2019
ANNUAL REPORT
1
Cellmid 2019 Annual Report CONTENTS
04
06
Chairman’s Letter
CEO Report
25
Corporate
Governance
68
Additional
Information for
Listed Entities
10
Directors’ Report
27
Annual Financial Report
70
Corporate
Directory
3
Cellmid Limited (ASX:CDY)
Annual Report
ABN 69 111 304 119
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
T: +61 2 9221 6830
F: +61 2 9221 8535
E: info@cellmid.com.au
W: www.cellmid.com.au
2
Cellmid 2019 Annual ReportCellmid 2019 Annual Report CHAIRMAN’S
LETTER
Dear Shareholder,
With this development we believe it is now timely to focus on
with the European Patent Office issuing an intention to
has been on completing clinical development plans in
It is my pleasure to
present to you the 2019
Annual Report. Both the
consumer health business
and the midkine related
biotechnology business
have progressed well
during the year, the
former to the point where
profitability is eagerly
anticipated in FY2020.
separating the consumer health and biotechnology assets,
grant; a promising sign for the successful grant in other
our lead indications – myocarditis, cancer, fibrosis, chronic
in order to unlock shareholder value in both businesses.
growth markets such as USA, Japan and China. Patent
kidney disease and associated conditions – so that we can
The Company’s évolis® anti-aging hair care product range
is now ideally positioned in the burgeoning market for
clean and efficacious beauty products, in which consumer
behaviour is clearly shifting from “big name” brands to
grant will strengthen the Company’s position in ongoing
activate partnering discussions. The midkine assets are
negotiations with retail and distribution partners in Europe
currently being packaged with a view to securing clinical
and other jurisdictions, as well as add commercial value to
the évolis® brand.
development partners, or dedicated funding into Lyramid.
In June this year, as announced on the ASX, we were
products with clinically validated scientific credentials, an
Together with the anticipated revenue growth, we have
fortunate indeed to secure the services of Bart Wuurman,
authentic story, and a strong relationship between the brand
worked hard throughout the year to implement effective cost
a highly accomplished biotech CEO, to head up Lyramid.
and the customer. The market appeal of the expanded
management, which is an essential component in delivering
Bart has over 30 years’ experience in innovative drug
range is evidenced by strong revenue growth for the year.
profitability in FY2020. In addition, we have during the year
development, biotech financing, business development
Growth was particularly strong in Japan, and pleasingly
profitable. Sales doubled in the USA, and are poised for
further substantial growth following our relatively heavy
investment in retail partnerships in this important market.
Sales were weaker in our home market of Australia,
although we are confident of further growing this market
after expanding our e-commerce, digital marketing, and
social media infrastructure and capability; and advancing
negotiations with a national distribution partner.
We remain poised to penetrate important new markets
in China and Korea, where we have already entered into
exclusive distribution agreements with well-credentialled
partners and await only the requisite regulatory approvals.
Based on the success of our QVC distribution channel in
Japan, we are not surprisingly excited about the prospect
of working with QVC China, an important component of
our Chinese strategy. Both the Chinese and Korean markets
offer the potential for transformative revenues over the next
two years. Planning to enter other new markets, in both
Asia and Europe, is also well advanced, with EU registration
for importation of évolis® Professional products into all EU
countries, including the UK, already in hand.
The first patent protection for the technology which
underpins the évolis® formulation was forthcoming in April,
filled the important roles of Sales Director and Marketing
and licensing; he is already accelerating our partnering
Director in our Sydney Head Office, and Chief Operating
discussions and identifying new opportunities to more
Officer in our USA business. All these roles have attracted
fully exploit our extensive midkine assets in readiness for a
highly qualified and experienced professionals who have
structural separation of the businesses.
quickly embraced the exciting potential of our évolis®
range of products. These appointments together with Ko
Koike, our outstanding Managing Director in Japan, mean
we have never been better positioned to deliver on our
growth strategy.
Our progress during the year would not have been possible
without the exceptional efforts of our existing and newly
recruited staff members who, without exception, have
worked tirelessly and with great professionalism to progress
and grow our businesses; none more so than CEO Maria
With
regard
to
the Company’s midkine assets,
Halasz. It is disappointing of course that the progress we
commercialised by wholly owned subsidiary Lyramid, there
have made is not reflected in the share price performance,
is a growing body of evidence from research around the
but we are optimistic that this will be remedied with the
world that midkine plays an important, if not critical role in
initiatives undertaken during the year.
the development of a wide range of diseases. During this
last year there were important publications of new findings
on the role of midkine in the development of yet more
disease indications - in a rare kidney disease (FSGS) and in
auto-immune myocarditis. These studies also demonstrated
the efficacy of midkine antibodies in mitigating the diseases.
It is the very wide range of disease indications in which
midkine is implicated which is at the core of the conundrum
on how best to extract value from the Company’s
intellectual property assets around this protein. As a
I also extend my sincere thanks to my fellow board members
for their wise counsel and guidance throughout the year.
Finally, I extend the Board’s thanks to all shareholders for
their support.
precursor to separating or consumer health and biotech
businesses, as foreshadowed in my opening, our focus
David King
Chairman
4
5
Cellmid 2019 Annual ReportCellmid 2019 Annual Report CEO
REPORT
During the first half of FY2019 we reviewed the business and
Our key consumer platforms are Facebook and Instagram,
assessed the strengths and weaknesses of our consumer
but we keep a close relationship with our customers through
health and biotech portfolios. The result of the review was
regular emails. Although already seeing great results from
the Strategy Update announced to the market in February
the hard work by our team, including sales going up 400%
2019, where we set out two key initiatives; operational
in a few months, this is just the beginning. We have much
profitability for our consumer health business in FY2020 and
more to do in the way we perfect the customer experience
separation of the two asset portfolios by the end of 2020.
from the first time they enter our website to the time they
Dear Shareholder,
The $10 million capital raising in September 2018 allowed
In order to deliver on these, we set out six key measurable
strategic objectives; to diversity revenue sources, expand
our e-commerce capabilities, build a global leadership
team, secure supply chain and improve efficiencies, as well
as put the structure in place for the separation of the biotech
assets and embark on an active partnering program.
us to gear up for growth by getting the right people,
It is my pleasure to report that we have advanced significantly
systems and channels in place during the year. We have
in these six strategic objectives and we are on schedule to
cleaned up our balance sheet by repaying a substantial
achieve the targets of our Strategy Update.
It is my pleasure to
report on the results of
this 2019 financial year.
This has been a year of
investment into our people,
operations and systems,
our intellectual property
assets as well as in our sales
and distribution channels
as we prepare to achieve
operational profitability for
the consumer business in
FY2020 and the separation
of our consumer health and
research activities.
loan, implemented a share buy-back and have successfully
navigated through a year with many new partners and
collaborators.
Importantly, the year marked accelerated sales growth with
a 30% increase in consumer sales to $7,338,967 (FY2018:
$5,647,930). This has been especially pleasing as most
of our new channels have not come online until the latter
part of the reporting year. Total revenue and other income
came in at $8.347,184, a 22% uplift from last year (FY2018:
$6.834,924).
In addition to the revenue in Advangen Limited, Cellmid
also received $807,972 from the Australian Tax Office under
the R&D Tax Incentive Scheme. This funding has been
crucial for the Company to continue its development of the
high value midkine assets.
Cellmid reported a net loss after tax of $5,909,557 million
in FY2019, up 58% form the previous financial year (FY2018:
$3,732,615 million loss). This included a significant one-
off expenditure of $2,608,371 relating to the litigation
with Ikon. Operating losses were $3,042,031 in the current
year, compared with $2,714,117 in FY2018, reflecting
the significant investment we have made into our sales
channels and building a global sales and marketing team.
We expect this investment to return appropriate dividends
in the coming months.
Importantly, our consumer health business continues to
show operational improvements. Our operating losses
this financial were down to $691,527 for the segment from
$1,226,334 in FY2018, a 44% reduction.
become regular customers.
Advangen Inc., (Japan)
Sales in Japan were up 40% to $5,929,848 during the
financial year (FY2018: $4,230,761). Operational profits
reached $1,656,427, a 133% increase on the $711,927
profit achieved in FY2018. The single largest source of
product revenue remained the omnichannel retail group,
QVC Japan, during the reporting period with just under $3
million in sales.
Chinese export of the heritage Lexilis® and Jo-Ju® brands
has also increased during the financial year contributing to
the record revenue. Working with two distributors, we have
also been able to establish a highly profitable bulk business
ADVANGEN LIMITED
Our consumer health business, Advangen, operates in one
of the fastest growing beauty segments; anti-aging hair
care. Our FGF5 inhibitor hair products continue to lead the
into China.
market with novel technology, proof of clinical efficacy and
clean and environmentally friendly formulations.
Retail is a fast-changing environment, where traditional rules
no longer apply. In the past, success of a new brand could
be measured by how many retail outlets would stock them;
today the fastest growing brands in beauty and health have
no brick and mortar retail presence at all.
We are prepared to move with the direct to consume wave;
our products and business are ideally suited to having a
close relationship with our customers. We fulfil a growing
The évolis® Professional anti-aging haircare ranges have
been launched in Japan at influencer and public relations
events. Since the end of the reporting period the Japanese
evolis® website and social platforms have also come to life.
In Japan, material sales from evolis® are expected from
e-commerce, similarly to other markets, while pharmacy and
salon sales will remain modest as we continue to focus our
investments into our direct to consumer channels.
Advangen International Pty Ltd (Australia)
desire for authentic, efficacious and clean products, that can
Our Australian operations carry the responsibility for the local
be most effectively communicated by direct contact with
business but also for international business development. To
our customers.
We have accelerated our investment into e-commerce
this year and launched a brand new, commercial platform
that extent expenses incurred include a significant portion
of global business development plus supporting the USA
and Japanese operations.
in February 2019. Since then, we have partnered with
The most significant development for the financial year has
specialists and implemented AfterPay, introduced auto-
been the building of a sales, marketing and operational
replenishment and a customer rewards program.
team that can deliver global growth. In addition, we have
Our ‘back end’ has gone through significant automation
too, with linking our accounting and fulfilment directly to
the e-commerce platform for seamless sales management.
Importantly, we have been working with a talented digital
marketing agency and most recently appointed a social
media specialist to assist with growing our evolis® tribe.
invested into our e-commerce capabilities, and brought
on partnerships that are expected to make this channel a
significant revenue earner.
6
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report CEO
REPORT
CONTINUED
We have reviewed our Australian distribution during the
built an inhouse team of sales, marketing and operational
year and cancelled discounting campaigns that were
experts. Our significant investment into our US testing, PR
unprofitable. Whilst this resulted in reduced sales, our
and branding activities has of course benefited the entire
channels became more profitable. Due to these factors
Group, not just the local business.
reported sales were down in Australia by 18% to $993,748
(FY2018: $1,216,021) . Our losses have also gone down,
even though our investment in e-commerce and our
marketing team increased significantly, with losses of
$1,495,001 (FY2018: $1,671,790). We expect e-commerce
to become increasingly important to the Australian sales
and we will continue focus on this channel.
We have been working with Fukangren, our Chinese
distribution partner for evolis®, on our regulatory approvals
during the reporting period. We filed the first round of
applications and have received periodical feedback and
further requests to add to the submission. The process has
been slow and onerous as expected when we signed the
distribution agreement with Fukangren. However, once
successful, our evolis® pharmacy products will be one
of two approved imported topical hair loss tonics on the
market representing significant marketing advantage.
In addition to China, we have been pursuing other markets
Now that we have cemented our position in the US as a
premium anti-aging hair care brand our major opportunities
will come from e-commerce. However, accessing hair salons
via a network of premium distributors and scaling into other
retailer partnerships we have secured since the end of the
financial year will remain important.
LYRAMID LIMITED
including Asia and Europe. We signed a distribution
It seems that all our activities, drug development and
agreement for Korea with marketing company, K2B, in
consumer health, converge around dealing with the side
August 2019. It is expected that after the relatively short
effects of aging. As we take a step back and look at where
regulatory period we will start selling products into Korea
our midkine antibodies have been most effective, they
in early 2020. There is a significant demand in Korea for
seem to stand out as promising agents to halt the chronic
clinically validated and clean products, such as evolis®,
inflammatory processes that result in aging and age-related
especially from the younger, look and fashion-conscious
diseases such as cancer, inflammatory and bone disorders.
Korean audience.
Advangen LLC., (USA)
Sales have doubled during FY2019 in the US and we have
closed the year with $415,371 revenue (FY2018: $205,604).
Our losses were up at $852,954 (FY2018: $266,468), as we
have increased investment into our retail channels as well as
With all the synergies between Lyramid and Advangen,
they are significant differences which make operations more
complex than feasible for a relatively small organization.
For that reason, our goal remains to create an effective
structure for the separation of our biotech and consumer
health assets.
Our public relations activities resulted in brand mentions in
publications such as Forbes, Allure, New Beauty, msn.com
and Readers Digest representing approximately 120 million
potential impressions through their readers.
With the recent appointment of Bart Wuurman as CEO of
Our midkine intellectual portfolio has also increased during
Our partnership with premium retailer Neiman Marcus
continued to strengthen during the financial year and as of
the end of August 2019, we are now ranged in 24 Nieman
Marcus stores with the full collection of evolis® PROMOTE,
Lyramid our biotech portfolio is actively being prepared
the year with newly granted US and European patent titled
for partnering. This is being helped by data generated in
“Antibody recognizing N-domain of midkine”. This brings
inflammatory kidney disease (FSGS) and myocarditis during
our total patent portfolio to 58 granted patents, re-enforcing
the year.
our leadership in midkine intellectual property.
REVERSE and PREVENT.
The value we are likely to derive in Lyramid from a
With the sharp focus on partnering our midkine assets, and
partnership or licensing deal is largely determined by the
an improved operational performance in our consumer
quality of data we have and will generate with our midkine
business, we are well prepared to execute on our objectives
antibody portfolio
in relevant therapeutic
indications.
of operational profitability for our consumer business in
Therefore, it was exciting to complete our collaboration with
FY2020 and separating Lyramid and Advangen Limited by
the Westmead Research Institute and demonstrate efficacy
the end of 2020.
of our lead antibody, CAB102, in FSGS (Focal Segmental
Glomerulosclerosis) in September 2018.
I would like to thank our dedicated team, who delivered
record revenue for our consumer business, and progressed
The study has shown that CAB102 alleviated damage to
our midkine portfolio. I am grateful for the support and
the kidney and preserved kidney function at least as well
contribution by our board members, especially our
as its precursor murine antibody. Whilst our application
Chairman, Dr David King. Finally, I would like to thank our
for orphan designation was unsuccessful during the year,
shareholders for their support.
this was due to the reclassification of FSGS to non-orphan
indication by the FDA and does not affect the value of the
data generated.
Other exciting developments have been published in
inflammatory heart disease by our collaborators at the
Ludwig Maximillian University. They have been able to
show for the first time that midkine promotes cardiac
muscle
inflammation associated with the sometimes-
fatal disease, myocarditis. Importantly, they have been able
to demonstrate the mechanism of action for midkine in
these conditions.
Maria Halasz
CEO and Managing Director
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report DIRECTORS’
REPORT
Mr Bruce Gordon
Director (Non-executive)
Qualifications
BA, Macquarie University, Fellow of The Institute of Chartered Accountants Australia and New
Zealand, Fellow of The Australian Institute of Company Directors
Experience
An audit and corporate finance specialist, and an experienced finance professional with a
career spanning more than 35 years advising and providing financial services to private and
publicly listed companies as well as subsidiaries of large multinationals.
The Directors present their report, together with the financial statements of the Group, being Cellmid Limited (“the Company”)
Interest in shares and options Shares:
110,000 indirectly held
and the entities it controlled, for the financial year ended 30 June 2019.
Special responsibilities
Chairman of the Audit and Risk Committee and member of the Nomination and Remuneration
1. GENERAL INFORMATION
Information on Directors
The names, qualifications, experience and special responsibilities of each person who has been a Director during the year and
Committee
Other directorships in listed
None
entities held in the previous
three years
to the date of this report are:
Dr David King
Qualifications
Chairman (Non-executive)
PhD in Seismology, Australian National University, Fellow of The Australian Institute of
Company Directors, Fellow of the Australian Institute of Geoscientists
Dr Fintan Walton
Director (Non-executive)
Qualifications
PhD, Genetics, Trinity College Dublin
Experience
Experience as chairman, executive and non-executive director in high growth companies,
across a variety of sectors, with focus on governance issues in publicly listed companies.
Interest in shares and options Shares: 200,000 directly held
Shares: 1,200,000 indirectly held
Special responsibilities
Member of the Audit and Risk Committee and member of the Nomination and Remuneration
Committee
Other directorships in
Current directorships - Litigation Capital Management Ltd, Galilee Energy Limited,
listed entities held in the
African Petroleum Corporation, Tap Oil Ltd and Renergen Ltd.
previous three years
Experience
Founder and CEO of PharmaVentures Ltd, a UK based corporate advisory firm that provides
advice on all aspects of corporate transactions, business brokering, mergers and acquisitions
and licensing deals to a diversified global network.
Interest in shares and options Shares: 12,500 directly held
Shares: 52,500 indirectly held
Special responsibilities
Member of the Nomination and Remuneration Committee
Other directorships in listed
None
entities held in the previous
three years
Ms Maria Halasz
Managing Director (Chief Executive Officer)
Dr Martin Cross
Director (Non-executive)
Qualifications
MBA, BSc in Microbiology, University of Western Australia, Graduate of the Australian Institute
Qualifications
PhD. Microbiology, Aberdeen University Scotland. Fellow of the Australia Institute of Company
of Company Directors
Directors.
Experience
26 years’ experience in life sciences working in executive positions in private and public
Experience
Over 30 years’ experience working in the pharmaceutical and biotech industries primarily
companies, then managing investment funds and later holding senior positions in corporate
finance specialising in life sciences. Maria has been CEO and Managing Director of Cellmid
since April 2007.
Interest in shares and options Shares: 420,000 directly held
Shares: 1,599,938 indirectly held
Special responsibilities
Managing Director and Chief Executive Officer
Other directorships in listed
None
entities held in the previous
three years
in all aspects of marketing, selling and business management. This included global roles at
international Headquarters of AstraZeneca and Novartis. Former Country President for Novartis
Australia/NZ, Managing Director for Alphapharm (Mylan) Australia/NZ and Chairman of the
Generics Industry Association and Medicines Australia.
Interest in shares and options Shares: 175,000 indirectly held
Special responsibilities
Member of the Audit and Risk Committee
Other directorships in listed
Non-Executive Director Oncosil Ltd
entities held in the previous
three years
Other
Non-Executive Director NHMRC National Institute of Dementia Research, Advisor Pursuit
Sports Pty Ltd, Advisor University of Technology Sydney (Pharmacy Commercial Advisory Board)
10
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report DIRECTORS’
REPORT
CONTINUED
Mr Dennis Eck
Director (Non-executive)
Qualifications
BSc, The University of Montana
Lyramid Limited (Lyramid)
The Group holds the largest intellectual property portfolio globally around midkine, a protein associated with various disease
states, including chronic inflammatory diseases and cancer. During FY2019 Lyramid continued with 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. During FY2019, the Group continued to investigate the most efficient method
for targeting midkine and completed further preclinical validation studies using its humanised antibodies in Focal Segmental
Glomerulosclerosis (FSGS). In addition, two new humanised midkine antibodies have been developed during the period.
The Group received additional patent coverage for its N terminal binding midkine antibodies in Europe and collaborated with
research groups in various clinical indications to increase underlying value of its midkine asset portfolio during FY2019.
Significant Change since the end of FY2019
The Group signed an exclusive distribution agreement with Korean marketing company K2B for the sale of its evolis® hair loss
products in August 2019. K2B is expected to market the products, following regulatory approval, through Korean television
Experience
40 years senior management experience in the retail sector, providing significant strategic and
shopping channels and e-commerce.
operational expertise. Mr Eck, a professional investor, has extensive retail experience, from
fashion to groceries, including cosmetics and hair salons. As a senior strategist, Mr Eck has
helped reshape the operations of several retail businesses delivering outstanding shareholder
returns.
Interest in shares and options Shares:
5,461,579 directly held
Special responsibilities
N/A
Other directorships in listed
ULTA Inc., resigned on 16 June 2019
entities held in the previous
three years
Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
Mr Lee Tamplin
Company Secretary
Qualifications
BA (Hons) Financial Services, Bournemouth University United Kingdom, Diploma of Financial
Planning, Graduate of the Australian Institute of Company Directors and Member of the
Governance Institute of Australia.
Experience
20 years’ experience in financial services in both Australia and UK. Company Secretary for
several ASX listed, NSX listed and proprietary companies.
Principal activities and significant changes in nature of activities
The Group has operated primarily through its subsidiary companies, Advangen Limited (consumer health product development
and sales) and Lyramid Limited (midkine and midkine antibody research and development). In February 2019 the Group
released its Strategy Update to the market outlining two key objectives to increase shareholder value; the separation of
Advangen and Lyramid by the end of 2020 and achieving operational profitability for Advangen in FY2020.
The principal activities of the Group during the financial year were:
Advangen Limited (Advangen):
During FY2019 Advangen continued with the development and sale of over-the-counter (OTC) and cosmetic products for hair
loss and anti-aging hair care using proprietary FGF5 inhibitor technology.
The Group acquired Advangen Inc. in 2013, a Japanese company with a proprietary hair loss technology inhibiting FGF5. Since
the acquisition, the Group has improved the technology, rebranded the original products, developed a range of new products
under the evolis® brand and built international distribution. During FY2019, Advangen achieved 30% revenue growth increasing
sales in all consumer health divisions. Advangen continued with novel product development during the reporting period with new
2. OPERATING RESULTS AND REVIEW OF OPERATIONS FOR THE YEAR
Operating results
The operations for the Group continued to improve during the 2019 financial year. Revenue and Other Income for the Group
increased 22% to $8,347,184 (2018: $6,834,924) during the reporting period, with a 30% increase in Consumer Health revenue
to $7,338,967 (2018: $5,652,386). Operating loss was up 12% to $3,042,031 (2018: $2,714,117 loss). An R&D tax credit of
$807,973 was received during the reporting period (2018: $1,056,963 including government grants).
Review of operations
The Group released its Strategy Update to investors in February 2019 with two key objectives to increase shareholder value;
the separation of Advangen and Lyramid by the end of 2020 and operational profitability for Advangen in FY2020. The Group
achieved several key milestones during FY2019 and made the following progress to reach these important strategic objectives
in both divisions.
• The Group boosted its senior management team with several new appointments in key sales, marketing and operational
functions laying the foundations for a sustainable global business.
• A significant increase in marketing spend resulted in building distribution channels for sustainable revenue growth for the
Group’s FGF5 inhibitor hair growth products globally.
• Scaling into existing sales channels, such as QVC in Japan and Neiman Marcus in the USA, delivered increased sales for the
Group.
• New opportunities, such as e-commerce in Australia, export sales to China and a distribution partnership with PSL in New
Zealand, assisted in achieving record revenue for the Group.
• Therapeutic efficacy for the Group’s midkine antibodies in FSGS (Focal Segmental Glomerulosclerosis) added significant
value to the Lyramid asset portfolio.
• The successful patent application for the N-terminal midkine-antibodies in Europe increased the intellectual property holding
of the Group around midkine, adding to the potential application in the treatment of multiple disease indications.
• Internationally recognised industry leader, Bart Wuurman, was appointed as CEO of Lyramid in June 2019 to execute on the
midkine development plans and the separation of the consumer and midkine businesses.
i. Advangen Limited
Revenue from the FGF5 inhibitor hair growth and anti-aging hair care products grew 30% during the reporting period to
$7,338,967 (FY2018: $5,652,386). The growth was largely the result of an increase of more than 100% in the US sales to
$415,371 (FY2018: $205,604) and a 40% increase in Japanese sales to $5,929,848 (FY2018: $4,230,761). Australian sales
were down 18% to $993,748 (FY2018: $1,216,021).
Importantly, a vastly improved global e-commerce platform was launched in FY2019, laying the foundations for sustainable
revenue growth in the Group’s direct to consumer business in Australia, the US and Japan. Repeat customer database
increased 400% between the launch of the new www.evolisproducts.com website in February and June 2019 in Australia, the
formulations containing additional ingredients for improved efficacy and implemented significant operational efficiencies.
first test site for the new platform.
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report DIRECTORS’
REPORT
CONTINUED
Growth in Japan from television shopping channel QVC and export to China
Sales on television shopping channel, QVC, continued to grow during FY2019 with two sales days delivering over $1 million
revenue each for the Group (30 November 2018 and 16 June 2019). The Jo-Ju® branded FGF5 inhibitor products for women
remain the largest single brand for the Group. A significant uplift in sales was also achieved from the partnership with Chinese
distributor, Huana Likang, responsible for selling the Lexilis® branded, and locally packaged bulk supplied products for men.
Building on USA premium retail partnership with Neiman Marcus in preparation to scaling into salons
The Group’s retail partnership with Neiman Marcus continued to expand during the reporting period and accounted for the
most significant component of revenue growth in the US. Going from e-commerce only to 10 Neiman Marcus stores during
FY2019 required a significant investment in sales and operational activities. This was in addition to the 21 soft surroundings
stores. The Group’s business model in premium retail is to launch each store with an experiential marketing event conducted
in collaboration with sales staff from the retail partner. The events have been supported by social and digital advertising
conducted in collaboration with Neiman Marcus.
Bloomingdales rolled out its Wellchemist department in 9 of their 65 retail stores up to 30 June 2019, where evolis® is
featured both on shelves and on counters. Wellchemist caters for the discerning and health conscious Bloomingdales
customer. The Group’s ongoing US public relations campaign delivered news on the evolis® technology and brand to
approximately 120 million potential readers with over 11 billion potential impressions during the reporting period.
The Group completed a critical pre-clinical program in FSGS (Focal Segmental Glomerulosclerosis) and delivered promising
efficacy results for CAB102, one of the humanised midkine antibody drug candidates, in FY2019. CAB102 reduced the area
of kidney injury 3-fold compared to control in an Adriamycin induced model of the disease. The work was partially funded by
an Australian Government DIIS Innovation connection grant.
The Group’s midkine antibody assets have been independently validated by the peer reviewed article “Midkine drives
cardiac inflammation by promoting neutrophil trafficking and NETosis in myocarditis” published in the Journal of
Experimental Medicine in February 2019. The published data, generated with the Group’s midkine antibodies, showed that
these antibodies limited not only neutrophil recruitment but also NET (neutrophil extracellular trap) formation, reinforcing
their potential for the treatment of inflammatory heart failure.
The Group’s intellectual property portfolio currently stands at 58 granted patents, 14 patent applications under examination
and one in PCT (Patent Cooperation Treaty) filing stage. Importantly, the Group was granted the European patent “Antibody
recognising N-domain of midkine”, following an extensive examination period. This is an important patent to the Group as it
covers the most effective midkine antibodies with strong potential for clinical development.
3. FINANCIAL REVIEW
Financial position
The net assets of the Group at 30 June 2019 were $5,857,277 ($1,855,172 at 30 June 2018) while current assets increased to
$7,233,627 ($4,159,083 at 30 June 2018). With the cash balance of $3,081,924 at 30 June 2019 the Directors believe that the
Company will be able to deliver on the its Strategic Plan as outlined in February 2019.
4. OTHER ITEMS
Ikon legal action
On 22 July 2016, Ikon Communications Pty Ltd (IKON) had filed a claim for an amount of $939,055 plus interest pursuant to
the services agreement entered into between Group Company Advangen International Pty Ltd (Advangen) and IKON on 15
June 2015, being a claim for invoices which Advangen has not paid to IKON. Advangen defended its position that it is not
liable for those unpaid invoices because IKON has breached the services agreement, failed to provide certain contractually
required services at all or adequately and engaged in misleading or deceptive conduct that has caused Advangen loss and
damage. Advangen filed a cross claim for payments made for services not provided or not properly provided by IKON, plus
Chinese import permit application progressing for evolis® in the face of changing regulatory environment
other loss it says it suffered by reason of IKON’s conduct and submitted evidence, including expert evidence, to that effect
Fukangren, the Group’s exclusive distributor in China for the evolis® branded tonics and shampoos, has been pursuing
regulatory submissions for the products since May 2018. Application for the tonics were submitted in early 2019, with
shampoo applications yet to be filed due to the change in responsible regulatory authority in the interim. Subject to
receiving the approvals, Fukangren will be required to order minimum product quantities to maintain market exclusivity for
the products in China.
during the reporting period.
The proceedings were heard in the New South Wales Supreme Court between 10 September 2018 and 23 September 2018.
On 2 November 2018 the court handed down its decision that IKON was entitled to its claim plus interest and the cross claim
by Advangen was dismissed. In the FY2018 financial accounts an amount was allocated as a contingent liability regarding this
matter, and the total costs of $2,608,371, including IKON’s claim with interest and costs of both parties have been included in
European import permits for evolis® and growing e-commerce sales dominated Australian activities
the Consolidated Profit and Loss Statements for FY2019 under the heading ‘Legal fees and claim’.
The Group continued to fund international business development activities from Advangen in Australia during FY2019 and,
Significant changes in state of affairs
as a precursor to sales in Europe, it secured import permits for all evolis® branded products. One of the key operational
objectives, building a substantial consumer data base, received a boost during the period with the launch of an e-commerce
platform that is more user friendly and capable of connecting and communicating with customers more effectively. An
important measure in achieving operational profitability has been ensuring that unprofitable third-party discounting
campaigns were not pursued during the reporting period. Although revenue was down in some of the Australian pharmacy
networks as a result, the overall profitability of the channel has improved.
ii. Lyramid Limited
Consolidating midkine related research and development under Lyramid
In preparation to separate the strictly research and development based midkine portfolio from a largely consumer product
development and sales driven Advangen, all midkine related patents and other and assets were consolidated in a single
subsidiary, Lyramid Limited, in FY2019.
The appointment of Lyramid CEO, Bart Wuurman, in June 2019 was an important milestone in this process, not only as he is
eminently qualified to deliver quality partnerships, but he has also brought solid focus to build a clinical development path.
There have been no significant changes in the state of affairs of the entities in the Group during the 2019 financial year.
Dividends paid or recommended
The Company has not paid or declared any dividends during the financial year (2018: Nil).
Events since the end of the financial year
Other than that noted on page 13 there have been no significant events since the closing of the 2019 financial year.
Likely developments and expected results of operations
The Group is focused on building sales of its evolis® branded FGF5 inhibitor hair products by maximising market penetration
with a growing product range. Concurrently, the Group is focused on the research and development of its midkine asset
portfolio with the view to separate the two businesses.
14
15
Cellmid 2019 Annual ReportCellmid 2019 Annual Report DIRECTORS’
REPORT
CONTINUED
Environmental regulations
Meetings of Directors
The Group’s operations are not regulated by any significant environmental law of the Commonwealth or of a state or territory
Eight meetings of the Directors were held during the financial year. Attendances by each Director during the year were as follows:
of Australia or Japan.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on
behalf of the Group for all or part of those proceedings.
Indemnification and insurance of officers and auditors
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 (other than legal costs) 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 Company. It is not possible to apportion the premium between amounts relating to
the insurance against legal costs and those relating to other liabilities.
Directors’ Meetings
Audit and Risk
Committee
Nomination and
Remuneration Committee
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Number
eligible to
attend
Number
attended
Dr David King
Ms Maria Halasz
Mr Bruce Gordon
Dr Fintan Walton
Dr Martin Cross
Mr Dennis Eck
8
8
8
8
8
8
7
8
7
8
8
7
5
-
5
-
5
-
5
*
5
4
*
4
5
-
1
-
1
1
-
-
1
-
1
1
-
-
During or since the end of the financial year, the Group has given an indemnity or entered into an agreement to indemnify, or
* by invitation
paid or agreed to pay insurance premiums in favour of its Directors 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;
Shares under option
• subject to the Corporations Act 2001, an indemnity in respect of liability to persons other than the Company and its related
Unissued ordinary shares of the Company under option at the date of this report are as follows:
bodies corporate, that they may incur while acting in their capacity as an officer of the Company or a related body corporate,
except for specified liabilities where that liability involves a lack of good faith or is for legal costs 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 the report.
There is no indemnity cover in favour of the auditor of the Group during the financial year.
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 is important and relevant where the nature of the services provided does not
compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for
Professional Accountants set by the Accounting Professional and Ethical Standards Board. There were no additional services
provided by the auditor during the year.
Expiry date
Exercise Price
Number under option
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Unlisted options
31 October 2019
1 July 2020
28 September 2021
3 October 2021
30 July 2024
$0.60
$0.60
$0.80
$0.80
$0.23
100,000
50,000
1,000,000
200,000
4,250,000
5,600,000
1,500,000 options lapsed during the financial year ended 30 June 2019 (1,440,000 in 2018) and no options have lapsed since the
end of the financial year to the date of this report.
16
17
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
DIRECTORS’
REPORT
CONTINUED
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
$
2019
0.17
-
(7.77)
$
2018
0.47
-
(6.74)
$
2017
0.50
-
(8.79)
$
2016
0.66
-
(7.60)
$
2015
0.60
-
(8.60)
Share price at financial year end
Total dividends declared
Basic earnings per share
Remuneration structure
5. REMUNERATION REPORT (AUDITED)
In accordance with best practice corporate governance the structure of non-executive director and senior executive remuneration
The remuneration report details the key management personnel remuneration agreements for the Group in accordance with the
requirements of the Corporations Act 2001 and its regulations.
is separate and distinct.
Non-executive director remuneration
The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporations Act 2001.
Objective
The key management personnel of the Group for the year consisted of the following Directors of Cellmid Limited:
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract and retain directors of
the highest calibre, while incurring costs that are acceptable to shareholders.
Name of Director
Position
Date Appointed
Date Ceased
Structure
Dr David King
Mr Bruce Gordon
Dr Fintan Walton
Dr Martin Cross
Mr Dennis Eck
Ms Maria Halasz
Mr Koichiro Koike
Mr Bart Wuurman
Non-executive Chairman
18 January 2008
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
CEO and Managing Director
Managing Director – Advangen Inc.
CEO - Lyramid
1 July 2015
21 July 2015
16 October 2017
26 March 2018
14 April 2007
1 May 2014
1 June 2019
Current
Current
Current
Current
Current
Current
Current
Current
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:
• provide competitive rewards to attract high calibre executives; and
• if and when appropriate, establish performance hurdles in relation to variable executive remuneration.
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 was set at $300,000 per annum. On 8 November 2018, at the annual general meeting of shareholders, the
aggregate remuneration was changed to $400,000, to ensure that the Group can compensate all of its non-executive directors.
In FY2019, the Group paid non-executive directors a total of $275,325 ($210,202 in 2018).
The amount of aggregate remuneration sought to be approved by shareholders and the fixed fees paid to directors are reviewed
annually. There has been no increase in individual director remuneration during the period.
Executive remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities
within the Group and 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; and
• ensure total remuneration is competitive by market standards.
The Board assesses the appropriateness of the nature and amount of remuneration of directors and senior managers of the Group
Structure
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.
Group performance and link to remuneration
No performance-based cash bonus or incentive payments have been made during the reporting period.
The table below details the last five years earnings and total shareholders return.
$
2019
$
2018
$
2017
$
2016
Revenue and Other Income
8,347,184
6,834,924
5,560,121
4,611,108
Operating Profit / (Loss)
(3,042,031)
(2,714,117)
(4,022,577)
(3,130,344)
Loss after income tax
(5,909,557)
(3,732,615)
(4,482,273)
(3,498,916)
$
2015
2,967,562
(3,174,838)
(3,337,348)
A policy of the Board is the establishment of employment or consulting contracts with the Chief Executive Officer and other
senior executives. Remuneration consists of fixed remuneration under an employment or consultancy agreement and may include
bonus or short term and long-term equity-based incentives that are subject to satisfaction of performance conditions. Details of
these performance conditions are outlined in the equity-based payments section of this remuneration report. The equity-based
incentives are intended to retain key executives and reward performance against agreed performance objectives.
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 executives 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.
18
19
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
DIRECTORS’
REPORT
CONTINUED
Remuneration details for the year ended 30 June 2019
Details of the remuneration of the directors and key management personnel (“KMP”) of the Group (as defined in AASB 124
Related Party Disclosures) and the highest paid executives of Cellmid are set out in the following tables.
Short-term benefits
Long-term
benefits
employment Share-based
payments
benefits
Post-
2018
Cash salary
Employee
Employee
fees
entitlements
entitlements Superannuation
Shares
Total
$
$
$
$
$
$
Directors
Non-executive directors
David King
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck^
65,000
50,000
50,000
35,641
-
Total non-executive directors 200,641
Executive directors and KMP
-
-
-
-
-
-
-
-
-
-
-
-
6,175
-
-
3,386
-
9,561
-
-
-
-
-
71,175
50,000
50,000
39,027
-
- 210,202
Short-term benefits
Long-term
benefits
employment Share-based
payments
benefits
Total executive directors
Post-
Maria Halasz*
428,538
18,457
4,696
22,800
-
474,491
2019
Cash salary
Employee
Employee
fees
entitlements
entitlements Superannuation
Shares
Total
and KMP
428,538
18,457
4,696
22,800
- 474,491
Directors
Non-executive directors
David King
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck
$
65,000
50,000
50,000
50,000
-
Total non-executive directors
215,000
Executive directors and KMP
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
$
$
^ Dennis Eck is remunerated on an equity basis, which was approved at the 2018 Annual General Meeting of the Group.
6,175
-
-
4,750
-
-
-
-
71,175
50,000
50,000
54,750
-
49,400
49,400
10,925
49,400 275,325
Directors’ and Key Management Personnel (KMP) shareholdings
The number of shares held in the Group during the financial year by each Director and (KMP) of Cellmid Limited, including their
related parties, are set out below:
Balance at
beginning
of year
Received
as part of
remuneration
Other
changes Pre
Consolidation
Consolidation*
Other
changes Post
Consolidation
Balance
at end of
year
Maria Halasz*
Koichiro Koike**
Bart Wuurman***
447,391
216,720
24,000
21,678
4,583
22,800
185,000
681,452
-
-
-
-
-
-
65,814
282,534
-
24,000
Total executive directors and KMP 688,111
21,678
4,583
22,800
250,814 987,986
* Amount includes consulting fees paid to Direct Capital Group Pty Ltd. Ms Halasz is also the director of Direct Capital Group
Pty Ltd (“DCG”) who provides consulting services to the Group. The contract between the Group and DCG is based on normal
commercial terms.
**Koichiro Koike was an existing employee of the Group in 2018 and was not considered as a KMP.
***Bart Wuurman was appointed as CEO of Lyramid Limited, a wholly owned subsidiary of Cellmid Limited, on 1 June 2019.
2019
David King
Maria Halasz
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck
Koichiro Koike
Bart Wuurman
2018
David King
Maria Halasz
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck
1,400,000
1,573,651
75,000
65,000
45,000
2,700,000
12,500
-
24,000,000
25,073,025
1,500,000
800,000
-
-
Koichiro Koike
12,500
-
500,000
-
-
-
130,000
144,646
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,400,000
(53,713)
2,019,938
35,000
-
130,000
110,000
65,000
175,000
2,631,579
5,461,579
-
-
157,146
-
4,000,000
2,250,000
-
500,000
900,000
-
-
(26,600,000)
(25,956,874)
(1,425,000)
(1,235,000)
(855,000)
-
1,400,000
207,500
1,573,651
-
-
-
75,000
65,000
45,000
-
-
2,700,000
2,700,000
-
12,500
*On 23 November 2017, the Group completed a twenty to one share consolidation.
20
21
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
DIRECTORS’
REPORT
CONTINUED
Directors’ and KMP option holdings
The number of options held in the company during the financial year by each director and member of key management
personnel of Cellmid Limited, including their personally related parties, are set out below.
Service agreements
The remuneration of the Chief Executive Officer, Maria Halasz, reflects the activities of the two business units, Advangen Limited
and Lyramid Limited, within the Group.
On 1 July 2016 a service agreement was signed between the Group and Maria Halasz. Pursuant to this service agreement Maria
Halasz’s salary component incurred by Cellmid Limited was reduced, and two consulting agreements, one with Lyramid Limited
and one with Advangen Limited, were signed by Direct Capital Group Pty Ltd, a company associated with Ms Halasz to better
reflect her operational responsibilities.
The above arrangement is covered under one service agreement and the conditions are as follows:
• The remuneration for Ms Halasz is fixed, however, at the discretion of the Board and subject to approval by shareholders, she
may receive performance-based incentives in the future.
• The duration of the service agreement is 3 years. In the event that the parties do not sign a new agreement prior to the expiry
of the term, the agreement is automatically extended for 12 months.
Received as
part of 2019
remuneration Consolidation
Balance at
end of
year
Vested and
exercisable at
end of year
• No leave and superannuation entitlement accrue in relation to the consulting agreements with Direct Capital Group Pty Ltd.
• Ms Halasz may resign from her position and thus terminate the service agreement, including the consulting agreements with
Direct Capital Group Pty Ltd, by giving six months’ written notice. On resignation any unvested options will be forfeited.
Balance at
beginning of
year Acquired
2019
David King
Maria Halasz
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck
200,000
-
100,000
100,000
-
-
Koichiro Koike
50,000
Bart Wuurman
-
-
-
-
-
-
-
-
-
Balance at
beginning of
year Acquired
Disposed/
Expired/
Exercised/
(200,000)
-
(100,000)
(100,000)
-
-
(50,000)
-
Disposed/
Expired/
Exercised/
2018
David King
4,000,000
Maria Halasz
-
Bruce Gordon
2,000,000
Fintan Walton
2,000,000
Martin Cross
Dennis Eck
-
-
Koichiro Koike
50,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Received as
part of 2017
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of
year
Vested and
exercisable at
end of year
remuneration Consolidation
-
-
-
-
-
-
-
(3,800,000)
200,000
200,000
-
(1,900,000)
(1,900,000)
-
100,000
100,000
-
100,000
100,000
-
-
-
-
-
-
-
50,000
50,000
Relationship between remuneration policy and company performance
The proportion of remuneration linked to performance and the proportion that is fixed is as follows:
Directors
David King
Maria Halasz
Bruce Gordon
Fintan Walton
Martin Cross
Dennis Eck^
Koichiro Koike
Bart Wuurman
22
Fixed remuneration
At risk STI
At risk LTI
2019
%
100.00
72.90
100.00
100.00
100.00
100.00
76.80
100.00
2018
%
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
2019
%
-
27.10
-
-
-
-
23.20
-
2018
%
2019
%
2018
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
^Dennis Eck is remunerated on an equity basis.
• The Group may terminate the employment agreement, including the consulting agreements with Direct Capital Group Pty Ltd,
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.
Equity-based compensation
No equity-based compensation in the form of options over ordinary shares were issued during the year ended 30 June 2019.
On 12 September 2018, equity shares were granted to some executives of the Group under the Employee Incentive Plan and
as approved by shareholders at the annual general meeting on 12 November 2018. Ordinary shares were issued under the
arrangement with the following conditions attached:
Name
Grant date
Shares issued
Vesting date
Service and performance criteria
Maria Halasz
12/11/2018
500,000
12/11/2018
A cash bonus of $185,000 was awarded to Ms Halasz
by non-conflicting members of the Board for achieving
profitability of at least one subsidiary of the Company
in FY2018. Ms Halasz accepted her bonus in shares
in lieu of cash. The fair value at the date of grant was
$185,000.
The vesting condition of achieving profitability of at
least one subsidiary has been met.
Dennis Eck
12/11/2018
130,000
12/11/2018
Vesting condition was previous service as a director
without compensation. The accumulated director’s
fee was to be taken in shares in lieu of cash. The fair
value of the shares at the date of grant was $49,400,
equivalent to the accumulated unpaid director’s fees.
The condition of previous unpaid service as a director
has been met.
Koichiro Koike 3/10/2018
144,646
12/11/2018
Vesting condition was for operating revenue to reach
$5 million in FY2018. The fair value at the date of grant
was $65,814.
The condition of achieving operating revenue over $5
million in FY2018 has been met.
23
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
DIRECTORS’
REPORT
CONTINUED
CORPORATE
GOVERNANCE
Loans to directors and other members of key management personnel
There were no loans to directors or other members of key management personnel during or since the end of the financial year.
This concludes the remuneration report which has been audited.
Auditor’s independence declaration
The auditor’s independence declaration in accordance with section 307C of the Corporations Act 2001 for the year ended
30 June 2019 has been received and can be found on page 64 of the financial report.
This director’s report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors.
The Board is committed to achieving and demonstrating the highest standards of corporate governance. As such, Cellmid
Limited and its Controlled Entities (‘the Group’) have adopted a corporate governance framework and practices to ensure they
meet the interests of shareholders.
The Australian Securities Exchange Corporate Governance Council’s Corporate Governance Principles and Recommendations
– 3rd edition (‘the ASX Principles’) are applicable for financial years commencing on or after 1 July 2014, consequently for the
Group’s 30 June 2019 year end. As a result, the Group has chosen to publish its Corporate Governance
Statement on its website rather than in this Annual Report.
The Corporate Governance Statement and governance policies and practices can be found in the
corporate governance section of the Company’s website at http://www.cellmid.com.au.
The Group’s Corporate Governance Statement incorporates the disclosures
required by the ASX Principles under the headings of the eight core principles.
All of these practices, unless otherwise stated, were in place for the full
reporting period.
Dr David King
Director
Dated this 28th day of August 2019
24
25
Cellmid 2019 Annual ReportCellmid 2019 Annual Report ANNUAL FINANCIAL REPORT
CONTENTS
28
Consolidated
Statement of Profit
or Loss and Other
Comprehensive
Income
31
29 30
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
32 63
Consolidated Statement
of Cash Flows
Notes to the Financial
Statements
Directors’ Declaration
64
65 68
Auditor’s Independence
Declaration under
Section 307C of the
Corporations Act 2001
Independent Auditor’s
Report
Additional
Information for
Listed Public
Companies
70
Corporate Directory
26
27
Cellmid 2019 Annual ReportCellmid 2019 Annual Report CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
FOR THE YEAR ENDED 30 JUNE 2019
Revenue from contracts with customers
Other income
Total Revenue
Cost of goods sold
Gross Profit
Selling and distribution expenses
Research and development expenses
Administrative expenses
Other operating expenses
Operating Profit / (Loss)
Finance costs
Legal fees
Loss before income tax expense
Income tax expense
Loss for the year after income tax
Note
3
4
5
5
5
5
6
Consolidated
2019
$
7,389,473
957,711
8,347,184
2018
$
5,712,182
1,122,742
6,834,924
(2,137,384)
(2,169,844)
6,209,800
4,600,028
(1,714,787)
(848,473)
(5,378,421)
(1,310,150)
(1,418,361)
(619,024)
(4,391,963)
(884,797)
(3,042,031)
(2,714,117)
(235,043)
(2,608,371)
(5,885,445)
(24,112)
(473,274)
(542,794)
(3,730,185)
(2,430)
(5,909,557)
(3,732,615)
Other comprehensive income, net of income tax
Items that will be reclassified to profit or loss when specific conditions are met
AS AT 30 JUNE 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Intangibles
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Provisions
Exchange differences on translating foreign controlled entities
115,798
106,223
TOTAL CURRENT LIABILITIES
Total comprehensive income for the year
(5,793,759)
(3,626,392)
Loss for the year attributable to:
Owners of Cellmid Limited
Total comprehensive income for the year attributable to:
Owners of Cellmid Limited
(5,909,557)
(3,732,615)
(5,793,759)
(3,626,392)
Earnings per share for loss attributable to the owners of Cellmid Limited
Basic earnings per share (cents)
Diluted earnings per share (cents)
9
9
(7.77)
(7.77)
(6.74)
(6.74)
NON-CURRENT LIABILITIES
Loans and borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
2019
Note
$
2018
$
1,607,783
1,031,346
1,180,731
339,223
3,081,924
2,286,671
1,618,408
246,624
7,233,627
4,159,083
800,243
1,758,264
2,558,507
9,792,134
2,426,909
266,804
214,549
2,908,262
1,019,855
6,740
1,026,595
3,934,857
5,857,277
770,990
1,818,504
2,589,494
6,748,577
1,539,742
2,007,427
175,345
3,722,514
1,166,447
4,444
1,170,891
4,893,405
1,855,172
47,765,837
632,353
(42,540,913)
38,014,078
2,595,360
(38,754,266)
5,857,277
1,855,172
10
11
12
13
14
15
16
17
18
17
18
19
20
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
28
29
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT
OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2019
FOR THE YEAR ENDED 30 JUNE 2019
Share
Based
Foreign
Currency
Consolidated
2019
$
2018
$
Note
Issued
Capital
$
Note
General Payments Translation Accumulated
Losses
Reserve
$
$
Reserve
$
Reserve
$
Total
Equity
$
Consolidated
Balance at 1 July 2018
38,014,078
18,258 2,164,497
412,605
(38,754,266)
1,855,172
Loss for the year
Other comprehensive income / (loss)
Total comprehensive income / (loss)
for the year
Transactions with equity holders
Shares issued –
-
-
-
employee share scheme
21
318,414
Shares issued –
net of transaction costs
19
9,548,140
Share buy back
(114,795)
-
-
-
-
-
-
-
-
-
(5,909,557)
(5,909,557)
115,798
-
115,798
-
115,798
(5,909,557)
(5,793,759)
-
92,360
-
-
-
-
-
-
-
-
318,414
9,640,500
(114,795)
2,122,910
(48,255)
Transfer to accumulated losses
-
(18,258) (2,152,907)
Balance at 30 June 2019
47,765,837
-
103,950
528,403
(42,540,913) 5,857,277
Balance at 1 July 2017
36,715,030
18,258 2,053,007
306,382
(35,021,651) 4,071,026
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers and employees
Interest received
Grant income received
Net cash used in operating activities
21
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of non-current assets
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares
Share buy back
Share issue costs, net of tax
Proceeds from loans and borrowings
Repayment of loans and borrowings
Finance costs
Net cash provided by financing activities
Loss for the year after income tax
Other comprehensive income
Total comprehensive income for
the year, net of tax
Transactions with equity holders
Share-based payments
21
Shares issued - net of transaction
-
-
-
-
costs (Cash)
19
1,299,048
-
-
-
111,490
-
-
-
111,490
-
1,299,048
-
-
-
-
-
-
(3,732,615)
(3,732,615)
106,223
-
106,223
Net increase / (decrease) in cash and cash equivalents held
Cash and cash equivalents at beginning of financial year
Effect of exchange rate changes
-
106,223
(3,732,615)
(3,626,392)
Cash and cash equivalents at end of financial year
10
Balance at 30 June 2018
38,014,078
18,258 2,164,497
412,605
(38,754,266) 1,855,172
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
The above Statement of Cashflows should be read in conjunction with the accompanying notes.
30
31
6,399,171
5,038,814
(12,954,633)
(10,293,029)
76,116
807,973
(5,671,373)
33,599
1,056,963
(4,163,653)
(65,677)
(65,677)
(107,167)
(107,167)
10,111,000
1,326,000
(114,795)
(470,499)
-
(1,987,446)
(263,289)
7,274,971
1,537,921
1,607,783
(63,780)
3,081,924
-
(26,952)
903,477
-
(357,981)
1,844,544
(2,426,276)
3,994,641
39,418
1,607,783
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
1. Summary Of Significant Accounting Policies
2. Segment Information
3. Revenue From Contracts With Customers
4. Other Income
5. Material Profit Or Loss Items
6. Income Tax
7. Interests Of Key Management Personnel (“KMP”)
8. Auditor’s Remuneration
9. Earnings Per Share
10. Cash And Cash Equivalents
11.Trade And Other Receivables
12. Inventories
13. Other Assets
14. Plant And Equipment
15. Intangible Assets
16. Trade And Other Payables
17. Loans And Borrowings
18. Provisions
19. Issued Capital
20. Reserves
21. Cash Flow Information
22. Events After The Reporting Period
23. Related Party Transactions
24. Financial Risk Management
25. Interests In Subsidiaries
26. Commitments
27. Contingent Liabilities And Contingent Assets
28. Share-Based Payments
29. Parent Entity Information
32
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
Cellmid Limited is a public company, listed on the Australian Securities Exchange, limited by shares and incorporated and
domiciled in Australia.
The financial statements cover Cellmid Limited as a Group, consisting of Cellmid Limited and the entities it controlled at the
end of, or during the year.
The financial statements were authorised for issue by the Directors on 28th August 2019.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001. Cellmid Limited
is a for-profit entity for the purpose of preparing the financial statements.
These financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”).
Historical Cost Convention
The financial statements have been prepared on a historical cost basis, except for certain non-current assets and financial
instruments that are measured at re-valued amounts or fair values. All amounts are presented in Australian dollars, unless
otherwise noted.
New standards and interpretations not yet adopted by the Group
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Group for the annual reporting period ended 30 June 2019. The Group’s assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117
‘Leases’ and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a ‘right-
of-use’ asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future
lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases
of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby
either a ‘right-of-use’ asset is recognised or lease payments are expensed to profit or loss as incurred.
A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives
received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs.
Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in
operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of
the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB
117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating
expense is replaced by interest expense and depreciation in profit or loss under AASB 16.
For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing
activities) and interest (either operating or financing activities) component.
For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The Group will adopt this
standard from 1 July 2019. As at reporting date, the Group has assessed the impact of the standard and the expected impacts
are as follows:
• Increase in assets and liabilities amounting to approximately $907,900 and $907,900 respectively.
• Increase in the loss position on the consolidated statement of comprehensive income in the amount of approximately $4,000.
The impact to the profit and loss in the years 2019 to 2021 is expected to increase the expense due to ‘front loading’ of
interest and depreciation expense by approximately $39,000 and in the years 2022 to 2023 the impact to the profit and loss
is expected to be a reduction in expense of approximately $38,000.
• It is not expected that there will be any net impact on the consolidated statement of cash flows.
33
33
44
46
46
47
47
48
49
49
49
49
50
50
50
51
52
52
52
53
54
55
55
56
56
59
60
61
61
61
Cellmid 2019 Annual ReportCellmid 2019 Annual Report NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
New and amended standards adopted by the Group
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes method taking
into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments do not have any impact on the carrying amounts of assets and liabilities within
the subsequent annual reporting period but may impact expenses and equity.
• Estimated impairment of intangibles
The group tests whether intangible assets have suffered any impairment at each reporting date. The recoverable amount of
intangible assets is assessed at its value in use. This calculation requires the use of assumptions.
Parent Entity Information
In accordance with the Corporations Act 2001, these financial statements present the results of the Consolidated Group only.
Supplementary information about the parent entity is included in Note 29.
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.
Going concern
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
For the year ended 30 June 2019, the Group incurred a loss after income tax of $5,909,557 (2018: $3,732,615), experienced
net cash outflows from operating activities of $5,671,373 (2018: $4,163,653) and at 30 June 2019 has cash and cash
The following Accounting Standards and Interpretations adopted during the year are most relevant to the Group:
equivalents of $3,081,924.
AASB 9 Financial Instruments
The Group has adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for
financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to
hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest.
New impairment requirements use an ‘expected credit loss’ (‘ECL’) model to recognise an allowance. Impairment is measured
using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition
in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses
using a lifetime expected loss allowance is available.
AASB 15 Revenue from Contracts with Customers
The Group has adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue
recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised
goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in
exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a
The financial statements have been prepared on a going concern basis, which contemplates continuity of normal activities
and realisation of assets and settlement of liabilities in the normal course of business including the presumption that sufficient
funds will be available to finance the operations of the Group. As is often the case with fast growing companies, the ability of
the Group to continue its development activities as a going concern is dependent upon growing revenue in Advangen, further
developing the Lyramid business and deriving cash from other sources of revenue such as grant funding. The directors have
considered the cash flow forecasts and the funding requirements of the business and will continue to build revenue through
scaling into existing channels and opening new market opportunities for the FGF5 inhibitor hair loss products.
The Group made a significant investment into the business in FY2019 and built a highly capable, global management team
expected to deliver on FY2020 sales targets. Together with the operational efficiencies already achieved, the Group is well
placed to exploit its opportunities in ecommerce and traditional retail.
In addition, the Group is actively pursuing opportunities to deliver a return for its high value midkine assets. With the
appointment of new Lyramid CEO, Bart Wuurman, an active partnering program has been put in place. Finally, as in previous
years, government grant opportunities for export activities and research and development will also be pursued.
measurement approach that is based on an allocation of the transaction price. Credit risk is presented separately as an expense
If the Group is unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities
rather than adjusted against revenue. Contracts with customers are presented in an entity’s statement of financial position as
other than in the normal course of business and at amounts different to those stated in the financial statements. The financial
a contract liability, a contract asset, or a receivable, depending on the relationship between the entity’s performance and the
statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the
customer’s payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as
amount of liabilities that might result should the Group be unable to continue as a going concern and meet its debts as and
an asset and amortised over the contract period.
Impact of adoption
when they become due and payable.
Principles of consolidation
The Group has adopted Accounting Standards AASB 9 and AASB 15 for the year ended 30 June 2019. The Accounting Standards
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Cellmid Limited (“the
were adopted from 1 July 2018 using transitional rules that allow for comparatives not be restated. The adoption of AASB 9 and
Company”) as at 30 June 2019 and the results of all subsidiaries for the year then ended. Cellmid Limited and its subsidiaries
AASB 15 did not result in any change to the opening net assets or the opening accumulated losses as at 1 July 2018.
together are referred to in these financial statements as “the Group”.
Critical Accounting Estimates and Judgements
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in the process of applying the Group’s accounting policies. The
areas involving a higher degree of judgement or complexity, or areas of assumptions and estimates are:
• R&D Tax Incentives
From 1 July 2011 the Australian Government has provided a tax incentive, in the form of a refundable tax offset of 43.5%,
for eligible research and development expenditure. Management has assessed its research and development activities and
expenditure to determine which are likely to be eligible under the scheme. For the period ended 30 June 2019 the Group has
recorded an item in other income of $807,973 (2018: $1,056,963) based on tax refund received from the government.
• Share-based payment transactions
34
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity.
35
Cellmid 2019 Annual ReportCellmid 2019 Annual Report NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
The Group recognises the fair value of the consideration received and the fair value of any investment retained together with
any gain or loss in profit or loss.
Intercompany transactions, balances and unrealised gains on transactions between entities in the group are eliminated.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit
or loss.
Foreign operations
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that
have a functional currency different from the presentation currency are translated into the presentation currency as follows:
• assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
• income and expenses for each statement of profit or loss and statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions), and
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
• all resulting exchange differences are recognised in other comprehensive income. The foreign currency translation reserve is
Segment reporting
recognised in profit or loss when the foreign operation or net investment is disposed.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
Identification of reporting segments
The Group is organised into two operating segments:
• Lyramid Limited; research and development of diagnostics and therapeutics; and
• Advangen Limited; research, development and marketing of hair growth products.
Revenue recognition
For each contract with a customer, the Group:
- identifies the contract with a customer;
- identifies the performance obligations in the contract;
- determines the transaction price which takes into account estimates of variable consideration and the time value of money;
allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of
These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (identified
each distinct good or service to be delivered; and
as the Chief Operating Decision Makers (CODM) in assessing performance and in determining the allocation of resources
- recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer
both from a product and geographic perspective. There is no aggregation of operating segments. The CODM primarily uses
of the goods or services promised.
a measure of adjusted earnings before interest, tax, depreciation and amortisation (“Adjusted EBITDA” or “Operating Profit/
(Loss)”) to assess the performance of operating segments. However, the CODM also receive information about segments
revenue and assets on a monthly basis.
The Group’s contracts with customers for the sale of goods generally include one performance obligation. The Group
has concluded that revenue from the sale of goods should be recognised at the point in time when control of the asset is
transferred to the customer, generally on delivery of the goods.
The principal products and services of each of these operating segments are as follows (further details on the business of each
segment in included on pages 12 to 15 in the Directors’ Report of this document):
Other income
Lyramid Limited
• Midkine diagnostics and therapeutics for cancer, inflammatory and ischemic conditions.
Advangen Limited
Interest revenue is recognised as interest accrues using the effective interest rate method.
Grants from the government are recognised at the fair value of the cash received. Government grants includes the research
and development tax incentive. This represents a refundable tax offset that is available on eligible research and development
expenditure incurred by the Group. Government Grants are recognised in profit or loss when the grant is received.
• research, development and marketing of hair growth products.
Income tax
Operating Profit / Loss
Operating profit / loss excludes the effects of significant one-off items of income and expenditure, which are not gained/
incurred in the ordinary course of business of either Lyramid or Advangen, such as legal claim and related legal expenses. It
also excludes the effects of equity-settled share-based payments. Corporate expense categories including net finance costs,
The income tax expense or benefit 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, unused tax losses and adjustments recognised for prior periods where applicable. The Group is tax
consolidated in Australia.
employee benefits, depreciation and amortisation are not allocated to segments, as this type of activity relates to the Head
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable
Office / corporate function of the Group.
Functional and presentation currency
that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Deferred tax
assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the
deferred tax balances relate to the same taxation authority.
Items included in the financial statements are measured using the currency of the primary economic environment in which the
entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars which is the
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle the liability simultaneously.
parent entity’s functional and presentation currency.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
36
37
Cellmid 2019 Annual ReportCellmid 2019 Annual Report NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing:
• the profit or loss attributable to owners of Cellmid Limited, excluding any costs of servicing equity other than ordinary shares
Investments and other financial assets
From 1 July 2018, the group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through OCI or through profit or loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of
initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership.
ordinary shares issued during the financial year.
Diluted earnings per share
Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction
• The after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
costs of financial assets carried at FVPL are expensed in profit or loss
• the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
ordinary shares.
Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the consolidated statement of financial position.
Trade receivables
Receivables are recognised initially at fair value and subsequently measured at amortised cost, less credit losses.
Collectability of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An
allowance for expected credit loss is recognised when there is objective evidence that the Group will not be able to collect all
amounts due according to the original terms of receivables.
solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash
flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or
loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented
as separate line item in the statement of profit or loss.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash
flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are
taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and
The Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but
losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously
instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision
recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from
matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and
economic environment.
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 standard costing and are reviewed regularly. Costs of purchased
losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of
profit or loss.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses)
in the period in which it arises.
inventory are determined after deducting rebates and realisable value is the estimated selling price in the ordinary course of
Equity instruments
business less the estimated costs of completion and the estimated cost necessary to make the sale.
The group subsequently measures all equity investments at fair value. Where the group’s management has elected to present
fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses
to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in
profit or loss as other income when the group’s right to receive payments is established.
38
39
Cellmid 2019 Annual ReportCellmid 2019 Annual Report NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as
applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported
separately from other changes in fair value.
Impairment
Intangible assets
Patents and trademarks
Patents and trademarks have a finite life and are measured at cost less any accumulated amortisation and any impairment
losses.
Research and development
Research expenditure and development expenditure that do not meet the criteria below are recognised as an expense as
incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the
group are recognised as intangible assets when the following criteria are met:
• it is technically feasible to complete the software so that it will be available for use
• management intends to complete the software and use or sell it
• there is an ability to use or sell the software
• it can be demonstrated how the software will generate probable future economic benefits
From 1 July 2018, the group assesses on a forward-looking basis the expected credit loss associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk. For trade receivables, the group applies the simplified approach permitted by AASB 9, which requires
expected lifetime losses to be recognised from initial recognition of the receivables.
• adequate technical, financial and other resources to complete the development and to use or sell the software are available,
and
• the expenditure attributable to the software during its development can be reliably measured.
Plant and equipment
Impairment of intangible assets.
Plant and equipment is measured at historical cost less accumulated depreciation/amortisation and any accumulated
impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
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 profit and loss during the financial period
in which they are incurred.
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired.
The assessment includes the consideration of external and internal sources of information. 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. The recoverable amounts of the asset is 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, including estimating timing of cash flows, product
development and availability of resources to exploit the assets.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss.
its estimated recoverable amount
Depreciation / Amortisation
Depreciation is calculated on a straight line basis over the asset’s useful life to the 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. Amortisation of the cost of the Midkine protein asset is calculated on a ug (or
mg) basis as the protein is consumed through research activities and/or production of MK Elisa kits.
The depreciation rates used for each class of asset are:
Class of asset
Depreciation Rate
Furniture and fittings
20%
Office equipment
Midkine
6.7% – 33.33%
Based on usage
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation and amortisation charges for its plant and
equipment. 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.
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.
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. Due to their short-term nature they are
measured at amortised cost and are not discounted.
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation, as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as interest expense.
40
41
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
Borrowings
Employee benefits provision
The liability for employee benefits expected to be settled more than 12 months from the reporting date are recognised and
measured at the present value of the estimated future cash flows to be made in respect of all employees at the reporting date.
In determining the present value of the liability, estimates of attrition rates and pay increases through promotion and inflation
have been taken into account.
Share-based payments
Share -based compensation benefits are provided to employees and directors via an employee option plan and the executive
incentive scheme.
The fair value of options granted is recognised as a benefit expense with a corresponding increase in equity. The total amount
to be expensed is determined by reference to the fair value of the options granted:
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
- including any market performance conditions (e.g. the entity’s share price)
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in
profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan
facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be
drawn down. In this case, the fee is deferred until the draw down occurs.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognised in profit or loss
as other income or finance costs.
- excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets
and remaining an employee of the entity over a specified time period), and
- including the impact of any non-vesting conditions (e.g. the requirement for employees to save or holdings shares for a
specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to
vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if
any, in profit or loss, with a corresponding adjustment to equity. The Group measures the cost of equity-settled transactions
Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguish all
with employees by reference to the fair value of the equity instruments at the date at which they are granted.
or part of the liability, a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying
amount of the financial liability and the fair value of the equity instruments issued.
The fair value at grant date is determined using the Black-Scholes 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
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for
share, the expected dividend yield and the risk free interest rate for the term of the option.
at least 12 months after the reporting period.
Employee benefits
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, and are allocated to share capital.
Provision is made for the Company’s liability for employee benefits arising from services rendered by employees up to the end
Contributed equity
of the reporting period. In determining the liability, consideration is given to employee wage increases and the probability that
the employee may satisfy vesting requirements.
Short term obligations
Liability for wages and salaries, including non-monetary benefits, annual leave, long service 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.
Other long-term employee benefit obligations
Liability for annual leave and long service leave not expected to be settled within 12 months from the reporting date is
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Where any group company purchases the company’s equity instruments, for example as the result of a share buy-back or a
share-based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes)
is deducted from equity attributable to the owners of the Group as treasury shares until the shares are cancelled or reissued.
Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental
transaction costs and the related income tax effects, is included in equity attributable to the owners of the Group.
recognised in the provision for employee benefits and measured as the present value of expected future payments to be made
Goods and Services Tax (GST)
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, of employee departures and period of service.
Retirement benefit obligations
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable
from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
Contributions for retirement benefit obligations are recognised as an expense as they become payable. Prepaid contributions
from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.
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.
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 taxation authority, are presented as operating cash flows.
42
43
Cellmid 2019 Annual ReportCellmid 2019 Annual Report NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
2. SEGMENT INFORMATION
2019
Lyramid
Australia
$
Australia
$
Advangen
USA
$
Japan
$
Total
$
Group
Total
$
Total revenue and other income
1,008,217
993,748
415,371
5,929,848
7,338,967
8,347,184
Cost of goods sold
(2,927)
(288,259)
(97,458)
(1,748,740)
(2,134,457)
(2,137,384)
Selling and distribution expenses
(185,602)
(619,184)
(432,881)
(477,120)
(1,529,185)
(1,714,787)
Research and development expenses (576,919)
(193,568)
(5,322)
(72,664)
(271,554)
(848,473)
2. SEGMENT INFORMATION (CONTINUED)
2018
Lyramid
Australia
$
Australia
$
Advangen
USA
$
Japan
$
Total
$
Group
Total
$
Total revenue and other income
1,182,538
1,216,021
205,604
4,230,761
5,652,386
6,834,924
Cost of goods sold
(12,104)
Selling and distribution expenses
(184,939)
(447,094)
(762,897)
(99,385)
(1,611,261)
(2,157,740)
(2,169,844)
(101,120)
(369,404)
(1,233,422)
(1,418,361)
Research and development expenses (432,514)
(125,358)
-
(61,152)
(186,510)
(619,024)
Administrative expenses
(491,807)
(1,337,684)
(244,460)
(1,229,456)
(2,811,600)
(3,303,407)
Other operating expenses
(195,882)
(214,781)
(27,106)
(247,561)
(489,448)
(685,330)
Corporate costs and unallocated items
Consultancy expense
Subscription expense
Occupancy expense
Share-based compensation
Directors’ remuneration
Employee benefits expense
Depreciation and amortisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(138,433)
(80,703)
(178,472)
(111,490)
(200,627)
(454,425)
(188,929)
Administrative expenses
(723,328)
(1,179,594)
(594,497)
(1,664,789)
(3,438,880)
(4,162,208)
Operating Profit / (Loss)
(134,708)
(1,671,793)
(266,468)
711,927
(1,226,334)
(2,714,117)
Other operating expenses
(180,401)
(208,143)
(138,168)
(310,109)
(656,419)
(836,821)
Corporate costs and unallocated items
Gain / (loss) on disposal of fixed assets
Consultancy expense
Subscription expense
Occupancy expense
Share-based payment compensation
Directors’ remuneration
Employee benefits expense
Depreciation and amortisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,020)
(190,409)
(106,120)
(187,623)
(318,414)
(225,925)
(506,122)
(152,891)
Operating Profit / (Loss)
(660,960)
(1,495,001)
(852,954)
1,656,427
(691,527)
(3,042,031)
Finance costs
Legal fees and claim
Profit / (Loss) before income
(129,461)
-
-
(2,608,371)
-
-
(105,582)
(105,582)
(235,043)
-
(2,608,371)
(2,608,371)
tax expense
(790,421)
(4,103,372)
(852,954)
1,550,845
(3,405,481)
(5,885,445)
Finance costs
Legal fees and claim
Profit / (Loss) before income
(355,693)
-
-
(117,581)
(117,581)
(473,274)
-
(535,126)
(7,668)
-
(542,794)
(542,794)
tax expense
(490,401)
(2,206,919)
(274,136)
594,346
(1,886,709)
(3,730,185)
Income tax expense
-
-
-
(2,430)
(2,430)
(2,430)
Profit / (Loss) after income
tax expense
(490,401)
(2,206,919)
(274,136)
591,916
(1,889,139)
(3,732,615)
Total assets
Total liabilities
1,487,721
813,396
238,881
4,208,580
5,260,857
6,748,578
2,637,405
657,745
34,987
1,563,270
2,256,002
4,893,407
Total intercompany
12,341,560
(10,536,834)
(1,051,417)
(753,309) (12,341,560)
-
Income tax expense
-
-
-
(24,112)
(24,112)
(24,112)
Major customers
Profit / (Loss) after income
tax expense
(790,421)
(4,103,372)
(852,954)
1,526,733
(3,429,593)
(5,909,557)
Total assets
Total liabilities
2,721,707
929,356
378,162
5,762,909
7,070,427
9,792,134
850,045
1,167,138
187,041
1,730,633
3,084,812
3,934,857
Total Intercompany
16,810,307
(14,245,413)
(1,913,395)
(651,499) (16,810,307)
-
The Group has a number of customers to whom it provides both products and services. The Group supplies a single external
customer in the Advangen segment who accounts for 39.5% of external revenue (2018: 11.0%). The next most significant client
accounts for 12.0% (2018: 3.2%) of external revenue.
44
45
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
- Sale of goods transferred at a point in time
- Royalties and license fees recognised at a point in time
Total revenue from contracts with customers
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Major product lines
- Heritage hair loss brands including Jo-Ju® and Lexilis®
- evolis® Pharmacy range
- evolis® Professional range
- Diagnostics income
2019
$
2018
$
7,301,686
87,787
5,647,930
64,252
7,389,473
5,712,812
5,888,754
713,323
681,814
105,582
4,584,023
963,059
73,636
92,094
Total revenue from contracts with customers
7,389,473
5,712,812
3. OTHER INCOME
Other income:
- Interest income
- Other revenue
- Government grants
Total other income
2019
$
2018
$
76,870
72,868
807,973
33,599
32,180
1,056,963
957,711
1,122,742
5. MATERIAL PROFIT OR LOSS ITEMS
The Group has identified a number of items which are material due to the significance of their nature and/or amount. These are
listed separately here to provide a better understanding of the financial performance of the Group.
Loss before income tax includes the following specific expenses:
Cost of goods sold
Advertising and marketing expenses
Travel expenses
Consultancy expenses
Employee benefits expense
Legal fees and claim
Other expenses
2019
$
(2,137,384)
(1,096,930)
(568,895)
(626,623)
(3,918,933)
(2,608,371)
(654,819)
2018
$
(2,169,844)
(977,785)
(385,888)
(488,718)
(3,283,562)
(542,794)
(642,864)
6. INCOME TAX
(a) The major components of income tax expense comprise:
Income tax expense
(24,112)
(2,430)
(b) Numerical reconciliation of income tax expense to accounting loss:
Loss for the year before income tax expense
(5,885,445)
(3,730,185)
Prima facie tax benefit on loss from ordinary activities before income tax at 27.50%
(2018: 27.50%)
Add / (less) tax effect of:
- Adjustment for tax-rate differences in foreign jurisdictions
- Share based payments
- Sundry items
- Research and development expenditure
- Tax losses not brought to account
Income tax expense
(1,618,497)
(1,025,801)
60,691
87,564
(132,918)
541,688
1,037,360
(24,112)
(18,878)
30,632
243,684
159,715
608,218
(2,430)
The Group operates across three tax jurisdictions being Australia, Japan and USA each with different corporate tax rates.
(c) Unused tax losses
Movements in unused tax losses
Carried forward unused tax losses at the
Australia
$
Japan
$
USA
$
Total
$
beginning of the financial year
23,608,834
1,612,286
822,345
26,043,465
Prior period differences between tax
calculation and income tax return
(66,934)
-
-
(66,934)
Actual carried forward unused tax losses at the
beginning of the financial year
23,541,900
1,612,286
822,345
25,976,531
Current unused / (used) tax losses for which no
deferred tax asset has been recognised
6,446,313
(1,534,153)
854,137
5,766,297
Carried forward unused tax losses at the end
of the financial year
Notional tax rate
Potential future tax benefit
29,988,213
27.50%
8,246,758
78,133
30.86%
24,112
1,676,482
31,742,828
21.00%
352,061
8,622,931
46
47
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
6. INCOME TAX (CONTINUED)
No income tax benefit was recognised. This income tax benefit arising from tax losses will only be realised if:
i. the Group derives future assessable income of a nature and of an amount sufficient to enable the Group 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; maintains the continuity of
ownership test and has carried on the same business since the tax loss was incurred; and
8. AUDITOR’S REMUNERATION
During the year the following fees were paid or payable for services provided by Grant Thornton Australia Limited, the auditor
of the parent entity and its related practices:
Audit or review of the Group Cellmid Limited
- Australia (Grant Thornton)
- Japan (Grant Thornton)
9. EARNINGS PER SHARE
2019
$
97,500
10,000
107,500
2018
$
97,500
10,000
107,500
Basic and diluted earnings per share (in cents)
(7.77)
(6.74)
Reconciliation of earnings to profit or loss from continuing operations
Loss for the year attributable to the owners of Cellmid Limited
(5,909,557)
(3,732,615)
iii. no changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the losses.
and dilutive earnings per share
Weighted average number of ordinary shares used in calculating basic
No.
75,729,120
No.
55,355,156
The Group has adopted the small business tax rate for the Australian entities, being 27.5%. The Group meets the small
business eligibility criteria set by the Australian Taxation Office being aggregated turnover below $25 million and 80% or less
of assessable income is passive income. The Group has no capital tax losses available.
7. INTERESTS OF KEY MANAGEMENT PERSONNEL (“KMP”)
(a) Directors and key management personnel
Details relating to options are set out in Note 28.
10. CASH AND CASH EQUIVALENTS
Cash at bank and on hand
3,081,924
1,607,783
The following persons were directors or key management personnel of Cellmid Limited during the financial year:
The effective interest rate on short term bank deposits at 30 June 2019
was 2.4% (2018: 2.4%); these deposits were all at call.
Dr David King
(Non-Executive Chairman)
Ms Maria Halasz
(CEO and Managing Director)
Mr Bruce Gordon
(Non-Executive Director)
Dr Fintan Walton
(Non-Executive Director)
Dr Martin Cross
(Non-Executive Director)
Mr Dennis Eck
(Non-Executive Director)
Mr Koichiro Koike
(CEO – Advangen Inc.)
Mr. Bart Wuurman
(CEO – Lyramid)
(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 2019.
The totals of remuneration paid to Executive directors and KMP of the company and the Group during the year are as follows:
Short-term employment benefits
Long-term benefits
Post-employment benefits
Share-based payments
48
2019
$
709,789
4,583
22,800
250,814
987,986
2018
$
446,995
4,696
22,800
-
474,491
11. TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Less: Impairment allowance
Other receivables
The ageing of the impaired receivables provided for above are as follows:
More than 30 days past due
More than 60 days past due
More than 90 days past due
Movements in the provision for impairment of receivables are as follows:
Opening balance
Additional provisions recognised
Receivables written off during the year
Foreign exchange movements
Closing balance
2,228,939
(86,075)
143,807
1,023,892
(56,967)
64,421
2,286,671
1,031,346
413
3,891
81,771
86,075
56,967
43,050
(13,942)
-
86,075
-
-
56,967
56,967
20,970
35,514
-
483
56,967
49
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
11. TRADE AND OTHER RECEIVABLES (CONTINUED)
Past due but not impaired
Customers with balances past due but without an allowance for expected credit loss amount to $56,991 as at 30 June 2019
(30 June 2018: $17,526).
The Group did not consider a credit risk on the aggregate balances after reviewing the credit terms of customers based on
recent collection practices.
Effective interest rates and credit risk
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 24(a). 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.
12. INVENTORIES
Midkine and MK ELISA
Consumer Health-finished goods
Consumer Health-raw materials
13. OTHER ASSETS
Prepayments
14. PLANT AND EQUIPMENT
At cost
Accumulated depreciation / amortisation
50
2019
$
35,193
1,005,738
577,477
1,618,408
2018
$
16,957
937,344
226,430
1,180,731
246,624
339,223
1,569,030
(768,787)
800,243
1,614,734
(843,744)
770,990
14. PLANT AND EQUIPMENT (CONTINUED)
Movements in carrying amounts
of plant and equipment
Computers and
office equipment
Furniture and
Fittings
516,431
(383,431)
133,000
107,676
56,536
(28,532)
(2,680)
133,000
572,436
(464,760)
107,676
55,944
107,167
(46,521)
(8,914)
107,676
At cost
Accumulated depreciation / amortisation
Net book value
Balance at 1 July 2018
Additions
Depreciation / amortisation
Foreign exchange movements
Balance at 30 June 2019
Movements in carrying amounts
of plant and equipment
At cost
Accumulated depreciation / amortisation
Net book value
Balance at 1 July 2017
Additions
Depreciation / amortisation
Foreign exchange movements
Balance at 30 June 2018
15. INTANGIBLE ASSETS
Patents and trademarks
At cost
Accumulated amortisation
Movements in carrying amounts of patents and trademarks
Balance at 1 July 2018
Additions
Amortisation
Foreign exchange movements
Balance at 30 June 2019
Balance at 1 July 2017
Additions
Amortisation
Foreign exchange movements
Balance at 30 June 2018
52,599
(35,860)
16,739
10,077
9,141
(2,479)
-
Midkine
1,000,000
(349,496)
650,504
653,237
-
(2,733)
-
16,739
650,504
42,298
(32,221)
10,077
12,777
-
(2,700)
-
1,000,000
(346,763)
653,237
675,983
-
(22,746)
-
10,077
653,237
Total
1,569,030
(768,787)
800,243
770,990
65,677
(33,744)
(2,680)
800,243
1,614,734
(843,744)
770,990
744,704
107,167
(71,967)
(8,914)
770,990
2019
$
2018
$
2,509,874
(751,610)
1,758,264
2,424,193
(605,689)
1,818,504
$
1,818,504
-
(145,921)
85,681
1,758,264
1,841,385
-
(115,571)
92,690
1,818,504
Intangible assets have finite useful lives. The Group has determined the useful life of the intangible assets at 20 years.
The remaining useful life is 14 years.
51
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables
17. LOANS AND BORROWINGS
Current
Non-current
2019
$
685,223
1,741,686
2018
$
603,759
935,983
2,426,909
1,539,742
266,804
1,019,855
2,007,427
1,166,447
1,286,659
3,173,874
The current loan amount includes a loan to fund Directors’ and Officers’ liability insurance for $132,315 at an interest rate of
5.20%.
The non-current loan amount includes loan facilities with Keiyo Bank Ltd (AUD: 1,118,692) at an interest rate of 1.50% and
Chiba Bank Ltd. (AUD: 35,652) at an interest rate of 2.10%. Amounts payable within 12 months are included within current
liabilities.
During the year the Group fully repaid the loan to Platinum Road amounting to $1,987,444 which was secured against the R&D
tax credit for a period of twenty-four months from commencement.
18. PROVISIONS
Balance at 1 July 2018
Additional provisions / (payments)
Balance at 30 June 2019
Annual
Leave
$
99,100
34,619
Employee Benefits
Long Service
Leave
$
80,689
6,881
Total
$
179,789
41,500
133,719
87,570
221,289
18. PROVISIONS (CONTINUED)
Analysis of employee provisions
Current
Non-current
2019
$
214,549
6,740
221,289
2018
$
175,345
4,444
179,789
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances.
The amount is presented as current, since the Group does not have an unconditional right to defer settlement.
19. ISSUED CAPITAL
At the beginning of the year
Share buyback and cancellation
20 to 1 shares consolidation on 23 November 2017
Shares issued – private placement
Shares issued – employee share scheme
Shares issued – loan shares
Transaction costs
2019
No.
56,912,357
(499,117)
-
26,381,589
814,646
400,000
-
2018
No.
1,072,456,303
(4,000,000)
(1,015,033,419)
3,489,473
-
-
-
2019
$
38,014,078
(114,795)
-
10,025,000
318,414
86,000
(562,860)
2018
$
36,715,030
-
-
1,326,000
-
-
(26,952)
84,009,475
56,912,357
47,765,837
38,014,078
Issue Price
$
2019
No.
2018
No.*
2019
$
2018
$
At the beginning of the year
Shares issued – January 2018
Shares issued – September 2018
Shares issue costs, net of tax
20 to 1 shares consolidation
on 23 November 2017
Shares buyback and cancellation
Shares issued – October 2018
Shares issued – November 2018
0.38
0.38
0.45
0.37
Shares issued – loan shares – April 2019 0.21
56,912,357
1,072,456,303
38,014,078
36,715,030
-
3,489,473
-
1,326,000
26,381,589
-
-
-
10,025,000
(562,860)
-
(26,952)
-
(1,015,033,419)
-
(499,117)
(4,000,000)
(114,795)
184,646
630,000
400,000
-
-
-
84,014
234,400
86,000
-
-
-
-
-
At the end of the year
84,009,475
56,912,357
47,765,837
38,014,078
* On 23 November 2017, the Group completed the twenty to one share consolidation and the number of issued shares was
reducedby 1,015,033,419.
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of the Company. On a
show of hands at meetings of the Company, each holder of ordinary shares has one vote in person or by proxy, and upon a poll
each share is entitled to one vote.
52
53
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
19. ISSUED CAPITAL (CONTINUED)
The Company does not have a limited amount of authorised capital and the fully paid ordinary shares have no par value.
For information relating to the Cellmid Limited and controlled entities employee option plan, including details of options
issued, exercised and lapsed during the financial year and the options outstanding at year-end, refer to Note 28
Share-based payments.
At the beginning of the year
Options lapsed – August 2017
Consolidation
Options lapsed – August 2018
Options issued – September 2018
Options issued – October 2018
Options lapsed – November 2018
At the end of the year
(c) Capital risk management
2019
No.
1,650,000
-
-
(900,000)
1,000,000
200,000
(600,000)
2018
No.
34,440,000
(1,440,000)
(31,350,000)
-
-
-
-
1,350,000
1,650,000
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that it can provide returns
for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
The Group looks to raise capital when an opportunity to invest in a business or company is seen as value adding relative to the current
parent entity’s share price at the time of the investment. The Group is not actively pursuing additional investments in the short term as it
continues to integrate and grow its existing businesses in order to maximise synergies.
20. RESERVES
Share-based payments reserve
Balance at the beginning of the year
Share-based payments expense
Transfer to accumulated losses
Balance at the end of the year
2019
$
2018
$
2,164,497
92,360
(2,152,907)
2,053,007
111,490
-
103,950
2,164,497
20. RESERVES (CONTINUED)
General reserve
Balance at the beginning of the year
Movement during the year*
Balance at the end of the year
* The movement in the general reserve is as a result of the
derecognition of the equity component of the convertible loan.
Foreign currency translation reserve*
Balance at the beginning of the year
Foreign exchange movements
Balance at the end of the year
Total reserves
2019
$
18,258
(18,258)
-
2018
$
18,258
-
18,258
412,605
115,798
528,403
632,353
306,382
106,223
412,605
2,595,360
* Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income - foreign
currency translation reserve. The cumulative amount is reclassified to profit or loss when the net investment is disposed.
21. CASH FLOW INFORMATION
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax for the year
Adjustments for:
- depreciation and amortisation
- share based payments
- bad and doubtful debts
- interest expense
- interest income
- foreign exchange movements
Changes in operating assets and liabilities
- (increase) in trade and other receivables
- (increase) / decrease in prepayments
- (increase) in inventories
- increase / (decrease) in trade and other payables
- increase / (decrease) in provisions
Net cash used in operating activities
22. EVENTS AFTER THE REPORTING PERIOD
2019
$
2018
$
(5,909,557)
(3,732,615)
152,891
318,414
2,025
-
-
187,538
111,490
-
115,293
-
141,177
(16,972)
(1,255,325)
10,290
(355,368)
1,182,580
41,500
(653,062)
(229,169)
(101,408)
284,055
(128,803)
(5,671,373)
(4,163,653)
No matters or circumstance has arisen since 30 June 2019 that has significantly affected, or may significantly affect the group’s
operations, the results of those operations, or the group’s state of affairs in future financial years.
54
55
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
23. RELATED PARTY TRANSACTIONS
(a) The Group’s main related parties are as follows:
Parent entities
Cellmid Limited is the ultimate parent entity.
Subsidiaries
For details of disclosures relating to subsidiaries, refer to Note 25. Transactions and balances between subsidiaries and the
parent have been eliminated on consolidation of the Group.
Key management personnel
For details of disclosures relating to key management personnel, refer to the remuneration report contained within the
Director’s report.
Transactions with related parties
24. FINANCIAL RISK MANAGEMENT (CONTINUED)
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 statement of financial
position.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
Trade receivables and contract assets
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and
the days past due. The expected loss rates are based on the payment profiles of sales over a period of 24 months before 30
June 2019 and the corresponding historical credit losses experienced within this period.
On that basis, the loss allowance as at 30 June 2019 (on adoption of AASB 9) was determined as follows for trade receivables:
Not
overdue
More than 30
days past due
More than 60
days past due
More than 90
days past due
Total
Expected loss rate
0%
1.1%
20%
95%
Gross carrying amount – trade
receivables
2,085,873
Impairment allowance
-
37,535
413
19,456
3,891
86,075
2,228,939
81,771
86,075
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable
The remuneration for Ms Halasz is restructured to reflect the management costs incurred by each wholly owned subsidiary of
expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the group, and
the Consolidated Entity. As a result, Direct Capital Group Pty Ltd, a related party to Ms Halasz, was paid $188,538
a failure to make contractual payments for a period of greater than 90 days past due. Impairment losses on trade receivables
(2018: $188,538) for management services. No amount was outstanding as at 30 June 2019 (30 June 2018: Nil).
are presented as net impairment losses within operating profit. Subsequent recoveries of amounts previously written off are
24. FINANCIAL RISK MANAGEMENT
credited against the same line item.
(b) Liquidity risk
The Group’s activities expose it to a number of financial risks as described below. The Group’s overall risk management
The Group manages this risk through the following mechanisms:
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 fair value of financial assets and liabilities equate to the carrying value.
(a) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures
to wholesale and retail customers, including outstanding receivables.
• preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities;
• managing credit risk related to financial assets; and
• only investing surplus cash with major financial institutions.
The Group is not exposed to any material liquidity risk.
Financial liabilities consist of two items, trade and other payables for which the contractual maturity dates are within 6 months
of the reporting date and loans and borrowings. 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.
Credit risk is managed on a Group basis. For banks and financial institutions, only independently rated parties with a minimum
Loans and borrowings at reporting date have contractual maturity dates as follows:
rating of ‘AA-’ are accepted.
If wholesale customers are independently rated, these ratings are used. Otherwise, if there is no independent rating,
management assesses the credit quality of the customer, taking into account its financial position, past experience and other
factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board.
Sales to retail customers are required to be settled in cash or using major credit cards, mitigating credit risk. There are no
significant concentrations of credit risk (except for a single counterparty that makes up approximately 50% of the total trade
receivables balance which was subsequently paid in July 2019), whether through exposure to individual customers, specific
Within one year
One to five years
industry sectors and/or region.
56
2019
$
2018
$
266,804
1,231,121
2,007,427
1,166,447
57
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
24. FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Market risk
Foreign exchange risk
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
functional currency of the Group, being Australian dollars.
The maximum exposure to foreign exchange risk is the fluctuation in exchange rates on the USD and JPY denominated bank
accounts and also the profit and net assets of the Japanese and US subsidiary, Advangen Inc and Advangen LLC.
The Group has performed a sensitivity analysis relating to its exposure to foreign currency risk at the end of the financial year.
The sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in this risk.
25. INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly owned subsidiaries in
accordance with the accounting policy described in Note 1:
Name
Country of
Incorporation
Percentage Owned (%)
2019
Percentage Owned (%)
2018
Subsidiaries of Cellmid Limited:
Advangen Limited
Kinera Limited
Lyramid Limited
Subsidiaries of Advangen Limited:
Advangen International Pty Ltd
Advangen LLC
Advangen Incorporated
Evolis Japan Incorporated
Australia
Australia
Australia
Australia
USA
Japan
Japan
100
100
100
100
100
100
100
100
100
100
100
100
100
-
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
On 30 June 2016, Cellmid Limited entered into a deed of cross guarantee to support the liabilities and obligations of four
of its wholly owned subsidiaries, Advangen Limited, Kinera Limited, Lyramid Limited and Advangen International Pty Ltd. By
entering into the deed, the wholly owned unlisted public entities have been relieved from the requirement to prepare a financial
report and directors’ report under ASIC Corporations (wholly owned companies) Instrument 2016/785 issued by the Australian
At the end of the financial year, the effect on loss and equity as a result of changes in the foreign exchange rate with all other
Securities and Investments Commission.
variables remaining constant would be as follows:
The following are the aggregate totals, for each category, relieved under the deed.
Year ended 30 June 2019
+/- 5% in foreign exchange rates
Year ended 30 June 2018
+/- 5% in foreign exchange rates
Interest rate risk
Loss
$
Equity
$
+/-53,964
+/-51,235
+/-13,460
+/-6,728
The Group’s main interest rate risk arises from loans from banks and other financial institutions.
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at the end of the financial year.
STATEMENT OF FINANCIAL POSITION
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
The sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in
TOTAL CURRENT ASSETS
this risk. At the end of the financial year, the effect on loss and equity as a result of changes in the interest rate with all other
variables remaining constant would be as follows:
Year ended 30 June 2019
+/- 1% in interest rates
Year ended 30 June 2018
+/- 1% in interest rates
58
Loss
$
Equity
$
+/-12,867
+/-12,867
+/- 31,73
+/- 31,739
NON-CURRENT ASSETS
Plant and equipment
Intangible assets
Investment in subsidiaries
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Employee provisions
TOTAL CURRENT LIABILITIES
Parties to the Deed
of Cross Guarantee
2019
$
Parties to the Deed
of Cross Guarantee
2018
$
1,956,127
124,873
708,952
141,559
2,931,511
686,939
1,440
2,888,105
3,576,484
6,507,995
1,705,477
-
214,549
1,920,026
722,681
196,051
548,509
186,993
1,654,234
688,395
1,440
2,888,105
3,577,940
5,232,174
1,150,885
2,007,427
175,345
3,333,657
59
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
25. INTERESTS IN SUBSIDIARIES (CONTINUED)
Parties to the Deed
of Cross Guarantee
2019
$
Parties to the Deed
of Cross Guarantee
2018
$
NON-CURRENT LIABILITIES
Employee provisions
Loans and borrowings
Loan from subsidiaries
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
(B) STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME:
Loss before income tax
Income tax expense
Loss after income tax
Loss attributable to members of the parent entity
(C) ACCUMULATED LOSSES:
Accumulated Losses at the beginning of the year
Loss after income tax + Transfer SOCE
Inventory restatement
Accumulated Losses at the end of the year
26. COMMITMENTS
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
Over five years
Minimum lease payments
6,740
132,315
122,665
261,720
2,181,746
4,326,249
47,765,837
157,085
(43,596,673)
4,326,249
4,444
-
122,665
127,109
3,460,766
1,771,408
38,014,078
2,169,778
(38,412,448)
1,771,408
(5,204,076)
(4,361,045)
-
(5,024,076
(5,204,076)
(38,412,448)
(5,204,076)
-
(43,616,524)
-
(4,361,045)
(4,361,045)
(34,051,403)
(4,361,045)
-
(38,412,448)
2019
$
2018
$
270,408
728,227
-
998,635
127,082
833,205
19,093
979,380
Operating please commitments includes contracted amounts for office space under non-cancellable operating lease expiring
within five years with no option to extend.
60
27. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Claims
The amounts recorded in legal fees and settlement and trade and other payables include amounts in relation to the concluded
legal dispute that has been underway since 2016 in the NSW Supreme Court between a wholly owned subsidiary Advangen
International Pty Ltd and Ikon Communications (Ikon). The Court ruled that Ikon is entitled to their claim of $939,055 plus
interest and costs. The Group fully paid Ikon’s claim with interest in December 2018 and accrued any potential liability to cover
any future obligations in relation to legal costs.
Guarantees
The Group has given bank guarantees as at 30 June 2019 of $129,560 (30 June 2018: $129,560) relating to the lease of
commercial office space.
For information about guarantees given by entities within the Group, including the parent entity, please refer to note 29.
Other than the matter noted above, the Group had no contingent liabilities or contingent assets at 30 June 2019. (30 June
2018: Nil)
28. SHARE-BASED PAYMENTS
The Cellmid Limited and Controlled Entities Employee Incentive Plan is designed as an incentive for eligible employees of the
Group. Under the Plan, participants are granted options which only vest if certain conditions are met.
A summary of the Company options granted under the Plan is as follows:
Expiry Date Exercise
price
Balance at start
of the year
Granted
Exercised
Expired
Balance at end
of the year
Exercisable at
end of year
1/08/2018
1/08/2018
1/08/2018
19/11/2018
19/11/2018
1/07/2020
31/10/2019
28/09/2021
03/10/2021
0.80
1.00
1.20
0.62
1.20
0.60
0.60
0.80
0.80
200,000
200,000
500,000
25,000
575,000
50,000
100,000
-
-
-
-
-
-
-
- 1,000,000
-
200,000
-
-
-
-
-
-
-
-
-
(200,000)
(200,000)
(500,000)
(25,000)
(575,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
100,000
50,000
100,000
1,000,000
1,000,000
200,000
200,000
1,650,000 1,200,000
- (1,500,000)
1,350,000
1,350,000
The weighted average exercise price during the financial year was $0.78 ($1.06 in 2018). The weighted average remaining
contractual life of the options outstanding at the end of the financial year was 1.48 years (0.33 years in 2018).
1,200,000 options were granted during the 2019 financial year (2018: Nil) with no vesting conditions attached as follows:
- 1,000,000 options granted at a fair value of $0.077 per option on 28/9/2018 and expiry date of 28/9/2021
- 200,000 options granted at a fair value of $0.076 per option on 3/10/2018 and expiry date of 3/10/2021
Other options on issue
No other options on issue.
29. PARENT ENTITY INFORMATION
The following information has been extracted from the books and records of the parent, Cellmid Limited, and has been
prepared on the same basis as the consolidated financial statements, except as disclosed below.
Investments in subsidiaries and intercompany loans are accounted for at cost in the financial statements of the parent entity.
61
Cellmid 2019 Annual ReportCellmid 2019 Annual Report
NOTES TO THE
FINANCIAL STATEMENTS
CONTINUED
29. PARENT ENTITY INFORMATION (CONTINUED)
ASSETS
Current assets
Non-current assets
Total Assets
LIABILITIES
Current liabilities
Non-current liabilities
Total Liabilities
EQUITY
Issued capital
Accumulated losses
Share based payments reserve
Total Equity
Statement of Profit or Loss and Other Comprehensive Income
Loss of the parent entity
Total comprehensive income
Contingent liabilities and contingent assets
Bank Guarantees
DIRECTORS’
DECLARATION
The directors of the company declare that:
1. the financial statements and notes, as set out on pages 28 to 62, are in accordance with the Corporations Act 2001 and:
i. comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements,
constitutes compliance with International Financial Reporting Standards; and
ii. give a true and fair view of the financial position as at 30 June 2019 and of the performance for the year ended
on that
date of the consolidated group;
2. in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable; and
3. the directors have been given the declarations required by s 295A of the Corporations Act 2001 from the Chief Executive
Officer and Chief Financial Officer.
The company and its four Australian wholly owned subsidiaries, Advangen Limited, Kinera Limited, Lyramid Limited and
Advangen International Pty Limited, have entered into a deed of cross guarantee under which the company and its subsidiaries
guarantee the debts of each other.
At the date of this declaration, there are reasonable grounds to believe that the companies which are party to this deed of cross
guarantee will be able to meet any obligations or liabilities to which they are, or may become, subject to by virtue of the deed.
Signed in accordance with a resolution of the Board of Directors made pursuant to Section 295 (5) of the Corporations Act 2001.
2019
$
2018
$
2,055,817
4,730,419
6,786,236
(626,402)
(302,557)
(928,959)
47,765,837
(42,012,510)
103,950
5,857,277
847.998
3,605,018
4,453,016
(2,590,589)
(7,255)
(2,597,844)
38,014,078
(38,525,679)
2,366,773
1,855,172
(3,486,829)
(3,486,829)
(3,626,391)
(3,626,391)
David King
Director
Dated this 28th day of August 2019
The parent entity has given bank guarantees as at 30 June 2019 of $129,560 (30 June 2018: $129,560) relating to the lease of
commercial office space.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries.
On 30 June 2016, Cellmid Limited entered into a deed of cross guarantee to support the liabilities and obligations of four of its
wholly owned subsidiaries, Advangen Limited, Advangen International Pty Ltd, Kinera Limited and Lyramid Limited.
By entering into the deed, the wholly owned unlisted public entities have been relieved from the requirement to prepare a
financial report and directors’ report under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 issued by the
Australian Securities and Investments Commission.
Apart from the items noted above the parent entity had no contingent liabilities or contingent assets at 30 June 2019.
Capital Commitments
The parent entity had no capital commitments at 30 June 2019 (Nil at 30 June 2018).
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report 66
67
Cellmid 2019 Annual ReportCellmid 2019 Annual Report ADDITIONAL INFORMATION
FOR LISTED ENTITIES
ASX ADDITIONAL INFORMATION
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
This information is effective as at 20 August 2019.
SUBSTANTIAL HOLDERS
Mr Dennis Keith Eck is an individual substantial shareholder of Cellmid Limited shares who holds 5,461,579 shares or 6.53% of
the voting rights.
HOLDING ANALYSIS
Holding Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,0000
100,001 – 99,999,999
Totals
Holders
Total Units
70
401
233
499
151
28,605
1,397,564
1,846,645
16,389,664
63,946,997
%
0.03
1.67
2.21
19.60
76.48
1,354
83,609,475
100.00
20 LARGEST SHAREHOLDERS
Fully Paid Ordinary Shares
Shareholders
MR DENNIS KEITH ECK
UBS NOMINEES PTY LTD
JASGO NOMINEES PTY LTD
WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED <>
MR GREGORY GLENN WORTH
MOORE FAMILY NOMINEE PTY LIMITED
CELL SIGNALS INC
ONE MANAGED INVT FUNDS LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SEISTEND (SUPER) PTY LTD
CITICORP NOMINEES PTY LIMITED
MR KEVIN PETER HOOPER & MR RONALD LESLIE HOOPER
MR TREVOR GOTTLIEB
MR DARIN ANJOUL & MRS TANIA ANJOUL
DIRECT CAPITAL GROUP PTY LTD
MR JAMES PATRICK TUITE & MRS WENDY TUITE
NATIONAL NOMINEES LIMITED
MISS FLORENCE ANNE GRAND
MRS MARGARET ANN RYAN & MR MICHAEL RODNEY RYAN
DR KUEN SENG CHAN
Total
Issued Share Capital
68
Balance
Percent
NUMBER OF HOLDERS AND VOTING RIGHTS IN EACH CLASS OF SECURITIES
5,461,579
3,871,929
2,631,578
2,128,917
1,824,000
1,750,000
1,300,000
1,212,891
1,185,665
1,150,000
1,071,861
1,050,000
914,974
850,000
800,938
791,876
771,442
758,700
710,000
700,000
6.53%
4.66%
3.15%
2.55%
2.18%
2.09%
1.55%
1.45%
1.42%
1.38%
1.28%
1.26%
1.09%
1.02%
0.96%
0.95%
0.92%
0.91%
0.85%
0.84%
30,936,350
83,609,475
37.00%
Class of Security
No. of Holders
Voting Rights
Ordinary Shares 1,354 Yes
Unlisted Options $0.60 expiring 31/10/2019
Unlisted Options $0.60 expiring 01/07/2020
Unlisted Options $0.80 expiring 28/09/2021
Unlisted Options $0.80 expiring 03/10/2021
Unlisted Options $0.23 expiring 30/07/2024
1
1
1
1
7
No
No
No
No
No
Subject to the ASX Listing Rules, the Company’s Constitution and any special rights or restrictions attached to a share, at a
meeting of shareholders:
• On a show of hands, each shareholder present (in person, by proxy, attorney or representative) has one vote; and
• On a poll, each shareholder present (in person, by proxy, attorney or representative) has;
− One vote for each fully paid share they hold; and
− A fraction of a vote for each partly paid share they hold.
UNMARKETABLE PARCELS OF SHARES
The number of shareholders with less than a marketable parcel of shares is 187.
CLASSES OF UNQUOTED SECURITIES
Class of Security
No. of Holders
Total Units
Unlisted Options $0.60 expiring 31/10/2019
Unlisted Options $0.60 expiring 01/07/2020
Unlisted Options $0.80 expiring 28/09/2021
Unlisted Options $0.80 expiring 03/10/2021
Unlisted Options $0.23 expiring 30/07/2024
GENERAL
There is no current on-market buy-back for the Company’s securities.
1
1
1
1
7
100,000
50,000
1,000,000
200,000
4,250,000
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report
CORPORATE
DIRECTORY
COMPANY DETAILS
The registered office of the company is:
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
The principal places of business are:
Cellmid Limited
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
Advangen International Pty Limited
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
Advangen Incorporated
Chiba Industry Advancement Centre
Tokatsu Techno Plaza
5-4-6 Kashiwanoha
Kashiwa
Chiba 277-082 Japan
Kinera Limited
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
Lyramid Limited
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
Advangen LLC
1601 Elm Street, Floor 33
Dallas
Dallas County
Texas 75207
BOARD OF DIRECTORS
Non-Executive Chairman
Dr David King
CEO and Managing Director
Ms Maria Halasz
Non-Executive Directors
Mr Bruce Gordon
Dr Fintan Walton
Dr Martin Cross
Mr Dennis Eck
Company Secretary
Mr Lee Tamplin
AUDITORS, SOLICITORS AND
PATENT ATTORNEY
Auditors
Grant Thornton Audit Pty Ltd
17/383 Kent Street
Sydney NSW 2000, Australia
Solicitors
Piper Alderman
Governor Macquarie Tower
1 Farrer Place
Sydney NSW 2000, Australia
Patent Attorney
FB Rice & Co
Level 23, 44 Market Street
Sydney NSW 2000 Australia
SHARE REGISTRY
Automic Pty Limited
Level 5, 126 Phillip Street
Sydney NSW 2000, Australia
“As we are entering
uncertain times again, anti-aging
hair care sales are showing double
digit growth, especially in emerging
markets. The cosmetics industry,
including hair care, seems to be
immune to negative economic
indicators.”
Maria Halasz
CEO and Managing Director
70
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Cellmid 2019 Annual ReportCellmid 2019 Annual Report Cellmid Limited
Suite 204, Level 2
55 Clarence Street
Sydney NSW 2000
ABN 69 111 304 119
T +61 2 9221 6830
F +61 2 9221 8535
E
info@cellmid.com.au
W www.cellmid.com.au
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Cellmid 2019 Annual Report