BIOTRON LIMITED ABN 60 086 399 144
ANNUAL REPORT
2010
CONTENTS
Operating and Financial Review
Statement of Corporate Governance
Directors’ Report
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Stock Exchange Information
Corporate Directory
2 – 4
5 – 7
8 – 16
17
18
19
20
21 – 36
37
38 – 39
40 – 41
42
OPERATING AND FINANCIAL REVIEW
Review of Operations
The period under review has seen a continual focus on the clinical
progression of Biotron’s antiviral drug development program,
specifically on the clinical development of the Company’s lead
drug, BIT225, in its HIV and Hepatitis C virus (HCV) programs.
Significant events achieved in this financial year include:
• Successful conclusion of a Phase Ib/IIa clinical trial of Biotron’s
lead drug, BIT225, in HCV infected subjects. This marked a
major milestone for the Company.
• Finalisation of design of Phase IIa clinical trial of BIT225,
completion of documentation for ethics and regulatory
submissions, and submission of documentation to relevant
authorities for approval for trial.
• Appointment of an experienced CRO (contract research
organisation) that specialises in HIV and HCV clinical trials,
to manage the clinical trial at sites in South America and
Asia.
• Demonstration that BIT225 can limit the spread of HIV in
cells taken from HIV infected patients.
• Presentation of data from the Company’s HCV and HIV
programs at international scientific conferences.
•
Initiation and successful completion of a $2.1 million capital
raising via an option issue, which was fully underwritten by
Bell Potter and Martin Place Securities.
• A further $641,000 was raised from the early exercise of
options at the end of March 2010.
Clinical Development of BIT225
Biotron has an impressive pipeline of world class clinical programs
developing new drugs to treat significant viral diseases including
HCV and HIV. To date, Biotron has successfully completed
two human trials of its lead drug BIT225 - an investigational,
orally-administered, novel antiviral compound in development
by Biotron for treatment of HCV and HIV infections. These
trials include a 48 person first-in-human safety study in healthy
volunteers in late 2007, and more recently a Phase Ib/IIa trial of
the drug in people infected with HCV, completed in late 2009.
BIT225 represents a first-in-class drug for treatment of HCV,
targeting the p7 protein of HCV. It is estimated that in the USA
alone, some 4 million people have been infected with Hepatitis
C with 2.7 million suffering from chronic infection. Worldwide,
170 million people are infected. HCV causes inflammation of
the liver, which may lead to fibrosis and cirrhosis, liver cancer
and, ultimately, liver failure. Existing drugs which treat HCV have
limited effectiveness and toxicity issues, leaving a significant
need for new therapies.
Biotron’s Phase Ib/IIa trial was the first study of the drug in a
patient population. A total of 18 infected patients, randomly
assigned to receive either one of two doses of BIT225, or
placebo, taking the drug twice daily for 7 days. The study was
successfully completed, with analysis indicating that within that
trial design the drug appeared to be safe and well tolerated,
and most importantly, showed that BIT225 can reduce levels of
the HCV in a number of treated patients receiving the highest
dose of drug, compared to those receiving placebo. This was
an important and exciting result, and supports the on-going
development of the Company’s drug.
The next stage of development of BIT225 is to test it in
combination with the currently approved HCV drugs in patients
infected with HCV, which, given that antiviral drugs cannot be
used on their own to treat chronic infections due to development
of drug resistance, is how BIT225 will most likely to be used
in a clinical setting. These existing drugs (interferon alpha and
ribavirin) are often associated with severe side effects, and have
limited benefit in a large percentage of patients. BIT225 has
been shown to be highly synergistic with these drugs in preclinical
laboratory testing, which means that greater reductions in virus
levels can be achieved using smaller quantities of the drugs in
combination than if they were used individually.
During the first half of 2010, Biotron’s focus has been on
finalising the design of this combination trial, and in preparing
the detailed documentation required by ethics and regulatory
authorities. The approval process is a multistep process,
involving ethics committees and review boards overseeing the
trial sites, and government authorities which are responsible for
issuing permits to import drug and final approvals to start the
trial, progressing to the next stage of testing of BIT225 against
the Hepatitis C virus. This trial will test the drug over a longer
treatment period in combination with the approved drugs in
patients infected with HCV genotype 1, the most common
variant of the virus in the Western world. Not only is genotype
1 the most common type of HCV, but it is also the form that is
most resistant to current approved drugs, with less than 50% of
treated patients responding to treatment.
Biotron’s application documentation has successfully passed the
first step in the ethics approval process, and is now progressing
through the next stage of approvals. We anticipate the trial will
conclude before the end of 2010.
The worldwide market for HCV treatment is currently almost
US$3.0 billion, but is estimated that this market will expand
to over US$10.0 billion as safe, effective therapies enter the
market. The pharmaceutical industry is particularly interested
in new drugs that specifically target the replication cycle of
the Hepatitis C virus, and there is considerable interest in the
outcomes of Biotron’s Phase IIa combination trial.
Biotron Annual Report 2010
2
OPERATING AND FINANCIAL REVIEW
BIT225 also works against HIV, the virus that causes AIDS.
BIT225 specifically targets HIV in reservoir cells and represents
an opportunity to attack HIV at its source in the body. Current
HIV therapies have little or no effect on HIV in the underlying
reservoir of infected cells where the virus hides from the immune
system. Late in 2009, Biotron scientists presented a paper at an
international conference, reporting that BIT225 is able to limit
the spread of virus in cells isolated from HIV-infected patients.
The Company proposes to progress BIT225 into a proof-of-
concept Phase Ib/IIa trial in HIV infected patients when funding
permits.
These trials in HCV and HIV patients are critical steps in the
Company’s development. Demonstration that BIT225 can attack
these viruses in patients will be a major advance in terms of
Company and technology valuations. The Company is focused
on achieving a successful outcome, and has been updating
potential commercial partners on progress on a regular basis
while progressing its clinical trial program. First-in-class drugs
are often very attractive to pharmaceutical companies as they
can provide an opportunity to secure the largest market share,
in contrast with ‘me-too’ next generation of existing classes
of drug. However, this benefit is often linked to the need to
provide evidence that the new class, with a new mode of action,
has clinical benefit.
The HCV Phase IIa combination trial has been specifically
designed with the aim of providing the information that
potential partners are likely to require in order to form a
partnership with an international pharmaceutical company for
continued development.
Other Viral Programs
The Company has an impressive portfolio of clinical and
preclinical antiviral programs developing drugs targeting HCV,
HIV, Dengue virus and Influenza virus. At present, focus is on
development of the HCV and HIV programs into trials in infected
patient populations, and additional resources will be committed
to these additional programs once the more advanced programs
have been successfully commercialised or as resources become
available. Right now, the clearer commercial path for Biotron is
firstly focusing on its Hepatitis C program, and secondly, exploiting
BIT225 to reduce the viral reservoirs in HIV infected patients.
The level of interest by the international community in Biotron’s
antiviral programs was reflected by the selection of Biotron to
participate in prestigious international scientific conferences
over the last 12 months. In December 2009, Biotron was
selected to present at the biannual HepDART conference in the
USA as well as the International Workshop on HIV Persistence.
In May 2010, Biotron attended the annual international biotech
industry partnering conference, BIO2010, in Chicago USA, and
presented to an investor showcase preceding that conference.
Patents
Biotron is focused on progressing patents related to its
antiviral programs through the international patenting process.
The Company recognises that the key to establishment of
partnerships is the expansion and continued strengthening of
Biotron’s intellectual property (IP) portfolio. Strong, defensible,
international patents are essential to attract partners and to
ensure a competitive advantage for the Company’s products
in the marketplace. Biotron continues to build a strong wall of
patents around its IP to maximise the value of the technologies
and to ensure its competitive position.
A summary of Biotron’s patent portfolio is set out below:
TITLE
STATUS
WO0021538
Method of modulatingion channel
functional activity
Priority - 12 October 1998
WO9813514
Method of determining ion channel
activity of a substance
Priority - 27 September 1996
WO04112687
Antiviral compounds and methods
Priority - 26 June 2003 Granted in India
WO6135978
Antiviral compounds and methods
Priority - 24 June 2005
WO2009/018609
Hepatitis C antiviral compounds and
methods
Priority - 3 August 2007
New Director
Granted in Australia, Canada, China,
New Zealand, and USA
Under examination elsewhere
Granted in Australia, Japan,
Europe and USA
Under examination elsewhere
New Zealand, Singapore and
South Africa
Under examination elsewhere
Granted in South Africa
Waiting for or
under examination elsewhere
Waiting for examination in all
jurisdictions
This past year has seen the Company welcome a new director
to Biotron’s board with credentials we believe will be important
to further Biotron’s commercial success. Dr Denis Wade has
been a director of several private and public companies in
the pharmaceutical sector, including Heartware Limited and
HeartWare International Inc. Among other stellar appointments,
he has served as a managing director and chairman of Johnson
and Johnson Research Pty Ltd, and is a former chairman of the
Clinical Pharmacology Section of the International Union of
Pharmacology.
3
Biotron Annual Report 2010
Capital Raising
In December 2009, the Company initiated a capital raising via an option issue, which was fully underwritten by Bell Potter and Martin
Place Securities. The issue closed, over-subscribed, in early January 2010, raising $2.1 million. A number of shareholders elected for
early exercise of these options at the end of March 2010, raising an additional $641,000 in funds.
The Directors would like to thank all those shareholders who supported the Company by participating in this capital raising.
On behalf of the Board we would like to thank the dedicated Biotron staff for their commitment and efforts during the year. Biotron
is poised to achieve the outcome that we have all been working towards – demonstration that its antiviral drug development program
can produce new, novel drugs which can attack virus infections in humans, resulting in significant clinical benefit to patients, and
generating major financial benefits to our shareholders.
We look forward to the next year with confidence.
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
Biotron Annual Report 2010
4
STATEMENT OF CORPORATE GOVERNANCE
This statement outlines the main Corporate Governance
practices that were in place throughout the financial year, which
comply with the Australian Stock Exchange (‘ASX’) Corporate
Governance Council recommendations, unless otherwise stated.
Board of Directors
The board of directors is responsible for the overall corporate
governance of the Company including its strategic direction,
setting remuneration, establishing goals for management and
monitoring the achievement of these goals and ensuring the
integrity of internal control and management information
systems. It is also responsible for approving and monitoring
financial and other reporting.
The composition of the board has been determined on the basis
of providing the Company with the benefit of a broad range of
technical, administrative and financial skills, combined with an
appropriate level of experience at a senior corporate level. The
names and further information regarding the skills, experience,
qualifications and relevant expertise of the directors are set out
in the Directors’ Report. The board is composed of a minimum
of three directors.
The composition of the board is monitored constantly to ensure
that it provides the Company with the appropriate levels of both
expertise and experience. The board comprises a majority of
independent, non-executive directors including the Chairperson.
The independence of directors is based on their capacity to put
the best interests of the Company and its shareholders ahead of
all other interests.
When a board vacancy exists, through whatever cause, or where
it is considered that the board would benefit from the services
of a new director with particular skills, the board identifies a
panel of candidates with appropriate expertise and experience.
A selection procedure is then completed and the board appoints
the most suitable candidate who must stand for election at the
next general meeting of shareholders.
Directors, other than the Managing Director, are subject to re-
election by the shareholders at least every three years.
Having regard to the current membership of the board and the
size, organisational complexity and scope of operations of the
entity, a Nomination Committee, a Remuneration Committee
and an Audit Committee have not been established.
Each director has the right to seek independent professional
advice at the Company’s expense. Prior approval of the
Chairman is required, but such approval is not unreasonably
withheld. A copy of the advice received by the director is made
available to all other members of the board.
In the event that a potential conflict of interest may arise, involved
directors must withdraw from all deliberations concerning the
matter.
Remuneration
The remuneration of the directors is determined by the board
as a whole, with the director to whom a particular decision
relates being absent from the meeting during the time that the
remuneration level is discussed and decided upon.
For details on the amount of remuneration and any amount of
equity based executive remuneration payment for each director,
refer to the Key Management Personnel note to the financial
statements and the Remuneration Report in the Directors’
Report.
Internal Controls
The board of directors acknowledges that it is responsible for
the overall internal control framework, but recognises that no
cost effective internal control system will preclude all errors and
irregularities. The system of internal control adopted by the
Company seeks to provide an appropriate division of responsibility
and careful selection and training of personnel relative to the
level of activities and size of the Company.
The full board takes responsibility for reviewing financial
reporting procedures, internal controls and the performance of
the financial management. Selected internal control mechanisms
employed to support the business include:
•
Investment appraisal – the Company has documented
guidelines for capital expenditure and investment appraisals.
These
review
include annual budgets, expenditure
procedures and appropriate levels of authority.
• Business planning, budgeting and
reporting – a
comprehensive business planning process includes evaluation
of strategies, objectives, and risks resulting in an annual
budget approved by the board. Monthly actual performance
is reported against budget and revised forecasts for the year
are prepared regularly.
• Quality and integrity of employees – there are clearly defined
accountabilities, performance measures, and reinforcement
of values and ethics by management.
The CEO and CFO state in writing to the board that the
Company’s financial statements present a true and fair view,
in all material respects, of the Company’s financial condition
and operational results and are in accordance with relevant
accounting standards.
5
Biotron Annual Report 2010
External Auditors
Board nominees review the performance of the external
auditors and meet with them during the half yearly review and
annual audit to discuss any issues that have arisen with respect
to accounting policies, any significant operational issues and
the level of proposed audit fees. The auditor is requested to
attend the Annual General Meeting and be available to answer
shareholder questions about the conduct of the audit and the
preparation and content of the auditor’s report.
KPMG, the Company’s auditors, were appointed on 20
November 2001.
Ethical Standards
All directors, managers and employees are expected to act with
the utmost integrity and objectivity, endeavouring at all times to
enhance the performance and reputation of the Company. Every
employee has direct access to a director to whom they may refer
any ethical issues that may arise from their employment.
Directors, officers and employees are permitted to trade in the
Company’s securities only in accordance with the provisions
of the Corporations Act and ASX Listing Rules. The directors
are under an obligation to report any dealings by them in the
Company’s securities.
The Role of Shareholders
The board ensures that the shareholders are informed of all
major developments affecting the Company by the following
means:
• Distribution of the annual report is made available to all
shareholders containing relevant information about the
operations of the Company during the year in addition to
disclosures required by the Corporations Act 2001.
• Lodgement of quarterly reports with the ASX which show
summarised financial information for the quarter. Copies of
these reports are available to shareholders on request.
summarised and audit
• Lodgement of the half yearly report with the ASX which
reviewed financial
contains
information. Copies of half yearly financial statements
prepared in accordance with the Corporations Act are
available to any shareholder on request.
• Lodgement of the annual report with the ASX which contains
full audited financial information prepared in accordance
with the Corporations Act. Distribution of the annual report
is made available to all shareholders.
• Announcements to the ASX concerning any significant
development in the Company’s operations, financing and
administration. All announcements are immediately available
to the general public.
• Disclosure of all major announcements to the ASX on the
Company’s website.
• The Annual General Meeting is the main opportunity for the
shareholders to hear the Managing Director and Chairman
provide updates on the Company’s performance, ask
questions of the board and to express views and vote on
various matters of business on the agenda.
The shareholders are responsible for voting on the appointment
of directors.
Risk Management
Due to the size of the Company, the number of officers and
employees and the nature of the Company’s business, a formal
risk management policy and internal compliance and control
system has not been implemented. The CEO and CFO declare,
in writing, to the board that the system of risk management
and internal compliance and control which implements the
policies adopted by the board has been assessed and found to
be operating efficiently and effectively in all material respects.
Each director reviews the business risks affecting his particular
area of expertise annually and reports to the board. The
board then determines the appropriate actions to eliminate or
minimise the identified business risks. The full board oversees
the establishment, implementation and ongoing review of
the Company’s risk management and internal control system.
The internal control system covers financial, operational and
compliance risks.
Recommendations made by external auditors and other external
advisers are investigated by the board and, where necessary,
appropriate action is taken to ensure that the Company has the
internal control environment to manage the key risks identified.
Ways of enhancing existing risk management strategies,
including segregation of duties, employment and training of
suitably qualified and experienced personnel are investigated by
the board.
Biotron Annual Report 2010
6
STATEMENT OF CORPORATE GOVERNANCE
Performance Evaluation of the Board and
Key Executives
Due to the size of the Company, the number of officers and
employees and the nature of the Company’s business, the board
has adopted an informal and continuous performance evaluation
process of the directors and key executives. The Company has
not established formal performance review measures for the
board or key executives nor has it established a nomination
committee.
Share Trading Policy
The board restricts directors, executives and employees from
acting on material information until it has been released to the
market. Share trading by directors, executives or employees
is not permitted at any time whilst in the possession of price
sensitive information not already available to the market. In
addition, the Corporations Act prohibits the purchase or sale of
securities whilst a person is in possession of inside information.
Restricted Persons can only trade the Company’s securities
during specific trading windows. All periods outside the specific
trading windows are closed periods where Restricted Persons
are prohibited from trading in the Company’s securities unless
in special circumstances and with the approval of the Chairman.
Trading windows are the 60 days from the first trading day after
each of the following:
•
•
•
the day half year results are announced;
the day full year results are announced; and
the day of the Annual General Meeting.
7
Biotron Annual Report 2010
DIRECTORS’ REPORT
The directors present their report together with the financial
report of Biotron Limited (‘the Company’) for the year ended 30
June 2010 and the auditor’s report thereon.
Committee of the Department of Industry, Science and
Resources. He is currently a director of Dynamic Hearing and
TGR BioSciences.
Dr Hirshorn was appointed as a director on 16 March 2000.
Directors
The names and particulars of the directors of the Company at
any time during or since the end of the financial year are:
Mr Bruce Hundertmark
Independent and Non-Executive Director
Mr Michael J. Hoy
Independent and Non-Executive Chairman
Mr Hoy has more than 30 years’ corporate experience in Australia,
the United Kingdom, USA and Asia. He is Chairman of CityPrint
Holdings Pty Limited, Chairman of Tellesso Technologies Limited
and a former director of John Fairfax Holdings Limited and FXF
Trust.
He has been a director since 7 February 2000 and Chairman
since 16 March 2000.
Mr Hundertmark is an independent businessman and company
director with a wide range of experience in diverse business
operations. He has specialised in recent years in high technology
based company start-up operations and in promoting the
formation of venture capital companies
including News
Datacom Research Limited in Israel, News Datacom Limited in
Hong Kong and both PT Indo Bio Products and PT Indo Bio Fuels
in Indonesia.
He has been a director of numerous private and publicly listed
companies including News International PLC, Sky Television PLC,
Prudential Cornhill Insurance Limited, Harris Scarfe Limited,
Bernkastel Wines Limited, Codan Limited, Samic Limited and
Investment & Merchant Finance Corporation Limited.
Dr Michelle Miller, BSc, MSc, PhD, GCertAppFin (Finsia)
Mr Hundertmark was appointed as a director on 16 March 2000.
Managing Director
Dr Miller has worked for over 20 years in the bioscience industry,
with extensive experience in managing commercial bioscience
research. She completed her PhD in the Faculty of Medicine
at Sydney University investigating molecular models of cancer
development. Her experience includes a number of years at
Johnson and Johnson developing anti-HIV gene therapeutics
through preclinical research to clinical trials. She has experience
in early-stage start-ups from time spent as Investment Manager
with a specialist bioscience venture capital fund.
She was appointed as Managing Director on 21 June 2002.
Dr Michael S. Hirshorn, MBA, MB, BS
Independent and Non-Executive Director
Dr Hirshorn has 30 years experience in founding, building,
managing and investing in technology companies. He played
a major role in all commercial aspects of Cochlear Limited’s
development, was a founding director of Resmed Inc., and Chief
Executive Marketing for Polartechnics Limited.
He has over eight years of private equity experience, raising
funds, investing and developing companies. He has served
on numerous government advisory committees, including the
Start IT and T Committee, the Start Grants Biological Sciences
Dr Denis N. Wade
Non-Executive Director
Dr Denis Wade has been involved for over 40 years with the
development of research-based pharmaceuticals and medical
devices in both industry and academia. He has been a director
of several private and public companies in the Health-care sector,
including Heartware Limited and subsequently HeartWare
International Inc., since December 2004. He was a Director
and Chairman of Gene Shears Pty Limited and, from 1987 until
his retirement in 2002, Dr. Wade was Managing Director and
Chairman of Johnson & Johnson Research Pty Ltd, a research
and development company of Johnson and Johnson Inc. He
was also a member of the J&J Corporate Office of Science
and Technology, Prior to that, Dr. Wade was the Foundation
Professor of Clinical Pharmacology at the University of New
South Wales and served as a member of a number of State and
Federal bodies related to the drug industry, including the P3
Committee.
He is a former Chairman of the Australian Academy National
Committee for Pharmacology, the Australasian Society for
Clinical and Experimental Pharmacology and Toxicology and a
former Chairman of the Clinical Pharmacology Section of the
International Union of Pharmacology.
Biotron Annual Report 2010
8
DIRECTORS’ REPORT
Dr Wade holds a First Class Honours degree in Medicine and
Science from the University of Sydney and a Doctorate of
Philosophy from the University of Oxford. He was awarded
an Honorary Doctorate of Science by the University of New
South Wales and is a Fellow of the Royal Australasian College
of Physicians and of the Australian Academy of Technological
Sciences and Engineering. In 1999 he was made a Member of
the Order of Australia.
Dr Wade was appointed as a Director on 30 April 2010.
Mr Peter G. Scott
Non-Executive Director
Mr Scott is a founding director of Biotron Limited with more
than 30 years of commercial and entrepreneurial experience in
Australia.
He is a director of Scott’s Acorn Pty Ltd and was formerly
Chairman and Managing Director of Scottcom Pty Ltd and
Managing Director of ICAM Pty Ltd, audio visual and multimedia
companies.
Mr Peter Scott resigned on 1 April 2010.
Directors’ Meetings
Peter J. Nightingale
Company Secretary
Mr Nightingale graduated with a Bachelor of Economics degree
from the University of Sydney and is a member of the Institute
of Chartered Accountants in Australia. He has worked as a
chartered accountant in both Australia and the USA.
As a director or company secretary Mr Nightingale has, for
the past 22 years, been responsible for the financial control,
administration, secretarial and in-house legal functions of a
number of private and public listed companies in Australia, the
USA and Europe including Pangea Resources Limited, Timberline
Inc., Perseverance Corporation Limited, Valdora
Minerals
Minerals N.L., Bolnisi Gold NL and Palmarejo Silver and Gold
Corporation. Mr Nightingale is currently a director of Augur
Resources Ltd, Callabonna Uranium Limited, Cockatoo Coal
Limited and Planet Gas Limited.
Mr Nightingale has been company secretary since 23 February
1999.
The number of directors’ meetings held and number of meetings attended by each of the directors of the Company, while they were
a director, during the year are:
Director
No. of Eligible Meetings to Attend
No. of Meetings Attended
Directors’ Meetings
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Peter G. Scott
6
6
6
6
1
5
6
6
6
5
1
5
9
Biotron Annual Report 2010
Directors’ Interests
At the date of this report, the beneficial interests of each director of the Company in the issued share capital of the Company and
options, each exercisable to acquire one fully paid ordinary share of the Company are:
Fully Paid Ordinary
Shares
Michael J. Hoy
1,408,214
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade*
-
-
-
130,000
-
475,000
Options
500,000
1,408,214
500,000
500,000
500,000
200,000
200,000
162,500
Option Terms
(Exercise Price and Term)
$0.35 at any time up to 30 September 2010
$0.10 at any time up to 30 December 2011
$0.35 at any time up to 30 September 2010
$0.40 at any time from 30 September 2006 up to 30 September 2010
$0.45 at any time from 30 September 2007 up to 30 September 2010
$0.35 at any time up to 30 September 2010
$0.35 at any time up to 30 September 2010
$0.20 at any time up to 30 March 2012
* Dr Denis N. Wade held 475,000 shares and 162,500 options at the time of becoming a director.
Option Holdings
The movement during the reporting period in the number of options over ordinary shares in the Company held directly, indirectly or
beneficially, by each specified director and executive, including their personally-related entities, is as follows:
Option holdings - 2010
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade*
Peter G. Scott**
Executives
Peter J. Nightingale
Held at
1 July 2009
Purchased
Expired
Held at
30 June 2010
Vested and
Exercisable
at 30 June 2010
500,000
1,500,000
200,000
200,000
-
-
1,408,214
-
-
-
-
500,000
200,000
2,287,785
-
-
-
-
-
-
-
1,908,214
1,500,000
200,000
200,000
162,500
-
1,908,214
1,500,000
200,000
200,000
162,500
-
2,487,785
2,487,785
* Dr Denis N. Wade held 162,500 options at the time of becoming a director.
** Mr Peter G. Scott held 500,000 options when he resigned from office on 1 April 2010.
Biotron Annual Report 2010
10
DIRECTORS’ REPORT
Option holdings - 2009
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Peter G. Scott
Executives
Peter J. Nightingale
Held at
1 July 2008
Purchased
Expired
Held at
30 June 2009
Vested and
Exercisable
at 30 June 2009
500,000
1,500,000
200,000
200,000
-
200,000
-
-
-
-
-
-
-
-
-
-
-
-
500,000
1,500,000
200,000
200,000
-
500,000
1,500,000
200,000
200,000
-
200,000
200,000
Remuneration Report - Audited
The policy of remuneration of directors and senior executives
is to ensure the remuneration package properly reflects the
person’s duties and responsibilities, and that remuneration is
competitive in attracting, retaining and motivating people of
the highest quality. The board is responsible for reviewing its
own performance. The non-executive directors are responsible
for evaluating the performance of the executive directors
who, in turn, evaluate the performance of all other senior
executives. The evaluation process is intended to assess the
Company’s business performance, whether long term strategic
objectives are being achieved and the achievement of individual
performance objectives.
Remuneration generally comprises salary and superannuation.
Longer term incentives are able to be provided through the
Company’s Incentive Option Plan which acts to align the
directors and senior executives’ actions with the interests of
the shareholders. The remuneration disclosed below represents
the cost to the Company for the services provided under these
arrangements.
11
Biotron Annual Report 2010
No directors or senior executives receive performance related remuneration. Options issued in prior periods as remuneration were
subject to service conditions due to the nature of the Company’s operations.
Details of director and senior executive remuneration and the nature and amount of each major element of the remuneration of each
director and senior executive of the Company are:
Directors Non-executive
Michael J. Hoy (Chairman)
Michael S. Hirshorn
Bruce Hundertmark
Peter G. Scott
Denis N. Wade
Executive
Michelle Miller (Managing Director)
Executives
Peter J. Nightingale (Company Secretary)
Year
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Primary Salary
and Fees
$
Post-Employment
Superannuation Benefits
$
55,046
55,046
27,523
27,523
27,523
27,523
20,642
5,000
4,587
-
219,230
200,000
75,000
75,000
4,954
4,954
2,477
2,477
2,477
2,477
1,858
25,000
-
-
19,731
18,000
-
-
Total
$
60,000
60,000
30,000
30,000
30,000
30,000
22,500
30,000
4,587
-
238,961
218,000
75,000
75,000
Options granted as compensation - Audited
Details of options that were granted as compensation to each key management person:
Director
Grant Date
Number of
Options Granted
Fair Value
at Grant Date
Option Terms
(Exercise Price and Term)
Michelle Miller
14 October 2005
Michelle Miller
14 October 2005
Michelle Miller
14 October 2005
500,000
500,000
500,000
$24,016
$21,114
$18,701
$0.35 at any time up to
30 September 2010
$0.40 at any time from
30 September 2006 up to 30 September 2010
$0.45 at any time from
30 September 2007 up to 30 September 2010
The number of options that had vested as at 30 June 2010 is 1,500,000 (2009 – 1,500,000). There were no options that vested
during the year ended 30 June 2010, no options were granted during or subsequent to year end and no options lapsed during the
year.
Biotron Annual Report 2010
12
DIRECTORS’ REPORT
The fair value of the options at grant date was determined based on the Black-Scholes formula. The model inputs of the options
issued, were the Company’s share price of $0.17 at the grant date, a volatility factor of 50% based on historic share price performance
and a risk free interest rate of 5.25% based on the 10 year government bond rate.
Consequences of Performance on Shareholder Wealth - Audited
In considering the Company’s performance and benefits for shareholders wealth, the board have regard to the following indices in
respect of the current financial year and the previous four financial years.
Net loss attributable to equity holders of
the Company
Dividends paid
Change in share price
2010
2009
$1,872,244
$1,776,099
2008
$1,882,093
-
-
-
(0.02) cents
0.0 cents
(9.0) cents
2007
$3,234,004
-
4.5 cents
2006
$2,198,973
-
7.0 cents
The overall level of key management personnel’s compensation is assessed on the basis of market conditions, status of the Company’s
projects, and financial resources of the Company.
Service Contracts - Audited
There are no service contracts for the key management personnel.
Non-executive Directors - Audited
Total compensation for all non-executive directors is determined by the board based on market conditions.
Options
At the date of this report, unissued ordinary shares of the Company under option are:
Number of Options
Exercise Price
5,450,000
750,000
500,000
108,119,266
* 6,418,049
$0.35
$0.40
$0.45
$0.10
$0.20
Expiry Date
30 September 2010
30 September 2010
30 September 2010
30 December 2011
30 March 2012
The options do not entitle the holder to participate in any share issue of the Company or any other body corporate.
* During the year, the Company issued 6,418,049 ordinary shares as a result of the exercise of $0.10 options. There is no amount
unpaid on the shares issued. A further 6,418,049 $0.20 ‘Piggy Back’ options were issued for no consideration as a result of the early
exercise of these options. Refer Note 11.
Number of Shares
6,418,049
Amount Paid on Each Share
$0.10
13
Biotron Annual Report 2010
Principal Activities
The principal activities of the Company during the financial year
were the funding and management of intermediate and applied
biotechnology research and development projects.
Financial Result and Review of Operations
The operating loss of the Company for the financial year after
income tax was $1,872,244 (2009 loss - $1,776,099).
A review of the Company’s operations for the year is set out in
the Operating and Financial Review.
In the opinion of the directors, it would prejudice the interests
of the Company to provide additional information, except as
reported in this Annual Report, relating to likely developments
in the operations of the Company.
Indemnification of Officers and Auditors
During or since the end of the financial year, the Company has
not indemnified or made a relevant agreement to indemnify an
officer or auditor of the Company against a liability incurred by
such an officer or auditor. In addition, the Company has not paid
or agreed to pay, a premium in respect of a contract insuring
against a liability incurred by an officer or auditor.
Impact of Legislation and Other External
Requirements
Non-audit Services
During the year KPMG, the Company’s auditor, performed no
other services in addition to their statutory duties.
The board has considered the non-audit services provided
during the prior year by the auditor and is satisfied that the
provision of those non-audit services during the prior year by the
auditor is compatible with, and did not compromise, the auditor
independence requirements of the Corporations Act 2001 for
the following reasons:
• all non-audit services were subject to the corporate
governance procedures adopted by the Company and have
been reviewed by the board to ensure they do not impact
the integrity and objectivity of the auditor; and
•
the non-audit services provided did not undermine the
general principles relating to auditor independence as set out
in APES 110 Code of Ethics for Professional Accountants, as
they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision making capacity
for the Company, acting as an advocate for the Company or
jointly sharing risks and rewards.
There were no changes in environmental or other legislative
requirements during the year that have significantly impacted
the results or operations of the Company.
Dividends
The directors recommend that no dividend be paid by the
Company. No dividend has been paid or declared since the end
of the previous financial year.
State of Affairs
In the opinion of the directors, there were no significant changes
in the state of affairs of the Company that occurred during the
financial year under review.
Environmental Regulation
The Company’s operations are not subject to significant
environmental regulations under Commonwealth or State
legislation in relation to its research projects.
Events Subsequent to Balance Date
There has not arisen in the interval between the end of the
financial year and the date of this report any item, transaction
or event of a material and unusual nature likely, in the opinion
of the directors of the Company, to affect significantly the
operations of the Company, the results of those operations, or
the state of affairs of the Company, in future financial years.
Likely Developments
During the year ended 30 June 2010, the Company continued
to fund and manage its research and development projects. The
success of these research projects, which cannot be assessed
on the same fundamentals as trading and manufacturing
enterprises, will determine future likely developments.
Biotron Annual Report 2010
14
DIRECTORS’ REPORT
A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act 2001 is included in the
Directors’ Report.
Details of the amounts paid and accrued to the auditor of the Company, KPMG, and its related practices for audit and non-audit
services provided during the year are set out below.
Statutory audit
- Audit and review of financial reports
Services other than statutory audit
2010
$
34,375
2009
$
26,240
- Grant audit
-
1,750
Lead Auditor’s Independence Declaration
The Lead Auditor’s Independence Declaration is set out on page 16 and forms part of the Directors’ Report for the year ended 30
June 2010.
This report has been signed in accordance with a resolution of the directors and is dated 30 August 2010:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
15
Biotron Annual Report 2010
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Biotron Limited:
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2010, 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.
KPMG
W.E. Austin
Partner
Brisbane 30 August 2010
Biotron Annual Report 2010
16
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2010
Other income
Administration and consultants’ expenses
Depreciation
Employee and director expenses
Direct research and development expenses
Rent and outgoings expenses
Legal expenses
Other expenses from ordinary activities
Operating loss before financing income
Interest income
Net financing income
Loss before tax
Income tax expense
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Basic loss per share attributable to ordinary equity shareholders
Diluted loss per share attributable to ordinary equity shareholders
Notes
2
3
3
5
4
4
2010
$
-
(196,335)
(23,122)
(380,171)
(965,313)
(58,233)
-
(292,076)
2009
$
5,000
(172,000)
(47,731)
(360,746)
(980,294)
(51,351)
(6,675)
(221,277)
(1,915,250)
(1,835,074)
43,006
43,006
58,975
58,975
(1,872,244)
(1,776,099)
-
-
(1,872,244)
(1,776,099)
-
-
(1,872,244)
(1,776,099)
(1.61) cents
(1.61) cents
(1.67) cents
(1.67) cents
The above statement of comprehensive income should be read in conjunction with the accompanying notes
17
Biotron Annual Report 2010
STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2010
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Plant and equipment
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee entitlements
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Notes
6
7
8
9
10
2010
$
1,780,567
9,471
23,577
1,813,615
44,230
44,230
2009
$
950,581
27,520
18,385
996,486
67,352
67,352
1,857,845
1,063,838
62,212
78,075
140,287
140,287
1,717,558
136,397
85,935
222,332
222,332
841,506
11
20,750,759
19,920,593
2,277,738
359,608
(21,310,939)
(19,438,695)
1,717,558
841,506
The above statement of financial position should be read in conjunction with accompanying notes
Biotron Annual Report 2010
18
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2010
Attributable to equity holders of the
Company
Notes
Share
Capital
Option
Premium
Reserve
Retained
Losses
Total
$
$
$
$
Balance at 1 July 2008
19,146,365
359,608
(17,662,596)
1,843,377
Total comprehensive income for the year
Loss for the year
Other comprehensive income
-
-
-
-
(1,776,099)
(1,776,099)
-
-
Total comprehensive loss for the year
19,146,365
359,608
(19,438,695)
67,278
Transactions with owners, recorded directly in
equity
Contribution by and distribution to owners
Ordinary shares issued
Cost of the share issue
807,500
(33,272)
-
-
-
-
807,500
(33,272)
Balance at 30 June 2009
11
19,920,593
359,608
(19,438,695)
841,506
Balance at 1 July 2009
19,920,593
359,608
(19,438,695)
841,506
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transaction with owners, recorded directly in equity
Contribution by and distribution to owners
Ordinary shares/options issued
Cost of the option issue
Share based payment transaction
Exercise of options
-
-
-
-
-
-
(1,872,244)
(1,872,244)
-
-
(1,872,244)
(1,872,244)
641,805
2,290,746
-
(244,255)
60,000
-
128,361
(128,361)
-
-
-
-
2,932,551
(244,255)
60,000
-
Balance at 30 June 2010
11
20,750,759
2,277,738
(21,310,939)
1,717,558
The statement of changes in equity is to be read in conjunction with the accompanying notes
19
Biotron Annual Report 2010
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2010
Cash flows from operating activities
Cash receipts in the course of operations
Payments for research and development
Cash payments in the course of operations
Cash used in operations
Interest received
Notes
2010
$
2009
$
-
3,910
(1,138,088)
(1,081,839)
(765,239)
(883,264)
(1,903,327)
(1,961,193)
45,017
68,950
Net cash used in operating activities
12
(1,858,310)
(1,892,243)
Cash flows from investing activities
Proceeds on sale of plant and equipment
Payments for plant and equipment
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of shares and options
Cost of issue of shares and options
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
-
-
-
2,932,551
(244,255)
2,688,296
829,986
950,581
Cash and cash equivalents at the end of the financial year
12
1,780,567
The above statement of cash flows should be read in conjunction with the accompanying notes
5,000
-
5,000
807,500
(33,272)
774,228
(1,113,015)
2,063,596
950,581
Biotron Annual Report 2010
20
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
1. REPORTING ENTITY
Biotron Limited (the ‘Company’) is a company domiciled in
Australia.
Basis of preparation
Statement of compliance
(‘AASBs’)
(including Australian
The financial report is a general purpose financial report which
has been prepared in accordance with Australian Accounting
Standards
Interpretations)
adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The financial report
of the Company also complies with International Financial
Reporting Standards (IFRSs) and interpretations adopted by the
International Accounting Standards Board (IASB).
The financial report was authorised for issue by the directors on
30 August 2010.
Basis of measurement
The financial statements have been prepared on the historical
cost basis.
Functional and presentation currency
These financial statements are presented in Australian dollars,
which is the Company’s functional currency.
Use of estimates and judgements
The preparation of financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
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 and in any future
periods affected.
In particular, information about significant areas of estimation
uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amounts
recognised in the financial statements are described in the
following notes.- Note 1 Going Concern.
Going concern
The financial report has been prepared on a going concern basis
which contemplates the realisation of assets and settlement of
liabilities in the ordinary course of business.
The Company has incurred a trading loss of $1,872,244 in
the year ended 30 June 2010 and has accumulated losses of
$21,310,939 as at 30 June 2010. The Company has cash on
hand of $1,780,587 at 30 June 2010 and used $1,853,310 of
cash in operations for the year then ended. These conditions
give rise to a material uncertainty that may cast significant doubt
upon the Company’s ability to continue as a going concern. The
ongoing operation of the Company is dependent on:
•
•
the Company raising additional funding from shareholders
or other parties; and/or
the Company reducing expenditure in line with available
funding.
The directors have prepared cash flow projections that support
the ability of the Company to continue as a going concern.
These cash flow projections assume the Company obtains
sufficient additional funding from shareholders or other parties.
If such funding is not achieved, the Company plans to reduce
expenditures significantly.
In the event that the Company does not obtain additional
funding and/or reduce expenditure in line with available
funding, it may not be able to continue its operations as a going
concern and therefore may not be able to realise its assets and
extinguish its liabilities in the ordinary course of operations and
at the amounts stated in the financial statements.
Changes in accounting policies
Commencing on 1 July 2009, the Company changed its
accounting policies in the following areas:
• presentation of financial statements; and
• operating segments.
Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these financial statements,
and have been applied consistently by the Company, except as
explained in the notes which address changes in accounting
policies.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits.
Trade and other receivables
Trade and other receivables are stated at their amortised cost
less impairment losses.
21
Biotron Annual Report 2010
Property, plant and equipment
Property plant and equipment are stated at their historical cost
less accumulated depreciation and accumulated impairment
losses. Depreciation is recognised in profit or loss using the
reducing balance method from the date of acquisition at rates
between 13% and 40% per annum.
Research and development
Grants
Where a grant is received relating to research and development
costs that have been expensed, the grant is recognised as
revenue when there is reasonable assurance it will be received.
Costs
Expenditure on research activities, undertaken with the
prospect of gaining new scientific or technical knowledge and
understanding, is recognised in profit and loss when incurred.
Development activities involve a plan or design for the production
of new or substantially improved products and processes.
Development expenditure is capitalised only if development
costs can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits
are probable, and the Company intends to and has sufficient
resources to complete development and to use or sell the asset.
The expenditure capitalised includes the cost of materials,
direct labour and overhead costs that are directly attributable
to preparing the asset for its intended use. Other development
expenditure is recognised in profit or loss when incurred.
Capitalised development expenditure is measured at cost less
accumulated amortisation and accumulated impairment losses.
Trade and other payables
Trade and other payables are stated at their amortised cost, are
non-interest bearing and are normally settled within 60 days.
Employee entitlements
Wages, salaries, annual leave and sick leave
Liabilities for employee entitlements for wages, salaries, annual
leave and sick leave represent present obligations resulting
from employees’ services provided to reporting date, calculated
at undiscounted amounts based on remuneration wages and
salary rates that the company expect to pay as at reporting
date including related on-costs, such as workers compensation
insurance and superannuation.
Long service leave
Liabilities for employee entitlements for long service leave is the
amount of future benefit that employees have earned in return
for their service in the current and prior periods plus related
on-costs, that benefit is discounted to determine its present
value.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effects.
Dividends on ordinary shares are recognised as a liability in the
period in which they are declared.
Taxation
Income tax
Income tax on the profit or loss for the year comprises current
and deferred tax. Income tax is recognised in the income
statement except to the extent that it relates to items recognised
directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially enacted at
the balance sheet date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided using the balance sheet method,
providing for temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The initial
recognition of assets or liabilities that affect neither accounting
nor taxable profit, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future are temporary differences and are not
provided for. The amount of deferred tax provided is based on
the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or
substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
Goods and services tax
Revenue, expenses and assets are recognised net of the amount
of goods and services tax (‘GST’), except where the amount of
GST incurred is not recoverable from the taxation authority. In
these circumstances, 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 ATO is included as a current asset or liability in the
balance sheet.
Biotron Annual Report 2010
22
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
Cash flows are included in the statement of cash flows on a
gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or
payable to, the ATO are classified as operating cash flows.
Revenue recognition
Finance income
Interest revenue is recognised as it accrues using the effective
interest rate method.
Earnings per share
The Company presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees.
Incentive option plan
The Incentive Option Plan allows the Company’s employees or
directors, or individuals whom the Plan Committee determine to
be employees for the purposes of the Plan, with the opportunity
to acquire options over unissued shares in the Company. The fair
value of options granted is measured at grant date and spread
as an expense over the period during which the employees or
directors become unconditionally entitled to the options. The
fair value of the options granted is measured using Black-
Scholes formula, taking into account the terms and conditions
upon which the options were granted. The amount recognised
as an expense is adjusted to reflect the actual number of options
that vest except where forfeiture is only due to share prices not
achieving the threshold for vesting.
Impairment
Financial assets
A financial asset is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired. A
financial asset is considered to be impaired if any objective
evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured
at amortised cost is calculated as the difference between its
carrying amount, and the present value of the estimated future
cash flows discounted at the original effective interest rate. An
impairment loss in respect of an available-for-sale financial asset
is calculated by reference to its fair value.
All impairment losses are recognised in profit or loss. Any
cumulative loss in respect of an available-for-sale financial asset
recognised previously in equity is transferred to profit and loss.
An impairment loss is reversed if the reversal can be related
objectively to an event occurring after the impairment loss was
recognised. For financial assets measured at amortised cost
and available-for-sale financial assets that are debt securities,
the reversal is recognised in profit or loss. For available-for-
sale financial assets that are equity securities the reversal is
recognised directly in equity.
Non-financial assets
The carrying amounts of the Company’s non-financial assets are
reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists then
the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to sell.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset.
An impairment loss is recognised if the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount.
Impairment losses are recognised in profit or loss.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates
used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no
impairment had been recognised.
Determination of fair values
A number of the Company’s accounting policies and disclosures
require the determination of fair value, for both financial
and non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes
based on the following methods. Where applicable, further
information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability.
Trade and other receivables
The fair value of trade and other receivables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the reporting date.
23
Biotron Annual Report 2010
Share-based payment transactions
The fair value of employee share options is measured using the
Black-Scholes formula. Measurement inputs include share price
on measurement date, exercise price of the instrument, expected
volatility (based on weighted average historic volatility adjusted
for changes expected due to publicly available information),
weighted average expected life of the instruments (based on
historical experience and general option holder behaviour),
expected dividends, and the risk-free interest rate (based on
government bonds). Service and non-market performance
conditions attached to the transactions are not taken into
account in determining fair value. Share-based payment
arrangements in which the Company receives goods or services
as consideration for its own equity instruments are accounted
for as equity-settled share-based payment transactions.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the reporting date.
Presentation of financial statements
The Company applies revised AASB 101 Presentation of Financial
Statements (2007), which became effective as of 1 January
2009. As a result, the Company presents in the consolidated
statement of changes in equity all owners changes in equity,
whereas all non-owners changes in equity are presented in the
consolidated statement of comprehensive income.
Comparative information has been re-presented so that it also
is in conformity with the revised standard. Since the changes in
accounting policy only impacts presentation aspects, there is no
impact on earnings per share.
Segment reporting
Determination and presentation of operating segments
As of 1 July 2009 the Company determines and presents
operating segments based on the information that internally
is provided to the CEO, who is the Company’s chief operating
decision maker. This change in accounting policy is due to the
adoption of AASB 8 Operating Segments. Previously, operating
segments were determined and presented in accordance with
AASB 114 Segment Reporting. The new accounting policy in
respect of segment operating disclosures is presented as follows.
An operating segment is a component of the Company that
engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate
to transactions with any of the Company’s other components.
All operating segments’ operating results are regularly reviewed
by the Company’s CEO to make decisions about resources to be
allocated to the segment and assess its performance, and for
which discrete financial information is available.
Segment results that are reported to the CEO include items directly
attributable to a segment as well as those that can be allocated
on a reasonable basis. Unallocated items comprise mainly of
corporate assets (primarily the Company’s headquarters), head
office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the
period to acquire property, plant and equipment, and intangible
assets other than goodwill.
Since the change in accounting policy only impacts presentation
and disclosure aspects, there is no impact on earnings per share.
New standards and interpretations not yet
adopted
The following standards, amendments to standards and
interpretations have been identified as those which may impact
the entity in the period of initial application. They are available
for early adoption at 30 June 2010, but have not been applied
in preparing this financial report.
• AASB 9 Financial Instruments includes requirements for the
classification and measurement of financial assets resulting
from the first part of Phase 1 of the project to replace AASB
139 Financial Instruments: Recognition and Measurement.
AASB 9 will become mandatory for the Company’s 30 June
2014 financial statements. Retrospective application is
generally required, although there are exceptions, particularly
if the entity adopts the standard for the year ended 30 June
2012 or earlier. The Company has not yet determined the
potential effect of the standard.
• AASB 124 Related Party Disclosures (revised December
2009) simplifies and clarifies the intended meaning of the
definition of a related party and provides a partial exemption
from the disclosure requirements for government-related
entities. The amendments, which will become mandatory for
the Company’s 30 June 2012 financial statements, are not
expected to have any impact on the financial statements.
• AASB 2009-5 further amendments to Australian Accounting
Standards arising from the Annual Improvements Process
affect various AASBs resulting in minor changes for
presentation, disclosure, recognition and measurement
purposes. The amendments, which become mandatory
for the Company’s 30 June 2011 financial statements, are
not expected to have a significant impact on the financial
statements.
Biotron Annual Report 2010
24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
• AASB 2009-10 Amendments to Australian Accounting
Standards - Classification of Rights Issue [AASB 132]
(October 2010) clarify that rights, options or warrants to
acquire a fixed number of an entity’s own equity instruments
for a fixed amount in any currency are equity instruments
if the entity offers the rights, options or warrants pro-rata
to all existing owners of the same class of its own non-
derivative equity instruments. The amendments, which
will become mandatory for the Company’s 30 June 2011
financial statements, are not expected to have any impact
on the financial statements.
•
IFRIC 19 Extinguishing Financial Liabilities with Equity
Instruments addresses the accounting by an entity when the
terms of a financial liability are renegotiated and result in the
entity issuing equity instruments to a creditor of the entity
to extinguish all or part of the financial liability. IFRIC 19
will become mandatory for the Company’s 30 June 2011
financial statements, with retrospective application required.
The Company has not yet determined the potential effect of
the interpretation.
• AASB 2010-3 Further amendments to Australian Accounting
Standards arising from the Annual Improvements Process
affect various AASBs resulting in minor changes for
presentation, disclosure, recognition and measurement
purposes. The amendments, which become mandatory
for the Company’s 30 June 2011 financial statements, are
not expected to have a significant impact on the financial
statements.
• AASB 2010-4 Further amendments to Australian Accounting
Standards arising from the Annual Improvements Process
affect various AASBs resulting in minor changes for
presentation, disclosure, recognition and measurement
purposes. The amendments, which become mandatory
for the Company’s 30 June 2012 financial statements, are
not expected to have a significant impact on the financial
statements.
25
Biotron Annual Report 2010
2. OTHER INCOME
Gain on sale of fixed assets
Total
3. LOSS FROM OPERATING ACTIVITIES
Loss from ordinary activities has been arrived at after charging the following items:
Auditors’ remuneration paid to KPMG
- Audit and review of financial reports
- Other services
Depreciation
- Office equipment
- Plant and equipment
Direct research and development expenditure
expensed as incurred
Provision for employee entitlements
2010
$
-
-
34,375
-
14,995
8,127
965,313
(7,860)
2009
$
5,000
5,000
26,240
1,750
24,831
22,900
980,294
(20,383)
4. LOSS PER SHARE
The calculation of basic loss per share at 30 June 2010 was based on the loss attributable to ordinary shareholders of $1,872,244
(2009 - $1,776,099) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2010 of
116,088,866 (2009 - 106,600,586), calculated as follows:
Net loss for the year
1,872,244
1,776,099
Issued ordinary shares at 1 July
Effect of shares issued on 14 April 2009
Effect of shares issued on 8 April 2010
Effect of shares issued on 28 May 2010
2010
2009
Number
114,537,315
-
1,477,030
74,521
Number
104,443,565
2,157,021
-
-
Weighted average number of ordinary shares
116,088,866
106,600,586
Options disclosed in the Issued Capital Note 11 are potential ordinary shares, but are not included in the calculation of diluted loss per
share as they are not dilutive.
Biotron Annual Report 2010
26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
5. INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax net profit
Loss before tax - continuing operations
(1,872,244)
(1,776,099)
Income tax using the domestic corporation tax rate of 30%
(561,673)
(532,830)
2010
$
2009
$
Increase in income tax expense due to:
- Adjustments not resulting in temporary differences
- Unrecognised temporary differences
- Effect of tax losses not recognised
Income tax expense current and deferred
Deferred tax assets have not been recognised in respect of the following items:
Deductible temporary differences (net)
Tax losses
Net
295
(42,527)
603,905
-
114,386
7,431,227
7,545,613
2,371
(24,045)
554,504
-
85,004
6,618,540
6,703,544
The deductible temporary differences and tax losses do not expire under the current tax legislation. Deferred tax assets have not been
recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company
can utilise the benefits of the deferred tax asset.
6. RECEIVABLES
Current
Other debtors
GST receivable
7. OTHER
Current prepayments
Security deposits
1,875
7,596
9,471
8,447
15,130
23,577
2,011
25,509
27,520
3,255
15,130
18,385
27
Biotron Annual Report 2010
8. PLANT AND EQUIPMENT
Office equipment - at cost
Accumulated depreciation
Plant and equipment - at cost
Accumulated depreciation
Total plant and equipment - net book value
Reconciliations
Reconciliations of the carrying amounts for each class of plant and equipment are set out below:
Office equipment
Balance at 1 July
Depreciation
Carrying amount at the end of the financial year
Plant and equipment
Balance at 1 July
Depreciation
Carrying amount at the end of the financial year
Total carrying amount at the end of the financial year
9. TRADE AND OTHER PAYABLES
Current
Creditors
Accruals
10. EMPLOYEE ENTITLEMENTS
Current
Employee annual leave provision
Long service leave provision
Number of employees at the end of the financial year
Biotron Annual Report 2010
2010
$
157,439
(133,610)
23,829
594,490
(574,089)
20,401
44,230
38,824
(14,995)
23,829
28,528
(8,127)
20,401
44,230
32,324
29,888
62,212
34,047
44,028
78,075
4
2009
$
157,439
(118,615)
38,824
594,490
(565,962)
28,528
67,352
63,655
(24,831)
38,824
51,428
(22,900)
28,528
67,352
34,897
101,500
136,397
46,722
39,213
85,935
4
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
11. ISSUED CAPITAL
Issued and paid up capital
121,755,364 (2009 - 114,537,315) fully paid ordinary shares
20,750,759
19,920,593
2010
$
2009
$
Fully paid ordinary shares
Balance at the beginning of the financial year
Issue of shares
Share base payment transaction
Exercise of options
Costs of issue
Balance at the end of financial year
19,920,593
641,805
60,000
128,361
-
19,146,365
807,500
-
-
(33,272)
20,750,759
19,920,593
Holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per
share at shareholders’ meetings. In the event of winding up of
the Company, ordinary shareholders rank after creditors and are
fully entitled to any proceeds of liquidation.
During the year ended 30 June 2009, the Company issued
10,093,750 ordinary shares through a Share Purchase Plan
and placement for cash totalling $807,500. Total issue costs
of $33,272 were recognised as a reduction of the proceeds of
issue of these shares.
During the year ended 30 June 2010, the Company issued
114,537,315 options at $0.02 each (2009 nil). Total issue costs
of $244,255 were recognised as a reduction of the proceeds
of the issue of these options. Also during the year ended 30
June 2010, a further 6,418,049 options were issued for no
consideration as a result of the early exercise of these options.
The following options, which were issued during the year ended
30 June 2010 for cash consideration or as a ‘piggyback option’
upon the early exercise of an existing option, were on issue at
30 June 2010:
• 108,119,266 options, each exercisable at 10 cents to acquire
one fully paid ordinary share at any time up to 30 December
2011.
• 6,418,049 options, each exercisable at 20 cents to acquire
one fully paid ordinary share at any time up to 30 March
2012.
The following options, were issued during the year ended 30
June 2008 and were on issue at 30 June 2010:
• 1,000,000 options, each exercisable at 35 cents to acquire
one fully paid ordinary share at any time up to 30 September
2010.
During the year ended 30 June 2010, the Company issued
6,418,049 ordinary shares through the exercise of options for
cash totalling $641,805.
• 4,450,000 options, each exercisable at 35 cents to acquire
one fully paid ordinary share at any time up to 30 September
2010 (of which certain options contained service conditions).
During the year ended 30 June 2010, the Company issued
800,000 shares for $60,000 in consideration for the provision
of market research services. The shares issued were valued by
reference to the closing share price on the date of issue.
• 750,000 options, each exercisable at 40 cents to acquire one
fully paid ordinary share at any time up to 30 September
2010 (of which certain options contained service conditions).
• 500,000 options, each exercisable at 45 cents to acquire one
fully paid ordinary share at any time up to 30 September
2010 (of which certain options contained service conditions).
29
Biotron Annual Report 2010
The fair value of the options at each grant date was determined based on the Black-Scholes formula. The model inputs for those
options issued during the year ended 30 June 2008, were the Company’s share price of $0.22 at the grant date, a volatility factor of
89.4% based on historic share price performance and a risk free interest rate of 7.25% based on the 10 year government bond rate.
Total expense arising from share based payment transactions recognised during the year ended 30 June 2010 was $60,000
(2009 – $nil).
During the year ended 30 June 2010, no options lapsed (2009 – nil).
The weighted average exercise price of options at year end was $0.12 (2009 – $0.363).
12. STATEMENT OF CASH FLOWS
Reconciliation of cash flows from operating activities
Loss for the period
(1,872,244)
(1,776,099)
2010
$
2009
$
Adjustments for:
Depreciation of plant and equipment
Provisions
Share based payment
Gain on sale of plant and equipment
Changes in assets and liabilities
Decrease in receivables
(Increase)/decrease in prepayments
(Decrease) in payables
Decrease in other assets
23,122
(7,860)
60,000
-
18,049
(5,192)
(74,185)
-
47,731
(20,383)
(5,000)
31,963
686
(181,230)
10,089
Net cash used in operating activities
(1,858,310)
(1,892,243)
Reconciliation of cash
For the purposes of the Statement of Cash Flows, cash includes cash on hand and at bank and cash on deposit net of bank overdrafts
and excluding security deposits. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the
related items in the Statement of Financial Position as follows:
Cash and cash equivalents in the statement of cash flows
1,780,567
950,581
Biotron Annual Report 2010
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
13. KEY MANAGEMENT PERSONNEL
DISCLOSURES
The policy of remuneration of directors and senior executives
is to ensure the remuneration package properly reflects the
person’s duties and responsibilities, and that remuneration is
competitive in attracting, retaining and motivating people of
the highest quality. The board is responsible for reviewing its
own performance. The non-executive directors are responsible
for evaluating the performance of the executive directors
who, in turn, evaluate the performance of all other senior
executives. The evaluation process is intended to assess the
Company’s business performance, whether long term strategic
objectives are being achieved and the achievement of individual
performance objectives.
Remuneration generally comprises salary and superannuation.
Longer term incentives are able to be provided through the
Company’s Incentive Option Plan which acts to align the
directors and senior executives’ actions with the interests of
the shareholders. The remuneration disclosed below represents
the cost to the Company for the services provided under these
arrangements.
No directors or senior executives receive performance related
remuneration. No bonuses were paid during the year.
Details of director and senior executive remuneration and the
nature and amount of each major element of the remuneration
of each director and senior executive of the Company are:
Directors
Non-executive
Michael J. Hoy
(Chairman)
Michael S. Hirshorn
Bruce Hundertmark
Peter G. Scott
Denis N. Wade
Executive
Michelle Miller
(Managing Director)
Executives
Peter J. Nightingale
(Company Secretary)
Total
Year
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
2010
2009
Primary Salary
and Fees
$
Post-Employment
Superannuation Benefits
$
55,046
55,046
27,523
27,523
27,523
27,523
20,642
5,000
4,587
-
219,230
200,000
75,000
75,000
429,551
390,092
4,954
4,954
2,477
2,477
2,477
2,477
1,858
25,000
-
-
19,731
18,000
-
-
31,497
52,908
Total
$
60,000
60,000
30,000
30,000
30,000
30,000
22,500
30,000
4,587
-
238,961
218,000
75,000
75,000
461,048
443,000
During 2010 and 2009, no long term benefits, termination benefits or share-based payments were paid.
31
Biotron Annual Report 2010
Equity holdings and transactions
The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or beneficially,
by each specified director and executive, including their personally-related entities, is as follows:
Fully paid ordinary shareholdings and transactions - 2010
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade*
Peter G. Scott**
Executives
Peter J. Nightingale
Held at
1 July 2009
Purchased
Received on
Exercise of
Options
Sales
Held at
30 June 2010
1,408,214
-
-
-
-
9,014,000
1,702,397
-
-
130,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,408,214
-
130,000
-
475,000
-
1,702,397
* Dr Denis N. Wade held 475,000 shares at the time of becoming a director.
** Mr Peter G. Scott held 9,014,000 shares when he resigned as director on 1 April 2010.
Fully paid ordinary shareholdings and transactions - 2009
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Peter G. Scott
Executives
Peter J. Nightingale
Held at
1 July 2008
Purchased
Received on
Exercise of
Options
Sales
Held at
30 June 2009
1,345,714
62,500
-
-
-
-
-
-
-
-
8,924,414
89,586
1,639,897
62,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,408,214
-
-
-
-
9,014,000
1,702,397
During the year ended 30 June 2010, Michael J. Hoy had an interest in an entity, CityPrint Holdings Pty Limited, which provided
printing services to the Company. Payments to CityPrint Holdings Pty Limited, which were in the ordinary course of business and on
normal terms and conditions, amounted to $21,239 (2009 - $17,062). Outstanding amounts at 30 June 2010 total $nil (2009 - $nil).
During the year ended 30 June 2010, Peter J. Nightingale had an interest in an entity, MIS Corporate Pty Limited, which provided full
administrative services, including rental accommodation, administrative staff, services and supplies, to the entity. Fees paid to MIS
Corporate Pty Limited during the year, which were in the ordinary course of business and on normal terms and conditions, amounted
to $121,526 (2009 - $122,025). Outstanding amounts at 30 June 2010 total $nil (2009 - $nil).
Biotron Annual Report 2010
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
Apart from the details disclosed in this note, no director has entered into a material contract with the Company since the end of the
previous financial year and there were no material contracts involving directors’ interests existing at year end.
Option holdings
The movement during the reporting period in the number of options over ordinary shares in the Company held directly, indirectly or
beneficially, by each specified director and executive, including their personally-related entities, is as follows:
Option holdings - 2010
Held at
1 July 2009
Purchased
Expired
Held at
30 June 2010
Vested and
Exercisable
at 30 June 2010
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade*
Peter G. Scott**
Executives
Peter J. Nightingale
500,000
1,500,000
200,000
200,000
-
-
1,408,214
-
-
-
-
500,000
200,000
2,287,785
-
-
-
-
-
-
-
1,908,214
1,500,000
200,000
200,000
162,500
-
1,908,214
1,500,000
200,000
200,000
162,500
-
2,487,785
2,487,785
* Dr Denis N. Wade held 162,500 options at the time of becoming a director.
** Mr Peter G. Scott held 500,000 options when he resigned from office on 1 April 2010.
Option holdings - 2009
Held at
1 July 2008
Purchased
Expired
Held at
30 June 2009
Vested and
Exercisable
at 30 June 2009
500,000
1,500,000
200,000
200,000
-
200,000
-
-
-
-
-
-
-
-
-
-
-
-
500,000
1,500,000
200,000
200,000
-
500,000
1,500,000
200,000
200,000
-
200,000
200,000
Biotron Annual Report 2010
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Peter Scott
Executives
Peter J. Nightingale
33
14. EMPLOYEE AND DIRECTOR INCENTIVE
OPTION PLAN
At 30 June 2010, the Company had 4 employees (2009 - 4).
All other personnel are contracted by the Company on a
consultancy basis.
The Company has an Incentive Option Plan to provide eligible
persons, being employees or directors, or individuals whom the
Plan Committee determine to be employees for the purposes of
the Plan, with the opportunity to acquire options over unissued
ordinary shares in the Company. The number of options
granted or offered under the Plan will not exceed 10% of the
Company’s issued share capital and the exercise price of options
will be the greater of the market value of the Company’s shares
as at the date of grant of the option or such amount as the Plan
Committee determines. Options have no voting or dividend
rights.
In the event that the employment or office of the optionholder
is terminated, any options which have not reached their exercise
period will lapse and any options which have reached their
exercise period may be exercised within three months of the
date of termination of employment. Any options not exercised
within this three month period will lapse.
During the year ended 30 June 2010, no options were granted
or forfeited to employees (2009 - nil). No ordinary shares have
been issued as a result of the exercise of any option granted
pursuant to the Incentive Option Plan during the years ended 30
June 2010 and 30 June 2009.
15. FINANCIAL INSTRUMENTS DISCLOSURE
The board has overall responsibility for the establishment and
oversight of the risk management framework. Informal risk
management policies are established to identify and analyse the
risks faced by the Company.
The main risks arising from the Company’s financial instruments
are credit risk, liquidity risk and interest rate risk. The summaries
below present information about the Company’s exposure to
each of these risks, their objectives, policies and processes for
measuring and managing risk, the management of capital and
financial instruments.
Credit risk
Credit risk arises mainly from the risk of counterparties defaulting
on the terms of their agreements. The carrying amounts of the
following assets represent the Company’s maximum exposure to
credit risk in relation to financial assets:
Notes
Carrying
amount
Carrying
amount
Cash and cash
equivalents
Trade and
other receivables
Security deposits
6
7
2010
$
2009
$
1,780,567
950,581
9,471
15,130
27,520
15,130
1,805,168
993,231
The Company mitigates credit risk on cash and cash equivalents
by dealing with regulated banks in Australia. Credit risk of trade
and other receivables is very low as it consists predominantly of
amounts recoverable from taxation authorities in Australia.
Biotron Annual Report 2010
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
Impairment losses
No impairment has been taken up against the Company’s financial assets.
None of the Company’s trade and other receivables are past due and no amount receivable has been renegotiated.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under
both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
Company
30 June 2010
Carrying
Amount
$
Contractual
Cash Flows
Less Than
One Year
Between One and
Five Years
Interest
$
$
Trade and other payables
62,212
(62,212)
(62,212)
30 June 2009
Trade and other payables
136,397
(136,397)
(136,397)
$
-
-
$
-
-
Ultimate responsibility for liquidity management rests with the board. The Company manages liquidity risk by maintaining adequate
funding and monitoring of future rolling cash flow forecasts of its operations, which reflect management’s expectations of expected
settlement of financial assets and liabilities.
Interest rate risk
The Company’s income statement is affected by changes in interest rates due to the impact of such changes on interest income from
cash and cash equivalents and interest bearing security deposits.
At balance date, the Company had the following mix of financial assets exposed to variable interest rate risk that are not designated
as cash flow hedges:
Financial Assets
Cash and cash equivalents
Security deposits
Net exposure
Note
7
2010
$
1,780,567
15,130
1,795,697
2009
$
950,581
15,130
965,711
35
Biotron Annual Report 2010
Sensitivity analysis
An increase of 100 basis points in interest rates throughout the
reporting period would have decreased the loss for the period
by the amounts shown below, whilst a decrease would have
increased the loss by the same amount. The Company’s equity
consists of fully paid ordinary shares. There is no effect on fully
paid ordinary shares by an increase or decrease in interest rates
during the period.
30 June 2010
30 June 2009
$
11,276
9,657
16. FINANCIAL REPORTING BY SEGMENTS
The Company operates in the biotechnology industry in
Australia.
17. OPERATING LEASE
The Company leases an office in North Ryde Sydney. The lease is
currently under negotiations for a period of 3 years starting from
November 2010 with an option to renew lease after that 3 years.
Lease payments are increased every year at an increment of 5%
per annum. This increment percentage is under negotiation.
During the year ended 30 June 2010, $58,233 was recognised as
an expense in the income statement in respect of the operating
lease (2009 - $51,351).
Less than one year
Between one and five years
More then five years
2010
2009
$
24,871
-
-
$
58,831
25,009
-
Capital management
The board’s policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business.
The board ensures costs are not incurred in excess of available
funds and will seek to raise additional funding through issues
of shares for the continuation of the Company’s operation.
There were no changes in the Company’s approach to capital
management during the year.
The Company is not subject to externally imposed capital
requirements.
Net fair values of financial assets and liabilities
The carrying amounts of financial assets and
liabilities
approximate their net fair values, given the short time frames to
maturity and or variable interest rates.
Biotron Annual Report 2010
36
DIRECTORS’ DECLARATION
1. In the opinion of the directors of Biotron Limited:
a)
the financial statements and notes set out on pages 17 to 36, and the Remuneration Report in the Directors’ Report, set out
on pages 11 to 13, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s financial position as at 30 June 2010 and of its performance for the
financial year ended on that date; and
(ii) complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations
Regulations 2001;
b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1;
c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable.
2. The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive
officer and chief financial officer for the financial year ended 30 June 2010.
This report has been signed in accordance with a resolution of the directors and is dated 30 August 2010:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
37
Biotron Annual Report 2010
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF BIOTRON LIMITED
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We performed the procedures to assess whether in all material
respects the financial report presents fairly, in accordance with
the Corporations Act 2001 and Australian Accounting Standards
(including the Australian Accounting Interpretations), a view
which is consistent with our understanding of the Company’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the
independence requirements of the Corporations Act 2001.
Report on the financial
report
We have audited the accompanying
financial report of Biotron Limited (the
Company), which comprises the statement of financial position
as at 30 June 2010, and the statement of comprehensive
income, statement of changes in equity and statement of cash
flows for the year ended on that date, a description of significant
accounting policies and other explanatory notes 1 to 17 and the
directors’ declaration.
Directors’ responsibility for the financial report
The directors of Biotron Limited are responsible for the
preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the
Australian Accounting Interpretations) and the Corporations Act
2001. This responsibility includes establishing and maintaining
internal control relevant to the preparation and fair presentation
of the financial report that is free from material misstatement,
whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are
reasonable in the circumstances.
In Note 1 the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial report comprising the financial
statements and notes complies with International Financial
Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report
based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. These Auditing Standards
require that we comply with relevant ethical requirements
relating to audit engagements and plan and perform the audit
to obtain reasonable assurance whether the financial report is
free from material misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement
of the financial report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are
Biotron Annual Report 2010
38
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF BIOTRON LIMITED
Auditor’s opinion
In our opinion:
a)
the financial report of Biotron Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s financial position as at 30 June 2010 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.
b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Material uncertainty regarding continuation as a going concern
Without qualifying our opinion, we draw attention to Note 1, “Going Concern” in the financial report. The conditions disclosed in
Note 1 indicate the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as
a going concern and, therefore, whether it will realise its assets and extinguish its liabilities in the normal course of business and at
the amounts stated in the financial report.
Report on the remuneration report
We have audited the Remuneration Report included in pages 11 to 13 of the directors’ report for the year ended 30 June 2010. 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 auditing standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Biotron Limited for the year ended 30 June 2010 complies with Section 300A of the
Corporations Act 2001.
KPMG
(cid:3)
Brisbane 30 August 2010
W.E. Austin
Partner
39
Biotron Annual Report 2010
ADDITIONAL STOCK EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2010
Home Exchange
The Company is listed on the ASX Limited. The home exchange is Sydney.
Use of Cash and Assets
Since the Company’s listing on the ASX, the Company has used its cash and assets in a way consistent with its stated business
objectives.
Class of Shares and Voting Rights
There is only one class of shares in the Company, fully paid ordinary shares.
The rights attaching to shares in the Company are set out in the Company’s Constitution. The following is a summary of the principal
rights of the holders of shares in the Company.
Every holder of shares present in person or by proxy, attorney or representative at a meeting of shareholders has one vote on a vote
taken by a show of hands, and, on a poll every holder of shares who is present in person or by proxy, attorney or representative has
one vote for every fully paid share registered in the shareholder’s name on the Company’s share register.
A poll may be demanded by the chairperson of the meeting, by at least 5 shareholders entitled to vote on the resolution or shareholders
with at least 5% of the votes that may be cast on the resolution on a poll.
Distribution of Equity Securityholders
As at 31 July 2009, the distribution of each class of equity was as follows:
Range
Fully Paid
Ordinary Shares
30 September
2010 $0.35
Options
30 September
2010 $0.40
Options
30 September
2010 $0.45
Options
30 December
2011 $0.10
Options
30 March
2012 $0.20
Options
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
58
373
303
635
167
1,536
-
-
-
-
12
12
-
-
-
-
2
2
-
-
-
-
1
1
2
38
50
197
124
411
-
20
21
58
11
110
At 31 July 2010, nil shareholders held less than a marketable parcel of shares.
ADDITIONAL STOCK EXCHANGE INFORMATION
Biotron Annual Report 2010
40
ADDITIONAL STOCK EXCHANGE INFORMATION
FOR THE YEAR ENDED 30 JUNE 2010
Twenty Largest Quoted Shareholders
At 31 July 2010 the twenty largest fully paid ordinary shareholders held 42.51% of fully paid ordinary as follows:
Name
Dr Angela Fay Dulhunty
Scott’s A V Pty Ltd
Rigi Investments Pty Ltd
Twynam Agricultural Group Pty Ltd
CBDF Pty Ltd
Pathold No 222 Pty Ltd
Martin Place Securities Staff Superannuation Fund Pty Ltd
Chris and Bhama Parish
Philip and Marylyn Board
Linkenholt Pty Ltd
Michael John Hoy
ANZ Nominees Limited
Edstop Pty Ltd
Ian and Marion Platt-Hepworth
Carrington Services Pty Ltd
Wightholme Nominees Pty Ltd
Peter James Nightingale
Prof Alan Jonathan Berrick
Christopher David Hammer
Ramsab Pty Ltd
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
There are no current on-market buy-backs.
Fully Paid Ordinary
Shares
9,968,362
9,014,000
4,492,645
3,700,000
2,875,254
2,650,000
2,300,000
1,600,000
1,599,950
1,500,000
1,408,214
1,358,829
1,248,276
1,228,420
1,200,000
1,200,000
1,175,714
1,150,000
1,090,715
1,000,000
%
8.19
7.40
3.69
3.04
2.36
2.18
1.89
1.31
1.31
1.23
1.16
1.12
1.03
1.01
0.99
0.99
0.97
0.94
0.90
0.82
41
Biotron Annual Report 2010
Principal Administration Office:
Suite 1.9, 56 Delhi Road
NORTH RYDE NSW 2113
Phone: 61-2 9805 0488
Fax:
61-2 9805 0688
CORPORATE DIRECTORY
Directors:
Mr Michael J. Hoy (Chairman)
Dr Michelle Miller (Managing Director)
Dr Michael S. Hirshorn
Mr Bruce Hundertmark
Dr Denis N. Wade
Company Secretary:
Mr Peter J. Nightingale
Registered Office:
Level 2, 66 Hunter Street
SYDNEY NSW 2000
Phone:
61-2 9300 3344
Fax:
61-2 9221 6333
E-mail:
enquiries@biotron.com.au
Homepage: www.biotron.com.au
Share Registrar:
Computershare Investor Services Pty Limited
PO Box 523
BRISBANE QLD 4001
Phone: 61-7 3237 2100
Fax:
61-7 3229 9860
Auditors:
KPMG
Level 16, Riparian Plaza
71 Eagle Street
BRISBANE QLD 4000
Home Exchange:
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
Solicitors:
Minter Ellison
88 Phillip Street
SYDNEY NSW 2000
Biotron Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shar
ustralia, is a publicly listed company limited by shares.
cly
sh
BIOTRON LIMITED Level 2, 66 Hunter Street, Sydney, NSW 2000, Australia
Level 2, 66 Hunter Street
Sydney NSW 2000
Tel: (61-2) 9300 3344
Fax: (61-2) 9221 6333
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of members is to be convened at Level 3, 66 Hunter
Street, Sydney, NSW, 2000 on 26 November 2010 at 11.00 am.
AGENDA
ORDINARY BUSINESS
To receive and consider the Company's annual financial report, the directors' report and the auditors' report for the
year ended 30 June 2010.
To consider and, if thought fit, pass the following resolutions, with or without amendment:
Resolution 1.
'That the Remuneration Report for the year ended 30 June 2010 be and is hereby adopted.'
Resolution 2.
'That Dr Michael S. Hirshorn be and is hereby re-elected as a Director.'
Resolution 3.
'That Dr Denis N. Wade be and is hereby elected as a Director.'
Resolution 4.
'That, for the purposes of ASX Listing Rule 10.11, the grant of 5,000,000 options to Michelle
Miller in accordance with the terms as set out in the Explanatory Memorandum
accompanying this Notice of Meeting is approved'.
To transact any other business that may be brought forward in accordance with the Company's Constitution.
By order of the Board
Peter J. Nightingale
Company Secretary
22 October 2010
pjn5610
Level 2, 66 Hunter Street
Sydney NSW 2000
Tel: (61-2) 9300 3344
Fax: (61-2) 9221 6333
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au
EXPLANATORY MEMORANDUM
This is the Explanatory Memorandum Notice referred to in the Notice of Annual General Meeting of Biotron
Limited to be convened at Level 3, 66 Hunter Street, Sydney, NSW, 2000 on 26 November 2010 at 11.00 am.
Resolution 1
Adoption of the Remuneration Report
The Remuneration Report, which can be found as part of the Directors’ Report in the Company's 2010 Annual
Report, contains certain prescribed details, sets out the policy adopted by the Board of Directors and discloses the
payments to key management personnel, Directors and senior executives.
In accordance with section 250R of the Corporations Act, a resolution that the Remuneration Report be adopted
must be put to the vote. The resolution is advisory only and does not bind Directors.
Resolution 2
Re-election of Michael Hirshorn as a Director
In accordance with Article 58 of the Company's Constitution and the Corporations Law, Michael Hirshorn retires
as a Director by rotation and, being eligible, offers himself for re-election.
Resolution 3
Election of Denis Wade as a Director
Having been appointed as a Director during the year, in accordance with Article 56 of the Company's Constitution
and the Corporations Law, Denis Wade retires as a Director and, being eligible, offers himself for election.
Resolution 4
Approval of Grant of Options to Michelle Miller
for the purposes of ASX Listing Rule 10.11
As part of her remuneration as Managing Director, Resolution 4 proposes the granting of three tranches of options
to Michelle Miller with the following principal terms and conditions:
Class of securities to be issued: 30 October 2015 options
Number of options to be issued: 5,000,000
Entitlement per option:
Issue price
Exercise price per option:
Vesting date:
Expiry date:
$nil
Exercisable at any time after the vesting date and before the expiry date
to acquire 1 fully paid ordinary share
the greater of the amount equal to 100% above the market value of the
Company's shares (as determined under section 139FA of the Income Tax
Assessment Act 1936) on the date of the grant of the options and:
$0.15 for the first tranche of 1,000,000 options
$0.20 for the second tranche of 1,000,000 options
$0.25 for the third tranche of 3,000,000 options
Immediately following shareholder approval of the grant
of options for the first tranche of 1,000,000 options
30 October 2011 for the second tranche of 1,000,000 options
30 October 2012 for the third tranche of 3,000,000 options
the earlier of 30 October 2015 and the date which is 1 month after the
date of ceasing to be an officer of the Company (other than due to the
occurrence of a Special Circumstance as defined by the Biotron Incentive
Option Plan)
By obtaining shareholder approval for Resolution 4 as required by ASX Listing Rule 10.11, the Company will
satisfy the requirements of Exception 14 of ASX Listing Rule 7.2 and thereby not require shareholder approval for
these issues under Listing Rule 7.1.
The options issued under Resolution 4 allow for the rights of the optionholder to be changed to comply with the
ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation. The optionholder
cannot participate in new issues without exercising the options.
All options granted under Resolution 4 may be allotted immediately following shareholder approval at the Annual
General Meeting and, in any event, within one month following the close of the meeting.
No funds will be raised from the issue of the options. In the event that any of the options are exercised, the funds
raised will be used to continue the development of the Company's biotechnology projects and for working capital
purposes.
The options which may be granted are intended to provide an incentive to Michelle Miller to recognise her
contribution to the Company. The Directors consider that the incentive represented by these options is a cost
effective and efficient incentive offered by the Company when compared with alternative forms of incentive such
as cash bonuses or increased remuneration.
Voting Exclusion Statement
The Company will disregard any votes cast on Resolution 4 by:
Michelle Miller; and
any associates of Michelle Miller.
However, the Company need not disregard a vote if:
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions
on the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the proxy decides.
Level 2, 66 Hunter Street
Sydney NSW 2000
Tel: (61-2) 9300 3344
Fax: (61-2) 9221 6333
E-mail: pnightingale@biotron.com.au
Website: www.biotron.com.au
FORM OF PROXY
I/we . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
being a member/members of Biotron Limited HEREBY APPOINT
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
or failing him, the Chairman of the Meeting, as my/our Proxy to vote for me/us and on my/our behalf at the Annual General
Meeting of Members of the Company to be held at 11.00 am on 26 November 2010 and at any adjournment thereof.
The Proxy is directed by me/us to vote as indicated by the marks in the appropriate boxes below:
RESOLUTION
1. Adoption of the Remuneration Report
2. Re-election of Michael S. Hirshorn as a Director
3. Election of Denis N. Wade as a Director
4. Approval of the grant of options to Michelle Miller
FOR
□
□
□
□
AGAINST
□
□
□
□
ABSTAIN
□
□
□
□
If no directions are given, the Proxy may vote as the Proxy thinks fit or may abstain.
If you do not wish to direct your Proxy how to vote, please place a mark in the box:
By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of
the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest. The Chairman
intends to vote undirected proxies in favour of each item.
□
Dated this . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . 2010
Signatures of Member(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMMON SEAL of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.C.N. . . . . . . . . . . . . . . . . . . . .
was hereunto affixed in accordance with
its Constitution in the presence of: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director
Secretary
PROXY INSTRUCTIONS
A member entitled to attend and vote is entitled to appoint not more than 2 proxies.
1.
2. Where more than 1 proxy is appointed, each proxy must be appointment to represent a specified
3.
4.
5.
6.
7.
8.
9.
proportion of the member's voting rights.
A proxy need not be a member.
Companies must sign under seal.
All joint holders must sign.
All executors of deceased estates must sign.
The Company will disregard any votes cast on Resolution 4 by:
Michelle Miller; and
any associates of Michelle Miller.
However, the Company need not disregard a vote if:
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on
the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in
accordance with a direction on the proxy form to vote as the proxy decides.
The Company has determined, in accordance with regulation 7.11.37 of the Corporations Regulations
2001 (Cth), that the Company's shares quoted on the Australian Stock Exchange Limited at 7.00 pm
Sydney time on 24 November 2010 are taken, for the purposes of the Annual General Meeting to be held
by the persons who held them at that time. Accordingly, those persons are entitled to attend and vote (if
not excluded) at the meeting.
Proxy forms must be received at the Company's registered office, Level 2, 66 Hunter Street, Sydney,
NSW, 2000, or by facsimile on (61-2) 9221 6333, not less than 48 hours before the time appointed for
holding the meeting.
pjn5610