
5,500,000
3,250,000
85,469,445
2017
No.
85,469,445
11,000,000
1,500,000
4,000,000
10,000,000
10,000,000
(14,650,000)
-
107,319,445
-
-
-
384,000
15,246
12,452
4,221
415,919
2017
$
415,919
79,900
6,059
5,435
4,300
4,120
-
161,694
677,427
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
8.
ISSUED CAPITAL (continued)
(iii) Capital Management
As the Company is a start-up operation in the field of consumer electronics, it is not prudent at this time to expose the
Company to the financial risk of borrowing. The Company is therefore financed 100% by equity at a level to ensure that the
Company can fund its operations and continue as a going concern.
The Company’s capital comprises only of ordinary share capital and options.
There are no externally imposed capital requirements.
Management effectively manages the Company’s capital by assessing the Company’s financial requirements and raising
additional capital as required to fund the Company’s operations.
There have been no changes in the strategy adopted by management to control the capital of the Company since the prior
year.
9. OPERATING SEGEMENTS
Nuheara Limited, Nuheara IP Pty Ltd and Nuheara, Inc are operating within the consumer electronics sector, and have
been aggregated to one reportable segment given the similarity of the products manufactured for sale, method in which
products are delivered, types of customers and regulatory environment.
10. RELATED PARTY DISCLOSURES
Key Management Personnel (KMP)
Any person(s) having authority and responsibility for planning, directing or controlling the activities of the Company, directly
or indirectly (whether executive or otherwise) of that Company, are considered KMP. For details of disclosures relating to
KMP refer to Note 17, Interests of KMP.
Transactions with director related entities
During the year, there were no transactions with director related entities.
11. EVENTS OCCURRING AFTER BALANCE DATE
On 26 July 2017, the Company issued 97,826,082 fully paid ordinary shares at $0.092 per share pursuant to a share placement
announced on 20 July 2017. The share issue will fund the working capital necessary to continue to support the rapid retail
uptake and product development of the current IQbudsTM and further development of the Company’s intellectual property
portfolio.
12. COMMITMENTS FOR EXPENDITURE
These amounts are payable, if required, over various times over the next five years.
Operating Lease Commitment
The Company has entered into a rental agreement commencing 1 April 2016 for a period of 24 months, with an option to
extend for a further term of 24 months from 1 April 2018.
Office Lease
Due within 1 year
Due 1 to 5 years
2017
$
72,633
-
2016
$
95,776
72,633
The Company has entered into fixed term agreements to provide contractors to the Company. The amounts due
under these fixed term contracts are as follows:
Contractors
Due within 1 year
Due 1 to 5 years
Exploration Expenditure Commitments
2017
$
213,551
28,442
2016
$
230,980
-
The Company has minimum statutory commitments as a condition of tenure of certain Peru mining tenements. Whilst these
obligations may vary, a reasonable estimate of the annual minimum commitments is $18,331. The Directors intend to dispose
of these tenements as soon as it is commercially practical to do so.
32
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
13. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
(i)
Estimated impairment of assets
The Company assesses impairment of its assets at the end of each reporting period by evaluating conditions and events specific to
the Company that may be indicative of impairment triggers. Where impairment has been triggered, assets are written down to their
recoverable amounts.
(ii)
Estimated warranty costs
Provision is made in respect of the Group’s best estimate of the liability on all products under warranty at the end of the reporting
period. The provision is measured as the present value of future cash flows estimated to be required to settle the warranty obligation.
The future cash flows have been estimated by reference to an industry average of warranty claims.
(iii) Valuation of options
Share-based payment transaction:
The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model, using the assumptions
detailed in Note 21 (b).
The Company measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes formula,
taking into account the terms and conditions upon which the instruments were granted, as discussed in Note 21 (b).
(iv) Reverse acquisition
For every business combination the Company identifies the acquirer, which is the combining entity that obtains control of the
other combining entities or businesses. Judgement is applied in determining whether control is transferred from one party to
another, in the determination of whether one of those entities was a business, as defined Australian Accounting Standard AASB 3:
Business Combinations, and in assessing the fair values of assets and liabilities acquired and consideration paid (refer note 22).
(v)
Capitalisation of development costs
Under AASB 138: Intangible Assets, an entity is required to recognise an intangible asset if, and only if, certain criteria are met.
Judgement has been made in the determination that research and development expenditure incurred during the year did not meet
the definition of an intangible asset.
(vi) Government grants
Under AASB 120: Accounting for Government Grants and Disclosure of Government Assistance, an entity shall not recognise a
government grant until there is reasonable assurance that the entity will comply with the conditions attaching to them and the grants
will be received. Management has assessed that no reasonable assurance exists to require recognition of the 2017 Research and
Development tax incentive as at 30 June 2017 under the Standard.
(vii) Assets held for sale
Judgement was used in the determination that mining interests in Australia and Peru met the requirements for classification as
disposal groups under AASB 5: Non-Current Assets held for Sale and Discontinued Operations.
(viii) Contingent Purchase Consideration
On 10 December 2015 Nuheara Limited (formerly Wild Acre Metals Limited) announced that its controlled entity, Wild Acre Metals
(Peru) SAC, had entered into an acquisition agreement to acquire the Salvador exploration project from Teck Peru S.A., a subsidiary
of Teck Resources Limited (Teck Agreement). Under the Teck Agreement, contingent purchase consideration of USD$2m (production
bonus) is payable to Teck Peru S.A. upon making a production decision. The production bonus is jointly and severally payable by the
Company in the event of a disposal of the tenements to a third party. As the Company intends to dispose of its Peruvian subsidiary,
including the mining tenements and liability for the production bonus, management has ascertained the probability of a production
bonus being payable as being assessed at nil at balance date.
33
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
13. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
(viii) Contingent Purchase Consideration (continued)
Additionally, if there is a sale of the Salvador interests by the Company within 36 months of the date of execution of the Teck
Agreement, an additional 20% of the purchase price is payable to Teck Peru S.A. The additional contingent purchase consideration is
assessed at nil at balance date.
(ix) Net Smelter Royalties
The Company holds an 80% interest in Terrace Gold Pty Ltd (“Terrace”). Terrace holds a 0.5% Net Smelter Royalty over the El
Molino Gold Project and part of the El Galeno Copper Project located in Northern Peru, currently owned under joint venture by
China Minmetals and Jiangxi Copper, and a 1.5% Net Smelter Royalty over the Mt Ida gold project located in Western Australia.
Management has ascertained that the probability of Net Smelter Royalty revenue was nil at balance date.
14. FINANCIAL INSTRUMENTS
Overview
The Company has exposure to the following risks from their use of financial instruments:
▪
▪
▪
▪
interest rate risk
credit risk
liquidity risk
foreign exchange risk
This note presents information about the Company’s exposure to each of the above risks.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.
Risk management policies are established by the Board of Directors to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
The Company’s principal financial instruments are cash, short-term deposits, receivables and payables.
(a)
Interest Rate Risk
The Company’s exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rates on those financial assets and financial
liabilities, is as follows:
30 June 2017
Financial Assets
Cash at bank
Trade and other receivables
Financial Liabilities
Trade and other payables
30 June 2016
Financial Assets
Cash at bank
Trade and other receivables
Financial Liabilities
Trade and other payables
Weighted Average
Effective Interest
Rate
%
1.54
-
-
Interest
Bearing
$
2,799,525
-
2,799,925
Non-Interest
Bearing
$
605,027
871,208
1,476,235
Total
$
3,404,552
871,208
4,275,760
-
-
1,796,242
1,796,242
Weighted Average
Effective Interest
Rate
%
1.03
-
-
Interest
Bearing
$
1,982,569
-
1,982,569
Non-Interest
Bearing
$
11,559
1,058,576
1,070,135
Total
$
1,994,128
1,058,576
3,052,704
-
-
571,645
571,645
It is the Company’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on
overdue balances.
34
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
14. FINANCIAL INSTRUMENTS (continued)
(a)
Interest Rate Risk (continued)
Sensitivity analysis
If interest rates on cash balances had weakened/strengthened by 1% at 30 June, there would be no material impact on the
statement of profit or loss and other comprehensive income. There would be no material effect on the equity reserves,
other than those directly related to the statement of profit or loss and other comprehensive income movements.
(b)
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet
its contractual obligations.
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets is the carrying amount, net of any allowances for doubtful debts, as disclosed in the statement of financial
position and notes to the financial statements.
(c)
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Company’s reputation.
The following are the contractual maturities of financial liabilities:
2017
Carrying Amount
Under 6 Months
2016
Carrying Amount Under 6 Months
Non-derivative financial liabilities:
Trade and other payables
1,796,242
1,796,242
571,645
571,645
Net Fair Values
The net fair value of cash and non-interest bearing monetary assets and financial liabilities of the Company approximates
their carrying amount.
(d)
Foreign exchange risk
Exposure to foreign exchange 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 Company holds financial instruments, which are other
than the AUD functional currency of the Company.
With instruments being held by overseas operations, fluctuations in the US dollar and Peruvian Soles may impact on the
Company’s financial results unless those exposures are appropriately hedged.
It is the Company’s policy that hedging is not necessary, as the Company does not hold funds of any significance in any
other denomination than Australian dollars.
The foreign currency risk on net financial assets / (liabilities) in the books of the Company at balance date in 2017 is not
material (2016: not material).
15. EARNINGS PER SHARE
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Basic loss per share
The earnings and weighted average number of ordinary shares used in the
calculation of basic loss per share are as follows:
Loss
Weighted average number of ordinary shares – basic loss per share
Weighted average number of ordinary shares – diluted loss per share
35
2017
Cents
(0.78)
(0.69)
2016
Cents
(2.22)
(2.09)
2017
$
(4,839,623)
2017
No.
622,333,724
701,003,854
2016
$
(6,716,807)
2016
No.
301,952,369
321,842,095
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
16. AUDITOR’S REMUNERATON
Amounts received, or due and receivable by the current auditors for audit or
review of the financial report
Amounts received, or due and receivable by the Peruvian auditors for audit or
review of the financial report
2017
$
38,575
7,753
46,328
2016
$
32,000
9,137
41,137
17. INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each
member of the Company’s KMP.
The totals of remuneration paid to KMP of the Company during the year are as follows:
Short term benefits
Post-employment benefits
Share based payments - shares
Share based payments - options
2017
$
633,420
36,945
-
142,258
812,623
2016
$
413,913
10,843
-
-
424,756
The remuneration disclosed for the Company differs from the Remuneration Report in the Directors’ Report which discloses
remuneration paid by the legal acquirer, Nuheara Limited, for KMP.
18. CONTINGENT LIABILITIES
There are no known contingent liabilities.
19. COMPANY DETAILS
Registered Office
The registered office is at Suite 5, 28 John Street, Northbridge, Western Australia 6003.
Principal Place of Business
The principal place of business in Australian is at Suite 5, 28 John Street, Northbridge, Western Australia 6003.
The principal place of business in Peru is Berlin 748, Of. 202, Miraflores, Lima, Peru.
36
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
20.
INFORMATION ABOUT CONTROLLED ENTITIES
The controlled entities listed below have share capital consisting solely of ordinary shares which are held directly by the
Company. The proportion of ownership interests held equals the voting rights held by the Company. Each controlled
entity’s principal place of business is also its country of incorporation.
Name of
Controlled
Entity
Principal
Place of
Business
Nuheara IP Pty Ltd
Perth, Australia
Wild Acre Metals (Peru) SAC
Lima, Peru
Nuheara, Inc
San Francisco, USA
Terrace Gold Pty Ltd
Perth, Australia
Ownership interest
held by
the Company
Proportion of
non-controlling
interest
2017
100%
100%
100%
80%
2016
100%
100%
100%
80%
2017
0%
0%
0%
20%
2016
0%
0%
0%
20%
The Company holds an 80% interest in Terrace Gold Pty Ltd (“Terrace”). Terrace holds a 0.5% Net Smelter Royalty over the
El Molino Gold Project and part of the El Galeno Copper Project located in Northern Peru, currently owned under joint
venture by China Minmetals and Jiangxi Copper, and a 1.5% Net Smelter Royalty over the Mt Ida gold project located in
Western Australia.
21. SHARE BASED PAYMENTS
The following share-based payment arrangement existed:
(a) Shares and options granted to KMP are as follows:
Grant
Date
No. of
Options
30 November 2016
4,500,000(i)
No. of
Shares
-
(i) 4,500,000 Management options were issued to Mrs Jean-Marie Rudd pursuant to the Company’s Incentive Option Plan.
The Company’s shareholders approved an Incentive Option Plan on 28 November 2016, with the main objective to attract,
motivate and retain key employees and provide selected employees with the opportunity to participate in the future
growth of the Company.
Employees are granted options which vest over three years from commencement with the Company, subject to meeting
specified performance criteria. The options are issued for no consideration and carry no entitlements to voting rights or
dividends of the Company. The number available to be granted is determined by the Board and is based on performance
measures including growth in shareholder return, return on equity, cash earnings and group EPS growth.
During the financial year 7,791,668 options vested with KMP (2016: 13,333,332).
37
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
21. SHARE BASED PAYMENTS (continued)
(b) Shares and options issued to non-KMP are as follows:
Grant
Date
No. of
Options
20 June 2017
10,000,000
20 June 2017
10,000,000
23 June 2017
No. of
Shares
-
-
2,500,000
Name
Foster Stockbroking
Hunter Capital
Intuitive Pty Ltd
A summary of the movements of all Company options issued is as follows:
Options outstanding and exercisable as at 30 June 2015
Transferred in
Granted
Forfeited
Exercised
Options outstanding and exercisable as at 30 June 2016
Transferred in
Granted
Forfeited
Exercised
Options outstanding and exercisable as at 30 June 2017
Weighted
Average
Exercise Price
-
$0.13
$0.05
-
-
$0.07
-
$0.03
-
-
$0.07
No.
-
20,719,445
65,750,000
-
-
85,469,445
-
36,500,000
(14,650,000)
-
107,319,445
The weighted average remaining contractual life of options outstanding at year end was 1.85 years (2016: 2.34). The
weighted average exercise price of outstanding options at the end of the reporting period was $0.07 (2016: $0.07).
The fair value of options granted during the year was $88,130 (2016: $31,919). These values were calculated using the
Black-Scholes option pricing model, applying the following inputs:
Grant Date
Share price on
issue date
Expected
volatility
Exercise price
Expiry date
Risk free
interest rate
Number
issued
Value per
option
Total
Employees
30/11/2016
Employees
21/02/2017
Employees
22/05/2017
Corp. Advisor
20/06/2017
Corp. Advisor
20/06/2017
$0.064
$0.110
$0.081
$0.077
$0.077
100%
$0.090
100%
$0.115
100%
$0.090
100%
$0.078
100%
$0.12
30/11/2019
16/02/2020
22/05/2020
02/11/2019
06/06/2019
1.50%
1.50%
1.50%
1.50%
1.50%
11,000,000
1,500,000
4,000,000
10,000,000
10,000,000
$0.0562
$413,070
$0.0488
$51,240
$0.0546
$152,880
$0.0532
$372,400
$0.0422
$295,400
Historical share price volatility has been the basis for determining expected share price volatility as it assumed that this is
indicative of future volatility.
Included in the statement of profit or loss is $200,000, which relates to equity-settled share-based payment transactions
(2016: $31,919).
38
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
22. NUHEARA LIMITED ACQUISITION OF NUHEARA IP PTY LTD
On 25 February 2016, Nuheara Limited (formerly Wild Acre Metals Limited) acquired Nuheara IP Pty Ltd. As required by
Australian Accounting Standard AASB3: Business Combinations, Nuheara Limited is deemed to have been acquired by
Nuheara IP Pty Ltd at that date, under the reverse acquisition rules. However, the acquisition was not treated as a Business
Combination as Wild Acre Metals Limited was not a business as defined in that Standard.
The details of the acquisition were as follows:
Consideration Paid
Assets and liabilities acquired at fair value:
Cash and cash equivalents
Trade and other receivables
Mineral tenements held for sale
Other current assets
Property, plant and equipment
Trade and other payables
Adjustment for subsequent settlement of inter entity loan and Australian
tenement sale
Listing costs
23. NOTES TO THE STATEMENT OF CASHFLOWS
Reconciliation of net loss to net cash flows used in operating activities
Loss from ordinary activities after income tax
Add back non-cash items:
Profit on sale of mining interests
Change in carrying value of disposal group
(Profit)/loss on disposal group
(Profit)/loss on property plant & equipment
Depreciation and amortisation expenses
Listing fees
Share based payments expense
Changes in assets and liabilities
Increase in trade debtors
Increase/(decrease) in other receivables
Increase in inventories
Increase/(decrease) in non-current assets
Increase in trade creditors
Increase in other payables
Increase in provision for employee entitlements
Increase in provision for warranty claims
Increase/(decrease) in unearned income
Net cash used in operating activities
2017
$
-
-
-
-
-
-
-
-
-
-
-
2016
$
5,314,315
37,476
10,150
345,040
8,327
9,433
(66,044)
344,382
4,969,933
(459,967)
4,509,966
2017
$
2016
$
(4,839,623)
(6,716,807)
-
-
-
-
587,837
-
461,508
(562,834)
750,201
(1,109,997)
126
734,921
484,825
115,345
246,634
(939,210)
(4,070,267)
(454)
2,443
(120,067)
3,558
5,077
4,969,933
31,919
(5,157)
(1,053,418)
(15,147)
(27,707)
446,464
228,504
24,302
-
939,210
(1,287,347)
39
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
24. PARENT ENTITY FINANCIAL INFORMATION
Nuheara IP Pty Ltd was acquired by Nuheara Limited (previously Wild Acre Metals Limited) on 25 February 2016. As
required by Australian Accounting Standard AASB3: Business Combinations, Nuheara Limited is deemed to have been
acquired by Nuheara IP Pty Ltd as at 25 February 2016 under the reverse acquisition rules. Accordingly, Nuheara IP Pty Ltd
is the Parent Entity for accounting purposes.
The following information has been extracted from the books and records of the legal parent, Nuheara Limited, and has
been prepared in accordance with Australian Accounting Standards.
Results for the parent entity:
Net profit/(loss)
Other comprehensive income
Total comprehensive loss for the year
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity
Contributed equity
Reserves
Accumulated losses
Total Equity
2017
$
2016
$
(3,496,050)
-
(3,496,050)
5,031,778
10,041,803
15,073,681
2,027,267
2,027,267
13,046,314
24,177,261
1,004,771
(12,135,718)
13,046,314
(2,020,949)
-
(2,202,949)
3,055,128
5,510,792
8,565,920
1,556,635
1,556,635
7,009,285
15,045,690
603,263
(8,639,668)
7,009,285
40
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTORS' DECLARATION
The Directors of Nuheara Limited declare that:
1.
the financial statements and notes, as set out on pages 15 to 40, are in accordance with the Corporations Act 2001 and:
a.
b.
2.
3.
comply with Australian Accounting Standards which, as stated in the accounting policy Note 1 to the financial statements,
constitutes compliance with International Accounting Reporting Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended on that
date of the Company;
the Directors have given the declarations required by S295A of the Corporations Act 2001 from the Chief Executive Officer
and Chief Financial Officer;
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
On behalf of the Board of Directors:
Justin Miller
Managing Director/Chief Executive Officer
Perth, 22 September 2017
41
NUHEARA LIMITED
ABN 29 125 167 133
ADDITIONAL ASX INFORMATION
The following additional information is required by the Australian Securities Exchange. The information is current as at 4 September
2017.
(a) Distribution schedule and number of holders of equity securities as at 4 September 2017
Fully Paid Ordinary Shares
Unlisted Options:
10 cents, exp 15/9/2017
Unlisted Options:
10 cents, exp 20/11/2017
Unlisted Options:
3 cents, exp24/2/2019
Unlisted Options:
5 cents, exp 31/5/2019
Unlisted Options:
4 cents, exp 18/4/2019
Unlisted Options:
6 cents, exp 18/4/2019
Unlisted Options:
9 cents, exp 20/4/2019
Unlisted Options:
9 cents, exp 30/11/2019
Unlisted Options:
11/5 cents, exp 16/2/2020
Unlisted Options:
9 cents, exp 22/5/2020
Unlisted Options:
7.8 cents, exp 2/11/2019
Unlisted Options:
12 cents, exp 6/6/2019
Unlisted Options:
9 cents, exp 14/7/2020
Unlisted Options:
11.5 cents, exp 24/7/2020
1 – 1,000
91
1,001 –
5,000
113
5,001 –
10,000
469
10,001 –
100,000
1,671
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,001 –
and over
911
10
Total
3,255
10
1
2
5
2
5
1
6
2
6
1
3
2
2
1
2
5
2
5
1
6
2
6
1
3
2
2
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 4 September 2017 is 335.
48
NUHEARA LIMITED
ABN 29 125 167 133
ADDITIONAL ASX INFORMATION
(b) 20 Largest holders of quoted equity securities
The names of the twenty largest holders of fully paid ordinary shares (ASX code: NUH) as at 4 September 2017 are:
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
David Cannington
Wasagi Corporation Pty Ltd
Inkling Capital Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
S A Coupe Pty Limited
Pershing Australia Nominees Pty Ltd
Mr Xuan Khoa Pham
Mr Alan Davis
Ms Kellie Anne Davis
Mr Kevin Fynn
Mr Sven Nordholm
Power Edge Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 2
1215 Capital Pty Ltd
Ms Carol Anne Austin
Ck Corporate Pty Ltd
Daem Nominees Pty Ltd
Mr Peter Alfred Ternes
TOTAL
Shares
63,142,857
63,142,857
24,802,321
22,984,406
18,881,669
17,282,661
17,000,000
12,858,695
8,250,000
8,095,238
8,095,238
8,095,238
8,095,238
8,095,238
6,730,714
4,348,975
4,328,720
4,250,000
4,000,000
4,000,000
316,480,065
% of Total
Shares
7.91%
7.91%
3.11%
2.88%
2.37%
2.16%
2.13%
1.61%
1.03%
1.01%
1.01%
1.01%
1.01%
1.01%
0.84%
0.54%
0.54%
0.53%
0.50%
0.50%
39.61%
Stock Exchange Listing – Listing has been granted for 647,227,793 ordinary fully paid shares of the Company on issue on the Australian
Securities Exchange.
The unquoted securities on issue as at 4 September 2017 are detailed below in part (d).
(c)
Substantial shareholders
Substantial shareholders in Nuheara Limited and the number of equity securities over which the substantial shareholder has a
relevant interest as disclosed in substantial holding notices provided to the Company are listed below:
Name
Wasagi Corporation Pty Ltd
David Cannington
Shares
63,142,857
63,142,857
% of Total
Shares
7.91%
7.91%
49
NUHEARA LIMITED
ABN 29 125 167 133
ADDITIONAL ASX INFORMATION
(d) Unquoted Securities
The number of unquoted securities on issue as at 4 September 2017:
Security
Fully Paid Ordinary Shares
Unlisted Options – exercisable at 10 cents on or before 15/9/2017
Unlisted Options – exercisable at 10 cents on or before 20/11/2017
Unlisted Options – exercisable at 3 cents on or before 24/2/2019
Unlisted Options – exercisable at 5 cents on or before 31/5/2019
Unlisted Options – exercisable at 4 cents on or before 18/4/2019
Unlisted Options – exercisable at 6 cents on or before 18/4/2019
Unlisted Options – exercisable at 9 cents on or before 20/4/2019
Unlisted Options – exercisable at 9 cents on or before 30/11/2019
Unlisted Options – exercisable at 11.5 cents on or before 16/2/2020
Unlisted Options – exercisable at 9 cents on or before 22/5/2020
Unlisted Options – exercisable at 7.8 cents on or before 2/11/2019
Unlisted Options – exercisable at 12 cents on or before 6/6/2019
Unlisted Options – exercisable at 9 cents on or before 14/7/2020
Unlisted Options – exercisable at 11.5 cents on or before 24/7/2020
(e) Holder Details of Unquoted Securities
Number on issue
151,088,035
8,319,445
500,000
20,000,000
30,000,000
3,000,000
5,500,000
1,000,000
10,500,000
1,500,000
4,000,000
10,000,000
10,000,000
1,000,000
3,000,000
The holders that hold more than 20% of a given class of unquoted securities that were not issued under an employee incentive
scheme as at 4 September 2017 are detailed below:
Security
Name
Unlisted Options – exercisable at 3
cents on or before 24/2/2019
Unlisted Options – exercisable at 3
cents on or before 24/2/2019
David Cannington
Wasagi Corporation Pty Ltd
Unlisted Options – exercisable at 7.8
cents on or before 2/11/2019
Foster Stockbroking Pty Ltd
Unlisted Options – exercisable at 12
cents on or before 6/6/2019
LTL Capital Pty Ltd
Number of
Securities
10,000,000
10,000,000
10,000,000
5,000,000
Unlisted Options – exercisable at 12
cents on or before 6/6/2019
Unlisted Options – exercisable at 5
cents on or before 31/5/2019
Unlisted Options – exercisable at 5
cents on or before 31/5/2019
(f) Restricted Securities
HSBC Custody Nominees (Australia) Limited
3,000,000
Meriwa Street Pty Ltd
8,014,285
Prosperion Wealth Management Pty Ltd
10,000,000
The Company had the following restricted securities as at 4 September 2017:
Security
20,000,000 Unlisted Options – exercisable at 3 cents on or before 24/2/2019
Escrow Period
Under escrow until 2 March 2018
30,000,000 Unlisted Options – exercisable at 5 cents on or before 31/5/2019
Under escrow until 2 March 2018
194,802,321 Fully Paid Ordinary Shares
Under escrow until 2 March 2018
50
NUHEARA LIMITED
ABN 29 125 167 133
ADDITIONAL ASX INFORMATION
(g) Voting Rights
All fully paid ordinary shares carry one vote per ordinary share without restriction.
Unquoted options have no voting rights.
(h) Company Secretary
The Company Secretaries are Ms Susan Hunter and Mrs Jean-Marie Rudd.
(i) Registered Office
The Company’s Registered Office is Unit 5, 28 John Street, Northbridge, WA 6003, Australia.
Telephone: +61 8 6555 9999
(j) Share Registry
The Company’s Share Registry is as follows:
Computershare Investor Services Pty Limited
11/172 St Georges Terrace, Perth WA 6000
Telephone: +61 (0)3 9415 4000 or 1300 850 505 (within Australia)
(k) On-Market Buy-back
The Company is not currently performing an on-market buy-back.
(l) Corporate Governance
The Board of Nuheara Limited is committed to achieving and demonstrating the highest standards of Corporate Governance. The
Board is responsible to its Shareholders for the performance of the Company and seeks to communicate extensively with
Shareholders. The Board believes that sound Corporate Governance practices will assist in the creation of Shareholder wealth and
provide accountability. In accordance with ASX Listing Rule 4.10.3, the Company has elected to disclose its Corporate Governance
policies and its compliance with them on its website, rather than in the Annual Report. Accordingly, information about the Company's
Corporate Governance practices is set out on the Company's website at http://www.nuheara.com/corporate-governance/.
(m) Application of Funds
During the financial year, Nuheara Limited confirms that it has used its cash and assets (in a form readily convertible to cash) in a
manner which is consistent with the Company’s business objectives.
(n) Schedule of Interests in Mining Tenements
The schedule of interests in mining tenements both as at 30 June 2017 and as at 4 September 2017 is as follows:
PERU:
Sambalay 1
Sambalay 2
Sambalay 3
Salvador
Salvador
MINING TENEMENT REGISTER
Tenement
Interest %
010180210
010180310
010185310
010227410
010328310
100%
100%
100%
100%
100%
51