ACTINOGEN MEDICAL LIMITED
ABN 14 086 778 476
ANNUAL FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2017
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
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
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 – Dr Geoffrey BrookeErnst & YoungManaging Director – Dr Bill KetelbeyErnst & Young BuildingNon-Executive Director – Dr Jason Loveridge11 Mounts Bay RoadPerth WA 6000Company SecretaryCompany Secretary - Peter WebseLawyersK&L GatesPrincipal Place of Business / Registered OfficeLevel 25 South TowerLevel 9, Suite 1, 68 Pitt Street525 Collins StreetSydney NSW 2000Melbourne VIC 3000Contact DetailsGTP LegalTelephone: 02 8964 740168 Aberdeen Streetwww.actinogen.com.auNorthbridge WA 6003ABN 14 086 778 476BankersShare RegisterNational Australia BankLink Market Services1232 Hay StreetLevel 12West Perth WA 6005680 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
2017 Shareholders’ Annual Report
Message from the Chairman
Dear Shareholder,
On behalf of Actinogen Medical, I am pleased to present the 2017 annual report to our shareholders.
Before discussing the past year, it is timely to reflect on Actinogen Medical’s history. It’s been just over 2.5
years since Actinogen Medical was founded, when the Company acquired the rights to Xanamem from
Edinburgh University. In that time, the team has significantly accelerated the previous ten years of
Xanamem research undertaken at the University, culminating with the successful regulatory approval of,
and patient enrollment into, our landmark Alzheimer trial, XanADu. From day one, the goal was always to
efficiently complete all the necessary preliminary research on Xanamem, enabling the Company to
advance into a Phase II evaluation of the drug in an Alzheimer’s population. All the Xanamem research
undertaken by Actinogen Medical, including the Phase I human trails, reiterated the Company’s belief in
the drug and conviction that Xanamem was appropriate to advance into a much larger proof-of-
concept Phase II trial.
Throughout 2016, the team at Actinogen Medical, along with their expert advisors, worked diligently to
gain regulatory approval for XanADu in all three regions participating in the study – the USA, the UK and
Australia. Achieving these significant milestones involved numerous interactions with the US Food and
Drug Administration (FDA) and the UK’s Medicines and Healthcare products Regulatory Agency (MHRA)
over many months, and the generation and submission of numerous volumes of supporting data. The first
regulatory approval in January from the FDA in the USA, arguably one of the most demanding regulatory
authorities globally, led to a succession of trial approvals from the MHRA in the UK, the Therapeutic Goods
Administration (TGA) in Australia and numerous ethics committees, and ultimately the successful
enrolment of the first patient into XanADu in May 2017. The Company is delighted to have since enrolled
and treated a number of patients in XanADu, and expects to complete the study as planned by early
2019.
Over the 2017 financial year, significant progress was made in raising global awareness of Actinogen
Medical and Xanamem within the Alzheimer’s research and biotech communities. Until July 2016 very
little had been published or presented on Xanamem, while all the developmental research was
underway. Starting with the AAIC (Alzheimer’s Association International Congress) in Toronto in July 2016,
the Company began presenting data at major international conferences, including CTAD (Clinical Trials
in Alzheimer’s disease) and ICE (International Congress on Endocrinology), culminating in the publication
of the first human research data in the British Journal of Pharmacology in February this year. Additionally,
Xanamem, and the cortisol hypothesis that underpins the development of the drug, gained further
visibility through a raft of recent publications supporting the association between raised cortisol and the
development of Alzheimer’s disease. One in particular, published by the Australian Imaging, Biomarker
and Lifestyle (AIBL) research consortium in Australia, demonstrated a clear association between raised
cortisol and the risk of developing Alzheimer’s in the healthy elderly. The study concluded that therapies
designed to lower cortisol may be beneficial in the management of the disease. This study provides
further strong endorsement for the trial of Xanamem in XanADu.
The cortisol hypothesis underpinning the development of Xanamem proposes that persistently raised
cortisol in the brain is associated with the development of Alzheimer’s disease, and that inhibition of this
excess cortisol presents a promising way to treat the disease. Raised cortisol has however been
associated with a number of diseases, offering the potential for Xanamem to provide benefit in treating
other conditions apart from Alzheimer’s. Given this opportunity, Actinogen Medical is working with
Edinburgh University on a proposal to study Xanamem in diabetes cognitive impairment, and discussions
continue with various research units on testing Xanamem in other diseases. The Company hopes to
ultimately demonstrate Xanamem’s potential across a range of diseases, mitigating the risk of a binary
outcome in one disease area .
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ACTINOGEN MEDICAL LIMITED
C H A I R M A N ’ S A D D R E S S
Since joining ACW in March 2017, I’ve been impressed with the progress made in the Xanamem research
programs, and XanADu in particular. Equally, it has become even more apparent to me just how great
the potential is for Xanamem. Alzheimer’s disease doesn’t discriminate – it’s a cruel and callous disease.
Over 400,000 Australians are affected by Alzheimer’s and the few available medicines to treat the
disease provide limited benefit. It is incumbent on us all to redouble our efforts to find new effective drugs
to treat the disease, and I thank all of our committed shareholders for their ongoing support for Actinogen
Medical in the hope that Xanamem proves its value as a treatment for Alzheimer’s.
We have a very exciting year ahead of us as we ramp up the patient enrolment in XanADu and hopefully
initiate Xanamem studies in other diseases. The hard work over the past few years is now beginning to
bear fruit and in a year from now we hope to be close to full enrolment in XanADu, and the
demonstration of the true value of Xanamem. I would like to thank my fellow board members and the
entire Actinogen Medical team for their dedication and achievements over the past few years. I look
forward to the next exciting and hopefully rewarding chapter leading up to the completion of XanADu.
Yours faithfully,
Dr Geoffrey Brooke
Chairman
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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
_____________________________________________________________
This Corporate Governance Statement (“Statement”) outlines the key aspects of Actinogen Medical
Limited’s (‘Actinogen Medical’ or ‘the Company’) 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”) “Corporate Governance Principles and 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 17 August 2017.
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
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:
•
•
•
•
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− 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, 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.
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.
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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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The proportion of women in the entity as at 17 August 2017 is as follows:
Women on the board: 0 of 3 (0%)
Women in senior executive positions: 0 of 2 (0%)
Women in the organisation: 4 of 9 (44%)
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 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:
Dr Geoffrey Brooke
Dr Bill Ketelbey
Dr Jason Loveridge
Dr Anton Uvarov
Mr Martin Rogers
Non-Executive Chairman (appointed 1 March 2017);
Managing Director (appointed 18 December 2014);
Non-Executive Director (appointed 1 December 2014, Interim Chairman
from 30 November 2016 to 1 March 2017);
Non-Executive Director (appointed 16 December 2013, resigned 14
August 2017); and
Non-Executive Chairman (appointed 1 December 2014, resigned 30
November 2016).
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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
_____________________________________________________________
The Company currently has one executive Director, the Managing Director, and two Non-Executive
Directors.
The Board is currently comprised of a majority of independent Directors, being Dr Geoffrey Brooke
(the Company’s Non-Executive Chairman), and Dr Jason Loveridge. Dr Anton Uvarov, a former Non-
Executive Director of the Company, was also deemed an independent Director for the entire
financial year up until his resignation date on 14 August 2017. Mr Martin Rogers, a former Chairman of
the Company during the financial year up until his resignation date on 30 November 2016, was not
considered to be independent as he was at one stage an Executive Chairman of the Company.
Actinogen Medical has adopted a definition of 'independence' for Directors that is consistent with
the Recommendations.
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 Directors review 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.
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.
respect the law and act in accordance with it;
All employees and Directors are expected to:
maintain high levels of professional conduct;
respect confidentiality and not misuse Company information, assets or facilities;
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.
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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
_____________________________________________________________
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 & CFO Certifications
The Board has received certifications from the CEO and CFO Equivalent in connection with the
financial statements for Actinogen Medical for the Reporting Period. 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.
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:
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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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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 recognises 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.
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.
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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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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.
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.
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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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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 $210,366.
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
_____________________________________________________________
Your Directors present their report pertaining to Actinogen Medical Limited (“the Company” or
“Actinogen”) for the year ended 30 June 2017.
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.
Dr Geoffrey Brooke (appointed 1 March 2017)
MBBS, MBA
Non-Executive Chairman
Dr Geoff Brooke is a healthcare industry and venture capital veteran with over 30 years’ international
experience as the founder, lead investor and/or Chairman/Director of numerous healthcare companies with
a realised value of more than $1.5 billion. Most notably, he was the Managing Director and Founder of
leading life sciences venture capital firm, GBS Ventures - one of Asia Pacific’s premier investors in the
healthcare space. There, Dr Brooke was responsible for GBS’s healthcare venture activity in the region and
raised $450 million in venture and private equity funds, focused on biopharmaceuticals, medical devices and
services.
Dr Brooke was also responsible for numerous investments and exits via NASDAQ and ASX public listings and
trade sales, as well as being lead investor in numerous investments syndicated in multiple rounds with premier
US venture firms.
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NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentDr Geoffrey BrookeNon-Executive Chairman1/03/2017CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/201314/08/2017Mr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/201630/11/2016
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Dr Brooke was also President and Founder of US-based seed healthcare venture capital firm, Medvest Inc,
with investors including the venture capital arm of leading global multinational medical devices,
pharmaceutical and consumer packaged goods manufacturer, Johnson & Johnson. Medvest was focused
including pharmaceuticals,
on founding companies based upon health care-related technology,
biotechnology, therapeutic devices, medical services and information systems.
Dr Brooke now acts a private investor in, and independent director for, a number of small to medium-sized
Australian and US private and public companies. He holds a Bachelor of Medicine and a Bachelor of Surgery
from Melbourne University and a Masters of Business Administration from IMEDE Switzerland (now IMD).
During the past three years Dr Brooke has served as a director of the following ASX-listed companies:
Non-Executive Director for ASX-listed company, Acrux Limited (ASX:ACR). Appointed 1 June, 2016 –
Current.
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 – Resigned
30 June 2017.
Dr Anton Uvarov (appointed 16 December 2013; resigned 14 August 2017)
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 capitalisations 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 Dimerix Ltd formerly Sun Biomedical Limited (ASX: DXB, formerly 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
_____________________________________________________________
The following Director resigned during the year ended 30 June 2017:
Mr Martin Rogers (appointed 1 December 2014; resigned 30 November 2016)
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.
Mr Rogers resigned on 30 November 2016.
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 June 2015, 43 million Loan Shares were issued to Directors. Of these Loan Shares, 5
million Class F shares, previously issued to Martin Rogers, lapsed on the date of his resignation (30 November 2016) as
they had not vested. As at 30 June 2017, 26 million Loan Shares have vested.
(b) Martin Rogers resigned from the Company on 30 November 2016. Of the 25 million Loan Shares previously issued to
Martin Rogers, 5 million Class F Loan Shares had not vested by the time he had resigned. Therefore, these Loan Shares
lapsed. Anton Uvarov resigned from the Company on 14 August 2017.
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.
14
NameFully paid ordinary sharesLoan shares (a)Movement (b)Total SharesTotal OptionsDr Bill Ketelbey353,803 12,000,000 - 12,353,803 - Dr Geoffrey Brooke400,000 - - 400,000 5,000,000 Dr Jason Loveridge21,875,078 6,000,000 - 27,875,078 - Dr Anton Uvarov4,187,244 - (4,187,244) - - Mr Martin Rogers11,407,894 20,000,000 (31,407,894) - - Total38,224,019 38,000,000 (35,595,138) 40,628,881 5,000,000 Dr Bill Ketelbey1111Dr Geoffrey Brooke44Dr Jason Loveridge1111Dr Anton Uvarov1111Mr Martin Rogers55DirectorNumber 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
_____________________________________________________________
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.
5.
SHARES UNDER OPTION
As at the date of this report, there were 50,310,938 unissued ordinary shares under option:
35,000,000 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).
4,393,750 unlisted options with an exercise price of $0.10 per share exercisable on or before 5
February 2021. These options were issued to employees and contractors of the Company and are
subject to vesting conditions.
417,188 unlisted options with an exercise price of $0.10 per share exercisable on or before 5
February 2021. These options were issued to employees of the Company after year end on 12 July
2017. These options are not subject to vesting conditions.
5,000,000 unlisted options with an exercise price of $0.10 per share exercisable on or before 24
March 2025. These options were issued to Geoffrey Brooke (Appointed as Non-Executive Chairman
on 1 March 2017) of the Company and are subject to vesting conditions.
During the year the following options lapsed:
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 however, lapsed due to the vesting
conditions having not being achieved.
556,250 unlisted options with an exercise price of $0.10 per share exercisable on or before 5
February 2021. These options were issued to employees of the Company however, lapsed due to the
vesting conditions having not being achieved by 30 June 2017.
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.
15
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
OPERATIONS AND FINANCIAL REVIEW
6.
PRINCIPAL ACTIVITIES
The principal activity of the Company 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) Progress with XanADu
(ii) Xanamem and the Cortisol Hypothesis presented to the world
(iii) Xanamem Pipeline
(iv) Research and Development Rebate and Commonwealth Grants
(v)
(vi) Changes to the Actinogen Medical Board
(vii) Investor Relations
(viii) Financial Position
(ix) ACW Management Update
IP Protection and Patent Status
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.
(i) Progress with XanADu
Over the past year Actinogen Medical has made substantial progress with XanADu, the ground-breaking
Phase II trial of Xanamem in patients with mild Alzheimer’s disease. The first half of the financial year was
focused primarily on achieving regulatory approval for the XanADu trial, which involved working closely
with the US Food and Drug Administration (FDA) before receiving approval on the trial design. In a
significant milestone for the company, the FDA approval was received in early 2017. Similar regulatory
approvals from the UK’s Medicines and Healthcare products Regulatory Agency (MHRA) and the
Therapeutic Goods Administration (TGA) in Australia followed soon thereafter, allowing the Company to
start actively recruiting and treating patients in all three countries where the study will be conducted: the
US, the UK and Australia. These regulatory approvals, from three key regulatory authorities, underscore the
depth and quality of Actinogen's research data on Xanamem.
Concurrent with these regulatory submissions and approvals, a great deal of logistical planning was
required to ensure rapid trial site selection and efficient patient enrolment. ICON, a globally deployed
Contract Research Organisation was selected to conduct the trial on Actinogen Medicals behalf. All 20
trial sites have been selected, with nearly all of them opened for patient recruitment by the end of the
financial year. In another major milestone for the company, the first patients were successfully enrolled
and treated, in Australia and the USA in May and June 2017. The first UK patient is expected to be enrolled
into the trial early in the 2018 financial year. The trial is planned to enroll the last patient by late 2018, with
top-line results expected in Q1 2019.
XanADu represents a landmark in the global search for an effective treatment for Alzheimer’s disease and
reinforces Australia’s role at the forefront of Alzheimer’s disease research. Xanamem provides an
important new approach to treating the disease at a time when several high-profile drug trials based on
more traditional approaches have failed.
16
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
The drug’s novel mechanism of action differentiates it from other Alzheimer’s drugs currently available or
under development. It has been specifically designed to block the excess production of cortisol, the stress
hormone, in the areas of the brain most affected by Alzheimer’s disease. Persistently raised cortisol levels
have been strongly associated with Alzheimer’s disease and lowering cortisol in the brain is therefore an
important new target for treating the disease.
XanADu is a double-blind, 12-week, randomised, placebo-controlled study to assess the safety, tolerability
and efficacy of Xanamem in subjects with mild dementia due to Alzheimer’s disease. It will enroll 174
patients at 20 research sites across the US, UK and Australia. The trial is registered on www.clinicaltrials.gov
with the identifier: NCT02727699, where more details on the trial can be found, including the location of
study sites open for patient recruitment.
(ii) Xanamem and the Cortisol Hypothesis presented to the world
In July 2016 Actinogen Medical initiated a comprehensive program of presenting and publishing the
major Xanamem research data. By the end of 2016, the Company had presented research data at five
major medical congresses, including the pre-eminent Alzheimer’s Association International Congress
(AAIC) in Toronto and Clinical Trials in Alzheimer’s Disease (CTAD) in San Diego, as well as the International
Congress of Endocrinology in Beijing.
In February 2017, results of the Phase I human trials of Xanamem were published in the British Journal of
Pharmacology. The paper titled: “Selection and early clinical evaluation of the CNS-penetrant 11β-
hydroxysteroid dehydrogenase type 1 (11β-HSD1) inhibitor UE2343 (Xanamem™)” presented the first
human research results published on Xanamem. The Company had previously published animal research
data in the medical Journal, Endocrinology. Publishing and presenting the Xanamem research data
served to significantly raise the profile of Xanamem as a promising novel treatment for Alzheimer’s disease
amongst the medical research and pharmaceutical community.
In January 2017, an Australian Imaging, Biomarker & Lifestyle (AIBL) study was published adding to the
growing number of recent independent studies supporting the strong association between cortisol and
the development and progression of Alzheimer's disease. The AIBL study: Plasma cortisol, amyloid-β, and
cognitive decline in preclinical Alzheimer’s disease: A 6-year prospective cohort study, was published in
Biological Psychiatry: Cognitive Neuroscience and Neuroimaging.
The study provided promising evidence for the potential of cortisol inhibition to prevent the cognitive
decline of Alzheimer’s disease and provides further validation for the continued development of
Xanamem in the treatment of Alzheimer’s disease. The study concluded that those subjects with a higher
blood cortisol had a much greater chance of developing Alzheimer’s disease. The AIBL study, which is
part-funded by the CSIRO and a number of universities, reported on 416 healthy elderly Australians
followed over 6 years.
(iii) Xanamem Pipeline
While Alzheimer’s disease alone presents an immensely attractive opportunity to improve patient’s health
worldwide, Xanamem, through the inhibition of cortisol production, presents several other potential
disease areas and indications worth pursuing.
The most advanced opportunity and one in which Actinogen Medical may support a second Phase II trial
of Xanamem, is in Diabetes Cognitive Impairment. This indication has been proposed as an Investigator
Initiated Trial that would be sponsored and conducted by the University of Edinburgh. Significantly,
Xanamem was discovered by the research team at the University of Edinburgh and the University is
Actinogen Medical’s largest shareholder.
17
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(iv) Research and Development Rebate and Commonwealth Grants
Actinogen Medical has been approved for the Commonwealth Government R&D tax rebate for three
years ending 30 June 2015, 2016 and 2017. The Company received a second annual rebate of $2.78
million in September 2016 and expects to receive a further R&D tax rebate of approximately $1.2 million in
September 2017.
Additionally, in March 2017, Actinogen Medical received a Commonwealth Export Market Development
Grant (EMDG) of $44,964. The Company anticipates receiving further R&D Tax Rebates and EMDG grants
each year, going forward.
(v)
IP Protection and Patent status
The Company has a comprehensive suite of composition of matter patents covering Xanamem and its
use in Alzheimer’s disease and other related neurological and metabolic diseases associated through the
inhibition of cortisol. Over the past year the Company received additional patent grants such that
Xanamem has patent protection through to at least 2031 across all major markets, including the US,
Europe/UK, Japan, Australia and China, with Canada expected in the next few months.
(vi) Changes to the Actinogen Medical Board
During the year there were changes to the Board of Actinogen Medical. Martin Rogers retired as
Chairman and Director at the AGM in November 2016 and Dr Jason Loveridge took over as interim
Chairman pending the recruitment of a replacement. The Board and Management would like to take this
opportunity of thanking Martin for his invaluable role in the establishment and early progress of Actinogen
Medical, and wish him well in his future endeavours.
In March 2017 Actinogen Medical appointed healthcare industry and venture capital veteran, Dr Geoff
Brooke, as its new Chairman. Geoff Brooke’s appointment adds significant life science and financial
expertise to the Actinogen Board, with his 30 years’ international experience as the founder, lead investor
and/or Chairman/Director of numerous healthcare companies with a realised value of more than $1.5
billion.
Most notably, Geoff was the Managing Director and Founder of leading life sciences venture capital firm,
GBS Ventures - one of Asia Pacific’s premier investors in the healthcare space. There, he was responsible
for GBS Venture’s healthcare venture activity in the region and raised $450 million in venture and private
equity funds, focused on biopharmaceuticals, medical devices and services.
(vii) Investor Relations
In September 2016, an update research report was published by Baker Young on Actinogen Medical
entitled: Actinogen Medical – Best Risk vs Reward Play in Alzheimer’s Dementia. This report details the
investment opportunity presented by ACW, with Baker Young estimating Actinogen Medical’s target
share price at $0.39, against the current share price of around $0.06.
A significant volume of news-flow has been generated over the first half of the 2017 financial year, starting
with the FDA approval for XanADu in early January 2017 and leading up to more recent announcements
on the first patients being enrolled into the trial in May and June 2017. This news-flow will continue as the
Company enrolls additional patients and achieves further key milestones in the trial. Additionally, further
developments and updates can be expected, particularly as the Company progresses planning for the
diabetes cognitive impairment trial.
18
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Progress with XanADu and particularly patient enrollment and treatment has generated significant news
from the Company with resultant media interest in Xanamem and XanADu. Recent media reports on TV,
radio and in print, included a full-page article in the Financial Review by Jill Margo, a nationally
syndicated news article by Sue Dunlevy from Newscorp and a nationally televised prime-time news item
on Channel 9 television.
At the end of June, Actinogen Medical’s CEO Dr Bill Ketelbey presented at the BIO International
Convention in San Diego. This annual convention, hosted by the Biotechnology Innovation Organisation, is
the largest global convention for the biotechnology industry and attracts the biggest companies in the
biotechnology sector to discuss new opportunities and potential partnerships. It offered Actinogen
Medical unparalleled networking opportunities to showcase Xanamem and the quality research that
supports its development.
(viii) Financial Position
Within the first half of the year, Actinogen Medical received the Australian Government R&D Tax Incentive
rebate of $2.78 million. This rebate was recognised as a receivable as at 30 June 2016 and related to work
completed in FY2016. Additionally, the Company received $44,964 in an EMDG grant from the
Commonwealth.
The Company ended the financial year with approximately $1.89 million cash on hand and $2 million
listed investments that are readily convertible into cash. Furthermore, the Company is expecting an
Australian Government R&D Tax Incentive rebate of approximately $1.2 million in the first quarter of the
2018 financial year relating to R&D spend during FY2017.
(ix) ACW Management Update
In recognition of the substantial progress made over the past year with the development of Xanamem
and of the capability and commitment of the Company’s Vice President of Drug Development, Vincent
Ruffles and his research team in achieving these key milestones, a number of promotions and role
updates were announced. The research team is now designated the Drug Development team to better
reflect its broader responsibility in developing Xanamem, and Kerrie Boyd and Bridget Rooney were
respectively promoted to Drug Development Director and Associate to more appropriately reflect their
increased responsibility.
8.
FINANCIAL PERFORMANCE
The financial performance of the Company during the year ended 30 June 2017 is as follows:
(a) Revenue includes $37,535 in interest revenue from cash held; $118,233 in dividends received from listed
investments held; $44,964 EMDG rebate received in the year; and $1,214,754 in research and development tax
rebate receivable recognised as at 30 June 2017.
19
Full-year endedFull-year ended30/06/201730/06/2016$ $Revenue ($)(a)1,415,4863,952,943Net loss after tax ($)(3,190,338)(3,633,758)Loss per share (cents)(0.52)(0.60)Dividend ($) - -
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 2017 is as follows:
(a) During the prior year ended 30 June 2016, the Company invested $6,000,225 in available-for-sale listed
investments comprising securities from major banks which are considered low risk investments that are readily
convertible to cash. Approximately $4,000,000 of these investments have been sold, so that as of 30 June 2017,
the balance of these investments were valued at $2,094,833. The Company received $118,233 in dividends during
the year from holding these investments and as at 30 June 2017 the Company recognised an unrealised gain of
$54,335. Refer to Financial Statements, Note 10: Available-for-sale Listed Investments for further information.
(b) Combining the $2,094,833 in available-for-sale listed investments with the $1,894,605 in cash and cash equivalents
held at year end, equates to $3,989,438. The Company’s expenditure is in line with the anticipated working
capital budgeted spend as set out in various announcements issued on the stock exchange during the current
and previous financial years; and 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 approximately $1.2 million in other income which relates to the
research and development rebate receivable recognised at year end.
10. DIVIDENDS
No amounts have been paid or declared by way of dividend since the date of incorporation. The Directors
recommend that no final dividend be paid.
11. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Company during the year.
12. EVENTS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
No matters or circumstances have arisen since the end of the financial year which significantly affected or
may significantly affect the operations of the Company, the results of those operations, or the state of the
Company in subsequent financial years.
13. OUTLOOK & BUSINESS STRATEGY
The recruitment of the first patients in Australia and the US into XanADu during May and June 2017 represents
a significant milestone for Actinogen Medical’s landmark Phase II clinical trial. Actinogen Medical now
expects to enrol the first UK patient within weeks and to enrol further patients across trial sites in the three
countries during the coming quarter.
20
As atAs at30/06/201730/06/2016$ $Cash and cash equivalents (b)1,894,605751,978Available-for-sale listed investments (a)(b)2,094,833 4,025,987 Net assets / Total equity9,365,76612,125,350Contributed equity26,578,39126,308,391Accumulated losses(23,078,026)(19,887,692)
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
As at 17 August 2017, there were 17 patients on trial, with more than 50 screened for inclusion in the trial.
There has been a substantial increase in patients screened over July and August 2017, reflecting the 19 sites
now open for recruitment. This significant wave of screened patients should translate into a substantial
increase in patient enrolment by the end of August 2017. The Company remains on track to complete the
trial, as planned by early 2019.
The priority for Actinogen Medical over the next 18 months is to achieve full patient enrolment into XanADu
by late 2018, and to report the top-line results on the study by Q1 2019. These results will be particularly
significant as they will help establish the proof-of-concept of the cortisol hypothesis that underpins the
development of Xanamem in the treatment of Alzheimer’s disease.
Exploration of the Diabetes Cognitive Impairment indication continues and the Company looks forward to
updating the market on the progress in the months ahead. This indication generated significant interest at
the BIO International meeting in June 2017, and reinforces the potential for Xanamem to be developed for
multiple disease application. The underlying mechanism of action through the inhibition of cortisol, offers
Xanamem a broad platform of additional disease applications for which it can be developed.
Concurrent with the ongoing clinical research, Actinogen Medical is actively reaching out to the
biotechnology and medical research communities to ensure that Xanamem is recognised and understood
as a potential future treatment for Alzheimer’s disease. The Company expects to participate in further
international symposiums and congresses in the months ahead, where there will be opportunities to
showcase Xanamem and Actinogen Medical to the research, biotech and investment communities.
The Company remains focused on ensuring the Alzheimer’s disease trial progresses as planned and looks
forward to regularly updating the market on the promising momentum being achieved with the
development of Xanamem.
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.
21
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:
22
NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentDr Geoffrey BrookeNon-Executive Chairman1/03/2017CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/201314/08/2017Mr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/201630/11/2016Mr 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
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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% of votes in favour of its Remuneration Report for the 2016
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:
Executives who will create value for shareholders;
coherent remuneration policies and practices to attract and retain executives;
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.
23
20172016201520142013Quotedpriceofordinaryshares at period end (cents) 6.00 7.20 7.20 1.10 1.00 Quotedpriceofoptionsatperiod end (cents)-----Loss per share (cents)0.520.540.600.290.18Dividends paid-----
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(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
Bonus Fee Incentives are set each calendar year, with any unmet milestones expiring at the end of each
year.
During the calendar year ended 31 December 2016, 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 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. Mr Ruffles met a certain portion of these milestones
and was paid a $9,880 bonus for the first quarter of the 2016 calendar year (representing 40% of the
maximum total); and a further $7,410 bonus for the last quarter of the 2016 calendar year (representing
30% of the maximum total).
24
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
During the calendar year ending 31 December 2017, a $28,100 bonus fee incentive scheme (15% of Mr
Ruffles Base Salary) 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 85% approval for the study sites, the first patient, all study sites initiated, various number of
subjects enrolled, the UK dose-escalation submission completed and ready to dose; and all agreements
for DCI (Diabetes Cognitive Impairment) signed and ready to initiate. Subsequent to year end, Mr Ruffles
met a certain portion of these milestones and was paid a $5,620 bonus (representing 20% of the maximum
total) under the bonus incentive set for the calendar year ending 31 December 2017.
As at the date of this report, there is $22,480 under the bonus fee incentive scheme remaining. If the
remaining short term performance conditions are not met by 31 December 2017 then the remainder of
the bonus fee falls away.
Long term incentive
(a) Employee Options
On 23 January 2017, remuneration in the form of Employee Options were granted to employees and
consultants 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 2,500,000 employee
options, exercisable on or before 5 February 2021.
Exercise Price The exercise price payable upon exercise of each Option is $0.10.
Vesting Dates, Vesting Conditions and Percentages
(a) Achieving XanADu regulatory approval in all 3 countries and 9 patients dosed by mid-year – 12.5%.
This vesting condition was not met by 30 June 2017 and subsequently, 312,500 options (12.5% of 2.5
million granted) lapsed and the corresponding share-based payment expense reversed.
(b) Achieving target of 65 patients dosed by year end 2017 – 12.5%
(c) Achieving dosing of more than 30 patients at 20mg or higher Xanamem by 30th Oct 2018 – 25%
(d) Achieving 174 patients dosed by 30th Oct-18 – 50%
Restrictions on Disposal The grant will expire after 4 years on 5 February 2021. As per the Actinogen
Employee Option Plan Rule (“AEOP”). The AEOP governs the options that are issued.
Other terms The rights and obligations which apply to options, including in relation to vesting, disposal and
forfeiture, are specified in the AEOP.
25
RecipientClassQuantityIssue PriceVesting Date / ConditionVestedLapsed(see (a) above)Share-based Payment Expense from issue to 30/6/2017Balance of Share-based Payment Expense remaining @ 30/6/2017VincentRufflesEmployee Options 2,500,000 $ 0.10 See "Vesting Dates, Vesting Conditions and Percentages" above.- (312,500) 21,249$ 55,751$
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(b) Director Options
On 24 March 2017, remuneration in the form of Director Options were granted to Dr Geoffrey Brooke as
part of his appointment as Non-Executive Chairman. Dr Brooke received 5,000,000 options at an exercise
price of $0.10 each, exercisable on or before 24 March 2025. The key terms of the offer as outlined below:
Entitlement: Each Option gives the holder (Option holder) the right to subscribe for one fully paid ordinary
share in the Company (Share) upon exercise of the Option.
Issue price of Options: Options are issued for no consideration.
Exercise Price: The exercise price payable upon exercise of each Option is $0.10.
Vesting Conditions:
(a) 2,000,000 Options to vest 1 year after the date of grant;
(b) 1,500,000 Options to vest 2 years after the date of grant; and
(c) 1,500,000 Options to vest 3 years after the date of grant.
In each case, subject to continuous service to the Company by Dr Geoffrey E.D. Brooke as Non-Executive
Chairman during the period from the date of grant up to and including the applicable vesting date.
Expiry Date: 5.00pm (Sydney time) on the date which is 8 years from grant of the Options. Expiry date is 24
March 2025.
Exercise Period: The Options are exercisable at any time after the applicable Vesting Condition has been
satisfied and on or prior to the Expiry Date
Lapse/Expiry:
(a) The Options will lapse upon the first to occur of:
(i) the Expiry Date;
(ii) Dr Geoffrey Brooke ceasing to be a director of the Company:
(A) where paragraph (b) applies, the date determined by paragraph (b) passing; or
(B) where paragraph (c) applies, the date specified in paragraph (c) passing; or
(C) where neither paragraph (b) or (c) applies, the date upon which Dr Geoffrey Brooke
ceases to be the non-executive Chairman of the Company; or
(iii) the Board making a determination that Dr Geoffrey Brooke has acted fraudulently, dishonestly or
in breach of his obligations to the Company or any of its subsidiaries.
(b)
If at any time prior to the Expiry Date, Dr Geoffrey E.D. Brooke ceases to be the non-executive
Chairman of the Company as a Bad Leaver, in respect of any Vested Option, the Option holder will
have until the earlier of:
(i) the Expiry Date; or
(ii) the date which is three months after the date of Dr Geoffrey Brooke ceasing to be a director of
the Company to exercise the Option.
26
RecipientClassQuantityIssue PriceVesting Date / ConditionVestedLapsedShare-based Payment Expense from issue to 30/6/2017Balance of Share-based Payment Expense remaining @ 30/6/2017GeoffreyBrookeDirector Options 5,000,000 $ 0.10 See "Vesting Conditions" above.- - 41,996$ 203,290$
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(c)
If at any time prior to the Expiry Date, Dr Geoffrey E.D. Brooke ceases to be the non-executive
Chairman of the Company as a Good Leaver, any:
(i) Vested Option; and
(ii) Unvested Option that the Board, in its absolute discretion, shall so determine, remains exercisable
until the Expiry Date.
(d) For the purposes of this clause:
“Bad Leaver” means a director of the Company who ceases to be a director of the Company by
any reason other than as a Good Leaver;
“Good Leaver” means a director of the Company who ceases to be a director of the Company by
reason of retirement, permanent disability, redundancy or death, or is otherwise determined by the
Board as a good leaver on a case by case basis and at its absolute discretion;
“Unvested Option” means an Option granted subject to a vesting condition and vesting condition
has not been satisfied; and
“Vested Option” means an Option granted subject to a vesting condition and which any vesting
condition has been satisfied.
Change in Control: Upon the occurrence of a Change in Control Event, the Board may determine (in
its discretion):
(a) that the Options may vest and be exercised at any time from the date of such determination, and in
any number until the date determined by the Board acting bona fide so as to permit the holder to
participate in any change of control arising from a Change in Control Event provided that the Board
will forthwith advise the Option holder in writing of such determination. Thereafter, the Options shall
lapse to the extent they have not been exercised; or
(b) to use their reasonable endeavours to procure that an offer is made to holders of Options on like
terms (having regard to the nature and value of the Options) to the terms proposed under the
Change in Control Event in which case the Board shall determine an appropriate period during
which the holder may elect to accept the offer and, if the holder has not so elected at the end of
that period, the Options shall immediately vest and become exercisable and if not exercised within
10 days, shall lapse.
For the purposes of this clause, "Change in Control Event" means:
(a) the occurrence of:
(i) the offeror under a takeover offer in respect of all Shares announcing that it has achieved
acceptances in respect of 50.1% or more of the Shares; and
(ii) that takeover bid has become unconditional (except any condition in relation to the cancellation
or exercise of the Options); or
(b) the announcement by the Company that:
(i) its shareholders have at a Court convened meeting of shareholders voted in favour, by the
necessary majority, of a proposed scheme of arrangement under which all Shares are to be
either:
(A) cancelled; or
(B) transferred to a third party; and
(ii) the Court, by order, approves the proposed scheme of arrangement; or
(c) the occurrence of the sale of all or a majority of the Company's main undertaking; or
(d) at the absolute discretion of the Board, the occurrence of a sale of at least 50% of the Company's
main undertaking.
Notice of Exercise: An Option holder may exercise their Options by lodging with the Company:
(a) in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion;
(b) a written notice of exercise of Options specifying the number of Options being exercised (Exercise
Notice); and
(c) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised.
Cheques shall be in Australian currency made payable to the Company and crossed "Not
Negotiable".
27
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price
in cleared funds.
Timing of issue of Shares: Within 10 Business Days of receipt of the Exercise Notice accompanied by the
Exercise Price, the Company will issue the number of Shares required under these terms and conditions in
respect of the number of Options specified in the Exercise Notice.
Shares issued on exercise: All Shares issued upon the exercise of Options will upon issue rank equally in all
respects with the then issued Shares.
Quotation of Shares on exercise: The Company will apply for official quotation on ASX of all Shares issued
upon exercise of Options within 10 Business Days after the date of issue of those Shares.
Quotation of Options: The Options will be unlisted upon grant. No application for quotation of the Options
will be made.
Transfer: The Options are personal to the Option holder to whom they were granted, and the Option
holder may not sell, transfer or otherwise dispose of, or make a declaration of trust in respect of, them:
(a) until after the Options have vested; and
(b) otherwise with the prior written consent of the Board, and provided that the transfer of the Options
complies with the Corporations Act.
Participation in new issues: There are no participation rights or entitlements inherent in the Options and
Option holders will not be entitled to participate in new issues of capital offered to shareholders during the
currency of the Options. If the Company makes an issue of Shares pro rata to existing shareholders there
will be no adjustment of the Exercise Price.
Adjustment for bonus issues of Shares: If the Company makes a bonus issue of Shares or other securities to
existing shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend
reinvestment):
(a) the number of Shares which must be issued on the exercise of an Option will be increased by the
number of Shares which the Option holder would have received if the Option holder had exercised the
Option before the record date for the bonus issue; and
(b) no change will be made to the Exercise Price.
Adjustments for reorganisation: If there is any reorganisation of the issued share capital of the Company,
the rights of the Option holder may be varied to comply with the ASX Listing Rules which apply to a
reorganisation of capital at the time of the reorganisation.
(c) 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) the loan may only be applied towards the subscription price for the Loan Shares;
(ii) 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);
28
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
(iii) 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;
(iv) the Company has security over the Loan Shares as security for repayment of the loan;
(v) 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)
(vii)
notwithstanding paragraph (v) above, the Participant may repay all or part of the loan at any time
before the Repayment Date; and
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: 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.
Sale of Loan Shares: 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).
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.
29
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
During the prior years ended 30 June 2016 and 30 June 2015, the following Employee Share Plan shares vested:
a) 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.
b) 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.
c) 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.
d) 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.
e) 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 year ended 30 June 2017, no new Loan shares were issued to KMP or any other employees. No Employee Share Plan shares
vested during the year ended 30 June 2017. The following Loan shares lapsed:
f) On 30 November 2016, Mr Rogers resigned as Non-Executive Chairman. The vesting condition on the 5,000,000 Class F Employee
Share Plan shares issued were not met and subsequently, these loan shares lapsed and the share-based payment reversed.
When the Employee Loan Shares were issued, they 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.
30
RecipientClass of Loan ShareQuantityIssue PriceVesting Date / ConditionVestedLapsed [f]Share-based Payment Expense from issue to 30/6/2017Balance of Share-based Payment Expense remaining @ 30/6/2017Jason 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.b-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.e-188,085$ -$ Martin RogersClass F5,000,000 0.02$ Upon recruitment of the phase 2a proof of concept study.-(152,955)$ -$ -$ Vincent RufflesClass G2,000,000 0.02$ 3 years from commencement of employment.--67,062$ 8,172$ Bill KetelbeyClass H6,000,000 0.04$ 3 years from commencement of employment.--185,630$ 33,256$ 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 recruitment of Phase II Xanamen Study.--109,444$ -$ 45,000,000 (152,955)$ 1,449,605$ 41,428$
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 2017 and 30 June 2016 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 2017:
(a) Of the $203,346 share-based payments expense:
(i) $115,035 in employee loan shares issued to Bill Ketelbey (despite being issued fully paid ordinary shares,
these loan shares are in substance options for accounting purposes);
(ii) $25,066 in employee loan shares issued to Vincent Ruffles (despite being issued fully paid ordinary shares,
these loan shares are in substance options for accounting purposes);
(iii) $21,249 in employee options issued to Vincent Ruffles under the Employee Option Plan; and
(iv) $41,996 in unlisted options issued to Geoffrey Brooke as part of his appointment as Non-Executive Chairman.
(b) On 30 November 2016, Mr Rogers resigned as Non-Executive Chairman. The vesting condition on the 5,000,000
Class F Employee Share Plan shares issued were not met and subsequently, these loan shares lapsed and all
associated share-based payment expense attached to the Class F shares were reversed.
(c) On 14 August 2017, Mr Uvarov resigned as Non-Executive Director.
31
As at 30/6/2017Post-employmentCash salary and feesCash bonusSuper-annuationOptions(a)Shares$$$$$$ %DirectorsBill Ketelbey 315,692 19,308 115,035 - 450,035 26%Geoffrey Brooke 30,441 2,892 41,996 - 75,329 56%Martin Rogers (b) 52,085 4,948 - - 57,033 0%Jason Loveridge 60,000 - - - - 60,000 0%Anton Uvarov (c) 54,795 5,205 - - 60,000 0%ExecutivesVincent Ruffles 179,604 7,410 17,766 46,315 - 251,095 18%Total 692,617 7,410 50,120 203,346 - 953,493 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 2016:
(a) The share-based payments expense of $326,728 relates to employee Loan shares that, despite being issued
as fully paid ordinary shares, are in substance options for accounting purposes.
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 $315,692 plus superannuation of $19,308;
Vice President: Mr Vincent Ruffles received wages totaling $187,014 (including a $7,410 bonus fee)
plus superannuation of $17,766. For more information on bonuses paid to Mr Ruffles in the prior
financial year ended 30 June 2016, and subsequent to year ended 30 June 2017, refer to Section
3(C) Short-term incentives.
Their contractual arrangements are outlined below.
Dr Bill Ketelbey – Managing Director
Employment date: employment commenced on 18 December 2014.
-
- During the year Dr Ketelbey’s salary was $335,000 per annum (including superannuation
-
-
prescribed by the relevant law) with effect from 1 February 2016.
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.
32
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
_____________________________________________________________
Mr Vincent Ruffles – Vice President of Clinical Research
the
law)
relevant
Employment date: employment commenced on 27 October 2014.
-
- During the year Mr Ruffle’s remuneration increased from $180,000 per annum (including
to $205,000 per annum (including
superannuation prescribed by
superannuation prescribed), with effect from 27 October 2016.
Included within the remuneration package is a bonus fee incentive totaling $28,100 (15% of Mr
Ruffles’ base salary) 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. During
the quarter ended 31 March 2017, Mr Ruffles met a certain portion of these milestones and was
paid, subsequent to year end, a $5,620 bonus fee under the bonus fee incentive set for
calendar year ended 31 December 2017. For further information on the bonus fee incentives
set in the 2016 and 2017 calendar years, refer to Section 3(C) Short-term incentives.
Term: the appointment of the employee will continue
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.
indefinitely from the date of
-
-
-
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.
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 $210,366.
During the financial year the Company remunerated the below mentioned Non-Executives as follows:
Non-Executive Chairman: Dr Geoffrey Brooke received fees totaling $30,441 (plus GST) and
superannuation totaling $2,892.
Non-Executive Director: Dr Jason Loveridge received fees totaling $60,000 (GST not applicable).
Non-Executive Director: Dr Anton Uvarov received a salary totaling $54,795 plus superannuation of
$5,205. Dr Uvarov resigned on 14 August 2017.
Former Non-Executive Chairman: Mr Martin Rogers received fees totaling $52,085 (plus GST) and
superannuation totaling $4,948. Mr Rogers resigned on 30 November 2016.
Their contractual arrangements are outlined below:
Dr Geoffrey Brooke – Non-Executive Chairman
- Appointment date: employment commenced on 1 March 2017;
- Dr Brooke’s remuneration is set at $100,000 inclusive of GST (plus superannuation prescribed by
-
the relevant law). Subject to annual review.
Term: Dr Brooke’s appointment is subject to retirement by rotation under the Company’s
Constitution.
33
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
-
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 Jason Loveridge – Non-Executive Director
- Contract date: commenced on 1 December 2014.
- Director’s Fee: during the year Dr Loveridge’s remuneration was set at $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 – Former Non-Executive Director
- Contract date: commenced on 16 December 2013.
- During the year Dr Uvarov’s remuneration was set at $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.
-
Termination: Dr Uvarov resigned on 14 August 2017.
Mr Martin Rogers – Former Non-Executive Chairman
-
-
Employment date: employment commenced on 1 December 2014.
Termination: Mr Rogers resigned on 30 November 2016.
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.
34
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Option holding of KMP as at 30 June 2017:
(a) Martin Rogers resigned on 30 November 2016.
(b) Geoffrey Brooke commenced as Non-Executive Chairman on 1 March 2017. He was issued Director Options as part of his appointment as Non-Executive Chairman.
Refer to Section 3(C)(b) within the Remuneration Report.
(c) Of the 2,500,000 options granted to Mr Ruffles, 312,500 options lapsed at financial year end due to the vesting condition of not achieving XanADu regulatory
approval in all 3 countries and 9 patients dosed by 30 June 2017 not being met, Refer to Section 3(C)(a) within the Remuneration Report for further information on
Employee Options issued to Vincent Ruffles.
35
ClassBalance at beginning of year 1/7/2016Granted as remunerationOptions exercisedNet change other (a)Balance at end of year 30/6/2017Vested at 30/6/2017Not vested at 30/6/2017DirectorsGeoffrey Brooke (b)Director Options- 5,000,000 - - 5,000,000 - 5,000,000 - 5,000,000 - - 5,000,000 - 5,000,000 Jason 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) - - - Martin RogersD7,500,000 - - (7,500,000) - - - Martin RogersE5,000,000 - - (5,000,000) - - - Martin RogersF5,000,000 - - (5,000,000) - - - 25,000,000 - - (25,000,000) - - - 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 Vincent Ruffles (c)Employee Options- 2,500,000 - (312,500) 2,187,500 - 2,187,500 2,000,000 2,500,000 - (312,500) 4,187,500 - 4,187,500 Total45,000,000 7,500,000 - (25,312,500) 27,187,500 6,000,000 21,187,500
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Option holding of KMP as at 30 June 2016:
36
ClassBalance at beginning of year 1/7/2015Granted as remunerationOptions exercisedNet change otherBalance 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
_____________________________________________________________
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.
(a) On 30 November 2016, Mr Rogers resigned as Non-Executive Chairman. The vesting condition on the 5,000,000 Class F Employee Share Plan shares issued were
not met and subsequently, these loan shares lapsed and all associated share-based payment expense attached to the Class F shares were reversed.
(b) Of the 2,500,000 options granted to Mr Ruffles, 312,500 options lapsed at financial year end due to the vesting condition of not achieving XanADu regulatory
approval in all 3 countries and 9 patients dosed by 30 June 2017 not being met, Refer to Section 3(C)(a) within the Remuneration Report for further information on
Employee Options issued to Vincent Ruffles.
37
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 ConditionDirectorsGeoffrey BrookeDirector Options5,000,000 245,286$ -$ -$ 41,996$ 56%Note AJason LoveridgeA3,000,000 -$ -$ -$ -$ 0%Note BJason LoveridgeB3,000,000 -$ -$ -$ -$ 0%Note CMartin RogersC7,500,000 -$ -$ -$ -$ 0%Note DMartin RogersD7,500,000 -$ -$ -$ -$ 0%Note EMartin RogersE5,000,000 -$ -$ -$ -$ 0%Note FMartin Rogers (a)F5,000,000 -$ -$ (152,955)$ -$ 0%Note GBill KetelbeyH6,000,000 -$ -$ -$ 72,254$ 16%Note HBill KetelbeyI3,000,000 -$ -$ -$ -$ 0%Note IBill KetelbeyJ3,000,000 -$ -$ -$ 42,781$ 10%Note JSenior ExecutivesVincent RufflesG2,000,000 -$ -$ - 25,066$ 10%Note KVincent Ruffles (b)Employee Options2,500,000 88,000$ -$ (11,000)$ 21,249$ 8%Note L52,500,000 333,286$ -$ (163,955)$ 203,346$
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
38
A5,000,000 director options were issued to Dr Brooke as part of his remuneration when appointed as Non-Executive Chairman on 1 March 2017. The vesting conditions are as follows: 2,000,000 vest one year after grant date, 1.5 million vest two years after grant date, and 1.5 million vest three years after grant date. The options were independently valued and the total share-based payment expense of these shares are being prorated over the vesting period of shares being issued.BUpon successful completion of the phase 1b multiple ascending dose (MAD) study.CUpon funding of the phase 2a proof of concept study.DUpon Shares trading on the ASX above $0.04 for ten consecutive trading days.EUpon Shares trading on the ASX above $0.06 for ten consecutive trading days.FUpon recruitment of the phase 1b multiple ascending dose study.GUpon recruitment of the phase 2a proof of concept study.H3 years from commencement of employment.IUpon Share trading on the ASX at 150% of the share price on the date of commencement of employment for 10 consecutive trading days.JUpon recruitment of Phase II Xanamem StudyK3 years from commencement of employment.L(a) Achieving XanADu regulatory approval in all 3 countries and 9 patients dosed by mid-year – 12.5%. This vesting condition was not entirely met by 30 June 2017 and subsequently, 312,500 options lapsed and the associated share-based payment expense was reversed.(b) Achieving target of 65 patients dosed by year end 2017 – 12.5%(c) Achieving dosing of more than 30 patients at 20mg or higher Xanamem by 30th Oct 2018 – 25%(d) Achieving 174 patients dosed by 30th Oct-18 – 50%
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
Number of options awarded, vested and lapsed during the year
39
Class# OptionsFinancial yearGrant dateExercise price ($)Fair value per option at grant date ($)Expiry dateNumber vested during the yearNumber lapsed during the yearDirectorsGeoffrey BrookeDirector Options5,000,000 201724/03/20170.10$ 0.0600$ 24/03/2025- - Jason LoveridgeA3,000,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Jason LoveridgeB3,000,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersC7,500,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersD7,500,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersE5,000,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Martin RogersF5,000,000 201719/11/20140.02$ 0.0376$ 19/11/2019- (5,000,000) Bill KetelbeyH6,000,000 201715/12/20140.04$ 0.0365$ 15/12/2019- - Bill KetelbeyI3,000,000 201715/12/20140.04$ 0.0365$ 15/12/2019- - Bill KetelbeyJ3,000,000 201715/12/20140.04$ 0.0365$ 15/12/2019- - Senior ExecutivesVincent RufflesG2,000,000 201719/11/20140.02$ 0.0376$ 19/11/2019- - Vincent RufflesEmployee Options2,500,000 201723/01/20170.10$ 0.0580$ 5/02/2021- (312,500) Total52,500,000 - (5,312,500)
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 2017.
As at the date of this report, 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 by Geoffrey Brooke; Martin Rogers’
resignation on 30 November 2016; and Anton Uvarov’s resignation on 14 August 2017.
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
40
Balance at beginning of year 1/7/2016Granted as remunerationOn exercise of optionsNet change other (a)Balance at end of year 30/6/2017DirectorsBill Ketelbey353,803 - - - 353,803 Geoffrey Brooke- - - 400,000 400,000 Martin Rogers11,407,894 - - (11,407,894) - Jason Loveridge21,875,078 - - - 21,875,078 Anton Uvarov4,187,244 - - (4,187,244) - 37,824,019 - - (15,195,138) 22,628,881 Other KMPVincent Ruffles- - - - - - - - - - Total37,824,019 - - (15,195,138) 22,628,881
ACTINOGEN MEDICAL LIMITED
D I R E C T O R S ’ R E P O R T
_____________________________________________________________
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.
This does not include such liabilities that arise from conduct involving a wilful breach of duty by the
officers or the improper use by the officers of their position or of information to gain advantage from
themselves or someone else or to cause detriment to the company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other
liabilities.
17. PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court, under section 237 of the Corporations Act 2001, to bring
proceedings on behalf of the Company or intervene in any proceedings to which the Company is
party for the purpose of taking responsibility on behalf of the Company for all or part of these
proceedings. The Company was not a party to any such proceedings during the year.
18. ENVIRONMENTAL REGULATIONS
The Company's operations are not subject to significant environmental regulation under the Australian
Commonwealth or State law.
19. NON-AUDIT SERVICES
No fees were paid for non-audit services to the external auditors and their associated entities during the
years ended 30 June 2017 and 30 June 2016.
20. AUDITOR’S INDEPENDENCE DECLARATION
The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
for the year ended 30 June 2017 forms a part of the Directors’ Report and can be found on page 42.
Signed in accordance with a resolution of the Board of Directors.
Dr Bill Ketelbey
Managing Director
Sydney, New South Wales
Date: Friday, 18 August 2017
41
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 2017, 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
18 August 2017
42
ACTINOGEN MEDICAL LIMITED
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 7
__________________________________________________________________
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
43
Full year endedFull year ended30/06/201730/06/2016Note$ $ Revenue from continuing operations 155,768 204,491 Other income 1,259,718 3,748,452 Total revenue & other income6 1,415,486 3,952,943 Business development (361,341) (697,793)Corporate administration expenses (578,468) (577,174)Research & development expenses6 (3,190,450) (5,613,245)Finance costs (8,532) (6,435)Share-based payment expenses (106,415) (326,728)Amortisation expense (353,501) (354,469)Depreciation expense6 (7,117) (10,857)Total expenses (4,605,824) (7,586,701)Loss Before Income Tax (3,190,338) (3,633,758)Income tax benefit/(expense) - - Loss for the Year(3,190,338)(3,633,758)Other comprehensive incomeNet fair value gain/(losses) for available-for-sale listed investments 54,335 22,272 Total comprehensive loss for the Year(3,136,003)(3,611,486)Earnings/(loss) per share for attributable to the ordinary equity holders of the CompanyBasic loss per share (cents)16(0.52)(0.60)Dilutive loss per share (cents)16(0.52)(0.60)Items that may be reclassified subsequently to profit and loss:
ACTINOGEN MEDICAL LIMITED
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 7
_________________________________________________________________
The above statement of financial position should be read in conjunction with the accompanying notes.
44
Full year endedFull-year ended30/06/201730/06/2016Note$ $CURRENT ASSETSCash and cash equivalents81,894,605751,978Trade and other receivables91,374,8682,966,276Available-for-sale listed investments102,094,833 4,025,987 TOTAL CURRENT ASSETS5,364,3067,744,241NON-CURRENT ASSETSProperty, plant and equipment112,2668,358Intangible assets124,843,453 5,196,954 TOTAL NON-CURRENT ASSETS4,845,7195,205,312TOTAL ASSETS10,210,02512,949,553CURRENT LIABILITIESTrade and other payables13763,682783,968Provision for employee entitlements80,577 40,235 TOTAL LIABILITIES844,259824,203NET ASSETS 9,365,76612,125,350EQUITYContributed equity1426,578,39126,308,391Reserve shares14(1,140,000) (1,140,000)Reserves157,005,401 6,844,651 Accumulated losses(23,078,026)(19,887,692)TOTAL EQUITY 9,365,76612,125,350
ACTINOGEN MEDICAL LIMITED
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 7
_________________________________________________________________
The above statement of cash flows should be read in conjunction with the accompanying notes.
45
Full year endedFull year ended30/06/201730/06/2016$ $CASH FLOWS FROM OPERATING ACTIVITIESDividends received 118,233 98,638 Interest received37,535104,170Interest paid(8,532) (6,435)Payments to suppliers and employees(824,224) (1,047,481)Payments for research and development(3,261,087) (5,331,088)Research and development rebate received 2,829,276 1,143,057Net cash (outflow) from operating activities8(1,108,799)(5,039,139)CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment(1,025) (12,460)Purchases of available-for-sale listed investments - (6,000,225)Proceeds on sale of available-for-sale listed investments1,982,451 1,998,192 Net cash inflow/(outflow) from investing activities1,981,426(4,014,493)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of shares 270,000 - Net cash inflow from financing activities 270,000 - Net increase/(decrease) in cash and cash equivalents1,142,627(9,053,632)Cash and cash equivalents at beginning of the year751,9789,805,610CASH AND CASH EQUIVALENTS AT END OF THE YEAR81,894,605751,978Note
ACTINOGEN MEDICAL LIMITED
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 7
_________________________________________________________________
The above statement of changes in equity should be read in conjunction with the accompanying notes.
46
Contributed EquityAccumulated LossesAvailable-for-sale ReserveOption ReserveReserve SharesTotalFull year ended 30/6/2017$$$$$$Balance as at 1/7/201626,308,391(19,887,688) 22,272 6,822,379(1,140,000)12,125,354Loss for the year - (3,190,338) - - - (3,190,338)Other comprehensive income - - 54,335 - - 54,335 Total comprehensive income for the year - (3,190,338)54,335 - - (3,136,003)Transactions with equity holders in their capacity as equity holdersShares issued during the year 270,000 - - - - 270,000 Share-based payments - - - 106,415 - 106,415 Capital raising costs - - - - - - Balance as at 30/6/201726,578,391(23,078,026)76,6076,928,794(1,140,000)9,365,766Contributed EquityAccumulated LossesAvailable-for-sale ReserveOption ReserveReserve SharesTotalFull-year ended 30/6/2016$$$$$$Balance as at 1/7/201526,254,891(16,253,930) - 6,495,651 (1,140,000)15,356,612Loss 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 year53,500 - - - - 53,500Capital raising costs - - - - - - Share-based payments - - - 326,728 - 326,728.00 Balance as at 30/6/201626,308,391(19,887,688)22,2726,822,379(1,140,000)12,125,354
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
1.
CORPORATE INFORMATION
The financial statements of Actinogen Medical Limited (“the Company” or “Actinogen”) for the year
ended 30 June 2017 were authorised in accordance with a resolution of Directors on 18 August 2017.
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 Company are described in the Directors’ Report. Information
on other related party relationships is provided in Note 20.
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 Company are for the financial year ended 30 June 2017.
(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) Going concern basis
This report has been prepared on the going concern basis, which contemplates the continuity of
normal business activity and the realisation of assets and settlement of liabilities in the normal course
of business.
The Company has incurred a total comprehensive loss for the year ended 30 June 2017 of $3,136,003
(30 June 2016: $3,611,486) and experienced net cash outflows from operating activities of $1,108,799
(30 June 2016: outflows of $5,039,139).
As at 30 June 2017, the Company has $1,894,605 in cash and cash equivalents plus $2,094,833 in
available-for-sale listed investments that are readily convertible into cash. Post year-end, the
Company is due to receive approximately $1,214,754 in other income which relates to the research
and development rebate receivable recognised at year end.
The Company remains dependent on its ability to raise funding in volatile capital markets. However,
the Directors continue to believe that the going concern basis of accounting by the Company is
appropriate as the Company has successfully completed capital raisings during previous reporting
periods, notwithstanding the challenging conditions in equity markets.
In consideration of the above matters, the Directors have determined that it is reasonably foreseeable
that the Company will continue as going concern and that it is appropriate that the going concern
method of accounting be adopted in the preparation of the financial statements. In the event that
the Company is unable to continue as a going concern (due to inability to raise future funding
requirements), it may be required to realise its assets at amounts different to those currently
recognised, settle liabilities other than in the ordinary course of business and make provisions for other
costs which may arise as a result of cessation or curtailment of normal business operations.
Accordingly, the financial statements do not include adjustments relating to the recoverability and
classification of assets amount or to the amounts and classification of liabilities that might be
necessary if the entity does not continue as a going concern.
(c) Compliance with IFRS
The financial statements of the Company also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
47
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
(d)
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.
(e) 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.
(f)
Foreign currency translation
The Company’s financial statements are presented in Australian dollars, which is also the Company’s
functional currency. For each entity, the Company 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 Company’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 Company’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
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).
(g)
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 Company. The depreciation rates used for each class of asset for the
current period are as follows:
Computer Equipment
General Pool Assets >$1,000
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.
48
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
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(h)
Impairment of non-financial assets
At each reporting date, the Company 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 Company 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.
(i)
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.
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.
49
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
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.
(j)
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.
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.
(k)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to balance date. Employee benefits that are expected to be settled within one year have
been measured at the amounts expected to be paid when the liability is settled, 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.
(l)
Share-based payments
The Company provides benefits to employees (including directors) of the Company 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’).
50
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
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 Company, 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
only 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.
(m) 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, bank overdrafts and other short term, highly liquid
investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
(n)
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.
(o)
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.
51
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
(p) 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 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.
(q) Contributed equity
Ordinary issued share capital is recognised at the fair value of the consideration received by the
Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in
equity as a reduction in share proceeds received.
(r)
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
Company. Interest, when charged by the lender, is recognised as an expense on an accrual basis.
(s)
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.
(t)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company,
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.
(u)
Investments and other financial assets
Classification
The Company 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.
52
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
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.
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 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 Company assesses at each balance date whether there is objective evidence that a financial
asset or Company 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.
(v)
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.
(w) 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.
53
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
(x)
New accounting standards and interpretations adopted
The following standards and interpretations have been adopted by the Company:
Reference
Title
Summary
AASB 14
^^^
Regulatory
deferral
accounts
AASB 14 allows an entity, whose activities are subject to rate-regulation, to
continue applying most of its existing accounting policies for regulatory
deferral account balances upon its first-time adoption of Australian
Accounting Standards. The Standard does not apply to existing Australian
Accounting Standard preparers.
AASB 2014-4 Clarification of
Acceptable
Methods of
Depreciation
and
Amortisation
(Amendments
to
AASB 116 and
AASB 138)
AASB 2015-1 Amendments to
Australian
Accounting
Standards –
Annual
Improvements
to Australian
Accounting
Standards 2012–
2014 Cycle
The amendments clarify the principle in AASB 116 Property, Plant and
Equipment and AASB 138 Intangible Assets that revenue reflects a pattern
of economic benefits that are generated from operating a business (of
which the asset is part) rather than the economic benefits that are
consumed through use of the asset. As a result, the ratio of revenue
generated to total revenue expected to be generated cannot be used to
depreciate property, plant and equipment and may only be used in very
limited circumstances to amortise intangible assets.
for Sale and Discontinued
The amendments clarify certain requirements in:
AASB 5 Non-current Assets Held
Operations – Changes in methods of disposal
AASB 7 Financial Instruments: Disclosures - servicing contracts;
applicability of the amendments to AASB 7 to condensed interim
financial statements
AASB 119 Employee Benefits - regional market issue regarding
discount rate
AASB 134 Interim Financial Reporting - disclosure of information
‘elsewhere in the interim financial report’
Application
date of
standard
Application
date for
Company*
1 January
2016
1 July 2016
1 January
2016
1 July 2016
1 January
2016
1 July 2016
AASB 2015-2 Amendments to
Australian
Accounting
Standards –
Disclosure
Initiative:
Amendments to
AASB 101
This Standard amends AASB 101 Presentation of Financial Statements to
clarify existing presentation and disclosure requirements and to ensure
entities are able to use judgment when applying the Standard in
determining what information to disclose, where and in what order
information is presented in their financial statements. For example, the
amendments make clear that materiality applies to the whole of financial
statements and that the inclusion of immaterial information can inhibit the
usefulness of financial disclosures.
1 January
2016
1 July 2016
The standards and interpretations were applied for the first time and they have not had a material impact
on the Group’s financial statements
(y)
New accounting standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30
June 2017 reporting periods and have not been early adopted by the Company. These new standards and
interpretations are set out below.
Title
Summary
Reference
AASB 9
Financial
Instruments
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement.
Except for certain trade receivables, an entity initially measures a financial asset
at its fair value plus, in the case of a financial asset not at fair value through profit
or loss, transaction costs. Debt instruments are subsequently measured at fair
Application
date of
standard*
Application
date for
Company*
1 January
2018
1 July 2018
54
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
Title
Summary
Reference
Application
date of
standard*
Application
date for
Company*
value through profit or loss (FVTPL), amortised cost, or fair value through other
comprehensive income (FVOCI), on the basis of their contractual cash flows and
the business model under which the debt instruments are held. There is a fair
value option (FVO) that allows financial assets on initial recognition to be
designated as FVTPL if that eliminates or significantly reduces an accounting
mismatch.
Equity instruments are generally measured at FVTPL. However, entities have an
irrevocable option on an instrument-by-instrument basis to present changes in the
fair value of non-trading instruments in other comprehensive income (OCI)
without subsequent reclassification to profit or loss.
For financial liabilities designated as FVTPL using the FVO, the amount of change
in the fair value of such financial liabilities that is attributable to changes in credit
risk must be presented in OCI. The remainder of the change in fair value is
presented in profit or loss, unless presentation in OCI of the fair value change in
respect of the liability’s credit risk would create or enlarge an accounting
mismatch in profit or loss.
All other AASB 139 classification and measurement requirements for financial
liabilities have been carried forward into AASB 9, including the embedded
derivative separation rules and the criteria for using the FVO. The incurred credit
loss model in AASB 139 has been replaced with an expected credit loss model in
AASB 9. The requirements for hedge accounting have been amended to more
closely align hedge accounting with risk management, establish a more principle-
based approach to hedge accounting and address inconsistencies in the hedge
accounting model in AASB 139.
AASB 15 replaces all existing revenue requirements in Australian Accounting
Standards (AASB 111 Construction Contracts, AASB 118 Revenue, AASB
Interpretation 13 Customer Loyalty Programmes, AASB
Interpretation 15
Agreements for the Construction of Real Estate, AASB Interpretation 18 Transfers of
Assets from Customers and AASB Interpretation 131 Revenue – Barter Transactions
Involving Advertising Services) and applies to all revenue arising from contracts
with customers, unless the contracts are in the scope of other standards, such as
AASB 117 (or AASB 16 Leases, once applied).
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 an entity expects to be entitled in exchange for those
goods or services. An entity recognises revenue in accordance with the core
principle by applying the following steps:
► Step 1: Identify the contract(s) with a customer
► Step 2: Identify the performance obligations in the contract
► Step 3: Determine the transaction price
► Step 4: Allocate the transaction price to the performance obligations in the
contract
► Step 5: Recognise revenue when (or as) the entity satisfies a performance
obligation.
AASB 16 requires lessees to account for all leases under a single on-balance sheet
model in a similar way to finance leases under AASB 117 Leases. The standard
includes two recognition exemptions for lessees – leases of ’low-value’ assets
(e.g., personal computers) and short-term leases (i.e., leases with a lease term of
12 months or less). At the commencement date of a lease, a lessee will recognise
a liability to make lease payments (i.e., the lease liability) and an asset
representing the right to use the underlying asset during the lease term (i.e., the
right-of-use asset).
Lessees will be required to separately recognise the interest expense on the lease
liability and the depreciation expense on the right-of-use asset.
Lessees will be required to remeasure the lease liability upon the occurrence of
certain events (e.g., a change in the lease term, a change in future lease
payments resulting from a change in an index or rate used to determine those
payments). The lessee will generally recognise the amount of the remeasurement
of the lease liability as an adjustment to the right-of-use asset.
55
1 January
2018
1 July 2018
1 January
2019
1 July 2019
AASB 15
Revenue from
Contracts with
Customers
AASB 16
Leases
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
Title
Summary
Reference
Application
date of
standard*
Application
date for
Company*
Lessor accounting is substantially unchanged from today’s accounting under
AASB 117. Lessors will continue to classify all leases using the same classification
principle as in AASB 117 and distinguish between two types of leases: operating
and finance leases.
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
The amendments to AASB 107 Statement of Cash Flows are part of the IASB’s
Disclosure Initiative and help users of financial statements better understand
changes in an entity’s debt. The amendments require entities to provide
disclosures about changes in their liabilities arising from financing activities,
including both changes arising from cash flows and non-cash changes (such as
foreign exchange gains or losses).
1 January
2017
1 July 2017
This Standard amends AASB 2 Share-based Payment, clarifying how to account
for certain types of share-based payment transactions. The amendments provide
requirements on the accounting for:
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.
1 January
2017
1 July 2017
2016-1
2016-2
2016-5
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
Amendments
to Australian
Accounting
Standards –
Classification
and
Measurement
of Share-
based
Payment
Transactions
For Standards: AASB 9, AASB 15 and AASB 16, the impact of the adoption of these standards are
currently being assessed by the Company. No determination has been made.
For Standards AASB 2016-1, AASB 2016-2 and AASB 2016-3, the impact of the adoption of all of these
new and revised standards and interpretations has not yet been assessed by the Company.
3.
FINANCIAL RISK MANAGEMENT
The Company’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 Company’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 Company as at 30 June 2017:
56
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
Set out below is an overview of the financial instruments held by the Company as at 30 June 2016:
(a) Market Risk
(i) 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.
57
Cash and cash equivalentsLoan and receivablesAvailable-for-saleAs at 30/6/2017$$$Financial assets:Available-for-sale-investments- - 2,094,833 Total non-current- - 2,094,833 Cash & cash equivalents1,894,605 - - Trade and other receivables- 1,374,868 - Total current1,894,605 1,374,868 - Total assets1,894,605 1,374,868 2,094,833 Financial liabilities:Trade and other payables- 763,682 - Total current- 763,682 - Total liabilities- 763,682 - Net exposure1,894,605 611,1862,094,833 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
N O T E S T O T H E 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 7
_________________________________________________________________
During the year the Company’s main equity price risk exposure related to the Company’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.
(ii) Interest rate risk
The Company’s main interest rate risk exposure relates primarily to the Company’s cash at bank and funds
held on deposit that are both held with variable interest rates. The Company 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 Company therefore has not undertaken any further analysis of exposure other that the
analysis in the table below:
(b) Credit risk
Credit risk is the risk of financial loss to the Company if a counter party to a financial instrument fails to meet
its contractual obligations. The Company’s main credit risk exposure relates to the financial assets of the
Company, which comprise cash and cash equivalents and trade and other receivables. The Company’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
Company’s maximum exposure to credit risk in relation to those assets. The Company does not hold any
credit derivatives to offset its credit exposure. The Company trades only with recognised, credit worthy third
parties and as such collateral is not requested nor is it the Company’s policy to securitise its trade and other
receivables. Receivable balances are monitored on an ongoing basis with the result that the Company
does not have a significant exposure to bad debts. The Company 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 Company’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 Company 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 Company 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 Company 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.
58
Weighted average interest rateBalanceWeighted average interest rateBalance%$%$Cash and cash equivalents1.21,894,6051.6751,978As at 30/6/2017As at 30/6/2016
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N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
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(i) Financing arrangements:
The Company does not have any financing arrangements.
(ii) Maturities of financial liabilities:
The Company’s only debt relates to trade payables, where payments are generally due within 30 days.
(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 Company’s assets and liabilities measured and recognised at fair value at
30 June 2017 and 30 June 2016.
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
Company is the current bid prices at the end of the financial year. These instruments are included in Level 1.
59
As at 30/6/2017Level 1Level 2Level 3TotalFinancial assetsAvailable-for-sale financial investments 2,094,833 - - 2,094,833 Total financial assets 2,094,833 - - 2,094,833 Financial liabilitiesTrade and other payables - 763,682 - 763,682 Total financial liabilities - 763,682 - 763,682 As at 30/6/2016Level 1Level 2Level 3TotalFinancial assetsAvailable-for-sale financial investments 4,025,987 - - 4,025,987 Total financial assets 4,025,987 - - 4,025,987 Financial liabilitiesTrade and other payables - 783,968 - 783,968 Total financial liabilities - 783,968 - 783,968
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
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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 Company 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 21.
Key estimates: Going concern basis
For further information on going concern basis refer to Note 2 (b).
Key estimates: Intangible Assets
For further information on intangible assets refer to Note 2 (i).
5.
SEGMENT INFORMATION
The Company’s sole operations are within the biotech industry within Australia. Given the nature of the
Company, its size and current operations, the Company’s management does not treat any part of the
Company as a separate operating segment. Internal financial information used by the Company’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.
60
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
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6.
REVENUE, OTHER INCOME AND EXPENSES
61
Full year endedFull year ended30/06/201730/06/2016$ $RevenueDividends Received on listed investments 118,233 100,320 Interest Revenue 37,535 104,171 155,768 204,491 Other incomeEMDG Grant 44,964 - Research and development tax rebate 1,214,754 3,748,452Total other income 1,259,718 3,748,452 Total revenue 1,415,486 3,952,943 Full year endedFull year ended30/06/201730/06/2016$ $ExpensesResearch and development expensesResearch consultants 294,952 539,764 Administrative 90,372 209,396 Laboratory expenses 1,584,211 3,820,489 Travel & accommodation costs 180,295 134,649 Employee expenses 1,040,620 908,947 3,190,450 5,613,245 Other expensesEmployee expenses 175,173 241,644 Depreciation 7,117 10,857 182,290 252,501
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
3 0 J U N E 2 0 1 7
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7.
INCOME TAX
The tax benefit of tax losses and other temporary differences will only arise in the future where the Company
derives sufficient net taxable income and is able to satisfy the carried forward tax loss recoupment rules. The
Directors believe that the likelihood of the Company achieving sufficient taxable income in the future is not
probable and the tax benefit of these tax losses and other temporary differences have not been
recognised.
62
Full-year endedFull-year ended30/06/201730/06/2016$ $Numerical reconciliation of income tax income to prima facie tax payableOperating loss before income tax (3,190,338)(3,633,758)Tax benefit at the Australian tax rate of 27.5% (2016: 30%)(877,343)(1,090,127)Tax effect of amounts that are not deductible / taxable in calculating taxable income: Fines and penalties 4,467 - Share-based payments 29,264 98,018Research and development 416,727 415,198Future income tax benefit not brought to account 426,885 576,911Income tax benefit / (expense) - - Full-year endedFull-year ended30/06/201730/06/2016$ $Tax LossesUnused tax losses for which no deferred tax asset has been recognised.Potential tax benefit @ 27.5% (2016: 30%)2,091,3782,090,587 2,091,378 2,090,587 Unrecognised temporary differencesTemporary differences for which deferred tax assets have not been recognised.- Provisions and accruals163,62026,810- Capital raising costs409,302636,854- Impairment - - 572,922 663,664Unrecognised deferred tax asset relating to the above temporary differences 157,554 199,099
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
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8.
CASH AND CASH EQUIVALENTS
During the prior year ended 30 June 2016, the Company invested $6,000,225 in available-for-sale listed
investments comprising securities from major banks which are considered low risk investments that are
readily convertible to cash. Approximately $4,000,000 of these investments have been sold since this time,
and as of 30 June 2017, the balance of these investments were valued at $2,094,833. The Company
received $118,233 in dividends during the year from holding these investments and as at 30 June 2017 the
Company recognised an unrealised gain of $76,607. Refer to Financial Statements, Note 10: Available-for-
sale Listed Investments for further information.
Combining the $2,094,833 in available-for-sale listed investments with the $1,894,605 in cash and cash
equivalents held at year end, equates to $3,989,438. The Company’s expenditure is in line with the
anticipated working capital budgeted spend as set out in various announcements issued on the stock
exchange during the current and previous financial years; and funds have been applied primarily to support
the Phase 2 study of Xanamem; and to support general working capital.
Post year-end the Company is due to receive up to approximately $1,214,754 in other income which relates
to the research and development rebate receivable recognised at year end. Refer to Note 9(d) below.
Reconciliation of net cash flows from operating activities
63
As atAs at30/06/201730/06/2016$ $Cash at bank and on hand1,757,834648,961Short term deposits 136,771 103,017Total cash and cash equivalents1,894,605751,978Full year endedFull year ended30/06/201730/06/2016$ $Loss for the year (3,190,338) (3,633,758)Non cash items:Unrealised gain/(loss) from available-for-sale listed investments 3,042 (1,682)Depreciation 7,117 10,857 Amortisation expense 353,501 354,469 Share-based payment expense 106,415 326,728 Issue of shares for sevices performed - 53,500 Change in assets and liabilities(Increase)/decrease in receivables 1,591,408 (2,750,816)Increase/(decrease) in trade creditors and other payables (20,286) 561,328 Increase/(decrease) in employee entitlements 40,342 40,235 (1,108,799) (5,039,139)
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
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Non cash financing & investing activities
No non-cash financing and investing activities occurred during the year ended 30 June 2017.
Financing facilities available
As at 30 June 2017, the Company 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 Company’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.
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 quarter ended 30 June 2017.
(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 research and development costs incurred during the year.
None of the current receivables are impaired or past due but not impaired. Due to their short-term nature,
carrying amounts approximate their fair value.
10. AVAILABLE-FOR-SALE LISTED INVESTMENTS
During the year the Company’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.
64
As atAs at30/06/201730/06/2016$ $Prepayments (a) 33,024 37,692Goods and services tax receivable (b)127,090323,189Research and development tax rebate receivable (c)1,214,7542,605,395Total trade and other receivables1,374,8682,966,276As atAs at30/06/201730/06/2016$ $Listed investments at fair value 2,094,833 4,025,987 Fair value 2,094,833 4,025,987
ACTINOGEN MEDICAL LIMITED
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Movements during the year:
11.
PROPERTY, PLANT AND EQUIPMENT
Movements during the year:
65
As atAs at30/06/201730/06/2016$ $At beginning of the year 4,025,987 - Purchases of available-for-sale listed investments - 6,000,225 Proceeds on sale of available-for-sale listed investments (1,982,451) (1,996,510)Unrealised gain on listed investments 54,335 22,272 Realised loss on listed investment (3,038) - At end of the year 2,094,833 4,025,987 As atAs at30/06/201730/06/2016$ $At cost23,948 22,923 Accumulated depreciation(21,682)(14,565)Total property, plant and equipment2,2668,358Plant and EquipmentOffice EquipmentComputer EquipmentGeneral PoolTotalBalance at 1/7/2016 - - 3,8194,5398,358Acquisitions - - - 1,025 1,025 Disposals - - - - - Depreciation - - (3,819) (3,298) (7,117)Balance at 30/6/2017 - - - 2,266 2,266 Plant 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
ACTINOGEN MEDICAL LIMITED
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12.
INTANGIBLE ASSETS
Movements during the year:
Intellectual property totalling $4,843,453 comprises patents and licences initially acquired through Corticrine
Limited. On 8 December 2014, Actinogen entered into an Assignment of Licence Agreement with Corticrine
Limited for the assignment of all of Corticrine’s interest in, to and under the Licence Agreement to Actinogen
and the assumption by Actinogen of all of Corticrine's obligations in respect of such assignment
(Assignment).
The intellectual property is supported by seven patent families, the most recent of which will expire in 2031.
The patent useful life has been aligned to the patent term and as a result, those patents are amortised on a
straight-line basis over the period of the patent. For further information refer to the accounting policy in Note
2.
66
As atAs at30/06/201730/06/2016$ $ At cost 5,756,743 5,756,744 Accumulated amortisation (913,290)(559,790)Total intangible assets 4,843,453 5,196,954 Intellectual Property$ Balance at 1/7/2016 5,196,954 Acquisitions - Amortisation expense (353,501)Balance at 30/6/20174,843,453 Balance at 1/7/2015 5,551,423 Acquisitions - Amortisation expense (354,469)Balance at 30/6/2016 5,196,954
ACTINOGEN MEDICAL LIMITED
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13.
TRADE AND OTHER PAYABLES
Trade and other payables are non-interest bearing liabilities stated at cost and settled within 30 days.
14.
CONTRIBUTED EQUITY
(a) Share Capital
Ordinary shares: These shares entitle the holder to participate in dividends and the proposed winding up of
the Company 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 Company 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:
67
As atAs at30/06/201730/06/2016$ $Trade payables 649,110 689,777Accruals and other payables 78,065 26,810NAB credit cards 1,747 1,916 Provision for payroll tax 11,723 32,514 PAYG payable 23,037 32,951 Total trade and other payables 763,682 783,968As atAs at30/06/201730/06/2016$ $ Fully paid ordinary shares28,858,39128,588,391Capital raising costs(2,280,000)(2,280,000)Total contributed equity26,578,39126,308,391DateQuantityUnit Price $Total $Balance carried forward 1 July 2015606,158,55826,254,891Issue of shares pursuant to service agreements6/05/2016 535,000 0.100 53,500 Balance at 30/6/2016606,693,55826,308,391Exercise of options26/04/2017 10,000,000 0.020 200,000 Exercise of options9/05/2017 3,500,000 0.020 70,000 Balance at 30/6/2017620,193,55826,578,391
ACTINOGEN MEDICAL LIMITED
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(c) Reserve shares
During the 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 50,310,938 unissued ordinary shares under option:
35,000,000 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
4,393,750 unlisted options with an exercise price of $0.10 per share exercisable on or before 5
February 2021. These options were issued to employees and contractors of the Company and are
subject to vesting conditions.
417,188 unlisted options with an exercise price of $0.10 per share exercisable on or before 5 February
2021. These options were issued to employees of the Company after year end on 12 July 2017. These
options are not subject to vesting conditions.
5,000,000 unlisted options with an exercise price of $0.10 per share exercisable on or before 24 March
2025. These options were issued to Geoffrey Brooke (Appointed as Non-Executive Chairman on 1
March 2017) of the Company and are subject to vesting conditions.
During the year the following options lapsed:
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 however, lapsed due to the vesting
conditions having not being achieved.
556,250 unlisted options with an exercise price of $0.10 per share exercisable on or before 5 February
2021. These options were issued to employees of the Company however, lapsed due to the vesting
conditions having not being achieved by 30 June 2017.
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.
(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.
68
DateQuantityUnit Price $Total $Balance at 30/6/2016(45,000,000) (1,140,000) Balance at 30/6/2017(45,000,000) (1,140,000)
ACTINOGEN MEDICAL LIMITED
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(f) Capital risk management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going
concern, so it can provide returns to shareholders and benefits to other stakeholders. The Company
considers capital to consist of cash reserves on hand and available-for-sale listed investments.
Consistent with the Company’s objective, it manages working capital by issuing new shares, investing in and
selling assets, submitting Research and Development rebates from the Australian Tax Office or modifying its
planned research and development program as required.
Given the stage of the Company’s development there are no formal targets set for return on capital. The
Company is not subject to externally imposed capital requirements. The net equity of the Company is
equivalent to capital. Net capital is obtained through capital raisings on the Australian Securities Exchange
and receipt of Research and Development rebates from the Australian tax Office.
15.
RESERVES
Reserves are made up of the options reserve. The option reserve records items recognised as expenses on
valuation of employee and Director share options. Details of the movement in reserves is shown below.
Movements in Option reserve during the year:
At year end there were 49,893,750 options on issue. Refer to Note 21: Share-based payments for further
information on share-based payments recognised and lapsed during the year.
69
As atAs at30/06/201730/06/2016$ $Option reserve6,928,7946,822,379Available-for-sale investments reserve 76,607 22,272 Reserves7,005,4016,844,651As atAs at30/06/201730/06/2016$ $Option ReserveOpening balance6,822,3796,495,651Share-based payment expense on loan shares175,812326,728Lapse of Class F loan shares (152,955) - Share-based payment expense on director options 41,996 - Share-based payment expense on employee options61,142 - Lapse of employee options (19,580) - Closing balance6,928,7946,822,379
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
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Movements in Available-for-sale investments reserve during the year:
16.
EARNINGS PER SHARE
As at 30 June 2017, there are 49,893,750 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.
Subsequent to year end, on 12 July 2017, 417,188 options were issued to employees of the Company with an
exercise price of $0.10 per share exercisable on or before 5 February 2021. These options are not subject to
vesting conditions. Refer to Note 21b) for further information.
There have been no other transactions involving ordinary shares or potential ordinary shares between the
reporting date and the date of authorisation of these financial statements. As at the date of this report, there
are 50,310,938 unissued ordinary shares under option:
17.
COMMITMENTS
Other than what is mentioned below, the Company has no future commitments existing as at 30 June 2017
(2016: Nil).
Rental Agreement
During the prior year the Company entered into a property rental lease agreement for a term of three years
which commenced from 1 July 2015 with no renewal option included in the agreement. There are no
restrictions placed upon the Company by entering into this lease. The Company has a continuation
agreement in place beyond 30 June 2018 however, as at the date of this report, the Company is yet to agree
renewal terms with the Lessor.
70
As atAs at30/06/201730/06/2016$ $Available-for-sale investments reserveBalance at the beginning of the year 22,272 -Unrealisedgain/(loss)onavailable-for-salelistedinvestments 54,335 22,272 Balance at end of year 76,607 22,272 Full-year endedFull-year ended30/06/201730/06/2016$ $Basic EPS from continuing operations attributable to the ordinary share holders of the Company (cents)(0.52) (0.60) Weighted number of ordinary shares used as the denominator609,009,996 606,240,449 Net loss used in calculating EPS(3,190,338) (3,633,758) Diluted EPS from continuing operations attributable to the ordinary share holders of the Company (cents)(0.52) (0.60) Weighted number of ordinary shares used as the denominator609,009,996 606,240,449 Net loss used in calculating diluted EPS(3,190,338) (3,633,758)
ACTINOGEN MEDICAL LIMITED
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The lease includes a clause to enable upward revision of the rental charge on an annual basis according to
prevailing market conditions. Future minimum rentals payable under non-cancellable operating leases as at 30
June 2017 are as follows:
18.
CONTINGENCIES
The Directors are not aware of any contingent liabilities or assets as at 30 June 2017 (2016: Nil).
19.
KEY MANAGEMENT PERSONNEL DISCLOSURES
Key management personnel of Actinogen Medical Limited are listed below:
(a) Key Management Personnel Compensation:
There were no long term benefits or termination benefits paid out during the years ended 30 June 2017 and 30
June 2016.
The detailed remuneration disclosures and relevant interested of each Key Management Personnel in fully paid
ordinary shares and options of the Company are provided in the audited remuneration report on pages 22 to
40.
71
As atAs at30/06/201730/06/2016$ $Within one year119,419$ 104,845 After one year but not more than five years-$ 109,039 More than five years-$ - 119,419$ 213,884 NamePositionAppointedResignedDr Bill KetelbeyManaging Director / Chief Executive Officer18/12/2014CurrentDr Geoffrey BrookeNon-Executive Chairman1/03/2017CurrentDr Jason LoveridgeNon-Executive Director1/12/2014CurrentDr Anton UvarovNon-Executive Director16/12/201314/08/2017Mr Martin RogersExecutive ChairmanNon-Executive Chairman1/12/20147/7/20167/07/201630/11/2016Mr Vincent RufflesVice President of Clinical Research27/10/2014CurrentFull-year endedFull-year ended30/06/201730/06/2016$ $Short-term employee benefits 700,027 650,886 Post employment benefits 50,120 49,646 Share-based payment 203,346 326,728 953,493 1,027,260
ACTINOGEN MEDICAL LIMITED
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20.
RELATED PARTY TRANSACTIONS
(a) Transactions with Key Management Personnel
Details of transactions with Key Management Personnel are set out in Note 19. There were no other related
party transactions that occurred during the year.
21.
SHARE – BASED PAYMENTS
The following share based payment existed at 30 June 2017:
(a) Loan Shares
Under the Employee Loan Share Plan (approved by shareholders on 19 November 2014), awards are made to
executives and other key management personnel who have an impact on the Company’s performance. The
Plan awards are delivered in the form of options over shares which vest over a period of five years subject to
meeting performance measures.
The fair value of share options granted have been valued using a Black Scholes methodology, taking into
account the terms and conditions upon which the share options were granted.
The approximate interest rate over a five year term was used. The assumed dividend payable in the next five
years was deemed to be nil. A volatility of the share price fluctuation was calculated by considering the
historical movement of the share price over period of time as well factoring market conditions of its competitors
to predict the distribution of relative share performance.
The exercise price of the share options is equal to the market price of the underlying shares on the date of
grant. The contractual term of the share options is five years and there are no cash settlement alternatives for
the employees. The Company does not have a past practice of cash settlement for these awards.
The fair value of options granted during the prior year ended 30 June 2015 was estimated on the date of grant
using the following assumptions:
Dividend yield (%) nil
Weighted average share price ($) 0.04
Expected volatility (%) 100
Risk-free interest rate (%) 5.0
Expected life (years) 5.0
72
RecipientClass of Loan ShareQuantityValue per shareValue recognised during the year $Value lapsed during the year $Value to be recognised in future years$Jason LoveridgeClass A 3,000,000 $ 0.0376 - - - Jason LoveridgeClass B 3,000,000 $ 0.0376 - - - Martin RogersClass C7,500,000 $ 0.0376 - - - Martin RogersClass D7,500,000 $ 0.0376 - - - Martin RogersClass E5,000,000 $ 0.0376 - - - Martin RogersClass F5,000,000 $ 0.0376 35,712 (152,955) - Vincent RufflesClass G2,000,000 $ 0.0376 25,066 - 8,172 Bill KetelbeyClass H6,000,000 0.0365$ 72,254 - 33,256 Bill KetelbeyClass I3,000,000 0.0365$ - - - Bill KetelbeyClass J3,000,000 0.0365$ 42,781 - - Total Loan Shares45,000,000 175,812 (152,955) 41,428
ACTINOGEN MEDICAL LIMITED
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On 30 November 2016, Mr Rogers resigned as Non-Executive Chairman. The vesting condition on the 5,000,000
Class F Employee Share Plan shares issued were not met and subsequently, these loan shares lapsed and all
associated share-based payment expense attached to the Class F shares to date, amounting to $152,955,
were reversed.
(b) Employee Options
Under the Employee Option Plan (approved by shareholders on 12 November 2015), awards are made to
employees of the Company. The Plan awards are delivered in the form of options over shares which vest over a
period of two years subject to meeting various vesting conditions.
The fair value of share options granted have been valued using a Monte Carlo Simulation methodology, taking
into account the terms and conditions upon which the share options were granted.
The approximate interest rate over a five year term was used. The assumed dividend payable in the next five
years was deemed to be nil. A volatility of the share price fluctuation was calculated by considering the
historical movement of the share price over period of time as well factoring market conditions of its competitors
to predict the distribution of relative share performance.
The exercise price of the share options is equal to the market price of the underlying shares on the date of
grant. The contractual term of the share options is five years and there are no cash settlement alternatives for
the employees. The Company does not have a past practice of cash settlement for these awards.
The fair value of options granted during the prior year ended 30 June 2017 was estimated on the date of grant
using the following assumptions:
Dividend yield (%) nil
Weighted average share price ($) 0.06
Expected volatility (%) 100
Risk-free interest rate (%) 2.17%
Expected life (years) 5.0
(i) Of the total options granted to employees mentioned above, 556,250 of these options that had the same
vesting condition attached (that is, achieving XanADu regulatory approval in all 3 countries and 9 patients
dosed by 30 June 2017), lapsed due to this condition not being entirely met by year end. Subsequently, the
share-based payment expense of $19,580 that was expensed during the vesting period was reversed as at
30 June 2017.
Refer to Section 3(C) within the Remuneration Report for further information on Employee Options.
73
RecipientGrant DateQuantityValue per shareValue recognised during the year $Value lapsed during the year $ (i)Value to be recognised in future years$Vincent Ruffles23/01/20172,500,000 0.0352$ 32,249 (11,000) 55,751 Tanya Woolley23/01/2017200,000 0.0352$ 1,495 - 5,545 Peter Webse23/01/2017300,000 0.0352$ 2,243 - 8,317 Therese Russell23/01/2017200,000 0.0352$ 2,580 (880) 4,460 Kerrie Boyd23/01/20171,250,000 0.0352$ 16,125 (5,500) 27,875 Bridget Rooney23/01/2017500,000 0.0352$ 6,450 (2,200) 11,150 Total Employee options4,950,000 61,142 (19,580) 113,098
ACTINOGEN MEDICAL LIMITED
N O T E S T O T H E 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 7
_________________________________________________________________
(c) Director Options
5,000,000 Director options were granted to Dr Geoffrey Brooke as part of his appointment to the Board as Non-
Executive Chairman. These options over shares will vest over a period of five years subject to meeting various
vesting conditions. Refer to Section 3(C)(b) within the Remuneration Report for further information on these
Director Options.
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 Company 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 2017 was estimated on the date of grant
using the following assumptions:
Dividend yield (%) nil
Weighted average share price ($) 0.058
Expected volatility (%) 100
Risk-free interest rate (%) 2.61%
Expected life (years) 5.0
22.
REMUNERATION OF AUDITOR
23.
EVENTS OCCURRING AFTER THE REPORTING PERIOD
There are no matters or circumstances that 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.
74
RecipientGrant DateQuantityValue per shareValue recognised during the year $Value lapsed during the year $Value to be recognised in future years$Geoffrey Brooke24/03/20175,000,000 0.0491$ 41,996 - 203,290 Total Director options5,000,000 41,996 - 203,290 Full-year endedFull-year ended30/06/201730/06/2016$ $Amounts paid or payable to Ernst & Young for:- Anauditorreviewofthefinancialstatements of the entity 40,225 31,200 40,225 31,200
ACTINOGEN MEDICAL LIMITED
DIRECTORS’ DECLARATION
In the Directors opinion:
1.
The financial statements and notes set out on pages 43 to 74, are in accordance with the
Corporations Act 2001 including:
(a) complying with Accounting Standards, the Corporations Regulations 2001 and other
mandatory professional reporting requirements; and
(b) giving a true and fair view of the Company’s financial position as at 30 June 2017 and of
its performance for the year ended on that date;
The remuneration disclosure included in the audited Remuneration Report in the Directors’
Report complies with Section 300A of the Corporations Act 2001.
The Directors have been given the declaration by the Managing Director and Chief Financial
Officer (or equivalent) as required by section 295A of the Corporations Act 2001.
The Company has included in the notes to the financial statements an explicit and unreserved
statement of compliance with International Financial Reporting Standards.
2.
3.
4.
5. Subject to the disclosure in Note 2(b) “Going concern basis”, there are reasonable grounds to
believe that the Company will be able to pay its debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the Directors.
Dr Bill Ketelbey
Managing Director
Sydney, New South Wales
Date: Friday, 18 August 2017
75
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 audit of the financial report
Opinion
We have audited the financial report of Actinogen Medical Limited (the Company), which comprises the
statement of financial position as at 30 June 2017, the statement of comprehensive income, statement
of changes in equity and statement of cash flows for the year then ended, notes to the financial
statements, including a summary of significant accounting policies, and the directors' declaration of the
Company.
In our opinion, the accompanying financial report of the Company is in accordance with the Corporations
Act 2001, including:
a)
giving a true and fair view of the Company's financial position as at 30 June 2017 and of its
financial performance for the year ended on that date; and
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Company in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the
Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Material uncertainty related to going concern
Without qualifying our opinion, we draw attention to Note 2b in the financial report. The matters set forth
in Note 2b indicate the existence of a material uncertainty that may cast significant doubt about the
Company’s ability to continue as a going concern, and therefore, the Company may be unable to realise
its assets and discharge its liabilities in the normal course of business.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter
is provided in that context. In addition to the matter described in the Material Uncertainty Related to
Going Concern section, we have determined the matters described below to be the key audit matters to
be communicated in our report.
76
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of material
misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying
financial report.
1. Research and development rebate
Why significant
How our audit addressed the key audit matter
We involved our R&D tax specialists to assess the
appropriateness of the R&D rebate calculated by the
Company’s third party expert, being 43.5% of eligible
R&D expenditure.
We evaluated the competency and independence of the
Company’s third party expert.
We assessed the Company’s accounting treatment of
the R&D rebate under Australian Accounting Standard -
AASB 120 Accounting for Government Grants and
Disclosure of Government Assistance.
The Company has lodged a Research and Development
(‘R&D’) rebate from the Australian Taxation Office
(‘ATO’) to receive eligible funding and support for its
ongoing research activities for the development of
Xanamem.
The R&D rebate program in Australia is a self-
assessment regime linked to the lodgement of the
annual corporate tax. For claims from entities with
aggregate turnover less than $20.0m, such as
Actinogen, the R&D rebate is returned in cash.
The R&D rebate receivable calculated for the year
ended 30 June 2017 was $1.2m.
Due to judgment involved in determining amounts that
meet the eligibility criteria to qualify for inclusion in the
R&D rebate calculation and the significance of this
source of cash inflow for the Company, we consider this
to be a key audit matter. Refer to Note 9 to the financial
report.
2. Intangible assets
Why significant
How our audit addressed the key audit matter
The balance of the Company’s intangible assets consists
of intellectual property and patents. As at 30 June
2017, the balance was $4.8m which represents 47% of
total assets.
Due to the significance to the Company’s financial
report and level of judgment involved in assessing
whether there are indicators of impairment present, we
consider this to be a key audit matter. Refer to Note 12
to the financial report.
We evaluated the appropriateness of the Company’s
judgment and conclusion that there were no impairment
indicators present. In doing so, we examined the patent
and license agreement, enquired of the Company and
assessed the appropriateness of the treatment of R&D
expenditure and amortisation period of the patent
pursuant to the requirements of Australian Accounting
Standard - AASB 136 Impairment of Assets and AASB
138 Intangible Assets respectively.
77
3. Share based payments
Why significant
How our audit addressed the key audit matter
We assessed the assumptions used in the Company’s
calculation including the share price of the underlying
equity, interest rate, volatility, time to maturity
(expected life), grant date and granting criteria. We
involved our valuation specialists in performing these
procedures.
We assessed the adequacy of the share based payment
disclosure in the financial report.
During the year ended 30 June 2017, Actinogen issued
9,950,000 unlisted options:
• 4,950,000 to employees and contractors of the
company
• 5,000,000 to the Non-Executive Chairman of the
company.
All options issued are subject to non-market based
vesting conditions.
556,250 options issued to employees and contractors
lapsed at 30 June 2017 as vesting conditions were not
met. No options vested during the period.
Under Australian Accounting Standard - AASB 2 Share-
based payment (‘AASB 2’) equity settled awards are
measured at fair value on grant date taking into
consideration the probability of the vesting conditions
attached.
Due to the complex and judgmental estimates used in
determining the valuation of the share based payments,
we consider the Company’s calculation of the share
based payment expense to be a key audit matter. Refer
to Note 14(d) to the financial report for details.
Information other than the financial report and auditor’s report
The directors are responsible for the other information. The other information comprises the information
included in the Company’s 2017 Annual Report, but does not include the financial report and our
auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial report or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
78
In preparing the financial report, the directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial report or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
79
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the audit of the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 22 to 40 of the directors' report for the year
ended 30 June 2017.
In our opinion, the Remuneration Report of Actinogen Medical Limited for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
Ernst & Young
T G Dachs
Partner
Perth
18 August 2017
80
ACTINOGEN 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
5 October 2017:
Holders
Edinburgh Technology Fund Limited
JK Nominees Pty Ltd
Distribution of ordinary shareholders as at 5 October 2017
Shares
48,147,864
40,000,000
Percentage of
Issued Capital
7.76%
6.45%
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
2,423
307,063
2,158,964
37,107,323
580,617,785
620,193,558
Holders
31
96
245
833
430
1,635
215
Voting Rights
Each fully paid ordinary share carries voting rights of one vote per share.
Twenty Largest holders of quoted ordinary shares as at 5 October 2017
Number of
Shares
Percentage of
Issued Capital
Edinburgh Technology Fund Limited
JK Nominees Pty Ltd
Webinvest Pty Ltd
Warambi Sarl
Sunset Capital Management Pty Ltd
Mr Martin Rogers
Mr Benjamin Cranstoun Dark
Denlin Nominees Pty Ltd
Oaktone Nominees Pty Ltd
Tisia Nominees Pty Ltd
Bnp Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd Drp
Bannaby Investments Pty Limited
Tisia Nominees Pty Ltd
Dr John William Ketelbey
Citicorp Nominees Pty Limited
Ms Margaret Elizabeth Livingston
Mrs Sarah Cameron
Rickenbacker Capital Investments Pty Ltd
Ardroy Securities Pty Ltd
Bannaby Investments Pty Ltd
Dr Jason Loveridge
TOTAL
48,147,864
40,000,000
25,258,566
21,875,078
20,000,001
20,000,000
15,359,546
15,282,816
14,717,184
14,717,184
13,634,703
13,376,781
13,150,000
12,157,894
10,193,480
9,654,749
8,994,464
7,900,000
7,572,241
7,500,000
6,000,000
345,492,551
7.76
6.45
4.07
3.53
3.22
3.22
2.48
2.46
2.37
2.37
2.20
2.16
2.12
1.96
1.64
1.56
1.45
1.27
1.22
1.21
0.97
55.69
81
ACTINOGEN 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 5 October 2017
There were 40,500,000 unlisted options exercisable at $0.02 each and expiring on 30 November
2018 held by five holders, on issue.
Details of the holders holding more than 20% of the above:
AH Super Pty Ltd
Tisia Nominees Pty Ltd
Oaktone Nominees Pty Ltd
TOTAL
Number of
Options
15,000,000
10,000,000
10,000,000
35,000,000
Percentage
37.04
24.69
24.69
86.42
There were 3,717,188 unlisted options exercisable at $0.10 each and expiring on 5 February 2021
held by six holders, on issue.
Details of the holders holding more than 20% of the above:
Vincent Ruffles
TOTAL
Number of
Options
2,421,875
2,421,875
Percentage
65.15
65.15
There were 5,000,000 unlisted options exercisable at $0.10 each and expiring on 24 March 2025
held by one holder, on issue.
Details of the holders holding more than 20% of the above:
Geoffrey Edward Duncan Brooke
Number of
Options
5,000,000
Percentage
100.00
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.
82