NUHEARA LIMITED
ABN 29 125 167 133
ANNUAL REPORT
FOR THE YEAR ENDED 30 JUNE 2019
NUHEARA LIMITED
ABN 29 125 167 133
CORPORATE DIRECTORY
Directors
Justin Miller
Executive Chairman
Managing Director/Chief Executive Officer
David Cannington
Executive Director/Chief Marketing Officer
Kathryn Foster
Independent Non-Executive Director
Company Secretaries
Principal Place of Business
190 Aberdeen Street
Northbridge WA 6003
Phone: +61 (8) 6555 9999
+61 (8) 6555 9998
Fax:
Share Registry
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
Perth WA 6000
Phone: 1300 850 505 (within Australia)
+61 3 9415 4000 (outside Australia)
Susan Hunter – Company Secretary
Jean-Marie Rudd – Joint Company Secretary
Auditors
Walker Wayland WA Audit Pty Ltd
Level 3, 1 Preston Street
Como WA 6152
Phone: +61 (8) 9364 9988
+61 (8) 9367 3444
Fax:
ASX Code
NUH
Website and Email
Website: www.nuheara.com
Email: administration@nuheara.com
Registered Office
190 Aberdeen Street
Northbridge WA 6003
Phone: +61 (8) 6555 9999
+61 (8) 6555 9998
Fax:
NUHEARA LIMITED
ABN 29 125 167 133
TABLE OF CONTENTS
Director’s Report ..................................................................................................................................................................................... 1
Remuneration Report .............................................................................................................................................................................. 6
Auditor’s Independence Declaration ..................................................................................................................................................... 13
Consolidated Statement of Profit or Loss and Other Comprehensive Income ...................................................................................... 14
Consolidated Statement of Financial Position ....................................................................................................................................... 15
Consolidated Statement of Changes in Equity ...................................................................................................................................... 16
Consolidated Statement of Cashflows ................................................................................................................................................... 17
Notes to the Financial Statements ........................................................................................................................................................ 18
Director’s Declaration ............................................................................................................................................................................ 45
Independent Audit Report ..................................................................................................................................................................... 46
ASX Additional Information ................................................................................................................................................................... 50
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
The Directors have the pleasure in presenting their report, together with the financial statements of the Group, being the
Company and its controlled entities, for the year ended 30 June 2019.
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 B. Bus (Marketing) (Executive Director and Chief Marketing Officer)
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.
Kathryn Foster BSc, ASc, MAICD (Independent Non-Executive Director)
Appointed: 12 February 2018
Ms. Foster has a strong background in technology, sales and early stage start-up companies. Ms. Foster has more than two
decades of experience designing, building and running large internet-based businesses. Prior to becoming a professional non-
exec director, Ms. Foster was executive Senior Director of Xbox Games Marketplace as well as Microsoft Store online where
she managed the profit and loss and global expansion in over 200 geographies with annual revenue budgets in the low billions
of dollars. She has extensive technical and commercial experience in software and hardware solutions and advises companies
on strategy and technology.
Ms. Foster is a non-executive director for Class Ltd and for other non-listed companies in Australia.
Ms. Foster holds a Bachelor of Science (BSc) in International Marketing from Oregon State University and Associate of Science
(ASc) - Computer Science and Information Systems from SCC Seattle, USA.
During the past three years, Ms Foster served as a director of the following listed Company:
Class Limited – appointed 1 July 2015*
* Denotes current directorship
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
2.
COMPANY SECRETARIES
Susan Hunter B. Com, 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 Chartered Accountants Australia and New Zealand, 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/Joint Company Secretary
Appointed: 30 November 2016
Mrs Rudd has over 25 years' experience in the corporate sector and professional services, including over 10 years as 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 Chartered Accountants Australia and New Zealand and a Member of the
Australian Institute of Company Directors.
3.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the development and commercialisation of its proprietary hearing and wearables
technology platform.
4.
DIVIDENDS
No dividend has been declared or paid by the Group since the start of the financial year and the Directors do not recommend
a dividend in relation to the financial year ended 30 June 2019.
5.
OPERATING AND FINANCIAL REVIEW
Our business model and objectives
Nuheara is transforming the way people hear by developing personalised hearing device solutions that are multifunctional,
accessible and affordable. The company is selling globally, via traditional retail and Direct-To-Consumer, to an underserviced
segment of the hearing market that fits between traditional headphones and hearing aids. Nuheara's advanced market
offering also includes government supply contracts, for fully subsidised products, to support mainstream mild-to-moderate
hearing challenges through to more complex hearing sensitivity disorders including Autism/APD.
Nuheara is headquartered in Perth, Australia with sales offices in the UK, USA and Singapore.
Operating results
The Group achieved a net loss after tax of $10,027,238. This compared with a net loss after tax of $7,416,412 for the year
ended 30 June 2018, a decline of 35%. The net loss after tax result represented a loss of 1.09 cents per share, compared to a
loss of 0.92 cents per share last year.
Net cash outflows of $5,125,619 were attributable to $5,258,854 received through capital raisings, offset by $6,504,146 in
net operating outflows, and $3,907,327 for the purchase of plant and equipment and intangible assets (capitalised
development costs and trademarks).
Further discussion on the Group’s operations is provided below.
Mining tenements
Whilst the Company recognises the value in its mineral assets, the directors are also cognisant that these mining interests lie
outside the company’s core business activities. The directors have determined that these assets will be divested and,
accordingly, they have been treated as a disposal group as at balance date. After year end, the mining assets held in southern
Peru were sold. Refer Note 8 Significant Events After Balance Date.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
5.
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Review of Operations
In May 2019, the Group released IQstreamTV™, designed for use with IQbuds BOOST™, that provides the user with the ability
to balance the volume of TV sound (independently from anyone else watching the TV) with ambient sounds and
conversations. IQstreamTV™ together with Nuheara’s existing product range including IQbuds™ and IQbuds BOOST™, are
being sold directly to the consumer and via major global retailer partners.
Revenue from ordinary activities for the year was $2,218,714. This compared with revenue of $3,962,565 for the year ended
30 June 2018, a decline of 44%.
The Group successfully completed a capital raising in December 2018, raising $5 million. Funds raised were used to assist
Nuheara in achieving its planned objectives of increasing sales and marketing activities of IQbuds™ and IQbuds BOOST™,
increasing inventory levels of IQbuds BOOST™, and the manufacture and development of IQstreamTV™ and IQbuds MAX™.
At year-end, the Group held $3,220,079 million in cash reserves.
Performance indicators
Management and the Board monitor the Group’s overall performance, from the execution of its strategic plan through to the
performance of the Group 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 Group’s performance.
Shareholder returns
The Group’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
2019
(1.09)
(1.02)
2018
(0.92)
(0.83)
The Statement of Cash Flows illustrates that cash used in operating activities amounted to $6,504,142 (2018: outflow of
$6,529,057). Net outflows of $3,907,327 used in investing activities comprised: $3,806,417 in development costs that were
capitalised as intangible assets, $102,299 as payment for plant and equipment and $1,389 as proceeds from the disposal of
plant and equipment. The net cash outflows from operating and investing activities was funded by $5,285,854 cash received
from the raising of funds from the issues of shares, net of share raising costs.
The net tangible asset backing of the Group was 0.01 cents per share (2018: 0.01 per share).
Asset and Capital Structure
Debts:
Trade and other payables
Less: Cash and cash equivalents
Net cash
Total equity
Total capital employed
2019
$
2018
$
1,237,885
(3,220,079)
(1,982,194)
10,697,884
8,715,690
1,583,180
(8,345,698)
(6,762,518)
15,018,701
8,256,183
The level of gearing in the Group is within acceptable limits set by the Directors.
3
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
5.
OPERATING AND FINANCIAL REVIEW (CONTINUED)
Asset and capital structure (continued)
Share issues during the year
The Group issued 90,736,569 shares during the year:
• 10 December 2018 issued 2,250,000 shares on exercise of options @ $0.04 each
• 10 December 2018 issued 66,936,667 shares under share placement @ $0.075 each
• 25 February 2019 issued 5,000,000 shares on exercise of options @ $0.05 each
• 25 February 2019 issued 5,000,000 shares on exercise of options @ $0.05 each
• 25 February 2019 issued 10,000,000 shares on exercise of options @ $0.05 each
• 17 April 2019 issued 322,718 shares on exercise of options @ $0.04 each
• 17 April 2019 issued 145,437 shares on exercise of options @ $0.06 each
• 17 April 2019 issued 572,718 shares on exercise of options @ $0.06 each
• 17 April 2019 issued 218,155 shares on exercise of options @ $0.06 each
• 17 April 2019 issued 145,437 shares on exercise of options @ $0.06 each
• 17 April 2019 issued 145,437 shares on exercise of options @ $0.06 each
Risk Management
The Group takes a proactive approach to risk management. The Board is responsible for ensuring that risks, and opportunities,
are identified on a timely basis and that the Group’s objectives and activities are aligned with the risks and opportunities
identified by the Board. The Group believes that it is crucial for all Board members to be part of this process, and as such the
Board has not established a separate risk management committee. 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 several 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.
6.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Significant changes in the state of affairs during the year ended 30 June 2019 are as follows:
The Group maintains its vision of building an ecosystem of affordable and accessible software and hardware products for a
hearing market that is currently underserviced. To that end the Group launched its new IQstream™ accessory product in May,
ahead of its scheduled shipping date, and continues the development of IQbuds MAX™, scheduled for mass production in the
second half of the 2019 calendar year.
The decision to pivot to this strategy and move beyond any association with the crowded market of Bluetooth wireless
earbuds, will allow the Group to build a first mover global retail offering, positioned with unique products to significantly
grow unit sales and revenue.
With the move to concentrate on high-end high value hearing products and related retail channels, a strategic decision was
made to discontinue LiveIQ™ as a product under development for any channel, with the technology developments
transferred to IQbuds MAX™.
The ongoing advances in R&D, design, and manufacture of forward-thinking new products consolidates Nuheara’s global
leadership position of smart hearing solutions. The Group’s investment in R&D has been supported by the receipt of a R&D
Tax Incentive cash rebate from the Australian Taxation Office of $2,157,358. The Group also received $105,333 in Export
Market Development Grants, which is an Australian government financial assistance program supporting export marketing
activities.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
6.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS (CONTINUED)
The Group also continued to work on the repositioning of its sales strategy towards driving a consultative sales process. This
has seen the ongoing development of new retail approaches across various territories with IQConnect™, a Point of Sale
hearing screening kiosk with a comprehensive Customer Relationship Management (CRM) platform. The Group also launched
a Direct to Consumer (DTC) website initiative, that transforms the customer journey by providing a choice of world-leading
online hearing assessments that categorise the customer’s level of hearing, allowing them to determine what level of self-
care they would benefit from.
7.
LIKELY DEVELOPMENTS
Consistent with the Group’s business plan, Nuheara will continue to work towards the productisation and commercialisation
of its smart hearing products, including current offerings, IQbuds™, IQbuds BOOST™, and IQstream TV™, plus the
development of new product, IQbuds MAX™.
8.
SIGNIFICANT EVENTS AFTER BALANCE DATE
The Group successfully completed a capital raising after balance date, raising $4 million in July 2019, with funds raised being
used to assist Nuheara in achieving its planned objectives of increasing sales and marketing activities of IQbuds™ and IQbuds
BOOST™, increasing inventory levels of IQbuds BOOST™, the launch of IQstreamTV™, and the manufacture and development
of new products, including IQbuds MAX™.
The Group also entered into a Mining Concessions Transfer Agreement (the “Transfer Agreement”), in August 2019, for the
sale of its mining assets in Southern Peru. Under the Transfer Agreement entered into with Corisur Peru SAC (“Corisur”), a
subsidiary of Auryn Resources Inc. (TSX:ARG), Corisur will pay US$250,000 for the transfer of the concessions upon recording
of the Transfer Agreement with the Peruvian Public Registry.
The Group’s remaining portfolio of mining assets consists of Net Smelter Royalties (“NSR”) located in Northern Peru and
Western Australia. These interests are actively being marketed for sale and the Group intends to dispose of these interests
as soon as it is commercially practical to do so.
9.
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any significant environmental, Commonwealth or State, regulations or laws.
5
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
10.
SHARE OPTIONS
As at the date of this report, the Group has 56,000,000 options over ordinary shares. These options have been issued on the
following terms.
Number of Unlisted Options
10,500,000
1,500,000
3,000,000
10,000,000
500,000
3,000,000
500,000
1,000,000
7,500,000
9,000,000
1,000,000
6,000,000
2,500,000
TOTAL
56,000,000
Exercise Price
$0.09 each
$0.115 each
$0.09 each
$0.078 each
$0.09 each
$0.115 each
$0.09 each
$0.09 each
$0.09 each
$0.09 each
$0.09 each
$0.09 each
$0.09 each
Expiry Date
30 November 2019
16 February 2020
22 May 2020
2 November 2019
14 July 2020
24 July 2020
10 November 2020
12 January 2020
1 March 2021
17 September 2021
10 December 2021
18 March 2022
17 April 2022
Option holders do not have any rights to participate in any issues of shares or other interests in the Group or any other entity.
11. REMUNERATION REPORT (AUDITED)
This report, which forms part of the Directors’ Report, details the amount and nature of remuneration of each Key
Management Personnel (KMP) of the Group. The following people were identified KMP during the year:
i) Directors
Justin Miller
David Cannington
Kathryn Foster
ii) Executives
Jean-Marie Rudd
Executive Chairman and Managing Director / Chief Executive Officer
Executive Director / Chief Marketing Officer
Non-Executive Director (appointed 12 February 2018)
Chief Financial Officer/Joint 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 Group 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
Group and the activities which it undertakes and is appropriate in aligning executives’ objectives with shareholder and
business objectives.
The remuneration policy, in regard 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.
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NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
11. REMUNERATION REPORT (AUDITED) (CONTINUED)
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 Group 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 Group.
There are no service or performance criteria on the options granted to Directors as, given the speculative nature of the
Group’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 Group 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 Group increases
sufficiently to warrant exercising the options granted. Given the stage of development of the Group and the high-risk nature
of its activities, the Board considers that the prospects of the Group 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.
All remuneration paid to KMP is valued at the cost to the Group 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 Group’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 everyone 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 Group 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 Board considering the desired and
actual outcomes, and their efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the KPI’s are
set for the following year.
Relationship between remuneration policy and Group 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 Group seeks to emphasise reward incentives for results and continued commitment to the Group 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 Group.
7
11. REMUNERATION REPORT (AUDITED) (CONTINUED)
Details of remuneration provided to Directors and executives during the year are as follows:
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
Short-Term Employee Benefits
Salary & Consulting Fees
$
Cash Bonus
$
Post-Employment Benefits
Superannuation
$
Share-Based Payments
Shares
$
Options
$
David Cannington
Kathryn Foster
(appointed 12 February 2018)
Justin Miller
Michael Ottaviano
(resigned 4 July 2018)
Jean-Marie Rudd
TOTAL
TOTAL
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
319,904
305,670
65,000
19,167
400,000
290,494
-
65,000
201,025
184,167
985,929
864,498
12,231
-
9,025
1,821
38,000
27,597
-
6,175
19,097
17,496
78,353
53,089
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,941
-
48,941
-
-
30,000
-
-
-
-
-
-
-
30,000
-
8
Total
$
332,135
305,670
104,025
20,988
438,000
318,091
-
71,175
220,122
250,604
1,094,282
966,528
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
11. REMUNERATION REPORT (AUDITED) (CONTINUED)
Services Agreements
Justin Miller – Chief Executive Officer
Mr Miller has been engaged as an Executive Director of the Group pursuant to an employment and services agreement
between the Group and Mr Miller (Miller Agreement).
The total annual remuneration payable to Mr Miller under the Miller Agreement is a salary of AUD$445,884 (2018: AUD
$438,000) per annum (inclusive of superannuation) and a telecommunications allowance of AUD$200 per month. Mr Miller
will also be entitled to participate in short-term cash incentives of up to 40% 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 Group at any time:
• by six months' written notice to Mr Miller, at which time the Group 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 Group. Mr Miller may also terminate the Miller Agreement immediately by giving notice if at
any time the Group 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 Group ceases, being directly or indirectly involved in a competing business during the continuance of his employment
with the Group, and for a period of 12 months after his employment with the Group 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 – Chief Marketing Officer
Mr David Cannington has been engaged as an Executive Director of the Group pursuant to an employment and services
agreement between the Group and Mr Cannington (Cannington Agreement).
The total annual remuneration payable to Mr Cannington under the Cannington Agreement is a salary of AUD$343,460 (2018:
USD$228,000) per annum and a telecommunications allowance of AUD$200 per month (2018: USD$750 health insurance
allowance per month). Mr Cannington will also be entitled to participate in short-term cash incentives of up to 40% 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 Group at any time:
• by six months' written notice to Mr Cannington, at which time the Group 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.
9
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
11. REMUNERATION REPORT (AUDITED) (CONTINUED)
Services Agreements (continued)
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 Group. Mr Cannington may also terminate the Cannington Agreement immediately
by giving notice if at any time the Group 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.
Mr Cannington is also subject to restrictions in relation to the use of confidential information during and after his employment
with the Group ceases, being directly or indirectly involved in a competing business during the continuance of his employment
with the Group, and for a period of 12 months after his employment with the Group 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/Joint Company Secretary
Mrs Jean-Marie Rudd has been engaged as a Chief Financial Officer/Joint Company Secretary of the Group pursuant to an
employment and services agreement between the Group and Mrs Rudd (Rudd Agreement).
The total annual remuneration payable to Mrs Rudd under the Rudd Agreement is a salary of $265,000 per annum (exclusive
of superannuation) (2018: $201,025) and a telecommunications allowance of $200 per month. Mrs Rudd will also be entitled
to participate in short-term cash incentives of up to 40% 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 Group at any time:
• by three months' written notice to Mrs Rudd, at which time the Group will immediately pay Mrs Rudd 3 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 Group. Mrs Rudd may also terminate the Rudd Agreement immediately by giving notice if at
any time the Group 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 Group ceases, being directly or indirectly involved in a competing business during the continuance of her
employment with the Group, and for a period of six months after her employment with the Group 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.
10
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
11. REMUNERATION REPORT (AUDITED) (CONTINUED)
KMP shareholdings
The number of ordinary shares the Group held by KMP during the financial year is as follows:
Ordinary Shares
Opening balance
1 July 2018
or balance on
appointment
Issued
during
the year
Purchased
during
the year
Closing Balance
30 June 2019
or resignation date
68,142,857
68,142,857
640,000
19,279
136,944,993
Justin Miller(1)
David Cannington
Kathryn Foster
Jean-Marie Rudd
Total
Notes:
(1) 68,142,857 shares are held by Wasagi Corporation Pty Ltd as trustee for the Wasagi Family Trust of which Justin Miller is
63,142,857
63,142,857
-
19,279
126,304,993
5,000,000
5,000,000
640,000
-
10,640,000
-
-
-
-
-
a beneficiary.
(2) 640,000 shares are held by Aylesham Pty Ltd as trustee for the Norval Court Super Fund of which Kathryn Foster is a
beneficiary.
The relevant beneficial interest of KMP in the options over ordinary share capital of the Group is as follows:
Options
Opening balance
1 July 2018
or balance on
appointment
Justin Miller
David Cannington
Jean-Marie Rudd
Total
Notes:
(1) Ms Foster does not have any beneficial interests in the options over ordinary share capital of the Group.
10,000,000
10,000,000
4,500,000
24,500,000
Issued
during
the year
-
-
-
-
Exercised
during
the year
5,000,000
5,000,000
-
10,000,000
Expired
during
the year
5,000,000
5,000,000
-
10,000,000
Closing Balance
30 June 2019
or resignation date
-
-
4,500,000
4,500,000
Options granted
There were no options issued to KMP for the year ended 30 June 2019 (2018: nil).
Shares issued
During the 2019 year, no shares were issued as remuneration (2018: nil).
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
11
NUHEARA LIMITED
ABN 29 125 167 133
DIRECTOR’S REPORT
12. DIRECTORS' MEETINGS
The following table sets out the number of meetings of the Group’s Directors held during the year ended 30 June 2019 and
the number of meetings attended by each Director:
Director
David Cannington
Kathryn Foster
Justin Miller
Number
Attended
5
5
5
Number Eligible
to Attend
5
5
5
13.
INDEMNIFYING OFFICERS OR AUDITOR
The Group 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 Group, other than conduct involving
a wilful breach of duty in relation to the Group. The premiums in total amounted to $34,725.
14. PROCEEDINGS ON BEHALF OF THE GROUP
No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to which
the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.
The Group 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 Group 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 2019 has been received and can be found on page 13 of
the financial report.
Made and signed in accordance with a resolution of the Directors.
Justin Miller
Managing Director/Chief Executive Officer
Perth, 13 September 2019
12
Auditor’s Independence Declaration Under Section 307C of The Corporations Act
2001 to The Directors of Nuheara Limited And Controlled Entities
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2019
there have been no contraventions of:
(i)
the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
WALKER WAYLAND WA AUDIT PTY LTD
Richard Gregson CA
Director
Level 3, 1 Preston Street, COMO WA 6152
Dated this 13th day of September 2019.
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Revenue
Cost of sales
Gross profit
Other income
Salaries and employee benefits
Marketing and promotional
Research and development
General and administrative
Share based payments
Total expenses
Loss before tax from continuing operations
Income tax benefit
Net loss after tax from continuing operations
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
3
3
2
2019
$
2,218,714
(1,849,115)
369,599
2,262,691
(5,943,896)
(2,532,568)
(1,573,372)
(2,157,092)
(450,513)
2018
$
3,962,565
(3,660,856)
301,709
1,289,395
(4,509,514)
(1,958,069)
(247,755)
(2,009,044)
(283,134)
(10,394,750)
(7,718,121)
(10,025,151)
(7,416,412)
(2,087)
(10,027,238)
-
(7,416,412)
(10,027,238)
(10,027,238)
(7,416,412)
(7,416,412)
16
16
(1.09)
(1.02)
(0.92)
(0.83)
The accompanying notes form part of these financial statements.
14
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
NOTES
2019
$
2018
$
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
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share option reserve
Foreign currency translation reserve
Accumulated losses
TOTAL EQUITY
4
5
6
7
8
8
9
3,220,079
674,458
2,432,267
206,233
6,533,037
605,957
3,515
5,241,203
5,850,675
8,345,698
849,035
2,353,392
206,233
11,754,358
762,526
32,098
4,533,697
5,328,321
12,383,712
17,082,679
1,237,885
424,399
1,662,284
1,583,180
474,029
2,057,209
23,544
23,544
6,769
6,769
1,685,828
2,063,978
10,697,884
15,018,701
38,325,527
1,410,267
(6,478)
(29,031,432)
10,697,884
33,038,866
960,561
(6,478)
(18,974,248)
15,018,701
The accompanying notes form part of these financial statements.
15
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
Ordinary
Shares
$
Accumulated
Losses
$
Share
Option
Reserve
$
Foreign
Currency
Translation
Reserve
$
Total
$
Balance at 1 July 2017
17,402,898
(11,557,836)
677,427
(4,850)
6,517,639
Comprehensive income
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
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
Balance at 30 June 2018
-
-
(7,416,412)
(7,416,412)
-
16,620,000
(984,032)
-
-
-
-
-
-
-
33,038,866
-
(18,974,248)
-
-
(362,329)
645,463
-
960,561
-
-
-
-
-
-
(7,416,412)
(7,416,412)
16,620,000
(984,032)
(362,329)
645,463
(1,628)
(6,478)
(1,628)
15,018,701
Balance at 1 July 2018
33,038,866
(18,974,248)
960,561
(6,478)
15,018,701
Comprehensive income
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their
capacity as owners
Shares issued during the year
Share issue costs
Options issued during the year
Movement in valuation of options
issued in prior periods
Option issue costs
Foreign currency translation
movements
Balance at 30 June 2019
-
-
(10,027,238)
(10,027,238)
-
5,740,250
(453,589)
-
-
-
-
-
-
-
-
-
38,325,527
(29,946)
(29,031,432)
-
-
(319,584)
777,762
(8,472)
-
1,410,267
-
-
-
-
-
-
-
(10,027,238)
(10,027,238)
5,740,250
(453,589)
(319,584)
777,762
(8,472)
-
(6,478)
(29,946)
10,697,884
The accompanying notes form part of these financial statements.
16
NUHEARA LIMITED
ABN 29 125 167 133
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
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
Income tax 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)
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 (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS HELD
Cash and cash equivalent at beginning of the financial year
NOTES
2019
$
2018
$
2,351,962
101,357
2,153,397
(11,108,775)
-
(2,087)
(6,504,146)
4,057,505
77,880
1,208,451
(11,873,017)
124
-
(6,529,057)
23
(102,299)
1,389
(3,806,417)
(3,907,327)
(133,335)
10,998
(4,043,428)
(4,165,765)
5,740,250
(454,396)
5,285,854
(5,125,619)
8,345,698
16,620,000
(984,032)
15,635,968
4,941,146
3,404,552
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
3,220,079
8,345,698
The accompanying notes form part of these financial statements.
17
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 2019 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 190 Aberdeen Street, Northbridge,
Western Australia.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
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 Group 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 Group’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 14.
Going concern
For the year ended 30 June 2019, the Group has incurred a net loss after tax of $10,027,238 (2018: loss of $7,416,412) and
net cash outflows from operating activities of $6,504,146 (2018: outflow of $6,529,057). As at 30 June 2019, the group has
a net current asset position of $4,870,753 (30 June 2018: $9,697,149).
18
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of preparation (continued)
Going concern (continued)
1.
(a)
The Group’s trading and cash flow forecasts for the 12-month period from the date of reporting indicate that there is some
risk that it may not meet all its payment obligations unless the Group is able to complete a successful equity/finance
raising. These matters present a significant material uncertainty in relation to the Group’s ability to continue as a going
concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial report.
The Directors remain committed to the long-term business plan that will result in the business progressing from start-up
phase into a more established business operation. The Directors believe there are reasonable grounds to believe that the
Group will be able to continue as a going concern after consideration of the following factors:
• Ongoing sales of IQbuds™, IQbuds BOOST™, and IQstreamTV™ through expanding distribution channels;
• New products planned for release over the course of the next 12-months;
• Active management of the current level of discretionary expenditure in line with the funds available to the Group
• Raising additional working capital through the issue of securities and/or other funding;
After taking into account all available information, the Directors have concluded that there are currently reasonable grounds
to believe that the Group will be able to pay its debts as and when they become due and payable, and to continue as a going
concern and be in a position to realise its assets and settle its liabilities and commitments in the normal course of business,
and at the amounts stated in the financial report. Accordingly, the Directors also believe that it is appropriate to adopt the
going concern basis in the preparation of the financial statements.
In the event that the Group does not achieve the conditions stated by the Directors, the ability of the Group to continue as a
going concern may be impacted and therefore the Group may not be able to realise its assets and extinguish its liabilities in
the ordinary course of operations, and at the amounts stated in the financial report. No adjustments have been made to the
recoverability and classification of recorded asset values and the amount and classification of liabilities that might be
necessary should the Group not continue as going concern.
New and Amended Accounting Policies Adopted by the Group
Initial application of AASB 9: Financial Instruments
The Group has adopted AASB 9: Financial Instruments with an initial application date of 1 July 2018. As a result, the Group
has changed its financial instruments accounting policies as follows.
As per AASB 9, an expected credit loss model is applied, not an incurred credit loss model as per the previous Standard
applicable. To reflect changes in credit risk, this expected credit loss model requires the Group to account for expected credit
loss since initial recognition. If a credit risk on a financial instrument has not shown significant change since initial recognition,
an expected credit loss amount, equal to 12-month expected credit loss, is used. However, a loss allowance is recognised at
an amount equal to the lifetime expected credit loss if the credit risk on that financial instrument has increased significantly
since initial recognition, or if the instrument is an acquired credit-impaired financial asset.
A simple approach is followed in relation to trade receivables, as the loss allowance is measured at lifetime expected credit
loss.
The Group reviewed and assessed the existing financial assets on 1 July 2018. The assessment was made to test the
impairment of these financial assets using reasonable and supportable information that is available to determine the credit
risk of the respective items at the date they were initially recognised, and to compare that to the credit risk as at 1 July 2017
and 1 July 2018. The assessment was performed without undue cost or effort, in accordance with AASB 9.
The application of the AASB 9 impairment requirements has not resulted in an additional loss allowance to be recognised.
19
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
New and Amended Accounting Policies Adopted by the Group (continued)
Initial application of AASB 15: Revenue from Contracts with Customers
The Group has adopted AASB 15: Revenue from Contracts with Customers with an initial application date of 1 July 2018. As a
result, the Group has changed its accounting policy revenue recognition as follows.
The Group has applied AASB 15 using the cumulative effect method; that is, by recognising the cumulative effect of initially
applying AASB 15 as an adjustment to the opening balance of equity as at 1 July 2018. Therefore, the comparative information
has not been restated and continues to be reported under AASB 118: Revenue.
The following table provides details of the significant changes and quantitative impact of those changes.
Adjustments made to consolidated statement of financial position:
As at 30 June 2019
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
Under previous
accounting
policies
AASB 15
adjustments
Restated
3,220,079
674,458
2,414,083
206,233
6,514,853
605,957
3,514
5,241,203
5,850,675
-
-
18,184
-
18,184
-
-
-
-
3,220,079
674,458
2,432,267
206,233
6,533,037
605,957
3,514
5,241,203
5,850,675
TOTAL ASSETS
12,365,528
18,184
12,383,712
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share option reserve
Foreign currency translation reserve
Accumulated losses
TOTAL EQUITY
1,237,885
393,941
1,631,826
23,544
23,544
-
30,458
30,458
1,237,885
424,399
1,662,284
-
-
23,544
23,544
1,655,370
30,458
1,685,828
10,710,158
(12,274)
10,697,884
38,325,527
1,410,267
(6,478)
(29,019,158)
10,710,158
-
-
-
(12,274)
(12,274)
38,325,527
1,410,267
(6,478)
(29,031,432)
10,697,884
20
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
New and Amended Accounting Policies Adopted by the Group (continued)
Initial application of AASB 15: Revenue from Contracts with Customers (continued)
As at 30 June 2018
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
Under previous
accounting
policies
AASB 15
adjustments
Restated
8,345,698
849,035
2,353,392
206,233
11,754,358
762,526
32,098
4,533,697
5,328,321
-
-
17,582
-
17,582
-
-
-
-
8,345,698
849,035
2,370,974
206,233
11,771,940
762,526
32,098
4,533,697
5,328,321
TOTAL ASSETS
17,082,679
17,582
17,100,261
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Share option reserve
Foreign currency translation reserve
Accumulated losses
TOTAL EQUITY
1,583,180
474,029
2,057,209
6,768
6,768
-
44,735
44,735
-
-
1,583,180
518,764
2,101,944
6,768
6,768
2,063,977
44,735
2,108,712
15,018,701
(27,153)
14,991,548
33,038,866
960,561
(6,478)
(18,974,248)
15,018,701
-
-
-
(27,153)
-
33,038,866
960,561
(6,478)
(19,001,401)
14,991,548
21
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
New and Amended Accounting Policies Adopted by the Group (continued)
Initial application of AASB 15: Revenue from Contracts with Customers (continued)
Adjustments made to statement of profit and loss and other comprehensive income:
As at 30 June 2019
Revenue
Cost of sales
Gross profit/(loss)
Other income
Salaries and employee benefits
Marketing and promotional
Research and development
General and administrative
Share based payments
Total expenses
Loss before tax from continuing operations
Income tax benefit
Net loss after tax from continuing operations
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)
Under previous
accounting
policies
AASB 15
adjustments
Restated
2,249,172
(1,867,299)
381,873
2,262,691
(5,943,896)
(2,532,568)
(1,573,372)
(2,157,092)
(450,513)
(10,394,750)
(10,012,877)
(2,087)
(10,014,964)
(44,735)
17,582
27,153
-
-
-
-
-
-
-
27,153
-
27,153
2,218,714
(1,849,115)
369,599
2,262,691
(5,943,896)
(2,532,568)
(1,573,372)
(2,157,092)
(450,513)
(10,394,750)
(10,025,151)
(2,087)
(10,027,238)
(10,014,964)
(10,014,964)
27,153
27,153
(10,027,238)
(10,027,238)
(1.09)
(1.02)
(1.09)
(1.02)
22
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of preparation (continued)
New and Amended Accounting Policies Adopted by the Group (continued)
Initial application of AASB 15: Revenue from Contracts with Customers (continued)
Adjustments made to statement of profit and loss and other comprehensive income:
As at 30 June 2018
Revenue
Cost of sales
Gross profit/(loss)
Other income
Salaries and employee benefits
Marketing and promotional
Research and development
General and administrative
Share based payments
Total expenses
Loss before tax from continuing operations
Income tax benefit
Net loss after tax from continuing operations
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)
Under previous
accounting
policies
AASB 15
adjustments
Restated
3,962,565
(3,660,856)
301,709
1,289,395
(4,509,514)
(1,958,069)
(247,755)
(2,009,044)
(283,134)
(7,718,121)
(7,416,412)
-
(7,416,412)
(30,458)
18,184
12,274
-
-
-
-
-
-
-
12,274
-
12,274
3,932,107
(3,642,672)
289,435
1,289,395
(4,509,514)
(1,958,069)
(247,755)
(2,009,044)
(283,134)
(7,718,121)
(7,428,686)
-
(7,428,686)
(7,416,412)
(7,416,412)
12,274
12,274
(7,428,686)
(7,428,686)
(0.92)
(0.92)
(0.92)
(0.92)
The application of these changes in accounting policies had no impact on the consolidated cash flows of the Group.
Accounting Standards for Application in Future Periods
The AASB has issued a number of new and amended Accounting Standards that have mandatory application dates for future
reporting periods, some of which are relevant to the Group. The directors have decided not to early-adopt any of the new
and amended pronouncements. The following sets out their assessment of the pronouncements that are relevant to the
Group but applicable in future reporting periods.
• AASB 16: Leases (applicable to reporting periods beginning on or after 1 January 2019).
The Group has chosen not to early-adopt AASB 16. However, the Group has conducted a preliminary assessment of the
impact of this new Standard, as follows. A core change resulting from applying AASB 16 is that most leases will be
recognised on the balance sheet by lessees as the standard no longer differentiates between operating and financing
leases. An asset and a financial liability are recognised in accordance with this new Standard. There are, however, two
exceptions allowed: short-term and low-value leases.
The accounting for the Group’s operating leases will be primarily affected by this new Standard. AASB 16 will be applied by
the Group from its mandatory adoption date of 1 July 2019. The comparative amounts for the year prior to first adoption will
not be restated, as the Group has chosen to apply AASB 16 retrospectively with cumulative effect.
23
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of preparation (continued)
Accounting Standards for Application in Future Periods (continued)
While the right-of-use assets for property leases will be measured on transition as if the new rules had always been applied,
all other right-of-use assets will be measured at the amount of the lease liability on adoption (after adjustments for any
prepaid or accrued lease expenses).
The Group’s non-cancellable operating lease commitments amount to $199,290 as at the reporting date. The Group has
performed a preliminary impact assessment and has estimated that on 1 July 2019, the Group expects to recognise the right-
of-use assets and lease liabilities of approximately $190,927 (after adjusting for prepayments and accrued lease payments
recognised as at 30 June 2019).
The repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities, thus
increasing operating cash flows and decreasing financing cash flows by approximately $170,820 in 2020.
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.
Employee benefits
Provision is made for the Group’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.
24
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information including dividends received from
subsidiaries, associates or 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 Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill,
intangible assets with indefinite lives and intangible assets not yet available for use.
Intangible assets
Research and development
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.
Development phase
An intangible asset arising from development (or from the development of an internal project) is recognised if, and only if, all
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 Group 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.
25
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and cash equivalents
Cash and cash equivalents include 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.
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 Group 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.
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 Group 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.
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.
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.
26
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments (continued)
Impairment
From 1 January 2018, the Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at fair value. The impairment methodology applied depends on whether there has been a significant
increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by AASB 9 Financial
Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
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 Group 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 Group for similar financial instruments.
Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment
in which that entity operates. The 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 Group’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.
27
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
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 based on weighted average costs.
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 21
28
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
Revenue from the sale of goods is recognised when the Group has delivered the products to the customer, the customer has
accepted the products and collectability of the related receivables is reasonably assured.
These products are sold under standard warranty terms. These terms may require the Group to provide a refund for faulty
products. The Group's obligation to provide a refund for these faulty products is recognised as a provision in accordance with
AASB 137: Provisions, Contingent Liabilities and Contingent Assets.
A receivable is recognised when the goods are delivered. The Group's right to consideration is deemed unconditional at this
time, as only the passage of time is required before payment of that consideration is due. There is no significant financing
component because sales are made within a credit term of 30 to 90 days.
Customers have a right to return products within 30 days as stipulated in the current contract terms. At the point of sale, a
refund liability is recognised based on an estimate of the products expected to be returned, with a corresponding adjustment
to revenue for these products. Consistent with the recognition of the refund liability, the Group further has a right to recover
the product when customers exercise their right of return, so consequently the Group recognises a right to returned goods
asset and a corresponding adjustment is made to cost of sales. Historical experience of product returns is used to estimate
the number of returns using the expected value method. It is considered highly probable that significant reversal in the
cumulative revenue will not occur given the consistency in the rate of return presented in the historical information.
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 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.
Provisions
Warranty provisions
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 historical averages for warranty claims.
Long service leave and annual leave
The Group 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.
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 Group’s estimate of shares that will eventually vest.
29
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Taxes
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.
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.
30
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New and amended accounting policies adopted by the Group
Standards and Interpretations applicable to 30 June 2019
1.
(q)
In the year ended 30 June 2019, the Directors have reviewed all of the new and revised Standards and Interpretations issued
by the AASB that are relevant to the Group 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 Group and, therefore, no material change is necessary to the Group accounting policies.
31
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2.
INCOME TAX
Income tax expense
Current income tax
Deferred income tax
Income tax expense
(i)
Numerical reconciliation of income tax expense to prima facie tax
payable
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% (2017: 27.5%)
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
(ii)
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
Potential unrecognised deferred tax asset @ 27.5% (2018: 27.5%)
2019
$
2018
$
2,087
-
2,087
-
-
-
2019
$
(10,025,151)
-
(10,025,151)
(2,756,917)
126,956
11,183
688,828
2,465,742
(533,704)
2,087
2018
$
(7,416,412)
-
(7,416,412)
(2,039,513)
83,722
11,542
278,741
1,997,832
(332,324)
-
2019
$
2018
$
(2,454)
-
1,443,651
8,003
72,293
49,598
457,739
(57,677)
6,666,881
8,638,035
(1,360)
(5,692)
591,450
6,609
51,325
78,931
414,475
(16,512)
4,419,672
,538,898
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 Group can utilise the
benefits.
3.
REVENUE AND OTHER INCOME
Revenue from contracts with customers
Revenue based on AASB 118
Interest income
Grants and rebates received
Sundry income
Total revenue and other income
2019
$
2,218,714
-
105,333
2,153,397
3,961
4,481,405
2018
$
-
3,962,565
77,066
1,208,451
3,878
5,251,960
32
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
2019
$
2018
$
674,458
849,033
4.
TRADE AND OTHER RECEIVABLES
Trade and other receivables
The Group applies the simplified approach to providing for expected credit losses
prescribed by AASB 9, which permits the use of the lifetime expected loss
provision for all trade receivables. To measure the expected credit losses, trade
receivables have been individually assessed based on credit risk characteristics.
The expected credit losses also incorporate forward-looking information.
Credit risk – trade and other receivables
The Group 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 Group. The trade and other
receivables as at 30 June are considered to be of low credit risk.
5.
PLANT AND EQUIPMENT
Plant and equipment – at cost
Less: accumulated depreciation
Total plant and equipment
Opening balance - plant and equipment
Additions
Disposals
Depreciation
Foreign currency translation movement
Closing balance – plant and equipment
6.
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
2019
$
1,215,035
(609,078)
605,957
2019
$
762,526
102,283
(35,899)
(222,953)
-
605,957
2019
$
9,828,331
(5,177,446)
4,650,885
662,512
(72,194)
590,317
5,241,203
Balance as at 1 July 2017
Balance as at 30 June 2018
Additions – internally developed
Amortisation charge
Balance as at 30 June 2019
Development
Costs
$
Patents
&
Trademarks
$
2,099,798
4,203,045
3,494,751
(3,046,911)
4,650,885
94,400
330,652
311,666
(52,000)
590,318
2018
$
1,148,651
(386,125)
762,526
2018
$
871,245
293,675
(16,269)
(386,125)
-
762,526
2018
$
6,333,580
(2,130,535)
4,203,045
350,846
(20,194)
330,652
4,533,697
Total
$
2,194,198
4,533,697
3,806,417
(3,098,911)
5,241,203
33
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
7.
TRADE AND OTHER PAYABLES - CURRENT
Trade creditors
Unearned Income
Other creditors and accrued expenses
8.
PROVISIONS – CURRENT
Employee provisions
Provision for refunds and warranty claims
9.
ISSUED CAPITAL
Ordinary shares
Issued and paid up capital
982,210,292 (2018: 891,473,723) Ordinary shares, fully paid
Movements during the period number of shares
Opening Balance at 1 July 2017
17 July 2017 issued 750,000 shares on exercise of options $0.04 each
20 July 2017 issued 97,826,082 shares under share placement at $0.092 each
20 July 2017 issued 2,250,000 shares on exercise of options at $0.04 each
12 March 2018 issued 2,000,000 shares on exercise of options at $0.05 each
14 March 2018 issued 3,000, shares on exercise of options at $0.05 each
14 March 2018 issued 1,500,000 shares on exercise of options at $0.05 each
15 March 2018 issued 3,000,000 shares on exercise of options at $0.05 each
21 March 2018 issued 2,000,000 shares on exercise of options at $0.05 each
21 March 2018 issued 3,750,000 shares on exercise of options at $0.05 each
21 March 2018 issued 2,000,000 shares on exercise of options at $0.05 each
21 March 2018 issued 4,735,714 shares on exercise of options at $0.05 each
21 March 2018 issued 8,014,286 shares on exercise of options at $0.05 each
15 June 2018 issued 63,157,895 shares under share placement at $0.095 each
Less: Share issue costs
Balance shares at 30 June 2018
Opening balance at 1 July 2018
10 December 2018 issued 2,250,000 shares on exercise of options $0.04 each
10 December 2018 issued 66,936,667 shares under placement at $0.075 each
25 February 2019 issued 20,000,000 shares on exercise of options at $0.05
each
17 April 2019 issued 322,718 shares on exercise of options at $0.04 each
17 April 2019 issued 1,227,184 shares on exercise of options at $0.06 each
Less: Share issue costs
Balance shares at 30 June 2019
2019
$
566,619
40,943
630,323
1,237,885
2018
$
692,795
28,453
861,932
1,583,180
2019
$
2018
$
259,321
165,078
424,399
236,275
237,754
474,029
2019
$
38,325,527
Number of
Shares
2018
697,489,746
750,000
97,826,082
2,250,000
2,000,000
3,000,000
1,500,000
3,000,000
2,000,000
3,750,000
2,000,000
4,735,714
8,014,286
63,157,895
-
891,473,723
Number of
Shares
2019
891,473,723
2,250,000
66,936,667
20,000,000
322,718
1,227,184
-
982,210,292
2018
$
33,038,867
2018
$
17,402,898
30,000
9,000,000
90,000
100,000
150,000
75,000
150,000
100,000
187,500
100,000
236,786
400,714
6,000,000
(984,030)
33,038,867
2019
$
33,038,867
90,000
5,020,250
600,000
-
30,000
(453,590)
38,325,527
34
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9.
ISSUED CAPITAL (CONTINUED)
Ordinary shares (continued)
Holders of ordinary shares
Holders of ordinary shares have the right to receive dividends as declared, and in the event of winding up the Group, 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.
Unlisted Options
Issued unlisted options
56,000,000 (2018: 78,000,000) unlisted options
2019
$
1,410,267
Description
Number
Grant
Date
Exercise
Price
Expiry
Date
Unlisted Options
10,500,000
30/11/2016
Unlisted Options
Unlisted Options
1,500,000
3,000,000
21/02/2017
22/05/2017
Unlisted Options
10,000,000
20/06/2017
Unlisted Options
500,000
14/07/2017
Unlisted Options
3,000,000
24/07/2017
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
Unlisted Options
500,000
1,000,000
7,500,000
9,000,000
1,000,000
6,000,000
2,500,000
Total Unlisted Options
56,000,000
10/11/2017
12/01/2018
1/03/2018
17/09/2018
10/12/2018
18/03/2019
17/04/2019
$0.09
$0.12
$0.09
$0.078
$0.09
$0.115
$0.09
$0.09
$0.09
$0.09
$0.09
$0.09
$0.09
2018
$
960,561
Weighted
Average
time until
expiry
2019
5 months
8 months
30/11/2019
16/02/2020
22/05/2020
11 months
2/11/2019
14/07/2020
24/07/2020
10/11/2020
12/01/2021
1/03/2021
17/09/2021
10/12/2021
18/03/2022
17/04/2022
4 months
12 months
13 months
16 months
18 months
20 months
27 months
29 months
33 months
34 months
16 months
For information relating to share options issued to KMP and contractors including details of options issued, exercised and
lapsed during the financial year, refer to Note 22 Share Based Payments.
35
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
9.
ISSUED CAPITAL (CONTINUED)
Unlisted Options (continued)
Movements during the period for number of options
Balance unlisted options at 30 June 2017
Issue of Employee options @ $0.09 each on 14 July 2017
Issue of Employee options @ $0.09 each on 24 July 2017
Issue of Employee options @ $0.09 each on 10 November 2017
Issue of Employee options @ $0.09 each on 12 January 2018
Issue of Employee options @ $0.09 each on 1 March 2018
Less: Options exercised/forfeited
Movement in valuation of options issued in prior reporting periods
Balance unlisted options at 30 June 2018
Balance unlisted options at 30 June 2018
Issue of Employee options @ $0.09 each on 17 September 2018
Issue of Employee options @ $0.09 each on 10 December 2018
Issue of Employee options @ $0.09 each on 18 March 2019
Issue of Employee options @ $0.09 each on 17 April 2019
Less: Options exercised/forfeited
Less: Option issue expenses
Movement in valuation of options issued in prior reporting periods
Balance unlisted options at 30 June 2019
Capital Management
Number of
Options
2018
107,319,445
1,000,000
3,000,000
1,000,000
1,000,000
8,000,000
(43,319,445)
-
78,000,000
Number of
Options
2019
78,000,000
10,500,000
1,500,000
6,000,000
2,500,000
(42,500,000)
-
-
56,000,000
2018
$
677,427
3,012
15,667
2,132
6,352
37,061
(426,553)
645,463
960,561
2019
$
960,561
84,095
5,026
15,430
5,407
(319,584)
(8,472)
667,804
1,410,267
As the Group is a start-up operation in the field of hearing health, it is not prudent at this time to expose the Group to the
financial risk of borrowing. The Group is therefore financed 100% by equity at a level to ensure that the Group can fund its
operations and continue as a going concern.
The Group’s capital comprises only of ordinary share capital and options.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial requirements and raising additional
capital as required to fund the Group’s operations.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior year.
10. OPERATING SEGEMENTS
Nuheara Limited, Nuheara IP Pty Ltd and Nuheara, Inc are operating within the hearing health 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.
36
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
11. RELATED PARTY DISCLOSURES
Key Management Personnel (KMP)
Any person(s) having authority and responsibility for planning, directing or controlling the activities of the Group, directly or
indirectly (whether executive or otherwise) of that Group, are considered KMP. For details of disclosures relating to KMP
refer to Note 18, Interests of KMP.
Transactions with director related entities
During the year, there were no transactions with director related entities.
12.
EVENTS OCCURRING AFTER BALANCE DATE
The Group successfully completed a capital raising after balance date, raising $4 million in July 2019, with funds raised being
used to assist Nuheara in achieving its planned objectives of increasing sales and marketing activities of IQbuds™ and IQbuds
BOOST™, increasing inventory levels of IQbuds BOOST™, the launch of IQstreamTV™, and the manufacture and development
of new products, including IQbudsMAX™.
The Group also entered into a Mining Concessions Transfer Agreement (the “Transfer Agreement”), in August 2019, for the
sale of its mining assets in Southern Peru. Under the Transfer Agreement entered into with Corisur Peru SAC (”Corisur”), a
subsidiary of Auryn Resources Inc. (TSX:ARG), Corisur will pay US$250,000 for the transfer of the concessions upon recording
of the Transfer Agreement with the Peruvian Public Registry.
The Group’s remaining portfolio of mining assets consists of Net Smelter Royalties (“NSR”) located in Northern Peru and
Western Australia. These interests are actively being marketed for sale and the Group intends to dispose of these interests
as soon as it is commercially practical to do so.
13. COMMITMENTS FOR EXPENDITURE
These amounts are payable, if required, over various times over the next five years.
Operating Lease Commitment
The Group has entered into a rental agreement commencing 1 September 2018 for a period of 24 months.
Office Lease
Due within 1 year
Due 1 to 5 years
2019
$
170,820
28,470
2018
$
142,350
199,290
The Group has entered into fixed term agreements to provide contractors to the Group. The amounts due under these fixed
term contracts are as follows:
Contractors
Due within 1 year
Due 1 to 5 years
2019
$
170,820
28,470
2018
$
142,350
199,290
37
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
14. 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 Group 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.
Estimated impairment of assets
The Group assesses impairment of its assets at the end of each reporting period by evaluating conditions and events specific
to the Group that may be indicative of impairment triggers. Where impairment has been triggered, assets are written down
to their recoverable amounts. An impairment trigger includes operating losses and net cash outflows.
The ability of capitalised development costs to generate sufficient future economic benefits to recover the carrying amount
is usually subject to greater uncertainty before the asset is available for use than after it is available for use. Judgement has
been made in the estimation of future profitability and net cash flows in the assessment of fair value for capitalised
development costs, and in the resulting determination that no impairment existed at balance date. Management
acknowledges that a modest reduction in realised revenue growth against these forecasts may result in an impairment at a
later date.
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.
Valuation of options
Share-based payment transaction:
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model, using the
assumptions detailed in Note 22.
The Group 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 22.
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 expenditure incurred during the year did not meet the
definition of an intangible asset. The group has assessed the effective life of development assets to be 2.5 years.
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 Group in the event of a disposal of the tenements to a third party. As the Group 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. Additionally, if there
is a sale of the Salvador interests by the Group 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.
38
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
14. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)
Net Smelter Royalties
The Group 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.
15.
FINANCIAL INSTRUMENTS
Overview
The Group 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 Group’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 Group, to
set appropriate risk limits and controls, and to monitor risks and adherence to limits.
The Group’s principal financial instruments are cash, short-term deposits, receivables and payables.
(i)
Interest Rate Risk
The Group’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 2019
Financial Assets
Cash at bank
Trade and other receivables
Financial Liabilities
Trade and other payables
30 June 2018
Financial Assets
Cash at bank
Trade and other receivables
Financial Liabilities
Trade and other payables
Weighted
Average
Effective
Interest
Rate
%
2.13
-
-
-
Weighted
Average
Effective
Interest
Rate
%
1.24
-
-
-
Interest
Bearing
$
Non-Interest
Bearing
$
Total
$
2,951,540
-
2,951,540
268,539
674,458
942,997
3,220,079
674,458
3,894,537
-
1,237,885
1,237,885
Interest
Bearing
$
Non-Interest
Bearing
$
Total
$
7,163,297
-
7,163,297
1,182,401
849,035
2,031,436
8,345,698
849,035
9,194,733
-
1,583,180
1,583,180
39
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
15.
FINANCIAL INSTRUMENTS (CONTINUED)
(2)
Interest Rate Risk (continued)
It is the Group’s policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue
balances.
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.
(ii)
Credit Risk
Credit risk is the risk of financial loss to the Group 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.
(iii)
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’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 Group’s
reputation.
The following are the contractual maturities of financial liabilities:
2019
2018
Carrying
Amount
Under
6 Months
Carrying
Amount
Under
6 Months
Non-derivative financial liabilities:
Trade and other payables
1,237,885
1,237,885
1,583,180
1,583,180
Net Fair Values
The net fair value of cash and non-interest-bearing monetary assets and financial liabilities of the Group approximates their
carrying amount.
(iv)
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 Group holds financial instruments, which are other than
the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in the US dollar and Peruvian Soles may impact on the
Group’s financial results unless those exposures are appropriately hedged.
It is the Group’s policy that hedging is not necessary, as the Group 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 Group at balance date in 2019 is not material
(2018: not material).
40
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16.
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
17. 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
2019
Cents
(1.09)
(1.02)
2019
$
2018
Cents
(0.92)
(0.92)
2018
$
(10,027,238)
(7,416,412)
2019
No.
2018
No.
914,324,594
980,383,498
802,765,484
898,701,661
2019
$
2018
$
39,800
7,626
47,426
37,175
16,212
53,387
18.
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 Group’s KMP.
The totals of remuneration paid to KMP of the Group during the year are as follows:
Short term benefits
Post-employment benefits
Share based payments - options
19. CONTINGENT LIABILITIES
There are no known contingent liabilities.
20. COMPANY DETAILS
Registered Office
2019
$
1,015,929
78,358
-
1,094,282
2018
$
864,498
53,089
48,941
966,527
The registered office is at 190 Aberdeen Street, Northbridge, Western Australia 6003.
Principal Place of Business
The principal place of business in Australia is at 190 Aberdeen Street, Northbridge, Western Australia 6003.
The principal place of business in Peru is Berlin 748, Of. 202, Miraflores, Lima, Peru.
41
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
21.
INFORMATION ABOUT CONTROLLED ENTITIES
The controlled entities listed below have share capital consisting solely of ordinary shares which are held directly by the
Group. The proportion of ownership interests held equals the voting rights held by the Group. Each controlled entity’s
principal place of business is also its country of incorporation.
Name of
Controlled
Entity
Nuheara IP Pty Ltd
Wild Acre Metals (Peru) SAC
Nuheara, Inc
Terrace Gold Pty Ltd
Principal
Place of
Business
Perth, Australia
Lima, Peru
New York, USA
Perth, Australia
Ownership interest
held by
the Company
Proportion of
non-controlling
interest
2019
100%
100%
100%
80%
2018
100%
100%
100%
80%
2019
0%
0%
0%
20%
2018
0%
0%
0%
20%
The Group 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.
22.
SHARE BASED PAYMENTS
Shares and options granted to KMP
There were no shares or options granted to KMP during the financial year (2018: nil).
The Group’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 Group.
Employees are granted options which vest over three years from commencement with the Group, subject to meeting
specified performance criteria. The options are issued for no consideration and carry no entitlements to voting rights or
dividends of the Group. 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 1,125,000 options vested with KMP (2018: 1,125,000).
There were no shares or options issued to non-KMP or employees.
A summary of the movements of all Group options issued is as follows:
Options outstanding and exercisable as at 30 June 2017
Granted
Forfeited
Exercised
Options outstanding and exercisable as at 30 June 2018
Granted
Forfeited
Exercised
Options outstanding and exercisable as at 30 June 2019
Weighted Average
Exercise Price
$0.07
$0.10
-
-
$0.07
$0.09
-
-
No.
107,319,445
14,000,000
(10,319,445)
(33,000,000)
78,000,000
20,500,000
(14,000,000)
(28,500,000)
56,000,000
The weighted average remaining contractual life of options outstanding at year end was 1.35 years (2018: 1.28). The
weighted average exercise price of outstanding options at the end of the reporting period was $0.09 (2018: $0.07).
42
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
22.
SHARE BASED PAYMENTS (CONTINUED)
The fair value of options granted during the year was $660,170 (2018: $447,125). 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/
Contractors
Employees/
Contractors
Employees/
Contractors
Employees/
Contractors
17/09/2018
10/12/2018
18/03/2018
17/04/2019
$0.084
$0.069
$0.067
$0.079
100%
$0.09
17/09/2021
1.50%
10,500,000
$0.0512
$84,095
100%
$0.09
10/12/2021
100%
$0.09
18/03/2022
100%
$0.09
17/04/2022
1.50%
1,500,000
$0.0390
$5,026
1.50%
6,000,000
$0.0390
$15,430
1.50%
2,500,000
$0.0458
$5,407
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 $450,513, which relates to equity-settled share-based payment transactions
(2018: $283,134).
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:
Loss/(profit) on property plant & equipment
Depreciation and amortisation expenses
Income tax
Share based payments expense
Changes in assets and liabilities
Decrease in trade debtors
Decrease/(increase) in other receivables
(Increase) in inventories
Decrease/(increase) in non-current assets
(Decrease) in trade creditors
(Decrease)/increase in other payables
Increase in provision for employee entitlements
(Decrease) in provision for warranty claims
Increase in unearned income
Net cash used in operating activities
2019
$
2018
$
(10,025,151)
(7,416,412)
18,253
3,337,654
(2,087)
450,513
95,015
79,556
(78,875)
28,585
(126,179)
(261,066)
39,822
(72,676)
12,490
(6,504,146)
1,967
1,932,031
-
283,134
255,138
(234,443)
(1,228,248)
(4,517)
(389,455)
148,779
103,396
(8,880)
28,453
(6,529,057)
43
NUHEARA LIMITED
ABN 29 125 167 133
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 (loss)
Other comprehensive income
Total comprehensive loss for the year
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Total equity of the parent entity
Contributed equity
Reserves
Accumulated losses
Total Equity
2019
$
(10,194,174)
-
(10,194,174)
6,091,745
12,403,391
18,495,136
1,560,703
21,829
1,582,532
16,912,604
2018
$
(7,527,479)
-
(7,527,479)
10,571,376
12,723,094
23,294,470
1,889,175
5,393
1,894,175
21,339,902
45,099,890
1,701,432
(29,888,718)
16,912,604
39,813,230
1,251,726
(19,665,054)
21,399,902
44
NUHEARA LIMITED
ABN 29 125 167 133
The Directors of Nuheara Limited declare that:
(1)
the financial statements and notes, as set out on page 18 to 44, are in accordance with the Corporations Act 2001
and:
(a)
(b)
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 2019 and of the performance for the year ended
on that date of the Group;
(2)
(3)
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 Group 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, 13 September 2019
45
Independent Auditor’s Report
To the Members of Nuheara Limited
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Nuheara Limited (“the Company”) and its controlled entities (“the
Group”), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of comprehensive income, the consolidated statement of changes in equity, and
the consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial
performance for the year then ended; and
b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the time
of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material Uncertainty Regarding Going Concern
Without modifying our opinion, we draw attention to the following matter. As a result of the matters
disclosed in Note 1a) ”Going Concern” of the financial report, there is material uncertainties that cast
significant doubt whether the Group can continue as a going concern and therefore whether it will realise
its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial
report. The ability of the Group to continue as a going concern is dependent upon its ability to generate
sufficient cash surpluses from continued sales of IQ buds, IQbuds BOOST™, and IQstreamTV™ through
expanding distribution channels, New products planned for release over the course of the next 12-months,
and an equity raising.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. In addition to the matter described in the Material Uncertainty Related to Going
section, we have determined the matters described below to be the key audit matters to be communicated
in our report.
Key Audit Matter
How our audit addressed the key audit matter
Capitalised Development Costs
(Note 6,13 &14) (AASB 136 and AASB138)
Capitalised development costs had a net carrying
2019
of
value
(2018:$4,203,045).
$4,650,885
June
30
at
This area is a key audit matter due to subjectivity and
management judgement applied in the assessment of
the capitalisation criteria
whether costs meet
described in AASB 138.
The impairment of development costs is a key audit
to subjectivity and management
matter due
judgement applied in the assessment of whether the
asset should be impaired under the criteria described
in AASB 136.
Audit procedures include the following:
•
•
•
•
•
•
•
assessing the Group's accounting policy in
respect of product development costs in
accordance with AASB 138;
testing a sample of amounts capitalised to
supporting documentation and assessing
compliance with AASB 138;
assessing the Group's accounting policy in
respect of amortisation, and period of
amortisation;
assessing the adequacy of the related
disclosures within the financial statements.
assessing the Group's accounting policy in
respect of impairment in accordance with
AASB 136;
assessing the future cash out flows of the
capitalised development costs; and
assessing the adequacy of the related
disclosures within the financial statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2019 but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with Australian Auditing Standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 9 to 10 of the directors’ report for the year
ended 30 June 2019.
In our opinion, the Remuneration Report of Nuheara Limited for the year ended 30 June 2019 complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
WALKER WAYLAND WA AUDIT PTY LTD
Richard Gregson CA
Director
Level 3, 1 Preston Street, COMO WA 6152
Dated this 13th day of September 2019.
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 5 September
2019.
(1)
Distribution schedule and number of holders of equity securities as at 5 September 2019
Fully Paid Ordinary Shares
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:
9 cents, exp 14/7/2020
Unlisted Options:
11.5 cents, exp 24/7/2020
Unlisted Options:
9 cents, exp 10/11/2020
Unlisted Options:
9 cents, exp 17/9/2021
Unlisted Options:
9 cents, exp 1/3/2021
Unlisted Options:
9 cents, exp 12/1/2021
1 – 1,000
137
1,001 –
5,000
125
5,001 –
10,000
606
10,001 –
100,000
1,986
100,001 –
and over
1,087
Total
3,941
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
2
5
1
1
2
2
10
7
1
6
2
5
1
1
2
2
10
7
1
The number of holders holding less than a marketable parcel of fully paid ordinary shares as at 5 September 2019 is 1,475.
50
NUHEARA LIMITED
ABN 29 125 167 133
ADDITIONAL ASX INFORMATION
(2)
20 Largest holders of quoted equity securities
The names of the twenty largest holders of fully paid ordinary shares (ASX code: NUH) as at 5 September 2019 are:
Rank
1
Name
Farjoy Pty Ltd
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
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