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Annual Report 2020
BIO-GENE TECHNOLOGY LIMITED – 2020 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.
Contents
Who We Are 2
Chairman’s and CEO’s Report 3
Financial Report 5
BIO-GENE TECHNOLOGY LIMITED – 2020 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 2020 Annual Report.
Bio-Gene achieved a number of significant milestones throughout the past year. Firstly, we were successful in raising significant funding
from government sources as well as completing a capital raise through existing and new shareholders, details of which are outlined
below. As of June 30, we had $5.5 million cash on hand, which extends our runway well beyond 12 months - an important position to be
in given these trying times - and allows us to continue moving forward with the commercialisation of our technology.
During the past 12 months, we have made excellent progress with our commercialisation activities which resulted in two evaluation
projects. The first of these is a four-way collaborative research program relating to stored grain pest control. The partnership includes
Bio-Gene; BASF, the world’s leading chemical company; GRDC, Australia’s national grains research, development and extension
investment body; and Queensland Department of Agriculture and Fisheries (DAF), recognised experts in the field of stored grain pests.
Having the involvement of BASF and GRDC in this project is exciting to Bio-Gene as it offers third-party validation of our technology and
identifies the opportunity for commercialisation by having both the industry and a commercial partner involved from an early stage.
The research program began in January 2020 and consists of three stages, the first of which was completed in April 2020. Stage 2 is
due to be completed early September, whereupon assessment of the data is made before the commencement of stage 3. DAF have
done a terrific job of staying on track with these studies, despite the distractions and restrictions of the COVID-19 pandemic.
The second partnership, which was announced in April 2020, is with Clarke Mosquito Control Inc. (Clarke) to develop both Flavocide
and Qcide for use in public health mosquito control in the Americas. Clarke, which is based in the US, is the largest vertically integrated
company serving the regional public health mosquito control market. Building on their initial testing, the next stage is to develop specific
formulations to identify the most suitable solutions for different market applications. This agreement with Clarke has the opportunity to
expand into other markets and is very valuable for discussions with other stakeholders to further develop commercial opportunities in
the public health space.
We have continued to engage with new companies to facilitate internal testing of our products, with the aim of replicating the Clarke and
BASF/GRDC projects into new market segments. Bio-Gene, together with these international companies, have agreed on specific
testing protocols and target pests, and we have ensured that we can access and discuss ongoing results with the various R&D divisions
whilst protecting our Intellectual Property throughout the process.
During the year the Company announced positive results from its residual testing of Flavocide in grain storage, which demonstrated the
ability for Flavocide to meet the key industry standard for any new grain protectant to enter the market.
In addition, the Company continued its work at Purdue University and was delighted to announce a globally significant breakthrough
with trial results that confirmed Flavocide can control resistant strains of the Anopheles gambiae mosquito. The Company has now
demonstrated Flavocide activity against resistant populations of the major mosquito species that carry diseases of such global
importance as Malaria, Zika virus and Dengue fever.
In addition, Bio-Gene commenced eco-toxicity studies with Flavocide with positive results. These studies are pivotal to further profiling
and understanding the safety profile of products containing flavesone when released into the environment, which is an important
component of our registration process.
Complementing our testing work, we have advanced our studies of Flavocide’s Mode of Action. We have also progressed our body of
work with collaborators to continue to improve manufacturing systems for both Qcide and Flavocide.
Our I.P. has been further supported by advancing the two new patent applications into the country by country examination phase. If
granted, these two patents will provide protection to at least 2038.
On 26 May 2020, Bio-Gene announced the successful completion of a $2.4 million capital raise via a placement to sophisticated and
professional investors at $0.155 per share. Combined with the proceeds from the Share Purchase Plan of $428,000, Bio-Gene raised a
total of $2.8 million.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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In addition, Bio-Gene secured non-dilutive funding from government sources of nearly $1 million. Pleasingly this amount included the
proceeds of the settlement with AusIndustry in respect of the R&D Incentive claim relating to the three years ending 30 June 2019 which
resulted in additional refunds totalling $359,140.
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 who 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
FY2021.
Don Brumley
Non-Executive Chairman
Richard Jagger
Chief Executive Officer and Managing Director
BIO-GENE TECHNOLOGY LIMITED – 2020 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
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25
26
27
28
29
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49
50
54
56
BIO-GENE TECHNOLOGY LIMITED – 2020 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 2020.
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.
On 29 November 2019, Kevin Rumble advised the Board of his plan to retire at the 2020 Annual General Meeting.
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 financial position
A successful capital raising involving new and existing shareholders, as well as significant non-dilutive funding from government sources
has put us in a very strong financial position going forward with $5.5 million as of June 30, 2020.
Review of operations
Other key achievements during the period include:
➢ Crucial advancements on our commercialisation strategy with the execution of two evaluation projects (BASF/GRDC and Clarke)
and a number of additional material transfer agreements (MTAs) signed with international companies
➢ Several international companies of significance to our key market segments have conducted in-house testing of Flavocide and
Qcide
➢ Advancement of Bio-Gene’s research and development programs for both Flavocide and Qcide, confirming our relevance to major
insecticide markets globally
➢ Advancement of the toxicology studies for Flavocide and physico-chemical studies for Qcide which are important steps towards
completing our registration enabling studies
➢ Our IP position continues to strengthen with the two new patents moving into the country by country phase of examination. In
addition, our intellectual property regarding manufacturing techniques offers significant value to the company
Commercial Advancements
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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
As a result of this process Bio-Gene was pleased to announce two evaluation projects during the year. The first of these is a four-way
collaborative research program relating to Flavocide for stored grain pest control. The four-way partnership includes Bio-Gene; BASF,
the world’s leading chemical company; GRDC, Australia’s national grains research, development and extension investment body; and
Queensland Department of Agriculture and Fisheries (DAF), recognised experts in the field of stored grain pests. The research program
which began in January 2020 is assessing Flavocide in combination with other chemical groups for control of the full range of key pests.
In April 2020, Bio-Gene announced that the program had completed Stage 1, which identified the optimum combination of Flavocide
with existing compounds for control of the most common, and highly resistant stored grain pest, the Lesser Grain Borer. The results of
this stage guided Stage 2 treatment modifications for evaluation on other major pests of stored grain, which collectively aim to develop
one product combination to control the five significant pest species. Stage 2 commenced in May and is anticipated to take approximately
three months to complete. Stage 3, comprising of field trials, will then follow to determine the residual efficacy of the optimum product
combination.
Bio-Gene announced that it had signed its second partnership, in April 2020, with Clarke Mosquito Control Inc. (Clarke) to develop both
Flavocide and Qcide for use in public health mosquito control in North, South and Central America. The partnership follows positive
results from their internal testing of Flavocide and Qcide earlier in the year. The next stage is to develop specific products which may
incorporate other chemistries to identify the most suitable formulations for different market applications. This agreement with Clarke has
the opportunity to expand into other markets and is very valuable for discussions with other stakeholders including for example NGOs
and philanthropic organisations, to further develop commercial opportunities in the public health space.
Entering into other evaluation partnerships is an ongoing process with a number of new companies identified and engaged throughout
the year, which should lead to the establishment of further 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
Following the completion of its initial program with the Queensland DAF, to assess Flavocide against a range of grain storage pests,
Bio-Gene subsequently expanded this program to undertake residual studies in respect of Flavocide. This is an important area as it
points to commercial viability and, in December 2019, Bio-Gene announced results from its stored grain trial that confirmed Flavocide
successfully controlled the Lesser Grain Borer, over a nine-month period, which is considered a key industry standard for any new grain
protectant to enter the market. In March 2020, Bio-Gene announced final results from this trial, showing Flavocide continued to control
this key stored grain pest over 13 months.
The residual efficacy over 13-months is highly encouraging because it further strengthens Bio-Gene’s technology as an effective
alternative in stored grain applications. Furthermore, these results serve as an excellent basis for the collaborative trial program with
BASF, Queensland DAF and GRDC.
Mosquitos
In December 2019, Bio-Gene was delighted to announce a globally significant breakthrough with trial results, being conducted at
Purdue University, that confirmed Flavocide can control the Anopheles gambiae mosquito species which carries Malaria and is
increasingly resistant to commonly used insecticides. These laboratory trial results demonstrate that Flavocide is active against resistant
strains of the Anopheles gambiae mosquito. Combined with previous trial work, the company has now demonstrated Flavocide activity
against resistant populations of the major mosquito species that carry diseases of such global importance as Malaria, Zika virus and
Dengue fever.
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 understanding how best to utilise the
insecticidal activity including identifying the best multiple compound combinations using the molecule.
The data generated as part of these new studies will ultimately be used to support a submission for a new classification of insecticide
with the Insect Resistance Action Committee (IRAC) prior to product registration.
The research undertaken to date has supported Bio-Gene’s 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
The company has continued the scale-up program of Flavocide manufacture, under a development agreement with Boron Molecular Pty
Ltd. Phase One of the project has been completed, which has delivered an improved standard operating procedure for synthesis of the
technical grade material with improvements in yield and purity. The next phase will involve production on a larger scale with dedicated
production equipment, which also aims to produce batch samples to demonstrate consistency of production and to provide technical
grade material suitable for use in toxicological and product chemistry testing.
Toxicology testing
Bio-Gene continued with its de-risking approach to its toxicology program with an initial focus on eco-toxicity. Positive results were seen
from preliminary aquatic eco-toxicity studies, performed on three species, Guppy (Poecilia reticulata), Water flea (Daphnia magna) and
freshwater algae (Pseudokirchneriella subcapitata) which represent key target species to indicate the environmental impact from the
introduction of a pesticide to an aquatic environment.
Preliminary results from an avian eco-toxicity study were also announced, again undertaken with technical grade flavesone, the active
constituent contained in Flavocide. This study was performed on Japanese Quail (Coturnix japonica); representing a key test species to
assess the environmental impact from the introduction of an insecticide to an outdoor environment. The study suggests that Flavocide
would be classified within the toxicity range of currently reregistered insecticides in relation to this species.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
All of these studies are pivotal to further profiling and understanding the safety profile of future products containing flavesone when
released into the environment, with particular relevance to outdoor uses such as for public health and crop protection.
Qcide™
Manufacturing
During the year the Company has continued to develop its eucalypt tree plantations in North Queensland and improve extraction
techniques of the Qcide natural oil. The collaboration with James Cook University (JCU) to develop a tissue culture system for the
Eucalyptus cloeziana chemotype to support expansion of tree plantations and scale up Qcide oil production continued with
establishment of several lines of superior trees in culture.
In addition, JCU has also commenced a laboratory-based engineering program aimed at improving oil extraction from harvested plant
biomass and thereby 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.
A eucalyptus harvest and associated experimentation programs were completed during the year which demonstrated further improved
extraction techniques of oil from biomass.
Flying Insects
Discussions with companies involved in insect control in consumer markets have continued to highlight significant interest in Qcide as a
natural insecticide for the control of household pests, in particular flying insects, such as houseflies and mosquitoes. The Company has
therefore continued efficacy studies to demonstrate the effectiveness of Qcide for these uses.
Testing carried out by University of Technology Sydney (UTS), evaluated Qcide against houseflies both alone and in combination with
pyrethrins, a natural compound used in the consumer market. This program demonstrated improvements in knockdown and mortality
with a combination product that offers potential for use as an effective ‘flying-insect-killer’ (FIK) product. Further testing is planned
against resistant strains of housefly to further demonstrate Qcide’s position in the consumer market.
Purdue University completed efficacy testing of Qcide against the Aedes aegypti mosquito that also evaluated the synergistic action
when combined with other insecticides. Findings demonstrated dose-mortality and mortality-over-time activity against both larvae and
adult stages including against synthetic pyrethroid (SP) resistant strains. Dose-mortality data also supported potential use of Qcide as a
synergist when used in combination with SPs.
Physico-chemical testing & registration package
A series of tests were undertaken by contract laboratories to determine physico-chemical properties of Qcide oil as part of the product
chemistry regulatory package and to assist in other studies associated with production and use of Qcide oil. Properties defined included
pH, solubility in water & solvents, viscosity, boiling point and flash point.
Intellectual Property Position
An important component of Bio-Gene’s value proposition is its Intellectual Property. The Company submitted two additional provisional
patent applications in 2017 and one in 2018. These cover unique inventions as part of the Company’s strategy to provide added
protection to its technology and therefore enhanced value to potential customers. As part of the global patent application process the
Company has now entered the specific country by country patent examination phase for the initial two of these patents, which 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 regulatory and commercialisation progress.
Improvement of the financial position of the Company
On 26 May 2020, Bio-Gene announced the successful completion of a $2.4 million capital raise via a placement to sophisticated and
professional investors at $0.155 per share. Combined with the proceeds from the Share Purchase Plan of $428,000, Bio-Gene raised a
total of $2.8 million.
In addition, Bio-Gene secured non-dilutive funding from government sources of nearly $1 million which included the R&D Tax Incentive,
the Export Market Development Grant and COVID-19 related government stimulus measures. Pleasingly this amount also included the
proceeds of the settlement with AusIndustry in respect of the R&D Incentive claim relating to the three years ending 30 June 2019 which
resulted in additional refunds totalling $359,140.
Through effective capital management, Bio-Gene has been able to further its development program and engage with potential
commercial partners during the year.
At the end of the year, Bio-Gene held $5.5 million in cash which, based on current plans, provides the Company with sufficient cash for
well in excess of 12 months.
COVID-19
To date COVID-19 has had no significant impact on the Company’s business processes or commercialisation strategy. However, due
to continued government lockdowns in various jurisdictions the pandemic has resulted in delays in some of the research programs.
Pleasingly, at this stage there has not been an impact on the research work being undertaken by Queensland DAF in relation to the
collaborative project with BASF and GRDC on grain storage pests.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
Financial summary
The financial results of the Company for the year ended 30 June 2020 are summarised as follows:
Statement of financial position:
➢ Cash and term deposits held of $5,521,868 (2019: $4,499,364) at reporting date. This increase represents the Company’s capital
raising offset by the 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 $1,933,099 (2019: $2,055,570).
➢ Total revenue including other income during the period was $1,136,609 (2019: $644,605). This revenue included the R&D Tax
Incentive of $784,785 (2019: $505,859), Government grants of $64,549 (2019:$Nil), Government stimulus $100,000 (2019:$Nil),
Research Collaboration receipts of $120,000 (2019 $Nil) interest of $64,480 (2019: $135,847) and Licence Fees of $2,795 (2019:
$2,899).
➢ Total operating expenses for the period were $3,069,709 (2019: $2,700,175). Research and development costs have been
expensed in the year in which they were incurred. The increase in expenditure is primarily due to the cost of advancing patents to
national phase.
➢ Basic and diluted net loss per share decreased to 1.62¢ (2019: 1.75¢) due to the decrease of the loss.
Statement of cash flows:
➢ The Company’s cash outflow from operations over the period was $1,644,691 (2019: $2,201,479).
Capital Raising
During the year Bio-Gene undertook a Share Placement and conducted a Share Purchase Plan (SPP) that were announced in May
2020. The Share Placement and SPP raised a total of $2,828,000.
At 30 June 2020 the Company had 151,116,276 (2019: 129,007,597) shares on issue. Refer to Note 15(a) for further detail of
movements in issued capital.
Earnings per share
Basic loss per share from continuing operations
Basic diluted loss per shares from continuing operations
Dividends
2020
(1.62¢)
(1.62¢)
2019
(1.75¢)
(1.75¢)
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 2020.
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.
Significant changes in state of affairs
Other than as detailed in this Annual Report there were no significant changes to the state of affairs of Bio-Gene Technology Limited
during the year.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
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.
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.
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 2020 is included in this report.
Auditor
JTP Assurance continues in office in accordance with Section 327 of the Corporations Act 2001.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
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DIRECTORS’ REPORT
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
Total remuneration
2020
$
28,000
28,000
2019
$
27,000
27,000
5,800
4,000
33,800
31,000
No officers were previously partners of the audit firm JTP Assurance.
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.
Options issued
On 18 September 2019 the Company issued 2,000,000, options for corporate advisory and general corporate services.
Details of options currently on issue are:
Broker Options - issued 24 November 2017
Options – issued 18 September 2019
Options Issued
2,000,000
2,000,000
Exercise Price
20 cents
20 cents
Expiry
24/11/20
24/11/20
Further details in respect of these options are included in Note 15(b).
Meetings of directors
The number of meetings of the Company’s Directors held during the year ended 30 June 2020 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
11
11
11
11
11
Attended
10
11
10
11
11
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
11
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
(Vested)*
LSP Shares
(Not Vested)*
Shares
543,548
1,000,000
-
426,493
625,000
4,475,528
Name and
Position
Qualifications and Experience
Non-Executive
Chairman
Donald Brumley
FCA, MAICD
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 – 2020 ANNUAL REPORT
12
DIRECTORS’ REPORT
Name and
Position
Non-Executive
Director
Robert Klupacs
BSc (Hons) Grad
Dip IP Law,
Australian
Registered Patent
and Trademark
Attorney
Particulars of interests in shares and options of
Bio-Gene Technology Limited
LSP Shares
(Vested)*
LSP Shares
(Not Vested)*
Shares
239,032
3,320,000
-
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
publicly traded companies as well as the academic arena.
He has over 30 year’s corporate experience in the
international technology development arena.
corporate
development,
focused primarily on biotechnology and
He has
biotechnology
particularly
healthcare related, but has also been involved in the
commercialisation of software, scientific instrumentation,
food technologies and enabling agricultural technology. He
has deep expertise and experience in all facets of
corporate development and technology transfer including:
IP licensing, patenting, intellectual property strategy and
management, joint venture creation and management,
fund-raising (private and public markets), corporate and
technology and corporate
scientific due diligence,
corporate
acquisitions,
governance and academic liaison. He is the Founder of 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, farming, and processing and live plant
transport techniques.
5,479,373
3,192,000
-
Kevin was instrumental in securing the contract with the
University of Western Australia
to grow Boronia
megastigma and producing essential oil that was regarded
as the best of its type in the world and was highly valued.
He also secured the contract in Western Australia for
exclusive access to that State’s native flora.
He has been involved in the development of Qcide™ from
the outset and has a vast knowledge of the plant
husbandry and the extraction methods used to produce
natural Qcide™. Kevin was also involved in development
of the synthesis of flavesone as a first step in the
commercialisation of Flavocide™.
Director of Bio-Gene Technology Limited since 16 June
2004.
Other Directorships of listed companies over the past
three years: None.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
13
Particulars of interests in shares and options of
Bio-Gene Technology Limited
Shares
LSP Shares
(Vested)*
LSP Shares
(Not Vested)*
350,871
596,000
1,400,920
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
this period Peter
developed extensive experience in international crop
protection markets.
formulation operations. During
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 region.
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.
165,433
375,000
964,044
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.
*Shares issued under the Loan Share Plan do not vest on issue and are subject to a number of restrictions refer Note 15(c) for details.
No member of Key Management Personnel hold Options in the Company.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
14
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited)
Introduction
This Remuneration Report for the year ended 30 June 2020 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 2020 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. No
advice as to specific remuneration levels nor actual remuneration recommendations were provided by independent consultants during
the year.
During the 2018 financial year and continuing into the 2019 financial year, the non-executive Chairman and Directors of the Company
worked closely with VSOPP Advisory (an independent professional advisory firm specialising in remuneration issues) 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 – 2020 ANNUAL REPORT
15
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 stretch 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 stretch 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 (including funding)
30%
20%
50%
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. The number of shares awarded is based on the weighted average closing prices over the five trading days up to and including 30
June 2020. When the shares vest they can only be dealt with by 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.
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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
16
DIRECTORS’ REPORT
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 2020 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 2020.
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 2020. 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.
The Non-executive Directors conduct an assessment of performance of objectives to determine outcomes based on the measures
previously set by the Board
Component
Customers and partners
Intellectual property and technology enabling
Corporate overarching (including funding)
Percentage of Scorecard
30%
20%
50%
100%
Outcomes
24.0%
2.8%
32.5%
59.3%
Both components of the LTI were tested at 30 June 2020. As the Company had not entered into any commercial agreements at that
date the LTI Type 1 shares issued in respect of the 2018 and 2019 financial years were carried forward to be tested again at 30 June
2021.
The Company’s share price on the ASX at the end of the financial year was 13 cents. As the price target for 30 June 2020 was 24.72
cents the first two-thirds of the LTI Type 2 shares issued in respect of the 2018 financial year and one-third of the LTI Type 2 shares
issued in respect of the 2019 financial year were carried forward to be tested again at 30 June 2021.
Remuneration outcomes
The key foci of the STI’s for the year ended June 30 2020 included expanding the funding base from a range of sources, entry into
collaborative research agreements, the advancement of the manufacturing of Flavocide and improvement to the Qcide oil extraction
process and the advancement of other research projects to enhance the data packages for both Flavocide and Qcide. During the year
the Company raised $2.8 million from a Share Placement and Securities Purchase Plan, secured two evaluation agreements and a
number of additional material transfer agreements. While the manufacturing projects advanced and the other data was generated a
number of the actual targets set in this area were not met. Accordingly, the impact of these items is reflected in the STI outcome. The
table below summarises the remuneration outcomes for executives under the Company’s STI program having regard to the
performance outcomes outlined above.
2020
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
%
14.82
8.90
8.90
$
130,972
43,413
28,944
$
77,666
25,744
17,164
203,329
120,574
Cash
$
Shares
$
Total
$
38,833
12,872
8,582
60,287
38,833
12,872
8,582
77,666
25,744
17,164
60,287
120,574
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 – 2020 ANNUAL REPORT
17
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.
D) Details of remuneration
Year ended 30 June 2020
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 2020. 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.
2020
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
$
239,219
185,018
424,237
73,059
50,000
41,096
164,155
588,392
123,353
123,353
38,833
12,872
51,705
-
-
-
-
51,705
8,582
8,582
-
-
-
-
-
-
-
-
-
-
22,726
17,577
40,303
6,941
-
3,904
10,845
51,148
11,719
11,719
24,610
13,348
37,958
141,019
466,407
38,261
267,076
179,280
733,483
-
-
-
-
-
-
-
-
80,000
50,000
45,000
175,000
37,958
179,280
908,483
6,020
6,020
29,413
29,413
179,087
179,087
Total
1. The STI recorded for the executives is the amount payable in respect of the year ending 30 June 2020, less adjustments to the
208,693
711,745
43,978
62,867
60,287
1,087,570
-
valuation at issue date (1 November 2019) of the STI for the year ending 30 June 2019.
2. The LTI is recognised based on the expected period to vesting of the equity at the date of issue. At this stage none of the LTI
Shares have vested.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
18
DIRECTORS’ REPORT
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
35,464
33,705
65,681
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. At this stage none of the LTI
Shares have vested.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
19
DIRECTORS’ REPORT
E) Service agreements
The 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.
Donald Brumley, Non-executive Chairman
➢ Term of Agreement – Commencing from 26 April 2017. A new agreement became effective 1 January 2018.
➢ 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 July 2020 $336,192 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 $168,096 per annum on a fulltime basis and Long Term Incentive of up to $168,096 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.
➢ 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.
➢ 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 July 2020 $231,132 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 $49,528 per annum on a fulltime basis and Long Term Incentive of up to $49,528 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 July 2020 $231,132 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 $49,528 per annum on a fulltime basis and Long Term Incentive of up to $49,528 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.
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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
20
DIRECTORS’ REPORT
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:
Issue date
No. of shares
Loan expiry
date
Vesting
date
Issue price
$
06/12/2018
06/12/2018
06/12/2018
01/11/2019
01/11/2019
01/11/2019
01/11/2019
01/11/2019
30/07/2020
30/07/2020
30/07/2020
30/07/2020
30/07/2020
696,722
105,745
105,744
483,220
2,201,972
383,509
383,508
383,507
450,840
1,262,930
253,424
253,424
253,422
06/12/2025
N/A
N/A
N/A
01/11/2026
N/A
N/A
N/A
N/A
30/07/2027
N/A
N/A
N/A
30/06/2021
30/06/2020
30/06/2021
01/11/2019
30/06/2022
30/06/2020
30/06/2021
30/06/2022
28/08/2020
30/06/2023
30/06/2021
30/06/2022
30/06/2023
(ii) Equity issued to Directors and key management personnel
0.1420
Nominal
Nominal
Nominal
0.1500
Nominal
Nominal
Nominal
Nominal
0.1340
Nominal
Nominal
Nominal
Fair value per
share at issue
date
$
0.0760
0.1311
0.1311
0.1411
0.0789
0.1411
0.1411
0.1411
0.1399
0.0843
0.1399
0.1399
0.1399
Date first
available to
deal with
30/06/2021
30/06/2020
30/06/2021
01/11/2019
30/06/2022
30/06/2020
30/06/2021
30/06/2022
28/08/2020
30/06/2023
30/06/2021
30/06/2022
30/06/2023
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 15 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.
Name
Directors
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Other key management personnel
Roger McPherson
303,111
224,892
Shares issued during the year
2020
Number
Loan per
share$
2019
Number
Loan per
share$
Shares vested during the year
2020
2019
Number
Number
-
1,444,194
1,071,514
-
-
454,667
337,338
-
0.15
N/A
-
-
0.15
N/A
0.15
N/A
-
469,395
391,119
-
-
123,997
103,320
103,330
86,099
-
0.142
N/A
-
-
0.142
N/A
0.142
N/A
-
-
316,927
-
-
-
99,776
187,500
66,517
-
-
177,393
-
-
-
46,861
187,500
39,050
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 – 2020 ANNUAL REPORT
21
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
59.3
-
-
-
-
-
-
-
-
-
83
42
59.3
83
42
59.3
-
-
17
58
40.7
-
-
-
-
-
-
-
-
-
17
58
40.7
17
58
40.7
2017
2017
2018
2019
2020
2015
2016
2017
2015
2016
2017
2015
2016
2017
2018
2019
2020
2018
2019
2020
100
100
100
20.6
12.6
100
100
100
100
100
100
100
100
100
100
20.6
12.6
100
20.6
12.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial
years in
which
shares &
options
vest
Note (iii)
Note (iii)
Note (v)
Note (vi)
Note (vii)
Note (i)
Note (ii)
Note (iii)
Note (i)
Note (ii)
Note (iii)
Note (i)
Note (ii)
Note (iii)
Note (v)
Note (vi)
Note (vii)
Note (iv,v)
Note (vi)
Note (vii)
Minimum
total
value of
issue yet
to vest
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Maximum
total value
of issue
yet to vest
$
-
-
-
17,432
133,373
-
-
-
-
-
-
-
-
-
-
4,605
41,989
-
3,837
27,993
Notes:
The financial years in which shares vest are 100% in 2015.
(i)
(ii)
The financial years in which shares vest are 100% in 2016.
(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 2018 financial
year.
(vi) 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 2019 financial year but an allowance was made for payment of these in the 2019 financial
year.
(vii) 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 2020 financial year but an allowance has been made for payment of these in respect of the 2020
year which will be settled in the 2021 financial year. The equity based component of the STI and the LTI for the 2019 year were
issued in the 2020 year. The equity based component of the STI vested during the 2020 year.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
22
DIRECTORS’ REPORT
(ii) Share-based compensation
Further details relating to shares and options are set out below:
Name
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
$
-
47
-
-
28
28
-
265,137
-
-
83,472
55,648
2020
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
2019
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
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.
-
265,137
-
-
83,472
55,648
-
86,977
-
-
22,976
19,147
-
86,977
-
-
22,976
19,147
-
23
-
-
10
12
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 2020 as these will be
issued in the 2021 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:
2020
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
2019
Donald Brumley
Richard Jagger
Robert Klupacs
Kevin Rumble
Peter May
Roger McPherson
Totals
Balance at
1 July
No.
1,350,000
1,550,514
3,430,000
8,671,373
1,058,317
639,429
16,699,633
Balance at
1 July
No.
1,200,000
690,000
3,385,000
8,671,373
831,000
450,000
15,227,373
Issued as
compensation
under Loan
Share Plan
No.
-
2,515,708
-
-
792,005
528,003
3,835,716
Issued as
compensation
under Loan
Share Plan
No.
-
860,514
-
-
227,317
189,429
1,277,260
Purchased
Under SPP
No.
Sold on
Market
No.
Net change
other
No.
Balance at
30 June
No.
Total
vested
30 June No.
193,548
16,129
129,032
-
16,129
16,129
370,967
-
(148,955)
-
-
(46,895)
(31,263)
(227,113)
193,548
2,382,882
129,032
-
761,239
512,869
3,979,570
1,543,548
3,933,396
3,559,032
8,671,373
1,819,556
1,152,298
20,679,203
1,543,548
1,051,493
3,559,032
8,671,373
946,871
540,433
16,312,750
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
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
23
DIRECTORS’ REPORT
Options
Options held by key management personnel:
At 30 June 2020 no Options were held by the key management personnel.
2019
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.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(iv) Voting and comments made at the company’s 2019 annual general meeting:
Bio-Gene Technology Limited received more than 86% of “yes” votes on its remuneration report for the 2019 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)
Events since the end of the financial year
No matter or circumstance has arisen since 30 June 2020, 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.
This report is made in accordance with a resolution of the Directors.
Mr. Donald Brumley
Chairman
Date: 26 August 2020
BIO-GENE TECHNOLOGY LIMITED – 2020 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 2020 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 26th day of August 2020
ABN: 13 488 640 554. Liability limited by a scheme approved under Professional Standards Legislation
BIO-GENE TECHNOLOGY LIMITED – 2020 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 2020 financial year. Bio-Gene's Corporate Governance Statement is structured with reference to the ASX
Corporate Governance Principles and Recommendations 4th Edition and can be found on the Bio-Gene website at:
http://bio-gene.com.au/investors/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 – 2020 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 2020
Revenues from continuing operations
Other income
Expenses from continuing operations
Research & Development
Commercialisation Expenses
Management Administration Expenses
Directors Expenses
Professional Services
Intellectual Property
Depreciation & Amortisation
Other Expenses
Note
3(a)
3(b)
3(c)
2020
$
122,795
1,013,814
2019
$
2,899
641,706
(1,444,154)
(1,424,718)
(306,523)
(194,440)
(189,944)
(378,614)
(208,690)
(58,439)
(288,904)
(314,137)
(159,584)
(189,070)
(263,525)
(61,086)
(45,556)
(242,499)
Loss from continuing operations before tax
Income tax (expense)
1(p)
-
-
(1,933,099)
(2,055,570)
Loss for the year from continuing operations after income tax
(1,933,099)
(2,055,570)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Total comprehensive loss for the year attributable to members of
the Company
-
-
(1,933,099)
(2,055,570)
Earnings per share:
Basic loss per share - from continuing operations
Diluted loss per share - from continuing operations
4
4
(1.62¢)
(1.75¢)
(1.62¢)
(1.75¢)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
27
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Employee benefits
Financial liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2020
$
2019
$
5
6
7
8
9
10
11
12
13
13
14
5,521,868
4,499,364
483,041
176,756
472,767
170,331
6,181,665
5,142,462
24,656
12,320
350,955
387,931
32,712
-
387,898
420,610
6,569,596
5,563,072
188,787
11,663
211,558
412,008
5,280
150,000
155,280
567,288
322,487
-
141,124
463,611
-
150,000
150,000
613,611
6,002,308
4,949,461
15
16(a,b)
16(c)
14,535,664
11,804,199
950,002
695,849
(9,483,358)
(7,550,587)
6,002,308
4,949,461
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
28
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
2020
At 1 July 2019
Loss for the period
Other comprehensive income
Adjustment following the
adoption of AASB16
Total comprehensive
income/(loss) for the year
Transactions with owners in their
capacity as owners:
Issued capital
Transaction costs related to
shares issued
Re-allocation of value of equity
which vested during the period
Cost of share-based payment
At 30 June 2020
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
Fully paid
ordinary
shares
Share option
reserve
Share loan
plan reserve
Accumulated
losses
Total
$
$
$
$
$
11,804,199
113,600
582,249
(7,550,587)
4,949,461
16(c)
-
-
-
-
2,828,600
(168,695)
71,560
-
14,535,664
15(a)
16(a,b)
(1,933,099)
-
(1,933,099)
-
328
328
(1,932,771)
(1,932,771)
-
-
-
-
-
-
-
-
-
-
-
-
-
86,800
200,400
(71,560)
238,913
749,602
-
-
(9,483,358)
-
-
2,828,600
(168,695)
-
325,713
6,002,308
$
$
$
$
$
11,768,501
113,600
520,223
(5,495,017)
6,907,307
-
-
-
-
15(a)
15(a)
16(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
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
29
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Cash flows from operating activities
Receipts from customers
Note
2020
$
120,000
2019
$
-
Payments to suppliers and employees inclusive of GST
(2,771,071)
(2,732,729)
Interest received
R&D tax incentive
Government grants
Licence fees
Interest paid
Net cash used in operating activities
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
Proceeds from issue of shares
Payment for share issue expenses
Repayments of lease liabilities
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
65,835
824,433
114,549
2,795
(1,232)
142,191
386,160
-
2,899
-
(1,644,691)
(2,201,479)
-
-
-
-
2,828,600
(147,637)
(13,768)
2,667,195
1,022,504
4,499,364
5,521,868
(2,682)
-
(4,200)
(6,882)
1,173
-
-
1,173
(2,207,188)
6,706,552
4,499,364
17(c)
17(b)
17(c)
17(a)
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
30
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 following the signing date of these financial statements.
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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
31
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020 is $350,955 (2019: $387,898). Refer to Note 10 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) 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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
32
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
k) 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.
l)
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.
m) 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
n)
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.
Unused tax losses for which no deferred tax asset has been recognised are $6,296,327 (2019: $4,555,816) resulting in a potential tax
benefit at 27.5% of $1,731,490 (2019: $1,252,849). The unused tax losses were incurred as part of the company’s research and
development activities. They can be carried forward indefinitely provided that the Company satisfies the “same business” or “continuing
ownership” tests.
o)
Issued capital
Ordinary shares are classified as equity (Note 15).
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.
p) 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.
Research collaboration receipts
Research collaboration receipts are recognised in accordance with the underlying agreement. Payments are brought to account as
revenues at the time that the relevant milestone has been achieved.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
33
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
Government stimulus
The government cash boost stimulus in respect of Covid-19 is recognised on an accruals basis when the Company qualifies for the
payment.
Sales
Sales are recognised when the goods have been delivered to the purchaser.
q) Comparative figures
Comparatives have been reclassified, where necessary, so as to be consistent with the figures presented in the current year.
r) 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.
s) 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.
t)
Financial Instruments
Financial instruments are recognised initially on the date that the Company becomes party to the contractual provisions of the
instrument. On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments
measured at fair value through profit or loss where transaction costs are expensed as incurred).
Financial assets
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
Classification
On initial recognition, the Company classifies its financial assets into the following category, those measured at:
➢
amortised cost
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
34
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for
managing financial assets.
Amortised cost
Assets measured at amortised cost are financial assets where:
➢
➢
the business model is to hold assets to collect contractual cash flows; and
the contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
The Company's financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the
statement of financial position. Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest
rate method less provision for impairment.
Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Gain or loss on derecognition is
recognised in profit or loss.
Impairment of financial assets
Impairment of financial assets is recognised on an expected credit loss (ECL) basis for the following assets:
➢
financial assets measured at amortised cost
When determining whether the credit risk of a financial assets has increased significantly since initial recognition and when estimating
ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This
includes both quantitative and qualitative information and analysis based on the Company's historical experience and informed credit
assessment and including forward looking information.
The Company uses the presumption that an asset which is more than 30 days past due has seen a significant increase in credit risk.
The Company uses the presumption that a financial asset is in default when:
➢
➢
the other party is unlikely to pay its credit obligations to the Company in full, without recourse to the Company to actions such as realising
security (if any is held); or
the financial asset is more than 90 days past due.
Credit losses are measured as the present value of the difference between the cash flows due to the Company in accordance with the
contract and the cash flows expected to be received. This is applied using a probability weighted approach.
Term Deposits
The Company has financial assets in the nature of term deposits which are held to maturity.
Trade receivables
Impairment of trade receivables has been determined using the simplified approach in AASB 9 which uses an estimation of lifetime
ECLs. The Company has determined the probability of non-payment of the receivable and multiplied this by the amount of the expected
loss arising from default.
The amount of the impairment is recorded in a separate allowance account with the loss being recognised in finance expense. Once the
receivable is determined to be uncollectable then the gross carrying amount is written off against the associated allowance.
Where the Company renegotiates the terms of trade receivables due from certain customers, the new expected cash flows are
discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in profit or loss.
Other financial assets measured at amortised cost
Impairment of other financial assets measured at amortised cost are determined using the ECL model in AASB 9. On initial recognition
of the asset, an estimate of the expected credit losses for the next 12 months is recognised. Where the asset has experienced
significant increase in credit risk then the lifetime losses are estimated and recognised.
Financial liabilities
The Company measures all financial liabilities initially at fair value less transaction costs, subsequently financial liabilities are measured
at amortised cost using the effective interest rate method.
The financial liabilities of the Company comprise trade and other payables.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
35
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
u) 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.
For comparative year
Lease payments for operating leases, where substantially all of the risks and benefits remain with the lessor, are charged as expenses
on a straight-line basis over the life of the lease term.
For current year
Right-of-use asset
At the lease commencement, the Company recognises a right-of-use asset and associated lease liability for the lease term. The lease
term includes extension periods where the Company believes it is reasonably certain that the option will be exercised.
The right-of-use asset is measured using the cost model where cost on initial recognition comprises of the lease liability, initial direct
costs, prepaid lease payments, estimated cost of removal and restoration less any lease incentives received. The right-of-use asset is
depreciated over the lease term on a straight-line basis and assessed for impairment in accordance with the impairment of assets
accounting policy.
Lease liability
The lease liability is initially measured at the present value of the remaining lease payments at the commencement of the lease. The
discount rate is the rate implicit in the lease, however where this cannot be readily determined then the Company's incremental
borrowing rate is used.
Subsequent to initial recognition, the lease liability is measured at amortised cost using the effective interest rate method. The lease
liability is remeasured whether there is a lease modification, change in estimate of the lease term or index upon which the lease
payments are based (e.g. CPI) or a change in the Company's assessment of lease term.
Where the lease liability is remeasured, the right-of-use asset is adjusted to reflect the remeasurement or is recorded in profit or loss if
the carrying amount of the right-of-use asset has been reduced to zero.
v) Adoption of new and revised accounting standards
The Company has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards
Board (the AASB) that are relevant to their operations and effective for an accounting period that begins on or after 1 July 2019.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are relevant to the Company
include:
➢ AASB 16, Leases
Leases - Adoption of AASB 16
The Company has adopted AASB 16 Leases using the modified retrospective (cumulative catchup) method from 1 July 2019 and
therefore the comparative information for the year ended 30 June 2019 has not been restated and has been prepared in accordance
with AASB 117 Leases and associated Accounting Interpretations.
Impact of Adoption of AASB 16
Company as a lessee
Under AASB 117, the Company assessed whether leases were operating or finance leases based on its assessment of whether the
significant risks and rewards of ownership had been transferred to the Company or remained with the lessor. Under AASB 16, there is
no differentiation between finance and operating leases for the lessee and therefore all leases which meet the definition of a lease are
recognised on the statement of financial position (except for short-term leases and leases of low value assets).
The Company has elected to use the exception to lease accounting for short-term leases and leases of low value assets, and the lease
expense relating to these leases are recognised in the statement of profit or loss on a straight-line basis.
Practical expedients used on transition
AASB 16 includes a number of practical expedients which can be used on transition, the Company has used the following expedients:
➢
➢
➢
➢
contracts which had previously been assessed as not containing leases under AASB 117 were not reassessed on transition to AASB 16;
lease liabilities have been discounted using the Company's incremental borrowing rate at 1 July 2019;
right-of-use assets at 1 July 2019 have been measured at an amount equal to the lease liability adjusted by the amount of any prepaid or
accrued lease payments;
a single discount rate was applied to all leases with similar characteristics.
See Notes 9 and 12 for further details.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
36
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
Total remuneration
Note 3: Revenue. other income and expenses
(a) Revenue from continuing operations
Research collaboration receipts
Licence fees
Total revenue from continuing operations
(b) Other income
Interest received
R&D tax incentive1
Government grants
Government stimulus
Total other income
2020
$
28,000
28,000
2019
$
27,000
27,000
5,800
4,000
33,800
31,000
2020
$
120,000
2,795
122,795
64,480
784,785
64,549
100,000
1,013,814
2019
$
-
2,899
2,899
135,847
505,859
-
-
1,013,814
1. During the year the Company settled its dispute with AusIndustry which resulted in an additional $359,140 for the R&D Incentive.
(c) Expenses
Loss before income tax includes the following specific 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
Right of use assets
License and registered patents
Total depreciation and amortisation expenses
Foreign currency exchange differences:
Foreign currency exchange losses
Operating expenses:
Operating lease expenses
Interest expense on lease liabilities (under other expenses)
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
758,739
65,494
238,913
1,063,146
8,056
13,440
36,943
58,439
658,455
63,656
69,989
792,100
8,613
-
36,943
45,556
3,482
2,424
-
1,232
1,600
-
2020
$
2019
$
1,933,099
1,933,099
2,055,570
2,055,570
No. of Shares
No. of Shares
119,372,094
117,749,630
-
-
119,372,094
117,749,630
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
37
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Information concerning the classification of securities
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 15(c).
The 14,474,452 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 2020. 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 2020. Details relating to the options are set out in Note 15(b).
Note 5: Cash and cash equivalents
Cash at bank
Deposit at call
Term deposits
2020
$
32,411
189,457
5,300,000
5,521,868
2019
$
22,586
176,778
4,300,000
4,499,364
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
2020
$
R&D tax incentive
GST refund due
Other receivables
394,907
30,985
57,149
483,041
The balance of other receivables of $483,041 (2018: $472,767) is not past due and not considered impaired.
Note 7: Other current assets
Prepayments
Security deposits
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
2020
$
102,556
74,200
176,756
2019
$
434,555
29,343
8,869
472,767
2019
$
96,131
74,200
170,331
38
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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
Balance at the beginning of year
Additions
Disposals
Depreciation expense, impairment and asset write off
Carrying amount at the end of year
Note 9: Right of use assets
2020
$
49,183
(24,527)
24,656
2020
$
32,712
-
-
(8,056)
24,656
On 1 June 2019 the Company entered into a two year lease for its office at Level 12, 456 Lonsdale Street, Melbourne.
The Company adopted AASB 16 effective from 1 July 2019.
Right of use asset
Leased office
Less: Accumulated depreciation
Total net right of use assets
Movements in the carrying amounts for right of use assets between the
beginning and the end of the current financial year
Right of use assets
Balance at the beginning of year
Recognised on initial application of AASB16 (previously classified as an
operating lease under AASB117)
Disposals
Depreciation expense, impairment and asset write off
Carrying amount at the end of year
Note 10: 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)
2020
$
26,880
(14,560)
12,320
-
25,760
-
(13,440)
12,320
2020
$
557,818
(206,863)
350,955
387,898
-
(36,943)
350,955
2019
$
49,183
(16,471)
32,712
2019
$
38,643
2,682
-
(8,613)
32,712
2019
$
-
-
-
-
-
-
-
-
2019
$
557,818
(169,920)
387,898
424,841
-
(36,943)
387,898
(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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
39
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 11: Trade and other payables
Current
Trade creditors
Other creditors and accruals
Total trade and other payables
Note 12: Lease liabilities
2020
$
133,954
54,833
188,787
2019
$
123,238
199,249
322,487
On 1 June 2019 the Company entered into a two year lease for its office at Level 12, 456 Lonsdale Street, Melbourne. The Company
adopted AASB 16 effective from 1 July 2019.
Current
Lease of office
Note 13: Employee benefits
Annual leave
Short-term incentive
Non-current
Long service leave
Note 14: Financial liabilities
Current
Amount payable for IP licences
Non-current
Amount payable for IP licences
2020
$
11,663
11,663
2020
$
73,092
138,466
211,558
5,280
5,280
2020
$
-
-
2019
$
-
-
2019
$
46,179
94,945
141,124
-
-
2019
$
-
-
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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
40
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 15: 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:
2020
No.
2019
No.
2020
$
2019
$
At the beginning of the reporting period
129,007,597
127,724,471
11,804,199
11,768,501
15,487,745
-
2,400,600
Shares issued at 15.5 cents pursuant to Share
Placement
Shares issued at 15.5 cents pursuant to Share
Purchase Plan
Shares issued on exercise of options
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)
2,761,276
-
-
3,859,658
-
5,866
-
1,277,260
-
-
151,116,276
-
-
129,007,597
136,641,824
14,474,452
151,116,276
-
151,116,276
117,885,641
11,121,956
129,007,597
-
129,007,597
(b) Movements in share options over ordinary shares during the year were as follows:
Balance at beginning of the year
Exercised during the year
Expired during the year
Issued during the period4
Balance at end of the year
Terms of options issued
Options issued – 24 November 2017
Options issued – 18 September 2019
Options Issued
2,000,000
2,000,000
Exercise Price
20 cents
20 cents
428,000
-
(168,695)
330,296
71,560
(330,296)
14,535,664
14,535,664
1,143,546
15,679,210
1,600,299
17,279,509
2020
No.
2,000,000
-
-
2,000,000
4,000,000
Value$
113,600
86,800
-
-
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
2019
No.
27,056,730
(5,866)
(25,050,864)
-
2,000,000
Expiry
24/11/20
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
and conditions upon which the instruments were issued.
4. The Options were issued for corporate advisory and general corporate services.
(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
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
41
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 73
Tranche 8a3
Tranche 8b3
Tranche 8c3
Tranche 92
Tranche 103
Tranche 11a3
Tranche 11b3
Tranche 11c3
Less Vested Shares1,2
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
507,162
2,201,972
383,509
383,508
383,507
15,244,918
(770,466)
14,474,452
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
01/11/2019
01/11/2019
01/11/2019
01/11/2019
01/11/2019
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
01/11/2019
30/06/2022
30/06/2020
30/06/2021
30/06/2022
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
N/A
01/11/2026
N/A
N/A
N/A
Unit Price
$
0.0340
0.0334
0.0622
0.0622
0.0922
0.0894
0.1314
0.1275
0.1311
0.0760
0.1311
0.1311
0.1311
0.1411
0.0789
0.1411
0.1411
0.1411
Fair Value at
Issue Date
$
170,000
20,307
97,188
97,188
17,288
16,763
65,700
63,750
34,519
52,951
13,863
13,863
13,863
71,560
173,736
54,113
54,113
54,112
1,084,877
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.
2. The Tranche 9 shares were issued in respect of the executives’ and employee’s short-term incentives for the 2019 financial
year and vested on 1 November 2019.
3. The Tranche 7, 8, 10 and 11 shares had not vested at the Reporting Date.
(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
Tranche 10
Loan
/Exercise
price
$
0.05
0.05
0.092
0.14
0.20
0.142
0.15
Share
price on
issue Date
$
0.05
0.05
0.092
0.14
0.20
0.142
0.15
Volatility
Maturity
date
Time to
maturity
74%
74%
74%
74%
74%
74%
77.4%
29/06/2022
30/06/2023
11/05/2024
26/07/2024
04/12/2024
06/12/2025
01/11/2026
7 years
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%
0.98%
Share Tranches 6, 8, 9 and 11 were issued for nominal consideration and valued at the 5 day VWAP on the day of issue.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
Expected
dividend
yield
-
-
-
-
-
-
-
42
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(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 $325,713 (2019: $96,551).
Note 16: Reserves and accumulated losses
Share options reserve
Share loan plan reserve
Total reserves
(a) Share option reserve
Note
(a)
(b)
Opening balance 1 July
Value of Broker options issued
Re-allocation of value of options exercised 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
2020
$
200,400
749,602
950,002
2020
$
113,600
86,800
-
200,400
2020
$
582,249
238,913
(71,560)
749,602
2019
$
113,600
582,249
695,849
2019
$
113,600
-
-
113,600
2019
$
520,223
96,551
(34,525)
582,249
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.
(c) Movement in accumulated losses
Opening balance 1 July
Adjustment following the adoption of AASB161
Net loss for the year
Closing balance
1. AASB 16 related amounts recognised in the statement of changes in equity.
Reversal of lease payment expensed in the prior period
Depreciation of right of use asset for the prior period
Interest expense related to lease repayment for the prior period
Note 17: Cash flow Information
(a) Reconciliation of cash
Cash at bank
Deposit at call
Term deposits
Total cash and cash equivalents
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
2020
$
(7,550,587)
328
(1,933,099)
(9,483,358)
(1,600)
1,120
152
(328)
2020
$
32,411
189,457
5,300,000
5,521,868
2019
$
(5,495,017)
-
(2,055,570)
(7,550,587)
-
-
-
-
2019
$
22,586
176,778
4,300,000
4,499,364
43
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(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
AASB 16 related amounts recognised in the statement of cash flows
Repayments of principal
Interest paid
Note 18: Commitments and contingencies
(a) Capital expenditure commitments
Committed but unrecognised expenditure as at reporting date amounted to $Nil (2019: $Nil).
(b) Other contingencies
(1,933,099)
(2,055,570)
58,439
325,713
101,426
(10,275)
(6,425)
(180,470)
(1,644,691)
45,556
96,551
72,746
(104,408)
(37,632)
(218,722)
(2,201,479)
13,768
1,232
15,000
-
-
-
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.
Note 19: 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 15 and 16 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 at amortised cost
Debt (i)
Cash and cash equivalents
Net cash/(debt)
Equity (ii)
Net debt to equity ratio
Note
5
15,16
2020
$
-
5,521,868
5,521,868
6,002,308
-
(i) Debt is defined as long-term and short-term borrowings.
(ii) Equity includes all capital and reserves as detailed in Note 15 and 16.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
2019
$
-
4,499,364
4,499,364
4,949,461
-
44
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(b) Financial risk management objectives
The Company’s CFO monitors and manages the financial risks relating to the operations of the Company through internal risk reports
which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest
rate risk and price risk), credit risk and liquidity risk. There have been no changes to these risks since the previous financial year.
The Board of Directors ensures that the Company maintains a competent management structure capable of defining, analysing,
measuring and reporting on the effective control of risk inherent in the Company’s underlying financial activities and the instruments
used to manage risk. Key financial risks including interest rate risk and foreign currency risk are reviewed by management on a regular
basis and are communicated to the Board so that it can evaluate and impose its oversight responsibility. The Company does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Company currently does not
have a policy regarding foreign exchange risk management. This and other financial risks are managed prudently by the Chief Financial
Officer and the Board.
The entity holds the following financial instruments:
Financial assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial liabilities at amortised cost
Trade and other payables
Lease liabilities
Financial liabilities
(c) Market risk
Note
5
6
7
11
12
14
2020
$
5,521,868
483,041
176,756
6,181,665
188,787
11,663
150,000
350,450
2019
$
4,499,364
472,767
170,331
5,142,462
322,487
-
150,000
472,487
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 2020 would increase/decrease by $64,481 (2019: $135,847).
(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 2020
Financial Liabilities at amortised cost
Trade and other payables
Lease liabilities
Financial liabilities
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
0 -12 months
Maturing 1 to 3 years
Total
188,787
11,663
-
200,450
-
-
150,000
150,000
188,787
11,663
150,000
350,450
45
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
30 June 2019
Financial Liabilities at amortised cost
Trade and other payables
Lease liabilities
Financial liabilities
322,487
-
-
322,487
-
-
150,000
150,000
322,487
-
150,000
472,487
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 at amortised cost
Cash and cash equivalents
Trade and other receivables
Financial Liabilities at amortised cost
Trade and other payables
30 June 2020
30 June 2019
USD
GBP
USD
GBP
-
-
3,975
-
-
-
-
-
13,550
-
-
-
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 2020, 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:
- 10%
Profit
$
Equity
$
+ 10%
Profit
$
Equity
$
30 June 2020
Financial Assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Financial Liabilities at amortised cost
Trade and other payables
Financial liabilities
30 June 2019
Financial Assets at amortised cost
Cash and cash equivalents
Trade and other receivables
Financial Liabilities at amortised cost
Trade and other payables
Financial liabilities
(g) Price risk
-
-
-
(644)
-
(644)
-
-
-
-
-
(644)
-
(644)
-
-
(2,147)
-
(2,147)
(2,147)
-
(2,147)
-
-
-
527
-
527
-
-
1,756
-
1,756
-
-
-
527
-
527
-
-
1,756
-
1,756
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.
➢
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
46
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(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 20: 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
(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
2020
$
772,032
62,867
252,671
1,087,570
2019
$
752,010
65,681
69,169
886,860
Further disclosures regarding key management personnel compensation are contained within the Remuneration Report.
Note 21: Related party transactions
(a) Receivable from and payable to related parties
The following balances were outstanding at 30 June 2020 in relation to transactions with related parties:
Current payables
Trade payables to directors or their related entities
2020
$
-
2019
$
-
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 20 and the Remuneration Report.
Note 22: 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 discovery of novel insecticides. 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.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
47
BIO-GENE TECHNOLOGY LIMITED
ABN 32 071 735 950
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note 23: 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. The Company adopted AASB 16 effective from
1 July 2019 in respect of this lease (refer to note 1x).
Non-cancellable operating lease commitments
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Total
2020
$
-
-
-
2019
$
14,400
11,200
25,600
Note 24: Events occurring after the reporting period
No matter or circumstance has arisen since 30 June 2020, 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 – 2020 ANNUAL REPORT
48
DECLARATION BY DIRECTORS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020 and of the performance for the year ended on that date.
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: 26 August 2020
BIO-GENE TECHNOLOGY LIMITED – 2020 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 2020, 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 Ltd., 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 2020 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. The Company has recorded $784,785 of income in the financial statements. This includes $394,907
recorded a receivable at year-end, representing an estimated claim for the period 1 July 2019 to 30 June 2020 using the
same methodology that was accepted in the 2019 AusIndustry claim less $20,000 which has been removed to present a
more conservative accrual. A further $359,140 represents the settlement of the dispute with AusIndustry in respect of the
R&D claim for the 3 years ending 30 June 2019.
ABN: 13 488 640 554. Liability limited by a scheme approved under Professional Standards Legislation
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
50
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 15)
The Company issued shares to executive directors and senior management under a share-based compensation plan.
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 15 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 statement of comprehensive income.
- We assessed whether the disclosure in note 15 in relation to the arrangements was adequate and whether it
complied with Australian Accounting Standards.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
51
INDEPENDENT AUDITOR’S REPORT
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 2020, 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 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 15 to 24 of the directors’ report for the year ended 30 June
2020. In our opinion, the Remuneration Report of Bio-Gene Technology Ltd., for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
52
INDEPENDENT AUDITOR’S REPORT
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 26th day of August 2020
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
53
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 21 August 2020 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 21 August 2020
The voting rights attaching to each class of equity securities are:
Ordinary Shares (i)
Share Options (ii)
1,016
14
(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 21 August 2020:
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
21
134
126
463
272
1,016
92
Options
0
0
1
7
6
14
The names of the 20 largest shareholders of each class of vested equity security as at 21 August 2020 are listed below:
No. Name
1 Rumble Nominees Pty Ltd
2
Invia Custodian Pty Ltd
3 Dr Russell Kay Hancock
4 Dead Knick Pty Ltd
5 Magdajano Pty Ltd
6 Altor Capital Management Pty Ltd
7
8 Mr Victor Rosenberg & Miss Jacqueline Rosenberg
9 Rigi Investments Pty Limited
JB Toro Pty Ltd
Inverness Capital Pty Ltd
10 Kevin Nolan Rumble
11 Arision Pty Limited
12 Pyxis Holdings Pty Ltd
13
14 SM Investments & Development Pty Ltd
15 Mr Paul Henri Veron & Mrs Julie Anne Veron
16 Xeen
17 Spinite Pty Ltd
18 Max Kay & Norma Kay
19
Invia Custodian Pty Limited
20 Super Hero Squad Pty Ltd
No. of shares held
6,651,373
3,500,000
3,193,548
3,000,000
2,870,000
2,497,754
2,190,000
2,137,000
2,091,936
2,020,000
2,000,000
1,800,000
1,617,384
1,572,000
1,500,000
1,499,750
1,460,377
1,392,640
1,300,000
1,250,000
45,543,762
% of total shares
4.33
2.28
2.08
1.95
1.87
1.63
1.43
1.39
1.36
1.31
1.30
1.17
1.05
1.02
0.98
0.98
0.95
0.91
0.85
0.81
29.65
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
54
SHAREHOLDER INFORMATION
E.
Shares subject to restriction arrangements
The total number of shares subject to restriction arrangements is 16,991,533 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
06/12/20181
01/11/20191
01/11/20191
30/07/20201
30/07/20201
30/07/20201
30/07/20201
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
30/06/2021
30/06/2022
28/08/2020
30/06/2021
30/06/2022
30/06/2023
5,000,000
608,000
1,562,500
1,562,500
187,500
187,500
500,000
500,000
1,013,956
767,017
2,585,479
493,881
253,424
253,424
1,516,352
16,991,533
1. These shares have not vested as at the date of this report.
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
55
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)
BIO-GENE TECHNOLOGY LIMITED – 2020 ANNUAL REPORT
56