Benitec Biopharma Inc.
Annual Report 2012

Plain-text annual report

Benitec Biopharma Ltd ABN 64 068 943 662 F6A / 1-15 Barr Street Balmain NSW 2041 Australia Tel: +61 (0) 2 9555 6986 Email: info@benitec.com www.benitec.com BENITEC BIOPHARMA LTD ANNUAL REPORT 2012 Contents CHAIRMAN AND THE CEO’S LETTER DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CORPORATE GOVERNANCE STATEMENT FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT SHAREHOLDER INFORMATION CORPORATE DIRECTORY 1 2 14 15 18 41 42 45 INSIDE BACK COVER BENITEC BIOPHARMA LTD ANNUAL REPORT 2012 Corporate Directory BENITEC BIOPHARMA LIMITED ABN 64 068 943 662 Directors Mr Peter Francis Dr Mel Bridges Dr John Chiplin Mr Iain Ross (Non-Executive Chairman) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) Company Secretary Mr Greg West Chief Executive Officer Dr Peter French Registered Office Level 16 356 Collins Street Melbourne Vic 3000 Australia Principal Place of Business F6A/1-15 Barr Street Balmain NSW 2041 Australia Auditors Grant Thornton Audit Pty Ltd Level 17, 383 Kent Street Sydney NSW 2000 Bankers Westpac Banking Corporation 274 Darling Street Balmain NSW 2041 Share Registry Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Melbourne Vic 3067 Stock Exchange Listing The Company is listed on the Australian Securities Exchange Limited ASX Code: BLT Chairman’s and CEO’s letter Dear Shareholder, We are pleased to present the Benitec Biopharma Annual Report for 2012. Your Company has made significant progress during the last twelve months towards our ultimate objective of obtaining a competitive and appropriate return on your investment through building on the Company’s dominant gene silencing intellectual property assets. We have continued to advance our in-house therapeutic programs through preclinical stages towards clinical trials. Whilst there has not been a lot of visibility of this to date, we can assure you that ‘behind the scenes’ the distinguished scientists leading the various programs have been working hard to assemble robust and validated data in all of the programs. This data, once verified, can be shared with potential partners to enable Benitec to engage their interest in commercial discussions. This has been a critical aspect of our strategy in 2011 – 2012. Most potential commercialisation partners will not sign confidentiality agreements at early stages of discussions therefore data needs to be in the public domain and to have been through a scientific peer review process. To support this initiative Benitec is proud to have finalised research partnerships with Stanford University on our neuropathic pain program, and the Royal Holloway, University of London for our new program, a ddRNAi treatment for an orphan disease called Oculopharyngeal Muscular Dystrophy. Furthermore our partnerships with the Children’s Cancer Institute Australia at UNSW (for our drug resistant lung cancer program) and with Chinese-based Biomics Biotechnologies (for our hepatitis B program) are working very well with excellent progress being made in vtro and in vivo. In addition to driving our in house programs, Benitec has been actively engaged in out-licensing ddRNAi for human therapy applications. During the last twelve months we announced licensing agreements with: • Calimmune Inc (California) for the development of a ddRNAi-based treatment for HIV/AIDS and • Genable Technologies Ltd (based in Ireland) for the development of a ddRNAi therapy for the orphan genetic eye disease Retinitis Pigmentosa, In the area of communications, Benitec has undertaken an aggressive strategy to raise the company’s profile and increase awareness of our achievements. We have engaged PR company DRPR Associates to guide our general media strategy, College Hill and Seed Media to lead our investor relations strategy, and Technoledge to produce professional branding and publication material. Our multimedia approach has extended to the production of several videos, which can be viewed on the Benitec Biopharma YouTube channel (http://www.youtube.com/user/BenitecNews). Here you will see and hear interviews with Benitec Biopharma’s CEO, CBO and CIG members. During 2011 – 2012 we have presented at or attended the following events: • 5th Pain Summit - San Francisco, 2011 • Combio – Cairns, 2011 • Ausbiotech Roadshow – Amsterdam, 2011 • BIO – Europe Amsterdam 2012 These presentations, combined with successes by other groups working in the RNAi space, are helping to validate the use of RNAi in general and of ddRNAi in particular and will contribute to a much greater awareness of Benitec’s technology. Some examples of these included: • Alnylam reporting positive clinical data for its experimental drug for TTR-mediated amyloidosis • Medistem’s use of ddRNAi to overcome transplant rejection • Granting approval by EMA of uniQure’s gene therapy molecule Glybera – the first gene therapy product to gain approval in a Western market • Tacere reporting positive data on Hepatitis C safety and delivery • Gradalis reporting very positive results from a Phase I/II clinical trial cancer vaccine “FANG” which incorporates a ddRNAi component. Other highlights for the year included: • Completion of a Research Report from van Leeuwenhoek • Appointment of Dr. Michael Graham as Chief Scientific Officer • Appointment of Mr Carl Stubbings as Chief Business Officer to drive business development • Termination of the UK patent revocation, further strengthening Benitec’s IP position • Several additional patents granted in the “Graham” patent family in the US • Positive meeting with the European Medicines Agency regarding Benitec Biopharma’s strategy to develop “Nervarna™” our ddRNAi treatment • JP Morgan Healthcare Conference – San Francisco 2012 • Ausbiotech 2011 – Adelaide • World Gene Therapy Congress – London 2012 for neuropathic pain • Production of Benitec Biopharma’s first GMP manufactured ddRNAi constructs (for Nervarna™). • The CIG meeting in May which provided an update on progress in all of the programs, and welcomed Tacere Chief Scientist Dr David Suhy to present the impressive progress in the Tacere Hepatitis C program. As you can see it has been a busy and constructive year. On behalf of the Board we would like to thank Benitec Biopharma shareholders for their continued support and patience whilst we consolidate our scientific position. We believe that the company is now well positioned to deliver on the promise that ddRNAi offers by demonstrating the safety and efficacy of the technology in the clinical setting. This is our key goal for 2013. Peter Francis Chairman Peter French Chief Executive Officer Benitec Biopharma Ltd Annual Report 2012 Page 1 Directors’ Report Your Directors submit their report on Benitec Biopharma Limited (“the Company”) for the financial year ended 30 June 2012. Dr John Chiplin PH.D. Non-Executive Director Appointed 1 February 2010 Dr John Chiplin has broad-based experience in the life science and technology industries, both from an operational and investment perspective. His most recent accomplishment was the corporate reengineering of Arana Therapeutics, a world leading Antibody developer, which resulted in the acquisition of the company by Cephalon for a significant premium to market (July 2009). Immediately prior to running Arana, Dr Chiplin was head of the $300M ITI Life Sciences investment fund in the UK. His own investment vehicle, Newstar Ventures Ltd, has funded more than a dozen early stage companies in the past ten years. Dr Chiplin’s Pharmacy and Doctoral degrees are from the University of Nottingham, UK. In addition to Benitec Biopharma, he currently serves on the Boards of Calzada Ltd and ScienceMedia, Inc. Other Current Directorships of Listed Companies Calzada Ltd. Former Directorships of Listed Companies in last three years Arana Therapeutics Ltd, Progen Pharmaceuticals Ltd and Healthlinx Ltd.. Mr Iain Ross BSC, CH.D. Non-Executive Director Appointed 1 June 2010 Mr Iain Ross is an experienced business man with 30 years’ experience in the international life sciences sector. Following a career with Sandoz, Fisons, Hoffman La Roche, and Celltech he has undertaken and input to a number of company turnarounds and start- ups as a board member on behalf of banks and private equity groups. He has led and participated in 4 IPOs, has direct experience of life science mergers and acquisitions both in the UK and USA and has raised more than £200m in the biotech sector. He is a Qualified Chartered Director and currently he is Chairman of Ark Therapeutics Group plc (LSE); Pharminox Limited; Biomer Technology Limited and a non-executive director of Tissue Therapies Limited (ASX). Also he is Vice Chairman of the Council of Royal Holloway, University of London. Other Current Directorships of Listed Companies Ark Therapeutics Group plc, Tissue Therapies Limited. Former Directorships of Listed Companies in last three years Silence Therapeutics plc. DIRECTORS The names and details of the Company’s Directors in office during the financial year and until the date of this report are as follows. The Directors were in office for all of the financial year ended 30 June 2012. Names, qualifications experience and special responsibilities Mr Peter Francis LLB, GRAD DIP (INTELLECTUAL PROPERTY) Non-Executive Chairman Appointed 23 February 2006 Mr Peter Francis is a partner at Francis Abourizk Lightowlers (FAL), a firm of commercial and technology lawyers with offices in Melbourne, Australia. He is a legal specialist in the areas of intellectual property and licensing and provides legal advice to a large number of corporations and research bodies. Other Current Directorships of Listed Companies None. Former Directorships of Listed Companies in last three years Xceed Capital Limited. Dr Mel Bridges BAPPSC, FAICD Non-Executive Director Appointed 12 October 2007 Dr Mel Bridges has more than 30 years’ experience in the global biotechnology and healthcare industry. During this period, he founded and managed successful diagnostics, biotechnology and medical device businesses. Mel is currently Chairman of a number of listed and unlisted companies. He is Chairman of Alchemia Ltd and Genetic Technologies Ltd. He also co-founded listed company Panbio Ltd. Mel has extensive experience as a public company director and is a Non- Executive Director of Campbell Brothers Limited, ImpediMed Limited and Tissue Therapies Limited. The businesses that Mel has founded have won numerous awards including the Queensland Export Award, Australian Small Business of the Year, Queensland Top 400, BRW’s Top 100 Fastest Growing Companies for seven consecutive years and The Australian Quality Award. Mel has won numerous awards for his achievements including the Ernst and Young 2002 Entrepreneur of the Year. In 2004 he was anointed the Queensland Entrepreneur of the Year, and in 2005 industry group AusBiotech awarded him the Chairman’s Industry Gold Medal for contributions to the Australian biotech industry. Other Current Directorships of Listed Companies Alchemia Ltd, Campbell Brothers Ltd, ImpediMed Ltd, Tissue Therapies Ltd. Former Directorships of Listed Companies in last three years Incitive Ltd, Peptech Ltd, Arana Therapeutics Ltd, Genera Biosystems Ltd. Page 2 Benitec Biopharma Ltd Annual Report 2012 Directors’ Report Benitec Biopharma Executives and Board. From Left to Right: Mr Greg West, Dr Michael Graham, Mr Carl Stubbings, Mr Iain Ross, Dr Mel Bridges, Dr John Chiplin, Dr Peter French, Mr Peter Francis COMPANY SECRETARY Mr Greg West CA Appointed 26 May 2011 Mr West is a Chartered Accountant with experience in the Biotech sector. He is a Director and audit committee Chairman of ITC Limited (a business arm of Wollongong University), IDP Education Pty Ltd and Education Australia Limited. He completed his studies with Price Waterhouse and has worked in senior finance executive roles in investment banking with Bankers Trust, Deutsche Bank, NZI, and other financial institutions. Interests in the shares and options of the company and related bodies corporate At the date of this report, the interest of the Directors in the shares and options of Benitec Biopharma Limited were: Director Number of Ordinary Shares Number of Options over Ordinary Shares Mr Peter Francis Dr Mel Bridges Dr John Chiplin Mr Iain Ross 2,237,175 2,710,000 1,190,846 750,000 CORPORATE INFORMATION Corporate Structure 44,000,000 12,998,333 10,264,063 10,187,500 Benitec Biopharma Limited is a company limited by shares that is incorporated and domiciled in Australia. Benitec Biopharma Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which are described in note 11 of the financial statements. Principal Activities Benitec Biopharma is an RNAi-based therapeutics company using its proprietary DNA-directed RNA interference (ddRNAi) or vector expressed technology to develop therapies for the treatment of life threatening diseases with significant unmet need and commercial attractiveness. Benitec Biopharma’s therapeutic programs include human immunodeficiency virus (HIV), Hepatitis B, OPMD orphan disease, delivery options and cancer. Benitec Biopharma generates revenue from licensing its technology. The principal activities of the Group during the year were the management, funding, building the IP estate and management and commercialisation of Benitec Biopharma’s therapeutic programs. Employees The Group had 5 employees as at 30 June 2012 (2011: 4 employees). DIVIDENDS No dividends in respect of the current or previous financial year have been paid, declared or recommended for payment. OPERATING AND FINANCIAL REVIEW Benitec Biopharma Limited (ASX: BLT) is an Australian biotechnology company developing novel therapeutic treatments to cure a range of diseases by turning off the active genes responsible for the disease. Benitec Biopharma holds the dominant intellectual property worldwide for this powerful ‘gene silencing’ technology, DNA-directed RNA interference (ddRNAi). Benitec Biopharma’s approach is different to other gene silencing methodologies, as ddRNAi results in the targeted cell continuously manufacturing specific silencing molecules thus the disease- associated gene is permanently “silenced”, using just a single treatment. There are other approaches for silencing target genes that can temporarily silence target genes, however in these cases the treatment must be continuously administered. Benitec Biopharma Ltd Annual Report 2012 Page 3 Directors’ Report Targeting Multiple Diseases The ddRNAi technology is potentially applicable to over 22,000 genes covering multiple conditions, including cancers, neurological diseases, infectious diseases, autoimmune diseases and rare genetic diseases. Benitec Biopharma’s approach is to focus on developing, through in-house programs or out-licensing arrangements, ddRNAi-based treatments for diseases which meet one of the following criteria: • Diseases which have a high public profile, high market potential and, if positive outcomes occur in early clinical trials, are very likely to attract the attention of large pharmaceutical companies. • Diseases with unmet needs involving terminally ill patients in which ddRNAi therapy offers an opportunity to improve survivability and/or quality of life. • Diseases that are considered “Orphan” – These diseases occur in less than in 100,000 of the population. While the market opportunities are smaller, the disease status means barriers to market entry are significantly lower. With these criteria in mind Benitec Biopharma has selected four different diseases and medical conditions to demonstrate the efficacy of the technology across a range of tissue types. : 1. Cancer-associated pain. This program is currently in pre- clinical development, in research collaboration with Queensland University’s TetraQ and starting from August 2012, Stanford University’s Prof David Yeomans. Up to 85% of terminal cancer patients suffer intractable neuropathic pain. Benitec Biopharma’s technology is being used to develop a novel pain product that can be administered as a single injection to provide long-term pain relief through silencing a key pain mediator in the spinal cord. An independent publication, using an approach identical to Benitec Biopharma’s, demonstrated a significant reduction in pain without side effects (Human Gene Therapy 2011, 22(4): 465-475) in a validated animal model. This provides proof of concept for Benitec Biopharma’s approach. 2. Lung cancer. Lung cancer is the most common cancer 3. Hepatitis B. An estimated 350 million people are chronically infected with the hepatitis B virus (HBV). Benitec Biopharma is developing a therapy that targets a key viral gene, in partnership with Biomics Biotechnologies in China. Optimised ddRNAi constructs have been prepared for testing in an in vivo model of HBV infection. Successful inhibition of viral infection will lead to commencement of a clinical trial. 4. OPMD (oculopharyngeal muscular dystrophy) is an orphan disease caused by a mutant gene. In collaboration with Professor George Dickson at Royal Holloway, University of London, Benitec Biopharma is using ddRNAi to target the suppression of the mutant gene responsible for this currently untreatable condition, which affects the swallowing muscles. There are many other diseases that can be targeted by ddRNAi. Benitec Biopharma lacks the resources to pursue all of these opportunities in-house, so the Company’s strategy is to enter into multiple partnering and licensing arrangements with external organisations to exploit the ddRNAi technology for other diseases. Examples of these arrangements in place currently are license agreements with Tacere Therapeutics (Hepatitis C); Calimmune Inc (HIV); Revivicor Inc (organ transplants) and Genable Technologies (Retinitis Pigmentosa). Strategic Advantage The ability of ddRNAi to be used in a range of diseases affords Benitec Biopharma a strategic advantage. For high profile diseases such as Hepatitis B or chronic pain, when favourable clinical data becomes available, there is a strong probability of attracting the interest of a large pharmaceutical company and subsequently negotiating suitable value/revenue licensing agreements. While orphan disease targets offer lower revenue opportunities (when compared with Hepatitis B for example) they afford an earlier opportunity to prove or “validate” the efficacy of ddRNAi and a lower barrier to market entry (due to reduced regulatory burden). worldwide. The program with Professor Maria Kavallaris and other researchers at UNSW has shown that using ddRNAi to silence a Both of these approaches enhance the Company’s ability to broaden the available licensing opportunities (and thus access to ongoing The ddRNAi technology is potentially applicable to over 22,000 genes, covering multiple conditions including cancers, neurological diseases, infectious diseases, autoimmune diseases and rare genetic diseases. gene that is only expressed in non-small cell lung cancer cells (the most common form of lung cancer) can significantly overcome the resistance of the cancer cells to chemotherapy drugs. Initial in vivo proof of concept data has demonstrated the feasibility and the effectiveness of the approach. revenue streams) while improving the overall risk profile by eliminating dependence on one program’s success or failure. A recent article in Therapeutics Daily discusses that there is good evidence that big pharma is seriously considering RNAi-based therapeutics again (http://www.therapeuticsdaily.com/news/article.cf m?contenttype=sentryarticle&contentvalue=2040798&channelID=34). Benitec Biopharma is well positioned to benefit from this interest as the Company’s programs in areas of significant unmet need move into the clinic. Page 4 Benitec Biopharma Ltd Annual Report 2012 Directors’ Report OVERVIEW OF OPERATIONS Benitec Biopharma has spent the previous 12 months consolidating its strategy in growing its R&D pipeline programs, maintaining and extending its intellectual property and executing on key milestones in its business development activity. These are described below in detail. 1. R&D Pipeline Benitec Biopharma has a product pipeline of in-house and partnered therapeutics based on its proprietary transformational technology, DNA-directed RNA interference (ddRNAi) for chronic and life- threatening conditions. Benitec Biopharma has four development programs underway in house and expects to enter clinical trials within the next one to two years. Successful results from any program could lead to a significant partnership deal with a major pharmaceutical company. In addition, Benitec Biopharma has entered into out-licensing deals for programs in hepatitis C, HIV and retinitis pigmentosa, bringing to seven the number of ddRNAi-based programs being actively progressed towards the clinic. These are summarized below: The R&D highlights of the previous 12 months include: • Hepatitis B – “Hepbarna™”. Over the past 12 months, ddRNAi constructs targeting three separate sequences on the target Hepatitis B Virus (HBV) gene have been designed, manufactured, tested, modified and finalised in conjunction with Benitec Biopharma’s collaboration with China-based Biomics Biotechnologies Co Ltd. The three sequences were selected from an initial screen of several thousand potential candidates, and have been tested extensively in in vitro assays to ensure high efficacy and low toxicity both individually and collectively. In vivo proof of concept testing of the final constructs in a mouse model using Adeno-associated virus (AAV) vector to deliver these to the infected liver cells and silence the hepatitis B virus has commenced. This is a key value inflection point for this program, and is anticipated to be completed in early to mid 2013. • Chronic cancer-associated pain – “Nervarna™”. Benitec Biopharma has chosen Protein Kinase C gamma (PRKCG) as the target for silencing by ddRNAi. There is compelling evidence that PRKCG is a key regulator of neuropathic pain. Highly active ddRNAi constructs that target conserved regions of the gene have been identified and designed to facilitate biodistribution and toxicology testing for enablement of clinical applications. Lentiviral particles expressing these conserved constructs have been manufactured by a UK-based GMP manufacturer in sufficient quantity to complete in vivo proof of concept studies. These constructs have been delivered and pre-clinical proof of concept testing in internationally validated in vivo pain models has commenced in collaboration with Dr David Yeomans of Stanford University and with the University of Queensland. It is currently planned that this data will form the basis of scientific discussions with the FDA and the EMA. An informal meeting with the EMA in May 2012 provided encouragement that this novel approach to pain therapeutics is of significant interest to the regulators. Significant advances in understanding the manufacturing and regulatory processes, costings and time-frames have been gained through this period. The next milestones for this program are obtaining in vitro and in vivo proof of efficacy of pain relief in vivo, followed by preparation to enter the clinic, which requires extensive biodistribution and toxicology studies and manufacturing of both pre-clinical and clinical batches of the construct. This is anticipated to occur from late 2012 to late 2013. • Chemotherapy-resistant lung cancer – “Tribetarna™”. Excellent progress has been made in an in vivo proof of concept model towards the development of Benitec Biopharma’s and UNSW’s ddRNAi-based therapeutic targeting a key gene identified as being responsible for cancer cells’ resistance to chemotherapy treatments. Preliminary data demonstrating knockdown of beta III tubulin in human non-small cell lung tumours from an intravenous injection has been obtained by the UNSW-based research team. Critical experiments to determine whether this silencing of beta III tubulin will increase the efficacy of chemotherapy in killing cancer cells in this in vivo model (as has been demonstrated in vitro) will soon commence. A successful result will be a significant value inflection point for this program, that is expected in early to mid 2013, and will be the basis of continuing the program towards the clinic. The steps to achieve clinical entry include discussions with the FDA and/or the EMA; satisfactory toxicology and biodistribution testing, manufacturing sufficient quantity of the construct and its non-viral vector, and clinical trial approval. Benitec Biopharma Ltd Annual Report 2012 Page 5 Directors’ Report • Genetic disease – “Pabparna™”. Work on developing a ddRNAi-based therapy for a human orphan genetic disease, Oculopharyngeal Muscular Dystrophy (OPMD) commenced in January. This involves a research collaboration with Prof. George Dickson (Royal Holloway, University of London) and Dr Capucine Trollet (Institut de Myologie, Paris). ddRNAi constructs targeting the causative gene (PABPN1) have been produced and introduced into gene therapy vectors where they have been confirmed to be highly active in cell lines. Testing in OPMD-derived cell lines and an in vivo model of the disease will commence in late 2012. Further data, including in vivo data is intended to be achieved over the next 18 months. External validation of the potential of Benitec Biopharma’s ddRNAi technology as the basis of new therapeutics for intractable diseases continued to accumulate over the past 12 months, including: • Hepatitis C. Two publications by Benitec Biopharma licensee, Tacere Therapeutics, in 2012 demonstrated the efficacy of the triple cassette strategy for both efficacy of the approach for inhibiting Hepatitis C virus replication (Antimicrobial Agents and Chemotherapy 2012, 56(3): 1362-1375) and the safety of AAV 8 delivery of triple cassette constructs to liver cells in a non- human primate model (Molecular Therapy 2012, doi:10.1038/ mt.2012.119). Tacere anticipate a 2013 entry into the clinic for their hepatitis C ddRNAi construct, TT-034. Benitec Biopharma’s strategy for silencing HBV is very similar to the Tacere approach, suggesting a high likelihood of success for this program. • Retinitis pigmentosa. Benitec Biopharma licensee Genable Technologies Ltd is utilizing ddRNAi to silence the mutant RHO gene. Genable’s Chief Scientist presented preliminary positive proof of concept data in an in vivo model of this debilitating eye disease at the World Gene Therapy Congress in London in May 2012. Benitec Biopharma’s strategy for OPMD is very similar to the Genable approach, suggesting a high likelihood of success for this program. • HIV/AIDS. Benitec Biopharma licensee Calimmune Inc. are developing a ddRNAi-based therapy for HIV, targeting CD34 stem cells, utilising a similar approach to that shown to be successful by the City of Hope in their 2010 pilot trial in four AIDS-related lymphoma patients. City of Hope’s Professor John Rossi reported at the Benitec Biopharma’s Chief Investigators Group (CIG) meeting in May that the ddRNAi product continues to be expressed in the immune cells of at least one of those patients more than three years after the original treatment. This provides significant confidence for Calimmune’s approach clinically. • Benitec Biopharma’s CEO Dr Peter French was the co-author on two papers with US-based stem cell company Medistem Inc. The work demonstrated the efficacy of ddRNAi in in vivo models of rheumatoid arthritis and heart transplant rejection. Medistem and Benitec Biopharma remain in communication about possibilities for deeper collaboration utilising each company’s technology. Page 6 Benitec Biopharma Ltd Annual Report 2012 More generally, important progress in gene therapy and RNAi has occurred, including: • European Approval. Approval of a gene therapy treatment by the European Medicines Authority. uniQure, a Dutch biotechnology company, developed Glybera to treat a rare disease - lipoprotein lipase deficiency. The treatment uses an AAV vector to deliver a replacement gene to cells. Although the therapy does not use ddRNAi, this event is significant for Benitec Biopharma since it is the first approval of a gene therapy treatment by a Western regulatory agency and provides a clear precedent for the use of AAV vectors in human therapy. Benitec Biopharma and uniQure are in communication regarding potential opportunities for collaboration. • siRNA. Benitec welcomed the announcement by US-based Alnylam of positive results using an siRNA-based therapy to treat amyloidosis, a rare untreatable disease of the liver. Although Alnylam’s gene silencing technology is distinct from Benitec Biopharma’s ddRNAi, the technologies are mechanistically related and this success validates the overall potential for RNAi-based human therapies. Moreover Benitec Biopharma and Alnylam have a cross-license to each other’s technologies and are open to possibilities of collaborations. • Advanced Cancer. Benitec Biopharma reported in January that Gradalis, a company that currently has no association with Benitec Biopharma, demonstrated impressive efficacy in a Phase I/II clinical trial of a cancer vaccine that also has a ddRNAi-based component. The combined treatment significantly prolonged survival in patients with advanced cancer (Molecular Therapy 2011, 20: 679-686). Gradalis has reported that they are planning to commence a second clinical trial soon. Chief Investigators’ Group The Benitec Biopharma Chief Investigators’ Group (CIG) was formed in February 2011 and met twice in the last year (November 2011 and May 2012) to review the company’s research programs. A further meeting is planned for November 2012. The CIG includes program leaders of groups associated with Benitec Biopharma’s clinical pipeline. Initial members were Professor John Rossi (City of Hope Cancer Centre, CA, USA); Dr York Zhu (Biomics Biotechnologies, Nantong, China) and Professor Maria Kavallaris (Children’s Cancer Institute Australia (CCIA) at the University of New South Wales (UNSW), Australia) as well as Benitec Biopharma’s CEO Dr Peter French, Dr Ken Reed (Benitec Biopharma founder) and Dr Michael Graham (the discoverer of Benitec Biopharma’s RNAi technology). Two new members joined the CIG in 2012, Prof. George Dickson (Royal Holloway - University of London) who heads the OPMD program and Dr Geoff Symonds from Calimmune Inc. Dr David Suhy (Tacere) also attended the May 2012 meeting. Recently Dr David Yeomans (Stanford University) who has commenced collaboration on the pain program has agreed to join the CIG and will attend the next meeting. The group is now chaired by Benitec Biopharma’s Chief Scientist Dr Michael Graham. The CIG brings together world-class researchers in their respective fields and has provided invaluable assistance to Benitec Biopharma in refining and focusing the company’s research pipeline. CIG membership is not a remunerated role. Directors’ Report 2. Intellectual Property Benitec Biopharma‘s core patents and patent rights are based on research in the 1990s conducted by Benitec Biopharma’s Chief Scientist Dr Michael Graham and colleagues at CSIRO and are supported by subsequent filings that extend the scope of its intellectual property. Benitec Biopharma’s patent estate represents a dominant position in DNA-directed gene silencing. Benitec Biopharma has also in-licensed several additional patent families that extend the scope of its patent estate and enhance the utility and value of ddRNAi. A major distraction for Benitec Biopharma resulted from litigation initiated by the Company against Nucleonics to protect its Graham family of patents. While Benitec Biopharma ultimately prevailed, the Company was forced to defend a key patent in US re-examination proceedings. Following the conclusion of this litigation in the mid-2000s, many of Benitec Biopharma’s own patents and its licensed patents were issued in a number of jurisdictions outside Europe and the US. A pivotal breakthrough for the company’s IP portfolio came in September 2010 when the US Patent Office’s Board of Appeal reversed all previous objections that arose from the re-examination proceedings and re-issued Benitec Biopharma’s foundational ‘099 US patent. This was followed by the issuance of the Re-Examination Certificate in March 2011, which was the final formal step in reinstating the patent. In Europe, a divisional application from the originally rejected European application was also allowed in 2011, thus giving Benitec Biopharma key patent claims to ddRNAi in both the US and Europe. And in June 2012, Benitec Biopharma announced that the challenge to the validity of the UK Graham patent GB 2353282 was over, following family of cases was been allowed. It is a continuation of US patent No 7727970. Whereas US7727970 has claims to methods of silencing HCV using an RNA interference construct, this newly allowed application claims the construct itself. Benitec Biopharma has licensed the exclusive rights to these Hepatitis C patents to Tacere Therapeutics, Inc. Graham portfolio Benitec Biopharma is the exclusive licensee from CSIRO of the Graham patents in the field of human therapeutics. • Further to the issuance of several US patents in late 2011 derived from the re-issued ‘099 Graham patent family including US8048670, US8053419 and US8067383, a further application from that family has issued as US8168774. This patent, “Control of Gene Expression” is complementary to the other patents in that family, with claims directed to constructs for silencing target genes in animal cells. Grant of this patent by the USPTO underlines Benitec Biopharma’s exclusive position in this foundational patent family for expressed RNAi as human therapeutics. • The Japanese Patent Office has similarly allowed JP2009- 161847 in the Graham patent family, now issued as JP4981103. This patent, directed generally to methods of gene silencing in eukaryotic cells and compositions for preventing and treating disease, is a divisional of granted patent JP4460600, which claims the constructs themselves. • The British Patent Office has notified Benitec Biopharma and CSIRO that the revocation action against the GB2353282 patent filed in 2010 has been withdrawn by the claimant. The withdrawal resolves the action completely and the patent has been Benitec Biopharma has the dominant patent position for the use of ddRNAi-based gene silencing for humans. the withdrawal of the Application for Revocation of the patent by the applicant, and the acceptance of the amended claims by the United Kingdom Intellectual Property Office (UKIPO). By virtue of its solely owned and licensed IP, Benitec Biopharma currently has more than 50 granted or allowed patents globally, including the key jurisdictions of the US, the UK, Japan, Europe, India, Canada and Australia. There are nearly 40 more patents pending. Benitec Biopharma has the dominant patent position for the use of ddRNAi-based gene silencing for humans. In 2011-12 there were some significant events in Benitec Biopharma’s patent portfolio. These are discussed as follows: Benitec Biopharma solely owned patents • The Canadian patent office allowed Benitec Biopharma’s application 2558771: “Multiple promoter expression cassettes for simultaneous delivery of RNAi agents”. The claims cover an RNA interference construct with multiple promoters to inhibit the level of Hepatitis C virus (HCV) in cells, tissues and organs. The single construct is able to target multiple sequences. • US application 12/723466 from the same “Multiple Promoter” maintained in amended form without any significant reduction in scope with respect to human therapeutics. • Following the grant in 2011 of two European patents in the Graham family, EP1555317 and EP1624060, oppositions have been filed against EP1555317 by BASF SE and an anonymous party under the name Strawman Limited, and against EP1624060 by BASF SE. Further licensed patents Benitec Biopharma is also the exclusive licensee from CSIRO of the Waterhouse et al. patent family in the field of human therapeutics. • The granted European Waterhouse et al patent application EP1068311 has been opposed by four parties, namely BASF SE, Strawman Limited, Carnegie Institution of Washington/University of Massachusetts, and Syngenta International AG. CSIRO is due to file a response to the oppositions later this year. • The Japanese Patent Office has issued the Waterhouse et al application as Japanese Patent No. 5105373. Benitec Biopharma Ltd Annual Report 2012 Page 7 Directors’ Report 3. Business Development Business development activity has been a major focus of Benitec Biopharma in 2012. The aim is to create appropriate/competitive return on investment for Benitec Biopharma stakeholders by commercialising the company’s gene silencing technology, ddRNAi. Strengthening Business Development Management Depth To drive the further development and execution of the company’s strategy, Benitec Biopharma appointed Mr. Carl Stubbings to the role of Chief Business Officer in early July 2012. Carl brings a wealth of corporate business, sales and marketing experience to Benitec Biopharma, with over thirty years background in biotechnology and medical diagnostics, including extensive international experience, particularly in North America, Latin America, Asia Pacific and Europe. Previously Carl held the position of Vice President, Sales & Marketing for Focus Diagnostics, a subsidiary of New York Stock Exchange listed Quest Diagnostics, a position he has held since 2007. Prior to joining Focus Diagnostics, Carl was the Senior Vice President of Panbio Inc USA, where he was responsible for business development in the Americas and Europe. Mr. Stubbings earned his B.Sc. from Queensland University of Technology, Brisbane, Australia. Pathways to Revenue There are two key drivers to revenue generation for Benitec Biopharma. The first is tied to the development of ddRNAi as therapeutic products. Benitec Biopharma has divided this development process into two additional categories: a number of levels in this aspect of the business. Over the last 12 months, Benitec Biopharma has executed a number of revenue- generating licensing agreements (refer to program updates below). In addition the company has been actively building a database of new potential prospects for partnerships and/or licensing. These potential opportunities are being subjected to a qualification process which we expect will lead to a short list of potential partners with whom negotiations will be conducted. Benitec Biopharma’s management views this as an ongoing process and not static. To understand the likely revenue impact of positive outcomes from Benitec Biopharma’s strategy the company has developed probable income or “Value Chain” models based on current and past deals in the industry. These models assume income from upfront payments, milestones and ultimately ongoing royalties. It is critical that stakeholders are able to see clearly the types of revenue outcome that are possible should Benitec Biopharma’s programs achieve a successful outcome. Out-licensing milestones utilising Benitec Biopharma’s ddRNAi technology achieved in 2012: • HIV/AIDS – Calimmune Inc, USA – licensing agreement signed 5 March 2012. • Hepatitis C - Tacere Therapeutics, USA – therapy is ready to enter phase I clinical trials. This treatment is an important program for Benitec Biopharma as it will be one the first treatments using ddRNAi to move into clinical trials. Positive patient data from these trials will validate the ddRNAi platform in a major disease Current therapies are not solving the Hepatitis C problem. treatment. It will also enhance interest in the Hepatitis B program. Benitec Biopharma and Tacere are developing messaging to strengthen the view that current therapies for Hepatitis C are not “solving the Hepatitis C problem”. • Retinitis Pigmentosa - Genable – licensing agreement signed 6 July 2012 with option to expand for other targets in the future. 1. In-house developments – developing programs for therapies in- house up to and including, where appropriate, phase I/II clinical trials. Assuming these programs produce successful clinical outcomes, Benitec Biopharma expects to be able to leverage these into licensing or partnering agreements with pharmaceutical companies. 2. Out-licensing ddRNAi to suitable partners. As discussed above this option is made possible by the broad applicability of the technology to a variety of diseases. Out-licensing provides the company with a wide range of potential revenue streams to further enhance income generated from its in-house programs. The second driver is the identification and qualification of potential partners and or licensees culminating in the execution of a revenue- generating agreement or event. Benitec Biopharma is engaged at Page 8 Benitec Biopharma Ltd Annual Report 2012 Directors’ Report Program Updates Cancer associated pain. Partnering/Business developments: • Preparation of a briefing package to be circulated to prequalified large Pharma companies likely to have an interest in the program. • Engagement of a US-based consultant with specific industry experience and networks in pain treatment market segment. • Development of a comprehensive “Value Chain” model enabling estimation of intrinsic value of the product. • Execution of a research agreement with Professor David Yeoman’s group at Stanford University. Using Prof Yeoman’s “Spared Pain” model, Stanford will undertake the final preclinical evaluation of this treatment. Drug resistant cancer. Following positive preliminary proof of concept data, the following partnering activities are in train: • Developing a “prospect” list of potential partners. • Preparing a briefing document to be circulated to prequalified large Pharma companies likely to have an interest in the program. • Developing “Value Chain” model enabling estimation of intrinsic value of the product. Hepatitis B virus infection Partnering developments • Preparation and circulation of a briefing package to a qualified list of Pharma Companies. • Developing “Value Chain” model enabling estimation of intrinsic value of the product. Oculopharyngeal muscular dystrophy Partnering developments Financial Overview Benitec Biopharma’s net loss for the year to 30 June 2012 was $4,112,617 compared to a net loss of $3,534,874 for the previous corresponding period. The loss for the year includes a charge for share based expense of $1,093,122 (2011 $112,568). Operating revenue was $503,034 compared to $345,545 in the previous corresponding period. The previous period included a non- recurring dividend received from licensee Tacere Therapeutics of $137,671. Operating expenses were $4,615,651 including share based expenses of $1,093,122. This compares to operating expenses for 2011 of $3,880,419 which included charges for share based expense of $112,568 and the convertible note settlement of $660,957. Benitec Biopharma’s current assets at 30 June 2012 was $3,220,403 (June 2011: $6,838,897), with current liabilities of $588,292 (June 2011: $1,197,474). Cash Flows The cash flows of the Company consist of income from licensing the Company’s technology, proceeds from issue of shares, payments to employees and suppliers for co-investment and/or licensing collaborations to exploit the Company’s intellectual property portfolio and the maintenance of the small corporate structure. Capital raisings / capital structure During the year the Company made share issues of $533,911 net of costs through conversions of the convertible note held by La Jolla Cove Investors, Inc. The issues were made to provide funding for the ongoing research and development programs and to generally support the business. Ordinary Shares 44,290,619 ordinary shares were issued during the year at prices ranging from $0.0112 to $0.0152 per share through conversions of the Convertible Note held by La Jolla Cove Investors, Inc. Options At the date of this Directors’ Report, the Company has a total of 428,985,202 options to acquire ordinary shares in the Company. Unless otherwise noted, all options are unlisted, restricted and are categorised as follows: Type Listed Options - BLTO Listed Options - BLTOB Employee Share Option Plan NED Options Directors’ Options Other Total Number 46,673,907 201,302,538 61,000,000 77,666,666 1,953,125 6,126,962 34,244,444 17,560 428,985,202 Employees Share Option Plan (ESOP) Employee options are managed under the ESOP Plan. ESOP options expire on the dates set out below. Options held by any employee who resigned earlier will expire on a time determined by the Board or within twelve months. The Board has the power to adjust, amend and cancel the ESOP. Non-Executive Directors are currently excluded from the ESOP. Options on issue under the Employees Share Option Plan are: Grant Date Expiry Date Exercise Price Number 21 February 2008 21 February 2013 $0.0781 300,000 13 July 2010 19 August 2014 $0.0204 6,500,000 13 July 2010 10 June 2013 $0.0289 5,000,000 17 November 2011 17 November 2016 $0.0500 45,000,000 7 February 2012 7 February 2017 $0.0500 4,200,000 Total 61,000,000 Benitec Biopharma Ltd Annual Report 2012 Page 9 • Initiated the development of a target list of pharmaceutical companies that specialize in the commercialisation of treatments for Orphan Diseases. Strategic Adviser Warrants Unlisted Options Directors’ Report ESOP options which lapsed during the financial year were: Environmental regulation Expiry Date Exercise Price 14 December 2011 $0.0407 No. Lapsed 1,000,000 Non-Executive Director Options Non-Executive Director Options on issue are Grant Date Expiry Date Exercise Price Number 28 November 2008 31 December 2012 $0.0889 13 July 2010 19 August 2014 $0.0228 26 September 2011 26 September 2016 $0.0500 Total 4,666,666 3,000,000 70,000,000 77,666,666 Summary of Shares, Options and Warrants on Issue – 30 June 2012 The Company had 970,628,529 listed ordinary shares and 247,976,445 listed options on issue at reporting date. There are also 174,881,795 unlisted options and 6,126,962 warrants on issue, details of which are included in note 16 to the financial statements. Unissued Shares As at the date of this report, there were 428,985,202 options over unissued ordinary shares (438,985,202 at the reporting date), details of which are included in note 16 to the financial statements. Option holders do not have the right, by virtue of the option, to participate in any share issue of the Company or any related body corporate or in the interest issue of any other registered scheme related to the Company. Shares issued as a result of the exercise of Options During the year no shares were issued on the exercise of options issued by the Company (2011: 420,000). Significant changes in the state of affairs During the year there were no significant changes in the Company’s state of affairs. Significant events after the reporting date No matters or circumstances have arisen since 30 June 2012 which have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group, in subsequent financial years. Likely developments and expected results Further information on likely developments in the operations of the Group has not been included in this report because at this stage the directors believe it would be likely to result in unreasonable prejudice to the Group. Benitec Biopharma Limited is listed on the Australian Securities Exchange (ASX) and is subject to the continuous disclosure requirements of the ASX Listing Rules which require timely disclosure of information which may affect security values or influence investment decisions, and information in which security holders, investors and ASX have a legitimate interest Page 10 Benitec Biopharma Ltd Annual Report 2012 The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or State legislation. Meetings of Directors The number of meetings of the Directors held during the year and the number of meetings attended by each director was as follows: Board of Directors Risk & Audit Committee Attended Attended Held Held Peter Francis Mel Bridges John Chiplin Iain Ross 9 8 9 7 9 9 9 9 2 2 - - 2 2 - - Committee membership Due to the small number of Directors, it was determined that the Board would undertake all of the duties of a properly constituted Remuneration and Nomination Committee. The Audit and Risk Committee is chaired by Dr Bridges and met twice during the financial year. Remuneration report This report details the nature and amount of remuneration for each director of the Company, and for all key management personnel. The information provided in the Remuneration Report has been audited as required by s308(3c) of the Corporations Act 2001. Remuneration Philosophy The remuneration policy of the Company is to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering long-term incentives based on key performance areas. The Board believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the consolidated entity, as well as create goal congruence between directors, executives, and shareholders. The Board is responsible for determining the appropriate remuneration package for the CEO, and the CEO is in turn responsible for determining the appropriate remuneration packages for senior management. All executives are eligible to receive a base salary (which is based on factors such as experience and comparable industry information), fringe benefits, options, and performance incentives. The Board reviews the CEO’s remuneration package, and the CEO reviews the other senior executives’ remuneration packages, annually by reference to the consolidated entity’s performance, executive performance, and comparable information within the industry. The performance of executives is measured against criteria agreed annually with each executive and is based predominantly on the overall success of the Company in achieving its broader corporate goals. Bonuses and incentives are linked to predetermined Directors’ Report performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses, and options, and can recommend changes to the CEO’s recommendations. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. Executives are entitled to participate in the Employee Share Option Plan. Australian executives or directors receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Options are valued using the Black- Scholes methodology. The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment, and responsibilities. The Board as a whole determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties, and accountability. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the consolidated entity. However, to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company. Performance Based Remuneration Each executive’s remuneration package has a performance-based component. The intention of this approach is to facilitate goal congruence between executives with the business and shareholders. Generally, the executive’s performance based remuneration is tied to the Company’s successful achievement of certain key milestones relating to its operating activities, as well as the Company’s overall financial position. Company Performance, Shareholder Wealth, and Directors’ and Executives’ Remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, directors, and executives. Two methods are applied in achieving this aim, the first being a performance based bonus based on achievement of key corporate milestones, and the second being the issue of options to the majority of directors and executives to encourage the alignment of personal and shareholder interests. x zz Details of Remuneration for Year Ended 30 June 2012 Table 1. Non-Executive Director Remuneration for the year ended 30 June 2012 Short Term Post Employment Equity Total Salary & Fees Cash Bonus Non Monetary Benefits Super- annuation Termination Benefits Options Peter Francis Mel Bridges John Chiplin Iain Ross 2012 2011 2012 2011 2012 2011 2012 2011 $ 85,000 64,166 55,000 55,000 50,000 50,000 50,000 50,000 $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ - - - - - - - - $ $ 663,531 26,211 105,026 20,673 82,666 - 82,666 - 748,531 90,377 160,026 75,673 132,666 50,000 132,666 50,000 There was no performance related remuneration payable to non-executive directors during the year. Table 2. Remuneration of key management personnel for the year ended 30 June 2012 Short Term Post Employment Equity Total Salary & Fees Cash Bonus Non Monetary Benefits Super- annuation Termination Benefits Options $ $ Peter French 2012 2011 Michael Graham 2012 2012 Greg West 249,800 249,801 84,792 152,333 35,000 35,000 $ - - $ 15,775 15,199 7,266 13,710 $ - - $ $ 304,125 54,125 125,000 7,425 604,700 354,125 217,058 173,468 % of remuneration consisting of options 88.6% 29.0% 65.6% 27.3% 62.3% - 62.3% - % of remuneration consisting of options 50.3% 15.3% 57.6% 4.3% Benitec Biopharma Ltd Annual Report 2012 Page 11 Directors’ Report Peter French Michael Graham Greg West Fixed remuneration At risk - STI At risk - Options 43.9% 42.4% 95.7% 5.8% 50.3% 57.6% 4.3% Consequences of performance on shareholder wealth In considering the Group’s performance and benefits for shareholder wealth, the Board have regard to the following indices in respect of the current financial year and the previous four financial years: 2012 Loss per share (cents per share) (0.43) Dividends (cents per share) - Net loss (4,113) Share price (cents per share) 1.7 2011 (0.68) - (3,535) 2.8 2010 (1.21) - (4,641) 2.6 2009 (0.80) - (2,471) 2.3 2008 (0.96) - (2,775) 6.2 Options Issued as Part of Remuneration for the Year Ended 30 June 2012 Options can be issued to executives as part of their remuneration. The options are not issued based on performance criteria, but are issued to the executives of the Company to increase goal congruence with Company objectives. During the year ended 30 June 2012, 48,000,000 options (2011: 11,500,000) were granted to Dr Peter French, Dr Michael Graham and Greg West under the terms of their employment agreements. Options were issued to directors following approval at the Annual General Meeting of shareholders on 17 November 2011. Number of Options held by Key Management Personnel Balance 1 July 11 Granted as Remuneration Options Acquired Options Exercised/ Balance at 30 June 12 Lapsed/Other Total Vested Exercisable at 30 June 12 at 30 June 12 Total Directors Peter Francis Mel Bridges John Chiplin Iain Ross Sub-total Executives Peter French Michael Graham Greg West Sub-total Total 4,000,000 40,000,000 2,998,333 10,000,000 10,000,000 10,000,000 6,998,333 70,000,000 10,000,000 30,000,000 15,000,000 3,000,000 10,000,000 48,000,000 264,063 187,500 451,563 - - - 44,000,000 16,833,333 16,833,333 12,998,333 6,166,666 6,166,666 10,264,063 3,333,333 3,333,333 10,187,500 3,333,333 3,333,333 - 77,449,896 29,666,665 29,666,665 - 40,000,000 20,000,000 20,000,000 15,000,000 5,000,000 5,000,000 3,000,000 - 58,000,000 25,000,000 25,000,000 16,998,333 118,000,000 451,563 135,449,896 54,666,665 54,666,665 Page 12 Benitec Biopharma Ltd Annual Report 2012 CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Benitec Biopharma Limited observe the ASX principles of corporate governance. The Company’s corporate governance statement is included on page 19 of this annual report. AUDITOR INDEPENDENCE The Directors received the declaration included on page 18 of this annual report from the auditor of Benitec Biopharma Limited. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. NON-AUDIT SERVICES Non-audit services provided by external auditors during the year ended 30 June 2012 relate to taxation advice for which fees of $42,800 (2011: $7,975) were paid. This report has been made in accordance with a resolution of the Directors. Peter Francis Chairman Sydney 28 August 2012 Directors’ Report Payments to Related Parties of Directors Legal services at normal commercial rates totalling $166,912 (2011: $133,068) were provided by Francis Abourizk Lightowlers, a law firm in which Mr Peter Francis is a partner and has a beneficial interest. Consultancy fees for executive duties totalling $40,000 (2011: $62,250) were provided by NewStar Ventures Ltd, a corporation in which Dr John Chiplin is a director and has a beneficial interest. Consultancy fees for executive duties totalling $18,999 (2011: $40,000) were provided by Gladstone Consultancy Partnership, an entity in which Mr Iain Ross is a partner and has a beneficial interest. Employment Contracts The employment conditions of Dr Peter French, the Chief Executive Officer, are formalised in a contract of employment prepared on his appointment as Chief Executive Officer and dated 4 June 2010. Dr French’s appointment with the Company may be terminated with the Company giving six months’ notice or by Dr French giving six months’ notice. The Company may elect to pay Dr French an equal amount to that proportion of his salary equivalent to six months’ pay in lieu of notice, together with any outstanding entitlements due to him. The Company may, at any time, by notice in writing terminate Dr French’s contract immediately in the event of serious misconduct. The employment conditions of Dr Michael Graham, the Chief Scientific Officer, are formalised in a contract of employment dated 1 January 2012. Dr Grahams’ appointment with the Company may be terminated with the Company giving three months’ notice or by Dr Graham giving three months’ notice. The Company may elect to pay Dr Graham an equal amount to that proportion of his salary equivalent to three month’s pay in lieu of notice, together with any outstanding entitlements due to him. The Company may, at any time, by notice in writing terminate the contract immediately in the event of serious misconduct. The employment conditions of Mr Greg West, the Company Secretary, are formalised in a contract of employment dated 23 August 2011. Mr West’s appointment with the Company may be terminated with the Company giving two months’ notice or by Mr West giving two months’ notice. The Company may elect to pay Mr West an equal amount to that proportion of his salary equivalent to two month’s pay in lieu of notice, together with any outstanding entitlements due to him. The Company may, at any time, by notice in writing terminate the contract immediately in the event of serious misconduct. Indemnification and insurance of Directors and Officers The Company has entered into Deeds of Indemnity with the Directors, the Chief Executive Officer and the Company Secretary, indemnifying them against certain liabilities and costs to the extent permitted by law. The Company has also agreed to pay a premium in respect of a contract insuring the Directors and Officers of the Company. Full details of the cover and premium are not disclosed as the insurance policy prohibits the disclosure. Benitec Biopharma Ltd Annual Report 2012 Page 13 Auditor’s Independence Declaration Page 14 Benitec Biopharma Ltd Annual Report 2012 Corporate Governance Statement The Board of Directors is responsible for establishing the corporate governance framework of the Group. The Board guides and monitors the business and affairs of Benitec Biopharma Limited on behalf of its shareholders by whom they are elected and to whom they are accountable. The Company’s corporate governance reflects the ASX Corporate Governance Council’s principles and recommendations. The following commentary summarises the Company’s compliance with the ASX Corporate Governance Council’s recommendations. PRINCIPLE 1 Lay solid foundations for management and oversight The Board has adopted a formal charter that sets out their responsibilities. This charter is posted on the Company’s website www.benitec.com. The Board sets objectives, goals and strategic direction along with a policy framework which management then works within to manage day-to-day business. The Board monitors this on a regular basis. There is clear segregation between the Board and management. Any functions not reserved for the Board and not expressly reserved for members by the Corporations Act and ASX Listing Rules are reserved for senior executives. Senior executives are subject to a formal performance review process on an annual basis. The focus of the performance review is to set specific objectives, and monitor performance against them for each executive, that are aligned with the Company’s business objectives. An annual review of the performance of each senior executive was conducted in accordance with this process during the year. PRINCIPLE 2 Structure the Board to add value Details on the Board members and their qualifications are included in the Directors’ Report. The Board has a policy of maintaining a majority of independent directors. The current Board composition is four independent Non-Executive Directors (NEDs). The Board has resolved that a majority of the members of each Board committee should be NEDs. The Board has approved that, where necessary, NEDs should meet during the year in absence of management at such times as they determine necessary. Directors are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with the exercise of their independent judgement. The Board assesses director independence on an annual basis, or more often if it feels it is warranted, depending on disclosures made by individual Directors. In the context of director independence, to be considered independent a NED may not have a direct or indirect material relationship with the Company. The Board has determined that a material relationship is one which has, or has the potential to, impair or inhibit a Director’s exercise of judgement on behalf of the Company and its shareholders. The Board has concluded that all NEDs are independent. In reaching this conclusion, the Board considered that: • Mr Francis, the Non-Executive Chairman, is a principal of Francis Abourizk Lightowlers, a material professional adviser to the Company. Notwithstanding this association, the Board is satisfied that it will not interfere with the independent exercise of his judgment. • Dr Bridges, Dr Chiplin and Mr Ross do not have any previous association with the Company or any other relationships that is relevant to their independence. The Board continually assesses its membership and makes appointments to complement and enhance the existing skill base of the Board. The Board has established a Remuneration and Nominations Committee comprising of all non-executive directors. Formal letters of appointment are used for all new NEDs. The Company’s Constitution provides that: • the maximum number of Directors shall be ten unless amended by a resolution at a General Meeting of Shareholders; • one third of the Directors (excluding the Managing Director and rounded down) must retire from office at the Annual General Meeting (AGM) each year; such retiring Directors are eligible for re-election; • Directors appointed to fill casual vacancies must submit to • election at the next general meeting; and the number of Directors necessary to constitute a quorum is not less than two Directors currently in office. The duties of a nomination committee have been assumed by the Board due to the size and scale of the Company. The Board carries out a Board performance assessment on an annual basis. In the last review, the Board undertook a detailed review of its performance and that of its committees and individual Directors. This involved a self-assessment process which required the completion and evaluation of detailed questionnaires on business and management matters. The results of this review were independently collated and analysed by the Board. Following recent changes to the Board, the next review is expected to take place during the year ended 30 June 2013. PRINCIPLE 3 Promote ethical and responsible decision-making The Board and management ensure that the business processes of Benitec Biopharma Limited are conducted according to sound ethical principles. The Board has established a formal Code of Conduct in this regard. This code is posted on the Company’s website. All Directors and employees of the Company are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. All Directors and employees of the Company are made aware of their obligations under the Corporations Act 2001 with regard to trading in the securities of the Company. In addition, the Company has adopted a Share Trading Policy, which is reviewed and updated on a regular basis as required. This policy is posted on the Company’s website. Benitec Biopharma Ltd Annual Report 2012 Page 15 Corporate Governance Statement Board members who have or may have a conflict of interest in any activity of the Company or with regard to any decision before the Board, notify the Board of such and a decision is made as to whether the Board member concerned is to be excluded from making decisions that relates to the particular matter. The Company’s constitution allows a Director to enter into any contract with the Company other than that of auditor for the Company, subject to the law. The Board has determined that Directors are able to seek independent professional advice for Company related matters at the Company’s expense, subject to the instruction and estimated cost being approved by the Chairman in advance as being necessary and reasonable. Diversity Policy • exercising oversight of the accuracy and completeness of the financial statements; • making informed decisions regarding accounting and compliance • policies, practices, and disclosures; reviewing the scope and results of operational risk reviews, compliance reviews, and external audits; and • assessing the adequacy of the consolidated entity’s internal control framework including accounting, compliance, and operational risk management controls based on information provided or obtained. “Compliance” refers to compliance with laws and regulations, internal compliance guidelines, policies and procedures, and other prescribed internal standards of behaviour. Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The company is committed to diversity and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available talent. A copy of the company’s diversity policy is available on the Benitec website. All other directors and the Chief Financial Officer are invited to attend Committee meetings. When the auditors are present at meetings, the Committee asks all executives to leave the meeting so that there can be open and frank communication between the Committee and the auditor. The diversity policy outlines the requirements for the Board to develop measurable objectives for achieving diversity, and annually assess both the objectives and the progress in achieving those objectives. Accordingly, the Board has developed the following objectives regarding gender diversity and aims to achieve these objectives over the next few years as director and senior executive positions become vacant and appropriately qualified candidates become available: 2012 2013 2014 Women on the Board Women in senior management roles Women employees in the company - 2 2 - 2 2 - 3 4 PRINCIPLE 4 Safeguard integrity in financial reporting The Board has established a Risk and Audit Committee which meets at least twice through the year. The Board has assumed all of the responsibilities of the Committee at this time due to the size and scale of the Company at this time. Dr Mel Bridges has been appointed to chair the Committee. The members of the Committee have significant financial, business and legal backgrounds, expertise and qualifications, full particulars of which are contained in this annual report, as are details of meetings of this Committee. The Committee is responsible for the appointment of the Company’s auditors and has a formal charter, which is posted on the Company’s website. The charter is reviewed annually to ensure that it is in line with emerging market practices which are in the best interests of shareholders. The main objective of the Committee is to assist the Board in reviewing any matters of significance affecting financial reporting and compliance of the consolidated entity including: The Committee has the power to conduct or authorise investigations into, or consult independent experts on, any matters within the Committee’s scope of responsibility. The Committee also considers the independence of the auditor. The Company requires that the audit partner be rotated every five years and, on an annual basis, the auditor provides a certificate to the Committee confirming their independence. The Chief Executive Officer and Chief Financial Officer have certified to the committee that the Group’s financial reports present a true and fair view, in all material respects, of the Group’s financial condition and operational results and are in accordance with relevant accounting standards. PRINCIPLE 5 Make timely and balanced disclosure The Board is committed to inform its shareholders and the market of any major events that influence the Company in a timely and conscientious manner. The Board is responsible for ensuring that the Company complies with the continuous disclosure requirements as set out in ASX Listing Rule 3.1 and the Corporations Act 2001. The Company’s Communication Protocols have been posted on the Company’s website. Any market sensitive information is discussed by the Board before it is approved to be released to the market. The Company’s procedure is to lodge the information with the ASX and make it available on the Company’s website shortly thereafter. All executives of the Company have been made aware of the Company’s obligations with regard to the continuous disclosure regime. Page 16 Benitec Biopharma Ltd Annual Report 2012 Corporate Governance Statement PRINCIPLE 6 Respect the rights of shareholders PRINCIPLE 8 Remunerate fairly and responsibly The Remuneration and Nomination Committee assists the Board in ensuring that the Company’s remuneration levels are appropriate in the markets in which it operates and are applied, and seen to be applied, fairly. The Board has assumed all of the responsibilities of the Committee at this time due to the size and scale of the Company at this time. The Company’s remuneration policy is described in the Remuneration Report contained within the Directors’ Report. Business of the Committee has been dealt with as part of the regular Board meetings as needed. The Board has access to senior management of the Company and may consult independent experts where the Board considers it necessary to carry out the duties of the Committee. Currently the Company pays directors’ fees to the NEDs. As stated in the Directors’ Report, businesses associated with directors may receive fees for professional services provided to the Company in addition to their duties as a NED. The Board ensures that its shareholders are fully informed of matters likely to be of interest to them. The Company provides all obligatory information such as annual reports, half yearly reports and other ASX required reports in accordance with the law and regulations. Notices of shareholders meetings, annual and extraordinary, are distributed in a timely manner and are accompanied by all information that the Company has obtained. The Company is always available to be contacted by shareholders for any query that the shareholders may have. The queries can be submitted by telephone, email or fax to the Company’s office. The chairman encourages questions and comments at the AGM ensuring that shareholders have a chance to obtain direct response from the CEO and other appropriate Board members. The Company requests that the auditors attend the AGM and are available to answer any questions with regard to the conduct of the audit and their report. PRINCIPLE 7 Recognise and manage risk The Directors continually monitor areas of significant business risk, recognising that there are inherent risks associated with the management, funding and commercialisation of biotechnology projects. The Board has delegated the responsibility for the establishment and maintenance of a framework for risk oversight and the management of risk for the Group to the Risk and Audit Committee. The Committee’s role is to provide a direct link between the Board and the external function of the Company. This includes: • Monitoring corporate risk assessment and the internal controls instituted; • Monitoring the establishment of an appropriate internal control framework, including information systems, and considering enhancements; • Reviewing reports on any defalcations, frauds and thefts from the Company and action taken by managements; • Reviewing policies to avoided conflicts of interest between the Company and members of management; and • Considering the security of computer systems and applications, and the contingency plans for processing financial information in the event of a systems breakdown. The Chief Executive Officer and Chief Financial Officer have made representations to the Committee on the system of risk management and internal compliance and control which implements the policies adopted by the Board. The Chief Executive Officer and Chief Financial Officer have also represented that, to the best of their knowledge, the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. Benitec Biopharma Ltd Annual Report 2012 Page 17 Financial Statement and Notes to the Financial Statements STATEMENT OF COMPREHENSIVE INCOME For the Year Ended 30 June 2012 Continuing Operations Revenue Other income Royalties & licence fees Research and development Employment related Share based expense Travel related costs Consultants costs Occupancy costs Corporate expenses Finance costs Foreign exchange translation Settlements Loss before income tax Income tax expense/(benefit) Note 2 2 3 3 3 3 4 2012 $ 323,577 179,457 503,034 (117,339) (1,309,171) (1,033,855) (1,093,122) (209,013) (275,170) (71,253) (504,931) (10,470) 8,672 - 2011 $ 342,545 3,000 345,545 (28,033) (1,280,313) (944,940) (122,568) (187,107) (226,875) (50,893) (438,433) (29,124) 88,824 (660,957) (4,615,651) (3,880,419) (4,112,617) (3,534,874) - - Loss for the year attributable to members of the parent entity (4,112,617) (3,534,874) Other Comprehensive Income Other Comprehensive Income for the year, net of tax Total Comprehensive Income for the year Total Comprehensive Income attributable to members of the parent entity - (4,112,617) (4,112,617) - (3,534,874) (3,534,874) Earnings per share (cents per share) Basic and diluted for loss for the year attributable to ordinary equity holders of the parent entity The accompanying notes form part of these financial statements 6 (0.43) (0.68) Page 18 Benitec Biopharma Ltd Annual Report 2012 Financial Statement and Notes to the Financial Statements STATEMENT OF FINANCIAL POSITION As at 30 June 2012 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Trade and other payables Borrowings Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY Note 8 9 10 12 13 15 13 14 15 16 17 2012 $ 3,075,880 127,466 17,057 2011 $ 6,654,097 147,832 36,968 3,220,403 6,838,897 30,803 30,803 26,461 26,461 3,251,206 6,865,358 533,170 55,122 588,292 - - - - 1,141,559 55,915 1,197,474 171,048 292,488 - 463,536 588,292 1,661,010 2,662,914 5,204,348 87,348,819 1,394,142 (86,080,047) 86,821,961 2,810,599 (84,428,212) 2,662,914 5,204,348 The accompanying notes form part of these financial statements Benitec Biopharma Ltd Annual Report 2012 Page 19 Financial Statement and Notes to the Financial Statements STATEMENT OF CASH FLOWS For the Year Ended 30 June 2012 Note CASH FLOWS FROM OPERATING ACTIVITIES RReceipts from customers Payments to suppliers and employees Net cash used in operating activities 8 CASH FLOWS FROM INVESTING ACTIVITIES Interest received Dividends received Purchase of property, plant and equipment Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issue of shares Proceeds from borrowings La Jolla Cove settlement Interest paid Net cash (used in)/provided by financing activities Net (decrease)/increase in cash held Exchange differences on cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year The accompanying notes form part of these financial statements 14 8 2012 $ 329,153 (3,651,431) (3,322,278) 163,701 - (17,836) 145,865 199,030 - (602,857) - (403,827) (3,580,240) 2,023 6,654,097 3,075,880 2011 $ 159,702 (3,498,800) (3,339,098) 48,171 137,671 (27,893) 157,949 7,431,881 1,791,681 - (24,098) 9,199,464 6,018,315 (15,225) 651,007 6,654,097 Page 20 Benitec Biopharma Ltd Annual Report 2012 Financial Statement and Notes to the Financial Statements STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2012 Convertible Share-based Contributed Note Equity Reserve Equity $ Payments Accumulated Losses $ Reserve $ Total $ Balance at 1 July 2010 Loss for the year Other comprehensive income for year Total comprehensive income for year 77,487,593 - - - 69,837 - - - 2,639,234 - - - (80,893,338) (3,534,874) - (3,534,874) (696,674) (3,534,874) - (3,534,874) Equity component of convertible note Transfer to Contributed Equity upon partial conversion of convertible note Share Based Payments Share issues, net of transaction costs Transactions with owners - 200,593 - 221,633 - 9,112,735 9,334,368 (221,633) - - (21,040) - 122,568 - 122,568 - - - - - 200,593 - 122,568 9,112,735 9,435,896 Balance 30 June 2011 86,821,961 48,797 2,761,802 (84,428,212) 5,204,348 Loss for the year Other comprehensive income for year Total comprehensive income for year Equity component of convertible note Transfer to Contributed Equity upon partial conversion of convertible note Transfer to Accumulated Losses the Share Based Payments Reserve no longer required Share Based Payments Share issues, net of transaction costs Transactions with owners - - - - - - - 25,858 74,655 (74,655) - - - - - (4,112,617) - (4,112,617) (4,112,617) - (4,112,617) - - 25,858 - - - 452,203 526,858 - - - (48,797) (2,460,782) 1,093,122 - (1,367,660) 2,460,782 - - 2,460,782 - 1,093,122 452,203 1,571,183 Balance 30 June 2012 87,348,819 - 1,394,142 (86,080,047) 2,662,914 The accompanying notes form part of these financial statements Benitec Biopharma Ltd Annual Report 2012 Page 21 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation The financial report covers Benitec Biopharma Limited and its controlled entities as a consolidated entity (“Group”). Benitec Biopharma Limited is a listed public company, incorporated and domiciled in Australia. The consolidated general purpose financial report statements of the Group have 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. Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Benitec Biopharma Limited is a for-profit entity for the purpose of preparing financial statements. The consolidated financial statements for the year ended 30 June 2012 (including comparatives) were approved and authorised for issue by the board of directors on 23 August 2012. The consolidated financial statements have been prepared using the measurement bases specified by Australian Accounting Standards for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. (b) Principles of Consolidation A controlled entity is any entity controlled by Benitec Biopharma Limited whereby Benitec Biopharma Limited has the power to control the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of controlled entities have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. A list of controlled entities is contained in note 11 to the financial statements. All controlled entities have a June financial year-end except for Benitec Ltd (UK) which has a December year-end. (c) New Accounting Standards and Interpretations not yet adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2011, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the consolidated entity. Adoption of AASBs and improvements to AASBs 2011 – AASB 1054 and AASB 2011-11 The AASB has issued AASB 1054 Australian Additional Disclosures and 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project, and made several minor Page 22 Benitec Biopharma Ltd Annual Report 2012 amendments to a number of AASBs. These standards eliminate a large portion of the differences between the Australian and New Zealand accounting standards and IFRS and retain only additional disclosures considered necessary. These changes also simplify some current disclosures for Australian entities and remove others. Standards, amendments and interpretations to existing standards that are not yet effective and have not been adopted early by the Group At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the Group. Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements. AASB 9 Financial Instruments (effective from 1 January 2013) The AASB aims to replace AASB 139 Financial Instruments: Recognition and Measurement in its entirety. The replacement standard (AASB 9) is being issued in phases. To date, the chapters dealing with recognition, classification, measurement and derecognition of financial assets and liabilities have been issued. These chapters are effective for annual periods beginning 1 January 2013. Further chapters dealing with impairment methodology and hedge accounting are still being developed. Management have yet to assess the impact that this amendment is likely to have on the financial statements of the Group. However, they do not expect to implement the amendments until all chapters of AASB 9 have been published and they can comprehensively assess the impact of all changes. Consolidation Standards A package of consolidation standards are effective for annual periods beginning or after 1 January 2013. Information on these new standards is presented below. The Group’s management have yet to assess the impact of these new and revised standards on the Group’s consolidated financial statements. AASB 10 Consolidated Financial Statements (AASB 10) AASB 10 supersedes the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements (AASB 127) and Interpretation 112 Consolidation – Special Purpose Entities. It revised the definition of control together with accompanying guidance to identify an interest in a subsidiary. However, the requirements and mechanics of consolidation and the accounting for any non-controlling interests and changes in control remain the same. AASB 11 Joint Arrangements (AASB 11) AASB 11 supersedes AASB 131 Interests in Joint Ventures (AASB 131). It aligns more closely the accounting by the investors with their rights and obligations relating to the joint arrangement. It introduces two accounting categories (joint operations and joint ventures) whose applicability is determined based on the substance of the joint arrangement. In addition, AASB 131’s option of using proportionate consolidation for joint ventures has been eliminated. AASB 11 now requires the use of the equity accounting method for joint ventures, which is currently used for investments in associates. Notes to the Financial Statements for the Year Ended 30 June 2012 AASB 12 Disclosure of Interests in Other Entities (AASB 12) AASB 12 integrates and makes consistent the disclosure requirements for various types of investments, including unconsolidated structured entities. It introduces new disclosure requirements about the risks to which an entity is exposed from its involvement with structured entities. Consequential amendments to AASB 127 Separate Financial Statements (AASB 127) and AASB 128 Investments in Associates and Joint Ventures (AASB 128) AASB 127 Consolidated and Separate Financial Statements was amended to AASB 127 Separate Financial Statements which now deals only with separate financial statements. AASB 128 brings investments in joint ventures into its scope. However, AASB 128’s equity accounting methodology remains unchanged. AASB 13 Fair Value Measurement (AASB 13) AASB 13 does not affect which items are required to be fair-valued, but clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair value measurements. It is applicable for annual periods beginning on or after 1 January 2013. The Group’s management have yet to assess the impact of this new standard. AASB 2011-9 Amendments to Australian Accounting Standards Presentation of Items of Other Comprehensive Income s (AASB 101 Amendments) The AASB 101 Amendments require an entity to group items presented in other comprehensive income into those that, in accordance with other IFRSs: (a) will not be reclassified subsequently to profit or loss and (b) will be reclassified subsequently to profit or loss when specific conditions are met. It is applicable for annual periods beginning on or after 1 July 2012. The Group’s management expects this will change the current presentation of items in other comprehensive income; however, it will not affect the measurement or recognition of such items. AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (AASB 124 Amendments) AASB 2011-4 makes amendments to AASB 124 Related Party Disclosures to remove individual key management personnel disclosure requirements, to achieve consistency with the international equivalent (which includes requirements to disclose aggregate (rather than individual) amounts of KMP compensation), and remove duplication with the Corporations Act 2011. The amendments are applicable for annual periods beginning on or after 1 July 2013. The Group’s management have yet to assess the impact of these amendments. (d) Revenue Revenue from the granting of licenses is recognised in accordance with the terms of the relevant agreements and is usually recognised on an accruals basis, unless the substance of the agreement provides evidence that it is more appropriate to recognise revenue on some other systematic rational basis. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset an a straight line basis. (e) Income Tax The charge for current income tax expense is based on the loss for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantially enacted by reporting date. Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. Benitec Biopharma Limited and its wholly-owned Australian subsidiary has formed an income tax consolidated group under the Tax Consolidation Regime. Benitec Biopharma Limited is responsible for recognising the current and deferred tax assets and liabilities for the tax consolidated group. The Group notified the ATO on 12 February 2004 that it had formed an income tax consolidated group to apply from 1 July 2002. No tax sharing agreement has been entered between entities in the tax consolidated group. Benitec Biopharma Ltd Annual Report 2012 Page 23 Notes to the Financial Statements for the Year Ended 30 June 2012 (f) Critical Accounting Estimates and Judgments (i) Trade and Other Receivables The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified. Key estimates – share-based payments transactions The Group 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 using a Black-Scholes model, using the assumptions detailed in note 21. Key judgements – tax losses Given the company’s and each individual entities’ history of recent losses, the Group has not recognised a deferred tax asset with regard to unused tax losses and other temporary differences, as it has not been determined whether the company or its subsidiaries will generate sufficient taxable income against which the unused tax losses and other temporary differences can be utilised. Key judgements – compound financial instruments The Group measures the fair value of the liability component using the prevailing market interest rate for similar convertible instruments. (g) Impairment of Non-Financial Assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. In 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). (h) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities on the statement of financial position. Page 24 Benitec Biopharma Ltd Annual Report 2012 (j) Property, Plant and Equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Depreciation The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a diminishing value basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements. The depreciation rates used for plant and equipment were 20-33 %. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. 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. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When assets which have been revalued are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (k) Leases Leases of fixed assets are classified as finance leases where the Group has substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Leased assets are depreciated on a straight-line basis over Notes to the Financial Statements for the Year Ended 30 June 2012 their estimated useful lives where it is likely that the consolidated entity will obtain ownership of the asset or over the term of the lease. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term. (l) Financial Instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Financial liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation. Compound instruments The component parts of compound instruments (convertible notes) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. The liability component is recorded on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument’s maturity date. The equity component is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not subsequently remeasured. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged or significant decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the statement of comprehensive income. (m) Intangibles Research and development Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. (n) Trade and Other Payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the group prior to the end of the financial year that are unpaid and arise when the group becomes obliged to make future payments in respect of the purchase of these goods and services. (o) Employee Benefits Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. (p) Provisions Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will results and that outflow can be reliably measured. (q) Contributed Equity Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (r) Share-based Payment Transactions Benefits are provided to employees of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled transactions’). The plan currently in place to provide these benefits is the Employee Share Option Plan (ESOP), which provides benefits to senior executives. The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined using a Black-Scholes model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Benitec Biopharma Limited (‘market conditions’). The cost of 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’). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the directors of the group, will ultimately vest. This opinion is formed based on the best available information at reporting date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Benitec Biopharma Ltd Annual Report 2012 Page 25 Notes to the Financial Statements for the Year Ended 30 June 2012 Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. (s) Earnings per Share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: • costs of servicing equity (other than dividends) and preference • share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (t) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. Page 26 Benitec Biopharma Ltd Annual Report 2012 Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income. Group companies The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows: • Assets and liabilities are translated at year-end exchange rates • prevailing at that reporting date. Income and expenses are translated at average exchange rates for the period. • Retained profits are translated at the exchange rates prevailing at the date of the transaction. (u) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (v) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (w) Going Concern Notwithstanding the net loss for the year of $4,112,617 and the cash and cash equivalents balance of $3,075,880, the directors have prepared the financial statements on a going concern basis. The reason for this is that the directors have performed a review of the cash flow forecasts, considered the cash flow needs of the consolidated entity, and believe that the strategies in progress to generate funds will be sufficient to maintain the going concern status of the consolidated entity. These strategies for which the outcome is currently uncertain include further licensing arrangements and additional capital raising. If these strategies are unsuccessful then the consolidated entity may need to realise its assets and extinguish liabilities other than in the ordinary course of business and at amounts different to those disclosed in the financial report. Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 2: REVENUE FROM CONTINUING OPERATIONS Revenue - Licensing revenue and royalties - Finance income - dividends received - Finance income - interest received Other income - Government grants Total revenue and other income NOTE 3: LOSS FOR THE YEAR (a) Expenses incurred by continuing operations Items included in Statement of Comprehensive Income Finance costs Interest payable – other persons Doubtful debts Other Finance costs Depreciation Included in Occupancy expenses Depreciation of plant and equipment Employee benefits expense Included in Employment related expenses Wages and salaries Superannuation costs Share-based payments expense CSIRO IP Settlement During the 2010 year, the Company reached a settlement with the CSIRO to replace the existing Licence Agreement and Commercial Agreement with a new exclusive Licence Agreement for the use of intellectual property and the Capital Growth Agreement with the issue of ordinary shares. The Licence Agreement contains a number of further contingent payments as outlined in Note 23. LJCI Settlement In April 2011 the Company negotiated the finalisation of the convertible note facility provided by La Jolla Cove Investors Inc. The agreement included a settlement cost of US$700,000 to be paid within 6 months from the closing of the May 2011 rights issue, in instalments. An instalment payment was made in the year to 30 June 2011 and the remainder of the settlement liability was paid in full this financial year and totalled $602,857 (note 14).. 2012 $ 323,580 - 167,701 491,281 11,753 503,034 8,517 - 1,953 10,470 2011 $ 156,702 137,671 48,172 342,545 3,000 345,545 26,826 - 2,298 29,124 12,822 9,053 676,845 47,760 1,093,122 - - 573,823 43,977 122,568 - 660,957 Benitec Biopharma Ltd Annual Report 2012 Page 27 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 3: LOSS FOR THE YEAR (CONTINUED) (b) Expenses The following expense items are relevant in explaining the financial performance: Research and development costs consist of: Project expenses IP litigation expenses Other IP related expenses 2012 $ 2011 $ 1,040,989 9,915 258,267 1,309,171 386,896 (15,703) 909,120 1,280,313 NOTE 4: INCOME TAX EXPENSE (a) The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on loss from ordinary activities before income tax at 30% (2011: 30%) Add Tax effect of: Non-deductible share-based payment expense Non-deductible legal fees Capital items deductible Other non-deductible items Deductible items not included in operating result Deferred tax asset not brought to account Income tax benefit reported in the income statement (1,233,785) (1,060,462) 327,937 14,656 (49,805) 14,873 (55,250) 981,374 - 36,770 15,674 (159,136) 39,283 (81,790) 1,011,374 - (b) The parent entity, acting as the Head Entity, notified the Australian Taxation Office on 12 February 2004 that it had formed a Tax Consolidated Group applicable as from 1 July 2002. No tax sharing agreement has been entered between entities in the tax consolidated group. (c) As at 30 June 2012, the Tax Consolidated Group has a net deferred tax asset of $10,745,949 (2011: $9,902,859) arising from significant available Australian tax losses (calculated at 30%), which has not been recognised in the financial statements. The deferred tax asset relating to temporary differences (calculated at 30%) was $36,360 (2011 $192,877). The Consolidated Group also has Australian capital tax losses for which no deferred tax asset is recognised on the statement of financial position of $381,588 (2011: $381,588) which are available indefinitely for against future capital gains subject to continuing to meet relevant statutory tests. The recoupment of available tax losses as at 30 June 2012 is contingent upon the following: (i) the Consolidated Group deriving future assessable income of a nature and of an amount sufficient to enable the benefit from the losses to be realised; (ii) the conditions for deductibility imposed by tax legislation continuing to be complied with; and (iii) there being no changes in tax legislation which would adversely affect the Tax Consolidated Group from realising the benefit from the losses. Page 28 Benitec Biopharma Ltd Annual Report 2012 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 5: AUDITOR’S REMUNERATION Audit Services Remuneration of Grant Thornton Audit Pty Ltd for: -auditing or reviewing the financial report Other Services Remuneration of Grant Thornton Australia Pty Ltd for: - taxation compliance 2012 $ 2011 $ 50,000 46,000 38,909 7,975 NOTE 6: EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options) and the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares. The following reflects the income and share data used in the total operations basic and diluted earnings per share computations: Loss after income tax used in the calculation of basic EPS and dilutive EPS (4,112,617) (3,534,874) 2012 $ 2011 $ Weighted average number of ordinary shares for basic and diluted earnings per share Weighted average number of converted, lapsed or cancelled potential ordinary shares included in diluted earnings per share All options to acquire ordinary shares are not considered dilutive for the years ended 30 June 2012 and 30 June 2011. Number 949,747,352 Number 519,094,683 - - Classification of securities No securities or convertible debt instruments could be classified as potential ordinary shares under AASB 133 and therefore have not been included in determination of dilutive EPS. Benitec Biopharma Ltd Annual Report 2012 Page 29 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 7: KEY MANAGEMENT PERSONNEL (a) Details of Key Management Personnel (i) Directors Mr Peter Francis Chairman - Non-Executive Appointed on 23 February 2006 Dr Mel Bridges Director - Non-Executive Appointed on 12 October 2007 Dr John Chiplin Director - Non-Executive Appointed on 1 February 2010 Mr Iain Ross Director - Non-Executive Appointed on 1 June 2010 (ii) Executives Dr Peter French Chief Executive Officer Appointed Chief Scientific Officer on 4 August 2009, appointed Chief Executive Officer on 4 June 2010 Dr Michael Graham Chief Scientific Officer Appointed on 1 January 2012 Mr Greg West Company Secretary Appointed on 26 May 2011 (b) Key management personnel remuneration includes the following expenses Short term employee benefits Salaries including bonuses Post-employment benefits Superannuation Share-based payments Total Remuneration (c) Options and Rights Holdings Number of Options held by Key Management Personnel 2012 $ 486,925 36,751 436,550 960,226 2011 $ 460,614 30,398 64,611 590,623 Balance Granted as 01-Jul-11 Remuneration Options Aquired Options Exercised/ Lapsed/Other Balance at 30-Jun-12 Total Vested at 30-Jun-12 Total Exercisable at 30-Jun-12 4,000,000 40,000,000 2,998,333 10,000,000 10,000,000 10,000,000 6,998,333 70,000,000 10,000,000 30,000,000 15,000,000 3,000,000 10,000,000 48,000,000 264,063 187,500 451,563 - - - 44,000,000 16,833,333 16,833,333 12,998,333 6,166,666 6,166,666 10,264,063 3,333,333 3,333,333 10,187,500 3,333,333 3,333,333 - 77,449,896 29,666,665 29,666,665 - 40,000,000 20,000,000 20,000,000 15,000,000 5,000,000 5,000,000 3,000,000 - 58,000,000 25,000,000 25,000,000 16,998,333 118,000,000 451,563 135,449,896 54,666,665 54,666,665 Directors Peter Francis Mel Bridges John Chiplin Iain Ross Sub-total Executives Peter French Michael Graham Greg West Sub-total Total Page 30 Benitec Biopharma Ltd Annual Report 2012 Notes to the Financial Statements for the Year Ended 30 June 2012 (d) Shareholdings Number of Shares held by Key Management Personnel Balance 01-Jul-11 Received as Remuneration Upon Options Exercised Net Change Other * Balance 30-Jun-12 Directors Peter Francis Mel Bridges John Chiplin Iain Ross Sub-total Executives Peter French Michael Graham Greg West Sub-total Total 2,237,175 860,000 1,190,846 750,000 5,038,021 - - - - 5,038,021 - - - - - - - - - - * Net Change Other refers to shares purchased or sold during the financial year. NOTE 8: CASH AND CASH EQUIVALENTS Cash at bank Deposits at call - - - - - - - - - - - 1,850,000 1,850,000 - - - - 2,237,175 2,710,000 1,190,846 750,000 6,888,021 - - - - 1,850,000 6,888,021 2012 $ 525,880 2,550,000 3,075,880 2011 $ 68,406 6,585,691 6,654,097 Reconciliation of Cash Flow from Operations with Loss after Income Tax Loss after Income Tax (4,112,617) (3,534,874) Non-cash flows included in operating loss: Interest received Dividends received Depreciation LJCI settlement Interest paid Share-based payments Foreign currency translation unrealised Provisions and non-cash adjustments Changes in assets and liabilities: Decrease in trade and other receivables (Increase)/decrease in other current assets Increase/(decrease) in trade and other payables Net cash flows from operations (163,701) - 12,822 602,857 - 1,093,122 (2,023) (793) 20,366 19,912 (792,223) (3,322,278) (48,171) (137,671) 9,053 - 26,826 122,568 (88,824) (168,710) 202,638 (8,904) 286,971 (3,339,098) Benitec Biopharma Ltd Annual Report 2012 Page 31 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 9: TRADE AND OTHER RECEIVABLES CURRENT Sundry Debtors NOTE 10: OTHER ASSETS CURRENT Prepayments Other current assets NOTE 11: CONTROLLED ENTITIES (a) Controlled entities: Parent Entity: Benitec Biopharma Limited Controlled entities of Benitec Biopharma Limited: Benitec Australia Limited Benitec Biopharma Limited Benitec, Inc. Benitec LLC RNAi Therapeutics, Inc. 2012 $ 2011 $ 127,466 147,832 10,603 6,453 17,056 30,515 6,453 36,968 Country of Incorporation Percentage Owned 2012 2011 Australia Australia United Kingdom USA USA USA 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% (b) Controlled entities acquired or disposed: No controlled entities were acquired or disposed during the financial year. Page 32 Benitec Biopharma Ltd Annual Report 2012 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 12: PROPERTY, PLANT AND EQUIPMENT Plant and Equipment At cost Accumulated depreciation Total Property, Plant and Equipment Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year. 2012 $ 68,319 (37,516) 30,803 Leasehold Improvement $ Plant and Equipment $ Balance at 30 June 2010 Additions Depreciation expense Balance at 30 June 2011 Additions Less Disposals Depreciation expense Balance at 30 June 2012 NOTE 13: TRADE AND OTHER PAYABLES CURRENT Unsecured liabilities Trade creditors Sundry creditors and accrued expenses NON-CURRENT Unsecured liabilities Sundry creditors and accrued expenses NOTE 14: BORROWINGS Convertible Note - - - - 13,176 - (1,416) 11,760 7621 27,893 (9,053) 26,461 8,593 (4,609) (11,406) 19,043 2012 $ 373,896 159,274 533,170 - - 2011 $ 51,539 (25,078) 26,461 Total $ 7,621 27,893 (9,053) 26,461 21,773 (4,609) (12,822) 30,803 2011 $ 470,243 671,316 1,141,559 171,048 292,488 Benitec Biopharma announced on 11 April 2011 that the Company and La Jolla Cove Investors Inc. (“LJCI”) had agreed to terminate the LJCI convertible note facility. The facility was established in April 2010 and provided funding to the Company of up to US$6 million under four convertible notes. The first of the four convertible notes were paid in full by LJCI and converted into shares in Benitec Biopharma, and the second convertible note was commenced on 11 January 2011. The Company and LJCI agreed to terminate the facility on the terms described in the 11 April 2011 announcement which included: (a) LJCI may advance a final instalment of up to US$200,000 to the Company under the facility, after which there will be no more advances made. (b) Within 6 months of the closing of the May 2011 rights issue, US$700,000 will be paid by the Company to LJCI, in instalments. In December 2011 LJCI made its final instalment of US$200,000 (AUD $199,030) to the Company under the facility. During the year the Company paid the balance of the settlement payout accrued at 30 June 2011 of AUD $602,857. Benitec Biopharma Ltd Annual Report 2012 Page 33 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 15: PROVISIONS CURRENT Provision for employee benefits NOTE 16: CONTRIBUTED EQUITY 2012 $ 2011 $ 55,122 55,915 926,337,910 (2011: 415,004,245) fully paid ordinary shares 87,348,819 86,821,961 (a) Ordinary Shares At the beginning of the reporting period Shares issued during the year Transaction costs relating to share issues Convertible Note conversion At the beginning of reporting period Shares issued during the year (b) Share options 86,821,961 - (7,053) 533,911 87,348,819 Number 926,337,910 44,290,619 970,628,529 77,487,593 8,101,173 (656,805) 1,890,000 86,821,961 Number 415,004,215 511,333,695 926,337,910 At the end of the financial year, there were 428,985,202 unissued ordinary shares (2011: 310,785,202) over which options were outstanding. Details Listed BLTOB Listed BLTO Unlisted Options Unlisted Options Strategic Advisor Warrants Other Options NED Options NED Options NED Options ESOP Options ESOP Options ESOP Options ESOP Options ESOP Options Directors’ Options Expiry Date Exercise Price 31 December 2013 8 April 2014 31 December 2012 10 April 2015 4 August 2014 30 September 2013 31 December 2012 19 August 2014 26 September 2016 21 February 2013 10 June 2013 19 August 2014 17 November 2016 7 February 2017 23 October 2015 $0.04 $0.10 $0.10 $0.10 $0.90 $0.03 $0.09 $0.02 $0.05 $0.08 $0.03 $0.02 $0.05 $0.05 $0.17 Number 201,302,538 46,673,907 22,244,444 12,000,000 6,126,962 17,560 4,666,666 3,000,000 70,000,000 300,000 5,000,000 6,500,000 45,000,000 4,200,000 1,953,125 428,985,202 Since 30 June 2012, the following options were issued under the ESOP: ESOP Options 18 July 2017 $0.0500 10,000,000 Page 34 Benitec Biopharma Ltd Annual Report 2012 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 17: RESERVES Convertible Note Equity Reserve At the beginning of the reporting period Equity component of convertible note Transfer to Contributed Equity upon partial conversion of convertible note Share-based Payments Reserve At the beginning of the reporting period Share based payments Transferred to Accumulated Losses Reserve no longer required 2012 $ 2011 $ 48,797 25,858 (74,655) - 2,761,802 1,093,122 (2,460,782) 1,394,142 1,394,142 69,837 200,593 (221,633) 48,797 2,639,234 122,568 - 2,761,802 2,810,599 Nature and purpose of Reserves Convertible Note Equity Reserve The Convertible Note Equity Reserve records the equity component of convertible notes at the time of drawdown of the funds. When a conversion to ordinary shares takes place, the equity component of the convertible note being converted is transferred to Contributed Equity. Share Based Payments Reserve The Share-based Payments Reserve represents the expense attributed to options based on a Black Scholes valuation method for vested options. NOTE 18: OPERATING SEGMENTS Business Segments The Group had only one business segment during the financial year, being the global commercialisation by licensing and partnering of patents and licences in biotechnology, more specifically in functional genomics, with applications in biomedical research and human therapeutics. Geographical Segments Business operations are conducted in Australia. However there are controlled entities based in the USA and United Kingdom. Geographical location Australia United States of America United Kingdom Segment Revenues from External Customers Segment Results 2012 $ 2011 $ 2012 $ 2011 $ Carrying Amount of Segment Assets 2012 $ 2011 $ 503,034 345,545 (4,112,617) (3,524,449) 3,327,085 6,848,328 - - - - - - (2,803) (7,621) 194,121 17,030 - - 503,034 345,545 (4,112,617) (3,534,873) 3,521,206 6,865,358 Accounting Policies Segment revenues and expenses are directly attributable to the identified segments and include joint venture revenue and expenses where a reasonable allocation basis exists. Segment assets include all assets used by a segment and consist mainly of cash, receivables, inventories, intangibles and property, plant and equipment, net of any allowances, accumulated depreciation and amortisation. Where joint assets correspond to two or more segments, allocation of the net carrying amount has been made on a reasonable basis to a particular segment. Segment liabilities include mainly accounts payable, employee entitlements, accrued expenses, provisions and borrowings. Deferred income tax provisions are not included in segment assets and liabilities. Benitec Biopharma Ltd Annual Report 2012 Page 35 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 19: FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial instruments comprise receivables, payables, cash and short-term deposits. The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Company financial risk management policy. The objective of the policy is to protect the assets and provide a solid return. The main risks arising from the financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. Risk Exposures and Responses Interest rate risk The Group generates income from interest on surplus funds. At reporting date, the Group had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk that are not designated in cash flow hedges: Financial Assets Cash and cash equivalents Financial Liabilities Net Exposure 2012 $ 3,075,880 - 3,075,880 2011 $ 6,654,097 - 6,654,097 The policy is to analyse its interest rate exposure across the Groups financial assets and liabilities. Consideration is given to the return on funds invested, alternative financing, the mix of fixed and variable interest rates and hedging positions. The Group currently has short term deposits at variable interest rates. The average interest rate applying to cash in the year was 4.25% (2011: 2.62%). The following sensitivity analysis is based on the interest rate risk exposures in existence at the reporting date: At 30 June 2012, if interest rates had moved, as illustrated in the table below, with all other variables held constant, the judgment of reasonably possible movements in post-tax profit and equity would have been as follows: +1% (100 basis points) -0.5% (50 basis points) Liquidity risk Post Tax Result Higher/ (Lower) Equity Higher/ (Lower) 2012 $ 44,560 (22,730) 2011 $ 15,753 (7,876) 2012 $ 44,560 (22,730) 2011 $ 15,753 (7,876) The Group’s objective is to obtain revenue from commercialisation and to continue to access funding markets which over recent years has been through the equities or convertible notes. The Group has a pipeline of programs to take its research and development to the clinic and potentially originate licensing transactions with pharmaceutical companies. Trade payables and other financial liabilities originate from the financing of the ongoing research and development programs in addition to the operations of the business generally. The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and interest resulting from recognised financial assets and liabilities as at 30 June 2012. Cash flows for financial assets and liabilities with fixed amount or timing are presented with their respective discounted cash flows for the respective upcoming fiscal years. The remaining contractual maturities of the Group’s financial liabilities are:: 6 months or less 6-12 months 1-5 years Over 5 years Page 36 Benitec Biopharma Ltd Annual Report 2012 2012 $ 475,215 57,955 - - 533,170 2011 $ 912,556 57,955 171,048 - 1,141,559 Notes to the Financial Statements for the Year Ended 30 June 2012 Maturity analysis of financial assets and liabilities based on management’s expectation The table below reflects management’s expectation of the maturity of financial assets and liabilities. These assets are considered in the context of the Group’s overall liquidity risk. The Group has established a risk reporting process overseen by the board which monitors existing financial assets and liabilities and provides information to enable effective risk management. The Board regularly evaluates managements rolling forecasts of liquidity which includes assessments of cash income and outgoings. ≤6 months 6-12 months 1-5 years >5 years $ Financial assets Cash and cash equivalents 3,075,880 Trade and other receivables 144,523 Financial Liabilities Trade and other payables (475,215) Net Maturity 2,745,188 $ - - (57,955) (57,955) $ - - - - $ - - - - Total $ 3,075,880 144,523 (533,170) 2,687,233 Foreign currency risk The Group has transactional currency exposures. Such exposure arises from licensing fees and royalties as well as expenditure by the Group in currencies other than the unit’s measurement currency. Foreign currency income and expenditure accounts for less than 10% of the Groups transactions. Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group’s exposure to credit risk arises from potential counter party payment default, with a maximum exposure equal to the carrying amount. Exposures at each reporting date are assessed and disclosed in the financial statements. The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties and as such collateral is not requested. The Group does not securitise its trade and other receivables. Customers who wish to trade on credit terms are subject to credit assessment procedures which may include an assessment of their independent credit rating, financial position, past experience and industry reputation. Receivable balances are regularly monitored. There are no significant concentrations of credit risk within the Group. NOTE 20: FINANCIAL INSTRUMENTS Fair values Fair values of financial assets and liabilities are equivalent to carrying values due their short term to maturity. Benitec Biopharma Ltd Annual Report 2012 Page 37 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 21: SHARE BASED PAYMENTS Benitec Biopharma Limited Employees Share Option Plan (ESOP): Description of plan The Group may from time to time issue employees options to acquire shares in the parent at a fixed price. Each option when exercised entitles the option holder to one share in the Company. Options are exercisable on or before an expiry date, do not carry any voting or dividend rights and are not transferable except on death of the option holder. Share Options granted during the year The following options were issued to executives by Benitec Biopharma Limited under its ESOP and are unlisted. Executive Peter French Michael Graham Greg West Grant Date Number Exercise Price Expiry Date 17 November 2011 17 November 2011 7 February 2012 30,000,000 15,000,000 3,000,000 48,000,000 $0.050 $0.050 $0.050 17 November 2016 17 November 2016 7 February 2017 The following options were issued Directors and approved by shareholders at the Annual General Meeting of shareholders on 17 November 2011. They were not issued as part of the ESOP. Director Peter Francis Mel Bridges John Chiplin Iain Ross Grant Date Number Exercise Price Expiry Date 26 September 2011 26 September 2011 26 September 2011 26 September 2011 40,000,000 10,000,000 10,000,000 10,000,000 70,000,000 $0.050 $0.050 $0.050 $0.050 26 September 2016 26 September 2016 26 September 2016 26 September 2016 The closing market price of an ordinary share of Benitec Biopharma Limited (ASX Code: BLT) on the Australian Securities Exchange at 30 June 2012 was $0.017 (30 June 2011: $0.028) The following table illustrates the number and weighted average exercise price (WAEP) of share options issued under the ESOP: Outstanding at the beginning of the year Granted during the year Exercised during the year Lapsed or forfeited during the year Outstanding at the end of the year 2012 Number 12,800,000 49,200,000 - (1,000,000) 61,000,000 2012 WAEP $0.0267 $0.0500 - $0.0407 $0.0453 2011 Number 7,300,000 11,500,000 (420,000) (5,580,000) 12,800,000 2011 WAEP $0.0710 $0.0371 $0.0224 $0.0722 $0.0267 Page 38 Benitec Biopharma Ltd Annual Report 2012 Notes to the Financial Statements for the Year Ended 30 June 2012 Details of ESOP share options outstanding as at end of year: Expiry Date 14 December 2011 21 February 2013 10 June 2013 19 August 2014 17 November 2016 7 February 2017 Grant Date 2012 Number Exercise Price 2011 Number 14 December 2006 21 February 2008 13 July 2010 13 July 2010 17 November 2011 7 February 2012 300,000 5,000,000 6,500,000 45,000,000 4,200,000 61,000,000 $0.0407 $0.0781 $0.0289 $0.0204 $0.0500 $0.0500 $0.0453 1,000,000 300,000 5,000,000 6,500,000 12,800,000 NOTE 22: EVENTS SUBSEQUENT TO REPORTING DATE There have been no material events subsequent to reporting date. NOTE 23: CONTINGENT LIABILITIES In January 2010, the Company reached a settlement with the CSIRO to replace the existing Licence Agreement and Commercial Agreement with a new exclusive Licence Agreement for the use of intellectual property and the Capital Growth Agreement with the issue of ordinary shares. As part of the settlement, a Transition Agreement was put in place in order to facilitate the change from the old agreements to the new agreement and to deal with a number of other matters. Under the terms of the Transition Agreement, the Company agreed to pay CSIRO an amount of $297,293 for past patent costs only in the event of a trigger event, being either a corporate transaction or an insolvency event. The Company has contracted for scientific work on the therapeutic programs, and payments are due within the next six months totalling $240,704 (2011: nil) NOTE 24: RELATED PARTY TRANSACTIONS Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated: Transactions with Directors and Director-related Entities: Legal services paid / payable to Francis Abourizk Lightowlers, a law firm in which Mr Peter Francis is a partner and has a beneficial interest. Consultancy fees for executive duties paid/payable to Parma Corporation Pty Ltd, a company in which Dr Mel Bridges is a director and has a beneficial interest. Consultancy fees for executive duties paid/payable to NewStar Ventures Ltd, a corporation in which Dr John Chiplin is a director and has a beneficial interest. Consultancy fees for executive duties paid/payable to Gladstone Partnership, an entity in which Mr Iain Ross is a principal and has a beneficial interest Transactions between related parties are on normal commercial terms and the conditions no more favourable than those available to other non-related parties. 2012 $ 166,912 - 40,000 18,999 2011 $ 133,068 15,000 62,250 40,000 Benitec Biopharma Ltd Annual Report 2012 Page 39 Notes to the Financial Statements for the Year Ended 30 June 2012 NOTE 25: BENITEC LIMITED PARENT COMPANY INFORMATION ASSETS Current assets Non-current assets TOTAL ASSETS LIABILITIES Current liabilities Non-current liabilities TOTAL LIABILITIES NET ASSETS/(DEFICIENCY) EQUITY Contributed equity Share based payments reserve Convertible note equity reserve Accumulated losses TOTAL EQUITY FINANCIAL PERFORMANCE Loss for the year Other comprehensive income 2012 $ 3,025,922 30,816 3,056,738 588,293 0 588,293 2,468,445 Parent Entity 20 11 $ 6,821,867 26,474 6,848,341 1,185,376 463,536 1,648,912 5,199,429 87,348,819 1,394,142 - (86,094,516) 86,821,961 2,761,802 48,797 (84,433,131) 2,468,445 5,199,429 (4,302,167) - (3,521,969) - TOTAL COMPREHENSIVE INCOME (4,302,167) (3,521,969) Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2012, other than the contingent liabilities described in note 23. Capital commitments The parent entity has no capital commitments as at 30 June 2012. Significant accounting policies The accounting policies of the parent are consistent with those of the consolidated entity (Note1). Page 40 Benitec Biopharma Ltd Annual Report 2012 Directors’ Declaration In accordance with a resolution of the Directors of Benitec Biopharma Limited, I state that: 1. In the opinion of the Directors: (a) the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including (i) giving a true and fair view of the financial position and performance of the Company and consolidated entity; and (ii) complying with Australian Accounting Standards, including the Interpretations, and the Corporations Regulations 2001 . (b) the financial statements and notes thereto also comply with International Financial Reporting Standards, as disclosed in Note 1; and (c) as indicated in note 1(w), there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.. On behalf of the Directors Peter Francis Director Sydney 28 August 2012 Benitec Biopharma Ltd Annual Report 2012 Page 41 Independent Audit Report Page 42 Benitec Biopharma Ltd Annual Report 2012 Independent Audit Report Benitec Biopharma Ltd Annual Report 2012 Page 43 Independent Audit Report Page 44 Benitec Biopharma Ltd Annual Report 2012 Shareholder Information 1. SHARE AND OPTION HOLDING INFORMATION a) Distribution of Equity Security Holders The number of holders and amount of holdings by a range of holding sizes of the ordinary shares and options as at 17 September 2012 are detailed below. Range Fully Paid Ordinary Shares (ASX:BLT) Options (ASX:BLTOA) Options (ASX:BLTO) 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 9,999,999,999 b) Marketable parcels Number of holders Number of shares held Number of holders Number of options held Number of Number of holders options held 162 486 323 68,298 1,570,248 2,651,057 1,282 57,490,224 857 908,848,702 3,110 970,628,529 59 167 105 305 172 808 28,076 472,274 795,302 11,937,050 188,076,664 201,309,366 37 153 67 113 30 411 24,461 401,021 469,186 3,569,991 42,209,248 46,673,907 The number of holdings of ordinary shares less than a marketable parcel of $500 as at 17 September 2012 is 1,562. c) Substantial Shareholders The names of substantial shareholders listed in the Company’s register as at 17 September 2012 were: Holder Dr Christopher Bremner d) Voting rights Number Of Ordinary Shares Held 192,637,678 % Of Issued Capital 20.24 The voting rights attached to each class of equity security are as follows: Each ordinary share holder is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. Option holders do not have any voting rights until the option is converted into an ordinary share. Benitec Biopharma Ltd Annual Report 2012 Page 45 Shareholder Information e) 20 Largest Ordinary Shareholders as at 17 September 2012 Holder National Nominees Limited CSIRO JP Morgan Nominees Australia Limited Sigma-Aldrich Pty Limited Mrs Jaclyn Stojanovski + MR Chris Retzos + Mrs Susie Retzos Mr Paul Leonard Grimshaw + Mr Dayne Paul Grimshaw Promega Corporation Lonart Pty Ltd Blamnco Trading Pty Ltd Dr Russell Kay Hancock HSBC Custody Nominees (Australia) Limited SAO Holdings Pty Ltd Fitel Nominees Limited Mr Taner Dilmac Mr Aron Malcolm Citicorp Nominees Pty Limited Mr James Gordon Pearce + Mrs Pamela Joy Pearce Mr Anthony John Baxter Mr Ross Dunstan Mr Greg Bernard Hilton + Mr Matthew John Hilton Totals: Top 20 holders of fully paid ordinary shares Total remaining holders balance Number Of Ordinary Shares Held % Of Issued Capital 219,890,356 48,116,431 33,016,173 19,531,250 15,706,419 13,497,413 12,996,339 10,446,502 10,000,000 10,000,000 9,066,775 8,907,055 7,103,625 6,500,000 6,500,000 6,324,457 5,647,415 4,959,656 4,834,651 4,651,001 457,695,518 512,933,011 22.65 4.96 3.40 2.01 1.62 1.39 1.34 1.08 1.03 1.03 0.93 0.92 0.73 0.67 0.67 0.65 0.58 0.51 0.50 0.48 47.15 52.85 Page 46 Benitec Biopharma Ltd Annual Report 2012 Shareholder Information f) 20 Largest BLTO Option holders (ASX: BLTO) as at 17 September 2012 Holder Number Of Options Held % Of BLTO Options Dr Christopher Bremner Mr Jeffrey Connor National Nominees Limited Goffacan Pty Ltd Mr Ian Domaille Mrs Felicity Anne Kissane JBWERE (NZ) Nominees Limited Mrs Debbie Rice Mr Arthur Barrie Wrigglesworth Resolute Securities Pty Ltd HSBC Custody Nominees (Australia) Limited Mr Wayne Andrew Gibson Mr Larry Raymond Cook Mr Adam Matthew Philippe UBS Nominees Pty Ltd JYZ Pair Pty Ltd Mr Simon John Moran + Mrs Christine Joyce Moran Mr David Burton Gibson Palmi Securities Pty Ltd Mr Aidan Moore Totals: Top 20 holders of BLTO Total Remaining Holders Balance 25,408,240 4,000,000 2,062,556 1,802,000 1,666,000 1,353,182 670,268 604,833 544,894 480,942 374,832 347,921 284,969 241,000 240,000 190,000 186,708 159,959 154,556 152,999 40,925,859 5,748,048 54.44 8.57 4.42 3.86 3.57 2.90 1.44 1.30 1.17 1.03 0.80 0.75 0.61 0.52 0.51 0.41 0.40 0.34 0.33 0.33 87.68 12.32 g) 20 Largest BLTOB Option holders (ASX: BLTOB) as at 17 September 2012 Name Number Of Options Held % Of BLTOB Options Dr Christopher Bremner Retzos Investments Pty Ltd ABN Amro Clearing Sydney Nominees Pty Ltd Sam Goulopoulos Pty Ltd Yondro Pty Ltd Dr Warnakulasooriya Karunasena + Mrs Alankarage Karunasena Mr Paul Marten JP Morgan Nominees Australia Limited Goffacan Pty Ltd Annemc Pty Ltd Ms Beverley Chard + Mr John Sheraton Mr Helmut Rocker National Nominees Limited Mr Sajith Renuka Karunasena Cohen Family Pty Ltd Mr Paul James Madden Mr Peter Jack Walravens + Mrs Madeleine Louise Walravens Mr Colm Patrick Cunningham Atlantis Mg Pty Ltd Atlantis Mg Pty Ltd Totals: Top 20 holders of BLTOB Total Remaining Holders Balance 45,297,373 12,000,000 7,340,000 5,000,000 5,000,000 4,000,000 3,600,000 3,560,023 3,458,622 3,030,000 2,900,000 2,900,000 2,725,895 2,620,000 2,500,000 2,400,000 2,164,116 2,106,674 2,000,000 2,000,000 116,602,703 84,706,663 22.50 5.96 3.65 2.48 2.48 1.99 1.79 1.77 1.72 1.51 1.44 1.44 1.35 1.30 1.24 1.19 1.08 1.05 0.99 0.99 57.92 42.08 Benitec Biopharma Ltd Annual Report 2012 Page 47 Shareholder Information h) Restricted securities There are no securities on issue subject to restriction agreements. i) Unquoted securities As at the date of this report, the Company has unquoted securities as follows: Details Unlisted Options Unlisted Options Strategic Advisor Warrants Other Options NED Options NED Options NED Options ESOP Options ESOP Options ESOP Options ESOP Options ESOP Options Directors’ Options Expiry Date Exercise Price 31-Dec-12 10-Apr-15 4-Aug-14 30-Sep-13 31-Dec-12 19-Aug-14 26-Sep-16 21-Feb-13 10-Jun-13 19-Aug-14 17-Nov-16 7-Feb-17 23-Oct-15 $0.10 $0.10 $0.90 $0.03 $0.09 $0.02 $0.05 $0.08 $0.03 $0.02 $0.05 $0.05 $0.17 Number 22,244,444 12,000,000 6,126,962 17,560 4,666,666 3,000,000 70,000,000 300,000 5,000,000 6,500,000 45,000,000 4,200,000 1,953,125 181,008,757 2. On-Market Buy Back There is currently no on-market buy back. 3. Listing on Exchanges Trading of the Company’s securities is available on the Australian Securities Exchange Limited (ASX). Page 48 Benitec Biopharma Ltd Annual Report 2012 Contents CHAIRMAN AND THE CEO’S LETTER DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION CORPORATE GOVERNANCE STATEMENT FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT SHAREHOLDER INFORMATION CORPORATE DIRECTORY 1 2 14 15 18 41 42 45 INSIDE BACK COVER BENITEC BIOPHARMA LTD ANNUAL REPORT 2012 Corporate Directory BENITEC BIOPHARMA LIMITED ABN 64 068 943 662 Directors Mr Peter Francis Dr Mel Bridges Dr John Chiplin Mr Iain Ross (Non-Executive Chairman) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) Company Secretary Mr Greg West Chief Executive Officer Dr Peter French Registered Office Level 16 356 Collins Street Melbourne Vic 3000 Australia Principal Place of Business F6A/1-15 Barr Street Balmain NSW 2041 Australia Auditors Grant Thornton Audit Pty Ltd Level 17, 383 Kent Street Sydney NSW 2000 Bankers Westpac Banking Corporation 274 Darling Street Balmain NSW 2041 Share Registry Computershare Investor Services Pty Limited Yarra Falls 452 Johnston Street Melbourne Vic 3067 Stock Exchange Listing The Company is listed on the Australian Securities Exchange Limited ASX Code: BLT Benitec Biopharma Ltd ABN 64 068 943 662 F6A / 1-15 Barr Street Balmain NSW 2041 Australia Tel: +61 (0) 2 9555 6986 Email: info@benitec.com www.benitec.com BENITEC BIOPHARMA LTD ANNUAL REPORT 2012