BIO-GENE TECHNOLOGY LIMITED
(ABN 32 071 735 950)
2017 ANNUAL REPORT
CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Statement of Profit or Loss and Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Declaration by Directors
Independent Auditor’s Report
Board of Directors and Company Particulars
3
13
14
15
16
17
18
34
35
37
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
2
DIRECTORS’ REPORT
The Board of Directors of Bio-Gene Technology Limited (“Bio-Gene” or the “Company”) has resolved to submit the following report
together with the financial statements of the Company for the year ended 30 June 2017.
Directors
The following persons were directors of the Company during the whole of the financial year and up to the date of this report:
Mr. Robert Klupacs (Managing Director and CEO)
Mr. Kevin Rumble (Non-Executive Director)
Mr. Peter May (Non-Executive Director)
Mr. Donald Brumley was appointed as Non-Executive Chairman of the Company on 26 April 2017 replacing Mr. Kevin Rumble in that
role.
Mr Richard Jagger was appointed as a Non-Executive Director on 26 April 2017 and as Head of Commercial Development on 26 May
2017.
Mr. John Cornelius was a Non-Executive Director of the Company from the beginning of the financial year until his retirement on 11 May
2017.
Details of each director’s qualifications and special responsibilities, together with meetings attended, are set forth in other parts of this
report.
Company Secretary:
Mr. Roger McPherson was appointed on 26 April 2017, replacing Kevin Rumble in this role. Over the past year John Cornelius assisted
Kevin with these duties.
Principal activities
The principal activity of the Company is to develop Flavocide™ as an insecticide with applications in a number of markets including
public health, animal health and agriculture. The Company’s objective is to achieve the registration of the active molecule within
Flavocide™ (flavesone) by major regulatory bodies throughout the world including the Environment Protection Agency (EPA) in the USA
and with the APVMA (Australian Pesticides & Veterinary Medicines Authority) in Australia. The Company aims to market products
through partnerships with major market players across a range of different market segments. It aims to control its intellectual property
and manufacturing and to obtain a return on invested capital through licensing fees, sales royalties and sales of manufactured product
to its partners for re-sale.
A Variation Agreement in respect to the Intellectual Property rights to the use of the beta triketone class of molecules as insecticides
which include Flavesone was entered into in December 2016 between the Company, Medibio Limited and University of Western
Sydney. The Variation Agreement confirms the ownership of these Intellectual Property Rights by the Company and the milestone
payments to be paid by the Company upon certain commercial events.
Review of operations
Improvement of the financial position of the Company
In conjunction with Henslow Pty Ltd, the Company completed two capital raisings from placements to existing and new professional
investors which raised a total of $3.7 million. The first was completed in March 2017 for $1 million. The second was in June 2017 for a
further $2.7 million.
The Board has resolved to seek to undertake an initial public offering (IPO) of the Company on the ASX within the next 12 months but
will seek to list as quickly as possible subject to market conditions. Accordingly, Henslow Pty Ltd has been appointed as Corporate
Adviser and Lead Manager to the Company to lead the IPO process.
Virbac Collaboration
In June 2017 the Company announced that it had signed a research collaboration agreement with Virbac (EPA:VIRP), one of the largest
animal health dedicated companies in the world. Under the terms of the agreement, Virbac and Bio-Gene will evaluate Flavocide™ as a
new agent for insect control (including tick, flies and lice) in ruminant animals.
As part of its strategy the Company will continue to seek further partners in discrete market segments.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
3
DIRECTORS’ REPORT
Flavocide™
Mosquitos, Flies and Fleas
Over the past twelve months the Company has continued to focus its efforts on expanding the data package through further efficacy
testing of Flavocide. The testing program is being undertaken with a number of groups to demonstrate activity across a number of pests
in a number of different sectors.
A series of detailed tests were conducted by specialist entomologists at the University of Technology Sydney (UTS). The program
assessed the “knockdown” and residual activity of Flavocide™ at a range of doses against two strains of mosquitos (including Aedes
aegypti which carries both Zika and Dengue viruses), house flies and fleas compared to water and/or commercial Permethrin controls.
Under this program, UTS has shown that Flavocide™ is as effective as the permethrin against all insects and more effective against
house flies in certain settings.
Initial field testing conducted by UTS in Cairns in the past few months indicated that Flavocide™ is efficacious against mosquitos in this
setting.
The results of the UTS testing were presented by our UTS collaborator, Prof. Peter Miller at the prestigious International Conference on
Urban Pests meeting, held in Birmingham, UK in early July 2017.
In parallel with the UTS studies the Company recently entered into a research collaboration with Prof. Catherine Hill and colleagues
from Purdue University in the USA. Prof. Hill is a world recognised expert on mosquito insecticide resistance and control as well as a
leading researcher in assessing new agents for tick and cockroach control. She is currently advising the US government on their Zika
vector control programs. Her lab is one of the very few labs in the world with access to pyrethrin and oganophosphate insecticide
resistant insects.
She has obtained promising initial results with Flavocide™ in pilot studies. Her group is currently undertaking more detailed studies in
these and other insect species with results expected throughout the second half of 2017.
Ticks and Buffalo Fly
As advised in June 2016, the Company entered into an Evaluation Agreement with a major global multi-national animal health company
to undertake a staged evaluation assessing Flavocide™ in treatment and prevention of ectoparasites in cattle (ticks, buffalo fly) and
sheep (lice). The initial results indicated extremely positive results against tick larvae and buffalo fly. Based on these results the
Company was able to secure a development agreement with Virbac. The goal of the collaboration with Virbac is to assess Flavocide™
in field trials in cattle for tick and buffalo fly control in both Australia and South America in the next 12-18 months.
Grain Storage Pests
Bio-Gene also engaged the Queensland Department of Agriculture and Fisheries (QDAF) to assess Flavocide™ against a range of
grain storage pests including insecticide resistant pests. This is a major issue in the grain industry. Very promising results have been
developed in both standard and resistant insect populations and the Company is now expanding these studies to other grain pests with
the plan to assess in “silo trials” in the next 12 months.
Unique Mode of Action
The Company has collaborated with a UK company, Neurosolutions Limited, which specialises in identifying method of action of
chemicals using their in-house proprietary assays. Neurosolutions has confirmed that the insecticidal effects of Flavocide™ appear to
work through a novel/unique mode of action (i.e. it appears to act via a chemical pathway no current insecticide uses). The Company is
now undertaking additional and more detailed studies to elucidate this mechanism in finer detail. The Company has recently filed further
patent applications at the Australian Patent Office based on these findings.
Qcide™
The Company has continued to work with its growers in North Queensland to expand its plantation as well as to increase inventory of
the product. The Company is currently exploring collaborations with third parties who may be able to utilise Qcide as an alternative in
product formulations they currently market using Eucalyptus oil. These third parties are currently undertaking exploratory reviews before
moving to the next stage of commercial supply discussions.
Broadening the composition of board of directors
In April 2017, following the completion of the first capital raising and to accelerate Bio-Gene’s transformation into a world class
insecticide development company over the next few years, the Company sought to add two additional directors to the Board. The
Company sought out specific high level international agrichemical company expertise as well as well credentialed corporate governance
expertise.
Donald Brumley, a former senior audit partner of Ernst & Young Australia, with 30 years partnership experience has joined the Board as
Non-Executive Chairman. In addition, Richard Jagger who, most recently was Managing Director of Sinochem Australia and prior to
that worked for Monsanto in senior roles in Australia and USA, also agreed to join the Board as an Executive Director and Head of
Commercial Development. Further details on their credentials are included elsewhere in this report.
As a planned consequence of these Board changes, John Cornelius advised the Board that he wished to resign as a Director to enable
the Board to appoint a Chief Financial Officer. John resigned from the Board in May 2017. Roger McPherson joined Bio-Gene as CFO
and Company Secretary in April. Roger is a seasoned CFO with experience with both private and public companies across a range of
industries.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
4
DIRECTORS’ REPORT
Financial summary
The financial results of the Company for the year ended 30 June 2017 are summarised as follows:
Statement of financial position:
Cash and term deposits held of $2,860,324 (2016: $101,646) at reporting date. This increase is due to the successful capital
raisings referred to above.
The Company’s policy is to hold its cash and cash equivalent deposits in “A” rated or better deposits.
The Company’s strategy is to outsource product development expenses including manufacturing, regulatory and trial expenses, to
specialist, best of breed partner organisations. As a consequence the Company has not incurred any major capital expenditure for
the period and does not intend to incur substantial commitments for capital expenditure in the immediate future.
Operating results:
The Company produced a loss from ordinary activities after income tax of $1,054,902 (2016: $322,518).
Consolidated revenue including other income during the period was $106,725 (2016: $186,415). This revenue included an
estimated R&D Tax Incentive of $100,000 (2016: $186,367), Licence Fees of $6,316 (2016: $Nil) and interest of $409 (2016: $48).
Total consolidated operating expenses for the period were $1,161,627 (2016: $508,933). Research and development costs have
been expensed in the year in which they were incurred. The increase in expenditure is primarily due to the recent acceleration of
the research program.
Basic and diluted net loss per share increased to 0.96¢ (2016: 0.37¢) due to a combination of an increase of the loss and an
increase in the number of shares on issue.
Statement of cash flows:
The Company’s cash outflow from operations over the period was $729,152 (2016: $419,345).
The increase is due to the increased investment in the Flavocide™ development program.
Business strategies and prospects
The Company’s strategy is to develop its proprietary technologies to a point where they can be licensed and/or partnered with an
agricultural or biotech partner for further development and ultimately released to the market. Bio-Gene would generate milestone
payments and royalty revenues from such transactions.
Material business risks:
The Company’s operations and business prospects are subject to a number of risks. The Board regularly reviews the possible impact of
these risks and seeks to minimise this impact through a commitment to its corporate governance principles and risk management
function. However, not all risks are manageable or within the control of the Company. The key business risks faced by the Company
that are likely to have an effect on its future prospects include:
Laboratory and Field Trials
1.
Development of the Company’s products may fail for a number of reasons including lack of efficacy, toxicity or adverse side effects.
Failure can occur at any stage of the trials, requiring the Company to abandon or repeat trials. The Company or the relevant regulatory
authorities may suspend the Company’s trials at any time if it appears that the trials could potentially result in unacceptable health risks.
2. Manufacturing/production
The Company has successfully manufactured product at a scale sufficient to conduct the trials that have been undertaken to date. The
Company is now working on improving the production process to allow for cost effective manufacturing at scale. With any chemical
production process, however, there is inherent variability which cannot be controlled and therefore the yields of finished product can
vary. The Company’s production technologies have also not been tested at a scale sufficient to make commercial quantities of a
product in the event that it proves successful and can be brought to market and are therefore subject to risk of failure or high costs.
3. Out-licensing
The Company is relying on its ability to be able to out-license its products at a time deemed appropriate. The agricultural industry is
highly competitive and numerous entities around the world compete with the Company to discover, validate and commercialise
insecticides. The Company’s competitors may discover and develop products in advance of the Company and/or products that are
more effective than those developed by the Company. As a consequence, the Company may not be able to out-license its products or
not be able to out-license its products for the desired returns, resulting in adverse effects on revenue and profitability.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
5
DIRECTORS’ REPORT
4. Sufficiency of funding
The Company has limited financial resources and may need to raise additional funds from time to time to finance the development and
commercialisation of its products and its other objectives. The Company’s product development activities may never generate revenues
and the Company may never achieve profitability. The Company’s ability to raise funds in the future will be subject, among other things,
to factors beyond the control of the Company and its Directors including cyclical factors affecting the economy and share markets
generally. The Directors can give no assurance that future funds can be raised by the Company on favourable terms, if at all.
5. Third party collaborations
The Company has established and intends to continue to establish collaborative relationships to achieve its product development
objectives. The Company does not have all the resources that it needs to internally develop its product candidates through to full
development and to launch marketable products and relies on its ability to maintain and enter into collaborative and licensing
relationships to achieve this objective, and relies on its collaborators to fulfil their responsibilities. Any failure by these collaborators to
fulfil their responsibilities could adversely impact the Company.
Earnings per share
Basic loss per share from continuing operations
Basic diluted loss per shares from continuing operations
Significant changes in state of affairs
2017
(0.96¢)
(0.96¢)
2016
(0.37¢)
(0.37¢)
Other than the raising of additional capital, the execution of the deal with Virbac and the enhancement of the Board (detailed earlier in
this report) there were no significant changes to the state of affairs of Bio-Gene during the year.
Likely developments and expected results of operations
The Company will continue to fully evaluate Flavocide™ in a range of market applications, and to develop a comprehensive data
package to support product registrations in Australia and internationally.
Disclosure of information, in addition to that provided in this report, regarding likely developments in the operations of the Company in
future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Company.
Accordingly, this information has not been disclosed in this report.
Events since the end of the financial year
No matter or circumstance has arisen since 30 June 2017, other than as disclosed in this report, that has significantly affected or may
significantly affect: -
Bio-Gene Technology Limited’s operations in future financial years, or
the results of those operations in future financial years, or
Bio-Gene Technology Limited’s state of affairs in future years.
Dividends
No dividends were paid or declared during the course of the financial year and no dividends are recommended in respect to the financial
year ended 30 June 2017.
Insurance and indemnification
During the financial year, the Company paid a premium in respect of a contract insuring the Directors and Company Secretary (as
named above), and all executive officers of the Company against a liability incurred when acting in their capacity as a Director,
Company Secretary or executive officer to the extent permitted by the Corporations Act 2001. Further disclosure required under section
300(9) of the Corporations Act 2001 is prohibited under the terms of the insurance contract.
Other than to the extent permitted by law, the Company has not otherwise, during or since the end of the financial year, indemnified or
agreed to indemnify an officer or auditor of the Company or any other related body corporate against a liability incurred as such by an
officer or auditor.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
6
DIRECTORS’ REPORT
Meetings of directors
The number of meetings of the Company’s Directors held during the year ended 30 June 2017 and the numbers of meetings attended
by each Director were:
Director
Donald Brumley1
Robert Klupacs
Richard Jagger1
Peter May
Kevin Rumble
John Cornelius2
Held and Eligible to Attend
3
9
3
9
9
7
Attended
3
9
3
9
9
7
1. Donald Brumley and Richard Jagger were appointed as directors on 26 April 2017.
2.
John Cornelius ceased to be a director on 11 May 2017.
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.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the
Corporations Act 2001.
Environmental issues
The company’s operations are not currently regulated by any significant environmental regulation under a law of the Commonwealth or
of a state or territory.
Capital Raising
During the year the Company raised $3,721,753 (2016: $360,000) by the issue of 60,062,032 (2016: 14,400,000) shares.
At 30 June 2017 the Company had 177,470,133 (2016: 109,553,101) shares on issue. Refer to Note 11(a) for further detail of
movements in issued capital.
Options issued
During the current and previous financial years the Company issued options to Financial Advisors as part consideration for capital
raisings.
Details of these options are:
Options issued – 20/6/16
Options issued – 16/6/17
Options Issued
7,548,400
1,300,000
Exercise Price
2.5 cents
4.6 cents
Expiry
20/6/21
16/6/20
The Company will issue 1,500,000 options in the 2018 financial year which are associated with the 7 cents round. The term of these
options will be 3 years. 750,000 will have an exercise price of 7 cents and the balance of 750,000 options will have an exercise price of
8.75 cents.
Further details in respect of these options are included in Note 11(b).
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
7
DIRECTORS’ REPORT
Information on directors and key management personnel in office during or since the end of the financial year
and to the date of this report
Particulars of interests in shares and options of
Bio-Gene Technology Limited
LSP* Shares
Options
Shares
100,000
2,000,000
Nil
100,000
6,640,000
Nil
Name and
Position
Non-Executive
Chairman
Donald Brumley
FCA, MAICD
Managing
Director and
Chief Executive
Officer
Robert Klupacs
BSc (Hons) Grad
Dip IP Law,
Australian
Registered Patent
and Trademark
Attorney
Qualifications and Experience
Don has 30 years’ experience as a senior partner of Ernst
& Young, Oceania, has extensive experience in IPO’s,
transactions and audit. Don has advised and worked with
Boards of organisations, ranging from some of the largest
in Australia to fast growing entrepreneurial and medium
sized organisations.
Don was the Oceania IPO Leader at Ernst & Young and
worked with clients listing on the Australian, US, UK and
key Asian stock exchanges. He held positions as Biotech
Markets Leader, National Leader of Strategic Growth
Markets and on the Board of Partners of Ernst & Young.
Don is a Fellow of Chartered Accountants Australia & New
Zealand, a member of the Australian Institute of Company
Directors and a Director of Murray River Organics Group
Limited.
Director of Bio-Gene Technology Limited since 26 April
2017.
Other Directorships of listed companies over the past
three years: Murray River Organics Group Limited since
September 2016.
Robert is a highly experienced professional uniquely
experienced in translating and commercialising early stage
intellectual property from a variety of technology areas into
commercial product or investable corporate vehicles. He is
an Australian registered patent attorney who has had a
wide and successful career to date within both private and
publically traded companies as well as the academic
arena. He has over 30 year’s corporate experience in the
international technology development arena.
corporate
development,
focused primarily on biotechnology and
He has
biotechnology
particularly
healthcare related, but has also been involved in the
commercialisation of software, scientific instrumentation,
food technologies and enabling agricultural technology. He
has deep expertise and experience in all facets of
corporate development and technology transfer including:
IP licensing, patenting, intellectual property strategy and
management, joint venture creation and management,
fund-raising (private and public markets), corporate and
technology and corporate
scientific due diligence,
corporate
acquisitions,
governance and academic liaison. He is the Founder of 23
companies in Australia and Singapore. He is a highly
experienced professional Director having been an
Executive or Non-Executive Chairman/Director on over 21
different corporate entities. He was previously a member
of the Pharmaceutical Industry Group and a past member
of the Victorian Biotechnology Advisory Committee. He
has also been involved as a director or advisor to a
number of Australian companies and CRCs.
compliance and
corporate
Director of Bio-Gene Technology Limited since 29 May
2015.
Other Directorships of listed companies over the past
three years: None.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
8
Particulars of interests in shares and options of
Bio-Gene Technology Limited
LSP* Shares
Options
Shares
100,000
1,250,000
Nil
100,000
1,532,000
Nil
DIRECTORS’ REPORT
Name and
Position
Executive
Director and
Head of
Commercial
Development
Richard Jagger
B.Sc.(Hons),
Masters of
International
Business, GAICD
Qualifications and Experience
Richard has over 20 years’ experience in the Agricultural
sector, working for Fortune 500 companies around the
world. He managed the introduction of Australia’s first
agricultural biotech products into the cotton sector. Having
worked as a senior executive manager for Monsanto’s
Roundup business within Australia and New Zealand, he
has extensive knowledge of the local business and
distribution network, as well as the major Crop Protection
companies globally. Over the past five years he co-created
the Australian subsidiary of Sinochem – one of the largest
Crop Protection companies in China – in the role of
Managing Director. He was previously a board member of
Crop Life Australia, the peak national industry organisation
representing the agricultural chemical and biotechnology
(plant science) sector in Australia.
experience
extensive
continuous
in
improvement,
business
has
Richard
management,
strategy
development, culture evolution, technology and innovation
implementation. With the opportunity to work with different
cultures and business styles across the globe, he has a
solid understanding of what is required to make a success
of cross cultural, or cross geographic businesses.
Non-Executive
Director
Peter May
B.App.Sc (Rural
Technology)
(Hons), MBA,
GAICD, AFAIM
Director of Bo-Gene Technology Limited since 26 April
2017.
Other Directorships of listed companies over the past
three years: None.
Peter’s career has included over 20 years of experience in
the Australian and international crop protection market
with companies Orica and Crop Care Australasia (now
part of Nufarm). His various roles included management of
non-crop pesticide products, export sales & toll formulation
operations. During this period Peter developed extensive
experience in international crop protection markets.
In 2001, he founded Xavca Pty Ltd, providing marketing &
consultancy services to companies such as Syngenta,
Sorex (now part of BASF), Babolna Bioenvironmental
(Hungary) and Proplan Plant Protection (Spain). Peter
continues to operate Xavca with a focus on market
research & marketing activities in both crop and non-crop
sectors in Australia, New Zealand and the Asian region. In
2008 Peter joined BioProspect Limited (ASX: BPO) as
Chief Executive Officer and subsequently was appointed
Non-Executive Director and then Non-Executive Chairman
of that company. In 2012 Peter joined Xenex Associates, a
UK-based international consultancy company, as a Senior
Associate.
Peter is a graduate member of the Australian Institute of
Company Directors (AICD), an associate fellow of the
Australian Institute of Management (AIM), and member of
the Australian Environmental Pest Managers Association
(AEPMA) and
the Mosquito Control Association of
Australia (MCAA).
Director of Bio-Gene Technology Limited since 29 May
2015.
Other Directorships of listed companies over the past
three years: None.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
9
DIRECTORS’ REPORT
Name and
Position
Non-Executive
Director
Kevin Rumble
AFAIA
Qualifications and Experience
Kevin is a founding director of Bio-Gene. Kevin has had an
extensive career in the fields of Advertising and Marketing
having run his own Advertising Agency for more than 20
years. He has more than 20 years’ experience in new
plant propagation, farming, and processing and live plant
transport techniques.
Kevin was instrumental in securing the contract with the
University of Western Australia
to grow Boronia
megastigma and producing essential oil that was regarded
as the best of its type in the world and was highly valued.
He also secured the contract in Western Australia for
exclusive access to that State’s native flora.
He has been involved in the development of Qcide™ from
the outset and has a vast knowledge of the plant
husbandry and the extraction methods used to produce
natural Qcide™. Kevin was also involved in development
of the synthesis of flavesone as a first step in the
commercialisation of Flavocide™.
Director of Bio-Gene Technology Limited since 16 June
2004.
Other Directorships of listed companies over the past
three years: None.
Former Non-
Executive
Director
John Cornelius
MAICD, SAFin,
MAusIMM
John has had a career in accounting, company secretarial,
and director roles primarily within the resources industry
as well as consulting to a range of corporate clients
involved in enterprise development, marketing, mining,
and forestry.
Director of Bio-Gene Technology Limited since 26 June
2016 until his retirement on 11 May 2017.
Other Directorships of listed companies over the past
three years: None.
Chief Financial
Officer and
Company
Secretary
Roger McPherson
B.Bus, CPA,
GAICD
Roger has more than 20 years’ experience in senior
finance roles in a wide variety of industries. His early
career included working with a Chartered Accounting
practice and two years with the Australian Taxation Office.
Before Bio-gene, Roger was CFO and Company Secretary
for a number of SMEs both listed and unlisted including
Patrys Limited, TPI Enterprises Ltd and eChoice Home
Loans. In these roles he was responsible for all financial
affairs and corporate administration as well as assisting in
investor relations activities. He has over 15 years of
biotechnology and pharmaceutical experience.
* Loan Share Plan - refer Note 11(c) for details
Particulars of interests in shares and options of
Bio-Gene Technology Limited
LSP* Shares
Options
Shares
10,958,746
6,384,000
Nil
N/A
Nil
Nil
100,000
Nil
Nil
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
10
DIRECTORS’ REPORT
Remuneration of directors and key management personnel
The directors and key management personnel are remunerated under Service Contracts entered into with the Company. Fees include
Directors’ Fees and fees for additional consulting services where applicable. The aggregate remuneration paid to each individual or
their related parties was:
Mr. Donald Brumley1
Mr. Richard Jagger1
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. John Cornelius2
Mr. Roger McPherson1
Totals
2017
Value of
compensation
under LSP
11,663
7,289
5,831
5,831
5,831
-
-
36,445
Fees
8,125
16,801
156,000
69,800
78,200
94,000
26,730
449,656
Total
Fees
19,788
24,090
161,831
75,631
84,031
94,000
26,730
486,101
-
-
108,000
32,400
57,120
-
-
197,520
2016
Value of
compensation
under LSP
-
-
10,688
3,206
6,413
-
-
20,307
Total
-
-
118,688
35,606
63,533
-
-
217,827
1. Donald Brumley, Richard Jagger and Roger McPherson were appointed on 26 April 2017.
2.
John Cornelius retired as a Director on 11 May 2017,
Further details of remuneration paid by the Company is included in Note 16
Equity held by directors and key management personnel
The number of fully paid ordinary shares and shares under the LSP held by key management personnel or their related parties:
2017
Mr. Donald Brumley1
Mr. Richard Jagger1
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. Roger McPherson1
Totals
Balance at
1 July
No.
-
-
5,640,000
532,000
16,342,746
-
22,514,746
Issued as
compensation
under LSP
No.
2,000,000
1,250,000
1,000,000
1,000,000
1,000,000
-
6,250,000
Purchased
during the
year
No.
100,000
100,000
100,000
100,000
-
100,000
500,000
Disposals
No.
Balance at 30
June
No.
Total vested
30 June
No.
-
-
-
-
-
-
0
2,100,000
1,350,000
6,740,000
1,632,000
17,342,746
100,000
29,264,746
100,000
100,000
5,740,000
632,000
16,342,746
100,000
23,014,746
1. Donald Brumley, Richard Jagger and Roger McPherson were appointed on 26 April 2017.
2.
John Cornelius retired as a Director on 11 May 2017, he held 1,000,000 shares at the beginning of the financial year and at the
date of his retirement.
Further details of equity holding of key management personnel is included in Note 16
Auditor’s Independence Declaration
A copy of the auditor’s declaration under Section 307C in relation to the audit for the year ended 30 June 2017 is attached.
Auditor
JTP Assurance continues in office in accordance with Section 327 of the Corporations Act 2001.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
11
DIRECTO
ORS’ REPO
ORT
Non-audit se
ervices
The Company
did not employ
the auditor on a
assignments ad
dditional to their
r statutory audit
duties during th
he year.
Accordingly, no
amounts paid o
o amount was p
or payable for a
paid or payable
audit services ar
e to the auditor (
re set out below
(JTP Assurance
w.
e) for non-audit
services provid
ded during the y
f
year. Details of
The Board of
with the genera
Directors has c
al standard of in
considered the p
ndependence fo
position and is
or auditors impo
satisfied that th
osed by the Corp
he planned prov
porations Act 20
vision of the no
001 for the follow
on-audit service
owing reasons:
e
es is compatible
All non-aud
dit services hav
ve been reviewe
ed to ensure the
ey do not impact
t the impartiality
y and objectivity
y of the auditor.
None of th
110, inclu
Company,
he services unde
ding reviewing
acting as advo
ermine the gen
or auditing th
cate for the Com
eral principles r
e auditor’s ow
mpany or jointly
relating to audit
wn work, acting
y sharing econo
or independenc
in a managem
mic risk and rew
ce as set out in
ment or a dec
wards.
Professional S
cision-making c
tatement APES
S
e
capacity for the
During the yea
non-related au
ar the following
udit firms:
fees were paid
d or payable for
r services provid
ded by the aud
itor of the Com
s
Audit services
e :
JTP Assurance
d review of finan
Audit and
ncial reports an
d other audit wo
ork under the C
orporations Act
2001
Other advisor
Total remuner
ry services
ration
No officers we
re previously pa
artners of the au
udit firm JTP As
ssurance.
This report is m
made in accorda
ance with a reso
olution of the Di
irectors.
Mr. Donald Bru
Chairman
umley
Date: 25 July 2
2017
BIO-GENE TECHN
NOLOGY LIMITED –
2017 ANNUAL REP
ORT
pany, its relate
d
d practices and
2017
$
10,500
-
10,500
2016
$
7,000
-
7,000
2
12
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Revenues from continuing operations
Expenses from continuing operations
Research & Development
Management and Employment Expenses
Directors Expenses
Financial Advisory
Professional Services
Intellectual Property
Depreciation & Amortisation
Other Expenses
Note
3(a)
3(b)
2017
$
2016
$
106,725
186,415
(440,876)
(378,615)
(125,273)
(22,000)
(46,646)
(25,157)
(39,745)
(83,315)
(173,684)
(197,520)
(20,307)
(16,470)
(26,206)
(27,401)
(15,806)
(31,539)
Loss from continuing operations before tax
Income tax (expense)
(1,054,902)
(322,518)
-
-
Loss for the year from continuing operations after income tax
(1,054,902)
(322,518)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Total comprehensive loss for the year attributable to members of
the Company
-
-
(1,054,902)
(322,518)
Earnings per share:
Basic loss per share - from continuing operations
Diluted loss per share - from continuing operations
4
4
(0.96¢)
(0.96¢)
(0.37¢)
(0.37¢)
The above consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
14
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Financial liabilities
Total current liabilities
Non-current liabilities
Financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
5
6
7
8
9
10
10
11
12
12
2017
$
2,860,324
160,562
3,020,886
30,203
461,784
491,987
3,512,873
223,935
226,000
449,935
150,000
150,000
599,935
2,912,938
2016
$
101,646
227,956
329,602
28,020
498,727
526,747
856,349
7,000
-
7,000
376,000
376,000
383,000
473,349
5,208,852
366,053
1,779,147
301,268
(2,661,967)
(1,607,066)
2,912,938
473,349
The above consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
15
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
2017
At 1 July 2016
Loss for the period
Other comprehensive income
Total comprehensive
income/(loss) for the year
Transactions with owners in their
capacity as owners:
Issued capital
Transaction costs related to
shares issued
Cost of share based payment
At 30 June 2017
2016
At 1 July 2015
Loss for the period
Other comprehensive income
Total comprehensive
income/(loss) for the year
Transactions with owners in their
capacity as owners:
Issued capital
Transaction costs related to
shares issued
Cost of share based payment
At 30 June 2016
Fully paid
ordinary
shares
Share option
reserve
Share loan
plan reserve
Accumulated
losses
Total
$
$
$
$
$
1,779,147
110,961
190,307
(1,607,066)
473,349
-
-
-
3,721,753
(292,048)
-
5,208,852
-
-
-
-
-
-
-
-
(1,054,901)
-
(1,054,901)
-
(1,054,901)
(1,054,901)
-
3,721,753
-
28,340
139,301
-
36,445
226,752
-
-
(2,661,967)
(292,048)
64,785
2,912,938
$
$
$
$
$
1,549,908
-
-
-
360,000
(130,761)
-
1,779,147
-
-
-
-
-
170,000
(1,284,548)
435,360
-
-
-
-
(322,518)
-
(322,518)
-
(322,518)
(322,518)
-
360,000
-
110,961
110,961
-
20,307
190,307
-
-
(1,607,066)
(130,761)
131,268
473,349
The above consolidated Statement of Changes in Equity should be read in conjunction with the accompanying note.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
16
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Payments to suppliers and employees inclusive of GST
(922,114)
(498,802)
Note
2017
$
2016
$
Interest received
R&D tax incentive
Licence fees
279
186,367
6,316
48
79,409
-
Net cash used in operating activities
13(b)
(729,152)
(419,345)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Net cash used in investing activities
Cash flows from financing activities
Net proceeds from issue of shares
Payment for share issue expenses
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalent at beginning of year
Cash and cash equivalents at end of year
13(a)
(4,985)
(28,020)
-
-
(4,985)
(28,020)
3,704,753
(211,938)
3,492,815
2,758,678
101,646
2,860,324
360,000
(19,800)
340,200
(107,165)
208,811
101,646
The above consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
17
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Introduction
The financial report covers Bio-Gene Technology Limited (“Bio-Gene” or “Company”), as an individual entity.
Bio-Gene is an unlisted public company limited by shares, incorporated and domiciled in Australia. The presentation currency and
functional currency of the Company is Australian dollars.
The principal activity of the Company during the financial year was developing insecticides/pesticides.
The Registered office address of the Company is Quinert Rodda and Associates, Suite 1, Level 6, 50 Queen Street, Melbourne, Victoria
3000.
The financial report was authorised for issue by the Board of Directors of Bio-Gene on the date shown on the Declaration by Directors
attached to the Financial Statements.
Note 1: Statement of significant accounting policies
The principal accounting policies which have been adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all years presented unless otherwise stated.
a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001,
Accounting Standards and Interpretations, and complies with other requirements of the law. Bio-Gene is a for-profit entity for the
purpose of preparing these financial statements.
These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IASB).
b) Basis of preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and
financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in
Australian dollars unless otherwise noted. All values are rounded to the nearest dollar.
The accounting policies have been consistently applied and, except where there is a change in accounting policy, are consistent with
those of the previous year.
c) Going concern
The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and
the realisation of assets and the settlement of liabilities in the normal course of business for the following reasons:
At 30 June 2017, the Company had net current assets of $2,570,951 (2016: $322,602);
The Board of directors has the ability to downscale its operations and discontinue programs should the need arise, whilst meeting
minimum expenditure commitments;
Cash flow forecasts prepared by the Board indicated that the company currently has sufficient cash reserves and working capital to fund
its planned activities for a period beyond 12 months from the date of signing of financial report;
Directors have a number of external funding alternatives available such as out-licensing arrangements or raising additional equity funds;
and
The Company has a history of successfully undertaking capital raisings during the last 3 years.
Based on the above, the directors believe the consolidated entity will continue as a going concern and that it is appropriate to adopt that
basis of accounting in the preparation of the financial report.
d) Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, 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 year. Shares issued under the Loan Share Plan and options issued
under the Employee Share Option Plan are excluded from this calculation. Refer to Note 4 for further details.
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 additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.
Shares issued under the Loan Share Plan and options issued under the Employee Share Option Plan are excluded from this
calculation. Refer to Note 4 for further details.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
18
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
e) Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company’s accounting policies, which are described below, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable
under the circumstance, the results of which form the basis of making the judgements. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
Judgements made in applying accounting policies that have the most significant effect on the amounts recognised in the financial
statements concerns management’s review of finite life intangibles for indicators of impairment. The carrying amount of intangibles at
30 June 2017 is $461,784 (2016: $498,727).
Refer to Note 8 for details of the assumptions made on the carrying value of Intangibles.
At each reporting period the Company assesses whether finite life intangibles have suffered any impairment in accordance with the
accounting policy stated in Note 1(h).
The Going Concern assumption also requires significant estimates, mainly in relation to expected cash inflows and outflows from
various alternatives available to the Company.
Other areas that require significant judgement and key assumptions include share based payments, which are calculated at fair value
using industry standard option pricing models, and the estimated useful life of intangibles, which is based understanding of competitive
forces, and general familiarity with the market.
There have been no other significant judgments made in applying accounting policies that the Directors consider would have a
significant effect on the amounts recognised in the financial statements. There have been no key assumptions made concerning the
future, and there are no other key sources of estimation uncertainty at the reporting date, that the Directors consider would have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
f) Property, plant and equipment
The purchase method of accounting is used for all acquisitions of assets. Cost is measured as the fair value of the assets given up,
shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.
Property, plant and equipment is recognised at cost and are depreciated over their estimated useful lives using the straight line method.
The expected useful life for property, plant and equipment is 10 years.
Profits and losses on disposal of plant and equipment are taken into account in determining the result for the year.
Impairment
The carrying values of plant and equipment are reviewed for impairment at each reporting date with recoverable amount being
estimated when events or changes in circumstances indicate that the carrying value may be impaired. Impairment exists when the
carrying value of an asset exceeds its estimated recoverable amount. The asset is then written down to its recoverable amount.
Impairment losses are recognised in the statement of profit or loss and other comprehensive income.
g)
Intangible assets
Licences
Licences have a finite useful life and are carried at cost less accumulated amortisation and impairment losses.
Amortisation is calculated using the straight line method, over the assets estimated useful lives of 20 years.
h)
Impairment of non-financial assets
Intangible assets that have an indefinite useful life and intangible assets not yet available for use 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 tested for impairment whenever events or changes in circumstances indicate the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount may not be recoverable.
At each reporting date, the Company reviews the carrying amounts of its finite life tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that
are independent from other assets, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
19
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
i) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, held at call with financial institutions, and other short-term deposits with an
insignificant risk of change in value.
j)
Trade and other receivables
Trade receivables and other receivables represent the principal amounts due at reporting date less, where applicable, any provision for
doubtful debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Debts which are known
to be uncollectable are written off. All trade receivables and other receivables are recognised at the amounts receivable as they are due
for settlement within 90 days.
k) Research and development costs
Research and development expenditure is expensed as incurred except to the extent that its future recoverability can reasonably be
regarded as assured, in which case it is deferred and amortised on a straight line basis over the period in which the related benefits are
expected to be realised.
The carrying value of development costs that have been capitalised are reviewed for impairment annually when the asset is not yet in
use or when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.
l)
Trade and other payables
Payables represent the principal amounts outstanding at reporting date plus, where applicable, any accrued interest. Liabilities for
payables and other amounts are carried at cost which approximates fair value of the consideration to be paid in the future for goods and
services received, whether or not billed. The amounts are unsecured and are usually paid within 30 days of recognition.
ANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 – CONTINUE
m)
Income taxes
Income taxes are accounted for using the comprehensive statement of financial position liability method whereby:
the tax consequences of recovering (settling) all assets (liabilities) are reflected in the financial statements;
current and deferred tax is recognised as income or expense except to the extent that the tax relates to equity items or to a business
combination;
a deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available to realise the asset; and
deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the
liability settled.
n)
Issued capital
Ordinary shares are classified as equity (Note 11).
Transaction costs arising on the issue of equity instruments are recognised directly in equity as a reduction of the proceeds of the equity
instruments to which the costs relate. Transaction costs are the costs that are incurred directly in connection with the issue of those
equity instruments and which would not have been incurred had those instruments not been issued.
o) Revenue recognition
Licence revenue
Licence revenue is recognised in accordance with the underlying agreement. Upfront milestone payments are brought to account as
revenues at the time of execution of the agreement and subsequent milestones when the relevant milestone has been achieved.
Interest income
Interest income is recognised on a time proportion basis using the effective interest method.
When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash
flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.
Interest income on impaired loans is recognised using the original effective interest rate.
R&D tax incentive
Income from the R&D Tax Incentive is recognised on an accruals basis when AusIndustry accept the claim or there is a reasonable
probability that AusIndustry will accept the claim.
Grant income
Grant income is recognised on a receipts basis.
p) Comparative figures
Comparatives have been reclassified so as to be consistent with the figures presented in the current year.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
20
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
q) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST except where the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the
statement of financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing
and financing activities, which is recoverable from, or payable to, the taxation authority, is classified as operating cash flows.
r)
Foreign currency translation
Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the entity
operates (“the functional currency”). The financial statements are presented in Australian dollars, which is Bio-Gene’s functional and
presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss and
other comprehensive income, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment
hedges or are attributable to part of the net investment in a foreign operation.
Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at reporting date.
Foreign exchange gains or losses resulting from the translation of monetary assets and liabilities at year end exchange rates are
recognised in the statement of profit or loss and other comprehensive income.
s) Financial assets
Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the time frame established by the market concerned, and are initially measured at fair
value, net of transaction costs.
Term Deposits
The Company has financial assets in the nature of term deposits which are held to maturity.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are
classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method less
impairment. Interest is recognised by applying the effective interest rate.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest rate basis for debt instruments
other than those financial assets ‘at fair value through profit or loss’.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each statement of
financial position date. Financial assets are impaired where there is objective evidence that as a result of one or more events that
occurred after the initial recognition of the financial asset the estimated future cash flows of the investment have been impacted. For
financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade
receivables where carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectable, it is
written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account are recognised in profit or loss.
With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the impairment not been recognised.
In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss is recognised directly
in equity.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
21
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
t) Prior period error
The comparative figures have been adjusted in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and
Errors. The shares issued to directors under the loan share plan were previously recognised as receivables in the Statement of
Financial Position however should have been recognised in the Share Loan Plan Reserve as an equity instrument as required by AASB
2 Share-based Payment. The options issued to the Financial Advisors were incorrectly valued per AASB 2 Share-based Payment. The
value of these equity instruments should have been calculated and then recognised in the financial statements using the valuation
methodology is outlined in Note 11(d). A retrospective restatement of the accounts has been applied to correct this. The impact of this
restatement is shown below:
Area of Financial Statements
Statement of Comprehensive Income
Directors Expenses
Loss for the Period
Statement of Financial Position
Receivables - Loan to Directors
Share Option Reserve
Share Loan Plan Reserve
Contributed Equity
Brought Forward Retained Losses
2016 Original
Balance
$
-
(302,211)
280,400
-
170,000
2,170,508
(1,416,759)
Adjustment
$
(20,307)
(20,307)
(280,400)
110,961
20,307
(391,361)
(190,307)
2016 Revised
Balance
$
(20,307)
(322,518)
-
110,961
190,307
1,779,147
(1,607,066)
The value of the 10 million shares issue under the LSP in 2015 of $170,000 has been adjusted against opening retained losses and the
Share Loan Plan Reserve for 2016.
u) New, revised or amending accounting standards and Interpretations adopted
New Accounting Standards for Application in Future Periods
The AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates
for future reporting periods, some of which are relevant to the Company. The directors have decided not to early adopt any of the new
and amended pronouncements. Their assessment of the pronouncements that are relevant to the Company but applicable in future
reporting periods is set out below:
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1
January 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised
requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements
for financial instruments and simplified requirements for hedge accounting.
The key changes that may affect the Company on initial application include certain simplifications to the classification of financial
assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable
election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive
income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk,
particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new
hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.
Although, the directors anticipate that the adoption of AASB 9 may have an impact on the Company’s financial instruments,
including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018 as
deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based
model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts
with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers
and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or
services. To achieve this objective, AASB 15 provides the following five-step process:
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period
presented as per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical
expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of initial
application. There are also enhanced disclosure requirements regarding revenue.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
22
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Although the directors anticipate that the adoption of AASB 15 may have an impact on the Company’s financial statements, it is
impracticable at this stage to provide a reasonable estimate of such impact.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and
related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be
classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure
and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the
liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using
the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for
all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with
AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial
application.
Although the directors anticipate that the adoption of AASB 16 may impact the Company's financial statements, it is impracticable
at this stage to provide a reasonable estimate of such impact.
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-10:
Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128).
This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over a subsidiary that
is not a “business” as defined in AASB 3: Business Combinations to an associate or joint venture, and requires that:
a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised only to the extent of the unrelated
investor's interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be recognised only to
the extent of the unrelated investor's interest in the associate or joint venture. The remaining gain or loss should be eliminated
against the carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of loss of control over subsidiaries
(involving an associate or joint venture) that are businesses per AASB 3 for which gains or losses were previously recognised only
to the extent of the unrelated investor's interest.
The transitional provisions require that the Standard should be applied prospectively to sales or contributions of subsidiaries to
associates or joint ventures occurring on or after 1 January 2018.
Although the directors anticipate that the adoption of AASB 2014-10 may have an impact on the Company's financial statements, it
is impracticable at this stage to provide a reasonable estimate of such impact.
Note 2: Remuneration of auditors
Audit services
JTP Assurance :
Audit and review of financial reports and other audit work under the Corporations Act 2001
Other advisory services
Total remuneration
2017
$
10,500
-
10,500
2016
$
7,000
-
7,000
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
23
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Note 3: Revenue and expenses from continuing operations
(a) Revenue
Interest received – bank deposits
R&D tax incentive1
Licence fees
Total revenue from continuing operations
2017
$
409
100,000
6,316
106,725
2016
$
48
186,367
-
186,415
1. During the year the Company undertook a number of its research activities overseas as the necessary experience and facilities
are not available in Australia. As a result the Company has lodged an Advanced Overseas Finding with AusIndustry to seek
approval to claim these costs as part of its R&D Incentive. As this approval had not been received at the time of completion of
these financial statements the Directors have elected to only include an estimate of the anticipated revenue from the AusIndustry
incentive claim in respect of its Australian based expenditure in these accounts. If the Company is successful in its request to
claim the overseas activities as well which will result in additional revenue, this revenue will be recognised in the 2018 financial
year.
(b) Expenses
Depreciation, amortisation and impairment of non-current assets:
Plant and equipment
License and registered patents
Total depreciation and amortisation expenses
Operating expenses:
Loss on disposal of non-current assets
Note 4: Earnings per share
Net loss used in calculating basic earnings per share:
Net loss used in calculating diluted earnings per share:
Weighted average number of ordinary shares used in calculating basic
earnings per share
Dilutive potential ordinary shares
Weighted average number of ordinary shares and potential ordinary shares
used in calculating diluted earnings per share
Information concerning the classification of securities
2,802
36,943
39,745
6,715
9,091
15,806
-
40,702
2017
$
1,054,902
1,054,902
2016
$
322,518
322,518
No. of Shares
No. of Shares
110,351,100
87,653,641
-
-
110,351,100
87,653,641
Fully paid ordinary shares
Fully paid ordinary shares carry the right to participate in dividends and the proceeds on winding up of the Company in equal proportion
to the number of shares held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each
shareholder has one vote on a show of hands. Fully paid ordinary shares are included as ordinary shares in the determination of basic
earnings per share.
Loan Share Plan
The Loan Share Plan (“LSP”) allows non-recourse, interest free loans to be provided to eligible participants to acquire shares under the
plan. When an issue is made it will be treated as an in-substance grant of options and expensed over the vesting period because of the
limited recourse nature of the loans.
Shares offered under the LSP may be subject to Vesting Conditions, Forfeiture Conditions and Disposal Restrictions (collectively
referred to as “Conditions”) as determined by the Board and specified in the Offer documents sent to participants. The Board has
discretion to waive or deem Conditions to have been satisfied. Shares under the LSP cannot be dealt with (including traded on the
ASX) unless they are not subject to any Conditions and there is no outstanding Loan on the shares.
Generally shares issued under the plan will vest over a 6 or 12 month period. The shares are acquired in the name of the participant
and each participant authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used
to repay the loan. In all other respects the shares issued under the LSP carry the same rights as other ordinary shares on issue. If the
participant leaves the Company, any shares that have not vested will be bought back by the Company and cancelled along with the
loan. In respect of shares that have vested the loan balance must be paid in full within six months of termination or the shares will be
sold and the proceeds applied to settle the loan balance. The issue price of the shares in the Company held under the LSP is not
included in equity until the loan has been repaid.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
24
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Amounts unpaid on shares held under the LSP are treated as the equivalent of options to acquire ordinary shares and are excluded as
potential ordinary shares in the determination of diluted earnings per share and basic earnings per share. Details relating to the LSP
are set out in Note 11(c).
The 17,666,000 shares on issue at reporting date that were granted under the LSP are not included in the calculation of diluted earnings
per share because they are anti-dilutive for the year ended 30 June 2017. These shares could potentially dilute basic earnings per
share in the future.
Options
Options granted by the Company are considered to be potential ordinary shares and have been excluded in the determination of diluted
earnings per share to the extent to which they are dilutive. The options have not been included in the determination of basic earnings
per share because they are anti-dilutive for the year ended 30 June 2017. Details relating to the options are set out in Note 11(b).
Note 5: Cash and cash equivalents
Cash at bank
Deposit at call
Term deposits
Note 6: Trade and other receivables
2017
$
60,055
800,269
2,000,000
2,860,324
2017
$
R&D tax incentive
GST refund due
Other receivables
100,000
53,431
7,130
160,561
The balance of other receivables of $160,561 (2016: $227,956) is not past due and not considered impaired.
Note 7: Property, plant and equipment
Plant and equipment
At cost
Accumulated depreciation
Total net plant and equipment
Movements in the carrying amounts for each class of property, plant and
equipment between the beginning and the end of the current financial year
Plant and equipment at cost:
Balance at the beginning of year
Additions
Disposals
Depreciation expense, impairment and asset write off
Carrying amount at the end of year
Note 8: Intangible assets
Licences - Qcide
Less: Accumulated amortisation
Total net intangible assets
Movements in the carrying amounts for intangible assets between the
beginning and the end of the current financial year
Carrying amount at the beginning of year
Additions – acquisitions
Amortisation expense (i)
Carrying amount at the end of year (ii)
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
2017
$
33,005
(2,802)
30,203
28,020
4,985
-
(2,802)
30,203
2017
$
557,818
(96,034)
461,784
498,727
-
(36,943)
461,784
2016
$
101,646
-
-
101,646
2016
$
186,367
11,589
30,000
227,956
2016
$
28,020
-
28,020
40,702
28,020
-
(40,702)
28,020
2016
$
557,818
(59,091)
498,727
131,818
376,000
(9,091)
498,727
25
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(i)
Intangible assets comprise licences in relation to Qcide, which has a finite useful life and is recorded at cost. Amortisation has been
historically calculated using straight line method over the estimated useful life of 20 years.
(ii) Intangible assets are reviewed on a regular basis and where a decision has been made not to pursue a product, the remaining
value recorded as an asset is impaired. At balance date, the directors also review the intellectual property portfolio to determine
whether there are any indicators of impairment related to intellectual property.
Note 9: Trade and other payables
Current
Trade creditors
Other creditors and accruals
Total trade and other payables
Note 10: Financial liabilities
Current
Amount payable for IP licences
Non-current
Amount payable for IP licences
2017
$
46,804
177,131
223,935
2017
$
226,000
226,000
150,000
150,000
2016
$
-
7,000
7,000
2016
$
-
-
376,000
376,000
In December 2016 the company signed a variation agreement to the Intellectual Property Assignment Deed originally signed 16
November 2009. This variation agreed additional fees of $376,000 to be paid to the licensor following the successful completion of an
IPO and signing of 2 licencing agreements.
Note 11: Contributed equity
The Company does not have authorised capital nor par value in respect of its issued shares.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in equal proportion to the number of shares
held. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one
vote on a show of hands.
(a) Movements in issued capital during the year were as follows:
Issued shares:
2017
No.
2016
No.
2017
$
2016
$
At the beginning of the reporting period
109,553,101
93,937,101
1,779,147
1,549,908
Shares issued at 2.5 cents
Shares issued at 4.6 cents
Shares issued at 7 cents
Value of shares issued to Financial Advisors1
Transaction costs arising on issue of shares
Shares issued pursuant to the Loan Share Plan (LSP)
Employee share plan loans
At end of the reporting period
Issued shares are comprised as follows:
Ordinary shares (net of transaction costs)
Restricted shares issued under the LSP
Accumulated transaction costs on issue of shares
Balance at end of the year
-
21,789,127
38,277,905
1,600,000
-
6,250,000
-
177,470,133
160,004,133
17,466,000
177,470,133
-
177,470,133
14,400,000
-
-
-
-
1,216,000
-
109,553,101
98,337,101
11,216,000
109,553,101
-
109,553,101
-
1,002,300
2,679,453
40,000
(292,048)
287,500
(287,500)
5,208,852
5,208,852
567,900
5,776,752
422,809
6,199,561
360,000
-
-
-
(130,761)
30,400
(30,400)
1,779,147
1,779,147
280,400
2,059,547
130,761
2,190,308
1. On the 25 October 2016 the Company issued shares to Henslow Pty Ltd as part of the remuneration due in respect of the 2.5 cent
capital raising which closed during the 2016 financial year.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
26
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(b) Movements in share options over ordinary shares during the year were as follows:
Balance at beginning of the year
Granted during the year1
Exercised during the year
Expired during the year
Lapsed during the year
Balance at end of the year
Terms of options issued
Options issued – 20/6/16
Options issued – 16/6/17
2017
No.
7,548,400
1,300,000
-
-
-
8,848,400
Value
$
110,961
28,340
2016
No.
-
7,548,400
-
-
-
7,548,400
Expiry
20/6/21
16/6/20
Options Issued
7,548,400
1,300,000
Exercise Price
2.5 cents
4.6 cents
1. Share options granted carry no rights to dividends and no voting rights.
2. The two tranches of options granted formed part of the capital raising costs associated with the 2.5 cents and 4.6 cent rounds
conducted during the 2016 calendar year. The Company will issue a further 1,500,000 options in the 2018 financial year which
are associated with the 7 cents round.
3. The valuations of options issued are determined by using an industry standard option pricing model taking into account the terms
and conditions upon which the instruments were issued.
(c) Loan share plan
The Company issues shares to Bio-Gene directors and key consultants under the Loan Share Plan (LSP). Under the plan, participants
are issued with equity to foster an ownership culture within the Company and to motivate them to achieve performance targets
Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plans or to receive any
guaranteed benefits.
The Company introduced the LSP. The plan allows non-recourse, interest free loans to be provided to eligible participants to acquire
shares under the plan. When an issue is made it is treated as an in-substance grant of options and expensed over the vesting period
because of the limited recourse nature of the loans. Generally shares issued under the plan vest over twelve months. Each participant
authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used to repay the loan. If
the participant leaves the Company, any shares that have not vested are bought back by the Company and cancelled along with the
loan. In respect of shares that have vested, generally, the loan balance must be paid in full within six months of termination of
appointment or the shares are sold and the proceeds applied to settle the loan balance. The issue price of the shares in the Company
held under the LSP is not included in equity until the loan has been repaid.
The valuations of shares issued under the LSP are determined by using an industry standard option pricing model taking into account
the terms and conditions upon which the instruments were issued.
The following share-based payment arrangements were in existence during the current and/or prior reporting period:
Shares in existence in the current and past period under the Loan Share Plan:
Tranche 1
Tranche 2
Tranche 3a
Tranche 3b
Loan Share Plan Tranche
Number
Issue date
Vesting Date
10,000,000
1,216,000
3,125,000
3,125,000
17,466,000
29/06/2015
30/06/2016
11/05/2017
11/05/2017
29/06/2015
30/06/2016
11/11/2017
11/05/2018
Loan expiry
date
29/06/2022
30/06/2023
11/05/2024
11/05/2024
Unit Price
$
0.017
0.0167
0.0311
0.0311
Fair Value at
Issue Date
Amount
$
170,000
20,307
97,188
97,188
384,683
(d) Fair values of share based payments
The fair value of all loan shares granted to Directors and key consultants and the financial advisor have been calculated using the
Binomial Option Pricing Model. Where relevant, the expected life used in the model has been adjusted based on management’s best
estimate for the effects of non-transferability, exercise (including the probability of meeting market conditions attached to the option),
and behavioural considerations. The model requires the Company share price volatility to be measured. The share price volatility has
been measured with reference to the historical share prices of the Company and other similar Companies.
The fair value of share based payments is calculated on the date of issue less any consideration paid. The values are not revised if
there is a subsequent change in terms.
Details in respect of the fair value of equity, on issue/grant date, that was in existence at reporting date are outlined below.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
27
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Equity Instrument
LSP Tranche 1
Options Tranche 1
LSP Tranche 2
LSP Tranche 3
Options Tranche 2
(e) Share based payments
Loan
/Exercise
price
$
0.025
0.025
0.025
0.046
0.046
Share
price on
issue Date
$
0.025
0.025
0.025
0.046
0.046
Volatility
Maturity
date
Time to
maturity
74%
74%
74%
74%
74%
29/06/2022
20/06/2021
30/06/2023
11/05/2024
16/06/2020
7 years
5 years
7 years
7 years
3 years
Risk free
interest
rate
2.61%
1.73%
1.81%
2.39%
1.79%
Expected
dividend
yield
-
-
-
-
-
The amount expensed in relation to equity settled share based payments to the statement of profit or loss and other comprehensive
income was $36,445 (2016: $20,307).
Note 12: Reserves and accumulated losses
Share options reserve
Share loan plan reserve
Total reserves
(a) Share option reserve
Opening balance 1 July
Value of options granted to financial advisors
Closing balance
(b) Share loan plan reserve
Opening balance 1 July
Value of shares recognised over vesting period 1
Closing balance
Note
(a)
(b)
2017
$
139,301
226,752
366,053
2017
$
110,961
28,340
139,301
2017
$
190,307
36,445
226,752
2016
$
110,961
190,307
301,268
2016
$
-
110,961
110,961
2016
$
170,000
20,307
190,307
1. The equity settled reserves arise on issue of equity under the LSP or the issue of options. Amounts are transferred out of the
reserves and into issued capital when the loans are repaid or the options are exercised. Amounts are transferred to accumulated
losses when the shares or options are cancelled.
(c) Movement in accumulated losses
Opening balance 1 July
Net loss attributable to the members of the parent entity for the period
Closing balance
2017
$
(1,607,066)
(1,054,902)
(2,661,968)
2016
$
(1,284,548)
(322,518)
(1,607,066)
Note 13: Cash flow Information
(a) Reconciliation of cash
Cash at bank
Deposit at call
Term deposits
Total cash and cash equivalents
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
2017
$
60,055
800,269
2,000,000
2,860,324
2016
$
101,646
-
-
101,646
28
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(b) Reconciliation of cash used in operating activities with loss after income tax
Loss from continuing operations after income tax
Non cash movements:
Depreciation and amortisation expense
Equity settled share based payment
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade creditors and accruals
Cash used in operating activities
(c) Non cash financing and investing activities
There were no non cash financing activities during the year.
Note 14: Commitments and contingencies
(a) Capital expenditure commitments
2017
$
(1,054,902)
39,745
36,445
44,394
205,166
(729,152)
2016
$
(322,518)
15,806
20,307
(139,940)
7,000
(419,345)
As at reporting date the Company had committed to the purchase of equipment with a supplier. Committed but unrecognised
expenditure as at reporting date amounted to $4,985 (2016: $NIL).
(b) Other contingencies
Research and development incentive
Research and Development grants received may be subject to review by AusIndustry and subsequent claw back of funds should there
be a determination of non-conforming claims.
During the year the Company undertook a number of its research activities overseas as the necessary experience and facilities are not
available in Australia. As a result the Company has lodged an Advanced Overseas Finding with AusIndustry to seek approval to claim
these costs as part of its R&D Incentive. As this approval had not been received at the time of completion of these financial statements
the Directors have elected to only include an estimate of the anticipated revenue from the AusIndustry incentive claim in respect of its
Australian based expenditure in these accounts. If the Company is successful in its request to claim the overseas activities as well
which will result in additional revenue, this revenue will be recognised in the 2018 financial year.
Bio-Gene supplier arrangements
As at reporting date projects had been committed to with suppliers and to the extent that work had been completed expenditure has
been provided for in the accounts. Committed but unrecognised expenditure as at reporting date amounted to $217,338 (2016: $NIL).
Issue of options
The Company will issue 1,500,000 options in the 2018 financial year which are associated with the 7 cents round. The term of these
options will be 3 years. 750,000 will have an exercise price of 7 cents and the balance of 750,000 options will have an exercise price of
8.75 cents.
Note 15: Financial instruments
(a) Capital risk management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance.
The Company’s overall strategy remains unchanged from the prior financial year.
The capital structure of the Company consists of cash and cash equivalents and equity attributable to equity holders, comprising issued
capital, reserves and retained earnings as disclosed in Notes 11, and 12, respectively. The Company operates globally, primarily
through arrangements with suppliers established in the markets in which the Company trades.
Operating cash flows are used to maintain and expand the Company’s assets.
Gearing ratio
The Company’s Board reviews the capital structure on a half-yearly basis. As a part of this review the Board considers the cost of
capital and the risks associated with each class of capital. The Company has a target gearing of 0% in line with the industry norm that
is determined as the proportion of net debt to equity. Based on recommendations of the Board the Company will balance its overall
capital structure through new share issues.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
29
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The gearing ratio at year end was as follows:
Financial assets
Debt (i)
Cash and cash equivalents
Net cash/(debt)
Equity (ii)
Net debt to equity ratio
Note
6
14,15
2017
$
-
2,860,324
2,860,324
2,912,938
-
2016
$
-
101,646
101,646
473,349
-
(i) Debt is defined as long-term and short-term borrowings.
(ii) Equity includes all capital and reserves as detailed in Note 11 and 12.
(b) Market risk
The Company’s activities expose it primarily to the financial risks of changes in foreign currency rates. The Company undertakes a
number of its research activities overseas, as the necessary experience and facilities are not available in Australia, and as such has
exposure to foreign currency movements which are predominately in US dollars and Pounds Sterling. The Board and Chief Financial
Officer monitor the potential impact of movements in foreign exchange exposure. The Company does not currently have a policy in
place in respect of hedging this risk and therefore acquires the foreign currency required to settle any liabilities at the rate available on
the day of payment.
(c) Financial risk management objectives
The Company’s CFO monitors and manages the financial risks relating to the operations of the Company through internal risk reports
which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest
rate risk and price risk), credit risk and liquidity risk. There have been no changes to these risks since the previous financial year.
The Board of Directors ensures that the Company maintains a competent management structure capable of defining, analysing,
measuring and reporting on the effective control of risk inherent in the Company’s underlying financial activities and the instruments
used to manage risk. Key financial risks including interest rate risk and foreign currency risk are reviewed by management on a regular
basis and are communicated to the Board so that it can evaluate and impose its oversight responsibility. The Company does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Company currently does not
have a policy regarding foreign exchange risk management. This and other financial risks are managed prudently by the Chief Financial
Officer and the Board.
The consolidated entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Financial liabilities
(d)
Interest rate risk management
Note
5
6
11
12
2017
$
2,860,324
160,562
3,020,886
2017
$
223,935
376,000
599,935
2016
$
101,646
227,956
329,602
2016
$
7,000
376,000
383,000
The Company’s exposure to market interest rates relates primarily to the Company’s short term deposits held and deposits at call. The
interest income earned from these balances can vary due to interest rate changes.
The sensitivity analysis below has been determined based on the exposure to interest rates for both derivatives and non-derivative
instruments at the end on the reporting period. If interest rates had been 100% higher/lower and all other variables were held constant,
the Company’s loss for the year ended 30 June 2017 would increase/decrease by $409 (2016: $48).
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
30
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(e) Liquidity risk
Liquidity risk is the risk that the Company will not be able to pay its debts as and when they fall due. The Company has no borrowings at
reporting date and the Directors ensure that the cash on hand is sufficient to meet the commitments of the Company at all times during
the research and development phase.
The Company manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash and where necessary
unutilised borrowing facilities are maintained.
Financing arrangements
The Company does not have access to any borrowing facilities at the reporting date.
Maturities of financial liabilities
The tables below analyse the Company’s financial liabilities.
30 June 2017
Financial Liabilities
Trade and other payables
Financial liabilities
30 June 2016
Financial Liabilities
Trade and other payables
Financial liabilities
0 -12 months
Maturing 1 to 3 years
Total
223,935
226,000
449,935
7,000
-
7,000
-
150,000
150,000
-
376,000
376,000
223,935
376,000
599,935
7,000
376,000
383,000
All current balances mature within one year; all non-current balances are expected to mature in between one and three years.
(f) Foreign currency risk management
The Company undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuation arise.
Exchange rate exposures are managed within approved policy parameters. The Company manages the currency risk by monitoring the
trend of the US dollar and Pound Sterling.
The consolidated entity’s foreign currency risk denominated financial assets and financial liabilities at the reporting date are as follows:
Consolidated
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
30 June 2017
30 June 2016
USD
GBP
USD
GBP
-
-
-
-
71,067
12,483
-
-
-
-
-
-
The following sensitivity analysis is based on the foreign currency risk exposures in existence at the statement of financial position date.
A 10 percent increase or decrease in the foreign exchange rate is used and represents management’s assessment of the possible
change in foreign exchange rates and historically is within a range of rate movements. A positive number indicates an increase in result
and other equity. A negative number indicates a decrease in result and other equity. At 30 June 2017, if foreign exchange rates had
moved, as illustrated in the table below, with all other variables held constant, pre-tax result and equity would have been affected as
follows:
30 June 2017
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Financial liabilities
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
- 10%
Profit
$
Equity
$
+ 10%
Profit
$
Equity
$
-
-
-
(12,611)
-
(12,611)
-
-
-
(12,611)
-
(12,611)
-
-
-
10,318
-
10,318
-
-
-
10,318
-
10,318
31
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
30 June 2016
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Financial liabilities
(g) Price risk
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Price risk is the risk that future cashflows derived from financial instruments will be changed as a result of a market price movement,
other than foreign currency rates and interest rates. The Company is not exposed to any material commodity price risks, other than
those already described above.
Net fair values
The carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their net fair values.
The net fair values of financial assets and financial liabilities are determined as follows:
the net fair value of financial assets and financial liabilities with standard terms and conditions and traded on active liquid markets are
determined with reference to quoted market prices; and
the net fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models
based on discounted cash flow theory.
(h) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company.
The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate
as a means of mitigating the risk of financial loss from defaults.
In addition, receivable balances are monitored on an ongoing basis with the result that the Company's exposure to bad debts is not
significant. There are no significant concentrations of credit risk within the Company.
Note 16: Key management personnel
(a) Details of key management personnel
The Directors and other members of key management personnel of the Company during the year were:
Name
Mr. Donald Brumley
Mr. Richard Jagger
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. John Cornelius
Mr. Roger McPherson
Position
Non-Executive Chairman (appointed 26/4/17)
Head of Commercial Development and Executive Director (appointed 26/4/17)
Managing Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director (retired 11/5/17)
Chief Financial Officer and Company Secretary (appointed 26/4/17)
(b) Key management personnel compensation
The aggregate compensation made to Directors and other members of key management personnel or their director related entities
were:
Name
Fees3
Mr. Donald Brumley1
Mr. Richard Jagger1
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. John Cornelius2
Mr. Roger McPherson1
Totals
8,125
16,801
156,000
69,800
78,200
94,000
26,730
449,656
2017
Value of
compensation
under LSP
11,663
7,289
5,831
5,831
5,831
-
-
36,445
Total
Fees
19,788
24,090
161,831
75,631
84,031
94,000
26,730
486,101
-
-
108,000
32,400
57,120
-
-
197,520
2016
Value of
compensation
under LSP
-
-
10,688
3,206
6,413
-
-
20,307
Total
-
-
118,688
35,606
63,533
-
-
217,827
1. Donald Brumley, Richard Jagger and Roger McPherson were appointed on 26 April 2017.
2.
3. Fees include Directors’ Fees and fees for additional consulting services where applicable.
John Cornelius retired as a Director on 11 May 2017
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
32
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(c) Key management personnel equity holdings
Shareholdings
Fully paid ordinary shares and shares under the Loan Share Plan held by key management personnel or their related parties:
2017
Mr. Donald Brumley1
Mr. Richard Jagger1
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. Roger McPherson1
Totals
Balance at
1 July
No.
-
-
5,640,000
532,000
16,342,746
-
22,514,746
Issued as
compensation
under LSP
No.
2,000,000
1,250,000
1,000,000
1,000,000
1,000,000
-
6,250,000
Purchased
during the
year
No.
100,000
100,000
100,000
100,000
-
100,000
500,000
Disposals
No.
Balance at 30
June
No.
Total vested
30 June
No.
-
-
-
-
-
-
0
2,100,000
1,350,000
6,740,000
1,632,000
17,342,746
100,000
29,264,746
100,000
100,000
5,740,000
632,000
16,342,746
100,000
23,014,746
1. Donald Brumley, Richard Jagger and Roger McPherson were appointed on 26 April 2017.
2.
John Cornelius retired as a Director on 11 May 2017, he held 1,000,000 shares at the beginning of the financial year and at the
date of his retirement.
2016
Mr. Robert Klupacs
Mr. Peter May
Mr. Kevin Rumble
Mr. John Cornelius1
Totals
Balance at
1 July
No.
5,000,000
340,000
15,958,746
-
21,298,746
Issued as
compensation
under LSP
No.
Purchased
during the
year
No.
640,000
192,000
384,000
-
1,216,000
-
-
-
1,000,000
1,000,000
Disposals
No.
Balance at 30
June
No.
Total vested
30 June
No.
-
-
-
-
0
5,640,000
532,000
16,342,746
1,000,000
23,514,746
5,640,000
532,000
16,342,746
1,000,000
23,514,746
1.
John Cornelius was appointed as a director on 26 June 2016.
Note 17: Related party transactions
(a) Receivable from and payable to related parties
The following balances were outstanding at 30 June 2017 in relation to transactions with related parties:
Current payables
Trade payables to director related entity of Mr. Robert Klupacs for
consultancy fees for his services
2017
$
16,500
2016
$
-
There were no other loans to or from related parties at the current and previous reporting date. All transactions were made on normal
commercial terms and conditions and at market rates.
(b) Transactions with key management personnel
Details of key management personnel compensation are disclosed in Note 16.
Note 18: Segment information
A segment is a component of the Company that engages in business activities to provide products or services within a particular
economic environment. The Company operates in one business segment, being the conduct of research and development activities in
the agricultural sector. The Board of Directors assess the operating performance of the Company based on management reports that
are prepared on this basis. The Company invests excess funds in short term deposits but this is not regarded as being a separate
segment.
Note 19: Events occurring after the reporting period
No matter or circumstance has arisen since 30 June 2017, other than as disclosed in this report, that has significantly affected or may
significantly affect: -
Bio-Gene Technology Limited’s operations in future financial years, or
the results of those operations in future financial years, or
Bio-Gene Technology Limited’s state of affairs in future years.
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
33
DECLAR
FOR THE
RATION BY
E YEAR EN
Y DIRECTO
NDED 30 J
ORS
7
JUNE 2017
The directors o
of the company d
declare that:
1. The financ
cial statements a
and notes, as se
et out in the follow
wing pages, are
e in accordance w
with the Corpora
ations Act 2001:
a)
b)
comply with app
give a true and
date of the com
plicable Account
fair view of the
pany.
ting Standards a
financial positio
and the Corpora
on as at 30 June
ations Regulation
e 2017 and of th
ns 2001; and
he performance
for the year en
ded on that
2.
In the dire
become du
ctors' opinion th
ue and payable.
here are reasona
able grounds to
o believe that the
e company will b
be able to pay it
its debts as and
d when they
resolution of the
e board of direct
tors.
This declaratio
on is made in acc
cordance with a
Mr. Donald B
Director
Brumley
Date: 25 July
y 2017
BIO-GENE TE
ECHNOLOGY LIMIT
TED – 2017 ANNUAL
L REPORT
34
BOARD OF DIRECTORS AND COMPANY PARTICULARS
Auditors
JTP Assurance
Level 10, 446 Collins Street
Melbourne VIC 3000
Australian Company Number
071 735 950
Share Registry
Automic Pty Ltd
Level 3, 50 Holt Street
Surry Hills NSW 2010
Directors
Donald Brumley
Robert Klupacs
Richard Jagger
Peter May
Kevin Rumble
Secretary
Roger McPherson
Registered Office
Suite 1, Level 6
50 Queen Street
Melbourne VIC 3000
Business Address
Level 13
575 Bourke Street
Melbourne VIC 3000
Tel: +61 3 9628 4178
Website
www.bio-gene.com.au
BIO-GENE TECHNOLOGY LIMITED – 2017 ANNUAL REPORT
37