BIOTRON LIMITED ABN 60 086 399 144
Annual Report
2011
CONTENTS
Operating and Financial Review ............................... 3 – 5
Statement of Corporate Governance .................... 6 – 11
Directors’ Report ................................................. 12 – 19
Statement of Comprehensive Income .......................... 20
Statement of Financial Position .................................... 21
Statement of Changes in Equity ................................... 22
Statement of Cash Flows ............................................. 23
Notes to the Financial Statements ....................... 24 – 37
Directors’ Declaration .................................................. 38
Independent Auditor’s Report .............................. 39 – 40
Additional Stock Exchange Information ................ 41 – 42
Corporate Directory ..................................................... 43
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OPERATING AND FINANCIAL REVIEW
Review of Operations
The period under review has seen significant advances on the
clinical progression of Biotron’s antiviral drug development
program, with continued focus on the clinical development of
the Company’s lead drug, BIT225, for treatment of Hepatitis C
virus (HCV).
Significant events achieved in this financial year include:
• Commencement of a Phase IIa clinical trial of BIT225 in a
combination study with current approved drugs in HCV-
infected patients. This marked a major milestone for the
Company.
• Finalisation of design of proposed Phase Ib/IIa clinical
trial of BIT225 in HIV-infected patients, completion of
documentation for ethics and regulatory submissions
and submission of documentation to relevant authorities
for approval for trial.
• An independent, international published study provided
strong support for the Company’s HIV drug development
program.
• Presentation of data from the Company’s HIV and HCV
programs at international scientific conferences as well as
showcasing the Company to the international investment
community at several high profile events.
•
Initiation and successful completion of a $2.4 million
capital raising via a rights issue and share placement.
Hepatitis C Virus Clinical Program
Biotron has an impressive pipeline of world class clinical
programs developing new drugs to treat significant viral diseases
including HCV and HIV. During the financial year ended 30 June
2011, Biotron commenced the third human trial of its lead drug,
BIT225 - an investigational, orally-administered, novel antiviral
compound in development for treatment of HCV and HIV
infections.
Since the end of the financial year, Biotron has announced the
dosing of the final patient in this landmark trial.
This trial follows on from the successful completion of the two
preceding human trials of BIT225. These previous trials included
a 48 person first-in-human safety study in healthy volunteers in
late 2007 and a Phase Ib/IIa trial of the drug in people infected
with HCV, completed in late 2009.
This latest trial was a Phase IIa trial of BIT225 in combination
with the current approved treatment for HCV - interferon and
ribavirin. The trial was designed to assess the safety of Biotron’s
drug when given daily for 28 days, as well to assess its effect on
the level of virus in the blood of the patients and to see whether
BIT225 can improve the efficacy of interferon and ribavirin.
During this trial, twenty four patients infected with genotype 1
HCV were dosed twice daily with BIT225 or placebo for 28 days
at the commencement of a standard course of treatment of
interferon and ribavirin.
Genotype 1 patients make up the majority of HCV infections
in the Western world, and are the hardest to treat, with less
than half responding to current approved treatment. There is
an unmet medical need for drugs that will improve treatment
outcomes for this group of patients.
This trial is a crucial step in the development path of BIT225.
We have previously shown that BIT225 is able to significantly
improve the activity of interferon and ribavirin in laboratory-based
studies, and a previous clinical trial of BIT225 in HCV-positive
patients showed promising results.
Now that all 24 patients have completed dosing with BIT225,
samples from all patients are being analysed and collated for
review by an independent data and safety monitoring committee
(DSMC). It is anticipated that preliminary headline data will be
available by the end of September 2011.
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. Antiviral drugs cannot be used on their own to
treat chronic infections due to development of drug resistance,
so this combination study reflects how BIT225 would be most
likely to be used in a clinical setting, subject to continuing positive
results and approvals.
interferon and ribavirin, are often
These existing drugs,
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.
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 for HCV have limited
effectiveness and toxicity issues, leaving a significant need for
new therapies. The worldwide market is currently almost US$3.0
billion, but it is estimated that this market will expand to over
US$10.0 billion as safe, effective therapies enter the market.
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OPERATING AND FINANCIAL REVIEW
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 combination trial.
HIV CLINICAL PROGRAM
BIT225 also works against HIV, the virus that causes AIDS.
While HCV remains our primary focus, the opportunity presented
by BIT225 in HIV is equally ground breaking. BIT225 specifically
stops the virus growing in reservoir cells, where until now the
virus has been able to hide from the body’s immune system.
We are currently progressing through the ethics and regulatory
approval process for a Phase Ib/IIa HIV study at the same
Bangkok hospital which has conducted the HCV trial.
Twenty four HIV positive subjects with high virus levels in their
blood will be randomly assigned to receive BIT225 or placebo
twice daily for 10 days. The aim of the trial is to determine if
BIT225 can reduce or eliminate HIV in the cells that establish
reservoirs of virus, compared to placebo.
We anticipate commencement of this trial (named BIT225-
004) in September 2011, after receipt of ethics and importation
approvals. Our goal is to see the HIV trial completed by the end
of the year but this is dependent, as always, on suitable patient
recruitment.
If successful, we anticipate that BIT225 could be used in future
combination therapies for HIV alongside other approved drugs,
complementing their activity by BIT225’s ability to clear virus
from cells that are inaccessible to other drugs.
In July 2010, Biotron scientists presented a paper at the XVIII
International AIDS conference in Vienna, demonstrating that
BIT225 has the potential to prevent the establishment of HIV
infection in the first cells to encounter the virus at the point of
infection. These cells, called dendritic cells, act as the ‘watch
dogs’ of the immune system, so reach the virus first when it
gets into the body. Within approximately 24 hours of first
infection, HIV starts replicating in these dendritic cells and is then
transmitted to the body’s T cells where the virus establishes a
more explosive infection.
Delegates at the conference heard that BIT225 was able to
significantly reduce levels of HIV in dendritic cells in the laboratory,
with up to 89% reduction in virus transferred to uninfected T cells.
The results are significant as prevention or minimisation of the
establishment of HIV infection would potentially ameliorate the
devastating effects of HIV infection in the body. The finding
opens up a new avenue for potential exploitation of BIT225
in addition to its potential use in controlling viral reservoirs in
patients with established infection.
In November 2010, an independent, international published
study provided further strong support for Biotron’s HIV drug
development program. The study demonstrated how the deadly
HIV virus manages to avoid the human body’s natural defence
mechanisms, showing that the Vpu protein of HIV is central to
this process. BIT225 specifically targets the Vpu protein of HIV.
The study on Vpu, published in the prestigious peer-reviewed
journal Cell Host & Microbe, showed that Vpu stops cells
infected with HIV from triggering an immune reaction, ‘hiding’
the infected cells so that immune cells are unable to seek them
out and destroy them. The study infers that drugs targeting Vpu
could potentially ‘wake up’ the cells, making them susceptible to
destruction by the body’s defence system. The study provides
solid evidence of the importance of Vpu as a potential major
target for therapeutic intervention.
These trials in HIV and HCV 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 engaging
with pharmaceutical companies in anticipation of partnering the
technology once these trials have been completed.
The proposed trials are designed to benefit shareholders through
significantly increasing the value of Biotron in the market and to
its future pharmaceutical company partners.
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. 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.
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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 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 intellectual property
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 modulating ion 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
WO6135978
Antiviral compounds and methods
Priority - 24 June 2005
WO2009/018609
Hepatitis C antiviral compounds and methods
Priority - 3 August 2007
CAPITAL RAISING
Granted in Australia, Canada, China, Japan New Zealand, and USA
Under examination elsewhere (Hong Kong and Europe)
Granted in Australia, Canada, China, Japan, New Zealand, Europe, and USA
Granted in India, New Zealand, Singapore and South Africa
Under examination elsewhere
Granted in South Africa
Waiting for or under examination elsewhere
Waiting for or under examination in all jurisdictions
In February 2011, the Company initiated a capital raising via a share purchase plan (SPP) to eligible shareholders, followed by a
placement under the same terms as the SPP, raising $2.4 million.
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 2011
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STATEmENT OF CORPORATE GOVERNANCE
The role and responsibilities of the Board of Directors is for the
overall Corporate Governance of the Company and oversight
of management, protecting the rights and interests of the
shareholders, by adopting systems of control and managed risk
as the basis for the administration.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to maintaining the highest standards of
Corporate Governance. Corporate Governance is about having
a set of core values and behaviours that underpin the Company’s
activities and ensure transparency, fair dealing and protection of
the interests of stakeholders.
The Board of Directors supports the Principles of Good Corporate
Governance and Best Practice Recommendations developed by
the ASX Corporate Governance Council (Council). Whilst the
Company’s practices are largely consistent with the Council’s
guidelines, the Board considers that the implementation of
some recommendations are not appropriate having regard
to the nature and scale of the Company’s activities and size
of the Board. The Board uses its best endeavours to ensure
exceptions to the Council’s guidelines do not have a negative
impact on the Company and the best interests of shareholders
as a whole. When the Company is not able to implement one
of the Council’s recommendations the Company applies the ‘if
not, why not’ explanation approach by applying practices in
accordance with the spirit of the relevant principle.
The following discussion outlines the ASX Corporate Governance
Council’s eight principles and associated recommendations
and the extent to which the Company complies with those
recommendations.
Details of all of the Council’s recommendations can be found on
the ASX website at http://www.asx.com.au
PRINCIPLE 1
Lay solid foundations for management and
oversight
BOARD OF DIRECTORS
In general, the Board is responsible for, and has the authority
to determine, all matters relating to the policies, practices,
management and operations of the Company. The Board
is also responsible for the overall corporate governance and
management oversight of the Company, and recognises the
need for the highest standards of behaviour and accountability
in acting in the best interests of the Company as a whole.
The Board also ensures that the Company complies with all
of its contractual, statutory and any other legal or regulatory
obligations. The Board has the final responsibility for the
successful operations of the Company.
Where the Board considers that particular expertise or information
is required, which is not available from within their members,
appropriate external advice may be taken and reviewed prior to
a final decision being made by the Board.
Without intending to limit the general role of the Board, the
principal functions and responsibilities of the Board include the
following:
•
•
•
formulation and approval of the strategic direction,
objectives and goals of the Company;
the prudential control of the Company’s finances and
operations and monitoring the financial performance of
the Company;
the resourcing, review and monitoring of executive
management;
• ensuring that adequate internal control systems and
procedures exist and that compliance with these systems
and procedures is maintained;
•
•
•
the identification of significant business risks and ensuring
that such risks are adequately managed;
the timeliness, accuracy and effectiveness of communications
and reporting to shareholders and the market; and
the establishment and maintenance of appropriate ethical
standards.
The Company has adopted Recommendation 1.2 of evaluating
the performance of senior executives. The Board reviewed face
to face the performance of its senior executives.
The Company has taken the appropriate measure to provide
each director and senior executive with a copy of the Company’s
policies which spells out the rights, duties and responsibilities
that they should follow.
The Company has adopted Recommendation 1.3 by conducting
the evaluations of senior executives in accordance with the
process described above. The small size of the Company does
not warrant the need of a Board Charter and thus no Board
Charter is posted on the Company’s website.
The performance evaluation for the Managing Director was
conducted on the process described in Recommendation 1.2 by
the Chairman of the Board. No other evaluation was carried out.
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PRINCIPLE 2
Structure the Board to add value
BOARD OF DIRECTORS - COMPOSITION, STRUCTURE
AND PROCESS
The Board has been formed so that it has effective composition,
size and commitment to adequately discharge its responsibilities
and duties given the Company’s current size, scale and nature
of its activities.
Independent directors
Due to the small size of the Company, the Board is made up of
five directors. The Company has adopted Recommendations
2.1, 2.2 and 2.3 as only the Managing Director is an executive
director.
Regular assessment of independence
An independent director, in the view of the Company, is a non-
executive director who:
•
is not a substantial shareholder of the Company or
an officer of, or otherwise associated directly with, a
substantial shareholder of the Company;
• within the last three years has not been employed in an
executive capacity by the Company, or been a director
after ceasing to hold any such employment;
• within the last three years has not been a principal of a
material professional advisor or a material consultant to
the Company, or an employee materially associated with
a service provider;
•
is not a material supplier or customer of the Company, or
an officer of or otherwise associated directly or indirectly
with a material supplier or customer;
• has no material contractual relationship with the Company
other than as a director of the Company;
• has not served on the Board for a period which could,
or could reasonably be perceived to, materially interfere
with the director’s ability to act in the best interests of the
Company; and
•
is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the director’s ability
to act in the best interests of the Company.
Company, a Nomination Committee has not been established
and therefore Recommendation 2.4 has not been adopted.
Performance review and evaluation
The Company follows Recommendations 2.5 and 2.6 by
disclosing the process for evaluating the performance of the
Board, and disclosure requirements under Principle 2 in the
following paragraphs.
It is the policy of the Board to ensure that the directors and
executives of the Company are equipped with the knowledge
and information they need to discharge their responsibilities
effectively, and that individual and collective performance is
regularly and fairly reviewed. Although the Company is not
of a size to warrant the development of formal processes for
evaluating the performance of its Board, individual directors and
executives, there is on-going monitoring by the Chairman and
the Board. The Chairman also speaks to directors individually
regarding their role as a director.
Induction and education
The Company has the policy to provide each new director or
officer with a copy of the following documents:
•
•
•
•
Code of Conduct;
Continuous Disclosure Policy;
Share Trading Policy; and
Shareholders Communication Policy.
Access to information
Each director has access to Board papers and all relevant
documentation.
Skills, knowledge and experience
Directors are appointed based on the specific corporate and
governance skills and experience required by the Company.
The Board consists of a relevant blend of personal experience in
accounting and finance, law, financial and investment markets,
financial management and public company administration, and,
director-level business or corporate experience required by the
Company.
Professional advice
Board members, with the approval of the Chairman, may seek
from time to time external professional advice.
The composition of the Board is reviewed periodically with
regards to the optimum number and skills of directors required for
the Board to properly perform its responsibilities and functions.
Having regard to the current membership of the Board and the
size, organisational complexity and scope of operation of the
Term of appointment as a director
The Constitution of the Company provides that a director, other
than the Managing Director, may not retain office for more
than three calendar years or beyond the third Annual General
Meeting following his or her election, whichever is longer,
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STATEmENT OF CORPORATE GOVERNANCE
without submitting himself or herself for re-election. One third of
the directors (excluding the Managing Director) must retire each
year and are eligible for re-election. The directors who retire
by rotation at each Annual General Meeting are those with the
longest length of time in office since their appointment or last
election.
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 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.
PRINCIPLE 3
Promote ethical and responsible decision
making
CODE OF CONDUCT AND ETHICAL STANDARDS
All directors, executives and employees act with the utmost
integrity and objectivity in carrying out their duties and
responsibilities, endeavouring at all times to enhance the
reputation and performance 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. Given the size of
the Company, a formal code of conduct has not been adopted
and therefore Recommendation 3.1 has not been adopted.
Access to company information and confidentiality
All directors have the right of access to all relevant Company books
and to the Company’s executive management. In accordance
with legal requirements and agreed ethical standards, directors
and executives of the Company have agreed to keep confidential
information received in the course of exercising their duties and
will not disclose non-public information except where disclosure
is authorised or legally mandated.
Share dealings and disclosures
The Company has adopted a policy relating to the trading of
Company securities. The Board restricts directors, executives
and employees from acting on material information until it has
been released to the market. Executives, employees and
directors are required to consult the Chairman and the Board
respectively, prior to dealing in securities in the Company or
other companies in which the Company has a relationship.
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.
As at the date of this report the Company has modified its share
trading policy as follows:
•
the trading windows for restricted persons are 60 days
after the release of the following:
o
o
o
the half year results;
the full year results; or
the holding of the Annual General Meeting
•
restricted persons are prohibited from trading in the
Company’s securities unless in special circumstances
and with the approval of the Chairman.
Conflicts of interest
To ensure that directors are at all times acting in the best interests
of the Company, directors must:
• disclose to the Board actual or potential conflicts of
interest that may or might reasonably be thought to exist
between the interests of the director and the interests
of any other parties in carrying out the activities of the
Company; and
•
if requested by the Board, within seven days or such
further period as may be permitted, take such necessary
and reasonable steps to remove any conflict of interest.
If a director cannot, or is unwilling to remove a conflict of interest
then the director must, as required by the Corporations Act,
absent himself from the room when Board discussion and/or
voting occurs on matters about which the conflict relates.
Related party transactions
Related party transactions include any financial transaction
between a director and the Company as defined in the
Corporations Act or the ASX Listing Rules. Unless there is an
exemption under the Corporations Act from the requirement to
obtain shareholder approval for the related party transaction,
the Board cannot approve the transaction. The Company also
discloses related party transactions in its financial statements as
required under relevant Accounting Standards.
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Board diversity
Given the small size of the Company, Recommendations 3.2,
3.3, 3.4 and 3.5 were not adopted for the year ended 30 June
2011 as the Company has not set a policy concerning diversity.
However, the Company’s Board does take into account the
gender, age, ethnicity and cultural background of potential
Board members.
PRINCIPLE 4
Safeguard integrity in financial reporting
AUDIT AND RISK COMMITTEE
The Company has not established an Audit and Risk Committee
or a corresponding charter.
The objective of a committee is to make recommendations to
the Board regarding among various matters the adequacy of the
external audit, risk management and compliance procedures. A
committee is asked to evaluate from time to time the effectiveness
of the financial statements prepared for the Board and to ensure
that independent judgement is always exercised.
The functions of an Audit and Risk Committee are performed
by the full Board because of the small size of the Company.
Therefore Recommendation 4.2 has not been adopted.
The duties and responsibilities of Recommendation 4.3 were not
adopted because the Company does not have an Audit and Risk
Committee. However, all the normal duties and responsibilities
of an Audit and Risk Committee are presently carried out by the
full Board.
Because the functions of an Audit and Risk Committee are performed
by the full Board, Recommendation 4.4 provides the name and
qualification of all directors as detailed in the Directors’ Report.
PRINCIPLE 5
Make timely and balanced disclosure
The Company has not adopted Recommendations 5.1 and
5.2 given the current membership of the Board, organisational
complexity and scope of operations of the Company.
CONTINUOUS DISCLOSURE TO THE ASX
The Board has designated the Company Secretary as the
person responsible for overseeing and co-ordinating disclosure
of information to the ASX as well as communicating with the
ASX. Accordingly the Company will notify the ASX promptly
of information:
• concerning the Company, that a reasonable person
would expect to have a material effect on the price or
value of the Company’s securities; and
•
that would, or would be likely to, influence persons who
commonly invest in securities in deciding whether to
acquire or dispose of the Company’s securities;
Announcements are made in a timely manner, are factual and do
not omit material information in order to avoid the emergence of
a false market in the Company’s securities.
PRINCIPLE 6
Respect the rights of shareholders
COMMUNICATIONS
The Company has not adopted Recommendation 6.1 by
establishing a formal Shareholders’ Communication Policy due to
the size of the Company, the effectiveness of current shareholder
communications and the level of shareholder participation at
general meetings.
Communication to the market and shareholders
The Board recognises its duty to ensure that its shareholders
are informed of all major developments affecting the Company’s
state of affairs. The Board considers that information will be
communicated to shareholders and the market through:
•
•
the Annual Report which is distributed to shareholders
(usually with the Notice of Annual General Meeting);
the Annual General Meeting and other general meetings
called to obtain shareholder approvals as appropriate;
•
the half-yearly financial statements;
• quarterly cash flow reports; and
• other announcements released to the ASX as required
under the continuous disclosure requirements of the
ASX Listing Rules and other information that may be
mailed to shareholders or made available through the
Company’s website.
The Company actively promotes communication with
shareholders through a variety of measures, including the use
of the Company’s website and email. The Company’s reports
and ASX announcements are made available on the Company’s
website, www.biotron.com.au, and on the ASX website,
www.asx.com.au, under ASX code ‘BIT’. The Company also
maintains an email list for the distribution of the Company’s
announcements via email.
BIOTRON Annual Report 2011
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STATEmENT OF CORPORATE GOVERNANCE
PRINCIPLE 7
Recognise and manage risk
The Board is responsible for the identification, monitoring and
management of significant business risks and the implementation
of appropriate levels of internal control, recognising however that
no cost effective internal control system will preclude all errors
and irregularities. The Board regularly reviews and monitors
areas of significant business risk.
Due to the size of the Company, Recommendation 7.2 is not
relevant for Biotron because the Board has the oversight function
of risk management and internal control systems. Therefore, the
risk management functions and oversight of material business
risks are performed directly by the Board and not by management.
The paragraph below contemplates the principles incorporated
in the Company’s Audit and Risk Committee Charter.
INTERNAL CONTROL AND RISK MANAGEMENT
The primary vehicle for managing corporate risks is the Audit
Committee appointed by the Board (currently performed by the
full Board). The Committee/Board reviews systems of external
and internal controls and areas of significant operational, financial
and property risk and ensures arrangements are in place to
contain such risks to acceptable levels.
The Company ensures that appropriate insurance policies are
kept current to cover all potential risks and maintaining Directors’
and Officers’ professional indemnity insurance.
INTERNAL AUDIT FUNCTION
The internal audit function is carried out by the Board. The
Company does not have an internal audit department nor has
an internal auditor. The size of the Company does not warrant
the need or the cost of appointing an internal auditor.
CEO AND CFO DECLARATIONS
The Company has adopted and complied with Recommendation
7.3. The Board has determined that the Managing Director and
the Company Secretary are the appropriate persons to make the
CEO and CFO declarations in respect of the year ended 30 June
2011, as required under section 295A of the Corporations Act
and recommended by the ASX Corporate Governance Council.
The Board is also satisfied that the internal control system is
operating effectively in all material respects.
The Company has adopted and complied with Recommendation
7.4 as follows:
•
•
•
the Board conducts evaluations regarding internal control
and risk management;
the Board has received the assurance from the Managing
Director and Company Secretary;
the Company does not have a written policy on risks
oversight management of business material
risks
because the number of people engaged in the Company’s
operations is minimal; and
• all directors have the right to seek independent legal and
other professional advice at the Company’s expense
concerning any aspect of the Company’s operations
or undertakings in order to fulfil their duties and
responsibilities as directors, subject to prior consultation
with the Chairman.
PRINCIPLE 8
Remunerate fairly and responsibly
Due to the size of the Company, Recommendation 8.1 has not
been adopted and the Company does not have a Remuneration
Committee. However, for the year ended 30 June 2011 the
functions and responsibilities listed below were carried out by
the full Board.
REMUNERATION RESPONSIBILITIES
The role and responsibility of the Board is to review and make
recommendations in respect of:
• executive remuneration policy;
• executive director and senior management remuneration;
• executive incentive plan;
• non-executive directors’ remuneration;
• performance measurement policies and procedures;
•
termination policies and procedures;
• equity based plans; and
•
required remuneration and remuneration benefits public
disclosure.
REMUNERATION POLICY
The directors’ remuneration is adopted by shareholders at the
Annual General Meeting. The salary and emoluments paid to
officers are approved by the Board. Consultants are engaged as
required pursuant to service agreements. The Company ensures
that fees, salaries and emoluments are in line with general
standards for publicly listed companies of the size and type of
the Company. All salaries of directors and statutory officers are
disclosed in the Annual Report of the Company each year.
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2
In line with Recommendation 8.2, the Company has a policy
to remunerate its directors and officers based on fixed and
incentive component salary packages to reflect the short and
long term objectives of the Company.
The salary component of the CEO’s remuneration is made up of:
• fixed remuneration; and
• equity based remuneration when invited to participate
by the Board in the executive share option plan of the
Company.
The salary component of non-executive and executive directors
is made up of:
• fixed remuneration; and
• equity based remuneration when invited to participate
by the Board in the executive share option plan of the
Company.
The Company has not adopted Recommendation 8.3 because
it does not have a Remuneration Committee.
BIOTRON Annual Report 2011
11
DIRECTORS’ REPORT
The directors present their report together with the financial report of Biotron Limited (‘the Company’) for the year ended 30 June
2011 and the auditor’s report thereon.
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 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.
Dr Michelle Miller
BSc, MSc, PhD, GCertAppFin (Finsia)
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 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.
Mr Bruce Hundertmark
Independent and Non-Executive Director
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.
Mr Hundertmark was appointed as a director on 16 March 2000.
12
BIOTRON Annual Report 2011
+
1
2
Dr Denis N. Wade
Independent and 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.
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.
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 more than 20 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 Minerals Inc., Perseverance Corporation Limited, Valdora Minerals
N.L., Mogul Mining N.L. and Bolnisi Gold N.L.. Mr Nightingale is currently Chairman of ASX listed Callabonna Uranium Limited and
a director of Augur Resources Ltd, Cockatoo Coal Limited and Sumatra Copper & Gold plc and unlisted public companies Equus
Resources Limited and Nickel Mines Limited.
Mr Nightingale has been Company Secretary since 23 February 1999.
BIOTRON Annual Report 2011
13
DIRECTORS’ REPORT
Directors’ Meetings
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:
Directors’ Meetings
No. of Eligible Meetings to Attend
No. of Meetings Attended
6
6
6
6
6
6
6
5
5
6
Director
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
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
1,566,108
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
-
-
-
130,000
-
475,000
Options
1,408,214
1,000,000
1,000,000
3,000,000
-
-
Option Terms
(Exercise Price and Term)
$0.10 at any time up to 30 December 2011
$0.22 at any time up to 30 October 2015
$0.22 from 30 October 2011 to 30 October 2015
$0.25 from 30 October 2012 to 30 October 2015
-
-
162,500
$0.20 at any time up to 30 March 2012
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:
14
BIOTRON Annual Report 2011
+
1
2
Option holdings - 2011
Held at
1 July 2010
Purchased/
Granted
Expired
Held at
30 June 2011
Vested and
Exercisable
at 30 June 2011
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Executives
1,908,214
1,500,000
200,000
200,000
162,500
Peter J. Nightingale
2,487,785
Option holdings - 2010
1,408,214
5,000,000
-
-
-
-
500,000
1,500,000
200,000
200,000
-
1,408,214
5,000,000
-
-
1,408,214
1,000,000
-
-
162,500
162,500
200,000
2,287,785
2,287,785
Held at
1 July 2009
Purchased/
Granted
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
500,000
1,500,000
200,000
200,000
-
-
1,408,214
-
-
-
-
500,000
Peter J. Nightingale
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.
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.
BIOTRON Annual Report 2011
15
DIRECTORS’ REPORT
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. Options issued in current and 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:
Year
Primary Salary
and Fees
$
Post-Employment
Superannuation
Benefits
$
Fair Value of
Options
$
Total
$
Options as %
of Remuneration
Directors
Non-executive
Michael J. Hoy
(Chairman)
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Executive
Michelle Miller
(Managing Director)
Executives
Peter J. Nightingale
(Company Secretary)
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
2011
2010
55,046
55,046
27,523
27,523
27,523
27,523
27,523
4,587
240,385
219,230
75,000
75,000
4,954
4,954
2,477
2,477
2,477
2,477
2,477
-
21,635
19,731
-
-
-
-
-
-
-
-
-
-
255,446
-
-
-
60,000
60,000
30,000
30,000
30,000
30,000
4,587
-
517,466
238,961
75,000
75,000
-
-
-
-
-
-
-
-
49%
-
-
-
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
24 December 2010
1,000,000
Michelle Miller
24 December 2010
1,000,000
Michelle Miller
24 December 2010
3,000,000
$105,000
$105,000
$312,000
$0.22 at any time up to
30 October 2015
$0.22 at any time from 30 October 2011 up to
30 October 2015
$0.25 at any time from 30 October 2012 up to
30 October 2015
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 $0.12 at the grant date, a volatility factor of 141% based on historic share price
performance, a risk free interest rate of 5.47% based on the 10 year government bond rate and no dividends paid.
The number of options that had vested as at 30 June 2011 is 1,000,000 (2010 – 2,400,000). No options were granted subsequent
to year end 2,400,000 options lapsed during the year.
16
BIOTRON Annual Report 2011
+
1
2
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
2011
2010
2009
2008
2007
$1,907,527
$1,872,244
$1,776,099
$1,882,093
$3,234,004
-
-
-
-
-
4.8 cents
(0.02) cents
0.0 cents
(9.0) cents
4.5 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
108,014,737
6,418,049
2,000,000
3,000,000
$0.10
$0.20
$0.22
$0.25
Expiry Date
30 December 2011
30 March 2012
30 October 2015
30 October 2015
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 104,529 ordinary shares as a result of the exercise of $0.10 options. There is no amount
unpaid on the shares issued.
Number of Shares
104,529
Amount Paid on Each Share
$0.10
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 $1,907,527 (2010 loss - $1,872,244).
A review of the Company’s operations for the year is set out in the Operating and Financial Review.
IMPACT OF LEGISLATION AND OTHER EXTERNAL REQUIREMENTS
There were no changes in environmental or other legislative requirements during the year that have significantly impacted the results
or operations of the Company.
BIOTRON Annual Report 2011
17
DIRECTORS’ REPORT
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
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.
NON-AUDIT SERVICES
During the year KPMG, the Company’s auditor, performed no
other services in addition to their statutory duties.
The Company’s operations are not subject to significant
environmental regulations under Commonwealth or State
legislation in relation to its research projects.
A copy of the auditors’ independence declaration as required
under Section 307C of the Corporations Act 2001 is included in
the Directors’ Report.
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 2011, 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.
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.
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
2011
$
2010
$
- Audit and review of
financial reports
30,500
34,375
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration is set out on page
19 and forms part of the Directors’ Report for the year ended 30
June 2011.
This report has been signed in accordance with a resolution
of the directors and is dated 29 August 2011:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
18
BIOTRON Annual Report 2011
+
1
2
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 2011, 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
Adam Twemlow
Partner
29 August 2011
BIOTRON Annual Report 2011
19
STATEmENT OF COmPREHENSIVE INCOmE
FOR THE YEAR ENDED 30 JUNE 2011
Other income
Administration and consultants’ expenses
Depreciation
Employee and director expenses
Direct research and development expenses
Rent and outgoings expenses
Travel 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
2011
$
447,490
(195,000)
(14,438)
(701,084)
(1,159,336)
(65,083)
(56,390)
(229,892)
2010
$
-
(196,335)
(23,122)
(380,171)
(965,313)
(58,233)
(48,748)
(243,328)
(1,973,733)
(1,915,250)
66,206
66,206
43,006
43,006
(1,907,527)
(1,872,244)
-
-
(1,907,527)
(1,872,244)
-
-
(1,907,527)
(1,872,244)
(1.49) cents
(1.49) cents
(1.61) cents
(1.61) cents
The above statement of comprehensive income should be read in conjunction with the accompanying notes
20
BIOTRON Annual Report 2011
STATEmENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2011
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
2011
$
2010
$
6
7
8
9
10
2,144,831
1,780,567
452,524
15,655
9,471
23,577
2,613,010
1,813,615
31,610
31,610
44,230
44,230
2,644,620
1,857,845
140,544
103,776
244,320
244,320
62,212
78,075
140,287
140,287
2,400,300
1,717,558
11
23,087,673
20,750,759
2,171,485
2,277,738
(22,858,858)
(21,310,939)
2,400,300
1,717,558
The above statement of financial position should be read in conjunction with the accompanying notes
BIOTRON Annual Report 2011
21
+21
STATEmENT OF CHANGES OF EQUITY
FOR THE YEAR ENDED 30 JUNE 2011
Attributable to equity holders of the
Company
Notes
Issued
Capital
Option
Premium
Reserve
Accumulated
Losses
Total
$
$
$
$
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
Transactions with owners, recorded directly in equity
Contribution by and distribution to owners
Ordinary shares 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 2009
11
20,750,759
2,277,738
21,310,939
1,717,558
Balance at 1 July 2010
20,750,759
2,277,738
21,310,939
1,717,558
Total comprehensive income for the year
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners, recorded directly in equity
Contribution by and distribution to owners
Ordinary shares/options issued
Cost of the share issue
Share based payment transaction
Transfer expired options
Exercise of options
-
-
-
-
-
-
(1,907,527)
(1,907,527)
-
-
(1,907,527)
(1,907,527)
2,490,453
(155,630)
-
-
-
-
255,446
-
-
-
2,490,453
(155,630)
255,446
(359,608)
(359,608)
2,091
(2,091)
-
-
-
Balance at 30 June 2011
11
23,087,673
2,171,485
(22,858,858)
2,400,300
The statement of changes in equity is to be read in conjunction with the accompanying notes
22
BIOTRON Annual Report 2011
STATEmENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2011
Cash flows from operating activities
Payments for research and development
Cash payments in the course of operations
Cash used in operations
Interest received
Notes
2011
$
2010
$
(1,159,336)
(1,138,088)
(875,611)
(765,239)
(2,034,947)
(1,903,327)
66,206
45,017
Net cash used in operating activities
12
(1,968,741)
(1,858,310)
Cash flows from investing activities
Payments for plant and equipment
Net cash used in 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 in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
12
The above statement of cash flows should be read in conjunction with the accompanying notes
(1,818)
(1,818)
-
-
2,490,453
(155,630)
2,334,823
364,264
1,780,567
2,144,831
2,932,551
(244,255)
2,688,296
829,986
950,581
1,780,567
BIOTRON Annual Report 2011
23
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
1. REPORTING ENTITY
CASH AND CASH EQUIVALENTS
Biotron Limited (the ‘Company’) is a company domiciled in
Australia.
Cash and cash equivalents comprise cash balances and call
deposits.
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).
TRADE AND OTHER RECEIVABLES
Trade and other receivables are stated at their amortised cost
less impairment losses.
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.
The financial report was authorised for issue by the directors on
29 August 2011.
RESEARCH AND DEVELOPMENT
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.
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.
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.
Grants
Where a grant is received relating to research and development
costs that have been expensed, the grant is recognised as
revenue when the grant becomes receivable.
Costs
Expenditure on
the
prospect of gaining new scientific or technical knowledge and
understanding, is recognised in profit and loss when incurred.
research activities, undertaken with
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.
24
BIOTRON Annual Report 2011
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.
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
BIOTRON Annual Report 2011
25
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
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.
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.
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.
NEW STANDARDS AND INTERPRETATIONS NOT YET
ADOPTED
A number of new standards, amendments to standards and
interpretations are effective for annual periods beginning after 1
July 2010, and have not been applied in preparing these financial
statements. None of these is expected to have a significant
effect on the financial statements of the Company, except for
AASB 9 Financial Instruments, which becomes mandatory for
the Company’s 2014 financial statements and could change
the classification and measurement of financial assets. The
Company does not plan to adopt this standard early and the
extent of the impact has not been determined.
26
BIOTRON Annual Report 2011
2. OTHER INCOME
Research and development rebate
2011
$
447,490
2010
$
-
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
30,500
34,375
Depreciation
- Office equipment
- Plant and equipment
Direct research and development expenditure
expensed as incurred
Provision for employee entitlements
9,127
5,311
1,159,336
(25,701)
14,995
8,127
965,313
(7,860)
4. LOSS PER SHARE
The calculation of basic loss per share at 30 June 2011 was based on the loss attributable to ordinary shareholders of $1,907,527
(2010 - $1,872,244) and a weighted average number of ordinary shares outstanding during the financial year ended 30 June 2011
of 127,850,937 (2010 – 116,088,866), calculated as follows:
Net loss for the year
1,907,527
1,872,244
Issued ordinary shares at 1 July
Effect of shares issued on 8 April 2010
Effect of shares issued on 28 May 2010
Effect of shares issued on 17 November 2010
Effect of shares issued on 2 March 2011
Effect of shares issued on 28 March 2011
Effect of shares issued on 11 April 2011
Weighted average number of ordinary shares
2011
Number
2010
Number
121,755,364
114,537,315
-
-
61,353
1,644
2,087,370
3,945,205
1,477,030
74,521
-
-
-
-
127,850,937
116,088,866
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 2011
27
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
2011
$
2010
$
5. INCOME TAX EXPENSE
Numerical reconciliation between tax expense and pre-tax net profit
Loss before tax - continuing operations
(1,907,527)
(1,872,244)
Income tax using the domestic corporation tax rate of 30%
(572,258)
(561,673)
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
79,437
521,363
(28,542)
-
133,007
7,609,592
7,742,600
295
(42,527)
603,905
-
114,386
7,431,227
7,545,613
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
447,490
5,034
452,524
524
15,131
15,655
1,875
7,596
9,471
8,447
15,130
23,577
28
BIOTRON Annual Report 2011
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
2011
$
137,695
(121,174)
16,521
506,463
(491,374)
15,089
31,610
Reconciliations of the carrying amounts for each class of plant and equipment are set out below:
Office equipment
Balance at 1 July
Additions
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
23,829
1,819
(9,127)
16,521
20,401
(5,312)
15,089
31,610
88,544
52,000
140,544
50,163
53,613
103,776
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
Number of employees at the end of the financial year
4
4
BIOTRON Annual Report 2011
29
+21
NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
11. ISSUED CAPITAL
Issued and paid up capital
147,965,108 (2010 - 121,755,364) fully paid ordinary shares
23,087,673
20,750,759
2011
$
2010
$
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
20,750,759
2,490,453
-
2,091
(155,630)
23,087,673
19,920,593
641,805
60,000
128,361
-
20,750,759
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 2011, the Company issued
26,105,215 ordinary shares through a Share Purchase Plan and
placement for cash totalling $2,480,000. Total issue costs of
$155,630 were recognised as a reduction of the proceeds of
issue of these shares.
During the year ended 30 June 2011, the Company issued
104,529 ordinary shares through the exercise of options for cash
totalling $10,453.
During the year ended 30 June 2010, the Company issued
114,537,315 options at $0.02. 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.
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.
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 2011:
• 108,014,737 (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 2011 and were on issue at 30 June 2011:
• 1,000,000 options with a fair value at grant date of 10.5
cents, each exercisable at 22 cents to acquire one fully
paid ordinary share at any time up to 30 October 2015.
• 1,000,000 options with a fair value at grant date of 10.5
cents, each exercisable at 22 cents to acquire one fully
paid ordinary share at any time after 30 October 2011 up
to 30 October 2015.
• 3,000,000 options with a fair value at grant date of 10.4
cents, each exercisable at 25 cents to acquire one fully
paid ordinary share at any time after 30 October 2012 up
to 30 October 2015.
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.
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 2011 were
the Company’s share price of $0.12 at the grant date, a volatility
30
BIOTRON Annual Report 2011
factor of 141% based on historic share price performance, a risk
free interest rate of 5.47% based on the 10 year government
bond rate and no dividends paid.
Total expense arising from share based payment transactions
recognised during the year ended 30 June 2011 was $255,446
(2010 – $60,000).
During the year ended 30 June 2011, the following options
lapsed (2010 – nil).
• 1,000,000 options, each exercisable at 35 cents to
acquire one fully paid ordinary share at any time up to 30
September 2010.
• 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).
• 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).
The weighted average exercise price of options at year end was
$0.11 (2010 – $0.12). The weighted average life of options at
year end was 0.68 years (2010 – 1.45 years).
12. STATEMENT OF CASH FLOWS
Reconciliation of cash flows from operating activities
Loss for the period
(1,907,527)
(1,872,244)
2011
$
2010
$
Adjustments for:
Depreciation of plant and equipment
Provisions
Share based payment
Changes in assets and liabilities
Decrease in receivables
(Increase) / decrease in prepayments
(Decrease) / increase in payables
Net cash used in operating activities
Reconciliation of cash
14,438
25,701
255,446
(443,053)
7,923
78,331
(1,968,741)
23,122
(7,860)
60,000
18,049
(5,192)
(74,185)
(1,858,310)
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
2,144,831
1,780,567
BIOTRON Annual Report 2011
31
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
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. During the year
ended 30 June 2011 compensation of key management personnel totalled $742,466 (2010 – $438,548), which comprised primary
salary and fees of $453,000 (2010 – $408,909), superannuation of $34,020 (2010 – $29,639), and share based payments with a
fair value of $255,446 (2010 – nil).
During 2011 and 2010, no long term benefits or termination benefits were paid.
Individual directors and executives compensation disclosures
Information regarding individual directors and executives’ compensation and some equity instruments disclosures as required by
Corporations Regulations 2M.3.03 is provided in the remuneration report section of the Directors’ Report.
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.
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:
32
BIOTRON Annual Report 2011
Fully paid ordinary shareholdings and transactions - 2011
Held at
1 July 2010
Purchased
Received on exercise
of options
Sales
Held at
30 June 2011
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Executives
Peter J. Nightingale
1,702,397
1,408,214
157,894
-
130,000
-
475,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,566,108
-
130,000
-
475,000
1,702,397
Fully paid ordinary shareholdings and transactions - 2010
Held at
1 July 2009
Purchased
Received on exercise
of options
Sales
Held at
30 June 2010
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade*
Peter Scott**
Executives
1,408,214
-
-
-
-
9,014,000
Peter J. Nightingale
1,702,397
-
-
130,000
-
-
-
-
-
-
-
-
-
-
-
* 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.
-
-
-
-
-
-
-
1,408,214
-
130,000
-
475,000
-
1,702,397
During the year ended 30 June 2011, 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 $25,089 (2010 – $21,239). Outstanding amounts at 30 June 2011 total $746 (2010 – nil).
During the year ended 30 June 2011, 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 $120,000 (2010 – $121,526). Outstanding amounts at 30 June 2011 total $11,000 (2010 – nil).
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.
BIOTRON Annual Report 2011
33
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
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 - 2011
Directors
Michael J. Hoy
Michelle Miller
Michael S. Hirshorn
Bruce Hundertmark
Denis N. Wade
Executives
Peter J. Nightingale
2,487,785
Option holdings - 2010
Held at
1 July 2010
Purchased/
Granted
Expired
Held at
30 June 2011
Vested and exercisable
at
30 June 2011
1,908,214
1,500,000
200,000
200,000
162,500
-
500,000
1,408,214
5,000,000
1,500,000
5,000,000
200,000
200,000
-
-
1,408,214
1,000,000
-
-
-
162,500
162,500
200,000
2,287,785
2,287,785
-
-
-
-
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 Scott**
Executives
500,000
1,408,214
1,500,000
200,000
200,000
-
-
-
-
-
-
500,000
Peter J. Nightingale
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.
34
BIOTRON Annual Report 2011
14. EMPLOYEE AND DIRECTOR INCENTIVE OPTION PLAN
At 30 June 2011, the Company had 4 employees (2010 – 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 2011, 5,000,000 options were issued to the Managing Director as detailed in note 11 (2010 – 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 2011 and 30 June 2010.
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.
BIOTRON Annual Report 2011
35
+21 NOTES TO THE FINANCIAL STATEmENTS
FOR THE YEAR ENDED 30 JUNE 2011
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:
Cash and cash equivalents
Trade and
other receivables
Security deposits
Notes
Carrying Amount
Carrying Amount
2011
$
2010
$
2,144,831
1,780,567
452,524
15,131
9,471
15,130
2,612,486
1,805,168
6
7
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 and other government authorities
in Australia.
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 2011
Carrying
Amount
$
Contractual
Cash Flows
$
Less Than
One Year
$
Between One
and Five Years
$
Interest
$
Trade and other payables
140,544
(140,544)
(140,544)
30 June 2010
Trade and other payables
62,212
(62,212)
(62,212)
-
-
-
-
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.
36
BIOTRON Annual Report 2011
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. The average interest rate on funds held during
the year was 4.13% (2010 – 3.75%).
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:
Note
2011
$
2010
$
Financial Assets
Cash and cash equivalents
2,144,831
1,780,567
Security deposits
7
15,131
15,130
Net exposure
2,159,962
1,795,697
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.
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.
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 for a period of 3 years starting from November 2010 with an
option to renew lease after that 3 years.
During the year ended 30 June 2011, $65,083 was recognised
as an expense in the income statement in respect of the
operating lease (2010 – $58,233).
30 June 2011
30 June 2010
$
16,049
Less than one year
Between one and five years
11,276
More then five years
2011
$
51,629
68,839
-
2010
$
24,871
-
-
BIOTRON Annual Report 2011
37
+21 DIRECTORS’ DECLARATION
1. In the opinion of the directors of Biotron Limited:
a) the financial statements and notes set out on pages 20 to 37, and the Remuneration Report in the Directors’ Report, set out
on pages 15 to 17, 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 2011 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 2011.
This report has been signed in accordance with a resolution
of the directors and is dated 29 August 2011:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
38
BIOTRON Annual Report 2011
+
1
2
INDEPENDENT AUDITOR’S REPORT
TO THE mEmBERSOF BIOTRON LImITED
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 2011, and the statement of comprehensive income, statement of changes in equity and statement of cash
flows for the year ended on that date, notes 1 to 17 comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration.
Directors’ responsibility for the financial report
The directors of Biotron Limited are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. 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 of the financial report that gives a true and fair view in order to design audit procedures that are 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, a true and fair 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.
BIOTRON Annual Report 2011
39
INDEPENDENT AUDITOR’S REPORT
TO THE mEmBERSOF 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 2011 and of its performance for the year
ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
b)
the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
Report on the remuneration report
We have audited the Remuneration Report included in pages 15 to 17 of the directors’ report for the year ended 30 June 2011. 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 2011 complies with Section 300A of the
Corporations Act 2001.
KPMG
Adam Twemlow
Partner
29 August 2011
40
BIOTRON Annual Report 2011
+
1
2
Additional Stock Exchange Information
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 2011, the distribution of each class of equity was as follows:
Range
Fully Paid Ordinary
Shares
30 December 2011
$0.10 Options
30 March 2012
$0.20 Options
30 October 2015
$0.22 Options
30 October 2015
$0.25 Options
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
62
374
312
649
216
1,613
2
37
47
187
122
395
-
20
21
58
11
110
-
-
-
-
1
1
-
-
-
-
1
1
At 31 July 2011, 358 shareholders held less than a marketable parcel of shares.
BIOTRON Annual Report 2011
41
Additional Stock Exchange Information
TWENTY LARGEST QUOTED SHAREHOLDERS
At 31 July 2011 the twenty largest fully paid ordinary shareholders held 37.79% of fully paid ordinary as follows:
Name
Fully Paid Ordinary
Shares
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Dr Angela Fay Dulhunty
Scott’s A V Pty Ltd
Rigi Investments Pty Ltd
Twynam Agricultural Group Pty Ltd
Prof Alan Jonathan Berrick
CBDF Pty Limited
Pathold No 222 Pty Ltd
Mrs. Narelle Fay
Linkenholt Pty Ltd
JP Morgan Nominees Australia Limited
Warman Investments Pty Ltd
Mr. Christopher Parish + Mrs. Bhama Parish
Mr. Philip Board + Mrs. Marylyn Board
Umbiram Pty Ltd
LSAF Holdings Pty Ltd
Lenvat Pty Ltd Lenvat Super Fund A/C
Ramsab Pty Ltd
Rigi Investments Pty Ltd
Edstop Pty Limited
Mr. Ian Gavin Platt- Hepworth + Mrs. Marion Platt- Hepworth
There are no current on-market buy-backs.
9,968,362
9,014,000
4,492,645
3,700,000
3,150,000
2,875,254
2,655,000
2,105,000
2,100,000
1,777,063
1,675,000
1,600,000
1,599,950
1,566,108
1,550,000
1,300,000
1,300,000
1,300,000
1,285,312
1,228,420
%
6.74
6.09
3.04
2.50
2.13
1.94
1.79
1.42
1.42
1.20
1.13
1.08
1.08
1.06
1.05
0.88
0.88
0.88
0.87
0.83
42
BIOTRON Annual Report 2011
+
1
2
Principal Administration Office:
Suite 19, 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:
Fax:
E-mail:
Homepage: www.biotron.com.au
61-2 9300 3344
61-2 9221 6333
enquiries@biotron.com.au
Share Registrar:
Computershare Investor Services Pty Limited
117 Victoria Street
West End QLD 4101
Phone: 61-7 3237 2100
61-7 3229 9860
Fax:
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 shares.
BIOTRON Annual Report 2011
43
Biotron Limited
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia