Bard1
Annual Report 2019

Plain-text annual report

Appendix 4E Rules 4.3A Appendix 4E Name of entity BARD1 Life Sciences Limited ABN or equivalent company reference 58 009 070 384 Year ended (‘current period’) 30 June 2019 12 months ended (‘comparative period’) 30 June 2018 Results for announcement to the market $AUD Revenues from ordinary activities Down 5.6% Loss from ordinary activities after tax attributable to members Down 5.5% To To 58,919 (1,717,273) Net loss for the period attributable to members Down 5.5% To (1,717,273) Dividends (distributions) Interim dividend Final dividend Previous corresponding period Amount per security Franked amount per security Nil Nil Nil - ¢ - ¢ - ¢ +Record date for determining entitlements to the dividend, (in the case of a trust, distribution) N/A The above results should be read in conjunction with the notes and commentary contained in Annual Report lodged with this report Other Information Net tangible assets per security $0.0057 $0.0014 Page 1 + See chapter 19 for defined terms Appendix 4E Appendix 4E Annual meeting The annual meeting will be held as follows: Place Date Time Approximate date the +annual report will be sent to shareholders requesting it TBA Melbourne, Victoria On or before 30 November 2018 TBA On or before 30 October 2019 Page 2 + See chapter 19 for defined terms Appendix 4E Appendix 4E Compliance statement 1 2 3 4 This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX. This report, and the +accounts upon which the report is based (if separate), use the same accounting policies. This report does give a true and fair view of the matters disclosed. This report is based on +accounts to which one of the following applies. (Tick one)   The +accounts have been audited.  The +accounts have been subject to review. The +accounts are in the process of being audited or subject to review  The +accounts have not yet been audited or reviewed. Sign here: Date: 16 August 2019 Print name: Peter Gunzburg Chairman Page 3 + See chapter 19 for defined terms Appendix 4E ANNUAL REPORT 30 June 2019 BARD1 LIFE SCIENCES LIMITED CONTENTS PAGE CONTENTS Corporate Directory ……..………………………………………………………………………………………….……..1 Directors’ Report ………………………………………………………………………………………………………….2 Auditor’s Independence Declaration …………………………………………………………………………………14 Statement of Comprehensive Income ……………………………………………….………………………………15 Statement of Financial Position ………………………………………………………………………………………16 Changes in Equity ……………………………………………………………………………………………………….17 Statement of Cash Flows ……………………………………………………………………………………………..18 Notes to the Financial Statements …………………………………………………………………………………..19 Directors’ Declaration ……………………………..…………………………………………………………………….38 Independent Auditor’s Report ………………………………………………………………………………………….39 Corporate Governance Overview …………………..…………………………………………………………………43 Shareholders Information ……………………………………………………………………………………………..44 Auditors - Australia Ernst & Young 11 Mounts Bay Road Perth Western Australia 6000 Solicitors DLA Piper Level 31, Central Park 152 St George’s Terrace Perth Western Australia 6000 Bankers - Australia National Australia Bank 1232 Hay Street West Perth Western Australia 6005 ASX Code BD1 - Fully Paid Ordinary Shares BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT CORPORATE DIRECTORY Directors Peter Gunzburg Dr Irmgard Irminger-Finger Executive Director Robert (Max) Johnston Chairman Non-Executive Director (appointed 17 June 2019) Non-Executive Director (appointed 17 June 2019) Non-Executive Director (resigned 17 June 2019) Non-Executive Director (deceased 12 August 2018) Philip John Powell Brett Montgomery Geoffrey Laurent Chief Executive Officer Dr Leearne Hinch Company Secretary Pauline Collinson Registered Office Unit B1, Tempo Building 431 Roberts Road Subiaco Western Australia 6008 Telephone: +61 8 9381 9550 Facsimile: +61 8 9381 7559 Website: www.bard1.com Postal Address PO Box 7493 Cloisters Square Perth Western Australia 6850 Share Registry - Australia Computershare Investor Services Pty Ltd Level11 172 St George’s Terrace Perth Western Australia 6000 Telephone: 1300 850 505 Overseas : +61 3 91454000 Facsimile: +61 8 93232033 - 1 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT DIRECTORS' REPORT The directors present their report together with the financial report of BARD1 Life Sciences Limited (BARD1 or the Company) and its controlled entities (collectively referred to as the Group) for the financial year ended 30 June 2019 and the independent auditor’s report thereon. DIRECTORS The names and details of the directors of the Company in office during the year ended 30 June 2019 and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Peter Gunzburg – Chairman BCom Mr Gunzburg was appointed a director on 24 September 2001. He has over 20 years’ experience as a stockbroker. He holds a Commerce Degree from the University of Western Australia and has previously been a director of the Australian Stock Exchange Limited, CIBC World Markets Australia Limited and a number of ASX listed companies. Mr Gunzburg has not been a director of any other listed entities over the last three years. Dr Irmgard Irminger-Finger – Chief Scientific Officer/Executive Director PD, PhD Dr Irminger-Finger was appointed a director 16 June 2016 and is an experienced chief scientist and internationally recognised expert in tumour biology. She is Executive Director and Chief Scientific Officer of BARD1 Life Sciences Limited responsible for scientific leadership and management of its research programs to evaluate, develop and validate BARD1 diagnostics. She studied biology and biochemistry at the University of Zurich, obtained a master in molecular biology and biochemistry and a PhD in molecular genetics. After several years as researcher at the Harvard University, she returned to Geneva, Switzerland. Having obtained a Swiss federal career development award, she focused her research on the molecular pathways at the aging and cancer interface. From 2006-2018 she headed the Molecular Gynaecology and Obstetrics Laboratory at the Geneva University Hospitals with focus on the function of tumour suppressor genes BRCA1 and BARD1. Dr Irminger-Finger built up her reputation as expert on the BRCA1 and BARD1 genes, as author of more than 90 scientific articles, speaker at more than 200 conferences and meetings, editor of scientific journals, and member of specific study groups and task forces on cancer, and inventor of several patents that paved the way towards applications in cancer diagnostics and therapy. Dr Irminger-Finger has received numerous awards and grants both for academic research and for her entrepreneurial work as founder of a successful biotech start-up. She is currently Adjunct Professor at the University of Western Australia and was previously Privat Docent at the University and University Hospital of Geneva, head of the Laboratory of Molecular Gynaecology and Obstetrics and Executive Director and founder of BARD1AG SA. Dr Irminger-Finger has not been a director of any other listed companies in the last three years. Robert (Max) Johnston – Non-Executive Director (appointed 17/06/2019) Mr Johnston held the position of President and Chief Executive Officer of Johnson & Johnson Pacific, a division of the world’s largest medical, pharmaceutical and consumer healthcare company for 11 years. Prior to joining Johnson & Johnson, Mr Johnston’s career also included senior roles with Diageo and Unilever in Australia, Africa and Europe. Mr Johnston has also held several prominent industry roles as a past President of ACCORD Australasia Limited, a former Vice Chairman of the Australian Food and Grocery Council and a former member of the board of ASMI. Mr Johnston has had extensive overseas experience during his career in leading businesses in both Western and Central-Eastern Europe and Africa as well as the Asia-Pacific region. Mr Johnston is currently a Non-Executive Director of PolyNovo Ltd (ASX: PNV), Medical Developments International Ltd (ASX: MVP), CannPal Limited (ASX: CP1) and ProLife Foods NZ and was a former Non-Executive Director of Enero Group Limited (ASX: EGG) and Non-Executive Chairman of Probiotec Ltd (ASX: PBP). Mr Philip Powell B. Comm (Hons), ACA, F.Fin, MAICD – Non-Executive Director (appointed 17/06/2019) Mr Powell is a Chartered Accountant with extensive experience in investment banking, specialising in capital raisings, initial public offerings (IPOs), mergers and acquisitions and other successful corporate finance assignments across a diverse range of sectors including pharma, utilities, IT, financial services, food and agriculture. He spent 10 years in senior financial roles at OAMPS Ltd, a former ASX-listed financial services group, and 10 years in audit with Arthur Andersen & Co in Melbourne, Sydney and Los Angeles. Mr Powell is currently a Non-Executive Director of PolyNovo Ltd (ASX: PNV), Medical Developments International Ltd (ASX: MVP) and RMA Global Ltd (ASX: RMY). He is also an alternate Director of the Nature’s Dairy Australia group. Brett Montgomery – Non-Executive Director (resigned 17/06/2019) Mr Montgomery has extensive experience in the management of publicly listed mining companies having previously been the Managing Director of Kalimantan Gold NL and a Director of Grants Patch Mining Limited. Mr Montgomery is a Non-Executive Director of ASX listed entities Tanami Gold NL (ASX:TAM) and AIC Mines Limited (ASX:A1C) and was the director of Magnum Power and Gas Limited (9/10/2008 to 19/8/2016) over the last three years. - 2 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT Professor Geoff Laurent – Non-Executive Director PhD, FRCP (Hon), FRCPath, FMedSci (deceased 12 August 2018) Professor Geoff Laurent was an accomplished organisational leader, thought-leader, scientific editor, advisory board member, and award winning respiratory scientist with over 250 peer reviewed publications. Prof Laurent was an Emeritus Professor at the University of Western Australia (UWA) and a Scientific Advisor and Consultant at Helmholtz Zentrum München. From 2012 until 2017, He was Director of the Institute for Respiratory Health and Director of the Centre for Cell Therapy and Regenerative Medicine at UWA. Prior to this he was Director of the Centre for Respiratory Research, Vice-Dean of Enterprise, and Head of the Research Department of Internal Medicine at University College London. He is Editor-in-Chief of the International Journal of Biochemistry and Cell Biology, was a Past President of the British Association for Lung Research, consulted to numerous biotechnology and pharmaceutical companies, and was a visiting scientist at Johnson and Johnson. Prof Laurent was elected a Fellow of the Academy of Medical Sciences, and received the European Respiratory Societies Presidential Award for his contribution to lung science. INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE As at the date of this report, the interests of the directors in the shares and performance shares of the Company were: Peter Gunzburg Dr Irmgard Irminger-Finger Max Johnston Philip Powell Ordinary Shares 39,382,206 112,652,737 5,700,000 5,000,000 CHIEF EXECUTIVE OFFICER Dr Leearne Hinch BSc BVMS MBA Dr Hinch is a biotechnology CEO, director and consultant with extensive experience in strategic planning, operational management, fundraising, business development and commercialisation. She is CEO of BARD1 responsible for strategic leadership, advancing its diagnostics pipeline and expanding its technologies. Dr Hinch has strategic, commercial and technical experience leading and managing the development and commercialisation of diagnostic, device, therapeutic and animal health products. She is director of commercialisation advisory Ingeneus Solutions Pty Ltd and has previously held executive positions in ASX-listed biotechnology and multinational animal health companies. She holds Bachelor of Science, Bachelor of Veterinary Medicine and Surgery, and Master of Business Administration qualifications. COMPANY SECRETARY Pauline Collinson Mrs Collinson has been employed by the Company for 27 years and has held the position of Company Secretary for 17 years. She is also the Company Secretary of ASX listed Tanami Gold NL and Joint Secretary of Hong Kong listed Dragon Mining Limited. REVIEW OF OPERATIONS PRINCIPAL ACTIVITIES The principal activity of the Group during the financial year was the research and development of non-invasive diagnostic tests for early detection of cancer. CORPORATE INFORMATION BARD1 Life Sciences Limited is a Company limited by shares and is incorporated and domiciled in Australia. It is the ultimate legal parent entity of the BARD1 Life Sciences Group. As at 30 June 2019 it has one wholly owned subsidiary, BARD1AG SA, a company domiciled in Switzerland. - 3 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT REVIEW AND RESULTS OF OPERATIONS The Company made significant progress during the 2019 financial year across its research and development, financial and corporate initiatives including: Research & Development KEY ACHIEVEMENTS FOR FY19 • Progressed Assay Development Program to transfer BARD1 technology to Luminex platform with Phase 1 & 2 completed and pilot RUO BARD1 kits delivered for evaluation • Advanced Ovarian Cancer Program with new OC-R001 study completed showing excellent diagnostic accuracy with 89% sensitivity and 97% specificity in high-risk women • Initiated new Breast Cancer Program with BC-001 study completed showing high diagnostic accuracy with 70% sensitivity and 88% specificity in average-risk women • Completed Cancer Vaccine Collaboration with exploratory studies showing vaccine effect on tumour growth, survival and immune response in a malignant mesothelioma mouse model • 5 new patents granted across 4 patent families in the USA, Europe, China and Hong Kong protecting the BARD1 technology and pipeline products Corporate • Commenced recruitment of additional staff to accelerate research projects and implement technology transfer • Strengthened Board and shareholder base with 2 new healthcare experienced directors appointed to guide commercialisation and growth strategies and 3 new substantial shareholders • Capital raisings of $10.8m including a $3.3m Entitlement Offer in December 2018, a $5.0m Placement in June 2019 and $2.5m Entitlement Offer in July 2019 to fund the Company’s growth strategy RESEARCH AND DEVELOPMENT The Company’s activities during the year focused on advancing its ovarian and breast cancer programs, completing its exploratory cancer vaccine studies and completing our Assay Development project to transfer the BARD1 technology to the Luminex platform and to build a Research Use Only (RUO) kit for use in our ongoing R&D programs. Our existing product development strategy seeks to commercialise its proprietary biomarker platform with a focus on advancing BARD1 autoantibody tests for early detection of ovarian, breast and lung cancers. BARD1 autoantibody tests measure BARD1 autoantibodies in the blood and use a proprietary algorithm to combine these levels into a cancer score that identifies the presence or absence of a specific cancer. BARD1 autoantibodies reflect the early immune response to tumour formation and are present in the early-stages of ovarian cancer, enabling BARD1 tests to detect cancer earlier across all cancer stages before symptoms appear. BARD1 autoantibody tests are targeting the large global market opportunity that exists for accurate, reliable and affordable blood tests which are less invasive and more convenient alternatives to current imaging methods (such as ultrasound for ovarian cancer, mammography for breast cancer and CT scans for lung cancer) that suffer cost, convenience, safety and other limitations. There are currently no blood tests approved for screening of ovarian, breast or lung cancer. BARD1 autoantibody tests have the potential to detect cancer early, improve patient outcomes, save lives and reduce healthcare costs. - 4 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT Assay Development Program The Assay Development program with Thermo Fisher Scientific to transfer the BARD1 technology to the Luminex platform progressed during the year. The Phase 1 assay feasibility phase to confirm proof-of- principle that the BARD1 technology was transferable to the Luminex platform was completed in December 2018. The Phase 2 assay development phase to optimize the multiplex BARD1 autoantibody assay on the Luminex platform was completed in June 2019. The Phase 3 assay validation phase to analytically validate the multiplex BARD1 assay is near completion with delivery of three working pilot RUO BARD1 kits to BARD1 Geneva for evaluation in June 2019 and completion expected by Q4 CY2019. The Company believes that successful completion of the assay development program to transfer the BARD1 technology to the Luminex platform is an important milestone, since it should de-risk the technology and potentially enable faster development of the BARD1 autoantibody tests including planned verification testing and validation studies for target cancers expected to commence Q4 CY2019. Pilot RUO BARD1 kits delivered to BARD1 Geneva Ovarian Cancer Diagnostic Program During the year the Company announced positive results from its important new OC-R001 Study to evaluate the accuracy of the BARD1-Ovarian cancer test to detect ovarian cancer in high-risk women with a family history of breast/ovarian cancer or carrying BRCA1/2 mutations. The study demonstrated compelling results for BARD1-Ovarian with excellent diagnostic accuracy of 0.97 AUC, 89% sensitivity (detection) and 97% specificity (low false positives) in high-risk women across all cancer stages. Upon successful completion of the assay development program, we plan to commence verification testing in Q4 CY2019 to further evaluate and optimise the performance of the BARD1-Ovarian cancer test on the new Luminex platform before undertaking additional validation studies for early detection of ovarian cancer in high risk asymptomatic women. Breast Cancer Diagnostic Program During the year, a new breast cancer program was initiated by undertaking the BC-001 study to evaluate the accuracy of a potential new BARD1-Breast cancer test to detect breast cancer. The results demonstrated that BARD1-Breast had high diagnostic accuracy for detection of breast cancer across common subtypes and all stages with AUC 0.86, 70% sensitivity and 88% specificity in average-risk women. The study was validated in an independent sample set of benign breast lesions which showed the BARD1-Breast cancer test accurately distinguished malignant breast cancer from benign lesions with accuracy of 0.85 AUC, 85% sensitivity and 76% specificity. The BARD1-Breast cancer test uses the same BARD1 autoantibody test methodology as the BARD1-Ovarian cancer test enabling fast development and parallel clinical testing. Upon successful verification studies in ovarian cancer, BARD1 plans to undertake additional verification testing and validation studies to evaluate, optimise and validate the performance of the BARD1-Breast cancer test on the Luminex platform for early detection of breast cancer in average risk asymptomatic women. Lung Cancer Diagnostic Program BARD1 plans to develop the BARD1-Lung cancer test as a screening test for early detection of lung cancer in high-risk asymptomatic individuals. Additional research studies are being planned for the BARD1-Lung cancer test. Cancer Vaccine Program The Cancer Vaccine collaboration with the Institute for Respiratory Health was completed during the year. The cancer vaccine program was an exploratory research project to evaluate BARD1 peptide vaccine formulations for cancer prevention and/or treatment in murine cancer models to assess in vivo effectiveness for reducing tumour size, inhibiting tumour growth and/or inducing an effective immune response. Encouraging initial results showing delayed tumour growth in a malignant mesothelioma mouse model were reported in the Company presentation released on 19 November 2018. Final results announced on 15 February 2019 confirmed a significant vaccine effect on tumour growth, survival and immune response using a 5-peptide BARD1 vaccine in the AB1 malignant mesothelioma mouse model. These results were encouraging but require further research to evaluate different BARD1 antigens, vaccine formulations and doses to determine the best cancer vaccine strategy. - 5 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT INTELLECTUAL PROPERTY PORTFOLIO The Company has established a strong intellectual property (IP) position protecting its biomarker technology platform and products with claims covering various BARD1 DNA and protein sequences, methods of diagnosis and treatment, and use in multiple cancers. The Company owns or exclusively licenses 5 patent families with 13 granted and 17 pending patents covering its technology, products and uses in the US, Europe, China, Japan and other countries (see below). During the year the following Patents were issued. • United States Patent No 10,018,639 titled ‘Kits for detecting breast or ovarian cancer in body fluid sample and use thereof’ was granted by the United States Patent and Trademark Office (USPTO). The claims are directed to kits comprising peptides from BARD1 isoforms for detecting autoantibodies associated with breast or ovarian cancer. This patent provides IP protection for the BARD1-Ovarian and BARD1-Breast cancer test in the important US market. • Chinese Divisional Patent No 201610347489.9 titled “BARD1 isoforms in lung and colorectal cancer and use thereof” was granted by the China National Intellectual Property Administration (CNIPA). This patent provides additional coverage over the parent case for specific BARD1 isoforms, various methods and kits for use in the detection of the specific BARD1 isoforms, and methods for treatment or prevention of lung and colorectal cancer. This patent strengthens protection of the BARD1-Lung cancer test in China. • US Patent No 10,273,475 titled “Regulation of BARD1 expression by non-coding RNA” was issued by the United States Patent and Trademark Office on 30 April 2019, protecting siRNA that target and reduce the expression of the novel long non-coding BARD1 RNA molecule BARD1 9’L in cancer. • European Patent No 2606358 titled “BARD1 isoforms in lung and colorectal cancer and use thereof” was granted by the European Patent Office on 26 December 2018 and confirmed validated on 3 June 2019 in France, Germany, Italy, Spain, Switzerland and United Kingdom, providing enforceable IP protection in these countries. The granted EP260663 claims are directed towards lung cancer and protect BARD1-Lung in Europe. • Hong Kong Patent No 17101268.4 titled “BARD1 isoforms in lung and colorectal cancer, detection method and use thereof” was issued by the Patents Registry, Intellectual Property Department post year end on 19 July 2019. The granted HK 17101268.4 claims are directed towards specific BARD1 isoforms, various methods and kits for use in the detection of the specific BARD1 isoforms, and methods for treatment or prevention of lung and colorectal cancer. It enforces protection over BARD1-Lung in Hong Kong. BARD1 Patent status summary Patent Family Title Granted Pending Expiry PCT/FR01/02731 Truncated BARD1 protein and its diagnostic and therapeutic uses US, JP PCT/IB2011/053635 BARD1 isoforms in lung and colorectal cancer and use thereof PCT/IB2011/054194 Kits for detecting breast or ovarian cancer in a body fluid sample and use thereof PCT/EP2014/073834 Lung Cancer Diagnosis US, EP, JP, JP div, CN, CN div, HK, IL, AU US 10,273,475 Regulation of BARD1 expression by non- coding RNA US * Plus any extension of term in the US due to prosecution delay FINANCIAL RESULTS 2021 2031* US divisional, CA, BR, SG US divisional, EP 2031* US, EP, CA, JP, IL, CN, AU, SG, KR, HK US continuation 2034* 2035 The Group reported a loss from operating activities for the year of $1,717,273, down 5.5% from previous year ($1,817,301 loss). The Group received a Research and Development Tax Incentive of $520,798, up 147% from previous year (2018: $210,785). Total expenses were contained to an increase of 5.3% to $2,296,990 (2018: $2,181,987). Expenditure included Research and Development expenses of $576,738, patent expenses of $137,023, cash employee expense of $791,549 and other working capital expenses of $791,680, including marketing costs in relation to positioning the Company for growth and investigating new business opportunities. The loss per share of the Group for the full-year ended 30 June 2019 was 0.14 cents per share (2018: 0.26 cents per share). - 6 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT CORPORATE Board and Management changes On 17 June 2019, BARD1 strengthened its Board with the appointment of two healthcare industry experienced Non-Executive Directors, Philip Powell and Max Johnston. Non-Executive Director Brett Montgomery resigned from the Board effective 17 June 2019. The Board thanks Brett for his contribution during his term. The Company has announced plans to expand its management team and has commenced recruitment of additional staff for the Geneva facility to underpin and accelerate our research projects. Additional R&D and operational staff and facility search activities are expected to commence from September 2019 to implement our planned development and technology transfer to Australia in 2020. Capital Raisings In December 2018, the Company issued 165,732,775 Shares at an issue price of $0.02 per share by way of a non- renounceable entitlement issue raising $3.315 million (before costs). A total of 59,141,274 Shares were issued to participating Shareholders. The remaining 106,591,501 shortfall Shares were issued to sophisticated and professional investors. In June 2019, the Company conducted an additional fund-raising which raised a total of $7.5 million (before costs). The first measure was a placement of 248,500,000 Shares at an issue price of $0.02 to raise approximately $5 million. This initiative welcomed 3 new substantial shareholders to the Company’s share register including The Merchant Opportunities Fund, David Williams and Jeff Emmanuel. This measure was competed prior to financial year end. The second measure being a non- renounceable Entitlement Offer to raise an additional $2.5 million (before costs) was completed in July 2019. A total of 124,289,854 New Shares were issued comprising: • • • 65,927,194 New Shares issued to existing eligible shareholders who participated in the Entitlement Offer; 10,000,000 New Shares issued pursuant to Underwriting Agreements entered with companies controlled by Non- Executive Directors Max Johnston and Philip Powell; and 48,362,660 Shortfall Shares were issued to sophisticated and professional investors introduced by Merchant Corporate Advisory Pty Ltd who acted as the Company’s Lead Manager for the Placement and Entitlement Offers. The capital raised will be used to fund the development of the existing pipeline, new R&D and commercial initiatives and working capital. OUTLOOK The Company is well positioned after completing capital raisings that delivered a solid cash position of $10.1 million as at 12 July 2019, a strengthened Board and strategic shareholder base that readies us to execute our growth strategy and deliver on our vision to build a leading Australian cancer diagnostics company. We have a strong cancer diagnostics pipeline with three BARD1 autoantibody tests in development for early detection of ovarian, breast and lung cancers, and have announced plans to accelerate our commercialisation efforts for our existing BARD1 assets and expand our cancer diagnostics portfolio through acquisition or in-licensing of complementary diagnostic assets for unmet needs in early detection, diagnosis and monitoring of cancer that should pave the way to an exciting future for the Company and our shareholders. The Company’s commercialisation strategy is to partner with certified laboratories to initially launch the BARD1 autoantibody tests as Laboratory Developed Tests (LDTs) in Australia and the USA to commence commercialisation and real-world product acceptance. If successful, the Company then plans to seek to partner with leading diagnostic distributors to develop and register In Vitro Diagnostic (IVD) kits with the US FDA, Australian TGA and gain European CE-IVD marking to drive geographic expansion, clinical adoption, market acceptance and access. The BARD1 Board and management thanks all shareholders for their strong support in FY2019 and looks forward to keeping the market informed of our technical and commercial progress in FY2020. INHERENT RISKS OF INVESTMENT IN BIOTECHNOLOGY COMPANIES There are many inherent risks associated with the development of medical devices including diagnostics to a marketable stage. The clinical development process is designed to evaluate the safety and effectiveness of a medical device prior to commercialisation and a significant proportion of medical devices fail one or both of these criteria. Other risks include uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer adequate protection to enable product development, the obtaining of necessary regulatory authority approvals and difficulties caused by the rapid advancements in technology. - 7 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT Companies such as BARD1 are dependent on the success of their research projects and their ability to attract funding to support these activities. Investment in research and development projects cannot be assessed on the same fundamentals as other trading enterprises and access to capital and funding for the Group and its projects going forward cannot be guaranteed. Investment in companies specialising in research projects, such as BARD1, should be regarded as highly speculative. BARD1 strongly recommends that professional investment advice be sought prior to individuals making such investments. FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report contain forward-looking statements regarding the Company’s business and the technical and commercial potential of its technologies and products in development. Any statement describing the Company’s goals, expectations, intentions or beliefs is a forward-looking statement and should be considered an at-risk statement. Such statements are subject to certain risks and uncertainties, particularly those risks or uncertainties inherent in the process of discovering, developing and commercialising medical devices that can be proven to be safe and effective for use in humans, and in the endeavour of building a business around such products and services. BARD1 undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Actual results could differ materially from those discussed in this Annual Report. As a result readers of this report are cautioned not to rely on forward-looking statements. Rounding No rounding has been applied to the amounts contained in the financial report under the option available to the Company under ASIC Corporations (Rounding in Financial/Director’s report) instrument 2016/191. The Company is an entity to which the legislative instrument applies. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 12 July 2019 the Company issued 124,289,854 shares pursuant to the entitlement offer announced on 18 June 2019 to shareholders who participated in the entitlement offer and to investors who participated in the shortfall offer. The Company raised a total of $2.5 million (before costs) from the entitlement offer. At the date of this report, other than that outlined above, there have been no matters or circumstances that have arisen since the end of the period which significantly, or may significantly effect: • • • The consolidated entity’s operations in future years; The results of those operations in future years; or The consolidated entity’s state of affairs in future years. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than those outlined in the Review and Results of Operations there were no other significant changes in the state of affairs of the Company during the period. FINANCIAL POSITION The net assets of the Group at 30 June 2019 totalled $7,134,679 (2018: $1,130,487). Total assets at 30 June 2019 totalled $7,626,534 (2018: $1,453,137). The Group had cash and cash equivalents of $7,556,661 at 30 June 2019 (2018: $1,445,657). DIVIDENDS No dividend has been declared, provided for or paid in respect of the year ended 30 June 2019 or 30 June 2018. SHARE OPTIONS Shares issued as a result of the exercise of options No options were exercised during the period and up to the date of the directors’ report. Options issued 2,000,000 options were issued to a consultant in the 2018 financial year exercisable at $0.0128 on or before 20 February 2022. These options remain on issue at the date of this report. There are no other options on issue. - 8 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has insurance in place to indemnify directors of the Company against liability incurred to a third party (not being the Company or a related party) that may arise from their position as directors or officers of the Company. In accordance with subsection 300(9) of the Corporations Act 2001, further details have not been disclosed due to confidentiality provisions of the insurance contracts. INDEMNIFICATION OF AUDITORS To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year. INTERESTS IN CONTRACTS OR PROPOSED CONTRACTS WITH THE COMPANY During the financial year, no director has had any interest in a contract or proposed contract with the Company being an interest the nature of which has been declared by the director in accordance with Section 300(11)(d) of the Corporations Act 2001 except for: The contracts for the executive and non-executive director services as disclosed in the remuneration report; and - - Underwriting agreements entered into with Mr. Powell and Mr. Johnson prior to their appointment as directors, for new shares not subscribed for by eligible shareholders under the Entitlement Offer announced on 18 June 2019 to subscribe for up to 5,000,000 shortfall shares each. Pursuant to the underwriting agreements companies controlled by Mr Powell and Mr Johnson were each issued 5,000,000 Shares. No fees were paid pursuant to the underwriting agreements. DIRECTORS’ MEETINGS The following table sets out the number of meetings of the Company’s directors held during the year ending 30 June 2019 and the number of meetings attended by each director. Directors’ Meetings No. of meetings held while in office Meetings attended Peter Gunzburg Dr Irmgard Irminger-Finger Brett Montgomery (resigned 17/06/19) Geoffrey Laurent (deceased 12/08/18) Max Johnston (appointed 17/06/19) Philip Powell (appointed 17/06/19) 4 4 4 0 0 0 4 4 4 0 0 0 REMUNERATION REPORT (AUDITED) This Remuneration Report outlines the director and executive remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key Management Personnel (KMP) of the Group are defined as those persons having the authority and responsibility for planning, directing and controlling the major activities of the Group. The remuneration report has been audited as required by section 300A of the Corporations Act 2001. Use of remuneration consultants Independent external advice is sought from remuneration consultants when required, however no advice has been sought during the period ended 30 June 2019. Remuneration Policy The Group has designed its compensation policies to ensure significant linkage between rewards and specific achievement that are intended to improve shareholder wealth. In assessing the link between the Group performance and compensation policy, it must be recognised that biotechnology companies generally do not make a profit until a drug or device is licensed or commercialised, either of which takes a number of years. Furthermore, the biotechnology sector as a hole is highly volatile, significantly driven by market sentiment and inherently high risk. Therefore, the direct correlation of compensation policy and traditional financial performance measures is not appropriate. As an alternative, key milestones are a more meaningful measure of performance to correlate levels of compensation. These milestones are discrete achievements and can be used to evaluate the Group’s progress towards commercialising its various projects. - 9 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT The Board recognises that the performance of the Company depends upon the quality of its Directors and Executives and to this end the Company is aware that it must attract, motivate and retain experienced Directors and Executives. The Board assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team. Such officers are given the opportunity to receive their base emolument in the form of salary and fringe benefits such as motor vehicle allowances. In accordance with best practice governance, the structure of Non-Executive Directors and senior executive remuneration is separate and distinct. It should be noted that the amount of salary and the grant of options is at the discretion of the board of directors. The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost which is acceptable to Shareholders. The Company’s Constitution and ASX Listing Rules specify that aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting of Shareholders. Approval by Shareholders was granted at a general meeting on 12 August 2008 to pay Non-Executive Directors an aggregate amount of $200,000 per annum. The Board considers fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Each Non-Executive Director may also receive an equity based component where approval has been received from Shareholders in a general meeting. The Company does not currently have a remuneration committee, the functions of which are carried out by the full board. Remuneration for directors and executives are not linked directly to the performance of the economic entity. The Company has Employment and/or Consultancy Agreements in place with Dr Irminger-Finger, Dr Hinch, Mr Powell and Mr Johnson. The major provisions of each of the agreements relating to compensation are set out below. Dr Irminger-Finger Dr Irmgard Irminger-Finger has a Consultancy Agreement with the Company dated 1 June 2016 to perform the role of Chief Scientific Officer as specified in the Consultancy Agreement under which Dr Irminger-Finger is paid $150,000 per annum for the equivalent of a 0.5 Full Time Equivalent. This arrangement can be terminated by either party by providing 180 days written notice, which based on current remuneration rates would amount to a termination payment of $75,000. Dr Hinch Dr Leearne Hinch has an Executive Employment Agreement with the Company dated 7 November 2016 to perform the role of Chief Executive Officer, under which Dr Leearne Hinch is paid a total fixed remuneration of $350,000 per annum (inclusive of superannuation). This arrangement can be terminated by either party by providing 6 months written notice, which based on current remuneration rates would amount to a termination payment of $175,000. As at 30 June 2019 Dr Hinch is eligible for a Short-Term Incentive (STI) of up to 40% cash bonus and Long-Term Incentive (LTI) being the grant of options (subject to shareholder approval) which vest upon the satisfaction of KPIs agreed between the Board and Dr Hinch. The only milestone agreed between the Board and Dr Hinch was the completion of a probationary period. To date, the Board has not agreed any further KPIs for Dr Hinch. Initially it was agreed that 20 million options would be granted subject to various KPIs, with Tranche one of 5 million being issued with a KPI of completion of the probationary period, which has been met. In the prior year, post-completion of the probation period, but prior to obtaining shareholder approval for the issue of the LTI, Dr Hinch agreed with the Board in good faith that the option exercise price would be renegotiated. As the 5 million options vested on the completion of Dr. Hinch’s probation, an expense for the award has been recognised within the income statements for the current and prior financial periods. For the remaining 15 million options which would be issued when the revised exercise price and KPIs are agreed, no expense in relation to these options has been brought to account. No KPIs have been set for the STI and therefore no STI was paid or payable during the financial year. Mr Johnston Max Johnston has a Letter of Agreement with the Company dated 17 June 2019 to perform the role of Non-Executive Director for an annual base fee of $50,000 plus superannuation entitlement. Mr Johnston is not entitled to a termination or redundancy benefit. Mr Powell Philip Powell has a Letter of Agreement with the Company dated 17 June 2019 to perform the role of Non-Executive Director for an annual base fee of $50,000 plus superannuation entitlement. Mr Powell is not entitled to a termination or redundancy benefit. The Company does not have any other consultancy or employment agreements in place. - 10 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT Remuneration of Key Management Personnel P Gunzburg Chairman I Irminger-Finger Executive-Director G Laurent Non-Executive Director B Montgomery Non-Executive Director P Powell 2 Non-Executive Director M Johnson 2 Non-executive director L Hinch 1 Chief Executive Officer Total Total 2019 2018 2019 2018 2019 2018 2019 2018 2019 2019 2019 2018 2019 2018 Short Term Benefits Salary And Fees 68,750 58,333 150,000 145,562 3,000 21,000 24,000 21,000 1,950 Post Employment Benefits Superannuation 6,531 5,542 - 4,438 285 1,995 - - 185 1,950 185 361,036 359,218 610,686 605,113 19,615 19,615 26,801 31,590 Long Term Benefits Share Based Payments - - - - - - - - - - - - - - - - - - - 8,750 8,750 8,750 8,750 53,041 15,564 53,041 15,564 Total 75,281 63,875 150,000 150,000 3,285 22,995 24,000 21,000 2,135 2,135 442,442 403,147 699,278 661,017 1 The 2019 and 2018 total remuneration for Dr. Hinch has been adjusted to reflect the fair value of tranche one of the options to be issued that were included as part of her employment agreement. 2 Mr Powell and Mr Johnson were appointed directors on 17 June 2019 Consolidated Entity Performance The table below shows the performance of the consolidated entity as measured by the consolidated entity’s closing share price and EPS over the last five years. 12 Months ended 31 December 2015 N/A** (85,269) (0.037)* 6 months ended 30 June 2016 $0.022 (2,841,093) (0.011)* 12 months ended 30 June 2017 $0.010 (2,604,171) (0.004)* 12 months ended 30 June 2018 $0.014 (1,817,301) (0.003)* 12 months ended 30 June 2019 $0.020 (1,717,273) (0.001)* Closing share price Loss after tax ($) EPS ($ per share) * The loss per share calculations for periods prior to 30 June 2019 have been adjusted by a factor of 1.019 to reflect the bonus element of the capital raising completed subsequent to year end. ** BARD1AG was not a listed entity during this period. Options Granted and Vested during the year ended 30 June 2019 SHARE OPTIONS Shares issued as a result of the exercise of options No options were exercised during the period and up to the date of the directors’ report. Options issued during the financial year and on issue at the date of this report No options were issued to KMP’s during the year. No options were held by KMP during the financial year or at year-end. Refer to previous page for discussion on Tranche one of 5 million options to be issued to the CEO. As at 30 June 2019 Dr Hinch is eligible for a Short Term Incentive (STI) of up to 40% cash bonus and Long Term Incentive (LTI) being the grant of options (subject to shareholder approval) which vest upon the satisfaction of KPIs agreed between the Board and Dr Hinch. The only milestone agreed between the Board and Dr Hinch was the completion of a probationary period. To date, the Board has not agreed any further KPIs for Dr Hinch. Initially it was agreed that 20 million options would be granted subject to various KPIs, with 5 million being issued with a KPI of completion of the probationary period, which has been met. In the prior year, post-completion of the probation period, but prior to obtaining shareholder approval for the issue of the LTI, Dr Hinch agreed with the Board in good faith that the option exercise price would be renegotiated. As the 5 million options vested on the completion of Dr. Hinch’s probation, an expense for the award has been recognised within the income statements for the current and prior financial periods. For the remaining 15 million options which would be issued when the revised exercise price and KPIs are agreed, no expense in relation to these options has been brought to account. - 11 - Peter Gunzburg Dr Irmgard Irminger- Finger Max Johnston*** Philip Powell*** Prof. Geoffrey Laurent Brett Montgomery BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT KEY MANAGEMENT PERSONNEL SHAREHOLDINGS At 30 June 2019 the interests of the key management personnel in the ordinary shares and performance shares in the Company were: Balance Ordinary Shares 30 June 2018 Subscribed for under Entitlements offer Net change other Balance Ordinary Shares 30 June 2019 Unquoted Performance Shares at 30 June 2019 Unquoted Performance Shares at 30 June 2018 29,835,004 5,967,001 - 35,802,005 - - 108,252,420 12,500,000 (8,599,683) 112,152,737 **108,252,420 **108,252,420 - - 10,599,600 - - - - - (10,599,600)* 4,700,000 940,000 (5,640,000)* - - - - - - - - - - - - - - - Dr. L Hinch - - - * Holding at time of ceasing to be a director ** The Performance Shares were escrowed for 2 years from date of quotation and have an expiry date of 5 years. As announced on 20 June 2018, these shares were released from Escrow. Milestones for conversion are as follows: • each Performance Share will convert into one Share upon the announcement by the ASX of the following prior to the Expiry Date; • • • the clinical trial of the blood test developed by BARD1AG SA S.A. for the detection of lung cancer (BBLC Test) has been completed; the clinical trial involved at least 2,000 participants, and returned a detection rate greater than 80%, and false positive results of less than 20%; and the results of the clinical trial provide statistically significant evidence that the BBLC Test provides an outcome equal or superior to the current "gold standard" CT Scan, which has a detection rate of less than 80%, and returns false positive results of more than 20%. Performance Shares are unquoted, not entitled to dividends and there are no participation rights or entitlements inherent in the Performance Shares and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Performance Shares. The Performance Shares were issued as consideration for the acquisition of shares held in BARD1AG SA and not granted as remuneration. No performance shares were issued or converted to ordinary shares during the year. *** As at 30 June 2019, companies controlled by Mr. Powell and Mr. Johnson had underwriting agreements with the Company to subscribe for up to 5,000,000 shortfall Shares each not subscribed for by eligible shareholders under the Entitlement Offer announced on 18 June 2019 each. Loans to Key Management Personnel There have been no loans to KMP’s during the financial year. Other Transactions with KMPs There have been no other transactions with KMP’s during the financial year. Voting and comments at the Company’s 2018 Annual General Meeting The Company received 100% of “yes” votes on its Remuneration Report for the 2018 financial year. The Company did not receive any specific feedback at the AGM on its remuneration policies. ** END OF REMUNERATION REPORT ** - 12 - BARD1 LIFE SCIENCES LIMITED DIRECTORS' REPORT NON-AUDIT SERVICES During the years ended 30 June 2019, and 30 June 2018 no fees were paid to external auditors Ernst & Young for non-audit services. AUDITORS INDEPENDENCE DECLARATION The lead auditor's independence declaration for the twelve months ending 30 June 2019 has been received and can be found on page 14. Signed in accordance with a resolution of the directors Peter Gunzburg Chairman 16 August 2019 - 13 - Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Auditor’s Independence Declaration to the Directors of BARD1 Life Sciences Limited As lead auditor for the audit of the financial report of BARD1 Life Sciences Limited for the financial year ended 30 June 2019, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of BARD1 Life Sciences Limited and the entities it controlled during the financial year. Ernst & Young V L Hoang Partner 16 August 2019 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation MH:BARD1:009 BARD1 LIFE SCIENCES LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019 Other income Research and development tax incentive Gain on held for trading investments Employee benefits expense Movement in the fair value of investments classified held for trading Impairment of available for sale financial assets Foreign exchange (loss)/gain Research and development expense Patent expenses Share based payments expense Administration costs Loss before income tax expense Income tax expense Loss after income tax expense Other comprehensive income Items that may be subsequently reclassified to operating result Foreign currency translation Fair value loss on available for sale financial assets Impairment loss reclassified to profit and loss Other comprehensive loss for the year, net of tax Total comprehensive loss attributable to the members of BARD1 Life Sciences Limited Loss per share: Basic loss per share Diluted loss per share Note Consolidated Group For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ 3 3 3 3 3 16 3 4 10 10 10 14 14 58,919 520,798 - 62,418 210,785 91,483 (791,549) (768,598) (32) - 5,282 (576,738) (137,023) (53,041) (743,889) (127) (28,230) (16,010) (770,842) (180,854) (41,595) (375,731) (1,717,273) (1,817,301) - - (1,717,273) (1,817,301) (13,299) - - (13,299) (4,634) (28,230) 28,230 (4,634) (1,730,572) (1,821,935) Cents Cents (0.14)* (0.26)* (0.14)* (0.26)* * The loss per share calculations for all periods prior to 30 June 2019 have been adjusted by a factor of 1.019 to reflect the bonus element of the capital raising completed subsequent to year end. The accompanying notes form part of these financial statements. - 15 - BARD1 LIFE SCIENCES LIMITED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 Current Assets Cash and cash equivalents Other receivables Held for trading investments Prepayments Total Current Assets Current Liabilities Trade and other payables Provisions Total Current Liabilities Non-Current Liabilities Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital Distribution reserve Share based payment reserve Foreign exchange translation reserve Accumulated losses TOTAL EQUITY Notes Consolidated Group 30 June 2019 $ 30 June 2018 $ 12 5 6 7 8a 8b 9 10 10 10 11 7,556,661 1,445,657 61,278 - 8,595 3,465 32 3,983 7,626,534 1,453,137 427,709 35,488 463,197 28,658 28,658 491,855 238,212 62,394 300,606 22,044 22,044 322,650 7,134,679 1,130,487 16,980,108 9,298,385 (309,421) (309,421) 94,636 (56,018) 41,595 (42,719) (9,574,626) (7,857,353) 7,134,679 1,130,487 The accompanying notes form part of these financial statements. - 16 - BARD1 LIFE SCIENCES LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2019 For the year ended 30 June 2019 Issued Capital $ Accumulated fix losses $ Distribution Reserve Foreign Currency Translation reserve $ Share Based Payments Reserve Total Equity $ 9,298,385 (7,857,353) (309,421) (42,719) 41,595 1,130,487 - - - - (1,717,273) - (1,717,273) - - - - - - - - (13,299) (13,299) - - - - - (1,717,273) (13,299) (1,730,572) 53,041 53,041 - 7,681,723 At 1 July 2018 Loss for the year Other comprehensive income Total comprehensive loss for the period Share based payment Issue of shares net of costs 7,681,723 At 30 June 2019 16,980,108 (9,574,626) (309,421) (56,018) 94,636 7,134,679 For the year ended 30 June 2018 Issued Capital $ Accumulated losses $ Available for sale Reserve Distribution Reserve Foreign Currency Translation reserve $ Share Based Payments Reserve Total Equity $ At 1 July 2017 Loss for the year Other comprehensive income Impairment loss reclassified to loss for the period Total comprehensive loss for the period Share based payment - - - - - 6,645,495 (6,040,052) (1,817,301) - - (28,230) 28,230 (1,817,301) - - - - - - - - (309,421) (38,085) - - - - - - - (4,634) - (4,634) - - - - - - - 257,937 (1,817,301) (32,864) 28,230 (1,821,935) 41,595 41,595 - 2,652,890 (309,421) (42,719) 41,595 1,130,487 Issue of shares net of costs 2,652,890 At 30 June 2018 9,298,385 (7,857,353) The accompanying notes form part of these financial statements. - 17 - BARD1 LIFE SCIENCES LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 Cash Flows from Operating Activities Interest received Other receipts from customers Payments to suppliers and employees Research and development tax incentive Notes Consolidated Group For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ 8,731 50,188 7,210 55,208 (2,150,436) (2,238,470) 520,798 210,785 Net cash flows used in operating activities 12 (1,570,719) (1,965,267) Cash Flows from Investing Activities Net cash received on sale of held for trading assets Net cash inflows from investing activities Cash Flows from Financing Activities Proceeds from issue of shares Share issue costs Net cash inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash equivalents at the end of the financial period - - 107,983 107,983 8,285,747 (604,024) 7,681,723 6,111,004 1,445,657 7,556,661 2,813,326 (160,436) 2,652,890 795,606 650,051 1,445,657 The accompanying notes form part of these financial statements. - 18 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 1. CORPORATE INFORMATION The financial report of BARD1 Life Sciences Limited (the Company) and its subsidiaries (collectively the “Consolidated Entity” or the “Group”) for the year ended 30 June 2019 was authorised for issue in accordance with a resolution of the directors on 15 August 2019. BARD1 Life Sciences Limited is a Company limited by shares incorporated and domiciled in Australia and whose shares are publicly traded on the Australian Securities Exchange. The company is a for-profit entity. The principal activities of the consolidated group during the financial year were the research and development of non-invasive diagnostic tests for early detection of cancer. The company’s registered office is Unit B1, Tempo Building, 431 Roberts Road, Subiaco Western Australia 6008 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) (b) Going Concern The consolidated financial statements have been prepared under the going concern basis of accounting. The directors believe this basis to be appropriate, taking into account the Group’s cash position at 30 June 2019, its subsequent capital raising in July 2019 and its anticipated working capital requirements for the twelve months from the date of approval of these financial statements. Basis of Preparation The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). The financial report has been prepared on a historical cost basis, except for certain investments, which have been measured at fair value. The financial report is prepared in Australian dollars. (c) Compliance Statement The Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by AASB that are relevant to its operations and effective for annual reporting periods beginning on 1 July 2018, including: AASB 9 Financial Instruments (AASB 9) AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. The Group has applied AASB 9 retrospectively, with the initial application date of 1 July 2018 and has elected not to restate comparative information which continues to be reported under AASB 139. The adoption of AASB 9 did not result in to any adjustment to the opening balance of retained as at 1 July 2018. Under AASB 9, on initial recognition a financial asset is classified as measured at: a) b) c) d) Amortised cost; Fair Value through Other Comprehensive Income (FVOCI) – debt investment; FVOCI – equity investment; or Fair Value through Profit or Loss (FVTPL) The classification of financial assets under AASB 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics, which arise on specified dates and are solely payments of principal and interest (“SPPI”). A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition. For financial assets measured at amortised cost, these assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. As of 30 June 2018, and 30 June 2019, the Company’s financial instruments consist of cash and cash equivalents, trade and other receivables, shares in listed companies and trade and other payables. Cash and cash equivalents and trade and other receivables previously designated as loans and receivables under AASB 139 are now classified as financial assets amortised cost under AASB 9. The trade and other payables are designated as financial liabilities at amortised cost. Shares in listed companies previously designated as AFS under AASB 139 are now classified as fair - 19 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 value through profit and loss under AASB 9. Existing financial assets and liabilities of the Group were assessed in terms of the requirements of AASB 9. In this regard the adoption of AASB 9 will impact the classification of financial assets and liabilities as follows: Class of financial instrument presented in the statement of financial position Cash and cash equivalents Trade and other receivables Shares in listed companies Trade and other payables Original measurement category under AASB 139 New measurement category under AASB 9 Loans and receivables Loans and receivables Investment held for trading Financial liability at amortised cost Financial assets at amortised cost Financial assets at amortised cost FVTPL Financial liability at amortised cost The change in classification has not resulted in any re-measurement adjustment at 1 July 2018. Impairment of financial assets In relation to the financial assets carried at amortised cost, AASB 9 requires an expected credit loss (“ECL”) model to be applied as opposed to an incurred credit loss model under AASB 139. The ECL model requires the Group to account for ECL and changes in those ECL at each reporting date to reflect changes in credit risk since initial recognition of the financial asset. In particular, AASB 9 requires the Group to measure the loss allowance at an amount equal to lifetime ECL if the credit risk on the instrument has increased significantly since initial recognition. On the other hand, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group is required to measure the loss allowance for that financial instrument at an amount equal to the ECL within the next 12 months. As at 1 July 2018, the directors of the Company reviewed and assessed the Group’s existing financial assets for impairment using reasonable and supportable information. In accordance with AASB 9, where the directors concluded that it would require undue cost and effort to determine the credit risk of a financial asset on initial recognition, the Group recognises lifetime ECL Given the nature of the Consolidated Entity’s business and the nature of its financial assets subject to impairment assessment, there was no material impact arising from the application of the new impairment requirements of AASB 9. As all of the Consolidated Entity’s cash deposits and other current receivables which are measured at amortised cost are short term (i.e., less than 12 months), and the Consolidated Entity has credit rating and risk management policies in place, the change to a forward-looking expected credit loss approach did not have a material impact on the amounts recognised in the financial statements. AASB 15 Revenue from Contracts with Customers (AASB 15) The Group has adopted AASB 15 as issued in May 2014 with the date of initial application being 1 July 2018. In accordance with the transitional provisions in AASB 15 the standard has been applied using the full retrospective approach. AASB 15 supersedes AASB 118 Revenue, AASB 111 Construction Contracts and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards. The new standard establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15, the revenue recognition model will change from one based on the transfer of risk and reward of ownership to the transfer of control of ownership At the date of initial application of AASB 15, 1 July 2018, the Group had no material contracts falling directly within the scope of AASB 15, and as a result, it was determined that the adoption of AASB 15 had no impact on the Group. Several other new and amended Accounting Standards and Interpretations applied for the first time from 1 July 2018 but did not have an impact on the consolidated financial statements of the Group and, hence, have not been disclosed. Other than the changes described below, the accounting policies adopted are consistent with those of the previous financial year The accounting policy of the Group on financial instruments is disclosed in more detail below. (c) New and amended accounting standards and interpretations issued but not yet effective The following relevant standards and interpretations have been issued by the AASB but are not yet effective for the period ended 30 June 2019. - 20 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Reference Title Summary AASB 16 Leases AASB 16 requires lessees to account for all leases under a single on- balance sheet model in a similar way to finance leases under AASB 117 Leases. The Group has an immaterial lease agreement at 30 June 2019 and therefore the new standard is not expected to have a material impact on its financial statements on transition. Uncertainty over Income Tax Treatments AASB Interpretation 23, and relevant amending standards Interpretation clarifies The the recognition and measurement criteria in AASB 112 Income Taxes when there is uncertainty over income tax treatments. the application of Application date of standard Application date for Group 1 January 2019 1 July 2019 1 January 2019 1 July 2019 The Company is in the process of determining the impact of the above on its financial statements. The Company has not elected to early adopt any new Standards or Interpretations. (d) Statement of Significant Accounting Policies (i) Basis of Consolidation The consolidated financial statements comprise the financial statements of BARD1 Life Sciences Limited and its subsidiaries as at 30 June 2019. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • • • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) Exposure, or rights, to variable returns from its involvement with the investee; and The ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: • • • The contractual arrangement with the other vote holders of the investee Rights arising from other contractual arrangements The Group’s voting rights and potential voting rights The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: - 21 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 • • • • • • • De-recognises the assets (including goodwill) and liabilities of the subsidiary De-recognises the carrying amount of any non-controlling interests De-recognises the cumulative translation differences recorded in equity Recognises the fair value of the consideration received Recognises the fair value of any investment retained Recognises any surplus or deficit in profit or loss Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities Business combinations are accounted for using the acquisition method. (ii) Revenue and other income Interest Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset) to the carrying amount of the financial asset. Government grants Government grants are recognised where they can be reliably measured, it is certain that the grant will be received and all attached conditions will be satisfied. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs for which it is intended to compensate, are expensed. When the grant relates to an asset, it is offset against the capitalised amount and recognised as income in equal amounts over the expected useful life of the related asset (when the asset is depreciated). (iii) Income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance date in the countries where the Group operates and generates taxable income. Deferred income tax is provided using the full liability method on temporary differences at the balance date between the tax bases of the assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • where the deferred income tax arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except: • where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and • in respect of deductible temporary difference associated with investments in subsidiaries, deferred tax asset are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. - 22 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date. Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of comprehensive income. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. (iv) Goods and services tax Revenues, expenses and assets (other than receivables) are recognised net of the amount of goods and services tax (GST), except: • • when the amount of GST incurred is not payable to or recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. When receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the Cash Flow Statement on a gross basis. The GST components of cash flows arising from investing and financing activities, which are recoverable from, or payable to, the ATO are classified as operating cash flows . (v) Trade and other receivables Accounting policy applied pre-1 July 2018 All trade and other receivables are initially recognised at the fair value of the consideration receivable and are subsequently measured at amortised cost. Receivables from related parties are recognised and carried at the fair value of the consideration receivable and are subsequently measured at amortised cost. Interest is taken up as income on an accrual basis. An allowance for doubtful debts are made based on an assessment made by directors on the recoverability of receivables. Collectability of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the Consolidated Entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. Accounting policy applied post 1 July 2018 Trade receivable that do not contain a significant financing component or for which the Consolidated Entity has applied the practical expedient are measured initially at the transaction price determined under AASB 15. Trade and other receivables that are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principle and interest are classified and subsequently measured at amortised cost. Receivables that do not meet the criteria for amortised cost are measured at fair value through profit or loss. Following initial recognition the amortised cost is calculated using the effective interest method. - 23 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 The Group assesses on a forward looking basis the expected credit loss associated with its trade receivables carried at amortised cost. The expected credit loss is calculated using the simplified approach which requires the loss allowance to be based on the lifetime expected credit loss. In determining the expected credit loss the Group assesses the profile of the debtors and compares with historical recoverability trends, adjusted for factors that are specific to the debtors’ general economic conditions and an assessment of both the current and forecast conditions as a reporting date. The Group considers an event of default has occurred when a financial asset is more than 90 days past due or external sources indicate that the debtor is unlikely to pay its creditors, including the Group. A financial asset is credit impaired when there is evidence that the counterparty is in significant financial difficulty or a breach of contract, such as a default or past due event has occurred. The Group writes off a financial asset when there is information indicating the counterparty is in severe financial difficulty and there is no realistic prospect of recovery. (vi) Investments and other financial assets Investments and financial assets in the scope of AASB 9 Financial Instruments are categorised as per 2 (c). The classification depends on the purpose for which the investments were acquired. When financial assets are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction costs. (vii) Leased assets The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement at the inception of the lease and requires an assessment of whether the fulfilment of the arrangement is dependent on the specific asset or assets and the arrangement conveys a right to use the asset. Operating Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Payments made under operating leases are expensed in the profit or loss on a straight-line basis over the term of the lease. (viii) Trade and other payables Liabilities for trade creditors and other amounts are carried at amortised cost and represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of these goods and services. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accruals basis. (ix) Foreign currency translation Both the functional and presentation currency of BARD1 Life Sciences Limited is Australian dollars (A$). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-translated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to the profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the original transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The results of the Group’s non-A$ reporting subsidiary is translated into A$ (presentation currency). Income and expenses are translated at the exchange rates at the date of the transactions. Assets and liabilities are translated at the closing exchange rate for each balance sheet date. Share capital, reserves and accumulated losses are converted at applicable historical rates. Exchange variations resulting from the translation are recognised in the foreign currency translation reserve in equity. On consolidation, exchange differences arising from the translation of monetary items considered to be part of the net investment in subsidiaries are taken to the foreign currency translation reserve. If a subsidiary were sold, the proportionate share of the foreign currency translation reserve would be transferred out of equity and recognised in the statement of comprehensive income. - 24 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (x) Employee benefits Liabilities arising in respect of wages and salaries, annual leave and any other employee entitlements expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates expected to be paid when the liability is settled. All other employee entitlement liabilities such as long service leave are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to high quality corporate bonds that have terms to maturity approximating the terms of the related liability are used. Contributions made by the Group to employee superannuation funds, which are defined contribution plans, are charged as an expense when incurred. (xi) Provisions A provision is recognised when a legal or constructive obligation exists as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the consolidated entity expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. (xii) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity 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. For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (xiii) Issued Capital Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity, net of tax, as a reduction of the proceeds received. (xiv) Earnings Per Share Basic earnings per share (EPS) is calculated by dividing the net profit attributable to members of the Company for the reporting period, after excluding any costs of servicing equity (other than dividends on ordinary shares), by the weighted average number of ordinary shares of the Company, adjusted for any bonus issue. Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and other non-discretionary changes in revenues and expenses that would result from the dilution of potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares of the Company adjusted for any bonus issue. (xv) Judgements in applying accounting policies and key sources of estimation uncertainty The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors it believes to be reasonable under the circumstances, the result of which form the basis of the carrying values of assets and liabilities that are not readily apparent from other sources. Management has identified the following critical accounting policies for which key estimates and assumptions that have the most significant impact on the financial statements. Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the financial position reported in future periods. - 25 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Significant judgement (i) Research and development expenditure Determination of whether expenditure during the period satisfies the criteria under the Group’s accounting policy for recognition as development expenditure is a significant judgement applied by the Group. During the current period, no expenditure was considered to meet the criteria to be recognised as a development asset and all expenditure was therefore expensed as incurred. The total research and development expense incurred for the year was $576,738 (2018: $770,842). Significant accounting estimates and assumptions The carrying value of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are outlined below. (i) (ii) Share-based payments The company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they were granted. The fair value of the options is determined using a Black-Scholes model, with all assumptions detailed in note 16. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amount of assets and liabilities with the next annual reporting period but may impact expenses and equity. Deferred tax assets Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets, including those arising from unutilised tax losses, require management to assess the likelihood that the Group will comply with relevant tax legislation and will generate sufficient taxable profit in future years in order to recognise and utilise those deferred tax assets. Estimates of future taxable profit are based on forecast cash flows from operations and existing tax laws in each jurisdiction. These assessments require the use of estimates and assumptions such as the operating performance over the life of the assets. At 30 June 2019, the Group has net deferred tax assets of $2,227,410 (2018: $1,703,469) which have not been recognised. A tax benefit will only be recognised to the extent that it is probable that future taxable profit will allow the deferred tax asset to be recovered. (xvi) Research and Development Research costs are expensed as incurred development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate: • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale Its intention to complete and its ability and intention to use or sell the asset • • How the asset will generate future economic benefits • The availability of resources to complete the asset • The ability to measure reliably the expenditure during development Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually. (xvii) Share-based payments Share-based payments employees (including directors and executives) and to non-employees in the form of share-based payment transactions. Employees render services in exchange for shares or rights over shares (“equity settled transactions”). The cost of these equity settled transactions with employees are measured by reference to the fair value at the date at which they are granted. The cost of equity settled transactions with non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The fair value of both employee and non- employee equity settled transactions is determined using a Black Scholes model. - 26 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 The cost of employee equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting date’). (xviii) Current versus non-current classification Expected to be realised or intended to be sold or consumed in the normal operating cycle The Group presents assets and liabilities in the statement of financial position based on current/non- current classification. An asset is current when it is: • • • Expected to be realised within twelve months after the reporting period; or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period Held primarily for the purpose of trading All other assets are classified as non-current. A liability is current when: • • • • It is expected to be settled in the normal operating cycle It is held primarily for the purpose of trading It is due to be settled within twelve months after the reporting period; or There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Group classifies all other liabilities as non-current. (xix) Comparatives Certain comparatives have been re-classified to conform with current year presentation. 3. OTHER INCOME AND EXPENSES Other income Interest received Other income Consolidated Group For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ 8,731 50,188 58,919 7,210 55,208 62,418 2018 Research and development incentive received * 520,798 210,785 *The research and development incentive tax credit is recognised when there is reasonable assurance of receipt. The incentive for the 2019 financial year has not been accrued as the Company is in the process of finalising the claim amount and the application has not been lodged. Expenses Research and development expenses Patent expenses Employee benefits Consulting and legal fees Rental expenses Share registry fees 576,738 137,023 791,549 317,767 14,102 56,310 770,842 180,854 768,598 167,128 20,449 80,188 Other administration expenses 355,710 107,966 - 27 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 4. INCOME TAX Consolidated Group 30 June 2019 $ 30 June 2018 $ (a) Major components of income tax expense for the periods presented are: Statement of comprehensive income Current income tax charge Deferred income tax Income tax expense reported in the Statement of Comprehensive Income - - - - - - (b) A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory income tax rate to income tax expense at the Group's effective income tax rate for the periods ended 30 June 2019 and 30 June 2018 is as follows: Accounting loss before tax At statutory income tax rate of 27.5% (2018: 27.5%) Adjustment for difference in tax rates Adjustments due to permanent and timing differences Deferred tax assets not brought to account (1,717,273) (1,817,301) (472,250) 303 (51,670) 523,596 (499,758) 670 (42,125) 541,212 Income tax expense reported in the Statement of Comprehensive Income - - Tax Losses Unused tax losses for which no tax loss has been booked as a deferred tax asset Potential benefit at relevant income tax rate 8,158,169 2,227,410 6,253,079 1,703,469 Deferred tax assets have not been brought to account at 30 June 2019 because the directors do not believe it is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if: (i) (ii) (iii) the Consolidated Entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction for the loss to be realised; the Consolidated Entity complies with the conditions for the deductibility imposed by law including the continuity of ownership and/or business tests; and no changes in tax legislation adversely affect the Consolidated Entity in realising the benefit from the deduction for the loss. 5. TRADE AND OTHER RECEIVABLES Current Other receivables Other receivable relates mainly to GST receivable. There are no receivables that are past the payment terms, and all receivables are current. The fair value is approximately the same as the carrying value. 61,278 61,278 3,465 3,465 - 28 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 6. INVESTMENTS CLASSIFIED AS HELD FOR TRADING a) Shares in listed entities classified as held for trading (b) Reconciliation Reconciliation of the carrying amount of the held for trading financial assets at the beginning and end of the current financial year Balance at beginning of the year Disposal of shares* Movement in fair value Balance at the end of the year Consolidated Group 30 June 2019 30 June 2018 $ - - 32 32 32 - (32) - 16,659 (16,627) - 32 Investments with a carrying value of $16,627 were sold during the year ended 30 June 2018. Investments classified as held for trading consist of investments in ordinary shares. The fair value has been determined by Level 1 in accordance with the fair value hierarchy under AASB 13 Fair Value Measurement. 7. TRADE AND OTHER PAYABLES Trade and other payables Trade and other payables are generally unsecured, interest free and on 30 day terms. 8. PROVISIONS a) Current Annual Leave b) Non-current Long Service Leave 9. CONTRIBUTED EQUITY (a) Issued and paid up capital 427,709 427,709 238,212 238,212 35,488 62,394 28,658 22,044 Ordinary shares (net of issue costs) 16,980,108 9,298,385 30 June 2019 $ 30 June 2018 $ For the year ended 30 June 2019 For the year ended 30 June 2018 Number of shares $ Number of shares $ At the beginning of the period 828,662,397 9,298,385 552,829,919 6,645,495 Issue of shares Less: Transaction costs At the end of the period 414,232,775 - 8,285,747 (604,024) 275,832,478 - 2,813,326 (160,436) 1,242,895,172 16,980,108 828,662,397 9,298,385 At 30 June 2019, the Company also had on issue 217,003,236 (2017: 217,003,236) performance shares. - 29 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (b) Terms and conditions of contributed equity Ordinary shares Ordinary shares have the right to receive dividends as declared, and, in the event of the winding up of the Company, to participate in the proceeds from the sale of surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company Performance Shares Performance shares have no right to receive dividends. Each Performance Share will convert into one Share upon the announcement by the ASX of the following prior to the Expiry Date: • the clinical trial of the blood test developed by BARD1AG S.A. for the detection of lung cancer (BBLC Test) has been completed; the clinical trial involved at least 2,000 participants, and returned a detection rate greater than 80%, and false positive results of less than 20%; and the results of the clinical trial provide statistically significant evidence that the BBLC Test provides an outcome equal or superior to the current "gold standard" CT Scan, which has a detection rate of less than 80%, and returns false positive results of more than 20%. • • ("Milestone") Performance Shares expire on 17 June 2021, being 5 years from the date of issue and are escrowed for 2 years from the date the Company received re-admission to the Official List of ASX. As announced on 20 June 2018, these shares were released from Escrow. If the Milestone is not met by 5.00pm on the Expiry Date the Company will, as soon as reasonably practical and in any event no later than 90 days after the Expiry Date, convert the total number of Performance Shares on issue into one ordinary share per performance share. Performance Shares are not transferrable. Performance Shareholders shall have no right to vote, subject to the Corporations Act or any right to participate in new issues of Capital offered to holders of ordinary shares. The Performance Shares are unquoted. No application for quotation of the Performance Shares will be made by the Company. All Performance Shares on issue are unvested at 30 June 2019. (c) Capital management When managing capital, defined as equity, management’s objective is to ensure that the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. - 30 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 10. RESERVES Distribution reserve* Foreign currency translation reserve Share based payment reserve Foreign Currency Translation Reserve ** Balance at beginning of year Foreign currency translation Balance at the end of the year Available for Sale Reserve *** Balance at beginning of year Fair Value loss on available for sale financial assets Impairment loss reclassified to profit and loss Balance at the end of the year Share Based Payment Reserve**** Balance at beginning of year Fair value of options granted Balance at end of year Consolidated Group 30 June 2019 $ 30 June 2018 $ (309,421) (56,018) 94,636 (270,803) (42,719) (13,299) (56,018) - - - - 41,595 53,041 94,636 (309,421) (42,719) 41,595 (310,545) (38,085) (4,634) (42,719) - (28,230) 28,230 - - 41,595 41,595 * ** The distribution reserve is used to record the accounting to BARD1AG SA shareholders as part of the transaction to acquire BARD1 Life Sciences Limited. The foreign currency translation reserve is used to record the translation of the results of non-A$ subsidiaries from their functional currency to the Group’s presentation currency. *** The available for sale reserve was used to record the movements in the fair value of available for sale investments prior to 1 July 2018 **** The share based payment reserve is used to record the fair value of equity instruments issued to employees, directors and contractors. 11. ACCUMULATED LOSSES Balance at the beginning of the year Net loss attributable to members Consolidated Group For the year ended 30 June 2019 $ (7,857,353) (1,717,273) For the year ended 30 June 2018 $ (6,040,052) (1,817,301) (9,574,626) (7,857,353) - 31 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 12. CASH AND CASH EQUIVALENTS Consolidated Group Cash and cash equivalents comprise cash at bank. Reconciliation of net loss after tax to net cash used in operations Net loss after income tax Profit on sale of investments held for sale Share based payments expense Fair value adjustment on investments classified as held for trading Impairment of available for sale financial assets Foreign exchange movement Changes in Assets & Liabilities: (Increase)/decrease in receivables Increase/(decrease) in payables Increase/(decrease) in provisions Increase/(decrease) in prepayments For the year ended 30 June 2019 For the year ended 30 June 2018 $ $ (1,717,273) - 53,041 32 - (5,282) (57,813) 181,479 (20,292) (4,611) (1,817,301) (91,483) 41,595 127 28,230 16,010 28,491 (205,378) 38,425 (3,983) Net cash used in operating activities (1,570,719) (1,965,267) 13. SEGMENT INFORMATION For management purposes, the Group is organised into one main operating segment, being the research and development of diagnostics for detection of various cancers. The chief operating decision makers of the Group are the Chief Executive Officer and Chief Scientific Officer. All the Group’s activities are interconnected and all significant operating decisions are based on analysis of the Group as one segment. The financial results of the segment are the equivalent of the financial statements as a whole. At 30 June 2019, all revenues and material assets are considered to be derived and held in one geographical area being Australia. 14. LOSS PER SHARE Basic loss per share amounts are calculated by dividing net loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period adjusted by any bonus issue. Diluted loss per share amounts are calculated by dividing the net loss attributable to ordinary equity holders of the parent adjusted for the weighted average number of ordinary shares and dilutive potential ordinary shares of the Company adjusted by any bonus issue. The following reflects the income and share data used in the basic and diluted earnings per share computations Consolidated Group For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ Net Loss used in calculating basic and diluted EPS (1,717,273) (1,817,301) Weighted average number of ordinary shares for basic loss per share Effect of dilution*: Share options 1,265,911,807 708,638,392 - - Weighted average number of ordinary shares adjusted for the effect of dilution Basic and diluted loss per share (cents per share) for the year attributable to members of BARD1 Life Sciences Limited ** 1,012,472,973 695,754,026 (0.14) (0.26) - 32 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 * At 30 June 2019, the Company had on issue 217,003,236 (2018: 217,003,236) performance shares, and 2,000,000 options (2018: 2,000,000) and 5,000,000 unissued options (2018: 5,000,000), that could potentially dilute basic earnings per share in the future, but are excluded from the calculation of diluted loss per share for the current period, because they were anti-dilutive as their inclusion reduced the loss per share. ** The loss per share calculations for all periods have been adjusted by a factor of 1.019 to reflect the bonus element of the capital raising completed subsequent to year end. 15. DIRECTORS & KEY MANAGEMENT PERSONNEL (a) Compensation by Category: Key Management Personnel Short-term employee benefits Post-employment benefits Share based payments Other long term benefits Consolidated Group For the year ended 30 June 2019 $ 610,686 26,801 53,041 8,750 699,278 For the year ended 30 June 2018 $ 605,113 31,590 15,564 8,750 661,017 Key management personnel are those directly accountable and responsible for the operational management and strategic direction of the Company and the consolidated entity. The Key Management Personnel during the year were: • Peter Gunzburg (appointed 24 September 2001) • Brett Montgomery (appointed 15 August 1989, resigned 17 June 2019) • Dr Irmgard Irminger Finger (appointed 16 June 2016) • Professor Geoff Laurent (appointed 16 June 2016, deceased 12 August 2018) • Dr Leearne Hinch (appointed 7 November 2016) • Max Johnston (appointed 17 June 2019) • Philip Powell (appointed 17 June 2019) There are no changes of the key management personnel after the reporting date and before the date the financial report was authorised for issue. (b) Options granted to Key Management Personnel There were no options granted to Key Management Personnel during the year (2018: Nil). (c) Loans to/ amounts owed to Key Management Personnel There were no loans to KMP or amounts owed to KMP’s at 30 June 2019 (2019: nil). 16. SHARE BASED PAYMENTS For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ (a) Recognised share based payment transactions Share based payment transactions recognised as operating expenses in the statement of comprehensive income during the financial years were as follows: Options expense for option to be issued* Option expense for consultant ** 53,041 - 53,041 32,995 8,600 41,595 - 33 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 * This relates to 5,000,000 options to be issued, subject to shareholder approval to Dr. Leanne Hinch vested upon completion of probationary period and still to be issued, and are exercisable on or before the date that is four years after their issue at an exercise price yet to be agreed. ** This relates to 2,000,000 options issued to Dr. Samuel Janes upon his appointment to the Company’s Corporate advisory board on 11 July 2017. The options were fully vested and are exercisable on or before the date that is four year after the issue date at an exercise price of $0.0128. The assessed fair value of the options were determined using a Black Scholes model, taking into account the exercise price, term of option, the share price at grant date, the expected price volatility of the underlying share and the risk-free interest rate for the term of the option. The following assumptions were used in the estimation: Number of options Risk free interest rate Company share price Expected volatility Option exercise price Option duration 2019 5,000,000 1.03% $0.029 100% $0.05 4 years Options – Dr. Hinch 2018 5,000,000 2.33% $0.014 100% $0.05 4 years 17. AUDITORS’ REMUNERATION Amounts received or due and receivable by Ernst & Young Australia for: - an audit or review of the financial report of the entity and any other entity in the consolidated entity 18. RELATED PARTY DISCLOSURES Other related party transactions (a) Wholly Owned Group Transactions Options – Dr Janes 2018 2,000,000 2.07% $0.007 100% $0.0128 1 year For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ 45,758 40,180 Details of interests in controlled entities are set out in Note 19. Details of dealings are set out below. (b) Ultimate Parent Company BARD1 Life Sciences Limited is the ultimate legal Australian holding Company. (c) Transactions with Other Related Parties The Company does not have any transactions with other related parties. 19. CONTROLLED ENTITIES Consolidated entities of BARD1 Life Sciences Limited Country of Incorporation Equity Interest held % BARD1AG SA Switzerland 30 June 2019 100 30 June 2018 100 20. EVENTS SUBSEQUENT TO BALANCE DATE On 12 July 2019, the Company issued 124,289,854 shares pursuant to the entitlement offer announced on 18 June 2019 to shareholders who participated in the entitlement offer and to investors who participated in the shortfall offer. The Company raised a total of $2.5 million (before costs) from the entitlement offer. At the date of this report, other than that outlined above, there have been no matters or circumstances that have arisen since the end of the period which significantly, or may significantly effect: • • • The consolidated entity’s operations in future years; The results of those operations in future years; or The consolidated entity’s state of affairs in future years. - 34 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 21. PARENT ENTITY Information relating to Bard1 Life Sciences Limited Current assets Total assets Current liabilities Non-current liabilities Total liabilities Issued capital Accumulated losses Reserves Total shareholders’ equity Loss of the parent entity Total comprehensive loss of the parent entity For the year ended 30 June 2019 $ 7,620,885 For the year ended 30 June 2018 $ 1,434,524 7,620,885 293,386 - 293,386 79,079,673 (71,892,485) 140,312 7,327,500 (1,679,071) (1,679,071) 1,442,004 137,503 - 137,503 71,397,949 (70,180,719) 87,271 1,304,501 (1,790,499) (1,790,499) Refer to note 23 for disclosure of any contingent asset and liabilities of the parent entity. 22. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (a) Financial Risk Management Objectives & Policies The Group's principal financial instruments comprise cash, equity instruments. The main purpose of these financial instruments is to raise finance for the Group operations. The Group has various other financial assets and liabilities such as receivables and payables, which arise directly from its operations. The main risks arising from the Group’s financial instruments are interest rate risk, credit risk, equity price risk, foreign currency risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate, foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analysis and monitoring of receivables are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts. The Chairman is responsible for managing the risks associated with the Group’s financial investments and reporting to the board of directors. The board reviews and agrees policies for managing each of these risks as summarised below: Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 to the financial statements. (b) Interest Rate Risk - Consolidated The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets (excluding investments in controlled entities and associates) and financial liabilities are as follows: Financial Instrument (i) Financial Assets Cash and cash equivalents Receivables Total financial assets (ii) Financial Liabilities Trade and other payables Total financial liabilities Floating Interest Rate 30 June 2019 $ 30 June 2018 $ Non-Interest Bearing 30 June 2019 $ 30 June 2018 $ Fixed Interest Rate 30 June 2019 $ 30 June 2018 $ Total 30 June 2019 $ 30 June 2018 $ 7,556,661 - 1,445,657 - - 61,278 - 3,465 7,556,661 1,445,657 61,278 3,465 - - - - 427,709 238,212 427,709 238,212 - - - - - - - - - 7,556,661 61,278 1,445,657 3,465 7,617,939 1,449,122 427,709 238,212 427,709 238,212 - 35 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 c) (d) (e) (f) (g) A reasonably possible change in interest rates would not have a material impact on the financial position or performance of the consolidated entity. Fair values The carrying amount of financial assets and financial liabilities recorded in the financial statements at amortised cost materially approximates their respective fair values. Credit Risk Exposures The consolidated entity’s maximum exposure to credit risk at balance date in relation to each class of recognised financial assets is the carrying amount, net of any allowance for doubtful debts, of those assets as indicated in the statement of financial position. Concentration of Credit Risk The consolidated entity is not materially exposed to any individual overseas country or individual customer. The company’s cash at banks are with reputable financial institutes with AA and above credit ratings. The majority of the cash balance at year end is held with one reputable bank in Australia and therefore the expected credit loss on the bank balances is negligible. Liquidity Risk Liquidity risk arises from the financial liabilities of the consolidated entity and the subsequent ability to meet the obligations to repay the financial liabilities as and when they fall due. The consolidated entity’s objective is to maintain consistency of funding via the raising of equity or short term loans as and when required. The contractual maturity analysis of trade payables is set out in note 9. All liabilities are contractually due and payable in the next six months. Market Price Risk on Held for Trading and Available for Sale Investments The consolidated entity’s listed equity investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. The consolidated entity manages the equity price risk through diversification of equity investments. The amount of investments recorded in the financial statements represents their respective net fair values, determined in accordance with the accounting policies disclosed in Note 2. A reasonably possible change in the market value of investments would not have a material impact on the financial position or performance of the group. Foreign currency risk The functional currency of the parent entity is Australian dollars, however the 100% owned subsidiary, BARD1AG operates in Switzerland, which exposes the Group to foreign exchange risk arising from fluctuations of the Australian dollar against the Swiss Franc. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency and net investments in foreign operations. The exposure to risks is measured using sensitivity analysis and cash flow forecasting. The Group has not formalised a foreign currency risk management policy however, it monitors its foreign currency expenditure in light of exchange rate movements. The Group does not have any further material foreign currency dealings other than the noted currencies. The Group’s exposure to foreign currency risk at the reporting date, expressed in Australian Dollars as follows: Financial assets Cash and cash equivalents Total financial assets Financial liabilities Trade and other payables Total financial liabilities For the year ended 30 June 2019 $ For the year ended 30 June 2018 $ 5,123 5,123 11,133 11,133 198,468 198,468 185,147 185,147 The following conversion rates were used at the end of the financial year: AUD/CHF: 1.404 (2018: 1.3639) For all periods presented, the Group did not enter into or hold any foreign exchange derivatives. - 36 - BARD1 LIFE SCIENCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 23. CONTINGENT ASSET AND LIABILITIES Saulyak Royalty Payment The Company has guaranteed the payment of a royalty by Saulyak Limited Liability Company based on gold output from the Saulyak Gold Project which was disposed of by the Company on 10 July 2007. The royalty is up to 2% net smelter royalty per ounce of gold produced from the Saulyak Gold Project payable only in respect of ounces of gold produced over 750,000 ounces in total. Gold production from the Saulyak Gold Project has not yet commenced with the current owners of the project yet to secure a mining licence. At the time of the sale of the project by the Company total reserves identified at the project were not in excess of 750,000 ounces. - 37 - BARD1 LIFE SCIENCES LIMITED DIRECTORS’ DECLARATION The Directors’ of the Company declare that: 1) In the opinion of the directors: the financial statements, notes and additional disclosures included in the directors’ report designated as audited, of the consolidated entity are in accordance with the Corporations Act 2001, including: (a) complying with Accounting Standards and the Corporations Regulations 2001; and (b) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its performance for the year ended on that date; The financial report also complies with International Financial Reporting Standards. In the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration has been made after receiving the declarations required to be made to the Directors’ in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019. 2) 3) 4) This declaration is made in accordance with a resolution of the Board of Directors signed on 15 August 2019. Peter Gunzburg Chairman 16 August 2019 38 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: +61 8 9429 2222 Fax: +61 8 9429 2436 ey.com/au Independent Auditor's Report to the Members of BARD1 Life Sciences Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of BARD1 Life Sciences Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019 and of its consolidated financial performance for the year ended on that date; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation MH:DA:BARD1:007 Going concern assessment Why significant How our audit addressed the key audit matter The Group’s financial report is prepared on a going concern basis. The Director’s assessment in respect of going concern is set out in note 2(a) to the financial report. As the Group is still operating in the research stage, the availability of sufficient funding for it to meet its obligations is considered to be integral to the going concern assessment. Accordingly, this was considered to be a key audit matter. This assessment is largely based on the expectations of and the estimates made by the Group. The expectations and estimates can be influenced by subjective elements such as estimated future cash flows from capital raising. Estimates are based on assumptions, including expectations regarding future developments in the economy and the market. Our audit procedures included the following:  Analysed the Group’s cash flow forecast and enquired with the Group to gain an understanding of the inputs and process underpinning the cash flow forecast prepared for the purpose of the going concern assessment.  Assessed whether the cash flow forecast accurately reflected the budget that was approved by the Directors.  Assessed the external inputs and assumptions within the cash flow forecast by comparing them to assumptions and estimates used elsewhere in the preparation of the financial report. We also compared them against our understanding and knowledge of the Group’s operations.  Assessed the sensitivity analysis that the Group performed on the cash flow forecast.  Assessed the possible mitigating actions identified by the Group in the event that actual cash flows are below forecast. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s 2019 Annual Report but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation MH:DA:BARD1:007 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 Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:     Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.  Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation MH:DA:BARD1:007  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Audit of the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors' report for the year ended 30 June 2019. In our opinion, the Remuneration Report of BARD1 Life Sciences Limited for the year ended 30 June 2019, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Ernst & Young V L Hoang Partner Perth 16 August 2019 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation MH:DA:BARD1:007 BARD1 LIFE SCIENCES LIMITED CORPORATE GOVERNANCE STATEMENT OVERVIEW The Board of BARD1 is responsible for the corporate governance of the Group and guides and monitors the business on behalf of its shareholders. The Board has strived to reach a balance between industry best practice and appropriate policies for BARD1 in terms of its size, stage of development and role in the biotechnology industry. BARD1 performed a review of its Board policies and governance practices with reference to the eight Principles of Good Corporate Governance (Principles) and the Best Practice Recommendations (Recommendations) established by the ASX Corporate Governance Council. The Recommendations are not mandatory and cannot, in themselves, prevent corporate failure or poor corporate decision-making. They are intended to provide a reference point for companies regarding their corporate governance structures and practices. The Directors have considered each of the core Principles and Recommendations applicable for the year ended 30 June 2019. There are instances where the Group would not benefit from compliance with the Recommendations, and in some instances the Group has not had the resources to comply. The Recommendations that were not adopted are discussed in the Corporate Governance Statement located on the Company’s website. BARD1’s Corporate Governance Statement, which summarises the Group’s corporate governance practices and incorporates the Company’s website at the disclosures www.bard1.com/investors/corporate-governance/ the ASX Principles, required by viewed on can be 43 BARD1 LIFE SCIENCES LIMITED SHAREHOLDERS’ INFORMATION Additional information as required by the Australian Securities Exchange and not shown elsewhere in this Report is as follows. The information is current as at 15 August 2019. The distribution of ordinary fully paid shares in the Company is as follows: Range of Units as of 15/08/2019 Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 Over Rounding Total Unmarketable Parcels Total holders 115 130 112 1,327 1,114 2,798 Units 32,819 369,185 953,511 63,018,809 1,302,810,702 1,367,185,026 % Units 0.00 0.03 0.07 4.61 95.29 0.00 100.00 Minimum $ 500.00 parcel at $ 0.0290 per unit 17,242 Minimum Parcel Size Holders 536 Units 3,846,232 Number of Securities on Issue The following equity securities were on issue as at 15 August 2019 • 1,367,185,026 fully paid ordinary shares Top 20 Shareholders as of 15/08/2019 Rank Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 15 17 18 19 20 IRMGARD IRMINGER-FINGER THE TRUST COMPANY AUSTRALIA LIMITED MR JEFFREY GERARD EMMANUEL MOGGS CREEK PTY LTD TONY WALKER HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED SUPERGUN PTY LTD MR PETER WILLIAM ROGERS + MS ALIDA JOHANNA CLARK WORLDWISE ENTERPRISES PTY LTD BNP PARIBAS NOMINEES PTY LTD UNIVERSITE DE GENEVE MRS LYNNE MAREE WILKS MR JOHN ANDREW RODGERS MR STEPHEN FRANCIS GRAY AJAVA HOLDINGS PTY LTD MR CHRISTOPHER DARVENIZA PROF GEOFFREY JOHN LAURENT BEIRNE TRADING PTY LTD FCCF HOLDINGS PTY LTD RAMORNIE CAPITAL LTD Units 112,652,737 103,444,233 95,587,553 81,000,000 30,867,552 26,106,847 23,294,046 20,000,000 16,088,160 14,378,614 12,500,000 11,620,000 11,352,788 10,395,000 10,000,000 10,000,000 9,999,600 8,146,311 7,610,135 7,500,000 % Units 8.24 7.57 6.99 5.92 2.26 1.91 1.70 1.46 1.18 1.05 0.91 0.85 0.83 0.76 0.73 0.73 0.73 0.60 0.56 0.55 Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total) 622,543,576 45.53 The portion of shares held by the 20 largest shareholders in the Company is 45.53%. 44 BARD1 LIFE SCIENCES LIMITED SHAREHOLDERS’ INFORMATION Voting Rights In accordance with the Company’s Constitution, voting rights of ordinary shares are on a show of hands whereby each member present in person (or representing a corporation who is a member) shall have one vote and upon a poll, each share will have one vote. Restricted Securities As at the date of this report there are no restricted securities on issue. Substantial Holders as at 15/08/2019 The substantial shareholders pursuant to the provisions of the Corporations Act and listed in the Company’s register is as follows: Rank Name 1 2 3 4 IRMGARD IRMINGER-FINGER MR JEFFREY GERARD EMMANUEL MERCHANT FUNDS MANAGEMENT (ACN 154 493 277) MOGGS CREEK PTY LTD Units 112,652,737 105,179,166 103,444,233 81,000,000 % Units 8.24 7.69 7.57 5.92 45 

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