Cellmid Limited
Level 6, 40 King Street
Sydney NSW 2000
ABN 69 111 304 119
T: +61 2 9299 0311
F: +61 2 9299 2198
E: info@cellmid.com.au
www.cellmid.com.au
2012 Annual Report
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Contents
Chairman’s Report
CEO’s Report
Directors’ Report
Corporate Governance Statement
Financial Report
Additional Information
Corporate Directory
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Cellmid Limited (ASX:CDY)
Annual Report
ABN 69 111 304 119
Level 6
40 King Street
Sydney NSW 2000
Australia
T: +61 2 9299 0311
F: +61 2 9299 2198
E: info@cellmid.com.au
W: www.cellmid.com.au
Chairman’s
Report
Dear Shareholder,
I am pleased to present to you the 2012 Annual Report of
Cellmid Limited.
The 2012 financial year continued to present challenging
market conditions for Cellmid, as for other companies in
the biotechnology sector competing for scarce capital in
risk-averse markets. Despite this difficult environment, I am
pleased to report that the Company has continued to build
successfully on our important midkine programmes, and
(through our controlled entity Advangen International Pty Ltd)
commenced commercial sales of our TGA listed évolis® hair
growth products in Australian pharmacies. Advangen enjoys
exclusive manufacturing and distribution rights internationally,
outside of China and Japan, and this global product platform
is expected to deliver significant revenues for the Company in
the coming years.
It is especially pleasing that the Company has continued
to make encouraging progress on the midkine product
development programmes. Humanising the first in class
anti-midkine antibody, hu91, in November 2011 represented
a key therapeutic milestone. It is expected that hu91 and
the Company’s other antibodies will continue to be tested
in several therapeutic areas in the coming year including in
inflammatory and cancer disease models.
The second report from our licensee Celera-Quest in early
2012 confirmed that midkine is one of the six markers on their
lung cancer screening test. Their intention is to fully validate the
blood test on an automated diagnostic platform and release
it to market in the large global laboratory network available
through the Quest pathology business. The test is designed as
an adjunct diagnostic tool for those presenting with non-specific
lung complaints. Lung cancer is one of the top cancer types by
number of sufferers and there is an urgent need to improve
early diagnosis and assist monitoring of treatment efficacy.
The Company’s GMP manufactured MK ELISA was CE
Marked in November 2011 and has since been field tested
in independent laboratories in Australia, Japan, USA, Turkey
and Germany. It has been popular with researchers and has
performed exceptionally well in a 500 sample healthy volunteer
study. As a result the Company has been able to establish the
healthy reference values for midkine, as a critical first step in
developing its own diagnostic products.
participants from 12 countries. The objective of the meeting
was to foster collaboration between leaders in midkine research
in a variety of therapeutic and diagnostic fields and provide an
opportunity for Cellmid to promote the Company’s intellectual
property platform which underpins this diverse independent
research. Presentations over the two day programme ranged
from cancer research to midkine biology, and included new
data on exciting potential treatments for musculoskeletal and
inflammatory conditions. Several research and commercial
collaborations are expected to arise from the deliberations at
the Conference.
Further details of all these important developments can be
found in the report from our CEO and Managing Director
Maria Halasz elsewhere in this Annual Report.
With regard to the developing Advangen hair growth product
business, our strategy for the period was to accelerate the
over-the-counter business and mitigate the Company’s
financial risks by generating early revenues. To that end
the Company has been successful in transferring the
manufacturing technology to Australia and TGA listing the
évolis® products so as to be able to include important hair
growth related claims on the packaging – the latter a “first”
in Australia for over 20 years. Following the launch of these
novel products around the end of the reporting period, early
indicators of market acceptance point to strong potential
sales and an important early revenue stream.
Although the year in review has been especially challenging for
“small cap” companies in our sector, as in other sectors, it is
pleasing that the Company has made solid progress on both
technical and commercial fronts; we enter the year ahead with
good prospects for yet more progress on both fronts. It is of
course disappointing that our progress is not well reflected
in the share price performance, however we will continue to
maintain focus on our business fundamentals.
Our staff and technical advisors deserve credit for their
excellent work throughout the year, nobody more so
than our indefatigable CEO Maria Halasz. On behalf of
the Board I extend to them our sincere thanks. We also
thank all our shareholders for their continued support.
In June 2012 the Company sponsored the 2nd Excellence
in Midkine Research Conference in Istanbul, with over 70
Dr David King
Chairman
4 Cellmid 2012 Annual Report
CEO’S
Report
Dear Shareholder,
The 2012 financial year has been transforming for Cellmid as
we have achieved a number of critical milestones in the areas
of diagnostics, therapeutics and personal care.
We have commenced commercial sales of our over-the-
counter (OTC) hair growth products in our personal care
subsidiary Advangen International Pty Ltd. Humanising the
first-in-class anti-midkine antibody (hu91) was a major achieve-
ment for our antibody program, whilst GMP manufacturing
and CE Marking our midkine (MK) blood test (MK-ELISA) set
us on the right path to commercialise our cancer diagnostic
assets.
On the EGM held on 30 September 2011 the majority of
our shareholders voted down the resolution to issue further
shares to La Jolla Cove Investors under the facility signed a
year before. Whilst the money from the facility was useful as
it made it possible to progress with the product development
programs it has resulted in the erosion of our share price. The
facility was eventually terminated in February 2012 and the
final share issue to La Jolla Cove Investors was made on 20
April 2012.
Since then Cellmid raised $1.4M in April 2012, of which $1M
was received by 30 June 2012 ending the financial year with
a cash balance of $1.05M. The remaining $400,000 was
received post balance date in July 2012.
Our revenue was slightly up to $171,273 for the year
($152,047 in 2011). This amount included a small initial order
of the évolis® hair growth products, which related to supply to
around 100 Terry White Chemists.
The consolidated net loss of the group amounted to
$1,972,483, after providing for income tax. This represents a
15% decrease on the losses reported for the year ended 30
June 2011 ($2,269,637). This result was achieved during a
period when the Advangen business has grown rapidly and
transformed from test marketing to getting regulatory listing,
completing GMP manufacture and commercially launching
the évolis® products to pharmacies.
Advangen International Pty Ltd – OTC pharmacy business
At the time we negotiated the exclusive manufacturing and
distribution agreement for the FGF-5 inhibitor hair growth
products we have done so with the specific strategic objective
of mitigating risks for the Company. By eventually providing
regular cash flows we intended this business to underwrite the
Company’s overheads.
In late 2010 we embarked on a test-marketing program and
began learning about the hair growth sector, market need,
perceptions and pricing. By late 2011 we established that
there was a genuine need for a scientifically and clinically
validated, effective and safe hair growth product that can be
used by men and women. We also found out that the last
time a regulatory approved topical product was released to
the market was in 1988, some 24 years earlier. That product
was minoxidil, the vasodilator that was originally developed as
a blood pressure medication.
At this point we knew we had a hair growth product that ticked
all the boxes; it had a very clear mechanism of action inhibiting
FGF-5. It was effective as demonstrated by the clinical trials
that delivered 32% reduction in hair loss and 18% increase
in the rate of hair growth. There have been no reported side
effects in Japan following three years of marketing so we
knew the products have excellent safety profile.
Even so, it took extraordinary team work by our staff to
receive TGA listing certificates for both the men and women’s
product, to transfer the technology into Australia, complete
GMP manufacture, launch the product in pharmacies and
receive the first commercial purchase order from one of the
biggest buying groups within nine months from completing
the test marketing.
In February 2012 after three months of data collation and
submission preparation Advangen’s first Australian products,
‘évolis® for men’ and ‘évolis® for women’ hair growth tonics,
received listing certificates from the TGA. This meant that
important claims such as “promotes hair growth”, “helps
reduce hair loss and thinning” and “restores the natural growth
cycle by inhibiting FGF-5” can now be listed on the packaging.
During our media launch on 29 March 2012 we advised the
market that after 24 years there is a clinically validated hair
growth product with a clear mechanism of action that is
safe to use for all ages and for both men and women. Most
importantly, we set up a quick succession of meetings with
pharmacy banner group buyers, where the reception was
uniformly enthusiastic. Our staff was understandably elevated
when the first significant order came through from Terry White
Chemists at the very end of the financial year.
It is difficult to predict sales at this stage and we do not expect
to come out with forecasts for the first full year of sales. There
Cellmid 2012 Annual Report 5
CEO’s Report
Continued
are many reasons for this; it will take some time to reach the
targeted number of pharmacy doors selling the product and
the line-fill rate (the rate of re-order) is yet to be established.
Furthermore, there is uncertainty around the timing and level of
market penetration in international territories such as the USA,
Europe, India and South America. Table 1 above provides
a summary of our distribution strategy both in Australia and
internationally.
MK Diagnostics
Whilst the 2012 financial year maybe called the year of évolis®
we’ve kicked significant goals in our midkine (MK) programs.
Our diagnostics business received a boost in August 2011
when we successfully transferred the MK-ELISA (blood test)
technology from pilot to commercial GMP manufacture and
the first 100 kits rolled off the manufacturing lines of Asure-
Quality. This was a critical step in our cancer diagnostic
program and using our own MK-ELISA has become the basis
of all our subsequent data collection.
By October 2011 we received CE Marking of the MK-ELISA
opening up sales opportunities to the research market as
the first ever validated MK blood test. In December 2011
the first stage of our Kumamoto University collaboration was
completed establishing the healthy MK reference range by
measuring the MK levels in approximately 240 healthy individ-
uals using our CE marked blood test. Knowing the healthy
reference range is essential in assessing MK levels of cancer
patients and a key component of our regulatory filing.
We have all been keen to get an update on our diagnostic
licenses and in March 2012 Celera-Quest provided us with
a brief report. Celera’s lung cancer test in development, as
confirmed by this update, does indeed include MK as one of
six markers used in the panel. We have also been advised that
Celera-Quest will launch the product as an LDT (laboratory
developed device) utilising the extensive clear lab system avail-
able through Quest. Whilst we haven’t received information on
the timing of a product launch the test was in the process of
being validated on an automated diagnostic platform at the
time of reporting.
6 Cellmid 2012 Annual Report
Our in-house cancer diagnostic studies (CS5000) have been
progressing to an extent that we have used up or sold all of
the first batch of MK-ELISA kits and had to complete the
second manufacturing batch with 250 units in June 2012.
CAB103 – MK Antibody program
Our strategic review of the MK antibody program in 2010
resulted in setting a clear path to product development in
this business unit. During the 2011 financial year we have
spent substantial resources to characterise and evaluate our
MK antibodies, their binding characteristics and biological
functionality. With more than 120 antibodies in our treasure
chest there was much to do.
By early 2011 we selected a lead antibody candidate for
humanisation and in October 2011 we had our first in class
humanised and de-immunised anti-MK antibody (hu-91). The
antibody engineering was done by Antitope Ltd in Cambridge.
The collaboration proved to be a great success with a deliv-
ery of a drug candidate in record time. We have spent three
subsequent months testing hu91 to confirm its binding
characteristics and functionality.
In mid 2012 we began testing hu91 and other MK antibodies
in pre-clinical models of diseases. We expect to continue this
work as we have at least 12 different diseases to be tested in
our menu of potentially suitable clinical indications.
CAMI101
Our therapeutic program for the treatment of heart attack has
reached a critical point with the completion of pharmacokinetic
studies. The next stage of additional efficacy studies in large
animals is planned subject to the availability of sufficient funding.
Patent Portfolio Update
In May 2012 our patent for the prevention and treatment of
autoimmune diseases (T-reg patent) was allowed. A key patent
in our antibody portfolio, this adds another layer of protec-
tion to use anti-MK antibodies for the treatment or prevention
of diseases associated with functional disorder of regulatory
T cells (T-regs). Regulatory T cells are central controllers of
the immune system and when their numbers are abnormally
low the body can attack its own tissues leaving the subject
susceptible to autoimmune diseases. This is another promis-
ing area for Cellmid’s anti-MK antibodies, which can boost
T-reg numbers and protect the body from attacking its own
immune system.
In addition to our new antibody patents in November 2011
the US Patent Office allowed our key midkine patent for the
prevention and treatment of ischemia. This is a fundamental
asset in our heart attack program and rounded up the patent
family, which has now been granted in all major jurisdictions.
2nd Excellence in Midkine Research Conference
A very important event of the period was the 2nd Excellence
in Midkine Research Conference. Cellmid was the sponsor
of the event, which provided a scientific forum for close to
70 midkine researchers from twelve countries. Significantly,
the conference demonstrated that midkine has become a
mainstream interest for researchers in several therapeutic and
diagnostic areas. This in turn is likely to provide the Company
with commercial product opportunities given its extensive
patent portfolio held within the area.
World-class midkine research was reported during the confer-
ence on the treatment of glioblastoma, prostate cancer and
osteoarthritis as well as novel findings on the role of midkine in
neurological disorders. Cellmid is already in discussions with
individual researchers and organisations where collaboration
may present a commercial opportunity.
We have been actively managing our patent portfolio and have
always had a strong focus on building a cohesive strategy
that makes commercial sense. In addition, we have been
giving consideration to preserving our position as the midkine
company. With 21 patent families and 78 patents, many of
them recently granted, Cellmid is the global leader in MK intel-
lectual property.
The 2012 financial year presented many challenges and the
funding environment continued to be less than favourable
for the sector. In this period we have succeeded to grow a
new business with cash flow potential, reducing our funding
risk going forward. Overall the Company has closed a very
successful operational period with a significant increase in
asset value and a springboard for future success.
During the 2012 financial year two of our antibody patent
families have been enriched with the granting of US patents. In
April 2012 our patent for the treatment of adhesion was allowed.
Adhesion occurs between the abdominal wall and other organs
in 95% of abdominal surgeries and can result in pain, bowel
obstruction or infertility in women. Current prevention methods
include wrapping internal organs in a bio-absorbable barrier to
prevent them from fusing. The only way to treat adhesions is by
repeat surgery and there is no approved drug for the preven-
tion or treatment of this condition. It therefore presents a strong
therapeutic opportunity for our anti-MK antibodies and is one of
the diseases to be tested in preclinical models.
I would like to thank the Board and the committed Cellmid
team for their contribution in achieving these substantial
milestones this financial year. I would also like to thank our
shareholders for their active support.
Maria Halasz
CEO and Managing Director
Cellmid 2012 Annual Report 7
Directors’
Report
10
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Contents
Directors’ Report
Auditor’s Independence Declaration
Corporate Governance Statement
Financial Report
Your directors present their report, together with the financial statements of the group, being the Company and its control-
led entity, for the financial year ended 30 June 2012.
Directors
The following persons were directors of Cellmid Limited during the financial year and up to the date of this report:
Dr David King
Ms Maria Halasz
Mr Robin Beaumont (resigned 27th August 2012)
Mr Graeme Kaufman (appointed 27th August 2012)
Principal Activities and Significant Changes in the Nature of Activities
The principal activities of the group during the financial year were;
• the development and commercialisation of diagnostic and therapeutic products for the management of diseases such
as cancer and various chronic inflammatory conditions by targeting midkine (Midkine business)
• the development and sale of over-the-counter (OTC) treatments to alleviate excessive and abnormal hair loss and re-
establish the natural hair growth cycle (OTC business)
There have been no significant changes in the nature of the principal activities of the group during the financial year.
Operating Results and Review of Operations for the Year
The consolidated net loss of the group amounted to $1,972,483, after providing for income tax. This represents a 15%
decrease on the losses reported for the year ended 30 June 2011 ($2,269,637). Revenue was slightly up to $171,273 for
the year ($152,047 in 2011). This amount included the first month revenue from the commercial sales of the évolis® hair
growth products, which related to supply to around 100 pharmacies.
Cellmid 2012 Annual Report 9
Directors’ Report
Continued
REVIEW OF OPERATIONS
The group has achieved significant commercial milestones in its OTC (over-the-counter) business and reached a number
of product development goals in its midkine portfolio of programs.
OTC business – Commercial launch of évolis® hair growth products
Advangen International Pty Ltd has been set up to develop, manufacture and sell OTC products aimed at the hair growth
market as well as to exploit the groups midkine intellectual property for hair growth. As exclusive distributor for a range of
FGF-5 inhibitor products globally outside of Japan and China, Advangen prepared a strategic product development and
marketing plan to commercialise the range internationally.
The critically important TGA listing of the évolis® for men and évolis® for women lotions was completed in February 2012.
In March 2012 the first batch of Australian GMP manufactured goods were received and a media launch held. The first
pharmacy banner group with 157 individual pharmacies agreed to stock the évolis® products in May and ordered the first
wholesale supply in June 2012.
A fully operational commercial website for the sale of the évolis® products was launched in April 2012.
The group’s patent application for the use of midkine for hair growth has advanced through the provisional phase and is
currently under national phase examinations in Australia, USA, Europe, Japan, China, South Korea, UK and Switzerland.
Midkine Business – Progressing with the diagnostic and therapeutic assets
Midkine (MK) Diagnostic Program
MK ELISA
The group’s MK ELISA (midkine blood test) was fully validated and the first batch of GMP manufactured test completed in
August 2011. Shortly after, in October 2011, the group received CE marking of the test kit. The GMP manufactured and
CE Marked MK ELISA has since been extensively road tested by scientists in Australia, Japan, USA, Turkey and Germany.
Consistent performance of the test in the hands of independent users has been an important step in the commercialisa-
tion process. Due to increasing demand for the test on the research market, and due to advancing with several internal
programs, a second GMP manufacturing run with 250 fully validated kits was completed in June 2012. Completion of
GMP manufacture and CE marking represents a significant milestone in the commercialisation of the group’s diagnostic
intellectual property assets.
Celera-Quest license update
In March 2012 the group received its second annual report from Celera-Quest in relation to its license for the use of midkine
as a biomarker for the early detection of lung cancer. The report has not provided specific product launch dates, however
it has outlined the significant progress made in the development of Celera-Quest’s six marker lung cancer test. Further, the
group was advised that Celera-Quest will be launching the lung cancer test on the market as an LDT (laboratory developed
test), utilising the extensive FDA licensed laboratory network that is provided by Quest. This could potentially accelerate
the launch of the test.
Projects CK3000 and CS5000
As part of its cancer screening program the group has continued the CK3000 Project with the collection of over 450 healthy
individual’s serum samples. During the period 270 samples have been tested with the GMP manufactured and CE Marked
MK-ELISA and the normal reference range study for the group’s internal diagnostic programs was reported in December
2011. The study provided statistically relevant results, however sample collection and testing remains ongoing to underpin
the quality of future regulatory submissions. Project CS5000 commenced in early 2012 with a partnership between the
John Hunter Hospital and the group for the testing of an unspecified number of cancer samples. The collection process
of blood samples from patients with prostate cancer has commenced earlier in the period and these samples have been
10 Cellmid 2012 Annual Report
tested as part of a pilot project. The objective of this study was to establish whether prostate cancer patients have elevated
blood midkine levels, which was confirmed by using the group’s MK ELISA.
Advances in therapeutic product development
The group has two therapeutic programs, CAMI103 (heart attack) and CAB101 (antibody both in pre-clinical stage. Critical
development milestones have been achieved in the antibody program (CAB101). Successful resolution of the technical
challenges relating to the manufacturing of midkine has been the key achievement for the CAMI103 program during the
period.
CAB101
This program is aimed to develop anti-midkine antibodies for the treatment of a range of inflammatory and autoimmune
diseases. The program reached a critical milestone in October 2011 with the humanisation of the first in class anti-midkine
antibody hu91. The antibody engineering was carried out by Antitope Inc in Cambridge, UK. Following humanisation hu91
was tested in a battery of in vitro assays for affinity and biological activity. In vivo animal studies have also commenced to
identify the key therapeutic indication for clinical trials.
Several of the group’s antibody patents have been granted during the period including the US applications for the treat-
ment of adhesion and diseases associated with the down-regulation of T-reg cells (regulatory cells that modulate immune
responses), both using antibodies against midkine.
CAMI103
Under this program the group is developing the midkine protein for the treatment of heart muscle damage following heart
attack (AMI). The CAMI103 development program is a series of preclinical studies from Stage 1 to Stage 7. Following the
completion of pharmacokinetic studies the group has spent some time refining the manufacturing process which is neces-
sary before embarking on definitive efficacy studies in large animals.
2ND EXCELLENCE IN MIDKINE RESEARCH CONFERENCE
One of the most important events of the period was the 2nd Excellence in Midkine Research Conference. The group was
the sponsor of the event which provided a scientific forum for close to 70 midkine researchers from twelve countries.
Significantly, the conference demonstrated that midkine has become a mainstream interest for researchers in several
therapeutic and diagnostic areas. This in turn is likely to provide the group with commercial product opportunities given its
extensive patent portfolio held within the area.
World class midkine research was reported during the conference on the treatment of glioblastoma, prostate cancer and
osteoarthritis as well as novel findings on the role of midkine in neurological disorders. The group has commenced discus-
sions with individual researchers and organisations where collaboration may present a commercial opportunity.
Financial Position
The net assets of the consolidated group are slightly up at $2,089,484 ($2,037,968 as at 30 June 2011). The directors
believe that the group is in a stable financial position to expand and grow its current operations.
Significant Changes in the State of Affairs
During the reporting period, the group has commenced commercial sales of its évolis® hair growth products through its
controlled entity Advangen International Pty Ltd. During its first month of commercial sales in June 2012 the group has
received revenue of $47,000 from the supply of approximately 100 pharmacies. Information on Advangen International Pty
Ltd is included under the heading “OTC business” above.
Cellmid 2012 Annual Report 11
Directors’ Report
Continued
Dividends Paid or Recommended
The group has not paid or declared any dividends during the financial year.
Events after the Reporting Period
Subsequent to the closing of the reporting period the group raised $400,000, increasing its net cash reserves from
$1,050,593 to $1,450,593. In addition, the group has continued with the expansion of its pharmacy distribution as previ-
ously advised and is on track to reach the projected 400 pharmacy doors for the first twelve months of operations.
Future Developments, Prospects and Business Strategies
Likely developments, future prospects and business strategies of the operations of the group and the expected results of
those operations have not been included in this report as the directors believe, on reasonable grounds, that the inclusion
of such information could result in unreasonable prejudice to the consolidated group.
Environmental Issues
The group’s operations are not subject to significant environmental regulations under the laws of the Commonwealth and
the State.
Board and Audit Committee meetings
The number of meetings of directors held during the year and the number of meetings attended by each director were as
follows:
Board meetings
Audit Committee meetings Remuneration meetings
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
7
7
7
-
7
7
7
-
0
4
4
-
4*
4
4
-
0
1
1
-
0
1
1
-
Ms Maria Halasz *
Dr David King
Mr Robin Beaumont
Mr Graeme Kaufman **
The Nomination Committee of the board met on several occasions during the financial year on an informal basis.
* Maria Halasz was in attendance by invitation.
** Mr Kaufman was appointed on 27th August 2012.
12 Cellmid 2012 Annual Report
Information on Directors
David King
Qualifications
– Chairman (Non-executive)
– Fellow of The Australian Institute of Company Directors, Fellow of the
Australian Institute of Geoscientists and a PHD in Seismology from the
Australian National University.
Experience
– Experience in high growth companies and a track record in starting
business ventures and developing them into attractive investment and/
or take-over targets.
Interest in Shares and Options
– Shares: 22,500,000 indirectly held.
Special Responsibilities
– A member of the Audit Committee, and Remuneration Committee
Directorships held in other listed
entities during the three years prior to
the current year
– Current directorships - Robust Resources Limited, Republic Gold
Limited
Previous directorship - Gas2Grid Limited, Ausmon Resources Limited,
Sapex Limited and Eastern Star Gas Limited.
Maria Halasz
Qualifications
Experience
– Managing Director (Executive)
– A Graduate of the Australian Institute of Company Directors;
BSc degree in microbiology and an MBA from the University of
Western Australia
– Over 18 years experience in biotechnology companies; initially working
in executive positions in biotechnology firms, then managing investment
funds and later holding senior positions in corporate finance specialising
in life sciences.
Interest in Shares and Options
– Shares: 2,725,250 indirectly held.
Options: 2,000,000 (Expiry: 16 April 2013, exercisable at 0.05735 each)
Directly held.
Options: 3,000,000 (Expiry: 03 July 2013, exercisable at 0.05735 each)
Options: 7,000,000 (Expiry: 17 November 2014, exercisable at 0.056
each) Directly held.
Options: 5,000,000 (Expiry: 15 June 2017, exercisable at 0.032 each)
Directly held.
Special Responsibilities
– Managing Director and Chief Executive Officer.
Directorships held in other listed
entities during the three years prior to
the current year
– None
Cellmid 2012 Annual Report 13
Directors’ Report
Continued
Robin Beaumont
Experience
– Director – Non-Executive (Resigned 27th August 2012)
– Senior strategic adviser and experienced public company director,
several years experience in biotechnology companies.
Interest in Shares and Options
– Shares: 1,875,000 shares indirectly held.
Special Responsibilities
– Chairman of the Audit Committee, and member of the Remuneration
– Options: 3,971,962 (Expiry: 15 November 2016, exercisable at $0.03
each) Directly held.
Directorships held in other listed
entities during the three years prior to
the current year
Committee.
– Evogenix Ltd, Arana Therapeutics Ltd and Select Vaccines Ltd.
Graeme Kaufman
– Director – Non-Executive (Appointed 27th August 2012)
Qualification
Experience
– BSc & MBA from Melbourne University
– Over 45 years’ experience in biotechnology spanning technical,
commercial and financial areas. Having worked for 34 years at CSL
Limited, Australia’s largest biopharmaceutical company, he held senior
positions including Production Director, General Manager Finance and
General Manager Biosciences.
Interest in Shares and Options
– Options: 1,000,000 (Expiry: 1 June 2014, exercisable at $0.05 each)
Directly held.
Special Responsibilities
– Member of the Audit Committee, and member of the Remuneration
Directorships held in other listed
entities during the three years prior to
the current year
Committee.
– Nil
Remuneration report
The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations
Act 2001.
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based compensation
E. Additional information
A. Principles used to determine the nature and amount of remuneration
The performance of the group depends on the quality of its directors and executives.
To prosper, the group must attract, motivate and retain highly skilled directors and executives. To this end, the group
embodies the following principles in its remuneration framework:
14 Cellmid 2012 Annual Report
• provide competitive rewards to attract high calibre executives
• establish appropriate performance hurdles in relation to variable executive remuneration.
The Board of Directors assesses the appropriateness of the nature and amount of remuneration of directors and senior
managers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high quality Board and executive team.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director and senior manager
remuneration is separate and distinct.
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the group with the ability to attract and retain direc-
tors of the highest calibre, while incurring costs that are acceptable to shareholders.
Structure
Each non-executive director receives a fixed fee for being a director of the group.
The constitution and the ASX listing Rules specify that the maximum aggregate remuneration of non-executive directors
shall be determined from time to time by a general meeting of shareholders. At the general meeting of shareholders in 2005,
the maximum amount set at $300,000 per annum. In 2012, the group paid non-executive directors a total of $143,349
(2011: ($153,751).
The amount of aggregate remuneration sought to be approved by shareholders and the fixed fees paid to directors are
reviewed annually. The Board considers fees paid to non-executive directors of comparable companies when undertaking
the annual review process.
Executive remuneration
Objective
The group aims to reward executives with a level and mix of remuneration commensurate with their position and respon-
sibilities within the group so as to:
•
reward executives for group and individual performance against targets set by reference to appropriate benchmarks
• align the interests of executives with those of shareholders
• ensure total remuneration is competitive by market standards.
Structure
A policy of the Board is the establishment of employment or consulting contracts with the CEO and other senior executives
at the time of this report this included the CEO.
Remuneration consists of fixed remuneration under an employment or consultancy agreement and long term equity-based
incentives that are subject to satisfaction of performance conditions. The equity-based incentives are intended to retain key
executives and reward performance against agreed performance objectives.
Cellmid 2012 Annual Report 15
Directors’ Report
Continued
Fixed remuneration
The level of fixed remuneration is set so as to provide a base level of remuneration that is both appropriate to the position
and competitive in the market.
Fixed remuneration is reviewed annually by the Board and the process consists of a review of group-wide and individual
performance, relevant comparative remuneration in the market, and internal and (where appropriate) external advice on
policies and practices.
Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including
cash and expense payment plans, such that the manner of payment chosen is optimal for the recipient without creating
additional cost for the group.
Remuneration policy and performance
Other than the CEO, Ms Halasz, none of the Director’s remuneration is ‘at risk’ remuneration. Refer to the table below for
further information on Ms Halasz’s remuneration.
B. Details of remuneration (audited)
Details of the remuneration of the directors and key management personnel of the group (as defined in AASB 124 Related
Party Disclosures) and the highest paid executives of Cellmid Limited are set out in the following tables.
2012
Name
Non-executive directors
David King (Chairman)
Robin Beaumont
Total non-executive
directors
Cash
salary and
fees
$
65,000
30,000
95,000
Executive directors and key Management
Maria Halasz
Nicholas Falzon 1
Total Executive
directors and key
Management
Total
400,000
-
400,000
495,000
Short-term benefits
Post employment
Benefits
Share-
based
payment
Cash
bonus
Non-
monetary
benefits
Superan-
nuation
Retire-
ment
benefits
Options
Total
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
5,850
-
5,850
36,000
-
36,000
41,850
$
-
-
-
-
-
-
-
$
-
42,499
42,499
$
70,850
72,499
143,349
30,500
466,500
-
-
30,500
466,500
72,999
609,849
1 Nicholas Falzon, company secretary, appointed on 6 October 2010, is a partner of Lawler Partners Pty Ltd who
provides accounting and company secretarial services to Cellmid Limited. The contract is based on normal commercial
terms. A total of $75,250 (2011 $52,300) was received by Lawler Partners Pty Limited in relation to this contract for the
year.
16 Cellmid 2012 Annual Report
2011
Name
Short-term benefits
Post employment
Benefits
Share-
based
payment
Cash
salary and
fees
Cash
bonus
Non-
monetary
benefits
Superan-
nuation
Retire-
ment
benefits
Options
Total
Non-executive directors
David King (Chairman)
Robin Beaumont
Koichiro Koike 1
Total non-executive
directors
65,000
30,000
52,901
147,001
Executive directors and key Management
Maria Halasz
Nicholas Falzon 2
Andrew Bursill 3
Total Executive
directors and key
Management
Total
358,333
-
-
358,333
505,334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,850
-
-
5,850
32,250
-
-
32,250
38,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
70,850
30,000
52,901
153,751
390,583
-
-
390,583
544,334
1. Koichiro Koike resigned on December 2010. The remuneration as a director was paid up to the serviced period.
2. Nicholas Falzon, company secretary, appointed on 6 October 2010, is a partner of Lawler Partners Pty Ltd who
provides accounting and company secretarial services to Cellmid Limited. The contract is based on normal commer-
cial terms. A total of $52,300 (2010 $nil) was received by Lawler Partners Pty Limited in relation to this contract for
the year.
3. Andrew Bursill, former company secretary, resigned on 5 October 2010. A total of $22,428 (2010 $65,549) in cash
was received by Franks & Associates in relation to this contract for the year.
Cellmid 2012 Annual Report 17
Directors’ Report
Continued
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Name
Fixed remuneration
At risk STI
At risk LTI
2012
2011
2012
2011
2012
2011
Directors
David King
Maria Halasz
Robin Beaumont
100%
96%
41%
100%
100%
100%
Other company and group executives
Nicholas Falzon
Andrew Bursill
100%
N/A
100%
100%
-
-
-
-
-
-
-
-
-
-
-
4%
59%
-
-
-
-
-
-
-
C. Service agreements (audited)
The CEO, Maria Halasz, is an employee of the group under an agreement signed on 21 September 2007. Under the terms
of the present contact:
• Ms Halasz may resign from her position and thus terminate this contract by giving six months’ written notice. On
resignation any unvested options will be forfeited.
• The group may terminate the employment agreement by providing six months’ written notice or providing payment in
lieu of the notice period (based on the fixed component of Ms Halasz’s remuneration).
• The group may terminate the contract at any time without notice if serious misconduct has occurred. Where termination
with cause occurs, the CEO is only entitled to that portion of remuneration which is fixed, and only up to the date of
termination. On termination with cause, any unvested options will immediately be forfeited.
• Ms Halasz’s employment agreement sets out certain performance incentives that are payable subject to achievement of
performance milestones. The number of performance shares or options awarded is at the discretion of the Board and
subject to shareholders’ approval.
18 Cellmid 2012 Annual Report
D.
Share-based compensation
Options
2012
Options Granted
in 2012
Value of options
at grant date
Options Vested
In 2012
Value of options
expensed in
2012
Proportion of
Remuneration
Maria Halasz
Robin Beaumont
Total
5,000,000
3,971,962
8,971,962
20,500
42,499
62,999
5,000,000
3,971,962
8,971,962
$
20,500
42,499
62,999
%
4%
59%
11%
The issuance of options to Directors, Executives and Key Management Personnel was approved by shareholders at the
Annual General Meeting on 25 November 2011.
These options were granted for no consideration. The options are convertible to one ordinary share each of the Company.
Options granted carry no dividend or voting rights. When exercised, each option will convert into one ordinary share of the
Company.
The Executive options for Ms Halasz were granted at the date of approval being at the Annual General Meeting held on 25
November 2011.
The assessed fair value at grant date of options granted is allocated over the period from grant date to vesting date. The
amounts are included in the tables in Sections B and D above. Fair values at grant date are determined using a binomial
option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share
price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate
for the term of the option.
The model inputs for options granted to Maria Halasz included:
• Options are granted for no consideration
• exercise price: $0.032
• grant date: 20 June 2012
• expiry date: 15 June 2017
• share price at grant date: $0.016
• share price volatility of the Company’s shares: 38%
• expected dividend yield: nil%
•
risk-free interest rate: 6%
Cellmid 2012 Annual Report 19
Directors’ Report
Continued
The Executive options for Mr Beaumont were granted at the date of approval being at the Annual General Meeting held on
25 November 2011.
The assessed fair value at grant date of options granted is allocated over the period from grant date to vesting date. The
amounts are included in the tables in Section B and D above. Fair values at grant date are determined using a binomial
option pricing model that take into account the exercise price, the term of the option, the impact of dilution, the share price
at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk-free rate for the
term of the option.
The model inputs for the options granted to Robin Beaumont included:
• options are granted for no consideration
• exercise price: $0.03
• grant date: 15 November 2011
• expiry date: 15 November 2016
• share price at grant date: $0.02
• expected price volatility of the Company’s shares: 38%
• expected dividend yield: nil%
•
risk-free interest rate: 6%
None of the director or executive options granted as share-based compensation were exercised during the period.
1,440,000 options have been granted under the terms of the Employee Incentive Plan on 14th August 2012 to various staff
members since the end of the financial year.
Loan to directors and executives
There were no loans to directors or executives during or since the end of the year.
Shares under option
Unissued ordinary shares of Cellmid Limited under option at the date of this report are as follows:
Expiry Date
Issue Price
Number under option
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Total
15 June 2013
01 June 2014
01 July 2014
17 November 2014
17 November 2014
19 February 2015
15 December 2015
15 November 2016
15 June 2017
14 August 2017
Shares issued on the exercise of options
$0.06
$0.05
$0.022
$0.0283
$0.0285
$0.028
$0.10
$0.0107
$0.041
$0.034
5,000,000
8,250,000
5,002,006
7,000,000
2,000,000
600,000
100,000
3,971,962
5,000,000
1,440,000
38,363,968
No shares were issued over options during the income year ended 30 June 2012 (2011: 750,000).
No amounts are unpaid on any of the shares for the 2012 income year (2011:$nil).
6,599,995 options were lapsed during the income year ended 30 June 2012 (2011: nil)
20 Cellmid 2012 Annual Report
2011
No options were granted to the directors for the year ended 30 June 2011.
Board and Audit Committee meeting
During the financial year, the group paid a premium to insure the directors and officers of the group.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of the group, and any other payments arising from liabilities incurred by the
officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful
breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for
them or someone else or to cause detriment to the group. It is not possible to apportion the premium between amounts
relating to the insurance against legal costs and those relating to other liabilities.
Indemnifying Officers or Auditor
During or since the end of the financial year, the group has given an indemnity or entered into an agreement to indemnify,
or paid or agreed to pay insurance premiums as follows:
• a right to access certain Board papers of the group during the period of their tenure and for a period of seven years
after that tenure ends
• subject to the Corporation Act, an indemnity in respect of liability to persons other the group and its related bodies
corporate that they may incur while acting in their capacity as an officer of the group or a related body corporate, except
where that liability involves a lack of good faith and for defending certain legal proceedings, and
•
the requirement that the group maintain appropriate directors’ and officers’ insurance for the officer.
No liability has arisen under these indemnities as at the date of this report.
There is no indemnity cover over the Auditor during the financial year.
Proceedings on behalf of the group
During the reporting period the Group completed proceedings against the Japanese Patent Office in the High Court of
Japan in relation to the challenge of the ruling on registration of one of its patents. The matter concluded in favour of the
Japanese Patent Office. This had no material consequences for the Group as did not include a financial ruling.
Cellmid 2012 Annual Report 21
Directors’ Report
Continued
Non-audit services
The group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the group and/or the group are important.
Details of the amounts paid or payable to the auditor, BDO (formerly PKF) for audit and non-audit services provided during
the year are set out below.
Auditing or reviewing the financial statement
BDO (formerly PKF)
taxation services
due diligence services
taxation services provided by related practice of auditor
Consolidated group
2011
$
2010
$
45,000
30,500
-
-
-
-
-
-
45,000
30,500
Rounding off of amounts
The Company is of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that
Class Order amounts in the directors’ report and the half-year financial report are rounded off to a dollar, unless otherwise
indicated.
Auditor’s Declaration
The lead auditor’s independence declaration under s 307C of the Corporations Act 2001 is set out on page 23 for the
half-year report ended 30 June 2012.
This report is signed in accordance with a resolution of the Board of Directors made pursuant to s.306 (3) of the Corpora-
tions Act 2001.
On behalf of the directors
Director
Dr David King
Sydney
Dated this day of 30 August 2012
22 Cellmid 2012 Annual Report
Cellmid 2012 Annual Report 23
Corporate
Governance Statement
Unless disclosed below, all the recommendations of the ASX Corporate Governance Council (including 2010 amendments)
have been applied for the entire financial year ended 30 June 2012.
Board Composition
The skills, experience and expertise relevant to the position of each director who is in office at the date of the annual report
and their term of office are detailed in the directors’ report
The names of independent directors that have served on the Board of the group during the period are:
o David King
o Robin Beaumont (Resigned on 27 August 2012)
o Graeme Kaufman (Appointed on 27 August 2012)
When determining whether a non-executive director is independent, the director must not fail any of the following materiality
thresholds:
•
less than 10% of group shares are held by the director and any entity or individual directly or indirectly associated with
the director;
• no sales are made to or purchases made from any entity or individual directly or indirectly associated with the director;
and
• none of the directors’ income or the income of an individual or entity directly or indirectly associated with the director is
derived from a contract with any member of the economic entity other than income derived as a director of the entity.
Independent directors have the right to seek independent professional advice in the furtherance of their duties as directors
at the group’s expense. Written approval must be obtained from the Chair prior to incurring any expense on behalf of the
group.
The names of the members of the nomination committee and their attendance at meetings of the committee are detailed
in the directors’ report.
Ethical Standards
The Board acknowledges and emphasises the importance of all directors and employees maintaining the highest stand-
ards of corporate governance practice and ethical conduct.
A code of conduct has been established requiring directors and employees to:
• act honestly and in good faith;
• exercise due care and diligence in fulfilling the functions of office;
• avoid conflicts and make full disclosure of any possible conflict of interest;
• comply with the law;
• encourage the reporting and investigating of unlawful and unethical behaviour; and
• comply with the share trading policy outlined in the code of conduct.
Directors are obliged to be independent in judgment and ensure all reasonable steps are taken to ensure due care is taken
by the Board in making sound decisions.
Cellmid 2012 Annual Report 25
Corporate Governance
Continued
Diversity Policy
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The group is committed to diversity
and recognises the benefits arising from employee and board diversity and the importance of benefiting from all available
talent.
The Board believes that the group benefits from this diversity.
Trading Policy
The group’s policy regarding directors and employees trading in its securities, is set by the Board. The policy restricts di-
rectors and employees from acting on material information until it has been released to the market and adequate time has
been given for this to be reflected in the security’s prices.
Audit Committee
The names and qualifications of those appointed to the audit committee and their attendance at meetings of the committee
are included in the directors’ report.
Performance Evaluation
An annual performance evaluation of the Board has not been made during the year.
Board Roles and Responsibilities
The Board is first and foremost accountable to provide value to its shareholders through delivery of timely and balanced
disclosures.
The Board sought external guidance to assist the drafting of its “Board Governance Document” which has been made
publicly available on the group’s website. This document details the adopted practices and processes in relation to matters
reserved for the Board’s consideration and decision-making and specifies the level of authorisation provided to other key
management personnel. The Board is ultimately responsible for ensuring its actions are in accordance with key corporate
governance principles.
Shareholder Rights
Shareholders are entitled to vote on significant matters impacting on the business, which include the election and remu-
neration of directors, changes to the constitution and receipt of annual and interim financial statements. Shareholders are
strongly encouraged to attend and participate in the Annual General Meetings of Cellmid Limited, to lodge questions to be
responded by the Board and/or the CEO, and are able to appoint proxies.
Risk Management
The Board considers identification and management of key risks associated with the business as vital to maximise share-
holder wealth. A yearly assessment of the business’s risk profile is undertaken and reviewed by the Board, covering all
aspects of the business from the operational level through to strategic level risks. The CEO has been delegated the task
of implementing internal controls to identify and manage risks for which the Board provides oversight. The effectiveness of
these controls is monitored and reviewed regularly.
26 Cellmid 2012 Annual Report
Remuneration Policies
The group’s Remuneration Committee comprises of the following non-executive directors:
o David King (Chair, independent);
o Robin Beaumont (independent, resigned on 27 August 2012);
The remuneration policy, which sets the terms and conditions for the key management personnel, was developed by the
Remuneration Committee after seeking professional advice from independent consultants and was approved by the Board.
All executives receive a base salary, superannuation, fringe benefits, performance incentives and retirement benefits. The
Remuneration Committee reviews executive packages annually by reference to company performance, executive perform-
ance, comparable information from industry sectors and other listed companies and independent advice. The performance
of executives is measured against criteria agreed half yearly which is based on the forecast growth of the group’s profits
and shareholders’ value. The policy is designed to attract the highest calibre executives and reward them for performance
which results in long-term growth in shareholder value.
Executives are also entitled to participate in the employee share and option arrangements.
The amount of remuneration for all key management personnel for the group and the five highest paid executives, includ-
ing all monetary and non-monetary components, are detailed in the directors’ report under the heading key management
personnel compensation. All remuneration paid to executives is valued at the cost to the company and expensed. Shares
given to executives are valued as the difference between the market price of those shares and the amount paid by the
executive. Options are valued using the Black-Scholes methodology.
The Board expects that the remuneration structure implemented will result in the group being able to attract and retain the
best executives to run the consolidated group. It will also provide executives with the necessary incentives to work to grow
long-term shareholder value.
The payment of bonuses, options and other incentive payments are reviewed by the Remuneration Committee annually
as part of the review of executive remuneration and a recommendation is put to the Board for approval. All bonuses, op-
tions and incentives must be linked to predetermined performance criteria. The Board can exercise its discretion in relation
to approving incentives, bonuses and options and can recommend changes to the committee’s recommendations. Any
changes must be justified by reference to measurable performance criteria.
Remuneration Committee
The names of the members of the remuneration committee and their attendance at meetings of the committee are detailed
in the directors’ report.
There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.
Cellmid 2012 Annual Report 27
Financial
Report
31
32
33
34
35
66
67
Contents
Statements of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ declaration
Auditor’s Report
Cellmid 2012 Annual Report 29
Statements
Of Comprehensive Income
For the year ended 30 June 2012
Revenue
Other revenue
Cost of sales
Consultancy expense
Communication expense
Depreciation and amortisation expense
Directors remuneration
Employee benefits expense
Finance costs
Gain/(Loss) on foreign exchange
Occupancy
Professional fees
Research and development expense
Share-based compensation
Subscriptions
Travel
Other expenses
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income:
Reclassification of impairment loss on available for sale asset
20
Note
3
3
Consolidated Group
2012
$
132,826
38,447
(33,157)
2011
$
29,106
122,941
(6,961)
(300,122)
(229,760)
(38,339)
(11,419)
(108,350)
(873,947)
(39,714)
49,237
(7,090)
(95,864)
(164,721)
(599,047)
(228,999)
(88,018)
(155,674)
(185,052)
(50,570)
(10,256)
(154,208)
(710,962)
(10,836)
(43,722)
-
(87,789)
(76,362)
(925,137)
(172,000)
(70,347)
(107,503)
(221,830)
4
5
(2,709,003)
(2,726,196)
736,520
456,559
(1,972,483)
(2,269,637)
Net gain/(loss) on remeasurement of financial assets available for sale
20a
-
6,227
Total comprehensive loss for the year
(1,972,483)
(2,263,410)
Net loss attributable to
Owners of Cellmid Limited
Non-controlling interests
Earnings per share for loss attributable to the ordinary equity
holders of the Company
Basic earnings per share (cents)
Diluted earnings per share (cents)
8
8
(1,970,360)
(2,269,637)
(2,123)
-
(1,972,483)
(2,269,637)
Cents
(0.46)
(0.46)
Cents
(0.65)
(0.65)
The above statement of comprehensive income should be read in conjunction with the accompanying notes
Cellmid 2012 Annual Report 31
Consolidated Statement
of Financial Position
As at 30 June 2012
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other financial assets
Plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of Cellmid Limited
Non-controlling interest
TOTAL EQUITY
Note
Consolidated Group
2012
$
2011
$
9
10
11
15
12
13
14
16
17
18
18
19
20
20
1,050,593
1,592,508
71,168
27,603
1,289,237
1,097,182
30,638
31,255
2,441,636
2,748,548
42,910
32,276
1,440
76,626
60,120
11,764
1,440
73,324
2,518,262
2,821,872
258,577
-
135,448
394,025
34,753
34,753
428,778
133,705
556,835
93,364
783,904
-
-
783,904
2,089,484
2,037,968
20,799,832
18,838,712
1,746,085
1,670,351
(20,441,455)
(18,471,095)
2,104,462
2,037,968
(14,978)
-
2,089,484
2,037,968
This statement of financial position should be read in conjunction with the accompanying notes.
32 Cellmid 2012 Annual Report
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2012
Consolidated Group
Attributable to owners of Cellmid Limited
Share Capital
Note
Issued
Capital
Share
Based
Payments
Reserve
$
$
Balance at 1 July 2010
17,386,273
1,660,231
Loss for the year as
reported in the 2011
financial statements
Other comprehensive
income
Total comprehensive
income for the year
Transactions with equity
holders:
Contributions of equity
Share based compensation
Total
-
-
-
1,280,439
172,000
1,452,439
-
-
-
-
-
-
Balance at 30 June 2011
19&20
18,838,712
1,660,231
Balance at 1 July 2011
18,838,712
1,660,231
Loss for the year as
reported in the 2012
financial statements
Other comprehensive
income
Total comprehensive
income for the year
Transactions with equity
holders:
Contributions of equity
Share based compensation
Movement in share based
payment reserve
Movement in available for
sale reserve
Net movement as a result
of shares issued to minority
interest
-
-
-
-
-
-
-
-
-
62,999
-
-
1,805,120
156,000
-
(11,005)
General
Reserve
Available
for Sale
Reserve
Accumu-
lated
Losses
Total
Non-
controlling
interest
Total
equity
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
3,893
(16,201,458)
2,848,939
-
(2,269,637)
(2,269,637)
6,227
-
6,227
6,227
(2,269,637)
(2,263,410)
-
-
-
-
1,280,439
172,000
6,227
(2,269,637)
(810,971)
10,120
(18,471,095)
2,037,968
10,120
(18,471,095)
2,037,968
$
-
-
-
-
-
-
-
-
-
$
2,848,939
(2,269,637)
6,227
(2,263,410)
1,280,439
172,000
(810,971)
2,037,968
2,037,968
-
-
-
-
-
-
(10,120)
(1,970,360)
(1,970,360)
(2,123)
(1,972,483)
-
-
-
-
(1,970,360)
(1,970,360)
(2,123)
(1,972,483)
-
-
-
-
-
1,794,115
21,005
1,815,120
156,000
62,999
(10,120)
-
-
-
156,000
62,999
(10,120)
33,860
(33,860)
-
33,860
-
Total
1,961,120
62,999
22,855
(10,120)
(1,970,360)
66,494
(14,978)
51,516
Balance at 30 June 2012
19 &20
20,799,832
1,723,230
22,855
-
(20,441,455)
2,104,462
(14,978)
2,089,484
This statement of changes in equity should be read in conjunction with the accompanying notes.
Cellmid 2012 Annual Report 33
Consolidated Statement
of Cash Flows
For the year ended 30 June 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts
Payments to suppliers and employees
Research and development expenses
Interest received
Income tax benefit
Other grant income
Finance costs
Consolidated Group
2012
$
2011
$
Note
116,225
50,724
(1,977,623)
(2,008,420)
(599,047)
(925,137)
5,370
736,520
-
(39,714)
50,813
456,559
57,574
(10,836)
Net cash used in operating activities
21
(1,758,269)
(2,328,723)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets
Purchase of non-current assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
Net increase (decrease) in cash held
Cash and cash equivalents at beginning of financial year
Cash and cash equivalents at end of financial year
9
9
This statement of cash flows should be read in conjunction with the accompanying notes.
-
(31,931)
(31,931)
(1,440)
(7,788)
(9,228)
1,805,120
1,280,439
-
556,835
(556,835)
1,248,285
(541,915)
1,592,508
1,050,593
-
1,837,274
(500,677)
2,093,185
1,592,508
These consolidated financial statements and notes represent those of Cellmid Limited and its Controlled Entity (the
“consolidated group” or “group”).
The separate financial statements of the parent entity, Cellmid Limited, have been presented in Note 2 within this financial
report.
The financial statements were authorised for issue on 30th August 2012 by the Directors of Cellmid Limited.
34 Cellmid 2012 Annual Report
Notes to the
Financial Statements
Contents
1 Summary of Significant Accounting Policies
2 Parent Information
3 Revenue and Other Revenue
4 Profit/(Loss) for the year
5
Income Tax Expense
6
Interests of Key Management Personnel (KMP)
7 Auditors’ Remuneration
8 Earnings per Share
9 Cash and Cash Equivalents
10 Trade and Other Receivables
11
Inventories
12 Other Financial Assets
13 Plant and Equipment
14
Intangible Assets
15 Other Assets
16 Trade and Other Payables
17 Borrowings
18 Provisions
19 Contributed Equity
20 Reserves and Accumulated Losses
21 Cash Flow Information
22 Critical Accounting Estimates and Judgements
23 Events after the Reporting Period
24 Related Party Transactions
25 Financial Risk Management
26 Subsidiary and Transactions with non-controlling Interest
27 Segment Information
28 Contingent Liabilities
29 Company Details
36
44
45
45
46
48
51
51
52
52
53
53
54
54
55
55
55
56
56
59
60
60
60
61
61
63
64
65
65
Cellmid 2012 Annual Report 35
Notes to the Financial Statements
Continued
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The financial statements are general purpose financial statements that have been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001, as appropriate for-profit oriented entities. These
financial statements also comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
The financial statements comprise the consolidated financial statements of the group.
The financial statements were authorised for issue by the Directors on 30 August 2012.
Basis of Preparation
The financial statements have been prepared on an accruals basis and are based on historical costs, except for certain
non-current assets and financial instruments that are measured at re-valued amounts or fair values, as explained in the
accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for
assets. All amounts are presented in Australian dollars, unless otherwise noted.
The preparation of financial statements in conformity with AIFRS requires the use of certain accounting estimates. It also
requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in Note 22.
Going Concern
The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. Based
on anticipated levels of operational cash flow requirements, the Consolidated Entity has sufficient cash to fund current
operations for more than one year.
a. Principles of Consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Cellmid Limited
at the end of the reporting period. A controlled entity is any entity over which Cellmid Limited has the ability and right to
govern the financial and operating policies so as to obtain benefits from the entity’s activities.
Income and expenses of subsidiaries acquired or disposed of during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. Total
comprehensive income of subsidiaries is attributed to the owners of the company and to the non-controlling interests even
if this results in the non-controlling interest having a deficit balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into
line with those used by other members of the group.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
b. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision makers, who are responsible for allocating resources and assessing performance of
the operating segments, is the Board of Directors.
36 Cellmid 2012 Annual Report
c. Revenue and Other Income Recognition
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. Revenue from the sale of goods is recognised at the point of delivery as this
corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement
in those goods.
Interest revenue is recognised using the effective interest rate method.
Royalties determined on a time basis are recognised on a straight-line basis over the period of the agreement.
Government grants are recognised in profit and loss on a systematic basis over the periods in which the group recognises
as expenses the related costs for which the grants are intended to compensate, but not before the receipt of the grant is
relatively certain.
d. Income Tax
The income tax expense (revenue) for the period is the tax payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled and their measurement also reflects the manner in which management expects to recover
or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and
liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate
to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where
it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur
in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
e. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid
investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are reported within short-
term borrowings in current liabilities in the statement of financial position.
f. Receivable
Receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful
debts.
Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A
provision for doubtful receivables is established when there is objective evidence that the group will not be able to collect
all amounts due according to the original terms of receivables.
The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted
if the effect of discounting is immaterial. The amount of the provision is recognised in the statement of comprehensive
income.
Cellmid 2012 Annual Report 37
Notes to the Financial Statements
Continued
g. Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct
materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of
normal operating capacity. Costs are assigned on the basis of weighted average costs. Costs of purchased inventory are
determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs of completion and the estimated cost necessary to make the sale.
h. Fixtures and Equipment
Fixtures and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and
any accumulated impairment.
The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing
costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be
measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the
financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the consolidated
group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter
of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Furniture and fittings
Office equipment
Depreciation Rate
20%
6.7–33.33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation
surplus relating to that asset are transferred to retained earnings.
i.
Investments and other financial assets
The group classified its investments in the following categories: loans and receivables and available for sale financial assets.
The classification depends on the nature and purpose of the investment and is determined at the time of initial recognition.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months after the
end of the reporting period.
Loan and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest
income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of
interest would be immaterial.
38 Cellmid 2012 Annual Report
(ii) Available-for-sale financial assets
Listed shares and listed redeemable notes held by the group that are traded in an active market are classified as
available-for-sale financial assets and are stated at fair value.
Gains and losses arising from changes in fair value are recognised in other comprehensive income and accumulated
in the investments revaluation reserve.
Where the investment is disposed of or is determined to be impaired, the cumulative gain or loss previously accumulated
in the investment revaluation reserve is reclassified to profit and loss.
The fair value of available-for-sale assets denominated in a foreign currency is determined in that foreign currency
and translated at the spot rate at the end of the reporting period. The foreign exchange gains and losses that are
recognised in profit and loss are determined based on the amortised cost of the monetary asset. Other foreign gains
and losses are recognised in other comprehensive income.
j.
Intangibles Other than Goodwill
Patents and trademarks
Patents and trademarks are recognised at cost of acquisition. Patents and trademarks have a finite life and are carried at
cost less any accumulated amortisation and any impairment losses. The group has not yet determined the useful life of
the intangible asset due to the uncertainties of the future benefit derived from the intangible asset. There is no amortisation
charge to the intangible assets in the 2012 Financial Year.
Research and development
Expenditure on research activities is recognised as an expense in the period in which is incurred.
Expenditure on development projects (relating to the design and testing of new or improved products) are capitalised as
intangible assets when it is probable that the project will be a success considering its commercial and technical feasibility
and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs
of materials, services, direct labour and an appropriate proportion of overheads. Development expenditures that do not
meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are
not recognised as an asset in a subsequent period.
k. Impairment of Assets
At the end of each reporting period, the group assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information including dividends received
from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication
exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher
of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying
amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a re-valued
amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment
loss of a re-valued asset is treated as a revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
l. Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
Cellmid 2012 Annual Report 39
Notes to the Financial Statements
Continued
m. Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in the statement of comprehensive income over the period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability
for at least 12 months after the reporting date.
n. Financial Instruments
The convertible notes issued by the group are treated as a financial liability, without an equity component. They are treated
in this manner because; they have multiple settlement alternatives not all of which involve the exchange of equity, the
number of shares to be issued is unknown at the time of issue and the conversion is at the option of the note holder not
the group.
o. Provisions
Provisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting
period.
p. Employee Benefits
Provision is made for the group’s liability for employee benefits arising from services rendered by employees to the end of
the reporting period. Employee benefits that are expected to be settled within the income year have been measured at the
amounts expected to be paid when the liability is settled. Employee benefits payable later than 12 months of the reporting
date have been measured at the present value of the estimated future cash outflows to be made for those benefits. In
determining the liability, consideration is given to employee wages increases and the probability that the employee may
satisfy vesting requirements.
Wages and salaries, annual leave and sick leave
Liability for wages and salaries, including non monetary benefits, annual leave and accumulating sick leave expected to be
settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Long service leave
Liability for long service leave is recognised in the provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date using the
projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee
departures and period of service
Retirement benefit obligations
Contributions to the defined contribution fund are recognised as an expense as they become payable. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payment is available. Contributions
are paid into the fund nominated by the employee.
Share-based payments
The fair value of options granted is recognised as a benefit expense with a corresponding increase in equity. The fair value is
measured at grant date and recognised over the period during which the directors and executives become unconditionally
entitled to the options.
40 Cellmid 2012 Annual Report
The fair value at grant date is determined using binomial option pricing model that takes into account the exercise price,
the term of option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option.
The fair value of the options granted is adjusted to reflect market vesting conditions, but excludes the impact of any non
market vesting conditions. Non market vesting conditions are included in assumptions about the number of options that are
expected to become exercisable. The benefit expense recognised each period takes into account the most recent estimate.
Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to
share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.
q. Equity-settled compensation
The group operates an employee share ownership plan. Share-based payments to employees are measured at the fair
value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are
measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined
the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are
received. The corresponding amount is recorded to the option reserve. The fair value of options is determined using the
binominal pricing model. The number of shares and options expected to vest is reviewed and adjusted at the end of each
reporting period such that the amount recognised for services received as consideration for the equity instruments granted
is based on the number of equity instruments that eventually vest.
Upon the exercise of options, the balance of the share based payments reserve relating to those options is transferred to
share capital and the proceeds received, net of any directly attributable transaction costs, are credited to share capital.
r. Functional and presentation currency
The functional currency of each of the group’s entities is measured using the currency of the primary economic environment
in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent
entity’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured
at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in
equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange
difference is recognised in profit or loss.
s. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from
customers or payments to suppliers.
Cellmid 2012 Annual Report 41
Notes to the Financial Statements
Continued
t. Government Grants
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and
all grant conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to
match the grant to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value
and are credited to income over the expected useful life of the asset on a straight-line basis.
u. Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
Where the group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial
statements or reclassified items in its financial statements, an additional statement of financial position as at the beginning
of the earliest comparative period will be disclosed.
v. Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the
financial statements and directors’ report have been rounded off to the nearest $1.
w. New Accounting Standards for Application in Future Periods
The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates
for future reporting periods and which the group has decided not to early adopt. A discussion of those future requirements
as they apply to the group and their impact on the group is as follows:
– AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or
after 1 January 2013).
This Standard is applicable retrospectively and includes revised requirements for the classification and measurement
of financial instruments, as well as recognition and de-recognition requirements for financial instruments. The group
has not yet determined any potential impact on the financial statements.
However, initial indications are that it may affect the group’s accounting for its available-for-sale financial assets, since
AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to
equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments,
for example, will therefore have to be recognised directly in profit or loss. In the current reporting period, the group
recognised $7,090 of impairment loss in the statement of comprehensive income. The group has not yet decided
when to adopt AASB 9.
– AASB 2010-2 Amendments to Australian Accounting Standards arising from Reduced Disclosure Requirements
This Standard gives effect to Australian Accounting Standards – Reduced Disclosure Requirements. AASB 1053
provides further information regarding the differential reporting framework and the two tiers of reporting requirements
for preparing general purpose financial statements.
– AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying
Assets [AASB 112]
The amendments provide a practical approach for measuring deferred tax liabilities and deferred tax assets when
investment property is measured using the fair value model in AASB 140 Investment Property. Under AASB 112,
the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to recover
an asset by using it or by selling it. However, it is often difficult and subjective to determine the expected manner of
recovery when the investment property is measured using the fair value model in AASB 140.
42 Cellmid 2012 Annual Report
To provide a practical approach in such cases, the amendments introduce a presumption that an investment property
is recovered entirely through sale. This presumption is rebutted if the investment property is held within a business
model whose objective is to consume substantially all of the economic benefits embodied in the investment property
over time, rather than through sale.
Interpretation 121 Income Taxes – Recovery of Re-valued Non-Depreciable Assets addresses similar issues involving
non-depreciable assets measured using the revaluation model in AASB 116 Property, Plant and Equipment. The
amendments incorporate Interpretation 121 into AASB 112 after excluding investment property measured at fair
value from the scope of the guidance previously contained in Interpretation 121.
– AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management
Personnel Disclosure Requirements [AASB 124]
This Standard makes amendments to Australian Accounting Standard AASB 124 Related Party Disclosures.
These amendments arise from a decision of the AASB to remove the individual key management personnel (KMP)
disclosures from AASB 124 on the basis they:
•
are not part of International Financial Reporting Standards (IFRSs), which include requirements to disclose
aggregate (rather than individual) amounts of KMP compensation;
•
•
are not included in New Zealand accounting standards and, accordingly, their removal is consistent with meeting
the 2010 Outcome Proposal of the Australian and New Zealand governments that for-profit entities are able to use
a single set of accounting standards and prepare only one set of financial statements;
are considered by the AASB to be more in the nature of governance disclosures that are better dealt with as part
of the Corporations Act 2001;
• were originally included in AASB 124 when fewer similar disclosure requirements were included in the Corporations
Act and, in many respects, relate to similar disclosure requirements currently in that Act and therefore detract from
the clarity of the requirements applying in this area; and
•
could be considered (during the transition period for this Amending Standard) for inclusion in the Corporations
Act or other legislation to the extent they presently go beyond the requirements in legislation and are considered
appropriate in light of government policy.
Cellmid 2012 Annual Report 43
Notes to the Financial Statements
Continued
NOTE 2: PARENT INFORMATION
The following information has been extracted from the books and records of the
parent and has been prepared in accordance with Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
TOTAL LIABILITIES
EQUITY
Issued capital
Accumulated losses
Share Based Payment Reserve
Available for sale asset reserve
TOTAL EQUITY
STATEMENT OF COMPREHENSIVE INCOME
Loss of the parent entity
Total comprehensive loss
2012
$
2011
$
2,719,856
2,794,729
2,912,584
2,983,845
(380,914)
(415,667)
(776,202)
(776,202)
20,799,832
18,838,712
(20,144,000)
(18,301,420)
1,723,230
1,660,231
-
10,120
2,379,062
2,207,643
(1,842,581)
(1,842,581)
(2,093,792)
(2,093,792)
44 Cellmid 2012 Annual Report
NOTE 3: REVENUE AND OTHER REVENUE
Revenue from continuing operations
Sales revenue:
– sale of goods
Other revenue:
– interest received
– government grants received
– rental revenue
– royalties
– other revenue
Total revenue
NOTE 4: PROFIT/(LOSS) FOR THE YEAR
Loss before income tax from continuing operations includes the following
specific expenses:
Cost of sales
Finance cost
Employee benefits expense
Defined contribution superannuation expenses
Foreign currency translation gain/(losses)
Rental expense on operating leases:
– minimum lease payments
Depreciation and amortisation
– Plant and equipment
Research and development expense
Consolidated Group
2011
$
2012
$
132,826
132,826
29,106
29,106
5,370
-
24,000
704
8,373
38,447
171,273
50,813
57,574
12,000
242
2,312
122,941
152,047
Consolidated Group
2011
$
2012
$
(2,709,003)
(2,726,196)
(33,157)
(39,714)
(6,961)
(10,836)
(810,563)
(641,729)
(63,384)
49,237
(69,233)
(43,722)
(91,176)
(87,789)
(11,419)
(599,047)
(10,256)
(925,137)
Cellmid 2012 Annual Report 45
Notes to the Financial Statements
Continued
NOTE 5: INCOME TAX EXPENSE
a. The components of tax expense comprise:
Income tax benefit
Note
Consolidated Group
2012
$
2011
$
736,520
736,520
456,559
456,559
b. Numerical reconciliation of income tax expense to
– Loss before income tax expense
(2,709,003)
(2,726,196)
Prima facie tax benefit on loss from ordinary activities before
income tax at 30% (2010: 30%)
(812,701)
(817,859)
Add:
Tax effect of:
– Research and development expenditure
– Share based payment
523,910
68,700
401,259
51,600
– Deduction on un-deducted R&D core technology expenditure
(190,438)
– Impairment loss on asset revaluation
– Sundry items
2,127
13,313
417,612
-
-
10,184
463,043
Adjusted income tax
(395,089)
(354,816)
Tax losses not brought to account
395,089
354,816
Research and development tax benefit
736,520
456,559
Income tax benefit
736,520
456,559
A $736,520 (2011 $456,559) research and development tax offset was received for a claim in accordance with the
Commonwealth Government’s Research and Development Tax Concession initiatives where the consolidated group’s
expenditure on research and development is below $1million and revenue is less than $5 million.
46 Cellmid 2012 Annual Report
NOTE 5: INCOME TAX EXPENSE (CONTINUED)
c. Tax losses
Carried forward unused tax losses
Current unused tax losses for which no deferred tax asset has
been recognised
Total
Potential future tax benefit at notional tax rate 30%
Note
Consolidated Group
2012
$
2011
$
10,536,355
1,316,962
9,343,378
1,192,977
11,853,317
10,536,355
3,555,995
3,160,907
All unused tax losses were incurred by Australian entities.
This income tax benefit arose from losses will only be obtained if:
i.
The group derives future assessable income of a nature and of an amount sufficient to enable to benefit from the
deductions for the losses to be realised;
ii. The group continues to comply with the conditions for deductibility imposed by tax legislation; and
iii. No changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions
for the losses.
d. Tax consolidation legislation
As Advangen International Pty Ltd ceased to be a wholly owned subsidiary of Cellmid Limited during the year, it ceased
to be part of the tax consolidated group from that date.
Cellmid 2012 Annual Report 47
Notes to the Financial Statements
Continued
NOTE 6: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)
a. Directors
The following persons were directors of Cellmid Limited during the financial year:
David King (Chairman)
- appointed from 18 January 2008 to current
Ms Maria Halasz (Chief Executive Officer)
- appointed from 16 April 2007 to current
Mr Robin Beaumont (Non executive)
- appointed from 12 October 2009 to 27 August 2012
b. Directors and key management personnel compensation
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the group’s key management personnel for the year ended 30 June 2012.
The totals of remuneration paid to KMP of the company and the group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
2012
$
495,000
41,850
72,999
609,849
2011
$
506,234
38,100
-
544,334
c. Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration, together with terms and conditions of the options, can be found in Note 19.
48 Cellmid 2012 Annual Report
NOTE 6: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)
(i) KMP Options Holdings
The numbers of options over ordinary shares in the Company held during the financial year by each director of Cellmid
Limited and other key management personnel of the group, including their personally related parties, are set out as table
below.
30 June 2012
Balance at
Beginning
of the Year
Granted as
remuneration
during the
Year
Exercised
during the
Year
Other
Changes
during the
Year
Balance at
end of Year
Vested and
Exercisable
at the end
of the Year
Directors of Cellmid Limited
M Halasz
D King
R Beaumont
Other key management personnel
N Falzon
12,000,000
5,000,000
-
-
-
-
3,971,962
-
-
-
-
-
-
-
-
-
-
-
-
-
17,000,000
-
3,971,962
-
30 June 2011
Balance at
Beginning
of the Year
Granted as
remuneration
during the
Year
Exercised
during the
Year
Other
Changes
during the
Year
Balance at
end of Year
Vested and
Exercisable
at the end
of the Year
Directors of Cellmid Limited
M Halasz
D King
K Koike **
R Beaumont
Other key management personnel
N Falzon
12,000,000
-
2,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,000,000
-
2,000,000
-
-
**Mr. Ko Koike resigned from the board in December 2010 and has remained as a consultant since then.
Cellmid 2012 Annual Report 49
Notes to the Financial Statements
Continued
NOTE 6: INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP)
(ii) KMP Shareholdings
The numbers of shares in the Company held during the financial year by each director and key management personnel
of Cellmid Limited, including their personally related parties, are set out below. There were no shares granted during the
reporting period as compensation.
30 June 2012
Directors of Cellmid Limited
M Halasz
D King
R Beaumont
Other key management personnel
N Falzon
Maria Halasz owns 2,725,250 shares indirectly.
David King owns 22,500,000 shares indirectly.
Robin Beaumont owns 1,875,000 shares indirectly.
Balance at
Beginning
of the Year
Received
during the
Year on the
exercise of
options
Other
Changes
during the
Year
Balance at
the end of
the Year
1,365,000
13,476,669
700,000
-
1,360,250
2,725,250
9,023,331
22,500,000
1,175,000
1,875,000
30 June 2011
Directors of Cellmid Limited
M Halasz
D King
K Koike **
R Beaumont
Other key management personnel
N Falzon
Balance at
Beginning
of the Year
Received
during the
Year on the
exercise of
options
1,046,250
10,010,000
-
400,000
-
-
-
-
-
-
Other
Changes
during the
Year
Balance at
the end of
the Year
318,750
1,365,000
3,466,669
13,476,669
-
-
300,000
700,000
-
-
Maria Halasz owns 1,365,000 shares indirectly.
David King owns 13,476,669 shares indirectly.
Robin Beaumont owns 700,000 shares indirectly.
**Mr. Ko Koike resigned from the board in December 2010 and has remained as a consultant since then.
(iii) Other KMP Transactions
There have been no other transactions involving equity instruments other than those described in the tables above.
The Chief Executive Officer is employed under an employment service contract.
50 Cellmid 2012 Annual Report
NOTE 7: AUDITORS’ REMUNERATION
During the year the following fees were paid or payable for services provided by the Auditor of the parent entity, its related
practices and a non-related audit firm:
–
auditing or reviewing the financial statement
BDO
–
taxation services provided by related practice of auditor
NOTE 8: EARNINGS PER SHARE
Consolidated Group
2012
$
2011
$
45,000
-
30,500
-
Consolidated Group
2012
$
2011
$
a. Basic and diluted earnings per share:
Earnings used in the calculation of dilutive EPS
(0.46)
(0.65)
b.
Loss used in calculating basic and diluted earnings per share:
Loss
(1,972,483)
(2,269,637)
c. Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used in calculating dilutive EPS
427,266,234
350,019,302
No.
No.
d.
Information concerning the classification of securities.
Options
Options granted to executives and directors are considered to be potential ordinary shares and have been included in the
determination of diluted earnings per share to the extent to which they are dilutive. In the year ended 30 June 2012, these
options were in fact anti-dilutive, and consequently diluted EPS is the same as basic EPS. The options have not been
included in the determination of basic earnings per share. Details relating to the options are set out in Note19.
Cellmid 2012 Annual Report 51
Notes to the Financial Statements
Continued
NOTE 9: CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Consolidated Group
2012
$
2011
$
1,050,593
1,050,593
1,592,508
1,592,508
The effective interest rate on short-term bank deposits was 3.5-4.5% (2011: 4-4.5%); these deposits were all on call.
Reconciliation of cash
Cash at the end of the financial year as shown in the statement of cash flows is reconciled to items in the statement of
financial position as follows:
Cash and cash equivalents
1,050,593
1,050,593
1,592,508
1,592,508
NOTE 10: TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Total current trade and other receivables
Effective interest rates and credit risk
Consolidated Group
2012
$
52,791
18,377
71,168
2011
$
3,112
24,491
27,603
The group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties
other than those receivables specifically provided for and mentioned within Note 10. The class of assets described as
“trade and other receivables” is considered to be the main source of credit risk related to the group.
There is no interest rate risk for the balances of Trade and other receivables.
There is no material credit risk associated with other receivables.
No receivables are past due or impaired.
52 Cellmid 2012 Annual Report
NOTE 11: INVENTORIES
Inventory at lower of cost and net realisable value
Total inventories
NOTE 12: OTHER FINANCIAL ASSETS
Available-for-sale financial assets
Total non-current financial assets
Available-for-sale financial assets
Listed investments, at fair value:
– shares in listed corporations
Total available-for-sale financial assets
Consolidated Group
2012
$
2011
$
1,289,237
1,289,237
1,097,182
1,097,182
Consolidated Group
2012
$
42,910
42,910
2011
$
60,120
60,120
42,910
42,910
60,120
60,120
Cellmid 2012 Annual Report 53
Notes to the Financial Statements
Continued
NOTE 13: PLANT AND EQUIPMENT
PLANT AND EQUIPMENT
Plant and equipment:
At cost
Accumulated depreciation
Total plant and equipment
Consolidated Group
2012
$
2011
$
129,759
(97,483)
32,276
97,828
(86,064)
11,764
Movements in Carrying Amounts
Movements in the carrying amounts for each class of plant and equipment between the beginning and the end of the
current financial year:
Consolidated Group
Balance at 1 July 2010
Additions
Disposals
Depreciation expense
Balance at 30 June 2011
Additions
Disposals
Depreciation expense
Balance at 30 June 2012
NOTE 14: INTANGIBLE ASSETS
Consolidated Group:
Balance at the beginning/end of 30 June 2010
Closing value at 30 June 2012
Plant and
Equipment
$
14,232
7,788
-
(10,256)
11,764
31,931
-
(11,419)
32,276
Total
$
14,232
7,788
-
(10,256)
11,764
31,931
-
(11,419)
32,276
Trademarks
& Licences
$
1,440
1,440
Intangible assets, other than goodwill, have finite useful lives. The group has not yet determined the useful life of the
intangible asset.
There is no amortisation charge to the intangible assets in the 2012 financial year.
54 Cellmid 2012 Annual Report
NOTE 15: OTHER ASSETS
Prepayments
Total other assets
NOTE 16: TRADE AND OTHER PAYABLES
Unsecured liabilities:
Trade payables
Sundry payables and accrued expenses
Total trade and other payables
NOTE 17: BORROWINGS
Convertible notes
Convertible notes
Consolidated Group
2012
$
30,638
30,638
2011
$
31,255
31,255
Consolidated Group
2012
$
112,702
145,875
258,577
2011
$
1,471
132,234
133,705
Consolidated Group
2012
$
-
-
2011
$
556,835
556,835
Each loan has a repayment term of 5 years. The conversion price is the lesser of the price calculated as a 20% discount to
the three lowest daily volume weighted average sales prices of the Company’s shares during the 21 days before conversion
or AU$0.09 (for notes issued in the first 12 months) and AU$0.15 (for notes issued afterwards).
Conversion will generally be at the note holders’ option except in the event that on the conversion date the Company’s
shares trade below a floor price of AU$0.025. In this instance Cellmid may elect to repay the face value of the Note plus a
5% premium.
Interest expenses on convertible note is calculated by applying the effective interest rate of 4.75% (2011 4.75%) to the
liability component. The loans were fully repaid during the 2012 income year.
Cellmid 2012 Annual Report 55
Notes to the Financial Statements
Continued
NOTE 18: PROVISIONS
Consolidated Group
Opening balance at 1 July 2011
Additional provisions
Balance at 30 June 2012
Analysis of total provisions
Current
Non-current
Provision for Employee Benefits
Employee Benefits
Annual Leave
Long Service
Leave
$
93,364
42,084
135,448
$
-
34,753
34,753
Consolidated Group
2012
$
135,448
34,753
170,201
2011
$
93,364
-
93,364
A provision has been recognised for employee entitlements relating to annual leave and long service leave.
NOTE 19: CONTRIBUTED EQUITY
Note
2012
No.
2011
No.
2012
$
2011
$
Consolidated Group
a. Share Capital
At the beginning of the year
392,634,129
325,781,294
18,780,723
17,328,284
Shares issued during the year
128,208,988
66,852,835
1,961,121
1,452,439
At the end of the year
19.c
520,843,117
392,634,129
20,741,843
18,780,723
b. Options
Balance at the beginning of
the year
Listed
Other
Directors
Executives
34,552,001
35,202,001
57,989
57,989
-
-
(6,599,995)
(650,000)
3,971,962
5,000,000
-
-
-
-
-
-
-
-
-
At the end of the year
19.d
36,923,968
34,552,001
57,989
57,989
Total contributed equity
20,799,832
18,838,712
56 Cellmid 2012 Annual Report
NOTE 19: CONTRIBUTED EQUITY (CONTINUED)
c. Movement in ordinary share capital
Date
Details
Opening balance 1 July 2010
05 Jul 2010 Share issue
15 Nov 2010 Share issue
16 Nov 2010 Exercise of converting note options
15 Dec 2010 Exercise of options
10 Jan 2011 Exercise of converting note options
01 Feb 2011 Exercise of converting note options
01 Apr 2011 Exercise of converting note options
13 Apr 2011 Share issue
14 Apr 2011 Exercise of converting note options
09 Jun 2011 Exercise of converting note options
Consolidated Group
Number of
shares
325,781,294
800,000
3,466,669
12,756,526
750,000
8,130,081
8,130,081
5,000,000
4,000,000
14,473,684
9,345,794
Issued price
$
0.020
0.025
0.015
0.030
0.025
0.024
0.020
0.039
0.019
0.021
17,328,284
16,000
86,667
197,726
22,500
200,000
198,546
100,000
156,000
275,000
200,000
Closing balance 30 June 2011
392,634,129
18,780,723
Opening balance 1 July 2011
04 Oct 2011 Share issue
02 Dec 2011 Share issue
13 Dec 2011 Share issue
13 Jan 2012 Exercise of converting note options
24 Jan 2012 Share issue
17 Feb 2012 Exercise of converting note options
20 Feb 2012 Exercise of converting note options
27 Feb 2012 Exercise of converting note options
02 Mar 2012 Exercise of converting note options
16 Mar 2012 Exercise of converting note options
28 Mar 2012 Exercise of converting note options
04 Apr 2012 Exercise of converting note options
12 Apr 2012 Exercise of converting note options
20 Apr 2012 Exercise of converting note options
04 May 2012 Share issue
07 May 2012 Share issue
30 May 2012 Share issue
12 Jun 2012 Share issue
392,634,129
4,000,000
23,560,944
4,411,765
1,666,667
22,500
1,442,309
2,083,333
3,191,489
3,191,489
1,595,745
2,105,263
2,777,778
3,333,333
14,196,360
12,283,641
5,175,428
31,689,481
11,481,463
0.039
0.017
0.016
0.012
-
0.0104
0.0096
0.0094
0.0094
0.0094
0.0095
0.009
0.009
0.009
0.0165
0.0165
0.0165
0.0165
18,780,723
156,000
400,708
71,250
20,000
-
15,000
20,000
30,000
30,000
15,000
20,000
25,000
30,000
127,767
202,680
85,395
522,876
189,444
Closing balance 30 June 2012
520,843,117
20,741,843
Cellmid 2012 Annual Report 57
Notes to the Financial Statements
Continued
NOTE 19: CONTRIBUTED EQUITY (CONTINUED)
Ordinary shares
No limit has been set on the total number of ordinary shares that the Company may issue. The ordinary shares do not carry
par value.
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion
to the number of and amounts paid on the shares held.
On a show of hand every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and
upon a poll each share is entitled to one vote
d. Movement in options
Date Details
Opening balance 1 July 2010
15 Nov 2010 Options issued
15 Dec 2010 Options exercised
Closing balance 30 June 2011
Opening balance 1 July 2011
08 Jan 2012 Options lapsed
07 Mar 2012 Options issued
08 May 2012 Options lapsed
12 Jun 2012 Options issued
Closing balance 30 June 2012
Consolidated Group
Number of
options
$
35,202,001
57,989
100,000
-
(750,000)
-
34,552,001
57,989
34,552,001
(549,995)
3,971,962
(6,050,000)
57,989
-
-
-
5,000,000 -
36,923,968
57,989
On 07 March 2012, 3,971,962 share options were granted to Mr. Robin Beaumont in lieu of cash payment for directors’
fees and subject to shareholders’ approval. The options are exercisable on or before 15 November 2016 with an exercise
price at $0.03 each. The options hold no voting or dividends rights and are not transferable.
On 12 June 2012, 5,000,000 share options were granted to Ms Maria Halasz pursuant to her employment agreement and
subject to shareholders’ approval to take up ordinary shares at an excise price of $0.032 each. The options are exercisable
on or before 15 June 2017. The options hold no voting or dividends rights and are not transferable.
These options vested immediately on grant date. Further details of these options are provided in the Directors’ Report.
The options hold no voting or dividend rights and are not listed. During the financial year, no other options vested with key
management personnel (2011: Nil).
58 Cellmid 2012 Annual Report
NOTE 20: RESERVES AND ACCUMULATED LOSSES
a. Reserves
Share based payment reserve
Balance 1 July
Option expense
Balance 30 June
Available for sale reserve
Balance 1 July
Gain (loss) on revaluation
Reclassification impairment loss to profit and loss
Balance 30 June
Total reserves
Balance 1 July
Revaluation and options expense
Balance 30 June
b. Accumulated losses
Movements in accumulated losses were as follows:
Balance 1 July
Net income (loss) for the year
Balance 30 June
Consolidated Group
2012
$
2011
$
1,660,231
1,660,231
62,999
-
1,723,230
1,660,231
10,120
(17,210)
(7,090)
7,090
-
3,893
6,227
10,120
-
10,120
1,670,351
1,664,124
52,879
6,227
1,723,230
1,670,351
Consolidated Group
2012
$
2011
$
(18,471,095)
(16,201,458)
(1,970,360)
(2,269,637)
(20,441,455)
(18,471,095)
Cellmid 2012 Annual Report 59
Notes to the Financial Statements
Continued
NOTE 21: CASH FLOW INFORMATION
a. Reconciliation of Cash Flow from Operations with Profit after Income Tax
(loss) for the year
Non-cash flows in profit:
- Depreciation and amortisation
- Share base payment
- Impairment loss on non-current investment
Changes in assets and liabilities, net of the effects of purchase and disposal of
subsidiaries:
- (increase)/decrease in trade and term receivables
- (decrease)/increase in prepayments
- (increase)/decrease in inventories
- increase/(decrease) in trade payables and accruals
- increase/(decrease) in provisions
Cash flow from operations
Consolidated Group
2012
$
2011
$
(1,972,483)
(2,269,637)
11,419
228,999
7,090
(43,565)
617
(192,055)
124,873
76,836
10,256
172,000
-
7,064
(8,981)
(97,182)
(179,055)
36,812
(1,758,269)
(2,328,723)
NOTE 22: CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under
the circumstances.
a. Critical accounting estimates and assumptions
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
i.
Estimated impairment of intellectual property
The group tests annually whether intellectual property has suffered any impairment, in accordance with the accounting
policy stated in note 1. The recoverable amounts of the intellectual property have been determined based on reviewing the
status of the research and development program, progress on its patent applications and projected cash flow calculations.
These calculations require the use of assumptions.
NOTE 23: EVENTS AFTER THE REPORTING PERIOD
No matter or circumstance has arisen since 30 June 2012 that has significantly affected, or may significantly affect:
– The group’s operation in future financial years
– The results of those operation in future financial years or
– The group’s state of affairs in future financial years.
– The group completed a capital raising by the issuing of 24,242,424 shares for a consideration of $400,000 on
27 July 2012.
60 Cellmid 2012 Annual Report
NOTE 24: RELATED PARTY TRANSACTIONS
Related Parties
a. The group’s main related parties are as follows:
Parent entities:
Cellmid Limited is the ultimate parent entity within the wholly-owned group.
Subsidiaries:
For details of disclosures relating to subsidiaries, refer to Note 26: Controlled Entity.
Key management personnel:
For details of disclosures relating to key management personnel, refer to Note 6: Interests of Key Management
Personnel (KMP).
b. Transactions with related parties:
Key management personnel:
Other than the transactions outlined in Note 6, the subsidiary (Advangen) issued 278,049 ordinary shares to Ms Maria
Halasz as remuneration on 12 March 2012 under the terms of her employment agreement.
The shares issued to Maria Halasz represent 5% of the total issued capital of Advangen International Pty Ltd as at
30 June 2012.
Subsidiaries:
The transactions with the subsidiary have been eliminated on consolidation of the group.
NOTE 25: FINANCIAL RISK MANAGEMENT
Specific Financial Risk Exposures and Management
The group’s activities expose it to a number of financial risks as described below. The group’s overall risk management
program seeks to minimise potential adverse effects on the financial performance of the group. To date, the group has
not had the need to utilise derivative financial instruments such as foreign exchange contracts or interest rate swaps to
manage any risk exposures identified.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the
accounting policies to these financial statements, are as follows:
Financial assets
Cash and cash equivalents
Loans and receivables
Available-for-sale financial assets:
Total financial assets
Financial liabilities
Financial liabilities at amortised cost:
- trade and other payables
- borrowings
Total financial liabilities
Note
Consolidated Group
2012
$
2011
$
1,050,593
1,592,508
71,168
42,910
27,603
60,120
1,164,671
1,680,231
258,577
-
258,577
133,705
556,835
690,540
9
10
12
16
17
Cellmid 2012 Annual Report 61
Notes to the Financial Statements
Continued
a. Credit risk
Credit risk is managed on a group basis. The group has no significant concentration of credit risk.
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period is
equivalent to the carrying value and classification of those financial assets (net of any provisions) as presented in the
table above.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
Credit risk related to balances with banks and other financial institutions is managed by the FRMC in accordance
with approved board policy. Such policy requires that surplus funds are only invested with counterparties with a
Standard & Poor’s rating of at least AA-.
b. Liquidity risk
The group manages this risk through the following mechanisms:
– preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities;
– managing credit risk related to financial assets;
– only investing surplus cash with major financial institutions
The group is not exposed to any material liquidity risk.
b. Liquidity risk (continued)
The table below analyse the group’s financial liabilities into relevant maturity groupings based on their contractual
maturities for:
(a) all non-derivative financial liabilities
(b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.
Contractual
maturities of
financial liabilities
Less than
6 months
6-12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
Total
contractual
cash flow
Carrying
amount
liabilities
As 30 June 2012
$
$
$
$
$
$
$
Non-derivative
Trade payable
Total
Derivative
Borrowings
Total
258,577
258,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
258,577
258,577
-
-
62 Cellmid 2012 Annual Report
Contractual
maturities of
financial liabilities
Less than
6 months
6-12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
Total
contractual
cash flow
Carrying
amount
liabilities
As 30 June 2011
$
$
$
$
$
$
$
Non-derivative
Trade payable
Total
Derivative
Borrowings
Total
c. Market risk
Foreign exchange risk
133,705
133,705
-
-
556,835
556,835
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
133,705
133,705
556,835
556,835
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating
due to movement in foreign exchange rates of currencies in which the group holds financial instruments which are
other than the AUD functional currency of the group.
The group has no significant concentration of foreign exchange risk. The maximum exposure to foreign exchange
risk is the fluctuation in the US dollar on its USD denominated bank account.
Price risk
The group is not exposed to any material price risk.
NOTE 26: SUBSIDIARY AND TRANSACTIONS WITH NON-CONTROLLING INTEREST
a. Significant investments in subsidiary
Country of Incorporation
Percentage Owned (%)
Subsidiaries of Cellmid Limited
Advangen International Pty Limited
Australia
b.
Transactions with non-controlling interest
2012
95
2011
100
On 12 March 2012, 278,049 ordinary shares were issued to Ms Maria Halasz as remuneration pursuant to her
employment agreement. The fair value of this issue was $10,000. The value represents 5% of the total of $200,000
valuation of Advangen International Pty Ltd on the date of issue.
As a result of this issue, the group recognised a non-controlling interest of $10,000 in the equity of the owner of
Advangen International Pty Ltd.
Cellmid 2012 Annual Report 63
Notes to the Financial Statements
Continued
NOTE 27: SEGMENT INFORMATON
Identification of reporting segments
The consolidated entity is organised into two operating segments: (1) research and development of diagnostics and
therapeutics and (2) research, development and marketing of hair growth products. These operating segments are based
on the internal reports that are reviewed and used by the Board of Directors (identified as the Chief Operating Decision
Makers (CODM)) in assessing performance and in determining the allocation of resources. There is no aggregation of
operating segments.
The CODM reviews both adjusted earnings before interest, tax, depreciation and amortisation (segment result) and profit
before income tax.
Types of products and services
The principal products and services of each of these operating segments are as follows:
R&D
R&D and marketing
Diagnostics and therapeutics for cancer and inflammatory conditions
Hair growth products
Geographic segment information
The primary geographic segment within which the consolidated group operates is Australia as at 30 June 2012. For
primary reporting purposes, the group operates in one geographic segment as described as at 30 June 2012.
Operating segment information
30 June 2012
Biotechnology
Retailing
Consolidated
Revenue
Sales revenue
Sales of products
Total sales revenue
Interest revenue
Royalties
Subleasing income
Other income
Total Revenue
Segment result
Share-based compensation
Gain on foreign exchange
Depreciation
Finance costs
$
Australia
12,590
-
12,590
5,370
704
24,000
11,077
53,741
(2,412,460)
(218,999)
49,237
(11,110)
(39,509)
$
Australia
-
115,704
115,704
-
-
-
1,828
117,532
(236,921)
-
-
(309)
(205)
Loss before income tax expenses
(2,579,100)
(119,903)
Income tax benefit
Loss after income tax benefit
$
12,590
115,704
128,294
5,370
704
24,000
12,905
171,273
(2,649,381)
(218,999)
49,237
(11,419)
(39,714)
(2,699,003)
736,520
(1,962,483)
64 Cellmid 2012 Annual Report
NOTE 27: OPERATING SEGMENTS (CONTINUED)
30 June 2012
Biotechnology
Retailing
Consolidated
Assets
Segment assets
Unallocated assets:
Other financial assets
Total assets
Liabilities
Segment liabilities
Total liabilities
$
$
$
2,135,203
340,149
2,475,352
(415,667)
(13,111)
42,910
2,518,262
(428,778)
(428,778)
NOTE 28: CONTINGENT LIABILITIES
a.
b.
Contingent liabilities
The parent entity and group had no contingent liabilities at 30 June 2012 or at 30 June 2011.
Contingent assets
The parent entity and group had no contingent assets at 30 June 2012 or at 30 June 2012.
NOTE 29: COMPANY DETAILS
The registered office of the company is:
Level 6,
40 King Street
Sydney NSW 2000
The principal places of business are:
Cellmid Limited
Level 6
40 King Street
Sydney NSW 2000
Advangen International Pty Limited
Level 6
40 King Street
Sydney NSW 2000
Cellmid 2012 Annual Report 65
Directors’
Declaration
The Directors of the group declare that:
1. the financial statements and notes, as set out on pages 29 to 65, are in accordance with the Corporations Act 2001
and:
a. comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements,
constitutes explicit and unreserved compliance with International Financial Reporting Standards (IFRS); and
b. give a true and fair view of the financial position as at 30 June and of the performance for the year ended on that
date of the company and group;
2. the Chief Executive Officer and Chief Financial Officer have each declared that:
a. the financial records of the group for the financial year have been properly maintained in accordance with s 286 of
the Corporations Act 2001;
b. the financial statements and notes for the financial year comply with Accounting Standards; and
c. the financial statements and notes for the financial year give a true and fair view; and
3. in the Directors’ opinion there are reasonable grounds to believe that the group will be able to pay its debts as and when
they become due and payable.
Signed in accordance with a resolution of the Board of Directors made pursuant to Section 295 (5) of the Corporations
Act 2001.
Dr David King
Director
Dated this 30th day of August 2012
66 Cellmid 2012 Annual Report
Cellmid 2012 Annual Report 67
68 Cellmid 2012 Annual Report
Additional
Information
Balance
Percent
28,500,000
22,500,000
21,212,121
19,243,030
17,396,462
10,272,000
9,000,000
8,000,000
5,923,000
5,350,000
5,250,000
5,157,625
5,100,000
5,000,000
5,000,000
5,000,000
5,000,000
4,897,588
4,641,708
4,000,000
4,000,000
5.229
4.128
3.892
3.530
3.192
1.884
1.651
1.468
1.087
0.981
0.963
0.946
0.936
0.917
0.917
0.917
0.917
0.898
0.852
0.734
0.734
200,443,534
545,085,540
36.773
Holders
Total Units
35
39
148
800
598
6,146
121,330
1,369,323
39,751,994
503,836,747
1,620
545,085,540
%
0.001
0.022
0.251
7.293
92.433
100.000
20 LARGEST SHAREHOLDERS AS AT 1 SEPTEMBER 2012
Holder Name
Cell Signals Inc
Seistend Pty Ltd
Hera Investments Pty Ltd
Mr Gregory Glenn Worth
Mr James Patrick Tuite & Mrs Wendy Tuite
Mr Gregory Bernard Hilton
Lee Geok Thye (Holdings) SDN BHD
Vista Partners LLC
Mr Trevor Gottlieb
Mr Paul Ruggiero & Mrs Lorissa Ruggiero
Mr Paul Ruggiero & Mrs Lorissa Ruggiero
Mr Paul Philip Ranby
Talrind Pty Ltd
Lims Design Services Pty Ltd
Rexi Marketing Pty Ltd
Mr Vincent Patrick Sweeney
Mr Christopher Walker
Ms Christine Anne Smith
Cancun Trading Pty Ltd
Mr Harold Leonard Gottlieb
Labirinto Pty Ltd
Total
Issued Capital
Distribution of shareholders
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Totals
The number of security investors holding less than a marketable parcel of securities is nil.
Cellmid 2012 Annual Report 69
Corporate
Directory
Office
Level 6, 40 King Street
Sydney NSW 2000 Australia
Tel: +61 2 9299 0311
Fax: +61 2 9299 2198
Email: info@cellmid.com.au
www.cellmid.com.au
Non-Executive Chairman
David King
Chief Executive Officer and Managing Director
Maria Halasz
Robin Beaumont (Resigned 27th August 2012)
Graeme Kaufman (Appointed 27th August 2012)
Nicholas Falzon
Andrew Bald
BDO Chartered Accountants
Level 10, 1 Margaret Street
Sydney NSW 2000 Australia
Piper Alderman
Governor Macquarie Tower
1 Farrer Place
Sydney NSW 2000 Australia
FB Rice & Co
Level 23, 44 Market Street
Sydney NSW 2000 Australia
Boardroom Limited
Level 2, 28 Margaret Street
Sydney NSW 2000 Australia
Non-Executive Director
Company Secretary
Auditors
Solicitors
Patent Attorney
Share Registry
70 Cellmid 2012 Annual Report
Cellmid Limited
Level 6, 40 King Street
Sydney NSW 2000
ABN 69 111 304 119
T: +61 2 9299 0311
F: +61 2 9299 2198
E: info@cellmid.com.au
www.cellmid.com.au
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