ACTINOGEN MEDICAL LIMITED
ABN 14 086 778 476
ANNUAL FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2016
ACTINOGEN MEDICAL LIMITED
C O N T E N T S P A G E
Contents
Corporate Directory
Chairman’s Address
Corporate Governance Statement
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
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ACTINOGEN MEDICAL LIMITED
C O R P O R A T E D I R E C T O R Y
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Board of DirectorsAuditorsNon- Executive Chairman – Mr Martin RogersErnst & YoungManaging Director – Dr Bill KetelbeyErnst & Young BuildingNon-Executive Director – Dr Jason Loveridge11 Mounts Bay RoadNon-Executive Director – Dr Anton UvarovPerth WA 6000Company SecretaryLawyersCompany Secretary - Peter WebseK&L GatesLevel 25 South TowerPrincipal Place of Business / Registered Office525 Collins StreetLevel 9, Suite 1, 68 Pitt StreetMelbourne VIC 3000Sydney NSW 2000GTP LegalPostal Address68 Aberdeen StreetPO Box 271Northbridge WA 6003West Perth WA 6872BankersContact DetailsNational Australia BankTelephone: 02 8964 74011232 Hay Streetwww.actinogen.com.auWest Perth WA 6005ABN 14 086 778 476Share RegisterLink Market ServicesLevel 12680 George StreetSydney NSW 2000Actinogen Medical Limited shares are listed on the Australia Stock Exchange (ASX). ASX Code: ACW
ACTINOGEN MEDICAL LIMITED
C H A I R M A N ’ S A D D R E S S
Actinogen Medical Limited
2016 Shareholders’ Annual Report
Message from the Chairman
Dear Shareholder,
It is a great pleasure on behalf of the Board to present the 2016 Actinogen Medical Annual Report. This year’s
many achievements are the result of careful and prudent long-term strategic planning and our strong
commitment to bring our distinctive novel drug Xanamem™ to market with a commercial focus on treating
Alzheimer’s disease.
Xanamem™ represents a new approach to treating Alzheimer’s disease – a condition with a significant unmet
medical need that threatens to place a huge burden on society. Xanamem works by blocking the
development and regeneration of cortisol – the “stress hormone” – which appears to contribute to the
cognitive impairment, amyloid plaques and neural death, that are the hallmarks of Alzheimer’s disease.
Alzheimer’s disease is one of the nation’s largest public health crises and has a debilitating effect on patients
and their loved ones. Currently, Alzheimer’s is the second-leading cause of death in Australia according to the
ABS, and sixth-leading cause of death in the United States. As baby boomers reach the age of greater risk of
Alzheimer’s, it can be expected that – barring a treatment breakthrough – millions of people will spend their
retirement years living with Alzheimer’s, or caring for a loved one that has the disease.
There are four different drugs on the market that treat the symptoms of Alzheimer’s to some degree. However,
there are currently no drugs that can significantly alter the course of the disease and one is badly needed. With
the development of Xanamem™, we are hopeful of finding an effective treatment for Alzheimer’s disease in its
earlier stages, when patients first start to demonstrate early symptoms of the disease.
I am pleased to report that in the 2016 financial year Xanamem™ Phase I clinical trial was successfully
completed with positive results. The results confirm, amongst others, that Xanamem™ crosses the blood-brain-
barrier and is effectively delivered to the brain, its primary site of action in Alzheimer’s disease.
These results are particularly encouraging as they confirm that following oral administration, Xanamem™,
reaches the brain in concentrations that are predicted to very effectively inhibit the 11beta-HSD1 enzyme in the
brain. This enzyme activates cortisol in the brain.
These results followed on from the earlier Phase I results that demonstrated the safety and tolerability of
Xanamem™, even at the highest dose of 35mg twice daily. These data will be used to define the optimum daily
dose for Xanamem™ to take forward into the Phase II clinical trial. The total participants in Phase I studies was
n=88.
The unique mechanism of action around cortisol inhibition and the validation that the drug clinically crosses the
blood-brain-barrier gives us great confidence as we advance into the next stages of development.
This year, good progress has also been made towards securing final US FDA approval under an Investigational
New Drug (IND) for the Phase II study. After agreement with the US FDA, the enhanced protocol will be
harmonised with both Australian and UK regulators and hospital sites, with patients expected to be enrolled in
the second half of 2016.
Importantly, a US-focused study and protocol design will allow for a broader value creation, as the US is the
largest market for Alzheimer’s drugs. Since initiating the trial the relevance of this phase II trial and its design has
increased, given the changing competitive and regulatory landscape in Alzheimer’s drugs in development.
As part of the US-focused strategy, in July 2016 we presented our positive Xanamem™ results at the Alzheimer’s
Association International Conference (AAIC), the world’s largest Alzheimer’s Dementia meeting. In a separate
study also presented at the same conference, the Australian Imaging, Biomarker & Lifestyle Flagship Study of
Ageing (AIBL), sponsored by the CSIRO and a number of Australian universities, showed a clear correlation
between elevated cortisol in the blood of a healthy aged population and the subsequent development of
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ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
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This Corporate Governance Statement (“Statement”) outlines the key aspects of Actinogen Medical
Limited’s (‘Actinogen Medical’ or ‘the Company’ or “ACW”) governance framework and main
governance practices. The Company’s charters, policies, and procedures are regularly reviewed
and updated to comply with law and best practice. These charters and policies can be viewed on
Actinogen Medical’s website located at www.actinogen.com.au.
This Statement is structured with reference to the Australian Securities Exchange Corporate
Governance Council’s (“the Council’s”) “Principles of Good Corporate Governance and Best
Practice Recommendations 3rd Edition” (“the Recommendations”).
The Board of Directors has adopted the Recommendations to the extent that is deemed appropriate
considering current the size and operations of the Company. Therefore, considering the size and
financial position of the Company, where the Board considers that the cost of implementing a
recommendation outweighs any potential benefits, those recommendations have not been
adopted.
This Statement was approved by the Board of Directors and is current as at 26 August 2016.
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
The Board is responsible for evaluating and setting the strategic direction for the Company,
establishing goals for management and monitoring the achievement of these goals. The Managing
Director is responsible to the Board for the day-to-day management of the Company.
The principal functions and responsibilities of the Board include, but are not limited to, the following:
• Appointment, evaluation and, if necessary, removal of the Managing Director, any other
executive directors, the Company Secretary and the Chief Financial Officer (if applicable)
and approval of their remuneration;
• Determining, in conjunction with management, corporate strategy, objectives, operations,
plans and approving and appropriately monitoring plans, new investments, major capital and
operating expenditures, capital management, acquisitions, divestitures and major funding
activities;
• Establishing appropriate levels of delegation to the Managing Director to allow the business to
be managed efficiently;
• Approval of remuneration methodologies and systems;
• Monitoring actual performance against planned performance expectations and reviewing
operating information at a requisite level to understand at all times the financial and operating
conditions of the Company;
• Monitoring the performance of senior management, including the implementation of strategy
•
and ensuring appropriate resources are available;
Identifying areas of significant business risk and ensure that the Company is appropriately
positioned to manage those risks;
• Overseeing the management of safety, occupational health and environmental issues;
• Satisfying itself that the financial statements of the Company fairly and accurately set out the
financial position and financial performance of the Company for the period under review;
• Satisfying itself that there are appropriate reporting systems and controls in place to assure the
Board that proper operational, financial, compliance, risk management and internal control
processes are in place and functioning appropriately;
• Ensuring that appropriate internal and external audit arrangements are in place and
operating effectively;
• Authorising the issue of any shares, options, equity instruments or other securities within the
constraints of the Corporations Act and the ASX Listing Rules; and
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• Ensuring that the Company acts legally and responsibly on all matters and assuring itself that
the Company has adopted, and that its practice is consistent with, a number of guidelines
including:
− Code of Conduct;
− Continuous Disclosure Policy;
− Diversity Policy;
− Performance Evaluation Policy;
− Procedures for Selection and Appointment of Directors;
− Remuneration Policy;
− Risk Management and Internal Compliance and Control Policy.
− Securities Trading Policy; and
− Shareholder Communications Policy.
Subject to the specific authorities reserved to the Board under the Board Charter, the Board has
delegated to the Managing Director responsibility for the management and operation of Actinogen
Medical. The Managing Director is responsible for the day-to-day operations, financial performance
and administration of Actinogen Medical within the powers authorised to him from time-to-time by
the Board. The Managing Director may make further delegation within the delegations specified by
the Board and is accountable to the Board for the exercise of those delegated powers. Further
details of Board responsibilities, objectives and structure are set out in the Board Charter on the
Actinogen Medical Website.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity
to justify the formation of separate committees at this time, including audit, risk, remuneration or
nomination committees, preferring at this stage of the Company’s development, to manage the
Company through the full Board of Directors. The Board assumes the responsibilities normally
delegated to the Audit, Risk, Remuneration and Nomination Committees. If the Company’s activities
increase, in size, scope and nature, the appointment of separate committees will be reviewed by the
Board and implemented if appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director, or putting
that person forward as a candidate to ensure that person is competent, experienced, and would not
be impaired in any way from undertaking the duties of director. The Company provides relevant
information to shareholders for their consideration about the attributes of candidates together with
whether the Board supports the appointment or re-election.
The terms of the appointment of a non-executive director, executive directors and senior executives
are agreed upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters
to do with the proper functioning of the Board, including agendas, Board papers and minutes,
advising the Board and its Committees (as applicable) on governance matters, monitoring that the
Board and Committee policies and procedures are followed, communication with regulatory bodies
and the ASX and statutory and other filings.
Diversity
The Company has adopted a formal Diversity Policy and is committed to workplace diversity, with a
particular focus on supporting the representation of women at the senior level of the Company and
on the Company Board.
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The Company is currently in an early stage of its development and given that it currently has a limited
number of employees, the application of measurable objectives in relation to gender diversity, at
various levels of the Company’s business, is not considered to be appropriate nor practical.
The Board will review this position on an annual basis and will implement measurable objectives as
and when they deem the Company to require them.
The proportion of women in the Company as at 31 August 2016 is as follows:
Women on the board: 0 of 4 (0%)
Women in senior executive positions: 0 of 2 (0%)
Women in the organisation: 4 of 10 (40%)
The Company’s Diversity Policy is available on its website.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance
The annual review includes consideration of the following measures:
comparing the performance of the Board against the requirements of its Charter;
assessing the performance of the Board over the previous 12 months having regard to the
corporate strategies, operating plans and the annual budget;
reviewing the Board’s interaction with management;
reviewing the type and timing of information provided to the Board by management;
reviewing management’s performance in assisting the Board to meet its objectives; and
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a
Board self-assessment checklist to be completed by each Director. The Board may also use an
independent adviser to assist in the review.
The Chairman has primary responsibility for conducting performance appraisals of Non-Executive
Directors, in conjunction with them, having particular regard to:
contribution to Board discussion and function;
degree of independence including relevance of any conflicts of interest;
availability for and attendance at Board meetings and other relevant events;
contribution to Company strategy;
membership of and contribution to any Board committees; and
suitability to Board structure and composition.
The Board conducts an annual performance assessment of the Managing Director against agreed
key performance indicators. Board and management performance reviews were conducted during
the financial year in accordance with the above processes.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in
fulfilling their duties and responsibilities, to obtain independent professional advice on any matter
connected with the discharge of their responsibilities, with prior notice to the Chairman, at Actinogen
Medical’s expense.
Principle 2: Structure the board to add value
Board Composition
During the financial year and to the date of this report the Board was comprised of the following
members:
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ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
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Mr Martin Rogers
Dr Bill Ketelbey
Dr Jason Loveridge
Dr Anton Uvarov
Chairman (appointed 1 December 2014);
Managing Director (appointed 18 December 2014);
Non-Executive Director (appointed 1 December 2014)
Non-Executive Director (appointed 16 December 2013)
The Board consisted of two Executive Directors until 5 July 2016, when the executive Chairman, Mr
Martin Rogers, reverted to Non-Executive Chairman role. The Company currently has one executive
Director, the Managing Director, and three Non-Executive Directors.
Actinogen Medical has adopted a definition of 'independence' for Directors that is consistent with
the Recommendations.
The Company’s Chairman, Mr Martin Rogers, is not an independent director by virtue of the fact that
he is a substantial shareholder and that he was Executive Chairman until 5 July 2016. The Board
values the insight and advice provided by Mr Rogers and considers that the materiality of his
relationship is such that it does not interfere with his capacity to bring an independent judgement on
issues before the Board and to act in the best interests of Actinogen Medical and its security holders
generally.
The Board does not currently consist of a majority of independent directors. Dr Jason Loveridge and
Dr Anton Uvarov are the only current directors considered to be independent. Given the size of the
Board and the nature and scale of the Company’s current operations the Board believes the
presence of two independent directors on the Board is sufficient.
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is
required in order to effectively govern Actinogen Medical. The Board believes that orderly
succession and renewal contributes to strong corporate governance and is achieved by careful
planning and continual review.
The Board is responsible for the nomination and selection of directors. The Board reviews the size and
composition of the Board regularly and at least once a year as part of the Board evaluation process.
The Board has a skills matrix covering the competencies and experience of each member. When the
need for a new director is identified, the required experience and competencies of the new director
are defined in the context of this matrix and any gaps that may exist.
Generally a list of potential candidates is identified based on these skills required and other issues
such as geographic location and diversity criteria. Candidates are assessed against the required
skills and on their qualifications, backgrounds and personal qualities. In addition, candidates are
sought who have a proven track record in creating security holder value and the required time to
commit to the position.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and
conditions of their appointment, including Director's duties, rights and responsibilities, the time
commitment envisaged, and the Board's expectations regarding involvement with any Committee
work.
An induction program is in place and new Directors are encouraged to engage in professional
development activities to develop and maintain the skills and knowledge needed to perform their
role as Directors effectively.
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Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides guidelines aimed at
maintaining high ethical standards, corporate behaviour and accountability within the Company.
All employees and Directors are expected to:
respect the law and act in accordance with it;
respect confidentiality and not misuse Company information, assets or facilities;
maintain high levels of professional conduct;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which
seeks the respect of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace
safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their
workplace and with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
An employee that breaches the Code of Conduct may face disciplinary action including, in the
cases of serious breaches, dismissal. If an employee suspects that a breach of the Code of Conduct
has occurred or will occur, he or she must report that breach to the Company Secretary. No
employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach.
All reports will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfills the functions normally delegated to the Audit Committee as detailed in
the Audit Committee Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a
new external auditor when any vacancy arises. Candidates for the position of external auditor must
demonstrate complete independence from the Company through the engagement period. The
Board may otherwise select an external auditor based on criteria relevant to the Company’s business
and circumstances. The performance of the external auditor is reviewed on an annual basis by the
Board.
The Board receives regular reports from management and from external auditors. It also meets with
the external auditors as and when required.
The external auditors attend Actinogen Medical's AGM and are available to answer questions from
security holders relevant to the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external
auditor. There are qualitative limits on this non-audit work to ensure that the independence of the
auditor is maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for
more than five years.
CEO Certifications
The Board has received certifications from the CEO in connection with the financial statements for
the Actinogen Medical for the Reporting Period. The Company does not currently have a CFO. The
certifications state that the declaration provided in accordance with Section 295A of the
Corporations Act as to the integrity of the financial statements is founded on a sound system of risk
management and internal control which is operating effectively.
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Principle 5: Make timely and balanced disclosure
The Company has a Continuos Disclosure Policy which outlines the disclosure obligations of the
Company as required under the ASX Listing Rules and Corporations Act. The policy is designed to
ensure that procedures are in place so that the market is properly informed of matters which may
have a material impact on the price at which Company securities are traded.
The Board considers whether there are any matters requiring disclosure in respect of each and every
item of business that it considers in its meetings. Individual Directors are required to make such a
consideration when they become aware of any information in the course of their duties as a Director
of the Company.
The Company is committed to ensuring all investors have equal and timely access to material
information concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with
the ASX. The Chairman, Managing Director and the Company Secretary are responsible for ensuring
that:
a) Company announcements are made in a timely manner, that announcements are factual
and do not omit any material information required to be disclosed under the ASX Listing Rules
and Corporations Act; and
b) Company announcements are expressed in a clear and objective manner that allows
investors to assess the impact of the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognizes the value of providing current and relevant information to its shareholders.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those
rights the Company is committed to:
• communicating effectively with shareholders through releases to the market via ASX, the
company website, information emailed or mailed to shareholders and the general meetings of
the Company;
• giving shareholders ready access to clear and understandable information about the
Company; and
• making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to
make enquiries of the Company. These contact details are available on the “contact us” page of
the Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Actinogen
Medical and Actinogen Medical's securities registry electronically.
The Company maintains information in relation to its Constitution, governance documents, Directors
and senior executives, Board and committee charters, annual reports and ASX announcements on
the Company’s website.
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ACTINOGEN MEDICAL LIMITED
C O R P O R A T E G O V E R N A N C E S T A T E M E N T
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Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout
Actinogen Medical's business activities.
The Board is responsible for the oversight of the Company’s risk management and internal
compliance and control framework. Responsibility for control and risk management is delegated to
the appropriate level of management within the Company with the Managing Director having
ultimate responsibility to the Board for the risk management and internal compliance and control
framework. Actinogen Medical has established policies for the oversight and management of
material business risks.
Actinogen Medical's Risk Management and Internal Compliance and Control Policy recognises that
risk management is an essential element of good corporate governance and fundamental in
achieving its strategic and operational objectives. Risk management improves decision making,
defines opportunities and mitigates material events that may impact security holder value.
Actinogen Medical believes that explicit and effective risk management is a source of insight and
competitive advantage. To this end, Actinogen Medical is committed to the ongoing development
of a strategic and consistent enterprise wide risk management program, underpinned by a risk
conscious culture.
Actinogen Medical accepts that risk is a part of doing business. Therefore, the Company’s Risk
Management and Internal Compliance and Control Policy is not designed to promote risk
avoidance. Rather Actinogen Medical's approach is to create a risk conscious culture that
encourages the systematic identification, management and control of risks whilst ensuring we do not
enter into unnecessary risks or enter into risks unknowingly.
Actinogen Medical assesses its risks on a residual basis; that is it evaluates the level of risk remaining
and considering all the mitigation practices and controls. Depending on the materiality of the risks,
Actinogen Medical applies varying levels of management plans.
The Board has required management to design and implement a risk management and internal
compliance and control system to manage Actinogen Medical's material business risks. It receives
regular reports on specific business areas where there may exist significant business risk or exposure.
The Company faces risks inherent to its business, including economic risks, which may materially
impact the Company’s ability to create or preserve value for security holders over the short, medium
or long term. The Company has in place policies and procedures, including a risk management
framework (as described in the Company’s Risk Management and Internal Compliance and Control
Policy), which is developed and updated to help manage these risks. The Board does not consider
that the Company currently has any material exposure to environmental or social sustainability risks
The Company’s process of risk management and internal compliance and control includes:
identifying and measuring risks that might impact upon the achievement of the Company’s
goals and objectives, and monitoring the environment for emerging factors and trends that
affect those risks.
formulating risk management strategies to manage identified risks, and designing and
implementing appropriate risk management policies and internal controls.
monitoring the performance of, and improving the effectiveness of, risk management systems
and internal compliance and controls, including regular assessment of the effectiveness of risk
management and internal compliance and control.
The Board review’s the Company’s risk management framework at least annually to ensure that it
continues to effectively manage risk. Management reports to the Board as to the effectiveness of
Actinogen Medical's management of its material business risks at each meeting.
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Principle 8: Remunerate fairly and responsibly
Actinogen Medical’s Remuneration Policy was designed to recognise the competitive environment
within which Actinogen Medical operates and also emphasise the requirement to attract and retain
high caliber talent in order to achieve sustained improvement in Actinogen Medical’s performance.
The overriding objective of the Remuneration Policy is to ensure that an individual’s remuneration
package accurately reflects their experience, level of responsibility, individual performance and the
performance of Actinogen Medical.
The key principles are to:
link executive reward with strategic goals and sustainable performance of Actinogen Medical;
apply challenging corporate and individual key performance indicators that focus on both
short-term and long-term outcomes;
motivate and recognise superior performers with fair, consistent and competitive rewards;
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development;
and
through employee ownership of Actinogen Medical shares, foster a partnership between
employees and other security holders.
The Board determines the Company’s remuneration policies and practices and assesses the
necessary and desirable competencies of Board members. The Board is responsible for evaluating
Board performance,
reviewing Board and management succession plans and determines
remuneration packages for the CEO, Non-Executive Directors and senior management based on an
annual review.
Actinogen Medical’s executive remuneration policies and structures and details of remuneration
paid to directors and senior managers are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their
services, the reimbursement of reasonable expenses and, in certain circumstances options. They do
not receive any termination or retirement benefits, other than statutory superannuation.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is
$500,000 per annum. The Directors set the individual Non-Executive Directors fees within the limit
approved by shareholders.
The total fees paid to Non-Executive Directors during the reporting period were $108,339.
Executive directors and other senior executives are remunerated using combinations of fixed and
performance based remuneration. Fees and salaries are set at levels reflecting market rates and
performance based remuneration is linked directly to specific performance targets that are aligned to
both short and long term objectives.
In accordance with the Company’s Securities Trading Policy, participants in an equity based incentive
scheme are prohibited from entering into any transaction that would have the effect of hedging or
otherwise transferring the risk of any fluctuation in the value of any unvested entitlement in the
Company’s securities to any other person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration
Report, within the Directors’ report.
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ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
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Your Directors present their report pertaining to Actinogen Medical Limited (“the Company” or
“Actinogen”) and its subsidiary Corticrine Limited (collectively, “the Group”) for the year ended 30
June 2016.
INFORMATION ON DIRECTORS
1.
BOARD OF DIRECTORS
The names and details of the Company’s Directors in office during the financial year and until the date
of this report are as follows. Directors were in office for this entire period unless otherwise stated.
Dr Bill Ketelbey (appointed 18 December 2014)
MBBCh, FFPM, MBA, GAICD
Managing Director and Chief Executive Officer
Dr Ketelbey is a highly experienced and successful healthcare and pharmaceutical sector professional,
with 30 years’ experience in the industry, including senior medical and management roles with global
pharmaceutical giant, Pfizer. Dr Ketelbey has a Medical degree from the University of the Witwatersrand,
South Africa, is a Fellow of the Faculty of Pharmaceutical Medicine with the Royal College of Physicians,
UK, has an MBA from Macquarie University and is a Graduate of the Australia Institute of Company
Directors
Prior to joining Actinogen Medical, Dr Ketelbey was the APAC Regional Vice President of Medical Affairs
for Pfizer’s Primary Care Business Unit and Country Medical Director for Pfizer Australia and New Zealand.
At Pfizer, Dr Ketelbey was responsible for leading the development of numerous medicines across a
broad range of therapeutic areas, including Aricept, the market leading therapy for Alzheimer’s Disease.
Dr Ketelbey has held no other directorships during the past three years.
Mr Martin Rogers (appointed 1 December 2014)
B.Eng (Chem), B. Sc.
Non-Executive Chairman
A well-recognized Australian biotechnology entrepreneur and executive, Mr Rogers has a depth of
experience in incubating companies and publicly listed organisations, with degrees in Chemical
Engineering and Science.
Experienced in all aspects of financial, strategic and operational management, he has helped raise over
$100m cash equity. Both an investor and senior executive in a privately funded advisory business, he was
instrumental in significantly increasing the value of investments in the science and biotechnology sectors.
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NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentMr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/2016CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/2013Current
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During the past three years Mr Rogers has served as a director of the following ASX-listed companies:
Non-Executive Director – Oncosil Limited (ASX: OSL) – Appointed 3 April 2013 – Current
Non-Executive Chairman – Rhinomed Limited (ASX: RNO) – Appointed 3 September 2012 –
Resigned 2 December 2015; and
Non-Executive Director – Cellmid Limited (ASX: CDY) – Appointed 19 September 2012 –
Resigned 30 June 2015.
Dr Jason Loveridge (appointed 1 December 2014)
BSc PhD FRSM
Non-Executive Director
Dr Loveridge has been working in the biotech and medtech industries for over 25 years and brings
extensive experience in the commercialisation of medical research to the Board of Actinogen. As a
venture investor with JAFCO Nomura Dr Loveridge invested in over 28 companies in Europe, the US
and Israel and has been directly involved in the management of a number of innovative companies
in the medical arena.
During the past three years Dr Loveridge has served as a director of the following ASX-listed
companies:
Non-Executive Director of Resonance Health Limited (ASX: RHT) – appointed February 2013 –
Current.
Dr Anton Uvarov (appointed 16 December 2013)
PhD BioChem.Med.Gen, MBA
Non-Executive Director
Dr Uvarov has significant experience as an equity analyst in the healthcare industry with a focus on
biotechnology sector, both domestically and internationally. Prior to moving to Australia he was with
Citigroup Global Markets where he spent two years as a member of New York based biotechnology
team that has been continuously ranked top 4 for Biotechnology in the All-America Institutional Investor
survey.
Dr Uvarov's scientific expertise and company knowledge spreads across variety of therapeutic areas
and spectrum of market capitalizations with his particular interest in early stage biotechnology
companies. Dr Uvarov holds a PhD degree in Biochemistry and Medical Genetics from the University of
Manitoba, Canada and an MBA degree from the University of Calgary, Canada.
During the past three years Dr Uvarov has also served as a Director of the following listed companies:
Executive Director of Sun Biomedical Limited (ASX: SBN) – appointed 20 November 2013 –
resigned – 23 November 2015;
Non-Executive Director of Acuvax Limited (ASX: ACU) – appointed: 10 October 2013;
resigned 14 March 2014; and
Non-Executive Director of Imugene Limited (ASX: IMU) appointed 5 January 2016 – Current.
13
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Interests in the shares and options of the Company and related bodies corporate
As at the date of this report, the interests of the Directors in the shares of the Company were as follows:
(a) During the prior year ended 30/6/2015, 43,000,000 Loan Shares were issued to Directors of which 26,000,000 have
vested as at 30 June 2016.
2. DIRECTORS’ MEETINGS
The following table sets out the number of meetings of the Company’s Directors held while each
Director was in the office and the number of meetings attended by each Director.
Due to size and scale of the Company, there is no Remuneration, Nomination or Audit Committee at
present. Matters typically dealt with by these Committees are, for the time being, reverted to the Board
of Directors. For details of the function of the Board please refer to the Corporate Governance
Statement which is included as part of this financial report.
3. CORPORATE GOVERNANCE
The Board recognises the recommendations of the Australian Securities Exchange Corporate
Governance Council, and has disclosed its level of compliance with those guidelines within the
Corporate Governance Statement which is included as part of this financial report.
4. COMPANY SECRETARY
The following person held the position of Company Secretary during the financial year.
Peter Webse (appointed 10 October 2013)
B.Bus, FGIA, FCPA, MAICD
Mr Webse has over 25 years’ company secretarial experience and is managing director of Platinum
Corporate Secretariat Pty Ltd, a company specialising in providing company secretarial, corporate
governance and corporate advisory services. Mr Webse holds a Bachelor of Business with a double
major in Accounting and Finance, is a Fellow of the Governance Institute of Australia, a Fellow Certified
Practicing Accountant and a Member of the Australian Institute of Company Directors.
14
NameFully paid ordinary sharesLoan shares (a)TotalDr Bill Ketelbey353,803 12,000,000 12,353,803 Mr Martin Rogers11,407,894 25,000,000 36,407,894 Dr Jason Loveridge21,875,078 6,000,000 27,875,078 Anton Uvarov4,187,244 - 4,187,244 Total37,824,019 43,000,000 80,824,019 Mr Martin Rogers1111Dr Bill Ketelbey1111Dr Jason Loveridge1110Dr Anton Uvarov1111DirectorNumber of meetings attendedNumber of meetings available to attend
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
5.
SHARES UNDER OPTION
As at the date of this report, there were 55,700,000 unissued ordinary shares under option:
48,500,000 unlisted options with an exercise price of $0.02 per share and an expiry date of 30
November 2018 (fully vested);
5,500,000 unlisted Facilitator options at $0.02 per share exercisable on or before 30 November
2018 (fully vested); and
1,700,000 unlisted options with an exercise price of $0.103 per share exercisable on or before 7
July 2020. These options were issued to employees of the Company and are subject to vesting
conditions (refer to Subsequent Events note).
During the year the following options expired:
9,103,177 listed options at $0.40 per share exercisable on or before 30 September 2015.
No option holder has any right, by virtue of the option, to participate in any share issue of the Company
or any related body corporate. For further details of the options outstanding please refer to the
Remuneration Report which is included as part of this financial report.
OPERATIONS AND FINANCIAL REVIEW
6.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the year was on biotechnology focused on the
development of novel
for Alzheimer’s disease and other major age-related
neurodegenerative disorders
treatments
7.
REVIEW OF OPERATIONS
Highlights during the Financial Year
(i) XanADu – Phase 2 trial in mild Alzheimer’s disease
(ii) XanamemTM Pipeline
(iii) Regulatory and Research outsourced contracts – ERA Consulting and ICON Clinical Research
(iv) Manufacturing
(v)
(vi) Resources
(vii) Operations
(viii) Budget, cash-flow and R&D rebate
(ix)
IP review and patent approvals
Investor Relations
This past year has been particularly productive for Actinogen Medical, focussed on setting the
business up to take on the full development of XanamemTM in Alzheimer’s disease and other major
indications, with the expectation of major commercial Big Pharma partnerships within the next few
years.
15
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
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(i) XanADu – Phase 2 trial in mild Alzheimer’s disease
Over 2015, all the required clinical, pre-clinical and safety trials were successfully completed for
XanamemTM, in preparation for initiating XanADu, the Phase 2 trial in mild Alzheimer’s disease (“AD”).
A second Phase 1 trial with 40 participants was successfully completed at the Linear Institute in Perth.
This was a multiple ascending dose study that included a pharmacokinetic/pharmacodynamic sub-
study of 24 participants, a fed/fasted sub-study of 12 participants and a central nervous system
(“CNS”) pharmacokinetic sub-study of 4 participants. The studies confirmed the safety and tolerability
of XanamemTM and the ADME profile of the drug, including that XanamemTM was efficiently delivered
to the brain in concentrations adequate to inhibit the 11BHSD1 enzyme in the brain, its primary site of
action.
Additionally we completed a rodent toxicology and toxicokinetic study in Melbourne, and undertook
an extensive array of laboratory based safety and drug interaction studies in the UK and Europe. We
also commissioned the manufacturing of XanamemTM active in the UK and encapsulation, and
stability and quality testing of the final product in Australia.
Data from all these trials helped confirm the optimum dose for XanamemTM in the XanADu trial, and
importantly confirmed the safety and tolerability of XanamemTM even at the highest does of 35mg
twice daily.
With the completion of all the necessary preliminary research, and the protocol and supportive
regulatory and ethical documentation, everything is well on track to recruit the first patients in the
second half of the 2016 calendar year. The study is expected to read out in 2018. As XanADu is a
double blind placebo controlled randomised study, no results will be known until the trial completes
in 2018.
The XanADu study is particularly notable through design elements that place it at the forefront of
Alzheimer’s research. For example: ADCOMS is the latest, and most sensitive measurement tool for
assessing cognitive ability in very early Alzheimer’s disease. It has been developed by a global
collaboration of Alzheimer’s researcher specialists, medical regulators and pharmaceutical industry
experts, under the direction of the FDA and NIH in the US and EMEA in Europe. The results of this
collaboration have recently been published (Wang J, et al. J Neurol Neurosurg Psychiatry 2016;0:1–7.)
Most significantly for XanADu, ADCOMS has been incorporated into the panel of assessment tools for
the study. In fact, ADCOMS is included as a co-primary endpoint, along with ADAS-Cog, making
XanADu only the second clinical trial in the world to use ADCOMS for endpoint assessment. We can
comfortably claim that XanADu is at the cutting edge of Alzheimer’s clinical research!
A further significant design feature is the CSF sub-study that will be run on a cohort of the XanADu
patients to ascertain whether we are able to replicate the amyloid plaque clearance seen in the
animal studies. If we can demonstrate that amyloid and tau proteins are mobilised from the human
brain by XanamemTM, we will have shown the potential for XanamemTM to be both a disease modifier
as well as a symptomatic AD therapy. Successful disease modification of AD is seen as the optimum
goal for any AD therapy, and to date no treatment has demonstrated such an outcome.
We look forward to announcing recruitment of the first patients in the next few months and updating
investors of the progress of XanADu over the next couple of years.
(ii) XanamemTM Pipeline
While the link between excess cortisol and metabolic and endocrine diseases has been known about
for many years, the association with diseases of the central nervous system has only been relatively
recently recognised. Excess cortisol has been shown to cause neurodegenerative damage to the
hippocampus, the area of the brain central to recent memory formation and retention. Decreasing
this excess cortisol to a more normal level has been shown to prevent and even reverse this
neurodegenerative damage. This principle led to the development of XanamemTM as a potential
therapy for Alzheimer’s disease.
16
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
is the potential
for XanamemTM to benefit a number of other
Equally, however, there
neurodegenerative diseases associated with elevated cortisol. Strategically we have elected to
target two key diseases – the cognitive decline associated with Diabetes and Parkinson’s disease
dementia. While Alzheimer’s disease is the primary development priority, these two other indications
are being developed in parallel and will provide a very significant pipeline of indications in the
development of XanamemTM
Both diseases present substantial unmet clinical need, and both represent sizable addressable
markets - XanamemTM s potential peak annual sales in these three markets alone are estimated to be
>$6bn. We expect The Alzheimer’s XanADu study to start recruiting patients in 2H2016, the Diabetes
study in 1H2017 and Parkinson’s disease, later in 2017.
(iii) Regulatory and Research outsourced contracts – ERA Consulting and ICON Clinical Research
Early on it was recognised that the key support functions for any drug development program,
research operations and regulatory affairs, would need to be outsourced. To that end we contracted
ICON Clinical Research (ICON) as our CRO (Clinical Research Organisation) and ERA Consulting
(ERA) as our Regulatory Affairs partners.
ERA initially undertook an extensive Gap Analysis to identify any clear gaps in our research data
package pending submission to the various regulatory bodies for approval to initiate our various
clinical studies. ERA have since authored and compiled the extensive documentation necessary for
the various regulatory submissions.
ICON, with its global research resources, is managing the planning, deployment and operations of
XanADu, our Phase 2 trial in mild Alzheimer’s disease. Following Actinogen’s successful drafting of the
research protocol, with the extensive input for the XanamemTM Clinical Advisory Board, it was passed
on to ICON for final drafting and operational enactment. ICON is currently identifying and recruiting
appropriate research sites in Australia, the UK and USA to run the trial, and ensuring all the necessary
ethical, regulatory and logistical details are in place, prior to the first patients being recruited to the
trail later this year.
(iv) Manufacturing
The manufacture of XanamemTM active was contracted to High Force in the UK, ensuring we have
adequate supplies for a number of clinical studies, including XanADu. A portion of this XanamemTM
active has since been formulated and encapsulated for the XanADu study, along with a matching
placebo, by a contract manufacturer in Australia.
(v)
IP review and patent approvals
We continue to solidify our IP protection of XanamemTM, with the granting of our most definitive
patent, Webster-7, in a number of key jurisdictions including the EU, USA, Australia, Japan and China.
This patent provides comprehensive composition of matter patent protection out to 2031. Trademark
protection for XanamemTM has been applied for, and granted in most key geographies.
(vi) Resources
A resource review defined the internal resources necessary to support our research and business
development initiatives, resulting in the recruitment of 3 additional heads over the year – A Strategy
and Business Development Director, a Clinical Research Manager and a Clinical Trials Associate.
Strategically, however, Actinogen will continue to outsource all specialist research and regulatory
functions as the predominant business model to ensure our lean agility and to retain the ability to
selectively access resources on an as-needs basis.
17
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(vii) Operations
On 1 July 2015, Actinogen Medical moved to new offices on Pitt St in the Sydney CBD, allowing for
adequate expansion and growth of the business over the next three years. We are now fully
operational and resourced.
We moved our investor registry services to Link Market Services, to enhance the efficacy and
effectiveness of the service we are able to provide to our shareholders. We trust that a noticeable
improvement in shareholder interaction has been experienced.
(viii) Budget, cash-flow and R&D rebate
Our cash-flow and budget projections for the financial year confirmed that we expect to have
adequate capital to fund the Phase 2 Alzheimer’s disease program through into 2018. These budget
projections include the expected Commonwealth Government R&D tax rebates for the 2016 and
2017 financial years. On 8 June 2016 we announced the harmonisation of the XanADu protocol. This
may require an upward revision of the trial budget and announcements in this regard will made at
the appropriate time.
ACW has been approved for the R&D tax rebate for three years, with the first rebate of $1.32m
received in early 2016. We expect to receive the 2015/2016 rebate in September/October 2016, with
the second and third rebates expected to be substantially larger than the first one.
(ix) Investor Relations
With ACW so relatively new to Alzheimer’s Research and Biotech Investors, significant resources have
been deployed on Investor Relations initiatives, to ensure we achieve appropriate recognition as a
mainstream neuroscience biotech company. To this end multiple investor presentations have been
given, a major symposium “Understanding Alzheimer’s” was hosted, our communications and social
media infrastructure was upgraded and resourced, and 4 editions of our Investor Newsletter issued.
Additionally research was initiated by Baker Young in August 2015 with the publication of a
comprehensive report: Actinogen Medical – Best Risk vs Reward Play in Alzheimer’s Dementia
detailing the investment opportunity presented by ACW. The Company’s target share price was
quoted at $0.35, on a current share price of around $0.075. An update report is due early in the new
financial year.
Going forward we will be enhancing these Investor Relations initiatives with our publications and
presentations program and participating aggressively in global biotech partnering symposia and
meetings
8.
FINANCIAL PERFORMANCE
The financial performance of the Company during the year ended 30 June 2016 is as follows:
(a) Revenue includes $104,171 in interest revenue; $98,638 in dividends received from listed investments
held; and $3,748,452 in research and development tax rebates recognised during the year ended 30
June 2016.
18
Full-year endedFull-year ended30/06/201630/06/2015$ $Revenue ($)(a)3,952,943153,429Net loss after tax ($)(3,633,758)(5,431,009)Loss per share (cents)(0.60)(1.32)Dividend ($) - -
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
9.
FINANCIAL POSITION
The financial position of the Company as at 30 June 2016 is as follows:
(a) At the end of the prior year ended 30 June 2015, the Group’s cash and cash equivalents totalled $9,805,610.
Since then the Group has invested $6,000,225 in available-for-sale listed investments comprising securities
from major banks which are considered
to
cash. Approximately $2,000,000 of these investments have been sold, so that as of 30 June 2016, the
balance of the Group’s investments were valued at $4,025,987. The Group received $98,638 in dividends
during the year from holding these investments and as at 30 June 2016 the Group recognised an unrealised
gain of $22,272. Refer to Financial Statements, Note 10: Available-for-sale Listed Investments for further
information.
readily convertible
investments
that are
low
risk
Combining the $4,025,987 in available-for-sale listed investments with the $751,978 in cash and cash
equivalents held at year end, equates to $4,777,965. The decrease from prior year-end balance of
$9,805,610 is in line with the anticipated working capital budgeted spend as set out in various
announcements issued on the stock exchange during the financial year and previous financial year. Funds
have been applied primarily to support the Phase 2 study of XanamemTM, and to support general working
capital.
Post year-end the Company is due to receive up to approximately $2.6 million in other income which relates
to the research and development rebate receivable recognjsed at year end.
(b) Accumulated losses increased due to a significant level of spending on research and development related
expenditure plus a prorated share-based payment expense was recognised based on loan shares granted
to Key Management Personnel in the prior year. Although an overall increase in accumulated losses from
prior year, the movement was partly reduced by $2,605,395 which relates to the research and development
tax rebate receivable recognised at year end.
10. DIVIDENDS
No amounts have been paid or declared by way of dividend since the date of incorporation. The
Directors recommend that no final dividend be paid.
11. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
On 23 February 2016, Corticrine Limited was deregistered and dissolved. Corticrine was entirely
dormant for the entire financial year up to its deregistration date.
Other than what is noted above, there were no significant changes in the state of affairs of the
Company during the year.
19
As atAs at30/06/201630/06/2015$ $Cash and cash equivalents (a)751,9789,805,610Available-for-sale listed investments (a)4,025,987 - Net assets / Total equity12,125,35015,356,608Contributed equity26,308,39126,254,891Accumulated losses (b)(19,887,692)(16,253,934)
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
12. EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 7 July 2016, 1.7 million options with an exercise price of $0.103 each, exercisable on or
before 7 July 2020 were issued to employees of the Company. These options will vest on
achieving FDA IND approval for the XanADu trial, and for achieving the first patient enrolled
into the study in the US and Australia, and for achieving MHRA regulatory approval for the study
in the UK, by the end of 2016; and
On 7 July 2016, Mr Martin Rogers reverted from Executive Chairman to Non-Executive
Chairman.
Other than what has been mentioned above, no matters or circumstances have arisen since the end
of the financial year which significantly affected or may significantly affect the operations of the
Company, the results of those operations, or the state of the Company in subsequent financial years.
13. OUTLOOK & BUSINESS STRATEGY
The year ahead for ACW is focussed on achieving solid progress with XanADu patient recruitment,
initiating additional XanamemTM studies in the pipeline indications, and communicating our
impressive research findings widely in the research, biotech and commercial partner communities.
This will all happen against a backdrop of significantly increasing interest in Alzheimer’s disease as an
investment opportunity.
A recent JP Morgan investment report concluded that “We see Alzheimer’s as representing one of
the most attractive potential new categories in Major Pharma & Biotech (>$10bn in peak sales
potential)” and “With a number of key catalysts anticipated in 2016, we expect investor focus on
Alzheimer’s to increase throughout the year”. This optimism is driven by the significant advances in β-
Amyloid research, but equally in biomarker and imaging research which allows us to diagnose and
treat much earlier in the disease process. Of particular significance to ACW has been the volume of
recent research supporting excess cortisol and its association with the development and progression
of Alzheimer’s disease.
A major frustration with Alzheimer’s research is not understanding the primary drivers of the disease.
It’s clear that about 15% of Alzheimer’s has a genetic basis – the problem is the underlying cause of
the other 85% is currently unknown. Over the years dozens of theories have been investigated and
disproven and it’s becoming clearer that no one single cause will be uncovered – it’s likely that
Alzheimer’s is caused by a number of underlying factors, and that treatment will equally have to
utilise a combination of therapies.
One of the most compelling recent discoveries is that elevated cortisol appears to be linked to the
development and progress of Alzheimer’s disease. This cortisol hypothesis underpins the discovery
and development of XanamemTM by the University of Edinburgh, and in the past year a number of
strongly supportive epidemiological studies have been published that provide further evidence
confirming this cortisol hypothesis.
Three of the four major publications, published in highly prestigious journals (Geerlings et al 2015,
Neurology; Popp et all 2015, Neurobiology of Aging; Lehallier et al 2015, JAMA Neurology), provide
impressively solid support. However, it’s the most recent paper that is still under review by Neurology,
which provides the most compelling supportive evidence. This publication, from the AIBL Research
Group in Australia – a Research Group funded by various Australian government agencies and
universities, including the CSIRO, concludes with “These results suggest that therapies targeted
toward lowering plasma cortisol and β-Amyloid levels may help mitigate cognitive decline in the
preclinical phase of AD”. Actinogen Medical could not have asked for a more solid, compelling
endorsement of the work currently underway in developing XanamemTM for Alzheimer’s disease!
20
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
The XanaADu Phase 2 trial in mild Alzheimer’s disease is our flagship clinical development trial, as it’s
the primary driver of the value of ACW. Having initiated XanADu earlier in 2016, the clear focus over
the next 2 years is on patient recruitment, data integrity and budget management – the speed,
quality and cost of the study. Regulatory and ethical approval, and patient recruitment in all
geographies, is expected within the second half of 2016, following the protocol harmonisation across
the US, UK and Australia. Importantly, a US focused study and protocol design will allow for broader
value creation, as the US is the largest market for Alzheimer’s drugs.
The phase II clinical trial initiation increases the attractiveness of XanamemTM as this novel approach
to treating Alzheimer’s is backed by pre-clinical and clinical data strongly supporting the mechanism
around the suppression of the “stress” hormone, cortisol. We remain on track for a 2018 data readout
of this landmark study. We will continue to regularly update the market on the ongoing clinical
progress with XanamemTM.
In tandem with the ongoing XanADu trial, we are also developing a pipeline of other indications for
XanamemTM that will value-add to the product and spread the risk of focussing only on Alzheimer’s
disease.
The two lead indications under development are DCI (diabetes related cognitive impairment) and
PDD (Parkinson’s disease dementia). The DCI Phase 2 study design has been agreed with the
research team and various non-dilutive funding sources are being investigated. We hope to have this
study initiated before the end of the year. The PDD study plans are under evaluation, with the
expectation that a definitive Phase 2 study proposal will be formulated before the year end, with
study initiation expected in 2017. These two indications are expected to add a 50% incremental
value XanamemTM, if they prove out.
The second major strategic priority is optimising the commercial opportunities presented through the
XanamemTM development program. This will evolve through the development of our Business
Development program. Key elements of this initiative will involve extensive communication of our
research to biotech and Big Pharma, and engaging with them in potential partnering discussions at
the various global biotech partnering meetings such as JP Morgan, Bio-US, Bio-Europe BioEquity and
AusBiotech.
A central principle behind any research program is communicating the results to the research,
academic and medical community, so the findings and recommendations can be factored into
future medical research or patient management. Importantly, for an investor, research results also
provide an ongoing objective measure of the potential value of the investment. It’s particularly
pleasing therefore, that in the past year we have undertaken a raft of research that will generate at
least one journal publication and a number of presentations at major international congresses.
Over the second half of 2016 we expect to publish our Phase 1 research on XanamemTM and to
present at least four papers at major international congresses, including at the Alzheimer Association
International Conference (AAIC) in Toronto in July, the International Conference of Endocrinology
(ICE) in Beijing in September, the International Symposium on Medicinal Chemistry (ISMC) in Lisbon in
November and Clinical Trials in Alzheimer Disease (CTAD) in San Diego in December. The medical
research and investor news-flow generated by these data presentations will be substantial, and will
go a long way to cementing Actinogen Medical as a major player in the Alzheimer’s research and
development space. We expect this to generate a significant increase in potential partnering
enquiries from Big Pharma and the biotech investors.
As would be expected, the news-flow will be significant over the 2016 financial year. This will be
driven by the regulatory approval and recruitment of patients to XanADu across all 3 geographies,
and by the extensive publications and presentation program we have in place to present the
research data being generated by ACW and on the cortisol hypothesis. Additionally we have the
pipeline development program for XanamemTM that is expected to come on line over the next 12
months.
21
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Importantly, cash-flow projections and budgets continue to appear to be adequate for the current
research program through into 2018. On 8 June 2016 we announced the harmonisation of the
XanADu protocol. This may require an upward revision of the trial budget and announcements in this
regard will made at the appropriate time.
Monthly operational expense are not expected to increase over last financial year. Only one
additional permanent headcount will be required – a Head of Business Development. The new
offices are fully resourced and operational.
The next 12 months hold huge promise for ACW, and we look forward to regularly updating
shareholders and the market on the progress we are making, in the lead up to announcing the
XanADu study results in 2018.
14. LIKELY DEVELOPMENTS AND EXPECTED RESULTS
Should any likely developments of the Company eventuate, this information will be made available to
the market in accordance with its continuous disclosure obligations under the ASX Listing Rules.
22
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
REMUNERATION REPORT (AUDITED)
The information contained in the remuneration report has been audited as required by Section 308(3C)
of the Corporations Act 2001. The Remuneration Report is set out under the following main headings:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Introduction
Remuneration Governance
Executive remuneration arrangements
A. Remuneration principles and strategy
B. Approach to setting remuneration
C. Detail of incentive plans
Executive remuneration outcomes (including link to performance)
Executive contracts
Non-executive director fee arrangements
Additional disclosures relating to options and shares
Loans to key management personnel (KMP) and their related parties
Other transactions and balances with KMP and their related parties
1.
Introduction
The remuneration report details the remuneration arrangements for key management personnel
(KMP) who are defined as those having authority and responsibility for planning, directing and
controlling the major activities of the Company, directly or indirectly, including any director (whether
executive or otherwise). Key management personnel of Actinogen comprise the Board of Directors
and the Vice President of Clinical Research.
The performance of the Company depends upon the quality of its key management personnel. To
prosper the Company must attract, motivate and retain appropriately skilled Directors and
Executives.
The Company’s broad remuneration policy is to ensure the remuneration package properly reflects
the person’s duties and responsibilities and that remuneration is competitive in attracting, retaining
and motivating people of the highest quality. The remuneration arrangements detailed in this report
are for the Directors of the Board and the Vice President of Clinical Research during the financial
year and are as follows:
23
NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentMr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/2016CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/2013CurrentMr Vincent RufflesVice President of Clinical Research27/10/2014Current
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
There were no other changes to KMP after the reporting date and before the date that the financial
report was authorised for issue.
The table below sets out the performance of the Company and the consequences of performance on
shareholders’ wealth over the past five years:
2.
Remuneration Governance
Remuneration of Directors is currently set by the Board of Directors. The Board has not established a
separate Remuneration Committee at this point in the Company’s development nor has the Board
engaged the services of a remuneration consultant to provide recommendations when setting the
remuneration received by Directors.
It is considered that the size of the Board along with the level of activity of the Company renders this
impractical and the full Board considers in detail all of the matters for which the Directors are
responsible.
All matters of remuneration will be done in accordance with Corporations Act requirements,
especially in respect of related party transactions. Refer to the Corporate Governance Statement for
further information.
Actinogen Medical Limited received 99.5% of votes in favour of its Remuneration Report for the 2015
financial year. The Company did not receive any specific feedback at the Annual General Meeting
or throughout the year on its remuneration practices.
3.
Executive Remuneration Arrangements
(A) Remuneration principles and strategy
The Company aims to reward Executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Company and aligned with market practice.
Executive remuneration must be:
aligned with the Company’s vision, values and overall business objectives; and
must be designed to motivate management to pursue the Company’s long term growth and
success.
The nature and amount of remuneration of Executives are assessed on a periodic basis by the Board (in
the absence of a Remuneration Committee) for their approval, with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high performing Executives.
The main objectives sought when reviewing executive remuneration is that the Company has:
coherent remuneration policies and practices to attract and retain executives;
24
20162015201420132012Quotedpriceofordinaryshares at period end (cents) 7.20 7.20 1.10 1.00 3.00 Quotedpriceofoptionsatperiod end (cents)-----Loss per share (cents)0.601.320.290.182.12Dividends paid-----
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Executives who will create value for shareholders;
competitive remuneration offered benchmarked against the external market; and
fair and responsible rewards to Executives having regard to the performance of the
Company, the performance of the Executives and the general pay environment.
(B) Approach to setting remuneration
The Company aims to reward executives with a level and mix of remuneration appropriate to their
position and responsibilities, while being market competitive. The Company’s remuneration structure
for Executives can include a mix of fixed remuneration, short term incentive (STI) and long term
incentive (LTI) as outlined below.
Fixed remuneration component:
Fixed Remuneration is represented by total employment cost and comprises base salary, statutory
superannuation contributions (where applicable) and other benefits. It is paid by the Company to
compensate fully for all requirements of the Executives employment with reference to the market
and the individual’s role and experience. It is subject to annual review considering market data and
the performance of the Company and individual. The Company benchmarks the fixed component
against appropriate market comparisons with the comparator group criteria being market
capitalisation.
STI component:
The STI component is in the form of a cash bonus to KMP. Payment of the cash bonus is entirely
discretionary and rewards the KMP for their contribution to achievement of business goals. The
business goals are determined annually by the Board and are linked to the strategic and operational
plans of the Company, including budgets agreed for each financial year.
A specific STI component is also provided for within the Managing Director’s remuneration package.
Currently this includes a performance condition whereby at the annual review of the Managing
Directors’ salary, one of the factors to be considered by the Board when granting an increase will be
the Company’s market capitalisation against appropriate ASX benchmarks with an aim for 50th
percentile pay on ASX market capitalisation. The Managing Director and the rest of the Board will
agree benchmarks for each year of the term.
LTI component:
The LTI component is in the form of Employee Loan Shares and Employee Options. The Board feels
that the shares and options currently on issue provide a sufficient long term incentive to align the
goals of the KMP with those of the shareholders to maximise shareholder wealth. The Board will
continue to monitor this policy to ensure that it is appropriate for the Company in future years.
(C) Details of incentive plans
Short term incentive
During the year, a $24,700 bonus fee incentive was put in place by the Board of Directors, payable to
Mr Ruffles on the achievement of a number of various short term performance conditions being met.
The key performance indicators (KPI’s) included delivery of the final preclinical report, the XanADu
protocol, a gap analysis and the manufacture of new Xanamem™. These performance conditions
were chosen because they are significant milestones that had to be accomplished prior to
activation of the XanADu study.
During the quarter ended March 2016, Mr Ruffles met a certain portion of these milestones and was
paid a $9,880 Bonus Fee which represents 40% of his 2016 bonus fee incentive.
25
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
During the year, a $75,000 bonus fee incentive was put in place by the Executive Chairman and the
rest of the Board members, payable to Dr Ketelbey dependent on achieving a KPI of the first 10
patients into the XanADu study, with the possibility of an additional stretch bonus to be determined at
a future date. The KPI of starting patient recruitment into XanADu is one of the most significant
milestones for the company. The KPI of the first 10 was chosen as this reflects a higher hurdle, with
achievement of a steady patient recruitment pattern to the study. This milestone has not yet been
met.
Long term incentive
(a) Employee Options
Subsequent to year end, on 7 July 2016, remuneration in the form of Employee Options were issued to
employees of the Company pursuant to the Employee Option Plan. Directors are not eligible to
receive options under this plan. Mr Ruffles is an employee of the Company and he received 1,000,000
employee options at an exercise price of $0.103 each, exercisable on or before 7 July 2020. Refer to
Section 12 – Events Subsequent to the end of the Financial Year for further information.
(b) Employee Loan Shares
During the prior year ended 30 June 2015, remuneration in the form of Employee Loan Shares were
issued to the majority of KMP upon certain performance conditions being met.
The performance conditions consist of a number of Key Performance Indicators (KPI’s) covering both
financial and non-financial measures of performance. Typically included are measures such as
contribution to research & development success, share price appreciation and tenure.
The Loan Shares represent an option arrangement. Due to the vesting conditions attached to the
loan shares, these shares will be expensed over the vesting period. The key terms of the Employee
Share Plan and of each limited recourse loan provided under the Plan are as follows:
(i)
(ii)
(iii)
(iv)
(v)
the loan may only be applied towards the subscription price for the Loan Shares;
the loan will be interest free, provided that if the loan is not repaid by the repayment date set by
the Board, the loan will incur interest at 9% per annum after that date (which will accrue on a
daily basis and compound annually on the then outstanding loan balance);
by signing and returning a limited recourse loan application, the participants of the Plan (each a
Participant) acknowledges and agrees that the Loan Shares will not be transferred,
encumbered, otherwise disposed of, or have a security interest granted over it, by or on behalf
of the Participant until the loan is repaid in full to the Company;
the Company has security over the Loan Shares as security for repayment of the loan;
the loan becomes repayable on the earliest of:
a) five years from the date on which the loan is advanced to the Participant;
b) one month after the Participant resigns or ceases to be employed by the Company other
than (i) where the Participant is removed from office by shareholders of the Company, or
(ii) where the Company does not renew the Participant's executive employment
agreement or (iii) where the Company dismisses the Participant other than for cause; and
c) (by the legal personal representative of the Participant) six months after the Participant
ceases to be an employee of the Company due to their death.
Repayment Date
(vi)
notwithstanding paragraph (v) above, the Participant may repay all or part of the loan at any
time before the Repayment Date; and
26
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(vii)
the loan will be limited recourse such that on the Repayment Date the repayment obligation
under the limited recourse loan will be limited to the lesser of (i) the outstanding balance of the
limited recourse loan and (ii) the market value of the Loan Shares on that date. In addition,
where the Participant has elected for the Loan Shares to be provided to the Company in full
satisfaction of the loan, the Company must accept the Loan Shares as full settlement of the
repayment obligation under the limited recourse loan.
Rights attaching to Loan Shares
(viii)
The Loan Shares will rank equally with all other fully paid ordinary shares on issue in the capital of
the Company. Holders of Loan Shares issued under the Plan will be entitled to exercise all voting
rights attaching to the Shares in accordance with the Company's constitution. In addition,
holders of Loan Shares issued under the Plan will be entitled to participate in dividends declared
and paid by the Company in accordance with the Company's constitution.
Vesting conditions
Under the Employee Share Plan, the Directors may issue the Loan Shares subject to vesting conditions
(including performance milestones and time based retention hurdles), such that the holder of the Loan
Shares is only entitled to the benefit of the Loan Shares once the vesting conditions are met. If the
vesting conditions are not met, the holder will lose their entitlement to the Loan Shares and the
Company may buy-back or arrange for the sale of those Loan Shares. This enables the Board to
attract, incentivise and retain key personnel and to align the interests of those personnel and
Shareholders through equity participation. The vesting conditions are summarised in the table below.
Sale of Loan Shares
(ix)
The Loan Shares may only be sold by a Participant where the Participant has been granted a
limited recourse loan and the loan has been repaid in full (otherwise any dealing by the
Participant in the Loan Shares is prohibited without the prior written consent of the Company).
27
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
During the year ended 30/6/2016, the following Employee Share Plan shares vested:
a)
b)
On 12 August 2015, the vesting condition on the 3,000,000 Class A Employee Share Plan shares issued to Dr Jason
Loveridge were met.
On 11 August 2015, the vesting condition on the 5,000,000 Class E Employee Share Plan shares issued to Mr Martin
Rogers were met.
During the prior year ended 30/6/2015, the following Employee Share Plan shares vested:
c)
d)
e)
On 16 December 2014, the vesting condition on the 7,500,000 Class C Employee Share Plan shares issued to Mr
Martin Rogers were met.
On 24 February 2015, the vesting condition on the 7,500,000 Class D Employee Share Plan shares issued to Mr
Martin Rogers were met.
On 21 May 2015, the vesting condition on the 3,000,000 Class B Employee Share Plan shares issued to Dr Jason
Loveridge were met.
No new Loan shares were issued to KMP or any other employees during the year ended 30 June 2016.
The Employee Loan Shares issued during the prior year ended 30 June 2015 were independently valued using a Black
Scholes methodology. The total share-based payment expense of these shares is being prorated over the vesting period
of shares being issued.
28
RecipientClass of Loan ShareQuantityIssue PriceVesting DateVestedShare-based Payment Expense from issue to 30/6/2016Balance of Share-based Payment Expense remaining @ 30/6/2016Jason LoveridgeClass A 3,000,000 $ 0.02 Upon successful completion of the phase 1b multiple ascending dose study.(a)112,848$ -$ Jason LoveridgeClass B 3,000,000 $ 0.02 Upon funding of the phase 2a proof of concept study.(e)112,848$ -$ Martin RogersClass C7,500,000 0.02$ Upon Shares trading on the ASX above $0.04 for ten consecutive trading days.(c)282,120$ -$ Martin RogersClass D7,500,000 0.02$ Upon Shares trading on the ASX above $0.06 for ten consecutive trading days.(d)282,128$ -$ Martin RogersClass E5,000,000 0.02$ Upon recruitment of the phase 1b multiple ascending dose study.(b)188,085$ -$ Martin RogersClass F5,000,000 0.02$ Upon recruitment of the phase 2a proof of concept study.-117,244$ 70,841$ Vincent RufflesClass G2,000,000 0.02$ 3 years from commencement of employment.-41,996$ 33,238$ Bill KetelbeyClass H6,000,000 0.04$ 3 years from commencement of employment.-113,377$ 105,509$ Bill KetelbeyClass I3,000,000 0.04$ Upon Share trading on the ASX at 150% of the share price on the date of commencement of employment for 10 consecutive trading days.-109,440$ -$ Bill KetelbeyClass J3,000,000 0.04$ Upon recruiment of Phase II Xanamen Study-66,662$ 42,781$ 45,000,000 1,426,748$ 252,369$
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
4.
Executive Remuneration Outcomes
During the financial years ended 30 June 2016 and 30 June 2015 the KMP’s received either or all of
the following benefits:
-
-
-
Short-term benefits: cash salary, cash fees and cash bonuses;
Post-employment benefits: retirement benefits; and
Share-based payments.
Refer to Table 1 and Table 2 below. All remuneration paid to Directors and Executives is valued at the
cost to the Company and expensed.
Table 1 - Remuneration of Key Management Personnel for the year ended 30 June 2016:
(a) The share-based payments expense of $326,728 relates to employee Loan shares that, despite being
issued fully paid ordinary shares, are in substance options for accounting purposes.
29
As at 30/6/2016Post-employmentCash salary and feesCash bonusSuper-annuationOptions (a)Shares$$$$$$ %DirectorsBill Ketelbey 277,372 - 19,308 115,349 - 412,029 28%Martin Rogers 98,754 - 9,382 96,919 - 205,055 47%Jason Loveridge 54,169 - - 89,326 - 143,495 62%Anton Uvarov 49,470 - 4,700 - - 54,170 - ExecutivesVincent Ruffles 161,241 9,880 16,256 25,134 - 212,511 12%Total 641,006 9,880 49,646 326,728 - 1,027,260 Short term benefitsShare-based paymentsValue of share-based payments as a % of total remunerationTotal
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Table 2 - Remuneration of Key Management Personnel for the year ended 30 June 2015:
(a) The share-based payments expense of $1,100,020 relates to employee loan shares that, despite being
issued fully paid ordinary shares, are in substance options for accounting purposes.
(b) The share-based payments expense of $390,000 relates to Director Placements Shares issued.
5.
Executive Contracts
During the financial year, the Company employed the below mentioned Executives and
remunerated them as follows:
Managing Director: Dr Bill Ketelbey received wages totaling $277,372 plus superannuation of
$19,308;
Executive Chairman: Mr Martin Rogers (reverted to Non-Executive Chairman post year end on 7
July 2016) received fees totaling $98,754 (plus GST) and superannuation totaling $9,382; and
Vice President: Mr Vincent Ruffles received wages totaling $171,121 (including a $9,880 bonus
fee) plus superannuation of $16,256.
Their contractual arrangements are outlined below.
Dr Bill Ketelbey – Managing Director
Employment date: employment commenced on 18 December 2014.
-
- During the year Dr Ketelebey’s salary increased from $269,308 per annum (including
superannuation prescribed by the relevant law) to $335,000 per annum (including
superannuation prescribed by the relevant law) with effect from 1 February 2016. Included
within the remuneration package is a bonus of $75,000, dependent on achieving a KPI of
the first 10 patients into the XanADu study, with the possibility of an additional stretch
bonus to be determined at a future date.
30
As at 30/6/2015Post-employmentCash salary and feesCash bonusSuper-annuationOptions(a)Shares(b)$$$$$$ %DirectorsBill Ketelbey 154,891 50,000 11,638 174,130 - 390,659 45%Martin Rogers 66,670 50,000 11,084 772,658 200,000 1,100,412 88%Jason Loveridge 23,334 25,000 - 136,370 100,000 284,704 83%Anton Uvarov 38,334 25,000 - - 40,000 103,334 39%Brendan de Kauwe 30,000 - - - 50,000 80,000 63%Daniel Parasiliti 15,000 - - - - 15,000 - ExecutivesVincent Ruffles 102,255 10,000 10,664 16,862 - 139,781 12%Total 430,484 160,000 33,386 1,100,020 390,000 2,113,890 Short term benefitsShare-based paymentsValue of share-based payments as a % of total remunerationTotal
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
-
-
Term: the appointment of the employee will continue for a period of three years from the
date of commencement of employment unless terminated earlier.
Termination: the Company or the individual may terminate the contract by giving three
month’s written notice. In the event of breach or criminal activity termination is effective
immediately without payment other than the fee accrued to the date of termination.
Mr Martin Rogers – Executive Chairman (reverted to Non-Executive Chairman on 7 July 2016)
-
Employment date: employment commenced on 1 December 2014.
-
- Director’s Fee: during the year Mr Rogers’ remuneration was increased from $80,000 per
annum (plus GST) plus the superannuation guarantee amount prescribed by the relevant
law to $125,000 per annum (plus GST) plus the superannuation guarantee amount
prescribed by the relevant law, with effect from 1 February 2016. Subject to annual review.
Term: Mr Rogers was elected as a Director at the Company‘s 2014 Annual General
Meeting, with effect from 1 December 2014 following the acquisition of Corticrine Limited;
and thereafter is subject to retirement by rotation under the Company’s Constitution.
Termination: The other members of the Board may request that the officer resign with
effect immediately in the event that the Board deems the individual’s performance is
unsatisfactory, or the Company’s shareholders may resolve to seek the officer’s removal
by member’s resolution. The individual may terminate the contract immediately.
-
- On 7 July 2016, Mr Martin reverted from Executive Chairman to Non-Executive Chairman.
His remuneration arrangement remained the same.
Mr Vincent Ruffles – Vice President of Clinical Research
Employment date: employment commenced on 27 October 2014.
-
- During the year Mr Ruffle’s remuneration increased from $165,000 per annum (including
superannuation prescribed by the relevant law) to $180,000 per annum (including
superannuation prescribed), with effect from 27 October 2015. Included within the
remuneration package is a bonus fee of $24,700 which was put in place by the Board of
Directors, payable to Mr Ruffles on the achievement of a number of various short term
performance conditions being met.
Term: the appointment of the employee will continue indefinitely from the date of
commencement of employment unless terminated earlier.
Termination: the Company or the individual may terminate the contract by giving three
month’s written notice. In the event of breach or criminal activity termination is effective
immediately without payment other than the fee accrued to the date of termination.
-
-
6.
Non-Executive Director Fee Arrangements
Non-Executive Directors are remunerated by way of fees, in the form of cash, non-cash benefits,
superannuation contributions or salary sacrifice into equity and do not normally participate in
schemes designed for the remuneration of executives.
As noted above, fees for Non-Executive Directors are generally not directly linked to the performance
of the Company, however, to align Directors’ interests with shareholder interests, the Directors are
encouraged to hold shares in the Company.
31
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors, at an
annual general meeting held on 12 November 2015, is $500,000 per annum. The Directors set the
individual Non-Executive Directors fees within the limit approved by shareholders. Total fees paid to
Non-Executive Directors during the year were $108,338.
During the financial year the Company remunerated the below mentioned Non-Executives as
follows:
Non-Executive Director: Dr Jason Loveridge received fees totaling $54,169 (GST not applicable)
plus a prorated share-based payment totaling $89,326 that related to the vesting of loan shares
during the year ; and
Non-Executive Director: Dr Anton Uvarov received a salary totaling $49,470 plus superannuation
of $4,700.
Their contractual arrangements are outlined below:
Dr Jason Loveridge – Non-Executive Director
-
- Contract date: commenced on 1 December 2014.
- Director’s Fee: during the year Dr Loveridge’s remuneration increased from $50,000 per
annum (excluding GST) to $60,000 per annum (excluding GST) with effect from 1 February
2016. Subject to annual review.
Term: Dr Loveridge was elected as a Director at the Company‘s 2014 Annual General
Meeting, with effect from 1 December 2014 following the acquisition of Corticrine Limited;
and thereafter is subject to retirement by rotation under the Company’s Constitution.
Termination: The other members of the Board may request that the officer resign with
effect immediately in the event that the Board deems the individual’s performance is
unsatisfactory, or the Company’s shareholders may resolve to seek the officer’s removal
by member’s resolution. The individual may terminate the contract immediately.
-
Dr Anton Uvarov – Non-Executive Director
- Contract date: commenced on 16 December 2013.
- During the year Dr Uvarov’s remuneration increased from $50,000 per annum (including
superannuation prescribed by the relevant law) to $60,000 per annum (including
superannuation prescribed), with effect from 1 February 2016. Subject to annual review.
-
-
Term: Dr Uvarov’s appointment was valid until the date of the Company‘s 2014 Annual
General Meeting whereby he was re-elected and thereafter is subject to retirement by
rotation under the Company’s Constitution.
Termination: The other members of the Board may request that the officer resign with
effect immediately in the event that the Board deems the individual’s performance is
unsatisfactory, or the Company’s shareholders may resolve to seek the officer’s removal
by member’s resolution. The individual may terminate the contract immediately.
32
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
7.
Additional disclosures relating to options and shares
Options
The table below discloses the number of Employee Loan Shares (in substance options) granted,
vested or lapsed during the year.
a) Option holding of KMP
At the date of this report, the unissued ordinary shares of Actinogen Medical under option carry no
dividend or voting rights. When exercisable, each option is convertible into one ordinary share of the
Company.
Option holding of KMP as at 30 June 2016:
b) Value of options awarded, vested and lapsed during the year
The value of the options awarded, vested and lapsed during the year are outlined in the Table
below. Included in this Table are the performance conditions attached to these loan shares (in
substance options), and they consist of a number of KPI’s that cover both financial and non-financial
measures of performance. Typically included are measures such as contribution to research &
development success, share price appreciation and tenure.
33
ClassBalance at beginning of year 1/7/2015Granted as remunerationOptions exercisedBalance at end of year 30/6/2016Vested at 30/6/2016Not vested at 30/6/2016DirectorsJason LoveridgeA3,000,000 - - 3,000,000 3,000,000 - Jason LoveridgeB3,000,000 - - 3,000,000 3,000,000 - 6,000,000 - - 6,000,000 6,000,000 - Martin RogersC7,500,000 - - 7,500,000 7,500,000 - Martin RogersD7,500,000 - - 7,500,000 7,500,000 - Martin RogersE5,000,000 - - 5,000,000 5,000,000 - Martin RogersF5,000,000 - - 5,000,000 - 5,000,000 25,000,000 - - 25,000,000 20,000,000 5,000,000 Bill KetelbeyH6,000,000 - - 6,000,000 - 6,000,000 Bill KetelbeyI3,000,000 - - 3,000,000 - 3,000,000 Bill KetelbeyJ3,000,000 - - 3,000,000 - 3,000,000 12,000,000 - - 12,000,000 - 12,000,000 Other KMPVincent RufflesG2,000,000 - - 2,000,000 - 2,000,000 2,000,000 - - 2,000,000 - 2,000,000 Total45,000,000 - - 45,000,000 26,000,000 19,000,000
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
No new Loan shares were issued to KMP or any other employees during the year ended 30 June 2016.The Employee Loan Shares issued during the prior year ended 30 June
2015 were independently valued and the total share-based payment expense of these shares are being prorated over the vesting period of shares being issued.
34
Class# OptionsValue of options granted during the year ($)Value of options vested during the year ($)Value of options lapsed during the year ($)Share-based payment recognised during the year ($)Remuneration consisting of option for the year (%)Vesting ConditionDirectorsJason LoveridgeA3,000,000 -$ 112,848$ - 35,789$ 25%Upon successful completion of the phase 1b multiple ascending dose (MAD) study.Jason LoveridgeB3,000,000 -$ -$ - 53,537$ 37%Upon funding of the phase 2a proof of concept study.Martin RogersC7,500,000 -$ -$ - -$ 0%Upon Shares trading on the ASX above $0.04 for ten consecutive trading days.Martin RogersD7,500,000 -$ -$ - -$ 0%Upon Shares trading on the ASX above $0.06 for ten consecutive trading days.Martin RogersE5,000,000 -$ 188,085$ - 25,883$ 13%Upon recruitment of the phase 1b multiple ascending dose study.Martin RogersF5,000,000 -$ -$ - 71,036$ 35%Upon recruitment of the phase 2a proof of concept study.Bill KetelbeyH6,000,000 -$ -$ - 72,451$ 18%3 years from commencement of employment.Bill KetelbeyI3,000,000 -$ -$ - -$ 0%Upon Share trading on the ASX at 150% of the share price on the date of commencement of employment for 10 consecutive trading days.Bill KetelbeyJ3,000,000 -$ -$ - 42,898$ 10%Upon recruiment of Phase II Xanamem StudySenior ExecutivesVincent RufflesG2,000,000 -$ - - 25,134$ 12%3 years from commencement of employment.45,000,000 - 300,933 - 326,728
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
c) Number of options awarded, vested and lapsed during the year
35
Class# OptionsFinancial yearGrant dateExercise price ($)Fair value per option at grant date ($)Expiry dateNumber vested during the yearNumber lapsed during the yearDirectorsJason LoveridgeA3,000,000 201619/11/20140.02$ 0.0376$ 19/11/20193,000,000 - Jason LoveridgeB3,000,000 201619/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersC7,500,000 201619/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersD7,500,000 201619/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersE5,000,000 201619/11/20140.02$ 0.0376$ 19/11/20195,000,000 - Martin RogersF5,000,000 201619/11/20140.02$ 0.0376$ 19/11/2019- - Bill KetelbeyH6,000,000 201615/12/20140.04$ 0.0365$ 15/12/2019- - Bill KetelbeyI3,000,000 201615/12/20140.04$ 0.0365$ 15/12/2019- - Bill KetelbeyJ3,000,000 201615/12/20140.04$ 0.0365$ 15/12/2019- - Senior ExecutivesVincent RufflesG2,000,000 201619/11/20140.02$ 0.0376$ 19/11/2019- - Total45,000,000 8,000,000 -
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Shares
There were no shares issued as compensation to KMP during the financial year ended 30 June 2016.
At 30 June 2016 the relevant interest of each KMP in ordinary fully paid shares of the Company were:
(a) Movement relates to shares purchased on-market during the year.
(b) 14,717,184 were subject to voluntary escrow until 30 November 2015.
8.
Loans Made to Key Management Personnel
No loans were made to any Director or KMP or any of their related entities during the reporting
period.
9.
Other Transactions with Key Management Personnel
There were no other transactions with any Director of KMP or any of their related entities during the
reporting period.
End of Audited Remuneration Report
15.
INDEMNIFICATION OF AUDITORS
To the extent permitted by Law, the Company has agreed to indemnify its auditors, Ernst & Young, as
part of the terms of its audit engagement agreement against claims by third parties arising from the
audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or
since the financial year.
16.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Actinogen Medical Limited paid a premium to insure the directors and
officers of the Company. The liabilities insured are legal costs that may be incurred in defending civil or
criminal proceedings that may be brought against the officers in their capacity as officers of the entity
in the Company, and any other payments arising from liabilities incurred by the officers in connection
with such proceedings.
36
Balance at beginning of year 1/7/2015Granted as remunerationOn exercise of optionsNet change other (a)Balance at end of year 30/6/2016DirectorsBill Ketelbey342,894 - - 10,909 353,803 Martin Rogers11,407,894 - - - 11,407,894 Jason Loveridge (b)21,875,078 - - - 21,875,078 Anton Uvarov4,187,244 - - - 4,187,244 37,813,110 - - 10,909 37,824,019 Other KMPVincent Ruffles- - - - - - - - - - Total37,813,110 - - 10,909 37,824,019
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Auditor’s Independence Declaration to the Directors of Actinogen
Medical Limited
As lead auditor for the audit of Actinogen Medical Limited for the financial year ended 30 June 2016, I
declare to the best of my knowledge and belief, there have been:
a. no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b. no contraventions of any applicable code of professional conduct in relation to the audit.
Ernst & Young
T G Dachs
Partner
31 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
38
ACTINOGEN MEDICAL LIMITED
C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E
I N C O M E
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 6
__________________________________________________________________
The above consolidated statement of comprehensive income should be read in conjunction with the
accompanying notes.
39
Full year endedFull year ended30/06/201630/06/2015Note$ $ Revenue from continuing operations 204,491 49,927 Other income 3,748,452 103,502 Total revenue & other income6 3,952,943 153,429 Business development(697,793) (507,609)Corporate administration expenses (577,174) (600,583)Research & development expenses6 (5,613,245) (2,758,346)Finance costs (6,435) (4,953)Share-based payment expenses (326,728) (1,490,020)Amortisation expense (354,469) (208,520)Depreciation expense6 (10,857) (12,906)Impairment expenses - (1,501)Total expenses (7,586,701) (5,584,438)Loss Before Income Tax (3,633,758) (5,431,009)Income tax benefit/(expense) - - Loss for the Year(3,633,758)(5,431,009)Other comprehensive incomeNet fair value gain/(losses) for available-for-sale listed investments 22,272 - Total comprehensive loss for the Year(3,611,486)(5,431,009)Earnings/(loss) per share for attributable to the ordinary equity holders of the companyBasic loss per share (cents)17(0.60)(1.32)Dilutive loss per share (cents)17(0.60)(1.32)Items that may be reclassified subsequently to profit and loss:
ACTINOGEN MEDICAL LIMITED
C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 6
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The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
40
Full year endedFull-year ended30/06/201630/06/2015Note$ $CURRENT ASSETSCash and cash equivalents8751,9789,805,610Trade and other receivables92,966,276215,460Available-for-sale listed investments10 4,025,987 - TOTAL CURRENT ASSETS7,744,24110,021,070NON-CURRENT ASSETSProperty, plant and equipment118,3586,755Intangible assets125,196,954 5,551,423 TOTAL NON-CURRENT ASSETS5,205,3125,558,178TOTAL ASSETS12,949,55315,579,248CURRENT LIABILITIESTrade and other payables14783,968222,640Provision for employee entitlements40,235 - TOTAL LIABILITIES824,203222,640NET ASSETS 12,125,35015,356,608EQUITYContributed equity1526,308,39126,254,891Reserve shares15(1,140,000) (1,140,000)Reserves166,844,651 6,495,651 Accumulated losses(19,887,692)(16,253,934)TOTAL EQUITY 12,125,35015,356,608
ACTINOGEN MEDICAL LIMITED
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 6
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The above consolidated statement of cash flows should be read in conjunction with the accompanying
notes.
41
Full year endedFull year ended30/06/201630/06/2015$ $CASH FLOWS FROM OPERATING ACTIVITIESDividends received 98,638 - Interest received104,17050,057Interest paid(6,435) - Payments to suppliers and employees(1,047,481) (1,065,090)Payments for research and development(5,331,088) (2,808,258)Research and development rebate received 1,143,057 103,502Net cash inflow/(outflow) from operating activities8(5,039,139)(3,719,789)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment(12,460) (8,120)Net proceeds from sale of property, plant and equipment - 36,566 Purchases of available-for-sale listed investments (6,000,225) - Proceeds on sale of available-for-sale listed investments 1,998,192 - Net cash inflow/(outflow) from investing activities(4,014,493)28,446CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of shares - 13,222,500Transaction costs associated with issue of shares - (853,223)Net cash inflow from financing activities - 12,369,277 Net increase/(decrease) in cash and cash equivalents(9,053,632)8,677,934Cash and cash equivalents at beginning of the year9,805,6101,127,676CASH AND CASH EQUIVALENTS AT END OF THE YEAR8751,9789,805,610Note
ACTINOGEN MEDICAL LIMITED
C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y
F o r t h e y e a r e n d e d 3 0 J u n e 2 0 1 6
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The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
42
Contributed EquityAccumulated LossesAvailable-for-sale ReserveOption ReserveReserve SharesTotalFull year ended 30/6/2016$$$$$$Balance as at 1/7/201526,254,891(16,253,934) - 6,495,651 (1,140,000)15,356,608Loss for the year - (3,633,758) - - - (3,633,758)Other comprehensive income - - 22,272 - - 22,272 Total comprehensive income for the year - (3,633,758) 22,272 - - (3,611,486)Transactions with equity holders in their capacity as equity holdersShares issued during the year 53,500 - - - - 53,500 Share-based payments - - - 326,728 - 326,728 Capital raising costs - - - - - - Balance as at 30/6/201626,308,391(19,887,692) 22,272 6,822,379(1,140,000)12,125,350Contributed EquityAccumulated LossesAvailable-for-sale ReserveOption ReserveReserve SharesTotalFull-year ended 30/6/2015$$$$$$Balance as at 1/7/20147,245,614(10,822,925) - 4,789,123 - 1,211,812 - Loss for the year - (5,431,009) - - - (5,431,009)Other comprehensive income - - - - - - Total comprehensive income for the year - (5,431,009) - - - (5,431,009)Transactions with equity holders in their capacity as equity holdersShares issued during the year19,862,500 - - - (1,140,000)18,722,500Capital raising costs(853,223) - - - - (853,223)Share-based payments - - - 1,706,528 - 1,706,528Balance as at 30/6/201526,254,891(16,253,934) - 6,495,651(1,140,000)15,356,608
ACTINOGEN MEDICAL LIMITED
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1.
CORPORATE INFORMATION
The financial statements of Actinogen Medical Limited (“the Company” or “Actinogen”) and its
subsidiary Corticrine Limited (collectively, “the Group”) for the year ended 30 June 2016 were
authorised in accordance with a resolution of Directors on 31 August 2016.
Actinogen Medical Limited is a for profit company limited by shares incorporated and domiciled in
Australia whose shares are publicly traded on the Australian Stock Exchange. The nature of
operations and principal activities of the Group are described in the Directors’ Report. Information on
other related party relationships is provided in Note 21.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated. The financial statements of the Group are for the financial year ended 30 June 2016.
(a)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards
Board, and the Corporations Act 2001. The financial statements have been prepared on a going
concern basis.
(b) Compliance with IFRS
The financial statements of the Group also comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
(c)
Historical cost convention
These financial statements have been prepared under the historical cost convention, except for
available-for-sale financial investments which have been measured at fair value.
(d) Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It
also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in Note 4.
(e)
Foreign currency translation
The Group’s financial statements are presented in Australian dollars, which is also the Group’s
functional currency. For each entity, the Group determines the functional currency and items
included in the financial statements of each entity are measured using that functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group’s entities at their respective
functional currency spot rates at the date the transaction first qualifies for recognition. Monetary
assets and liabilities denominated in foreign currencies are translated at the functional currency spot
rates of exchange at the reporting date. Differences arising on settlement or translation of monetary
items are recognised in profit or loss with the exception of monetary items that are designated as part
of the hedge of the Group’s net investment of a foreign operation. These are recognised in other
comprehensive income until the net investment is disposed of, at which time, the cumulative amount
is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those
monetary items are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value is
determined. The gain or loss arising on translation of non-monetary items measured at fair value is
treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation
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differences on items whose fair value gain or loss is recognised in other comprehensive income or
profit or loss are also recognised in other comprehensive income or profit or loss, respectively).
(f)
Plant & equipment
Each asset of plant and equipment is stated at cost, net of accumulated depreciation and
impairment losses, if any. Assets are depreciated from the date the asset is ready for use.
Items of plant and equipment are depreciated using the diminishing value method over their
estimated useful lives to the Group. The depreciation rates used for each class of asset for the current
period are as follows:
Plant and Equipment
Office and Equipment
Computer Equipment
General Pool Assets >$1,000
7.5% to 37.5%
40%
25% to 66.67%
37%
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. The recoverable amount is
assessed on the basis of expected net cash flows that will be received from the assets continual use or
subsequent disposal. The expected cash flows have been discounted to their present value in
determining the recoverable amount.
An asset is de-recognised upon disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in the
statement of comprehensive income when the asset is de-recognised.
The assets’ residual values, useful lives and methods of depreciation are reviewed, and adjusted if
appropriate, at each balance date.
(g)
Impairment of non-financial assets
At each reporting date, the Group reviews the carrying values of its assets to determine whether there
is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is
compared to the assets carrying value. Any excess of the assets carrying value over its recoverable
amount is expensed to the statement of comprehensive income.
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.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less cost to sell, recent market transactions are taken
into account. If no such transactions can be identified, an appropriate valuation model is used. These
calculations are corroborated by valuation multiples, quoted share prices for publicly traded
companies or other available fair value indicators.
(h)
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of
intangible assets acquired in a business combination is their fair value at the date of acquisition.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation
and accumulated
intangibles, excluding capitalised
development costs, are not capitalised and the related expenditure is reflected in profit or loss in the
period in which the expenditure is incurred.
Internally generated
impairment
losses.
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The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with
finite lives are amortised over the useful economic life and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset are considered to modify the amortisation period or
method, as appropriate, and are treated as changes in accounting estimates and adjusted on a
prospective basis. The amortisation expense on intangible assets with finite lives is recognised in the
statement of comprehensive income.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually,
either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed
annually to determine whether the indefinite life continues to be supportable. If not, the change in
useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference
between the net disposal proceeds and the carrying amount of the asset and are recognised in the
statement of comprehensive income when the asset is derecognised.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are
recognised as an intangible asset when the Company can demonstrate:
The technical feasibility of completing the intangible asset so that the asset will be available for
use or sale
Its intention to complete and its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development
The ability to use the intangible asset generated
Following initial recognition of the development expenditure as an asset, the asset is carried at cost
less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset
begins when development is complete and the asset is available for use. It is amortised over the
period of expected future benefit. During the period of development, the asset is tested for
impairment annually.
Patents
The Company made upfront payments to purchase patents. The patents have been granted for a
period of 20 years by the relevant government agency with the option of renewal at the end of this
period. As a result, those patents are amortised on a straight-line basis over the period of the patent.
(i)
Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-
assessable or disallowed items. It is calculated using the tax rates that have been enacted or are
substantially enacted by the end of the reporting period.
Deferred income tax is accounted for using the liability method on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
However, the deferred income tax from the initial recognition of an asset or liability, in a transaction
other than a business combination is not accounted for if it arises that at the time of the transaction
affects either accounting or taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the asset is realised or
liability is settled. Deferred tax is credited in the statement of comprehensive income except where it
relates to items that may be credited directly to equity, in which case the deferred tax is adjusted
directly against equity.
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Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if
it is probable that future taxable amounts will be available to utilise those temporary differences and
losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current
tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset
and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items
recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
The Company’s entitlement to the Research and Development tax rebate is recognised as a tax
benefit upon receipt from the Australian Taxation Office.
(j)
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, plus related on-costs.
Employee benefits payable later than one year have been measured at the present value of the
estimated future cash outflows to be made for those benefits discounted using the interest rate on
corporate bonds with terms to maturity approximating the terms of the liability.
(k)
Share-based payments
The Group provides benefits to employees (including directors) of the Group in the form of share-
based payment transactions, whereby employees render services in exchange for shares or rights
over shares (‘equity-settled transactions’). The cost of these equity-settled transactions with employees
is measured by reference to the fair value at the date at which they are granted. The fair value is
determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance conditions are fulfilled, ending on the date on which the
relevant employees become fully entitled to the award (‘vesting date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting
date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that,
in the opinion of the directors of the Group, will ultimately vest. This opinion is formed based on the
best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination
of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is
conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it
had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award, and
designated as a replacement award on the date that it is granted, the cancelled and new award
are treated as if they were a modification of the original award.
(l)
Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short term, high liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value and bank overdrafts.
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(m)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
entity and the revenue can be reliably measured. The following specific recognition criteria must also
be met before revenue is recognised:
Interest revenue is recorded using the effective interest rate method (EIR). EIR is the rate that exactly
discounts the estimated future cash payments or receipts over the expected life of the financial
instrument, or a shorter period, where appropriate, to the net carrying amount of the financial asset or
liability. Interest income is included in finance income in the statement of comprehensive income.
Research & development tax rebates are recognised when there is reasonable assurance that the
rebate will be received. The rebate is recognised as income over the period necessary to match on a
systematic basis the costs that it is intended to compensate.
(n)
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost
using the effect interest method, less allowance for impairment. Trade receivables are generally due
for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off by reducing the carrying amount directly. An allowance account
(provision for impairment of trade receivables) is used when there is objective evidence that the
Company will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days
overdue) are considered indicators that the trade receivable is impaired. The amount of the
impairment allowance is the difference between the asset’s carrying amount and the present value
of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to
short-term receivables are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the statement of comprehensive income within
impairment losses – financial assets. When a trade receivable for which an impairment allowance
had been recognised becomes uncollectible in a subsequent period, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against
impairment losses – financial assets in the statement of comprehensive income.
(o) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and
payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in
the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
(p) Contributed equity
Ordinary issued share capital is recognised at the fair value of the consideration received by the
Group. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as
a reduction in share proceeds received.
(q)
Trade and other payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to the
Group. Interest, when charged by the lender, is recognised as an expense on an accrual basis.
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(r)
Provisions
Provisions for legal claims and make good obligations are recognised when the Company has a
present legal or constructive obligation as a result of past events, it is probable that an outflow of
resources will be required to settle the obligation and the amount has been reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised
even if the likelihood of an outflow with respect to any one item included in the same class of
obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date. The discount rate used to determine
the present value reflects current market assessments of the time value of money and the risks
specific to the liability. The increase in the provision due to the passage of time is recognised as
interest expense.
(s)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Group,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to
take into account the after income tax effect of interest and other financing costs associated with
dilutive potential ordinary shares and the weighted average number of additional ordinary shares
that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
(t)
Investments and other financial assets
Classification
The Group classifies its financial assets in the following categories: loans and receivables and
available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition.
Recognition
Financial instruments are initially measured at fair value on trade date, which includes transaction
costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these
instruments are measured as set out below.
Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-
derivatives that are either designated in this category or not classified in any of the other categories.
They are included in non-current assets unless management intends to dispose of the investment
within 12 months of the reporting period.
Loans and receivables
Loans and receivables are non-derivative financial assets initially recognised at fair value with fixed or
determinable payments that are not quoted in an active market and are stated at amortised cost
using the effective interest rate method.
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Subsequent measurement
Available-for-sale financial assets are subsequently measured at fair value. Changes in the fair value
of available for sale financial assets are recognised in the consolidated statement of comprehensive
income.
Loans and receivables are carried at amortised cost using the effective interest rate method.
Details of how the fair value of financial instruments is determined and disclosed in Note 3.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset
or Group of financial assets is impaired. In the case of equity securities classified as available-for-sale,
a significant or prolonged decline in the fair value of a security below its cost is considered as an
indicator that the securities are impaired. If any such evidence exists for available-for-sale financial
assets, the cumulative loss - measured as the difference between the acquisition cost and the current
fair value, less any impairment loss on that financial asset previously recognised in the statement of
comprehensive income - is removed from equity and recognised in the statement of comprehensive
income. Impairment losses recognised in the statement of comprehensive income on equity
instruments classified as available-for-sale are not reversed.
If there is evidence of impairment for any of the Company’s financial assets carried at amortised cost,
the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows, excluding future credit losses that have not been incurred. The cash flows
are discounted at the financial asset’s original effective interest rate. The loss is recognised in the
statement of comprehensive income.
(u)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision maker. The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors.
(v) Government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense
item, it is recognised as income on a systematic basis over the periods that the costs, which it is
intended to compensate, are expensed. When the grant relates to an asset, it is recognised as
income in equal amount over the expected useful life of the related asset.
(w) New accounting standards and interpretations adopted
The following standards and interpretations have been adopted by the Company:
Reference
Title
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments
The Standard contains three main parts and makes amendments to a
number of Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the
issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards
to delete references to AASB 1031 and also makes minor editorial
amendments to various other standards.
Part C makes amendments to a number of Australian Accounting
Application
date of
standard*
Application
date for
Group*
1 January 2015 1 July 2015
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Reference
Title
Application
date of
standard*
Application
date for
Group*
Standards, including incorporating Chapter 6 Hedge Accounting into AASB
9 Financial Instruments.
AASB 2015-3 Amendments to Australian Accounting Standards arising from the
1 July 2015
1 July 2015
Withdrawal of AASB 1031 Materiality
The Standard completes the AASB’s project to remove Australian guidance
on materiality from Australian Accounting Standards.
AASB 2015-4 Amendments to Australian Accounting Standards – Financial Reporting
Requirements for Australian Groups with a Foreign Parent
The amendment aligns the relief available in AASB 10 Consolidated
Financial Statements and AASB 128 Investments in Associates and Joint
Ventures in respect of the financial reporting requirements for Australian
groups with a foreign parent.
1 July 2015
1 July 2015
*Designates the beginning of the applicable annual reporting period unless otherwise stated.
The company has not yet determined the impact of the above new and amended accounting standards.
(x)
New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2016 reporting periods and have not been early adopted by the Group. These new standards and
interpretations are set out below.
Application
date of
standard*
Application
date for
Group*
1 January
2018
1 July 2018
Reference
Title
Summary
AASB 9
Financial
Instruments
AASB 9 (December 2014) is a new standard which replaces AASB 139.
This new version supersedes AASB 9 issued in December 2009 (as
amended) and AASB 9 (issued in December 2010) and includes a model
for classification and measurement, a single, forward-looking ‘expected
loss’ impairment model and a substantially-reformed approach to hedge
accounting.
AASB 9 is effective for annual periods beginning on or after 1 January
2018. However, the Standard is available for early adoption. The own
credit changes can be early adopted in isolation without otherwise
changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification
and measurement of financial assets compared with the requirements of
AASB 139. There are also some changes made in relation to financial
liabilities.
The main changes are described below.
Financial assets
a.
Financial assets that are debt instruments will be classified based on
(1) the objective of the entity's business model for managing the
financial assets; (2) the characteristics of the contractual cash flows.
b. Allows an irrevocable election on initial recognition to present gains
and losses on investments in equity instruments that are not held for
trading in other comprehensive income. Dividends in respect of
these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or recycling
on disposal of the instrument.
c.
Financial assets can be designated and measured at fair value
through profit or loss at initial recognition if doing so eliminates or
50
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
significantly reduces a measurement or recognition inconsistency
that would arise from measuring assets or liabilities, or recognising
the gains and losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are
limited to the measurement of liabilities designated at fair value through
profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in
fair value is to be accounted for as follows:
►
The change attributable to changes in credit risk are presented
in other comprehensive income (OCI)
►
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by
changes in the credit risk of liabilities elected to be measured at fair
value. This change in accounting means that gains or losses attributable
to changes in the entity’s own credit risk would be recognised in OCI.
These amounts recognised in OCI are not recycled to profit or loss if the
liability is ever repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment
model that will require more timely recognition of expected credit losses.
Specifically, the new Standard requires entities to account for expected
credit losses from when financial instruments are first recognised and to
recognise full lifetime expected losses on a more timely basis.
Hedge accounting
Amendments to AASB 9 (December 2009 & 2010 editions and AASB
2013-9) issued in December 2013 included the new hedge accounting
requirements, including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can be hedged and
disclosures.
Consequential amendments were also made to other standards as a
result of AASB 9, introduced by AASB 2009-11 and superseded by AASB
2010-7, AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential amendments arising from
the issuance of AASB 9 in Dec 2014.
AASB 2014-8 limits the application of the existing versions of AASB 9 (AASB
9 (December 2009) and AASB 9 (December 2010)) from 1 February 2015
and applies to annual reporting periods beginning on after 1 January
2015.
AASB 14 permits first-time adopters to continue to account for amounts
related to rate regulation in accordance with their previous GAAP when
they adopt Australian Accounting Standards. However, to enhance
comparability with entities that already apply Australian Accounting
Standards and do not recognise such amounts, AASB 14 requires that the
effect of rate regulation must be presented separately from other items.
An entity that is not a first-time adopter of Australian Accounting
Standards will not be able to apply AASB 14.
AASB 2014-1 Part D makes amendments to AASB 1 First-time Adoption of
Australian Accounting Standards, which arise from the issuance of AASB
14 Regulatory Deferral Accounts in June 2014.
1 January
2016
1 July 2016
AASB 14
^^^
Regulatory
deferral
accounts
AASB 2014-4 Clarification of
Acceptable
Methods of
Depreciation
and
Amortisation
(Amendments
AASB 116 Property Plant and Equipment and AASB 138 Intangible Assets
both establish the principle for the basis of depreciation and amortisation
as being the expected pattern of consumption of the future economic
benefits of an asset.
1 January
2016
1 July 2016
The IASB has clarified that the use of revenue-based methods to
calculate the depreciation of an asset is not appropriate because
revenue generated by an activity that includes the use of an asset
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ACTINOGEN MEDICAL LIMITED
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Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
to
AASB 116 and
AASB 138)
generally reflects factors other than the consumption of the economic
benefits embodied in the asset.
The amendment also clarified that revenue is generally presumed to be
an inappropriate basis for measuring the consumption of the economic
benefits embodied in an intangible asset. This presumption, however,
can be rebutted in certain limited circumstances.
AASB 1057
Application of
Australian
Accounting
Standards
AASB 15
Revenue from
Contracts with
Customers
1 January
2016
1 July 2016
1 January
2018
1 July 2018
Note A
This Standard lists the application paragraphs for each other Standard
(and Interpretation), grouped where they are the same. Accordingly,
paragraphs 5 and 22 respectively specify the application paragraphs for
Standards and Interpretations in general. Differing application
paragraphs are set out for individual Standards and Interpretations or
grouped where possible.
The application paragraphs do not affect requirements in other
Standards that specify that certain paragraphs apply only to certain
types of entities.
AASB 15 Revenue from Contracts with Customers replaces the existing
revenue recognition standards AASB 111 Construction Contracts, AASB
118 Revenue and related Interpretations (Interpretation 13 Customer
Loyalty Programmes, Interpretation 15 Agreements for the Construction
of Real Estate, Interpretation 18 Transfers of Assets from Customers,
Interpretation 131 Revenue—Barter Transactions Involving Advertising
Services and Interpretation 1042 Subscriber Acquisition Costs in the
Telecommunications Industry). AASB 15 incorporates the requirements of
IFRS 15 Revenue from Contracts with Customers issued by the
International Accounting Standards Board (IASB) and developed jointly
with the US Financial Accounting Standards Board (FASB).
AASB 15 specifies the accounting treatment for revenue arising from
contracts with customers (except for contracts within the scope of other
accounting standards such as leases or financial instruments).The core
principle of AASB 15 is that an entity recognises revenue to depict the
transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. An entity recognises revenue in
accordance with that core principle by applying the following steps:
(a) Step 1: Identify the contract(s) with a customer
(b) Step 2: Identify the performance obligations in the contract
(c) Step 3: Determine the transaction price
(d) Step 4: Allocate the transaction price to the performance
obligations in the contract
(e) Step 5: Recognise revenue when (or as) the entity satisfies a
performance obligation
AASB 2015-8 amended the AASB 15 effective date so it is now effective
for annual reporting periods commencing on or after 1 January 2018.
Early application is permitted.
AASB 2014-5 incorporates the consequential amendments to a number
Australian Accounting Standards (including Interpretations) arising from
the issuance of AASB 15.
AASB 2015-1 Amendments
to Australian
Accounting
Standards –
Annual
Improvements
to Australian
Accounting
Standards
The subjects of the principal amendments to the Standards are set out
below:
1 January
2016
1 July 2016
AASB 5 Non-current Assets Held for Sale and Discontinued Operations:
• Changes in methods of disposal – where an entity reclassifies an
asset (or disposal group) directly from being held for distribution
to being held for sale (or visa versa), an entity shall not follow
the guidance in paragraphs 27–29 to account for this change.
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Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
2012–2014
Cycle
AASB 7 Financial Instruments: Disclosures:
•
Servicing contracts - clarifies how an entity should apply the
guidance in paragraph 42C of AASB 7 to a servicing contract
to decide whether a servicing contract is ‘continuing
involvement’ for the purposes of applying the disclosure
requirements in paragraphs 42E–42H of AASB 7.
• Applicability of the amendments to AASB 7 to condensed
interim financial statements - clarify that the additional
disclosure required by the amendments to AASB 7 Disclosure–
Offsetting Financial Assets and Financial Liabilities is not
specifically required for all interim periods. However, the
additional disclosure is required to be given in condensed
interim financial statements that are prepared in accordance
with AASB 134 Interim Financial Reporting when its inclusion
would be required by the requirements of AASB 134.
AASB 119 Employee Benefits:
• Discount rate: regional market issue - clarifies that the high
quality corporate bonds used to estimate the discount rate for
post-employment benefit obligations should be denominated
in the same currency as the liability. Further it clarifies that the
depth of the market for high quality corporate bonds should be
assessed at the currency level.
AASB 134 Interim Financial Reporting:
• Disclosure of information ‘elsewhere in the interim financial
report’ - amends AASB 134 to clarify the meaning of disclosure
of information ‘elsewhere in the interim financial report’ and to
require the inclusion of a cross-reference from the interim
financial statements to the location of this information.
This Standard inserts scope paragraphs into AASB 8 and AASB 133 in
place of application paragraph text in AASB 1057. This is to correct
inadvertent removal of these paragraphs during editorial changes made
in August 2015. There is no change to the requirements or the
applicability of AASB 8 and AASB 133.
1 January
2016
1 July 2016
AASB 2015-9 Amendments
to Australian
Accounting
Standards –
Scope and
Application
Paragraphs
[AASB 8, AASB
133 & AASB
1057]
AASB 16
Leases
The key features of AASB 16 are as follows:
Lessee accounting
1 January
2019
1 July 2019
•
Lessees are required to recognise assets and liabilities for all
leases with a term of more than 12 months, unless the
underlying asset is of low value.
• A lessee measures right-of-use assets similarly to other non-
financial assets and lease liabilities similarly to other financial
liabilities.
• Assets and liabilities arising from a lease are initially measured
on a present value basis. The measurement includes non-
cancellable lease payments (including inflation-linked
payments), and also includes payments to be made in optional
periods if the lessee is reasonably certain to exercise an option
to extend the lease, or not to exercise an option to terminate
the lease.
53
ACTINOGEN MEDICAL LIMITED
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_________________________________________________________________
Reference
Title
Summary
Application
date of
standard*
Application
date for
Group*
• AASB 16 contains disclosure requirements for lessees.
Lessor accounting
• AASB 16 substantially carries forward the lessor accounting
requirements in AASB 117. Accordingly, a lessor continues to
classify its leases as operating leases or finance leases, and to
account for those two types of leases differently.
• AASB 16 also requires enhanced disclosures to be provided by
lessors that will improve information disclosed about a lessor’s
risk exposure, particularly to residual value risk.
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a
Lease
(c) SIC-15 Operating Leases—Incentives
(d) SIC-27 Evaluating the Substance of Transactions Involving the Legal
Form of a
Lease
The new standard will be effective for annual periods beginning on or
after 1 January 2019. Early application is permitted, provided the new
revenue standard, AASB 15 Revenue from Contracts with Customers, has
been applied, or is applied at the same date as AASB 16.
2016-1
2016-2
IFRS 2
(Amendmen
ts)
Amendments
to Australian
Accounting
Standards –
Recognition of
Deferred Tax
Assets for
Unrealised
Losses
[AASB 112]
Amendments
to Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments
to AASB 107
Classification
and
Measurement
of
Share-based
Payment
Transactions
(Amendments
to IFRS 2)
This Standard amends AASB 112 Income Taxes (July 2004) and AASB 112
Income Taxes (August 2015) to clarify the requirements on recognition of
deferred tax assets for unrealised losses on debt instruments measured at
fair value.
1 January
2017
1 July 2017
This Standard amends AASB 107 Statement of Cash Flows (August 2015)
to require entities preparing financial statements in accordance with Tier
1 reporting requirements to provide disclosures that enable users of
financial statements to evaluate changes in liabilities arising from
financing activities, including both changes arising from cash flows and
non-cash changes.
1 January
2017
1 July 2017
This standard amends to IFRS 2 Share-based Payment, clarifying how to
account for certain types of share-based payment transactions. The
amendments provide requirements on the accounting for:
1 January
2018
1 July 2018
►
The effects of vesting and non-vesting conditions on the
measurement of cash-settled share-based payments
► Share-based payment transactions with a net settlement
feature for withholding tax obligations
► A modification to the terms and conditions of a share-based
payment that changes the classification of the transaction from
cash-settled to equity-settled
Designates the beginning of the applicable annual reporting period unless otherwise stated.
Only applicable to not-for-profit/public sector entities.
The application of this IFRS is highly unlikely to have an impact on Australian entities.
*
**
^^^
The impact of the adoption of all of these new and revised standards and interpretations has not yet been
assessed by the Group.
54
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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3.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk, (including interest rate risk and
price risk), credit risk and liquidity risk. The Group’s overall risk in these areas is not significant enough to
warrant a formalised specific risk management program.
Risk management is carried out by the Board of Directors in their day to day function as the overseers
of the business.
Set out below is an overview of the financial instruments held by the Group as at 30 June 2016:
55
Cash and cash equivalentsLoan and receivablesAvailable-for-saleAs at 30/6/2016$$$Financial assets:Available-for-sale-investments- - 4,025,987 Total non-current- - 4,025,987 Cash & cash equivalents751,978 - - Trade and other receivables- 2,966,276 - Total current751,978 2,966,276 - Total assets751,978 2,966,276 4,025,987 Financial liabilities:Trade and other payables- 783,968 - Total current- 783,968 - Total liabilities- 783,968 - Net exposure751,978 2,182,3084,025,987
ACTINOGEN MEDICAL LIMITED
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Set out below is an overview of the financial instruments held by the Group as at 30 June 2015:
(a) Market Risk
(i) Foreign Exchange Risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency and net investments in foreign
operations.
During the prior year ended 30/6/2015, Actinogen Medical Limited acquired 100% of the issued
capital in Corticrine Limited; a company located in the United Kingdom; however, on 23 February
2016 Corticrine Limited was deregistered and dissolved. The subsidiary’s cash and cash equivalents
were denominated in Great British Pounds.
(ii) Price risk
Equity price risk represents the risk that the value of a financial instrument will fluctuate as a result of
changes in market prices, whether those changes are caused by factors specific to the individual
instrument or its issuer or factors affecting all instruments in the market. Equity price risk is minimised
through ensuring that investment activities are undertaken in accordance with the Board established
mandate limits and investment strategies.
During the year the Group’s main equity price risk exposure related to the Group’s available-for-sale
financial assets which comprised of various ASX-listed investments. All the investment assets were
securities from major banks and are considered low risk investments.
(iii) Interest rate risk
The Group’s main interest rate risk exposure relates primarily to the Group’s cash at bank and funds
held on deposit that are both held with variable interest rates. The Group does not rely on the
generation of interest on cash and cash equivalents to provide for working capital and as result does
not consider this to be material. The Group therefore has not undertaken any further analysis of
exposure other that the analysis in the table below:
56
Cash and cash equivalentsLoan and receivablesAvailable-for-saleAs at 30/6/2015$$$Financial assets:Available-for-sale-investments- - - Total non-current- - - Cash & cash equivalents9,805,610 - - Trade and other receivables- 215,460 - Total current9,805,610 215,460 - Total assets9,805,610 215,460 - Financial liabilities:Trade and other payables- 222,640 - Total current- 222,640 - Total liabilities- 222,640 - Net exposure9,805,610 (7,180)-
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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(b) Credit risk
Credit risk is the risk of financial loss to the Group if a counter party to a financial instrument fails to
meet its contractual obligations. The Group’s main credit risk exposure relates to the financial assets of
the Group, which comprise cash and cash equivalents and trade and other receivables. The Group’s
exposure to credit risk arises from potential default of the counter party, with the maximum exposure
equal to the carrying amount of these instruments.
The carrying amount of financial assets included in the statement of financial position represents the
Group’s maximum exposure to credit risk in relation to those assets. The Group does not hold any
credit derivatives to offset its credit exposure. The Group trades only with recognised, credit worthy
third parties and as such collateral is not requested nor is it the Group’s policy to securitise its trade
and other receivables. Receivable balances are monitored on an ongoing basis with the result that
the Group does not have a significant exposure to bad debts. The Group has no significant
concentrations of credit risk except for cash held with National Australia Bank and various receivables
with recognised third parties.
(i) Cash
The Directors believe that there is negligible credit risk with the Group’s cash and cash equivalents, as
funds are held at call with National Australia Bank, a reputable Australian Banking institution.
(ii) Trade and other receivables
While the Group has policies in place to ensure that transactions with third parties have an
appropriate credit history, the management of current and potential credit risk exposures is limited as
far as is considered commercially appropriate. Up to the date of this report, the Board has placed no
requirement for collateral on existing debtors.
(c)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial liabilities as and when they
fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities, the availability of funding through an adequate amount of committed credit facilities and
the ability to close out market positions. The Group manages liquidity risk by continuously monitoring
forecast and actual cash flows. Surplus funds are generally only invested at call or in bank bills that
are highly liquid and with maturities of less than six months.
(i) Financing arrangements:
The Group does not have any financing arrangements.
(ii) Maturities of financial liabilities:
The Group’s only debt relates to trade payables, where payments are generally due within 30 days.
57
Weighted average interest rateBalanceWeighted average interest rateBalance%$%$Cash and cash equivalents1.6751,9781.69,805,610As at 30/6/2016As at 30/6/2015
ACTINOGEN MEDICAL LIMITED
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(d)
Fair Value Measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
Accounting standards require disclosure of fair value measurements by level of the following fair
value measurement hierarchy:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices) (level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(level 3).
The following tables present the Group’s assets and liabilities measured and recognised at fair value
at 30 June 2016 and 30 June 2015.
The fair value of financial instruments traded in active markets (such as available-for-sale securities) is
based on quoted market prices at the reporting date. The quoted market price used for financial
assets held by the Group is the current bid prices at the end of the financial year. These instruments
are included in Level 1.
(e)
Fair Values
Set out below is a comparison of the carrying amounts and fair values of financial instruments as at 30
June 2016. The carrying value of trade receivables and trade payables are assumed to approximate
their fair value due to their short-term nature.
58
At 30/6/2016Level 1Level 2Level 3TotalFinancial assetsTrade and other receivables 2,966,276 - - 2,966,276 Available-for-sale financial investments 4,025,987 - - 4,025,987 Total financial assets 6,992,263 - - 6,992,263 Financial liabilitiesTrade and other payables 783,968 - - 783,968 Total financial liabilities 783,968 - - 783,968 At 30/6/2015Level 1Level 2Level 3TotalFinancial assetsTrade and other receivables 215,460 - - 215,460 Total financial assets 215,460 - - 215,460 Financial liabilitiesTrade and other payables 222,640 - - 222,640 Total financial liabilities 222,640 - - 222,640
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 6
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4.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Key estimates: Impairment
The Company assesses impairment at each reporting date by evaluating conditions specific to the
Company that may lead to impairment of non-financial assets. Where an impairment trigger exists, the
recoverable amount of the asset is determined. Value-in-use calculations performed in assessing
recoverable amounts incorporate a number of key estimates.
The Company follows the guidance of AASB 139 Financial Instruments: Recognition and Measurement
on determining when an available-for-sale financial asset is impaired. This determination requires
significant judgement. In making this judgement, the Company evaluates, among other factors, the
duration and extent to which the fair value of an investment is less than its cost and the financial health
of and near term business outlook for the investee, including factors such as industry and sector
performance, changes in technology and operational and financing cash flows.
Key estimates: Share-based payments
The Group initially 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. Estimating fair value for share-
based payment transactions requires determination of the most appropriate valuation model, which is
dependent on the terms and conditions of the grant.
This estimate also requires determination of the most appropriate inputs to the valuation model
including the expected life of the share option, volatility and dividend yield and making assumptions
about them. The assumptions and models used for estimating fair value for share-based payment
transactions are disclosed in Note 22.
5.
SEGMENT INFORMATION
The Group’s sole operations are within the biotech industry within Australia. Given the nature of the
Group, its size and current operations, the Group’s management does not treat any part of the Group
as a separate operating segment. Internal financial information used by the Group’s decision makers
is presented on a “whole of entity” manner without dissemination to any separately identifiable
segments. Accordingly, the financial information reported elsewhere in this financial report is
representative of the nature and financial effects of the business activities in which it engages and the
economic environments in which it operates. All non-current assets are held in Australia and all
revenue is derived in Australia.
59
Carrying amountFair valueAt 30/6/2016$$Financial assets:Available-for-sale-investments4,025,987 4,025,987 Trade and other receivables2,966,276 2,966,276 Total current6,992,263 6,992,263 Total financial assets6,992,263 6,992,263 Financial liabilities:Trade and other payables783,968 783,968 Total current783,968 783,968 Total financial liabilities783,968 783,968
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 6
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6.
REVENUE, OTHER INCOME AND EXPENSES
7.
INCOME TAX
60
Full year endedFull year ended30/06/201630/06/2015$ $RevenueDividends Received 100,320 - Interest Revenue 104,171 49,927 204,491 49,927 Other incomeResearch and development tax rebate 3,748,452 103,502Total other income 3,748,452 103,502 Total revenue 3,952,943 153,429 ExpensesResearch and development expensesResearch consultants 539,764 1,857,890 Administrative 209,396 186,873 Laboratory expenses 3,820,489 90,846 Employee expenses 1,043,596 622,737 5,613,245 2,758,346 Other expensesEmployee expenses 241,644 57,119 Depreciation 10,857 12,906 252,501 70,025 Full-year endedFull-year ended30/06/201630/06/2015$ $Numerical reconciliation of income tax income to prima facie tax payableOperating loss before income tax (3,633,758)(5,431,009)Tax benefit at the Australian tax rate of 30% (2013: 30%)(1,090,127)(1,629,303)Tax effect of amounts that are not deductible / taxable in calculating taxable income: Fines and penalties - 24Share-based payments98,018447,000Research and development415,198764,338Future income tax benefit not brought to account576,911417,941Income tax benefit / (expense) - -
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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The tax benefit of tax losses and other temporary differences will only arise in the future where the Group
derives sufficient net taxable income and is able to satisfy the carried forward tax loss recoupment rules. The
Directors believe that the likelihood of the Group achieving sufficient taxable income in the future is not
probable and the tax benefit of these tax losses and other temporary differences have not been
recognised.
8.
CASH AND CASH EQUIVALENTS
At the end of the prior year ended 30 June 2015, the Group’s cash and cash equivalents totalled $9,805,610.
Since then the Group has invested $6,000,225 in available-for-sale listed investments comprising securities
to
from major banks which are considered
readily convertible
investments
that are
low
risk
61
Full-year endedFull-year ended30/06/201630/06/2015$ $Tax income (expense) relating to items of other comprehensive incomeAvailable for sale financial assets - - - -Tax LossesUnused tax losses for which no deferred tax asset has been recognised.Potential tax benefit @ 30%2,090,5871,554,949 2,090,587 1,554,949 Unrecognised temporary differencesTemporary differences for which deferred tax assets have not been recognised.- Provisions and accruals26,81015,000- Capital raising costs636,854865,387- Impairment - 205,435 663,664 1,085,822Unrecognised deferred tax asset relating to the above temporary differences 199,099 325,747As atAs at30/06/201630/06/2015$ $Cash at bank and on hand648,9619,775,125Short term deposits 103,017 30,485Total cash and cash equivalents751,9789,805,610
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 6
_________________________________________________________________
cash. Approximately $2,000,000 of these investments have been sold, so that as of 30 June 2016, the
balance of the Group’s investments were valued at $4,025,987. The Group received $98,638 in dividends
during the year from holding these investments and as at 30 June 2016 the Group recognised an unrealised
gain of $22,272. Refer to Financial Statements, Note 10: Available-for-sale Listed Investments for further
information.
Combining the $4,025,987 in available-for-sale listed investments with the $751,978 in cash and cash
equivalents held at year end, equates to $4,777,965. The decrease from prior year-end balance of
$9,805,610 is in line with the anticipated working capital budgeted spend as set out in various
announcements issued on the stock exchange during the financial year and previous financial year. Funds
have been applied primarily to support the Phase 2 study of XanamemTM, and to support general working
capital.
Post year-end the Company is due to receive up to approximately $2.6 million in other income which relates
to the research and development tax rebate receivable recognjsed at year end. Refer to Note 9(c) below.
Reconciliation of net cash flows from operating activities
Non cash financing & investing activities
No non-cash financing and investing activities occurred during the year ended 30 June 2016.
Financing facilities available
As at 30 June 2016, the Group had no financing facilities available. For the purposes of the statement of cash
flows, cash includes cash on hand and in banks and investments in money market instruments, net of
outstanding bank overdrafts.
Interest rate risk exposure
The Group’s exposure to interest rate risk is discussed in Note 3.
Credit risk exposure
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of
cash and cash equivalents mentioned above.
62
Full year endedFull year ended30/06/201630/06/2015$ $Loss for the year (3,633,758) (5,431,009)Non cash items:Unrealised gain/(loss) from available-for-sale listed investments (1,682) - Depreciation 10,857 12,906 Amortisation expense 354,469 208,520 Writeoff property, plant and equipment - 95,096 Writeoff available-for-sale financial asset - 1,500 Share-based payment expense 326,728 1,490,020 Issue of shares for sevices performed 53,500 - Change in assets and liabilities(Increase)/decrease in receivables (2,750,816) (219,535)Increase/(decrease) in trade creditors and other payables 561,328 122,713 Increase/(decrease) in employee entitlements 40,235 - (5,039,139) (3,719,789)
ACTINOGEN MEDICAL LIMITED
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9.
TRADE AND OTHER RECEIVABLES
(a) Prepayments
This amount relates to prepaid insurances.
(b) Goods and services tax receivable
This amount relates to good and services tax (GST) paid during the quarters ended 30 June 2016
and 31 March 2016 that is refundable to the Company.
(c) Research and development tax rebate receivable
This amount relates to the research and development tax rebate that the Company is entitled to
claim on the research and development costs incurred during the year.
None of the current receivables are impaired or past due but not impaired.
10. AVAILABLE-FOR-SALE LISTED INVESTMENTS
During the year the Group’s available-for-sale listed investments comprised of securities from major banks,
these are considered low risk investments. The fair value of listed investments in listed corporations is based
on the bid price on the Australian Securities Exchange prior to close of business on balance date.
Movements during the year:
63
As atAs at30/06/201630/06/2015$ $Prepayments (a) 37,692 33,953Goods and services tax receivable (b)323,189181,507Research and development tax rebate receivable (c)2,605,395 - Total trade and other receivables2,966,276215,460As atAs at30/06/201630/06/2015$ $Listed investments at fair value 4,025,987 - Fair value 4,025,987 - As atAs at30/06/201630/06/2015$ $At beginning of the year - 1,500Purchases of available-for-sale listed investments 6,000,225 - Proceeds on sale of available-for-sale listed investments (1,996,510)Unrealised gain/(loss) on listed investments 22,272 Impairment of available for sale financial assets - (1,500)At end of the year 4,025,987 -
ACTINOGEN MEDICAL LIMITED
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11.
PROPERTY, PLANT AND EQUIPMENT
Movements during the year:
12.
INTANGIBLE ASSETS
64
As atAs at30/06/201630/06/2015$ $At cost22,923 10,462 Accumulated depreciation(14,565)(3,707)Total property, plant and equipment8,3586,755Plant and EquipmentOffice EquipmentComputer EquipmentGeneral PoolTotalBalance at 1/7/2015 - - 3,6313,1246,755Acquisitions - - 8,383 4,077 12,460Disposals - - - - - Depreciation - - (8,195) (2,662)(10,857)Balance at 30/6/2016 - - 3,819 4,539 8,358 Plant and EquipmentOffice EquipmentComputer EquipmentGeneral PoolTotalBalance at 1/7/2014102,7592153,663- 106,637Acquisitions - 4,332 3,789 8,121 Disposals (93,884) (144) (1,069)- (95,097)Depreciation(8,875)(71)(3,295) (665) (12,906)Balance at 30/6/2015- - 3,631 3,124 6,755 As atAs at30/06/201630/06/2015$ $ At cost 5,756,744 5,756,744 Accumulated amortisation (559,790)(205,321)Total intangible assets 5,196,954 5,551,423
ACTINOGEN MEDICAL LIMITED
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Movements during the year:
Intellectual property totalling $5,196,954 comprises patents and licences initially acquired through Corticrine
Limited. On 8 December 2014, Actinogen entered into an Assignment of Licence Agreement with Corticrine
Limited for the assignment of all of Corticrine’s interest in, to and under the Licence Agreement to Actinogen
and the assumption by Actinogen of all of Corticrine's obligations in respect of such assignment
(Assignment).
The intellectual property is supported by seven patent families, the most recent of which will expire in 2031.
The patent useful life has been aligned to the patent term and as a result, those patents are amortised on a
straight-line basis over the period of the patent. For further information refer to Note 13 below and to the
accounting policy in Note 2.
13.
DERECOGNISITON OF SUBSIDIARY: CORTICRINE LIMITED
On 1 December 2014, Actinogen Medical Limited acquired 100% of the shares in Corticrine Limited, an
unlisted company based in the United Kingdom, in exchange for 125,000,000 ordinary shares in Actinogen at
0.044 cents per share. The total acquisition consideration therefore equalled $5,500,000. On 8 December
2014, Actinogen entered into an Assignment of Licence Agreement with Corticrine Limited for the assignment
of all of Corticrine’s interest in, to and under the Licence Agreement to Actinogen and the assumption by
Actinogen of all of Corticrine's obligations in respect of such assignment (Assignment).
On 23 February 2016, Corticrine Limited was deregistered and dissolved. Corticrine was entirely dormant for the
entire financial year up to its deregistration date.
14.
TRADE AND OTHER PAYABLES
65
Intellectual Property$ Balance at 1/7/2015 5,551,423 Acquisitions - Amortisation expense (354,469)Balance at 30/6/20165,196,954 Balance at 1/7/2014 - Acquisitions 5,756,744 Amortisation expense (205,321)Balance at 30/6/2015 5,551,423 As atAs at30/06/201630/06/2015$ $Trade payables 689,777 192,276Accruals and other payables 26,810 15,000Goods and services tax payable - 3,665 NAB credit cards 1,916 - Provision for payroll tax 32,514 - PAYG payable 32,951 11,699 Total trade and other payables 783,968 222,640
ACTINOGEN MEDICAL LIMITED
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Trade and other payables are non-interest bearing liabilities stated at cost and settled within 30 days.
Information about the Group’s exposure to foreign currency risk is provided in Note 3.
15.
CONTRIBUTED EQUITY
(a)
Share Capital
Ordinary shares: These shares entitle the holder to participate in dividends and the proposed winding up of
the Group in proportion to the number and amount paid on the share held. Effective 1 July 1998 the
Corporations legislation in place abolished the concepts of authorised capital and par share values.
Accordingly, the Group does not have authorised capital or par value in respect of its issued shares.
(b)
Movement of fully paid ordinary shares during the period were as follows:
66
As atAs at30/06/201630/06/2015$ $ Fully paid ordinary shares28,588,39128,534,891Capital raising costs(2,280,000)(2,280,000)Total contributed equity26,308,39126,254,891DateQuantityUnit Price $Total $Balance carried forward 1 July 2014202,632,3387,245,614Issue of shares - Tranche 12/09/2014 50,000,000 0.02 1,000,000 Issue of shares - Tranche 21/12/2014 50,000,000 0.02 1,000,000 Capital raising costs - - (227,163)Issue of shares - Director placement1/12/2014 19,500,000 0.02 390,000 Consideration shares - Acquisition of Corticrine Ltd3/12/2014 125,000,000 0.044 5,500,000 Issue of loan shares3/12/2014 33,000,000 0.02 660,000 Issue of loan shares12/12/2014 12,000,000 0.04 480,000 Placement shares6/05/2015 105,289,474 0.095 10,002,500 Share Purchase Plan20/05/2015 8,736,746 0.095 830,000 Capital raising costs - - (626,060)Balance at 30/6/2015606,158,55826,254,891Issue of shares pursuant to service agreements6/05/2016 535,000 0.100 53,500 Balance at 30/6/2016606,693,55826,308,391
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(c)
Reserve shares
During the prior year ended 30 June 2015, the Company issued 45,000,000 Loan Shares under the Employee
Share Plan approved at the Annual General Meeting of shareholders on 19 November 2014. The details of
these loan shares are listed below:
33,000,000 shares issued at $0.02 each on 3 December 2014 of which 26,000,000 have vested; and
12,000,000 shares issued at $0.04 each on 12 December 2014.
(d)
Share Options
As at the date of this report, there were 55,700,000 unissued ordinary shares under option:
48,500,000 unlisted options with an exercise price of $0.02 per share and an expiry date of 30 November
2018 (fully vested);
5,500,000 unlisted Facilitator options at $0.02 per share exercisable on or before 30 November 2018 (fully
vested); and
1,700,000 unlisted options with an exercise price of $0.103 per share exercisable on or before 7 July 2020.
These options were issued to employees of the Group and are subject to vesting conditions (refer to
Subsequent Events note).
During the year, the following options expired on 30 September 2015:
9,103,177 listed options on issue post-consolidation. These options were exercisable at 40 cents each (20
cents pre-consolidation) with an expiry date of 30 September 2015.
(e)
Terms and Conditions of Issued Capital
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to
the number of shares held. At shareholders’ meetings each ordinary share is entitled to one vote when a
poll is called, otherwise each shareholder has a vote on a show of hands. Ordinary shares have no par
value.
(f)
Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern,
so it can provide returns to shareholders and benefits to other stakeholders. The Group considers capital to
consist of cash reserves on hand and available-for-sale listed investments.
Consistent with the Group’s objective, it manages working capital by issuing new shares, investing in and
selling assets, submitting Research and Development rebates from the Australian Tax Office or modifying its
planned research and development program as required.
Given the stage of the Company’s development there are no formal targets set for return on capital. The
Company is not subject to externally imposed capital requirements. The net equity of the Company is
equivalent to capital. Net capital is obtained through capital raisings on the Australian Securities Exchange
and receipt of Research and Development rebates from the Australian tax Office.
67
DateQuantityUnit Price $Total $Reserve shares (loan shares)3/12/2014(33,000,000)0.02$ (660,000) Reserve shares (loan shares)12/12/2014(12,000,000)0.04$ (480,000) Balance at 30/6/2015(45,000,000) (1,140,000) Balance at 30/6/2016(45,000,000) (1,140,000)
ACTINOGEN MEDICAL LIMITED
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16.
RESERVES
Reserves are made up of the options reserve. The option reserve records items recognised as expenses on
valuation of employee and Director share options. Details of the movement in reserves is shown below.
Movements during the year:
There were no options issued during the year. At year end there were 54,000,000 options on issue. The
$326,728 in shared-based payment expense is attributable to the loan shares issued to Key Management
Personnel during the prior year.
17.
EARNINGS PER SHARE
There are 54,000,000 unissued ordinary shares under option excluded from the calculation of diluted earnings
per share that could potentially dilute basic earnings per share in the future because they are anti-dilutive or
the current period presented.
68
As atAs at30/06/201630/06/2015$ $Option reserve6,844,6516,495,651As atAs at30/06/201630/06/2015$ $Option ReserveOpening balance6,495,6514,789,123Share-based payment expense326,7281,706,528Closing balance6,822,3796,495,651Available-for-sale investments reserveBalance at the beginning of the year--Unrealisedgain/(loss)onavailable-for-salelisted investments 22,272 -Balance at end of year 22,272 - Full-year endedFull-year ended30/06/201630/06/2015$ $Basic EPS from continuing operations attributable to the ordinary share holders of the Company (cents)(0.60) (1.32) Weighted number of ordinary shares used as the denominator606,240,449 412,406,878 Net loss used in calculating EPS(3,633,758) (5,431,009) Diluted EPS from continuing operations attributable to the ordinary share holders of the Company (cents)(0.60) (1.32) Weighted number of ordinary shares used as the denominator606,240,449 412,406,878 Net loss used in calculating dilurted EPS(3,633,758) (5,431,009)
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There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of authorisation of these financial statements.
18.
COMMITMENTS
Other than what is mentioned below, the Group has no future commitments existing as at 30 June 2016 (2015:
Nil).
Rental Agreement
During the prior year the Group entered into a property rental lease agreement for a term of three years which
commenced from 1 July 2015 with no renewal option included in the agreement. There are no restrictions
placed upon the Group by entering into this lease.
The lease includes a clause to enable upward revision of the rental charge on an annual basis according to
prevailing market conditions. Future minimum rentals payable under non-cancellable operating leases as at 30
June 2016 are as follows:
19.
CONTINGENCIES
The Directors are not aware of any contingent liabilities or assets as at 30 June 2016 (2015: Nil).
20.
KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel of Actinogen Medical Limited are listed below:
69
As atAs at30/06/201630/06/2015$ $Within one year104,845$ 100,813 After one year but not more than five years109,039$ 201,625 More than five years-$ - 213,884$ 302,438 NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentMr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/2016CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/2013CurrentMr Vincent RufflesVice President of Clinical Research27/10/2014Current
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(a) Key Management Personnel Compensation:
There were no long term benefits or termination benefits paid out during the years ended 30 June 2016
and 30 June 2015.
The detailed remuneration disclosures and relevant interested of each Key Management Personnel in fully
paid ordinary shares and options of the Group are provided in the audited remuneration report on pages
23 to 36.
21.
RELATED PARTY TRANSACTIONS
(a) Transactions with Key Management Personnel
Details of transactions with Key Management Personnel are set out in Note 20. There were no other related
party transactions that occurred during the year.
22.
SHARE – BASED PAYMENTS
The following share based payment existed at 30 June 2016:
Employee Plan Loan Shares
Under the Employee Share Plan (approved by shareholders on 19 November 2014), awards are made to
executives and other key management personnel who have an impact on the Group’s performance. The Plan
awards are delivered in the form of options over shares which vest over a period of five years subject to
meeting performance measures.
70
Full-year endedFull-year ended30/06/201630/06/2015$ $Short-term employee benefits 650,886 590,484 Post employment benefits 49,646 33,386 Share-based payment 326,728 1,490,020 1,027,260 2,113,890 RecipientClass of Loan ShareQuantityIssue PriceValue recognised during the year $Value to be recognised in future years$Jason LoveridgeClass A 3,000,000 $ 0.02 35,789 - Jason LoveridgeClass B 3,000,000 $ 0.02 53,537 - Martin RogersClass C7,500,000 0.02$ - - Martin RogersClass D7,500,000 0.02$ - - Martin RogersClass E5,000,000 0.02$ 25,883 - Martin RogersClass F5,000,000 0.02$ 71,036 70,841 Vincent RufflesClass G2,000,000 0.02$ 25,134 33,238 Bill KetelbeyClass H6,000,000 0.04$ 72,451 105,509 Bill KetelbeyClass I3,000,000 0.04$ - - Bill KetelbeyClass J3,000,000 0.04$ 42,898 42,781 45,000,000 326,728 252,369
ACTINOGEN MEDICAL LIMITED
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The fair value of share options granted have been valued using a Black Scholes methodology, taking into
account the terms and conditions upon which the share options were granted.
The approximate interest rate over a five year term was used. The assumed dividend payable in the next five
years was deemed to be nil. A volatility of the share price fluctuation was calculated by considering the
historical movement of the share price over period of time as well factoring market conditions of its competitors
to predict the distribution of relative share performance.
The exercise price of the share options is equal to the market price of the underlying shares on the date of
grant. The contractual term of the share options is five years and there are no cash settlement alternatives for
the employees. The Group does not have a past practice of cash settlement for these awards.
The fair value of options granted during the prior year ended 30 June 2015 was estimated on the date of grant
using the following assumptions:
Dividend yield (%) nil
Weighted average share price ($) 0.04
Expected volatility (%) 100
Risk-free interest rate (%) 5.0
Expected life (years) 5.0
23.
PARENT ENTITY NOTE
71
Full-year endedFull-year ended30/06/201630/06/2015$ $Current assets7,744,24110,021,070Non-current assets5,205,3125,558,178Total assets12,949,55315,579,248Current liabilities824,203222,640Total liabilities824,203222,640Net Assets12,125,35015,356,608Contributed equity26,308,39126,254,891Reserve shares(1,140,000)(1,140,000)Reserves6,844,6516,495,651Accumulated losses(19,887,692)(16,253,934)Total equity12,125,35015,356,608Profit / (loss) for the year(3,633,758) (5,431,009) Other comprehensive income for the year22,272 - Total comprehensive income / (loss) for the year(3,611,486) (5,431,009)
ACTINOGEN MEDICAL LIMITED
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24.
REMUNERATION OF AUDITOR
25.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
On 7 July 2016, 1.7 million options with an exercise price of $0.103 each, exercisable on or before 7 July
2020 were issued to employees of the Group. These options will vest on achieving FDA IND approval for
the XanADu trial, and for achieving the first patient enrolled into the study in the US and Australia, and
for achieving MHRA regulatory approval for the study in the UK, by the end of 2016.
On 7 July 2016, Mr Martin Rogers reverted from Executive Chairman to Non-Executive Chairman.
Other than what has been mentioned above, no matters or circumstances have arisen since the end of the
financial year which significantly affected or may significantly affect the operations of the Company, the
results of those operations, or the state of the Company in subsequent financial years.
72
Full-year endedFull-year ended30/06/201630/06/2015$ $Amounts paid or payable to Ernst & Young for:- Anauditorreviewofthefinancialstatements of the entity 31,200 21,695 31,200 21,695
Ernst & Young
11 Mounts Bay Road
Perth WA 6000 Australia
GPO Box M939 Perth WA 6843
Tel: +61 8 9429 2222
Fax: +61 8 9429 2436
ey.com/au
Independent auditor's report to the members of Actinogen Medical
Limited
Report on the financial report
We have audited the accompanying financial report of Actinogen Medical Limited, which comprises the
statement of financial position as at 30 June 2016, the statement of comprehensive income, statement of
changes in equity and statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors' declaration.
Directors' responsibility 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 controls as the directors determine are necessary to enable the preparation of the financial
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Auditor's responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor's judgment, including the assessment
of the risks of material misstatement of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal controls relevant to the entity's preparation of the
financial report that gives a true and fair view 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 entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
Opinion
In our opinion:
a.
the financial report of Actinogen Medical Limited is in accordance with the Corporations Act
2001, including:
i
ii
giving a true and fair view of the company's financial position as at 30 June 2016 and of its
performance for the year ended on that date;
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
b.
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Report on the remuneration report
We have audited the Remuneration Report included within the directors' report for the year ended 30
June 2016. 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.
Opinion
In our opinion, the Remuneration Report of Actinogen Medical Limited for the year ended 30 June 2016
complies with section 300A of the Corporations Act 2001.
Ernst & Young
T G Dachs
Partner
Perth
31 August 2016
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
75
ACTINOGEN MEDICAL LIMITED
S H A R E H O L D E R I N F O R M A T I O N
___________________________________________________________
Substantial shareholders
The following substantial shareholders have lodged notices with the company as at
27 September 2016:
Holders
Edinburgh Technology Fund Limited
Mr Martin Rogers
Tisia Nominees Pty Ltd
JK Nominees Pty Ltd
Shares
48,147,864
36,250,000
34,717,184
34,717,184
Percentage of
Issued Capital
7.94
5.98
5.72
5.72
Distribution of ordinary shareholders as at 27 September 2016
Range of Holding
1-1,000
1,001-5,000
5,001-10,000
10,001 - 100,000
100,001 – over
Shareholders with less than a marketable
parcel.
Shares
8,845
1,054,237
2,471,402
37,185,109
565,973,965
606,693,558
Holders
36
325
295
818
427
1,901
490
Voting Rights
Each fully paid ordinary share carries voting rights of one vote per share.
Twenty Largest holders of quoted ordinary shares as at 27 September 2016
Edinburgh Technology Fund Limited
JK Nominees Pty Ltd
Webinvest Pty Ltd
Mr Martin Rogers
Warambi Sarl
Mr Jason Peterson & Mrs Lisa Peterson
Tisia Nominees Pty Ltd
Denlin Nominees Pty Ltd
Tisia Nominees Pty Ltd
Oaktone Nominees Pty Ltd
Bannaby Investments Pty Limited
Dr John William Ketelbey
Cabletime Pty Ltd
Ms Margaret Elizabeth Livingston
Mrs Sarah Cameron
Ardroy Securities Pty Ltd
1215 Capital Pty Ltd
Mr Benjamin Cranstoun Dark
Bannaby Investments Pty Ltd
Rogers Sf Management Pty Ltd
TOTAL
Number of
Shares
48,147,864
30,500,000
25,500,000
25,000,000
21,875,078
19,465,788
18,150,000
15,282,816
14,717,184
14,717,184
12,555,263
12,157,894
12,034,703
9,854,749
9,000,000
8,300,000
7,878,022
7,668,913
7,500,000
7,350,000
327,655,458
Percentage
of Issued
Capital
7.94
5.03
4.20
4.12
3.61
3.21
2.99
2.52
2.43
2.43
2.07
2.00
1.98
1.62
1.48
1.37
1.30
1.26
1.24
1.21
54.01
76
ACTINOGEN MEDICAL LIMITED
S H A R E H O L D E R I N F O R M A T I O N
___________________________________________________________
Unquoted Securities as at 27 September 2016
There were 54,000,000 unlisted options exercisable at $0.02 each and expiring on 30 November
2018 held by seven holders, on issue.
Details of the holders holding more than 20% of the above:
AH Super Pty Ltd
TOTAL
Number of
Options
18,500,000
18,500,000
Percentage
34.26
34.26
There were 1,700,000 unlisted employee options exercisable at $0.103 each and expiring on 7 July
2020 held by four holders, on issue.
Details of the holders holding more than 20% of the above:
Vincent Ruffles
Kerrie Boyd
TOTAL
Number of
Options
1,000,000
500,000
1,500,000
Percentage
58.82
29.41
88.23
Restricted Securities
The Company has no securities on issue that are subject to either ASX or voluntary escrow.
On-Market Buy-Back
There is no current on-market buy back in place.
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