Biotron Limited Annual Report 2019

FY2019 Annual Report · Biotron Limited

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Annual Report

ANNUAL REPORT 2019

BIOTRON LIMITED ABN 60 086 399 144

Contents

Operating and Financial Review ...................................................................................................... 1

Corporate Governance Statement .................................................................................................. 5

Directors’ Report .............................................................................................................................. 6

Lead Auditor’s Independence Declaration ....................................................................................16

Statement of Profit or Loss and Other Comprehensive Income .................................................17

Statement of Financial Position ....................................................................................................18

Statement of Changes in Equity ....................................................................................................19

Statement of Cash Flows ...............................................................................................................20

Notes to the Financial Statements ................................................................................................21

Directors’ Declaration ....................................................................................................................39

Independent Auditor’s Report .......................................................................................................40

Additional Stock Exchange Information .......................................................................................44

Corporate Directory ........................................................................................................................47

Operating and
Financial Review

REVIEW OF OPERATIONS

Biotron Limited (‘Biotron’ or ‘the Company’) has completed several significant milestones during the
2018-2019 financial year. These include:

Reporting of positive results from the Company’s pivotal Phase 2 BIT225 HIV-1 clinical trial.
Presentation of data from the BIT225 HIV-1 trial at the HIV DART and Emerging Viruses 2018
conference in Miami, Florida USA, which received the Conference’s 2018 Poster Award.
Appointment of Professor Stephen Locarnini as a Non-Executive Director.

Raising $6.0 million in capital from the exercise of Company options.

HIV-1 Program

The major highlight during the year was the release
of positive human clinical data from the BIT225-009
Phase 2 trial of its lead drug BIT225 in HIV-infected
patients in combination with current antiretroviral
drugs.

The data from this Phase 2 clinical trial indicates that
BIT225 has induced key immune responses not seen in
patients dosed with approved anti-HIV drugs.

During HIV-1 infection, the virus hides in long-lived
cells known as macrophages. This cellular source
of virus persists even in people taking antiretroviral
drugs, although there is no detectable virus in their
blood. The continued presence of virus causes serious
problems including accelerated aging of the immune
system and HIV-associated neurocognitive disorder
(also known as AIDS-related dementia). Eradication of
virus from hidden reservoirs is key to further improving
health outcomes in this population and also key to any
strategy to cure patients infected with HIV-1.

In previously reported laboratory-based studies,
Biotron has shown that BIT225 attacks HIV-1 growing
in macrophages. An earlier Phase 1b/2a human clinical
trial (BIT225-004) demonstrated that BIT225 targets
replication of HIV-1 in macrophage lineage cells in
infected individuals.

The data from the BIT225-009 clinical trial indicate
that treatment with BIT225 triggers a range of positive
changes to the immune cells which help to fight HIV-1
in these patients.

In addition to statistically significant changes in
immune cells, there was a statistically significant
reduction in the level of the macrophage activation
marker sCD163 in the blood of the BIT225-treated
cohort by the end of the treatment period compared to
the placebo group in the trial.

Higher levels of sCD163 are linked with worse clinical
outcomes in patients and so this reduction of sCD163
by BIT225 provides additional evidence of potential
clinical benefit in these patients.

ANNUAL REPORT 2019

Phase 2 clinical trial indicates that
BIT225 has induced key immune
responses not seen in patients dosed
with approved anti-HIV drugs.

Operating and
Financial Review

Since releasing data from the BIT225-009 trial, the
Company’s main efforts have been directed towards
further understanding of these unique responses to
BIT225. This has involved testing samples of blood
collected during the trial for various markers, the levels
of which allow the determination of precisely how
BIT225 treatment has impacted on specific immune
pathways.

These analyses are supplementary in nature and will
not change the reported key positive findings from the
clinical trial. These analyses are proceeding well and
are important as they are providing key information
on characterising the mechanism of action of BIT225
on HIV-1 behind the positive results observed in the
BIT225-009 clinical trial.

Analysis of safety data was another key aspect of the
BIT225-009 Phase 2 trial. In the trial, a once daily
200 mg dose of BIT225 over a 12 week period was used
for the first time and was shown to be well tolerated,
with no serious adverse events or patient withdrawals.
The safety data from this extended dosage period adds
to the existing data from previous trials which indicates
that BIT225 is a well-tolerated drug.

In November 2018, Biotron presented a poster entitled
BIT225-009: Significant Immunological Outcomes
after 12 weeks of BIT225 and Antiretroviral Therapy
in an HIV-1 Phase 2 Clinical Trial at the HIV DART and
Emerging Viruses 2018 conference in Miami, Florida.
In a notable acknowledgement of the importance of
these results from the BIT225-009 trial, the conference
awarded Biotron’s Head of Research and Development,
Dr Carolyn Luscombe, the 2018 HIV DART Poster Award.

The importance of the BIT225-009 trial results cannot
be overestimated. They open up a new and unique
approach to dealing with significant health issues
associated with the presence of long-term low level
replication of HIV-1 that continues despite treatment
with current antiretroviral drugs. The trial data,
together with additional information from the ongoing,
post-trial analyses, are showing us and, importantly,
potential partners how BIT225 may play a role in the
eradication of HIV-1.

The positive outcomes from the BIT225-009 trial also
mean that Biotron has continued to meet with key
potential partners with compelling Phase 2 data in
hand. The additional data currently being generated
by the Company on characterising the mechanism of
action of BIT225 seen in the results of the BIT225-009
trial are valuable to furthering these discussions.

Hepatitis B Virus Program

Control and cure of Hepatitis B virus (HBV) has recently
emerged as an important focus of endeavour for
antiviral drug development by the pharmaceutical
industry. Over 2 billion people worldwide have been
infected with HBV. The World Health Organisation
estimates that over 250 million are chronically infected.

Like HIV-1, HBV can be treated with drugs that stop the
virus replicating, but these do not eradicate the virus.
Chronic infection with HBV can lead to complications
such as cirrhosis and liver cancer, which cause close to
one million deaths worldwide each year.

There is a concerted international effort to develop
treatment strategies to cure HBV. Because the virus life
cycle is complex, it is expected that several different
approaches in combination will be required to eradicate
the virus.

Biotron has designed a portfolio of small molecule
drugs that effectively work against HBV in cell cultures.
While early, the data are encouraging, and the Company
is working with a USA-based research group to
further characterise the anti-HBV activity of Biotron’s
compounds.

The reason for optimism is the fact that these
compounds reduce the levels of several key markers of
HBV infection in the cell assays, one of which is called
cccDNA. It is generally accepted that a cure for HBV
will require drugs that target cccDNA and, to date, the
identification of such compounds has proved elusive.

The USA Food and Drug Administration (FDA)
recognises the need to develop effective new
treatments for HBV. In consultation with European
regulatory authorities and professional societies
representing the European and American liver
groups (EASL and AASLD) the FDA has published a
clear guidance document for preclinical and clinical
development of new compounds.

The HBV therapeutic space is currently very active
within the pharmaceutical and biotech industries,
with significant investor interest in the search for
and development of effective HBV treatments. While
Biotron’s work on its HBV compounds is preclinical,
the data from these recent studies further validate
Biotron’s approach to antiviral drug development
and may provide the Company with an early stage
development opportunity with an appropriate partner.

BIOTRON LIMITED

Commercialisation

Development of new drugs is a slow, measured
process. The strict international regulatory and safety
requirements mean that there are no shortcuts to
the development of new drugs. Similarly, beneficial
partnerships in the biopharmaceutical industry take
time. They are dependent on good science, addressing
clear unmet medical needs, and rigorous data.

Biotron’s core antiviral programs have all these key
elements.

Biotron is focused on achieving a commercial outcome
for its antiviral programs. The Company has been
sharing information on its antiviral programs with
potential partners in the pharmaceutical industry since
early preclinical development. This has included regular
updates on progress and discussions of the next stage
of development. The Company has good relationships
with the pharmaceutical companies active in this space
and ongoing dialogue on these programs is in progress
and ongoing.

Discussions with pharmaceutical companies
are iterative in nature. Every successful series of
experiments or clinical trial generates another series
of questions that will guide the decision-making
process on the side of commercial partners. Good, well
founded science is core to success. Biotech companies,
such as Biotron, also need to demonstrate how their
drug(s) will fit within a changing treatment landscape,
especially with new mode of action drugs such as
BIT225. The Company is consulting with internationally
recognised HIV-1 experts with extensive expertise in
clinical development of HIV-1 treatments, as well as
experience in advising the pharmaceutical industry.
The aim is to map out the next stage of clinical
development based on the latest data.

The positive outcomes from the body of Biotron’s
work to date mean that the Company is able to
continue discussions with key potential partners with
compelling Phase 2 data in hand. Phase 2 is generally
considered the best time to license technology to
a major pharmaceutical company as they have the
expertise and resources necessary for late stage
clinical development and regulatory approvals in major
markets such as the USA. This is not a rapid process,
nor is there a guarantee of a successful commercial
outcome.

We appreciate the ongoing support and patience
of shareholders while we work to achieve the long-
awaited commercial outcomes.

Operating and
Financial Review

The positive outcomes
from the body of Biotron’s
work to date mean that the
Company is able to continue
discussions with key potential
partners with compelling
Phase 2 data in hand.

ANNUAL REPORT 2019

Operating and
Financial Review

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

WO0021538

Method of modulating ion
channel functional activity

Priority – 12 October 1998

WO04112687

Antiviral compounds and
methods

Priority – 26 June 2003

WO06135978

Antiviral compounds and
methods

Priority – 24 June 2005

STATUS

Granted in Australia

Granted in Australia, Brazil, Canada, China, India, Japan, Korea, New Zealand,
Singapore and South Africa

Under examination elsewhere (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, Canada, 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, India, and USA)

WO/2018/145148

Published 16 August 2018

Methods of treating Influenza

Priority – 8 February 2017

BIOTRON LIMITED

Operating and
Financial Review

Corporate

In October 2018, Biotron was pleased to announce the appointment of Professor Stephen Locarnini as a
Non-Executive Director of the Company. Professor Locarnini, BSc(Hons), PhD, MBBS, FRC(Path), was a past Director
of the World Health Organisation (WHO) Regional Reference Laboratory for Hepatitis B and D. Curative treatments
for Hepatitis B infections with antiviral agents represent a major focus for Professor Locarnini who is currently the
Divisional Head, Research & Molecular Development of Victorian Infectious Diseases Reference Laboratory (VIDRL).
He is a member of the Scientific Advisory Board of a number of emerging as well as established pharmaceutical and
biotechnology companies and is considered one of the world’s leading HBV experts. His skills and networks will be of
real benefit to Biotron at its current stage of development.

During the year in review the Company raised a total of $6,038,728 from the exercise of options, including
options exercised by the Company’s Managing Director, Dr Michelle Miller, which had been granted as part of her
remuneration package. This significant injection of funds combined with the receipt of the Australian Government’s
R&D Tax rebate places the Company in a sound financial position as it focuses on achieving commercial outcomes
for its programs.

During the next financial year, the Company will be focused on:

•

Continuing detailed supplementary analyses of samples from the Phase 2 HIV-1 trial seeking to further
characterise the clinical efficacy of BIT225.

• Ongoing sharing of data from the HIV-1 Phase 2 clinical trial and discussions with potential pharmaceutical

company partners regarding commercialisation opportunities for the Company’s antiviral intellectual property.

• Undertaking additional in vitro cell-based preclinical testing of compounds for the HBV program, including

screening of newly designed and synthesised compounds for potential anti-HBV activity.

•

Continued testing of Biotron compounds for activity against other key commercially relevant virus targets.

Subsequent Events

No matters or circumstances have arisen since the end of the financial year which significantly affected or may
significantly affect the operations of the Company, the results of those operations, or the state of affairs of the
Company in future financial years.

We look forward to the next year with confidence.

Michael J. Hoy
Chairman

Michelle Miller
Managing Director

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 2019 Corporate Governance Statement, dated as at and approved by the Board on 02 August 2019, reflects
the corporate governance practices throughout the 2019 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.

ANNUAL REPORT 2019

Directors’ Report

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 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 25 years in the bioscience
industry, with extensive experience in commercial drug
development. 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.

Dr Susan M. Pond AM, MD DSc, FTSE FAHMS
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). Previous non-executive positions
include chair of AusBiotech Limited and director
of Australian Nuclear Science and Technology
Organisation, Wound Management Innovation CRC and
Australian Academy of Technological Sciences and
Engineering (ATSE). Dr Pond also served as a board
member of Commercialisation Australia and Innovation
Australia.

Dr Pond is currently chair of the New South Wales
Smart Sensing Network and director of the Trusted
Autonomous Systems Defence Cooperative Research
Centre, Vectus Biosystems Ltd and Australian
Phenomics Network. She is a Fellow of the Australian
Institute of Company Directors, the Academy of
Technological Sciences & Engineering, the Academy of
Health and Medical Sciences and the Royal Society of
NSW.

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 held
academic appointments at the University of California,
San Francisco and the University of Queensland before
joining industry.

Dr Pond was appointed as a director on 7 March 2012.

BIOTRON LIMITED

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.
He is a director of Aus Bio Limited and REVA Medical
Limited and a former director of 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.

Prof Stephen Locarnini, BSc(Hons), PhD, MBBS,
FRC(Path)
Independent and Non-Executive Director

Professor Locarnini is a past director of the World
Health Organisation (WHO) Regional Reference
Laboratory for Hepatitis B and D for the Western
Pacific Region (WPRO). His current major research
interests include viral hepatitis, hepatitis vaccines
and antiviral chemotherapy with an emphasis on
the basic virology of the various agents of hepatitis,
the molecular pathogenesis of hepatitis, as well as
prevention and public health control measures.

Curative treatments for hepatitis B infections
with antiviral agents represent the current focus
for Professor Locarnini who is also interested in
intellectual property issues when applied to clinical and
diagnostic virology. He is a named inventor on over 20
internationally granted patents.

He worked at the Victorian Infectious Diseases
Reference Laboratory (VIDRL, originally Fairfield
Hospital Virus Laboratory) from 1989, as Director of
Laboratory Services from 1990 to 1998 and, in 1993,
he oversaw the amalgamation of all the Fairfield
Laboratories into the one service of the VIDRL. He
subsequently assumed the position of Head, Research
& Molecular Development of VIDRL when the laboratory
relocated to Melbourne Health in 1998.

Directors’ Report

Professor Locarnini is the recipient of numerous
awards including the European Association for the
Study of Liver Disease (EASL) International Recognition
Award in 2010, the Malaysian Liver Foundation’s
Medal for work on Viral Hepatitis in 2003 and the
Gastroenterological Society of Australia (GESA)
Distinguished Research Prize in 2013. In 2019 he
received the William H. Prusoff HEP DART Lifetime
Achievement Award. He is author of 289 peer-reviewed
articles, 24 invited editorials and 100 book chapters
and reviews and every year delivers numerous invited,
plenary, and named lectures at major international
meetings and conferences.

Professor Locarnini currently has an academic
appointment at the University of Melbourne.

He is a member of the Scientific Advisory Board
of a number of emerging as well as established
pharmaceutical and biotechnology companies. In 2017,
he co-founded the biotech start-up company CLEAR-B
with the Morningside-Newton Investment group in
Boston, USA focusing on curative strategies for chronic
hepatitis B. He is also the Hepatitis Virus Editor for
Antiviral Therapy.

Professor Locarnini was appointed as a Director on 23
October 2018.

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 Chartered Accountants Australia and
New Zealand. 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 Argent Minerals Limited, Bolnisi
Gold N.L., Cockatoo Coal Limited, Callabonna Uranium
Limited, Mogul Mining N.L., Pangea Resources Limited,
Perseverance Corporation Limited, Sky Metals Limited
(previously Planet Gas Limited) Sumatra Copper &
Gold plc, Timberline Minerals, Inc. and Valdora Minerals
N.L. Mr Nightingale is currently a director of Alpha
HPA Limited, Nickel Mines Limited and unlisted public
company Prospech Limited.

Mr Nightingale has been Company Secretary since 23
February 1999.

ANNUAL REPORT 2019

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

Stephen Locarnini

Directors’ Meetings

No. of Eligible Meetings to Attend

No. of Meetings Attended

REMUNERATION COMMITTEE MEETINGS

The number of remuneration committee meetings held and number of meetings attended by each of the directors of
the Company, while they were a member of the committee, during the year are:

Director

Michael J. Hoy

Michelle Miller

Susan M. Pond

Robert B. Thomas

Stephen Locarnini

Remuneration Committee Meetings

No. of Eligible Meetings to Attend

No. of Meetings Attended

DIRECTORS’ INTERESTS

At the date of this report, the beneficial interests of each director of the Company in the issued share capital of the
Company and options, each exercisable to acquire one fully paid ordinary share of the Company are:

Directors

Michael J. Hoy

Michelle Miller

Susan M. Pond

Robert B. Thomas

Stephen Locarnini

Fully Paid
Ordinary Shares

Options

Option Terms
(Exercise Price and Term)

7,789,828

2,965,625

545,246

2,663,195

1,557,965

$0.05 at any time up to 12 December 2019

190,625

109,049

$0.05 at any time up to 12 December 2019

There were no options over unissued ordinary shares granted as compensation to directors or executives of the
Company during 2019 and 2018 financial years.

BIOTRON LIMITED

Directors’ Report

UNISSUED SHARES UNDER OPTION

At the date of this report, unissued ordinary shares of the Company under option are:

Number of Options

106,226,853

Exercise Price

$0.05

Expiry Date

12 December 2019

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.

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

78,429,130

9,859,614

PRINCIPAL ACTIVITIES

Amount paid on each share

$0.06

$0.05

The principal activities of the Company during the financial year were the funding and management of intermediate
and applied biotechnology research and development projects.

FINANCIAL RESULT AND REVIEW OF OPERATIONS

The operating loss of the Company for the financial year after income tax was $1,611,799 (2018 - $1,593,645 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 2019.

ENVIRONMENTAL REGULATIONS

The Company’s operations are not subject to significant environmental regulations under Commonwealth or State
legislation in relation to its research projects.

ANNUAL REPORT 2019

Directors’ Report

EVENTS SUBSEQUENT TO BALANCE DATE

There has not arisen in the interval between the end of the financial year and the date of this report any item,
transaction or event of a material and unusual nature likely, in the opinion of the directors of the Company, to affect
significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in
future financial years.

LIKELY DEVELOPMENTS

During the year ended 30 June 2019, 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.

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.

5 million employee options were exercised during the year.

The number of options that had vested as at 30 June 2019 is nil. No options were granted as remuneration during
the year.

There were no remuneration consultants used by the Company during the year ended 30 June 2019 or in the prior
year.

BIOTRON LIMITED

Directors’ Report

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.

2019

2018

2017

2016

2015

Net loss attributable to equity
holders of the Company

$1,611,799

$1,593,645

$3,093,405

$3,004,303

$2,723,221

Dividends paid

Change in share price

0.05 cents

(0.1) cents

(4.0) cents

(7.0) cents

3.0 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.

Details of remuneration for the year ended 30 June 2019 - 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:

Primary
Fees
$

Year

Superannuation
$

Share Based
Payments
- Options
$

Other
$

Total
$

Value of
Options
as a % of
Remuneration

Directors

Non-executive

Michael J. Hoy
(Chairman)

Susan M. Pond

Robert B. Thomas

Stephen Locarnini**

Denis N. Wade*

Executive

2019
2018

70,356
68,807

37,523
36,697

26,221
-

-
15,290

6,684
6,537

3,565
3,486

2,491
-

-
1,453

-
-

77,040
75,344

41,088
40,183

28,712
-

-
16,743

Michelle Miller
(Managing Director)

2019
2018

307,191
300,000

29,183
28,500

-
10,134

14,886
5,525

351,260
344,159

Executives

Peter J. Nightingale
(Company Secretary)

2019
2018

78,000
75,000

-
-

78,000
75,000

-
-

-
3%

-
-

** appointed as a director on 23 October 2018
resigned as a director on 20 November 2017
*

No bonuses were paid during the financial year and no performance based components of remuneration exist. The
Company employed no other key management personnel.

ANNUAL REPORT 2019

Directors’ Report

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

$17,900

Michelle Miller

25 November 2015

1,000,000

$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 2019 and 2018 financial years. The number of options that vested as at 30 June
2019 is nil (2018 - 5,000,000).

During the year, Michelle Miller exercised the 5,000,000 options. No options lapsed during 2019 and 2018 financial
years.

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 2019 financial year.

Exercise of options granted as compensation - Audited

5 million shares issued on the exercise of options previously granted as compensation during the 2019 financial year
(2018- nil).

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.

Options granted

Director

Number

% vested
at year end

exercised/forfeited
during the year

balance
at year end

Financial year in
which grant vests

Date

Michelle Miller

1,000,000 25 November 2015

3,000,000 25 November 2015

100%

1,000,000

3,000,000

1 July 2015

1 July 2016

1 July 2017

The number of options that had vested as at 30 June 2019 is nil (2018 - 5,000,000). 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

$387,750

Lapsed in the year

BIOTRON LIMITED

Directors’ Report

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 2019 - Audited

Held at
1 July 2018

Granted/
Purchased

Exercised/Sold

Expired

Held at
30 June 2019

Vested and
exercisable at
30 June 2019

Directors

Michael J. Hoy

Michelle Miller

Susan M. Pond

2,804,337

5,703,125

196,288

Robert B. Thomas

2,104,793

Stephen Locarnini

Executives

Peter J. Nightingale

1,246,372

5,512,500

87,239

2,104,793

1,557,965

190,625

109,049

190,625

109,049

Loans to key management personal and their related parties - Audited

There were no loans made to key management personnel or their related parties during the 2019 and 2018 financial
years and no amounts were outstanding at 30 June 2019 (2018 - $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 2019, 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 (2018 - $144,000). There were no outstanding amounts at 30 June 2019 (2018 - $nil).

ANNUAL REPORT 2019

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 2019 - Audited

Held at
1 July 2018

Purchased

Received on
exercise of
options

Sales

Held at
30 June 2019

Directors

Michael J. Hoy

Michelle Miller

Susan M. Pond

7,789,828

953,125

545,246

Robert B. Thomas

8,000,000

Stephen Locarnini

Executives

Peter J. Nightingale

5,760,416

Service contracts - Audited

1,246,372

5,512,500

3,500,000

87,239

2,004,793

7,341,598

7,789,828

2,965,625

545,246

2,663,195

2,165,513

3,594,903

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.

Michelle Miller’s is employed by the Company as Managing Director and is required to provide the Company
with three months notice in order to terminate employment. The contractual salary is $328,500 (including
superannuation). During the year ended 30 June 2019, the Remuneration Committee resolved to increase
compensation to Michelle Miller to $360,000 (including superannuation).

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

52,500

49,950

2019
$

2018
$

BIOTRON LIMITED

Directors’ Report

LEAD AUDITOR’S INDEPENDENCE DECLARATION

The Lead Auditor’s Independence Declaration is set out on page 16 and forms part of the Directors’ Report for the
year ended 30 June 2019.

This report has been signed in accordance with a resolution of the directors and is dated 29 August 2019:

Michael J. Hoy
Chairman

Michelle Miller
Managing Director

ANNUAL REPORT 2019

Lead Auditor’s Independence Declaration

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 2019 there have been:

ii.

no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the audit.

KPMG

Stephen Board
Partner
Brisbane
29 August 2019

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
Professional Standards Legislation.

limited by a scheme approved under

BIOTRON LIMITED

Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2019

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

Notes

2019
$

2018
$

1,072,832

1,622,584

(299,580)

(12,467)

(806,272)

(275,674)

(11,642)

(817,458)

(1,115,879)

(1,692,656)

(61,236)

(73,849)

(404,488)

(77,604)

(106,549)

(251,230)

(1,700,939)

(1,610,229)

89,140

16,584

(1,611,799)

(1,593,645)

(1,611,799)

(1,593,645)

Total comprehensive loss for the year

(1,611,799)

(1,593,645)

Basic and diluted loss per share (cents)

(0.29) cents

(0.40) cents

The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes.

ANNUAL REPORT 2019

Statement of Financial Position
As at 30 June 2019

Current assets

Cash and cash equivalents

Other assets

Total current assets

Non-current assets

Plant and equipment

Other financial assets – bond deposit

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Employee entitlements

Total current liabilities

Non-current liabilities

Employee entitlements

Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Accumulated losses

Total equity

Notes

2019
$

2018
$

5,739,788

37,004

5,776,792

46,321

33,855

80,176

5,856,968

202,466

209,623

412,089

5,909

417,998

5,438,970

1,543,002

58,354

1,601,356

17,854

1,619,210

160,778

176,924

337,702

1,281,508

47,523,320

41,439,162

284,758

599,655

(42,369,108)

(40,757,309)

5,438,970

1,281,508

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

BIOTRON LIMITED

Statement of Changes in Equity
For the Year Ended 30 June 2019

Attributable to equity holders of the Company

Notes

Issued
Capital
$

Option
Reserves
$

Accumulated
Losses
$

Total
$

Balance at 1 July 2017

40,325,345

278,419

(39,163,664)

1,440,100

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

(1,593,645)

Ordinary shares/options issued

1,365,967

311,182

Cost of shares issued

Share based payment

Exercise of options

(252,230)

10,134

(80)

1,677,149

(252,230)

10,134

Balance at 30 June 2018

41,439,162

599,655

(40,757,309)

1,281,508

Balance at 1 July 2018

41,439,162

599,655

(40,757,309)

1,281,508

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

Exercise of options

Balance at 30 June 2019

6,038,728

(269,467)

314,897

(314,897)

(1,611,799)

6,038,728

(269,467)

47,523,320

284,758

(42,369,108)

5,438,970

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

ANNUAL REPORT 2019

Statement of Cash Flows
For the Year Ended 30 June 2019

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

Notes

2019
$

2018
$

1,073,232

(1,079,958)

(1,580,305)

89,140

1,622,584

(1,863,780)

(1,617,399)

16,584

Net cash used in operating activities

(1,497,891)

(1,842,011)

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

Consideration received – option exercise, share not yet granted

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

(11,949)

(40,933)

(52,882)

6,038,728

(291,678)

500

1,653,149

(255,528)

5,747,550

1,397,621

4,196,777

1,543,002

(444,389)

1,987,384

Cash and cash equivalents at 30 June

5,739,788

1,543,002

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

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 Company adopted AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers effective
from 1 July 2018. There was no material impact on the financial statements upon adoption.

The financial report was authorised for issue by the directors on 29 August 2019.

(b) Basis of measurement

The financial statements have been prepared on the historical cost basis, unless otherwise stated.

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

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.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

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.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

(g) Financial instruments

Non-derivative financial assets
Recognition and initial measurement

The Company initially recognises trade receivables on the date that they are originated. All other financial assets are
recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the
instrument.

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.

Classification and subsequent measurement – Policy applicable from 1 July 2018

On initial recognition, a financial asset is classified as measured at:

∫ Amortised cost;
∫ Fair value through other comprehensive income – equity investment; or
∫ Fair value through profit or loss.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both the following conditions and is not designated as fair
value through profit or loss:

∫ It is held within a business model whose objective is to hold assets to collect contractual cash flows; and
∫ Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and

interest on the principal amount outstanding.

All financial assets not classified as measured at amortised cost or fair value through other comprehensive income
as described above are measured at fair value through profit or loss. This includes all derivative financial assets. On
initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements
to be measured at amortised cost or at fair value through other comprehensive income as at fair value through
profit or loss if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Prior to 1 July 2018, The Company classified its financial assets into one of the following.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held
for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are
expected to be settled within 12 months; otherwise, they are classified as non-current. Financial assets at fair value
through profit or loss are measured at fair value and changes therein, which take into account any dividend income,
are recognised in profit or loss.

Amortised cost

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.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

Non-derivative financial liabilities

Financial liabilities are measured at amortised cost.

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 loans and borrowings and 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.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

(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.

(l) Impairment

Financial instruments
Policy applicable from 1 July 2018

The Company recognises expected credit losses (‘ECLs’), where material, on:

∫ Financial assets measured at amortised cost;

The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
measured at 12-month ECLs:

∫ Other debt securities and bank balances for which credit risk (i.e the risk of default occurring over the
expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECLs.
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at
fair value through other comprehensive income are credit-impaired.

The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof.

Policy applicable before 1 July 2018
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.

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.

(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.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

(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 January 2019, 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 and is assessing the impact.

AASB 16 Leases

AASB 16 removes the lease classification test for lessees and requires all the leases (including operating leases)
to be brought onto the balance sheet. The definition of a lease is also amended and is now the new on/off balance
sheet test for lessees.

AASB is effective for annual reporting periods beginning on or after 1 January 2019, with early adoption permitted
where AASB 15 Revenue from Contracts with Customers is adopted at the same time.

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 LIMITED

5. OTHER INCOME

Research and development rebate

Other

Notes to the Financial Statements
For the Year Ended 30 June 2019

Note

2019
$

2018
$

1,072,832

1,621,653

931

1,072,832

1,622,584

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

52,500

49,950

11,505

962

10,453

1,189

1,115,879

1,692,656

38,608

63,313

(74,915)

62,837

The calculation of basic and diluted loss per share at 30 June 2019 was based on the loss attributable to ordinary
shareholders of $1,611,799 (2018 - $1,593,645 loss) and a weighted average number of ordinary shares
outstanding during the financial year ended 30 June 2019 of 559,287,341 (2018 – 397,150,054), calculated as
follows:

Net loss for the year

1,611,799

1,593,645

Weighted average number of ordinary shares (basic and diluted)

Issued ordinary shares at 1 July

Weighted average number of ordinary shares at 30 June

2019
Number

2018
Number

502,417,116

392,229,816

559,287,341

397,150,054

As the Company is loss making, none of the potentially dilutive securities are currently dilutive.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

8. CASH AND CASH EQUIVALENTS

Cash at bank

Cash and cash equivalents in the statement of cash flows

5,739,788

1,543,002

5,739,788

1,543,002

2019
$

2018
$

9. INCOME TAX EXPENSE

Current tax expense

Current year

Tax losses not recognised

Deferred tax expense

Current year

De-recognition of temporary differences

(802,107)

(970,021)

802,107

970,021

65,030

89,176

(65,030)

(89,176)

Numerical reconciliation between tax expense and pre-tax net profit

Loss before tax - continuing operations

(1,611,799)

(1,593,645)

Prima facie income tax benefit at the Australian tax rate of 27.5%

(443,245)

(438,252)

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

385,425

122,850

(65,030)

595,928

(68,500)

(89,176)

214,244

204,140

9,469,650

9,346,799

9,683,894

9,550,939

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.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

2019
$

2018
$

37,004

36,448

21,906

58,354

239,116

(202,718)

36,398

514,442

(504,519)

9,923

46,321

205,851

(195,398)

9,453

511,958

(503,557)

8,401

17,854

10. OTHER ASSETS

Current prepayments

Security deposits

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

9,453

38,450

(11,505)

36,398

8,401

2,484

(962)

9,923

46,321

19,906

(10,453)

9,453

9,590

(1,189)

8,401

17,854

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

12. TRADE AND OTHER PAYABLES

Current

Creditors

Accruals

13. EMPLOYEE ENTITLEMENTS

Current

Employee annual leave provision

Long service leave provision

Non-current

Long service leave provision

14. CAPITAL AND RESERVES

Issued and paid up capital

2019
$

2018
$

158,270

44,196

202,466

135,778

25,000

160,778

69,024

140,599

209,623

50,282

126,642

176,924

5,909

595,705,860 (2018 – 502,417,116) fully paid ordinary shares

47,523,320

41,439,162

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

41,439,162

40,325,345

6,038,728

1,365,967

314,897

(269,467)

(252,230)

47,523,320

41,439,162

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully
paid.

∫ During the year ended 30 June 2019, 2,000,000 ordinary shares (2018 – nil) were issued through the exercise of

30 November 2018 $0.15 employee options for cash totalling $300,000 (2018 - $nil). The fair value of the options
when granted was $35,806 (2018 - $nil). Total Issue cost of $2,654 was recognised as a reduction in proceeds of
issue of these shares.

∫ During the year ended 30 June 2019, 3,000,000 ordinary shares (2018 – nil) were issued through the exercise of

30 November 2018 $0.18 employee options for cash totalling $540,000 (2018 - $nil). The fair value of the options
when granted was $48,751 (2018 - $nil). Total Issue cost of $5,904 was recognised as a reduction in proceeds of
issue of these shares.

∫ During the year ended 30 June 2019, 78,429,130 ordinary shares (2018 – 30,833) were issued through the
exercise of 30 November 2018 $0.06 listed options for cash totalling $4,705,747 (2018 - $1,850). The fair
value of the options when granted was $203,916 (2018 - $80). During the year, the Company entered into an
agreement with CPS Capital Group Pty Ltd to underwrite any shortfall arising from the exercise of 30 November
2018 $0.06 options. 1,336,137 options were underwritten by CPS capital Pty Ltd. Total Issue cost of $260,909
was recognised as a reduction in proceeds of issue of these shares.

∫ During the year ended 30 June 2019, 9,859,614 ordinary shares (2018 – nil) were issued through the exercise

of 12 December 2019 $0.05 listed options for cash totalling $492,981 (2018 - $nil). The fair value of the options
when granted was $26,424 (2018 - $nil).

∫ In June 2018, the Company offered eligible shareholders to purchase one new share and one new listed option
under a pro- rata renounceable rights issue. Under this offer, the Company issued 98,078,690 ordinary shares
and 98,078,690 listed options for cash totalling $1,471,180. The listed options are each exercisable at 5 cents
to acquire one fully paid ordinary share exercisable at any time up to 12 December 2019. Total issue cost of
$244,929 was recognised as a reduction in proceeds of issue of these shares. At 30 June 2018, $22,211 was
outstanding for payment.

∫ In June 2018, the Company issued 6,000,000 options as part consideration to the lead manager and underwriter
under the same terms as offered under the Renounceable Rights Issue. The options were valued at $24,000.

∫ In June 2018, the Company issued 12,007,777 ordinary shares and 12,007,777 listed options for cash totalling

$180,119 under a Share Placement Offer. Total issue cost of $7,301 was recognised as a reduction in proceeds of
issue of these shares. The listed options are each exercisable at 5 cents to acquire one fully paid ordinary share
exercisable at any time up to 12 December 2019.

There were no unlisted options on issue as at 30 June 2019.

The following unlisted options were on issue at 30 June 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 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.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

The following listed options were on issue at 30 June 2019:

Opening Balance
1 July 2018
Number

78,429,130

116,086,467

Exercise
Price
$

0.06

0.05

Granted
during the year
Number

Exercised/Expired
during the year
Number

78,429,130

9,859,614

Closing Balance
30 June 2019
Number

106,226,853

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

Options exercised during the period

Balance at end of period

Option premium reserve

Balance at the beginning of period

Issue of options

Exercise of options

Balance at end of period

Nature and purpose of reserves

Equity based compensation reserve:

2019
$

2018
$

284,758

84,557

515,098

599,655

84,557

(84,557)

515,098

(230,340)

284,758

74,423

10,134

84,557

203,996

311,182

(180)

515,098

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.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

2019
$

2018
$

15. STATEMENT OF CASH FLOWS

Reconciliation of cash flows from operating activities

Loss for the period

(1,611,799)

(1,593,645)

Adjustments for:

Depreciation of plant and equipment

Provisions for employee entitlements

Share based payments

Interest

Effect of exchange rate adjustments

Changes in assets and liabilities

Decrease/(Increase) in prepayments

(Decrease)/Increase in payables

Net cash used in operating activities

16. RELATED PARTIES

12,467

38,608

(9)

11,642

(74,915)

10,134

(495)

(7)

(556)

63,398

(15,129)

(179,596)

(1,497,891)

(1,842,011)

Key management personnel and director transactions

During the year ended 30 June 2019, 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 (2018 -
$144,000). There were no outstanding amounts at 30 June 2019 (2018 - $nil).

Key management personnel compensation

During the year ended 30 June 2019, compensation of key management personnel totalled $617,188 (2018 -
$591,612), which comprised primary salary and fees of $556,814 (2018 - $532,491), superannuation of $45,488
(2018 - $43,462), share based payments of $nil (2018 - $10,134) and long service leave of $14,886 (2018 -
$5,525). During the 2019 and 2018 financial years, no long term benefits or termination payments were paid.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

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.

No options were issued during the year ended 30 June 2019 and 30 June 2018. During the year ended 30 June 2019,
no options were on issue (2018 - 5,000,000) as detailed in note 14.

The terms and conditions of the options held by key management personnel during the year ended 30 June 2019 are
as follows:

Grant date

Expiry date

Vesting date

25 November
2015

30 November
2018

25 November
2015

30 November
2018

30 November
2016

25 November
2015

30 November
2018

30 November
2017

Options outstanding at 30 June 2018

Fair value
of options
granted
$

Exercise
price

Total
granted
Number

Total
Exercised
Number

Balance
at end of
the period
Number

$0.15

17,903

1,000,000

$0.15

17,903

1,000,000

$0.18

48,751

3,000,000

84,557

5,000,000

Grant date

Number of
options

Exercise
price

Fair value
at grant date

Vesting date*

Expiry date

25 November 2015

1,000,000

25 November 2015

1,000,000

25 November 2015

3,000,000

$0.15

$0.18

$0.018

25 November 2015

30 November 2018

$0.018

30 November 2016

30 November 2018

$0.016

30 November 2017

30 November 2018

* Vesting conditions are based on minimum service periods being achieved.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

Movement of options in the equity based compensation reserve during the year

Outstanding at 1 July

Number of
options
2019

Weighted average
exercise price
2019

Number of
options
2018

5,000,000

Weighted average
exercise price
2018

$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 nil years (2018 – 0.42 years).

During the year, 5 million ordinary shares were issued as a result of the exercise of options granted pursuant to the
Incentive Option Plan (2018 – nil).

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 2019 was
$nil (2018 - $10,134).

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.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

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

Carrying amount

2019
$

2018
$

5,739,788

1,543,002

33,855

21,906

5,773,643

1,564,908

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 a 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.

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 $5,739,788 for its immediate use.

The following are the contractual maturities of financial liabilities, including estimated interest payments:

Carrying
amount
$

Contractual
cash flows
$

Less than
one year
$

Between one
and five years
$

Interest
$

30 June 2019

Trade and other payables

202,466

(202,466)

30 June 2018

Trade and other payables

160,778

(160,778)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at signifi-
cantly different amounts.

BIOTRON LIMITED

Notes to the Financial Statements
For the Year Ended 30 June 2019

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 2% (2018 – 0.98%).

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

2019
$

2018
$

5,739,788

1,543,002

33,855

21,906

5,773,643

1,564,908

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.

2019
$

46,348

2018
$

11,819

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$97 (2018 -
US$150).

The Company is not exposed to price risks.

ANNUAL REPORT 2019

Notes to the Financial Statements
For the Year Ended 30 June 2019

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 September
2018 with an option to renew the lease for a further term by giving a notice of such intention to the landlord or the
agent at least 3 months before the expiration of the existing lease.

During the year ended 30 June 2019, $61,236 was recognised as an expense in profit or loss in respect of the
operating lease (2018 - $77,604).

The future minimum leases payments under non-cancellable operating leases are payable as follows:

Less than one year

Between one and five years

2019
$

45,250

52,792

2018
$

6,539

21. COMMITMENTS AND CONTINGENCIES

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.

BIOTRON LIMITED

Directors’ Declaration

In the opinion of the directors of Biotron Limited:

the financial statements and notes set out on pages 17 to 38, and the Remuneration Report in the
Directors’ Report, set out on pages 10 to 14, 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 2019 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;

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 2019.

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 29 August 2019:

Michael J. Hoy
Chairman

Michelle Miller
Managing Director

ANNUAL REPORT 2019

Independent Auditor’s Report

To the shareholders of Biotron Limited

Report on the audit of the Financial Report
To the shareholders of Biotron Limited

Opinion
Report on the audit of the Financial Report
We have audited the Financial Report of
Biotron Limited (the Company).
Opinion
In our opinion, the accompanying
Financial Report of the Company is in
We have audited the Financial Report of
accordance with the Corporations Act
Biotron Limited (the Company).
2001, including:
In our opinion, the accompanying
• giving a true and fair view of the
Financial Report of the Company is in
Company's financial position as at 30
accordance with the Corporations Act
June 2019 and of its financial
2001, including:
performance for the year ended on that
date; and
• giving a true and fair view of the
Company's financial position as at 30
• complying with Australian Accounting
June 2019 and of its financial
Standards and the Corporations
performance for the year ended on that
Regulations 2001.
date; and

The Financial Report comprises:

• Statement of financial position as at 30 June 2019;

• Statement of profit or loss and other comprehensive
income, Statement of changes in equity, and Statement of
The Financial Report comprises:
cash flows for the year then ended;
• Statement of financial position as at 30 June 2019;
• Notes including a summary of significant accounting
• Statement of profit or loss and other comprehensive
policies; and
income, Statement of changes in equity, and Statement of
• Directors' Declaration.
cash flows for the year then ended;

• Notes including a summary of significant accounting
policies; and

• Directors' Declaration.

• complying with Australian Accounting
Standards and the Corporations
Basis for opinion
Regulations 2001.

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.
Basis for 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 conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
We are independent of the Company in accordance with the Corporations Act 2001 and the ethical
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We
of the Financial Report section of our report.
have fulfilled our other ethical responsibilities in accordance with the Code.
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
Professional Standards Legislation.

limited by a scheme approved under

BIOTRON LIMITED

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
Professional Standards Legislation.

limited by a scheme approved under

Independent Auditor’s Report

Key Audit Matters

The Key Audit Matter we identified is:

• 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.

Research and development expenditure - $1,115,879

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 40% of total expenses) and the
audit effort associated with assessing the
completeness and accuracy of the amounts
recorded by the Company.

Our procedures included:

• Assessing the Company’s policy for

research and development expenditure
against the requirements of the accounting
standards;

• 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, we selected our sample from the
Company’s payments since balance date,
and unprocessed invoices post balance
date, and the underlying documentation of
the transaction.

ANNUAL REPORT 2019

Independent Auditor’s Report

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.

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:

• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;

• 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

• 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:

• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and

• to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with 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/ar2.pdf. This
description forms part of our Auditor’s Report.

BIOTRON LIMITED

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 2019, 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 14 of the Directors’ report for the year ended 30 June
2019.

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
29 August 2019

ANNUAL REPORT 2019

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 2019, the distribution of each class of quoted equity securityholders was as follows:

Range

1 - 1,000

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 and over

Fully Paid
Ordinary
Share Holders

169

1,185

1,037

2,866

917

6,174

Total Number
of Shares

46,941

4,051,516

8,340,336

109,134,438

474,132,629

595,705,860

12 December 2019
$0.05
Listed Option Holders

Total Number
of Listed Options

345

171

729

12,970

304,356

694,761

14,126,501

91,088,265

106,226,853

At 31 July 2019, 1,410 shareholders held less than a marketable parcel of shares. At 31 July 2019, nil 12 December
2019 5 cent listed option holders held less than a marketable parcel of options.

BIOTRON LIMITED

Additional Stock Exchange Information

TWENTY LARGEST QUOTED SHAREHOLDERS

At 31 July 2019 the twenty largest fully paid ordinary shareholders held 18.32% of fully paid ordinary as follows:

Name

Armco Barriers Pty Ltd

Jey Investment Pty Ltd

Dr Angela Fay Dulhunty

Umbiram Pty Ltd

Citicorp Nominees Pty Limited

Fordholm Investments Pty Ltd

DNS Accounting and Law Consultancy Pty Ltd

Spiceme Capital Pty Ltd

Scott’s A V Pty Ltd

10 Rookharp Investments Pty Limited

11 Pathold No 222 Pty Ltd

12 Mr Nick Karopoulos

13 Road & Construction Supplies of Australia Pty Ltd

14 ABN Amro Clearing Sydney Nominees Pty Ltd

15 Mr. Peter James Nightingale

16 Mr Andrew John Meek + MS Saskia Elle Meek < Andrew Meek SuperFund A/C>

17 Rigi Investments Pty Limited

18 Mr Russel Wayne Halder

19 Mr John Yan

20 Attollo Copia Pty Ltd

There are no current on-market buy-backs.

Fully Paid
Ordinary Shares

11,800,000

10,640,806

10,000,000

7,789,828

6,961,690

5,800,000

5,265,588

5,000,000

4,808,000

4,666,667

4,200,000

4,179,000

3,800,000

3,662,427

3,594,903

3,564,849

3,541,485

3.390.000

3,266,858

3,200,565

1.98

1.79

1.68

1.31

1.17

0.97

0.88

0.84

0.81

0.78

0.71

0.70

0.64

0.61

0.60

0.59

0.57

0.55

0.54

ANNUAL REPORT 2019

Additional Stock Exchange Information

TWENTY LARGEST 12 DECEMBER 2019 5 CENT QUOTED OPTION HOLDERS

At 31 July 2019 the twenty largest 12 December 2019 5 cent option holders held 43.13% of listed options as follows:

Name

Rookharp Capital Pty Limited

2 Mr Edward O’brien + Mrs Naomi O’brien

Rookharp Investments Pty Limited

Road & Construction Supplies of Australia Pty Ltd

DNS Accounting and Law Consultancy Pty Ltd

6 Mrs Michael Carabott

7 Mrs Narelle Fay

8 Mr Andrew Fay

Goffacan Pty Ltd

10 Umbiram Pty Ltd

11 IQ Global Asset Partners Pty Ltd

12 Mr Dale Maurice Raynes

13 Fordholm Investments Pty Ltd < Fordholm Super Fund A/C>

14 Mr Dhaval Jitendrakumar Patel

15 Mrs ZI Juan QI

16 Mr Peter John Leigh

17 Bond Street Custodians Limited < WLPHLO- D09537 A/C>

18 Mr Andrew James Schutz + Ms Sandy Schutz

19 Mr Russel Wayne Halder

20 Mrs Sharon Lewis

Quoted Options

5,751,000

5,730,000

4,666,667

3,700,000

3,685,868

2,694,344

2,500,050

2,500,000

1,779,242

1,557,965

1,911,544

1,500,000

1,200,000

1,147,828

1,000,000

5.41

5.39

4.39

3.48

3.47

2.54

2.35

1.67

1.47

1.65

1.41

1.13

1.08

0.94

BIOTRON LIMITED

Corporate Directory

PRINCIPAL ADMINISTRATION OFFICE:

Suite 3.3, 56 Delhi Road
NORTH RYDE NSW 2113
Phone: 61-2 9805 0488
61-2 9805 0688
Fax:

DIRECTORS:

Mr Michael J. Hoy (Chairman)
Dr Michelle Miller (Managing Director)
Dr Susan M. Pond
Mr Robert B. Thomas
Prof Stephen Locarnini

COMPANY SECRETARY:

Mr Peter J. Nightingale

REGISTERED OFFICE:

Level 2, 66 Hunter Street
SYDNEY NSW 2000
Phone: 61-2 9300 3344
Fax:
61-2 9221 6333
E-mail: enquiries@biotron.com.au
Homepage: www.biotron.com.au

SHARE REGISTRAR:

Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
SYDNEY NSW 2000
Phone: 1300 787 272

Fax: +61 3 9473 2500

AUDITORS:

KPMG Level 16, Riparian Plaza
71 Eagle Street
BRISBANE QLD 4000

HOME EXCHANGE:

ASX Limited 20 Bridge Street
SYDNEY NSW 2000

SOLICITORS:

Minter Ellison
88 Phillip Street
SYDNEY NSW 2000

Biotron Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares.

ANNUAL REPORT 2019