ANNUAL
REPORT 2016
3
THE INCONTINENCE
MARKET IN AUSTRALIA
Asthma
2 million
Anxiety
disorders
2.3 million
Arthritis
3.1 million
Incontinence
4.8 million
Urinary Incontinence Affects
1 IN 3 WOMEN
and up to a
billion women
worldwide
50%
don’t report it
4
CONTENTS
Consolidated Financial Statements
Directors’ Report
Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Additional Information for Listed Public Companies
7
24
25
26
27
28
29
67
68
70
Annual report 2016
5
CONSOLIDATED
FINANCIAL
STATEMENTS
CONSOLIDATED
FINANCIAL
STATEMENTS
7
DIRECTORS’ REPORT
For the Year Ended 30 June, 2016
The directors present their report, together with the interim financial statements of the Group, being Analytica
Limited (the Company) and its controlled entities, for the year ended 30 June, 2016.
1.
General information
Information on directors
The names, qualifications, experience and special responsibilities of each person who has been a
director during the year and to the date of this report are:
Dr Michael Monsour
Chairman (appointed 28 June 2004)
Qualifications
MBBS‑HONS, FACRRM, FAICD
Experience
Dr Michael Monsour is a Medical Practitioner with extensive interests in
Queensland medical and dental centres. Michael Monsour graduated
from the University of Queensland in 1977 in medicine with honours. He
operates a medical management company, which provides management
support to medical and dental practitioners. He is the principal of Godbar
Software (established 1988) which is one of the leading software
developers of Occupational Health, Safety and Medical Accounting
software packages in Australia.
Interest in shares
and options
Direct:
Dr MP Monsour Director’s interest in ordinary shares 2,606,337
Indirect (ordinary shares):
MPAMM Pty Ltd 44,687,785
Halonna Pty Ltd 430,497,784
MP Monsour Medical Practice Pty Ltd 19,747,277
Other related parties:
Ordinary shares 2,726,981
Unlisted options:
13,000,000 @ 3.24c expire 29/10/2018
Listed options:
ALTOA Options 16,666,666 @ 1.4c Expire 28/02/2018
8
Mr Ross
Mangelsdorf
Executive Director (appointed 7 October 2008)
Qualifications
B.Bus, FCA, CTA, MAICD
Experience
Mr Mangelsdorf has been a Director/partner of a chartered accounting firm
for 35 years. He works with SME production, manufacturing and retail firms
assisting with business, taxation and management services.
Interest in
shares and
options
Direct:
Ross Mangelsdorf
Director’s interest in ordinary shares: 217,411
Indirect:
RM & JM Mangelsdorf
Ordinary shares 217,411
Tambien Pty Ltd
Ordinary shares 32,794,029
Other related parties:
Ordinary shares 17,342,526
Unlisted options:
10,000,000 @ 3.24c expire 29/10/2018
Listed options:
ALTOA Options 2,614,995 @ 1.4c Expire 28/02/2018.
Special
responsibilities
Mr Mangelsdorf performs the function of Chief Financial Officer.
Mr Warren Brooks
Non Executive Director (appointed 25 July 2011)
Qualifications
Securities Institute Certificate, Diploma in Financial Planning
Experience
Warren previously had 30 years experience working in Investment Banking and
Stockbroking.
Interest in
shares and
options
Indirect director’s interest:
W Brooks Investments Pty Ltd
Ordinary shares 48,645,000
Unlisted options:
8,000,000 @ 3.24c Expire 29/10/2018
Listed options:
ALTOA Options 5,405,000 @ 1.4c Expire 28/02/2018
Other
directorships in
listed entities
held in the
previous three
years
Mr Brooks was the Managing Director and Founder of boutique Financial
Advisory firm Clime AFM Pty Ltd which was a wholly owned subsidiary of Clime
Investment Management Ltd, an ASX listed Company.
Warren founded Australian Financial Management (Investment) Pty Ltd in 1998
and sold the business to Clime Investment Management.
Annual report 2016
9
Mr Carl Stubbings
Non Executive Director (appointed 13 January 2013)
Qualifications
Bachelor of Applied Science (Medical Technology) degree from the
Queensland University of Technology.
Experience
Mr Stubbings’ experience in the sector spans over 30 years with a focus
on medical diagnostics as well as biotechnology. He has specialised in
sales with a particular emphasis on marketing across North America, Latin
America, Asia Pacific and Europe as well as roles covering manufacturing
and administration.
Previously a board member of the Queensland North America Biotech
Advisory Council.
Interest in shares
and options
Indirect director’s interest:
C&K Stubbings Super Fund
Ordinary shares 2,746,322
Unlisted options:
4,000,000 @ 1.62c Expire 10/12/2020
Listed options:
ALTOA Options 305,146 @ 1.4c Expire 28/02/2018
Other current
directorships in
listed entities
Currently focused on developing and executing the commercialisation
strategy including licensing and partnership agreements, Mr Stubbings’
works as a business development consultant for Biotron (ASX:BIT) and
BCAL Diagnostics.
Mr Stubbings is also currently a non executive director of unlisted public
company Sienna Diagnostics and Otakaro Pathways Ltd (New Zealand),
providing strategic input for both companies as they initiate commerciali-
sation of their diagnostic tests.
Dr Thomas Lönngren Non Executive Director (appointed 10 August 2015)
Qualifications
Experience
Degree in Pharmacy, Master of Science Degree in social and regulatory
pharmacy. Honorary Doctorate from University of Bath, UK (2011), Univer-
sity of Uppsala, Sweden (2008), and Honorary Fellow of the Royal College
of Physicians and Honorary Member of the Royal Pharmaceutical Society
of Great Britain.
Dr Lönngren has a profound knowledge and experience in drug and
medical device regulation, and health economics across the world’s major
markets. His extensive network of contacts in multinational pharmaceu-
tical and medical device companies and capital markets will be a great
asset for our Company as we expand our operations into the United States
and Europe.
Interest in shares
and options
Unlisted options:
10,000,000 @ 1.62 Expire 10/12/2020
Other current
directorships in
listed entities
Dr Lönngren’s current positions include Director and Founder of Pharma
Executive Consulting Ltd in London, Strategic Advisor at NDA Group in
Sweden, Germany, UK and Cambridge, MA, US and Non Executive Director
of Global Kinetics Corporation in Australia.
Directors have been in office since the start of the year to the date of this report unless otherwise stated.
10
Principal activities and significant changes in nature of activities
The principal activities of the Group during the year were:
•
•
•
•
The development of strategies on commercial sales of the PeriCoach System;
The development of intellectual property of medical device and mobile health application in
relation to patents and systems in the pelvic floor exercise field (PeriCoach);
Development of intellectual property of medical device to assist neurologists and rehabilitatise
treatment of muscular spasticity (ELF 2).
The development of intellectual property in the medical device field in relation to patents in the
burette field (AutoStart Infusion System);
•
The development of strategies for commercial sales of burette products;
There were no significant changes in the nature of the Group’s principal activities during the year.
2. OPERATING RESULTS
AND REVIEW OF
OPERATIONS FOR THE YEAR
Operating results
The consolidated loss of the Group amounted to $ (3,881,472), after providing for income tax. This
represented a decrease on the loss of $1,434,132 result reported for the year ended 30 June 2015
of $(5,315,604). Increase for market development of $173,928 to $1,938,948 (2015:$1,765,019).
Research and development decrease by $893,617 to $2,469,665 (2015:$3,363,283) was due to the
continued development of PeriCoach. Administration costs increased by $172,856 to $1,187,810
(2015:$1,014,953).
Review of operations
PeriCoach®
•
•
•
•
•
Executing the commercialisation strategy for PeriCoach is focussed on the flowing milestones:
Building ‘best‑in‑class’ conservative treatment for pelvic floor conditions, with a particular focus
on urinary incontinence.
Validate and extend clinical credibility and effectiveness of PeriCoach.
Confirming market acceptance while creating a positive sales environment.
Securing a competitive partnering agreement with a major multinational company with the
resources to make PeriCoach a global success.
Best-In-Class
•
PeriCoach qualifies for the Australian Government’s Research and Development Tax incentive. The
company continues to make substantial investment in PeriCoach to establish this unique approach
as ‘best in class’. As a result of this investment Analytica received a $1,893,605 refund for 2015 year.
Substantial investment in the development of PeriCoach has continued through 2016 with claim
recently lodged for this year. The board strongly believe development must continue to secure and
enhance the partnering value of PeriCoach.
Annual report 2016 11
•
•
•
•
•
•
•
PeriCoach is a sophisticated medical device designed to collect valuable data that has not
been available previously outside of a clinical environment. The limited market release identified
opportunities to improve ease of use, connectivity and responsiveness. These enhancements
were incorporated in Version 2 of PeriCoach. The company has continued to collect data and
identified further enhancements to PeriCoach, which include monitoring, and biofeedback
capabilities. These additional features are being incorporated into Version 3 of PeriCoach.
There is an ongoing flow of data being collected by PeriCoach sensors. This data is transmitted
to Analytica’s proprietary cloud database for further analysis. In addition to transmitting the
data to Analytica, the App simplifies information providing immediate feedback to the user. This
programming is ongoing as more data is collected opportunities are identified.
Data analysis is continually being improved to enable refinement of treatment programs and
importantly, provide detailed evidence of effectiveness.
In conjunction with the release of PeriCoach the purchase and payment system was further
refined. The UK and the US, ordering and payment portals are now linked to each country’s
logistics.
The web page continues to evolve to ensure it remains fresh and interesting to consumers.
Australian (TGA) and European (CE) registration was achieved in 2014 supported by extensive
documentation and testing.
Following United States Food and Drug Administration (FDA) approval in March 2015 as a
prescription only product the company lodged an application with the FDA for PeriCoach to be
approved as an ‘Over the Counter’ (OTC) product, meaning it does not require a prescription. The
FDA granted this important milestone in the world’s largest medical device market in July 2016.
Establish and extend clinical credibility of effectiveness
•
•
•
Clinical Trial. Although not required for regulatory clearance, Analytica is conducting a clinical
trial for incontinence treatment and sexual function. This trial is to provide independent evidence
and validation of PeriCoach efficacy, for consumers, clinicians and partners.
Clinical advisory boards consisting of key opinion leaders in both Australia and the United States
continue to provide expert guidance and clinical relations support.
Clinical papers and case studies using PeriCoach in treatment have been published in leading
clinical journals.
Testing market acceptance and create a positive sales environment
•
The company has been represented at clinician’s conferences in Australia and United States,
Europe and the United Kingdom.
• Mail and email campaigns targeting General Practioners (GP) and their support teams.
•
•
•
Articles in GP publications. Engagement of clinical advisory board members in events.
Expanded PeriCoach health care network.
Continuing support by jacobstahl, specialist medical device PR agency, based in New York,
driving PeriCoach marketing strategy.
•
Developing video promotions, training and testimonials.
• Media activity in women’s magazines.
12
•
•
•
Data warehousing and analysis of usage and performance of PeriCoach published.
Key social media bloggers activity including their support of local and national events.
Expanded web content, digital media campaign including Google Adwords, remarketing,
Facebook advertising, conversion rate optimisation.
Partnership
The US, EU and Chinese markets are considered the largest medical device markets in the world. To
address these markets competitively will require significantly more marketing and sales resources
than Analytica has available. To address these markets effectively, the company is actively engaged
in discussions with potential partners that have the capacity maximise the sales of PeriCoach in
these important regions. Directors Carl Stubbings and Dr Thomas Lönngren both have experience
and networks in the US and EU. In addition consultants have been engaged to assist with the further
development of the company’s partnering strategy.
ELF2
Analytica has deferred development of this medical device for treatment of muscular spasticity,
devoting resources to PeriCoach. The ELF2 device delivers a low frequency voltage used by
neurologists to locate nerve endings during botulinum neurotoxin A injection treatment. Analytica’s
development of this device, licenced from Gorman ProMed Ltd in 2012, is to enhance usability
features of a device currently in use and respected by the market. Analytica has applied for a patent
for simultaneous low frequency stimulation and electromyography functionality for the ELF2 product.
AutoStart Infusion System
This product, despite overwhelming evidence of cost effectiveness and safety has struggled for a
foothold in the small Australian market. Medical Australia Ltd has successfully listed the AutoStart
burette on the Queensland Health purchasing schedule. Inclusion in this schedule is a pre‑requisite
for all public Queensland health facilities to purchase medical devices. Analytica believes this
important step could provide a valuable opportunity to gain some market share in Australia.
Intellectual Property
Analytica continues to develop and protect its Intellectual Property through patents, trademarks
and design registrations. Protection of Intellectual Property is critical in partnering negotiations and
assists in securing a potential partner’s freedom to operate in the market.
PeriCoach was granted patent protection in China in August 2016. China has an estimated 227
million women with urinary incontinence. Many jurisdictions allow patent protection for 20 years
providing patent coverage until 2032. Analytica also has PeriCoach patents pending in the PCT
national phase in Australia, Japan, Brazil, India, Germany, and France. Design registrations have also
been granted in these jurisdictions.
Analytica’s R&D team has developed a number of novel ideas for future products and product
enhancements during PeriCoach product development process. Analytica aims to investigate these
ideas and assess their patentability and commercial viability in the coming year.
Analytica’s licensed burette patents (1995) are maintained for the North American, Australian, and
European markets and more recent (2006) patent pending embodiments are extended in these
regions and China until 2026. Patent protection for this later embodiment of the AutoStart burette
was granted in United States in July 2016.
Analytica’s Flush feature developed in 2008 is currently in the Patent Cooperation Treaty (PCT)
national phase, and has been granted patents in China, with US, Australia and Germany pending..
Analytica has lodged (2013) a patent for a simultaneous low frequency electrical stimulation and
electromyography device, and this is currently in PCT.
Analytica also maintains a number of registered trademarks in the various jurisdictions above, and
owns the top level (.com) internet domains with these trademarks and other relevant keywords.
Annual report 2016 13
3. FINANCIAL REVIEW
Financial position
The net assets of the Group have increased by $ 917,842 from 30 June 2015 to $ 1,298,891 at
30 June 2016.
The directors have secured capital from the August 2015 share rights issue, the Share Purchase Plan
and placements in April 2016, to secure the company’s financial position to continue the development
of PeriCoach, and support clinical evidence collection and market assessment of PeriCoach in United
States of America and United Kingdom.
The chairman Dr Monsour expressed his confidence in applying for a large placement which was
approved by Shareholders in April 2016.
Analytica have been fortunate to attract the support of INOV8 as a cornerstone investor in the April
placement taking up 10% of capital, followed by their further support in August and September 2016.
The company announced an expenditure reduction program in February which further extends the
companies cash resources.
4. OTHER ITEMS
Significant changes in state of affairs
a)
b)
c)
The following significant changes in the state of affairs of the parent entity occurred during the year:
PeriCoach was released for sale by prescription in the United States of America in June 2015.
OTC sale of PeriCoach approval granted by USFDA in June 2016.
Cornerstone investor INOV8.
Changes in the controlled entities and divisions:
a)
No changes.
Events after the reporting date
Cornerstone Investor INOV8 $250,000 placement August and $250,000 placement September.
Clarification from USFDA of permitted marketing messaging of PeriCoach in treatment of sexual
function.
Except for the above, no other matters or circumstances have arisen since the end of the year which
significantly affected or could significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in future financial years.
Environmental issues
The Group's operations are not regulated by any significant environmental regulations under a law of
the Commonwealth or of a state or territory of Australia
Future developments and results
Continue the commercialisation strategy for PeriCoach namely:
•
Executing the commercialisation strategy for PeriCoach is focussed on the flowing milestones:
14
•
•
•
•
Building ‘best‑in‑class’ conservative treatment for pelvic floor conditions, with a particular focus
on urinary incontinence.
Validate and extend clinical credibility and effectiveness of PeriCoach
Confirming market acceptance while creating a positive sales environment
Securing a competitive partnering agreement with a major multinational company with the
resources to make PeriCoach a global success.
Non audit services.
The Board of Directors, in accordance with advice from the audit committee, is satisfied that
the provision of non audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that
the services disclosed below did not compromise the external auditor’s independence for the
following reasons:
•
•
•
all non audit services are reviewed and approved by the audit committee prior to
commencement to ensure they do not adversely affect the integrity and objectivity of the
auditor; and
the nature of the services provided do not compromise the general principles relating to auditor
independence in accordance with APES 110: Code of Ethics for Professional Accountants set
by the Accounting Professional and Ethical Standards Board.
The following fees were paid or payable to the external auditors for non audit services provided
during the year ended 30 June, 2016:
Bentleys Brisbane QLD Pty Ltd
Other review
2016
$
2015
$
2,600
1,500
Auditor’s independence declaration
•
The lead auditors independence declaration for the year ended 30 June, 2016 has been
received and can be found on page 24 of the financial report.
Company secretary
The following person held the position of Company secretary at the end of the year:
•
•
Bryan Dulhunty (COSA Pty Ltd) has been the company secretary since 15 October 2012. COSA
provides specialised Company Secretarial and CFO services to Life Science Companies.
Byran Dulhunty has extensive experience in the biotech industry having held roles covering
Chairman, Managing Director, Company Secretary, CFO, and Non Executive Director of listed
and non listed biotech companies.
Annual report 2016 15
Meetings of directors
During the year, 14 meetings of directors were held. Attendances by each director during the year
were as follows:
Directors’ Meetings
Number eligible to attend
Number attended
Dr Michael Monsour
Mr Ross Mangelsdorf
Mr Warren Brooks
Mr Carl Stubbings
Dr Thomas Lonngren
14
14
14
14
13
14
14
14
14
13
No indemnities have been given or insurance premiums paid, during or since the end of the year, for
any person who is or has been an officer or auditor of Analytica Limited.
Employees
Analytica recognises the value of diversity in the workplace and is committed to providing equal
opportunity for all of its staff. Over 65% of current full‑time equivalent employees are female.
Where possible Analytica offers flexible work practices and work life balance as a key retention tool.
Analytica is also committed to providing a workplace free from any form of harassment, bullying and
discrimination.
Options
Unissued shares under option
At the date of this report, the unissued ordinary shares of Analytica Limited under option are as
follows
Grant Date
Date of Expiry
Exercise Price
Number under Option
Unlisted Options
30 June 2013
29 October 2018
12 February 2014
12 February 2019
22 May 2014
22 May 2019
$0.0322
$0.0439
$0.0733
28 September 2015
28 February 2020
$0.019
26 November 2015
10 December 2020
$0.0162
Listed Options
11 August 2015
28 February 2018
$0.014
44,500,000
5,000,000
4,375,000
10,416,667
14,000,000
78,291,667
119,372,193
119,372,193
Option holders do not have any rights to participate in any issues of shares or other interests in the
Company or any other entity.
For details of options issued to directors and other key management personnel as remuneration,
refer to the remuneration report.
16
REMUNERATION REPORT
(AUDITED)
Remuneration policy
The remuneration policy of Analytica Limited has been designed to align key management personnel (KMP)
objectives with shareholder and business objectives by providing a fixed remuneration component and
offering specific long term incentives based on key performance areas affecting the Group’s financial results.
The Board of Analytica Limited believes the remuneration policy to be appropriate and effective in its ability
to attract and retain the best key management personnel to run and manage the Group, as well as create
goal congruence between directors, executives and shareholders.
The Board’s policy for determining the nature and amount of remuneration for key management personnel
of the Group is as follows:
•
•
•
•
The remuneration policy has been developed by the Board following professional advice from
independent external consultants when required.
All key management personnel receive a base salary (which is based on factors such as length of
service and experience), superannuation, fringe benefits, and performance incentives.
Performance incentives are based on predetermined key performance indicators.
Incentives paid in the form of options or rights are intended to align the interests of the KMP and
the Group with those of the shareholders. In this regard, key management personnel are prohibited
from limiting risk attached to those instruments by use of derivatives or other means.
The performance of key management personnel is measured against criteria agreed with each executive
and is based predominantly on the forecast growth of the Group’s profits and shareholders’ value. All
bonuses and incentives must be linked to predetermined performance criteria. The Board may, however,
exercise its discretion in relation to approving incentives, bonuses and options. Any changes must be
justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre
of executives and reward them for performance that results in long term growth in shareholder wealth.
Key management personnel receive a superannuation guarantee contribution required by the law, which is
currently 9.5% (2015: 9. 5%), and do not receive any other retirement benefits. Some individuals, however,
have chosen to sacrifice part of their salary to increase payments towards superannuation.
Upon retirement, key management personnel are paid employee benefit entitlements accrued to the date of
retirement. Key management personnel are paid a percentage of between 5 10% of their salary in the event
of redundancy. Any options not exercised before or on the date of termination will lapse.
All remuneration paid to key management personnel is valued at the cost to the Group and expensed.
The Board’s policy is to remunerate non executive directors at market rates for time, commitment
and responsibilities. The board determines payments to the non executive directors and reviews their
remuneration annually, based on market practice, duties and accountability. Independent external advice is
sought when required. The maximum aggregate amount of fees that can be paid to non executive directors
is subject to approval by shareholders at the Annual General Meeting, the current maximum is $ 550,000
which was approved at the 2011 AGM. In November 2004 the Board set individual directors fees at $50,000
per annum plus statutory superannuation and the chairman’s fee at $75,000 plus statutory superannuation.
Based on the current board structure total fees paid on a yearly basis will be $269,792 (2015:$225,000) plus
statutory superannuation.
. Key management personnel employed by the Company during the year, in addition to the Company’s
Directors, is the Company’s Operations Manager, Mr Geoff Daly (appointed on the 7 November 2005) and
accepted the position of CEO on the 12 February 2014. Mr Daly has extensive experience in the design of
medical devices, prototyping and manufacturing.
Annual report 2016 17
Mr Daly is employed by the Company under the terms and conditions set out in an employment contract.
Due to the size of the company and the nature of its operations, the contract is open ended and not for a
specific time frame. Mr Daly’s contract can be terminated by either party giving notice commensurate with the
period of employment. There is no provision in the employment contract for the payment of any termination
payments other than accrued statutory entitlements.
Mr Mangelsdorf is employed by the Company as CFO. Mr Mangelsdorf has 35 years in the accounting
profession. Due to the size of the company and the nature of its operations, employment contract is open
ended and not for a specific time frame. Mr Mangelsdorf can be terminated by either party giving notice
commensurate with the period of employment. There is no provision for the payment of any termination
payments other than accrued statutory entitlements. Key management personnel are also entitled and
encouraged to participate in the employee share and option arrangements to align their interests with
shareholders’ interests.
Options granted under these arrangements do not carry dividend or voting rights. Each option is entitled to be
converted into one ordinary share and is valued using the Black Scholes methodology.
Key management personnel who are subject to these arrangements are subject to a policy governing the use
of external hedging arrangements. Such personnel are prohibited from entering into hedge arrangements,
i.e. put options, on unvested shares and options which form part of their remuneration package. Terms of
employment signed by such personnel contain details of such restrictions.
Relationship between remuneration policy and company performance
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and
executives. Two methods have been applied to achieve this aim, the first being a performance based bonus
based on key performance indicators, and the second being the issue of options to directors and executives
to encourage the alignment of personal and shareholder interests. The Company believes this policy has been
effective in increasing shareholder wealth over the past 5 years.
The following table shows the gross revenue, profits and dividends for the last five years for the Company, as
well as the share prices at the end of the respective financial years.
2016
$
2015
$
2014
$
2013
$
2012
$
Revenue
Net Profit
2,116,243
(3,881,472)
1,119,378
587,483
541,262
194,705
(5,315,604)
(3,176,008)
(1,135,752)
(2,222,009)
Share Price at Year‑end
Dividends Paid (cents)
0.01
-
0.01
-
0.04
-
0.02
-
0.02
-
18
Performance conditions linked to remuneration
Company executive fees are not linked to the performance of the Group. However, to align executives' interests
with shareholder interests, the executives are encouraged to hold shares in the Group.
Employment details of members of key management personnel
The following table provides employment details of persons who were, during the financial year, members of
key management personnel of the Group.
The table also illustrates the proportion of remuneration that was performance based, non performance based,
and the proportion of remuneration received in the form of options.
Proportions of Elements of
Remuneration Related to Performance
Proportions of Elements of
Remuneration Relatted to
Performance
Position Held as
at 30 June 2016
and any Change
during the Year
Contract Details
(Duration and Termination)
Non-salary
Cash-based
Incentives
%
Shares/
Units
%
Options/
Rights
%
Fixed
Salary/Fees
%
Group KMP
Directors
Dr Michael Monsour Chairman
Annual Review
Mr Ross Mangelsdorf Executive Director
Annual Review
and Chief Financial Officer
Mr Warren Brooks
Non ‑ executive Director
Annual Review
Mr Carl Stubbings
Non ‑ executive Director
Annual Review
KMP
Geoffrey Daly
Chief Executive Officer
Open ‑ ended contract;
Termination by 5 weeks
notice or 4 weeks employee.
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Total
%
100
100
100
100
100
100
100
100
100
100
Service Agreements
On appointment to the Board, all non executive directors enter into a service agreement with the Company
in the form of a letter of appointment. The letter summarises the Board policies and terms, including
remuneration, relevant to the office of director.
The remuneration and other terms of employment for the Managing Director and senior executives are set out
in formal service agreements as summarised below.
All service agreements are for an unlimited duration. The agreements for executives (other than the Managing
Director, Chief Executive Officer and Chief Finance Officer which require three months notice) may be terminated
by giving six weeks notice (except in cases of termination for cause where termination is immediate).
In cases of resignation, no separation payment is made to the executive, except for amounts due and payable
up to the date of ceasing employment, including accrued leave entitlements.
Annual report 2016
19
Remuneration details for the year ended 30 June, 2016
The following table of benefits and payment represents components of the current year and comparative year
remuneration for each member of the key management personnel of the Group. Such amounts have been
calculated in accordance with Australian Accounting Standards.
Table of benefits and payments
short term
post employment
long
term
termi-
nation
share based payments
cash
salary
fees
$
bonus
$
non
mon-
etary
$
other
$
$
pension and
superannu-
ation
$
other post
employ-
ment
$
options
and
rights
$
shares
and
units
cash-
settled
$
$
$
$
2016
Directors
Dr Michael
Monsour
Mr Ross
Mangelsdor
Mr Warren
Brooks
Mr Carl
Stubbings
Dr Thomas
Lonngren
KMP
75,000
176,000
50,000
50,000
49,047
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
75,000
7,125
176,000
16,720
50,000
4,750
50,000
4,750
49,047
-
210,000
19,950
610,047
53,295
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,432
18,580
-
26,012
-
-
-
-
-
-
-
-
-
-
-
-
-
82,125
19,720
54,750
62,182
67,627
229,950
689,354
Geoffrey Daly
210,000
610,047
short term
post employment
long
term
termi-
nation
share based payments
cash
salary
fees
$
non
mon-
etary
$
bonus
$
other
$
$
pension and
superannu-
ation
$
other post
employ-
ment
$
options
and
rights
$
shares
and
units
cash-
settled
$
$
$
$
2015
Directors
Dr Michael
Monsour
Mr Ross
Mangelsdorf
75,000
81,500
-
-
-
-
Mr Warren Brooks
50,000
Mr Carl Stubbings
50,000
KMP
Geoffrey Daly
210,000
-
466,500
-
-
-
-
-
-
-
-
-
-
-
75,000
7,125
81,500
7,742
50,000
4,750
50,000
4,750
-
210,000
19,950
-
466,500
44,317
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
82,125
89,242
54,750
54,750
229,950
510,817
Securities received that are not performance related
No members of key management personnel are entitled to receive securities which are not performance
based as part of their remuneration package.
Cash performance related bonuses
There were no bonuses granted as remuneration to key management personnel and other executives during
the year ended 30 June 2016 (2015: nil).
Description of options/rights granted as remuneration
Details of the options granted as remuneration to those key management personnel and executives during
the year:
20
Granted as
remuneration
No.
Value of
options at
grant date
$
Vested
during the
year
No.
Lapsed
during the
year
No.
Value
of lapsed
options at
lapse date
$
2016
Directors
Mr Carl Stubbings
4,000,000
.003
1,333,333
Dr Thomas Lonngren
10,000,000
.003
3,333,333
‑
‑
‑
‑
2015: Nil
Options were approved at the 2015 AGM for directors. These options are brought to account at valuation
prepared by BDO Chartered Accountants.
All options were issued by Analytica Limited and entitle the holder to ordinary shares in Analytica Limited for
each option exercised.
There have not been any alterations to the terms or conditions of any share based payment arrangements
since grant date.
Corporate Governance
Analytica Ltd is committed to implementing the highest possible standards of corporate governance. In
determining what those high standards should involve, Analytica Ltd has turned to the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles) and has a
corporate governance framework that reflects those recommendations within the structure of the Company.
The Board of Analytica Ltd approved an updated series of policies and charters in line with the amendments
to the ASX Principles. The Company’s policies and charters together form the basis of the Company’s
governance framework at the date of signing of the directors’ report.
Within this framework:
‑
the Board of Directors is accountable to shareholders for the performance of the Company;
‑
‑
‑
the Company’s goals to achieve milestones are set and promulgated;
the risks of the business are identified and managed, and
the Company’s established values and principles underpin the way in which it undertakes its operations.
The Company has in place an entrenched, well developed governance culture which has its foundations in
the ethical values that the Board, management and staff bring to the Company and their commitment to
positioning the Company as a leader in its field.
In certain instances, due to the size and stage of development of Analytica and its operations, it may not be
practicable or necessary to implement the ASX Principles in their entirety. In these instances, Analytica Ltd
has identified the areas of divergence.
Annual report 2016 21
Key management personnel options and rights holdings
Unlisted Options
30 June, 2016
Directors
Grant-
ed as
remu-
nera-
tion
Balance at
beginning
of year
Exer-
cised
Other
chang-
es
Balance
at the end
of year
Vested
during
the
year
Vested and
exercisable
Unlisted Options @ 3.24 cents, Expire 29/10/18
Dr Michael Monsour
13,000,000
Mr Ross Mangelsdorf
10,000,000
Mr Warren Brooks
8,000,000
-
-
-
Unlisted Options @ 1.62 cents, Expire 10/12/20
Mr Carl Stubbings
Dr Thomas Lonngren
Other KMP
4,000,000
10,000,000
Unlisted Options @ 3.24 cents, Expire 29/10/18
Geoffrey Daly
6,000,000
Unlisted Options @ 4.50 cent, Expire 12/02/19-
Geoffrey Daly
5,000,000
-
-
42,000,000 14,000,000
-
-
-
-
-
-
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
4,000,000
10,000,000
6,000,000
5,000,000
56,000,000
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
1,333,333
3,333,333
6,000,000
-
41,666,666
Grant-
ed as
remu-
nera-
tion
Balance at
beginning
of year
Exer-
cised
Other
chang-
es
Balance
at the end
of year
Vested
during
the
year
Vested and
exercisable
30 June, 2015
Directors
Unlisted Options @3.24 cents, Expire 29/10/18
Dr Michael Monsour
13,000,000
Mr Ross Mangelsdorf
10,000,000
Mr Warren Brooks
8,000,000
-
-
-
Other KMP
Unlisted Options @3.24 cents, Expire 29/10/08
Geoffrey Daly
6,000,000
-
Unlisted Options @3.24 cents, Expire 29/10/08
Geoffrey Daly
5,000,000
42,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
-
-
-
13,000,000
10,000,000
8,000,000
6,000,000
-
6,000,000
5,000,000
42,000,000
-
-
-
37,000,000
22
Key management personnel shareholdings
The number of ordinary shares in Analytica Limited held by each key management person of the Group during
the year is as follows:
30 June, 2016
Directors
Balance at
beginning of
year
On
exercise of
options
Other changes
during the year
Balance at
end of year
Dr Michael Monsour
131,290,332
Mr Ross Mangelsdorf
Mr Warren Brooks
Mr Carl Stubbings
22,067,559
32,430,000
1,830,882
187,618,773
-
-
-
-
-
368,975,832
500,266,164
28,503,818
50,571,377
16,215,000
48,645,000
915,440
2,746,322
414,610,090
602,228863
30 June, 2015
Directors
Balance at
beginning of
year
On
exercise of
options
Other changes
during the year
Balance at
end of year
Dr Michael Monsour
102,539,666
Mr Ross Mangelsdorf
Mr Warren Brooks
Mr Carl Stubbings
20,472,402
31,759,341
1,627,450
156,398,859
-
-
-
-
-
28,750,666
131,290,332
1,595,157
22,067,559
670,659
32,430,000
203,432
1,830,882
31,219,914
187,618,773
Annual report 2016 23
This director’s report, incorporating the remuneration report, is signed in accordance with a resolution of the
Board of Directors.
Director
Dr Michael Monsour
Dated this 30th day of September 2016
Director
Mr Ross Mangelsdorf
24
Annual report 2016 25
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the Year Ended 30 June, 2016
Sales revenue
Cost of sales
Gross profit
R&D tax incentive revenue
Royalty revenue
Investment revenue
Loss on disposal of assets
Administrative expenses
Depreciation, amortisation and impairments
Fair value adjustment
Finance costs
Marketing expenses
Occupancy costs
Option expenses
Other currency gains (losses)
Patent maintenance
Research and development
Profit before income tax
Income tax expense
Profit for the year
Consolidated Group
Note
2016
$
2015
$
190,802
73,824
(81,392)
(22,784)
109,410
51,040
1,893,605
988,107
10,679
21,157
-
6,228
51,219
(194)
(1,187,810)
(1,014,953)
(117,793)
(93,365)
(15,671)
(53,280)
(2,272)
(384)
(1,938,948)
(1,765,019)
(5,180)
(4,607)
(7,020)
-
(48,574)
(27,923)
(125,803)
(86,778)
(2,469,665)
(3,363,282)
(3,881,472)
(5,315,604)
-
-
(3,881,472)
(5,315,604)
2
2
2
2
2
2
3
Other comprehensive income, net of income tax
Total comprehensive income for the year
(3,881,472)
(5,315,604)
Profit attributable to:
Members of the parent entity
Total comprehensive income attributable to:
(3,881,472)
(5,315,604)
Members of the parent entity
(3,881,472)
(5,315,604)
Earnings per share
Basic/diluted earnings per share (dollars)
Diluted earnings per share (dollars)
(0.0027)
(0.0059)
(0.0021)
(0.0056)
26
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As At 30 June, 2016
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other financial assets
Property, plant and equipment
Intangible assets
TOTAL NON‑CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Borrowings
Trade and other payables
Short‑term provisions
Employee benefits
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Employee benefits
TOTAL NON‑CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained earnings
TOTAL EQUITY
Consolidated Group
Note*
2016
$
2015
$
7
8
9
13
10
11
12
14
15
16
17
17
19
18
1,252,514
581,531
19,136
19,493
224,325
231,692
225,852
71,911
1,721,827
904,627
4,179
30,078
36,822
19,850
38,382
117,184
71,079
175,416
1,792,906
1,080,043
-
2,568
267,844
488,817
53,050
53,650
155,017
113,246
475,911
658,281
18,104
18,104
40,713
40,713
494,015
698,994
1,298,891
381,049
96,910,986
92,114,779
537,844
534,737
(96,149,939)
(92,268,467)
1,298,891
381,049
Annual report 2016 27
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
For the Year Ended 30 June, 2016
2016
Consolidated Group
Ordinary
Shares
$
Retained
Earnings
$
Option
Reserve
$
Total
$
Note
Balance at 1 July 2015
92,114,779
(92,268,467)
534,737
381,049
Profit attributable to
members of the parent entity
Shares issued during the year
Transaction costs
-
(3,881,472)
-
(3,881,472)
5,235,681
(439,474)
-
-
-
3,107
5,238,788
(439,474)
-
-
Shares bought back during the year
-
Balance at 30 June 2016
19
96,910,986
(96,149,939)
537,844
1,298,891
2015
Consolidated Group
Ordinary
Shares
$
Retained
Earnings
$
Option
Reserve
$
Total
$
Note
Balance at 1 July 2014
88,792,648
(86,952,863)
534,737
2,374,522
Profit attributable to members of the parent entity
-
(5,315,604)
Shares issued during the year
Transaction costs
Shares bought back during the year
3,715,760
(393,511)
(118)
-
-
-
-
-
-
-
(5,315,604)
3,715,760
(393,511)
(118)
Balance at 30 June 2015
19
92,114,779
(92,268,467)
534,737
381,049
28
CONSOLIDATED STATEMENT
OF CASH FLOWS
For the Year Ended 30 June, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Receipt from grants
Receipt from royalty income
Consolidated Group
Note
2016
$
2015
$
191,061
73,564
1,893,605
988,107
7,271
6,228
Payments to suppliers and employees
(6,204,350)
(5,758,761)
Interest received
Finance costs
Interest paid
21,157
51,216
-
(2,272)
-
(384)
Net cash provided by (used in) operating activities
22
(4,093,528)
(4,640,030)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for intangible asset
Purchase of property, plant and equipment
Net cash used by investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares
Costs of fund raising
Net cash used by financing activities
(17,962)
(11,716)
(11,165)
(38,248)
(29,127)
(49,964)
5,235,681
3,715,642
(439,474)
(394,211)
4,796,207
3,321,431
Net increase (decrease) in cash and cash equivalents held
673,552
(1,368,563)
Cash and cash equivalents at beginning of year
578,963
1,947,526
Cash and cash equivalents at end of financial year
7
1,252,514
578,963
Annual report 2016 29
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE, 2016
These consolidated financial statements and notes represent those of Analytica Listed Public Limited and
Controlled Entities (the “consolidated group” or “group”).
The separate financial statements of the parent entity, Analytica Listed Public Limited, have not been
presented within this financial report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 25th August 2016 by the directors of the company.
Note 1: Summary of significant accounting policies
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting
Standards Board and International Financial Reporting Standards as issued by the International
Accounting Standards Board. The Group is a for‑profit entity for financial reporting purposes
under Australian Accounting Standards. Material accounting policies adopted in the preparation of
these financial statements are presented below and have been consistently applied unless stated
otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis
and are based on historical costs, modified, where applicable, by the measurement at fair value of
selected non‑current assets, financial assets and financial liabilities.
a.
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the
parent (Analytica Listed Public Limited) and all of the subsidiaries (including any structured entities).
Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. A list of the subsidiaries is provided in Note 24.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements
of the Group from the date on which control is obtained by the Group. The consolidation of a
subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances
and unrealised gains or losses on transactions between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as
“non‑controlling interests”. The Group initially recognises non‑controlling interests that are present
ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary’s net
assets on liquidation at either fair value or at the non‑controlling interests’ proportionate share of the
subsidiary’s net assets. Subsequent to initial recognition, non‑controlling interests are attributed their
share of profit or loss and each component of other comprehensive income. Non‑controlling interests
are shown separately within the equity section of the statement of financial position and statement
of comprehensive income.
30
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination
involving entities or businesses under common control. The business combination will be accounted
for from the date that control is obtained, whereby the fair value of the identifiable assets acquired and
liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability
resulting from a contingent consideration arrangement is also included. Subsequent to initial
recognition, contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset or liability
is remeasured in each reporting period to fair value, recognising any change to fair value in profit or
loss, unless the change in value can be identified as existing at acquisition date.
All transaction costs incurred in relation to business combinations, other than those associated with
the issue of a financial instrument, are recognised as expenses in profit or loss when incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill is calculated as the
excess of the sum of:
(i)
(ii)
the consideration transferred;
any non‑controlling interest (determined under either the full goodwill or proportionate
interest method); and
(iii)
the acquisition date fair value of any previously held equity interest;
over the acquisition date fair value of net identifiable assets acquired.
The acquisition date fair value of the consideration transferred for a business combination plus the
acquisition date fair value of any previously held equity interest shall form the cost of the investment
in the separate financial statements.
Fair value re measurements in any pre‑existing equity holdings are recognised in profit or loss in the
period in which they arise. Where changes in the value of such equity holdings had previously been
recognised in other comprehensive income, such amounts are recycled to profit or loss.
The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds less
than 100% interest will depend on the method adopted in measuring the non‑controlling interest.
The Group can elect in most circumstances to measure the non‑controlling interest in the acquire
either at fair value (full goodwill method) or at the non‑controlling interest’s proportionate share of the
subsidiary’s identifiable net assets (proportionate interest method). In such circumstances, the Group
determines which method to adopt for each acquisition and this is stated in the respective notes to
these financial statements disclosing the business combination.
Under the full goodwill method, the fair value of the non‑controlling interest is determined using valuation
techniques which make the maximum use of market information where available. Under this method,
goodwill attributable to the non‑controlling interest is recognised in the consolidated financial statements.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of
associates is included in investments in associates.
Goodwill is tested for impairment annually and is allocated to the Group’s cash‑generating units or
groups of cash‑generating units, representing the lowest level at which goodwill is monitored and not
larger than an operating segment. Gains and losses on the disposal of an entity include the carrying
amount of goodwill related to the entity disposed of.
Changes in the ownership interests in a subsidiary that do not result in a loss of control are
accounted for as equity transactions and do not affect the carrying amounts of goodwill.
Annual report 2016 31
b.
Income Tax
The income tax expense (income) for the year comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current
tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the
relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited outside profit or loss when
the tax relates to items that are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition
of an asset or liability, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled and their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the related asset
or liability. With respect to non‑depreciable items of property, plant and equipment measured at fair
value and items of investment property measured at fair value, the related deferred tax liability or
deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered
entirely through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of
the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set‑off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where: (i) a legally enforceable right of
set‑off exists; and (ii) the deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities where it is intended
that net settlement or simultaneous realisation and settlement of the respective asset and liability will
occur in future periods in which significant amounts of deferred tax assets or liabilities are expected
to be recovered or settled.
c.
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non‑
recurring basis, depending on the requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
As fair value is a market‑based measure, the closest equivalent observable market pricing
information is used to determine fair value. Adjustments to market values may be made having
regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities
that are not traded in an active market are determined using one or more valuation techniques. These
valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset
or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in
the absence of such a market, the most advantageous market available to the entity at the end of the
reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account transaction costs and transport costs).
32
For non‑financial assets, the fair value measurement also takes into account a market participant’s
ability to use the asset in its highest and best use or to sell it to another market participant that would
use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to
share‑based payment arrangements) may be valued, where there is no observable market price in
relation to the transfer of such financial instruments, by reference to observable market information
where such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial
statements.
d.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured
products includes direct materials, direct labour and an appropriate proportion of variable and fixed
overheads. Cost of inventory is determined using the fist‑in‑first‑out basis and are net of any rebates
and discounts received.
e.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where
applicable, any accumulated depreciation and impairment losses.
Property
Freehold land and buildings are carried at their fair value (being the amount for which an asset
could be exchanged between knowledgeable, willing parties in an arm’s length transaction), based
on periodic, but at least triennial, valuations by external independent valuers, less accumulated
depreciation for buildings.
Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation
surplus in equity. Decreases that offset previous increases of the same asset are recognised against
revaluation surplus directly in equity; all other decreases are recognised in profit or loss.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying
amount of the asset and the net amount is restated to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of plant and
equipment is greater than the estimated recoverable amount, the carrying amount is written down
immediately to the estimated recoverable amount and impairment losses are recognised either in
profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal
assessment of recoverable amount is made when impairment indicators are present (refer to Note
1(m) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not
in excess of the recoverable amount from these assets. The recoverable amount is assessed on
the basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials,
direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
recognised as expenses in profit or loss during the financial period in which they are incurred.
Annual report 2016 33
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets,
but excluding freehold land, is depreciated on a straight‑line basis over the asset’s useful life to
the consolidated group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Depreciation Rate
13.33% – 20%
Plant and equipment leased to external parties
33% – 66.67%
Leased plant and equipment
33% ‑ 100%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are recognised in profit or loss in the period in which they arise. When
revalued assets are sold, amounts included in the revaluation surplus relating to that asset are
transferred to retained earnings.
Changes to fair values of investment properties are recognised in profit or loss in the period in which
they occur.
f.
Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of
the asset – but not the legal ownership – are transferred to entities in the consolidated group, are
classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts
equal to the fair value of the leased property or the present value of the minimum lease payments,
including any guaranteed residual values. Lease payments are allocated between the reduction of the
lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight‑line basis over the shorter of their estimated useful lives
or the lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are recognised as expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight‑line
basis over the lease term.
g.
Financial Instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the
contractual provisions to the instrument. For financial assets, this is equivalent to the date that the
entity commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified “at fair value through profit or loss”, in which case transaction costs are
expensed to profit or loss immediately.
34
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective
interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is
measured at initial recognition less principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amount and the
maturity amount calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that discounts estimated future cash payments or receipts
(including fees, transaction costs and other premiums or discounts) over the expected life (or when
this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying
amount of the financial asset or financial liability. Revisions to expected future net cash flows will
necessitate an adjustment to the carrying amount with a consequential recognition of an income or
expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint ventures as being
subject to the requirements of Accounting Standards specifically applicable to financial instruments.
(i)
Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading
for the purpose of short‑term profit taking, derivatives not held for hedging purposes, or when they
are designated as such to avoid an accounting mismatch or to enable performance evaluation
where a group of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Such assets are
subsequently measured at fair value with changes in carrying amount being included in profit or loss.
(ii)
Loans and receivables
Loans and receivables are non‑derivative financial assets with fixed or determinable payments that
are not quoted in an active market and are subsequently measured at amortised cost. Gains or
losses are recognised in profit or loss through the amortisation process and when the financial asset
is derecognised.
(iii)
Held-to-maturity investments
Held‑to‑maturity investments are non‑derivative financial assets that have fixed maturities and fixed
or determinable payments, and it is the Group’s intention to hold these investments to maturity.
They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss
through the amortisation process and when the financial asset is derecognised.
(iv)
Available-for-sale investments
Available‑for‑sale investments are non‑derivative financial assets that are either not capable of being
classified into other categories of financial assets due to their nature or they are designated as such
by management. They comprise investments in the equity of other entities where there is neither a
fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with any re measurements other than impairment
losses and foreign exchange gains and losses recognised in other comprehensive income. When
the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously
recognised in other comprehensive income is reclassified into profit or loss.
Available‑for‑sale financial assets are classified as non‑current assets when they are not expected
to be sold within 12 months after the end of the reporting period. All other available‑for‑sale financial
assets are classified as current assets.
(v)
Financial liabilities
Non‑derivative financial liabilities other than financial guarantees are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and
when the financial liability is derecognised.
Annual report 2016 35
Impairment
A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events (a “loss event”) having occurred,
which has an impact on the estimated future cash flows of the financial asset(s).
In the case of available‑for‑sale financial assets, a significant or prolonged decline in the market
value of the instrument is considered to constitute a loss event. Impairment losses are recognised
in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other
comprehensive income is reclassified into profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the
debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency
in interest or principal payments; indications that they will enter bankruptcy or other financial
reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance
account is used to reduce the carrying amount of financial assets impaired by credit losses. After
having taken all possible measures of recovery, if management establishes that the carrying
amount cannot be recovered by any means, at that point the written‑off amounts are charged to
the allowance account or the carrying amount of impaired financial assets is reduced directly if no
impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been
renegotiated, the Group recognises the impairment for such financial assets by taking into account
the original terms as if the terms have not been renegotiated so that the loss events that have
occurred are duly considered.
Financial guarantees
Where material, financial guarantees issued that require the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due
are recognised as a financial liability at fair value on initial recognition.
The fair value of financial guarantee contracts has been assessed using a probability‑weighted
discounted cash flow approach. The probability has been based on:
–
–
–
the likelihood of the guaranteed party defaulting during the next reporting period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed
party defaulting; and
the maximum loss exposure if the guaranteed party were to default.
Financial guarantees are subsequently measured at the higher of the best estimate of the obligation
in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the
amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB
118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised in
accordance with AASB 118.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or
the asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
when the related obligations are discharged, cancelled or have expired. The difference between the
carrying amount of the financial liability extinguished or transferred to another party and the fair value
of consideration paid, including the transfer of non‑cash assets or liabilities assumed, is recognised
in profit or loss.
h.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset
may be impaired. The assessment will include the consideration of external and internal sources of
information including dividends received from subsidiaries, associates or joint ventures deemed to
36
be out of pre‑acquisition profits. If such an indication exists, an impairment test is carried out on the
asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value
less costs of disposal and value in use, to the asset’s carrying amount. Any excess of the asset’s
carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the
revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued
asset is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash‑generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and
intangible assets not yet available for use.
i.
Intangibles Other than Goodwill
Patents and trademarks
Patents and trademarks are recognised at cost of acquisition. They have a finite life and are carried
at cost less any accumulated amortisation and any impairment losses. Patents and trademarks are
amortised over their useful lives ranging from 0 to 20 years.
Amortisation
Amortisation is based on the cost of an asset less its residual value.
Amortisation is recognised in profit or loss on a straight‑line basis over the estimated useful lives of
intangible assets, other than goodwill, from the date that they are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and
adjusted if appropriate
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred.
Development costs are capitalised only when technical feasibility studies identify that the project is
expected to deliver future economic benefits and these benefits can be measured reliably.
Capitalised development costs have a finite useful life and are amortised on a systematic basis
based on the future economic benefits over the useful life of the project.
Software
Software is recorded at cost. Software has a finite life and is carried at cost less any accumulated
amortisation and impairment losses. It has an estimated useful life of between one and five years.
j.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year‑
end exchange rate. Non‑monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non‑monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Annual report 2016 37
Exchange differences arising on the translation of non‑monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income; otherwise the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from
the Group’s presentation currency, are translated as follows:
–
–
–
assets and liabilities are translated at exchange rates prevailing at the end of the reporting
period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other
than Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
k.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short‑term employee benefits. Short‑term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before
12 months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short‑term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short‑term employee benefits such as wages, salaries and sick leave are
recognised as part of current trade and other payables in the statement of financial position. The
Group’s obligations for employees’ annual leave and long service leave entitlements are recognised
as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long‑term employee benefits are measured at the present value
of the expected future payments to be made to employees. Expected future payments incorporate
anticipated future wage and salary levels, durations of service and employee departures and are
discounted at rates determined by reference to market yields at the end of the reporting period on
government bonds that have maturity dates that approximate the terms of the obligations. Any re
measurements for changes in assumptions of obligations for other long‑term employee benefits are
recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long‑term employee benefits are presented as non‑current provisions
in its statement of financial position, except where the Group does not have an unconditional right
to defer settlement for at least 12 months after the end of the reporting period, in which case the
obligations are presented as current provisions.
Termination benefits
When applicable, the Group recognises a liability and expense for termination benefits at the earlier
of: (i) the date when the Group can no longer withdraw the offer for termination benefits; and (ii)
when the Group recognises costs for restructuring pursuant to AASB 137: Provisions, Contingent
Liabilities and Contingent Assets and the costs include termination benefits. In either case, unless the
number of employees affected is known, the obligation for termination benefits is measured on the
basis of the number of employees expected to be affected. Termination benefits that are expected
to be settled wholly before 12 months after the annual reporting period in which the benefits are
recognised are measured at the (undiscounted) amounts expected to be paid. All other termination
benefits are accounted for on the same basis as other long‑term employee benefits.
38
Equity-settled compensation
The Group operates an employee share and option plan. Share‑based payments to employees are
measured at the fair value of the instruments issued and amortised over the vesting periods. Share‑based
payments to non‑employees are measured at the fair value of goods or services received or the fair value
of the equity instruments issued, if it is determined the fair value of the goods or services cannot be
reliably measured, and are recorded at the date the goods or services are received. The corresponding
amount is recorded to the option reserve. The fair value of options is determined using the Black‑Scholes
pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end
of each reporting period such that the amount recognised for services received as consideration for the
equity instruments granted is based on the number of equity instruments that eventually vest.
l.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can
be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at
the end of the reporting period.
m.
Provision for Warranties
Provision is made in respect of the Group’s best estimate of the liability on all products and services
under warranty at the end of the reporting period. The provision is measured as the present value of
future cash flows estimated to be required to settle the warranty obligation. The future cash flows
have been estimated by reference to the consolidated group’s history of warranty claims.
n.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks,
other short‑term highly liquid investments with original maturities of 12 months or less, and bank
overdrafts. Bank overdrafts are reported within borrowings in current liabilities on the statement of
financial position.
o.
Revenue and Other Income
Revenue is measured at the fair value of the consideration received or receivable after taking into
account any trade discounts and volume rebates allowed. When the inflow of consideration is
deferred, it is treated as the provision of financing and is discounted at a rate of interest that is
generally accepted in the market for similar arrangements. The difference between the amount
initially recognised and the amount ultimately received is interest revenue.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to
the transfer of significant risks and rewards of ownership of the goods and the cessation of all
involvement in those goods.
Interest revenue is recognised using the effective interest method.
Dividend revenue is recognised when the right to receive a dividend has been established.
Dividends received from associates and joint ventures are accounted for in accordance with the
equity method of accounting.
Royalty revenue is recognised in the consolidated statement of profit or loss and other
comprehensive income when it is probable that the economic benefits gained from royalty will flow
to the entity and the amount of the royalty can be measured reliably.
The Group is eligible for Federal Government grants in respect of Research and Development
expenditure. Such grants are accounted for when there is reasonable assurance that the Group will
comply with the conditions attaching to the grant and the grant will be received.
All revenue is stated net of the amount of goods and services tax.
Annual report 2016 39
p.
Trade and Other Receivables
Trade and other receivables include amounts due from customers for goods sold and services
performed in the ordinary course of business. Receivables expected to be collected within 12 months
of the end of the reporting period are classified as current assets. All other receivables are classified
as non‑current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at
amortised cost using the effective interest method, less any provision for impairment. Refer to Note
1(l) for further discussion on the determination of impairment losses.
q.
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that
remain unpaid at the end of the reporting period. The balance is recognised as a current liability with
the amounts normally paid within 30 days of recognition of the liability.
r.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that
necessarily take a substantial period of time to prepare for their intended use or sale are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or
sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
s.
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 Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The
net amount of GST recoverable from, or payable to, the ATO is included with other receivables or
payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to, the ATO are presented as
operating cash flows included in receipts from customers or payments to suppliers.
t.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
Where the Group retrospectively applies an accounting policy, makes a retrospective restatement or
reclassifies items in its financial statements, an additional (third) statement of financial position as at
the beginning of the preceding period in addition to the minimum comparative financial statements is
presented.
u.
Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100. Accordingly,
amounts in the financial statements have been rounded off to the nearest $1.
v.
Going concern
The financial statements have been prepared on a going concern basis.
This basis has been adopted as the company has sufficient cash at 30 June 2016 to conduct its
affairs. The company has a guarantee of continuing financial support from Dr Monsour to allow the
company to meet its liabilities and it is the belief that such financial support will continue to be made
available.
40
The company’s forward cash flow projections currently indicate that the company will be required to
raise additional funds to meet forecast needs. The Directors have considered this position and have
assessed available funding options and believe should funding be required that sufficient funds could
be sourced to satisfy creditors as and when they fall due.
The company also expects to generate sales income during the 2016 year from the sales of its
Pericoach.
However, if adequate capital raising is not achieved the company may be unable to continue as a
going concern. No adjustments have been made relating to the recoverability and classification of
recorded assets amounts and classification of liabilities that might be necessary should the company
not continue as a going concern.
w.
Earnings per share
The Group presents basic and diluted earnings per share information for its ordinary shares.
Basic earnings per share is calculated by dividing the profit attributable to owners of the company by
the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share adjusts the 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.
x.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
ordinary shares and share options which vest immediately are recognised as a deduction from equity,
net of any tax effect.
y.
Critical accounting estimates and judgements
The directors evaluate estimates and judgements incorporated into the interim financial statements
based on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group.
These estimates and judgements are based on the best information available at the time of preparing
the financial statements, however as additional information is known then the actual results may
differ from the estimates.
Key estimates – impairment
The Group assesses impairment at the end of each reporting year by evaluating conditions specific
to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets
are reassessed using value‑in‑use calculations which incorporate various key assumptions.
z.
New Accounting Standards for Application in Future Periods
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when
adopted in future periods, are discussed below:
– AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting
periods beginning on or after 1 January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting
outlined below) and includes revised requirements for the classification and measurement of
financial instruments, revised recognition and derecognition requirements for financial instruments
and simplified requirements for hedge accounting.
Annual report 2016 41
The key changes that may affect the Group on initial application include certain simplifications to the
classification of financial assets, simplifications to the accounting of embedded derivatives, upfront
accounting for expected credit loss, and the irrevocable election to recognise gains and losses on
investments in equity instruments that are not held for trading in other comprehensive income. AASB
9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability
to hedge risk, particularly with respect to hedges of non‑financial items. Should the entity elect to
change its hedge policies in line with the new hedge accounting requirements of the Standard, the
application of such accounting would be largely prospective.
Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s
financial instruments, including hedging activity, it is impracticable at this stage to provide a
reasonable estimate of such impact.
– AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning
on or after 1 January 2018, as deferred by AASB 2015‑8: Amendments to Australian Accounting
Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue
with a single, principles‑based model. Except for a limited number of exceptions, including leases, the
new revenue model in AASB 15 will apply to all contracts with customers as well as non‑monetary
exchanges between entities in the same line of business to facilitate sales to customers and potential
customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15
provides the following five‑step process:
–
–
–
–
–
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that
existed in each prior period presented per AASB 108: Accounting Policies, Changes in Accounting
Estimates and Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative
effect of retrospective application to incomplete contracts on the date of initial application. There are
also enhanced disclosure requirements regarding revenue.
Although the directors anticipate that the adoption of AASB 15 may have an impact on the
Group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of
such impact.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in
AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model
that eliminates the requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard include:
–
–
–
recognition of a right‑to‑use asset and liability for all leases (excluding short‑term leases
with less than 12 months of tenure and leases relating to low‑value assets);
depreciation of right‑to‑use assets in line with AASB 116: Property, Plant and Equipment in
profit or loss and unwinding of the liability in principal and interest components;
variable lease payments that depend on an index or a rate are included in the initial
measurement of the lease liability using the index or rate at the commencement date;
42
–
–
by applying a practical expedient, a lessee is permitted to elect not to separate non‑lease
components and instead account for all components as a lease; and
additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to
comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as
an adjustment to opening equity on the date of initial application.
Although the directors anticipate that the adoption of AASB 16 will impact the Group’s financial
statements, it is impracticable at this stage to provide a reasonable estimate of such impact
–
AASB 2014‑3: Amendments to Australian Accounting Standards – Accounting for
Acquisitions of Interests in Joint Operations (applicable to annual reporting periods
beginning on or after 1 January 2016)
New Accounting Standards for Application in Future Periods (continued)
This Standard amends AASB 11: Joint Arrangements to require the acquirer of an interest (both initial
and additional) in a joint operation in which the activity constitutes a business, as defined in AASB 3:
Business Combinations, to apply all of the principles on business combinations accounting in AASB 3
and other Australian Accounting Standards except for those principles that conflict with the guidance
in AASB 11; and disclose the information required by AASB 3 and other Australian Accounting
Standards for business combinations.
The application of AASB 2014‑3 will result in a change in accounting policies for the above described
transactions, which were previously accounted for as acquisitions of assets rather than applying the
acquisition method per AASB 3.
The transitional provisions require that the Standard should be applied prospectively to acquisitions
of interests in joint operations occurring on or after 1 January 2016. As at 30 June 2016,
management is not aware of the existence of any such arrangements that would impact the financial
statements of the entity going forward and as such is not capable of providing a reasonable estimate
at this stage of the impact on initial application of AASB 2014‑3.
AASB 2014‑10: Amendments to Australian Accounting Standards – Sale or Contribution of
–
Assets between an Investor and its Associate or Joint Venture (applicable to annual reporting periods
beginning on or after 1 January 2018, as deferred by AASB 2015‑10: Amendments to Australian
Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128).
This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing
control over a subsidiary that is not a “business” as defined in AASB 3 to an associate or joint venture,
and requires that:
–
–
–
a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised
only to the extent of the unrelated investor’s interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in
that associate or joint venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at
fair value also be recognised only to the extent of the unrelated investor’s interest in the
associate or joint venture. The remaining gain or loss should be eliminated against the
carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of
loss of control over subsidiaries (involving an associate or joint venture) that are businesses per
AASB 3 for which gains or losses were previously recognised only to the extent of the unrelated
investor’s interest.
The transitional provisions require that the Standard should be applied prospectively to sales or
contributions of subsidiaries to associates or joint ventures occurring on or after 1 January 2018.
Although the directors anticipate that the adoption of AASB 2014‑10 may have an impact on the Group’s
financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
Annual report 2016 43
2.
Result for the year
Profit before income tax from continuing operations includes the following specific expenses:
Cost of sales
Finance Costs
‑ external
- related entities
- Total interest expense
Other expenses:
Administrative expenses
Administration - general
Compliance costs
Employee costs - general
Depreciation and amortisation
Amortisation
Depreciation of property plant and equipment
Marketing expenses
PeriCoach
Wages
Patent maintenance
AutoStart Burette
ELF 2
PeriCoach
Research and development costs
Auto Start Burette
Employee and labour
ELF 2
PeriCoach
Consolidated Group
2016
$
2015
$
81,392
22,784
256
2,016
2,272
384
384
Consolidated Group
2016
$
2015
$
95,543
108,222
639,252
487,944
453,015
418,787
1,187,810
1,014,953
98,324
19,469
117,793
71,348
22,017
93,365
1,693,311
1,113,551
245,637
651,468
1,938,948
1,765,019
26,429
32,756
66,618
125,803
38,015
3,478
45,285
86,778
238
8,956
534,284
505,548
-
-
1,935,143
2,848,778
2,469,665
3,363,282
The comparative expenditure in 2015 for Marketing has decreased by $527,774 and Research &
Development has increased by $527,774 to be consistent with classification in 2016.
This reclassification of US expenditure has no impact on R&D tax incentive.
3
Income Tax Expense
Profit
Tax
Add:
Tax effect of:
non deductible expenses
Less:
Tax effect of:
44
Consolidated Group
2016
$
2015
$
(3,881,472) (5,315,604)
30%
30%
(1,164,442) (1,594,681)
740,900
1,267,735
(423,542)
(326,946)
non assessable income
(568,081)
(296,432)
Temporary differences and tax losses not brought to account
991,623
623,378
Income tax attributable to parent entity
‑
‑
Carried forward tax losses of $15,120,591 (2015:$11,886,210) have not been brought to
account as a deferred tax asset because it is not yet considered probable that they will reverse
to the extent of being utilised in the future.
Annual report 2016
45
Balance at
beginning
of year
Granted as
remuneration
Exercised
Other changes
Balance at the
end of year
Vested during
the year
Vested and
exercisable
2016
Directors
Unlisted Options @ 3.24 cents Expire 29/10/18
Dr Michael Monsour
13,000,000
Mr Ross Mangelsdorf
10,000,000
Mr Warren Brooks
8,000,000
-
-
-
Unlisted Options @1.62 cents Expire 10/12/20
Mr Carl Stubbings
Dr Thomas Lonngren
4,000,000
10,000,000
31,000,000
14,000,000
Other KMP
Unlisted Options @ 3.24c Expire 29/10/2018
Geoffrey Daly
6,000,000
Unlisted Options @ 4.50c Expire 12/02/2019
Geoffrey Daly
5,000,000
11,000,000
Balance at
beginning
of year
Granted as
remuneration
2015
Directors
Unlisted Options @ 3.24 cents Expire 29/10/18
Dr Michael Monsour
13,000,000
Mr Ross Mangelsdorf
10,000,000
Mr Warren Brooks
8,000,000
31,000,000
Other KMP
Unlisted Options @ 3.24c Expire 29/10/2018
Geoffrey Daly
6,000,000
Unlisted Options @ 4.50c Expire 12/02/2019
Geoffrey Daly
5,000,000
11,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
-
-
-
13,000,000
10,000,000
8,000,000
4,000,000
1,333,333
1,333,333
10,000,000
3,333,333
3,333,333
45,000,000
4,666,666
35,666,666
-
6,000,000
-
6,000,000
-
-
5,000,000
11,000,000
-
-
-
6,000,000
Exercised
Other changes
Balance at the
end of year
Vested during
the year
Vested and
exercisable
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
31,000,000
6,000,000
5,000,000
11,000,000
-
-
-
-
-
-
-
13,000,000
10,000,000
8,000,000
31,000,000
6,000,000
-
6,000,000
46
Key management personnel shareholdings
Balance at
beginning of
year
On
exercise of
options
Other
changes
during the
year
Balance at
end of year
30 June, 2016
Dr Michael Monsour
2,606,337
-
2,606,337
MPAMM Pty Ltd
44,687,785
MP Monsour Medical Practice Pty Ltd
12,247,277
Halonna Pty Ltd
Other related parties
54,664,451
17,084,482
Total: Dr Michael Monsour
131,290,332
Mr Ross Mangelsdorf
RM & JM Mangelsdorf
Tambien Pty Ltd
Other related parties
14,222
14,222
18,848,357
3,190,758
Total: Mr Ross Mangelsdorf
22,067,559
Mr Warren Brooks
W Brooks Investments Pty Ltd
32,430,000
Total: Mr Warren Brooks
32,430,000
Mr Carl Stubbings Cumberland Pty Ltd
1,830,882
Total: Mr Carl Stubbings
1,830,882
187,618,773
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,687,785
7,500,000
19,747,277
375,833,333
430,497,784
14,357,501
2,726,981
368,975,832
500,266,164
203189
217,411
203189
217,411
13,945,672
32,794,029
14,151,768
17,342,526
28,503,818
50,571,377
16,215,000
48,645,000
16,215,000
48,645,000
915,440
2,746,322
915,440
2,746,322
414,610,090
602,228,863
Annual report 2016 47
Balance at
beginning of
year
On
exercise of
options
Other
changes
during the
year
Balance at
end of year
30 June, 2015
Dr Michael Monsour
2,606,337
-
2,606,337
MPAMM Pty Ltd
38,484,118
MP Monsour Medical Practice Pty Ltd
11,880,611
Halonna Pty Ltd
Other related parties
32,484,118
17,084,482
Total: Dr Michael Monsour
102,539,666
Mr Ross Mangelsdorf
RM & JM Mangelsdorf
14,222
14,222
Tambien Pty Ltd
17,253,200
-
-
-
6,203,667
44,687,785
366,666
12,247,277
22,180,333
54,664,451
-
17,084,482
-
-
-
-
28,750,666
131,290,332
-
-
14,222
14,222
1,595,157
18,848,357
Other related parties
3,190,758
-
3,190,758
Total: Mr Ross Mangelsdorf
20,472,402
-
Mr Warren Brooks
W Brooks Investments Pty Ltd
31,759,341
Total: Mr Warren Brooks
31,759,341
Mr Carl Stubbings
Cumberland Pty Ltd
Total: Mr Carl Stubbings
-
1,627,450
1,627,450
156,398,859
-
-
-
-
-
-
-
1,595,157
22,067,559
-
670,659
32,430,000
670,659
32,430,000
-
-
203,432
1,830,882
203,432
1,830,882
31,219,914
187,618,773
48
5
Remuneration of Auditors
Consolidated Group
2016
$
2015
$
Remuneration of the auditor of the Company, Bentleys, for:
‑ auditing or reviewing the financial report
64,952
70,466
‑ other services
2,600
1,500
6
Earnings per Share
(a) Reconciliation of earnings to profit or loss from continuing operations
Consolidated Group
2016
$
2015
$
Loss from continuing operations
(3,881,472)
(5,315,604)
Earnings used to calculate basic EPS from continuing
operations
(3,881,472)
(5,315,604)
(b) Earnings used to calculate overall earnings per share
Consolidated Group
2016
$
2015
$
Earnings used to calculate overall earnings per share
(3,881,472)
(5,315,604)
(c) Weighted average number of ordinary shares outstanding during the year used in calculating
basic EPS
Consolidated Group
2016
No.
2015
No.
Weighted average number of ordinary shares outstanding during
the year used in calculating basic EPS
1,415,930,397
897,958,600
Weighted average number of dilutive options outstanding
449,320,836
53,875,000
Weighted average number of ordinary shares
outstanding during the year used in calculating dilutive EPS
1,865,251,233
951,833,600
Earnings per share
Basic earnings per share (dollars)
Diluted earnings per share (dollars)
(0.0027)
(0.0059)
(0.0021)
(0.0056)
Annual report 2016 49
7
Cash and cash equivalents
Cash at bank and in hand
Short‑term bank deposits
Reconciliation of cash
Consolidated Group
2016
$
2015
$
67,004
39,487
1,185,510
542,044
1,252,514
581,531
Cash and Cash equivalents reported in the consolidated statement of cash flows are reconciled to
the equivalent items in the consolidated statement of financial position as follows:
Cash and cash equivalents
Consolidated Group
2016
$
2015
$
1,252,514
581,531
Bank overdrafts
14
(2,568)
Balance as per consolidated statement of cash flows
1,252,514
578,963
8
Trade and other receivables
CURRENT
Trade receivables
Sundry Debtors
GST receivable
Other receivables
Total current trade and other receivables
Credit risk
Consolidated Group
2016
$
2015
$
4,677
4,677
259
259
11,051
19,234
3,408
19,136
-
19,493
The Group has no significant concentration of credit risk with respect to any single counterparty or
group of counterparties other than those receivables specifically provided for and mentioned within
Note 12. The class of assets described as “trade and other receivables” is considered to be the main
source of credit risk related to the Group.
50
9
Inventories
CURRENT
At cost:
Raw materials and consumables
Work in progress
Finished goods
Consolidated Group
2016
$
2015
$
199,586
176,148
-
40,021
24,739
15,523
224,325
231,692
10
Other financial assets
Financial assets at fair value through profit or loss are shares held for trading for the purpose of
short‑term profit taking. Changes in fair value are included in the consolidated statement of profit
or loss and other comprehensive income.
Listed investments, at fair value
Investments in Invion
Financial assets at fair value through profit and loss
listed shares at cost
less fair value adjustment
Consolidated Group
2016
$
2015
$
4,179
19,850
522,356
522,356
(518,177)
(502,506)
4,179
19,850
Annual report 2016
51
11
Property, plant and equipment
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Office equipment At cost
Accumulated depreciation
Total office equipment
Computer equipment At cost
Accumulated depreciation
Total computer equipment
Total property, plant and equipment
Consolidated Group
notes
2016
$
2015
$
27,226
26,636
(18,990)
(17,991)
8,236
12,450
(9,632)
2,818
108,890
(89,866)
19,024
30,078
8,645
10,845
(8,922)
1,923
99,919
(72,105)
27,814
38,382
(a) Movements in carrying amounts of property, plant and equipment
Movement in the carrying amounts for each class of property, plant and equipment between
the beginning and the end of the current year:
Consolidated
Year ended 30 June, 2016
Balance at the beginning of year
Additions
Disposals written down value
Depreciation expense
Balance at the end of the year
Consolidated
Year ended 30 June, 2015
Plant and
Equip-
ment
$
Office
Equip-
ment
$
Computer
Equip-
ment
$
Total
$
8,645
590
-
(999)
8,236
1,923
1,605
-
27,814
8,970
-
38,382
11,165
-
(710)
(17,760)
(19,469)
2,818
19,024
30,077
Plant and
Equip-
ment
$
Office
Equip-
ment
$
Computer
Equip-
ment
$
Total
$
Balance at the beginning of year
‑
1,950
19,697
21,647
Additions
9,600
1,554
27,792
38,946
Disposals ‑ written down value
‑
(194)
‑
(194)
Depreciation expense
(955)
(1,387)
(19,675)
(22,017)
Balance at the end of the year
8,645
1,923
27,814
38,382
52
12 Intangible Assets
Consolidated Group
2016
$
2015
$
Patents, trademarks and other rights
Cost
273,450
255,487
Accumulated amortisation and impairment
(236,628)
(236,023)
Net carrying value
Licenses and franchises
Cost
36,822
19,464
20,000
20,000
Accumulated amortisation and impairment
(20,000)
(20,000)
Net carrying value
Software
Cost
Accumulated amortisation and impairment
Net carrying value
Total Intangibles
-
-
-
-
-
163,165
(65,445)
97,720
36,822
117,184
(a)
Reconciliation Detailed Table
Consolidated
Year ended 30 June, 2016
Balance at the beginning of the year
Additions
Amortisation
Closing value at 30 June, 2016
Patents,
trademarks
and other
rights
$
Licenses
and
franchises
$
Software
$
Total
$
19,464
17,962
(604)
36,822
-
-
-
97,720
117,184
-
17,962
(97,720)
(98,324)
-
36,822
Annual report 2016 53
Patents,
trademarks
and other
rights
$
Licenses
and
franchises
$
Software
$
Total
$
Consolidated
Year ended 30 June, 2015
Balance at the beginning of the year
8,223
5,607
162,986
176,816
Additions
Amortisation
11,716
-
-
11,716
(475)
(5,607)
(65,266)
(71,348)
Closing value at 30 June, 2015
19,464
-
97,720
117,184
13
Other assets
CURRENT
Prepayments
14
Borrowings
CURRENT
Unsecured liabilities:
Bank overdraft
Consolidated Group
2016
$
2015
$
225,852
71,911
Consolidated Group
2016
$
2015
$
-
2,568
Director loan facility from Dr Michael Monsour represents an unsecured loan facility from MPAMM
Pty Ltd, a related entity associated with Dr Monsour. The loan facility is repayable on demand and
bears interest at 7.40% (2014: 7.63%) per annum (annual variable rate per Westpac Banking Corpora-
tion for business loans, plus 2%). The interest charged for the year ended 30 June 2016 amount-
ed to $2016 (2015:nil). The maximum amount available under the loan agreement is $400,000.
Therefore 100% of the facility was undrawn at 30 June 2016, (2015: 100%).
54
15
Trade and other payables
CURRENT
Unsecured liabilities
Trade payables
Other payables
16
Provisions
CURRENT
Provisions ‑ audit
Provisions ‑ taxation
Consolidated Group
2016
$
2015
$
241,824
26,020
267,844
239,322
249,495
488,817
Consolidated Group
2016
$
2015
$
43,000
41,000
10,050
12,650
53,050
53,650
Consolidated Group
Provisions audit
$
Provisions taxation
$
Total
$
CURRENT
Opening balance at 1 July 2015
Additional provisions
Provisions used
41,000
66,952
12,650
-
53,650
66,952
(64,952)
(2,600)
(67,552)
Balance at 30 June 2016
43,000
10,050
53,050
Annual report 2016
55
17
Employee Benefits
Current liabilities
Provision for employee benefits
Other employee benefits
Long service leave
(a)
Provision for Long-term Employee Benefits
Non‑current liabilities
Long service leave
Consolidated Group
2016
$
2015
$
111,083
103,421
10,553
33,381
9,825
-
155,017
113,246
Consolidated Group
2016
$
2015
$
18,104
40,713
Provision for employee benefits represents amounts accrued for annual leave and long service
leave. The current portion for this provision includes the total amount accrued for annual leave
entitlements and the amounts accured for long service leave entitlements that have vested due to
employees having completed the required period of service. Based on past experience, the Group
does not expect the full amount of annual leave or long service leave balances classified as current
liabilities to be settled in the next 12 months. However these amounts amounts must be classified
as current liabilities since the group does not have an unconditional right to defer the settlement of
these amounts in the event the employees wish to use their leave entitlement.
The non‑current portion for this provision includes amounts accrued to long service leave
entitlements that have not yet vested in relation to those employees who have not yet completed
the required period of service. In claculating the present value of future cash flows in respect of long
service leave, the probability of long service leave being taken is based on historic data.
18
Reserves and retained surplus
Consolidated Group
2016
$
2015
$
534,737
534,737
52,309
(49,202)
537,844
534,737
Option reserve
Opening balance
Transfer In
Adjust Non Vesting Event
Closing balance
(a)
Share option reserve
Share option reserve
This reserve records the cumulative value of share based payments including employee
service received for the issue of share options.
When the option is exercised the amount in the share option reserve is transferred to share capital
56
19
Issued Capital
Consolidated Group
2016
$
2015
$
Fully paid 2,165,855,366 (2015: 939,220,439) Ordinary shares
96,910,986
92,114,779
Total
96,910,986
92,114,779
Consolidated Group
2016
$
2015
$
At the beginning of the reporting period
939,220,439
815,361,809
Shares issued during the year
12 August 2015 358,117,144 rights issue @ 0.8 cents per share
1 March 2016 418,602 options converted @ 0.11 cents per share
22 March 2016 109,813,725 placement @ 0.255 cents per share
28 April 2016 222,627,485 SPP @ 0.255cents per share
28 April 2016 333,333,333 placement @ 0.3 cents per share
28 April 2016 202,324,638 placement @ 0.255 cents per share
8 October 2014 28,333,334 placement @ 0.3 cents per share
4 November 2014 85,540,964 1for 8 entitlement @ 0.3 cents per share
5 November 2014 9,984,332 placement @ 0.3 cents per share
358,117,144
418,602
109,813,725
222,627,485
333,333,333
202,324,638
28,333,334
85,540,964
9,984,332
At the end of the reporting period
2,165,855,366
939,220,439
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding
up of the Company. On a show of hands at meetings of the Company, each holder of ordinary shares
has one vote in person or by proxy, and upon a poll each share is entitled to one vote.
The Company does not have authorised capital or par value in respect of its shares.
(b)
Options
(i)
(ii)
For information relating to the Analytica Limited employee option plan, including details of options
issued, exercised and lapsed during the year and the options outstanding at year‑end, refer to Note
23 Share‑based payments.
For information relating to share options issued to key management personnel during the year, refer
to Note 23
(c)
Capital Management
Management controls the capital of Analytica Limited in order to ensure the entity continues as
a going concern as well as to maintain optimal returns to shareholders and benefits for other
stakeholders. Capital consists of share capital, reserves and retained profit.
Annual report 2016 57
There are no externally imposed capital requirements.
The Group monitors capital through the gearing ratio, which is calculated as net debt divided by total
capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is
defined as equity per the consolidated statement of financial position plus net debt.
The target for Analytica Limited’s gearing ratio is between 0% and 50%. The gearing ratios at the
current and prior years are shown below:
Debt to equity gearing ratio for 2016 is 0% (2015: 0%)
There have been no changes in the strategy adopted by management during the year.
20
Contingencies
In the opinion of the Directors, the Company did not have any contingencies at 30 June 2016 (30
June 2015 :None).
21
Operating Segments
Segment information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed
and used by the Board of Directors (chief operating decision makers) in assessing performance and
determining the allocation of resources.
The Group is managed primarily on the basis of product category and service offerings as
the diversification of the group’s operations inherently have notably different risk profiles and
performance assessment criteria. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments
are considered to have similar economic characteristics and are also similar with respect to the
following:
• the products sold and/or services provided by the segment;
• the manufacturing process;
• the type or class of customer for the products or services;
• the distribution method; and
• any external regulatory requirements.
Performance is measured based on segment profit before income tax as included in the internal
financial reports.
Types of products and services by reportable segment
(i) Medical Devices
- AutoStart Burette
‑ PeriCoach (Perineometer)
‑ ELF 2
58
Analytica’s lead product is the Perineometer device branded PeriCoach, to assist women and their
clinicians in treatment of Stress Urinary Incontinence. PeriCoach entered controlled market release
in June 2014, with clinical trials undertaken in November 2014, with its public release in Australia nd
United Kingdom January 2015 and release in the United States in June 2015.
Analytica is also commercialising the AutoStart Burette infusion system. The AutoStart Burette
set automatically restarts the delivery of intravenous fluid once the burette has dispensed its
predetermined amount of liquid or drug. Automatic restart of the IV fluid, once the drug is dispensed
can provide enormous savings in nursing time during and following a medication event, and reduces
the risk of blood clots forming that may obstruct the intravenous cannula.
Analytica has licensed the AutoStart Burette and other burette intellectual property to Medical
Australia (Formerly BMDI Tuta) for distribution in the Australian Market. The AutoStart Burette has a
TGA ARTG entry, CE‑marking, and USFDA 510(k) ‘approval’.
Analytica continues the development of this medical device for treatment of muscular spasticity.
The ELF2 device delivers a low‑frequency voltage used by neurologists to locate nerve endings
during Botulinum neurotoxin A injection treatment. Analytica’s development of this device, licenced
from Gorman ProMed Ltd in 2012, is to enhance usability features of a device currently in use and
respected by the market.
(ii) Corporate
The corporate segment includes all other operations including the administration, and associated
listed public company expenditure.
Basis of accounting for purposes of reporting by operating segments
(a)
Accounting policies adopted
Unless stated below, all amounts reported to the Board of Directors, being the chief operating
decision maker with respect to operating segments, are determined in accordance with accounting
policies that are consistent to those adopted in the annual financial statements of the Group.
Income tax expense
Income tax expense is calculated based on the segment operating net profit using a notional charge
of 30%. The effect of taxable or deductible temporary difference is not included for internal reporting
purposes.
(b)
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives
the majority of economic value from the asset. In the majority of instances, segment assets are
clearly identifiable on the basis of their nature and physical location.
(c)
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability
and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to
the Group as a whole and are not allocated. Segment liabilities include trade and
Annual report 2016 59
Medical Devices
Corporate
Total
2016
$
2015
$
2016
$
2015
$
2016
$
2015
$
REVENUE
Grant revenue
-
-
1,893,605
988,107
1,893,605
988,107
Sales revenue
190,802
73,824
Royalty revenue
10,679
6,228
-
-
-
-
190,802
73,824
10,679
6,228
Interest revenue
Loss on sale of
equipment
-
-
-
-
21,157
51,218
21,157
51,218
-
(194)
-
(194)
Total segment revenue
201,481
80,052
1,914,762
1,039,131
2,116,243
1,119,183
Depreciation and
amortisation
(103,176)
(76,376)
(14,617)
(16,989)
(117,793)
(93,365)
Cost of sales
(81,392)
(22,784)
-
-
(81,392)
(22,784)
Interest expense
-
-
(2,272)
(384)
(2,272)
(384)
Marketing
(1,938,948)
(1,765,019)
Patent Maintenance
(125,803)
(86,778)
-
-
-
-
(1,938,948)
(1,765,019)
(125,803)
(86,778)
Other expense
Research and
development
-
-
(1,261,842)
(1,103,175)
(1,261,842)
(1,103,175)
(2,469,665)
(3,363,282)
-
-
(2,469,665)
(3,363,282)
Total segment expense
(4,718,984)
(5,314,239)
(1,278,731)
(1,120,548)
(5,997,715)
(6,434,787)
Segment profit (loss)
(4,517,503)
(5,234,187)
636,031
(81,417)
(3,881,472)
(5,315,604)
(e) Segment assets
Segment assets
Financial assets at fair value
through profit and loss
(f) Segment liabilities
Segment liabilities
280,171
442,135
1,508,556
618,058
1,788,727
1,060,193
-
-
-
-
4,179
19,850
4,179
19,850
(494,016)
(698,994)
(494,016)
(698,994)
60
(g) Geographical information
In presenting information on the basis of geographical segments, segment revenue is based on
the geographical location of customers whereas segment assets are based on the location of
the assets.
22
(a)
2016
2015
Revenue
Revenue
2,042,658
33,368
40,216
1,114,350
499
4,526
Australia
United Kingdom
United States
Cash Flow Information
Reconciliation of result for the year to cashflows from operating activities
Consolidated Group
2016
$
2015
$
Profit for the year
(3,881,472)
(5,315,604)
Cash flows excluded from profit attributable to operating activities
Non cash flows in profit:
- amortisation
- depreciation
‑ fair value adjustment Invion Limited (previously CBio Limited)
‑ net (gain)/loss on disposal of property, plant and equipment
‑ share options expensed
Changes in assets and liabilities,
net of the effects of purchase and disposal of subsidiaries:
98,324
19,469
15,671
-
3,107
71,349
22,017
53,280
194
-
‑ (increase)/decrease in trade and other receivables
357
17,159
‑ (increase)/decrease in prepayments
(153,941)
309,727
‑ (increase)/decrease in inventories
7,367
(54,522)
‑ increase/(decrease) in trade and other payables
(220,973)
218,964
‑ increase/(decrease) in provisions
‑ increase/(decrease) in employee benefits
(600)
19,163
10,895
26,511
‑ Cashflow from operations
(4,093,528)
(4,640,030)
Annual report 2016
61
23
Share‑based Payments
The following unlisted options were issued during the current financial year:
(a)
(b)
(c)
On 28 September 2015 the company issued 52,083,334 unlisted options in 3 tranches to Sales Force
4 Hire. The first tranch of 10,416,667 vested during the year and the remaining 41,666,667 were foreited.
On 10 November 2015 the company granted 10,000,000 unlisted options to Origin Capital. Shortly
after granting these options they were forfeited.
On 12 November 2015 th company issued 14,000,000 in 3 tranches to directors. The first tranche of
4,666,667 options vested during the year.
Grant Date
Expiry
Date
Exercise
price
Start of
the year
Exer-
cised
during
the year
For-
feited
during
the year
Granted
during
the year
Balance at
the end of
the year
Vested and
exercisable
30-10-13
29-10-18
3.224
44,500,000
12-02-14
12-02-19
4.39
5,000,000
22‑05‑14
22‑05‑19
7.33
4,375,000
-
-
-
28‑09‑15
28-02-20
10‑11‑15
08-11-20
1.9
0.5
12‑11‑15
10-12-20
1.62
-
-
-
52,083,334
10,000,000
14,000,000
-
-
-
-
-
-
-
-
-
44,500,000
44,500,000
5,000,000
-
4,375,000
4,375,000
41,666,667
10,416,667
10,416,667
10,000,000
-
-
-
14,000,000
4,666,666
Total
53,875,000
76,083,334
‑51,666,667
78,291,667
63,958,333
24
Related Parties
(a)
The Group's main related parties are as follows:
(i) Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity
are considered key management personnel.
For details of remuneration disclosures relating to key management personnel, refer to Note 4:
Interests of Key Management Personnel (KMP) and the remuneration report in the Directors' Report.
Other transactions with KMP and their related entities are shown below.
Loan facility to the company up to $400,000 provided by Dr Monsour. No funds have been
drawn‑down as at reporting date (2015: nil).
(ii) Subsidiaries:
The consolidated financial statements include the financial statements of Analytica Limited and the
following subsidiaries:
Name of subsidiary
PeriCoach Pty Ltd
% ownership interest
2016
% ownership interest
2015
100.0
100.0
62
(b)
Transactions with related parties
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
25
Financial Risk Management
The Company is exposed to a variety of financial risks through its use of financial instruments.
This note discloses the Company‘s objectives, policies and processes for managing and measuring
these risks.
The Company‘s overall risk management plan seeks to minimise potential adverse effects due to the
unpredictability of financial markets.
The Company does not speculate in financial assets.
The most significant financial risks to which the Company is exposed to are described below:
Specific risks
• Market risk currency risk, cash flow interest rate risk and price risk
• Credit risk
• Liquidity risk
Financial instruments used
The principal categories of financial instrument used by the Company are:
• Trade receivables
• Cash at bank
• Bank overdraft
•
Investments in listed shares
• Trade and other payables
Objectives, policies and processes
The CFO has primary responsibility for the development of relevant policies and procedures to
mitigate the risk exposure of the Company, these policies and procedures are tabled at the board
meeting following their approval.
Reports are presented at each Board meeting regarding the implementation of these policies and any
risk exposure which the Risk Management Committee believes the Board should be aware of.
Specific information regarding the mitigation of each financial risk to which Company is exposed is
provided below.
Liquidity risk
Liquidity risk arises from the Company’s management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due.
Annual report 2016 63
The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its
liabilities when they become due. The Company maintains cash and marketable securities to meet
its liquidity requirements for up to 30 day periods. Funding for long term liquidity needs is additionally
secured by an adequate amount of committed credit facilities and the ability to sell long term
financial assets.
The Company manages its liquidity needs by carefully monitoring scheduled debt servicing payments
for long term financial liabilities as well as cash outflows due in day to day business.
Liquidity needs are monitored in various time bands, on a day to day and week to week basis, as well
as on the basis of a rolling 30 day projection. Long term liquidity needs for a 180 day and a 360 day
period are identified monthly.
At the reporting date, these reports indicate that the Company expected to have sufficient liquid
resources to meet its obligations under all reasonably expected circumstances and will not need to
draw down any of the financing facilities.
The Company‘s liabilities have contractual maturities which are summarised below:
Not later than 1 month
2016
$
2015
$
-
2,568
267,844
488,817
267,844
491,385
Bank overdraft and loans
Trade payables
Total
Market risk
(i) Foreign currency sensitivity
Most of the Company transactions are carried out in Australian Dollars. Exposures to currency
exchange rates arise from the Company’s overseas sales and purchases, which are primarily
denominated in USD and CHF.
The Company did not actively reduce exposure of foreign currency risk by utilising forward exchange
contracts for non Australian Dollar cash flows during the 2016 or 2015 year.
Whilst these forward contracts are economic hedges of the cash flow risk, the Company does not
apply hedge accounting to these transactions. The implications of this decision are that unrealised
foreign exchange gains and losses are recognised in profit and loss in the period in which they occur.
Generally, the Company‘s risk management procedures distinguish short term foreign currency
cash flows (due within 6 months) from longer term cash flows. Where the amounts to be paid and
received in a specific currency are expected to largely offset one another, no further hedging activity
is undertaken.
Forward exchange contracts are mainly entered into for significant long term foreign currency
exposures that are not expected to be offset by other currency transactions.
Foreign currency denominated assets translated into Australian Dollars at the closing rate are
included in the inventory balance of $225,280 (2015:$231,692). Net currency gains/losses of
$48,574 (2015:$27,923) are disclosed in the statement of profit and loss. Any increase or decrease
in exchange rates would not significantly impact users of the financial statements, as such no
sensitivity analysis is disclosed.
(ii) Cash flow interest rate sensitivity
The Company is exposed to interest rate risk as funds are borrowed at floating and fixed rates.
Borrowings issued at fixed rates expose the Group to fair value interest rate risk.
64
The Company’s policy is to minimise interest rate cash flow risk exposures on long term financing.
Longer term borrowings are therefore usually at fixed rates. At the reporting date, the Company
is exposed to changes in market interest rates through its bank borrowings, which are subject to
variable interest rates.
The following table illustrates the sensitivity of the net result for the year and equity to a reasonably
possible change in interest rates of +2.00% and 2.00% (2015: +2.00%/ 2.00%), with effect from the
beginning of the year. These changes are considered to be reasonably possible based on observation
of current market conditions.
The calculations are based on the financial instruments held at each reporting date. All other
variables are held constant.
2016
2015
+2.00%
-2.00%
+2.00%
-2.00%
$
$
$
$
25,050
(25,050)
11,631
(11,631)
25,050
(25,050)
(11,631)
(11,631)
‑
‑
‑
‑
51
51
(51)
(51)
Cash and cash equivalents
Net results
Equity
Borrowings
Net results
Equity
(iii) Other price risk
The Company are exposed to equity securities price risk. This arises from listed and unlisted
investments held by the Company and classified as available for sale on the consolidated statement
of financial position.
Equity instruments are held for strategic rather than trading purposes and the Company does not
actively trade these investments.
The Company is not exposed to commodity price risk.
There is no profit impact, except for investments held at fair value through profit or loss. Equity would
increase / decrease as a result of fair value movements through the investment reserve.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the Company.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits
with banks and financial institutions, as well as credit exposure to wholesale and retail customers,
including outstanding receivables and committed transactions.
The Company has adopted a policy of only dealing with creditworthy counterparties as a means
of mitigating the risk of financial loss from defaults. The utilisation of credit limits by customers is
regularly monitored by line management. Customers who subsequently fail to meet their credit terms
are required to make purchases on a prepayment basis until creditworthiness can be re established.
Trade receivables consist of a large number of customers, spread across diverse industries
and geographical areas. Ongoing credit evaluation is performed on the financial condition of
accounts receivable.
Annual report 2016 65
The Board receives monthly reports summarising the turnover, trade receivables balance and aging
profile of each of the key customers individually and the Company’s other customers analysed by
industry sector as well as a list of customers currently transacting on a prepayment basis or who
have balances in excess of their credit limits.
Management considers that all the financial assets that are not impaired for each of the reporting
dates under review are of good credit quality, including those that are past due.
The credit risk for liquid funds and other short term financial assets is considered negligible, since the
counterparties are reputable banks with high quality external credit ratings.
26
Fair Value Measurement
The Group measures the following assets and liabilities at fair value on a recurring basis:
• Financial assets
Fair value hierarchy
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be
assigned to a level in the fair value hierarchy as follows:
Level 1
Level 2
Unadjusted quoted prices in active markets for identical
assets or liabilities that the entity can access at the measurement date.
Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly or indirectly.
Level 3
Unobservable inputs for the asset or liability.
The table below shows the assigned level for each asset and liability held at fair value by the Group:
30 June, 2016
$
$
$
$
Level 1
Level 2
Level 3
Total
Recurring fair value measurements
Listed shares
4,179
-
-
4,179
30 June, 2015
$
$
$
$
Level 1
Level 2
Level 3
Total
Recurring fair value measurements
Listed shares
19,850
-
-
19,850
27
Events Occurring After the Reporting Date
At 31st August $250,000 and 30th September $250,000 capital was received from INOV8 for
placement of shares. No other matters or circumstances have arisen since the end of the year which
significantly affected or could significantly affect the operations of the Group, the results of those
operations, or the state of affairs of the Group in future financial years.
66
28
Company Details
The registered office of the company is:
Analytica Limited
c/o Avance Chartered Accountants
222 Bazaar Street,
Maryborough Qld 4655
Telephone: (07) 3278 1950
Share Registry
Link Market Services
Level 15, 324 Queen Street
Brisbane, Queensland 4000
Telephone: +61 1300 554 474
Email: registrars@linkmarketservices.com.au
The postal address for the registered office of the company is:
Analytica Limited
PO Box 438
Maryborough Qld 4650
The principal place of business is:
320 Adelaide Street
Brisbane Qld 4000
Telephone: (07) 3278 1950
Annual report 2016 67
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Analytica Listed Public Limited, the directors of the
company declare that:
1.
the financial statements and notes, as set out on pages 18 to 50, are in accordance with the
Corporations Act 2001 and:
a. comply with Australian Accounting Standards, which, as stated in accounting policy
Note 1 to the financial statements, constitutes compliance with International Financial
Reporting Standards; and
b. give a true and fair view of the financial position as at 30 June 2016 and of the
performance for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will be
able to pay its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief Financial Officer.
At the date of this declaration, there are reasonable grounds to believe that the companies which are
party to this deed of cross guarantee will be able to meet any obligations or liabilities to which they
are, or may become, subject to by virtue of the deed.
Directors
Dr Michael Monsour Mr Ross Mangelsdorf
Dated this 30th day of September 2016
INDEPENDENT AUDIT REPORT TO
THE MEMBERS OF ANALYTICA LIMITED
68
Annual report 2016 69
70
ADDITIONAL INFORMATION
FOR LISTED PUBLIC COMPANIES
For the Year Ended 30 June, 2016
ASX Additional Information
Additional information required by the ASX Listing Rules and not disclosed elsewhere in this report is
set out below. This information is effective as at 20 September, 2016.
Substantial shareholders
The number of substantial shareholders and their associates are set out below:
Shareholders
HALONNA PTY LTD
INOV8
Voting rights
Ordinary Shares
Number of shares
430,497,784
238,038,923
On a show of hands, every member present at a meeting in person or by proxy shall have one vote
and upon a poll each share shall have one vote.
Options
No voting rights.
Distribution of equity security holders
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and over
Shares
368,418
643,075
990,458
Options
ALTOA
5,686
250,081
720,807
56,222,434
9,951,258
2,143,345,266
108,444,361
2,201,569,651
119,372,193
There were 2,090 holders of less than a marketable parcel of ordinary shares.
Annual report 2016
71
Twenty largest shareholders
1 HALONNA PTY LTD
2
INOV8 LLC
3 MR JOHN GEOFFREY MOODY
4
IGNATIUS LIP PTY LTD
5 W BROOKS INVESTMENTS PTY LTD
6 M P A M M PTY LTD
7 DR TERESA MARGARET MULLINS + DR PETER JAMES MULLINS
8 HALONNA PTY LIMITED
9 MRS SIGRID ARUNDEL
10 MR RICHARD THOMAS HAYWARD DALY + MRS SARAH KAY DALY
11 VAN AM MARKETING PTY LTD
12 J MOODY NOMINEES PTY LTD
13 TAMBIEN PTY LTD
14 M P MONSOUR MEDICAL PRACTICE PTY LTD
15 MRS MARGE MEI YU LIP
16 MRS SABINA LIP
17 MR MARK OVERELL TAGG ARUNDEL +MRS SIGRID JO‑ANNE ARUNDEL
18 MR VICTOR PEREIRA
19 MR SCOTT JAMES BURNS
20 MR ROSS JAMES BURNS + MRS DIANE MARIE BURNS
Number held
392,997,784
238,038,923
58,000,000
57,175,229
48,645,000
44,687,785
41,145,097
37,500,000
36,300,000
29,784,598
29,616,442
29,200,000
22,738,771
19,747,277
17,370,586
17,132,353
16,800,000
16,382,353
15,535,791
14,962,300
TOTAL
1,183,760,289
72
Twenty Largest Option Holders
1 HALONNA PTY LIMITED
2 MR JOHN ARTHUR JARVIS
3
IGNATIUS LIP PTY LTD
4 W BROOKS INVESTMENTS PTY LTD
5 MR JOHN GEOFFREY MOODY
6 MRS SUSAN SHIELDS
7 D B M (VIC) PTY LTD
8 MRS MARGE MEI YU LIP
9 MR JUSTIN ANTHONY VIRGIN
10 AUST EXECUTOR TRUSTEES LTD
11 M P MONSOUR MEDICAL PRACTICE PTY LTD
12 CRIMSON PERMANENT ASSURANCE COMPANY PTY LTD
13 MRS SIGRID ARUNDEL
14 MR JOHN ARTHUR JARVIS
15 MR SCOTT JAMES BURNS
16 HALONNA PTY LTD
17 MRS AYAKO FLANDERS
18 TAMBIEN PTY LTD
19 MR MARK OVERELL TAGG ARUNDEL + MRS SIGRID JO‑ANNE ARUNDE
20 MRS SABINA LIP
TOTAL
Number held
12,500,000
6,336,110
5,699,208
5,405,000
3,000,000
3,000,000
2,999,999
2,943,136
2,738,455
2,500,000
2,500,000
2,376,470
2,075,000
1,775,000
1,666,666
1,666,666
1,400,000
1,333,333
1,250,000
1,250,000
64,415,043
Annual report 2016