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Ampio PharmaceuticalsBIOTRON LIMITED
ABN 60 086 399 144
ANNUAL REPORT | 2017
CONTENTS
Operating and Financial Review ________________________________________________________________ 1
Corporate Governance Statement _____________________________________________________________ 5
Directors’ Report __________________________________________________________________________________ 6
Lead Auditor’s Independence Declaration ____________________________________________________ 15
Statement of Profit or Loss and Other Comprehensive Income _________________________ 16
Statement of Financial Position ________________________________________________________________ 17
Statement of Changes in Equity ________________________________________________________________ 18
Statement of Cash Flows ________________________________________________________________________ 19
Notes to the Financial Statements _____________________________________________________________ 20
Directors’ Declaration ____________________________________________________________________________ 33
Independent Auditor’s Report __________________________________________________________________ 34
Additional Stock Exchange Information ______________________________________________________ 39
Corporate Directory ______________________________________________________________________________ 45
REVIEW OF OPERATIONS
EXECUTIVE SUMMARY
Biotron’s strategy is to systematically grow the value of the Company and work towards
a commercial outcome for shareholders. This is best achieved by the demonstration of
positive data from clinical trials and other supporting studies. Focus has been on the
planned, step-wise clinical development of the Company’s lead antiviral drug, BIT 225.
A key Phase 2 clinical trial of BIT225 for HIV-1, designed to demonstrate a clear clinical
benefit for BIT225 over and above that provided by current anti-HIV drugs, is in progress
and scheduled for completion in the second half of 2017.
The completion of this trial marks a key transition point for the Company, which is now
fully focused on achieving commercial transaction(s) for the Company’s portfolio of
antiviral programs.
During the financial year in review, the primary focus has been on the design,
commencement and implementation of this Phase 2 clinical trial. In addition, there has
been expansion of the Company’s early stage programs with additional screening of the
Company’s proprietary compound library against additional viral targets.
A summary of significant events achieved in the financial year includes:
Commencement of a key Phase 2 human clinical trial (BIT225-009) of BIT225 in
HIV-1 infected subjects, in combination with current HIV-1 treatment (cART).
Demonstration in a specialised mouse model of HIV-1 infection that BIT225
accelerates the rate of reduction of viral load and delays rebound of virus when
anti-HIV treatment is stopped.
Publication of an independent scientific report highlighting the importance of
reservoirs of HIV-1 in macrophage cells, thus validating Biotron’s approach to
elimination of HIV-1 by targeting macrophages.
Execution of an agreement under which the Company will utilise the non-clinical and
pre-clinical services program offered by the United States National Institute of Allergy
and Infectious Diseases (NIAID) to screen Biotron compounds for activity against key
viral infections.
Appointment of Lynx Financial (HK) Limited of Shanghai as corporate advisor to assist
the Company with execution of its commercialisation strategy in China.
Successful completion of an underwritten renounceable rights issue, raising
$1.4 million after costs.
Receipt of $1.6 million under the Australian Government R&D Tax Incentive
Refund program.
Showcasing the Company to the international investment community at various
events in the USA, China and Australia.
Since the end of the financial year, the Company has announced that the Phase 2 HIV-1
clinical trial is fully enrolled, with all patients now recruited into the study.
BIOTRON ANNUAL REPORT 2017
1
REVIEW OF OPERATIONS
CLINICAL PROGRAMS
The Company has had successful outcomes to date with its
clinical programs, which include clinical trials in HIV-1, HCV and
HIV-1/HCV co-infected populations. BIT225 is in mid-stage clinical
development with 9 clinical trials completed. Encouraging results
in clinical studies completed to date indicate efficacy against both
HCV and HIV-1.
Compared to other anti-HIV drugs, BIT225 has a different
mechanism of action and targets reservoirs of the virus. These
long-lived pools of virus persist despite conventional drug treatment
and are never completely eliminated. The reservoirs act as ‘burning
embers’, producing low levels of virus that cause chronic disease in
people infected with HIV-1 through constant activation of the body’s
immune system. These factors mandate life-long treatment using
currently available drugs.
Eradication of HIV-1 is a current focus of scientists, clinicians
and the pharmaceutical industry and is an area where BIT225
has potential.
The interest in approaches to the eradication of HIV-1 in specific
cell types was underscored in the second half of the financial
year by the publication of a high profile scientific paper in Nature
Medicine from an independent group highlighting the need for new
drugs to eliminate virus in macrophage cell reservoirs. This paper
is validation of Biotron’s anti-HIV-1 approach, which specifically
targets HIV-1 in macrophage cells.
In July 2017, the Company announced that the BIT225-009 clinical
trial was fully recruited, with all 36 subjects successfully enrolled.
The purpose of this clinical trial is to demonstrate that the addition
BIT225 to current anti-HIV-1 drugs results in an additional,
measurable benefit to patients. This is the key outcome that needs
to be demonstrated to potential commercial partners.
The Company has reason to be cautiously optimistic in its outlook
regarding the outcome of the trial on the basis of previously
generated data. In particular, the results of a study undertaken in
the second half of the financial year in a specialised mouse model
were particularly encouraging. In this study, mice with a human
immune system were infected with HIV-1 and then treated with
current anti-HIV-1 drugs (cART) with the addition of either BIT225
or placebo. The results showed that BIT225 can significantly speed
up the reduction of HIV-1 levels, possibly providing less opportunity
for establishment of long lived, deleterious reservoirs of virus. In
addition, once drug treatment was stopped, there was a delay in
the rebound of virus in the BIT225-treated mice.
Due to the ethical challenges associated with stopping successful
treatment in patients, the current BIT225-009 HIV-1 Phase 2 clinical
trial will not include a treatment interruption (i.e. stopping of cART).
However, in other aspects, the design of the trial mirrors that of the
successful mouse study. This provides assurance that the clinical trial
is appropriately designed to obtain a successful outcome.
During the financial year, Biotron significantly advanced its core
HIV-1 program. Previously, Biotron has built up a detailed data
package on its HIV-1 program, including results from a clinical trial
(BIT225-004) in patients which showed that BIT225 targets and
reduces levels of HIV-1 residing in long-lived monocyte/macrophage
reservoirs. These reservoirs exist even in patients undergoing
treatment with current antiretroviral drugs and are responsible for
ongoing cycles of reseeding HIV-1 infection.
The study in humanised mice and the current Phase 2 clinical trial
are key to a commercial outcome for Biotron’s HIV-1 program. In
parallel, the Company has been actively engaging with potential
commercial partners through meetings held regularly throughout
the year with several pharmaceutical companies active in the HIV-1
therapeutic area. Feedback has been positive and we anticipate
entering commercial discussions with one or more of these parties
on the back of positive data from the BIT225-009 trial.
That BIT225-004 study also indicated that BIT225 may reduce
immune activation. Immune activation is responsible for a number of
ongoing health issues in these patients. New treatment strategies are
needed to prevent development of associated disorders that include
accelerated aging and neurological dysfunction.
During the first half of the financial year, the Company finalised
the design and protocol for a pivotal Phase 2 trial (BIT225-009),
designed in consultation with international medical and scientific
HIV-1 experts. Following receipt of the necessary regulatory
and ethics approvals, the trial commenced in early 2017. Since
then, very good progress has been made, with the first cohort
of patients enrolled in a short period. This was soon followed
by enrolment of the second and final cohort of patients after
an independent review of preliminary safety data from the first
group approved further recruitment.
It should be noted that the results for safety and the capsule
formulation from previous BIT225 clinical trials against Hepatitis C
virus (HCV) are also relevant for the Company’s HIV-1 program.
Completed studies done to predict drug-drug interactions
and modelling of pharmacokinetic data from previous trials to
determine optimal dosage of BIT225 benefit all BIT225 programs.
While the Company remains focused on achieving a commercial
outcome for its HIV-1 program in worldwide markets, including the
USA and Europe, it continues to seek suitable partners for other
programs including HCV. The outlook for treatment of HCV is
particularly strong in emerging markets such as China, where an
estimated 30 million people or more are infected with the virus.
The Company has appointed a specialist corporate advisory firm,
based in Shanghai, to assist with identifying suitable partners and
executing a China commercialisation strategy.
2
BIOTRON ANNUAL REPORT 2017
REVIEW OF OPERATIONS
In the 2017/18 financial year, the Company will be focused on the
following activities:
Completing the current Phase 2 HIV-1 clinical trial. The clinical
phase of the trial is scheduled for completion before the end of
October, with preliminary data anticipated in November 2017.
Continued testing of Biotron compounds for activity against
other key commercially relevant virus targets.
Executing a commercial agreement for development of BIT225
for HCV in China.
Executing a partnership agreement for development of BIT225
for treatment of HIV-1 in key worldwide markets such as the
USA and Europe.
NON-CLINICAL PROGRAMS
In addition to its potential as a new class of anti-HIV-1 and anti-HCV
drug, BIT225 is an important asset as it demonstrates the robustness
of Biotron’s approach to antiviral drug development and that the
Company can generate good drugs with activity against a new class
of viral protein targets.
Biotron’s core expertise lies in designing and developing drugs that
target a class of virus protein known as viroporins. Viroporins are
found in a very broad range of viruses and have key roles in the virus
life cycle.
BIT225 is only one of the Company’s compounds. Biotron’s
proprietary compound library is a rich source of potential hits
against other viruses. Screening against other viruses continues
with hits from this screening acting as starting points for further
chemistry to generate compounds with increased potency against
specific viruses.
There have been a number of high profile international outbreaks
of viral diseases, including Ebola, Middle East Respiratory virus
(MERS-CoV) and more recently, Zika virus, covered extensively in
the media. These outbreaks are a reminder that there is an ongoing
need for new drugs to treat life-threatening diseases.
Positive data from ongoing antiviral screening are important as
they demonstrate the additional depth beyond BIT225 of Biotron’s
library of compounds and approach to developing drugs that target
serious viral diseases. This demonstration of Biotron’s core expertise
and validation of its assets is key to attracting a commercial partner
for Biotron’s entire platform.
BIOTRON ANNUAL REPORT 2017
3
REVIEW OF OPERATIONS
PATENTS
Biotron continues to progress 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.
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
WO06135978
Antiviral compounds and methods
Priority – 24 June 2005
Granted in Australia, Canada, China, Germany, France, United Kingdom, The Netherlands,
Japan, New Zealand, and USA
Granted in Austria, Australia, Belgium, Canada, Switzerland, Germany, Denmark, Spain,
Finland, France United Kingdom, Greece, Ireland, Italy, Japan, Luxembourg, Monaco,
The Netherlands, Portugal, Sweden and USA
Granted in Australia, Canada, China, India, Japan, Korea, New Zealand, Singapore and
South Africa
Under examination elsewhere (Brazil, Europe, Hong Kong, and USA)
Granted in Austria, Australia, Belgium, Canada, Switzerland, China, Germany, Denmark,
Spain, Finland, France, United Kingdom, Hong Kong, Ireland, Italy, Japan, Korea,
Luxembourg, Monaco, The Netherlands, New Zealand, Poland, Portugal, Sweden,
Singapore, Turkey, South Africa and USA
Under examination elsewhere (Brazil, India)
WO2009/018609
Hepatitis C antiviral compounds
and methods
Priority – 3 August 2007
Granted in Austria, Australia, Belgium, Switzerland, China, Germany, Denmark, Spain,
Finland, France, United Kingdom, Hong Kong, Ireland, Italy, Japan, Korea, Luxembourg,
Monaco, The Netherlands, New Zealand, Poland, Portugal, Sweden, Singapore, Turkey
and South Africa
Under examination in elsewhere (Brazil, Canada, India, and USA)
CORPORATE
In February 2017, the Company received an R&D Tax Incentive rebate of $1.6 million for the 2016/17 financial year. The R&D Tax Incentive is an
Australian Government program under which companies receive cash refunds for 43.5% of eligible expenditure on research and development.
The cash refund results from expenditure on Biotron’s HCV and HIV drug development programs. It is an important source of funds for the
Company’s ongoing research and development activities.
In the second half of the financial year in review, the Company completed a capital raising by way of an underwritten renounceable rights
issue, raising $1.4 million after costs. The funds will be used to support the Company’s ongoing activities described above, in particular
the detailed analyses from the current HIV-1 Phase 2 trial, and importantly, ongoing commercial activities. Thank you to everyone who
participated; your ongoing support is appreciated.
On behalf of the Board we would like to thank the Biotron staff for their commitment and dedication during the year. Biotron is poised to
achieve the outcome that we have all been working towards – demonstration that its systematic approach to antiviral drug development
can result in significant clinical benefit to patients and generate value for our shareholders.
We look forward to the next year with confidence.
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
4
BIOTRON ANNUAL REPORT 2017
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 Company has reviewed its corporate governance practices
against the Corporate Governance Principles and Recommendations (3rd edition) published
by the ASX Corporate Governance Council.
The 2017 Corporate Governance Statement, dated as at and approved by the Board on
4 August 2017, reflects the corporate governance practices throughout the 2017 financial
year. A description of the Company’s current corporate governance practices is set out in
the Company’s corporate governance statement which can be viewed at
http://www.biotron.com.au/corporate-governance.
BIOTRON ANNUAL REPORT 2017
5
DIRECTORS’ REPORT
The directors present their report together with the financial statements of Biotron Limited
(‘the Company’) for the year ended 30 June 2017 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 Telesso Technologies Limited and Lipotek Pty Limited and
a former director of John Fairfax Holdings Limited and FXF Trust.
Mr Hoy 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 commercial development of early to mid-stage technologies. She completed her PhD
in the Faculty of Medicine at Sydney University investigating molecular models of cancer
development. Her experience includes several years at Johnson & Johnson developing
anti-HIV gene therapeutics through preclinical research to clinical trials. She has finance
industry experience from time spent as an Investment Manager with a specialist bioscience
venture capital fund.
Dr Miller was appointed as Managing Director on 21 June 2002.
6
BIOTRON ANNUAL REPORT 2017
DIRECTORS’ REPORT
Dr Susan M. Pond AM, MD DSc, FTSE
Independent and Non-Executive Director
Dr Denis N. Wade
Independent and Non-Executive Director
Dr Pond has a strong scientific and commercial background having
held executive positions in the biotechnology and pharmaceutical
industry for 12 years, most recently as chairman and managing
director of Johnson & Johnson Research Pty Limited (2003 – 2009).
She has held many previous board positions including as executive
director of Johnson & Johnson Pty Limited, non-executive director
and chairman of AusBiotech Limited, director of the Australian
Nuclear Science and Technology Organisation and Australian
Academy of Technological Sciences and Engineering (ATSE) and board
member of Commercialisation Australia and Innovation Australia.
Dr Pond is currently on the boards of the Wound Management
Innovation Cooperative Research Centre and Vectus Biosystems
Ltd. In February 2017, she was appointed as Director of the
Australian Institute for Nanoscale Science & Technology at the
University of Sydney. She is a Fellow of the Australian Institute of
Company Directors, ATSE and the Australian Academy of Health
and Medical Sciences.
Dr Pond holds a first class honours degree in Bachelor of Medicine
and Surgery from the University of Sydney and a Doctor of
Medicine degree from the University of New South Wales. She
obtained specialist clinical credentials in internal medicine, clinical
pharmacology and clinical toxicology and has held academic
appointments at the University of California, San Francisco and
the University of Queensland before joining the industry.
Dr Pond was appointed as a director on 7 March 2012.
Mr Robert B. Thomas BEc, MSDIA, SF Fin, FICD
Independent and Non-Executive Director
Mr Thomas has over 35 years’ experience in the securities industry,
with Potter Partners (now UBS), County NatWest and Citigroup.
He is the chairman of Starpharma Holdings Limited and a director
of Aus Bio Limited, REVA Medical Limited and Virgin Australia
Limited. He chairs Grahger Retail Securities Pty Ltd and is a director
of O’Connell Street Associates Pty Limited.
Mr Thomas has a Bachelor of Economics degree from Monash
University (1963 – 1966). He has been a member of the Securities
Institute of Australia since 1976 and was appointed as a Fellow to
the Institute in 1997. He is a Master Stockbroker and is a Fellow of
the Institute of Company Directors.
Mr Thomas was appointed as a director on 7 March 2012.
Dr 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 healthcare 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, was managing
director and chairman of Johnson & Johnson Research Pty Ltd, a
research and development company of Johnson & 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.
Mr 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
25 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
Bolnisi Gold N.L., Callabonna Uranium Limited, Cockatoo Coal
Limited, Mogul Mining N.L., Pangea Resources Limited, Perseverance
Corporation Limited, Sumatra Copper & Gold plc, Timberline
Minerals, Inc. and Valdora Minerals N.L. Mr Nightingale is currently
a director of ASX listed Argent Minerals Limited, Collerina Cobalt
Limited, Planet Gas Limited and unlisted public companies Nickel
Mines Limited and Prospech Limited.
Mr Nightingale has been Company Secretary since 23 February 1999.
BIOTRON ANNUAL REPORT 2017
7
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:
Director
Michael J. Hoy
Michelle Miller
Susan M. Pond
Robert B. Thomas
Denis N. Wade
DIRECTORS’ INTERESTS
No. of Eligible Meetings to Attend
No. of Meetings Attended
Directors’ Meetings
6
6
6
6
6
6
6
6
5
5
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:
Directors
Michael J. Hoy
Michelle Miller
Susan M. Pond
Robert B. Thomas
Denis N. Wade
Fully Paid
Ordinary Shares
Options
Option Terms
(Exercise Price and Term)
6,231,863
1,246,372
$0.06 at any time up to 30 November 2018
762,500
512,500
$0.06 at any time up to 30 November 2018
-
-
2,000,000
$0.15 at any time up to 30 November 2018
3,000,000
$0.18 at any time up to 30 November 2018
436,197
87,239
$0.06 at any time up to 30 November 2018
6,755,929
1,004,793
$0.06 at any time up to 30 November 2018
2,046,348
409,269
$0.06 at any time up to 30 November 2018
There were no options over unissued ordinary shares granted as compensation to directors or executives of the Company during 2017 and
2016 financial years.
UNISSUED SHARES UNDER OPTION
At the date of this report, unissued ordinary shares of the Company under option are:
Number of Shares
Exercise Price
2,000,000
3,000,000
78,459,963
$0.15
$0.18
$0.06
Expiry Date
30 November 2018
30 November 2018
30 November 2018
All options expire on the earlier of their expiry date or termination of the employee’s employment provided the exercise period has been
reached. In the event that the employment of the option holder 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. The persons entitled to exercise the options do not have,
by virtue of the options, the right to participate in a share issue of the Company or any other body corporate.
8
BIOTRON ANNUAL REPORT 2017
DIRECTORS’ REPORT
SHARES ISSUED ON EXERCISE OF OPTIONS
During or since the end of the financial year, the Company issued ordinary shares as a result of the exercise of options as follows (there are
no amounts unpaid on the shares issued):
Number of Shares
74,519
PRINCIPAL ACTIVITIES
Amount paid on each share
$0.12
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 $3,093,405 (2016 – $3,004,303 loss).
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.
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 year ended
30 June 2017.
ENVIRONMENTAL REGULATIONS
The Company’s operations are not subject to significant environmental regulations under Commonwealth or State legislation in relation to
its research projects.
EVENTS SUBSEQUENT TO BALANCE DATE
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a
material and unusual nature likely, in the opinion of the directors of the Company, to affect significantly the operations of the Company,
the results of those operations, or the state of affairs of the Company in future financial years.
LIKELY DEVELOPMENTS
During the year ended 30 June 2017, 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.
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.
BIOTRON ANNUAL REPORT 2017
9
DIRECTORS’ REPORT
REMUNERATION REPORT – AUDITED
Principles of compensation – Audited
Key management personnel have authority and responsibility for planning, directing and controlling the activities of the Company. Key
management personnel comprise the directors of the Company and the Company Secretary. No other employees have been deemed to be
key management personnel.
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 vesting
conditions of options issued under the plan are based on a minimum service periods being achieved.
In the event that the employment or office of the option holder 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. 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.
The number of options that had vested as at 30 June 2017 is 2,000,000. No options were granted as remuneration during the year and
5,000,000 unlisted options granted to Michelle Miller expired during 2016 financial year.
There were no remuneration consultants used by the Company during the year ended 30 June 2017 or in the prior year.
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.
2017
2016
2015
2014
2013
Net loss attributable to equity holders of the Company
$3,093,405
$3,004,303
$2,723,221
$3,085,814
$3,850,745
Dividends paid
Change in share price
-
-
-
-
-
(4.0) cents
(7.0) cents
3.0 cents
2.0 cents
(2.0) cents
The overall level of key management personnel’s compensation is assessed on the basis of market conditions, status of the Company’s
projects, and financial performance of the Company.
10
BIOTRON ANNUAL REPORT 2017
DIRECTORS’ REPORT
Details of remuneration for the year ended 30 June 2017 – Audited
Details of director and senior executive remuneration and the nature and amount of each major element of the remuneration of each
director of the Company, and other key management personnel of the Company are set out below:
Directors
Non-executive
Michael J. Hoy
(Chairman)
Susan M. Pond
Robert B. Thomas
Denis N. Wade
Executive
Michelle Miller
(Managing Director)
Executives
Peter J. Nightingale
(Company Secretary)
Primary
Fees
$
Superannuation
$
Share Based
Payments
– Options
$
Other
Long Term
$
68,807
68,807
36,697
36,697
36,697
36,697
36,697
36,697
6,537
6,537
3,486
3,486
3,486
3,486
3,486
3,486
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Year
2017
2016
2017
2016
2017
2016
2017
2016
Total
$
75,344
75,344
40,183
40,183
40,183
40,183
40,183
40,183
2017
302,548
2016
325,383
28,500
29,048
31,521
42,902
5,525
5,096
368,094
402,429
2017
2016
75,000
75,000
-
-
-
-
-
-
75,000
75,000
Value of Options
as a % of
Remuneration
-
-
-
-
-
-
-
-
9%
11%
-
-
No bonuses were paid during the financial year and no performance based components of remuneration exist. The Company employed no
other key management personnel.
Options granted as compensation – Audited
Details of options 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
25 November 2015
1,000,000
Michelle Miller
25 November 2015
1,000,000
$17,900
$17,900
Michelle Miller
25 November 2015
3,000,000
$48,900
$0.15 at any time to 30 November 2018
$0.15 at any time from 30 November 2016
up to 30 November 2018
$0.18 at any time from 30 November 2017
up to 30 November 2018
The fair value of the options at grant date was determined based on Black-Scholes formula. The model inputs of the options issued, were
the Company’s share price of $0.046 at the grant date, a volatility factor of 100% based on historic share price performance, a risk free rate
of 2.11% based on the 10 year government bond rate and no dividends paid.
No options were granted during the 2017 and 2016 financial years. The number of options that vested as at 30 June 2017 is 2,000,000
(2016 – 1,000,000) and 5,000,000 options lapsed during 2016 financial year. No options lapsed during 2017 financial year.
Modification of terms of equity-settled share-based payment transactions – Audited
No terms of equity-settled share-based payment transactions (including options granted as compensation to a key management person)
have been altered or modified by the Company during the 2017 financial year.
Exercise of options granted as compensation – Audited
There were no shares issued on the exercise of options previously granted as compensation during the 2017 and 2016 financial years.
BIOTRON ANNUAL REPORT 2017
11
DIRECTORS’ REPORT
Analysis of options and rights over equity instruments granted as compensation – Audited
All options refer to options over ordinary shares of Biotron Limited, which are exercisable on a one-for-one basis.
Director
Michelle Miller
Options granted
Number
1,000,000
1,000,000
3,000,000
Date
% vested
in year
% forfeited
in year
Financial year in
which grant vests
25 November 2015
25 November 2015
25 November 2015
100%
100%
-
-
-
-
1 July 2015
1 July 2016
1 July 2017
The number of options that had vested as at 30 June 2017 is 2,000,000 (2016 – 1,000,000). No options were granted subsequent to
year end.
Analysis of movements in options – Audited
Director
Michelle Miller
Granted in the year
-
Valuation of options
exercised in the year
-
Lapsed in the year
-
Options and rights over equity instruments – Audited
The movement during the reporting period in the number of options over ordinary shares in the Company held directly, indirectly or
beneficially, by each key management person, including their personally related entities, is as follows:
Option holdings 2017 – Audited
Held at
1 July 2016
Granted/
Purchased*
Exercised
Expired
Held at
30 June 2017
Directors
Michael J. Hoy
Michelle Miller
Susan M. Pond
700,961
1,246,372
5,000,000
55,556
512,500
87,239
Robert B. Thomas
1,237,038
1,004,793
Denis N. Wade
273,977
409,269
Executives
Peter J. Nightingale
1,151,924
-
* Purchased as part of the pro-rata renounceable rights issue to shareholders.
Loans to key management personal and their related parties – Audited
-
-
-
-
-
-
Vested and
exercisable
at 30 June 2017
1,246,372
2,512,500
87,239
1,004,793
409,269
700,961
1,246,372
-
5,512,500
55,556
87,239
1,237,038
1,004,793
273,977
409,269
1,151,924
-
-
There were no loans made to key management personnel or their related parties during the 2017 and 2016 financial years and no amounts
were outstanding at 30 June 2017 (2016 – $nil).
Other transactions with key management personnel – Audited
The following key management person holds a position in another entity that results in them having control or joint control over the
financial or operating policies of that entity, and this entity transacted with the Company during the year as follows:
During the year ended 30 June 2017, Peter J. Nightingale had a controlling interest in an entity, MIS Corporate Pty Limited, which
provided full administrative services, including rental accommodation, administrative staff, services and supplies, to the Company.
Fees paid to MIS Corporate Pty Limited during the year amounted to $144,000 (2016 – $144,000). There were no outstanding
amounts at 30 June 2017 (2016 – $nil).
12
BIOTRON ANNUAL REPORT 2017
DIRECTORS’ REPORT
Movements in shares – Audited
The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or beneficially, by each
key management person, including their personally-related entities, is as follows:
Fully paid ordinary shareholdings and transactions 2017 – Audited
Held at
1 July 2016
Purchased
Received on
exercise of
options
Sales
Held at
30 June 2017
Directors
Michael J. Hoy
Michelle Miller
Susan M. Pond
Robert B. Thomas
Denis N. Wade
Executives
Peter J. Nightingale
Service contracts – Audited
4,985,491
1,246,372
-
348,958
5,395,207
1,637,079
762,500
87,239
1,360,722
409,269
5,760,416
-
-
-
-
-
-
-
-
-
-
-
-
-
6,231,863
762,500
436,197
6,755,929
2,046,348
5,760,416
In accordance with best practice corporate governance, the Company provided each key management personnel with a letter detailing the
terms of appointment, including their remuneration.
Non-executive directors – Audited
Total compensation for all non-executive directors is determined by the Board based on market conditions.
Non-audit Services
During the year KPMG, the Company’s auditor, performed no other services in addition to their statutory duties.
A copy of the auditors’ independence declaration as required under Section 307C of the Corporations Act 2001 is included in the
Directors’ Report.
Details of the amounts paid and accrued to the auditor of the Company, KPMG, and its related practices for audit and non-audit services
provided during the year are set out below.
Statutory audit
Audit and review of financial reports – KPMG
46,850
43,400
2017
$
2016
$
BIOTRON ANNUAL REPORT 2017
13
DIRECTORS’ REPORT
LEAD AUDITOR’S INDEPENDENCE DECLARATION
The Lead Auditor’s Independence Declaration is set out on page 15 and forms part of the Directors’ Report for the year ended 30 June 2017.
This report has been signed in accordance with a resolution of the directors and is dated 28 August 2017:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
14
BIOTRON ANNUAL REPORT 2017
DIRECTORS’ REPORT
To the Directors of Biotron Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Biotron Limited for the financial year ended
30 June 2017 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
Stephen Board
Partner
Brisbane
28 August 2017
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
BIOTRON ANNUAL REPORT 2017
15
STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
Continuing operations
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
Notes
2017
$
2016
$
5
11
6
1,659,479
1,548,185
(241,960)
(225,250)
(13,074)
(15,457)
(826,501)
(850,813)
(3,155,423)
(3,132,197)
(76,849)
(62,686)
(82,507)
(36,404)
(386,216)
(306,046)
(3,123,051)
(3,080,668)
29,646
26,646
76,365
76,365
(3,093,405)
(3,004,303)
9
-
-
(3,093,405)
(3,004,303)
-
-
(3,093,405)
(3,004,303)
Basic and diluted loss per share (cents)
7
(0.93) cents
(0.96) cents
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
16
BIOTRON ANNUAL REPORT 2017
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Current assets
Cash and cash equivalents
Other assets
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
2017
$
2016
$
8
10
11
12
13
14
14
1,987,384
3,418,453
42,730
27,755
2,030,114
3,446,208
29,496
29,496
37,075
37,075
2,059,610
3,483,283
367,671
115,959
251,839
230,357
619,510
346,316
619,510
346,316
1,440,100
3,136,967
40,325,345
39,163,122
278,419
860,729
(39,163,664) (36,886,884)
1,440,100
3,136,967
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
BIOTRON ANNUAL REPORT 2017
17
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Attributable to equity holders of the Company
Notes
Balance at 1 July 2015
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 shares issued
Share based payment
Transfer of expired options
Exercise of options
Balance at 30 June 2016
Balance at 1 July 2016
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 shares issued
Share based payment
Transfer of expired options
Exercise of options
Balance at 30 June 2017
Issued
Capital
$
Option
Reserves
$
Accumulated
Losses
$
Total
$
37,207,759
1,339,848
(34,404,581)
4,143,026
-
-
-
2,000,158
(44,816)
-
-
21
-
-
-
-
-
42,902
(3,004,303)
(3,004,303)
-
-
(3,004,303)
(3,004,303)
-
-
-
2,000,158
(44,816)
42,902
(522,000)
522,000
(21)
-
-
-
14
39,163,122
860,729 (36,886,884)
3,136,967
39,163,122
860,729 (36,886,884)
3,136,967
-
-
-
-
-
-
(3,093,405)
(3,093,405)
-
-
(3,093,405)
(3,093,405)
1,374,145
203,996
(213,124)
-
-
-
31,521
-
-
-
1,578,141
(213,124)
31,521
(816,625)
816,625
1,202
(1,202)
-
-
-
14
40,325,345
278,419
(39,163,664)
1,440,100
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
18
BIOTRON ANNUAL REPORT 2017
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
Cash flows from operating activities
Cash receipts in the course of operations
Payments for research and development
Cash payments in the course of operations
Interest received
Net cash used in operating activities
Cash flows from investing activities
Rental bond
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/(decrease) in cash held
Cash and cash equivalents at 1 July
Effect of exchange rate adjustments on cash held
Cash and cash equivalents at 30 June
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Notes
2017
$
2016
$
1,659,479
1,548,185
(2,977,402)
(3,260,756)
(1,545,220)
(1,444,702)
29,646
76,366
15
(2,833,497)
(3,080,907)
(6,412)
(5,495)
(11,907)
-
(4,763)
(4,763)
1,578,141
2,000,158
(163,615)
(44,816)
1,414,526
1,955,342
(1,430,878)
(1,130,328)
3,418,453
4,523,224
(191)
25,557
8
1,987,384
3,418,453
BIOTRON ANNUAL REPORT 2017
19
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1. REPORTING ENTITY
Biotron Limited (the ‘Company’) is a company domiciled in Australia. The address of the Company’s
registered office is at Level 2, 66 Hunter Street, Sydney, NSW 2000. The Company is a for-profit entity
and is primarily engaged in the funding and management of intermediate and applied biotechnology
research and development projects.
2. BASIS OF PREPARATION
a. Statement of compliance
These financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting
Standards Board (‘AASB’) and the Corporations Act 2001. The financial statements of the Company
also comply with International Financial Reporting Standards (‘IFRSs’) adopted by the International
Accounting Standards Board (‘IASB’).
The financial report was authorised for issue by the directors on 28 August 2017.
b. Basis of measurement
The financial statements have been prepared on the historical cost basis, unless otherwise stated.
c.
Functional and presentation currency
These financial statements are presented in Australian dollars, which is the Company’s functional currency.
d. Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amounts recognised in the
financial statements are described in the following notes:
Note 9 – Unrecognised deferred tax asset
Note 2(e) – Going concern
20
BIOTRON ANNUAL REPORT 2017
e. Going concern
The financial statements have been prepared on a going concern
basis which contemplates the realisation of assets and settlement
of liabilities in the ordinary course of business.
The Company has incurred a trading loss of $3,093,405 for the year
ended 30 June 2017 and has accumulated losses of $39,163,664
at 30 June 2017. The Company has cash on hand of $1,987,384 at
30 June 2017 and used $2,833,497 of cash in operations for the
year ended 30 June 2017. These conditions give rise to a material
uncertainty that may cast significant doubt upon the Company’s
ability to continue as a going concern. The ongoing operation of the
Company is dependent on:
the Company raising additional funding from shareholders or
other parties; and/or
the Company reducing expenditure in line with available funding.
The directors have prepared cash flow projections that support the
ability of the Company to continue as a going concern. These cash
flow projections assume the Company obtains sufficient additional
funding from shareholders or other parties. If such funding is not
achieved, the Company plans to reduce expenditures significantly.
In the event that the Company does not obtain additional funding
and/or reduce expenditure in line with available funding, it may not
be able to continue its operations as a going concern and therefore
may not be able to realise its assets and extinguish its liabilities in
the ordinary course of operations and at the amounts stated in the
financial statements.
3. 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.
a. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits
with an original maturity of three months or less.
b. Trade and other receivables
Trade and other receivables are stated at their amortised cost less
impairment losses.
c. 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.
d. Government Grants
Where a grant is received relating to research and development
costs that have been expensed, the grant is recognised as other
income when the grant becomes receivable and the Company
complies with all attached conditions.
Costs
Expenditure on research activities, undertaken with the prospect of
gaining new scientific or technical knowledge and understanding, is
recognised in profit and loss when incurred.
Development activities involve a plan or design for the production
of new or substantially improved products and processes.
Development expenditure is capitalised only if development costs
can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable, and
the Company intends to and has sufficient resources to complete
development and to use or sell the asset. The expenditure
capitalised includes the cost of materials, direct labour and
overhead costs that are directly attributable to preparing the
asset for its intended use. Other development expenditure is
recognised in profit or loss when incurred.
Capitalised development expenditure is measured at cost less
accumulated amortisation and accumulated impairment losses.
e. 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.
f.
Employee entitlements
Short-term employee benefits
Short-term employee benefits are expensed as the related service
is provided. A liability is recognised for the amount expected to
be paid under short term cash bonus or profit sharing plans if the
Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee, and
the obligation can be estimated reliably.
Long term employee benefits
The Company’s net obligation in respect of long term employee
benefits is the amount of future benefit that employees have
earned in return for their service in the current and prior periods.
That benefit is discounted to determine its present value.
Re-measurements are recognised in profit or loss in the period
in which they arise.
Share-based payment transactions
The grant-date fair value of share-based payment awards
granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The
amount recognised as an expense is adjusted to reflect the number
of awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that
meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment
is measured to reflect such conditions and there is no true-up for
differences between expected and actual outcomes.
g.
Financial Instruments
Non-derivative financial assets
The Company holds loans and receivables. Loans and receivables
are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are
recognised at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, loans and receivables are
measured at amortised cost using the effective interest method,
less any impairment losses. They are included in current assets,
except for those with maturities greater than 12 months after the
reporting period, which are classified as non-current assets. Loans
and receivables comprise cash and cash equivalents and trade and
other receivables.
The Company initially recognises loans and receivables on the date
that they are originated.
BIOTRON ANNUAL REPORT 2017
21
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows on the financial asset
in a transaction in which substantially all the risks and rewards of
ownership of the financial asset are transferred. Any interest in
such transferred financial assets that is created or retained by the
Company is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount
presented in the Statement of Financial Position when, and only
when, the Company has a legal right to offset the amounts and
intends either to settle them on a net basis or to realise the asset
and settle the liability simultaneously.
Non-derivative financial liabilities
The Company initially recognises debt securities issued and
subordinated liabilities on the date that they are originated. All
other financial liabilities are recognised initially on the trade
date, which is the date that the Company becomes a party to the
contractual provisions of the instrument.
The Company derecognises a financial liability when its contractual
obligations are discharged, cancelled or expire.
Other financial liabilities comprise trade and other payables.
h. Share Capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects.
i.
Tax
Income tax comprises of current tax and deferred tax and is
recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in
other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted or substantially
enacted at the reporting date, and any adjustment to tax payable in
respect of previous years.
Current tax assets and liabilities are offset only if certain criteria
are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amount of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for temporary differences on the
initial recognition of assets or liabilities in a transaction that is not
a business combination and that affects neither accounting nor
taxable profit or loss.
The measurement of deferred tax reflects the tax consequences
that would follow the manner in which the Company expects, at
the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be
applied to temporary differences when they reverse, using tax rates
enacted or substantively enacted at the reporting date. Deferred
tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to
taxes levied by the same tax authority on the same taxable entity,
or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities
will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits
and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which
they can be utilised. Deferred tax assets are reviewed at each
reporting date and 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.
j.
Finance income
Finance income comprises interest income on funds invested.
Interest income is recognised as it accrues in profit or loss, using the
effective interest method.
k.
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.
Impairment
l.
Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss
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 objective evidence indicates that one or more
events have had a negative effect on the estimated future cash
flows of that asset.
Financial assets measured at amortised cost
Individually significant financial assets are tested for impairment
on an individual basis. The remaining financial assets are assessed
collectively in groups that share similar credit risk characteristics.
22
BIOTRON ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 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. Losses are
recognised within profit or loss. When an event occurring after the
impairment was recognised causes the amount of impairment loss
to decrease, the decrease in impairment loss is reversed through
profit or loss.
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.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit (‘CGU’) exceeds its recoverable
amount. The recoverable amount of an asset or CGU is the greater
of their fair value less costs of disposal and value in use. 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 or CGU. For impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the cash
inflows of other assets or CGUs. Impairment losses are recognised in
profit or loss.
An impairment loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying amount that would
have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.
m. Provisions
A provision is recognised if, as a result of a past event, the Company
has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that
reflects the current market assessments of the time value of money
and the risks specific to the liability. The unwinding of the discount
is recognised as a finance cost.
n. Segment reporting
Determination and presentation of operating segments
The Company determines and presents operating segments based
on the information that is provided internally to the Managing
Director, who is the Company’s chief operating decision maker.
An operating segment is a component of the Company that
engages in business activities from which it may earn revenues
and incur expenses, including revenues and expenses that relate
to transactions with any of the Company’s other components. All
operating segments’ operating results are regularly reviewed by the
Company’s Managing Director to make decisions about resources to
be allocated to the segment and assess its performance.
Segment results that are reported to the Managing Director include
items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly
corporate assets (primarily the Company’s headquarters), head
office expenses, and income tax assets and liabilities.
o. 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 2017, and have not been applied in preparing these financial
statements. The Company is in the process of assessing the impact of
new standards. Those which may be relevant to the Company are set
out below. The Company does not plan to adopt these standards early.
AASB 9 Financial Instruments
AASB 9 replaces the existing guidance in AASB 139 Financial
Instruments: Recognition and Measurement. AASB 9 includes
revised guidance on the classification and measurement of
financial instruments, including a new expected credit loss model
for calculating impairment on financial assets and the new
general hedge accounting requirements. It also carries forward
the guidance on recognition and derecognition of financials
instruments from AASB 139.
AASB 9 is effective for the Company’s annual reporting period
beginning 1 July 2018 and can be early adopted.
4. 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 measurement date. Fair value is determined at initial
recognition and, for disclosure purposes, at each annual 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
Non-derivative financial liabilities are measured at fair value, at
initial recognition, and for disclosure purposes, at each annual
reporting date. Fair value is calculated based on the present value
of future principal and interest cash flows, discounted at the market
rate of interest at the measurement date.
BIOTRON ANNUAL REPORT 2017
23
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
5. OTHER INCOME
Research and development rebate
Other – Legal fees reimbursed
6. LOSS FROM OPERATING ACTIVITIES
Loss from ordinary activities has been arrived at after charging the following items:
Auditors’ remuneration paid to KPMG
– Auditor’s and review of financial reports
Depreciation
– Office equipment
– Plant and equipment
Direct research and development expenditure expensed as incurred
Provision for employee entitlements
Superannuation expense
7.
LOSS PER SHARE
Note
2017
$
2016
$
1,613,724
1,548,185
45,755
-
1,659,479
1,548,185
11
11
46,850
43,400
12,311
763
14,550
907
3,155,423
3,132,197
21,482
65,630
40,500
66,177
The calculation of basic and diluted loss per share at 30 June 2017 was based on the loss attributable to ordinary shareholders of
$3,093,405 (2016 – $3,004,303 loss) and a weighted average number of ordinary shares outstanding during the financial year ended
30 June 2017 of 314,467,471 (2016 – 313,099,418), calculated as follows:
Net loss for the year
Weighted average number of ordinary shares (basic and diluted)
Issued ordinary shares at 1 July
Weighted average number of ordinary shares at 30 June
As the Company is loss making, none of the potentially dilutive securities are currently dilutive.
8. CASH AND CASH EQUIVALENTS
Cash at bank
Cash and cash equivalents in the statement of cash flows
3,093,405
3,004,303
2017
Number
2016
Number
313,765,334 296,402,910
331,742,012
313,099,418
2017
$
2016
$
1,987,384
3,418,453
1,987,384
3,418,453
24
BIOTRON ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 9.
INCOME TAX EXPENSE
Current tax expense
Current year
Tax losses not recognised
Deferred tax expense
Current year
De-recognition of temporary differences
2017
$
2016
$
(1,341,634)
(1,367,846)
1,341,634
1,367,846
-
-
44,003
(44,003)
-
15,679
(15,679)
-
Numerical reconciliation between tax expense and pre-tax net profit
Loss before tax - continuing operations
(3,093,405)
(3,004,303)
Prima facie income tax benefit at the Australian tax rate of 27.5% (2016 – 30%)
(850,686)
(901,291)
Increase in income tax expense due to:
– Adjustments not resulting in temporary differences
– Effect of tax losses not recognised
– Unrecognised temporary differences
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
621,849
272,840
(590,106)
326,864
(44,003)
(15,679)
-
-
223,323
227,691
9,415,299
9,876,428
9,638,622
10,104,119
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.
10. OTHER ASSETS
Current prepayments
Security deposits
21,319
21,411
42,730
12,755
15,000
27,755
BIOTRON ANNUAL REPORT 2017
25
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
2017
$
2016
$
205,851
205,851
(185,945)
(173,634)
19,906
32,217
511,958
506,463
(502,368)
(501,605)
9,590
29,496
4,858
37,075
32,217
-
(12,311)
19,906
4,858
5,495
(763)
9,590
29,496
42,004
4,763
(14,550)
32,217
5,765
-
(907)
4,858
37,075
344,171
23,500
367,671
92,459
23,500
115,959
117,537
134,302
251,839
5
106,233
124,124
230,357
4
11. PLANT AND EQUIPMENT
Office equipment – at cost
Accumulated depreciation
Plant and equipment – at cost
Accumulated depreciation
Total plant and equipment – net book value
Reconciliations
Reconciliations of the carrying amounts for each class of plant and equipment are set out below:
Office equipment
Balance at 1 July
Additions
Depreciation
Carrying amount at the end of the financial year
Plant and equipment
Balance at 1 July
Additions
Depreciation
Carrying amount at the end of the financial year
Total carrying amount at the end of the financial year
12. TRADE AND OTHER PAYABLES
Current
Creditors
Accruals
13. EMPLOYEE ENTITLEMENTS
Current
Employee annual leave provision
Long service leave provision
Number of employees at the end of the financial year
26
BIOTRON ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 14. CAPITAL AND RESERVES
Issued and paid up capital
392,299,816 (2016 – 313,765,334) fully paid ordinary shares
40,325,345
39,163,122
2017
$
2016
$
Fully paid ordinary shares
Balance at the beginning of the financial year
Issue of shares
Exercise of options
Costs of issue
Balance at the end of financial year
39,163,122
37,207,759
1,374,145
2,000,158
1,202
21
(213,124)
(44,816)
40,325,345
39,163,122
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid.
In June 2017, the Company offered eligible shareholders to purchase one new share and one new listed option through a pro-rata
renounceable rights issue. Under this offer, the Company issued 78,459,963 ordinary shares and 78,459,963 listed options for cash
totalling $1,569,199. Total issue cost of $213,124 was recognised as a reduction in proceeds of issue of these shares. The listed options
are each exercisable at 6 cents to acquire one fully paid ordinary share exercisable at any time up to 30 November 2018.
During the year ended 30 June 2017, 74,519 ordinary shares (2016 – 1,313) were issued through the exercise of the listed options for
cash totalling $8,942 (2016 – $158). The fair value of the options when granted was $1,202 (2016 – $21).
In July 2015, the Company issued 17,361,111 new fully paid ordinary shares through a share purchase plan for a cash totalling
$2,000,000. Total issue cost of $44,816 was recognised as a reduction in the proceeds of these shares.
The following options were issued during the year ended 30 June 2016 and were on issue at 30 June 2017:
1,000,000 options with a fair value at grant date of 1.8 cents, each exercisable at 15 cents to acquire one fully paid ordinary share at
any time up to 30 November 2018.
1,000,000 options with a fair value at grant date of 1.8 cents, each exercisable at 15 cents to acquire one fully paid ordinary share at
any time after 30 November 2016 up to 30 November 2018.
3,000,000 options with a fair value at grant date of 1.6 cents, each exercisable at 18 cents to acquire one fully paid ordinary share at
any time after 30 November 2017 up to 30 November 2018.
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 2016 were the Company’s share price of $.046 at the grant date, a volatility factor of 100% based on
historic share price performance, risk free interest rate of 2.11% based on the 10 year government bond rate and no dividends paid.
During the year ended 30 June 2016, the following options lapsed.
2,000,000 options, each exercisable at 21 cents to acquire one fully paid ordinary share at any time up to 30 October 2015.
3,000,000 options, each exercisable at 24 cents to acquire one fully paid ordinary share at any time up to 30 October 2015.
BIOTRON ANNUAL REPORT 2017
27
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Terms and conditions – Shares
Holders of ordinary shares are entitled to receive dividends as declared 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.
Option Reserves
Equity based compensation reserve
Option premium reserve
Movements during the period
Equity based compensation reserve
Balance at the beginning of period
Share based payment expense
Expiry of options
Balance at end of period
Option premium reserve
Balance at the beginning of period
Issue of options
Exercise of options
Expiry of options
Balance at end of period
Nature and purpose of reserves
Equity based compensation reserve:
2017
$
2016
$
74,423
203,996
278,419
42,902
817,827
860,729
42,902
31,521
522,000
42,902
-
(522,000)
74,423
42,902
817,827
203,996
(1,202)
(816,625)
203,996
817,848
-
(21)
-
817,827
The equity based compensation reserve is used to recognise the grant date fair value of options issued but not exercised.
Option premium reserve:
The option premium reserve is used to accumulate proceeds received from the issuing of options.
15. STATEMENT OF CASH FLOWS
Reconciliation of cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation of plant and equipment
Provisions for employee entitlements
Share based payments
Effect of exchange rate adjustments
Changes in assets and liabilities
Decrease in receivables
Decrease/(Increase) in prepayments
(Decrease)/Increase in payables
Net cash used in operating activities
28
BIOTRON ANNUAL REPORT 2017
(3,093,405)
(3,004,303)
13,073
21,482
31,521
15,457
40,500
42,902
191
(25,557)
-
(8,564)
10,184
7,139
202,205
(167,229)
(2,833,497)
(3,080,907)
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 16. RELATED PARTIES
Key management personnel and director transactions
The following key management person holds a position in another entity that results in them having control or joint control over the
financial or operating policies of that entity, and this entity transacted with the Company during the year as follows:
During the year ended 30 June 2017, Peter J. Nightingale had a controlling 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, amounted to $144,000 (2016 – $144,000). There were no outstanding amounts at
30 June 2017 (2016 – $nil).
Key management personnel compensation
During the year ended 30 June 2017, compensation of key management personnel totalled $638,987 (2016 – $673,322), which comprised
primary salary and fees of $556,446 (2016 – $579,281), superannuation of $45,495 (2016 – $46,043), share based payments of $31,521
(2016 – $42,902) and long service leave of $5,525(2016 – $5,096). During the 2017 and 2016 financial years, no long term benefits or
termination payments were paid.
17. SHARE BASED PAYMENTS
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. The vesting conditions of options issued under the plan are
based on a minimum service periods being achieved. There are no other vesting conditions attached to options issued under the plan.
In the event that the employment or office of the option holder 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.
No options were issued during the year ended 30 June 2017. During the year ended 30 June 2016, 5,000,000 options were issued to the
Managing Director as detailed in note 14.
Options outstanding at 30 June 2017
Grant date
25 November 2015
25 November 2015
25 November 2015
Number
of options
1,000,000
1,000,000
3,000,000
Exercise
price
Fair value
at grant date
Vesting
date*
Expiry
date
$0.15
$0.15
$0.18
$0.018
$0.018
$0.016
25 November 2015
30 November 2018
30 November 2016
30 November 2018
30 November 2017
30 November 2018
* Vesting conditions are based on minimum service periods being achieved.
Options outstanding at 30 June 2016
Grant date
25 November 2015
25 November 2015
25 November 2015
Number
of options
1,000,000
1,000,000
3,000,000
Exercise
price
Fair value
at grant date
Vesting
date*
Expiry
date
$0.15
$0.15
$0.18
$0.018
$0.018
$0.016
25 November 2015
30 November 2018
30 November 2016
30 November 2018
30 November 2017
30 November 2018
* Vesting conditions are based on minimum service periods being achieved.
Movement of options in the equity based compensation reserve during the year
Outstanding at 1 July
Number
of options
2017
5,000,000
Weighted average
exercise price
2017
$0.17
Number
of options
2016
5,000,000
Weighted average
exercise price
2016
$0.17
The equity based compensation reserve is used to record the options issued to directors and executives of the Company as compensation.
Options are valued using the Black-Scholes option pricing model.
The weighted average remaining contractual life of share options outstanding at the end of the year in the equity based compensation
reserve was 1.42 years (2016 – 2.42 years).
No ordinary shares have been issued as a result of the exercise of any option granted pursuant to the Incentive Option Plan during the
current and prior financial year.
BIOTRON ANNUAL REPORT 2017
29
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Fair value of options
The fair value of options granted is measured at grant date and recognised as an expense over the period during which the employee
becomes unconditionally entitled to the options. The fair value of the options granted is measured using an option valuation methodology,
taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to
reflect the actual number of options that vest.
When options on issue are modified and the modification is beneficial to the other party the incremental fair value at the date of the
modification is recognised over the remaining modified vesting period and the original grant-date fair value is recognised over the
remaining original vesting period. When the modification is to options on issue that have fully vested the incremental fair value is
recognised as an expense in the period the modification occurs. The incremental fair value is the difference between the fair value of the
share based payment at the date of modification between the old and new terms.
Expenses arising from share-based payment transactions
Total expenses arising from share based payment transactions recognised during the year ended 30 June 2017 was $31,521 (2016 – $42,902).
18. FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
The Company’s financial instruments comprise deposits with banks, receivables, trade and other payables and from time to time short
term loans from related parties. The Company does not trade in derivatives or in foreign currency.
The Company manages its risk exposure of its financial instruments in accordance with the guidance of the Board of Directors. The main
risks arising from the Company’s financial instruments are market risk, credit risk and liquidity risks. This note presents information about
the Company’s exposure to each of these risks, its objectives, policies and processes for measuring and managing risk, and the Company’s
management of capital.
Risk management framework
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 primary responsibility to monitor the financial risks lies with the Managing Director and the Company Secretary under the authority of
the Board.
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
Security deposits
Cash and cash equivalents
Note
8
10
Carrying amount
2017
$
2016
$
1,987,384
3,418,453
21,411
15,000
2,008,795
3,433,453
The Company mitigates credit risk on cash and cash equivalents by dealing with regulated banks in Australia.
Trade and other receivables
Credit risk of trade and other receivables is very low as it usually consists predominantly of amounts recoverable from regulated bank
in Australia.
All financial assets are current and are not past due or impaired and the Company does not have any material credit risk exposure to any
single debtor or group of debtors under financial instruments entered into by the Company.
30
BIOTRON ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 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.
Ultimate responsibility for liquidity management rests with the Board. The Company monitors rolling forecasts of liquidity on the basis of
expected fund raisings, trade payables and other obligations for the ongoing operation of the Company. At balance date, the Company has
available funds of $1,987,384 for its immediate use.
The following are the contractual maturities of financial liabilities, including estimated interest payments:
30 June 2017
Trade and other payables
30 June 2016
Trade and other payables
Carrying
amount
$
Contractual
cash flows
$
Less than
one year
$
Between one
and five years
$
Interest
$
367,671
(367,671)
(367,671)
115,959
(115,959)
(115,959)
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
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 1.30% (2016 – 1.99%).
At balance date, the Company had the following mix of financial assets exposed to variable interest rate risk that are not designated as cash
flow hedges:
Financial assets
Cash and cash equivalents
Security deposits
Net exposure
Note
8
10
2017
$
2016
$
1,987,384
3,418,453
21,411
15,000
2,008,795
3,433,453
The Company did not have any interest bearing financial liabilities in the current or prior year.
The Company does not have interest rate swap contracts. The Company always analyses its interest rate exposure when considering
renewals of existing positions including alternative financing.
Sensitivity analysis
The following sensitivity analysis is based on the interest rate risk exposures at balance date.
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.
22,773
38,378
BIOTRON ANNUAL REPORT 2017
31
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017
Currency risk
The Company is exposed to currency risk on cash and cash equivalents that are denominated in United States currency. The company’s
gross financial exposure to foreign currency risk at balance date was US$600 (2016 – US$5,269).
Sensitivity analysis
The following sensitivity analysis is based on the currency risk exposures at balance date.
A 5% strengthening of the United States dollar to Australian dollar at 30 June 2017 would have decreased post tax profit and net assets for
the period by the amounts shown below, while weakening would have increased the post-tax profit and net assets for the period.
2017
$
39
2016
$
355
The Company is not exposed to price risks.
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 operations. 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.
Estimation of fair values
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.
19. FINANCIAL REPORTING BY SEGMENTS
The Company operates in one reportable operating and geographical segment, being the biotechnology industry in Australia.
20. OPERATING LEASES
The Company leases an office in North Ryde, Sydney. The lease is for a period of 3 years starting from November 2013 with monthly
renewal after the 3 years.
During the year ended 30 June 2017, $76,849 was recognised as an expense in profit or loss in respect of the operating lease (2016 – $62,686).
The future minimum leases payments under non-cancellable operating leases are payable as follows:
Less than one year
Between one and five years
21. COMMITMENTS AND CONTINGENCIES
6,488
24,250
-
-
The Company may be party to commercial disputes and litigation in the normal course of business. No material liabilities are expected to
arise in respect of the commercial disputes and litigation existing at balance date.
There are no capital commitments at the date of these financial statements.
22. SUBSEQUENT EVENTS
There have been no matters arise 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.
32
BIOTRON ANNUAL REPORT 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 DIRECTORS’ DECLARATION
1.
In the opinion of the directors of Biotron Limited:
a)
the financial statements and notes set out on pages 16 to 32, and the Remuneration Report in the Directors’ Report, set out on
pages 10 to 13, are in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2017 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)
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 2017.
3. The directors draw attention to note 2(a) of the financial statements, which includes a statement of compliance with International
Financial Reporting Standards.
This report has been signed in accordance with a resolution
of the directors and is dated 28 August 2017:
Michael J. Hoy
Chairman
Michelle Miller
Managing Director
BIOTRON ANNUAL REPORT 2017
33
Independent Auditor’s Report
To the shareholders of Biotron Limited
Report on the audit of the Financial Report
The Financial Report comprises:
(cid:114) Statement of financial position as at 30 June 2017;
(cid:114) Statement of profit or loss and other comprehensive
income, Statement of changes in equity, and Statement of
cash flows for the year then ended;
(cid:114) Notes including a summary of significant accounting
policies; and
(cid:114) Directors' Declaration.
Opinion
We have audited the Financial Report of
Biotron Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
(cid:114) giving a true and fair view of the
Company's financial position as at 30
June 2017 and of its financial
performance for the year ended on that
date; and
(cid:114) complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Company in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia.
We have fulfilled our other ethical responsibilities in accordance with the Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
34
BIOTRON ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT
Material uncertainty related to going concern
We draw attention to Note 2(e), “Going Concern” in the financial report. The conditions disclosed in
Note 2(e), indicate a material uncertainty exists that may cast significant doubt on the Company’s ability
to continue as a going concern and, therefore, whether it will realise its assets and discharge its
liabilities in the normal course of business, and at the amounts stated in the financial report. Our
opinion is not modified in respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt in the Company’s assessment of
going concern. This included:
(cid:120) Analysing the cash flow projections by:
(cid:120)
Evaluating the underlying data used to generate the projections for consistency with other
information tested by us, our understanding of the Company’s intentions, and past results and
practices;
(cid:120) Assessing the planned levels of operating and capital expenditures for consistency of
relationships and trends to the Company’s historical results, results since year end, and our
understanding of the business, industry and economic conditions of the Company;
(cid:120) Assessing significant non-routine forecast cash inflows and outflows for feasibility, quantum and
timing. We used our knowledge of the client, its industry and financial position to assess the level
of associated uncertainty; and
(cid:120)
Evaluating the Company’s going concern disclosures in the financial report by comparing them to
our understanding of the matter, the events or conditions incorporated into the cash flow projection
assessment, the Company’s plans to address those events or conditions, and accounting standard
requirements. We specifically focused on the principal matters giving rise to the material
uncertainty.
Key Audit Matters
In addition to the matter described in the
Material uncertainty related to going
concern section, the Key Audit Matter
we identified is:
(cid:120) Research and development
expenditure.
Key Audit Matters are those matters that, in our
professional judgment, were of most significance in our
audit of the Financial Report of the current period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
BIOTRON ANNUAL REPORT 2017
35
INDEPENDENT AUDITOR’S REPORT
Research and development expenditure - $3,155,423
Refer note 6
The key audit matter
How the matter was addressed in our audit
Research and development expenditure is a key
audit matter due to the significance of the
amount (being 66% of total expenses) and the
audit effort associated with assessing the
completeness and accuracy of the amounts
recorded by the Company.
Our procedures included:
(cid:120) Assessing the Company’s policy for
research and development expenditure
against the requirements of the accounting
standards;
(cid:120)
(cid:120)
(cid:120)
Selecting a statistical sample of items
recorded as research and development
expenditure and checking the expenditure
amount recorded for consistency to invoices
from third parties or other underlying
documentation;
For the sample identified above, checking
the nature of the expenditure for
consistency with its classification as
research and development expenditure, in
accordance with the Company’s accounting
policy and the criteria in the accounting
standards; and
Testing the completeness of research and
development expenditure recorded in the
year by checking payments recorded since
year end and unprocessed invoices for
evidence of the timing of the transactions.
For this procedure, we selected our sample
from the Company’s payments since
balance date, and unprocessed invoices
post balance date, and agreed the details
recorded to the underlying documentation
of the transaction.
Other Information
Other Information is financial and non-financial information in Biotron Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
36
BIOTRON ANNUAL REPORT 2017
INDEPENDENT AUDITOR’S REPORT
In connection with our audit of the Financial Report, our responsibility is to read the Other Information.
In doing so, we consider whether the Other Information is materially inconsistent with the Financial
Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained prior
to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
(cid:114) preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
(cid:114) implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and
(cid:114) assessing the Company's ability to continue as a going concern. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
(cid:114) to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
(cid:114) to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar1.pdf. This
description forms part of our Auditor’s Report.
BIOTRON ANNUAL REPORT 2017
37
INDEPENDENT AUDITOR’S REPORT
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration
Report of Biotron Limited for the year
ended 30 June 2017, complies with
Section 300A of the Corporations Act
2001.
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 responsibilities
We have audited the Remuneration Report included in pages
10 to 13 of the Directors’ report for the year ended 30 June
2017.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Stephen Board
Partner
Brisbane
28 August 2017
38
BIOTRON ANNUAL REPORT 2017
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 2017, the distribution of each class of equity was as follows:
Fully Paid
Ordinary
Shares
Total Number
of Shares
30 November 2018
$0.06 Listed
Options
Total Number
of Listed
Options
30 November 2018
$0.15 Unlisted
Options
30 November 2018
$0.18 Unlisted
Options
Range
1 – 1,000
1,001 – 5,000
5,001 – 10,000
107
362
380
28,882
1,309,312
3,076,612
10,001 – 100,000
1,244
49,289,315
100,001 and over
581
338,598,139
2,674
392,302,260
30
138
68
190
120
546
14,212
393,535
526,880
7,249,811
70,273,081
78,457,519
-
-
-
-
1
1
-
-
-
-
1
1
At 31 July 2017, 1,383 shareholders held less than a marketable parcel of shares and 439 listed option holders held less than a marketable
parcel of options.
BIOTRON ANNUAL REPORT 2017
39
ADDITIONAL STOCK EXCHANGE INFORMATION
TWENTY LARGEST QUOTED SHAREHOLDERS
At 31 July 2017 the twenty largest fully paid ordinary shareholders held 26.37% of fully paid ordinary as follows:
Name
Armco Barriers Pty Ltd
Bond Street Custodians Limited
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