Annual
Report
for the year ended 30 June 2017
Adherium Limited
ABN 24 605 352 510
Company Overview
Adherium (ASX:ADR) is a global leader in digital health technologies which address sub-
optimal medication use in chronic diseases. Our Smartinhaler™ platform is the world’s most
clinically supported asthma and COPD medication adherence solution, leading to improved
health outcomes for patients with chronic respiratory disease.
Adherium has the broadest range of “smart” devices for respiratory medications globally.
The Bluetooth® enabled Smartinhaler™ medication sensors wrap around a patient’s existing
inhalers and automatically send usage data to their smartphone. Using the Smartinhaler™
app enables patients and healthcare professionals to track medication adherence, set daily
reminders, and discover insights into their medication usage.
Table of
Contents
Chairman’s Statement
CEO’s Report
Directors’ Report (including Remuneration Report)
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Australian Securities Exchange Additional Information
02
03
05
18
20
21
22
23
24
43
44
48
1
Annual Report 2017 Adherium Ltd Chairman’s
Statement
Adherium continues to make solid progress. In November
last year new health outcomes data was released that
showed our Smartinhaler™ technology generates a
five-fold reduction in hospital re-admission in children
with poorly controlled asthma. This data was published
in the world leading respiratory journal Thorax, having
been through an intensive peer-review process and we
believe these results to be unrivalled.
Key messages
ORIGINAL ARTICLE
Paediatric lung disease
for Health and Care Excellence has recommended further
studies to investigate their use clinically.18
An Australian study demonstrated that children’s adherence
increased when electronic data were fed back, although it was
underpowered to show any improvement in clinical outcomes.19
Paediatric lung disease
A recent study in New Zealand improved self-reported asthma
control in the short-term using electronic monitoring, no feed-
STAAR: a randomised controlled trial of electronic
back and reminder alarms.20
seeing subjects out of clinic every 2 months, used covert moni-
However, this study involved
adherence monitoring with reminder alarms and
toring and had no effect on objective clinical outcomes.
In order to determine whether clinically relevant benefits
feedback to improve clinical outcomes for children
could be observed in a routine clinical setting through the use
of electronic monitoring, we undertook a study in which chil-
dren with poorly controlled asthma were randomised to the use
with asthma
of reminder alarms and feedback or routine care. We hypothe-
sised that by addressing both the intentional and non-intentional
Robert W Morton,1,2 Heather E Elphick,1,2 Alan S Rigby,3 William J Daw,1,2
adherence barriers, rates would increase to a degree necessary
to improve asthma control and clinical outcomes.
David A King,1 Laurie J Smith,2 Mark L Everard4
METHODS
The STudy of Asthma Adherence Reminders study was a multi-
ABSTRACT
centre, open-label, parallel group randomised controlled trial,
Background Suboptimal adherence to inhaled steroids
with an allocation ratio of 1:1. Written consent was taken from
is common in children with asthma and is associated
the parents/carers of all participants, and ethical approval for
with poor disease control, reduced quality of life and
the study was granted by the South Yorkshire Research Ethics
even death. Previous studies using feedback of
committee, REC reference 13/YH/0289. The protocol was regis-
electronically monitored adherence data have
tered with ClinicalTrials.gov, number NCT02451709.
What is the key question?
demonstrated improved adherence, but have not
▸ Can electronic adherence monitoring with
demonstrated a significant impact on clinical outcomes.
Participants and setting
feedback and alarms improve clinical outcomes
The aim of this study was to determine whether
Children with doctor-diagnosed asthma aged 6–16 years attend-
in children with poorly controlled asthma?
introduction of this approach into routine practice would
ing hospital clinics in Sheffield or Rotherham were screened for
result in improved clinical outcomes.
What is the bottom line?
eligibility. Participants had to be taking regular inhaled steroids,
Methods Children with asthma aged 6–16 years were
▸ Electronic monitoring with feedback and alarms
with no change in their medication in the last month and an
randomised to the active intervention consisting of
improved adherence, decreased hospital
Asthma Control Questionnaire (ACQ) score of at least 1.5, indi-
electronic adherence monitoring with daily reminder
admissions and courses of oral steroids
cating they had poorly controlled asthma.21
alarms together with feedback in the clinic regarding
required.
could not speak English or had another significant chronic con-
their inhaled corticosteroid (ICS) use or to the usual care
dition were excluded. The EMDs available for this trial were
Why read on?
arm with adherence monitoring alone. All children had
only compatible with seretide or symbicort inhalers. Therefore,
▸ This study provides the first unequivocal
poorly controlled asthma at baseline, taking ICS and
all participants were at BTS level 3 at the start of the trial.
long-acting β-agonists. Subjects were seen in routine
evidence that adherence monitoring with
clinics every 3 months for 1 year. The primary outcome
feedback can impact on important clinical
Interventions
was the Asthma Control Questionnaire (ACQ) score.
outcomes when used in the management of
Prior to randomisation, all participants had their inhaler tech-
Secondary outcomes included adherence and markers of
children with poorly controlled asthma.
nique checked by a qualified asthma nurse, and received a brief
asthma morbidity.
asthma education session, emphasising the importance of taking
Results 77 of 90 children completed the study
inhaled steroids regularly. All participants were reviewed in their
(39 interventions, 38 controls). Adherence in the
routine asthma clinics 3 monthly and all treatment decisions
intervention group was 70% vs 49% in the control
were made by the clinical team. A member of the study team
group (p≤0.001). There was no significant difference in
downloaded data from the EMD at each visit.
the change in ACQ, but children in the intervention
Intervention group
group required significantly fewer courses of oral
Participants in the intervention group had a commercially avail-
steroids (p=0.008) and fewer hospital admissions
able EMD attached to their regular inhaler. The ‘Smartinhalers’
(p≤0.001).
and ‘Smartturbos’ are manufactured by Adherium (Auckland,
Conclusions The results indicate that electronic
New Zealand) (figure 1). They have a CE safety mark and are
adherence monitoring with feedback is likely to be of
validated for adherence monitoring in asthma.12
significant benefit in the routine management of poorly
were told the devices monitored the date and time of all actua-
controlled asthmatic subjects.
tions. At clinic visits, the adherence data from the previous
Trial registration number NCT02451709; pre-result.
3 months were uploaded to the website http://www.
smartinhalerlive.com, which displays the data graphically. These
data were reviewed with the patient and parent/carer (figure 2).
Open, non-judgemental discussions were held about the adher-
ence rate, barriers identified and, if necessary, personalised strat-
egies for improvement were devised. Devices were set to play
reminder alarms (music or character noises), with different
Large adult population studies and smaller paedi-
atric studies have shown that adherence rates of
75%–80% are required to significantly improve
asthma control.6–8 However, when objectively mea-
sured, the average rate of adherence in children
with asthma is around 50%, some way below this
desired therapeutic level.9
Subjective and indirect measurements of adher-
ence have been shown to overestimate rates due to
patients wanting to be looked upon favourably by
their clinician—the social desirability bias.10 11
Electronic monitoring devices (EMDs) record
adherence rates by logging the exact date and time
an inhaler is actuated, with modern devices proven
to be highly accurate and reliable in the clinical
setting.12 Monitoring allows intentional adherence
barriers such as negative illness perceptions or
medication beliefs to be identified, and addressed
with regular open dialogue.13–15 Reminder alarms
built into the devices can address non-intentional
practical barriers such as simply forgetting to take
the medication.16
Due to their cost, the British Thoracic Society
(BTS) has questioned the viability of EMDs outside
the research setting,17 and The National Institute
INTRODUCTION
Adherence to inhaled steroids is often suboptimal
in children with asthma, resulting in poor disease
control,1 increased need for oral steroids2 and
decreased lung function.3 This leads to increased
healthcare utilisation and associated cost.4 The
recent National Review of Asthma Deaths in the
UK reported that poor adherence was associated
with 34% of deaths due to asthma, emphasising the
significance of the problem.5
Participants who
Participants
2
Control group
Figure 1 ‘Smartturbo’ and ‘Smarttrack’ electronic adherence
monitors. Adherium, New Zealand.
times agreed for weekdays and weekends. Alarms sounded for
5 s, every minute for 15 min (or until actuation), if the inhaler
had not been actuated within the previous 6 hours of the speci-
fied time. The devices were locked to prevent tampering. Times
were reviewed each study visit and changed if necessary.
Control participants had the same EMDs attached to their
regular inhaler, they were also told the devices monitored how
much the inhalers were taken, but that these data would not be
reviewed. Participants were seen in their standard asthma clinic
and the data were downloaded, but not reviewed. The alarms
were disabled, and the devices locked.
Primary outcome
The primary outcome for the study was change in the ACQ
score at 3, 6, 9 and 12 months. This questionnaire has been vali-
dated for the use in children aged 6–16 years.22 It integrates
values generated by six clinical questions related to symptoms in
the previous week and a value related to FEV1% predicted to
generate a score of 0–6. The score is inversely related to asthma
control with a high score indicating poor control.
Secondary outcomes
Secondary outcomes recorded at baseline and each visit were
FEV1%,23
number of unplanned attendances to general practi-
tioner (GP)/emergency department (ED) for asthma since last
visit (as reported by parents), number of courses of oral steroids
required, number of days off school due to asthma, use of
β-agonists in the past week and BTS level of asthma therapy.
Quality of life was measured using the Mini Paediatric Asthma
Quality of Life Questionnaire (mini PAQLQ).24
rate was calculated for each 3-month period, both morning and
afternoon doses, and recorded as a percentage. This was calcu-
lated as number of doses actually taken/number of doses pre-
scribed×100. The daily adherence was capped at 100%, to
avoid falsely increased values due to dose dumping. The overall
3 monthly figure was a mean of each daily %. Parental beliefs
about inhaled steroids and perceptions about asthma were
recorded at baseline and 12 months with the Beliefs about
Medicines Questionnaire (BMQ) and the Brief
Perceptions Questionnaire (IPQ).25 26
Sample size
The sample size was calculated using a repeated measures ana-
lysis for four follow-up visits. The Minimal Clinically Important
Morton RW, et al. Thorax 2016;0:1–8. doi:10.1136/thoraxjnl-2015-208171
The adherence
Illness
▸ Additional material is
published online only. To view
please visit the journal online
(http://dx.doi.org/10.1136/
thoraxjnl-2015-208171).
1Academic Unit of Child
Health, University of Sheffield,
Sheffield, South Yorkshire, UK
2Department of Respiratory
Medicine, Sheffield Children’s
Hospital, Sheffield, South
Yorkshire, UK
3Hull York Medical School,
University of Hull, Hull,
Yorkshire, UK
4School of Paediatrics and
Child Health, Princess
Margaret Hospital University of
Western Australia, Perth,
Western Australia, Australia
Correspondence to
Dr Robert W Morton, Sheffield
Children’s Hospital, Western
Bank, Sheffield, South
Yorkshire S10 2TH, UK;
rwmorton99@gmail.com
Received 8 December 2015
Revised 28 July 2016
Accepted 6 October 2016
To cite: Morton RW,
Elphick HE, Rigby AS, et al.
Thorax Published Online
First: [please include Day
Month Year] doi:10.1136/
thoraxjnl-2015-208171
Copyright Article author (or their employer) 2016. Produced by BMJ Publishing Group Ltd (& BTS) under licence.
Morton RW, et al. Thorax 2016;0:1–8. doi:10.1136/thoraxjnl-2015-208171
1
Thorax article ‘STAAR: a randomised controlled trial of electronic
adherence monitoring with reminder alarms and feedback to improve
clinical outcomes for children with asthma’ was published on 4 Nov 2016
Adherium’s relationship with its
primary pharmaceutical partner
AstraZeneca continues to
strengthen, and in the last year
AstraZeneca has distributed
Adherium’s sensor for their dry
powder inhaler into multiple
new G7 markets. Adherium is
also Astra Zeneca’s strategic
supplier of intelligent device
innovation, and Adherium
has developed new
sensors for AstraZeneca’s
main aerosol inhaler
platform, and recently
achieved clearance
from the US FDA for
these sensors.
SmartTouch for Symbicort® device
achieved US FDA 510(k) approval.
Two channels to market are now being targeted in addition
to our business with AstraZeneca. These are:
• Direct to consumer: enabling people to effectively
manage their own asthma and COPD and also
their children’s or elderly parents’; and
• Payor & Provider: supplying to the healthcare system
to reduce chronic care costs.
This strategy will increase the total number of channels to
market Adherium has to five: Pharmaceutical, Provider,
Payor, Patient, and Projects (clinical trials).
2017 has been an unprecedented year for investment
into the digital health sector, with US$6.5 billion being
invested in the first half. Our Thorax data demonstrates
the proposition for investment, indicating that Adherium’s
Smartinhaler technology could save the US healthcare
system US$17 billion per annum in asthma alone.
The US market represents just under half of the world’s
healthcare spend, and so is critical to Adherium’s future.
In June 2017 we appointed Arik Anderson as our US-
based Group CEO. Arik has a background of 25 years
in medical technologies working for global medical
technology companies. In his last role at Terumo, he was
responsible for global sales of more than US$300 million
per annum in medical technologies for chronic care. An
immediate task for Arik is to build out our commercial
operations from our Silicon Valley office to support
expansion into the US market across all of our channels.
Our CEO rightly pays tribute to the achievements of
our founder, Garth Sutherland, who conceived, built
and led Adherium over the past 17 years. It has been a
pleasure working with Garth in my first year as Chair
and I look forward to his continuing contribution to
building Adherium.
We appreciate the support of all shareholders. We
have commenced a programme to improve investor
engagement with regular update calls and meetings.
As part of this, I am happy to receive, and will respond
to your questions as we build Adherium together.
With our pharmaceutical distribution model operating and
gaining momentum, we recently achieved a milestone of
manufacturing and selling 100,000 Smartinhaler devices.
During the year Adherium completed a strategic review to
carefully select new channels to market for its broad range
of sensors across all major asthma and COPD medications.
Thomas Lynch
Non-executive Chairman
2
Annual Report 2017 Adherium Ltd
CEO’s
Report
I am Arik Anderson, Adherium’s Group CEO, and it is my
pleasure to provide you with an update on Adherium as
I complete my first 100 days.
My view of Adherium so far is that the Company’s
Smartinhaler™ technology represents the best medication
adherence monitoring solution in the world, and
accordingly I can see why AstraZeneca selected
Adherium as its strategic partner based on their due
diligence across the market. Secondly, Adherium has
by far the most compelling clinical data demonstrating
the effectiveness of its Smartinhaler™ technology in
medication adherence monitoring. Thirdly, Adherium
has a great pharmaceutical partner in AstraZeneca,
and we can see that this collaboration has a multi-year
head start on other initiatives in the market. Finally,
Adherium also has the most extensive set of international
regulatory approvals, and the broadest range of patents
and trademarks. These are the reasons I chose to join
the Adherium team.
Adherium wins “Most Innovative Hi-Tech Hardware Product Award’
at the 2017 NZ High Tech Awards
At Adherium, our vision is to become the adherence
company. We are positioned strategically within a very
large market opportunity. Each year there are just under
a billion asthma or COPD inhalers manufactured to
serve the world’s half-a-billion people who have chronic
respiratory diseases - and these diseases are increasing
in prevalence. However, despite the broad availability
of effective medications, including inhaled steroids,
between 40% and 50% of patients poorly control in their
respiratory health in the G7 countries. The underlying
cause of this poor control is widely understood to
be due to sub-optimal medication adherence to
available maintenance medications. This is where
Adherium’s innovative approach of using connected
digital technology has been proven in numerous peer
reviewed journal articles to be effective at improving
adherence. Adherence monitoring technology will
become ubiquitous in the care of respiratory patients,
and Adherium is at the heart of that transformation
in chronic disease management and remote patient
monitoring.
The Company’s
Smartinhaler™
technology
represents the
best medication
adherence
monitoring solution
in the world
I have hit the ground running with a strategic and
operating plan approved by our board of directors. In
the coming year we will build out our Silicon Valley office
in the US as our global headquarters and commercial
hub, and I have recently appointed Tim Marcotte as
Adherium’s new CFO to help me with that task. Our other
key priorities that you will hear me continue to report
throughout the year because they are critical to our
success are:
• continued successful rollouts of our technology with
AstraZeneca as they enter new geographies, and we
anticipate this will amount to at least 25,000 devices
delivered in fiscal 2018. The ongoing rollouts must
continue to be successful to grow that momentum,
and that will allow Adherium and AstraZeneca to
realize the potential of adherence for Symbicort® and
other treatments. Already this year we have released
our new Model 4 version of the Turbu+ device and
gained US FDA 510(k) approval for our SmartTouch for
Symbicort® device to support these rollouts;
3
Annual Report 2017 Adherium Ltd
•
launch our direct-to-consumer channel, initially with
a successful pilot in New Zealand defined as adding
1,300 active users by June 2018, followed by a launch
in the US in the second half of fiscal 2018; and
• development of our payer and provider relationships,
including developing relationships with large self
insured companies, leveraging our amazing clinical
data and direct-to-consumer evidence to enable
these entities to achieve healthcare cost savings
while improving the quality of life of their customers
and employees.
Top: Adherium at the 2017 ERS Conference in Italy
Bottom: Testing devices at our Asia-based manufacturing plant
I would like to take this opportunity to thank
Garth Sutherland, Adherium’s asthmatic founder, for
the 17 years heavy lifting Garth has admirably
completed, including 5 rounds of capital raising totalling
more than $50 million, the AstraZeneca partnership, and
the team, technology, and manufacturing partnerships
Garth put in place.
I am also excited to be working closely with our refreshed
board, with Thomas Lynch as Chairman following his
appointment in September 2016.
Finally, I would like to thank all of Adherium’s employees,
supporters, shareholders, partners and customers, I am
very much looking forward to working with you all during
this very exciting time.
Arik Anderson
Group CEO
Adherence
monitoring
technology will
become ubiquitous
in the care of
respiratory patients,
and Adherium is
at the heart of that
transformation in
chronic disease
management and
remote patient
monitoring.
4
Annual Report 2017 Adherium Ltd
Directors’ Report
The Directors present their report on the consolidated entity (the Group), consisting of Adherium Limited (the Company
or Adherium) and the entities it controlled at the end of, or during, the year ended 30 June 2017, together with the
independent auditor’s report thereon.
Directors
The Directors of the Company at any time during the year and until the date of this report are:
Mr Thomas Lynch, BSc, FCA. Age 61.
Independent Non-Executive Chairman
Appointed as a Director and Chairman on 1 September 2016.
Mr Lynch has extensive capital markets experience in the internationalisation of the healthcare sector. He has recently
stepped down as chair of Icon plc, one of the world’s largest clinical research organisations having served on its board
for 22 years. Mr Lynch is currently a Chairperson at several notable organisations, including Evofem Holdings, Evofem,
Dublin Academic Medical Centre, Sigmoid Pharma, Molecular Medicine Ireland and the Queen’s University of Belfast
Foundation. Mr Lynch also serves as a non-executive director of GW Pharma plc, a biotechnology company listed on
NASDAQ and AIM. In a pro-bono capacity, Mr Lynch serves as chair of the Ireland East Hospital Group, the largest
hospital group in Ireland. Mr Lynch has also served in a range of roles at Elan Corporation plc and Amarin Corporation
plc. Throughout his career, Mr Lynch has been involved in the listing of a number of companies on the NASDAQ market
and brings significant international capital markets experience to Adherium. Mr Lynch has held no other Australian
public company directorships in the last three years.
Mr Jeremy Curnock Cook, MA. Age 68.
Non-Executive Director
Appointed as a Director on incorporation of Adherium Limited on 17 April 2015.
Mr Curnock Cook was formerly head of the life science private equity team at Rothschild Asset Management in the UK and
an active investor in the Australian life science sector. At Rothschild, Mr Curnock Cook was responsible for the launch of the
first dedicated biotechnology fund for the Australian market. Over his 40-year career, Mr Curnock Cook has specialised in
creating value in emerging biotech enterprises, through active participation with management. He has served on over 40
boards in various roles, including chair of private and public biotechnology companies listed on NASDAQ, LSE, TSX and
ASX. Mr Curnock Cook received his MA in Natural Sciences from Trinity College in Dublin, Ireland. He is currently Managing
Director of BioScience Managers (manager of a major shareholder in Adherium), Chairperson of Avena Therapeutics and
AmpliPhi Biosciences and sits on the board of Avita Medical, Rex Bionics Pty and acts as an alternative director for Sea
Dragon Ltd. Mr Curnock Cook was previously a director of Bioxyne Limited and Phylogica Limited. He has held no other
Australian public company directorships in the last three years.
Dr William Hunter, MD. Age 54.
Independent Non-Executive Director
Appointed as a Director on 17 December 2015.
Dr Hunter has extensive experience in commercialising medical device technologies. He co-founded Angiotech
Pharmaceuticals in 1992 and assumed the position of CEO in 1997 when Angiotech was a venture-stage, private,
pre-clinical company with less than 50 employees. He led Angiotech through its IPO and listing on the Toronto Stock
Exchange and NASDAQ. Dr Hunter has over 200 patents and patent applications to his name and products in which
he was an inventor or co-investor, including the TAXUS® Drug-Eluting Coronary Stent, the Zilver PTX Peripheral
Drug-Eluting Stent, the Quill barbed wound closure device and the 5-FU Anti-Infective Catheter. Combined, these
products have generated revenues of over $12 billion and have helped the lives of over 6 million patients globally. He
is currently President and CEO of Cardiome Pharma Corp (NASDAQ: CRME), a Director of Rex Bionics, Co-Founder
of Canary Medical and is an Industry Expert Advisor for BioScience Managers (manager of a major shareholder
in Adherium). He has previously served as a director of Epirus Biopharmaceuticals (NASDAQ: EPRS) and Union
Medtech. Dr Hunter completed his BSc from McGill University and a MSC and MD from the University of British
Columbia. Dr Hunter served as a practising physician in British Columbia for five years. Dr Hunter held no other
Australian public company directorships in the last three years.
As noted, as an Industry Expert Advisor for BioScience Managers, Dr Hunter has an association with a significant
shareholder of the Company. The board of directors is of the opinion that this does not compromise Dr Hunter’s
independence as to the best of the board’s knowledge he is not involved in decision making by BioScience Managers
and the value of the advisory services provided is not material.
5
Annual Report 2017 Adherium Ltd Mr Bruce McHarrie, B.Com, FCA, GAICD. Age 59.
Independent Non-Executive Director
Appointed as a Director on 20 July 2015.
Mr McHarrie is currently an independent director and consultant with over 20 years’ experience in the health and life
sciences sectors. He was formerly with Telethon Kids Institute in Perth, Western Australia, for 15 years, where his roles
included Chief Financial Officer, Director of Operations and Director of Strategic Projects. Prior to joining Telethon Kids,
Mr McHarrie was a Senior Manager at Deloitte in London before moving to Rothschild Asset Management as Assistant
Director of the Bioscience Unit, a life sciences private equity group investing in early stage biotechnology and healthcare
companies. Outside his role at Adherium, he is currently an advisor to BioScience Managers (manager of a major
shareholder in Adherium), a director at AusCann (Australasian Medical Cannabis) and an independent consultant. Bruce
is a Fellow of the Institute of Chartered Accountants Australia and New Zealand. He holds a Bachelor of Commerce
from the University of Western Australia and is a graduate member of the Australian Institute of Company Directors. Until
recently, Mr McHarrie served as a non-executive director and chairman on the board of ASX listed company, Phylogica
Limited. Mr McHarrie has held no other Australian public company directorships in the last three years.
As noted, as an advisor to BioScience Managers, Mr McHarrie has an association with a significant shareholder of the
Company. The board of directors is of the opinion that this does not compromise Mr McHarrie’s independence as to
the best of the board’s knowledge he is not involved in decision making by BioScience Managers and the value of the
advisory services provided is not material.
Professor John Mills, AO, SB, MD, FACP, FIDSA, FRACP. Age 77.
Independent Non-Executive Director
Appointed as a Director on 20 July 2015.
Professor Mills is an internationally-regarded physician, scientist and biotechnology businessman. He was recruited
from the US to Melbourne 25 years ago as the managing director of the Burnet Institute of Medical Research and
Public Health. Since then Professor Mills has been managing director of an ASX-listed company, Narhex Life Sciences,
chairman of another ASX-listed company, AMRAD Corp., executive chairman of a Swedish biotechnology company,
Cavidi AB and non-executive director of a further ASX listed company, Phosphagenics Corp. Ltd. Thirteen years ago
he co-founded a boutique anatomic pathology practice, TissuPath Specialist Pathology. Before taking his current
position as Director of R&D at TissuPath, he served as Managing Director for three years. He is currently an investment
committee member at an Australian venture capital firm, GBS Venture Partners. Professor Mills is an honours graduate
of the University of Chicago and Harvard Medical School, and is a Fellow of both the US and Australian Colleges of
Physicians. His expertise is in infectious diseases and pulmonary diseases. He maintains a clinical practice at The Alfred
Hospital in Melbourne. Professor Mills has held no other Australian public company directorships in the last three years.
Mr Bryan Mogridge BSc, ONZM, FNZIOD. Age 71.
Independent Non-Executive Director
Appointed as a Director on 20 July 2015.
Mr Mogridge has been a successful public company director for over 30 years. He has been CEO of two listed
companies and has a background in science, manufacturing, investment and technology. His business philosophy
is to be invested where he is involved and grow value for all shareholders. Mr Mogridge is currently Chairperson of
Rakon Ltd and sits on the Board as a Director of Mainfreight, Clearspan, BUPA ANZ and Thinxtra. He also recently
joined as a director of Auckland Regional Amenities Funding Board. Mr Mogridge also has significant involvement in
philanthropy, chairing one of New Zealand’s most successful charities (The Starship Foundation) for 20 years, helping
to transform sick children’s lives through New Zealand’s national children’s hospital “The Starship”. Mr Mogridge
is currently a Trustee for The Starship Foundation. He has previously held directorships at Yealands Wine Group,
Momentum Energy, Waitakere City Holdings, Enterprise Waitakere, Pyne Gould Corporation. Mr Mogridge has also
previously chaired national organisations such as the NZ Wine Institute, the NZ Food and Beverage Exporters Council
and the NZ Tourism Board. He was previously deputy chair of UBS NZ and chair of ASX-listed Lantern Hotel Group
having resigned in June 2015 and held no other Australian public company directorships in the last three years.
Mr Garth Sutherland, MSc, MAICD. Age 51.
Executive Director
Appointed as a Director on 20 July 2015.
Mr Sutherland founded Adherium in 2001 (formerly known as Nexus6). Having had asthma all his life he wanted a
solution for automatically tracking his asthma medication use to improve his asthma management. He is an inventor
of 13 patent families related to the Smartinhaler™ platform and a contributor to over 70 registered designs and several
trademarks registered or used by Adherium. Prior to Adherium, Mr Sutherland worked in a variety of commercial,
marketing and engineering roles. He has spent over 20 years working for some of the world’s top technology
companies in Europe, North America and Australasia including Microsoft and Gallagher Group. Mr Sutherland
graduated with a Masters of Science in Physics from the University of Waikato, New Zealand, with First-Class
Honours. Mr Sutherland has held no other Australian public company directorships in the last three years.
Dr Doug Wilson, MB, ChB, FRACP, FRCPA was a Director and Chairman of Adherium until his resignation on 1 September 2016.
6
Annual Report 2017 Adherium Ltd Joint Company Secretaries
Rob Turnbull, B.Com, CA. Age 50.
VP Finance & Business Services and Joint Company Secretary
Appointed 21 August 2015.
Mr Turnbull has over 25 years’ corporate experience, starting his career with PricewaterhouseCoopers where he
worked in Auckland, Toronto, and London; and has over 15 years’ experience with technology and life-sciences
companies. Mr Turnbull has also been Chief Financial Officer for an ASX-listed biotech company undertaking multiple
international studies ranging from preclinical to clinical Phase 3, and with operations in the United States, Australia
and New Zealand. In addition to capital markets financing and compliance, treasury, tax, financial reporting,
commercial contract negotiations and general management, he has been involved in M&A activity to acquire and
develop specific technologies. Mr Turnbull graduated from Auckland University with a Bachelor of Commerce, and is
a Chartered Accountant and member of Chartered Accountants Australia and New Zealand.
Mark Licciardo, B.Bus (Acc), GradDip CSP, FCSA, FCIS, FAICD. Age 53.
Joint Company Secretary
Appointed 10 May 2016.
Mr Licciardo is Managing Director of Mertons Corporate Services Pty Ltd (Mertons) which provides company secretarial
and corporate governance consulting services to ASX listed and unlisted public and private companies. Prior to
establishing Mertons, Mr Licciardo was Company Secretary of the Transurban Group (2004-07) and Australian
Foundation Investment Company Limited, Djerriwarrh Investments Limited, AMCIL Limited and Mirrabooka Investments
Limited (1997-2004). Mr Licciardo has also had an extensive commercial banking career with the Commonwealth
Bank and State Bank Victoria. Mr Licciardo is a former Chairman of Governance Institute of Australia (GIA) (formerly
the Chartered Secretaries Australia) in Victoria, a fellow of both GIA and the Australian Institute of Company Directors
(AICD), former Chairman of Melbourne Fringe Limited and a director of ASX listed Frontier Digital Ventures and several
unlisted public and private companies.
Directors’ Meetings
The number of meetings of Directors (including meetings of committees of directors) held during the period and the
number of meetings attended by each Director was as follows:
Directors’ Meetings
Audit & Risk Committee
Meetings
Nomination & Remumeration
Committee Meetings
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
T Lynch
J Curnock Cook
W Hunter
B McHarrie
J Mills
B Mogridge
G Sutherland
D Wilson
10
13
13
13
13
13
13
3
10
12
11
13
13
13
13
3
-
6
-
6
6
1
6*
-
-
4
-
6
6
1
3*
-
3
5
-
-
5
5
5*
2
3
5
-
-
4
5
3*
2
*In attendance ex-officio.
Committees of the Board
The Company has established the following committees of the board, with membership in the year to 30 June 2017 as noted:
Committee
Audit & Risk
Nomination & Remuneration
Membership
Bruce McHarrie (Chair), Non-Executive Director
Jeremy Curnock Cook, Non-Executive Director (resigned September 2017)
John Mills, Non-Executive Director
Brian Mogridge, Non-Executive Director (appointed February 2017)
Brian Mogridge (Chair), Non-Executive Director
Jeremy Curnock Cook, Non-Executive Director
John Mills, Non-Executive Director
Thomas Lynch, Non-Executive Director (appointed December 2016)
Doug Wilson, Non-Executive Director (resigned September 2016)
The committees’ Charters are available on the Company’s website.
7
Annual Report 2017 Adherium Ltd Principal Activities
During the year, the principal continuing activity of the Group was the development, manufacture and supply of its
Smartinhaler™ digital health technologies which address sub-optimal medication use and improve health outcomes in
chronic disease.
Results and Dividends
The net loss after tax of the Group for the year ended 30 June 2017 was $12,810,000.
No dividends were paid, declared or recommended during the year ended 30 June 2017.
Review of Operations
During the 2016 fiscal period Adherium transitioned its financial year end from March to June. Accordingly, the 2016
comparatives presented are for a fifteen-month period whereas this report is for the twelve-month period to 30 June 2017.
Revenue this year was $2,347,000, up 12% on 2016 on a twelve-month (versus fifteen-month) basis with the delivery
of 18,000 Smartinhaler™ devices and related mobile app and cloud services, mostly to our major commercial partner
AstraZeneca in relation to:
• AstraZeneca’s ongoing deployments of our monitoring technology into Europe;
• the Australian commercial pilot programme involving over 130 respiratory clinicians and several channels to
distribute the Smartinhaler™ asthma management solution to consumers; and
• the BreatheMate COPD study across a number of US sites using Adherium’s SmartTouch™ for Symbicort®
with supporting services provided by Adherium.
In the latter part of fiscal 2017 this included delivery of 10,000 new Turbu+ devices (based on a new version of
Adherium’s SmartTurbo) and software license updates to AstraZeneca for launches and expansion in key global markets
including Australia, Austria, Italy, The Netherlands, and Switzerland.
In addition, milestones were completed with the Medical Research Institute of New Zealand for two international
studies being run with Adherium’s Smartinhaler™ platform during fiscal 2017.
Revenue of $2,626,000 in the comparative fifteen months was generated on the supply of 30,000 Smartinhaler™
devices, mostly as an initial market launch volume to AstraZeneca’s commercial programme.
Sales and marketing expenses were $3,312,000 for the year (2016: $2,148,000), reflecting the expansion of the global
business development team in the current and previous period, and formal market research projects undertaken in the
year related to new sales channels for Adherium. The Company also attended, presented, and exhibited at a number of
global respiratory industry meetings, including European Respiratory Society (ERS) and American Thoracic Society (ATS).
Research and development expenses for the year to 30 June 2017 of $4,242,000 (2016: $2,713,000) included:
• development of the new version of Adherium’s SmartTurbo™, distributed as Turbu+ by AstraZeneca for their
block-buster drug Symbicort® Turbuhaler, incorporating new sensor technology that generates more data
for enhancing medication adherence and user experience. This device completed development, was
transferred to manufacturing, and launched into multiple new markets by AstraZeneca;
• grant by the US Patent and Trademark Office (USPTO) of a key patent covering medication adherence
monitoring devices that include an optical dose counter, further strengthening the Company’s growing
intellectual property portfolio;
• preparation and submission of an FDA 510(k) application for Adherium’s SmartTouch™ for Symbicort®.
Clearance of this by the US FDA was received in September 2017;
• development of the next generation of our mobile apps (iOS and Android) and cloud software platform,
enabling self-enrolment by patients.
Adherium’s research and development activities are subsidized by grant income received from a New Zealand
Government (Callaghan Innovation) Growth Grant. The increase in grant income from $290,000 in fiscal 2016 to
$409,000 was reflective of increased research and development activities in fiscal 2017.
Administrative expenses of $6,260,000 (2016: $3,906,000) included hires in the roles of Chairman, Chief Executive
Officer, Chief Operating Officer, and Head of Corporate Development in the year, and the assistance of global
consulting company Arthur D. Little in the development of the Company’s strategic plan to target new markets for the
Smartinhaler™ technology.
8
Annual Report 2017 Adherium Ltd
Non-cash costs in the year included share and option compensation expense of $478,000 (2016: $198,000), and
depreciation and amortisation expenses of $270,000 (2016: $164,000). The 2016 period also included non-cash interest
and fair value expenses of $378,000 related to increments in borrowing and embedded derivative classifications of
the Convertible Notes prior to their conversion to Adherium shares, and the expensing of previously capitalised product
development costs of $270,000.
Cash reserves at 30 June 2017 were $22,779,000 (2016: $27,211,000), a net use of funds of $4,432,000 reflecting the
operations discussed above together with an $8m share placement to Fidelity International Limited, one of the world’s
leading investment institutions.
There was increased activity across all areas of Adherium’s business following its IPO in August 2015, enabling the
Company to support AstraZeneca’s global distribution of Adherium’s technology. This relationship has evolved from
development and clinically focused to commercially focused, and continues to be an important strategic cornerstone of
our business, in both potential revenue generation and technology validation. The Company’s intention is now to add to
this segment of its business by distributing its technology through direct to consumer, and payer and provider channels. In
preparation for this, a critical review of activities and resources was undertaken at the end of fiscal 2017 for alignment with
the Company’s revised strategy. Salaries and wages at $6.8m in 2017 (2016: $3.7m) was the Company’s largest expense,
with the increase representing a full financial year after building the internal resource needed to meet expected demand
post-IPO and focus on new business development opportunities. As a result of the strategic review, a reorganisation and
consolidation of staffing was implemented. In relation to this, approximately $3m of costs recorded in fiscal 2017 as salaries
and wages and other administrative costs relate to roles removed or costs that will not be incurred in fiscal 2018.
Significant Changes in the State of Affairs
There have been no significant changes in the state of affairs of the Group during the financial year ended 30 June 2017.
Events since the end of the Financial Year
There are no matters or circumstances that have arisen since the end of the financial year that have significantly affected
or may significantly affect the operations of the Group, the results of those operations or the state of affairs in future years.
Likely Developments and Expected Results
Commentary on the Group’s strategic direction and plan is set out in the CEO’s Report on pages 3 to 4.
Environmental Regulation
The Group’s operations are not subject to any significant environmental Commonwealth or State regulations or laws.
Directors’ Interests
The relevant interest of each Director in shares and options over shares in the Company as notified by the Directors to
the ASX in accordance with section 205G of the Corporations Act 2001 as at 30 June 2017 is:
Director
T Lynch
J Curnock Cook
W Hunter
B McHarrie
J Mills
B Mogridge
G Sutherland
Ordinary Shares
Options over Ordinary Shares
600,000
380,000
300,000
300,000
340,000
9,613,023 *
11,869,055
-
-
-
-
-
-
866,190
* relevant interest includes 7,813,023 ordinary shares held in the Director’s capacity as trustee of the Company’s Employee Share Plan.
Indemnification and Insurance of Directors and Officers
The Company has entered into deeds of access, insurance and indemnity with each director and officer which contain
rights of access to certain books and records of the Group for a period of seven years after the director or officer ceases
to hold office. This seven-year period can be extended where certain proceedings or investigations commence before
the seven-year period expires.
9
Annual Report 2017 Adherium Ltd
In respect of the indemnity of the directors and officers, the Company is required, pursuant to the constitution, to indemnify
all directors and officers, past and present, against all liabilities allowed under law. Under the deed of access, insurance
and indemnity, the Company indemnifies parties against all liabilities to another person that may arise from their position
as a director or an officer of the Company or its subsidiaries to the extent permitted by law. The deed stipulates that the
Company will meet the full amount of any such liabilities, including reasonable legal costs and expenses.
In respect of insurance being obtained on behalf of the directors and officers, the Company may arrange and maintain
directors’ and officers’ insurance for its directors and officers to the extent permitted by law. Under the deed of access,
insurance and indemnity, the Company must obtain such insurance during each director’s and officer’s period of
office and for a period of seven years after a director or an officer ceases to hold office. This seven year period can be
extended where certain proceedings or investigations commence before the seven-year period expires.
Disclosure of the insurance premiums and the nature of liabilities covered by such insurance are prohibited by the
relevant contracts of insurance.
Shares Under Option
Unissued shares
As at the date of this report, unissued ordinary shares of the Company under option comprised:
Exercise price
Total Number of Options
$0.075268
$0.075268
$0.075268
$0.134039
$0.134039
$0.134039
$0.134039
$0.134039
$0.134039
$0.665
Outstanding at 30 June 2017
600,521
799,061
589,892
173,238
217,214
542,952
1,039,428
259,857
173,238
1,400,000
5,795,401
Vested
600,521
799,061
589,892
173,238
217,214
542,952
1,039,428
259,857
173,238
1,400,000
5,795,401
Expiry Date
31 March 2018
31 March 2019
31 March 2020
31 March 2020
30 November 2020
16 December 2020
1 January 2021
24 March 2021
31 March 2022
3 September 2018
The options over unissued ordinary shares do not entitle the holder to participate in any share issue of the Company or
any entity in the Group.
No options were granted to the Directors of the Company or other key management personnel of the Group in the year
to 30 June 2017.
Details of fully paid ordinary shares issued on exercise of options in the year to 30 June 2017 are contained in the
accompanying consolidated financial statements.
Proceedings on behalf of the Company
There are no legal or other proceedings being made on behalf of the Company or against the Company as at the date of this report.
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.
The fees paid to PricewaterhouseCoopers for other services set out in note 5 of the Group’s financial statements for
the year ended 30 June 2017 related to independent assurance services provided pursuant to the Group’s claims for
reimbursement under governmental research and development grant programmes. The directors are satisfied that the
provision of these services during the year by the auditor did not impair the auditors’ independence as the amounts paid
were not significant and the services provided were assurance related.
10
Annual Report 2017 Adherium Ltd Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 in
relation to the audit for the financial year is provided with this report.
Corporate Governance Statement
The board of Directors of Adherium Limited is responsible for corporate governance. The board has prepared the
Corporate Governance Statement (CGS) in accordance with the third edition of the ASX Corporate Governance
Council’s Principles and Recommendations under which the CGS may be made available on the Company’s website.
Accordingly, a copy of the Company’s CGS is available on the Adherium website at www.adherium.com under the
Investors/Corporate Governance section.
Remuneration Report (Audited)
The Directors present the Group’s 2017 remuneration report which sets out the remuneration information for the
Company’s Non-Executive Directors, Executive Director and other key management personnel of the Group.
The report contains the following sections:
(a) Details of key management personnel disclosed in this report
(b) Remuneration governance
(c) Executive remuneration policy and framework
(d) Relationship between remuneration and Group performance
(e) Non-Executive director remuneration policy
(f) Details of remuneration of key management personnel
(g) Service agreements
(h) Details of share and option based compensation and bonuses
(i) Equity instruments held by key management personnel
(j) Other transactions with key management personnel
(a) Details of key management personnel disclosed in this report
The following persons acted as key management personnel of the Company and the Group during the year ended 30 June 2017.
(i) Non-Executive and Executive Directors
•
•
•
•
•
•
•
•
Thomas Lynch
Non-Executive Chairman (appointed 1 September 2016)
Doug Wilson
Non-Executive Chairman (appointed 20 July 2015; resigned 1 September 2016)
Jeremy Curnock Cook
Non-Executive Director (appointed on incorporation 17 April 2015)
William Hunter
Non-Executive Director (appointed 17 December 2015)
Bruce McHarrie
Non-Executive Director (appointed 20 July 2015)
John Mills
Non-Executive Director (appointed 20 July 2015)
Bryan Mogridge
Non-Executive Director (appointed 20 July 2015)
Garth Sutherland
Executive Director (appointed 20 July 2015) and Founder (Group CEO until 9 June 2017)
(ii) Non-Executive and Executive Directors
•
•
•
•
Arik Anderson
Rob Turnbull
Mark Licciardo
Group Chief Executive Officer (appointed 9 June 2017)
Joint Company Secretary (appointed 21 August 2015) and VP Finance
& Business Services (Chief Financial Officer until 11 September 2017)
Joint Company Secretary (appointed 10 May 2016)
Ross Bradding
Chief Operating Officer (appointed 1 August 2016)
(iii) Changes since the end of the reporting period
In the period after 30 June 2017 and up to the date of this report the following changes to key management personnel were:
• On 31 August 2017 Mr Ross Bradding resigned as Chief Operating Officer; and
• On 11 September 2017 Mr Tim Marcotte joined the Group as Chief Financial Officer.
11
Annual Report 2017 Adherium Ltd
(b) Remuneration Governance
The Nomination and Remuneration Committee is a committee of the board. Its responsibilities include assisting the
board in ensuring that the Company:
• has coherent remuneration policies and practices which are observed and which enable it to attract and
retain executives and directors who will create value for shareholders;
• fairly and responsibly rewards executives having regard to the performance of the Company,
the performance of the executive and the general pay environment;
• provides disclosure in relation to the Company’s remuneration policies to enable investors to understand the
costs and benefits of those policies and the link between remuneration paid to directors and key executives
and corporate performance; and
• complies with the provisions of the ASX Listing Rules and the Corporations Act.
The primary purpose of the Nomination and Remuneration Committee is to support and advise the board in fulfilling its
responsibilities to shareholders in ensuring that the board is appropriately remunerated, structured and comprised of
individuals who are best able to discharge the responsibilities of directors by:
• assessing the size, composition, diversity and skills required by the board to enable it to fulfil its
responsibilities to shareholders, having regard to the Company’s current and proposed scope of activities;
• assessing the extent to which the required knowledge, experience and skills are represented on the board;
• establishing processes for the identification of suitable candidates for appointment to the board;
• overseeing succession planning for the board and the Chief Executive Officer;
• establishing processes for the review of the performance of individual directors and the board as a whole;
• assessing the terms of appointment and remuneration arrangements for non-executive directors; and
• assessment and reporting to the board in relation to:
- executive remuneration policy;
-
-
the remuneration of executive directors;
the remuneration of persons reporting directly to the Chief Executive Officer, and as appropriate,
other executive directors;
- diversity plans, measurable diversity objectives and ensuring equality in remuneration across gender
aligned, where relevant, with the ASX Corporate Governance Guidelines;
-
- superannuation arrangements; and
- all equity-based plans.
the Company’s recruitment, retention and termination policies and procedures;
(c) Executive remuneration policy and framework
Remuneration policy
The policy for determining the nature and amount of remuneration of key management personnel is agreed by the
board of directors as a whole on advice from the Nomination and Remuneration Committee. The board obtains
professional advice where necessary to ensure that the Group attracts and retains talented and motivated directors and
employees who can enhance the performance of the Group through their contributions and leadership. The Nomination
and Remuneration Committee makes specific recommendations on the remuneration package and other terms of
employment for the CEO having regard to his performance, relevant comparative information, and if appropriate,
independent expert advice.
For key management personnel, the Group provides a remuneration package that incorporates both cash-based
remuneration and, if appropriate, share-based remuneration. The contracts for service between the Group and key
management personnel are on a continuing basis, the terms of which are to align executive performance-based
remuneration with Group objectives.
The Nomination and Remuneration Committee is also responsible for making recommendations to the board in relation
to the terms of any issue of equity-based remuneration to employees, as part of their individual package, or a wider staff
incentive and retention scheme, and for ensuring that any such issue is made in accordance with the ASX Listing Rules.
Executive pay
The executive pay and reward framework has three components:
• base pay and benefits, including legislative superannuation;
• short-term performance incentives; and
•
long-term incentives through participation in the Adherium Employee Share Plans.
A combination of some or all of these components comprises an executive’s total remuneration.
Base pay
Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Base pay for
executives is reviewed annually to ensure that executive remuneration is competitive with the market.
12
Annual Report 2017 Adherium Ltd
There are no guaranteed base pay increases included in any executives’ contracts.
Short-term incentives (STI)
Executives have a target STI opportunity depending on the accountabilities of the role and impact on the organisation.
The STI is a cash-based incentive which forms part of the executive’s total compensation, representing between 0%
and 50% of base salary. Each year, the Nomination and Remuneration Committee in conjunction with the CEO, will
consider the appropriate targets and key performance indicators (KPIs) of each executive to link the STI plan and the
level of payout if targets are met. This will include setting any maximum payout under the STI plan, and minimum levels
of performance to trigger payment of STI. The targets and KPIs selected are chosen to align executive performance
with the Group’s annual business objectives set by the board and encompassing business development, research &
development, and cash management.
The STI achievement is calculated and paid annually. The Nomination and Remuneration Committee in conjunction
with the CEO assesses the extent to which targets and KPIs have been achieved at a Company and individual
performance level to determine the STI to be paid. Measurement of achievement of the business objectives does not
involve comparison with factors external to the Company.
Long-term incentives (LTI)
Long-term incentives are provided to certain employees via the Adherium Employee Share Plans (the Plans), one of
which is operated for New Zealand resident participants and the other for participants resident elsewhere.
The board has the discretion to offer and issue to eligible employees including directors:
• ordinary shares in the Company issued at an issue price determined by the board. To date all shares have been
•
issued at the Company’s initial public offering price of A$0.50 per share;
limited recourse loans where some or all of the issue price of the share awards are funded by way of a loan
from the Company.
The Plans are designed to focus directors and executives on delivering long-term shareholder returns.
Share awards issued under the Plans generally vest in three equal tranches over three years of continuing employment.
If the vesting condition is not met, the related share award is forfeited and loan cancelled such that the executive
receives no benefit from unvested shares.
Participation in the Plans is at the board’s discretion and executives do not have a contractual right to participate in the Plans.
(d) Relationship between remuneration and Group performance
The Group is presently in a business growth phase, as it undertakes continued product development, and seeks relevant
regulatory approvals for its technologies and market penetration for its products, and this is the focus of executives and
the board. During this phase expenditures continue to exceed revenues, and in the year ended 30 June 2017 the Group
incurred a loss after tax of $12,810,000 (7.6 cent loss per share). In the year to 30 June 2017 the Company’s shares traded
between 12.5 and 50 cents per share. Given the stage of the Group’s commercial development, the board does not
utilise earnings per share as a performance measure and does not presently include the Company’s share price as a
measure of executive performance.
No dividends were paid, declared or recommended during the period ended 30 June 2017.
(e) Non-Executive Director remuneration policy
On appointment to the board, Non-Executive Directors enter into a service agreement with the Company in the form of a
letter of appointment. The letter summarises the board policies and terms, including remuneration, relevant to the office
of director.
Non-Executive Directors receive a fee which is inclusive of fees for chairing or participating on board committees. They
do not receive performance-based pay. Non-Executive Directors’ fees and payments are reviewed annually by the
board. The Non-Executive Chairman’s fees are determined independently of the fees of Non-Executive Directors based
on comparative roles in the external market. Non-Executive Chairman and Director fees were approved at the 2016
Annual General Meeting at $100,000 per annum for the Non-Executive Chairman (previously $80,000 per annum) and
$50,000 for each Non-Executive Director (previously $40,000 per annum). Legislative superannuation contributions are
also paid where applicable.
A Non-Executive Director may be paid fees or other amounts as the board determines where a Director performs ser-
vices outside the scope of the ordinary duties of a Director. The Company may reimburse Non-Executive Directors for
their expenses properly incurred as a Director or in the course of office.
13
Annual Report 2017 Adherium Ltd
(f) Details of remuneration of key management personnel
Remuneration for the year
ended 30 June 2017
Short Term Benefits
Post Employment Benefits
Share-based Payments
Salaries & Fees
$
Cash Bonus
$
Superannuation
$
Value of Options/
Loan Funded Shares5
Performance Related
Renumeration
Fixed
Renumeration
$
Directors’ remuneration
Thomas Lynch 1
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
John Mills
Bryan Mogridge
Doug Wilson 1
Sub-total Directors
Executives’ remuneration
Arik Anderson 2
Garth Sutherland 2
Ross Bradding 3
Mark Licciardo 4
Rob Turnbull
Sub-total executives
80,000
46,667
46,667
46,667
46,667
46,667
13,333
326,668
44,181
264,474
212,130
44,628
207,801
773,214
Total key management personnel
1,099,882
-
-
-
-
-
-
-
-
-
79,342
-
-
49,983
129,325
129,325
-
-
-
4,196
4,196
-
-
8,392
-
14,047
6,364
-
7,796
28,207
36,599
1. Doug Wilson resigned 1 September 2016. At that time Thomas Lynch was appointed a Director and Chairman.
2. Arik Anderson joined Adherium as Chief Executive Officer on 9 June 2017. At that time, former Chief Executive Officer, Garth Sutherland,
transitioned to the role of Founder.
3. Ross Bradding joined Adherium as Chief Operating Officer on 1 August 2016.
Remuneration for the fifteen months
ended 30 June 2016
Short Term Benefit
Post Employment
Benefits
- Adherium Limited
- Adherium (NZ) Limited
- Adherium Limited
- Adherium (NZ) Limited
- Adherium Limited
- Adherium Limited
- Adherium Limited
- Adherium Limited
- Adherium (NZ) Limited
- Adherium (NZ) Limited
Directors’ remuneration
Doug Wilson
Jeremy Curnock Cook
Bruce McHarrie
William Hunter 1
John Mills
Bryan Mogridge
Matt McNamara 2
Maxine Simmons 2
Sub-total Directors
Executives’ remuneration
Garth Sutherland
Bronwyn Le Grice 3
Mark Licciardo 4
Rob Turnbull
Sub-total executives
Total key management personnel
Salaries & Fees
$
Cash Bonus
$
Superannuation
$
Performance Related
Renumeration
Fixed
Renumeration
$
80,000
41,908
40,000
14,162
40,000
20,000
40,000
40,000
15,019
14,162
345,251
312,638
181,186
5,718
234,101
733,643
1,078,894
-
-
-
-
-
-
-
-
-
-
-
22,105
-
-
-
22,105
22,105
-
-
-
-
3,483
-
3,483
-
-
-
6,966
13,390
16,002
-
7,023
36,415
43,381
William Hunter was appointed a Non-Executive Director 17 December 2015.
Adherium (NZ) Limited directors resigned on admission of Adherium Limited to the Official List of the ASX.
Bronwyn Le Grice joined Adherium 19 August 2015 and resigned as Head of Commercial Development and Corporate Affairs on 22 April 2016,
and as Joint Company Secretary 10 May 2016.
1.
2.
3.
14
$
-
-
-
12,200
6,100
6,100
6,100
6,100
6,100
42,700
19,165
21,652
27,125
67,942
110,642
$
-
-
-
-
-
-
-
-
5,678
3,407
3,407
3,407
15,899
7,658
3,585
11,243
27,142
Share-based Payments
Value of Options/
Loan Funded Shares5
Total
$
92,200
52,767
52,767
56,963
56,963
52,767
13,333
377,760
44,181
377,028
240,146
44,628
292,705
998,688
1,376,448
Total
$
80,000
47,586
40,000
17,569
43,483
20,000
43,483
40,000
18,426
17,569
368,116
355,791
197,188
5,718
244,709
803,406
1,171,522
$
13%
12%
12%
11%
11%
12%
-
-
-
26%
9%
26%
4%
6%
$
-
-
-
-
18%
19%
8%
-
-
1%
87%
88%
88%
89%
89%
88%
100%
100%
74%
91%
-
74%
96%
94%
-
-
-
-
-
-
82%
81%
92%
99%
Annual Report 2017 Adherium Ltd
(f) Details of remuneration of key management personnel
Remuneration for the year
ended 30 June 2017
Short Term Benefits
Post Employment Benefits
Share-based Payments
Salaries & Fees
Cash Bonus
Superannuation
Value of Options/
Loan Funded Shares5
$
12,200
6,100
6,100
6,100
6,100
6,100
-
42,700
-
19,165
21,652
-
27,125
67,942
110,642
Performance Related
Renumeration
$
Fixed
Renumeration
$
13%
12%
12%
11%
11%
12%
-
-
26%
9%
-
26%
87%
88%
88%
89%
89%
88%
100%
100%
74%
91%
-
74%
Total
$
92,200
52,767
52,767
56,963
56,963
52,767
13,333
377,760
44,181
377,028
240,146
44,628
292,705
998,688
1,376,448
1. Doug Wilson resigned 1 September 2016. At that time Thomas Lynch was appointed a Director and Chairman.
2. Arik Anderson joined Adherium as Chief Executive Officer on 9 June 2017. At that time, former Chief Executive Officer, Garth Sutherland,
transitioned to the role of Founder.
3. Ross Bradding joined Adherium as Chief Operating Officer on 1 August 2016.
4. A company of which Mr Licciardo is a director received fees from the Company for company secretarial and corporate governance consulting services.
5. The fair values of options and loan funded shares are calculated at the date of grant using a Black-Scholes pricing model and allocated to each
reporting period in accordance with vesting. The values noted represent the portion of the fair value of the options or loan funded shares allocated
to the reporting period.
Remuneration for the fifteen months
ended 30 June 2016
Short Term Benefit
Post Employment
Benefits
Salaries & Fees
Cash Bonus
Superannuation
Share-based Payments
Value of Options/
Loan Funded Shares5
$
-
5,678
-
3,407
-
-
-
-
3,407
3,407
15,899
7,658
-
-
3,585
11,243
27,142
Performance Related
Renumeration
$
Fixed
Renumeration
$
4%
6%
-
-
-
-
18%
19%
8%
-
-
1%
96%
94%
-
-
-
-
82%
81%
92%
-
-
99%
Total
$
80,000
47,586
40,000
17,569
43,483
20,000
43,483
40,000
18,426
17,569
368,116
355,791
197,188
5,718
244,709
803,406
1,171,522
Directors’ remuneration
Thomas Lynch 1
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
John Mills
Bryan Mogridge
Doug Wilson 1
Sub-total Directors
Executives’ remuneration
Arik Anderson 2
Garth Sutherland 2
Ross Bradding 3
Mark Licciardo 4
Rob Turnbull
Sub-total executives
Total key management personnel
1,099,882
$
80,000
46,667
46,667
46,667
46,667
46,667
13,333
326,668
44,181
264,474
212,130
44,628
207,801
773,214
$
-
-
-
-
-
-
-
-
79,342
-
-
-
49,983
129,325
129,325
Jeremy Curnock Cook
- Adherium Limited
- Adherium Limited
- Adherium (NZ) Limited
- Adherium (NZ) Limited
- Adherium Limited
- Adherium Limited
- Adherium Limited
- Adherium Limited
- Adherium (NZ) Limited
- Adherium (NZ) Limited
Directors’ remuneration
Doug Wilson
Bruce McHarrie
William Hunter 1
John Mills
Bryan Mogridge
Matt McNamara 2
Maxine Simmons 2
Sub-total Directors
Executives’ remuneration
Garth Sutherland
Bronwyn Le Grice 3
Mark Licciardo 4
Rob Turnbull
Sub-total executives
Total key management personnel
$
80,000
41,908
40,000
14,162
40,000
20,000
40,000
40,000
15,019
14,162
345,251
312,638
181,186
5,718
234,101
733,643
1,078,894
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22,105
22,105
22,105
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
4,196
4,196
8,392
14,047
6,364
7,796
28,207
36,599
3,483
3,483
6,966
13,390
16,002
7,023
36,415
43,381
1.
2.
3.
William Hunter was appointed a Non-Executive Director 17 December 2015.
Adherium (NZ) Limited directors resigned on admission of Adherium Limited to the Official List of the ASX.
Bronwyn Le Grice joined Adherium 19 August 2015 and resigned as Head of Commercial Development and Corporate Affairs on 22 April 2016,
and as Joint Company Secretary 10 May 2016.
4. A company of which Mr Licciardo is a director received fees from the Company for company secretarial and corporate governance consulting
services, commencing 10 May 2016.
5. The fair values of options and loan funded shares are calculated at the date of grant using a Black-Scholes pricing model and allocated to each
reporting period in accordance with vesting. The values noted represent the portion of the fair value of the options or loan funded shares allocated
to the reporting period.
15
Annual Report 2017 Adherium Ltd
(g) Service agreements
Joint Company Secretary - Mr Mark Licciardo
Mr Licciardo currently provides company secretarial and corporate governance services under a service arrangement
between the Company and Merton Corporate Services Pty Ltd, a company associated with Mr Licciardo. The current
arrangement has no predetermined termination date, with each party having the right to terminate the arrangement by
giving ninety days’ notice in writing to the other party.
Other key management personnel of the Group
Remuneration and other terms of employment for other key management personnel of the Group are formalised in
employment agreements which specify the components of remuneration, benefits and notice periods. Participation in the STI
and LTI plans is subject to the board’s discretion. Other major provisions of the agreements relating to remuneration are set
out below:
Name
Term of
Agreement
Notice Period
Base Salary 2
Termination
Payments 3
Arik Anderson, Group Chief Executive Officer
No fixed term 1 month by Company;
3 months by executive
US$400,000
6 months
Garth Sutherland, Founder
Ross Bradding, Chief Operating Officer
Rob Turnbull, VP Finance & Business Services
(Chief Financial Officer until 11 September 2017)
No fixed term
No fixed term
No fixed term
3 months 1
NZ$280,000
2 months 1
NZ$245,000
1 month 1
NZ$220,000
6 months
2 months
1 month
1. The notice period applies without cause equally to either party.
2. Base salaries quoted are annual as at 30 June 2017; they are reviewed annually by the Nomination and Remuneration Committee.
3. Base salary payable if the Group terminates the employee with notice, and without cause (e.g. for reasons other than unsatisfactory performance).
(h) Details of share and option based compensation
Options over ordinary shares of the Company
All options over ordinary shares issued by the Company are exercisable on a one-for-one basis, and any shares issued
on exercise are fully paid and rank pari passu with existing ordinary shares.
During the period to 30 June 2017 and to the date of this report:
•
•
173,238 options held by Garth Sutherland in relation to the 2010 financial year lapsed; and
150,000 options over ordinary shares were exercised by Rob Turnbull during the year to 30 June 2017.
The options had a value of $144 at the time of exercise.
Loan funded Employee Share Plan
The board has established the loan funded Adherium Employee Share Plans (Plans). Offers of allocations under the
plans were made to, and acceptances received from, key management personnel during the year ended 30 June 2017
as follows:
Name
Grant date
Thomas Lynch
8 November 2016
Jeremy Curnock Cook
8 November 2016
Bruce McHarrie
8 November 2016
William Hunter
8 November 2016
John Mills
8 November 2016
Bryan Mogridge
8 November 2016
Garth Sutherland
8 November 2016
Ross Bradding
23 August 2016
Loan funded
purchase price
at $0.50
per share
Number
of shares
Loan
maturity date
Fair value
of award
600,000
300,000
300,000
300,000
300,000
300,000
521,367
459,145
$300,000
8 November 2021
$150,000
8 November 2021
$150,000
8 November 2021
$150,000
8 November 2021
$150,000
8 November 2021
$150,000
8 November 2021
$260,684
8 November 2021
$229,573
23 August 2021
$31,140
$15,570
$15,570
$15,570
$15,570
$15,570
$60,565
$41,583
All awards vest one third annually over three years of continued employment from the grant date. After vesting the
participant may take title to the shares by repaying to the Company the proportion of the loan related to those shares.
The fair value of the awards of loan funded shares are calculated at the date of grant using a Black-Scholes pricing
model, which are being allocated over the vesting periods as share based compensation.
16
Annual Report 2017 Adherium Ltd
(i)
Equity instruments held by key management personnel
Shareholdings
The numbers of ordinary shares in the Company held during the period to 30 June 2017 by each director and other key
management personnel of the Group, including their personally related parties, are set out below
Name
Thomas Lynch
Jeremy Curnock Cook
Bruce McHarrie
William Hunter
John Mills
Bryan Mogridge
Doug Wilson
Garth Sutherland
Ross Bradding
Mark Licciardo
Rob Turnbull 2
Balance
at the start of the
period 1
Purchases
Other changes
during the period
Balance
at the end of the
period
-
80,000
-
-
40,000
8,358,807
1,039,428
11,347,688
-
-
409,645
-
-
-
-
-
-
-
-
-
-
-
600,000 1
300,000 1
300,000 1
300,000 1
300,000 1
300,000 1
954,216 2
-
521,367 1
459,145 1
-
150,000 3
600,000
380,000
300,000
300,000
340,000
9,613,023 2
1,039,428 4
11,869,055
459,145
-
559,645
1. Award of loan funded shares under the Company’s Employee Share Plan.
2. Ordinary shares held jointly with the VP Finance & Business Services in their capacity as trustees of the Company’s Employee Share Plan.
At 30 June 2017 7,813,023 ordinary shares were held in this capacity.
3. Exercise of options to acquire ordinary shares.
4. Holding as at the date of resignation.
(j) Other transactions with key management personnel
There were no other transactions with Directors or other key management personnel.
End of audited Remuneration Report.
This report is made in accordance with a resolution of the directors.
Thomas Lynch
Non-Executive Chairman
Sydney
26 September 2017
17
Annual Report 2017 Adherium Ltd
Auditor’s Independence Declaration
Auditor’s Independence Declaration
As lead auditor for the audit of Adherium Limited for the year ended 30 June 2017, I declare that to the best of my
knowledge and belief, there have been:
1. no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
2. no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Adherium Limited and the entities it controlled during the period.
Jonathan Skilton
Partner
PricewaterhouseCoopers
Auckland
29 September 2017
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
18
Annual Report 2017 Adherium Ltd
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
Notes to the Financial Statements
19
Annual Report 2017 Adherium Ltd Consolidated Statement of Profit or Loss and
Other Comprehensive Income for the year ended 30 June 2017
Notes
June 2017
$000
June 2016
$000
Continuing Operations
Sales
Cost of sales
Gross profit
Grants income
Manufacturing support
Research and development costs
Sales and marketing costs
Administrative expenses
Operating loss
Interest income
Interest expense
Finance income (cost) - net
Loss before income tax
Income tax expense
Loss for the period attributable to equity holders
Other comprehensive income
Items that may be reclassified subsequently to profit or loss when
certain conditions are met: Foreign exchange differences on
translation of foreign operation
Other comprehensive income for the period, net of tax
Total comprehensive loss for the period
Total comprehensive loss attributable to:
Equity holders of Adherium Limited
2,347
(1,186)
1,161
409
(1,179)
(4,242)
(3,312)
(6,260)
(13,423)
613
-
613
2,626
(1,336)
1,290
290
(879)
(2,713)
(2,148)
(3,906)
(8,066)
560
(379)
181
(12,810)
(7,885)
-
-
(12,810)
(7,885)
22
22
203
203
(12,788)
(7,682)
(12,788)
(7,682)
7
6
Basic and diluted loss per share
8
7.6 cents
6.6 cents
The accompanying notes form part of the financial statements.
20
Annual Report 2017 Adherium Ltd Consolidated Statement of Financial Position as at 30 June 2017
Notes
June 2017
$000
June 2016
$000
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Income received in advance
Total current liabilities
EQUITY
Share capital
Accumulated deficit
Other reserves
Total equity
Total liabilities & equity
The accompanying notes form part of the financial statements.
9
10
11
12
13
14
22,779
27,211
826
726
78
948
418
49
24,409
28,626
417
265
298
31
25,091
28,995
2,382
4
2,386
1,394
104
1,498
15
74,278
66,720
(25,820)
(13,010)
(25,753)
(26,253)
22,705
25,091
27,457
28,955
21
Annual Report 2017 Adherium Ltd
Consolidated Statement of Changes in Equity for the year ended 30 June 2017
Share
Capital
Accumulated
Deficit
Share &
Option
Compensation
Reserve
Foreign
Currency
Translation
Reserve
Merger
Reserve
$000
$000
$000
$000
Total
Equity
$000
1,017
(7,885)
203
(7,682)
2,204
-
-
-
-
-
(27,535)
-
-
-
-
-
35,000
(3,706)
426
198
447
-
203
203
-
-
-
-
-
-
650
(27,535)
27,457
-
22
22
-
-
-
-
-
-
-
-
-
-
-
(12,810)
22
(12,788)
8,023
(511)
46
478
672
(27,535)
22,705
434
-
-
-
-
-
-
-
-
198
632
-
-
-
-
-
-
478
1,110
Equity as at 1 April 2015
Loss for the year
Other comprehensive
income
Total comprehensive loss
Transactions with owners:
$000
5,261
-
-
-
Shares issued on Convertible
Notes conversion
2,204
Shares issued in capital
reorganisation
27,535
Shares issued in initial
public offering
Share issue costs
Shares issued on option
exercise
Share and option grants
for services
35,000
(3,706)
426
-
Equity as at 30 June 2016
66,720
Loss for the year
Other comprehensive
income
Total comprehensive loss
Transactions with owners:
Shares issued in private
placement
Share issue costs
Shares issued on option
exercise
Shares issued in initial
public offering
-
-
-
8,023
(511)
46
-
(5,125)
(7,885)
-
(7,885)
-
-
-
-
-
-
(13,010)
(12,810)
-
(12,810)
-
-
-
-
Equity as at 30 June 2017
74,278
(25,820)
The accompanying notes form part of the financial statements.
22
Annual Report 2017 Adherium Ltd Consolidated Statement of Cash Flows for the year ended 30 June 2017
Notes
June 2017
$000
June 2016
$000
Cash flows from operating activities:
Receipts from customers
Receipts from grants
Interest received
Resident withholding tax refunded (paid)
Payments to employees
Payments to suppliers
Net cash provided from (used in) operating activities
Cash flows from investing activities:
Purchase of property, plant and equipment
Purchase of software
Product development costs incurred
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issue of shares
Proceeds from the exercise of options
Payment of capital raising costs
Payment of convertible note issue costs
Net cash provided from financing activities
Net increase (decrease) in cash
Cash at the beginning of the year
Effect of exchange rate changes on cash balances
Cash at the end of the year
Reconciliation with loss after income tax:
Loss after income tax
Non-cash items requiring adjustment:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Product development costs expensed
Interest accrued to borrowings
Share and option compensation expense
Foreign exchange (gain)
Changes in working capital:
Trade and other receivables
Inventories
Trade and other payables
Income received in advance
Net cash provided from (used in) operating activities
The accompanying notes form part of the financial statements.
13
13
15
15
9
12
13
13
7
2,363
506
601
(9)
(6,333)
(8,709)
(11,581)
(362)
(202)
-
(564)
8,023
46
(511)
-
7,558
(4,587)
27,211
155
22,779
1,124
82
560
(15)
(3,284)
(6,380)
(7,913)
(297)
(41)
(102)
(440)
35,000
426
(3,471)
(43)
31,912
23,559
3,468
184
27,211
(12,810)
(7,885)
234
36
-
-
478
(74)
80
(303)
875
(97)
(11,581)
152
12
270
378
198
(121)
(630)
522
327
(1,136)
(7,913)
23
Annual Report 2017 Adherium Ltd Notes to the financial statements for the year ended 30 June 2017
1. General Information
Adherium Limited (the Company or Adherium) is a company domiciled in Australia. The address of the Company’s
registered office is Collins Square, Tower Four, Level 18, 727 Collins Street, Melbourne, VIC 3008. The consolidated
financial statements of the Company as at and for the year ended 30 June 2017 comprise the Company and its
subsidiaries (together referred to as the Group and individually as Group entities). The Group is a for-profit entity and
primarily develops, manufactures and supplies digital health technologies which address sub-optimal medication use
and improve health outcomes in chronic disease.
The separate financial statements of the parent entity, Adherium Limited, have not been presented within this
financial report as permitted by the Corporations Act 2001.
The consolidated financial statements were authorised for issue by the Board on 26 September 2017.
2. Basis of Presentation
This general purpose consolidated financial report for the twelve months ended 30 June 2017 has been prepared in
accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards
Board and the Corporations Act 2001.
The consolidated financial statements have been prepared on a going concern basis, meaning the Group has the
intention to continue its business for the foreseeable future, without the need to significantly curtail activity.
As of June 30, 2017, the Group had net cash of $ 22,779,000 (2016: $27,211,000) and operating cash outflows of
$11,581,000 (2016: $7,913,000).
The Directors have approved forecasts that indicate the Group can manage its operating requirements beyond 12
months from the date of authorization of these financial statements. The directors considered the achievability of the
assumptions underlying the forecast, and as with any forecast, there are uncertainties within the assumptions required
to meet the Group’s expectations. Whether the Group can secure sufficient cash flows from new revenue streams over
the next 12 months and beyond, and/or it can execute plans to reduce costs and/or raise additional capital, represent
material uncertainties that cast significant doubt over the Group’s ability to continue as a going concern. If revenue
forecasts from new sales initiatives are not met over the next 12-24 months, cash reserves could reduce to a level where
the Group is unable to meet its obligations in the normal course of business. Despite these uncertainties, the Directors
are of the view that the underlying assumptions in forecasting the performance and cash flows of the Group for the
next year are reasonable and adoption of the going concern basis is appropriate from the date of approval of these
financial statements.
During the period to 30 June 2016 Adherium completed an initial public offering and listed on the Australian Securities
Exchange. In that process the listing entity, Adherium Limited was incorporated in Australia by the existing New
Zealand based operating company, Adherium (NZ) Limited (formerly Nexus6 Limited). Prior to the initial public offering
and listing, the owners of Adherium (NZ) Limited swapped their security holdings for securities in Adherium Limited.
This capital reorganisation did not fall within the scope AASB 3 Business Combinations, and from the shareholders’
perspective the reporting entity is the same before and after the reorganisation. Accordingly, the carrying values of
the Group’s assets and liabilities on reorganisation, and the relevant comparative financial information, are that of
Adherium (NZ) Limited.
These financial statements are prepared for the year ended 30 June 2017, the comparative information is for the fifteen-
month period from 1 April 2015 to 30 June 2016. During the period to 30 June 2016, the Group transitioned to a 30 June
balance date.
(a) Compliance with International Financial Reporting Standards
These consolidated financial statements comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
(b) Historical cost convention
These financial statements have been prepared under the historical cost convention as modified by
certain policies below.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s
functional currency.
24
Annual Report 2017 Adherium Ltd
(d) Critical accounting estimates
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The Company makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are addressed below.
(i)
Impairment of non-current assets
The Company reviews annually whether any property, plant and equipment have suffered any
impairment in accordance with the accounting policy stated in note 3.10. In making this assessment,
the extent of the likely future use of these assets is required to be estimated in determining if their
value is impaired at the balance sheet date. The Company evaluates indicators of impairment,
including expected future demand for devices, in relation to each type of asset at the balance sheet date.
(ii) Recognition of deferred tax assets
As at 30 June 2017, the Company has not recognised as an asset tax losses which could be offset
against future taxable profits. These tax losses would only be recognised to the extent that it is
expected that there will be future taxable profits and such losses will be available in the future (after
shareholder continuity tests) to offset those future taxable profits. The Company has considered
its future expected profitability and shareholder continuity and has concluded that sufficient certainty
does not yet exist to recognise these tax losses as an asset.
(e) Rounding of amounts
The Company has applied the relief available to it under ASIC Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191. Accordingly, amounts in the consolidated financial statements
and Directors’ Report have been rounded to the nearest $1,000.
3. Summary of significant accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all periods presented, unless otherwise stated.
3.1 Principles of consolidation:
The consolidated financial statements incorporate all of the assets, liabilities and results of Adherium
Limited and all subsidiaries. Subsidiaries are all entities over which the Group has control. The Group
controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. A list of the
subsidiaries is provided in note 20. All intercompany transactions are eliminated. The assets and liabilities
of Group companies whose functional currency is not Australian dollars are translated into Australian
dollars at the period-end exchange rate. The revenue and expenses of these companies are translated
into Australian dollars at rates approximating those at the dates of the transactions. Exchange differences
arising on this translation are recognised in the foreign currency translation reserve. On disposal or partial
disposal of an entity, the related exchange differences that were recorded in equity are recognised in the
income statement as part of the gain or loss on sale.
3.2 Segment Reporting
The Company has considered the requirements for segmental reporting as set out in AASB 8: Operating
Segments. The standard requires that operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker. The chief operating decision-maker
has been identified as the Chief Executive Officer. The Company has determined that one segment exists
for the Company’s Smartinhaler business.
3.3 Foreign currency translation
(a) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
25
Annual Report 2017 Adherium Ltd
(b) Group Companies
The financial results and position of foreign operations whose functional currency is different from
the Group’s presentation currency is translated as follows:
• Assets and liabilities are translated at period end exchange rates prevailing at that reporting date.
•
• Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Income and expenses are translated at average exchange rates for the period.
3.4 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents
amounts receivable for goods supplied, stated net of discounts, returns and taxes. The Company
recognises revenue when the amount of revenue can be reliably measured; when it is probable
that future economic benefits will flow to the entity; and when specific criteria have been met for
each of the Company’s activities,as described below. Amounts received from customers in accordance
with contractual sales terms before these revenue recognition criteria are met are deferred and
recorded as Income Received in Advance until such time as the criteria for recognition as revenue are met.
(a) Sales of devices
The Company manufactures and sells a range of inhaled medication monitoring devices and
related equipment. Sales of products are recognised when they have been delivered to the
customer and there is no unfulfilled obligation that could affect the customer’s acceptance of the
products. Delivery does not occur until the products have been shipped to the specified location,
and either the customer has accepted the products in accordance with the sales contract, the
acceptance provisions have lapsed or the Company has objective evidence that all criteria for
acceptance have been satisfied. No element of financing is deemed present as the sales are made
with a credit term of 30-60 days.
(b) Sales of licences and subscriptions to software
The Company sells licences and subscriptions to its device customers to enable access to data collected by
purchased devices. Revenue is recognised in the accounting period to which the licence or subscription relates.
(c) Grants
Grants received for research and development are recognised in the Statement of Comprehensive
Income when the requirements under the grant agreement have been met. Any grants for which the
requirements under the grant agreement have not been completed are carried as liabilities until all
the conditions have been fulfilled.
(d) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
3.5 Research and development
Research costs include direct and directly attributable overhead expenses for product invention and
design. Research costs are expensed as incurred.
When a project reaches the stage where it is reasonably certain that future expenditure can be
recovered through the process or products produced, development expenditure is recognised as a
development asset within Intangible Assets when:
•
•
•
•
a product or process is clearly defined and the costs attributable to the product or process can be
identified separately and measured reliably;
the technical feasibility of the product or process can be demonstrated;
the existence of a market for the product or process can be demonstrated and the Company
intends to produce and market the product or process;
adequate resources exist, or their availability can be reasonably demonstrated to complete the
project and market the product or process.
In such cases the asset is amortised from the commencement of commercial production of the product
to which it relates on a straight-line basis over the years of expected benefit. Research and
development costs are otherwise expensed as incurred.
3.6 Employee benefits
(a) Wages, salaries and annual leave
Liabilities for wages and salaries, bonuses and annual leave expected to be settled within 12
months of the reporting date are recognised in accrued liabilities in respect of employees’ services
up to the reporting date and are measured at the amounts expected to be paid when the liabilities
are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and
measured at the rates paid or payable.
26
Annual Report 2017 Adherium Ltd
(b) Share-based payments
The Company operates equity-settled share and option plans and awards certain employees,
directors and consultants shares and options, from time to time, on a discretionary basis. The fair
value of the services received in exchange for the grant of the options is recognised as an expense
with a corresponding increase in the share and option compensation reserve over the vesting
period. The total amount to be expensed over the vesting period is determined by reference to the
fair value of the options at grant date. At each balance sheet date, the Company revises its
estimates of the number of options that are expected to vest and become exercisable. It recognises
the impact of the revision of original estimates, if any, in the Statement of Comprehensive Income,
and a corresponding adjustment to equity over the remaining vesting period.
3.7 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. 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.
3.8
Income Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the Statement of
Comprehensive Income, except to the extent that it relates to items recognised in directly in equity. In this
case, the tax is also recognised directly in equity.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the balance sheet date in the countries where the company generated taxable income.
Deferred income tax is recognised on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date
and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit
will be available against which the temporary differences can be utilised.
3.9 Goods and Services Tax (GST)
The Statement of Comprehensive Income has been prepared so that all components are stated
exclusive of GST. All items in the balance sheet are stated net of GST, with the exception of receivables
and payables, which include GST invoiced.
3.10
Impairment of non-financial assets
Assets that are subject to amortisation and depreciation are reviewed whenever events or changes
in circumstances indicate that the carrying amount of the assets may not be recoverable. The carrying
amount of an asset is considered impaired when its recoverable amount is less than its carrying value.
In that event, a loss is recognised in the Statement of Comprehensive Income based on the amount by
which the carrying amount exceeds the recoverable amount.
3.11 Cash and cash equivalents
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.
3.12 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost,
less provision for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for impairment is established when there is objective evidence
that the Company will not be able to collect all amounts due according to the original terms of receivables.
3.13
Inventories
Inventories are stated at the lower of cost or net realisable value. Cost is determined using the first-in,
first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct
labour, other direct costs and related production overheads (based on normal operating capacity). It
excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of
business, less applicable variable selling expenses.
27
Annual Report 2017 Adherium Ltd
3.14 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation and any impairments
recognised. 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 Company and the cost of the item can be measured reliably. All other repairs and maintenance
are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.
Depreciation is determined principally using the diminishing value method to allocate their cost, net of
their residual values, over their estimated useful lives, as follows:
Manufacturing tooling equipment
Computer equipment
Office furniture, fixtures & fittings
4 years
2 years
4 years
3.15
Intangible assets
(a) Intellectual property
Costs in relation to protection and maintenance of intellectual property are expensed as incurred
unless the project has yet to be recognised as commenced, in which case the expense is deferred
and recognised as contract work in progress until the revenues and costs associated with the
project are recognised.
Acquired patents, trademarks and licences have finite useful lives and are carried at cost less
accumulated amortisation and impairment losses. Amortisation is calculated using the straight line
method to allocate the cost over the anticipated useful lives, which are aligned with the unexpired
patent term or agreement over trademarks and licences.
(b) Acquired software
Acquired software licences are capitalised on the basis of the costs incurred to acquire and bring
to use the specific software. These costs are amortised over their estimated useful lives (two to
three years).
(c) Product development
Directly attributable product development costs that are capitalised in accordance with the
research and development policy (3.5 above) include the associated direct external costs and
employee costs.
3.16 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method.
3.17 Convertible Notes
The terms included in the convertible notes contract related to the conversion features, had they been a
standalone contract, would have met the definition of a derivative. These are separated from the host
contract because the terms are not considered closely related to the host and accounted for in the same
way as a derivative and measured at fair value through profit or loss. The fair value of the embedded
derivative is estimated based on market conditions prevalent at the issue date. The remainder of the
proceeds are allocated to the loan instrument portion of the convertible note. Transaction costs are
allocated to the liability and embedded derivative components in proportion to their initial carrying amounts.
The embedded derivative is subsequently re-measured to fair value at each reporting date and any
movements in fair value are immediately recognised in the statement of comprehensive income with
‘interest expense’. Transaction costs associated with embedded derivatives are expensed to the
statement of comprehensive income when incurred.
The host loan instrument portion meets the definition of a financial liability and is subsequently carried at
amortised cost with any difference between the proceeds (net of transaction costs) and the redemption
value of the loan instrument being recognised in the statement of comprehensive income in ‘interest
expense’ over the period of the borrowings, using the effective interest method until extinguished on
conversion or maturity of the notes.
28
Annual Report 2017 Adherium Ltd
3.18 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
ordinary shares or options are deferred until the issue of the shares or options, and then shown in equity
as a deduction, net of tax, from the proceeds.
3.19 Financial assets
(a) Financial assets recognised in the Statement of Financial Position include cash and cash
equivalents, and trade and other receivables. The Company believes that the amounts reported for
financial assets approximate fair value.
(b) Financial assets: Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are classified as non-current assets.
The Company’s loans and receivables comprise “trade and other receivables” and “cash and cash
equivalents” in the Statement of Financial Position. Loans and receivables are measured at
amortised cost using the effective interest method less impairment.
3.20 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the financial
statements in the period in which the dividends are approved by the Company’s shareholders.
3.21 Comparative Information
Where necessary, certain comparative information has been reclassified in order to provide a more
appropriate basis for comparison.
3.22 New Accounting Standards for application in future periods
The following standards have been issued but are not yet effective and have not yet been adopted:
AASB 9 Financial instruments
AASB 9 Financial instruments addresses the classification, measurement and recognition of financial
assets and financial liabilities. It replaces all previous versions of AASB 9 and completes the project to
replace IAS 39 that relates to the classification and measurement of financial instruments. AASB 9
retains but simplifies the mixed measurement model and establishes three primary measurement
ategories for financial assets: amortised cost, fair value through other comprehensive income and fair
value through profit or loss. The basis of classification depends on the entity’s business model and the
contractual cash flow characteristics of the financial asset. There is now a new expected credit losses
model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there
were no material changes to classification and measurement. AASB 9 relaxes the requirements for
hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic
relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the
same as the one management actually use for risk management purposes. Contemporaneous
documentation is still required but is different to that currently prepared under IAS 39. The standard is
effective for accounting periods beginning on or after 1 January 2018. Early adoption is permitted.
The Company intends to apply this standard from 1 July 2018 and has yet to assess its full impact.
AASB 15 Revenue from contracts with customers
AASB 15 is effective for periods commencing on or after 1 January 2018. The standard addresses
recognition of revenue from contracts with customers and sets out a five step model for revenue
recognition with the core principle being for entities to recognise revenue to depict the transfer of goods
or services to customers in way that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The Company has yet to assess AASB’s full impact. The
Company intends to apply this standard from 1 July 2018.
AASB 16 Leases
AASB 16 replaces the AASB 117 Leases. Under AASB 16, a contract is, or contains, a lease if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. Under AASB 117, a lessee was required to make a distinction between a finance lease
(on balance sheet) and an operating lease (off balance sheet). AASB 16 will require a lessee to
recognise a lease liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all
lease contracts. Included is an optional exemption for certain short-term leases and leases of low-
value assets; however, this exemption can only be applied by lessees. The standard is effective for
accounting periods beginning on or after 1 January 2019. The Company intends to apply this standard
from 1 July 2019 and has yet to assess its full impact.
There are no other standards, amendments, or interpretations to existing standards that have been issued
and yet to be adopted by the Company that are likely to have a material impact on the financial statements.
29
Annual Report 2017 Adherium Ltd
4. Segment Information
The chief operating decision maker is the Chief Executive Officer, who reviews financial information for the Company as a
whole. The information reviewed is prepared in the same format as included in the financial statements. The Company has
therefore determined that one reportable segment exists for the Company’s Smartinhaler business.
(a) Geographic segment information
The Company operates predominantly from New Zealand, with some manufacturing also undertaken
by suppliers in Asia at which the Company locates equipment and tools:
Domicile of non-current assets
New Zealand and Australia
South-East Asian Countries
Other Countries
June 2017
$000
June 2016
$000
546
111
25
682
178
148
3
329
The Company sells its products and services domestically and internationally. Revenues by customer region of
domicile are:
Location of customer sales
New Zealand and Australia
Europe
North America
b) Major customers
Revenues are derived from major external customers as follows:
Major customers
Customer A group entities
Customer B group entities
5. Expenses
June 2017
$000
June 2016
$000
462
1,829
56
2,347
331
1,970
325
2,626
June 2017
$000
1,762
303
June 2016
$000
1,993
303
Loss before income tax includes the following specific expenses:
June 2017
$000
June 2016
$000
Fees paid to PricewaterhouseCoopers for:
Audit of the financial statements
Other services
- Fees in respect of grant review
Total fees to PricewaterhouseCoopers
Depreciation and amortisation
Directors’ remuneration
- Fees
- Consulting
- Share option compensation
Total Directors’ remuneration
30
110
21
131
270
335
-
43
378
119
1
120
164
332
8
16
356
Annual Report 2017 Adherium Ltd
Employee benefits expense
- Wages and salaries
- Share option compensation
Total employee benefits expense
Foreign exchange (gain) loss
Operating lease costs
6.
Income tax
Current tax
Deferred tax
Income tax expense
Numerical reconciliation of income tax expense to prima facie tax
payable (receivable):
Loss before income tax
Tax calculated at domestic tax rates
Tax effects of:
Expenses not deductible for tax purposes
Under (over) provision in prior year
Deferred tax assets not recognised (note 16)
Income tax expense
The weighted average applicable tax rate was 29% (2016: 28%).
7. Interest
6,787
416
7,203
(74)
459
3,737
67
3,804
(121)
222
June 2017
$000
June 2016
$000
-
-
-
(12,810)
(3,697)
139
(84)
3,642
-
-
-
-
(7,885)
(2,249)
174
-
2,075
-
In January 2015 Adherium (NZ) Limited offered 2 million NZ$1 Convertible Notes on a pro rata basis to its shareholders.
The Convertible Notes bore no interest from the issue date until 31 August 2015.
Management had carried out an assessment of the terms of the Convertible Notes and judged that they consisted of
two components:
• a host loan instrument, measured at amortised cost; and
• an embedded derivative representing the features which may convert the Convertible Notes to ordinary
shares in Adherium (NZ) Limited.
The Company received approval to be admitted to the official list of ASX Limited on 17 August 2015, and accordingly
4,763,205 ordinary shares in the Company were issued on conversion of the Convertible Notes (see note 15).
Interest expense related to the component was as follows:
Fair value change on conversion of embedded derivative
Interest expense
Total interest expense on Convertible Notes
June 2016
$000
163
216
379
31
Annual Report 2017 Adherium Ltd
8. Earnings per share
Basic loss per share is based upon the weighted average number of outstanding ordinary shares. For all periods
presented, the Company’s potentially dilutive ordinary share equivalents (being the Options set out in note 15 and the
Convertible Notes set out in note 7) have an anti-dilutive effect on loss per share and, therefore, have not been included
in determining the total weighted average number of ordinary shares outstanding for the purpose of calculating diluted
loss per share.
In conjunction with the capital reorganisation ahead of the initial public offering and listing in August 2015, the
Company undertook a share split of approximately 8.66:1. The effect of this share split has been incorporated into the
calculation of weighted average shares outstanding for all periods presented.
June 2017
$000
June 2016
$000
Profit (loss) after income tax attributable to equity holders
(12,810)
(7,885)
Weighted average shares outstanding (basic)
Weighted average shares outstanding (diluted)
Basic and diluted loss per share
169,431,030
169,431,030
7.6 cents
119,606,316
119,606,316
6.6 cents
9. Cash and cash equivalents
Cash at bank and on hand
Deposits at call
10. Trade and other receivables
Trade receivables and accruals
Grant income accrued
GST and other taxes receivable
Security deposits
11. Inventories
Raw materials and components
Finished goods
June 2017
$000
138
22,641
22,779
June 2016
$000
111
27,100
27,211
June 2017
$000
June 2016
$000
449
203
135
39
826
561
302
85
-
948
June 2017
$000
June 2016
$000
277
449
726
197
221
418
The cost of inventories recognised as an expense and included in ‘cost of sales’ amounted to $591,000 (2016: $1,111,000).
32
Annual Report 2017 Adherium Ltd 12. Property, plant and equipment
Manufacturing
Equipment
Computer
Equipment
Fixtures
& Fittings
Office
Equipment
$000
$000
$000
$000
As at 1 April 2015
Cost
Accumulated depreciation
Net book value
Movements in the period
ended 30 June 2016
Opening net book value
Additions
Depreciation
Foreign currency translation
Closing net book value
As at 30 June 2016
Cost
Accumulated depreciation
Net book value
Movements in the period
ended 30 June 2017
Opening net book value
Additions
Disposals
Depreciation
Foreign currency translation
Closing net book value
As at 30 June 2017
Cost
Accumulated depreciation
Net book value
206
(64)
142
142
191
(129)
1
205
402
(197)
205
205
101
-
(158)
(4)
144
499
(355)
144
33
(19)
14
14
55
(18)
1
52
90
(38)
52
52
88
(2)
(52)
(2)
84
174
(90)
84
10
(2)
8
8
29
(3)
1
35
40
(5)
35
35
152
(5)
(18)
1
165
188
(23)
165
4
(2)
2
2
6
(2)
-
6
10
(4)
6
6
24
-
(6)
-
24
34
(10)
24
Total
$000
253
(87)
166
166
281
(152)
3
298
542
(244)
298
298
365
(7)
(234)
(5)
417
895
(478)
417
33
Annual Report 2017 Adherium Ltd 13. Intangible assets
Software
$000
Product
development
costs
$000
-
-
-
-
41
-
(12)
-
2
31
43
(12)
31
31
270
(36)
-
265
313
(48)
265
190
-
190
190
32
57
-
(270)
(9)
-
-
-
-
-
-
-
-
-
-
-
-
As at 1 April 2015
Cost
Accumulated amortisation
Net book value
Movements in the period ended 30 June 2016
Opening net book value
Additions
- External costs
- Employee costs
Amortisation
Accumulated costs written off (net)
Foreign currency translation
Closing net book value
As at 30 June 2016
Cost
Accumulated amortisation
Net book value
Movements in the year ended 30 June 2017
Opening net book value
Additions
- External costs
Amortisation
Foreign currency translation
Closing net book value
As at 30 June 2017
Cost
Accumulated amortisation
Net book value
34
Total
$000
190
-
190
190
73
57
(12)
(270)
(7)
31
43
(12)
31
31
270
(36)
-
265
313
(48)
265
Annual Report 2017 Adherium Ltd 14. Trade and other payables
Trade payables
Accruals
Employee benefits
15. Share capital
June 2017
$000
June 2016
$000
1,020
196
1,166
2,382
591
294
509
1,394
Share numbers presented below have where applicable been restated to reflect the 8.66:1 share split undertaken prior
to the Company’s initial public offering in August 2015. Similarly, amounts have been presented in Australian dollars
following the change in presentation currency in the period to 30 June 2016.
Ordinary Shares (b)
$000
Adherium (NZ) Limited
Share capital as at 31 March 2015
Shares issued on Convertible Notes conversion
Shares acquired by Adherium Limited in reorganisation
Adherium Limited
Shares issued to Adherium (NZ) Limited shareholders
Shares issued in initial public offering
Share issue costs
Shares issued in employee share plans
Shares issued on option exercise
65,236,795
4,763,205
70,000,000
70,000,000
70,000,000
-
6,778,640
4,441,285
5,261
2,204
7,465
35,000
(a)
35,000
(3,706)
-
426
Share capital as at 30 June 2016
151,219,925
66,720
Ordinary share issued
Share issue costs
Shares issued in employee share plans
Cancellation of shares issued in
employee share plan
Shares issued on option exercise
Share capital as at 30 June 2017
16,046,097
-
4,797,095
(708,383)
494,458
8,023
(511)
-
-
46
171,849,192
74,278
(a) Capital Reorganisation
During the period to 30 June 2016 Adherium completed an initial public offering and listed on the
Australian Securities Exchange. In that process the listing entity, Adherium Limited, was incorporated in
Australia by the existing New Zealand based operating company, Adherium (NZ) Limited. Prior to the
initial public offering and listing, the owners of Adherium (NZ) Limited swapped their security holdings
for securities in Adherium Limited. This was accounted for as a capital reorganisation and the variance
between the value of the shares issued to the shareholders of Adherium (NZ) Limited and carrying
value of the Group’s assets and liabilities ($27,535,000) has been recorded in the Merger Reserve.
(b) Ordinary Shares
The ordinary shares have no par value and all ordinary shares are fully paid-up and rank equally as to
dividends and liquidation, with one vote attached to each fully paid ordinary share.
35
Annual Report 2017 Adherium Ltd
(c) Employee incentive plans
Adherium Employee Share Option Plan (Adherium ESOP)
In conjunction with the capital reorganisation Adherium Limited granted replacement options to
Adherium (NZ) Limited option holders on equivalent terms. No further issue of options under the Adherium
ESOP are contemplated.
Exercise
price range
$0.075268 –
0.134039
Outstanding
at 1 April 2015
Granted
Exercised
Outstanding at
30 June 2016
Granted
Exercised
Lapsed
Outstanding at
30 June 2017
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract
Life (years)
Exercisable
Weighted
Average
Exercise
Price
Weighted
Average
Share Price
at Exercise
9,331,144
$ 0.1000
4.0
8,522,695
$
0.0969
173,238
$
0.1340
(4,441,285)
$ 0.0959
5,063,097
-
(494,458)
$
$
$
0.1049
-
0.0931
(173,238)
$ 0.0752
3.5
5,063,097
$
0.1049
$
0.5749
$
0.1609
4,395,401
$ 0.1083
2.8
4,395,401
$
0.1083
The weighted average fair value of options granted prior to the Company’s IPO was determined using the
Black-Scholes valuation model:
Significant Black-Scholes valuation model inputs
Weighted average share price at grant date
Exercise price
Volatility
Dividend yield
Expected option life
Annual risk-free interest rate
Discount for lack of marketability
Weighted average fair value of options granted
June 2016
$
0.1340
0.1340
75%
0%
5 years
4.2%
50%
0.0442
There were no options granted in the year ended 30 June 2017. The options granted in the period ended June 2016
were granted before the Company listed on the ASX. The volatility measured at the standard deviation of
continuously compounded share returns is based on statistical analysis of weekly share prices of listed peer
companies over a six-year period prior to listing on the ASX. The Company has no legal or constructive obligation to
repurchase or settle the options in cash.
36
Annual Report 2017 Adherium Ltd
Adherium Employee Share Plans (Adherium ESP)
The Company operates employee share plans for employees, directors and consultants within the Group.
Participants are invited by the Board of Directors and those who accept an offer of ESP shares are provided with
an interest free loan from the Company to finance the whole of the purchase of the ESP shares they were invited to
apply for (ESP Loan). The ESP Loans are provided to participants on a non-recourse basis and upon vesting must be
repaid in order to remove trading restrictions on vested ESP shares. The term of the ESP Loan is five years, however
participants may forfeit their ESP shares if they do not repay the ESP Loan or leave the Company. Awards typically vest
one third annually over a three-year period, and are subject to restriction until vesting conditions are met.
The assessed weighted average fair value at grant date of the awards made during the 2017 financial period is 6.3
cents per award. The awards were priced using a Black-Scholes option pricing model that takes into account the
exercise price, the term of the award, the share price at grant date and expected price volatility of the underlying
share, the expected dividend yield and the risk free interest rate for the term of the award.
The following awards have been made under the Adherium ESP:
Grant date
Shares granted
Issue price
Vested as at
30 June 2017
Restricted as at
30 June 2017
Share price
at grant date
16 May 2016
23 August 2016
6,778,640
1,742,879
8 November 2016
2,621,367
23 December 2016
432,849
(d) Other option issues
$0.50
$0.50
$0.50
$0.50
2,257,287
4,521,353
-
-
-
1,742,879
2,621,367
432,849
$0.50
$0.48
$0.35
$0.26
There were no other options granted in the year ended 30 June 2017. Pursuant to a capital advisory
agreement with the Lead Manager to the Company’s IPO, 1,400,000 options with an exercise price of
$0.665 were granted in the period to 30 June 2016. The grant was contingent upon The Company and
the Lead Manager entering into the capital advisory agreement after the Company’s IPO. The options
were exercisable from 3 September 2016, and expire 3 September 2018. A fair value at grant date of
$134,000 ($0.0956 per option) was determined using a Black-Scholes option pricing model, of which
$19,000 has been recorded in the Statement of Profit or Loss and Other Comprehensive Income for the
year ended 30 June 2017 (2016: $115,000). The significant inputs to the option pricing model were a grant
date share price of $0.50, a 0% dividend yield, an expected option life of 1 year, an annual risk-free rate
of 1.81%, and a volatility of 70.5%. The volatility measured at the standard deviation of continuously
compounded share returns is based on statistical analysis of weekly share prices of listed peer companies
over a six-year period prior to listing on the ASX. The Company has no legal or constructive obligation to
repurchase or settle the options in cash.
16. Deferred Income Tax
June 2017
$000
June 2016
$000
Movements
Deferred tax asset (liability) at the beginning of the year
Credited (charged) to the income statement (note 6)
Change in unrecognised deferred tax assets
Deferred tax asset (liability) at the end of the year
-
3,642
(3,642)
-
-
2,075
(2,075)
-
37
Annual Report 2017 Adherium Ltd
The movement in deferred income tax assets and liabilities during the period is as follows:
Deferred tax assets (liabilities)
Provisions
and accruals
Intangible
assets
Convertible
notes
$000
$000
$000
As at 1 April 2015
Credited (charged) to the income statement
Impact of loss of shareholder continuity
Effect of exchange rate changes
-
97
-
4
Change in unrecognised deferred tax assets
(101)
-
107
-
4
(111)
As at 30 June 2016
-
-
Credited (charged) to the income statement
Effect of exchange rate changes
Change in unrecognised deferred tax assets
(26)
-
26
147
1
(148)
As at 30 June 2017
-
-
-
(12)
-
-
12
-
-
-
-
-
Tax
losses
$000
-
1,883
(1,697)
(10)
(176)
Total
$000
-
2,075
(1,697)
(2)
(376)
-
-
3,521
(11)
3,642
(10)
(3,510)
(3,632)
-
-
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related
tax benefit through future taxable profits is probable, or to the extent that they can be set off against deferred income
tax liabilities. The Company did not recognise deferred income tax assets of $4,851,000 (2016: $1,341,000) in respect
of losses amounting to $16,821,000 (2016: $4,554,000) that can be carried forward against future taxable income. The
Company also did not recognise further deferred income tax assets of $355,000 (2016: $232,000) in respect of other
timing differences amounting to $1,262,000 (2016: $830,000).
17. Related party transactions
(a) Key management and personnel
The key management personnel include the directors of the Company, the CEO, and senior executives
responsible for the planning, directing and controlling of the Group’s activities. Compensation for this
group was as follows:
June 2017
$000
June 2016
$000
336
43
907
29
67
1,382
361
16
750
360
11
1,174
Directors
- fees and other short term benefits
- share and option compensation
CEO and management
- short-term benefits
- post-employment benefit contributions
- share and option compensation
38
Annual Report 2017 Adherium Ltd
Key management personnel and their associates subscribed for share capital in the Company as follows:
June 2017
Ordinary Shares
June 2017
$000
June 2016
Ordinary Shares
June 2016
$000
Shares in IPO
Shares through
options exercised
-
150,000
150,000
$
-
20
20
120,000
1,212,666
1,332,666
$
60
152
212
18. Financial instruments and risk management
(a) Categories of financial instruments
Financial assets
Loans and receivables classification:
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Measured at amortised cost:
Trade and other payables
Convertible notes – liability component
Measured at fair value:
Convertible notes – embedded conversion derivative
June 2017
$000
June 2016
$000
22,779
652
23,431
27,211
863
28,074
2,382
1,394
-
-
-
-
Total financial liabilities
2,382
1,394
The Convertible Notes did not bear interest (see note 7) and were therefore not cash flow interest rate sensitive prior
to their conversion in August 2015.
(b) Risk management
The Company is subject to a number of financial risks which arise as a result of its activities.
Foreign exchange risk
During the normal course of business the Company enters into contracts with overseas customers or suppliers or
consultants that are denominated in foreign currency. As a result of these transactions there is exposure to fluctuations in
foreign exchange rates.
The Company does not utilise derivative financial instruments. It operates a policy of holding cash and cash equivalents
in the currency of near-term estimated future supplier payments, however it does not designate formal hedges and as
such remains unhedged against foreign currency fluctuations. A foreign exchange gain of $166,000 is included in results
for the period ended 30 June 2017 (2016: $121,000 gain).
39
Annual Report 2017 Adherium Ltd
The carrying amounts of foreign currency denominated assets and liabilities are as follows:
Assets
New Zealand Dollars
US dollars
UK pound
Liabilities
New Zealand Dollars
US dollars
UK pound
European euros
Hong Kong dollars
Japanese Yen
June 2017
$000
June 2016
$000
4.524
1,120
146
1,516
513
30
19
2
5
6,145
670
30
936
233
126
-
4
-
The following table details the Company’s sensitivity to a 10% increase and decrease in each of the currencies noted
against the Australian dollar as at the reporting date.
Decrease (increase) in loss after income tax
10% strengthening of Australian dollar against:
New Zealand Dollars
US dollars
UK pound
Hong Kong dollars
Japanese Yen
10% weakening of Australian dollar against:
New Zealand Dollars
US dollars
UK pound
Hong Kong dollars
Japanese Yen
June 2017
$000
June 2016
$000
768
48
38
-
1
(939)
(59)
(46)
-
(1)
538
7
38
1
-
(657)
(8)
(47)
-
-
Cash flow and fair value interest rate risk
The Company is exposed to interest rate risk as it holds cash and cash equivalents (refer note 9) and had borrowings.
Trade and other receivables and payables do not bear interest and are not interest rate sensitive.
The Company’s interest bearing financial assets bear interest at deposit rates for up to 90 days and accordingly any
change in interest rates would have an immaterial effect on reported loss after tax.
The Convertible Notes did not bear interest (see note 7) and were therefore not cash flow interest rate sensitive prior to
their conversion in August 2015.
40
Annual Report 2017 Adherium Ltd Credit risk
The Company incurs credit risk from transactions with trade receivables and financial institutions in the normal course of
its business. The credit risk on financial assets of the Company, which have been recognised in the statement of financial
position, is the carrying amount, net of any allowance for doubtful debts.
The Company does not require any collateral or security to support transactions with financial institutions or customers.
The counterparties used for banking activities are financial institutions with an AA- credit rating (2016: AA-) and the
Company assesses the credit quality of customers by taking into account their financial position, past experience and
other factors. The credit quality of trade receivables can be assessed by reference to external credit ratings (if available)
or to historical information about counterparty default rates:
Counterparties with external credit rating:
• AA-
Counterparties without external credit rating:
• existing customers (more than 6 months) with no defaults in the past
Total trade receivables
June 2017
$000
June 2016
$000
374
75
449
556
5
561
The Company is exposed to a concentration of credit risk as 83% of accounts receivable are with one counterparty
(2016: 99%). The customer has an external credit rating of AA-.
Liquidity risk
The table below shows the Company’s non-derivative financial liabilities by relevant maturity grouping based on the
remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows.
As at 30 June 2017
Trade and other payables
As at 30 June 2016
Trade and other payables
Less than
3 months
$000
Between 3 months
and 1 year
$000
2,382
1,394
-
-
Capital risk
The Company manages its capital to ensure that it is able to continue as a going concern. The capital structure of the
Company consists of cash and cash equivalents, and equity comprising issued capital, reserves and accumulated deficit.
Fair value estimation
Financial liabilities measured at fair value in the statement of financial position are grouped into three Levels of a fair value
hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly
- Level 3: unobservable inputs for the asset or liability
At 30 June 2016 the embedded conversion derivative with a fair value of $473,000 was classified as subject to recurring fair value
measurement within Level 3 of the hierarchy. There were no transfers between the fair value hierarchy levels in 2016 or 2017.
In the period to 30 June 2016, the Company performed its own estimate of the fair value of the embedded conversion
derivative recognised separately from the host convertible notes (see note 7) using a present value technique. The main
inputs to the valuation are the expected probability of the convertible notes converting and the discount rate used.
At initial recognition and 30 June 2016 a probability of 75% of the convertible notes converting was applied together
with a discount rate of 8.45%. A reasonably possible change at 30 June 2016 of plus or minus 5 percentage points to
the estimate of the probability of the notes converting would have led to an increase or decrease respectively in the
valuation of the derivative of $32,000. A reasonably possible change to the discount rate applied would not have a
material impact upon the valuation.
The Convertible Notes converted to shares in the Company immediately prior to its listing on the ASX in August 2015.
41
Annual Report 2017 Adherium Ltd
19. Parent entity information
The following details information related to the legal parent, Adherium Limited as at 30 June 2017. The information
presented here has been prepared using consistent accounting policies as presented in Note 1.
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Accumulated deficit
Reserves
Total equity
Statement of Profit and Loss and Comprehensive Income
Loss after tax
Total comprehensive loss
20. Interests in controlled entities
Parent
June 2017
$000
Parent
June 2016
$000
19,347
51,520
70,867
570
-
570
70,297
74,278
(4,677)
696
70,297
(3,288)
(3,288)
22,479
44,059
66,538
822
-
822
65,716
66,720
(1,178)
174
65,716
(1,178)
(1,178)
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in Note 3:
Name of Entity
Status
Country of incorporation
Percentage owned
Adherium (NZ) Limited
Adherium North America, Inc.
Adherium Europe Ltd
Nexus6 Limited
Operating
Operating
Operating
Dormant shell
New Zealand
United States
United Kingdom
New Zealand
21. Contingencies and commitments
June 2017
June 2016
100%
100%
100%
100%
100%
100%
100%
100%
The Company had no contingencies or commitments to purchase any property, plant or equipment at 30 June 2017 (2016: nil).
The following aggregate future non-cancellable minimum lease payments for premises have been committed to by the
Company, but not recognised in the financial statements.
June 2017
$000
June 2016
$000
373
973
-
199
797
67
$
1,346
$
1,063
Not later than one year
Later than one year and not later than five years
Later than five years
22. Events occurring after balance date
There were no events occurring after balance date which require disclosure .
42
Annual Report 2017 Adherium Ltd Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 20 to 42 in accordance
with the Corporations Act 2001:
(a) comply with Accounting Standards and the Corporations Regulations 2001, and other mandatory professional
reporting requirements;
(b) as stated in note 2, the consolidated financial statements also comply with International Financial Reporting
Standards; and
(c) give a true and fair view of the financial position of the consolidated entity as at 30 June 2017 and of its
performance for the fifteen months ended on that date.
In the Directors’ opinion there are reasonable grounds to believe that Adherium Limited will be able to pay its debts
as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made by the Chief Executive Officer
and Chief Financial Officer to the Directors in accordance with sections 295A of the Corporations Act 2001 for the year
ended 30 June 2017.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the board.
Thomas Lynch
Non-Executive Chairman
Sydney
26 September 2017
43
Annual Report 2017 Adherium Ltd
Independent Auditor’s Report
Independent auditor’s report
To the shareholders of Adherium Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Adherium Limited (the Company) and its controlled entities
(together, 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 2017 and of its financial
performance for the year then ended
b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
•
•
the consolidated statement of financial position as at 30 June 2017
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
•
•
•
•
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include a summary of significant
accounting policies
the directors’ declaration.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
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.
PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand
T: +64 9 355 8000, F: +64 9 355 8001, pwc.co.nz
44
Annual Report 2017 Adherium Ltd
Independent Auditor’s Report
Material uncertainty related to going concern
Without modifying our opinion, we draw attention to Note 2 of the Basis of Preparation within the
consolidated financial statements, which indicates the Group incurred a net loss of $12,810,000 (2016:
$7,885,000) and operating cash outflow of $11,581,000 (2016: $ 7,913,000) during the year ended 30
June 2017. The cash balance at 30 June 2017 was $22,779,000 (2016: $27,211,000).
The Group’s ability to continue as a going concern is dependent on its ability to fund its operations
until such time as it can secure sufficient cash flows from new revenue streams. If the Group is unable
to secure sufficient cash flows from these new revenue streams over the next 15 months, and/or it
cannot execute other plans to reduce costs, and/or raise additional capital, cash reserves could reduce
to a level where the Group is unable to meet its obligations as they fall due, after that period.
These conditions along with other matters as set forth in Note 2, indicate that a material uncertainty
exists that may cast significant doubt on the Group’s ability to continue as a going concern.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
• Our audit focused on where the
directors made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future
events.
• We have determined that there
are no Key Audit Matters to
communicate.
• For the purpose of our audit we
used overall Group materiality
of $149,500, which represents
approximately 1% of the Group’s
expenses.
• We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the
nature, timing and extent of our
audit procedures and to
evaluate the effect of
PwC
45
Annual Report 2017 Adherium Ltd
Independent Auditor’s Report
misstatements on the financial
report as a whole.
• We chose Group expenses
because, the Group is in a start-
up phase and has not been
profitable for the past two years.
Total expenses are a generally
acceptable benchmark for start-
up entities.
• We selected 1% based on our
professional judgement and it is
within the range of commonly
acceptable expense related
thresholds.
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 for the current period. We have determined that there are no Key
Audit Matters to communicate. We refer you to the material uncertainty in relation to going concern
disclosed above.
Other information
The directors are responsible for the other information. The other information comprises the Company
Overview, Chairman’s Statement, CEO’s Report, Directors’ Report (including Remuneration Report)
and Australian Securities Exchange Additional Information, included in the Group’s annual report for
the year ended 30 June 2017 but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the
Company/Group to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Company/Group or to cease operations, or has no realistic alternative but to do so.
PwC
46
Annual Report 2017 Adherium Ltd
Independent Auditor’s Report
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 the 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_files/ar*.pdf.
This description forms part of our auditor’s report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 11 to 17 of the directors’ report for the year
ended 30 June 2017.
In our opinion, the remuneration report of Adherium Limited for the year ended 30 June 2017
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Jonathan Skilton
Partner
Auckland, New Zealand
29 September 2017
PwC
47
Annual Report 2017 Adherium Ltd
Australian Securities Exchange Additional Information
Additional information required by the Australian Securities Exchange Ltd and not shown elsewhere in this report is as
follows. The shareholder information set out below was applicable as at 13 September 2017.
(a) Distribution of equity securities
Ordinary share capital
As at 13 September 2017 there were 171,849,192 ASX quoted ordinary shares held by 769 shareholders. All issued
ordinary shares carry one vote per share and carry the rights to dividends.
Range (size of holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Number of
Ordinary Shares
Holders
7,352
396,282
1,183,600
15,440,493
154,821,465
171,849,192
20
116
137
366
130
769
There were 141 shareholders holding less than a marketable parcel of ordinary shares at a price of $0.095, totalling
429,446 ordinary shares.
Unquoted options over ordinary shares
As at 13 September 2017 there were 5,795,401 options over ordinary shares held by 10 holders. 1,400,000 options
over ordinary shares (24.2% of all options outstanding) are held by Bell Potter Securities Limited.
(b) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Substantial shareholders
Notification
Date
Ordinary Shares
Held
One Funds Management Limited
28/07/2016
23,823,832
FIL Limited
Mr Garth Sutherland
K One W One Ltd
I.G. Investment Management, Ltd and associates
AstraZeneca PLC and its related bodies
29/07/2016
16,726,595
01/08/2016
11,869,055
26/07/2016
10,990,860
01/09/2015
26/08/2015
9,535,000
8,079,720
81,025,062
48
Annual Report 2017 Adherium Ltd (c) Twenty largest holders of quoted equity securities as at 13 September 2017
Ordinary Shares
Shareholders
HSBC Custody Nominees (Australia) Limited
One Funds Management Limited
K One W One Ltd
Mr Garth Sutherland
Adherium ESP Trustee Limited
AstraZeneca AB
Citicorp Nominees Pty Limited
NZVIF Investments Limited
Cure Kids Ventures Ltd
Brispot Nominees Pty Ltd
National Nominees Limited
Bennamon Pty Ltd
UBS Nominees Pty Ltd
Doctor Iain Arthur McCormick
Mogridge & Associates Ltd
Popeye Investments Pty Ltd
K M Fitzpatrick & Associates Pty Ltd
Ross Alan Sutherland + Valerie Mary Sutherland + Garth Campbell
Sutherland
Dr John Douglas Wilson
Mr John Leonard Walley + Mrs Lynn Walley + Walley Trustee Ltd
Number
28,455,392
23,823,832
10,990,860
10,275,171
8,113,023
8,079,720
5,559,834
4,483,383
3,461,417
3,057,158
2,604,884
2,168,000
2,161,016
1,622,000
1,500,000
1,206,060
1,077,000
1,072,517
1,039,428
999,445
%
16.56
13.86
6.40
5.98
4.72
4.70
3.24
2.61
2.01
1.78
1.52
1.26
1.26
0.94
0.87
0.70
0.63
0.62
0.60
0.58
Total top 20 holders of ordinary shares
121,750,140
70.85
(d) Use of cash as at listing for business objectives
In the year ended 30 June 2017, the Company has used the cash that it had at the time of admission in a way
consistent with its business objectives.
(e) Voting Rights
On a show of hands, every shareholder present in person or by proxy holding stapled securities in the
Company shall have one vote and upon a poll each stapled security shall have one vote.
49
Annual Report 2017 Adherium Ltd Share Registry
Computershare Investor Services Pty Ltd
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067, Australia
Solicitors
K&L Gates
Level 25 South Tower
525 Collins Street
Melbourne VIC 3000, Australia
Auditors
PricewaterhouseCoopers
188 Quay Street
Auckland 1142, New Zealand
Shareholder Enquiries
1300 850 505 (+61 3 9415 4000)
Shareholders requiring clarification of holdings,
or requesting changes of name or address should
contact Computershare Investor Services directly on
the above number. Shareholders wishing to create
an online account with Computershare should
visithttps://www.investorcentre.com
Corporate Information
ASX code: ADR
Directors
Mr Thomas Lynch (Chair)
Prof John Mills
Mr Jeremy Curnock Cook
Mr Bruce McHarrie
Mr Bryan Mogridge
Dr William Hunter
Mr Garth Sutherland
Joint Company Secretaries
Mr Rob Turnbull
Mr Mark Licciardo
Registered Office
Collins Square, Tower 4
Level 18, 727 Collins St
Melbourne VIC 3000, Australia
+61 3 86575540
NZ Office
(Prinicipal Administrative Office)
Level 2, 204 Quay Street
Auckland 1010, New Zealand
+64 9 307 2771
Website
www.adherium.com
www.smartinhaler.com
50
Annual Report 2017 Adherium Ltd
www.adherium.com