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OrgenesisBenitec Biopharma Limited
ABN 64 068 943 662
Annual Report - June 30, 2019
Contents
Directors Report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flow
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor's report to the members of Benitec Biopharma Limited
Corporate directory
Shareholder information
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19
20
21
22
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24
48
49
53
54
General information
The financial statements cover Benitec Biopharma Limited as a Group consisting of Benitec Biopharma Limited
and the entities it controlled at the end of, or during, the year. The financial statements are presented in
Australian dollars, which is Benitec Biopharma Limited's functional and presentation currency.
Benitec Biopharma Limited is a listed public company limited by shares, incorporated and domiciled in
Australia. Benitec Biopharma Limited shares are listed on the Australian Securities Exchange in Australia
(ASX: BLT). It is also listed on the NASDAQ Global Select Market in United States (NASDAQ: BNTC;
NASDAQ: BNTCW).
Its registered office and principal place of business is:
Level 14, 114 William St
Melbourne, VIC, 3000
Australia
A description of the nature of the Group's operations and its principal activities are included in the Directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on August 29,
2019. The directors have the power to amend and reissue the financial statements.
The information in this report should be read in conjunction with the most recent annual financial report and any
public announcements made by Benitec Biopharma Limited.
BENITEC BIOPHARMA LIMITED
Executive Chairman’s and CEO Letter
Dear Shareholder
The past year has been one of great change for Benitec. Through the dedication of the Board and the core
members of the scientific, clinical, and financial teams at the Company, Benitec continues to navigate a series of
unprecedented structural, operational, and financial challenges.
Benitec recently announced the completion of a workforce reduction of approximately 50%. Through this
streamlining of operations, the Company retained staff members who are key to the achievement of the core
research and development goals. The rationalisation of resources will result in an extended financial runway for
the Company while allowing Benitec to continue to advance the BB-301 program through development for the
treatment of Oculopharyngeal Muscular Dystrophy.
Through our continued focus on the optimisation of the nonclinical and clinical attributes of BB-301 for the
treatment of Oculopharyngeal Muscular Dystrophy, our team has an unprecedented opportunity to develop a
novel genetic medicine that could facilitate clinically meaningful patient benefit in a potentially fatal clinical
disorder for which profound unmet medical need still exists.
We will continue to strive for innovative solutions to improve outcomes for patients suffering from chronic
diseases.
Thank you,
Jerel A. Banks, M.D., Ph.D.
Executive Chairman and CEO
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019
The Company’s directors present their report on the consolidated entity (referred to hereafter as the 'Group')
consisting of Benitec Biopharma Limited (referred to hereafter as the 'Company' or 'parent entity') and the
entities it controlled at the end of, or during, the year ended June 30, 2019.
Directors
The following persons were directors of the Company during the whole of the period and up to the date of this
report, unless otherwise noted:
Dr Jerel A Banks (Executive Chairman and CEO)
Mr Peter Francis (Non-Executive Director)
Mr Kevin Buchi (Non-Executive Director)
Ms Megan Boston (Executive Director and Head of Operations Australia)
Principal Activities
During the financial year the principal continuing activities of the Group consisted of development of the
Group’s therapeutic pipeline and pre-clinical programs, funding, and protecting and building the IP estate.
The Group is pursuing Oculopharyngeal Muscular Dystrophy, or OPMD and is seeking to partner Hepatitis B
based on its patented gene-silencing technology, ddRNAi.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Results
Benitec’s comprehensive profit for the 12 months ended June 30, 2019 was $4.094m compared to a loss of
$11.640m for the previous corresponding period.
The profit of $4.094m is explained by:
•
Increase in revenue of $15.781m: Under the terms of the license agreement between Axovant and
Benitec, Benitec received an upfront payment of $14.179m in July 2018. Revenue also includes
payment for services provided to Axovant totaling $1.532m.
• Reduction in Research and development costs of $3.786m: Research and development costs were
reduced by $3.786m due to reimbursements of $4.736m received from Axovant for the OPMD
program.
Page | 1
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Cash Flows
As at June 30, 2019, the Company had cash on hand of $22.411m. This was an increase of $6.326m from June
30, 2018. This represents payments to suppliers of $16.092m offset by receipts from Axovant of $2.619m and
grant income of $4.121m, revenue and other income of $15.209m, purchase of plant and equipment of
$0.576m, and foreign exchange gain of $1.039m.
Review of Operations
Benitec Biopharma is a clinical-stage biotechnology company focused on the development of novel genetic
medicines. The proprietary platform, called DNA-directed RNA interference, or ddRNAi, combines RNA
interference, or RNAi, with gene therapy to create medicines that facilitate sustained silencing of disease-
causing genes following a single administration. Benitec endeavours to develop and commercialise BB-301 for
the treatment of Oculopharyngeal Muscular Dystrophy, or OPMD.
The ddRNAi-based genetic medicine currently under development by Benitec (BB-301) represents a proprietary
product candidate that can, potentially, be used to meaningfully improve upon the existing standard of care for a
rare, chronic, life-threatening form of muscular dystrophy. In the past, the research and development efforts of
the Company have been directed towards disorders that include head and neck squamous cell carcinoma, or
HNSCC, OPMD, wet age-related macular degeneration, or AMD, and chronic hepatitis B or HBV. Through the
combination of the targeted gene silencing effect of RNAi together with the durable gene expression associated
with the use of modified viral vectors, ddRNAi has the potential to produce durable silencing of disease-causing
genes following a single administration of the proprietary genetic medicine. This novel attribute of the
investigational agent that is being advanced through nonclinical development could facilitate the achievement of
robust clinical activity while greatly reducing the dosing frequencies traditionally expected for medicines
employed for the management of chronic diseases. Additionally, the establishment of chronic gene silencing via
ddRNAi-based genetic medicines could significantly reduce the risk of patient non-compliance during the
course of medical management of potentially fatal clinical disorders.
Axovant Termination
On June 6, 2019 the termination of the License and Collaboration Agreement with Axovant Sciences was
announced, as the Benitec team endeavored to conduct several additional exploratory analyses of BB-301 prior
to the initiation of a clinical study in order to potentially improve the biological efficacy of the compound via
further optimization of the proprietary delivery method employed to dose the target tissues.
Preclinical data derived from recently concluded in vivo evaluations of BB-301 in two distinct large animal
species suggest that the opportunity exists to further improve the biological efficacy of the compound via
additional optimization of the proprietary delivery method employed to dose key target tissues that underlie the
morbidity and mortality associated with the progression of OPMD. The initial biological efficacy profile
observed for BB-301 following in vivo testing in the A17 mouse model of OPMD, including full correction of
the disease phenotype, remains unchanged. However, the Benitec team plans to conduct several additional
exploratory analyses prior to the initiation of clinical testing.
Completion of the experimental work noted above will delay the initiation of the BB-301 clinical study beyond
the timelines that were initially outlined by Axovant Sciences following the execution of the License and
Collaboration Agreement between Benitec Biopharma and Axovant Sciences. As such, the License and
Collaboration Agreement between Benitec Biopharma and Axovant Sciences was terminated, and all rights and
licenses granted to Axovant Sciences will cease, including the rights to BB-301, which was in preclinical
development for the treatment of OPMD, and all other early stage research collaboration programs.
The termination of the License and Collaboration Agreement will be effective on September 3, 2019.
Preclinical Programs
Preclinical research efforts supporting the development of proprietary ddRNAi-based therapeutics targeted
towards the treatment of HBV and AMD have concluded.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Workforce Reduction
On July 31, 2019 Benitec announced the completion of a workforce reduction of approximately 50%. Through
this streamlining of operations, the Company retained staff members who are key to the achievement of the core
research and development goals. The rationalization of resources will result in an extended financial runway for
the Company while allowing Benitec to continue to advance the BB-301 program through development.
Company Pipeline
The following table sets out our product candidates and their development status.
Highlights of progress over the previous 12 months include:
Head and Neck Squamous Cell Carcinoma:
BB-401 is a DNA plasmid that expresses an antisense RNA molecule targeting the EGFR mRNA, thus,
preventing its translation into its cognate protein via post-transcriptional gene silencing. Benitec acquired the
rights to BB-401 from Nant Capital in 2016, and BB-401 has undergone clinical evaluation in a Phase 2 study in
patients with advanced HNSCC. EGFR is the cell-surface receptor for members of the epidermal growth
factor family, or EGF family, of extracellular protein ligands.
Key updates include:
•
In December 2018, the Company completed the investigation of the single agent activity of
BB-401 in a Phase 2 clinical trial which was designed as an open label study to explore the
safety, tolerability and efficacy of BB-401 following intratumoral injections. The Phase 2
study patients were refractory to all standard therapies such as surgery, chemotherapy and
immunotherapy. The study was conducted at clinical trial sites in Australia and Russia.
• On December 21, 2018 Benitec announced the interim clinical trial results for the Phase 2
study involving the assessment of the single agent activity of BB-401.
• An interim analysis was conducted to evaluate the objective response rate observed for the
initial 12-patient cohort treated in Stage 1 of the Phase 2 study.
• Benitec’s scientific and clinical teams will continue to follow patients that were treated in
the first cohort of this Phase 2 study.
• However, based on the initial analysis, the objective response rate required to support
continued patient enrollment into the Phase 2 study was not achieved.
• There are several critical points to note regarding the underlying nature of BB-401 as it
relates to the other distinct investigational agent in the Benitec pipeline:
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
• At the molecular level, the investigational agent that is currently under development by
Benitec (BB-301) is fundamentally different from BB-401. BB-301 employs ddRNAi
which facilitates gene silencing via the production of short hairpin RNA-based molecules
whereas BB-401 represents a modified antisense oligonucleotide.
• BB-301 functions by a mechanism of action that is completely distinct from that of BB-
401, as BB-401 achieves gene-silencing via a mechanism described as post-transcriptional
interference. BB-301 ultimately achieves gene-silencing via RNA interference driven by
activation of the RNA-Induced Silencing Complex.
• BB-301 employs a tissue-specific delivery vector (AAV9) whereas BB-401 has no
delivery vector and was delivered intratumorally as a “naked” plasmid.
The Company has terminated the clinical development of BB-401 along with the discovery stage programs
directed at the engineering of follow-on anti-EGFR strategies (BB-501).
Oculopharyngeal Muscular Dystrophy (OPMD):
OPMD is an insidious, autosomal-dominant, late-onset degenerative muscle disorder that typically presents in
patients at 40-to-50 years of age. The disease is characterized by progressive swallowing difficulties
(dysphagia) and eyelid drooping (ptosis). OPMD is caused by a specific mutation in the poly(A)-binding
protein nuclear 1, or PABPN1, gene. OPMD is a rare disease and has been reported in at least 33 countries.
Patients suffering with OPMD are well identified and are geographically clustered, which we believe should
simplify clinical development and global commercialisation efforts.
BB-301 is a monotherapy delivered using an innovative AAV single vector system with the capability to both
‘silence and replace’ disease causing genes. In addition to using RNA interference to ‘silence’ the mutant
PABPN1 gene expression that causes the OPMD, BB-301 simultaneously introduces a normal copy of the same
gene, thus, providing the potential to restore normal function to the treated tissues and, in the process, improve
treatment outcomes. This single gene therapy product, versus an equivalent system with two or more vectors,
vastly simplifies the manufacturing and regulatory processes and reduces the complexity of the clinical strategy
for BB-301.
Key updates include:
• On July 9, 2018 Benitec announced that it had licensed to Axovant Sciences the exclusive
global rights for BB-301 intended for the treatment of OPMD, and had also entered into a
fully funded research collaboration for the development of five additional gene therapy
products in neurological disorders.
• Under the terms of the agreement, Benitec received an upfront cash payment of US$10m
(AUD$14.2m) and was slated to receive additional cash payments totalling US$17.5m
(AUD$23.6m) upon completion of four specific near-term manufacturing, regulatory and
clinical milestones.
Axovant was granted worldwide rights to BB-301 and was slated to assume all future
development costs. The total potential value of all of the development, regulatory and
commercial milestones achievable by Benitec, of which there were eight milestones
including the four near-term milestones, was US$187.5m (AUD$253.3m). As previously
reported, there could be no assurance as to the total amount of payments that the Company
would actually receive or when they would be received.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
• Upon commercialisation, Benitec was slated to retain 30% of the net profits on worldwide
sales of BB-301.
• On June 6, 2019 the termination of the License and Collaboration Agreement with
Axovant Sciences was announced, as the Benitec team endeavoured to conduct several
additional exploratory analyses of BB-301 prior to the initiation of the clinical study in
order to potentially improve the biological efficacy of the compound via further
optimization of the proprietary delivery method employed to dose the target tissues.
• Preclinical data derived from recently concluded in vivo evaluations of BB-301 in two
distinct large animal species suggests that the opportunity exists to further improve the
biological efficacy of the compound via additional optimization of the proprietary delivery
method employed to dose key target tissues that underlie the morbidity and mortality
associated with the progression of OPMD. The initial biological efficacy profile observed
for BB-301 following in vivo testing in the murine model of OPMD, including full
correction of the disease phenotype, remains unchanged. However, the Benitec team plans
to conduct several additional exploratory analyses prior to the initiation of BB-301 clinical
testing.
• Completion of the experimental work noted above will delay the initiation of the BB-301
clinical study beyond the timelines that were initially outlined by Axovant Sciences
following the execution of the License and Collaboration Agreement between Benitec
Biopharma and Axovant Sciences. As such, the License and Collaboration Agreement
between Benitec Biopharma and Axovant Sciences was terminated, and all rights and
licenses granted to Axovant Sciences will cease, including the rights to BB-301, which
was in preclinical development for the treatment of OPMD, and all other early stage
research collaboration programs.
• The termination of the License and Collaboration Agreement will be effective on
September 3, 2019.
• Benitec will retain all financial payments that were received during the term of the
Axovant License and Collaboration Agreement prior to the termination of the Agreement.
• On July 31, 2019 Benitec announced the completion of a workforce reduction of
approximately 50%. Through this streamlining of operations, the Company retained staff
members who are key to the achievement of the core research and development goals. The
current team will continue to work diligently on Benitec’s primary asset, BB-301. The
rationalization of resources will result in an extended financial runway for the Company
while allowing Benitec to continue to advance the BB-301 program through development.
Age-related macular degeneration (AMD):
The Company was exploring the development of a ddRNAi-based therapy for the treatment of wet AMD, which
is designated BB-201. The delivery vector for BB-201 was comprised of a novel AAV capsid that was
developed in collaboration with 4DMT and was designed to deliver ddRNAi constructs to the retina using a
direct intravitreal injection.
The key updates achieved include:
• The Company completed the molecular analyses of the retinal tissues from an in vivo
proof of concept study in a non-human primate. These data indicated that additional
optimization work on the BB-201 AMD program was required to progress the program
forward.
• The Company has elected to terminate this program.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Hepatitis B – BB-103:
The Company is developing BB-103 for the treatment of HBV. Results of in vivo and in vitro studies, from
December 2016, March 2016 and December 2015, demonstrated the potential utility of an approach that
combines RNAi with gene therapy to treat HBV. In April 2017, the Company completed a pre-IND submission
with the FDA in which the feedback provided by the agency included details regarding steps required to initiate
a clinical trial for BB-103. The Company is seeking partnerships to support the progression of BB-103 into the
clinic. Benitec will continue to seek a partner for HBV.
Licensed programs
In addition to the proprietary development program, the Company has licensed its ddRNAi technology to
companies who are developing therapeutic programs in other disease areas.
HIV/AIDS: In March 2012, Benitec granted a non-exclusive, royalty-bearing, worldwide license to a U.S.
based biotechnology company, Calimmune, Inc. Under the agreement, Calimmune could develop, use and
commercialise ddRNAi to silence up to three targets for the treatment or prevention of HIV/AIDS. Calimmune's
approach was developed with core technology from the laboratory of Dr. David Baltimore, a Nobel Laureate in
the area of HIV/AIDS, and involves silencing the gene that codes for a receptor protein known as CCR5.
Calimmune's HIV/AIDS treatment is known as CAL-1. In August 2017, the CSL Behring subsidiary of CSL
Ltd. announced that it would acquire Calimmune Inc. gaining two ex vivo autologous gene therapy candidates
and two stem cell therapy technologies.
As part of this deal, CSL Behring also acquired CAL-1, the autologous T cell and blood stem cell therapy in
Phase I/II testing to treat HIV infection. The announcement indicated that CSL Behring was evaluating options
for developing this candidate, including licensing or partnering as the company is "unlikely" to develop the
candidate on its own.
On December 19, 2018 the license was terminated by Calimmune Inc.
Cancer Immunotherapy: In August 2013, an exclusive, royalty-bearing, worldwide license was granted to a
U.S.-based biotechnology company, Regen Biopharma Inc. to use ddRNAi for silencing expression of
indoleamine 2,3—dioxygenase, or IDO, in dendritic cells. Regen is developing a cancer immunotherapy using
the licensed technology. IDO is associated with immune-suppression and is overexpressed in some cancers.
Regen has reported preclinical evidence that modification of these cells using ddRNAi targeting the silencing of
IDO may significantly enhance their efficacy in cancer immunotherapy. Regen's first treatment, which is for
breast cancer, is called dCellVax.
Regen advised Benitec in July 2019 that they intend to terminate the agreement.
Intractable Neuropathic Pain: In November 2014, an exclusive, royalty-bearing, worldwide license was
granted to a U.S.-based biotechnology company, Circuit Therapeutics, Inc. to use ddRNAi for the development
of treatments for and the prevention of pain. This license has been terminated in February 2019.
Intellectual property
The Company manages a substantial portfolio of patents relating to the ddRNAi platform technology,
improvements to this technology and its pipeline programs. The Company continues to hold a dominant
position in the field of expressed RNAi and it defends its position in this space. With the limited patent term
remaining on the platform patents licensed from CSIRO, Benitec’s focus has increasingly been on establishing
patent protection for its pipeline and products in development with the aim of securing competitive and
commercially relevant intellectual property positions for each of its programs.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Commercialisation
Business development activities based on proactive engagement with biotechnology and pharmaceutical
companies remains a major focus for the Company, primarily in the following areas:
• Partnering pipeline programs by co-development or licensing to other biotechnology and
pharmaceutical companies
• Collaborating with biotechnology and pharmaceutical companies on nominated targets
using Benitec’s ddRNAi technology; and
• Licensing ddRNAi to commercial users of the technology.
Significant changes in the state of affairs
During the year the Company had the following significant changes in the state of affairs:
Change in Management composition
On January 9, 2019 Ms Georgina Kilfoil resigned from the role Chief Development Officer.
Matters subsequent to the end of the financial year
No matters or circumstances other than those described above have arisen since June 30, 2019 that have
significantly affected, or may significantly affect the Group's operations, the results of those operations, or the
Group's state of affairs in future financial years.
Likely developments and expected results of operations
The Group will continue to progress the BB-301 program through the clinic, seek commercialisation
opportunities with major pharmaceutical companies and others for its unique IP, protect and build the Group’s
IP estate and secure adequate funding.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Page | 7
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities
Interests in shares:
Interests in options
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
formerly
the Chief
Dr Jerel Banks
Executive Chairman and CEO
Dr. Banks earned an M.D. from the Brown University School of Medicine
and a Ph.D. in Organic Chemistry from Brown University, and he holds an
A.B. in Chemistry from Princeton University.
Investment Officer
Dr. Banks was
of Nant Capital, LLC. Prior to joining Nant Capital, LLC, Dr. Banks
served as vice president, portfolio manager and research analyst for the
Franklin Biotechnology Discovery. Fund at Franklin Templeton
Investments from 2012 to 2015. Previously, Dr. Banks worked as a senior
equity research analyst covering the biotechnology sector at Sectoral Asset
Management Inc. and Apothecary Capital. Dr. Banks began his career in the
asset management industry as an equity research associate on the healthcare
investment team at Capital Research and Management.
Nil
GlobeImmune, Inc (resigned April 15, 2018)
Member of the Remuneration and Nomination Committee (resigned June
15, 2018)
Nil
10,000,000 options over ordinary shares
Mr Peter Francis
Non-Executive Director
LLB, Grad Dip (Intellectual Property)
Peter is a partner at Francis Abourizk Lightowlers (‘FAL’), a firm of
commercial and technology lawyers with offices in Melbourne. 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.
Nil
Optiscan Imaging Limited (resigned April 23, 2018), Rision Ltd (resigned
April 12, 2018) and Neuroscope Ltd (public non listed resigned August
2017)
Chair of the Remuneration and Nomination Committee (resigned June 15,
2018) Chair of Audit & Risk Committee (commenced June 16, 2018)
636,261 ordinary shares
1,400,000 options over ordinary shares
Ms Megan Boston
Executive Director - Head of Operations Australia
B.Comm, CA, GAICD, Grad Diploma Share Trading
Ms Megan Boston has previously been CEO and Managing Director of
ASX listed entities. Megan holds a Bachelor of Commerce and is a
Chartered Accountant with over 13 years’ experience as a non-executive
Director across a range of industries. She has chaired company boards as
well as board sub-committees particularly in the area of finance and risk
management. Megan has completed the Company Directors Course
Diploma run by the Australian Institute of Company Directors. Previously,
Megan held senior executive roles at various banking institutions in the area
of risk and compliance, as well as working for PricewaterhouseCoopers.
Nil
Nil
Chair of the Audit and Risk Committee (resigned on June 15, 2018)
100,000 ordinary shares
5,000,000 options over ordinary shares issued on March 12, 2019 subject to
approval at the 2019 AGM.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Information on directors continued
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships
Former directorships (last 3 years):
Special responsibilities:
Interests in shares:
Interests in options:
Mr Kevin Buchi
Non-Executive Director
BA (Chemistry), MBA, CPA
Kevin most recently served as the CEO of TetraLogic Pharmaceuticals
Corporation, a public U.S. Biotechnology company. Prior to that, Kevin
served as Chief Executive Officer (‘CEO’) of Cephalon, Inc. through its
$6.8 billion acquisition by Teva Pharmaceutical Industries (‘Teva’) in
October 2011. After the acquisition, he served as Corporate Vice President,
Global Branded Products of Teva. Kevin joined Cephalon, Inc. in 1991 and
held various positions, including Chief Operating Officer, Chief Financial
Officer and Head of Business Development prior to being appointed CEO.
Amneal Pharmaceuticals, Dicerna Pharmaceuticals
Stemline Therapeutics, Inc. (May 2016), Forward Pharma A/S, (May 2016)
Alexza Pharmaceuticals, Inc. (June 2016) and Epirus Biopharmaceuticals,
Inc. (July 2016)
Chair of the Remuneration and Nomination Committee (commenced June
16, 2018)
1,448,210 ordinary shares
840,000 options over ordinary shares
Other current directorships quoted above are current directorships for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
Former directorships (last 3 years) quoted above are directorships held in the last 3 years for listed entities only
and excludes directorships of all other types of entities, unless otherwise stated.
Company Secretary
Mr Oliver Kidd was appointed Company secretary on June 29, 2018.
Meetings of directors
The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held
during the year ended June 30, 2019, and the number of meetings attended by each director were:
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
Full Board Full Board
Attended Held
10
10
10
10
10
10
10
10
Audit and Risk
Committee
Remuneration and
Nominations
Committee
Attended Held
n/a
4
n/a
4
Attended Held
n/a
1
n/a
1
n/a
4
n/a
4
n/a
1
n/a
1
Held: represents the number of meetings held during the time the director held office or was a member of the
relevant committee.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the Group, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
• Principles used to determine the nature and amount of remuneration
• Details of remuneration
• Service agreements
• Share-based compensation
• Consequences of performance on shareholder wealth
• Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the Group's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of
strategic objectives and the creation of value for shareholders, and conforms to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following
key criteria for good reward governance practices:
• competitiveness and reasonableness;
• acceptability to shareholders;
• performance linkage / alignment of executive compensation; and
•
transparency.
The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration
arrangements for its directors and executives. The performance of the Group depends on the quality of its
directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and
high quality personnel.
This committee is currently managed by two directors. The Nomination and Remuneration Committee has
structured an executive remuneration framework that is market competitive and complementary to the reward
strategy of the Group.
Alignment to shareholders' interests:
• has economic profit as a core component of plan design;
•
focuses on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and
delivering constant or increasing return on assets as well as focusing the executive on key non-financial
drivers of value; and
• attracts and retains high calibre executives.
Alignment to program participants' interests:
•
•
• provides a clear structure for earning rewards.
rewards capability and experience;
reflects competitive reward for contribution to growth in shareholder wealth; and
In accordance with best practice corporate governance, the structure of non-executive directors and executive
remunerations are separate.
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BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-
executive directors' fees and payments are reviewed annually by the Nomination and Remuneration Committee.
The Nomination and Remuneration Committee may, from time to time, receive advice from independent
remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with
the market. The chairman's fees are determined independently to the fees of other non-executive directors based
on comparative roles in the external market. The chairman is not present at any discussions relating to the
determination of his own remuneration. Non-executive directors may receive share options or other incentives.
ASX listing rules require the aggregate non-executive directors remuneration be determined periodically by a
general meeting.
Executive remuneration
The Group aims to reward executives with a level and mix of remuneration based on their position and
responsibility, which has both fixed and variable components.
Executives typically receive a base salary (which is based on factors such as experience and comparable
industry information), 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
Group’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 Group in achieving its broader corporate goals. Bonuses and
incentives are linked to predetermined 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.
The executive remuneration and reward framework has four components:
• base pay and non-monetary benefits;
• short-term performance incentives;
• share-based payments; and
• other remuneration such as superannuation and long service leave.
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary and non-monetary benefits, are reviewed annually by the
Nomination and Remuneration Committee, based on individual and business unit performance, the overall
performance of the Group and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor
vehicle benefits) where it does not create any additional costs to the Group and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the targets of
those executives responsible for meeting those targets. STI payments are granted to executives based on specific
annual targets and key performance indicators ('KPI's') being achieved. KPI's include profit contribution,
leadership contribution and product management.
Page | 11
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
The long-term incentives ('LTI') include long service leave and share-based payments. Executives may be
invited to participate in the Employee Share Option Plan ('ESOP'). Shares are awarded to executives over a
period of three years based on long-term incentive measures. These include increase in shareholders' value
relative to the entire market and the increase compared to the Group's direct competitors. Australian executives
or directors receive a superannuation guarantee contribution required by the Government and do not receive any
other retirement benefits.
Group performance and link to remuneration
Executive bonus and incentive payments are based on performance and are at the discretion of the Nomination
and Remuneration Committee.
Use of remuneration consultants
During the financial year ended June 30, 2019, the Group did not engage any remuneration consultants, to
review its existing remuneration policies and provide any recommendations on how to improve both the STI and
LTI programs.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel (KMP) of the Group are set out in the following
tables.
The key management personnel of the Group consisted of the directors of Benitec Biopharma Limited and the
following persons:
● Ms Georgina Kilfoil – Chief Development Officer. Resigned January 9, 2019.
Short-term
benefits
Post-
employment
benefits
Long-term benefits
2019
Directors:
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
Cash salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super
annuation
$
Employee
leave
$
Share-
based
payments
Options Total
$
$
578,985
70,000
266,509
76,650
-
-
-
-
- 15,287
-
-
-
6,650
19,312
-
- 714,263 1,293,248
76,650
-
-
- 92,914 394,022
76,650
-
-
Other Key Management Personnel:
Georgina Kilfoil(5)
168,533
1,160,677
- (15,689 )
(402 )
-
10,728
36,690
- 163,572
-
- 807,177 2,004,142
Page | 12
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
Short-term
benefits
Post-
employment
benefits
Long-term benefits
Cash
salary
and fees
$
Cash
bonus
$
Non-
monetary
$
Super
annuation
$
Employee
leave
$
Share-
based
payments
Options Total
$
$
116,273
83,195
77,500
76,650
28,288
-
-
-
-
-
-
-
-
-
-
-
8,233
7,362
-
-
-
6,717 122,990
- 19,902 111,330
84,862
-
-
88,591
- 11,941
28,288
-
-
2018
Directors:
Jerel Banks(1)
Peter Fancis(2)
Megan Boston(3)
Kevin Buchi
John Chiplin(4)
Other Key Management Personnel:
Georgina Kilfoil(5)
Greg West(6)
David Suhy(7)
Cliff Holloway(8)
-
275,000
620,974
-
396,362 10,749
158,872
-
1,833,114 10,749
(529 )
-
-
-
(529 )
20,049
20,049
23,220
10,867
89,780
- 42,370 336,890
- 96,627 737,650
- 79,444 509,775
-
- 169,739
- 257,001 2,190,115
(1)
(2)
Jerel Banks held the position of Non Executive director from July 1, 2017 to October 12, 2017. He was then appointed Non -
Executive Chairman, a role he held to June 15, 2018. On June 15, 2018 he was appointed executive Chairman and CEO on June 26,
2018.
Peter Francis held the position of Chairman from July 1, 2017 to October 12, 2017. At this date he assumed the role of non-
executive director.
(3) Megan Boston held the position of non-executive director from July 1, 2017 to June 15, 2018. At this date she was appointed
executive director and Head of Operations Australia.
John Chiplin resigned as a director on October 23, 2017.
(4)
(5) Georgina Kilfoil appointed as Chief Development Officer on February 9, 2018, resigned on January 9, 2019.
(6) Greg West resigned as CEO and Company Secretary June 15, 2018.
(7) David Suhy resigned as CSO on June 22, 2018.
(8) Cliff Holloway resigned as Chief Business and Operations Officer on January 7, 2018.
The proportion of remuneration at risk and the fixed proportion are as follows:
Name
Directors:
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
John Chiplin
Other Key Management Personnel:
Georgina Kilfoil
Greg West
David Suhy
Cliff Holloway
Fixed remuneration
2019
2018
At risk -
STI (bonus)
At risk -
LTI (options)
2019 2018 2019 2018
45 %
100 %
76 %
100 %
- %
95 %
83 %
100 %
87 %
100 %
100 %
- %
- %
- %
87 %
87 %
84 %
100 %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
- %
55 %
- %
24 %
- %
- %
- %
- %
- %
- %
5 %
17 %
- %
13 %
- %
13 %
13 %
16 %
- %
Page | 13
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
The proportion of the cash bonus paid/payable or forfeited is as follows. No part of the forfeited bonus is
payable in future years.
In 2018 a cash bonus was paid to David Suhy. No cash bonus was paid/payable in 2019.
Employee
David Suhy
Included in
Remuneration
($)
Percentage
vested
during the
year
Percentage
forfeited
during the
year
10,749
100 %
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Name:
Title
Agreement commenced
Details
Name
Title
Agreement commenced
Details
Name
Title
Agreement commenced
Details
Dr Jerel Banks
Executive Chairman and CEO
June 15, 2018 (Executive Chairman); June 26, 2018 (CEO)
Dr Banks was appointed Executive Chairman on June 15, 2018 and CEO on June
26, 2018 with a base salary of US$400,000 plus superannuation. Dr Banks was
granted 10 million unlisted share options under the Benitec Directors' and Officers'
Option Plan 2018. Each year Dr Banks can receive up to a 50% bonus on his base
salary, to be reviewed annually by the Nomination and Remuneration Committee.
Dr Banks’ appointment as CEO may be terminated with the Company giving six
months’ notice or by Dr Banks giving six months notice. The Company may elect
to pay Dr Banks 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.
Ms Megan Boston
Executive Director – Head of Operations Australia
June 15, 2018
Ms Boston was appointed Executive Director – Head of Operations Australia on
the June 15, 2018 with a base salary of $330,000 plus superannuation. Ms Boston
was granted 5 million unlisted share options under the Benitec Directors' and
Officers' Option Plan 2018 subject to shareholders approval. Ms Boston’s
appointment may be terminated with the Company giving six months’ notice or by
Ms Boston giving six months’ notice. The Company may elect to pay Ms Boston
an equal amount to that proportion of her salary equivalent to six months pay in
lieu of notice, together with any outstanding entitlements due to her.
Ms Georgina Kilfoil (resigned January 9, 2019)
Chief Development Officer
September 29, 2014
Ms Kilfoil joined Benitec on September 29, 2014 and was appointed as Chief
Development Officer on February 9, 2018 with the base salary of $275,000 plus
superannuation. Ms Kilfoil’s appointment may be terminated with the Company
giving three months’ notice or by Ms Kilfoil giving three months’ notice. The
Company may elect to pay Ms Kilfoil an equal amount to that proportion of her
salary equivalent to three month’s pay in lieu of notice, together with any
outstanding entitlements due to her.
Page | 14
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
Share-based compensation
Issue of shares
There were no shares issued to directors and other key management personnel as part of compensation during
the year ended 30 June 2019.
Options
Details of options over ordinary shares granted, vested and lapsed for directors and other key management
personnel as part of compensation during the year ended June 30, 2019 are set out below:
Number
of
options
granted Grant date
Value
per
options
at grant
date
Value of
options
at grant
date
Name
Megan Boston
5,000,000 12/03/2019 $ 0.1009 $ 504,500
Number
vested/
(forfeited)
Vested and
first
exercise
date
- $ 0.2001 12/03/2020 11/03/2024
Last
exercise
date
price
Exercise
Options granted carry no dividend or voting rights. Options vest over five years with vesting based on remaining
in service. There are no other performance criteria.
Consequences of performance on shareholder wealth
The earnings of the Group for the five years to June 30, 2019 are summarised below:
Profit/(Loss) after income tax
2015
$'000
(11,509 )
2016
$'000
(24,778 )
2017
$'000
2018
$'000
(5,690 ) (11,640 )
2019
$'000
4,094
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Basic earnings per share (cents per share)
0.69
(9.96 )
0.097
(17.41 )
0.125
(3.24 )
0.135
(5.53 )
0.060
1.59
2015
2016
2017
2018
2019
Additional disclosures relating to key management personnel
In accordance with Class Order 14/632, issued by the Australian Securities and Investments Commission,
relating to 'Key management personnel equity instrument disclosures', the following disclosure relates only to
equity instruments in the Company or its subsidiaries.
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Ordinary Shares
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
Georgina Kilfoil
Balance
at
July
1, 2018
-
636,261
100,000
1,448,210
-
2,184,471
Received as part
of remuneration
-
-
-
-
-
-
Exercise of
options
-
-
-
-
-
-
Disposals/
other
Balance at
June 30,
2019
-
-
- 636,261
- 100,000
- 1,448,210
-
-
- 2,184,471
Page | 15
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Remuneration report continued
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and
other members of key management personnel of the Group, including their personally related parties, is set out
below:
Options over
ordinary
shares
Jerel Banks
Peter Francis
Megan Boston
Kevin Buchi
Georgina Kilfoil(1)
Greg West(2)
David Suhy(3)
Balance
at July 1,
2018
10,000,000
1,400,000
Granted Exercised
-
-
-
- 5,000,000
-
840,000
-
1,400,000
-
3,013,332
-
2,300,000
18,953,332 5,000,000
Expired/
forfeited/
other
Balance
at June 30,
2019
Vested and
exercisable
- 10,000,000 3,333,333
- 1,400,000 1,400,000
-
- 5,000,000
-
840,000 840,000
-
-
-
- (1,400,000 )
- (3,013,332 )
-
- (800,000 ) 1,500,000 500,000
- (5,213,332 ) 18,740,000 6,073,333
-
-
Vested and
not
exercisable
-
-
-
-
-
-
-
-
(1)
(2)
(3)
Georgina Kilfoil resigned on January 9, 2019
Greg West resigned as CEO and Company Secretary on June 15, 2018. Mr West had 3 months to exercise options that had vested,
including options, which would vest within the 3 months period post his resignation.
David Suhy resigned as Chief Scientific Officer on June 22, 2018. His options terms were varied, and the options continue until
their normal expiry date.
Other transactions with key management personnel and their related parties
Legal services at normal commercial rates totalling $726 (2018: $8,212) were provided by Francis Abourizk
Lightowlers, a law firm in which Peter Francis is a partner and has a beneficial interest.
This concludes the remuneration report, which has been audited.
Page | 16
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Shares under option
Unissued ordinary shares of the Company under option at the date of this report are as follows:
The numbers in this table are as at August 29, 2019
Grant date
December 17, 2014**
May 6, 2015**
August 20, 2015 ****
November 12, 2015*
July 17, 2017**
April 11, 2018**
June 26, 2018**
March 12, 2019**
March 21, 2019**
April 11, 2019**
May 2, 2019**
May 16, 2019**
Expiry date
December 17, 2019
May 6, 2020
August 21, 2020
November 12, 2020
July 16, 2022
April 11, 2023
June 26, 2023
March 12, 2024
March 21, 2024
April 11, 2024
May 2, 2024
May 16, 2024
$
$
$USD
$
$
$
$
$
$
$
$
$
Exercise
price
Number
under option
700,000
350,000
11,498,000
2,240,000
3,800,000
650,000
10,000,000
5,000,000
1,575,000
1,150,000
275,000
200,000
37,438,000
1.250
1.250
0.275
0.770
0.196
0.298
0.228
0.200
0.206
0.208
0.198
0.206
* Non-Executive Directors options
** ESOP options
*** Unlisted options
**** Warrants. These options represent 574,900 unlisted warrants. Each warrant represents is convertible into
20 shares. The exercise price of each warrant is convertible on the payment of $USD5.50 ($USD 0.275 per
share).
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share
issue of the Company or of any other body corporate.
Shares issued on the exercise of options
No options were exercised and converted during the year.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity
as a director or executive, for which they may be held personally liable, except where there is a lack of good
faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and
executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract
of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the
auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of
the Company or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to 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 part of those proceedings.
Page | 17
BENITEC BIOPHARMA LIMITED
Directors' Report
for the year ended June 30, 2019 continued
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by
the auditor are outlined in note 20 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor's behalf), is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 20 to the financial statements do not
compromise the external auditor's independence requirements of the Corporations Act 2001 for the following
reasons:
• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor;
• none of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical
Standards Board, including reviewing or auditing the auditor's own work, acting in a management or
decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic
risks and rewards; and
• all services have been pre-approved by the audit committee.
Officers of the Company who are former partners of Grant Thornton Audit Pty Ltd
There are no officers of the Company who are former partners of Grant Thornton Audit Pty Ltd.
Rounding of amounts
The Parent entity has applied the relief available to it under ASIC Corporations (Rounding in
Financial/Directors’ Reports). Instrument 2016/191 and accordingly amounts in the financial statements and
Directors’ Report have been rounded off to the nearest $1,000, or in certain cases, to the nearest dollars.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001
is set out on the following page.
Auditor
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the directors
______________________________
Jerel Banks
Executive Chairman
August 29, 2019
Page | 18
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Benitec Biopharma Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of
Benitec Biopharma Limited the year ended 30 June 2019, I declare that, to the best of my knowledge and belief,
there have been:
a
audit; and
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the
b
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M R Leivesley
Partner – Audit & Assurance
Sydney, 29 August 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian
subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Page | 19
BENITEC BIOPHARMA LIMITED
Statement of profit or loss and other comprehensive income
For the year ended June 30, 2019
Revenue
Other income
Total Income
Expenses
Royalties and licence fees
Research and development
Employee benefits expense
Share-based expense
Travel related costs
Consultants costs
Occupancy costs
Depreciation
Corporate expenses
Foreign exchange realized loss
Foreign exchange unrealized loss
Change in market value of listed investment
Net loss on disposal of fixed assets
Total Expenses
Finance Income
Profit/(Loss) before income tax
Income tax
Profit/(Loss) after income tax for the year attributable to the
owners of Benitec Biopharma Limited
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit and loss
Foreign currency translation loss
Income tax on items that may be reclassified to profit and loss
Total comprehensive Profit/(Loss) for the year attributable to
the owners of Benitec Biopharma Limited
Basic earnings income/(loss) cents per share
Diluted earnings income/(loss) cents per share
Note
4a
4b
Consolidated
2019
$'000
2018
$'000
16,159
1,350
17,509
378
4,087
4,465
5
5
5
6
17
28
28
(609 )
(3,104 )
(5,025 )
(939 )
(350 )
(662 )
(648 )
(221 )
(1,884 )
(106 )
-
(28 )
(9 )
(13,585 )
(451 )
(6,890 )
(5,094 )
(434 )
(468 )
(783 )
(587 )
(194 )
(1,360 )
(39 )
(5 )
(41 )
(1 )
(16,347 )
170
242
4,094
-
(11,640 )
-
4,094
(11,640 )
(117 )
-
(63 )
-
3,977
(11,703 )
1.59
1.59
(5.53 )
(5.53 )
The above statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
Page | 20
BENITEC BIOPHARMA LIMITED
Consolidated Statement of Financial Position
as at June 30, 2019
ASSETS
Current Assets
Cash and cash equivalents
Other financial assets
Trade and other receivables
Other assets
Total Current Assets
Non-Current Assets
Deposits
Plant and equipment
Total Non-Current Assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2019
$'000
2018
$'000
7
8
9
10
11
12
13
14
15
16
17
22,411
181
3,616
535
26,743
16,085
130
4,255
425
20,895
13
670
683
125
319
444
27,426
21,339
3,556
210
3,766
2,376
171
2,547
-
-
48
48
3,766
2,595
23,660
18,744
164,087
831
(141,258 )
23,660
164,087
1,492
(146,835 )
18,744
The above statement of financial position should be read in conjunction with the accompanying notes
Page | 21
BENITEC BIOPHARMA LIMITED
Consolidated Statement of Changes in Equity
for the year ended June 30, 2019
Issued
capital
$'000
Reserves
$'000
Accumulated Total
equity
$'000
losses
$'000
Balance at July 1, 2017
155,580
1,674
(135,748 )
21,506
Loss after income tax
Other comprehensive income
- Foreign exchange translation reserve
Total comprehensive income
-
-
-
-
(63 )
(63 )
(11,640 )
-
(11,640 )
(11,640 )
(63 )
(11,703 )
Contributions of equity, net of transaction costs
Share-based payments
Transfer of expired share-based payments
Balance at June 30, 2018
8,507
-
-
164,087
-
434
(553 )
1,492
-
-
553
(146,835 )
8,507
434
-
18,744
Issued
capital
$'000
Reserves
$'000
Accumulated Total
equity
$'000
losses
$'000
Balance at July 1, 2018
164,087
1,492
(146,835 )
18,744
Profit after income tax
Other comprehensive income
- Foreign exchange translation reserve
Total comprehensive income
-
-
-
-
4,094
4,094
(117 )
(117 )
-
4,094
(117 )
3,977
Contributions of equity, net of transaction costs
Share-based payments
Transfer of expired share-based payments
Balance at June 30, 2019
-
-
-
164,087
-
939
(1,483 )
831
-
-
1,483
(141,258 )
-
939
-
23,660
The above statement of changes in equity should be read in conjunction with the accompanying notes
Page | 22
BENITEC BIOPHARMA LIMITED
Consolidated Statement of Cash Flows
for the year ended June 30, 2019
Cash flows from operating activities
Receipts from customers
Interest received
Government grants
Receipts of CRO prepayment
Payments to suppliers and employees
Net cash provided by/(used in) operating activities
Cash flows from investing activities
Payments for plant and equipment
Proceeds from disposal of plant and equipment
Clinical trial deposit
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
IPO and share issue transaction costs
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the financial year
Note
2019
$'000
2018
$'000
17,664
164
4,121
-
(16,092 )
5,857
237
246
4,112
109
(14,498 )
(9,794 )
(576 )
6
-
(570 )
-
-
-
5,287
16,085
1,039
22,411
(83 )
2
(66 )
(147 )
8,820
(313 )
8,507
(1,434 )
17,375
144
16,085
27
12
7
The above statement of cash flows should be read in conjunction with the accompanying notes
Page | 23
BENITEC BIOPHARMA LIMITED
Notes to the consolidated financial statements June 30, 2019 continued
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 2.
New, revised or amending Accounting Standards and Interpretations adopted
The annual financial statements have been prepared in accordance with the accounting policies adopted in the
Group’s last annual financial statements for the year ended June 30, 2018, with the exception of new accounting
standards AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments (2014) which
became mandatorily effective for financial years beginning on or after January 1, 2018.
The nature and effect of the changes arising from these standards are summarised below.
New Standards adopted as at July 1, 2018
AASB 15 Revenue from Contracts with Customers
AASB 15 replaces AASB 118 and covers contracts for goods and services. AASB 15 is based on the principle that
revenue is recognised when control of a good or service transfers to a customer; so the notion of control replaces the
existing notion of risks and rewards.
The Group has adopted AASB 15 from July 1, 2018, using a modified retrospective approach. Under this approach,
transitional adjustments are recognised in retained earnings as at July 1, 2018 (the date of initial application), without
restating the comparative period.
Many of the Group’s contracts comprise a variety of performance obligations including, but not limited to, licensing
fees, ongoing support, reimbursement of know how. Under AASB 15, the Group must evaluate the separability of the
promised goods or services based on whether they are ‘distinct’. A promised good or service is ‘distinct’ if both:
•
•
the customer benefits from the item either on its own or together with other readily available resources: and
it is ‘separately identifiable’ (i.e. the Group does not provide significant service integrating, modifying or
customising it).
While this represents significant new guidance, the implementation of this new guidance did not have a significant
impact on the timing or amount of revenue recognised during the year. No adjustments were required to account for
the impact of AASB 15 on initial adoption.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement
requirements. It makes changes to the previous guidance to the classification and measurement of financial assets and
includes an ‘expected credit loss’ model for impairment of financial assets. Our financial assets include those outlined
in note 9 and trade and other receivables. There was no change to the classification of Listed equity investments.
They remain fair value through the profit and loss. The security deposit also remains unchanged and therefore no
adjustment was required to be made to retained earnings.
Page | 24
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
New, revised or amending Accounting Standards and Interpretations adopted continued
The classification of trade and other receivables changed from loans and receivables to amortised cost. No adjustment
was required as a result of this change.
Changes in significant accounting policies
The Group’s accounting policies, which have changed as a result of the changes to accounting standards noted above,
are summarised below:
Revenue
Revenue arises mainly from licensing revenues and royalties, as well through the provision of research and
development services.
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied
Further information about each source of revenue from contracts with customers and the criteria for recognition
follows.
Licensing revenues
Revenue from licensees of Benitec’s intellectual property reflects the transfer of a right to use the intellectual property
as it exists at the point in time in which the licence is transferred to the customer. Consideration can be variable and is
estimated using the most likely amount method. Subsequently, the estimate is constrained until it is highly probable
that a significant revenue reversal will not occur when the uncertainty is resolved. Revenue is recognised as or when
the performance obligations are satisfied.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations
and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a
performance obligation before it receives the consideration, the Group recognises either a contract asset or a
receivable in its statement of financial position, depending on whether something other than the passage of time is
required before the consideration is due.
Royalties
Revenue from licensees of Benitec’s intellectual property reflect a right to use the intellectual property as it exists at
the point in time in which the licence is granted. Where consideration is based on sales of product by the licensee,
revenue is recognised when the customer’s subsequent sales of product occurs.
Services revenue
Revenue is earned (constrained by variable considerations) from the provision of research and development services
to customers. Services revenue is recognised when performance obligations are either satisfied over time or at a point
in time. Generally, the provision of research and development services under a contract with a customer will represent
satisfaction of a performance obligation over time where Benitec retains the right to payment for services performed
but not yet completed.
Page | 25
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
New, revised or amending Accounting Standards and Interpretations adopted continued
Financial Instruments
Recognition and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions
of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those
carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of
financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or
when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised
when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the
transaction price in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Subsequent measurement of financial assets
For the purpose of subsequent measurement, financial assets, other than those designated and effective as hedging
instruments, are classified into the following categories upon initial recognition:
• financial assets at amortised cost
• financial assets at fair value through profit or loss (FVPL)
Classifications are determined by both:
• The entity’s business model for managing the financial asset
• The contractual cash flow characteristics of the financial assets
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance
costs, finance income or other financial items, except for impairment of trade receivables which is presented within
other expenses.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as
FVPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash
flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest
on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a business model other than ‘hold to collect’ or ‘hold to collect and sell’ are
categorised at fair value through profit and loss. Further, irrespective of business model, financial assets whose
contractual cash flows are not solely payments of principal and interest are accounted for at FVPL. All derivative
financial instruments fall into this category, except for those designated and effective as hedging instruments, for
which the hedge accounting requirements apply. The Group’s investments in equity instruments fall under this
category.
Page | 26
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
New, revised or amending Accounting Standards and Interpretations adopted continued
Impairment of financial assets
AASB 9’s new impairment model uses more forward-looking information to recognize expected credit losses - the
‘expected credit losses (ECL) model’. The application of the new impairment model depends on whether there has
been a significant increase in credit risk.
The Group considers a broader range of information when assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have
low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit
risk is not low (‘Stage 2’).
• ‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
12-month expected credit losses are recognised for the first category while ‘lifetime expected credit losses’ are
recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the
expected life of the financial instrument.
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets
and records the loss allowance at the amount equal to the expected lifetime credit losses. In using this practical
expedient, the Group uses its historical experience, external indicators and forward-looking information to calculate
the expected credit losses using a provision matrix.
The Group assess impairment of trade receivables on a collective basis as they possess credit risk characteristics
based on the days past due. The Group allows 1% for amounts that are 30 to 60 days past due, 1.5% for amounts that
are between 60 and 90 days past due and writes off fully any amounts that are more than 90 days past due.
All financial assets, except for those at fair value through profit or loss (FVPL), are subject to review for impairment
at least at each reporting date to identify whether there is any objective evidence that a financial asset or a group of
financial assets is impaired.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities
were not impacted by the adoption of AASB 9. However, for completeness, the accounting policy is disclosed below.
The Group’s financial liabilities include trade and other payables. Financial liabilities are initially measured at fair
value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair
value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective
interest method except for financial liabilities designated at FVPL, which are carried subsequently at fair value with
gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss
are included within finance costs or finance income.
Page | 27
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
New Accounting Standards and Interpretations not yet mandatory or early adopted
AASB 16 Leases - The AASB has issued a new standard for the recognition of leases. This will replace AASB 117:
Leases. The new standard introduces a single lessee accounting model that no longer requires leases to be classified as
operating or financing.
Other major changes include, the recognition of a right-to-use asset and liability, depreciation of right-to-use assets in
line with AASB 116: Property Plant and Equipment, variable lease payments that depend on an index or rate are
included in the initial measurement of lease liability, option for lessee to not separate non-lease components and
account for all components as a lease, and additional disclosure requirements.
Impact - The entity has undertaken a detailed review and has concluded that it will have a material impact on its
financial position on the transactions and balances recognized in the financial statements when it is first adopted for
the year ending June 30, 2020 due to the material size of lease entered into by the Company. The Company’s only
lease is the lease on its research and development facilities. The Group’s existing lease commitments are set out in
note 22.
The following is a reconciliation of total operating lease commitments as at June 30, 2019
to the lease liability recognised at July 1, 2019.
Total operating lease commitments disclosed at June 30, 2019
Recognition exceptions:
Lease with remaining lease term of less then 12 months
Operating leases liabilities before discounting
Discounted using incremental borrowing rate
Operating lease liabilities
920,883
(7,621 )
913,262
(70,169 )
843,093
The Mandatory application date/date of adoption by group - Must be applied for financial years commencing on or
after January 1, 2019. Expected date of adoption by the group: July 1, 2019.
There are no other standards that are not yet effective and that would be expected to have a material impact on the
entity in future reporting periods and on foreseeable future transactions.
Going concern
The directors have prepared the financial statements on a going concern basis after taking into consideration the net
income for the year of $4.094m (2018 loss: $11.640m) and the cash and cash equivalents balance of $22.411m (2018:
$16.085m). The directors have recognised the capital raisings in the last 3 years, performed a review of the cash flow
forecasts, considered the cash flow needs of the Group, and believe that there will be sufficient cash to maintain the
going concern status of the Group.
We expect that our research and development and general and administrative expenses will proceed at lower rate
compare to previous year due to staff rationalisation and the single focus on OPMD program due to the loss of the
Axovant contract.
The financial report does not contain any adjustments to the amounts or classifications of recorded assets or liabilities
that might be necessary if the Group does not continue as a going concern.
The financial statements take no account of the consequences, if any, of the effects of unsuccessful product
development or commercialisation, nor of the inability of the Group to obtain adequate funding in the future.
Page | 28
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 24.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Benitec Biopharma
Limited ('Company' or 'parent entity') as at June 30, 2019 and the results of all subsidiaries for the year then ended.
Benitec Biopharma Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when it is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from the date that control ceases.
The Company’s 100% owned subsidiary, Tacere Therapeutics, Inc. has a 31 December year end. The Company is
reviewing the appropriate time to align the subsidiary year end to the parent’s year end. For consolidation purposes
Tacere prepares financial statements for the 12 month period ended 30 June that are used to consolidate into the group
accounts.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-
controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
Group recognises the fair value of the consideration received and the fair value of any investment retained together
with any gain or loss in profit or loss.
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible
for the allocation of resources to operating segments and assessing their performance.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Benitec Biopharma Limited's functional and
presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the
average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in
equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is
disposed of.
Page | 29
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
Government research and development grants
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.
Grant income is generated through the Australian federal government’s Research and Development Tax Incentive
program, under which the government provides a cash refund for the 43.5% (2018: 43.5%) of eligible research and
development expenditures. Grants are recorded when a reliable estimate can be made. In the twelve months ended
June 30, 2019 the Company estimated the grant income that will be receivable following the lodgement of the 2019
tax return. Prior to June 30, 2017 the grant income was only taken up on the lodgement of the previous year’s tax
return, which was the time at which it was considered a reliable estimate could be made.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
• When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither
the accounting nor taxable profits; or
• When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and
the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available
for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that
it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Benitec Biopharma Limited (the 'head entity') and its wholly-owned Australian subsidiaries have formed an income
tax consolidated group under the tax consolidation regime. The head entity and each subsidiary in the tax consolidated
group continue to account for their own current and deferred tax amounts. The tax consolidated group has applied the
'separate taxpayer within group' approach in determining the appropriate amount of taxes to allocate to members of
the tax consolidated group. No tax sharing agreement has been entered between entities in the tax consolidated group.
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or
assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary
in the tax consolidated group.
Page | 30
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a
liability for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
Plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Leasehold improvements
Plant and equipment
period of the lease term
3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting
date.
An item of plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
Impairment of non-financial assets
Other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-
financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is
the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the
asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped
together to form a cash-generating unit.
Page | 31
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
and which are unpaid. Due to their short-term nature, they are measured at amortised cost and are not discounted. The
amounts are unsecured and are usually paid within 30 days of recognition.
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries and other employee benefits expected to be settled within 12 months of the reporting
date are measured at the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefits
Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value
of expected future payments to be made in respect of services provided by employees up to the reporting date using
the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the
reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits are provided to directors and senior executives. The plan currently
in place to provide these benefits is the Employee Share Option Plan ('ESOP').
Equity-settled transactions are awards of shares, or options over shares that are provided to employees in exchange for
the rendering of services.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not
determine whether the Group receives the services that entitle the employees to receive payment. No account is taken
of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award,
the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The
amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less
amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair
value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that
market condition has been met, provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the
total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during
the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and
any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a modification. The dilutive effect, if any, of outstanding
options is reflected as additional share dilution in the computation of earnings per share.
Page | 32
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 1. Significant accounting policies continued
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its
highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
Issued capital
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.
Costs related to an initial offering are expensed in the statement of profit or loss and other comprehensive income.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Benitec Biopharma Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as
part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
Rounding of amounts
The Parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’
Reports). Instrument 2016/191 and accordingly amounts in the financial statements and Directors Report have been
rounded off to the nearest $1,000, or in certain cases, to the nearest dollars.
Page | 33
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the
respective notes) within the next financial year are discussed below.
Research and development expenses
Management does not consider the development programs to be sufficiently advanced to reliably determine the
economic benefits and technical feasibility to justify capitalisation of development costs. These costs have been
recognised as an expense when incurred. Research and development expenses relate primarily to the cost of
conducting clinical and pre-clinical trials. Clinical development costs are a significant component of research and
development expenses. Estimates have been used in determining the expense liability under certain clinical trial
contracts where services have been performed but not yet invoiced. Generally, the costs, and therefore estimates,
associated with clinical trial contracts are based on the number of patients, drug administration cycles, the type of
treatment and the outcome being the length of time before actual amounts can be determined will vary depending on
length of the patient cycles and the timing of the invoices by the clinical trial partners.
Research and development refundable tax offsets
The Group accounts for the federal government research and development grant tax incentive when a reliable estimate
of the amounts receivable can be made. In determining the estimate management reviews historical claims,
Government overseas findings enabling the claim of overseas expenditure and the allocation of staff and overheads
costs within approved projects. Judgement is also applied in determining the eligibility of the activities undertaken in
Australia and overseas. Grant Income for the year ended June 30, 2019 includes an estimate of Research and
Development grant receivable for June 30, 2019 of $907k (refer Note 4b).
Share-based payment 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 by using the Black-Scholes model
taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and
assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that
future taxable amounts will be available to utilise those temporary differences and 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. The Group applies judgments in determining whether the tests for utilisation of carry
forward tax losses are satisfied in a year where taxable income is generated. This involves management considering
the Continuity of Ownership and/or Similar Business tests.
Page | 34
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 2. Critical accounting judgements, estimates and assumptions continued
Revenue recognition
The Group applies judgement in determining whether contracts entered into fall within the scope of AASB 15
‘Revenue from Contracts with Customers’. In doing so, management considers the commercial substance of the
transaction and how risks and benefits of the contract accrue to the various parties to the contract. In determining the
accounting treatment of the contract with Axovant management assessed that the contract was within the scope of
AASB 15 ‘Revenue from Contracts with Customers’.
Management has also made the judgement that the grant of the licence and transfer of associated know-how and
materials are accounted for as one performance obligation as they are not considered to be distinct; they are highly
interrelated and could not provide benefits to the customer independently from each other. Judgements were made in
relation to the transfer of the licence and know-how and whether this should be recognised over time or a point in
time. The point in time has been determined with regard to the point at which the transfer of know-how has
substantially been completed and the customer has control of the asset and the ability to direct the use of and receive
substantially all of the remaining benefits.
On June 6, 2019 the termination of the License and Collaboration Agreement with Axovant Sciences was announced.
The termination of the License and Collaboration Agreement will be effective on September 3, 2019. The termination
discharges all future performance obligations at termination date under the contract. As such, there are no contract
liabilities recognised at June 30, 2019.
Costs of capital raising
Costs directly attributable to an equity transaction are held in the statement of financial position until the completion
of the transaction. On completion, the costs will be applied against issued capital. Costs associated with abandoned or
sub-optimal equity transactions are expensed to profit or loss in the year the transaction is determined to no longer be
viable under existing conditions.
Note 3. Operating segments
The Group had only one business segment during the period, being the global commercialisation by licensing and
partnering of and licences in biotechnology, with applications in biomedical research and human therapeutics.
Business operations are conducted in Australia. However, there are controlled entities based in the USA and United
Kingdom. The United Kingdom entity has no segment revenues, results or assets.
Geographical locations
Australia
USA
Segment
Revenues from External
Customers
Segment Results
Carrying Amount of
Segment Assets
June 2019 June 2018 June 2019 June 2018 June 2019 June 2018
$’000
$’000
$’000
14,627
-
14,627
378
-
378
3,755
339
4,094
$’000
(11,733 )
93
(11,640 )
$’000
$’000
25,112
2,314
27,426
19,639
1,700
21,339
Accounting Policies
Segment revenues and expenses are directly attributable to the identified segments. 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. 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
Page | 35
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 4. Revenue and other income
(a) Revenue
Licensing revenue and royalties
Service revenue*
Total
(b) Other income
Australian Government R&D grants
Foreign exchange unrealized gain
Other
Total
2019
$'000
2018
$'000
14,627
1,532
16,159
907
443
-
1,350
378
-
378
3,999
87
1
4,087
*On June 6, 2019 termination of Licence and Collaboration Agreement with Axovant Science was announced. The termination of the License and
Collaboration Agreement will be effective on September 3, 2019.
(c) Disaggregated revenue
Services transferred at a point of time
Services transferred over time
Services transferred at a point of time
Services transferred over time
Twelve months to June 30, 2019
Licensing
Royalties
Development
activities
14,179
192
14,371
-
256
256
-
1,532
1,532
Total
14,179
1,980
16,159
Twelve months to June 30, 2018
Licensing
Royalties
Development
activities
-
235
235
-
143
143
-
-
-
Total
-
378
378
Note 5. Expenses
Profit/(Loss) before income tax includes the following specific expenses:
2019
$'000
2018
$'000
Depreciation
Leasehold improvements
Plant and equipment
Total depreciation
Research and development
Project expenses
Other IP related expenses
Total research and development
Employee benefits expense
Defined contribution superannuation expense
Employee benefits expense excluding superannuation
Rental expense relating to operating leases
Minimum lease payments
31
190
221
2,152
952
3,104
197
4,828
5,025
25
169
194
6,219
671
6,890
241
4,853
5,094
491
384
Page | 36
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 6. Income tax benefit
Income tax benefit
Current tax
Aggregate income tax benefit
Numerical reconciliation of income tax benefit and tax at the statutory rate
Income/(Loss) before income tax benefit
Tax at the statutory tax rate of 27.5% (27.5%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable
income:
R&D expenses
R&D incentive income
Legal expenses
Share-based payments
Timing differences utilised not previously recognised
Impact of foreign exchange rate differences
(Utilisation of carried forward losses)/Tax losses not brought to account
Income tax benefit
2019
$'000
2018
$'000
-
-
-
-
4,094
(11,640 )
1,126
(3,201 )
573
(249 )
225
258
(264 )
-
1,669
(1,669 )
-
2,605
(1,124 )
70
119
(196 )
-
(1,727 )
1,727
-
Tax losses are recognised only if the consolidated entity considers it is probable that future taxable amounts will be
available to utilise those temporary differences and losses.
Tax losses for which no deferred tax asset has been recognised - Australia
- Tax losses not recognised
- Capital losses not recognised
- Other deferred tax assets not recognised
54,083
1,272
980
56,335
61,471
1,272
627
63,370
Potential tax benefit of tax assets not recognised at 27.5% (27.5%)
15,492
17,427
Tax losses for which no deferred tax asset has been recognised - US (Tacere)
- Tax losses not recognised
Potential tax benefit of tax assets not recognised at 21% - US
771
162
846
178
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been
recognised in the statement of financial position as the recovery of this benefit is uncertain.
Page | 37
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 7. Cash and cash equivalents
Cash at bank
Cash on deposit
Note 8. Other financial assets
Market value of listed shares
Security deposit
Deposit other
Note 9. Trade and other receivables
R&D grant receivable
Receivables
There are no receivable balances that are past due that are not impaired.
Note 10. Current assets - other
Prepayments
Note 11. Deposits non - current
Other
Note 12. Property, plant and equipment
Leasehold improvements - at cost
Less: Accumulated depreciation
Plant and equipment - at cost
Less: Accumulated depreciation
2019
$'000
2018
$'000
15,369
7,042
22,411
9,575
6,510
16,085
1
147
33
181
907
2,709
3,616
535
535
13
13
109
(73 )
36
1,516
(882 )
634
670
30
100
-
130
4,121
134
4,255
425
425
125
125
79
(44 )
35
975
(691 )
284
319
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Balance at June 30, 2017
Additions
Disposals
Depreciation expense
FX loss
Balance at June 30, 2018
Leasehold
improvement equipment
Plant and
$'000
$'000
Total
$'000
60
-
-
(25 )
-
35
385
86
(27 )
(169 )
9
284
445
86
(27 )
(194 )
9
319
Page | 38
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Balance at June 30, 2018 b’fwd
Additions
Disposals
Depreciation expense
FX loss
Balance at June 30, 2019
Note 13. Trade and other payables
Trade creditors
Sundry creditors and accrued expenses
Total
Note 14. Provisions
Employee benefits
Provision for make good
Total
Note 15. Equity - issued capital
Leasehold
improvement equipment
Plant and
$'000
$'000
Total
$'000
35
30
-
(31 )
2
36
284
541
(54 )
(190 )
53
634
319
571
(54 )
(221 )
55
670
2019
$'000
2018
$'000
2,101
1,455
3,556
200
10
210
2019
$'000
580
1,796
2,376
146
25
171
2018
$'000
2019
Shares
2018
Shares
Ordinary shares - fully paid
257,029,426 257,029,426
164,087 164,087
Movements in ordinary share capital
Details
Balance
Balance
Date
June 30,
2018
June 30,
2019
Shares
Issue price
$'000
257,029,426
164,087
257,029,426
164,087
The weighted average number of shares on issue during
the twelve months to June 30, 2019 was
257,029,426
Issued capital
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk management
The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can
provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to
reduce the cost of capital.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders.
Operating globally, the Group develops speciality pharmaceutical products. The overall strategy of the Group is to
Page | 39
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
continue its drug development programs, which depends on selling assets and raising additional equity to fund the
activities.
The capital risk management policy remains unchanged from the prior year.
Note 16. Equity Reserves
Foreign currency translation reserve
Share-based payments reserve
2019
$'000
2018
$'000
(1,465 )
2,296
831
(1,348 )
2,840
1,492
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of
foreign operations to Australian dollars.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Balance at June 30, 2017
Foreign currency translation
Share-based payments
Balance at June 30, 2018
Foreign currency translation
Share-based payments
Balance at June 30, 2019
Note 17. Equity - accumulated losses
Accumulated losses at the beginning of the financial year
Income/(Loss) after income tax benefit for the year
Transfer from share-based payment reserve for expired options
Accumulated losses at the end of the financial year
Foreign
currency
$'000
Share-
based
payments
$'000
(1,285 )
(63 )
-
(1,348 )
(117 )
-
(1,465 )
2,959
-
(119 )
2,840
-
(544 )
2,296
Total
$'000
1,674
(63 )
(119 )
1,492
(117 )
(544 )
831
2019
$'000
2018
$'000
(146,835 )
4,094
1,483
(141,258 )
(135,748 )
(11,640 )
553
(146,835 )
Note 18. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 19. Financial instruments
Financial risk management objectives
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest
rate risk) and liquidity risk. 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.
Page | 40
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 19. Financial instruments continued
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Total Financial Liabilities
2019
$'000
2018
$'000
22,411
3,616
26,027
16,085
4,255
20,340
3,556
3,556
2,376
2,376
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
At June 30, 2019 the Company held USD cash or cash equivalents of AUD$12m and trade payables and accruals of
AUD$2.43m. Net USD exposure in AUD of $9.59m. Each 1 cent movement in the AUD/USD exchange rate has a +/-
effect of AUD $139k on profit and net assets of the Company. Exposure to foreign exchange rates vary during the
year depending on the volume of overseas transactions. Nonetheless the analysis above is considered to be
appropriate of the Group’s exposure to currency risk.
Interest rate risk
The Group generates income from interest on surplus funds. At reporting date, the Group had the following assets
exposed to Australian variable interest rate risk that are not designated in cash flow hedges.
As at the reporting date, the Group had the following variable rate cash and cash equivalents outstanding:
Weighted
average
interest
rate
%
Weighted
average
interest
rate
%
Balance
2019
$'000
Cash and cash equivalents
Net exposure to cash flow interest rate risk
2 %
22,411
22,411
2 %
Balance
2018
$'000
16,085
16,085
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Group. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and
notes to the financial statements. The Group does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash
equivalents) to be able to pay debts as and when they become due and payable.
Page | 41
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 19. Financial instruments continued
Liquidity risk continued
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and
liabilities.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the financial liabilities are required to be paid.
2019
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Total non-derivatives
Weighted
average
interest
rate
%
1 year or
less
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5
years
Remaining
contractual
maturities
$'000 $'000
-% 2,101
-% 1,455
3,556
-
-
-
-
-
-
-
-
-
2,101
1,455
3,556
%
$'000
$'000
$'000
$'000 $'000
580
-%
-% 1,796
2,376
-
-
-
-
-
-
-
-
-
580
1,796
2,376
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 20. Remuneration of auditors
During the financial year the following fees were paid or payable for services
provided by Grant Thornton Audit Pty Ltd and affiliated entities, the auditor of
the Company:
Audit services
Audit or review of the financial statements
Other audit services
- F1 review
- F3 review
Other services
Tax compliance services
Note 21. Contingent liabilities and commitments
There no contingent liabilities.
2019
$
2018
$
168,398
240,806
-
-
17,990
6,660
15,650
184,048
42,617
308,073
Page | 42
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 22. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
2019
$'000
2018
$'000
289
631
920
219
293
512
Operating lease commitments includes contracted amounts for offices under non-cancellable operating leases expiring
within 3 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the
terms of the leases are renegotiated.
Parent entity
Benitec Biopharma Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 25.
Key management personnel
Disclosures relating to key management personnel are set out in note 23 and the remuneration report in the directors'
report.
Note 23. Related party transactions
Parent entity
Benitec Biopharma Limited is the parent entity.
Key management personnel
Disclosures relating to key management personnel are set out in June 30, 2019 Annual Report in the remuneration
report.
Compensation
The aggregate compensation made to directors and other members of key management personnel of the Group is set
out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
The following transactions occurred with related parties:
Payment for other expenses:
Legal services paid / payable to Francis Abourizk Lightowlers, a law firm in
which Mr Peter Francis is a partner and has a beneficial interest.
Annabel West, the wife of Greg West, our former Chief Executive Officer,
was employed as a part-time clerical and administrative assistant.
2019
$
1,160,275
36,690
807,177
2,004,142
2018
$
1,843,334
89,780
257,001
2,190,115
726
8,212
-
42,278
Page | 43
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 23. Related party transactions continued
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 24. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Profit/(loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
2019
$'000
2018
$'000
3,542
3,542
(13,566 )
(13,566 )
25,095
25,112
3,390
3,390
19,461
19,639
2,351
2,399
164,087
2,296
(144,661 )
21,722
164,087
2,840
(149,687 )
17,240
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at June 30, 2019 and June 30, 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at June 30, 2019 (2018: nil), other than the contingent liabilities
described as belonging to the parent entity in note 21.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at June 30, 2019 and June 30,
2018.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for
the following:
•
• Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
indicator of an impairment of the investment.
Page | 44
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 25. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
Name
Benitec Australia Limited
Benitec Biopharma Limited
Benitec, Inc.
Benitec LLC
RNAi Therapeutics, Inc.
Tacere Therapeutics, Inc.*
Principal place of business /
Country of incorporation
Australia
United Kingdom
USA
USA
USA
USA
2019
%
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
2018
%
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
100.00 %
All companies in the Group adopt the same accounting policies.
* Note Tacere year end is 31 December which was the year end date when the Company was acquired.
Note 26. Events after the reporting period
No matter or circumstance has arisen since June 30, 2019 that has significantly affected, or may significantly affect
the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Note 27. Reconciliation of profit/(loss) after income tax to net cash used in
operating activities
Profit/(Loss) after income tax benefit for the year
Adjustments for:
Loss on disposal of fixed assets
Depreciation and amortisation
Share-based payments
Loss on assets held for sale
Net unrealised foreign exchange
Change in operating assets and liabilities:
(Decrease)/Increase in trade and other receivables
(Decrease) in other current assets
Decrease in trade and other payables
Decrease in R&D grant receivable
(Decrease) in employee benefits
(Decrease) in provision
Net cash used in operating activities
2019
$'000
2018
$'000
4,094
(11,640 )
9
221
939
29
(1,053 )
(2,542 )
(104 )
1,066
3,214
(1 )
(15 )
5,857
1
194
434
-
(82 )
72
(121 )
1,259
112
(23 )
-
(9,794 )
Note 28. Earnings per share
Profit/(Loss) after income tax attributable to the owners of Benitec Biopharma
Limited
4,094
(11,640 )
Page | 45
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 28. Earnings per share continued
Weighted average number of ordinary shares used in calculating basic
earnings per share
Weighted average number of ordinary shares used in calculating diluted
earnings per share
Basic earnings per share
Diluted earnings per share
Number
Number
257,029,426 210,454,829
257,029,426 210,454,829
Cents
Cents
1.59
1.59
(5.53 )
(5.53 )
Outstanding options to acquire ordinary shares are not considered dilutive for the years ended June 30, 2019 and June
30, 2018, because they are anti-dilutive, as the strike price was lower than share price.
Note 29. Share-based payments
Benitec Biopharma Limited Employees Share Option Plan (ESOP):
Description of plan
The Group may from time to time issue employee’s options to acquire shares in the parent at a fixed price. Each
option when exercised entitles the option holder to one share in the Parent 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.
The following table shows 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
2019
2019
WAEP
2018
2018
WAEP
Number
24,477,332
8,200,000
-
(6,737,332 )
25,940,000
Number
0.416 9,724,000
0.202 19,950,000
-
0.585 (5,196,668 )
24,477,332
-
Options exercisable at the end of the year
8,106,667
6,527,333
Details of ESOP share options outstanding as at end of year:
2019
2018
Grant date
August 22, 2013 **
May 15, 2014 **
December 17, 2014 **
May 6, 2015 **
November 12, 2015*
August 9, 2016**
July 17, 2017**
April 11, 2018**
June 26, 2018**
March 12, 2019**
March 21, 2019**
April 11, 2019**
May 2, 2019**
May 16, 2019**
Expiry date
August 22, 2018
May 15, 2019
December 17, 2019
May 6, 2020
November 12, 2020
August 9, 2021
July 17, 2022
April 11, 2023
June 26, 2023
March 12, 2024
March 21, 2024
April 11, 2024
May 2, 2024
May 16, 2024
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Exercise
price
Number
Number
under option Under option
480,000
-
1.25
90,000
-
1.50
700,000 2,334,000
1.25
1.25
650,000
350,000
0.77 2,240,000 2,240,000
0.1665
- 1,466,666
0.196 3,800,000 6,566,666
650,000
650,000
0.298
0.228 10,000,000 10,000,000
-
0.200 5,000,000
-
0.206 1,575,000
-
0.208 1,150,000
-
275,000
0.198
-
200,000
0.206
25,940,000 24,477,332
0.832
0.218
-
0.426
0.416
Page | 46
BENITEC BIOPHARMA LIMITED
Notes to the financial statements June 30, 2019 continued
Note 29. Share-based payments continue
* Non-Executive Directors options
** ESOP options
The weighted average remaining life of the options issued under the ESOP at June 30, 2019 was 3 years and 7 months
(2018: 3 years and 10 months).
For the options granted during the year, the valuation model inputs used to determine the fair value at the grant date
are as follows:
Share price
at grant Exercise Expected *
volatility
price
date
Dividend Risk-free
interest rate
yield
Grant date
12/03/2019
21/03/2019
11/04/2019
02/05/2019
16/05/2019
Expiry date
12/03/2024
21/03/2024
11/04/2024
02/05/2024
16/05/2024
$
$
$
$
$
0.135 $
0.130 $
0.140 $
0.140 $
0.130 $
0.200
0.206
0.208
0.198
0.206
104.10 %
103.73 %
103.84 %
103.24 %
102.92 %
-%
-%
-%
-%
-%
Fair value
at grant date
0.1009
0.0916
0.0999
0.1003
0.0908
1.670 % $
1.530 % $
1.520 % $
1.400 % $
1.280 % $
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were $0.939m (2018: $0.434m).
* expected volatility was determined with reference to the Benitec share price based on historical volatility.
Page | 47
BENITEC BIOPHARMA LIMITED
Directors Declaration June 30, 2019
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at June 30,
2019 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
______________________________
Jerel Banks
Chairman
August 29, 2019
Melbourne
Page | 48
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Benitec Biopharma Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Benitec Biopharma Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to
one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the
member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not
provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In
the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian
subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Page | 49
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition – Axovant Services License &
Collaboration Agreement (Note 4a)
During the year the Group entered into a material licence
agreement. In accordance with AASB 15 Revenue from
Contracts with Customers, the Group needs to assess the
contract in respect to the 5-step model outlined in the
standard.
This area is a key audit matter due to the material nature
of the transaction, significant judgement and estimation,
and the subsequent termination of the agreement after
year end.
Recognition of R&D Tax Incentive (Note 4b)
Under the research and development (R&D) tax incentive
scheme, the Group receives a 43.5% refundable tax offset
(2018: 43.5%) of eligible expenditure if its turnover is less
than $20 million per annum. A Registration of R&D
Activities Application is filed with AusIndustry in the
following financial year and, based on this filing, the Group
receives the incentive in cash. Management performed a
detailed review of the Group’s total R&D expenditure to
estimate the refundable tax offset receivable under the
R&D tax incentive legislation.
This area is a key audit matter due to the size of the
receivable and because there is a degree of judgement
and interpretation of the R&D tax legislation required by
management to assess the eligibility of the R&D
expenditure under the scheme.
Our procedures included, amongst others:
• obtaining and reading the underlying agreement
between the Group and the counterparty;
• obtaining management’s assessment of the accounting
treatment of the different elements of the contract,
including identification of performance obligations and
assessment for variable consideration;
• assessing the appropriateness of the accounting
treatment applied in line with AASB 15;
• evaluating management’s assessment of the impact of
the contract termination on future performance
obligations; and
• assessing the adequacy of the relevant disclosures in
the financial statements.
Our procedures included, amongst others:
• obtaining, through discussions with management, an
understanding of the process to estimate the claim;
• utilising an internal R&D tax specialist to:
o
review the expenditure methodology employed by
management for consistency with the R&D tax
offset rules; and
o consider the nature of the expenses against the
eligibility criteria of the R&D tax incentive scheme
to form a view about whether the expenses
included in the estimate were likely to meet the
eligibility criteria;
•
inspecting supporting documentation for a sample of
expenses claimed to assess validity of the claimed
amount and eligibility against the R&D tax incentive
scheme criteria;
• comparing the nature of the R&D expenditure included
in the current year estimate to the prior year claim;
• considering the entity's history of successful claims;
• comparing the eligible expenditure used in the
receivable calculation to the expenditure recorded in
Page | 50
the general ledger;
• selecting a sample of R&D expenditure and agreeing
to supporting documentation to ensure appropriate
classification;
inspecting copies of relevant correspondence with
AusIndustry and the ATO related to the claims; and
• assessing the adequacy of the relevant disclosures in
•
the financial statements.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s
report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in
the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the
Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of
our auditor’s report.
Page | 51
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 10 to 16 of the Directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Benitec Biopharma Limited, for the year ended 30 June 2019 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M R Leivesley
Partner – Audit & Assurance
Sydney, 29 August 2019
Page | 52
BENITEC BIOPHARMA LIMITED
Corporate Directory June 30, 2019
Directors
Dr Jerel A Banks - Executive Chairman
Ms Megan Boston - Executive Director, Head of Operations Australia
Mr Kevin Buchi - Non-Executive Director
Mr Peter Francis - Non-Executive Director
CEO
Dr Jerel A Banks
Company Secretary
Mr Oliver Kidd
Notice of annual general meeting The details of the annual general meeting of Benitec Biopharma Limited are:
Registered office
Share register
Auditor
Bankers
Collins Square, Tower 5
727 Collins Street
Melbourne, VIC 3008
Friday November 29, 2019 at 10:00 am (AEST)
Level 14
114 William Street
Melbourne, VIC 3000
Head office telephone: +61 3 8692-7222
Fax: +61 (0)3 9966-9923
Computershare Investor Services Pty Limited
Yarra Falls
452 Johnston Street
Abbotsford, VIC 3067
Shareholders Enquiries: 1300 787 272
Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
Sydney, NSW 2000
Westpac Banking Corporation
274 Darling Street
Balmain, NSW 2041
Stock exchange listing
Benitec Biopharma Limited shares are listed on the Australian Securities
Exchange in Australia (ASX: BLT)
Benitec Biopharma Limited shares are listed on the NASDAQ Global Select
Market in United States (NASDAQ: BNTC; NASDAQ: BNTCW)
Website
www.benitec.com
Page | 53
BENITEC BIOPHARMA LIMITED
Shareholder information June 30, 2019
The shareholder information set out below was applicable as at 30 June 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Total Shareholders
Holding less than a marketable parcel
Equity security holders
Number of holders
of ordinary shares
766
1,575
710
1,176
186
4,413
2,786
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary
Shares held
NANT CAPITAL LLC
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
DALIT PTY LTD
CITICORP NOMINEES PTY LIMITED
CS FOURTH NOMINEES PTY LIMITED
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