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Annual Report 2019
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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WHO WE ARE
Bio-Gene is an Australian AgTech development company enabling the next generation of novel insecticides, addressing the global
problems of insecticide resistance and toxicity. Its novel platform technology is based on naturally occurring beta-triketones, a type of
chemistry that may offer new solutions for insect management control in, crop protection (including grain storage), public health, consumer
applications and animal health.
Insecticide resistance is a real and growing problem. Almost 600 insect types (as well as other arthropod pests such as ticks and mites)
are resistant to more than one insecticide class. In terms of public health, over 60 countries have reported mosquito resistance to at least
one insecticide class. With insect-borne diseases such as malaria, Zika and dengue fever becoming more widespread and only limited
solutions available to address this expansion, the problem of insecticide resistance is expected to grow.
Many of the insecticide classes currently in use have toxicity profiles that pose mounting human and environmental problems, especially
in agriculture where both crops and livestock can be continually exposed to these compounds. With the global insecticide market valued
at in excess of US$32 billion per annum, there is real potential to disrupt the current paradigm with an insect control solution that is
targeted, safer, has low environmental impact and is cost effective to use.
Flavocide™ is one of our lead beta-triketone insecticide products, one of a class of chemistry identified in extracts of specific Australian
native flora that have been shown to have insecticidal activity. Flavocide, based on flavesone, is a chemically synthesised, nature-identical
compound. Our research indicates Flavesone has a novel mode of action versus all other insecticides on the market today. We have
demonstrated Flavesone efficacy when used alone, or in combination with other existing insecticides on resistant populations of certain
pests, and it therefore has the potential to address existing insecticide resistance to other chemistry. Our second product, Qcide™,
contains the natural form of another triketone the Company is also developing, and is suitable for natural or biological applications.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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CHAIRMAN’S AND CEO’S REPORT
Dear Shareholder,
On behalf of the Bio-Gene Technology Board and management team, we are pleased to present our 2019 Annual Report.
During the past 12 months, we have made strong progress on improving the value proposition of our lead molecules Flavocide™ and
Qcide™, via several successful efficacy, safety, and toxicology studies. All our achievements have served to further strengthen the
Company’s value proposition in relation to dealing with potential commercial partners, and therefore our progress to commercialisation,
and we are pleased to outline some of this year’s highlights.
Development testing on our two molecules continued throughout the year, with results reported on Flavocide field testing across a range
of crop pests, and grain storage pests. Work continues at Purdue University reviewing Flavocide and Qcide against the Anopheles
mosquito, which is the carrier for malaria.
In addition, Bio-Gene completed toxicity studies confirming that Flavocide is significantly less toxic to bees when compared with other
commonly used insecticides, further enhancing the commercial value proposition. Furthermore, positive results have also been generated
demonstrating how the compound is safer for other beneficial insects - those who perform valued services like pollination and pest control
- further increasing its attractiveness as an alternative to other commercial insecticide products.
In June 2019 we announced an update on a program of trials that commenced in December 2017, in conjunction with the Queensland
Government Department of Agriculture & Fisheries, (DAF). These trials were aimed at establishing the efficacy of Flavocide against a
range of grain storage pests of global significance. Pleasingly, the results showed that Flavocide provided 100% residual control of first
generation offspring of adult Lesser grain borer, over a three-month period, therefore confirming Flavocide’s potential as a protectant
insecticide in grain storage.
Complementing our testing work, we have advanced our studies for Flavocide regarding the Mode of Action, which will serve to support
a future submission by Bio-Gene for a new classification of insecticide. In addition, we continue our body of work with CSIRO to develop
improved manufacturing systems for the compound at lower cost and higher yield, and we released positive results from our 28-day oral
and dermal toxicity studies.
Qcide development was also advanced during the year with positive results from human testing as personal repellents, the completion of
the acute toxicity and product chemistry packages, and with the help of James Cook University, we have further improved the extraction
techniques of Qcide oil from our plantation trees. We obtained a $50,000 grant for this work through the Innovations Connections Program.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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We have also strengthened our intellectual property portfolio during the year with the submission of two new international patents. The
first of these patents covers the use of beta-triketones to control resistant pest populations, and the second patent covers the use of beta-
triketones in combination with other chemistry to control pests. We look forward to the successful granting of these patents, anticipated
during the next two years, to provide Bio-Gene with strengthened IP protection.
All our work to date has had the same purpose, which was to strengthen our position in relation to dealing with potential commercial
partners. We have now established a substantial knowledge base and presented our findings to the world’s major players in the areas of
crop protection, public health, animal health and consumer products under non-disclosure agreements. We have since developed and
signed multiple Material Transfer Agreements with potential partners, under which we have provided Flavocide and Qcide for their internal
evaluation. These agreements outline mutually agreed specific testing protocols and target pests and give us a high level of control and
assurance as to the type of testing being conducted, the sharing of results, and the protection of current and future Intellectual Property.
In all cases, the testing has involved both compounds.
The approach to testing varies amongst the companies, some are focusing on a single major application while others are interested in
broader screening as they look for the best opportunities.
During the year ahead we will continue to work with potential partners with the aim of advancing our technology towards commercial
partnerships. We take this opportunity to thank our fellow Directors, our employees, our adviser to the Board Doug Rathbone, our
scientific advisors and everyone that has worked with Bio-Gene during the past year for their valuable contribution. We also thank you our
shareholders for your ongoing support and we look forward to sharing updates with you as we make further progress during FY2020.
Don Brumley
Non-Executive Chairman
Richard Jagger
Chief Executive Officer and Managing Director
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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FINANCIAL REPORT CONTENTS
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance
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
Shareholder Information
Board of Directors and Company Particulars
6
25
26
27
28
29
30
31
49
50
53
55
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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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 2019.
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. Donald Brumley (Non-Executive Chairman)
Mr. Richard Jagger (Managing Director and CEO)
Mr. Robert Klupacs (Non-Executive Director)
Mr. Kevin Rumble (Non-Executive Director)
Mr. Peter May (Executive Director, Research and Development)
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
Principal activities
The principal activity of the Company is to pursue the development and ultimately the commercialisation of insecticide products.
Bio-Gene’s lead beta-triketone insecticide products are Flavocide™ (flavesone), a synthetically produced nature-identical compound, and
Qcide™, a natural oil with high levels of tasmanone. Early research indicates insecticidal activity of these products when used alone, or
in combination with other existing insecticides, as well as a novel mode of action with the potential to overcome existing insecticide
resistance.
Bio-Gene is seeking to commercialise these products via partners as insecticide formulations for use in a range of target markets.
Review of operations
Key achievements during the period include:
➢ Execution of a number of material transfer agreements (MTAs) with international companies which are potential commercial partners
➢ Undertaking of internal testing of Flavocide and Qcide by several international companies
➢ Advancement of the research and development programs for both Flavocide and Qcide
➢ Advancement of the toxicology studies for both Flavocide and Qcide
➢ The submission of two international patents
➢ Managing the financial position of the Company.
Commercial Discussions
One of the key focus areas for the Company during the year has been engagement and discussions with several international companies,
many of which have received samples of Flavocide and Qcide under material transfer agreements, with which to undertake their own
testing. Bio-Gene, together with these international companies have agreed on specific testing protocols and target pests. In addition,
Bio-Gene has ensured that it can access and discuss ongoing results with the various R&D divisions whilst protecting its Intellectual
Property throughout the process.
This is an ongoing process with a number of new companies identified and engaged throughout the year. It is envisaged that this work
will lead to the establishment of formal evaluation agreements.
Flavocide™
Over the year the Company has continued to expand Flavocide’s data package through further efficacy testing of the product. The testing
program has been undertaken with a number of groups to demonstrate efficacy across a range of pests in different market sectors.
Grain Storage Pests
During the prior financial year Bio-Gene completed its initial program with the Queensland Department of Agriculture and Fisheries, (DAF),
to assess Flavocide against a range of grain storage pests. The Company has now expanded this program to undertake residual studies
in respect of Flavocide in this important area and reported positive results from the initial stage of this work in June 2019.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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DIRECTORS’ REPORT
Crop Insects & Mites
During the year the Company continued its research collaborations to assess Flavocide against a range of mites and insect species
including insecticide resistant strains. Positive results have been obtained against several major pests tested. The Company is
investigating other programs to evaluate efficacy against additional crop pests to support commercialisation strategies.
Beneficial Arthropods
In July 2018, Bio-Gene announced further positive safety study results which demonstrated Flavocide is safer for a number of beneficial
arthropods (insects and mites) when compared to commonly used insecticides. These beneficial anthropods are predators and/or
parasites of pest species and therefore beneficial for high crop yields,.
Mosquitos
The Company has continued to progress its research collaboration with Purdue University in the USA. The program is being led by
Professor Catherine Hill who is a world-renowned expert on mosquito insecticide resistance and control, as well as a leading researcher
in assessing new agents for tick and mosquito control. Promising results with Flavocide were obtained in pilot studies.
The Company is now undertaking further work which is specifically focused on a resistant strain of the Anopheles mosquito which carries
Malaria. This work is being undertaken to facilitate evaluation programs by a number of NGO’s which have registered interest in Bio-Gene
and its particular application in the public health sector.
Unique Mode of Action
The Company has continued with it studies of Flavocide’s mode of action (MoA), conducted by Pacific Discovery Services (a division of
Neurosolutions). This work comprises studies to elucidate the mode of action and assist in identifying the best multiple compound
combinations using the molecule.
The data generated as part of these new studies will be used to support a submission for a new classification of insecticide with the Insect
Resistance Action Committee (IRAC).
The research undertaken to date has supported engagement with both industry experts and companies who are looking to find new
insecticide technology, to enable them to offer to the market new and valuable commercial products.
Manufacturing
In October, Bio-Gene announced completion of the latest stage of its development project with CSIRO, which improved both the yield and
cost of the synthesis process to produce flavesone, the active constituent contained within Flavocide.
The project developed an improved process for production of flavesone in a more efficient manner with higher yields. The new process
lowers the costs of raw materials, achieves more efficient homogeneous process reactions, produces less waste material and results in
finished product with a higher purity.
The Company is now engaging in discussions with potential manufacturers with the intention of auditing the best candidates, and ultimately
commencing pilot plant (small scale) production of Flavocide, which will determine the best approach for commercial-use manufacturing.
Efficiencies achieved through this process will help underpin the long-term supply of the product once in commercial use.
Toxicology testing & registration package
In October, Bio-Gene announced positive results from 28-day toxicology studies of Flavocide. The studies comprised repeat oral and
dermal dose testing with Flavocide in rats and show no observable adverse effects. These results will assist in determining the next stage
of studies which will include longer term repeat dose toxicity testing. Prior to undertaking further repeat dose tox studies, Bio-Gene has
sought regulatory advice which has given us guidance on the best approach to take in developing the tox package for both business
planning and regulatory requirements. This has enabled us to prioritise and schedule studies that may involve undertaking other tests
before conducting a 90 day or 1 year repeat dose study. These more focused tests may also allow us to seek a reduction in the scope of
studies currently on the timeline.
Importantly, these results represent an important de-risking milestone for the ongoing commercial development of Flavocide, with Bio-
Gene now able to determine the parameters for longer-term repeat dose toxicity testing. The results also provide further supporting data
towards creation of a global registration-enabling data package to support the commercialisation of Flavocide.
Qcide™
After presenting Bio-Gene’s technology to a number of key industry companies, the potential applications for Qcide have grown to now
include vector control and crop protection, in addition to consumer applications. The Company has expanded its Qcide trial program to
gather further data in these market segments, as well as create additional focus on advances in oil production from its farming practices.
Manufacturing
The Company has continued to develop its eucalypt tree plantations in North Queensland and improve extraction techniques of the Qcide
natural oil. A collaboration with James Cook University (JCU) was announced to develop a tissue culture system for the Eucalyptus
cloeziana chemotype to support expansion of tree plantations and scale up Qcide oil production.
In addition, JCU has also been working on an engineering program in conjunction with Bio-Gene’s contract farmers to find effective ways
to increase production from current and future plantations. Maximising the yield potential from each kilogram of bio-mass that is harvested
will help to provide a more cost-effective product.
Two eucalyptus harvests and associated experimentation programs were completed during the year which demonstrated further improved
extraction techniques of oil from biomass.
The company was also pleased to announce success in its application for a $50,000 grant via the Australian Government’s Innovations
Connections program to assist in undertaking the JCU engineering project.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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DIRECTORS’ REPORT
Mosquitos
Discussions with many major players in the vector control segment have highlighted a significant interest in Qcide as an alternative product
for the control of mosquitoes. As a result of this feedback the Company is continuing it efficacy studies to demonstrate the effectiveness
of Qcide.
In July 2018, Bio-Gene announced positive results from testing carried out by University of Technology Sydney (UTS), showing Qcide
personal insect repellent formulations to be effective in human exposure tests performed under high insect pressure conditions. UTS
recently completed the development of a Qcide and pyrethrins flying insect formulation to facilitate testing as a ‘flying-insect-killer’ (FIK)
product as a comparison to existing commercial formulations of household sprays.
In addition, work is underway with Purdue University to explore the efficacy of Qcide against the Aedes aegypti mosquito as well as the
synergistic action when combined with other insecticides.
Toxicology testing & registration package
The preliminary acute mammalian toxicity testing on Qcide oil was completed during the year with results demonstrating a favourable
safety profile.
The chemistry data package on Qcide 540EW, an oil-in-water emulsion formulation of Qcide oil was completed. This data package will
form part of the data requirements for the registration of this end use product.
Intellectual Property Position
In July 2018, Bio-Gene announced the submission of two new international patent applications covering the use of beta-triketones, the
naturally occurring class of chemicals which form the basis of Flavocide. The first patent covers use of beta-triketones to control resistant
pest populations, and the second covers use of beta-triketones in combination with other chemistry to control pests.
These submissions are significant milestones in the development of the Company’s Intellectual Property (I.P.) and if successfully granted
will provide protection to at least 2038.
Scientific Advisors
Bio-Gene continues to utilise external expertise to support and enhance its limited internal resources. Professor Catherine Hill provides
guidance on the science program, Neil Anderson is facilitating the Flavocide manufacturing scale up program, DTS Regulatory Consultants
provide regulatory guidance, and Doug Rathbone offers support to the board and management on the Company’s commercial strategy.
In addition to these resources, other consultants are identified and engaged where appropriate to support the Company’s progress.
Management of the financial position of the Company
Through effective capital management, Bio-Gene has been able to further its development program and engage with potential commercial
partners during the year. In June the R&D Incentive of $386,160 was received relating to spend in Australia during the 2018 financial
year.
At the end of the year, Bio-Gene held $4.5 million in cash which, based on current plans, provides the Company with sufficient cash for
at least 12 months.
Financial summary
The financial results of the Company for the year ended 30 June 2019 are summarised as follows:
Statement of financial position:
➢ Cash and term deposits held of $4,499,364 (2018: $6,706,552) at reporting date. This decrease represents the Company’s ongoing
investment in its research and development programs and commercialisation activities during the financial year.
➢ 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 $2,055,570 (2018: $2,833,050).
➢ Total revenue including other income during the period was $644,605 (2018: $474,523). This revenue included an estimated R&D
Tax Incentive of $505,859 (2018: $337,666), interest of $135,847 (2018: $130,073), sales of $Nil (2018 $4,210) and Licence Fees of
$2,899 (2018: $2,574).
➢ Total operating expenses for the period were $2,700,175 (2018: $3,307,573). Research and development costs have been expensed
in the year in which they were incurred. The decrease in expenditure is primarily due to the Listing Expenses and the expensing of
director equity issues which were incurred in the prior financial year.
➢ Basic and diluted net loss per share decreased to 1.75¢ (2018: 2.41¢) due to the decrease of the loss.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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DIRECTORS’ REPORT
Statement of cash flows:
➢ The Company’s cash outflow from operations over the period was $2,201,479 (2018: $2,373,454).
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, chemical 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-licencing
The Company is relying on its ability to be able to out-licence 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-licence its products or not be able to out-
licence its products for the desired returns, resulting in adverse effects on revenue and profitability.
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 licencing 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
2019
(1.75¢)
(1.75¢)
2018
(2.41¢)
(2.41¢)
Other than detailed below there were no significant changes to the state of affairs of Bio-Gene Technology Limited during the year:
Likely developments and expected results of operations
The Company will continue to fully evaluate Flavocide and Qcide 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.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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DIRECTORS’ REPORT
Events since the end of the financial year
No matter or circumstance has arisen since 30 June 2019, 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 2019.
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.
Meetings of directors
The number of meetings of the Company’s Directors held during the year ended 30 June 2019 and the numbers of meetings attended by
each Director were:
Director
Donald Brumley
Richard Jagger
Robert Klupacs
Peter May
Kevin Rumble
Held and Eligible to Attend
10
10
10
10
10
Attended
10
10
8
10
10
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.
Capital Raising
During the prior year Bio-Gene successfully completed its initial public offering (IPO) and listed on the ASX on 29 November 2017 with
the ticker BGT. Prior to the IPO, at the Annual General Meeting held on 6 September 2017, shareholders approved the consolidation of
the Company’s capital on a 1:2 basis.
The Company raised capital from the exercise of options during the current year $1,173 (2018: $7,163,800).
At 30 June 2019 the Company had 129,007,597 (2017: 127,724,471) shares on issue. Refer to Note 13(a) for further detail of movements
in issued capital.
Options issued
On 8 March 2018 the Company issued Loyalty Options to all shareholders on a 1:5 basis pursuant to a Prospectus dated 1 March 2018.
Of the 25,056,730 options issued, 5,866 were exercised, the balance expired on 4 December 2018.
Details of options currently on issue are:
Broker Options - issued 24 November 2017
Options Issued
2,000,000
Exercise Price
20 cents
Expiry
24/11/20
Further details in respect of these options are included in Note 13 (b).
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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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
350,000
1,000,000
-
242,393
1,308,121
-
Name and
Position
Non-Executive
Chairman
Donald Brumley
FCA, MAICD
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 former 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
from
September 2016 to November 2017.
Managing
Director and
Chief Executive
Officer
Richard Jagger
B.Sc.(Hons),
Masters of
International
Business, GAICD
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. Prior to joining Bio-Gene for 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. Richard is
a
founding member of Victoria’s Cleantech Cluster,
designed to support, consolidate and promote clean,
sustainable technology for use around the world.
experience
extensive
continuous
in
improvement,
business
Richard
has
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.
Director of Bio-Gene Technology Limited since 26 April
2017.
Other Directorships of listed companies over the past three
years: None.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
11
Particulars of interests in shares and options of
Bio-Gene Technology Limited
LSP* Shares
Options
Shares
110,000
3,320,000
-
DIRECTORS’ REPORT
Name and
Position
Non-Executive
Director
Robert Klupacs
BSc (Hons) Grad
Dip IP Law,
Australian
Registered Patent
and Trademark
Attorney
Qualifications and Experience
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.
transfer
corporate
including:
technology
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
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,
acquisitions,
corporate
governance and academic liaison. He is the Founder of 26
companies in Australia and Singapore. He is a highly
experienced professional Director having been an
Executive or Non-Executive Chairman/Director on over 24
different corporate entities. He was previously a member of
the Pharmaceutical Industry Group and a past member of
the Victorian Biotechnology Advisory Committee.
compliance and
corporate
Director of Bio-Gene Technology Limited since 29 May
2015.
Other Directorships of listed companies over the past three
years: None.
Non-Executive
Director
Kevin Rumble
AFAIA
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,
live plant
transport techniques.
farming, and processing and
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.
5,479,373
3,192,000
-
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
the
commercialisation of Flavocide™.
flavesone as a
first step
in
Director of Bio-Gene Technology Limited since 16 June
2004.
Other Directorships of listed companies over the past three
years: None.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
12
Particulars of interests in shares and options of
Bio-Gene Technology Limited
Shares
LSP* Shares
Options
281,861
776,456
-
DIRECTORS’ REPORT
Name and
Position
Executive
Director –
Research &
Development
Peter May
B.App.Sc (Rural
Technology)
(Hons), MBA,
GAICD, AFAIM
Qualifications and Experience
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 and specialty pesticide products, export sales & toll
formulation operations. During this period Peter developed
extensive experience
international crop protection
markets.
in
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). 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. working on market development projects in the
Asia/Oceania
Peter is a graduate member of the Australian Institute of
Company Directors (AICD) and member of the Australian
Environmental Pest Managers Association (AEPMA) and
the Mosquito Control Association of Australia (MCAA).
Peter holds a Bachelor of Applied Science (Rural
Technology) (First Class Honours) from the University of
Queensland, and a Masters of Business Administration
from the Queensland University of Technology.
Director of Bio-Gene Technology Limited since 29 May
2015.
Other Directorships of listed companies over the past three
years: None.
114,050
525,379
-
Chief Financial
Officer and
Company
Secretary
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.
Roger McPherson
B.Bus, CPA,
GAICD
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 13(c) for details
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
13
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited)
Introduction
This Remuneration Report for the year ended 30 June 2019 outlines the remuneration arrangements in place for the key management
personnel (‘KMP’) of Bio-Gene Technology Limited which comprises all Directors (executive and non-executive) and those executives
who have authority and responsibility for planning, directing and controlling the activities of the Company.
The remuneration report is set out under the following main headings:
A. Key management personnel
B. Remuneration governance
C. Principals used to determine the nature and amount of remuneration
D. Details of remuneration
E. Service Agreements
F. Share-based compensation to Directors and key management personnel
G. Additional disclosures relating to Directors and key management personnel
A) Key management personnel
The following individuals were classified as KMP during the 2019 financial year and unless otherwise indicated were classified as KMP
for the entire year.
(a) Directors
(i) Non-executive Chairman
Mr. Donald Brumley
(ii) Managing Director and Chief Executive Officer
Mr. Richard Jagger
(iii) Executive Directors
Mr. Peter May (Executive Director Research & Development)
(iv) Non-executive Directors
Mr. Robert Klupacs
Mr. Kevin Rumble
(b) Executives
The following people were the executives with the greatest authority for the strategic direction and management of the group (“other key
management personnel”) during the financial period:
Mr. Roger McPherson
Chief Financial Officer and Company Secretary
B) Remuneration governance
Role of Remuneration and Nomination Committee
The Company has adopted various Corporate Governance charters and policies including a Remuneration & Nomination Committee
Charter. Under this Charter, the function of the Remuneration and Nomination Committee (the Committee) is undertaken by the non-
executive members of the Board (Chaired by Robert Klupacs) given the Company’s size and scale of intended operations.
The Remuneration & Nomination Committee Charter includes principles for establishing appropriate remuneration policies and levels
including incentive policies for directors and senior executives and ensuring that senior executives are being rewarded commensurate
with their responsibilities and the market. Further information on the Committee’s role and responsibilities is contained in its Charter which
is available on the Company’s website at https://bio-gene.com.au.
The Committee is authorised by the Board to obtain outside independent professional advice with relevant experience and expertise.
During the 2019 financial year, the Committee engaged VSOPP Advisory to provide advice with establishing the Company’s remuneration
strategy and structures. VSOPP Advisory was paid a total of $8,800 for these services during the year. No advice as to specific
remuneration levels nor actual remuneration recommendations were provided by VSOPP Advisory.
Commencing in the prior year and continuing into the current year, the non-executive Chairman and Directors of the Company worked
closely with VSOPP Advisory and in conjunction with the Managing Director developed the Executive Remuneration Strategy and
Structure which is outlined below. The Board believes the Remuneration Strategy and Structure to be appropriate and effective in that it
needs to create goal congruence between directors, executives and shareholders.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
14
DIRECTORS’ REPORT
C) Principals used to determine the nature and amount of remuneration
Executive remuneration strategy and structure
The Company’s remuneration strategy is founded on the objective of aligning remuneration with the interests of the Company’s
shareholders by providing market competitive remuneration arrangements that attract, incentivise and retain quality personnel and which
encourage and promote achievement of the Company’s short and medium term strategic objectives consistently with the Company’s
longer term corporate goals.
The remuneration strategy is underpinned by a remuneration structure comprising fixed remuneration, a short-term incentive and long-
term incentive as described below:
Fixed Remuneration (“FR”)
FR consists of base salary and statutory superannuation contributions in recognition of day-to-day accountabilities. KMP may elect to
have specific benefits provided out of fixed remuneration on a total employment cost basis, that is, the cost of the benefit along with any
costs of providing the benefit such as fringe benefits tax are deducted from pre-tax salary.
Short-Term Incentive (‘STI’)
The STI is a cash and equity based plan that involves linking the achievement of specific financial and non-financial targets using a
balanced scorecard approach with the opportunity to earn an annual incentive up to a maximum set percentage of total remuneration.
Long-Term Incentive (‘LTI’)
The LTI plan is an equity based plan which is intended to provide the opportunity to earn incentives over the medium and longer term
based on the achievement of the Company’s strategic goals and the creation of shareholder value measured in terms of share price
growth.
Total Remuneration refers to the aggregate of the above remuneration components. Remuneration mix refers to the proportion of Total
Remuneration that each remuneration component makes up. The mix of remuneration components within the Company’s remuneration
structure is as follows:
Component
CEO
Executive Team
Senior Managers
Fixed remuneration
Short-term incentive
Long-term incentive
50%
70%
85%
25%
15%
15%
25%
15%
N/A
Executive remuneration components
Fixed Remuneration (“FR”)
Fixed pay is set with reference to the assessment of the external market for comparable roles having regard to relevant industries and the
relative stage of an organisation’s business life-cycle taking into consideration the size and complexity of the executive’s role and the skills
and experience of the executive.
Short-Term Incentive (‘STI’)
Under the STI, executives are awarded cash and shares under the Company’s loan-funded share plan (LSP) having regard to the short-
term incentive proportion of the executive’s total remuneration (the STI value) and the extent to which performance has been achieved
against targets over the financial year.
Performance is determined by assessing actual performance against targets across a number of financial and non-financial dimensions
as described in the table below. The executives are measured as a group using these criteria as it is considered key to encouraging team
approach to achieving the Company’s objectives.
Component
Customers and partners
Intellectual property and technology enabling
Corporate overarching
60%
20%
20%
100%
The STI Value is determined by applying the executive team’s performance out of 100% to the executive team’s maximum potential STI
amount. 50% of the STI Value (subsequent to assessment and approval) is delivered immediately in cash. The remaining 50% of the STI
value is delivered in the form of shares under the Company’s loan-funded share scheme (LSP). The shares are issued at a nominal value
and subject to specific forfeiture and disposal restrictions. The number of shares awarded is based on the weighted average closing prices
over the five trading days up to and including 30 June 2019.
When the shares vest they can only be dealt with by the the executive having regard to the Company’s securities trading policy.
Awards of shares under the Executive Remuneration Strategy and Structure to directors were approved for a 3 year period at the 2018
Annual General Meeting which was held on 20 November 2018.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
15
DIRECTORS’ REPORT
Long-Term Incentive (‘LTI’)
Under the LTI, executives are awarded shares under the Company’s loan-funded share plan (LSP) having regard to the long-term incentive
proportion of the executive’s total remuneration (the LTI value). The LTI value is satisfied with the annual issue of shares, under two
different programs, and these shares are then tested against specific performance conditions in future years to determine whether the
shares vest.
LTI Type 1
50% of the LTI Value is delivered as shares issued at the share price based on the weighted average closing prices over the five trading
days up to and including 30 June 2019 with a three year performance condition. The performance condition is focussed on the successful
execution of commercial agreements approved by the Board. The number of shares awarded is based on a valuation of this instrument
using an appropriate valuation methodology.
The Company will provide an interest-free loan to the executives to fund the acquisition of these shares. The proceeds from the sale of
shares that vest must first be applied to extinguishing the loan prior to remittance to executives.
LTI Type 2
50% of the LTI Value is delivered as shares issued at a nominal value with a three year progressive performance condition. One third of
the allocation vests each year provided a 15% compound share price growth target is achieved. If the performance condition is not met
at either (or both) of the first two testing points the shares may be carried forward and retested the following year. Shares that have not
vested at the third testing point will be forfeited. The number of shares awarded is based on the weighted average closing prices over the
five trading days up to and including 30 June 2019.
Unvested shares are subject to forfeiture in the event of any executive resigning or where the executive acts fraudulently or dishonestly
or is in breach of his or her obligations to the Company. Once vested, the shares are subject to a disposal restriction being the earliest
time after vesting when the executive can deal in the shares having regard to the Company’s securities trading policy.
Awards of shares under the Executive Remuneration Strategy and Structure to directors were approved for a 3 year period at the 2018
Annual General Meeting which was held on 20 November 2018.
The Board believes the LTI to be appropriate and effective in that it creates goal congruence between directors, executives and
shareholders with the dual focus on the successful execution of commercial deals and share price growth.
Performance outcomes
The tables below provide a summary of the STI key balanced scorecard objectives and outcomes for the year ended 30 June 2019. The
objectives are agreed with the Board at the beginning of each financial year and are designed to focus executives on delivering against
agreed priorities.
Component
Customers and partners
Intellectual property and technology enabling
Corporate overarching
Percentage of Scorecard
60%
20%
20%
100%
Outcomes
25%
3%
14%
42%
Both components of the LTI were tested at 30 June 2019. As the Company had not entered into any commercial agreements at that date
the LTI Type 1 shares issued in respect of the 2018 financial year were carried forward to be tested again at 30 June 2020.
The Company’s share price on the ASX at the end of the financial year was 9 cents. As the price target for 30 June 2019 was 21.5 cents
the first one-third of the LTI Type 2 shares issued in respect of the 2018 financial year were carried forward to be tested again at 30 June
2020.
Remuneration outcomes
The key focus of the STI for the year ended 30 June 2019 was the execution of collaboration agreements, the advancement of the
manufacturing of Flavocide at a pilot plant and improvement to the Qcide oil extraction process. While a number of material transfer
agreements were entered into no collaboration agreements were executed, due to external factors the pilot plant manufacturing of
Flavocide was not commenced and while significant improvements were made to the Qcide oil extraction process the target set was not
met. Accordingly, the impact of these items is reflected in the STI outcome. The tables below summarises the remuneration outcomes
for executives under the Company’s STI program having regard to the performance outcomes outlined above.
2019
Name
Richard Jagger
Peter May
Roger McPherson
Total
STI
STI Outcomes
STI Delivery
Maximum
STI
% of TR
%
25
15
15
Actual STI
% of TR
Max STI
Value
Actual STI
Value
%
10.50
6.30
6.30
$
134,770
42,428
28,286
205,484
$
56,604
17,820
11,880
86,304
Cash
$
Shares
$
Total
$
28,302
28,302
8,910
5,940
8,910
5,940
43,152
43,152
56,604
17,820
11,880
86,304
There are no remuneration outcomes under the Company’s LTI program as the relevant performance targets had not been met (refer
above).
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
16
DIRECTORS’ REPORT
Non-executive director remuneration
The Company’s remuneration strategy regarding non-executive directors is that remuneration for non-executive directors should be
sufficiently competitive to attract and retain individuals of calibre that have the skills and experience to contribute towards a Board that will
drive the Company towards achievement of shareholder aligned objectives whilst fulfilling its governance role of prudential oversight.
Given the Company’s size and scale of intended operations and the distribution of membership by each of the directors to relevant Board
sub-committees, the Board has adopted a non-executive director fee structure during the financial year which comprises solely of board
fees.
At the 2017 Annual General Meeting a Non-Executive Directors’ Fee Pool of $450,000 was approved by shareholders.
Directors’ fees are currently set at $80,000 for the Chairman and $45,000 per Non-executive Director and reflect the demands which are
made on and the responsibilities of the Directors. Mr. Robert Klupacs receives an additional $5,000 per annum for his role in chairing the
meetings of the Non-executive Directors in respect of remuneration arrangements.
D) Details of remuneration
Year ended 30 June 2019
Details of the remuneration of each Director of Bio-Gene and the key management personnel (KMP) of the Company are set out in the
following table for the year ended 30 June 2019. As indicated above incentives are dependent upon the attainment of agreed corporate
and individual milestones and all incentives related to the year have been expensed in full over the vesting period.
2019
Name
Executive Directors
Richard Jagger
Peter May
Subtotal Executive Directors
Non-Executive Directors
Donald Brumley
Robert Klupacs
Kevin Rumble
Subtotal Non-Executive
Directors
Total Directors
Other KMP
Roger McPherson
Total Other KMP
Short-term employee
benefits
Post employment
benefits
Equity-based payments
Cash salary
& fees
Cash STI5
Non-
monetary
benefits
Super-
annuation
$
$
$
$
STI1
$
LTI2
$
Total
$
246,154
180,822
426,976
73,059
50,000
41,096
164,155
591,131
117,727
117,727
28,302
8,910
37,212
-
-
-
-
37,212
5,940
5,940
-
-
-
-
-
-
-
-
-
23,385
17,178
40,563
6,941
-
3,904
10,845
51,408
14,273
14,273
21,937
7,229
29,166
22,952
342,730
6,063
220,202
29,015
562,932
-
-
-
-
-
-
-
-
80,000
50,000
45,000
175,000
29,166
29,015
737,932
4,539
4,539
6,449
6,449
148,928
148,928
Total
1. The STI recorded for the executives is the amount payable in respect of the year ending 30 June 2019, less adjustments to the
708,858
65,681
33,705
35,464
43,152
886,860
-
valuation at issue date (6 December 2018) of the STI for the year ending 30 June 2018.
2. The LTI is recognised based on the expected period to vesting of the equity at the date of issue.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
17
DIRECTORS’ REPORT
Year ended 30 June 2018
Details of the remuneration of each Director of Bio-Gene and the key management personnel (KMP) of the Company are set out in the
following table for the year ended 30 June 2018. As indicated above incentives are dependent upon the attainment of agreed corporate
and individual milestones and all incentives related to the year have been expensed in full over the vesting period.
2018
Name
Executive Directors
Richard Jagger1
Peter May2
Subtotal Executive Directors
Non-Executive Directors
Donald Brumley
Robert Klupacs3
Kevin Rumble
Subtotal Non-Executive
Directors
Total Directors
Other KMP
Roger McPherson4
Total Other KMP
Short-term employee
benefits
Post employment
benefits
Equity-based payments
Cash salary
& fees
Cash STI5
Non-
monetary
benefits
Super-
annuation
$
$
$
$
STI5
$
Shares &
Options
$
Total
$
213,700
139,490
353,190
57,078
115,000
72,603
244,681
597,871
29,625
7,826
37,451
-
-
-
-
37,451
176,833
176,833
31,521
31,521
-
-
-
-
-
-
-
-
-
18,877
7,635
26,512
5,422
-
6,897
12,319
38,831
12,500
12,500
29,625
7,826
37,451
-
-
-
-
31,586
25,269
56,855
50,538
25,269
25,269
323,413
188,046
511,459
113,038
140,269
104,769
101,076
358,076
37,451
157,931
869,535
6,521
6,521
32,653
32,653
260,028
260,028
Total
1. Richard Jagger was appointed as Managing Director and Chief Executive Officer effective 1 January 2018. Prior to that date he
190,584
774,704
43,972
51,331
68,972
1,129,563
-
was an Executive Director and Head of Commercial Development.
2. Peter May was appointed as Executive Director, Research & Development effective 1 January 2018. Prior to that date he was a
Non-executive Director and Consultant to the Company.
3. Robert Klupacs stepped down as the Managing Director and Chief Executive Officer effective 31 December 2017. From 1
4.
January 2018 he has been a Non-executive Director of the Company.
In addition to the STI described above for the six months ended 30 June 2018, Roger McPherson was awarded a cash bonus of
$25,000 following the successful Listing of the Company which is included with the Cash STI.
5. The STI recorded for the executives is the amount payable in respect of the six month period ending 30 June 2018. The equity
based component of the STI was subject to shareholder approval at the 2018 Annual General Meeting.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
18
DIRECTORS’ REPORT
E) Service agreements
Remuneration and other terms of employment for the Non-Executive Chairman, Managing Director and Chief Executive Officer, Non-
Executive Directors and other key management personnel are formalised in service agreements. These agreements may provide for the
provision of performance related cash bonuses and the award of equity in the Company.
Other major provisions of the agreements relating to remuneration are set out below:
Donald Brumley, Non-executive Chairman
➢ Term of Agreement – Commencing from 26 April 2017. A new agreement became effective 1 January 2018.
➢ Director’s fee – $80,000 per annum to be reviewed independently and annually by the Board of Directors.
➢ Termination – No terms have been agreed.
➢
➢ Equity – The Chairman shall be entitled to participate in the Loan Share Plan of the Company.
Incentive – Nil.
Richard Jagger, Managing Director and Chief Executive Officer
➢ Term of Agreement – Commencing from 1 January 2018 and ongoing unless terminated in accordance with its terms.
➢ Base Remuneration – Effective 1 January 2018 $320,000 per annum on a fulltime basis, subject to annual increases at the discretion
of the Board of Directors. Currently working on the basis of 80% of a full time equivalent.
➢ Termination – By four months’ notice from either side.
➢
Incentive – Short Term Incentive of up to $160,000 per annum on a fulltime basis and Long Term Incentive of up to $160,000 on a full
time basis subject to achievement of performance targets and at the discretion of the Board of Directors.
➢ Equity – The Director shall be entitled to participate in the Loan Share Plan of the Company.
Robert Klupacs, Non-executive Director
➢ Term of Agreement – Commencing from 1 January 2018.
➢ Director’s Fees $45,000 per annum plus an additional $5,000 per annum for chairing the Non-executive Director meetings in respect
of remuneration of executives of the Company, to be reviewed independently and annually by the Board of Directors.
➢ Termination – No terms have been agreed.
➢
➢ Equity – The Director shall be entitled to participate in the Loan Share Plan of the Company.
Incentive – Nil.
Kevin Rumble, Non-executive Director
➢ Term of Agreement – Commencing from 1 July 2017. A new agreement became effective 1 January 2018.
➢ Director’s Fees $45,000 per annum to be reviewed independently and annually by the Board of Directors.
➢ Termination – No terms have been agreed.
➢
➢ Equity – The Director shall be entitled to participate in the Loan Share Plan of the Company.
Incentive – Nil.
Peter May, Executive Director, Research & Development
➢ Term of Agreement – Commencing from 1 January 2018 and ongoing unless terminated in accordance with its terms.
➢ Base Remuneration – Effective 1 January 2018 $220,000 per annum on a fulltime basis, subject to annual increases at the discretion
of the Board of Directors. Currently working on the basis of 90% of a full time equivalent.
➢ Termination – By two months’ notice from either side.
➢
Incentive – Short Term Incentive of up to $47,143 per annum on a fulltime basis and Long Term Incentive of up to $47,143 on a full
time basis subject to achievement of performance targets and at the discretion of the Board of Directors.
➢ Equity – The Director shall be entitled to participate in the Loan Share Plan of the Company.
Roger McPherson, Chief Financial Officer and Company Secretary
➢ Term of Agreement – Commencing from 1 January 2018 and ongoing unless terminated in accordance with its terms.
➢ Base Remuneration – Effective 1 January 2018 $220,000 per annum on a fulltime basis, subject to annual increases at the discretion
of the Board of Directors. Currently working on the basis of 60% of a full time equivalent.
➢ Termination – By two months’ notice from either side.
➢
Incentive – Short Term Incentive of up to $47,143 per annum on a fulltime basis and Long Term Incentive of up to $47,143 on a full
time basis subject to achievement of performance targets and at the discretion of the Board of Directors.
➢ Equity – The Executive shall be entitled to participate in the Loan Share Plan of the Company.
F) Share-based compensation to Directors and key management personnel
(i) General overview
The Company issues equity to Directors, employees and key consultants under the Loan Share Plan (LSP). Under the plan, participants
are issued with equity to foster an ownership culture to motivate Directors, employees and consultants to achieve performance targets of
the Company. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the plan or to
receive any guaranteed benefits.
The LSP was approved at the 2017 Annual General Meeting. Only Australian residents are eligible to participate in the plan. The plan
allows non-recourse, interest free loans to be provided to eligible participants to acquire shares under the plan. If and when an issue is
made involving an interest free-loan, 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, except for shares issued as part of the annual short-term incentive arrangements, shares issued under the plan will vest over
a three year 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.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
19
DIRECTORS’ REPORT
If the participant leaves the Company, any shares that have not vested will be brought back by the Company and cancelled along with the
loan. In respect of shares that have vested the loan balance must generally 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 LSP is not
included in equity until the loan has been repaid.
In accordance with the rules of the LSP the Board has the ability to vary the terms in respect of issues in circumstances it considers
appropriate. The valuations of shares issued under the LSP are determined by using an industry standard pricing model taking into
account the terms and conditions upon which the instruments were issued.
Participants are not permitted to enter into transactions which limit the economic risk of participating in the plan other than as described
above as the LSP allows participants access to a limited recourse loan to fund the acquisition of any shares issued under the LSP.
The terms and conditions of each issue of equity affecting remuneration of Directors and key management personnel in this or future
reporting periods are as follows:
Shares issued under the LSP
Following the consolidation of the Company’s equity in September 2017, all share numbers are reported on a post consolidation basis.
Issue date
No. of shares
Loan expiry
date
Vesting
date
Issue price
$
26/07/2017
06/12/2018
06/12/2018
06/12/2018
06/12/2018
06/12/2018
Total
187,500
263,304
696,722
105,745
105,745
105,744
1,464,760
26/07/2024
N/A
06/12/2025
N/A
N/A
N/A
26/07/2018
01/01/2019
30/06/2021
30/06/2019
30/06/2020
30/06/2021
0.1400
Nominal
0.1420
Nominal
Nominal
Nominal
Fair value per
share at issue
date
$
0.0894
0.1311
0.0760
0.1311
0.1311
0.1311
Date first
available to
deal with
26/07/2018
01/01/2019
30/06/2021
30/06/2019
30/06/2020
30/06/2021
(ii) Equity issued to Directors and key management personnel
Details of equity issued in the Company provided as remuneration to each Director the key management personnel of the Company are
set out below. When vested, prior to the Director or key management personnel being able to deal with each share, the loan advanced
to acquire the share under the LSP must be repaid.
The assessed fair value at the date of issue of the equity instruments is allocated over the period from issue date to vesting date, and this
amount is included in the remuneration tables above. Fair values at issue date are determined using a binomial option pricing model that
takes into account the amount of loan, the term of the loan, the share price at issue date and expected price volatility of the Bio-Gene
shares, the expected dividend yield and the risk-free interest rate for the term of the loan.
Further information on the shares issued under the LSP, including factors and assumptions used in determining fair value is set out in
Note 13 to the financial statements.
Details of shares that have been issued and vested in this or the previous year are outlined in the table below. The tables only include
transactions whilst a member of the key management personnel.
Shares issued under the LSP
Following the consolidation of the Company’s equity in September 2017, all share numbers are reported on a post consolidation basis.
Name
Directors
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Other key management personnel
Roger McPherson
Shares issued during the year
2019
Number
Loan per
share$
2018
Number
Loan per
share$
Shares vested during the year
2019
2018
Number
Number
-
469,395
391,119
-
-
123,997
103,320
103,330
86,099
-
0.142
N/A
-
-
0.142
N/A
0.142
N/A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
375,000
-
0.14
-
-
-
177,393
-
-
-
46,861
187,500
39,050
1,000,000
625,000
-
500,000
500,000
500,000
-
187,500
-
Refer to Section C of this Remuneration Report for details of the performance criteria that need to be met in relation to the shares issued
above. Participants need to be appointed as a Director or employed by the company at the vesting date. Unvested shares are brought
back by the Company at the cessation of appointment or employment at the issue price.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
20
DIRECTORS’ REPORT
G) Additional disclosures related to Directors and key management personnel
(i) Details of remuneration: cash bonuses and shares
Cash bonus
Note (vi)
Shares
Name
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Paid%
Forfeited
%
Year
issued
Vested%
Forfeited
%
-
-
83
42
-
-
-
-
-
-
-
-
-
83
42
83
42
-
-
17
58
-
-
-
-
-
-
-
-
-
17
58
17
58
2017
2017
2018
2019
2015
2016
2017
2015
2016
2017
2015
2016
2017
2018
2019
2018
2019
100
100
100
20.6
100
100
100
100
100
100
100
100
100
100
20.6
100
20.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial
years in
which
shares &
options
vest
Note (iii)
Note (iii)
Note (v)
Note (vi)
Note (i)
Note (ii)
Note (iii)
Note (i)
Note (ii)
Note (iii)
Note (i)
Note (ii)
Note (iii)
Note (v)
Note (vi)
Note (iv,v)
Note (vi)
Minimum
total
value of
issue yet
to vest
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Maximum
total value
of issue
yet to vest
$
-
-
-
40,765
-
-
-
-
-
-
-
-
-
-
10,769
-
8,974
Notes:
The financial years in which shares vest are 100% in 2015.
(i)
The financial years in which shares vest are 100% in 2016.
(ii)
(iii) The financial years in which shares vest are 100% in 2018.
(iv) The financial years in which shares vest are 50% in 2018 and 50% in 2019.
(v) The executive team were eligible to receive an STI which is made up of 50% cash and 50% shares issued at nominal value. These
bonuses were not paid in the 2018 financial year but an allowance was made for payment of these in the 2019 financial year.
(vi) The executive team are eligible to receive an STI which is made up of 50% cash and 50% shares issued at nominal value. These
bonuses were not paid in the 2019 financial year but an allowance has been made for payment of these in respect of the 2019 year
which will be settled in the 2020 financial year. The equity based component of the STI and the LTI for the 2018 year were issued
in the 2019 year. The equity based component of the STI vested during the 2019 year.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
21
DIRECTORS’ REPORT
(ii) Share-based compensation
Further details relating to shares and options are set out below:
Name
2019
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
2018
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
A
Remuneration
consisting of
shares and
options %
B
C
D
E
Value at issue
date
$
Value at loan
repayment date
$
Value at
cancellation date
$
Total of columns
B-D
$
-
23
-
-
10
12
-
-
-
-
-
13
-
86,977
-
-
22,976
19,147
-
-
-
-
-
34,051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
86,977
-
-
22,976
19,147
-
-
-
-
-
34,051
A = The percentage of the value of remuneration consisting of equity, based on the value at grant date set out in column B.
B = The value at issue date calculated in accordance with AASB 2 “Share-based Payments” of shares and options issued during the
year as part of remuneration. These amounts represent the entire value of the equity issued during the year. The amount
recognised in remuneration is the proportion of the value attributable to the period from issue date to vesting date for equity issued
in the current and prior years.
C = The value at loan repayment date for shares and exercise date of options that were issued as part of remuneration and were repaid
or exercised during the year.
D = The value at cancellation/lapse date of equity that was granted as part of remuneration and that was cancelled or lapsed during the
year.
The above table does not included any equity awards under the Company’s STI or LTI for the year ending 30 June 2019 as these will be
issued in the 2020 year.
(iii) 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:
2019
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
2018
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
Balance at
1 July
No.
1,200,000
690,000
3,385,000
8,671,373
831,000
450,000
15,227,373
Balance at
1 July
No.
2,100,000
1,350,000
6,740,000
17,342,746
1,632,000
100,000
29,264,746
Issued as
compensation
under Loan
Share Plan
No.
-
860,514
-
-
227,317
189,429
1,277,260
Purchased on
Market
No.
Net change
other
No.
Balance at 30
June
No.
Total vested
30 June No.
150,000
-
45,000
-
-
-
195,000
150,000
860,514
45,000
-
227,317
189,429
1,472,260
1,350,000
1,550,514
3,430,000
8,671,373
1,058,317
639,429
16,699,633
1,350,000
867,393
3,430,000
8,671,373
877,861
489,050
15,685,677
Issued as
compensati
on under
Loan Share
Plan
No.
-
-
-
-
-
750,000
750,000
Consolidati
on
Adjustment
No.
(1,050,000)
(675,000)
(3,370,000)
(8,671,373)
(816,000)
(425,000)
(15,007,373)
Purchased
under the
Initial
Public
Offering
No.
150,000
15,000
15,000
-
15,000
25,000
220,000
Net change
other
No.
Balance at
30 June
No.
Total vested
30 June No.
(900,000)
(660,000)
(3,355,000)
(8,671,373)
(801,000)
350,000
(14,037,373)
1,200,000
690,000
3,385,000
8,671,373
831,000
450,000
15,227,373
1,200,000
690,000
3,385,000
8,671,373
831,000
262,500
15,039,873
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
22
DIRECTORS’ REPORT
Options
Options held by key management personnel:
2019
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
2018
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
Balance
at 1 July
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Granted
as
compen-
sation
No.
Lapsed No.
-
-
-
-
-
-
-
(240,000)
(138,000)
(677,000)
(1,734,275)
(166,200)
(90,000)
(3,045,475)
Net change
other
No.
(240,000)
(138,000)
(677,000)
(1,734,275)
(166,200)
(90,000)
(3,045,475)
Balance
at 30
June
No.
Total
vested
30 June
No.
Vested
and
exercise-
able
No.
Vested
but not
exer-
ciseable
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
at 1 July
No.
Granted as
compen-
sation
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Loyalty
Options
Issued
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Net
change
other
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Balance
at 30
June
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Total
vested
30 June
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Vested
and
exercise-
able
No.
240,000
138,000
677,000
1,734,275
166,200
90,000
3,045,475
Vested
but not
exer-
ciseable
No.
-
-
-
-
-
-
-
(iv) Voting and comments made at the company’s 2018 annual general meeting:
Bio-Gene Technology Limited received more than 98% of “yes” votes on its remuneration report for the 2018 financial year. The company
did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.
END OF REMUNERATION REPORT (Audited)
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
23
DIRECTORS’ REPORT
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.
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 2019 is attached.
Auditor
JTP Assurance continues in office in accordance with Section 327 of the Corporations Act 2001.
Non-audit services
The Company did not employ the auditor on assignments additional to their statutory audit duties during the year.
Accordingly, no amount was paid or payable to the auditor (JTP Assurance) for non-audit services provided during the year. Details of
amounts paid or payable for audit services are set out below.
The Board of Directors has considered the position and is satisfied that the planned provision of the non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:
➢ All non-audit services have been reviewed to ensure they do not impact the impartiality and objectivity of the auditor.
➢ None of the services undermine the general principles relating to auditor independence as set out in Professional Statement APES
110, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making capacity for the Company,
acting as advocate for the Company or jointly sharing economic risk and rewards.
During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-
related audit firms:
Audit services
JTP Assurance :
Audit and review of financial reports and other audit work under the Corporations Act 2001
Total remuneration for audit services
Other advisory services associated with the audit firm
Jeffrey Thomas & Partners
Advice on taxation and other matters and review and lodgement of corporate tax returns
JT&P Corporate Advisers Pty Ltd
Investigating accountants report for the IPO Prospectus
Total remuneration
2019
$
27,000
27,000
4,000
-
31,000
2018
$
27,000
27,000
5,470
15,000
47,470
No officers were previously partners of the audit firm JTP Assurance.
This report is made in accordance with a resolution of the Directors.
Mr. Donald Brumley
Chairman
Date: 22 August 2019
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
24
AUDITOR’S INDEPENDENCE DECLARATION TO THE
DIRECTORS OF BIO-GENE TECHNOLOGY LIMITED
10th Floor, 446 Collins Street
Melbourne, VIC 3000
P.O. Box 627, Collins Street West E: enquiries@jtpassurance.com.au
VIC 8007
T: +61 3 9602 1494
F: +61 3 9602 3606
www.jtpassurance.com.au
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF BIO-GENE TECHNOLOGY LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2019 there have been:
(i)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
(ii)
No contraventions of any applicable code of professional conduct in relation to the audit.
Signed at Melbourne this 22nd day of August 2019
ABN: 13 488 640 554. Liability limited by a scheme approved under Professional Standards Legislation
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
25
CORPORATE GOVERNANCE
The Board of Directors of Bio-Gene Technology Limited (Board) is responsible for the corporate governance of the Company. The Board guides
and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are
accountable.
The Board supports the core corporate governance principles published by the ASX Corporate Governance Council (Council). The Company’s
corporate governance framework is designed to comply with the Council's principles whilst being relevant, efficient and cost effective for the
current stage of the Company’s development.
The Corporate Governance Statement contains certain specific information and discloses the extent to which the Company has followed the
Council’s principles during the 2019 financial year. Bio-Gene's Corporate Governance Statement is structured with reference to the ASX
Corporate Governance Principles and Recommendations 3rd Edition and can be found on the Bio-Gene website at:
http://bio-gene.com.au/about-us/governance.
The Board will continue its ongoing review process to ensure that the model is relevant, efficient and cost effective to the Company and its
shareholders.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
26
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Revenues from continuing operations
Expenses from continuing operations
Research & Development
Commercialisation Expenses
Management Administration Expenses
Directors Expenses
Professional Services
Intellectual Property
Depreciation & Amortisation
Listing Expenses
Other Expenses
Loss from continuing operations before tax
Income tax (expense)
Note
3(a)
3(b)
2019
$
2018
$
644,605
474,523
(1,424,718)
(1,437,255)
(314,137)
(159,584)
(189,070)
(263,525)
(61,086)
(45,556)
-
(242,499)
(2,055,570)
-
(293,071)
(323,845)
(331,498)
(240,192)
(56,894)
(41,999)
(299,505)
(283,314)
(2,833,050)
-
Loss for the year from continuing operations after income tax
(2,055,570)
(2,833,050)
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
-
-
(2,055,570)
(2,833,050)
Earnings per share:
Basic loss per share - from continuing operations
Diluted loss per share - from continuing operations
4
4
(1.75¢)
(2.41¢)
(1.75¢)
(2.41¢)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
27
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
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
Employee benefits
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
2019
$
2018
$
5
6
7
8
9
10
11
12
11
4,499,364
6,706,552
472,767
170,331
368,359
128,499
5,142,462
7,203,410
32,712
387,898
420,610
38,643
424,841
463,484
5,563,072
7,666,894
322,487
493,737
-
141,124
463,611
150,000
150,000
613,611
-
115,850
609,587
150,000
150,000
759,587
4,949,461
6,907,307
13
14(a,b)
14(c)
11,804,199
11,768,501
695,849
633,823
(7,550,587)
(5,495,017)
4,949,461
6,907,307
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
28
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
2019
At 1 July 2018
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
Exercise of options
Re-allocation of value of equity
which vested during the period
Cost of share-based payment
At 30 June 2019
2018
At 1 July 2017
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
Exercise and conversion of
options
Cost of share-based payment
At 30 June 2018
Fully paid
ordinary
shares
Share option
reserve
Share loan
plan reserve
Accumulated
losses
Total
$
$
$
$
$
11,768,501
113,600
520,223
(5,495,017)
6,907,307
-
-
-
-
13(a)
13(a)
14(b)
-
1,173
34,525
-
11,804,199
-
-
-
-
-
-
-
-
-
-
-
-
(2,055,570)
-
(2,055,570)
-
(2,055,570)
(2,055,570)
-
-
-
-
-
1,173
-
113,600
(34,525)
96,551
582,249
-
-
(7,550,587)
-
96,551
4,949,461
$
$
$
$
$
5,208,852
139,301
226,752
(2,661,967)
2,912,938
-
-
-
7,568,446
-
-
-
-
(1,008,797)
113,600
-
-
-
-
-
-
-
11,768,501
(139,301)
-
113,600
-
293,471
520,223
-
-
(5,495,017)
(2,833,050)
-
(2,833,050)
-
(2,833,050)
(2,833,050)
-
-
7,568,446
(895,197)
(139,301)
293,471
6,907,307
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
29
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
Cash flows from operating activities
Payments to suppliers and employees inclusive of GST
(2,732,729)
(2,618,404)
Note
2019
$
2018
$
Interest received
R&D tax incentive
Licence fees
Sales
142,191
386,160
2,899
-
115,355
122,811
2,574
4,210
Net cash used in operating activities
15(b)
(2,201,479)
(2,373,454)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Payments for security deposits
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 increase in cash and cash equivalents
Cash and cash equivalent at beginning of year
Cash and cash equivalents at end of year
(2,682)
-
(4,200)
(6,882)
1,173
-
1,173
(2,207,188)
6,706,552
4,499,364
15(a)
(13,496)
(226,000)
(70,000)
(309,496)
7,170,800
(641,622)
6,529,178
3,846,228
2,860,324
6,706,552
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
30
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Introduction
The financial report covers Bio-Gene Technology Limited (“Bio-Gene” or “Company”), as an individual entity.
Bio-Gene is a listed 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, Level 6, 400 Collins 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.
a) Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001,
Australian 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 an accruals basis and are based on 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 statements have been prepared on a going concern basis. The financial statements have been prepared in accordance with
generally accepted accounting standards, which are based on the Company continuing as a going concern. The Company has incurred
operating losses; however the Company is able to continue as a going concern on the basis that the Company has sufficient cash reserves
to cover expenditure for at least the next twelve months.
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.
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 2019 is $387,898 (2018: $424,841).
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
31
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Refer to Note 9 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:
➢ Computer equipment – 2 years; and
➢ Plant and equipment – 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 entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.
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.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
32
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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)
Employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, and annual leave and long service leave expected to be settled within
12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.
Long-term employee benefits
Liabilities for annual leave and long service leave that are not expected to be settled wholly within 12 months of the reporting date are
measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting
date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are discounted using market yields at the end of the reporting period of the corporate bonds.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
m) Share based payments
Equity settled share based payments with employees, key consultants providing similar services and Directors are measured at fair value
at the date of issue. Fair value is measured by use of industry standard pricing models. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.
The fair value determined at the issue date of the equity settled share based payments is expensed on a straight line basis over the
vesting period, based on the entity’s estimate of shares that will eventually vest.
For cash settled share based payments, a liability equal to the portion of the goods or services received is recognised at the current fair
value determined at each reporting date.
n) 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.
o) Provisions
Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past event, it is probable the
Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking
into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using
a current pre-tax rate specific to the liability.
ANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2008 – CONTINUE
p)
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.
q)
Issued capital
Ordinary shares are classified as equity (Note 13).
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.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
33
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
r) 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.
Sales
Sales are recognised when the goods have been delivered to the purchaser.
s) Comparative figures
Comparatives have been reclassified so as to be consistent with the figures presented in the current year.
t) 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.
u) 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.
v) 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.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
34
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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.
w) Leases
Leases of property, plant and equipment where the Company bears substantially all the risks and benefits incidental to ownership of the
asset, are classified as finance leases.
Finance leases are capitalised, recorded as an asset and a liability equal to the present value of the minimum lease payments, including
any residual payments as determined by the lease contract. Leased assets are amortised on a straight line basis over the estimated
useful lives where it is likely that the Group will obtain legal ownership of the asset on expiry of the lease. Lease payments are allocated
over both the lease interest expense and the lease liability.
Lease payments for operating leases where substantially all the risks and benefits of ownership remain with the lessor are charged as
expenses in the periods in which they are incurred.
x) 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 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. The following sets out their assessment of the pronouncements that are relevant to the Company but applicable in future
reporting periods.
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
The Company has chosen not to early-adopt AASB 16. However, the Company has conducted a preliminary assessment of the impact of
this new Standard, as follows.
A core change resulting from applying AASB 16 is that most leases will be recognised on the balance sheet by lessees as the standard
no longer differentiates between operating and finance leases. An asset and a financial liability are recognised in accordance to this new
Standard. There are, however, two exceptions allowed: short-term and low-value leases.
Basis of preparation
The accounting for the Company's operating leases will be primarily affected by this new Standard.
AASB 16 will be applied by the Company from its mandatory adoption date of 1 July 2019. The comparative amounts for the year prior to
first adoption will not be restated, as the Company has chosen to apply AASB 16 retrospectively with cumulative effect. While the right-
of-use assets for property leases will be measured on transition as if the new rules had always been applied, all other right-of-use assets
will be measured at the amount of the lease liability on adoption (after adjustments for any prepaid or accrued lease expenses).
The Company's non-cancellable operating lease commitments amount to $25,600 as at the reporting date. Of this $25,600, there are no
short-term leases or low-value leases that will be recognised as expense in profit or loss on a straight-line basis.
The Company has performed a preliminary impact assessment and has estimated that on 1 July 2019, the Company expects to recognise
the right-of-use assets and lease liabilities of approximately $23,974 (after adjusting for prepayments and accrued lease payments
recognised as at 30 June 2019).
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
35
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Following the adoption of this new Standard, the Company's net profit after tax is expected to decrease by approximately $585 in 2020.
The repayment of the principal portion of the lease liabilities will be classified as cash flows from financing activities, thus increasing
operating cash flows and decreasing financing cash flows by approximately $14,087.
Given that the Company's activities as a lessor will not be materially impacted by this new Standard, the Company does not expect any
significant impact on its financial statement from a lessor perspective. Nonetheless, starting from 2020, additional disclosures will be
required.
Note 2: Remuneration of auditors
Audit services
JTP Assurance:
Audit and review of financial reports and other audit work under the Corporations Act 2001
Total remuneration for audit services
Other advisory services provided by firms associated with the audit firm
Jeffrey Thomas & Partners
Advice on taxation and other matters and review and lodgement of corporate tax returns
JT&P Corporate Advisers Pty Ltd
Investigating accountants report for the IPO Prospectus
Total remuneration
Note 3: Revenue and expenses from continuing operations
(a) Revenue
Interest received – bank deposits
R&D tax incentive1
Licence fees
Sales
Total revenue from continuing operations
2019
$
27,000
27,000
4,000
-
31,000
2018
$
27,000
27,000
5,470
15,000
47,470
2019
$
135,847
505,859
2,899
-
644,605
2018
$
130,073
337,666
2,574
4,210
474,523
1. During the three years ended 30 June 2019 and to date the Company has undertaken a number of its research activities overseas
as the necessary experience and facilities are not available in Australia. As a result, the Company lodged an Advanced Overseas
Finding with AusIndustry to seek approval to claim these costs as part of its R&D Incentive. AusIndustry initially disallowed this
claim and also indicated that they did not believe the Australian based activities qualified for the R&D Incentive, the Company
lodged an appeal. AusIndustry has now reviewed its decision and has accepted that majority of the Australian based activities do
qualify for the R&D Incentive, but not all. As a result of this treatment the estimated overseas costs on the project exceed the
estimated allowed Australian expenditure and therefore the overseas expenditure has still been disallowed. The Company and its
advisors still do not agree with this decision and have lodged a further appeal with the Administrative Appeals Tribunal. Given the
current position the Company has taken a conservative view and only recognised revenue for the R&D Incentive for the year ended
30 June 2019 based on the AusIndustry decision which excludes any overseas expenditure. The Company also lodged its income
tax return for the year ended 30 June 2018 and claimed the R&D Incentive on the basis approved by AusIndustry. The Company
received the R&D Incentive for the 2018 year during the reporting period and that amount ($386,160) less the prior year accrual of
$314,856 is included in current year revenue. If the Company is successful in its appeal additional revenue for the 2017, 2018 and
2019 financial years will be recognised in respect of the overseas activities at that time. It is anticipated that this matter should be
resolved during the 2020 financial year.
(b) Expenses
Employee salary and benefit expenses:
Salary and employee benefit expenses
Defined contribution superannuation expenses
Share based payments
Total employee salary and benefit expenses
Depreciation, amortisation and impairment of non-current assets:
Plant and equipment
License and registered patents
Total depreciation and amortisation expenses
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
2019
$
2018
$
658,455
63,656
69,989
792,100
8,613
36,943
45,556
383,094
32,521
11,263
426,878
5,056
36,943
41,999
36
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Foreign currency exchange differences:
Foreign currency exchange losses
Total foreign currency exchange differences
Operating expenses:
Operating lease expenses
Listing expenses1
2,424
2,424
1,165
1,165
1,600
-
-
299,505
1.
In accordance with Accounting Standards the Company has expensed the proportion of the capital raising costs incurred in relation
to Prospectus preparation on the basis of the shares on issue before and after the Listing. ASX Listing Fees have been expensed.
A total of $299,505 has been expensed from the proceeds of the Listing.
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
2019
$
2018
$
2,055,570
2,055,570
2,833,050
2,833,050
No. of Shares
No. of Shares
117,749,630
117,638,526
-
-
117,749,630
117,638,526
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.
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 13(c).
The 11,121,956 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 2019. 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 2019. Details relating to the options are set out in Note 13(b).
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
37
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 5: Cash and cash equivalents
Cash at bank
Deposit at call
Term deposits
2019
$
22,586
176,778
4,300,000
4,499,364
2018
$
6,120
300,432
6,400,000
6,706,552
Funds placed on term deposit are invested for a maximum of 90 days and therefore considered to be cash equivalents.
Note 6: Trade and other receivables
2019
$
R&D tax incentive
GST refund due
Other receivables
434,555
29,343
8,869
472,767
The balance of other receivables of $472,767 (2018: $368,359) is not past due and not considered impaired.
Note 7: Other current assets
Prepayments
Security deposits
Note 8: 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 9: 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 – 2019 ANNUAL REPORT
2019
$
96,131
74,200
170,331
2019
$
49,183
(16,471)
32,712
38,643
2,682
-
(8,613)
32,712
2019
$
557,818
(169,920)
387,898
424,841
-
(36,943)
387,898
2018
$
314,856
37,925
15,578
368,359
2018
$
58,499
70,000
128,499
2018
$
46,501
(7,858)
38,643
30,203
13,496
-
(5,056)
38,643
2018
$
557,818
(132,977)
424,841
461,784
-
(36,943)
424,841
38
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(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 10: Trade and other payables
Current
Trade creditors
Other creditors and accruals
Total trade and other payables
Note 11: Financial liabilities
Current
Amount payable for IP licences
Non-current
Amount payable for IP licences
2019
$
123,238
199,249
322,487
2019
$
-
-
2018
$
184,793
308,944
493,737
2018
$
-
-
150,000
150,000
150,000
150,000
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. Following the successful listing of the Company the payment for $226,000 became due and was paid.
Note 12: Employee benefits
Annual leave
Short-term incentive
2019
$
46,179
94,945
141,124
2018
$
23,569
92,281
115,850
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
39
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 13: 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:
2019
No.
2018
No.
2019
$
2018
$
At the beginning of the reporting period
127,724,471
177,470,133
11,768,501
5,208,852
Share buyback approved at the General meeting held
on 6 September 2017
Share consolidation approved at the AGM held on 6
September 2017
Shares issued on exercise of options1
Share issued on conversion of options1
Shares issued at 20 cents pursuant to ASX listing
Transaction costs arising on issue of shares
Shares issued pursuant to the Loan Share Plan (LSP)
Re-allocation of value of shares issued under the LSP
which vested during the period
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 (ASIC reconciliation)
-
(2,117,675)
-
5,866
-
-
-
1,277,260
-
-
129,007,597
117,885,641
11,121,956
129,007,597
-
129,007,597
(88,051,217)
1,150,000
2,023,230
35,500,000
-
1,750,000
-
-
127,724,471
117,616,471
10,108,000
127,724,471
-
127,724,471
-
-
1,173
-
-
-
98,935
34,525
(98,935)
11,804,199
11,804,199
884,810
12,689,009
1,431,606
14,120,615
-
-
63,800
404,646
7,100,000
(1,008,797)
252,500
-
(252,500)
11,768,501
11,768,501
820,400
12,588,901
1,431,606
14,020,507
1.
In order to undertake the Listing, the Company was required to ensure that all then existing options had been exercised, converted
into shares or lapsed. These adjustments reflect the exercise and conversion of the then existing options:
a. Net cash proceeds $63,800 for the exercise of 1,150,000 options.
b. Reduction in reserves ($139,301) and increase in transaction costs ($265,345) totalling $404,646 following the conversion
of 3,274,201 options.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
40
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(b) Movements in share options over ordinary shares during the year were as follows:
Balance at beginning of the year
Consolidation approved at AGM held on 6 September 2017
Granted during the year2,3
Exercised during the year4
Expired during the year4
Issued during the period4
Balance at end of the year
Terms of options issued
Options issued – 24 November 2017
Options Issued
2,000,000
Exercise Price
20 cents
2019
No.
2018
No.
27,056,730
-
-
(5,866)
(25,050,864)
2,000,000
Value
$
113,600
8,848,400
(4,424,199)
2,000,000
(1,150,000)
(3,274,201)
25,056,730
27,056,730
Expiry
24/11/20
1. Share options granted carry no rights to dividends and no voting rights.
2. The Broker Options were issued pursuant to the Prospectus dated 5 October 2017.
3. The valuations of options issued are determined by using an industry standard option pricing model taking into account the terms
4.
and conditions upon which the instruments were issued.
25,056,730 Loyalty options were issued to all shareholders on a 1:5 basis pursuant to the Prospectus dated 1 March 2018. These
options expired on 4 December 2018. Prior to the expiry of the options, 5,866 were exercised.
(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 for shares to be issued for a nominal value or for non-recourse, interest free loans to
be provided to eligible participants to acquire shares under the plan. Shares issued under the plan vest in accordance with the Executive
Remuneration Strategy and Structure (refer to Remuneration Report for details).
When as issue is made at nominal value it is expensed over the vesting period. If the participant leaves the Company, any shares that
have not vested are bought back by the Company and cancelled. When an issue is made, and a loan is provided, 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. 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.
Shares in existence in the current and past period under the Loan Share Plan:
Following the consolidation of the Company’s equity in September 2017, all share numbers are reported on a post consolidation basis.
Tranche 1
Tranche 2
Tranche 3a
Tranche 3b
Tranche 4a
Tranche 4b
Tranche 5a
Tranche 5b
Tranche 61
Tranche 7
Tranche 8a
Tranche 8b
Tranche 8c
Loan Share Plan Tranche
Issue date
29/06/2015
30/06/2016
11/05/2017
11/05/2017
26/07/2017
26/07/2017
04/12/2017
04/12/2017
06/12/2018
06/12/2018
06/12/2018
06/12/2018
06/12/2018
Vesting Date
29/06/2015
30/06/2016
11/11/2017
11/05/2018
26/01/2018
26/07/2018
04/06/2018
04/12/2018
01/01/2019
30/06/2021
30/06/2019
30/06/2020
30/06/2021
Loan expiry
date
29/06/2022
30/06/2023
11/05/2024
11/05/2024
26/07/2024
26/07/2024
04/12/2024
04/12/2024
N/A
06/12/2025
N/A
N/A
N/A
Unit Price
$
0.034
0.0334
0.0622
0.0622
0.0922
0.0894
0.1314
0.1275
0.1311
0.0760
0.1311
0.1311
0.1311
Number
5,000,000
608,000
1,562,500
1,562,500
187,500
187,500
500,000
500,000
263,304
696,722
105,745
105,745
105,744
11,385,260
Fair Value at
Issue Date
$
170,000
20,307
97,188
97,188
17,288
16,763
65,700
63,750
34,525
52,978
13,866
13,866
13,865
677,284
1. The Tranche 6 shares were issued in respect of the executives’ short-term incentive for the 2018 financial year and vested on
1 January 2019.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
41
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(d) Fair values of share based payments
The fair value of all loan shares granted to Directors, other key management personnel, other employees and consultants have been
calculated using an industry standard 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.
Following the consolidation of the Company’s equity in September 2017, all share numbers and prices are reported on a post consolidation
basis.
Equity Instrument
Tranche 1
Tranche 2
Tranche 3
Tranche 4
Tranche 5
Tranche 7
Loan
/Exercise
price
$
0.05
0.05
0.092
0.14
0.20
0.142
Share
price on
issue Date
$
0.05
0.05
0.092
0.14
0.20
0.142
Volatility
Maturity
date
Time to
maturity
74%
74%
74%
74%
74%
74%
29/06/2022
30/06/2023
11/05/2024
26/07/2017
04/12/2017
06/12/2018
7 years
7 years
7 years
7 years
7 years
7 years
Risk free
interest
rate
2.61%
1.81%
2.39%
2.46%
2.36%
2.75%
Expected
dividend
yield
-
-
-
-
-
-
Share Tranches 6 and 8 were issued for nominal consideration and valued at the 5 day VWAP on the day of issue, 13.11 cents each.
(e) Share based payments
The amount expensed in relation to equity settled share based payments to the statement of profit or loss and other comprehensive
income was $96,551 (2018: $293,471).
Note 14: Reserves and accumulated losses
Note
(a)
(b)
Share options reserve
Share loan plan reserve
Total reserves
(a) Share option reserve
Opening balance 1 July
Value of Broker options issued pursuant to the Prospectus dated
5/10/17
Re-allocation of value of options exercised and converted during the
period1
Closing balance
(b) Share loan plan reserve
Opening balance 1 July
Value of shares recognised over vesting period 1
Re-allocation of value of shares issued under the LSP which vested
during the period
Closing balance
2019
$
113,600
582,249
695,849
2018
$
113,600
520,223
633,823
2019
$
2018
$
113,600
139,301
-
-
113,600
2019
$
520,223
96,551
(34,525)
582,249
113,600
(139,301)
113,600
2018
$
226,752
293,471
-
520,223
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, shares issued for nominal value vest or the options are exercised.
Amounts are transferred to accumulated losses when the shares or options are cancelled.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
42
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(c) Movement in accumulated losses
Opening balance 1 July
Net loss attributable to the members of the parent entity for the period
Closing balance
Note 15: Cash flow Information
(a) Reconciliation of cash
Cash at bank
Deposit at call
Term deposits
Total cash and cash equivalents
(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
Employee benefits
Changes in assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in other current assets
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 16: Commitments and contingencies
(a) Capital expenditure commitments
2019
$
(5,495,017)
(2,055,570)
(7,550,587)
2018
$
(2,661,967)
(2,833,050)
(5,495,017)
2019
$
22,586
176,778
4,300,000
4,499,364
2018
$
6,120
300,432
6,400,000
6,706,552
(2,055,570)
(2,833,050)
45,556
96,551
72,746
(104,408)
(37,632)
(218,722)
(2,201,479)
41,999
293,471
69,710
(214,797)
(58,499)
327,712
(2,373,454)
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 $Nil (2018: $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 three years ended 30 June 2019 and to date the Company has undertaken a number of its research activities overseas as the
necessary experience and facilities are not available in Australia. As a result, the Company lodged an Advanced Overseas Finding with
AusIndustry to seek approval to claim these costs as part of its R&D Incentive. AusIndustry initially disallowed this claim and also indicated
that they did not believe the Australian based activities qualified for the R&D Incentive, the Company lodged an appeal. AusIndustry has
now reviewed its decision and has accepted that majority of the Australian based activities do qualify for the R&D Incentive, but not all.
As a result of this treatment the estimated overseas costs on the project exceed the estimated allowed Australian expenditure and
therefore the overseas expenditure has still been disallowed. The Company and its advisors still do not agree with this decision and have
lodged a further appeal with the Administrative Appeals Tribunal. Given the current position the Company has taken a conservative view
and only recognised revenue for the R&D Incentive for the year ended 30 June 2019 based on the AusIndustry decision which excludes
and overseas expenditure. The Company also lodged its income tax return for the year ended 30 June 2018 and claimed the R&D
Incentive on the basis approved by AusIndustry. The Company received the R&D Incentive for the 2018 year during the reporting period
and that amount ($386,160) less the prior year accrual of $314,856 is included in current year revenue. If the Company is successful in
its appeal additional revenue for the 2017, 2018 and 2019 financial years will be recognised in respect of the overseas activities at that
time. It is anticipated that this matter should be resolved during the 2020 financial year.
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
43
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 17: 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 13 and 14 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.
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
(i) Debt is defined as long-term and short-term borrowings.
(ii) Equity includes all capital and reserves as detailed in Note 13 and 14.
(b) Financial risk management objectives
Note
5
13,14
2019
$
-
4,499,364
4,499,364
4,949,461
-
2018
$
-
6,706,552
6,706,552
6,907,307
-
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 entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial liabilities
Trade and other payables
Financial liabilities
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
Note
5
6
7
10
11
2019
$
4,499,364
472,767
170,331
5,142,462
322,487
150,000
472,487
2018
$
6,706,552
368,359
128,499
7,203,410
493,737
150,000
643,737
44
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(c) 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. 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.
(d)
Interest rate risk management
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 2019 would increase/decrease by $135,847 (2018: $130,073).
(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 2019
Financial Liabilities
Trade and other payables
Financial liabilities
30 June 2018
Financial Liabilities
Trade and other payables
Financial liabilities
0 -12 months
Maturing 1 to 3 years
Total
322,487
-
322,487
493,737
-
493,737
-
150,000
150,000
-
150,000
150,000
322,487
150,000
472,487
493,737
150,000
643,737
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 entity’s foreign currency risk denominated financial assets and financial liabilities at the reporting date are as follows:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
30 June 2019
30 June 2018
USD
GBP
USD
GBP
-
-
13,550
-
-
-
-
-
69,337
-
-
-
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 2019, 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:
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
45
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
30 June 2019
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Financial liabilities
30 June 2018
Financial Assets
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Trade and other payables
Financial liabilities
(g) Price risk
- 10%
Profit
$
Equity
$
+ 10%
Profit
$
Equity
$
-
-
-
(2,147)
-
(2,147)
-
-
-
(2,147)
-
(2,147)
-
-
-
-
(10,424)
-
(10,424)
(10,424)
-
(10,424)
-
-
-
1,756
-
1,756
-
-
8,528
-
8,528
-
-
-
1,756
-
1,756
-
-
8,528
-
8,528
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 18: 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. Roger McPherson
Position
Non-Executive Chairman
Managing Director and Chief Executive Officer
Non-Executive Director
Executive Director – Research and Development
Non-Executive Director
Chief Financial Officer and Company Secretary
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
46
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
(b) Key management personnel compensation
The aggregate compensation made to Directors and other members of key management personnel of the Company is set out below:
Short term employee benefits
Post-employment benefits
Equity based payments
2019
$
752,010
65,681
69,169
886,860
2018
$
843,676
51,331
234,556
1,129,563
Further disclosures regarding key management personnel compensation are contained within the Remuneration Report.
Note 19: Related party transactions
(a) Receivable from and payable to related parties
The following balances were outstanding at 30 June 2019 in relation to transactions with related parties:
Current payables
Trade payables to directors or their related entities
2019
$
-
2018
$
-
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 18 and the Remuneration Report.
Note 20: 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 21: Leases
Finance leases
The Group does not currently have any finance leases in place.
Operating leases
Lease arrangements
Bio-Gene’s office space at 456 Lonsdale Street, Melbourne, Australia, has a lease term extending to 31 May 2021. The Company can
terminate the lease with two months notice, prior to every six month anniversary of the agreement which commenced on 1 June 2019.
The Company does not have an option to purchase the property covered by the lease.
Non-cancellable operating lease commitments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Total
2019
$
14,400
11,200
25,600
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
2018
$
-
-
-
47
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Note 22: Events occurring after the reporting period
No matter or circumstance has arisen since 30 June 2019, 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 – 2019 ANNUAL REPORT
48
DECLARATION BY DIRECTORS
FOR THE YEAR ENDED 30 JUNE 2019
The directors of the company declare that:
1. The financial statements and notes, as set out in the following pages, are in accordance with the Corporations Act 2001:
comply with applicable Accounting Standards and the Corporations Regulations 2001; and
a)
b) give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year ended on that date of the
company.
2.
In the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable.
3. The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the board of directors.
Mr. Donald Brumley
Director
Date: 22 August 2019
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
49
INDEPENDENT AUDITOR’S REPORT
10th Floor, 446 Collins Street
Melbourne, VIC 3000
P.O. Box 627, Collins Street West E: enquiries@jtpassurance.com.au
VIC 8007
T: +61 3 9602 1494
F: +61 3 9602 3606
www.jtpassurance.com.au
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Bio-Gene Technology Limited (the Company), which comprises the statement of
financial position as at 30 June 2019, the statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of Bio-Gene Technology Limited., is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the company’s financial position as at 30 June 2019 and of its financial performance
for the year then ended;
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
R&D Tax Incentive (refer to note 3)
Under the research and development (R&D) tax incentive scheme, the Company receives a 43.5% refundable tax offset
of eligible expenditure if its turnover is less than $20 million per annum, provided it is not controlled by income tax exempt
entities. An R&D application is filed with AusIndustry and based on the outcome of this filing, the Company receives the
incentive in cash. The receivable at year-end for the incentive was $434,555. This represents an estimated claim for the
period 1 July 2018 to 30 June 2019.
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INDEPENDENT AUDITOR’S REPORT
We focused on the R&D tax incentive due to the material nature of the receivable and because there is a degree of
judgement and interpretation of the R&D tax legislation required in assessing the eligibility of the R&D expenditure under
the scheme. There is an inherent level of subjectivity in the R&D incentive in regard to the level of receivable recognised
and the recognition of the related income.
How our audit addressed the key audit matter
To evaluate the R&D tax incentive, we performed the following procedures, amongst others:
- Discussion with management to determine an understanding of the R&D environment the business operates in and
to understand the process used to estimate the R&D tax incentive.
- Comparing the estimates made in previous years to the amount of cash physically received after year end.
-
Testing the mathematical accuracy of the calculation and agreeing inputs to supporting documentation.
- Reviewing the classification of expenses included in the R&D claim to ensure that they meet the criteria of R&D
expenditure
- Reviewing the work of experts who assisted the company in completing the claim.
-
Assessing the adequacy of the related disclosures within the financial statements and reviewing accounting treatment
in line with Australian Accounting Standards.
Share Options and Equity Transactions (refer to note 13)
The Company issued shares to executive directors and senior management under a share based compensation plan.
Further to this, loyalty options were issued to shareholders. These arrangements have differing terms and conditions that
give rise to different accounting outcomes.
Share based payment arrangements require judgemental assumptions including volatility rate and expected life in
determining the fair value of the arrangements and the expensing of that fair value over the estimated service period.
In recognising these transactions, the Company performed a valuation to calculate the accounting expense. Details of the
share based payment arrangements offered to directors, executive management, third parties and shareholders, are
disclosed in the Remuneration Report and note 13 to the financial report.
The audit of the share based payment arrangements and the associated expense is a key audit matter due to the
judgements required in determining fair value.
How our audit addressed the key audit matter
To evaluate the share transactions, we performed the following procedures, amongst others:
-
In performing our procedures we assessed the terms of the share based payment arrangements issued during the
period including review of documentation issued to shareholders.
- We assessed the methodology used by the Company in valuing the share options.
- We assessed the expense recorded on the consolidated statement of comprehensive income.
- We assessed whether the disclosure in note 13 in relation to the arrangements was adequate and whether it complied
with Australian Accounting Standards.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the
Company’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report
thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the financial report
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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INDEPENDENT AUDITOR’S REPORT
or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free
from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do
so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian
Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/Home.aspx. This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 13 to 22 of the directors’ report for the year ended 30 June
2019. In our opinion, the Remuneration Report of Bio-Gene Technology Ltd., for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Signed at Melbourne this 22nd day of August 2019
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
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SHAREHOLDER INFORMATION
Substantial shareholders
A.
The Company’s Holders of Relevant Interests as notified by ASX Substantial Shareholders and the number of shares in which they have
an interest as disclosed by notices received under Part 6.7 of the Corporations Act 2001 as at 19 August 2019 are:
Name
Kevin Nolan Rumble
Ordinary Shares
8,671,373
B.
Number of holders of equity securities and voting rights
Number of holdings as at 19 August 2019
The voting rights attaching to each class of equity securities are:
Ordinary Shares (i)
Share Options (ii)
815
11
(i) Ordinary shares
On a show of hands, every member present at a meeting, in person or by proxy, shall have one vote and upon a poll each share shall
have one vote.
(ii) Options
No voting rights.
C.
Distribution of equity securities
Distribution of holders of equity securities as at 19 August 2019:
No. of holders
1
1,001
5,001
10,001
100,001 and over
-
-
-
-
1,000
5,000
10,000
100,000
Number of holders of less than a marketable parcel of shares
D.
20 largest holders of quoted securities
Ordinary Shares
18
90
96
379
232
815
74
Options
0
0
1
5
5
11
The names of the 20 largest shareholders of each class of equity security as at 19 August 2019 are listed below:
No. Name
Invia Custodian Pty Limited
1. Rumble Nominees Pty Ltd
2. Magdajano Pty Ltd
3.
4. Dead Knick Pty Ltd
5.
6. Victor Rosenberg & Jacqueline Rosenberg
7. David Gregory Greer
8. Kevin Nolan Rumble
9. Mark Douglas Holmes
Invia Custodian Pty Ltd
10. Arision Pty Limited
11. Dr Russell Kay Hancock
12.
Inverness Capital Pty Ltd
13. Mr Darren Ronald Patterson
14. Mr Paul Henri Veron & Mrs Julie Anne Veron
15. Xeen Pty Ltd
16. Richard Andrew Jagger
17. Max Kay & Norma Kay
18.
John W King Nominees Pty Ltd
19. Healthville Investments Pty Ltd
20. Altor Capital Management Pty Ltd
No. of shares held
6,651,373
2,870,000
2,600,000
2,578,667
2,500,000
2,177,000
2,140,000
2,020,000
2,006,000
2,000,000
2,000,000
1,732,384
1,700,000
1,511,899
1,499,750
1,485,514
1,392,640
1,362,500
1,352,004
1,250,000
42,829,731
% of total shares
5.16
2.22
2.02
2.00
1.94
1.69
1.66
1.57
1.55
1.55
1.55
1.34
1.32
1.17
1.16
1.15
1.08
1.06
1.05
0.97
33.21
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SHAREHOLDER INFORMATION
E.
Shares subject to restriction arrangements
The total number of shares subject to restriction arrangements is 11,121,956 shares. These shares were all issued under the Loan Share
Plan and the escrow period ends on the latter of the date of repayment of the associated loan or as outlined below:
Date shares issued
29/06/2015
30/06/2016
11/05/2017
11/05/2017
26/07/2017
26/07/2017
04/12/2017
04/12/2017
06/12/2018
06/12/2018
06/12/2018
Vesting date
Number under shares
29/06/2015
30/06/2016
11/11/2017
11/05/2018
26/01/2018
26/07/2018
04/06/2018
04/12/2018
30/06/2021
30/06/2020
30/06/2021
5,000,000
608,000
1,562,500
1,562,500
187,500
187,500
500,000
500,000
696,722
211,490
105,744
11,121,956
BIO-GENE TECHNOLOGY LIMITED – 2019 ANNUAL REPORT
54
BOARD OF DIRECTORS AND COMPANY PARTICULARS
Directors
❖
❖
❖
❖
❖
Donald Brumley
Robert Klupacs
Richard Jagger
Peter May
Kevin Rumble
Secretary
❖
Roger McPherson
Australian Company Number
071 735 950
Australian Business Number
32 071 735 950
Registered Office
Level 6
400 Collins Street
Melbourne, VIC 3000
Business Address
Level 11
456 Lonsdale Street
Melbourne, VIC 3000
Tel: +61 3 9068 1062
Email: bgt.info@bio-gene.com.au
Website
www.bio-gene.com.au
Auditors
JTP Assurance
Level 10
446 Collins Street
Melbourne, VIC 3000
Lawyers
Quinert Rodda & Associates Pty Ltd
Level 6
400 Collins Street
Melbourne, VIC 3000
Share Registry
Automic Pty Ltd
Level 5
126 Phillip Street
Sydney, NSW 2000
Securities Quoted
Australian Securities Exchange (ASX)
Ordinary Fully Paid Shares (Code: BGT)
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