Anatara Lifesciences Limited Annual Report 2019

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FY2019 Annual Report · Anatara Lifesciences Limited

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ANNUAL
REPORT
2019

ANATARA LIFESCIENCES Annual Report 2019Contents

Chair’s letter

Review of operations and activities

Directors’ report

Directors and company secretary

Principal activities

Dividends - Anatara Lifesciences Ltd

Review of operations

Significant changes in the state of affairs

Events since the end of the financial year

Likely developments and expected results of operations

Environmental regulation

Information on directors

Company secretary

Meetings of directors

Remuneration report (audited)

Shares under option

Insurance of officers and indemnities

Proceedings on behalf of the company

Non-audit services

Taxation services

Auditor’s independence declaration

Rounding of amounts

Corporate governance statement

Financial statements

Independent auditor’s report to the members

Corporate directory

Shareholder Information

Chair’s letter

Dear Shareholders,

On behalf of the Anatara Board, I am pleased to present our 2019 Annual Report. Significant progress has been made this year
with value added as we progress our products to market.

During FY19 we focused on developing our human product pipeline, and in particular on our Gastrointestinal ReProgramming
(GaRP) gut health product, as we edge closer to achieving our goal of commercialisation in 2020. We also refocused our
attention on our animal health asset, Detach®, and finding the right partner to take it to market following the retention of rights
to the product, announced in June 2019.

Human health opportunities

Anatara’s lead human health product, GaRP, is being developed to specifically target two human gastrointestinal (GI) disorders,
Inflammatory Bowel Disease (IBD) and Irritable Bowel Syndrome (IBS), where there is a significant unmet medical need.

IBD is a US$15.9 billion market1. The current treatment approach to IBD is to suppress the inflammation with the goal of inducing
and maintaining remission, while in the case of IBS, gastroenterologists primarily treat the symptoms of abdominal pain, bloating
and alternating constipation and diarrhoea. These therapeutic approaches have high treatment failure rates. Consequently, there is
a significant unmet medical need for products that can i) re-establish the homeostasis of the microbiome, ii) treat the inflammation
and iii) repair the mucosal damage which will in turn have the downstream effect of reducing disease-associated diarrhoea.

Significant market opportunity

GI disorders affect a significant proportion of the population at some stage of their life, with IBS the most commonly diagnosed
gastrointestinal condition, affecting an estimated 11% of the global population2. IBD is a global disease with accelerating incidence
in newly industrialised countries, with more than 5 million sufferers globally3.

“Imagine a day where you fell ill from having eaten too much,
then imagine that day lasts months at a time.”

Australian IBS patient5

The current therapeutic approaches for both disorders have high treatment failure rates and therefore patients have a poor quality
of life. Many turn to dietary supplements and complementary medicines in an attempt to relieve their symptoms. Approximately
50% of IBS4 and 30-50% of IBD6 patients seek additional relief through the use of adjunct therapies. Increased education and
more detailed evaluation of dietary supplements has led to health care providers working with patients to develop individualised
programs, which include dietary supplements in the symptom management for GI disorders.

Developing a dietary supplement provides several regulatory and commercial advantages as it is less expensive than prescription
medicines and has a less risky pathway to market, thereby accelerating market entry. Both the public and health care professionals
alike understand the term ‘dietary supplement’ and with the right partner, marketing can be aimed at both the public and
professionals. Marketing, sales, and medical affairs activities encourage health care professionals to recommend products to
their patients. Therefore, finding and selecting the best marketing partner is critical to the success of a product such as GaRP
and consequently this will continue to be a major focus for Anatara moving into the new financial year.

1 Grand View Research, https://www.grandviewresearch.com/industry-analysis/inflammatory-bowel-disease-ibd-treatment-market. 2 Clinical Gastroenterology and Hepatology
2012: 10, 712-721. 3 Crohn’s and Colitis Australia, https://www.crohnsandcolitis.com.au/. 4 World J. Gastroenterol 2014: 346-362. 5 https://badgut.org/wp-content/uploads/IBS-
Global-Impact-Report.pdf. 6 Gastroenterology 2017: 152:415-429.

ANATARA LIFESCIENCES Annual Report 20195

Evidence by design

There are more than 200 bromelain-based dietary supplement products on the market used for “improving gut health”, reducing
inflammation and general digestive well-being. Despite the extensive use of bromelain-based products there is no definitive
clinical data demonstrating its efficacy in pain management and inflammation. This lack of efficacy data may be due to the poor
chemical characterisation and amount, type or quality of the bromelain incorporated into these products.

With this deficiency in mind, Anatara has characterised the physical and biochemical activity of bromelain, specifying what we
believe to be the most effective and safe. Through this process, Anatara developed a bromelain-based oral drench (Detach®)
which is approved in Australia as an aid to control diarrhoea in piglets. Anatara is also leveraging its bromelain specification in
development of Anatara’s Gastrointestinal ReProgramming (GaRP) dietary supplement. Each GaRP formulation component was
selected based on published literature (human or pig studies) or in-house data that supported their use in addressing the key disease
characteristics of IBD and IBS.

GaRP is a regenerative, multi-component dietary supplement that has been designed to address three of the primary underlying
factors that contribute to the symptoms experienced by IBS and IBD patients: microbiome dysbiosis, inflammation and
mucosal damage (see Figure 1).

Figure 1

GaRP’s point of difference lies within its triple-targeted
therapeutic approach (anti-adhesion; anti-inflammatory and
mucosal regeneration). With a dual targeted formulation (small
intestine and colon), unlike other supplements commonly
marketed, GaRP components will be delivered to where they
can exert their greatest therapeutic effect. Positioned as an
adjunct to existing therapies, GaRP will not be replacing current
prescription medications, rather it will work as an adjunct to
prescription drugs where needed. Over the last 20 years, the
use of dietary supplements as adjuncts to prescription drugs
has increased significantly.

Grounded in scientific evidence

listed with

Most complementary medicines
regulatory
authorities have no requirement to conduct their own safety
or efficacy studies7. However, from the outset, Anatara’s
approach has been to develop evidence-based products using
pre-clinical in-vitro and animal and human in-vivo clinical
studies.

In February, Anatara was pleased to announce its breakthrough positive efficacy data from its proof-of-concept studies for
GaRP in reducing inflammation and restoring gut integrity, using industry-standard in vitro gut models. Anatara was able to
demonstrate GaRP components addressed the dysbiosis of the microbiome by inhibiting the attachment and invasion of pro-
inflammatory bacteria (obtained from IBD and IBS patients) into healthy gut cells by >95%. The level of inflammation commonly
observed in IBD and IBS-D patients was reduced by 85% by significantly reducing the production of pro-inflammatory proteins.
By addressing both the microbiome imbalance and the inflammation, specifically selected GaRP components were able to
accelerate the regeneration of the mucosal layer which restored gut integrity (see Figure 2).

7 Department of Health, Therapeutic Goods Administration, https://www.tga.gov.au/listed-complementary-medicines, Updated 4 May 2018

InﬂammationMicrobiomeDysbiosisMucosalDamage6

Figure 2

Buoyed by these results, we believe we are developing a game changing, over-the-counter product for the management of
symptoms for IBD and IBS patients.

Last year, we informed shareholders of our intent to evaluate GaRP in a larger animal efficacy studies in 2019. After receiving
strong pre-clinical in-vitro evidence, and following consultation with our expert Product Development Advisory Board, Anatara
moved forward this year with animal studies in a mouse model, representative of moderate IBD and severe IBS. Initial data from
this important animal study is expected to be reported in October 2019.

At the time of writing, the company is undertaking pre-trial activities with a view to taking GaRP into a human clinical study to
demonstrate its ability to induce and maintain remission in patients suffering from gastrointestinal conditions. Initiation of trial
activities is expected to commence in late 2019.

Detach®

Anatara achieved a major milestone during the year, with the Australian Pesticides and Veterinary Medicines Authority (APVMA)
registering Detach® for use in piglets in Australia. While the termination of the global licencing agreement with Zoetis in June 2019
was a set-back, we have refocused our attention and remain committed to re-partnering Detach® in 2020.

Working off a program of prior business development discussions with more than 10 top multi-national animal health companies,
Anatara continues to evaluate potential licencing partners presence in global and regional markets.

The threat of global antimicrobial resistance continues to grow, with more than 70% of bacteria now having developed some
level of resistance to antibiotics8. Antibiotic use in animal agriculture remains a rapidly evolving issue with growing consumer
demand for antibiotic-free meat. Detach® is naturally derived and provides producers with a safe and effective alternative to
antibiotics which are traditionally used on farms to minimise illness, such as scour.

Given the macro environment, prior discussions with potential partners and the growing need for products like Detach®, we
continue to believe it is well positioned to fulfill an unmet need in the global animal health market.

8 US Food and Drug Administration. Battle of the bugs: fighting antibiotic resistance. Updated May 4, 2016

ANATARA LIFESCIENCES Annual Report 2019Pro-inﬂammatory bacteriaBeneﬁcial bacteriaGaRP regenerated gut> 95%Damaged mucosal layerRegenerated mucosal layerInhibition ofpro-inﬂammatoryproteins> 85%Inhibition of attachment & invasion of pro-inﬂammatory bacteriaDiseased gutGaRP gut repair in actionRebalanced microbiomeCompromised gut integrityRestored gut integrityMicrobial imbalance7

Strengthening the team

There were several changes at the Board and executive level in FY19 as we transitioned to a human health focus. Anatara
announced the appointment of three human health focused directors, with Dr Jane Ryan and Dr David Brookes joining as Non-
Executive Directors and I was pleased to join the Board as Non-Executive Chairman. As a result of these appointments, Paul
Grujic, Iain Ross and Dr Jay Hetzel stepped off the Board of Directors last year and I want to thank them each for their long-
standing commitment and contributions as Directors.

We advised shareholders last year that Anatara planned to appoint a new CEO to lead the Company and bring global
commercialisation experience from the human healthcare sector, and so we were delighted to announce the appointment
of Steven Lydeamore as Chief Executive Officer (CEO) in November 2018. Steve hit the ground running, putting his 26 years
of international biopharmaceutical experience to great use. Steve brings a strong track record of successfully commercialising
products on a global scale and is actively pursuing partnering opportunities for Detach® and GaRP, as well as potential in-
licensing opportunities from the gastrointestinal health sector.

“This is a silent tsunami…… if we don’t act now, antimicrobial
resistance will have a disastrous impact within a generation.”

Dr. Haileyesus Getahun, Director, U.N. Interagency Coordination Group (IACG) on

Antimicrobial Resistance, 2019

Outlook

The progress we have made in executing on our human health development plans, in parallel with the steps we have taken to
deliver on the global value of Detach®, positions us well for the future.

Anatara recently completed pre-clinical in vitro and the first phase of in vivo animal studies. Initial results are impressive,
significantly decreasing experimental colitis (one form of IBD) as quantitated by endoscopy. Results are being further analysed
and will be reported shortly. Anatara anticipates initiation of a human clinical study in IBS in late 2019, with a view to partnering in
the second half of calendar 2020. We will also progress discussions for partnering of our animal health assets. We look forward
to communicating further regarding these important milestones over the coming year.

Finally, on behalf of my fellow directors, I thank shareholders for their continued support. We look forward to seeing those who
can join us at the Anatara AGM in Sydney on 11th November 2019.

Yours sincerely,

Sue MacLeman
Chair

Review of operations and activities

During the year to 30 June 2019, the Company made significant steps towards taking its first human gastrointestinal health
product, GaRP (Gastrointestinal ReProgramming dietary supplement), to market. Expenditure in furthering this effort resulted in
a loss after tax of $2,868,272 for the period (2018: $3,569,016).

Detach®

In October 2018, the Australian Pesticides and Veterinary Medicines Authority (APVMA) registered Detach® for use in piglets
in Australia. We reported in June 2019 that Zoetis gave notice of termination of the global licencing agreement. An advisory
meeting was held with external animal health experts in August 2019 informing our strategy for partnering Detach® in 2020. As
Anatara moves forward, the Board believes that a substantial market opportunity for Detach® exists, with more pressure than
ever on producers to reduce their antibiotic use and find suitable alternatives which minimise illnesses, such as scour, on farms.
Effective, registered alternatives to antibiotics for scour prevention in piglets are limited.

Human health

In October 2018, the Company formed a Product Development Advisory Board with world-leading scientists and clinicians in
gastrointestinal health. The Company reported positive efficacy data from its in vitro Proof of Concept studies of its GaRP dietary
supplement product in reducing inflammation and restoring gut integrity. GaRP is a unique, natural dietary supplement designed
to restore and maintain a healthy human gut and microbiome.

Following these positive results, Anatara has commenced pre-clinical animal studies in IBD and anticipates initiation of a human
clinical study in IBS in late 2019, with a view to partnering in the second half of calendar 2020. The human study is anticipated
to be funded from existing resources.

CEO appointment

In November 2018, Anatara announced the appointment of Steven Lydeamore as Chief Executive Officer. Steve has a deep
understanding of the human health space and brings a strong track record of success in sales and marketing; research and
development, business development, mergers and acquisitions, manufacturing and finance spanning Asia Pacific, Europe, Latin
America and North America and is leading the next phase of Anatara’s growth.

Board renewal

In August 2018, Anatara was pleased to announce the appointment of two human health focused directors, with Sue MacLeman
joining as Non-Executive Chairman and Dr. Jane Ryan as Non-Executive Director. Sue has more than 30 years’ experience as
a pharmaceutical, biotechnology and medical technology executive and brings a unique set of experiences in technology
commercialisation, strategic planning, capital markets and fund raising, M&A and alliance management. Jane too, has over
30 years of international experience in the pharmaceutical and biotechnology industries where she has managed research
and development programs and held key roles in business development and alliance management both in Australia and
internationally.

ANATARA LIFESCIENCES Annual Report 20199

As a result of these appointments, Paul Grujic and Iain Ross stood down from the Board of Directors in August 2018 and
September 2018 respectively, with Dr Jay Hetzel retiring as Chairman and Director in November 2018.

In January 2019, Anatara announced the further appointment of Dr David Brookes as Non-Executive Director and Chair of
the Company’s Audit and Risk Committee. Dr. Brookes has extensive experience in the health and biotechnology industries,
having held Board positions in a number of listed biotechnology companies. Dr. Brookes, MBBS (Adelaide), maintains a role as
a clinician and is a Fellow of the Australian College of Rural and Remote Medicine.

Together, each new Board member brings a strong background and the relevant human health experience necessary to lead the
Company through the next stage of development as it turns its focus to developing a human product pipeline for gastrointestinal
health applications.

Partnering

Anatara participated in the 2019 BIO International Convention (Philadelphia, USA) in June 2019 exploring partnering opportunities
for its GaRP dietary supplement and potential new human health projects.

Investor outreach

Anatara was pleased to continue an active market awareness program during the period, delivering presentations directly to
shareholders and investors in Brisbane, Melbourne (December 2018), Brisbane (February 2019), Adelaide, Brisbane, Melbourne,
Sydney (March 2019), Sydney (April 2019) and Gold Coast, Perth (June 2019). Financial news media interviews were recorded
in April and May 2019.

In July 2019, the external equity research teams at PAC Partners and Pitt Street Research independently updated their analyst
coverage of Anatara. PAC Partners provided a Buy rating and price target of $0.90/share and Pitt Street Research providing a
base case valuation of $1.09/share.

Commercial focus

Looking ahead, Anatara will continue to execute its human health development plans, and in parallel, the Company has prioritised
a strategic review of all options to deliver on the global value of the Company’s animal health assets, including the launch of
Detach® in Australia and global licensing.

Directors’ report

Your directors present their report on the consolidated entity consisting of Anatara Lifesciences Ltd and the entities it controlled
at the end of, or during, the year ended 30 June 2019. Throughout the report, the consolidated entity is referred to as the group.

Directors and company secretary

The following persons held office as directors of Anatara Lifesciences Ltd during the whole of the financial year and up to the
date of this report, except where otherwise stated:

Ms Sue MacLeman, Non-Executive Chair (appointed 1 September 2018)

Dr Tracie Ramsdale, Non-Executive Director

Dr Jane Ryan, Non-Executive Director (appointed 1 September 2018)

Dr David Brookes, Non-Executive Director (appointed 23 January 2019)

Dr Jay Hetzel, Interim Chairman (resigned 12 November 2018)

Mr Iain Ross, Non-Executive Director (resigned 30 September 2018)

Mr Paul Grujic, Non-Executive Director (resigned 31 August 2018)

Effective 7 January 2019, Dr Tracie Ramsdale resigned as Interim CEO changing her role from Executive Director to Non-Executive Director.

The following persons held office as company secretary of Anatara Lifesciences Ltd during the whole of the financial year and
up to the date of this report, except where otherwise stated:

Mr Stephen Denaro

Principal activities

The group is developing non-antibiotic oral solutions for gastrointestinal diseases in animals and humans and continues to
develop and commercialise Detach®, a non-antibiotic therapy that prevents and treats diarrhoea (also known as scour) in piglets.

Dividends - Anatara Lifesciences Ltd

No dividends were declared or paid to members for the year ended 30 June 2019. The directors do not recommend that a
dividend be paid in respect of the financial year.

Review of operations

Information on the operations and financial position of the group and its business strategies and prospects is set out in the
review of operations and activities on pages 8 to 9 of this annual report.

ANATARA LIFESCIENCES Annual Report 201911

Significant changes in the state of affairs

Significant changes in the state of affairs of the group during the financial year were as follows.

On 3 December 2018, the company appointed Mr Steven Lydeamore as Chief Executive Officer (CEO). Interim CEO Dr Tracie
Ramsdale reverted to her previous role as Non-Executive Director. The remaining Non-Executive Directors all retired in the year
ended 30 June 2019, replaced by three new appointments: Ms Sue MacLeman (Chair), Dr Jane Ryan and Dr David Brookes.

These board and management changes coincide with the company’s new business strategy in human health, shifting focus
towards building a pipeline of gastrointestinal health products. Through a targeted development program, the company is
committed to delivering positive outcomes for patients and driving value for shareholders, by developing scientifically innovative
and commercially attractive products for gut health in areas needing improved or new therapeutic options. The company’s lead
program is focused on the development of a dietary supplement to fill a gap in currently available treatment options for sufferers
of gastrointestinal conditions such as irritable bowel syndrome (IBS) and inflammatory bowel disease (IBD), which affects more
than 14% of the Australian population.

On 14 June 2019, the company announced that Zoetis Inc. has given notice of termination of the exclusive worldwide license
of Detach®. The company is currently assessing and closely reviewing all options to unlock the global value of the company’s
animal health assets, including Detach®. Discussions are currently in progress with an Australian contract manufacturer and
with potential veterinary sales, marketing and distribution partners to investigate sale of Detach® in Australia following regulatory
approval from the Australian Pesticides and Veterinary Medicines Authority (APVMA) in October 2018. Prior discussions with
multinational animal health companies are being further evaluated for product licensing opportunities and a review is underway
of the global regulatory environment for Detach® to determine fastest path to market in other jurisdictions. The company
continues to research potential applications for Detach® in areas outside of piglets.

Events since the end of the financial year

No matter or circumstance has arisen since 30 June 2019 that has significantly affected the group’s operations, results or state
of affairs, or may do so in future years.

Likely developments and expected results of
operations

Other than the information disclosed in the review of operations and activities on pages 8 to 9, there are no likely developments
or details on the expected results of operations that the group has not disclosed.

Environmental regulation

The group is not affected by any significant environmental regulation in respect of its operations.

Information on directors

The following information is current as at the date of this report.

Ms Sue MacLeman Non-Executive Chair

Experience and
expertise

Other current
public directorships

Former public
directorships in last
3 years

Special responsibilities

Sue has more than 30 years’ experience as a pharmaceutical, biotechnology and medical
technology executive with senior roles in corporate, medical, commercial and business
development. Sue has served as CEO and Board member of several ASX and NASDAQ listed
companies in the sector and is currently Chair - Anatara Lifesciences (ASX:ANR), Chair -
MTPConnect (Medical Technology and Pharmaceuticals Industry Innovation Growth Centre),
Chair of Novita Healthcare Ltd (ASX:NHL), Non-Executive Director of Palla Pharma Ltd (ASX:PAL),
Non-Executive Director - Oventus Medical Ltd (ASX: OVN), and Non-Executive Director of veski.

Sue is also appointed to a number of academic and government advisory committees. Her
broad commercial experience is underpinned by graduate qualifications in pharmacy and post
graduate qualifications in corporate governance, commercial law, business administration and
marketing.

Novita Healthcare Ltd (ASX: NHL), since 6 September 2018 Oventus
Medical Ltd (ASX: OVN), since 27 November 2015 Palla Pharma
Limited (ASX: PAL), since 27 November 2018

RHS Limited (ASX: RHS), until June 2018

Member of the audit and risk management committee
Member of the remuneration and nominations committee

Dr Tracie Ramsdale Non-Executive Director*

Experience
and expertise

Other current
public directorships

Former public
directorships in last
3 years

Special responsibilities

Tracie holds a PhD in Biochemistry from the University of Queensland, a Master of Pharmacy
from the Victorian College of Pharmacy and a Bachelor of Applied Science (Chemistry) from the
Royal Melbourne Institute of Technology. Following a successful career as a Principal Investigator
and Commercial Manager of the Centre for Drug Design and Development at the University of
Queensland, Tracie co-founded Alchemia Limited, a drug discovery and development company
and served as the company’s CEO for almost 10 years. During this time, she was responsible for
multiple financing transactions and licensing the company’s technology to major international
pharmaceutical and manufacturing partners.

Dr Ramsdale has served on a number of industry and government advisory groups and provided
independent consulting advice to the biotechnology industry, academia and government.

Tracie is a Fellow of the Australian Academy of Technological Sciences and Engineering,
and a member of the Australian Institute of Company Directors.

None

Member of the audit and risk management committee
Member of the remuneration and nominations committee

*Effective 7 January 2019, Dr Tracie Ramsdale resigned as Interim CEO changing her role from Executive Director to Non-
Executive Director.

ANATARA LIFESCIENCES Annual Report 201913

Dr Jane Ryan Non-Executive Director

Experience
and expertise

Jane has over 30 years of international experience in the pharmaceutical and biotechnology
industries where she has held executive roles in management of research and development pro-
grams as well as business development and alliance management. Jane has worked in Australia,
the United States and United Kingdom with companies including Peptech, Roche, Cambridge
Antibody Technology and Biota Holdings. Throughout her career, she has led many successful
fundraising campaigns and licensing initiatives including the awarding of a $230 million US Gov-
ernment contract.

Jane currently chairs the Advisory Board at the ithree Institute at the University of Technology
Sydney (UTS) which studies how microbes grow, live, adapt and survive. She is also currently a
Board Member of unlisted company, Kayban, and Technology Development Investments (TDI),
a part time Vice President Research and Development at Reef Pharmaceuticals and strategic
advisor to Imunexus and Opal Pharmaceuticals. Jane was previously a Board Member of the
Victorian endowment for Science Knowledge and Innovation (veski), Diabetes Victoria, TechIn-
SA, and the Diabetes Vaccine Development Centre. Jane is assisting CSIRO with its GMP protein
manufacture initiative.

Other current pub-
lic directorships

Former public
directorships in last
3 years

Special responsibilities

None

Member of the audit and risk management committee
Chair of the remuneration and nominations committee

Dr David Brookes Non-Executive Director

Experience
and expertise

Dr. Brookes has extensive experience in the health and biotechnology industries, first becoming
involved in the biotechnology sector in the late 1990’s as an analyst. Dr.

Brookes has since held Board positions in numerous ASX listed biotechnology companies, in-
cluding Chairman of genomics solutions company, RHS Ltd, which was acquired by PerkinElmer
Inc (NYSE:PKI $9B biotech company) in June 2018. He has also Chaired and been a member of
a number of risk and audit committees in ASX listed companies. He is currently a Non-Executive
Director of Factor Therapeutics (ASX: FTT) as well as Non-Executive Chairman of the Better
Medical group(unlisted).

Dr. Brookes maintains roles as a clinician and as a biotechnology industry consultant. Dr
Brookes, MBBS (Adelaide), is a Fellow of the Australian College of Rural and Remote Medicine
and a Fellow of the Australian Institute of Company Directors.

Factor Therapeutics Limited (ASX: FTT), since 10 April 2019

AtCor Medical Holdings Limited (ASX: ACG), until 3 April 2018 RHS Limit-
ed (ASX: RHS), until 15 June 2018

Chair of the audit and risk management committee
Member of the remuneration and nominations committee

Other current pub-
lic directorships

Former public
directorships in last
3 years

Special responsibilities

Dr Jay Hetzel Non-Executive Director and Interim Chairman

Experience
and expertise

Dr Hetzel has a background in life sciences research, product development and commercial-
isation. He had a distinguished research career with CSIRO for more than 20 years in animal
genetics and genomics. In 1998 he co-founded Genetic Solutions to commercialise genom-
ics technology in livestock. The company was sold to Pfizer Animal Health in 2008. He has
since worked on commercialising a range of bio-based products in early-stage ventures and is
currently Chairman of UniQuest Pty, Ltd, the commercialisation company of the University of
Queensland. He is a Fellow of the Australian Academy of Technology and Engineering and a
Fellow of the Australian Institute of Company Directors.

Date of resignation

12 November 2018

Special responsibilities

Member of the audit and risk management committee
Member of remuneration and nominations committee

Mr Iain Ross Non-Executive Director

Experience
and expertise

Iain is a biochemistry graduate of London University, and is an experienced businessman
with more than 30 years’ experience largely in the international life sciences and technology
sectors. Following a career with multi-national companies, including Sandoz AG, Fisons plc,
Hoffman La Roche, Celltech plc and Reed International plc, for the past 18 years he has un-
dertaken a number of company turnarounds and start-ups as a board member on behalf of
banks and private equity groups.

Iain’s track record includes multiple financing transactions as well as extensive experience of
divestments and strategic restructurings and more than 20 years in cross-border management
as a Chairman and CEO. He has led and participated in four initial public offerings and has
direct experience of M&A transactions in Europe, USA and Pacific Rim.

Currently he is Chairman of e-Therapeutics plc and RedX Pharma plc, each of which is listed on
the London Stock Exchange. In addition, Iain is Chairman of Biomer Technology Limited, a pri-
vate UK Company, and Chairman and Non-Executive Director of Kazia Therapeutics (ASX: KZA)
which is listed in Australia on the ASX. He is a qualified Chartered Director of the UK Institute of
Directors and former

Vice-Chairman of the Council of Royal Holloway, University of London.

Date of resignation

30 September 2018

Special responsibilities

Chair of the remuneration committee

Chair of the audit and risk management committee
Member of the nominations committee

ANATARA LIFESCIENCES Annual Report 201915

Mr Paul Grujic Non-Executive Director

Experience
and expertise

Paul is a graduate in Applied Biology and in Marketing with more than 30 years’ experience in
the Animal Health industry. His roles have included Sales, Marketing, Business Development
and General Management in the UK, USA and Australia.

He was previously the President of CSL Animal Health with 250 staff and operations in the USA,
Australia and New Zealand. He has also held senior positions with Glaxo, Pitman-Moore, Web-
ster Animal Health, American Cyanamid and Fort Dodge (Wyeth). In addition, he has worked as
an advisor to several Animal Health companies and was a Non-Executive Director of Catapult
Genetics, an Executive Director of Peptech Animal Health and a Director of NOAH the UK Ani-
mal Health trade association.

Paul has wide experience in acquisition, divestment and integration of companies and played a
major role in the sale of CSL Animal Health and Catapult Genetics to Pfizer and Peptech Animal
Health to Virbac, a global Animal Health company.

Date of resignation

31 August 2018

Special responsibilities

Member of the audit and risk management committee
Member of the remuneration and nominations committee

Company secretary

The company secretary is Mr Stephen Denaro, appointed to the position on 24 February 2014. Stephen has extensive experience
in mergers and acquisitions, business valuations, accountancy services, and income tax compliance gained from positions as
Company Secretary and Chief Financial Officer of various public companies and with major chartered accountancy firms in
Australia and the United Kingdom. He provides company secretarial services for a number of start-up technology and ASX listed
and unlisted public companies.

Stephen has a Bachelor of Business in accountancy, Graduate Diploma in Applied Corporate Governance and is a member of
the Institute of Chartered Accountants in Australia and the Australian Institute of Company Directors.

Meetings of directors

The numbers of meetings of the company’s board of directors and of each board committee held during the year ended 30
June 2019, and the numbers of meetings attended by each director were

Ms Sue MacLeman

Dr Tracie Ramsdale

Dr Jane Ryan

Dr David Brookes

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

Full meetings of directors

Meetings of committees

Audit Remuneration

A= Number of meetings attended

B= Number of meetings held during the time the director held office or was a member of the committee during the year

ANATARA LIFESCIENCES Annual Report 201917

Remuneration report (audited)

The directors present the Anatara Lifesciences Ltd 2019 remuneration report, outlining key aspects of our remuneration policy
and framework, and remuneration awarded this year.

The report is structured as follows:

A. Key management personnel (KMP) covered in this report

B. Remuneration policy and link to performance

C. Elements of remuneration
D. Link between remuneration and performance
E. Remuneration expenses

F. Contractual arrangements with executive KMPs
G. Non-executive director arrangements
H. Additional statutory information

A. Key management personnel covered in this report

Ms Sue MacLeman, Non-Executive Chair (appointed 1 September 2018)

Dr Tracie Ramsdale, Non-Executive Director*

Dr Jane Ryan, Non-Executive Director (appointed 1 September 2018)

Dr David Brookes, Non-Executive Director (appointed 23 January 2019)

Dr Melvyn Bridges, Executive Chairman and Chief Executive Officer (resigned 17 May 2018)

Dr Jay Hetzel, Non-Executive Director and Interim Chairman (resigned 12 November 2018)

Mr Paul Grujic, Non-Executive Director (resigned 31 August 2018)

Mr Iain Ross, Non-Executive Director (resigned 30 September 2018)

Other key management personnel

Mr Steven Lydeamore, Chief Executive Officer (appointed 3 December 2018)

Dr Michael West, Chief Operating Officer

Dr Tracey Mynott, Chief Scientific Officer and R&D Director (resigned 24 August 2018)

Dr Tracey Brown, Chief Development Officer

*Effective 7 January 2019, Dr Tracie Ramsdale resigned as Interim CEO changing her role from Executive Director to Non-Executive Director.

B. Remuneration policy and link to performance

Our remuneration and nominations committee is made up of independent non-executive directors. The committee
reviews and determines our remuneration policy and structure annually to ensure it remains aligned to business needs,
and meets our remuneration principles. In particular, the board aims to ensure that remuneration practices are:

• competitive and reasonable, enabling the company to attract and retain key talent

• aligned to the company’s strategic and business objectives and the creation of shareholder value

•

transparent and easily understood, and

• acceptable to shareholders.

Element

Purpose

Performance metrics

Potential value

Fixed
remuneration
(FR)

Provide competitive
market remuneration

Nil

STI

LTI

Reward for in-year
performance and
retention

Alignment to long-
term shareholder
value

KPI achievement,
determined by
remuneration and
nominations committee

Positioned at the market rate

CEO: 40% of FR

COO: 30% of FR

CDO: 30% of FR

CEO: 600,000 unlisted 5-year
options at $0.736 exercise
price

COO: 210,000 unlisted
5-year options at $1.70
exercise price

CDO: 210,000 unlisted 5-year
options at $1.70 exercise price

Assessing performance

The remuneration and nominations committee is responsible for assessing performance against KPIs and determining the
STI and LTI to be paid. To assist in this assessment, the committee receives data from independently run surveys.

Performance is monitored on an informal basis throughout the year and a formal evaluation is performed annually.

Securities trading policy

Anatara Lifesciences Ltd’s securities trading policy applies to all directors and executives, see https://anataralifesciences.
com/investors/corporate-governance/. It only permits the purchase or sale of company securities during certain periods.

C. Elements of remuneration

(i) Fixed annual remuneration (FR)

Key management personnel may receive their fixed remuneration as cash, or cash with non-monetary benefits such as
health insurance and car allowances. FR is reviewed annually, or on promotion. It is benchmarked against market data for
comparable roles in companies in a similar industry and with similar market capitalisation. The committee aims to position
executives at or near the median, with flexibility to take into account capability, experience, value to the organisation and
performance of the individual.

(ii) Short-term incentives

All executives are entitled to participate in a short-term incentive scheme which provides for executive employees to
receive a combination of short-term incentive (STI) as part of their total remuneration if they achieve certain performance
indicators as set by the board. The STI can be paid either by cash, or a combination of cash and the issue of equity in the
company, at the determination of the remuneration and nominations committee and board.

ANATARA LIFESCIENCES Annual Report 201919

The company’s CEO, COO and CDO are entitled to short-term incentives in the form of cash bonus up to 40%, 30% and
30% of FR, respectively, against agreed various key performance indicators (KPIs), including target EBITDA, appreciation in
share price value, retention of key talent, and achievement of major project milestones.

On an annual basis, KPIs are reviewed and agreed in advance of each financial year and include financial and non-financial
company and individual performance goals that relate to:

• Operational management

•

Investor relations and shareholder value creation

• R&D activities

• Product development and commercialisation

(iii) Long-term incentives

Executives may also be provided with longer-term incentives through the company’s ‘executive option plan’ (EOP), that
was approved by shareholders at the annual general meeting held on 13 November 2017. The aim of the EOP is to
allow executives to participate in, and benefit from, the growth of the company as a result of their efforts and to assist
in motivating and retaining those key employees over the long-term. Continued service is the condition attached to the
vesting of the options. The board at its discretion determines the total number of options granted to each executive.

D. Link between remuneration and performance

Statutory performance indicators

We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder
wealth. The table below shows measures of the group’s financial performance over the last five years as required by the
Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the variable
amounts of remuneration to be awarded to KMPs. As a consequence, there may not always be a direct correlation
between the statutory key performance measures and the variable remuneration awarded.

2019

2018

2017

2016

2015

Loss for the year attributable to owners ($)

2,868,272

3,569,016

1,705,002

723,934

1,795,228

Basic loss per share (cents)

Share price at year end ($)

5.80

0.255

7.22

0.635

3.5

1.00

1.4

1.26

5.3

1.00

The company’s earnings have remained negative since inception due to the nature of the business. Shareholder wealth
reflects this speculative and volatile market sector. No dividends have ever been declared by Anatara Lifesciences Ltd. The
company continues to focus on revenue growth with the objective of achieving key commercial milestones in order to
add further shareholder value.

E. Remuneration expenses

The following tables show details of the remuneration expense recognised for the group’s key management personnel
for the current and previous financial year measured in accordance with the requirements of the accounting standards.

The following table shows details of remuneration expenses of each director or other key management personnel
recognised for the year ended 30 June 2019.

2019

Short-term benefits

Post-
employment
benefits

Cash salary
and fees

Cash
bonus

Other*

Superannu-
ation

Long
term
benefits

Long
service
leave*

Share-based payments

Options

Total

Termi-
nation
benefits

Non-executive directors

Ms Sue MacLeman

115,769

Dr Tracie Ramsdale

232,407

46,073

16,579

Dr Jane Ryan

Dr David Brookes

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

Other KMP

62,019

32,347

37,692

21,900

12,114

10,998

23,885

5,892

3,073

3,581

1,151

Mr Steven Lydeamore

257,190

67,853

13,537

21,649

259

126,767

318,944

67,911

35,420

41,273

21,900

13,265

75,216

435,704

18,201

298,063

Dr Michael West

Dr Tracey Mynott

250,000

38,463

(42)

1,032

27,312

2,592

12,284

125,000

176,779

Dr Tracey Brown

250,000

28,500

8,612

29,094

2,504

18,201

336,911

Total KMP compensation

1,309,901

142,426

39,718

138,919

5,355

125,000

111,618

1,872,937

*The amount disclosed in this column represent the movements in the associated provisions.

Notes

• Cash bonus includes estimation of the bonus for the current year and any adjustments to the bonus for prior years.

ANATARA LIFESCIENCES Annual Report 201921

The following table shows details of remuneration expenses of each director or other key management personnel
recognised for the year ended 30 June 2018.

2018

Short-term benefits

Post-
employment
benefits

Cash salary
and fees

Cash
bonus

Other*

Superannu-
ation

Long
term
benefits

Long
service
leave*

Share-based payments

Termi-
nation
benefits

Options

Total

Non-executive directors

Dr Tracie Ramsdale

156,568

19,615

6,029

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

Executive directors

84,170

82,581

70,000

Dr Melvyn Bridges

260,932

Other KMP

11,610

3,879

6,650

19,256

Dr Michael West

250,000

132,500

14,931

29,212

1,255

Dr Tracey Mynott

250,000

12,500

27,251

24,937

10,030

Dr Tracey Brown

250,000

132,500

17,525

29,212

1,171

581

194,462

88,630

83,162

77,231

714

280,902

43,164

471,062

17,318

342,036

43,164

473,572

Total KMP compensation

1,404,251

297,115

65,736

124,756

12,515

106,684

2,011,057

Notes

• Cash bonus includes estimation of the bonus for the current year and any adjustments to the bonus for prior years.

F. Contractual arrangements with executive KMPs

Name:
Position:
Contract duration:
Notice period:

Dr Tracie Ramsdale
Interim Chief Executive Officer
17 May 2018 - 7 January 2019
3 months by either party

Fixed remuneration:

$340,000 per annum, plus 9.5% superannuation

Name:
Position:
Contract duration:
Notice period:
Fixed remuneration:

Mr Steven Lydeamore
Chief Executive Officer
Unspecified
6 months by either party
$395,000 per annum, plus 9.5% superannuation

Dr Michael West
Chief Operating Officer
Unspecified
3 months by either party
$250,000 per annum, plus 9.5% superannuation

Name:
Position:
Contract duration:
Notice period:
Fixed remuneration:

Dr Tracey Brown
Chief Development Officer
Unspecified
3 months by either party
$250,000 per annum, plus 9.5% superannuation

G. Non-executive director arrangements

Non-executive directors receive a board fee and fees for chairing but not participating on board committees, see table
below. They do not receive performance-based pay or retirement allowances. The fees are exclusive of superannuation.
The chair receives double the base fee of other non-executive directors, reflective of the additional demands and
responsibilities of this role.

Fees are reviewed annually by the board taking into account comparable roles and market data provided by the board’s
independent remuneration adviser.

The maximum annual aggregate directors’ fee pool limit is $500,000, adopted on initial public offering of Anatara
Lifesciences Ltd on 14 October 2014.

Base fees

Chair

Other non-executive directors

Additional fees
Audit and risk management committee-chair
Audit and risk management committee-member
Remuneration and nominations committee-chair
Remuneration and nominations committee-member

$140,000

$70,000

$5,000
$0
$5,000
$0

ANATARA LIFESCIENCES Annual Report 201923

H. Additional statutory information

(i) Relative proportions of fixed vs variable remuneration expense

The following table shows the relative proportions of remuneration that are linked to performance and those that are fixed,
based on the amounts disclosed as statutory remuneration expense on page 20 above:

Name

Fixed remuneration

At risk- STI

At risk -LTI

2019

2018

2019

2018

2019

2018

Non-executive director

Ms Sue MacLeman

Dr Tracie Ramsdale

Dr Jane Ryan

Dr David Brookes

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

Executive directors

Dr Melvyn Bridges

Other KMP

Mr Steven Lydeamore

Dr Michael West

Dr Tracey Mynott

Dr Tracey Brown

100

(ii) Terms and conditions of the share-based payment arrangements Options

The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period are
as follows:

Grant date

Vesting and
exercise date

Expiry date

Exercise price ($)

Value per option at
grant date ($)

Vested (%)

2016-09-23

2019-04-10

2019-09-23

2021-09-23

2019-02-18

2024-02-17

2020-02-18

2024-02-17

2021-02-18

2024-02-17

1.700

0.736

0.5796

0.2731

0.0%

100.0%

0.0%

For detailed disclosures please refer to note 17 on page 50.

(iii) Reconciliation of options and ordinary shares held by KMP

Balance at
start of the
period1

Granted as
remuneration

Exercised

Other
changes2

Balance at
end of the
period3

Vested and
exercisable

Option holdings

2019

Options

Ms Sue MacLeman

Dr Tracie Ramsdale

Dr Jane Ryan

Dr David Brookes

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

65,000

Mr Steven Lydeamore

600,000

Dr Michael West

Dr Tracey Mynott

Dr Tracey Brown

210,000

500,000

210,000

1,180,000

600,000

Notes

600,000

200,000

(65,000)

210,000

(500,000)

210,000

(760,000)

1,020,000

200,000

1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the balance is
as at the date they became KMP.

2. Other changes incorporates changes resulting from the expiration/forfeiture of options.

3. For former KMP, the balance is as at the date they cease being KMP.

ANATARA LIFESCIENCES Annual Report 201925

Balance at the
start of the
period1

Granted as
remuneration

Received on
exercise of
options

Other changes2

Balance at
the end of the
period3

12,477

50,000

12,477

45,614

50,000

486,109

1,427,942

71,219

50,000

4,391,337

112,477

6,534,698

Share holdings

2019

Ordinary shares

Ms Sue
MacLeman

Dr Tracie
Ramsdale

Dr Jane Ryan

Dr David Brookes

Dr Jay Hetzel

Mr Iain Ross

Mr Paul Grujic

Mr Steven
Lydeamore

Dr Michael West

45,614

486,109

1,427,942

71,219

Dr Tracey Mynott

4,391,337

Dr Tracey Brown

6,422,221

Notes

1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the balance is
as at the date they became KMP.

2. Other changes incorporates changes resulting from the acquisition of shares.

3. For former KMP, the balance is as at the date they cease being KMP.

(iv) Other transactions with key management personnel

Aggregate amounts of other transactions with key management personnel of Anatara Lifesciences Ltd:

Amounts recognised as expense

Consultancy fees paid to Dr Tracie Ramsdale

Consultancy fees paid to Mr lain Ross

2019
$

20,000

2018
$

129,923

20,000

149,923

(v) Voting of shareholders at last year’s annual general meeting

Anatara Lifesciences Ltd received more than 75 percent of favourable votes on its remuneration report for the 2018
financial year. The company did not receive any specific feedback at the 2018 annual general meeting or throughout the
year on its remuneration practices.

[This concludes the remuneration report, which has been audited]

Shares under option

A. Unissued ordinary shares

Unissued ordinary shares of Anatara Lifesciences Ltd under option at the date of this report are as follows:

Date options granted

2015-12-14

2016-09-23

2017-11-28

2018-09-10

2019-04-10

Total

Expiry date

2020-12-14

2021-09-23

2022-11-17

2020-12-14

2024-02-17

Issue price of shares
($)

Number under
option

1.450

1.700

2.270

1.450

0.736

765,000

420,000

36,000

750,000

600,000

2,571,000

No option holder has any right under the options to participate in any other share issue of the company or any other entity.

B. Shares issued on the exercise of options

No ordinary shares of Anatara Lifesciences Ltd were issued during the year ended 30 June 2019 on the exercise of options
granted.

Insurance of officers and indemnities

A. Insurance of officers

During the financial year, Anatara Lifesciences Ltd paid a premium of $44,788 to insure the directors and secretaries of
the company and its Australian-based controlled entities, and the general managers of each of the divisions of the group.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the group, and any other payments arising from liabilities
incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct
involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to
gain advantage for themselves or someone else or to cause detriment to the company. It is not possible to apportion the
premium between amounts relating to the insurance against legal costs and those relating to other liabilities.

ANATARA LIFESCIENCES Annual Report 201927

B. Indemnity of auditors

Anatara Lifesciences Ltd has agreed to indemnify their auditors, Grant Thornton Audit Pty Ltd, to the extent permitted by
law, against any claim by a third party arising from Anatara Lifesciences Ltd’s breach of their agreement. The indemnity
stipulates that Anatara Lifesciences Ltd will meet the full amount of any such liabilities including a reasonable amount of
legal costs.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on
behalf of the company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the
Corporations Act 2001.

Non-audit services

The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the company and/or the group are important.

Details of the amounts paid or payable to the auditor (Grant Thornton Audit Pty Ltd) for audit and non-audit services provided
during the year are set out below.

The board of directors has considered the position and, in accordance with advice received from the audit committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity

of the auditor

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics

for Professional Accountants.

During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its
related practices and non-related audit firms:

Taxation services

Grant Thornton Audit Pty Ltd and its related entities and other Grant Thornton network firms:

Taxation services

Grant Thornton Audit Pty Ltd and its related entities and other Grant Thornton network firms:

Tax compliance services

Total remuneration for taxation services

Total remuneration for non-audit services

2019
$

2018
$

24,000

25,650

24,000

25,650

24,000

25,650

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 30.

Rounding of amounts

The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in the
directors’ report. Amounts in the directors’ report have been rounded off in accordance with the instrument to the nearest dollar.

This report is made in accordance with a resolution of directors.

Ms Sue MacLeman
Non-Executive Chair

Melbourne
27 August 2019

ANATARA LIFESCIENCES Annual Report 201929

Corporate governance statement

Anatara Lifesciences Ltd and the board are committed to achieving and demonstrating the highest standards of corporate
governance. Anatara Lifesciences Ltd has reviewed its corporate governance practices against the Corporate Governance
Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.

The 2019 corporate governance statement is dated as at 30 June 2019 and reflects the corporate governance practices in place
throughout the 2019 financial year. The 2019 corporate governance statement was approved by the board on 27 August 2019.
A description of the group’s current corporate governance practices is set out in the group’s corporate governance statement
which can be viewed at https://anataralifesciences.com/investors/corporate-governance/.

Level 22, Tower 5
Collins Square
727 Collins Street
Melbourne VIC 3008

GPO Box 4736
Melbourne VIC 3001

T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Directors of Anatara Lifesciences Ltd

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Anatara
Lifesciences Ltd for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.

Grant Thornton Audit Pty Ltd
Chartered Accountants

T S Jackman
Partner – Audit & Assurance

Melbourne, 27 August 2019

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

ANATARA LIFESCIENCES Annual Report 2019

Financial statements

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 (direct method)

Notes to the financial statements

Directors’ declaration

These financial statements are consolidated financial statements for the group consisting of Anatara Lifesciences Ltd and its
subsidiaries. A list of major subsidiaries is included in note 12.

The financial statements are presented in the Australian currency.

Anatara Lifesciences Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business is:

433 Logan Road, Brisbane QLD 4120

The financial statements were authorised for issue by the directors on 27 August 2019. The directors have the power to amend
and reissue the financial statements.

Consolidated statement of profit or loss and
other comprehensive income

For the year ended 30 June 2019

Revenue from contracts with customers

Gross profit

Other income

General and administrative expenses

Research and development expenses

Operating loss

Finance income

Loss before income tax

Income tax expense

Loss for the period

Other comprehensive income

Items that may be reclassified to profit or loss:

Other comprehensive income for the period, net of tax

Total comprehensive loss for the period

Total comprehensive income for the period is
attributable to:

Owners of Anatara Lifesciences Ltd

Loss per share for loss attributable to the ordinary
equity holders of the company:

Notes

3(a)

3(b)

2019
$

663,405

877,573

2018
$

6,467

1,338,156

(3,775,495)

(4,348,060)

(776,256)

(785,931)

(3,010,773)

(3,789,368)

142,501

220,352

(2,868,272)

(3,569,016)

(2,868,272)

(3,569,016)

(2,868,272)

(3,569,016)

(2,868,272)

(3,569,016)

Cents

Basic and diluted loss per share

(5.80)

(7.22)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.

ANATARA LIFESCIENCES Annual Report 2019Consolidated statement of financial position

As at 30 June 2019

ASSETS

Current assets

Cash and cash equivalents

Trade and other receivables

Term Deposits

Other current assets

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Employee benefit obligations

Contract liability

Total current liabilities

Non-current liabilities

Contract liability

Employee benefit obligations

Total non-current liabilities

Total liabilities

Net assets

EQUITY

Share capital

Other reserves

Accumulated losses

Total equity

Notes

5(a)

5(b)

5(c)

6(a)

6(b)

6(a)

7(a)

7(b)

2019
$

2018
$

1,360,077

895,986

4,050,000

49,021

6,355,084

20,196

7,046

27,242

1,447,732

2,040,244

6,200,000

74,459

9,762,435

42,924

7,046

49,970

6,382,326

9,812,405

364,551

88,269

452,820

13,939

466,759

5,915,567

16,941,392

499,070

(11,524,895)

5,915,567

419,513

120,604

46,281

586,398

617,124

21,433

638,557

1,224,955

8,587,450

16,941,392

583,749

(8,937,691)

8,587,450

The above consolidated statement of financial position should be read in conjunction with the accompanying

Consolidated statement of changes in equity

For the year ended 30 June 2019

Attributable to owners of Anatara Lifesciences Ltd

Notes

Share capital
$

Other reserves
$

Accumulated
losses
$

Total equity
$

16,941,392

448,422

(5,368,675)

12,021,139

(3,569,016)

135,327

Balance at 1 July 2017

Loss for the period

Total comprehensive loss for
the period

Transactions with owners in
their capacity as owners:

Options issued/expensed

7(b)

Balance at 30 June 2018

16,941,392

583,749

(8,937,691)

8,587,450

Balance at 1 July 2018

Loss for the period

Total comprehensive loss for
the period

Transactions with owners in
their capacity as owners:

Options issued/expensed

Options forteited/lapsed

7(b)

Attributable to owners of Anatara Lifesciences Ltd

Notes

Share capital
$

Other reserves
$

Accumulated
losses
$

Total equity
$

16,941,392

583,749

(8,937,691)

8,587,450

(2,868,272)

196,389

(281,068)

(84,679)

196,389

281,068

196,389

Balance at 30 June 2019

16,941,392

499,070

(11,524,895)

5,915,567

ANATARA LIFESCIENCES Annual Report 201935

Consolidated statement of cash flows

For the year ended 30 June 2019

Notes

2019
$

2018
$

Cash flows from operating activities

Receipts from customers (inclusive of GST)

Payments to suppliers and employees (inclusive of GST)

Research and development tax incentive and other
grants received

Net cash (outflow) from operating activities

8(a)

Cash flows from investing activities

669,872

(4,397,727)

1,301,538

(2,426,317)

(4,721,011)

1,405,865

(3,315,146)

Payments for investment in term deposits

(7,050,000)

(4,200,000)

Payments for property, plant and equipment

Proceeds from withdrawal from term deposits

Interest received

Net cash inflow (outflow) from investing activities

Net cash inflow (outflow) from financing activities

Net (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the
financial year

Cash and cash equivalents at end of year

5(a)

9,200,000

188,662

2,338,662

(87,655)

1,447,732

1,360,077

(23,170)

219,179

(4,003,991)

(7,319,137)

8,766,869

1,447,732

Contents of the notes to the financial
statements

Segment information

2. Revenue from contract with customers

3. Other income and expense items

Income tax expense

Financial assets and financial liabilities

6. Non-financial assets and liabilities

Equity

8. Cash flow information

9. Critical estimates, judgements and errors

10. Financial risk management

11. Capital management

12.

Interests in other entities

13. Contingent liabilities

14. Commitments

15. Events occurring after the reporting period

16. Related party transactions

17. Share-based payments

18. Remuneration of auditors

19. Loss per share

20. Parent entity financial information

21. Summary of significant accounting policies

22. Changes in accounting policies

ANATARA LIFESCIENCES Annual Report 2019

1. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Chief Executive Officer of Anatara Lifesciences Ltd. The group has identified one
reportable segment; that is, the research, development of oral solutions for gastrointestinal diseases and the commercialisation
of the Detach® diarrhoea treatment for piglets. The segment details are therefore fully reflected in the body of the financial
statements.

2. Revenue from contract with customers

A. Disaggregation of revenue from contracts with customers

The group derives revenue from the licensing of its intellectual property over time:

Licensing fees

B. Accounting policies

(i) Licensing revenue

2019
$

663,405

2018
$

6,467

The group signed a license, development and commercialisation agreement with Zoetis Services LLC (Zoetis) on 10 May
2018 for the group’s Detach® product. The first milestone payment of US$2,500,000 was payable upfront at the effective
date of the agreement signed 10 May 2018 (funds were received in July 2018). This comprised consideration for the rights
granted, subject to the terms and conditions of the agreement. Of this amount, US$2,000,000 offset the previously paid
option and evaluation agreement entered into in 2016. The balance of US$500,000 (equivalent to A$669,872) was be
recognised as revenue over time to 26 October 2032 to reflect the license access rights transferred to Zoetis over the term
of the license agreement. The unearned revenue was recognised as deferred revenue as disclosed in note6(b).

On 14 June 2019, the group announced Zoetis had given notice of termination of the Detach® licensing agreement. Under
the terms of the original agreement, the first milestone payment is non-refundable. Accordingly, the $663,405 deferred
revenue amount recognised at 30 June 2018 was recognised as revenue in the year ended 30 June 2019.

3. Other income and expense items

A. Other income

Research and development tax incentive

Other grants

2019
$

840,932

36,641

877,573

2018
$

1,162,620

175,536

1,338,156

(i) Fair value of R&D tax incentive

The group’s research and development (R&D) activities are eligible under an Australian government tax incentive for
eligible expenditure. Management has assessed these activities and expenditure to determine which are likely to be eligible
under the incentive scheme. Amounts are recognised when it has been established that the conditions of the tax incentive
have been met and that the expected amount can be reliably measured. For the year ended 30 June 2019, the group has
included an item in other income of $840,932 (2018: $1,162,620) to recognise income over the period necessary to match
the grant on a systematic basis with the costs that they are intended to compensate.

(ii) Fair value of other grants

The group’s other grant income is recognised when compliance with the conditions attached to the grant have been
determined and the group has ascertained the grant will be received. For the year ended 30 June 2019, the group has
included an item in other income of $36,641 (2018: $175,536) to recognise income over the period necessary to match
the grant on a systematic basis with the costs that they are intended to compensate.

B. Breakdown of expenses by nature

General and administrative expenses

Accounting and audit

Consulting

Depreciation

Employee benefits

Insurance

Investor relations

Legal

Listing and share registry

Occupancy

Share-based payments

Superannuation

Travel and entertainment

Other

Notes

17(b)

2019
$

247,998

233,469

22,728

2018
$

238,815

219,000

21,177

2,044,647

2,683,854

59,046

280,739

92,205

69,607

25,215

196,389

170,281

210,178

122,993

35,198

158,439

102,233

75,531

68,459

135,327

196,971

291,108

121,948

3,775,495

4,348,060

ANATARA LIFESCIENCES Annual Report 201939

4. Income tax expense

A. Numerical reconciliation of income tax expense to prima facie tax

payable

Loss from continuing operations before income tax expense

Tax at the Australian tax rate of 27.5% (2018: 27.5%)

Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:

R&D tax incentive

Accounting expenditure subject to R&D tax incentive

Blackhole expenditure (Section 40-880, ITAA 1997)

Deferred revenue

Share-based payments

Other items

Subtotal

Tax losses and other timing differences for which no deferred tax
asset is recognised

Income tax expense

B. Tax losses

Unused tax losses for which no deferred tax asset has been
recognised

Potential tax benefit @ 27.5%

2019
$

(2,868,272)

(788,775)

2018
Represented $

(3,569,016)

(981,479)

(231,256)

531,624

(73,819)

(182,436)

54,007

(18,354)

(709,009)

709,009

(319,721)

789,787

(86,827)

182,436

37,215

94,155

(284,434)

284,434

2019
$

2018
Represented $

6,168,136

1,696,237

3,589,914

987,226

The numerical reconciliation of income tax expense to prima facie tax payable and unused tax losses for the year ended
30 June 2018 have been represented to reflect the income tax return lodged for the same period.

5. Financial assets and financial liabilities

A. Cash and cash equivalents

Current assets

Cash at bank and in hand

Deposits at call

2019
$

1,360,077

2018
$

947,732

500,000

1,447,732

(i) Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the consolidated statement of cash flows at the end of the
financial year as follows:

Balances as above

Balances per statement of cash flows

(ii) Classification as cash equivalents

2019
$

1,360,077

2018
$

1,447,732

Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition
and are repayable with 24 hours notice with no loss of interest. See note 21(j) for the group’s other accounting policies on
cash and cash equivalents.

(iii) Risk exposure

The group’s exposure to interest rate risk is discussed in note 10. The maximum exposure to credit risk at the end of the
reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

ANATARA LIFESCIENCES Annual Report 201941

B. Trade and other receivables

2019

Current
$

Non-current
$

Trade receivables

Accrued receivables (ii)

848,659

Other receivables

Total trade and other
receivables

47,327

895,986

Total
$

Current
$

669,872

848,659

1,318,785

47,327

51,587

895,986

1,370,372

895,986

2,040,244

2018

Non-current
$

Total
$

669,872

1,318,785

51,587

1,370,372

2,040,244

(i) Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as current.

Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant
financing components, when they are recognised at fair value. The group holds the trade receivables with the objective
to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective
interest method.

(ii) Accrued receivables

Accrued receivables include $800,481 from the Australian Taxation Office in relation to the R&D tax incentive (2018:
$1,208,848) and $48,178 interest income from deposits at call with terms greater than three months (2018: $94,339).

(iii) Fair value of trade and other receivables

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair
value.

Trade payables

Accrued expenses

Other payables

2019

2018

Current
$

Non-current
$

Total
$

Current
$

Non-current
$

116,764

214,617

33,170

364,551

116,764

80,661

214,617

290,000

33,170

48,852

364,551

419,513

Total
$

80,661

290,000

48,852

419,513

Trade payables are unsecured and are usually paid within 30 days of recognition.

The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their short-
term nature.

6. Non-financial assets and liabilities

A. Employee benefit obligations

2019

2018

Current
$

Non-current
$

Total
$

Current
$

Non-current
$

Total
$

Leave obligations (i)

88,269

13,939

102,208

104,484

21,433

125,917

Superannuation payables

16,120

Total employee benefit
obligations

(i) Leave obligations

88,269

13,939

102,208

120,604

21,433

142,037

The leave obligations cover the group’s liabilities for long service leave and annual leave which are classified as either other
long-term benefits or short-term benefits, as explained in note 21(p).

The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long service
leave where employees have completed the required period of service and also for those employees that are entitled to
pro-rata payments in certain circumstances. The entire amount of the provision of $88,269 (2018: $104,484) is presented
as current, since the group does not have an unconditional right to defer settlement for any of these obligations. However,
based on past experience, the group does not expect all employees to take the full amount of accrued leave or require
payment within the next 12 months.

B. Contract liability

Deferred revenue

2019

Current
$

Non-current
$

Total
$

Current
$

46,281

2018

Non-current
$

Total
$

617,124

663,405

617,124

663,405

ANATARA LIFESCIENCES Annual Report 201943

7. Equity

A. Share capital

Notes

7(a)(ii)

Ordinary shares

Fully paid

2019
Shares

2018
Shares

2019
$

2018
$

49,413,236

16,941,392

7(a)(i)

49,413,236

16,941,392

(i) Movements in ordinary shares:

There has been no movement in ordinary shares in the year ended 30 June 2019 (2018: nil).

(ii) Ordinary shares

Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in
proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and
upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

(iii) Options

Information relating to options, including details of options issued, exercised and lapsed during the financial year and
options outstanding at the end of the reporting period is set out in notes 7(b)(ii) and 17.

B. Other reserves

The consolidated statement of financial position line item ‘other reserves’ comprises the ‘share-based payments reserve’.

(i) Nature and purpose of other reserves

Share-based payments

The share-based payment reserve records items recognised as expenses on valuation of share options issued to key
management personnel, other employees and eligible contractors.

Details

Balance at 1 July 2017

Issue of EOP unlisted options at $2.27 (2017-11-28)

Amortisation of share-based payments for options issued in prior
periods

Balance 30 June 2018

Forfeiture of EOP unlisted options at $1.45 (2018-08-24)

Issue of unlisted options at $1.45 in lieu of payment for services (2018-
09-10)

Lapse of Pork CRC unlisted options at $0.50 (2018-09-18)

Issue of Pork CRC unlisted options at $0.50 (2018-10-29)

Lapse of EOP unlisted options at $0.50 (2018-11-11)

Issue of EOP unlisted options at $0.736 (2019-04-10)

Lapse of Pork CRC unlisted options at $0.50 (2019-04-29)

Amortisation of share-based payments for options issued in prior
periods

Balance 30 June 2019

Number of options

2,400,000

36,000

2,436,000

(500,000)

750,000

(375,000)

375,000

(340,000)

600,000

(375,000)

2,571,000

Total
$

448,422

11,253

124,074

583,749

(85,616)

31,557

(115,710)

36,703

(48,297)

75,216

(36,703)

58,171

499,070

8. Cash flow information

A. Reconciliation of profit/(loss) after income tax to net cash inflow

from operating activities

Notes

3(b)

17(b)

Loss for the period

Adjustments for

Depreciation and amortisation

Finance income

Share-based payments

Change in operating assets and liabilities:

Movement in trade and other receivables

Movement in other operating assets

Movement in trade and other payables

Movement in other operating liabilities

Net cash inflow (outflow) from operating activities

2019
$

2018
$

(2,868,272)

(3,569,016)

22,728

(142,501)

196,389

21,177

(219,178)

135,327

1,098,097

(615,393)

25,438

(54,962)

(703,234)

(2,426,317)

2,421

885,123

44,393

(3,315,146)

ANATARA LIFESCIENCES Annual Report 201945

B. Non-cash investing and financing activities

Non-cash investing and financing activities disclosed in other notes are:

• options issued for no cash consideration - note 17.

9. Critical estimates, judgements and errors

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal
the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which
are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information
about each of these estimates and judgements is included in other notes together with information about the basis of
calculation for each affected line item in the financial statements. In addition, this note also explains where there have
been actual adjustments this year as a result of an error and of changes to previous estimates.

A. Significant estimates and judgements

The areas involving significant estimates or judgements are:

• Estimation of R&D tax incentive income accrual - note 3 (a) (i)

• Estimation of other grants income accrual - note 3 (a) (ii)

• Estimation of employee benefit obligations - note 6 (a) (i)

• Estimation of share-based payments - note 17 (a) (i)

Estimates and judgements are continually evaluated. They are based on historical experience and other factors,including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.

10. Financial risk management

This note explains the group’s exposure to financial risks and how these risks could affect the group’s future financial
performance.

The group’s risk management is predominantly controlled by the board. The board monitors the group’s financial risk
management policies and exposures and approves substantial financial transactions. It also reviews the effectiveness of
internal controls relating to market risk, credit risk and liquidity risk.

A. Market risk

(i) Foreign exchange risk

The majority of the company’s operations are denominated in Australian dollars, with the few exceptions on services
acquired from overseas suppliers but at a marginally insignificant amount and frequency. Therefore, management has
concluded that market risk from foreign exchange fluctuation is not material.

(ii) Cash flow and fair value interest rate risk

The group’s main interest rate risk arises from cash and cash equivalents and other financial assets at amortised cost
(deposits at call) held, which expose the group to cash flow interest rate risk. During 2019 and 2018, the group’s cash and
cash equivalents and deposits at call at variable rates were denominated in Australian dollars.

The group’s exposure to interest rate risk at the end of the reporting period, expressed in Australian dollars, was as follows:

Financial instruments with cash flow risk

Cash and cash equivalents

Financial assets at amortised cost

Sensitivity

2019
$

1,360,077

4,050,000

5,410,077

2018
$

1,447,732

6,200,000

7,647,732

Profit or loss is sensitive to higher/lower interest income from cash and cash equivalents as a result of changes in interest
rates.

Impact on loss for the period

Impact on other components of equity

2019
$

2018
$

10,820

16,060

2019
$

2018
$

Interest rates - change by 20 basis
points (2018: 21 basis points)*

* Holding all other variables constant

The use of 0.20 percent (2018: 0.21 percent) was determined based on analysis of the Reserve Bank of Australia cash rate
change, on an absolute value basis, at 30 June 2019 and the previous four balance dates. The average cash rate at these
balance dates was 1.60 percent (2018: 1.85 percent). The average change to the cash rate between balance dates was
12.69 percent (2018: 11.18 percent). By multiplying these two values, the interest rate risk was derived.

Profit is less sensitive to movements in interest rates in 2019 than 2018 due to decreased cash and cash equivalents and
deposits at call. The group’s exposure to other classes of financial instruments with cash flow risk is not material.

B. Credit risk

Exposure to credit risk relating to financial assets arises from the potential non-performance by counter parties of contract
obligations that could lead to a financial loss to the group.

(i) Risk management

The company manages credit risk and the losses which could arise from default by ensuring that financial assets such as
cash at bank and deposits at call are held with reputable organisations.

(ii) Impairment of financial assets

While cash and cash equivalents and term deposits are subject to the impairment requirements of AASB 9, the identified
impairment loss was immaterial.

ANATARA LIFESCIENCES Annual Report 2019

C. Liquidity risk

Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities. The group manages this risk through the following mechanisms:

• preparing forward looking cash flow analyses in relation to its operating, investing and financing activities;

• obtaining funding from a variety of sources;

• maintaining a reputable credit profile;

• managing credit risk related to financial assets;

•

investing cash and cash equivalents and deposits at call with major financial institutions; and

• comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

(i) Maturities of financial liabilities

The tables below analyse the group’s financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Contractual
maturities of
financial liabilities

Less than 6
months

6 - 12
months

Between 1
and 2 years

Between 2
and 5 years

Over 5
years

At 30 June 2019

Trade and other
payables

Total

At 30 June 2018

Trade and other
payables

Total

364,551

419,513

Total
contractual
cash flows

Carrying
amount
(assets)/
liabilities

364,551

419,513

11. Capital management

A. Risk management

The group’s objectives when managing capital are to

•

safe guard their ability to continue as a going concern, so that they can continue to provide returns for shareholders
and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital

In order to maintain or adjust the capital structure, the group may issue new shares or reduce its capital, subject to the
provisions of the group’s constitution. The capital structure of the group consists of equity attributed to equity holders
of the group, comprising contributed equity, reserves and accumulated losses. By monitoring undiscounted cash flow
forecasts and actual cash flows provided to the board by the group’s management, the board monitors the need to raise
additional equity from the equity markets.

B. Dividends

No dividends were declared or paid to members for the year ended 30 June 2019 (2018: nil). The group’s franking account
balance was nil at 30 June 2019 (2018: nil).

12. Interests in other entities

A. Subsidiaries

The group’s principal subsidiaries at 30 June 2019 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership interests held
equals the voting rights held by the group. The country of incorporation or registration is also their principal place of
business.

Name of entity

Place of business/ country of incorporation

Ownership interest held by the group

2019
%

2018
%

100

Sarantis Pty Ltd

Australia

13. Contingent liabilities

The group had no contingent liabilities at 30 June 2019 (2018: nil).

14. Commitments

A. Non-cancellable operating leases

The company leases an office and a laboratory under non-cancellable operating leases expiring on 30 August 2019 and
30 November 2020, respectively. On renewal, the terms of the leases are renegotiated.

Commitments for minimum lease payments in relation to non-cancellable
operating leases are payable as follows:

Within one year

Later than one year but not later than five years

2019
$

2018
$

80,761

32,402

113,163

72,156

64,550

136,706

ANATARA LIFESCIENCES Annual Report 201949

15. Events occurring after the reporting period

No matter or circumstance has occurred subsequent to period end that has significantly affected, or may significantly
affect, the operations of the group, the results of those operations or the state of affairs of the group or economic entity
in subsequent financial years.

16. Related party transactions

A. Subsidiaries

Interests in subsidiaries are set out in note 12(a).

B. Key management personnel compensation

Short-term employee benefits

Post-employment benefits

Long-term benefits

Termination benefits

Share-based payments

2019
$

1,492,045

138,919

5,355

125,000

111,618

1,872,937

2018
$

1,767,102

124,756

12,515

106,684

2,011,057

Detailed remuneration disclosures are provided in the remuneration report on pages 17 to 26.

C. Transactions with other related parties

The following transactions occurred with related parties:

Sales and purchases of goods and services

2019 $

2018 $

Purchases of various goods and services from entities
controlled by key management personnel (i)

20,000

149,923

(i) Purchases from entities controlled by key management personnel

The group acquired the following goods and services from entities that are controlled by members of the group’s key
management personnel:

• Consultancy fees

For detailed disclosures please refer to the remuneration report on page 17.

17. Share-based payments

A. Executive option plan

The establishment of the ‘executive option plan’ (EOP) was approved by shareholders at the 2017 annual general meeting.
The plan is designed to provide long-term incentives for executives (including directors) to deliver long-term shareholder
returns. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the
plan or to receive any guaranteed benefits.

Set out below are summaries of options granted under the plan:

2019

2018

Average exercise
price per share
option

Number of options

Average exercise
price per share
option

Number of options

$1.35

$1.00

2,436,000

1,725,000

$0.98

(1,590,000)

$1.41

$1.37

2,571,000

1,727,000

$1.33

$2.27

$1.35

$1.30

2,400,000

36,000

2,436,000

1,573,333

As at 1 July

Granted during the
year

Forfeited/lapsed
during the year

As at 30 June

Vested and
exercisable at 30 June

Share options outstanding at the end of the year have the following expiry date and exercise prices:

Grant date

Expiry date

Exercise price

Share options

2015-09-18

2015-11-11

2015-12-14

2016-09-23

2017-11-28

2018-09-10

2019-04-10

Total

2018-09-18

2018-11-11

2020-12-14

2021-09-23

2022-11-17

2020-12-14

2024-02-17

($)

30 June 2019

30 June 2018

0.500

1.350

1.450

1.700

2.270

1.450

0.736

375,000

340,000

765,000

1,265,000

420,000

36,000

750,000

600,000

2,571,000

2,436,000

Weighted average remaining contractual life of options outstanding at end of period

2.36

1.81

ANATARA LIFESCIENCES Annual Report 201951

(i) Fair value of options granted

The assessed fair value of options at grant date was determined using the Black-Scholes option pricing model that
takes into account the exercise price, term of the option, security price at grant date and expected price volatility of
the underlying security, the expected dividend yield, the risk-free interest rate for the term of the security and certain
probability assumptions.

The model inputs for options granted under EOP during the year ended 30 June 2019 included:

Grant date

Expiry date

Exercise
price ($)

No. of
options

Share price
at grant
date
($)

Expected
volatility

Dividend
yield

Risk- free
interest
rate

Fair value
at grant
date per
option
($)

2018-09-10

2020-12-14

1.450

750,000

2018-10-29

2019-04-29

0.500

375,000

2019-04-10

2024-02-17

0.736

600,000

0.57

0.46

0.49

57.76%

88.67%

80.00%

0.00%

1.99%

0.0421

1.97%

1.51%

0.0979

0.2731

1,725,000

B. Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period were as follows:

Options issued under EOP

18. Remuneration of auditors

2019
$

196,389

2018
$

135,327

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:

A. Grant Thornton Audit Pty Ltd

(i) Audit and other assurance services

Audit and review of financial statements

Total remuneration for audit and other assurance services

2019
$

56,031

2018
$

59,968

(ii) Taxation services

Tax compliance services

Total remuneration for taxation services

Total auditor’s remuneration

2019
$

24,000

80,031

2018
$

25,650

85,618

It is the group’s policy to employ Grant Thornton Audit Pty Ltd on assignments additional to their statutory audit duties
where Grant Thornton Audit Pty Ltd’s expertise and experience with the group are important. These assignments are
principally tax advice.

19. Loss per share

A. Reconciliation of loss used in calculating loss per share

Basic and diluted loss per share

Loss attributable to the ordinary equity holders of the company used in
calculating loss per share:

From continuing operations

2,868,272

3,569,016

2019
$

2018
$

B. Weighted average number of shares used as the denominator

Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share

49,413,236

On the basis of the group’s losses, the outstanding options as at 30 June 2019 are considered to be anti-dilutive and
therefore were excluded from the diluted weighted average number of ordinary shares calculation.

2019
Number

2018
Number

20. Parent entity financial information

A. Summary financial information

The individual financial statements for the parent resemble the consolidated financial statements as the company’s
subsidiary, Sarantis Pty Ltd is a dormant entity.

ANATARA LIFESCIENCES Annual Report 201953

B. Guarantees entered into by the parent entity

The parent entity has not entered into any guarantees in relation to debts of its subsidiaries in the year ended 30 June
2019 (2018: nil).

C. Contingent liabilities of the parent entity

The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.

D. Contractual commitments for the acquisition of property, plant or

equipment

The parent entity has not entered into any contractual commitments for the acquisition of property, plant or equipment in
the year ended 30 June 2019 (2018: nil).

E. Determining the parent entity financial information

The financial information for the parent entity has been prepared on the same basis as the consolidated financial statements,
except as set out below.

(i) Investments in subsidiaries

Investments in subsidiaries are accounted for at cost in the financial statements of Anatara Lifesciences Ltd.

(ii) Tax consolidation legislation

Anatara Lifesciences Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.

The head entity, Anatara Lifesciences Ltd, and the controlled entities in the tax consolidated group account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group
continues to be a stand-alone taxpayer in its own right.

In addition to its own current and deferred tax amounts, Anatara Lifesciences Ltd also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax consolidated group.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate
Anatara Lifesciences Ltd for any current tax payable assumed and are compensated by Anatara Lifesciences Ltd for any
current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to
Anatara Lifesciences Ltd under the tax consolidation legislation. The funding amounts are determined by reference to the
amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the
head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require
payment of interim funding amounts to assist with its obligations to pay tax instalments.

Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current
amounts receivable from or payable to other entities in the group.

Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

Contents of the summary of significant
accounting policies

A. Basis of preparation

B. Principles of consolidation

C. Segment reporting

D. Foreign currency translation

E. Revenue recognition

F. Government grants

Income tax

H. Leases

Impairment of non-financial assets

J. Cash and cash equivalents

K. Trade receivables

Investments and other financial assets

M. Property, plant and equipment

Intangible assets

O. Trade and other payables

Employee benefits

Q. Contributed equity

R. Dividends

Loss per share

T. Rounding of amounts

U. Goods and services tax (GST)

21. Summary of significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial
statements to the extent they have not already been disclosed in the other notes above. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the group consisting
of Anatara Lifesciences Ltd and its subsidiaries.

ANATARA LIFESCIENCES Annual Report 2019

A. Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Anatara Lifesciences
Ltd is a for-profit entity for the purpose of preparing the financial statements.

(i) Compliance with IFRS

The consolidated financial statements of the Anatara Lifesciences Ltd group also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis.

(iii) New and amended standards adopted by the group

The group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2018:

• AASB 9 Financial Instruments

• AASB 15 Revenue from Contracts with Customers

• AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based

Payment Transactions

• AASB 2017-1 Amendments to Australian Accounting Standards - Transfers to Investment Property, Annual Improvements

2014-2016 Cycle and Other Amendments

•

Interpretation 22 Foreign Currency Transactions and Advance Consideration.

The group also elected to adopt the following amendments early:

• AASB 2018-1 Amendments to Australian Accounting Standards - Annual Improvements 2015-2017 Cycle.

The group had to change its accounting policies without making retrospective adjustments following the adoption of
AASB 9 and AASB 15. This is disclosed in note 22. Most of the other amendments listed above did not have any impact on
the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

(iv) New standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2019
reporting periods and have not been early adopted by the group. The group’s assessment of the impact of these new
standards and interpretations is set out below.

Title of
standard

Nature of
change

AASB 16 Leases

AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the
balance sheet by lessees, as the distinction between operating and finance leases is removed.
Under the new standard, an asset (the right to use the leased item) and a financial liability to
pay rentals are recognised. The only exceptions are short-term and low-value leases.

Impact

The group has reviewed all leasing arrangements in light of the new lease accounting rules
in AASB 16. The standard will affect the accounting for the group’s operating leases.

As at the reporting date, the group has non-cancellable operating lease commitments of
$113,163, see note 14(a).

The group expects to recognise right-of-use assets of approximately $107,962 on 1 July
2019 and lease liabilities of $109,438 (after adjustments for prepayments and accrued lease
payments recognised as at 30 June 2019). Overall net assets will be approximately $1,746
lower, and net current assets will be $28,678 lower due to the presentation of a portion of
the liability as a current liability.

The group expects that net profit after tax will increase by approximately $314 for the year end-
ed 30 June 2020 as a result of adopting the new rules.

Operating cash flows will increase and financing cash flows decrease by approximately
$80,761 as repayment of the principal portion of the lease liabilities will be classified as cash
flows from financing activities.

The group does not act in the capacity as a lessor and hence the group does not expect
any lessor impact on the financial statements.

Mandatory
application
date/ Date of
adoption by
group

The group will apply the standard from its mandatory adoption date of 1 July 2019.

The group intends to apply the modified retrospective transition approach and will not restate
comparative amounts for the year prior to first adoption. Right-of-use assets will be measured
at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease
expenses).

There are no other new standards and interpretations that are not yet effective and that would be expected to have a
material impact on the group in the current or future reporting periods and on foreseeable future transactions.

(e) Changes to presentation - classification of expenses

Anatara Lifesciences Ltd decided in the current financial year to change the classification of its expenses in the consolidated
statement of profit or loss from a classification by nature to a functional classification. We believe that this will provide more
relevant information to our stakeholders as it is more in line with common practice in the industries Anatara Lifesciences
Ltd is operating in. The comparative information has been reclassified accordingly.

ANATARA LIFESCIENCES Annual Report 201957

B. Principles of consolidation

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity
when the group 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date
on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted
by the group.

C. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. This has been identified as the chief executive officer.

D. Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Australian dollar ($), which is Anatara Lifesciences Ltd’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised
in profit or loss.

Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of profit or loss,
within finance costs. All other foreign exchange gains and losses are presented in the consolidated statement of profit or
loss on a net basis within other gains/(losses).

E. Revenue recognition

The accounting policies for the group’s revenue from contracts with customers are explained in note 2.

F. Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the group will comply with all attached conditions. Note 3 provides further information on how the group
accounts for government grants.

G. Income tax

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the
applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of
the reporting period in the countries where the company and its subsidiaries and associates operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss.

Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end
of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.

Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.

H. Leases

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee are
classified as operating leases (note 14). Payments made under operating leases (net of any incentives received from the
lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

I. Impairment of non-financial assets

Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-
generating units). Non-financial assets other than good will that suffered an impairment are reviewed for possible reversal
of the impairment at the end of each reporting period.

J. Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on
hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the
consolidated statement of financial position.

ANATARA LIFESCIENCES Annual Report 201959

K. Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less loss allowance. See note 5(b) for further information about the group’s accounting for trade
receivables and note 10(b) for a description of the group’s impairment policies.

L. Investments and other financial assets

(i) Classification

From 1 July 2018, the group classifies its financial assets in the following measurement categories:

•

those to be measured subsequently at fair value (either through OCI or through profit or loss), and

those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of
the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the
time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).

(ii) Recognition and derecognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets
have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.

(iii) Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the
cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt
instruments:

• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and
losses. Impairment losses are presented as separate line item in the consolidated statement of profit or loss.

• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the
assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the
carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and
foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the
cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other
gains/(losses). Interest income from these financial assets is included in finance income using the effective interest
rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are
presented as separate line item in the consolidated statement of profit or loss.

• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/
(losses) in the period in which it arises.

(iv) Impairment

The group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.

(v) Income recognition

Interest income

Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces the
carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective
interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired
loans is recognised using the original effective interest rate.

M. Property, plant and equipment

Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.

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. The carrying amount of any component accounted for as a separate asset is derecognised when
replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are
incurred.

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 (note 21(i)).

N. Intangible assets

(i) Research and development

Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge and
understanding, is recognised in the consolidated statement of profit or loss and other comprehensive income as an
expense when it is incurred.

Expenditure on development activities, being the application of research findings or other knowledge to a plan or design
for the production of new or substantially improved products or services before the start of commercial production or use,
and other development expenditure, is recognised in the consolidated statement of profit or loss and other comprehensive
income as an expense as incurred.

ANATARA LIFESCIENCES Annual Report 201961

O. Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which
are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are
presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised
initially at their fair value and subsequently measured at amortised cost using the effective interest method.

P. Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that are
expected to be settled wholly within 12 months after the end of the period in which the employees render the related
service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the
amounts expected to be paid when the liabilities are settled. The liabilities are presented as current employee benefit
obligations in the balance sheet.

(ii) Other long-term employee benefit obligations

The group also has liabilities for long service leave and annual leave that are not expected to be settled wholly within 12
months after the end of the period in which the employees render the related service. These obligations are therefore
measured as the present value of expected future payments to be made in respect of services provided by employees up
to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the end of the reporting period of high-quality corporate
bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements
as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to
defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected
to occur.

(iii) Share-based payments

Share-based compensation benefits are provided to employees via the ‘employee option plan’ (EOP). Information relating
to these schemes is set out in note 17.

Employee options

The fair value of options granted under the EOP is recognised as a share-based payment expense with a corresponding
increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted:

•

including any market performance conditions (e.g. the company’s share price)

• excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth

targets and remaining an employee of the company over a specified time period), and

•

including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for
a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that
are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to
original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

Q. Contributed equity

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.

R. Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion
of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

S. Loss per share

(i) Basic loss per share

Basic loss per share is calculated by dividing:

•

the loss attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares

• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements

in ordinary shares issued during the year.

(ii) Diluted loss per share

Diluted loss per share adjusts the figures used in the determination of basic loss per share to take into account:

•

the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares,and

the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.

T. Rounding of amounts

The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding off’ of amounts in
the financial statements. Amounts in the financial statements have been rounded off in accordance with the instrument
to the nearest dollar.

U. Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.

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 taxation authority is included with other receivables or payables in the consolidated
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 taxation authority, are presented as operating cash flows.

ANATARA LIFESCIENCES Annual Report 201963

22. Changes in accounting policies

This note explains the impact of the adoption of AASB 9 Financial Instruments on the group’s financial statements.

A. AASB 9 Financial Instruments – impact of adoption

AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments:
classification and measurement, impairment and hedge accounting. The adoption of this standard has not materially
impacted the amounts disclosed in these financial statements.

(i) Classification and measurement

Except for certain trade receivables, under AASB 9, the group initially measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs.

Under AASB 9, debt financial instruments are subsequently measured at fair value through profit or loss (FVPL), amortised
cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the group’s
business model for managing the assets; and whether the instruments’ contractual cash flows represent ‘solely payments
of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’).

The new classification and measurement of the group’s debt financial assets are as follows:

• Debt instruments at amortised cost for financial assets that are held within a business model with the objective to hold
the financial assets in order to collect contractual cash flows that meet the SPPI criterion. This category comprises
other financial assets at amortised cost (deposits at call).

The assessment of the group’s business models was made as of the date of initial application, 1 July 2018 and then applied
retrospectively to those financial assets that were not derecognised before 1 July 2018. The assessment of whether
contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts
and circumstances as at the initial recognition of the assets. There has been no adjustment made to the amounts disclosed
as a result of the application of this standard.

(ii) Impairment of financial assets

The adoption of AASB 9 has altered the group’s accounting for impairment losses for financial assets by replacing AASB
139’s incurred loss approach with a forward-looking expected credit loss (ECL) approach.

AASB 9 requires the group to record an allowance for ECLs for all loans and other debt financial assets not held at FVPL.

ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the
cash flows that the group expects to receive. The shortfall is then discounted at an approximation to the asset’s original
effective interest rate.

The adoption of the ECL requirements of AASB 9 has not resulted in any material change in impairment allowances of the
group’s debt financial assets.

B. AASB 9 Financial Instruments – accounting policies applied from 1

July 2018

Investments and other financial assets

The accounting policies applied by the group from 1 July 2018 are set out in note 21(l).

C. AASB 15 Revenue from Contracts with Customers – impact of

adoption

AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related interpretations and it applies to
all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new
standard establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15,
revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange
for transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their
customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs
directly related to fulfilling a contract. The adoption of AASB 15 has not impacted the amounts and the accounting policies
disclosed within the financial statements.

In the directors’ opinion:

the financial statements and notes set out on pages 31 to 64 are in accordance with the Corporations Act 2001,
including:

ii) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional

reporting requirements, and

iii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its

performance for the financial year ended on that date, and

there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.

Note 21(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.

The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of directors.

Ms Sue MacLeman
Non-Executive Chair

Melbourne
27 August 2019

ANATARA LIFESCIENCES Annual Report 2019
65

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Independent Auditor’s Report
To the Members of Anatara Lifesciences Ltd

Report on the audit of the financial report

Opinion

We have audited the financial report of Anatara Lifesciences Ltd (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year

ended on that date; and

b complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial

report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in

forming our opinion thereon, and we do not provide a separate opinion on these matters.

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Key audit matter

How our audit addressed the key audit matter

Recognition of research and development tax incentive –
Notes 3(a)(i), 5(b)(ii), and 9(a)

The Group receives a 43.5% refundable tax offset (2018:
43.5%) of eligible expenditure under the research and
development (R&D) tax incentive scheme. An R&D plan is
filed with AusIndustry in the following financial year and,
based on this filing, the Group receives the incentive in cash.
Management perform a detailed review of the Group’s total
research and development expenditure to determine the
potential claim under the R&D tax incentive legislation.

The Group recognises R&D tax incentive rebate income on an
accruals basis, meaning that a receivable is recorded at the
balance date based on the estimated claim that is yet to be
received from the Australian Taxation Office. The receivable
at year end for the incentive was $800,481. This represents
an estimated claim for the period 1 July 2018 to 30 June 2019.

This area is a key audit matter due to the degree of judgement
and interpretation of the R&D tax legislation required by
management to assess the eligibility of the R&D expenditure
under the scheme.

Our procedures included, amongst others:

 Obtaining the R&D incentive calculations prepared by
management and engaging an internal R&D Tax
Expert to assist the engagement team in assessing
the reasonableness of the estimate;

 Comparing the nature of the R&D expenditure

included in the current year estimate to the prior year
approved claim;

 Comparing the estimates made in previous years to

the amount of cash actually received after lodgement
of the R&D tax claim;

 Considering the nature of the expenses against the
eligibility criteria of the R&D tax incentive scheme to
form a view about whether the expenses included in
the estimate were likely to meet the eligibility criteria;

 Assessing the eligible expenditure used to calculate
the estimate to ensure it is in accordance with
expenditure recorded in the general ledger;
 Agreeing a sample of individual expenditure items

included in the estimate to underlying supporting
documentation to ensure that they have been
appropriately recognised in the accounting records
and that they are eligible expenditures;
Inspecting copies of relevant correspondence with
AusIndustry and the ATO related to the claims; and



 Reviewing the appropriateness of the relevant

disclosures in the financial statements.

Information other than the financial report and auditor’s report thereon

The Directors are responsible for the other information. The other information comprises the information included in the

Chairman’s letter and Review of operations and activities, but does not include the financial report and our auditor’s report

thereon.

Our opinion on the financial report does not cover the other information and we do not express any form of assurance

conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider

whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or

otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the financial report

The Directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in

accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors

determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material

misstatement, whether due to fraud or error.

In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing

Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions

of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance

Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our

auditor’s report.

Report on the remuneration report

Opinion on the remuneration report

We have audited the Remuneration Report included in pages 17 to 26 of the Directors’ report for the year ended 30 June
2019.

In our opinion, the Remuneration Report of Anatara Lifesciences Ltd, for the year ended 30 June 2019 complies with
section 300A of the Corporations Act 2001.

Responsibilities

The Directors of the Group are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.

Grant Thornton Audit Pty Ltd
Chartered Accountants

T S Jackman
Partner – Audit & Assurance

Melbourne, 27 August 2019

Corporate directory

Directors

Ms Sue MacLeman

Non-Executive Chair

Dr Tracie Ramsdale

Non-Executive Director

Dr Jane Ryan

Non-Executive Director

Dr David Brookes

Non-Executive Director

Secretary

Mr Stephen Denaro

Registered office and principal place of
business

433 Logan Road

Brisbane QLD 4120 Australia

Telephone: +61 (0)7 3394 8202

Share register

Computershare Investor Services Pty Limited
Level 1, 200 Mary Street

Brisbane QLD 4000

Telephone: +61 (0)7 3237 2100

Auditor

Grant Thornton Audit Pty Ltd

Collins Square

Tower 5, 727 Collins Street

Melbourne VIC 3008

Telephone: +61 (0)3 8320 2222

Solicitors

Thomson Geer

Level 16, Waterfront Place

1 Eagle Street

Brisbane QLD 4000

Bankers

Commonwealth Bank of Australia

Melbourne VIC 3000

Stock exchange listings

Anatara Lifesciences Ltd shares are listed on the Australian
Securities Exchange (ASX code: ANR)

Website

www.anataralifesciences.com

ANATARA LIFESCIENCES Annual Report 2019

Shareholder Information

Below is the current shareholder information at 20 September 2019 based on available information:

Top 20 Security Holders

Rank

Name

No of Shares % Issued Capital

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED

PARMA CORPORATION

MYENG PTY LTD

UBS NOMINEES PTY LTD

IAIN ROSS

JACOBY MANAGEMENT SERVICES

KALOKERY PTY LTD

DAVID CHARLES VENABLES

BEEBEE HOLDINGS PTY LTD

MR BRENDAN PHYLAND

NAVIGATOR AUSTRALIA LTD

GENETIC HORIZONS PTY LTD

MATTHEW TURNER

TULIP SUPER PTY LTD

BNP PARIBAS NOMINEES PTY LTD

JONTRA HOLDINGS PTY LTD

MRS BARBARA GREY

WOTS IN THERE PTY LTD ,

DR MARK DANIEL REEVES

20.

MR JOHN DUGALD MACTAGGART

Totals: Top 20 holders of FULLY PAID ORDINARY SHARES

Total Remaining Holders Balance

Distribution of Security Holders

No of Securities Held

Total holders

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 Over

126

310

182

381

5,457,668

5,442,839

4,310,011

2,583,123

1,260,000

920,731

748,833

719,750

614,218

598,082

571,327

486,109

464,102

450,000

417,673

355,614

354,255

330,000

320,614

311,614

26,716,563

22,696,673

Total

49,413,236

Units

69,853

931,432

1,438,559

12,186,310

34,787,082

11.04

11.01

8.72

5.23

2.55

1.86

1.52

1.46

1.24

1.21

1.16

0.98

0.94

0.91

0.85

0.72

0.67

0.65

0.63

54.07

45.93

100.00

% Units

0.14

1.88

2.91

24.66

70.40

0.01

Rounding

Total

1,070

49,413,236

100.00

ANATARA LIFESCIENCES Annual Report 201971

ANNUAL REPORT 2019

Anatara Lifesciences Ltd
ABN 41 145 239 872

433 Logan Road, Stones Corner,
Brisbane, Queensland, Australia, 4120

+ 61 (0)7 3394 8202