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2023 ReportASX Announcement 31 August 2021 BCAL DIAGNOSTICS – APPENDIX 4E AND PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 Attached is the Appendix 4E and Preliminary Financial Report for the year ended 30 June 2021. The Appendix 4E and Preliminary Financial Report have been approved for release by the Board. Jayne Shaw Chair Investor & Media Enquiries Matthew Wright NWR Communications matt@nwrcommunications.com.au +61 451 896 420 About BCAL Diagnostics BCAL Diagnostics Limited is an Australian screening and diagnostic company committed to the early, accurate diagnosis of breast cancer, and therefore early intervention and improved outcomes for women. Over the past decade BCAL has developed a non-invasive blood test for the detection of breast cancer, with results to date demonstrating 91% specificity and 87% accuracy. The test is initially designed to complement current imaging technologies, such as the mammogram, with the aim of becoming a monitoring and screening tool suitable for women of all ages and backgrounds in any location. With more than two million new cases of breast cancer diagnosed globally each year, a substantial opportunity exists for BCAL to improve patient outcomes. BCAL has partnered with global integrated cancer care and cardiac provider jurisdictions, GenesisCare commercialisation and market entry points. for regulatory approvals across several to conduct clinical research required Founded in 2010, BCAL is headquartered in Sydney and listed on the Australian Securities Exchange (ASX:BDX). For more information: https://www.bcaldiagnostics.com/ BCAL Diagnostics Limited | ABN 51 142 051 223 Suite 506, Lvl 5, 50 Clarence Street, Sydney NSW 2000 w bcaldiagnostics.com e info@bcaldiagnostics.com 1 The Companies Announcements Office The Australian Securities Exchange Limited SYDNEY Date: 31 August 2021 APPENDIX 4E PRELIMINARY FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2021 This preliminary financial report by BCAL Diagnostics Limited (“BCAL” or “the Company”) is provided to the Australian Securities Exchange (ASX) under ASX listing Rule 4.3A are as follows:- 1. The reporting period is twelve months to 30 June 2021. The previous reporting period was twelve months to 30 June 2020. 2. The results for announcement to the market for the above reporting periods are as follows:- Revenue from ordinary activities Loss from ordinary activities after tax attributable to members Net loss attributable to members Proposed dividend Net tangible assets per issued security 30 June 2021 $ $ 275,252 30 June 2020 $ $ 442,096 % change Change (38%) (1,524,970) (1,524,970) - 0.022 (696,360) (696,360) - 0.004 (119%) (119%) - 325% 3 to 6. See attached financials. 7. 8. 9. No dividends have been paid or are proposed. There is no dividend reinvestment plan. Net tangible assets per security $0.022 (2020; $0.004). 10. There has been no acquisition or disposal of any entities occurring during the financial year. 11. The Company has no associates or joint venture entities. 12. Any other significant information needed by an investor to make an informed assessment of the Group’s financial performance and financial position. Included in this document. 13. The Company is not a foreign entity. 14. Commentary on the results See Commentary below and the attached financials. 15. The report is based on financial statements which are in the process of being audited. The Appendix 4E should be read in conjunction with the accompanying Preliminary Final Report. COMMENTARY ON RESULTS FOR THE YEAR REVENUE BCAL is developing a non-invasive laboratory blood test for the detection of breast cancer. As such, it is not yet revenue producing. BCAL is developing a new diagnostic approach using an in vitro diagnostic (IVD) test for blood samples. It seeks to improve the accuracy of breast cancer detection and reduce the rate of false positives and false negatives in a way that is accessible. BCAL’s approach confirms a “fingerprint” of lipid biomarkers extracted from extracellular vesicles from a patient's blood sample, to diagnose the presence of breast cancer cells. Income for 2021 is comprised largely of an accrual for the research and development tax offset of $275,000 (2020: $341,982), which reflects the research and development activity during the year. The current year saw a commitment of time to listing on the ASX and a capital raising of $10 million, before costs, achieved on 21 July 2021. With these resources activity has now accelerated into the 2022 FY. The prior year includes a COVID-19 cash boost government subsidy of $99,610. EXPENDITURE Expenditure for the year, excluding ASX listing costs, and comprising largely of all costs relating to research and development amounted to $1,210,172 (2020: $1,138,456). The costs associated with listing on the ASX, excluding capital raising costs, amounted to $590,050, all of which have been expensed during the year. BALANCE SHEET Net assets as at 30 June 2021 are $3,606,856 (2020 : $438,917), reflecting the capital raise of $4,725,001, before costs, completed in December 2020/January 2021, and the financial result for the year. The Company issued 1,499,998 shares at $2.95 per share and converted 200,002 convertible notes at $1.50 per share in this capital raising. In April 2021 following shareholder approval, the Company undertook a share split in the ratio of approximately 26.13 new shares for every one share resulting in issued capital of 160,000,002 new shares. The Company has 11,557,877 share options on issue, these options having been issued to directors, employees and a consultant. The cost of these options has been recognised as charge to profit and loss of $176,256 (2020 : $142,044) and result in a share-based payments reserve of $318,300. In the event these options were exercised the Company would issue 11,557,877 shares and receive $663,422 in cash. CASHFLOW Operating cash outflow for the year amounted to $1,206,420 (2020 :$661,651) with the increase reflecting the ASX listing costs referred to above. Cash at the end of the year amounted to $3,407,605 (2020 :416,226). Subsequent to year end, on the ASX listing the Company raised $10 million, before costs, issuing 40 million shares at 25 cents each. The Company is now well funded to accelerate its product development as outlined below. 2 OUTLOOK With its capital raising and recent ASX listing completed, BCAL is focussed on accelerating its product development programme in bringing the product to market. To this end the Company has recently completed the following initiatives: Expanding clinical study centres to all Australian states To mitigate the risk of the programme slowing due to COVID-19 the Company is, in collaboration with GenesisCare Clinical CRO, expanding clinical study centres to all states of Australia. A number of agreements are under review to enable BCAL to maintain the pace of development, notwithstanding the closure of a number of breast cancer screening centres due to COVID-19. Product Development Agreement – IZON Science Limited (IZON) BCAL has recently executed a Product Development Agreement with IZON. IZON will work with BCAL in the further development of the test. The agreement involves developing a bespoke kit, using IZON equipment and components, to accelerate the time for processing clinical samples and providing a format that can be processed rapidly and effectively by pathology laboratories. Recruitment of skilled scientists to accelerate development BCAL has recently recruited two highly skilled scientists in support of its product development, with experience in lipidomics, mass spectrometry and data analytics. Dr Cheka Kehelpannala has over 7 years’ experience in lipidomics and analytical chemistry in Australia and Internationally. Dr Mark David will relocate from the Imperial College London, which is a world leader in research, diagnosis in analytical chemistry, and metalbolomics/lipidomics and mass spectrometry. treatment of diseases. Dr David has over 17 years’ experience USA market entry discussions progressing BCAL is working on accelerating its market entry into the USA and is in discussion with potential partners who can provide BCAL with scientific development, technical support on product development, and commercial input to market entry in relation to billing and reimbursement assistance. 3 BCAL DIAGNOSTICS LIMITED ABN 51142051223 TABLE OF CONTENTS STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGE IN EQUITY STATEMENT OF CASH FLOWS NOTES TO THE PELIMINARY FINANCIAL REPORT PAGE 5 6 7 8 9 4 BCAL Diagnostics Limited Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2021 Revenue from continuing operations Income Expenses Research and development Personnel costs Superannuation Marketing Consulting fees Legal fees Audit fees General and administration Depreciation ASX listing costs, including legal fees Share based payments Loss before income tax Income tax Loss after income tax Other comprehensive income for the year Total comprehensive loss for the year Loss is attributable to: Members of BCAL Diagnostics Limited Earnings per share From continuing operations - Basic loss per share¹ - Diluted loss per share¹ Notes 3 2021 $ 2020 $ 275,252 442,096 (664,113) (75,944) (5,784) - (126,691) - (34,000) (127,384) - (590,050) (176,256) (1,524,970) - (1,524,970) - (1,524,970) (466,773) (285,489) (25,454) (34,116) (69,246) (16,497) - (91,110) (7,727) - (142,044) (696,360) - (696,360) - (696,360) (1,524,970) (696,360) Cents 1.13 1.06 Cents 0.61 0.59 12 4 18 18 ¹The loss per share has been calculated post share split on the basis of ~26.13 new shares for each existing share. The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 5 BCAL Diagnostics Limited Statement of Financial Position As at 30 June 2021 ASSETS Current Assets Cash and cash equivalents Tax receivables Other receivables and prepayments Total Current Assets Non-Current Assets Plant and equipment Total Non-Current Assets Total Assets LIABILITIES Current Liabilities Trade and other payables Provisions Total Current Liabilities Non-Current Liabilities Convertible notes Total Non-Current Liabilities Total Liabilities Net Assets EQUITY Contributed equity Reserves Accumulated losses Capital and reserves attributable to owners of BCAL Diagnostics Limited Equity Notes 2021 $ 2020 $ 5 6 7 8 9 10 11 12 13 13 3,407,605 352,603 368,401 4,128,609 3,850 3,850 4,132,459 504,159 21,445 505,604 - - 505,604 3,606,855 416,226 403,329 - 819,555 - - 819,555 74,250 6,385 80,635 300,003 300,003 380,638 438,917 9,456,232 318,300 (6,167,677) 3,606,855 3,606,855 4,939,580 142,044 (4,642,707) 438,917 438,917 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 6 BCAL Diagnostics Limited Statement of Changes in Equity For the year ended 30 June 2021 2021 At 30 June 2020 Total comprehensive Loss for the year Other comprehensive income Share issue Share based payments At 30 June 2021 2020 At 30 June 2019 Total comprehensive Loss for the year Other comprehensive income Share issue Share based payments At 30 June 2020 Note Contributed equity $ Accumulated losses $ Share based payment reserve $ Total $ 4,939,580 (4,642,707) 142,044 438,917 - - - 4,516,652 - 9,456,232 (1,524,970) - (1,524,970) - - (6,167,677) 12 Contributed equity $ Accumulated losses $ 4,434,543 (3,946,347) - (696,360) - - 505,037 - 4,939,580 - (696,360) - - (4,642,707) - - - - 176,256 318,300 Share based payment reserve $ - - - - 142,044 142,044 (1,524,970) - (1,524,970) 4,516,652 176,256 3,606,855 Total $ 488,196 (696,360) - (696,360) 505,037 142,044 438,917 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 7 BCAL Diagnostics Limited Statement of Cash Flows For the year ended 30 June 2021 Cash flows from operating activities Payments to suppliers and employees Government grants received Research and development tax offset Interest received Net cash outflow from operating activities Cash flow from investing activities Purchase of plant and equipment Net cash outflow from investing activities Cash flows from financing activities Loans received Proceeds from share issue Costs of share issue Net cash inflow from financing activities Notes 2021 $ 2020 $ 15 (1,606,596) 57,943 341,981 252 (1,206,420) (3,850) (3,850) - 4,409,999 (208,350) 4,201,649 (944,756) 26,067 256,534 504 (661,651) (3,807) (3,807) 300,003 505,037 - 805,040 Net increase in cash and cash equivalents 2,991,379 139,582 Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at end of the year 5 416,226 3,407,605 276,644 416,226 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 8 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1 Summary of significant accounting policies (a) Basis of preparation Reporting Entity BCAL Diagnostics Limited (formerly BCAL Diagnostics Pty Limited) is a company limited by shares, incorporated and domiciled in Australia. The Company became an unlisted public company on 5 February 2021 and listed on the Australia Securities Exchange on 21 July 2021. The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standard Board and the Corporations Act 2001. Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below. They have been consistently applied unless otherwise stated. In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts in the directors’ report and in the financial report have been rounded to the nearest dollar, unless otherwise stated. The financial report has been prepared on an accruals basis and is based on historical costs, except for selected financial assets for which the fair value basis of accounting has been applied. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2. (b) Going concern The financial statements have been prepared on a going concern basis which contemplates the realisation of assets and the settlement of liabilities in the normal course of business. As disclosed in the financial statements, the Company incurred losses of $1,524,970, had net cash outflows from operating activities of $1,206,420, net cash outflows from investing activities of $3,850, and net cash inflows from financing activities of $4,201,649 for the year ended 30 June 2021. 9 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1 Summary of significant accounting policies (continued) (b) Going concern (continued) The Company had approximately $3.4 million in cash on hand at 30 June 2021 and subsequent to year end the Company raised $10 million, before costs, in an Initial Public Offering as part of its listing on the Australian Securities Exchange. The Directors have reviewed the cash flow forecast as at 30 June 2021 and are of the view that the Company has funding for its activities beyond the next twelve months. As a result, the Directors believe that the Company will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classifications of recorded assets and liabilities that might be necessary if the Company do not continue as a going concern. (c) Operating segments Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. (d) Foreign currency translation (i) Functional and presentation currency The functional and presentation currency of the Company is Australian dollars. Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the end of the reporting period. Foreign exchange gains and losses resulting from settling foreign currency transactions, as well as from restating foreign currency denominated monetary assets and liabilities, are recognised in profit or loss, except when they are deferred in other comprehensive income as qualifying cash flow hedges or where they relate to differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value was determined. Items included in the financial statements of the Company’s operations are measured using the currency of the primary economic environment in which it operates (‘the functional currency’). The financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates ruling at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Profit or Loss and Other Comprehensive Income. 10 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) (e) Revenue recognition Revenue from contracts with customers The Company currently has no revenue from the sale of goods or services. Interest income Interest income is recognised as interest accrues using the effective interest method. The effective interest method uses the effective interest rates which is the rate that exactly discounts the estimated future cash receipts over the expected future life of the financial asset. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate. Research and Development Tax Offset Research and Development Tax Offset claims are recognised as other income in the period to which the incentive claims relate. (f) Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit and loss over the period necessary to match them with the costs that they are intended to compensate. (g) Income tax The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit. Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 11 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. (h) Impairment of non-financial assets At the end of each reporting period the Company assesses whether there is any indication that individual assets are impaired. Where impairment indicators exist, recoverable amount is determined and impairment losses are recognised in profit or loss where the asset's carrying value exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cash generating unit to which the asset belongs. (i) Cash and cash equivalent For the purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on hand and at bank, deposits held at call with financial institutions, other short-term, highly liquid investments with maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. (j) Other receivables Other receivables are recognised at amortised cost, less any allowance for credit losses. (k) Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the year end and which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition. (l) Provisions Provisions for legal claims, service warranties and make good obligations are recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses. 12 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) (m) Employee benefits (i) Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the end of the reporting period are recognised in other payables in respect of employees' services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. (ii) Retirement benefit obligations The Company does not maintain a company superannuation plan. The Company makes fixed percentage contributions for all Australian resident employees to complying third party superannuation funds. The Company's legal or constructive obligation is limited to these contributions. Contributions to complying third party superannuation funds are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (iii) Share - based payments The fair value of options granted under the Employee Share Option Plan (“ESOP”) is recognised as an employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and recognised over the period during which the employees become unconditionally entitled to the options. The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate of the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the Statement of Profit or Loss and Other Comprehensive Income with a corresponding adjustment to equity. Where the terms of options are modified, the expense continues to be recognised from grant date to vesting date as if the terms had never been changed. In addition, at the date of the modification, a further expense is recognised for any increase in fair value of the transaction as a result of the change. 13 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital. (n) Contributed equity Costs directly attributable to the issue of new shares are shown as a deduction from the equity as a deduction proceeds net of any income tax benefit. Costs directly attributable to the issue of new shares or options associated with the acquisition of a business are included as part of the purchase consideration. (o) Goods and services tax (GST) Revenues, expenses and assets are recognised net GST, except where the GST incurred on the purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. (p) Plant and equipment Each class of plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment are measured on the cost basis. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight line basis over the asset’s useful life to the company commencing from the time the asset is held ready for use. Depreciation is calculated on a diminishing-value basis over the estimated useful life of the assets as follows: Plant and equipment – ranging from 1 to 5 years Office furniture – 1 to 5 years An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. 14 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) (q) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of BCAL Diagnostics Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of ordinary shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (r) Adoption of New and Revised Accounting Standards Changes in accounting policies on initial application of Accounting Standards. There are no new accounting standards or interpretations applicable that would have a material impact on the accounts of the Company. The Company has not incorporated the impact of accounting standards issued but which are not yet mandatory. 2 Critical accounting estimates and judgements 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, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. (i) Research and development expenditure The entity has expensed research and development expenditure incurred during the year, where applicable, as the costs relate to the initial expenditure for research and development of biopharmaceutical products where generation of future economic benefits are not considered certain. It was considered appropriate to expense these research and development costs as they did not meet the criteria to be capitalised under AASB 138 Intangible assets. 15 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 1. Summary of significant accounting policies (continued) (ii) Share based payment transactions The entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments are granted. The accounting estimates and assumptions relating to equity-settled shares-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Judgment is required in relation to the non-market vesting conditions. 3 Other Income Research and development tax offset Interest received Government subsidy – cash boost 4 Income tax (a) Deferred tax Income tax (b) Numerical reconciliation of income tax benefit to prima facie tax payable Loss from continuing operations before income tax expense Tax benefit at the Australian tax rate of 26% (2020: 27.5%) Tax effect of amounts which are deductible/not taxable in calculating taxable income Tax effect of accounting R&D tax incentive not deductible Carried forward tax benefit not recognised Total income tax expense Tax losses (c) Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 26% (2020:27.5%) 2021 $ 2020 $ 275,000 252 - 275,252 2021 $ - - (1,524,970) (396,492) 54,501 164,368 177,623 - 341,982 504 99,610 442,096 2020 $ - - (696,360) (191,499) (85,014) 216,195 60,318 - 2,369,475 616,063 1,882,308 517,625 The benefit of deferred tax assets not brought to account will only be brought to account if: • Future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised; and • The conditions for deductibility imposed by the relevant tax legislation continue to be complied with and no changes in tax legislation adversely affect the Company in realising the benefit. 16 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 5 Cash at bank and in hand 6 Current assets – tax receivables Research and development tax offset receivable Government subsidy – cash boost GST receivable 7 Other receivables and prepayments Non-current Prepayments Equipment deposit 2021 $ 3,407,605 3,407,605 2021 $ 275,000 - 77,603 352,603 2021 $ 242,202 126,199 368,401 2020 $ 416,226 416,226 2020 $ 341,982 57,943 3,404 403,329 2020 $ - - - 17 Plant and equipment $ Office Furniture $ 29,776 3,850 33,626 29,776 - 29,776 29,776 - 29,776 29,776 - 29,776 - 3,850 21,947 - 21,947 14,475 7,472 21,947 21,947 - 21,947 14,475 7,472 21,947 - - BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 8 Plant and equipment Cost Opening balance, 1 July 2020 Additions Closing balance, 30 June 2021 Opening balance, 1 July 2019 Additions Closing balance, 30 June 2020 Depreciation Opening balance, 1 July 2020 Additions Closing balance, 30 June 2021 Opening balance, 1 July 2019 Additions Closing balance, 30 June 2020 Written down value 30 June 2020 Written down value 30 June 2021 9 Current liabilities - Trade and other payables Trade creditors PAYG withholding tax Accrued expenses Superannuation payable 10 Current liabilities - Provisions Provision for annual leave, opening balance Provided/(used) during the year Provision for annual leave, closing balance Total $ 51,723 3,850 55,573 44,251 7,472 51,723 51,723 - 51,723 44,251 7,472 51,723 - 3,850 2021 $ 250,699 12,182 229,000 12,278 504,159 2021 $ 6,385 15,060 21,445 2020 $ 60,023 8,138 - 6,089 74,250 2020 $ 18,703 (12,318) 6,385 18 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 11 Convertible notes Opening balance Converted to equity Convertible notes raised during the year Closing balance 2021 $ 300,003 (300,003) - - 2020 $ - - 300,003 300,003 Each convertible note is convertible into one fully paid ordinary share at the option of the noteholder, at a price being the lower of $1.50 and the price of the next equity capital raise. Convertible notes have an interest rate of 5% and are secured by a general charge over the asset of the Company. The notes were converted into 200,002 fully paid ordinary shares (5,226,101 post share split) during the year. 12 Contributed equity (a) Share capital Ordinary Shares Fully Paid (b) Movements in ordinary share capital 2021 Shares 160,000,002 2021 $ 9,456,232 2020 Shares 4,423,173 2020 $ 4,939,580 Opening balance 1 July 2019 Share issue Closing balance 30 June 2020 Share issue on conversion of convertible notes Share issue Shares issued for services rendered Cost of share issue Share split¹ Closing balance 30 June 2021 Number of Shares 4,086,481 336,692 4,423,173 200,002 1,494,914 5,084 - 6,123,173 160,000,002 160,000,002 Issue price $ $1.50 $1.50 $2.95 $2.95 4,434,543 505,037 4,939,580 300,003 4,409,999 15,000 (208,350) 9,456,232 - 9,456,232 ¹Share split approved by shareholders on 26 April 2021 on the basis of ~26.13 new shares for every one share held. 19 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 12 Contributed equity (continued) (c) Ordinary shares Each ordinary shareholder maintains, when present in person or by proxy or by attorney at any general meeting of the Company, the right to cast one vote for each ordinary share held. Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. (d) Options As at the date of the financial statements, the following options over unissued ordinary shares were on issue: Details No of options Issue date Date of expiry Conversion price ($) Employee options Employee options Total options on issue 30 June 2020 Director, employee, consultant options Total pre share split Options on issue post share split¹ 30 June 2021 110,579 20/11/2019 88,463 30/01/2020 20/11/2029 30/11/2030 $1.50 $1.50 199,042 243,276 23/11/2020 23/11/2023 442,318 11,557,877 $1.50 $0.0574 Options Balance at beginning of year Granted during the year Adjusted for share split¹ Balance at end of year 2021 No. 199,042 243,276 442,318 11,557,877 11,557,877 2020 No. - 199,042 199,042 - 199,042 ¹Adjusted for share split approved by shareholders on 26 April 2021 on basis of ~26.13 new options for every one option held. The weighted average exercise price of options on issue is $0.0574 after adjusting for the share split ($1.50 pre share split). The unlisted options issued during the year were valued using the Black-Scholes model. The weighted average remaining contractual life of the options is 4.15 years. 20 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 12 Contributed equity (continued) The options outstanding as at 30 June 2021 were determined on the date of grant using the following assumptions: Grant date Expiry date Exercise price ($) on issue Exercise price adjusted for share split ($) Expected volatility (%) Risk-free interest rate (%) Expected life (years) Share price at this date ($) Fair value per option ($) Number of options Adjusted for share split Series 1 20/11/2019 20/11/2029 1.50 $0.0574 Series 2 30/01/2020 30/11/2030 1.50 $0.0574 Series 3 23/11/2020 23/11/2023 1.50 $0.0574 56.2 0.8 5 1.50 0.7211 110,579 2,889,456 55.5 0.71 5 1.50 0.7118 88,463 2,311,560 75.80 0.14 3 $1.50 0.7343 243,276 6,356,861 The vesting of options is subject to service periods. Of the options outlined above, all options have vested with the exception of 577,896 Series 3 options which vest on 1 November 2021. The Company recognised expenses of $176,256 in relation to share based payments for the year (2020: 142,044). (e) Capital risk management The Company's objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The capital management policy remains unchanged from the 30 June 2020 Annual Report. 21 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 13 Reserves and accumulated losses (a) Reserves Total reserves Share based payments reserve Movements in share based payments reserve were as follows: Balance 1 July Transfer to share based payments reserve Balance 30 June (b) Accumulated losses Movements in accumulated losses were as follows: Opening accumulated losses Loss for the year Balance 30 June (c) Nature and purpose of reserves 2021 $ 318,300 142,044 176,256 318,300 2020 $ 142,044 - 142,044 142,044 (4,642,707) (1,524,970) (6,167,677) (3,946,347) (696,360) (4,642,707) The share based payment reserve comprises the cumulative value of employee services received through the issue of shares options. When the option is exercised, the related balance previously recognised in the share based payments reserve is transferred to share capital. When the share options expire, the related balance previously recognised in the share option reserve is transferred to accumulated losses. 14 Commitments and contingent liabilities Capital commitments As at 30 June 2021, the Company has no capital commitments (2020: $nil). The Company has no contingent liabilities as at 30 June 2021 (2020:$nil). 15 Reconciliation of loss after income tax to net cash outflow from operating activities Loss for the year Non-cash employee benefits expense - share based payments Depreciation Employee benefits provision Other non cash items Change in operating assets and liabilities Increase in trade and other receivables Increase in trade and other payables Net cash outflow from operating activities Non-cash financing activities are outlined in note 11. 2021 $ (1,524,970) 176,256 - 15,060 (59) (317,674) 444,967 (1,206,420) 2020 $ (696,360) 142,044 7,727 (12,318) 12,783 (144,018) 28,491 (661,651) 22 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 16 Segment information BCAL Diagnostics Limited is an Australian company developing a novel blood screening test to improve the early diagnosis and monitoring of breast cancer that is safe, cost effective, accurate and available to all women regardless of age, race and geographic location. The Company has only one reporting segment in this and the prior year. 17 Financial risk management (a) Financial risk management The Company’s financial instruments consist mainly of deposits with banks, other receivables and payables. The directors’ overall risk management strategy seeks to assist the Company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. The Company does not speculate in financial assets. Credit risk The Company is currently not selling product or services and has no customer risk at present. With respect to credit risk arising from other financial assets of the Company, which comprise cash and cash equivalents, the Company’s exposure to credit risk arises form default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. The maximum exposure to credit risk at balance date is as follows: Cash and cash equivalents (Note 5) Other receivables (Note 6) Research and development tax incentive receivable (Note 6) 2021 $ 3,407,605 77,603 275,000 3,760,208 2020 $ 416,226 61,348 341,982 819,556 To deal with credit risk the Company deposits funds with banks with a credit rating of A+ S&P. Receivables risk is low as all receivables are due from government. Liquidity risk The Company’s policy is to maintain a comfortable level of liquidity through the continual monitoring of cash reserves and the raising of additional capital as required. 23 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 17 Financial risk management (continued) (b) Financial instrument composition and maturity analysis The table below reflects the undiscounted contractual settlement terms for financial instruments of a fixed period of maturity as well as management’s expectations of the settlement period of all other financial instruments. As such, the amounts may not reconcile to the Statement of Financial Position. Within 1 year 2021 $ 2020 $ 1 to 5 years 2020 $ 2021 $ Over 5 years 2021 $ 2020 $ Total 2021 $ 2020 $ Financial liabilities - due for payment: Trade and other payables Total contractual outflows Cash and cash equivalents Other receivables Total anticipated inflows Net inflow on financial instruments (c) Net fair values (504,159) (74,250) (504,159) (74,250) 3,407,605 352,603 416,226 403,329 3,760,208 819,555 3,256,049 745,305 - - - - - - - - - - - - - - - - - - - - - - - - (504,159) (74,250) (504,159) (74,250) 3,407,605 352,603 416,226 403,329 3,760,208 819,555 3,256,049 745,305 The net fair value of assets and liabilities approximates their carrying value. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the Statement of Financial Position and notes to the financial statements. (d) Market risk Foreign currency risk The Company undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity’s functional currency. Foreign exchange risk is currently minimal. 24 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 18 Earnings per share Basic loss per share (cents per share)* Diluted loss per share (cents per share)** Weighted average number of shares Basic loss per share calculation* Diluted loss per share calculation Loss for the period used in earnings per share From continuing operations * calculation is after share split of ~26.13 new shares for every one share 19 Related party transactions (a) Key management personnel 2021 Cents 1.13 1.06 2020 Cents 0.61 0.59 134,707,382 143,722,515 114,855,432 117,583,393 (1,524,970) (696,360) The total remuneration paid to key management personnel of the Company during the year is as follows: Short-term employee benefits Post- employment benefits Share based payments (b) Transactions with other related parties 2021 $ 388,189 27,478 160,017 575,684 2020 $ 229,327 21,002 79,076 329,405 During the year parties associated with the directors Ms Jayne Shaw and Mr Ronald Phillips (the “Investors”) converted 133,334 convertible notes of $1 each into 133,334 fully paid ordinary shares (pre share split) of $1.50 each, equally. Post share split this amounted to 3,484,050 new shares. 20 Audit fees Audit Fees – current year - prior year Other services¹ ¹Other services relate to assurance services for the initial public offering. 2021 $ 34,000 35,000 36,591 105,591 2020 $ - - - - 25 BCAL Diagnostics Limited Notes to the Financial Statements For the year ended 30 June 2021 21 Events subsequent to balance date Subsequent to balance date the Company issued 40,000,000 shares at $0.25 per share to raise $10 million before costs, and listed on the Australian Securities Exchange on 21 July 2021. In addition, the Company issued a further 6,875,631 new shares to a broker for facilitating the capital raise at a deemed price of $0.00001 per share. Other than as outlined above no matter or circumstance has arisen since 30 June 2021 that has significantly affected, or may significantly affect: a) The Company’s operations in future financial years; or b) The results of those operations in future financial years; or c) The Company’s state of affairs in future financial years. 22 Company details Corporate Head Office and Principal Place of Business Suite 506, Level 5, 50 Clarence Street, Sydney NSW 2000. 26
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