ANNUAL
REPORT
for the year ended 30 June 2022
Adherium Limited
ABN 24 605 352 510
Company Overview
Adherium is a provider of integrated digital health solutions and a worldwide leader
in connected respiratory medical devices, with more than 180,000 sold globally.
Adherium’s Hailie® platform solution provides clinicians, healthcare providers and
patients access to remotely monitor medication usage parameters and adherence,
supporting reimbursement for qualifying patient management.
Adherium’s Hailie® solution includes a suite of integration tools to enable the capture
and sharing of health data via mobile and desktop apps, Software Development Kit
(SDK) and Application Programming Interface (API) integration tools, and Adherium’s
own broad range of sensors connected to respiratory medications. Adherium’s
Hailie® solution is designed to provide visibility to healthcare providers of medication
use history to better understand patterns in patient respiratory disease. These tools
ultimately enable people who live with Asthma or COPD to more easily manage their
condition with input from their physician.
2
Annual Report 2022 Adherium Ltd Report
Statement
Independence Declaration
(including Remuneration Report)
and Other Comprehensive Income
Contents
02 Chairman’s
04 CEO’s
08 Directors’ Report
23 Auditor’s
25 Consolidated Statement of Profit or Loss
26 Consolidated Statement
27 Consolidated Statement
28 Consolidated Statement
29 Notes to the
49 Directors’
50 Independent Auditor’s
55 Australian Securities Exchange
Consolidated Financial Statements
Additional Information
of Changes in Equity
of Financial Position
of Cash Flows
Declaration
Report
1
Annual Report 2022 Adherium Ltd Chairman’s
Statement
“ We have seen the world
continue to stabilise to a new
reality post-COVID; one where
digital health is more accepted
and integrated than ever.”
2
Annual Report 2022 Adherium Ltd Dear Shareholder,
On behalf of the Board of Directors of Adherium Limited,
I am pleased to be writing to you for the first time as
Chairman after taking over from James Ward-Lilley
in April 2022. James remains an independent non-
executive director of Adherium, and on behalf the Board
and all shareholders I would like to thank him for his
service in the role of Chairman.
Adherium has traditionally supplied to the clinical trials
market, but recognised in early 2019 an opportunity for
US healthcare providers to access reimbursement for
remote physiological monitoring of patients using our
Hailie® technology. The pressure on healthcare systems
across the globe, spurred on by the challenges of the
COVID-19 pandemic, has accelerated virtual healthcare
models. This last year we have seen the realisation
of that opportunity with the release and clearance
to market of new Hailie® sensors for AstraZeneca’s
Symbicort® HFA and GSK’s Ellipta® medication franchise
incorporating physiological parameters, with further
new sensors for Teva and GSK inhaler medications in the
pipeline.
The opportunity was further enhanced this year by the
introduction in the US of reimbursement to healthcare
providers for remote therapeutic monitoring of patient
medication use. All of Adherium’s US FDA cleared
Hailie® sensors qualify to be used in this setting.
This execution on our R&D and regulatory roadmap,
together with the enabling reimbursement, has now put
us in a position to engage with US based healthcare
systems and you will have seen this recently in our
announcements partnering with Perigon Health 360,
Dulcian Health and CareCentra Inc. It is exciting to be
able to announce this progress.
While reimbursement of digital monitoring of respiratory
medication use outside the US is less advanced,
Adherium continues to put in place relationships to
pursue commercial uptake of the Hailie® technology,
such as with Helicon Health in the UK, and also
continues to support significant ground-breaking
Asthma and COPD clinical trials of new respiratory
medications and regimes.
This month we announced we had received share
subscription commitments of $13.5 million. The first
tranche of this for $1.67 million has been completed,
and the balance is the subject of shareholder approval
at the upcoming Extraordinary and Annual General
Meetings. In addition, we are making an offer to existing
shareholders on similar terms so that you also have
an opportunity to invest. I would like to thank all of
those who have provided their commitments to date,
and thank in advance the shareholders who choose
to continue to support Adherium by reinvesting. This
investment will provide the opportunity to continue
developing our commercial infrastructure, regulatory
progressions, and updates and enhancements of our
integrated digital platform improving outcomes for
patients, partners and shareholders.
In the coming year, we want to continue to
commercialise our remote patient monitoring product
offerings. We have seen the world continue to stabilise
to a new reality post-COVID; one where digital health is
more accepted and integrated than ever. Adherium has
set itself up to be a leader in this space and to continue
to advance its position.
I would like to thank all shareholders for your ongoing
support, as well as the Adherium team and our business
partners for their dedication and belief. I look forward to
updating you further on our progress throughout fiscal
2023.
Lou Panaccio
Non-Executive Chairman
3
Annual Report 2022 Adherium Ltd CEO’s
Report
“ Adherium progressed with US
FDA 510(k) clearances from
covering 71% to 91% of the
US top 20 branded inhaler
medications by sales volume.”
4
Annual Report 2022 Adherium Ltd Dear Shareholder,
It has been a transformative year for Adherium as
we progress commercial expansion toward revenue
growth following new commercial partnerships,
major regulatory achievements, software platform
improvements, operational milestones, and executive
team appointments all toward executing on our strategy
as a leader in respiratory eHealth, remote patient
monitoring and data management solutions.
Our commercial strategy is focused on the US leveraging
Adherium’s technology for generating and transmitting
patient data enabling doctor reimbursement for remote
patient monitoring to improve patients’ quality of life
and address the high unmet need of patients with
severe and ‘difficult- to-treat’ Asthma and chronic
obstructive pulmonary disease (COPD). The goal is to
improve patient management and clinical outcomes to
reduce the frequency of exacerbations and the number
of emergency visits and hospital admissions, which
represent a very high-cost burden to healthcare systems
worldwide.
Despite the challenges of the Covid-19 pandemic,
Adherium continued to drive a strong development
program of its cutting-edge Hailie® platform for Asthma
and COPD patients. Adherium progressed with US
Food and Drug Administration (FDA) 510(k) clearances
from covering 71% to 91% of the US top 20 branded
inhaler medications by sales volume for adherence and
usage enabling the US Medicare Remote Therapeutic
Monitoring reimbursement codes, and 32% coverage
for physiological parameters enabling the Remote
Physiological Monitoring reimbursement codes.
With more than 180,000 sensors sold globally,
Adherium is uniquely positioned with extensive
product development history, clinical trial services
and experience to benefit from the rapidly developing
remote patient monitoring and telehealth trends, as well
as the positive reimbursement environment, particularly
in the US.
Commercial partnerships
This year, we set out clear pathways to demonstrate our
value proposition to patients and healthcare providers,
focusing on existing and new commercial partnerships:
Trudell Medical Limited partnership includes utilizing
the strength and expertise of Trudell’s US operation,
Monaghan Medical, and its wholly owned subsidiary
Aetonix’s aTouchAway® platform integrated with
Adherium’s Hailie® sensors.
The integration of Hailie® digital sensors into the
aTouchAway® platform will provide clinicians with the
information to track inhaler medication adherence and
respiratory physiological parameters such as inhalation
flow rate and possible rescue inhaler overuse as key
additional data insights to help detect potential issues
leading to readmissions.
Trudell Medical International (Canada) and Monaghan
Medical (US) are renowned for their market leading
Aerochamber® and Aerobika® respiratory devices.
Perigon Health 360’s world-class proprietary platform,
Medesto, is a US-based enterprise drug and therapy
monitoring platform that consolidates remote monitoring
services into one portal enabling healthcare providers to
pursue reimbursement for respiratory and chronic care
management services.
Adherium’s sophisticated digital product portfolio has
been successfully incorporated into Perigon’s Medesto
drug and therapy monitoring platform through our
Hailie® Software Development Kit (SDK). In addition,
patient enrolment and set-up for remote patient
monitoring has commenced representing a significant
milestone for the Company as we continue to focus on
expanding Adherium’s footprint by delivering enhanced
remote patient care.
Innovation is crucial to our future, and we’re extremely
pleased to be collaborating with Perigon enabling both
companies to continue to achieve commercial success
accelerating momentum in the digital healthcare
industry.
Dulcian Health is a leader in Chronic Care
Management (CCM) for physician practices in the US,
focusing on developing software that adds functionality
to electronic health record (EHR) systems. The Dulcian
software accurately captures all clinical staff time spent
performing non-face-to-face care activities, billable
under US Medicare codes for care management
services.
Dulcian’s CCM platform will be adapted to include
respiratory remote patient monitoring, and will leverage
the inhalation data and physiological parameters
generated by Adherium’s next generation Hailie®
devices.
5
Annual Report 2022 Adherium Ltd CareCentra is a behaviour-shaping company based in
the US with an Artificial Intelligence (AI) driven platform
that leverages data science, Nobel Prize-winning nudge
theory, behaviour science, and personal technologies
to enable remote monitoring and coordinate care
for patients. Adherium’s Hailie® solution integration
into CareCentra’s AI platform will leverage previously
unavailable data for patients that need help before they
have exacerbations and potentially find themselves in
an emergency room or hospital.
These partnerships mark another important step in the
execution of our US commercial strategy with remote
patient monitoring companies. The combination of
Dulcian’s and CareCentra’s integrated platforms
and our sophisticated devices are well positioned to
advance patient care by bringing new solutions to
doctors and patients.
Helicon Health is a UK-based medical technology
development company, an NHS-focused contract
research partner and specialised medical device
accelerator. A spin-out from the UCL Centre for Health
Informatics and Multi Professional Education (CHIME),
Helicon supports integrated care systems by enabling
the ethical collection of real-world data for analysis
and interpretation for real world evidence to inform
translation into better outcomes for patients and more
effective use of scarce resources.
Adherium’s next generation sensor connects via the
Hailie® app to Helicon’s comprehensive remote patient
monitoring platform creating the most advanced care
for respiratory patients that are in remote settings.
This is Adherium’s first UK distribution agreement
cementing our growth strategy to partner with
leading players globally across strategically important
geographies. The expertise of the team at Helicon
will transform our market access in the UK, provide
opportunities in this revolutionary care model and
accelerate adoption.
Major regulatory achievements
In September 2021, Adherium announced the first US
FDA 510(k) clearance of our next generation Hailie®
sensors with physiological parameters for AstraZeneca's
Symbicort® inhalers representing a crucial regulatory
step for the business, enabling respiratory patients to
receive increased support with their medication usage
and disease treatment.
Then in July 2022, Adherium received US FDA 510(k)
clearance to market connecting GlaxoSmithKline's
6
Ellipta® inhaler users with our second next generation
Hailie® sensor, designed for use with the Breo®, Anoro®,
Incruse®, Trelegy® and Arnuity® Ellipta® dry powder
inhalers (DPIs).
Adherium’s strong capabilities demonstrate our
leadership position in providing digital solutions to
respiratory patients, which will further broaden the
pathway for doctors and hospital groups in the US to
access reimbursement for remote monitoring of patients
prescribed Asthma and COPD medications. We’re on the
path toward building a cash flow positive business.
Regulatory progress was also made in the UK with the
Medicines and Healthcare products Regulatory Agency
(MHRA) registration confirmation the Company received
in January. The current generation of Hailie® sensor
products are CE Marked and are available to patients
working with National Health Service (NHS).
Software platform improvements
Adherium continues to implement new technologies
and improve its software infrastructure along with the
next generation digital sensors. In April, the Company
released the latest Hailie® platform integration
tools comprised of an advanced Rest application
programming interface (API) and an updated software
development kit (SDK) to promote better connection with
partner and customer patient management systems.
These platform enhancements enable us to leverage
our existing Hailie® architecture, provide more scalable
integration opportunities for our customers, and deliver
the most up-to-date physiological, adherence, and
inhaler technique data from the next generation devices.
To drive sales, we must be flexible by meeting customer
needs across different channels and market segments,
and this includes strengthening the commercial
attractiveness of our respiratory product portfolio with
adaptable platform integration and software offerings.
Operational milestones
Commencing manufacturing for market release of our
next generation Hailie® sensors with physiological
parameters for monitoring Asthma and COPD
medication use marks an important milestone in
our product roadmap. The first production run was
completed at our contract manufacturing partner facility
in Southeast Asia.
Adherium’s newest FDA 510(k) cleared Hailie® sensors
were engineered specifically for use with AstraZeneca's
Symbicort® and GlaxoSmithKline's Ellipta® inhalers. This
Annual Report 2022 Adherium Ltd new series of devices provide a superior perspective
into inhaler usage and technique, while capturing
physiological parameters including inhalation duration
and volume, and peak inhalation flow in addition to
the existing monitoring of device activation timing and
frequency.
Our technology provides drug agnostic physiological
data allowing clinicians to better manage the patient’s
respiratory condition, inform preventative treatment
programs improving patient technique and outcomes.
Clinical studies have clearly shown an improved
adherence to preventative medication by 180% in
children and reduced severe exacerbations by 60% in
adults. The effectiveness of the Hailie® solution has been
demonstrated in more than 100 clinical studies.
The addition of physiological parameters to our Hailie®
portfolio enhances the opportunity for remote patient
monitoring services, notably valuable when managing
Asthma and COPD patients. In the US, this patient
population is estimated to represent a total serviceable
market of 8.5 million severe and difficult to treat patients
in the US alone.
Adherium has been providing clinical trial services
since its founding with the primary focus of solving
the persistent medical problem of prescription non-
adherence. Our integrated digital platform technology
allows researchers to gather the data needed to support
their clinical studies.
Adherium’s new approach is based on developing new
customer relationships, while also supporting existing
customers in this segment. During the year, progress
was made in our clinical trial services business, notably
the new contract for the supply of the Hailie® solution to
Avillion LLP, sponsor of a clinical study in mild Asthma
in partnership with AstraZeneca. Avillion is a UK-based
entity that focuses on the co-development and financing
of pharmaceutical candidates from proof-of-concept
through to regulatory approval.
The Hailie® platform and sensors are also being used in
two Asthma clinical mobile health studies at National
Jewish Health, a leading US respiratory hospital based
in Denver, Colorado. Both studies are using real world
evidence and are designed to assess the efficacy,
health benefits, and side effects of Asthma monoclonal
therapies. In addition recently Adherium announced a
two-part clinical study at Washington University School
of Medicine in St. Louis in the United States to monitor
the adherence of Asthma patients including using
Adherium’s US FDA 510(k) cleared next generation
Hailie® sensors for AstraZeneca’s Symbicort® medication.
Key appointments
We have significantly strengthened the senior
management team bringing highly qualified and
relevant experience to the business.
Francis White was appointed Vice President of Global
Business Development based in the UK, bringing a
wealth of knowledge with over 20 years of healthcare
leadership experience, including key account
management, sales and marketing expertise. Keven
Gessner, based in the USA, joined the leadership team
as Executive Vice President Advisor with 25 years of
experience in the pharmaceutical industry including
positions heading digital health, marketing and market
access. Tara Creaven-Capasso joined as Vice President
of Quality, Regulatory and Clinical Affairs based in
Melbourne to focus on developing regulatory strategies
and quality management systems to drive Adherium’s
market expansion forward. Tara is a certified regulatory
and quality professional with over 20 years of health
technology product development and commercial
experience across the US, Europe, and Asia Pacific.
Conclusion
At this pivotal time in our growth, we plan our first
remote patient monitoring revenue this next financial
year establishing foundational customers to drive more
significant scale up in FY24 and FY25. We are already
observing an increase in new partnerships and product
development milestone success, and we look forward to
continuing this momentum over the coming year.
I would like to thank the Board of Directors, who
have been critical in guiding the development of our
integrated digital respiratory management ecosystem,
and all our staff for your dedication and effort over the
past year. Finally, I would like to thank our shareholders
for their continued support and trust. We look towards
greater success in FY23 as we help provide better
quality of life for people with Asthma and COPD.
Rick Legleiter
Group CEO
7
Annual Report 2022 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 2022, 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 Lou Panaccio, BEc, CA, MAICD. Age 65.
Independent Non-Executive Chair
Appointed as a Director 25 February 2022 and Chairman 29 April 2022.
Mr Panaccio is currently on the boards of ASX and NASDAQ listed Avita Therapeutics Inc. (Non-executive Chairman from
July 2014), ASX50 company Sonic Healthcare Limited, one of the world’s largest medical diagnostics companies (Non-
executive Director from June 2015), and ASX-listed Rhythm Biosciences Limited (Non-executive Director from August 2017).
He is also a Non-executive Director of Unison Housing Limited, VGI Health Technology Limited, NeuralDX Limited (Non-
executive Chairman from March 2019) and Haemokinesis Limited (from July 2021).
Mr Panaccio was the Chief Executive Officer and Executive Director of Melbourne Pathology for ten years to 2001, the
Chief Executive Officer of Monash IVF until 2009 and the Executive Chairman of Health Networks Australia until 2017.
He was also a Non-executive Director of ASX-listed Genera Biosystems Limited from November 2010 until 28 June 2019
(Chairman from July 2011 until 28 June 2019).
Mr Panaccio holds a Bachelor of Economics from Monash University and is a Member of the Australian Institute of
Company Directors.
Mr James Ward-Lilley, BA (Hons), MBA. Age 57.
Independent Non-Executive Director
Appointed as a Director 14 April 2020.
Mr Ward-Lilley had an extensive 28-year global pharmaceutical career at AstraZeneca before becoming Chief
Executive Officer of Vectura Group PLC (the inhaled formulation and device development specialist) in September 2015.
At Vectura he was responsible for leading the business through a critical transformation period including the successful
merger with Skyepharma. James stepped down in June 2019 leaving Vectura as a growing, cash generative business
with a strong balance sheet and positive pipeline momentum positioned to take a new CDMO focussed approach.
At AstraZeneca James had a number of increasingly senior roles including leading the business in China to become the
number one pharmaceutical company in the market in 2008. He went on to become Regional Vice President for Central
Eastern Europe and the Middle East and led AstraZeneca’s investor relations team during the transition of Chair, CEO
and strategy as Leif Johansson and Pascal Soriot joined the business.
Mr Ward-Lilley’s last role at AstraZeneca was to lead the Respiratory, Inflammation & Autoimmunity franchise with
responsibility for the revitalisation of one of AstraZeneca’s three core therapeutic areas including the acquisitions of
Almirall’s respiratory business and Pearl Therapeutics. He was responsible for leading AstraZeneca’s corporate device
strategy in 2014/15 and was the key sponsor for AstraZeneca’s initial investment in Adherium at the time of the IPO
in 2015.
Mr Ward-Lilley is Chief Commercial Officer of the Galway, Ireland Aerogen Group and Board Director of Aerogen
Pharma Ltd. He has not held any other Australian public company directorships in the last three years.
Mr George Baran, MBA. Age 62.
Non-Executive Director
Appointed as a Director on 13 May 2021.
Mr Baran has over 35 years of experience in the medical device industry and serves as Executive Chair of the Trudell
Medical Limited Board of Directors as well as being a significant shareholder. In addition to his role at Trudell, Mr Baran
is an active investor in and Director of several medical device and e-health / connected care companies including
Sensory Technologies, Mozzaz Corporation, and Sky Medical Technology Inc. He was also a lead investor and a former
Director of Vanrx Phamasystems, which was recently acquired by Cytiva Life Sciences.
8
Annual Report 2022 Adherium Ltd Mr Baran has been responsible for the marketing of new drug delivery technologies to medical opinion leaders and
major pharmaceutical companies. This has included collaboration with business and clinical partners in the design and
co-ordination of clinical studies. He has also been granted several US and international patents for medical devices for
drug delivery and minimally invasive surgery.
Mr Baran holds an MBA from the Richard Ivey School of Business, Western University, London (ON) where he currently
serves on the Advisory Board of the Lawrence National Centre for Policy and Management. Mr Baran has not held any
other Australian public company directorships in the last three years.
Mr Jeremy Curnock Cook, MA. Age 73.
Independent 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 is 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, AMEX, 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),
and sits on the board of Avita Medical, Rex Bionics Pty, Humanetix Ltd, Marine Department Ltd, Cambridge Respiratory
Innovations Ltd, and 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.
As noted, Mr Curnock Cook has an association with significant shareholders through his capacity as Managing Director
of BioScience Managers Pty Ltd. The board of directors is of the opinion that this does not compromise the independence
of Mr Curnock Cook as, to the best of the Board’s knowledge and based on advice recieved, he is not involved in
decision making by the shareholders, and also does not control BioScience Managers Pty Ltd.
Dr William Hunter, MD. Age 59.
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-inventor, including the TAXUS Drug-Eluting Coronary Stent, the Zilver PTX Peripheral DrugEluting
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 15 million patients globally. He is currently
President and CEO of Canary Medical Inc. and formerly Correvio Pharma Corp (NASDAQ: CORV). Dr Hunter is also a
Director of Rex Bionics and 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.
Mr Bruce McHarrie, B.Com, FCA, GAICD. Age 64.
Independent Non-Executive Director
Appointed as a Director on 20 July 2015.
Mr McHarrie is a company director and adviser in the health and life sciences sectors with over 25 years’ experience. 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), and
a director at Pharmamark Nutrition (nutritional foods). Mr McHarrie 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. Mr McHarrie was previously a director at AusCann
Group Holdings Ltd. He 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.
9
Annual Report 2022 Adherium Ltd Mr Matthew McNamara BSc (Hons), MBA, GAICD was an Independent Non-Executive Director until his resignation on
25 February 2022.
Joint Company Secretaries
Mr Rob Turnbull, B.Com, CA. Age 55.
General Manager 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 almost 20 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.
Mr Mark Licciardo, B.Bus (Acc), GradDip CSP, FCSA, FCIS, FAICD. Age 58.
Joint Company Secretary
Appointed 10 May 2016.
Mr Licciardo is the founder of Mertons Corporate Services, now part of Acclime Australia and is responsible for Acclime
Australia’s Listed Services Division. He is also an ASX-experienced director and chair of public and private companies,
with expertise in the listed investment, infrastructure, bio-technology and digital sectors. He currently serves as a director
on a number of Australian company boards as well as foreign controlled entities and private companies.
During his executive career, Mr Licciardo held roles in banking and finance, funds management, investment and
infrastructure development businesses, including being the Company Secretary for ASX:100 companies Transurban
Group and Australian Foundation Investment Company Limited.
Mr Licciardo holds a Bachelor of Business degree in accounting, a Graduate Diploma in Governance and is a Fellow
of the Chartered Governace Institute, the Governance Institute of Australia and the Australian Institute of Company
Directors.
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 & Remuneration
Committee Meetings
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend
Meetings
attended
Meetings
eligible
to attend#
Meetings
attended
Lou Panaccio
James Ward-Lilley
George Baran
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara
2
6
6
6
6
6
5
2
6
6
5
6
6
4
1
6
-
-
-
6
5
1
2
-
-
-
6
5
-
1
-
1
-
-
1
-
1
-
1
-
-
1
# Nomination & Remuneration Committee business was largely dealt with at Board meetings during this period.
Committees of the Board
The Company has established the following committees of the board, with membership in the year to 30 June 2022 as noted:
Committee
Audit & Risk
10
Membership
Bruce McHarrie (Chair), Non-Executive Director
James Ward-Lilley, Non-Executive Director
Lou Panaccio, Non-Executive Director (appointed 25 February 2022)
Matthew McNamara, Non-Executive Director (until resignation 25 February 2022)
Annual Report 2022 Adherium Ltd Nomination & Remuneration
Jeremy Curnock Cook (Chair), Non-Executive Director
James Ward-Lilley, Non-Executive Director
Lou Panaccio, Non-Executive Director (appointed 25 February 2022)
Matthew McNamara, Non-Executive Director (until resignation 25 February 2022)
The committees’ Charters are contained in the Corporate Governance Policy which is available on the Company’s website.
Principal Activities
During the year, the principal continuing activity of the Group was the development, manufacture and supply of
its Hailie® (formerly Smartinhaler®) digital health technologies which address sub-optimal medication use, support
reimbursement for remote patient monitoring, and improve health outcomes in chronic disease.
Results and Dividends
The net loss after tax of the Group for the year ended 30 June 2022 was $10,044,000.
No dividends were paid, declared or recommended during the year ended 30 June 2022.
Review of Operations
Adherium continued to drive a strong development program of its cutting-edge Hailie® sensors and software platform
for both Asthma and chronic obstructive pulmonary disease (COPD) medication inhalers. The Company remains focused
on its remote patient monitoring growth strategy following distribution agreements with world-class companies, key
regulatory achievements, software platform enhancements and senior management team appointments to help build
the Company’s commercial expertise. During the year, Adherium made significant progress, notably:
US and UK Partnerships
•
In July 2022, the Company signed a distribution agreement for US patient monitoring with Perigon Health 360
to sell the Hailie® platform, including its new, next generation sensors. Adherium’s innovative Hailie® product
portfolio has been incorporated into Perigon’s world-class proprietary platform, Medesto, enabling optimum
patient management and treatment. The signing of this distribution agreement is for an initial three-year term
and patient enrolment and set-up for remote patient monitoring has already commenced.
• Adherium also announced that it signed its first UK distribution agreement with Helicon Health Ltd to sell the
Hailie® sensor range and cloud data services. Adherium’s Hailie® sensor connects via the Hailie® app to Helicon’s
comprehensive remote patient monitoring platform creating, for the first time, the most advanced care for Asthma
and COPD patients that are in remote settings.
• For clinical trial services, Adherium announced in June 2022 that it has been awarded the contract for the supply
of the Hailie® solution to Avillion LLP, sponsor of a US-based clinical study in mild Asthma in partnership with
AstraZeneca. With the contract revenue guidance of approximately US$650,000, the upcoming clinical study is
an expansion of the clinical co-development agreement with AstraZeneca for PT027, a potential first-in-class
inhaled, fixed-dose combination rescue medication containing albuterol, a short-acting beta2-agonist (SABA),
and budesonide, an inhaled corticosteroid (ICS), in the US.
• Most recently, the Company entered into contracts with Dulcian Health in the US to integrate Hailie® technology
into Chronic Care Management Services, and with CareCentra Inc., also in the US, to use the Hailie® platform in
conjunction with an Artificial Intelligence (AI) driven patient behaviour shaping platform.
These agreements mark another milestone in Adherium’s journey towards improving clinical outcomes and helping
respiratory patients live longer healthier lives. The execution of Adherium’s commercial strategy for the Hailie® platform
in the US and, for the first time, in the UK expands its footprint to deliver enhanced remote patient care, accelerating
momentum in the digital healthcare industry.
Key Regulatory Achievements
•
In September 2021, Adherium announced it had received U.S. Food and Drug Administration (FDA) 510(k)
clearance to market its first, next generation Hailie® sensor with physiological parameters for monitoring Asthma
and COPD medication use. That sensor, designed for use with AstraZeneca’s Symbicort® aerosol inhaler, was
the first in a series of planned Hailie® devices specifically designed to enable physicians and providers to
enhance patient care and clinical workflow by capturing physiological parameters including inhalation flow
rate, duration, volume, and peak inhalation flow. This data is especially valuable for clinicians to improve patient
inhaler use technique. Clinical studies have shown that up to 92% of Asthma patients use their inhaler incorrectly.
Improving technique improves patient quality of life.
11
Annual Report 2022 Adherium Ltd •
In January 2022, the Company received its Medicines and Healthcare products Regulatory Agency (MHRA)
registration confirmation as a medical devices manufacturer of inhaler dose sensors in the UK. The current
generation of Hailie® sensor products are CE Marked and are available in the UK to patients working with
National Health Service (NHS).
• Adherium announced, in March 2022, the submission to the FDA of a 510(k) clearance to market application
to connect Ellipta® inhaler users with its next generation Hailie® sensor, and received clearance in July 2022.
Adherium’s latest Hailie® sensor, designed for use with the GlaxoSmithKline (GSK) Ellipta® dry powder inhaler
(DPI), is the second in Adherium’s series of new next-generation sensors to receive US clearance, following the
Hailie® for Symbicort®, designed to capture physiological parameters.
In early August 2022, Adherium announced another submission to the FDA of a 510(k) clearance to market
application, this time to connect GSK Ventolin®, Advair®, and Flovent® pressurised metered-dose inhaler (pMDI)
users with its next generation Hailie® sensor. Most recently, a further 510(k) clearance to market application has
been submitted, this for Adherium’s fourth next generation Hailie® sensor, connecting users of Teva’s ProAir® and
Albuterol Sulphate HFA metered dose inhalers.
•
The strong regulatory capabilities the Company is consolidating and further developing will increase global market
availability as well as create a competitive advantage in an increasingly regulated global environment. Adherium has
510(k) clearances for 91% of the US top 20 branded inhalers for adherence usage enabling the Remote Therapeutic
Monitoring (RTM) reimbursement codes, and 32% coverage for physiological parameters enabling the Remote
Physiological Monitoring (RPM) reimbursement codes.
Hailie® Sensor and Platform Developments
• Adherium continues to make great progress in the development of its next generation Hailie® sensors, with the
first production run for the new Hailie® for Symbicort® completed in February 2022.
• The Company continues to invest in development, updates and enhancements of its innovative digital platform.
Especially important is offering a flexible channel platform to integrate the Hailie® sensor including introducing
an advanced Rest application programming interface (API) and a new, updated software development kit (SDK)
to improve connection with channel partners and customer patient management systems. These releases extend
Adherium’s interoperability capabilities and integration of the Hailie® platform with disease management and
clinical trial customers.
Senior Management and Board Appointments
•
In February 2022, Lou Panaccio was appointed as a non-executive director and subsequently, in March 2022, as
Chairman of the Board. Mr Panaccio brings more than 30 years of leadership experience in healthcare services,
ASX and NASDAQ listings, and has extensive global commercial experience, particularly in the US.
• Adherium welcomed in April 2022 Mr Francis White as Vice President of Global Business Development based
in the UK. Previously serving as Managing Director of Olympus Medical UKIE, Mr White brings over 20 years of
healthcare leadership experience, including key account management, sales and marketing expertise.
• Following Mr White’s appointment, Adherium appointed Tara Creaven-Capasso as its Vice President of Quality,
Regulatory and Clinical Affairs. With over two decades of experience in the medical device, pharmaceutical,
bioscience, and vaccine sectors, Mrs Creaven-Capasso joins Adherium from COVID19 Vaccine Corporation Ltd.
(CVC), which she co-founded in 2020.
At this pivotal time in Adherium’s market expansion strategy, the Company is pleased to welcome Mr Lou Panaccio,
Mr Francis White and Mrs Tara Creaven-Capasso, strengthening both the Board and leadership team, and ensuring it
remains poised to capitalise on all upcoming commercial opportunities as it progresses through the development of its
Hailie® sensors and integrated digital platform.
Financial commentary
• Revenue to 30 June 2022 was $529,000, compared with $401,000 in the prior year, the increase due to a higher
level of clinical trial activity in 2022.
• Research and development activities to 30 June 2022 amounted to $5,877,000 compared with $5,477,000 in the
prior year, the increased expenditure resulting from progress in developing the new next generation sensors with
physiological parameters, and the enhanced Hailie® portal, Rest API and SDK.
• Sales and Marketing costs were $944,000 to 30 June 2022, compared with $845,000 in the prior year. This
increase reflects recruitment and increased activity in the US and UK which has resulted in the announced
commercial arrangements.
• Administrative costs decreased to $5,263,000 for 2022, down from $6,143,000 in the year ended 30 June 2021.
Within this, payroll decreased from $1,751,000 in the prior year to $1,654,000 following senior management
changes earlier in the year, and non-cash costs included asset depreciation and amortisation expense of
$183,000 compared to $145,000 in the prior year. The overall decrease in administrative costs related largely to
the decrease in foreign exchange losses of $33,000 in 2022 compared to losses of $888,000 in the prior year.
12
Annual Report 2022 Adherium Ltd
•
•
In the year to 30 June 2022, the Company received in cash annual Australian R&D Tax Incentives of $370,000 and
$1,627,000 for both the 2020 and 2021 financial years respectively. The Company intends to submit an R&D Tax
Incentive claim for the 2022 financial year before the end of calendar 2022 for which an accrual of $1,173,000 has
been made.
In addition to the changes noted above, the loss for the 2022 year of $10,044,000 decreased from $15,036,000
in 2021 due to finance expenses of $2,228,000 on convertible notes. Those notes converted to ordinary shares
during the 2021 financial year and so the finance expenses did not reoccur in 2022.
• Adherium ended the year to 30 June 2022 with cash of $5,283,000.
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 2022.
Events since the end of the Financial Year
Subsequent to the balance sheet date, the Company received share capital subscription commitments from institutional
and sophisticated investors of $13.5 million. The first tranche of $1.7 million (334,154,330 ordinary shares) was received
in September 2022. The balance of $12.8 million (2,565,845,670 ordinary shares) together with options on a 1:2 basis is
subject to shareholder approval to be sought by the Company.
There are no other 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 Chairman's Report and CEO's Report on pages
2 to 7.
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 2022 is:
Director
Lou Panaccio
James Ward-Lilley
George Baran*
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Ordinary Shares
Options over Ordinary Shares
-
3,599,611
423,080,272
2,992,539
3,412,539
3,577,392
-
10,000,000
10,485,950
-
-
-
* Shares and options disclosed are registered to Trudell Medical Limited, in which Mr Baran has a 33.33% beneficial interest.
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.
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.
13
Annual Report 2022 Adherium Ltd
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 options comprised:
Exercise price
Total Number of Options
Vested Options
Expiry Date
$0.030000
$0.020000
$0.030000
$0.040000
$0.021900
$0.040000
Outstanding at 29 September
2022
104,855,877
25,000,000
25,000,000
25,000,000
27,519,467
17,176,559
224,551,903
104,855,877
25 October 2022
25,000,000
25,000,000
25,000,000
27,519,467
13,843,225
221,218,569
7 May 2023
7 May 2023
7 May 2023
29 January 2027
14 April 2027
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. Key management personnel were granted SARs as follows:
During the year ended 30 June 2022 and to the date of this report no Directors of the Company or any other key
management personnel of the Group were granted options.
Details of fully paid ordinary shares issued on exercise of options in the year to 30 June 2022 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.
There were no fees paid to PricewaterhouseCoopers for other services in the years ended 30 June 2021 and 2022.
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 fourth 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.
14
Annual Report 2022 Adherium Ltd
Remuneration Report (Audited)
The Directors present the Group’s 2022 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-based compensation
(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 2022.
(i) Non-Executive and Executive Directors
•
•
•
•
•
•
•
Lou Panaccio
Non-Executive Chairman (appointed 25 February 2022)
James Ward-Lilley
Non-Executive Director (appointed 14 April 2020)
George Baran
Non-Executive Director (appointed 13 May 2021)
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)
Matthew McNamara
Non-Executive Director (appointed 18 October 2019, resigned 25 February 2022)
(ii) Other key management personnel
•
•
•
•
•
•
Rick Legleiter
Chief Executive Officer (appointed 13 May 2021)
Anne Bell
Robert Spurr
Geoff Feakes
Rob Turnbull
Chief Financial Officer (appointed 20 April 2020, resigned 15 September 2021)
Interim Chief Financial Officer (appointed 19 October 2021, resigned 30 May 2022)
Chief Technology Officer (appointed 3 August 2020)
Joint Company Secretary (appointed 21 August 2015) and General Manager
Mark Licciardo
Joint Company Secretary (appointed 10 May 2016)
(iii) Changes since the end of the reporting period
The Company has announced the appointment of Daniel Kaplon as Chief Financial Officer, effective 10 October 2022.
There have been no other changes in key management personnel.
(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.
15
Annual Report 2022 Adherium Ltd
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:
the remuneration of executive directors;
the remuneration of persons reporting directly to the Chief Executive Officer;
- executive remuneration policy;
-
-
- 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 or her 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 or option 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 and option plans, or other incentive
securities focussed on increasing shareholder value.
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. There are no
guaranteed base pay increases included in any executive 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 and equity based incentive which forms part of the executive’s total compensation, representing
between 0% and 60% 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.
16
Annual Report 2022 Adherium Ltd
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 and Executive Share
Option Plan (the Plans) and where appropriate via other incentive securities such as SARs.
Under the Plans,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, with 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; or
• options over ordinary shares in the Company with an exercise price determined by the board.
The Plans are designed to focus directors, executives and staff on delivering long-term shareholder returns.
Share and option 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 or option award is forfeited and, where relevant, the
loan cancelled such that the participant receives no benefit from unvested shares where the related loan is not repaid.
Participation in the Plans is at the board’s discretion and staff do not have a contractual right to participate in the Plans.
During the year ended 30 June 2022, the Company issued Stock Appreciation Rights (SARs) to its CEO as a long-term
incentive focussed on delivering long-term shareholder returns. The Company did not establish a plan for the SARs as
further issues of this type of security were not intended. The issue of the SARs was ratified by shareholders at the 2021
AGM.
Two tranches of SARs were issued, the first vesting immediately in September 2021 and the second vesting over three
years of continuing employment and subject to achievement of target annual volume weighted average prices (VWAP)
for the Company’s ordinary shares. On any exercise of a vested SAR, the Company will issue that number of ordinary
shares equivalent in value to the amount by which the fair market value of an ordinary share exceeds a base price of
$0.016.
(d) Relationship between remuneration and Group performance
The Group continues 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 2022 the
Group incurred a loss after tax of $10,044,000 (0.5 cent loss per share). In the year to 30 June 2022 the Company’s shares
traded between 0.6 and 3.0 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 2022.
(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. At the 2016 Annual General meeting shareholders approved an aggregate
annual non-executive director fee pool of $500,000. From this the Non-Executive Chairman is paid $100,000 per annum
and each Non-Executive Director is paid $50,000 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.
17
Annual Report 2022 Adherium Ltd
(f) Details of remuneration of key management personnel
Remuneration for the
year ended 30 June 2022
Short Term Benefits
Post-Employment Benefits
Incentive
Share-based Payments
Salaries & Fees
$
Bonus
$
Insurance
& Other
$
Superannuation
$
Value of Options/SARs/
Severance
Loan Funded Shares5
Performance Related
Remuneration
Remuneration
Directors’ remuneration
Lou Panaccio1
James Ward-Lilley
George Baran
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara1
Sub-total Directors
Executives’ remuneration
Rick Legleiter
Robert Spurr3
Anne Bell2
Geoff Feakes
Mark Licciardo4
Rob Turnbull
Sub-total executives
25,000
91,667
50,000
50,000
50,000
50,000
33,333
350,000
275,017
149,124
60,883
232,014
6,766
235,533
959,337
Total key management personnel
1,309,337
-
-
-
-
-
-
-
-
29,791
-
(63,494)
97,348
-
88,321
151,966
151,966
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500
-
-
-
-
5,000
3,333
10,833
27,502
14,326
6,088
23,201
-
12,769
83,886
94,719
1. On 25 February 2022 Matthew McNamara resigned as a director and Lou Panaccio was appointed.
2. Anne Bell resigned from the role of CFO on 15 September 2021.
3. Robert Spurr was appointed interim CFO on 19 October 2021, and resigned 30 May 2022.
4. A company of which Mr Licciardo is a director received the 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 for SARs using
the Monte Carlo Simulation valuation model. Fair values are allocated to each reporting period in accordance with vesting. The values noted
represent the portion of the fair value of the options, loan funded shares, or SARs allocated to the reporting period.
Remuneration for the
year ended 30 June 2021
Short Term Benefits
Post-Employment Benefits
Incentive
Share-based Payments
Salaries & Fees
$
Bonus
$
Insurance
& Other
$
Superannuation
$
Severance
Loan Funded Shares6
Remuneration
Remuneration
Value of Options/
Performance Related
Directors’ remuneration
James Ward-Lilley
George Baran4
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara
Bryan Mogridge4
Sub-total Directors
Executives’ remuneration
Mike Motion1
Rick Legleiter2
Anne Bell
Geoff Feakes3
Mark Licciardo5
Rob Turnbull
Sub-total executives
Total key management personnel
100,000
6,720
50,000
50,000
50,000
50,000
29,167
335,887
540,923
36,669
287,494
201,679
6,180
234,299
1,307,244
1,643,131
-
-
-
-
-
-
-
-
327,993
-
116,485
95,504
-
58,462
598,444
598,444
-
-
-
-
-
-
-
-
-
91,546
-
-
-
-
91,546
91,546
1. Mike Motion resigned from the role of Group CEO on 13 May 2021.
2. Rick Legleiter was appointed Group CEO 13 May 2021.
3. Geoff Feakes was appointed CTO 3 August 2020.
4. Bryan Mogridge resigned as a director 29 January 2021, and George Baran was appointed 13 May 2021.
18
-
-
-
-
4,750
4,750
-
9,500
98,227
3,487
27,881
19,159
-
8,715
157,469
166,969
139,620
139,620
139,620
$
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,646
402,479
$
-
-
-
-
-
-
$
-
-
-
-
-
39,441
1,654
551
839,723
62,625
32,580
1,789
936,717
978,363
87,913
14,232
4,744
14,232
121,121
62,625
32,580
1,789
184,907
306,028
Total
$
27,500
131,108
50,000
50,000
51,654
55,551
36,666
1,172,033
163,450
205,722
385,143
6,766
338,412
2,271,526
2,674,005
Total
$
187,913
6,720
50,000
64,232
59,494
54,750
43,399
466,508
131,702
494,485
348,922
6,180
303,265
2,339,610
2,806,118
87,913
1,054,056
%
-
-
-
-
-
-
-
30%
3%
1%
74%
33%
27%
%
47%
22%
8%
33%
39%
36%
37%
20%
-
-
-
-
-
Fixed
%
100%
70%
100%
100%
97%
99%
100%
26%
100%
100%
67%
100%
73%
Fixed
%
53%
100%
100%
78%
92%
100%
67%
61%
100%
64%
63%
100%
80%
5. A company of which Mr Licciardo is a director received the fees from the Company for company secretarial and corporate governance
consulting services.
allocated to the reporting period.
6. 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
Annual Report 2022 Adherium Ltd Total key management personnel
1,309,337
1. On 25 February 2022 Matthew McNamara resigned as a director and Lou Panaccio was appointed.
2. Anne Bell resigned from the role of CFO on 15 September 2021.
3. Robert Spurr was appointed interim CFO on 19 October 2021, and resigned 30 May 2022.
Directors’ remuneration
Lou Panaccio1
James Ward-Lilley
George Baran
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara1
Sub-total Directors
Executives’ remuneration
Rick Legleiter
Robert Spurr3
Anne Bell2
Geoff Feakes
Mark Licciardo4
Rob Turnbull
Sub-total executives
Directors’ remuneration
James Ward-Lilley
George Baran4
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara
Bryan Mogridge4
Sub-total Directors
Executives’ remuneration
Mike Motion1
Rick Legleiter2
Anne Bell
Geoff Feakes3
Mark Licciardo5
Rob Turnbull
Sub-total executives
Total key management personnel
29,791
(63,494)
97,348
88,321
151,966
151,966
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
91,667
50,000
50,000
50,000
50,000
33,333
350,000
275,017
149,124
60,883
232,014
6,766
235,533
959,337
100,000
6,720
50,000
50,000
50,000
50,000
29,167
335,887
540,923
36,669
287,494
201,679
6,180
234,299
1,307,244
1,643,131
327,993
116,485
95,504
58,462
598,444
598,444
91,546
91,546
91,546
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500
5,000
3,333
10,833
27,502
14,326
6,088
23,201
-
12,769
83,886
94,719
$
-
-
-
-
$
-
-
-
-
-
4,750
4,750
9,500
98,227
3,487
27,881
19,159
-
8,715
157,469
166,969
(f) Details of remuneration of key management personnel
Remuneration for the
year ended 30 June 2022
Short Term Benefits
Post-Employment Benefits
Incentive
Share-based Payments
Salaries & Fees
$
Bonus
$
Insurance
& Other
$
Superannuation
Severance
$
Value of Options/SARs/
Loan Funded Shares5
$
Total
$
Performance Related
Remuneration
%
Fixed
Remuneration
%
-
-
-
-
-
-
-
-
-
-
139,620
-
-
-
139,620
139,620
-
39,441
-
-
1,654
551
-
41,646
839,723
-
62,625
32,580
-
1,789
936,717
978,363
27,500
131,108
50,000
50,000
51,654
55,551
36,666
402,479
1,172,033
163,450
205,722
385,143
6,766
338,412
2,271,526
2,674,005
-
30%
-
-
3%
1%
-
74%
-
-
33%
-
27%
100%
70%
100%
100%
97%
99%
100%
26%
100%
100%
67%
100%
73%
4. A company of which Mr Licciardo is a director received the 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 for SARs using
the Monte Carlo Simulation valuation model. Fair values are allocated to each reporting period in accordance with vesting. The values noted
represent the portion of the fair value of the options, loan funded shares, or SARs allocated to the reporting period.
Remuneration for the
year ended 30 June 2021
Short Term Benefits
Post-Employment Benefits
Incentive
Share-based Payments
Salaries & Fees
$
Bonus
$
Insurance
& Other
Superannuation
Severance
$
Value of Options/
Loan Funded Shares6
$
Total
$
Performance Related
Remuneration
%
Fixed
Remuneration
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
87,913
-
-
14,232
4,744
-
14,232
121,121
87,913
-
62,625
32,580
-
1,789
184,907
306,028
187,913
6,720
50,000
64,232
59,494
54,750
43,399
466,508
1,054,056
131,702
494,485
348,922
6,180
303,265
2,339,610
2,806,118
47%
-
-
22%
8%
-
33%
39%
-
36%
37%
-
20%
53%
100%
100%
78%
92%
100%
67%
61%
100%
64%
63%
100%
80%
1. Mike Motion resigned from the role of Group CEO on 13 May 2021.
2. Rick Legleiter was appointed Group CEO 13 May 2021.
3. Geoff Feakes was appointed CTO 3 August 2020.
4. Bryan Mogridge resigned as a director 29 January 2021, and George Baran was appointed 13 May 2021.
5. A company of which Mr Licciardo is a director received the fees from the Company for company secretarial and corporate governance
consulting services.
6. 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.
19
Annual Report 2022 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
Rick Legleiter
Geoff Feakes, CTO
Rob Turnbull, Joint Company Secretary and
General Manager
Term of
Agreement
No fixed term
No fixed term
No fixed term
Notice Period 1
Base Salary 2
Termination
Payments 3
6 months
A$275,000
A$52,000
4 months
A$232,000
-
2 months
NZ$251,200
2 months
1. The notice period applies without cause equally to either party unless otherwise stated.
2. Base salaries quoted are annual as at 30 June 2022; they are reviewed annually by the Nomination and Remuneration Committee.
3. Amount or base salary payable if the Group terminates employees with notice, and without cause (e.g. for reasons other than unsatisfactory
performance).
(h) Details of share-based compensation
Executive Share Option Plan
The board has established the Adherium Executive Share Option Plan (ESOP).
Awards under the ESOP typically vest one third annually over three years of continued employment from the grant date.
The fair value of the awards of options are calculated at the date of grant using a Black-Scholes pricing model, which is
allocated over the vesting periods as share-based compensation.
The board made no offers to key management personnel under the ESOP in the year ended 30 June 2022.
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.
No options over ordinary shares were exercised during the period to 30 June 2022 and to the date of this report.
Loan funded Employee Share Plan
The board has established the loan funded Adherium Employee Share Plans (Plans).
Awards under the Plans typically 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 is allocated over the vesting periods as share-based compensation.
In the year ended 30 June 2022 the board made offers to key management personnel under the Plans which were
accepted as follows:
Key Management
Personnel
Shares
Price
Loan
Term
Vesting1 Total Value2
2022 Expense
Allocation
Geoff Feakes
14,500,000
$0.016
$232,000
7 years
3 years
$110,669
$40,023
1. Vesting is also subject to target VWAPs of $0.032, $0.064 and $0.096 in years 1, 2, and 3 respectively.
2. Valuation at the date of award, using the Black & Scholes option pricing model, to be allocated over the vesting periods as
share-based compensation.
20
Annual Report 2022 Adherium Ltd Stock Appreciation Rights (SARs)
In the year ended 30 June 2022, the Company issued Stock Appreciation Rights (SARs) to its CEO as a long-term
incentive.
The fair value of the awards of SARs are calculated at the date of grant using a Monte Carlo Simulation valuation
model, which is allocated over the vesting periods as share-based compensation.
On any exercise of a vested SAR, the Company will issue that number of ordinary shares equivalent in value to the
amount by which the fair market value of the ordinary shares exceeds the base price.
Key Management
Personnel
SARs
Base Price
Term
Vesting
Total Value1
2022 Expense
Allocation
Rick Legleiter
Rick Legleiter
69,168,049
79,809,288
$0.016
$0.016
10 years
10 years
Immediate
3 years2
$670,930
$372,443
$670,930
$168,793
1. Valuation at the date of award, using the Monte Carlo Simulation valuation model, to be allocated over the vesting periods as share-based
compensation.
2. Vesting is also subject to target VWAPs of $0.032, $0.064 and $0.096 in years 1, 2 and 3 respectively.
(i)
Equity instruments held by key management personnel
Shareholdings
The numbers of ordinary shares in the Company held during the year to 30 June 2022 by each director and other key
management personnel of the Group, including their personally related parties, are set out below:
Name
Balance at the start
of the year
Purchases
Other changes
during the period
Balance at the end
of the year
Lou Panaccio
James Ward-Lilley
George Baran
Jeremy Curnock Cook
William Hunter
Bruce McHarrie
Matthew McNamara
Anne Bell
Geoff Feakes
Rob Turnbull
Rob Turnbull (as trustee) 1
-
2,167,412
422,697,512
2,276,439
2,696,439
2,861,292
1,206,743
9,823,246
4,500,000
2,559,645
7,893,504
-
-
-
-
-
-
-
-
-
-
-
-
1,432,1992
382,7602
716,1002
716,1002
716,1002
716,1002
3,728,3962
17,738,1162
2,037,3902
-
3,599,611
423,080,2724
2,992,539
3,412,539
3,577,392
1,922,8433
13,551,6423
22,238,116
4,597,035
25,955,5622
33,849,066
1. Ordinary shares held on behalf of employees in the capacity of trustee of the Company’s Employee Share Plan.
2. Shares issued in lieu of salary/fees or as awards under the Company's Employee Share Plan.
3. Holding as at date directorship or employment ended.
4. The registered holder of the ordinary shares is Trudell Medical Limited, in which the director has a 33.33% beneficial interest.
21
Annual Report 2022 Adherium Ltd Options
The numbers of options over ordinary shares in the Company held during the year to 30 June 2022 by each director and
other key management personnel of the Group, including their personally related parties, are set out below:
Balance
at the
start of
the year Awarded Exercised
Balance
at the
end of
the year
Lapsed
Name
Vested
Vested and
exercisable
Vested and
unexercisable
James Ward-Lilley 10,000,000
George Baran1
10,485,950
William Hunter
1,500,000
-
-
-
-
-
-
-
-
10,000,000
6,666,666
6,666,666
10,485,950 10,485,950
10,485,950
1,500,000
-
-
-
-
-
-
1. Holding as of date directorship commenced. The registered holder of the options is Trudell Medical Limited, in which the director has
a 33.33% beneficial interest.
(j) Other transactions with key management personnel
Transactions with directors or other key personnel are set out in note 18 of the accompanying Group financial statements
for the year ended 30 June 2022.
End of audited Remuneration Report.
This report is made in accordance with a resolution of the directors.
Lou Panaccio
Non-Executive Chairman
Melbourne
30 September 2022
22
Annual Report 2022 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 2022, I declare that to the
best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Adherium Limited and the entities it controlled during the period.
Scott Walsh
Partner
PricewaterhouseCoopers
Sydney
30 September 2022
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
23
Annual Report 2022 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 Consolidated Financial Statements
24
Annual Report 2022 Adherium Ltd Consolidated Statement of Profit or Loss and
Other Comprehensive Income for the year
ended 30 June 2022
Notes
June 2022
$000
June 2021
$000
Continuing Operations
Sales
Cost of sales
Gross profit
Other income - Covid 19 payroll support
Other income - R&D tax credit
Manufacturing support
Research and development costs
Sales and marketing costs
Administrative expenses
Operating loss
Finance income
Finance expense
Finance income (cost) - net
Loss before income tax
Income tax credit (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 operations
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
5
7
5
15
7
529
(207)
322
-
2,807
(1,012)
(5,877)
(944)
(5,363)
401
(426)
(25)
61
370
(764)
(5,477)
(845)
(6,143)
(10,067)
(12,823)
24
(1)
23
23
(2,236)
(2,213)
(10,044)
(15,036)
-
-
(10,044)
(15,036)
50
50
864
864
(9,994)
(14,172)
(9,994)
(14,172)
Basic and diluted loss per share
8
(0.5) cents
(1.7) cents
The accompanying notes form part of the financial statements.
25
Annual Report 2022 Adherium Ltd Consolidated Statement of Financial Position
as at 30 June 2022
Notes
June 2022
$000
June 2021
$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
Right-of-use assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Income received in advance
Lease liabililies
Total current liabilities
Non-Current liabilities
Lease liabililies
Total liabilities
EQUITY
Share capital
Accumulated deficit
Other reserves
Total equity
Total liabilities & equity
The accompanying notes form part of the financial statements.
26
9
10
11
12
13
13
14
19
19
16
5,283
1,593
1,071
272
8,219
227
1
86
15,178
567
962
202
16,909
127
3
-
8,533
17,039
1,697
1,214
42
2,953
43
2,996
110,523
(83,429)
(21,557)
5,537
8,533
2,319
685
-
3,004
-
3,004
110,172
(73,385)
(22,752)
14,035
17,039
Annual Report 2022 Adherium Ltd Consolidated Statement of Changes in Equity
for the year ended 30 June 2022
Share
Capital
Accumulated
Deficit
Share-based
Compensation
Reserve
Foreign
Currency
Translation
Reserve
Merger
Reserve
$000
$000
$000
$000
$000
Total
Equity
$000
Equity as at 1 July 2020
87,682
(58,349)
1,837
(251)
(27,535)
3,384
Loss for the period
Other comprehensive
income
Total comprehensive loss
Transactions with owners:
Shares and options issued
on conversion of convertible
notes
Shares and options issued in
placements
Share and option grants for
services
Share issue costs
-
-
-
(15,036)
-
(15,036)
4,063
19,014
222
(809)
-
-
-
-
Equity as at 30 June 2021
110,172
(73,385)
Loss for the period
Other comprehensive
income
Total comprehensive loss
Transactions with owners:
Share, option and SARs
grants for services
-
-
-
(10,044)
-
(10,044)
351
-
Equity as at 30 June 2022
110,523
(83,429)
The accompanying notes form part of the financial statements.
-
-
-
1,165
858
310
-
4,170
-
-
-
1,145
5,315
-
864
864
-
-
-
-
-
-
-
-
-
-
-
(15,036)
864
(14,172)
5,228
19,872
532
(809)
613
(27,535)
14,035
-
50
50
-
-
-
-
-
(10,044)
50
(9,994)
1,496
663
(27,535)
5,537
27
Annual Report 2022 Adherium Ltd Consolidated Statement of Cash Flows
for the year ended 30 June 2022
Notes
June 2022
$000
June 2021
$000
Cash flows from operating activities:
Receipts from customers
Research and development tax incentive receipts
Interest received
Interest 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
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from the issue of shares
Proceeds from the issue of convertible notes
Payment of capital raising 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 and non-operating activities items requiring
adjustment:
Depreciation
Amortisation of intangible and right-of-use assets
Property, plant and equipment (gain) loss on disposal
Convertible notes finance cost
Convertible notes issue cost
Share-based compensation expense
Shares granted for services
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.
28
809
1,997
24
(1)
(5,918)
(6,521)
(9,610)
(279)
(279)
-
-
-
-
(9,889)
15,178
(6)
5,283
782
-
23
(8)
(4,536)
(7,534)
(11,273)
(29)
(29)
19,872
3,000
(968)
21,904
10,602
4,584
(8)
15,178
(10,044)
(15,036)
181
5
(1)
-
-
1,145
351
33
(1,185)
(144)
(528)
577
(9,610)
142
3
(5)
2,228
94
310
222
888
(1)
150
(268)
-
(11,273)
9
12
13
15
Annual Report 2022 Adherium Ltd Notes to the consolidated financial
statements for the year ended 30 June 2022
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 2022 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 29 September 2022.
2. Basis of Preparation
This general purpose consolidated financial report for the twelve months ended 30 June 2022 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.
As of 30 June 2022 the Group had cash of $5,283,000 (2021: $15,178,000) and recorded a loss after tax of $10,044,000
(2021: $15,036,000) and operating cash outflows of $9,610,000 (2021: $11,273,000) for the year then ended.
The Directors have approved forecasts that, following completion of the capital raise described in note 23, 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:
• continue to raise additional capital until the Company is supported by cash flows from operations;
• secure sufficient cash flows from new revenue streams; and
• execute plans at the costs forecasted,
represent material uncertainties that cast significant doubt over the Group’s ability to continue as a going concern and
therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.
Despite these uncertainties, the Directors are of the view that the Company will be successful in the above matters and
accordingly have adopted the going concern basis for the preparation of the financial report.
(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.
(d) Critical accounting estimates
The preparation of financial statements requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on
an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
29
Annual Report 2022 Adherium Ltd
The significant areas of estimate, uncertainty and critical judgements in applying accounting policies that have
the most significant effect on amounts recognised in the financial a statements are:
(i) Research & Development (R&D) tax credit
The recogniton of the R&D tax credit set out in note 7 includes assumptions surrounding the probability
that particular R&D projects will meet the criteria for acceptance by tax authorities, and also that the costs
of each R&D project will qualify to be claimed.
(ii) Convertible notes
The assumptions applied in recording the recognition and conversion of the convertible notes are set out
in note 15.
(iii) 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.
(iv) Recognition of deferred tax assets
As at 30 June 2022, 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 21. 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 Group 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 Group has determined that one segment exists
for the Group’s Hailie® (formerly known as 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 and not related to net investments in subsidiaries are
recognised in the Statement of Profit & Loss and Other Comprehensive Income. Foreign exchange gains
and losses resulting from translation of net investments in subsidiaries are recognised in the foreign
currency translation reserve.
30
Annual Report 2022 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 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) Grants
Grants received for research and development are recognised in the Statement of Profit & Loss and Other
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.
(c) 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.
31
Annual Report 2022 Adherium Ltd
(b) Share-based payments
The Company operates equity-settled share and option plans and awards certain employees,
directors and consultants shares, options and other incentive securities, from time to time, on a
discretionary basis. The fair value of the services received in exchange for the grant of the securities is
recognised as an expense with a corresponding increase in the share-based 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 securities at grant date. At each balance sheet date, the Company
revises its estimates of the number of securities that are expected to vest and become exercisable. It
recognises the impact of the revision of original estimates, if any, in the Statement of Profit & Loss and
Other Comprehensive Income, and a corresponding adjustment to equity over the remaining vesting
period.
3.7 Leases
At lease commencement, as Lessee an asset (the right to use the leased item) and a financial liability to pay
rentals across all leases are recognised unless the lease term is 12 months or less, or the underlying asset has
a low value. The right-of-use assets recognised comprise the initial measurement of the corresponding lease
liability, lease payments made at or before the commencement day, less any lease incentives received and
any initial direct costs. They are subsequently measured at cost less accumulated depreciation and
impairment losses.
3.8
Income Tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the Statement of Profit
& Loss and Other 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 Profit & Loss and Other 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 the Statement of Profit & Loss and Other 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
The Group makes use of a simplified approach in accounting for trade and other receivables, and records
any loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash
flows, considering the potential for default at any point during the life of a financial instrument.
In calculating expected credit losses, the Group uses its historical experience, external indicators and
forward-looking information using a provision matrix. The Group assesses impairment of trade receivables
on a collective basis and as they possess shared credit risk characteristics, grouped them based on the days
past due.
32
Annual Report 2022 Adherium Ltd
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.
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 Profit & Loss and Other 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.
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).
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 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.
3.18 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.
33
Annual Report 2022 Adherium Ltd
3.19 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.
3.20 Comparative Information
Where necessary, certain comparative information has been reclassified in order to provide a more
appropriate basis for comparison.
3.21 New Accounting Standards for application in future periods
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.
4. Segment Information
The chief operating decision maker is the Chief Executive Officer, who reviews financial information for the Group as a
whole. The information reviewed is prepared in the same format as included in the financial statements. The Group has
therefore determined that one reportable segment exists for the Group’s Hailie® business.
(a) Geographic segment information
The Group operates predominantly from New Zealand, with some manufacturing also undertaken
by suppliers in Asia at which the Group locates equipment and tools:
Domicile of non-current assets
New Zealand and Australia
South-East Asian Countries
Other Countries
June 2022
$000
June 2021
$000
200
110
4
314
57
71
2
130
The Group 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
Asia
b) Major customers
Revenues are derived from major external customers as follows:
Major customers
Customer A group entities
5. Revenue
Income from continuing operations:
Sensor sales and monitoring services
New product design and engineering services
34
June 2022
$000
June 2021
$000
7
355
167
-
529
53
231
116
1
401
June 2022
$000
396
June 2021
$000
148
June 2022
$000
June 2021
$000
294
235
529
264
137
401
Annual Report 2022 Adherium Ltd
6. Expenses
Loss before income tax includes the following specific expenses:
June 2022
$000
June 2021
$000
Fees paid to PricewaterhouseCoopers for:
- audit of the financial statements
- interim report review
Fees paid to PricewaterhouseCoopers for non-audit services:
- fees in respect of other advice and services
Total fees to PricewaterhouseCoopers
Depreciation and amortisation
Directors’ remuneration
- director fees
- share-based compensation
Total Directors’ remuneration
Employee benefits expense
- wages and salaries
- share-based compensation
Total employee benefits expense
Foreign exchange loss (gain)
Operating lease costs
7.
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 17)
Income tax expense
The weighted average applicable tax rate was 29% (2021: 29%).
99
40
-
139
186
361
42
403
5,943
1,102
7,045
33
139
91
37
-
128
145
345
121
466
4,661
189
4,850
888
89
June 2022
$000
June 2021
$000
-
-
-
(10,044)
(2,877)
(388)
895
2,370
-
-
-
-
(15,036)
(4,293)
905
968
2,420
-
35
Annual Report 2022 Adherium Ltd Research & development (R&D) tax credit
The Group is eligible to participate in the Research and Development (R&D) Tax Incentive Offset scheme to potentially
obtain a tax rebate or credits equivalent to the entitlements under the scheme operating at the time. These are only
recognised when it is probable that a claim under the schemes is likely to be successful or would be available to be
offset against income tax payable. During the current year, the Group has received an amount of $1,627,000 in relation
to the R&D Tax Incentive Offset scheme for income tax year 2021. As at 30 June 2022, $1,173,000 (2021: $370,000) was
accrued for the 2022 income tax year.
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 Convertible Notes discussed
in note 15 and the Options set out in note 16) 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.
June 2022
$000
June 2021
$000
Profit (loss) after income tax attributable to equity holders
(10,044)
(15,036)
Weighted average shares outstanding (basic)
Weighted average shares outstanding (diluted)
Basic and diluted loss per share
2,173,918,843
2,173,918,843
(0.5) cents
900,972,255
900,972,255
(1.7) cents
9. Cash and cash equivalents
Cash at bank and on hand
Deposits at call
10. Trade and other receivables
Trade receivables and accruals
R&D tax credit receivable
GST and other taxes receivable
Security deposits
11. Inventories
Raw materials and components
Finished goods
June 2022
$000
315
4,968
5,283
June 2021
$000
162
15,016
15,178
June 2022
$000
June 2021
$000
302
1,173
62
56
1,593
100
370
77
20
567
June 2022
$000
June 2021
$000
960
111
1,071
868
94
962
The cost of inventories recognised as an expense and included in 'cost of sales' amounted to $101,000 (2021: $276,000).
36
Annual Report 2022 Adherium Ltd 12. Property, plant and equipment
Manufacturing
Equipment
$000
Computer
Equipment
$000
Fixtures
& Fittings
$000
Office
Equipment
$000
Total
$000
As at 1 July 2020
Cost
Accumulated depreciation
Net book value
Movements in the year
ended 30 June 2021
Opening net book value
Additions
Disposals
Depreciation
Foreign currency translation
Closing net book value
As at 30 June 2021
Cost
Accumulated depreciation
Net book value
Movements in the year
ended 30 June 2022
Opening net book value
Additions
Disposals
Depreciation
Foreign currency translation
Closing net book value
As at 30 June 2022
Cost
Accumulated depreciation
Net book value
763
(579)
184
184
11
-
(119)
(1)
75
770
(695)
75
75
190
-
(135)
(5)
125
929
(804)
125
123
(107)
16
16
24
-
(12)
-
28
154
(126)
28
28
91
-
(38)
(1)
80
242
(162)
80
20
(10)
10
10
-
-
(1)
-
9
20
(11)
9
9
8
(2)
(2)
-
13
23
(10)
13
60
(35)
25
25
-
-
(10)
-
15
60
(45)
15
15
-
-
(6)
-
9
58
(49)
9
966
(731)
235
235
35
-
(142)
(1)
127
1,004
(877)
127
127
289
(2)
(181)
(6)
227
1,252
(1,025)
227
37
Annual Report 2022 Adherium Ltd 13. Intangible and right-of-use assets
As at 30 June 2020
Cost
Accumulated amortisation
As at 30 June 2020 - Net book value
Movements in the year ended 30 June 2021
Opening net book value
Additions
Disposals
Amortisation
Foreign currency translation
Closing net book value
As at 30 June 2021
Cost
Accumulated amortisation
Net book value
Movements in the year ended 30 June 2022
Opening net book value
Additions
Disposals
Amortisation
Foreign currency translation
Closing net book value
As at 30 June 2022
Cost
Accumulated amortisation
Net book value
14. Trade and other payables
Trade payables
Accruals
Employee benefits
38
Software
$000
Right-of-Use Asset
$000
300
(295)
5
5
-
-
(3)
1
3
299
(296)
3
3
-
-
(2)
-
1
290
(289)
1
-
-
-
-
-
-
-
-
-
-
-
-
-
89
-
(3)
-
86
89
(3)
86
Total
$000
300
(295)
5
5
-
-
(3)
1
3
299
(296)
3
3
89
-
(5)
-
87
379
(292)
87
June 2022
$000
June 2021
$000
335
506
856
1,697
701
365
1,253
2,319
Annual Report 2022 Adherium Ltd 15. Convertible Notes
June 2021
During the year to 30 June 2021 the Company issued Secured Convertible Notes (“2020 Notes”) with a face value of
$3 million, an interest rate of 9% per annum, and maturity date of 25 October 2022. The terms of the 2020 Notes
included conversion features, which allowed the noteholder to convert the principal and accrued interest to shares in
the Company at 3 cents per share after the occurrence of certain events, including partnering and funding milestones.
The 2020 Notes were accounted for as two separate liability components from their issue date – the debt portion
recorded at amortised cost and the embedded derivative conversion option recorded at fair value. In accounting for the
debt portion of the 2020 Notes, settlement was assumed to take place on 25 October 2022 with interest accruing at 9%
per annum to that date. The calculation of the fair value of the embedded derivative conversion option took into account
the probability of the noteholder converting and the market price of the ordinary shares.
On 18 March 2021 the Company and noteholder agreed to modify the 2020 Notes’ terms to:
• automatically convert the 2020 Notes principal plus interest to ordinary shares at the same time and price as
•
under a capital raise for at least $15 million; and
in consideration of the variation of the 2020 Notes to provide for the automatic conversion mechanism referred to
above; at closing of the capital raising to issue to the noteholder various options over ordinary shares.
On 30 April 2021, the Company received shareholder approval to amend the 2020 Notes and proceed with the capital
raise. This was completed on 7 May 2021 for a total of $18 million, and accordingly the 2020 Notes automatically
converted to 238,989,991 ordinary shares in addition to the grant to the noteholder of:
• 25,000,000 options with an exercise price of $0.02 and an expiry date of 7 May 2023;
• 25,000,000 options with an exercise price of $0.03 and an expiry date of 7 May 2023;
• 25,000,000 options with an exercise price of $0.04 and an expiry date of 7 May 2023; and
• 104,855,877 options with an exercise price of $0.03 and an expiry date of 25 October 2022.
The fair value of the modification of the 2020 Notes terms was assessed at $1,344,000, and the fair value of the options
granted $1,165,000, with both recorded as a finance cost.
Convertible Notes
Recognition at Note issue
Financing cost:
- Amortised cost
- Fair value change
- Modification
Total financing cost
Carrying value at conversion
Conversion:
- Shares issued
June 2021
Embedded
derivative
conversion
option at
fair value
$000
Debt
component
at amortised
cost
$000
Total
$000
1,622
1,378
3,000
519
-
1,444
1,963
3,585
-
(800)
(100)
(900)
478
519
(800)
1,344
1,063
4,063
4,063
4,063
39
Annual Report 2022 Adherium Ltd 16. Share capital
Share capital as at 1 July 2020
Shares issued in employee share plans
Shares issued in placements
Shares issued on conversion of Convertible Notes
Shares issued for services
Share issue costs
Share capital as at 30 June 2021
Shares issued in employee share plans
Cancellation of shares issued in employee share plans
Shares issued for services
Share issue costs
Ordinary Shares
601,906,334
13,250,000
1,262,405,631
238,989,991
9,181,155
-
2,125,733,111
68,490,750
(7,399,372)
21,426,603
-
$000
87,682
-
19,014
4,063
222
(809)
110,172
-
-
351
-
Share capital as at 30 June 2022
2,208,251,092
110,523
(a) 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.
(b) Employee incentive plans
Adherium Executive Share Option Plan (Adherium ESOP)
The Company operates an employee share option plan for employees, directors and consultants within the Group.
Participants are invited by the Board of Directors and awards typically vest one third annually over a three-year period.
The tables below set out the movements in options within relevant exercise price ranges:
Exercise
price range
$0.075268 –
0.134039
Outstanding at
1 July 2020
Granted
Exercised
Lapsed
Outstanding at
30 June 2021
Granted
Exercised
Lapsed
Outstanding at
30 June 2022
Options
2,232,689
-
-
(2,059,451)
173,238
-
-
(173,238)
-
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract
Life (years)
Weighted
Average
Exercise
Price
Weighted
Average
Share Price
at Exercise
Exercisable
$
$
$
$
$
$
$
$
0.1340
0.6
2,232,689
$
0.1340
-
-
0.1340
0.1340
-
-
0.1340
-
0.8
173,238
$
0.1340
-
-
-
-
40
Annual Report 2022 Adherium Ltd
Exercise
price range
$0.04
Outstanding
at 1 July 2020
Granted
Exercised
Lapsed
Outstanding at
30 June 2021
Granted
Exercised
Lapsed
Outstanding at
30 June 2022
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract
Life (years)
Weighted
Average
Exercise
Price
Weighted
Average
Share Price
at Exercise
Exercisable
Options
20,000,000
$ 0.0400
6.8
-
$
-
7,500,000
$ 0.0400
-
(4,500,000)
$
$
-
-
23,000,000
$ 0.0400
5.1
9,666,667
$
0.0400
-
-
$
$
-
-
(5,823,441)
$ 0.0400
17,176,559
$ 0.0400
4.8
13,843,225
$
0.0400
-
-
-
The weighted average fair value of options granted during the periods was estimated using the Black-Scholes
valuation model:
Significant Black-Scholes valuation model inputs
June 2022
June 2021
Share price at grant date
Exercise price
Volatility
Dividend yield
Expected option life
Annual risk-free interest rate
Weighted average fair value of options granted
-
-
-
-
-
-
-
$0.0300
$0.0400
114.4%
0%
1 year
0.27%
$0.0106
The Company has no legal or constructive obligation to repurchase or settle the options in cash.
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 employment with 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 2020 financial period is 1.3
cents per ESP share awarded. 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. There were no
new awards under the Adherium ESP during fiscal 2019.
41
Annual Report 2022 Adherium Ltd
The following incentive awards have been made and are on issue under the Adherium ESP:
Grant date
Shares granted
Issue price
Vested as at
30 June 2022
Restricted as at
30 June 2022
Share price
at grant date
8 November 2016
10 July 2019
10 July 2019
10 July 2019
10 July 2019
21 October 2020
2,100,000
3,377,435
1,099,872
1,099,872
1,099,887
5,876,711
21 October 2020
4,500,000
26 November 2021
68,490,750
$0.500
$0.027
$0.075
$0.150
$0.250
$0.040
$0.050
$0.016
-
2,984,757
978,842
978,842
-
5,876,711
2,100,000
3,377,435
1,099,872
1,099,872
1,099,887
-
1,500,000
4,500,000
-
68,490,750
$0.350
$0.028
$0.028
$0.028
$0.028
$0.026
$0.026
$0.013
(c) Stock Appreciation Rights (SARs)
On 20 September 2021, the Company issued 148,977,337 Stock Appreciation Rights (SARs) with a 10-year life to its
CEO as a long-term incentive. 69,168,049 SARs vested at grant, and 79,809,288 SARs vest in three equal tranches
over three years subject to the achievement of target VWAPs of $0.032, $0.064 and $0.096 in years 1, 2 and 3
respectively for the Company’s ASX listed shares. As at 30 June 2022 no SARs had vested.
The fair value of the award of SARs of $1,043,000 was calculated at the date of grant using a Monte Carlo
Simulation valuation model. The significant inputs to the valuation model were a grant date share price of $0.016, a
dividend yield of 0%, an early exercise factor of 2.5, an annual risk-free rate of 1.27%, and a volatility of 110%.
On any exercise of a vested SAR, the Company will issue that number of ordinary shares equivalent in value to the
amount by which the fair market value of the ordinary shares exceeds the base price of $0.016.
(d) Other option issues
June 2021
In August 2020 the Company completed a shareholder approved placement of shares and related options.
83,333,333 options with an exercise price of $0.0600 per option and an expiry date of 17 February 2022 were issued.
The options' fair value at grant date of $858,000 ($0.0103 per option) was estimated using a Black-Scholes option
pricing model, and was been recorded in equity in conjunction with the placement. The significant inputs to the
option pricing model were a grant date share price of $0.0270, a 0% dividend yield, an expected option life of 1.5
years, an annual risk-free rate of 0.27%, and a volatility of 125.6%.
As set out in Note 15, in October 2020 the Company issued Convertible Notes (“2020 Notes”). The terms of these
were amended in March 2021 and as consideration the options set out in Note 15 were issued in May 2021. The
options' fair value at grant date of $1,165,000 was estimated using a Black-Scholes option pricing model, and was
recorded as a finance cost related to the 2020 Notes (refer note 15). The significant inputs to the option pricing
model were a grant date share price of $0.0170, a 0% dividend yield, an expected option life to expiry, an annual
risk-free rate of 0.09%, and a volatility of 103.3% - 113.6%.
17. Deferred Income Tax
Movements:
Deferred tax asset (liability) at the beginning of the year
Credited (charged) to the income statement (note 7)
Change in unrecognised deferred tax assets
Deferred tax asset (liability) at the end of the year
June 2022
$000
June 2021
$000
-
2,370
(2,370)
-
-
2,420
(2,420)
-
42
Annual Report 2022 Adherium Ltd
The movement in deferred income tax assets and liabilities during the period is as follows:
Deferred tax assets (liabilities)
Provisions
and accruals
$000
Intangible
assets
$000
As at 30 June 2020
Credited (charged) to the income statement
Effect of exchange rate changes
Change in unrecognised deferred tax assets
As at 30 June 2021
Credited (charged) to the income statement
Effect of exchange rate changes
Change in unrecognised deferred tax assets
As at 30 June 2022
-
443
-
(443)
-
(8)
(4)
12
-
-
4
(1)
(3)
-
(37)
(8)
45
-
Tax
losses
$000
-
1,973
(409)
(1,564)
-
2,415
97
Total
$000
-
2,420
(410)
(2,010)
-
2,370
85
(2,512)
(2,455)
-
-
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 entent that they can set off against deferred income tax
liabilities. The Company did not recognised deferred income tax assets of $18,896,000 (2021: $16,384,000) in respect of
losses amounting to $61,280,000 (2021: $52,994,000) that can be carried forward against future taxable income. The
Company also did not recognise further deferred income tax assets of $805,000 (2021: $862,000) in respect of other
timing differences amounting to $2,774,000 (2021: $2,969,000).
18. Related party transactions
(a) Key management 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:
Directors
- director fees and other legislated superannuation
- share-based compensation
CEO and management
- short-term benefits
- post-employment benefit contributions
- share-based compensation
June 2022
$000
June 2021
$000
361
42
1,111
224
937
2,675
345
121
1,998
157
185
2,806
Key management personnel and their associates did not subscribe for share capital in the Company in the years
ended 30 June 2021 and 2022.
(b) Related parties
There were no other transactions with related parties in the periods presented.
43
Annual Report 2022 Adherium Ltd
19. 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
Lease liabilities
Total financial liabilities
June 2022
$000
June 2021
$000
5,283
302
5,585
1,697
85
1,782
15,178
100
15,278
2,319
-
2,319
(b) Risk management
The Group 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 Group 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 Group 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 loss of $34,000 is included in results
for the period ended 30 June 2022 (2021: $888,000 loss).
The carrying amounts of foreign currency denominated financial assets and financial liabilities are as follows:
June 2022
$000
June 2021
$000
67
133
6
729
126
75
153
425
35
3
674
38
176
85
Assets
New Zealand Dollars
US dollars
UK pound
Liabilities
New Zealand Dollars
US dollars
UK pound
Japanese Yen
44
Annual Report 2022 Adherium Ltd
The following table details the sensitivity of financial assets and financial liabilities 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
10% weakening of Australian dollar against:
New Zealand dollars
US dollars
UK pound
Hong Kong dollars
June 2022
$000
June 2021
$000
54
(28)
11
-
(66)
34
(13)
-
21
(4)
26
-
(26)
11
(35)
-
Cash flow and fair value interest rate risk
The Group is exposed to interest rate risk as it holds cash and cash equivalents (refer note 9).
Trade and other receivables and payables do not bear interest and are not interest rate sensitive.
The Group’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.
Credit risk
The Group 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 Group, which have been recognised in the statement of financial
position, is the carrying amount, net of any allowance for doubtful debts.
The Group 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 A1/A2 credit rating (2021: A1/A2) and the
Group 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:
• A-2
Counterparties without external credit rating:
• existing customers (more than 6 months) with no defaults in the past
Total trade receivables
June 2022
$000
June 2021
$000
123
179
302
57
43
100
The Group applies the simplified model of recognising lifetime expected credit losses for all trade receivables
as these items do not have a significant financing component. In measuring the expected credit losses, the trade
receivables have been assessed on a collective basis as they possess shared credit risk characteristics and have
been grouped based on the days past due. In calculating the expected credit losses, the Group uses its historical
experience, external indicators and forward-looking information.
On this basis, the loss allowance as at 30 June 2021 and 30 June 2022 for trade and other receivables was determined to
be $nil.
45
Annual Report 2022 Adherium Ltd Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to
make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment
arrangements, amongst others, are considered indicators of no reasonable expectation of recovery.
The Group is exposed to a concentration of credit risk as 41% of accounts receivable are with one counterparty
(2021: 57%). The customer has an external credit rating of A-2.
Liquidity risk
The table below shows the Group’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 2022
Trade and other payables
Lease liabilities
As at 30 June 2021
Trade and other payables
Lease liabilities
Less than
3 months
$000
Between 3 months
and 1 year
$000
Between 1 year
and 2 years
$000
1,697
12
2,319
-
-
36
-
-
-
45
-
-
Capital risk
The Group manages its capital to ensure that it is able to continue as a going concern. The capital structure of the
Group 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.
Lease liabilities
The Group entered into a lease for office space during the year ending 30 June 2022. This lease is a two-year lease with
a two-year right of renewal. The lease liabilities recognised in the balance sheet are:
Lease Liabilities
Lease liabilities (current)
Lease liabilities (non-current)
Total lease liabilities
The total cash outflow for leases in 2022 was $145,000 (2021: $89,000).
The lease liabilities are secured by the underlying right-of-use-assets.
June 2022
$000
June 2021
$000
42
43
85
-
-
-
46
Annual Report 2022 Adherium Ltd
20. Parent entity information
The following details information related to the legal parent, Adherium Limited as at 30 June 2022. During the year
ended 30 June 2022 Adherium Limited recognised an impairment on the carrying value of its investments in and loans
to subsidiaries to record those at the Group carrying value. This resulted in an impairment charge of $5,367,000 (2021:
$5,096,000 impairment) 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
21. Interests in controlled entities
Parent
June 2022
$000
Parent
June 2021
$000
6,257
45
6,302
783
-
783
5,519
110,523
(10,413)
5,409
5,519
(10,497)
(10,497)
15,309
20
15,329
1,318
-
1,318
14,011
110,172
(99,916)
3,755
14,011
(14,348)
(14,348)
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
June 2022
June 2021
100%
100%
100%
100%
100%
100%
100%
100%
22. Contingencies and commitments
The Group had no contingencies or commitments to purchase any property, plant or equipment at 30 June 2022 (2021: nil).
The following aggregate future non-cancellable minimum short-term lease payments for premises have been committed to
by the Group, but not recognised in the financial statements.
Not later than one year
Later than one year and not later than five years
Later than five years
June 2022
$000
June 2021
$000
54
-
-
54
23
-
-
23
47
Annual Report 2022 Adherium Ltd 23. Events occurring after balance date
Subsequent to the balance sheet date, the Company received share capital subscription commitments from institutional
and sophisticated investors of $13.5 million. The first tranche of $1.7 million (334,154,330 ordinary shares) was received
in September 2022. The balance of $12.8 million (2,565,845,670 ordinary shares) together with options on a 1:2 basis is
subject to shareholder approval to be sought by the Company.
There are no other events occurring after the balance sheet date which require disclosure or adjustment in the financial
statements.
48
Annual Report 2022 Adherium Ltd
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 25 to 48 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 2022 and of its
performance for the financial year 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 General Manager & Joint Company Secretary to the Directors in accordance with section 295A of the
Corporations Act 2001 for the year ended 30 June 2022.
This declaration is made in accordance with a resolution of the Directors.
On behalf of the board.
Lou Panaccio
Non-Executive Chairman
Melbourne
30 September 2022
49
Annual Report 2022 Adherium Ltd
Independent Auditor’s Report
Independent auditor’s report
To the members 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 2022 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 Group financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 30 June 2022
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then ended
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information
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 & Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (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.
Material uncertainty related to going concern
We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss after
tax of $10,044,000 and had operating cash outflows of $9,610,000 during the year ended 30 June 2022. As
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
50
Annual Report 2022 Adherium Ltd
Independent Auditor’s Report
a result, the Group is dependent on being successful in continuing to raise additional capital; securing
sufficient cash flows from new revenue streams; and executing their plans at the costs forecasted.
These conditions, along with other matters 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 opinion is not modified
in respect of this matter.
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 Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
• Our audit focused on where
the Group made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
• Amongst other relevant topics,
we communicated the following
key audit matters to the Audit
and Risk Committee:
−− Accounting for research &
development tax credit
Inventory valuation
−−
•
These are further described in
the Key audit matters section
of our report, except for the
matter which is described in
the material uncertainty related
to going concern section.
•
For the purpose of our audit
we used overall Group
materiality of $ 502,200,
which represents
approximately 5% of the
Group’s loss before tax.
• 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
misstatements on the
financial report as a whole.
• We chose Group loss before
tax because, in our view, it is
the benchmark against which
the performance of the Group
is most commonly measured.
51
Annual Report 2022 Adherium Ltd
Independent Auditor’s Report
• We utilised a 5% threshold
based on our professional
judgement, noting it is within
the range of commonly
acceptable 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. The key audit matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. Further, any commentary on the outcomes of a particular audit
procedure is made in that context.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matter described below to be the key audit matters to be communicated in our report.
Key audit matter
How our audit addressed the key audit matter
Accounting for research & development tax credit
(Refer to Note 7)
We have performed following procedures, amongst
others:
The Group has recognised an R&D tax credit
receivable of $1,173,000. This was a key audit
matter because management applied judgement in
assessing the likelihood that the relevant taxation
authorities will accept the claims the group intends
to make.
•
•
•
•
assessing the Group’s accounting policies
against the requirements of Australian
Accounting Standards;
tested the research & development cost on a
sample basis that form part of the claim to
supporting documentation;
evaluated the basis on which management
made their judgements over the likelihood of
successful R&D tax credit claims;
evaluated the adequacy of disclosures in light
of the requirements of Australian Accounting
Standards.
Inventory valuation (Refer to Note 11)
We have performed following procedures, amongst
others:
The Group held inventory of $1,071,000 as at
30 June 2022. As described in note 2 to the
consolidated financial statements, inventories are
valued at the lower of cost and net realisable value.
• assessing the Group’s accounting policies
against the requirements of Australian
Accounting Standards;
This was a key audit matter because of the:
•
tested the mathematical accuracy of the
calculation of the carrying value of inventory on
a sample basis;
52
Annual Report 2022 Adherium Ltd
Independent Auditor’s Report
Key audit matter
How our audit addressed the key audit matter
•
•
financial significance of the inventory balance
included in the financial report; and
judgements required by the Group in
estimating the carrying value of inventory,
including estimating selling prices and related
costs.
• evaluating the appropriateness of significant
assumptions used to determine the carrying
value of inventory;
• comparing the carrying value of a sample of
inventory items to the most recent sales price;
and
• assessing the reasonableness of the
disclosures in the financial report having regard
to the requirements of Australian Accounting
Standards.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the year ended 30 June 2022, but does not include the financial report and
our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, 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 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 Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
53
Annual Report 2022 Adherium Ltd
Independent Auditor’s Report
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: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 15 to 22 of the directors’ report for the year
ended 30 June 2022.
In our opinion, the remuneration report of Adherium Limited for the year ended 30 June 2022 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
Scott Walsh
Partner
Sydney
30 September 2022
54
Annual Report 2022 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 9 September 2022. This information excludes
any proposed security issues announced by the Company on 16 September 2022.
(a) Distribution of equity securities
Ordinary share capital
As at 9 September 2022 there were 2,227,695,536 ASX quoted ordinary shares held by 1,003 shareholders. All issued
ordinary shares carry one vote per share and carry the right 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
7,607
222,163
491,570
20,871,254
2,206,102,942
2,227,695,536
34
64
58
430
417
1,003
There were 466 shareholders holding less than a marketable parcel of ordinary shares at a price of $0.0080,
totalling 11,091,056 ordinary shares.
Unquoted options over ordinary shares
As at 9 September 2022 there were 224,551,903 options over ordinary shares held by 9 holders.
b) Twenty largest holders of quoted equity securities as at 9 September 2022
Shareholders
Phillip Asset Management Limited
Trudell Medical Ltd
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
K One W One Ltd
Citicorp Nominees Pty Limited
One Funds Management Limited
Quantamatics Pty Ltd
Adherium ESP Trustee Limited
Summatix Pty Ltd
BNP Paribas Noms (NZ) Ltd
Planet Innovation Pty Ltd
Tara Creaven-Capasso
Geoff Feakes
Miss Ruth Amanda Stroppiana
Dr Huy Tran
National Nominees Limited
JMID Pty Ltd
Mr Khim Thiew Khor
Mr Carlsen Wilson Henry Marks + Mrs Edwina Mary Marks
Ordinary Shares
Units
% Units
500,000,000
423,080,272
221,141,775
209,050,039
80,503,018
70,286,398
48,808,957
38,186,966
35,849,066
35,496,341
28,516,873
26,666,667
19,444,444
19,000,000
18,125,327
14,606,060
14,035,000
12,000,000
11,748,383
10,700,000
22.44
18.99
9.93
9.38
3.61
3.16
2.19
1.71
1.61
1.59
1.28
1.20
0.87
0.85
0.81
0.66
0.63
0.54
0.53
0.48
Total top 20 holders of fully paid ordinary shares
1,837,245,586
82.47
55
Annual Report 2022 Adherium Ltd
(c) Substantial shareholders
In accordance with ASX Listing Rule 4.10.4, a listing of substantial holding and other notices provided to the
Company and released to the ASX are included below:
Substantial shareholders
Phillip Asset Management Limited
Trudell Medical Ltd
Notification
Date
Ordinary Shares
Held
10/05/2021
500,000,000
19/05/2021
422,697,512
Viburnum Funds Pty Ltd and subsidiaries and associates
30/11/2021
219,057,245
FIL Limited
I.G. Investment Management, Ltd and associates
AstraZeneca PLC and its related bodies
10/05/2021
211,645,356
01/09/2015
26/08/2015
9,535,000
8,079,720
(d) 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.
56
Annual Report 2022 Adherium Ltd Corporate
Information
ASX code: ADR
Directors
Mr Lou Panaccio (Chair)
Mr James Ward-Lilley
Mr George Baran
Mr Jeremy Curnock Cook
Dr William Hunter
Mr Bruce McHarrie
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, 63 Albert Street
Auckland 1010, New Zealand
+64 9 307 2771
Website
www.adherium.com
www.hailie.com
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
One International Towers, Watermans Quay,
Barangaroo NSW 2000, Australia
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 visit https://www.investorcentre.com
www.adherium.com