More annual reports from Cyclopharm Limited:
2023 ReportAnnual Report 2022Cyclopharm LimitedAnnual Report 2022Cyclopharm Limitedwww.cyclopharm.comAnnual Report 2022Cyclopharm LimitedAnnual Report 2022Cyclopharm Limitedwww.cyclopharm.comAnnual Report 2022Cyclopharm LimitedAnnual Report 2022Cyclopharm Limitedwww.cyclopharm.comAnnual Report 2022Cyclopharm LimitedAnnual Report 2022Cyclopharm Limitedwww.cyclopharm.com Cyclopharm Limited | abn 74 116 931 250
Innovative
solutions in
nuclear medicine
Cyclopharm Limited is a health technology
company that is a world leader in functional
lung ventilation imagery. Our imaging product
Technegas™ is a clinical market leader in
nuclear medicine diagnostic imaging and is
available in over 60 countries.
Contents
01 2022 Highlights
02 Third-party Distribution
08 Chairman’s Letter
10 Managing Director’s Review
20 Directors’ Report
37 Auditor’s Independence Declaration
38 Consolidated Financial Statements
42 Notes to the Consolidated Financial Statements
79 Directors’ Declaration
80 Independent Auditor’s Report
84 Shareholder Information
85 Corporate Directory
Front cover map
Technegas™ available now
Seeking Approval
CYC Offices
2022 Highlights
Record Group
Sales Revenue
$23.22m
up 31.1%
Third-party
Distribution
Revenues
$9.22m
More than double
FY2021
USFDA
Approval expected
in 2023, with significant
commercialisation
preparation progress
achieved for rapid
US rollout
Maintained
full year
Dividends at
1.0cps
Summary Financials
Sales Revenue
Technegas™ Division
Molecular Imaging Division
Total Sales Revenue
Net Loss Before Tax
Technegas™ Division
Molecular Imaging Division
Total Net Loss Before Tax
Loss After Tax
Full Year ending 31 December
Diluted Loss Per Share
Sales revenue
Five year history
2019
$'000
2020
$'000
2021
$'000
2022
$'000
14,079
–
14,079
(3,171)
746
(2,425)
(2,912)
2019
cents
(4.28)
14,523
153
14,676
(5,983)
139
(5,844)
(6,044)
2020
cents
(7.89)
17,312
392
17,704
(4,652)
305
(4,347)
(5,040)
2021
cents
(5.62)
22,878
340
23,218
(6,411)
381
(6,030)
(6,612)
2022
cents
(7.17)
Change
%
32.2%
(13%)
31.1%
37.8%
24.9%
38.7%
31.2%
Change
%
27.6%
$23.22m
2022
up
31.1%
$17.70m
2021
$14.08m
2019
$14.68m
2020
$9.22m
Third-party
distribution
$13.40m
2018
1
$2.17m$4.10mCyclopharm Limited | annual report 2022 Cyclopharm’s record revenue
performance in 2022, was driven
by increased sales across all our
business units but, in particular, our
third-party distribution business which
leverages our core strengths, while
diversifying our revenue streams.
In 2022, the third-party distribution business
In 2022, the third-party distribution business
contributed a substantial $9.22 million in revenue,
contributed a substantial $9.22 million in revenue,
up from $4.10 million in 2021.
up from $4.10 million in 2021.
2
Cyclopharm Limited | annual report 2022 Third-party
distribution revenue
More than double
FY2021
$9.22m
$4.10m
$2.17m
2020
2021
2022
Third-party distribution consists of
a mix of radiopharmaceuticals, capital
equipment and associated consumables.
The third-party distribution business
continues to reinforce a key pillar of
the Company’s growth strategy by
developing additional revenue streams.
3
Cyclopharm Limited | annual report 2022 As part of its ‘Beyond PE’ initiatives
Cyclopharm continues to sponsor several
clinical trials that investigate new
applications for Technegas™ including
the diagnosis and monitoring of COPD,
asthma, long-COVID, lung cancer and
other respiratory disease states.
Cyclopharm estimates the global COPD market alone is
approximately 30 times the size of the PE market and over
500 million patients suffering with COPD and asthma could
benefit from the use of Technegas™.
4
Cyclopharm Limited | annual report 2022 These markets represent significant
opportunities to expand sales of Technegas™
and drive shareholder value over
the medium term.
5
Cyclopharm Limited | annual report 2022 We continued to work closely with the United States Food
and Drug Administration (USFDA) during 2022 to progress the
final stage of the approval process to sell the company’s core
Technegas™ products in the US market.
Piedmont Park, Atlanta, Georgia, USA.
6
Cyclopharm Limited | annual report 2022 The market for nuclear
medicine ventilation imaging for
pulmonary embolism in the US
is estimated to be approximately
US$180 million annually.
7
Cyclopharm Limited | annual report 2022 Chairman’s
Letter
Dear Shareholders,
Cyclopharm delivered another solid financial
performance in 2022 and continued to make significant
progress in executing our growth objectives.
Cyclopharm’s record revenue performance in
2022, was driven by increased sales across all our
business units but, in particular, our third-party
distribution business which leverages our core
strengths, while diversifying our revenue streams.
This record performance was achieved despite
some residual challenges and disruptions
to our markets resulting from temporary
shortages of Technetium, the isotope used to
make Technegas™.
Throughout 2022, Cyclopharm demonstrated
the resilience of our business and the financial
benefits derived from revenue diversification,
while we continued to support and advance our
‘Beyond PE’ growth initiatives. ‘Beyond PE’ aims
to extend the use of Technegas™ into new and
exponentially larger applications beyond its
traditional Pulmonary Embolism market.
We continued to work with the United States Food
and Drug Administration (USFDA) during 2022 to
progress the final stage of the approval process to
sell the company’s core Technegas™ products in
the US market. Supporting this approval process
remains an ongoing focus for Cyclopharm as it
represents a transformational business opportunity
that is estimated to be worth US$180 million
annually. During 2022 we addressed the definitive
list of items and recommendations provided by the
USFDA in their Complete Response Letter (CRL).
Importantly, the additional information requested
by the USFDA did not relate to the demonstrated
efficacy and safety of Technegas™.
Post year-end, Cyclopharm submitted its reply
to the CRL on 30 March 2023, and now awaits
the USFDA’s stated six-month formal submission
review process. On that basis we anticipate
attaining approval to commence commercial sales
of Technegas™ in the US during 2023, which is
consistent with previous expectations. As part of
our preparations for a rapid commercialisation
of Technegas™ in the US we continued to invest,
during 2022, in building inventory and establishing
sales capabilities and infrastructure.
Cyclopharm’s third-party distribution business
demonstrated significant growth in 2022 by
leveraging our regulatory expertise and operational
footprint to secure additional distribution
agreements in Europe and the Asia-Pacific region.
The third-party distribution business is a mix of
radiopharmaceuticals and capital equipment with
associated consumable and service revenue and
continues to reinforce a key pillar of the Company’s
growth strategy by developing additional revenue
streams. In 2022, the third-party distribution
business contributed a substantial $9.2 million
in revenue made up of $2.4 million from capital
works projects and $6.8 million from consumable
sales and services, up from $4.1 million in revenue
for the prior year. In the current financial year, the
Company plans to continue to grow third-party
distribution revenue by establishing new
partnerships and expanding into new markets.
Cyclopharm continued to sponsor several clinical
trials into new applications for Technegas™,
throughout 2022, as part of the ‘Beyond PE’ growth
initiative. The potential uses of Technegas™ for
managing ‘Beyond PE’ applications have been
enhanced by the advent of improved nuclear
medicine imaging techniques, cameras and software.
During 2022, Technegas™ was recognised in
peer reviewed articles and abstracts for clinical
applications that include long-COVID and lung
cancer. The Company is confident that the clinical
benefits seen in these early publications have the
potential to materially expand the addressable
market for Technegas™ globally.
8
Cyclopharm Limited | annual report 2022 Dublin, Ireland
Bristol, UK
Stockholm, Sweden
Leverkusen, Germany
Brussels, Belgium
Head office:
Sydney, Australia
Toronto, Canada
Atlanta, USA
Technegas™
Available Now
Seeking Approval
CYC Offices
Technegas™ is
available in over
60 countries
In 2022, Cyclopharm renewed its Technegas™
CE mark under the updated European Medical
Device Regulations (MDR), meaning Technegas™
may continue to be sold freely in any part of
the European Economic Area. In addition,
Cyclopharm renewed licensing under the
Medical Device Single Audit Process (MDSAP)
for participating countries to include Canada,
Australia, Brazil, Japan and the USA.
Cyclopharm ended the 2022 financial year with
a strong balance sheet and a cash balance of
$20.3 million. Our cash balance combined with
ongoing operational cash flows and prudent
expense and capital management means we are
appropriately capitalised to fund the ongoing
USFDA approval process, the anticipated
launch of Technegas™ into the US market,
R&D activities and continuing organic growth.
We expect 2023 to be a milestone year for
Cyclopharm. The anticipated commencement
of Technegas™ sales in the US will significantly
improve the underlying profitability of the
Company. The availability of Technegas™ in
the US is also expected to be a catalyst for the
acceleration of ‘Beyond PE’ trials that have the
potential to lead to exponential growth in the use
of Technegas™ in additional clinical applications,
including long-COVID and lung cancer alongside
Chronic Obstructive Pulmonary Disease (COPD)
and asthma. We are also anticipating continued
strong growth in our third-party distribution
business, underpinned by a return to normal
growth patterns in sales revenue from our
existing Technegas™ business, post-COVID.
In line with good corporate governance practice,
Cyclopharm’s Board continually evaluates
its skills and composition to ensure they
appropriately support the Company’s growth
and governance requirements. In September
2022, the Board appointed Mr. Kevin Barrow
and Professor Gregory King as Non-Executive
Directors. Dr. King is a world-renowned clinician
and respiratory physiologist who brings over
25 years’ experience as a clinician, educator and
researcher to the Cyclopharm Board. Mr. Barrow
brings to Cyclopharm more than 20 years of
experience in the healthcare industry, which
includes numerous governance and senior
executive roles in both the pharmaceutical and
diagnostic imaging equipment sectors.
Cyclopharm expects to enter a new growth phase
in 2023 that will build on the record revenue
performance; robust sales of Technegas™;
continued growth in third-party distribution
sales and the improved utilisation of the
company’s sales and service infrastructure
globally in 2022.
In addition, Cyclopharm is well placed to extend
its clinical leadership in lung imaging and drive
ongoing growth in revenue and earnings, while
remaining absolutely committed to delivering
positive health outcomes for our patients and
growing financial rewards to our shareholders.
On behalf of the Board, I thank our Managing
Director, all our staff and wider stakeholders for
their commitment to the company and I thank you,
the shareholders, for your continuing support.
David Heaney
Chairman
9
Cyclopharm Limited | annual report 2022
Managing Director’s
Review
Key features of Cyclopharm’s financial results
for the 2022 year include:
¥ Record Group Sales revenue
of $23.22 million, up 31.1% on
the prior comparable period (pcp)
¥ All regulatory renewals in
existing markets under MDR[1]
and MDSAP[2] achieved
¥ Technegas™ sales increased
by 4.1% to $13.66 million
¥ Third-party distribution
revenue $9.22 million, more than
double FY2021 revenue
¥ Technegas™ at final stage
of USFDA approval process,
on track, as previously advised,
to submit its Complete Response
Letter (CLR) reply in coming
weeks, followed by an expected
six-month formal submission
review by the USFDA
¥ FDA approval expected
in 2023, with significant
commercialisation preparation
progress achieved for rapid
US rollout
¥ Strong Balance Sheet
to fully fund growth strategy –
$20.30 million net cash
¥ R&D tax incentive payment
of $1.64 million received in
November 2022
¥ Continued progress in
developing new, ‘Beyond PE',
clinical applications providing
significant, long term growth
opportunities for Technegas™
¥ Final dividend maintained at
0.5 cents per share (cps), bringing
total unfranked dividends for
2022 to 1.0 cps
¥ Expanded Board with the
appointment of Mr. Kevin Barrow
and Professor Gregory King as
Non-Executive Directors
1. MDR- Medical Device Regulation – The recently implemented European Union regulatory framework for Medical Devices
in support of CE accreditation
2. Medical Device Single Audit Program – A single audit regulatory framework that allows medical device manufacturers
a compliance pathway for participating countries. Current country participants include Australia, Brazil, Canada, Japan
and the United States
10
Cyclopharm Limited | annual report 2022 Dear Shareholders,
Cyclopharm delivered another solid financial performance in 2022
and continues to make progress on the execution of all of our four major
growth objectives:
1
Grow
Grow
Technegas™
sales
2
Expand
Expand
the use of
Technegas™
3
Leverage
4
Develop
Leverage core
strengths to continue
to accelerate our
third-party distribution
business
Identify, develop
and commercialise
complementary
innovative
technology
Against these objectives, during 2022,
Cyclopharm continued to deliver record
revenue performance and made significant
progress towards United States Food
and Drug Administration (USFDA)
approval to commence US sales in 2023
of Technegas™, our core proprietary
technology used in functional lung imaging.
Whilst actively progressing USFDA
approval, the company continued to invest
in further R&D and support of clinicians
to expand the use of Technegas™ in new
diagnostic applications as part of our
‘Beyond PE’ initiatives.
Our core Technegas™ products are now
available in 64 countries, with 7 of our
offices directly servicing 17 out of those
countries. Cyclopharm will continue to
leverage our expanding global footprint,
regulatory expertise and direct marketing
capabilities to grow global Technegas™
sales and to continue the rapid expansion
of our successful third-party distribution
partnerships business.
11
Cyclopharm Limited | annual report 2022 Financial performance
Despite the impact of residual effects of the
COVID-19 pandemic and global supply chain
disruptions, Cyclopharm generated record total
sales revenues in 2022 of $23.22 million, up from
$17.70 million on the prior year. Revenue from
sales of Technegas™ generators and Patient
Administration Set (PAS) consumables remained
robust, attaining pre-COVID levels for the first
time since the pandemic’s onset, with unit sales of
each exceeding those of 2021. This was achieved
despite the global shortage of the isotope used
to manufacture Technegas impacting the final
quarter of 2022.
Technegas™ service revenue declined over the
period, with generator servicing being affected
by travel and access restrictions associated with
COVID-19 in early 2022 and the gradual rebound
in patient procedures. Nevertheless, consumable
revenue continued to return towards pre-pandemic
levels, increasing by just over 5% year on year,
from $9.54 million to $10.04 million.
Cyclopharm continued to secure new third-party
distribution agreements in 2023, providing a
growing complementary source of revenue and
profits. Our Asia-Pacific third-party distribution
business delivered a surge in revenues to
$4.16 million compared with $1.09 million in
2021, which was the first year we distributed
third-party products in the Asia-Pacific region.
In addition, earnings from our third-party
distribution in Europe, which launched in 2020,
grew to $4.92 million, up from $2.92 million in
2021. This growth has underpinned our revenue
diversification strategy and during the year helped
to offset the lingering impact of the pandemic
and the isotope shortage in the closing months of
2022. Third-party distribution consists of a mix
of radiopharmaceuticals, capital equipment and
associated consumables. Cyclopharm expects to
continue to expand this revenue stream through
a wider range of third-party partnerships to a
broader geographic reach in the coming year.
As anticipated, Cyclopharm recorded a loss after
tax of $6.61 million, compared to $5.04 million in
2021. This figure included $2.97 million of expenses
associated with the USFDA approval process in
2022. In total, $19.24 million has been expensed
on the current USFDA approval process over the
past 9 years, which reflects the Board’s confidence
in the anticipated returns from Technegas™
sales in the USA market. The net loss before tax
of approximately $6.03 million in 2022, is up 38%
from $4.35 million in 2021. This increase includes
$0.95 million of legal costs from ongoing strategies
to actively protect Cyclopharm’s commercial
interests in Europe and Australia. Staffing costs
have also increased over the period by $0.31 million
predominantly driven by the increasing costs of
global regulatory compliance and USFDA readiness.
The results were further impacted by a significant
increase in distribution costs. Distribution costs
of $2.38 million were recorded in 2022, up from
$0.72 million in 2021. This significant increase
is the combined result of the pleasing growth
in the distribution of third-party products and
the negative impact the pandemic has had on
manufacturing, distribution and logistics globally.
Over the past few months, the Company has started
to see some encouraging cost-base improvements
in product movement as worldwide supply chains
continue to recover.
Cyclopharm ended the financial year with a strong
balance sheet and a cash balance of approximately
$20.30 million, reflecting prudent expense and
capital management supported by ongoing
operational cashflows. This cash balance ensures
the Company remains appropriately capitalised
to fund its ongoing USFDA approval process, the
anticipated launch of Technegas™ into the US
market, R&D activities and working capital to fund
continuing organic growth.
Cyclopharm received a Research and Development
Tax incentive payment for the 2022 financial year
of $1.64 million from the Australian Taxation Office
in November 2022 (vs $2.3 million in 2021). Based
on ongoing and planned research and development
activities, Cyclopharm expects to receive an R&D
tax incentive in respect of the 2023 financial year.
The exact amount of any future R&D tax incentive
is subject to the nature, timing and value of R&D
activities undertaken each year, elements of which
are outside of the Company’s control.
12
Managing Director’s Review (CONTINUED)Cyclopharm Limited | annual report 2022 Operations and
strategy deliverables
During the year to 31 December 2022, we
continued to successfully execute the Company’s
growth strategy of leveraging its significant
intellectual property, technology and technical
expertise to broaden sales and service into
new countries and expanding end-use product
applications and complementary businesses.
While COVID-19 continued to interrupt many
customers’ activities, Cyclopharm continued
to prioritise employee safety and welfare while
executing our growth strategies.
Operating highlights for the year included:
¥ Response to USFDA CRL progressed during
2022 and was submitted on 30 March 2023.
USFDA six-month review to follow.
¥ USFDA application to market and distribute
Technegas™ in the United States is on track for
final decision in 2023 with a rapid roll out of
Technegas™ in the US thereafter.
¥ Preparation for US commercialisation,
including personnel training and inventory
build, is well advanced and continuing.
¥ Strong support for Technegas™ continues to
be expressed from frontline US healthcare
workers and clinicians based on superior
clinical outcomes, operational efficiencies and
an unprecedented safety profile.
¥ Continuation of pilot clinical trials targeting
new applications for Technegas™ in chronic
respiratory disease states and long-COVID-19,
COPD, asthma and lung cancer.
¥ Technegas™ procedures continue to rebound
following the impact from COVID-19 to
pre-pandemic levels.
¥ The appointments of Mr. Kevin Barrow and
Professor Gregory King, as Non-Executive
Directors of Cyclopharm significantly enhances
the skill-set of the Board and positions the
Company for the next phase of growth.
Expand Technegas™ revenues
Technegas™ sales grew by 4.1% to $13.66 million,
matching pre-pandemic levels.
3,347 PAS sets were sold, which is 268 more than
the previous year. PAS sets sold increased solidly
in our established markets of Europe and Canada,
up 4% and 12% respectively. A decline in sales was
recorded in Australia/New Zealand with other
markets such as China (80 sets) and South Africa
(60 sets) making a valuable contribution to the
total. All other markets recorded gains in sales.
Canada remains the largest country market by
volume with 923 PAS sets sold, followed by France
with 700 PAS sets sold.
In total 76 Technegas™ Generators were sold
compared to 57 sold in 2021. Europe, excluding
France and Germany, accounted for 24 generators
followed by 15 generator sales in Australia and
New Zealand and 14 in Canada.
Sales of generators and other service revenue
represented 27.0% of Technegas™ total revenue,
down from 27.8% in 2021. The decrease was
primarily a result of the relative strength of PAS
sales over the period and some lag effects from
the COVID-19 disruption.
Sales of Patient Administration Sets (PAS)
represented 73.0% of Technegas™ revenue (72.2%
in FY21). Each box set of PAS is equal to 50 patient
doses of Technegas™. Cyclopharm sold 3,347 PAS
boxes (167,350 patient doses) in 2022 up 8.7% from
3,079 in 2021. In comparison, PAS Revenue was
up 5.3%. The Group’s sales of PAS sets, although
effectively normalised by year end, were still
impacted from the residual effect of the COVID-19
pandemic throughout the year, through a reduction
in diagnostic procedures.
The Technegas™ division benefited significantly
from the more than doubling of third-party
distribution revenues to $9.22 million. Third-party
revenue was driven by a strong performance in
Europe and exceptional growth in the Asia-Pacific.
$13.21m $13.66m
$12.35m
2,782
3,347
3,079
$9.22m
76
57
51
$4.10m
$2.17m
2020
2021
2022
2020
2021
2022
2020
2021
2022
2020
2021
2022
Technegas™
Sales ($m)
Technegas™ PAS
Sales (units)
Technegas™ Generator
Sales (units)
Third-party Distribution
Revenues ($m)
13
Cyclopharm Limited | annual report 2022 Regional review
Europe
Europe was the best performing region in
2022, in terms of revenue, delivering sales of
$12.49 million, up 9% on 2021.
¥ The European result benefited from
$4.97 million of third-party distribution
revenues, a 66% increase on the prior year.
¥ Underlying sales of Technegas™ products
and services in Europe declined 12% to
$7.52 million, driven by slightly weaker
Generator and Service revenue, largely offset
by stronger PAS sales across the board.
¥ In total 1,677 PAS sets were sold in Europe in
2022, up from 1,609 in 2021 and 31 generators
were sold in 2022, down from 37 in 2021. PAS
sales were down 8% in France, down 7% in
Germany but up 3% in the rest of Europe,
reflecting the uneven recovery in imaging
services flowing from the COVID-19 pandemic.
Asia-Pacific
The Asia-Pacific region recorded a substantial
rise in revenues, up 119%, from $3.26 million in
2021 to $7.13 million in 2022, primarily driven by
a significant increase in third-party sales.
¥ Notwithstanding the strength in third-party
sales revenue, Generator sales across the
Asia-Pacific region were also strong at
29 units in 2022. Generator sales in Asia
rose from 6 units in 2021 to 14 units in 2022.
Australia/New Zealand unit sales lifted to
15 units in 2022 compared to 4 units in 2021.
¥ Asia-Pacific PAS sales of 609 sets in 2022
were up 4% from 588 in 2021.
¥ The residual impact of COVID-19 in suppressing
the number of diagnostic procedures across
the Asia-Pacific is starting to reverse, albeit
modestly. The gradual resumption of non-urgent
elective surgery in these markets is also
providing a catalyst for the expectation of a
continuing recovery in 2023.
Canada
Canada reported a solid recovery in sales of
$2.96 million in 2022, up 21% compared to sales
of $2.44 million in 2021.
¥ Canada saw generator sales rise by 5 to 14
in 2022 due to continuing market share
penetration and
¥ PAS sales grew by 12% to 923 reflecting the
reduced impact of COVID-19 and the strong
market position in that jurisdiction.
Rest of the World
Revenue in South Africa and Latin America
continued to deliver a modest, but growing,
contribution to overall group sales revenue, with
year-on-year growth up 233% to $0.30 million.
¥ In Latin America PAS sales were up 77% to
78 sets in 2022, however, there were no generator
sales.
¥ In South Africa PAS sales rose strongly,
up 275% to 60 sets in 2022 and there were two
generators sold, up from one in 2021.
USFDA approval process
Cyclopharm continues to progress toward attaining
USFDA approval to commence commercial sales of
Technegas™ in the US market in 2023.
The US market represents an opportunity for
Cyclopharm to significantly increase sales of our
Technegas™ product suite. The impact of the
COVID-19 pandemic in the USA has been a catalyst
for expressions of support for Technegas™ to
include a request for Fast Track Approval of the
technology from US medical professionals along
with hundreds of formal expressions of interest.
This high level of support reinforces the Board’s
expectation there will be strong initial demand for
Technegas™ following USFDA approval.
Entry into the US market will also accelerate
opportunities to explore the expansion of the use
of Technegas™ into the treatment and management
of additional and much larger indications, such as
COPD, asthma and long-COVID.
Sales by region
Technegas™
Third-party Sales
Total
Canada
Europe
APAC
Rest of the World
Europe
APAC
2018
$m
2.14
8.35
–
2.66
–
0.25
13.40
2019
$m
2.55
8.74
2.35
0.44
–
–
14.08
2020
$m
1.76
8.27
2.26
0.06
2.17
–
14.52
2021
$m
2.44
8.51
2.17
0.09
3.00
1.10
17.31
2022
$m
2.96
7.52
2.88
0.30
4.97
4.25
22.88
Change
2021
to 2022
21%
(12%)
33%
233%
66%
286%
32%
14
Managing Director’s Review (CONTINUED)Cyclopharm Limited | annual report 2022 In April 2021, the USFDA conducted a site
inspection of the Company’s Kingsgrove facility.
As part of the inspection process, the Company
is required to provide bimonthly updates. To
date there has been twelve submissions to the
USFDA delivering objective evidence highlighting
the progress the company has made in response
to the inspection. Some of the more substantial
initiatives have included a facility upgrade
to an ISO 8 standard and the extraction and
recording of real-time data from bespoke legacy
manufacturing equipment. These bimonthly
updates will continue until US approval is received.
As previously disclosed, in June 2021 Cyclopharm
received a Complete Response Letter (CLR) from
the USFDA. The letter outlined a definitive list
of items and recommendations that are required
to be addressed prior to granting approval for
commercial sales of Technegas™ in the US
market. The additional information request from
the USFDA does not relate to the demonstrated
efficacy and safety of Technegas™.
As earlier advised, the Company met with
the USFDA in late January 2022 to seek
additional guidance and clarification for items
listed in the CRL. Despite experiencing some
impediments, most notably delays in securing
critical instrumentation early in 2022 and a
global shortage of the isotope used to produce
Technegas™ at the end of 2022, Cyclopharm
has overcome these obstacles and submitted its
response to the USFDA on 30 March 2023. The
Company remains confident of commencing
sales in the US market in late 2023 following
the FDA’s stated six-month formal submission
review process.
US market entry and sales model
Cyclopharm continued to undertake numerous
activities to ensure it is well placed to rapidly
commercialise Technegas™ in the USA once
USFDA approval has been achieved. These
activities include building inventory reserves by
$2.78 million to $8.29 million at December 2022.
In addition Cyclopharm is pursuing agreements for
third-party distribution, service and installation,
and administrative support for Technegas™ in
the US market.
It is very important to emphasize that
reimbursement for Technegas™ is based on
established nuclear medicine procedures that
are agnostic to the approved agents being used.
Therefore, Technegas™ will be reimbursable
utilising existing procedural codes.
The existing market for PE
in the USA is estimated to be
US$180 million
annually
The initial existing market for nuclear medicine
ventilation imaging in the USA for pulmonary
embolism alone is estimated to be approximately
US$180 million annually and the Company will be
active in two stages. The first stage is the current
addressable market of US$90 million, representing
approximately 600,000 individual procedures.
Based on Cyclopharm’s experience in the Canadian
market, it remains confident that Technegas™ can
achieve a 50% share of the USA market over two
to three years, post US market entry, with an 80%
share representing around 480,000 procedures per
annum achievable over a 5 to 7-year period.
The second stage of converting the US$180 million
market is through increasing the pulmonary
embolism diagnostic market imaged through nuclear
medicine from 15% to 30%. In the USA, 85% of all
imaging to rule out PE is performed with CTPA.
Based on global experience, the unique properties of
Technegas™ and the reliability of imaging outcomes
enabled by our product, it is projected that the USA
nuclear medicine market will adopt the 3-D imaging
technique referred to as Single Photon Emission
Tomography (SPECT) as opposed to the current
2-D imaging or Planar Imaging. SPECT imaging
provides superior outcomes to both Planar and
CTPA in the diagnosis of PE.
Regulatory approval in existing markets
achieved
Cyclopharm is pleased to advise that during
2022 the Company renewed its Technegas™
CE mark under the updated European Medical
Device (MDR) Regulations. This achievement
demonstrates Technegas™ conforms to rigorous
European health and safety standards and
may continue to be sold freely in any part of the
European Economic Area.
In addition, during 2022 Cyclopharm renewed
licensing under the Medical Device Single Audit
Process (MDSAP) for participating countries
to include Canada, Australia, Brazil, Japan and
the USA.
15
Cyclopharm Limited | annual report 2022 ‘Beyond PE’ – substantially expanding
the use of Technegas™
Cyclopharm is confident that the extension
of Technegas™ into new applications such
as the diagnosis and monitoring of COPD,
asthma, long-COVID, lung cancer and other
respiratory disease states will create substantive
opportunities globally to exponentially expand
the market for Technegas™ beyond its traditional
PE market. In 2022 we invested $0.15 million
in Beyond PE trials, which follows on from
$0.21 million invested in 2021.
Technegas™ remains the recognised functional
ventilation imaging agent used in diagnosing
Pulmonary Embolism as referenced in both the
recently published Canadian Association of
Nuclear Medicine Guidelines and the updated
2019 European Association of Nuclear Medicine
Guidelines. Both guidelines reinforce the superior
use of Technegas™ particularly in patients
with COPD and the potential for nuclear
medicine imaging.
Cyclopharm estimates the global COPD market
alone is approximately 30 times the size of the PE
market and over 500 million patients suffering
with COPD and asthma could benefit from the
use of Technegas™ in diagnosis and ongoing
patient monitoring/management. These markets
represent significant opportunities to expand
sales of Technegas™ and drive shareholder value
over the medium term.
As part of its Beyond PE initiatives Cyclopharm
continues to sponsor several clinical trials that
investigate new applications for Technegas™.
The Beyond PE trials were impacted by
COVID-19, particularly during 2020-2021, with
a reduction in the rate of patient recruitment.
Those conditions eased during the course of 2022
as patient recruitment recommenced.
The diagnosis and monitoring of COPD, asthma
and other respiratory disease states, are all
being considered. Those 6 clinical trials are
listed below:
Study
Hunter Medical
Research Institute
(Newcastle, AU)
Woolcock Institute
(Sydney, AU)
CHUM
(Montreal, CA)
Indication
100 Patient Study
into the diagnosis and
response to therapy
in severe asthma
and COPD[1]
Diagnosis and response
therapy in mild to
moderate COPD[2]
Early detection of
COPD in asymptomatic
smokers[3]
Dalhousie
(Halifax, CA)
Post-lung transplant
patients
Status
¥ Imaging Analysis Underway
¥ Case Study Published
¥ Data analysis underway
¥ Targeting presentation of data at the ERS
Sept 2023 Annual Conference
¥ 25 Patient / 75 Scan Protocol
¥ 19 Patients enrolled
¥ 73% Total Protocol Scans Completed
¥ 30 Patient Study
¥ 100% Recruited
¥ Analysis complete
¥ Manuscript at final review stage
¥ 30 Patient Study
¥ 30% Recruited
¥ Recruitment has resumed following a
COVID-19 hold
McMaster University
Firestone Institute
(Hamilton, CA)
Ventilation in lung
cancer patients pre and
post lung resection[4]
¥ 58 Patients (116 scans)
¥ 100% Recruited
¥ Abstract presented at American Thoracic
McMaster University
Firestone Institute
(Hamilton, CA)
COVID-19 Related
Lung Ventilation and
Perfusion Injury[5]
Society May 2022
¥ Manuscript submitted for publication
¥ Abstract submitted for ISMRM & ISMRT
June 2023 Annual Conference
¥ 42 patients (84 scans)
¥ Recruitment to close
¥ Manuscript being drafted
¥ Abstract presented at the American Thoracic
Society May 2022
¥ Abstract submitted for ATS May 2023
Annual Conference
1. ACTRN12617001275358 - Can functional lung ventilation imaging identify treatable traits in obstructive airway disease?
2. http://investor.cyclopharm.com/site/PDF/1561_0/BetterDefiningAirwaysDiseasewithTechnegas
3. https://ichgcp.net/clinical-trials-registry/NCT03728712
4. https://clinicaltrials.gov/ct2/show/NCT04191174?term=technegas&draw=2&rank=3
5. https://clinicaltrials.gov/ct2/show/NCT04549636
16
Managing Director’s Review (CONTINUED)Cyclopharm Limited | annual report 2022 During 2022 the Company continued to receive
enquiries from clinical sites in the USA who were
interested in conducting additional trials on
Technegas™, including applications associated
with patients who had contracted COVID-19.
Advancing these initiatives could expand the use
of Technegas™ by improving the management of
patients with COPD; other small airways diseases
and those who are recovering from Long-COVID.
Other businesses
Third-party distribution
Cyclopharm has leveraged its regulatory
expertise and operational footprint to establish
a third-party distribution business that is
delivering exceptional growth. The Company
entered into third- party distribution agreements
for Europe in 2020, followed by agreements in
the Asia-Pacific region in 2021. In 2022, the
third-party distribution business more than
doubled its revenue contribution in 2022 at
solid, albeit lower, margins than Cyclopharm’s
proprietary Technegas™ products.
These complementary third-party revenue
streams supported Cyclopharm’s overall revenue
performance in 2020 and 2021, which were the
years when the COVID pandemic had its most
profound impact on our Technegas™ business.
The continued and substantial growth of the
Company’s third-party distribution business in
2022 demonstrates that it is now delivering a
material contribution to the overall business.
Third-party revenue is a combination of
capital works projects and ongoing sales from
consumables and related service support. Of the
total $9.2 million third-party revenues generated
in 2022, capital works projects equalled $2.4 million
with the ongoing revenues of associated with
recurring consumable sales and service equating
to $6.8 million.
These growing third-party partnerships continue
to reinforce the Company’s strategy of pursuing
additional and complementary revenue streams.
Initially introduced to leverage off our Technegas
sales and service infrastructure, this initiative
is now providing a material contribution to the
Company’s earnings and revenue and is emerging
as a core part of the business.
Commercialising new technologies –
Ultralute™
Cyclopharm’s proprietary UltraluteTM technology
extends the useful life of Molybdenum-99 (Mo-99)
generators by up to 50%, improves operating
efficiencies in nuclear medicine departments and
can lead to better health outcomes for patients.
Changes to Medical Device Regulations in the
European Union (EU) required recertification of
existing medical devices against more onerous
standards. This process has dramatically
slowed the introduction of new products into
the EU with the result that the registration of
UltraluteTM in Europe was not completed in 2022,
and consequently there were no revenues from
the sale of UltraluteTM.
Cyclopharm is engaging regulatory partners in
Europe to progress this initiative.
Macquarie Medical Imaging
Cyclopharm continues to maintain its 20%
equity ownership in Macquarie Medical
Imaging (MMI). It is anticipated that MMI will
be de-registered upon the finalisation of its
accounts payable and receivables.
Cyclotek NSW Pty Ltd
During the year, Cyclotek NSW Pty Ltd made a
$0.34 million positive contribution to the Group’s
results. Cyclotek NSW Pty Ltd is a collaboration
between Cyclopharm, Cyclotek (Aust) Pty Ltd and
the Australian Nuclear Science and Technical
Organisation (ANSTO’) set up in part to realise
the inherent value of Cyclopharm’s legacy
Cyclotron assets both to generate profits and
contribute to enhanced health outcomes for the
Australian community.
Cyclotek NSW Pty was formed as a joint venture
in late 2019, with Cyclopharm required to
contribute $40k per annum, over a period of 9
years, to fund the ongoing research activities of
Cyclotek NSW in exchange for a share of profits
from the business venture collaboration.
17
Cyclopharm Limited | annual report 2022 Ongoing Litigation
Leadership Team
Throughout 2022 Cyclopharm continued to defend
its valuable Intellectual Property vigorously and
successfully. In 2019, the Company successfully
brought an initial civil case against its former
employee in the German market, Mr Bjorn
Altmann and Almedis Altmann GmbH (“Almedis”).
A further judgement totalling approximately
€0.4 million in favour of Cyclopharm was
handed down in Germany against Mr Altmann in
December 2022. Given the timing of receipt of the
official judgment and further consequential court
actions required to be taken in January 2023 to
enable enforcement of the judgment award, this
favourable outcome is an event subsequent to the
close of 2022 financials. As a consequence, the
financial benefit will be recorded in 2023.
Litigation expenses were $0.95 million in 2022
compared to $1.09 million in 2021. The Company
continues to defend its intellectual property in
German and Australian courts, good progress
is being made to resolve each matter, and the
Company is confident that legal proceedings will
conclude in 2023.
Corporate Governance
In line with good corporate governance practices,
Cyclopharm's Board continually evaluates its skills
and composition to ensure they appropriately
support the Company's growth and governance
requirements.
In September 2022, the Board appointed
Mr. Kevin Barrow and Professor Gregory King
as a Non-Executive directors. Dr. King is a
world-renowned respiratory physiologist who
brings over 25 years’ experience as a clinician,
educator and researcher to the Cyclopharm Board.
Mr. Barrow brings to Cyclopharm more than
20 years of experience in the healthcare industry,
which includes numerous governance and senior
executive roles in both the pharmaceutical and
diagnostic imaging equipment sectors.
Cyclopharm’s focus on its strategic pillars has
allowed the Company to grow and secure a
talented team in readiness for USFDA approval
for Technegas™. Approval in the US market
will create both a step change in the business’
financial and operational performance as well as
mark a new phase in the growth of the business.
The breadth and depth of experience and the
integration of complementary skills across the
Cyclopharm management team, which we have
put in place, developed and refined over the past
several years, ensures that we are well positioned
to rapidly take advantage of entry into the US
market and the opportunities that will naturally
flow from our Beyond PE initiatives.
Summary and outlook
Cyclopharm has again proved the resilience of
the business by delivering another record revenue
performance in 2022 despite the latent effects
of the COVID-19 pandemic which impacted the
level of patient procedures across the globe
particularly in the first half of the financial year.
Our ability to substantially grow third party sales
underpinned an improving performance from
our core Technegas™ business and delivered on
our strategy of revenue diversification across
the group.
As a result, we were able to deliver record revenues
and earnings that support our ability to maintain
dividend payments.
During 2022 we continued to focus on securing
approval from the USFDA to commence sales of
Technegas™ in the US market in 2023, consistent
with previous expectations. Entry into the USA
market is our most significant near-term growth
catalyst and represents an opportunity for
Cyclopharm to significantly increase sales of our
Technegas™ product suite. In preparation for a
rapid entry into the US market the Company has
been building our inventory along with US sales
capabilities and infrastructure. The Company’s
strong balance sheet and cash balance at year
end of $20.3 million means we are fully funded
for an expected entry into the US market in 2023,
following a successful conclusion to the process for
USFDA approval of Technegas™.
18
Managing Director’s Review (CONTINUED)Cyclopharm Limited | annual report 2022 We are also continuing to accelerate
opportunities, via clinical trials, to develop our
Beyond PE strategy, designed to expand the use of
Technegas™ into the treatment and management
of additional and exponentially larger indications,
such as COPD, Asthma and Long-COVID.
Cyclopharm estimates there are over 500 million
patients suffering each with COPD and Asthma
who may benefit from the use of Technegas™ and
that the global COPD market is approximately
30 times the size of the PE market. The Company
remains confident that expectations of trial
results being published in the first half of 2023
will be met.
Cyclopharm is well placed to extend its market
leadership in lung imaging and drive ongoing
growth in revenue and earnings. The Company is
poised to enter its next growth phase in 2023 from
a position of strength, having delivered record
2022 sales revenues, robust sales of Technegas™
and continuing strong growth in third party sales.
Our strong capital position means we are able to
maintain a consistent dividend policy with the
final dividend for 2022 maintained at 0.5 cents
per share (CPS), giving a total dividend for 2022 to
1.0 cps. The Company expects to commence sales
in the USA in 2023, a major catalyst for growth,
alongside its well established and profitable
existing operations in 64 different countries.
Finally, I thank all my colleagues, the Cyclopharm
Board, with a special thanks to my entire global
team, who collectively have contributed to the
growth of the Company over recent years. On
behalf of the Cyclopharm management team, with
the ongoing support of the Board, we are absolutely
committed to delivering positive health outcomes
for our patients and growing financial rewards to
our shareholders.
James McBrayer
Managing Director
19
Cyclopharm Limited | annual report 2022 Directors’
Report
The Directors of Cyclopharm submit their report
for the year ended 31 December 2022.
Directors
Mr J S McBrayer
The names and details of the Company’s
Directors in office during the financial year
and until the date of this report are as follows.
Directors were in office for this entire year
unless otherwise stated.
Mr D J Heaney
Non Executive Chairman (Independent)
Mr Heaney was appointed to the Cyclopharm
Board on 20 November 2006 and is currently
the Chairman of Cyclopharm and Chairman
of the Remuneration and Board Nomination
Committees. He was formerly Chairman of the
Audit and Risk Committee until 28 February
2019. Mr Heaney has been re-appointed as acting
Chairman of the Audit and Risk Committee
effective 1 December 2021.
Mr Heaney has also served as a Non-Executive
Director of a number of ASX-listed and non-listed
companies.
Mr Heaney has more than 40 years experience
in all aspects of wholesale banking and finance,
gained in general management roles with
National Australia Bank Limited and subsidiary
companies in both Australia and the US.
Managing Director and Company Secretary
BSPharm, GDM, FAICD, AIM
Mr McBrayer has been a member of the Board
since 3 June 2008 at which time he accepted the
role of Managing Director. Mr McBrayer serves as
a member of the Board Nominations Committee.
Mr McBrayer has more than 30 years experience
in nuclear medicine and is a trained Nuclear
Pharmacist. Mr McBrayer held the role of
Managing Director at Lipa Pharmaceuticals,
Australia’s largest contract manufacturer of
over-the-counter products and senior management
positions with Brambles Cleanaway business and
Syncor, the world’s largest radioactive diagnostic
and therapeutic pharmaceutical provider.
Ms D M Angus
Non Executive Director (Independent)
B.Sc (Hons), M.(Biotechnology)
Ms Angus was appointed to the Board on 10 August
2021. She holds a Master of Biotechnology,
Bachelor of Science (Hons) and a Graduate
Diploma of Intellectual Property Law. Ms Angus
is a registered patent attorney and a member of
the Institute of Company Directors.
Ms Angus is currently a Non-Executive Director
of ASX Listed Companies Imagion Biosystems
Limited and Neuren Pharmaceuticals Limited.
She brings deep executive experience in the
Biotechnology industry and has previously
held senior positions with Prana Biotechnology
Limited (now Alterity Therapeutics) and Florigene
Limited. Ms Angus also has wide expertise
in corporate strategy, innovative product
development, governance and compliance in
the pharmaceutical sector.
20
Cyclopharm Limited | annual report 2022 Mr K M J Barrow
Professor G G King
Non Executive Director (Independent)
(appointed on 1 September 2022)
Non Executive Director (Independent)
(appointed on 27 September 2022)
M.Sc (Hons), MBA
MB ChB, PhD, FRACP
Mr Barrow was appointed to the Board on
1 September 2022. He brings to the Cyclopharm
board more than 20 years of experience in the
healthcare industry, which includes numerous
governance and senior executive roles.
Professor King was appointed to the Board on
27 September 2022. Dr. King is a world-renowned
clinician and respiratory physiologist who brings
over 25 years’ experience as a clinician, educator
and researcher to the Cyclopharm board.
Mr Barrow is currently Chief Executive Officer
of the Butterfly Foundation, Australia’s national
charity providing clinical services and support to
address eating disorders and body image issues.
Prior to this role, Mr Barrow was the Managing
Director at Philips Australia and New Zealand
overseeing all Philips’ operations in the region,
while also direct General Manager for the
Healthcare division, a leader in cardiac care,
acute care and home healthcare.
Mr Barrow joined Philips from BD, (Becton,
Dickinson and Company), a leading global medical
technology company that develops, manufactures
and sells medical devices, instrument systems and
reagents. Mr Barrow was the Managing Director
for BD Australia and New Zealand a market
leader in the Medical, Diagnostic and Lifescience
sector. Prior to this, Mr Barrow held several
senior sales and marketing management roles
at pharmaceutical company Eli Lilly.
Mr Barrow is a non-executive director of Wandi
Nerida, Australia’s first residential recovery centre
for people affected by an eating disorder and
was previously Chair of the Medical Technology
Association of Australia (MTAA), where he was a
director between 2009 and 2014.
Dr. King is Professor of Respiratory Medicine
at the Northern and Central Clinical Schools
of the University of Sydney. He is also the Staff
Specialist in the Department of Respiratory
Medicine at Royal North Shore Hospital, where
he directs the asthma service and is the Medical
Director of the Respiratory Investigation Unit,
and the Research Leader of the Airway Physiology
and Imaging Group at the Woolcock Institute of
Medical Research. In addition, Dr. King supervises
PhD and other postgraduate students at the
University of Sydney.
Dr. King has investigated the mechanics of
airways disease in relation to clinical aspects
of disease. His expertise includes complex
measurements of airway and lung function,
including the use of Cyclopharm’s Technegas™
in numerous research initiatives since 1997.
He has a clinical and research interest in asthma,
COPD and bronchiolitis in haemopoietic stem cell
transplant recipients. His research is designed to
better understand and manage airways diseases,
with the ultimate objective of developing cures.
Mr J S McBrayer
Company Secretary
Mr McBrayer was appointed as Company
Secretary on 25 March 2011.
21
Cyclopharm Limited | annual report 2022 Interests in the shares and options of the
Company and related bodies corporate
The number of ordinary Cyclopharm shares
and options on issue held directly, indirectly
or beneficially, by Directors, including their
personally-related entities as at the date of
this report is as follows:
Directors
Mr D J Heaney
Mr J S McBrayer
Ms D M Angus
Mr K M J Barrow
Professor G G King
Interest
As at report date
No. of
options
No. of
shares
BI
270,000
BI 5,109,580
10,000
BI
10,000
NBI
–
BI
5,399,580
–
200,000
–
–
–
200,000
BI: Beneficial interests
NBI: Non beneficial interests
Dividends
On 20 February 2023, the Directors declared a
final unfranked dividend of 0.5 cents per share
in respect of the financial year ended 31 December
2022, to be paid on 4 April 2023 to those
shareholders registered on 28 March 2023. An
interim unfranked dividend of 0.5 cents per share
was paid on 12 September 2022.
A final unfranked dividend of 0.5 cents per share
in respect of the financial year ended 31 December
2021 was paid on 12 April 2022.
The balance of franking credits available for
future dividend payments is $1,059.
Principal Activities
During the year, the principal activities of
the consolidated entity consisted of the
manufacture and sale of medical equipment
and radiopharmaceuticals, including associated
research and development and distribution
of third-party products to the diagnostic
imaging sector.
There were no significant changes in the nature
of the consolidated entity’s principal activities
during the financial year.
Operating and Financial Review
Operating results for the year
For the financial year, Cyclopharm recorded
a consolidated loss after tax of $6,611,515.
Loss after tax from the operations of the
Technegas™ division was $6,960,043.
Technegas™ divisional revenue of $22,878,333
was 32.2% higher than the previous year (2021:
$17,312,091) with $9,215,071 (2021: $4,098,985)
from distributing third-party products to the
diagnostic imaging sector.
Technegas™ division loss before tax of $6,410,559
(2021: $4,651,577) recorded an unfavourable
variance of $1,758,982 impacted by a significant
increase in distribution costs. Distribution
costs of $2.38 million were recorded in 2022,
up from $0.72 million in 2021. This significant
increase is the combined result of the growth
in the distribution of third-party products and
the negative impact the pandemic has had
on manufacturing, distribution and logistics
globally. Employee benefits expense was higher
at $9,081,003 (2021: $8,848,778) reflecting
ongoing investment in human capital to meet
global regulatory requirements which includes
compliance to USFDA guidelines. USFDA clinical
trial costs totalling $2,973,729 (2021: $1,303,372)
also contributed to the Technegas™ division
loss before tax.
Income from the business venture collaboration
contributed $340,464 to total revenue, down from
$392,483 in 2021.
Financial position
Net assets decreased to $36,536,610 at
31 December 2022 (2021: $43,067,734) impacted by
the net loss after tax of $6,611,515.
Net cash balance was $20,296,176 at
31 December 2021.
Further details of Cyclopharm’s Operating and
Financial Review are set out on pages 10 to 19 of
the Managing Director’s Review.
22
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Significant changes in state
of affairs
Likely developments and
future results
Shares issued and cancelled during the year
Technegas™
320,997 lapsed Long Term Incentive Plan shares
were cancelled on 4 October 2022. There were no
other shares issued and cancelled during the year.
Options issued during the year
No options were issued and cancelled during
the year.
Other than as set out above, there were no
significant changes in the state of affairs of the
Cyclopharm Group during the year.
Significant events after
balance date
Final dividend
On 20 February 2023, the Directors declared a
final unfranked dividend of 0.5 cents per share in
respect of the financial year ended 31 December
2022, payable on 4 April 2023.
Shares issued
On 23 March 2023, 642,500 long term incentive
plan shares were issued at an exercise price of
$1.82 per share.
Ongoing litigation
A further judgement totalling approximately
Euro 0.4 million in favour of Cyclopharm was
handed down in Germany against Mr Altmann in
December 2022. Given the timing of receipt of the
official judgment and further consequential court
actions required to be taken in January 2023 to
enable enforcement of the judgment award, this
favourable outcome is an event subsequent to the
close of 2022 financials. As a consequence, the
financial benefit will be recorded in 2023.
No other matters or circumstances have arisen
since the end of the financial year, not otherwise
dealt with in the financial report, which
significantly affected or may significantly affect
the operations of the economic entity, the results
of those operations, or the state of affairs of the
economic entity in future financial periods.
The opportunities for developing additional
Technegas™ indications, particularly for asthma
and COPD, will continue to be a key priority. If
successful, there is significant potential to expand
Technegas’™ revenue and profitability over the
medium to longer term.
The Directors maintain their view that FDA
approval to sell Technegas™ into the USA market
provides Cyclopharm with the opportunity to
significantly expand its sales and profitability.
The Company remains confident of commencing
sales in the US market in late 2023 following the
lodgement of Cyclopharm’s reply to the Complete
Response Letter on 30 March 2023 and the
USFDA’s stated six–month formal submission
review process.
In preparation for a rapid entry into the US market
the Company has been building inventory along
with US sales capabilities and infrastructure. The
USA presents Cyclopharm with a transformational
market opportunity estimated at US$180 million
annually for pulmonary embolism.
Ultralute™
Cyclopharm is currently seeking to register
Ultralute™, in Europe, as a medical device to
support better acceptance of this new first in
class technology. Changes to Medical Device
Regulations in the European Union (EU) required
recertification of existing medical devices
against more onerous standards. This process
has dramatically slowed the introduction of new
products into the EU with the result that the
registration of Ultralute™ in Europe was not
completed in 2022, and consequently there were
no revenues from the sale of Ultralute™.
Cyclopharm is engaging regulatory partners
in Europe to progress this initiative. Further
details are set out on page 17 of the Managing
Director’s Review.
23
Cyclopharm Limited | annual report 2022 Third-party distribution
Cyclopharm has leveraged its regulatory expertise
and operational footprint to establish a third-party
distribution business that is delivering exceptional
growth. Third-party revenue is a combination of
capital works projects and ongoing sales from
consumables and related service support.
These growing third-party partnerships continue
to reinforce the Company’s strategy of pursuing
additional and complementary revenue streams.
Initially introduced to leverage off our Technegas™
sales and service infrastructure, this initiative
is now providing a material contribution to the
Company’s earnings and revenue and is emerging
as a core part of the business.
Material business risks
The Directors have identified the following
material business risks which may, if they
eventuate, substantially impact on the future
performance of the Cyclopharm Group, along with
its approach to managing these risks. The risk
factors listed below are not exhaustive. Additional
risks may also adversely affect the financial
performance of Cyclopharm.
Regulatory
Future expansion of Cyclopharm’s range of
products and services may be governed by
regulatory controls in each target market and it
is not possible for Cyclopharm to guarantee that
approvals in all target markets will be obtained
and maintained in the future.
The Technegas™ System is required to be
registered with the relevant regulatory bodies in
each country or relevant jurisdiction. If for any
reason such product registrations are withdrawn,
cancelled (or otherwise lose their registered status)
or are not renewed, it may have a significant effect
on the sales of products which rely on them in the
relevant country or countries.
The manufacture of Technegas™ does not involve
the emission of any environmentally sensitive
materials and the Cyclopharm Group is not
required to hold any environmental licence or
consent under the Environmental Protection Act
(Cth). However, in order to expand the Company’s
research and development capabilities, in 2018,
Cyclopharm secured a Radiation Management
Licence from the NSW EPA to sell, possess or
store regulated materials.
It is possible that licensing requirements could
change with the development of new products
and any additional regulatory requirements could
impact upon the profitability of the group.
The Cyclopharm Group has obtained:
¥ a listing on the Australian Register of
Therapeutic Goods Register for the
Technegas™Plus Technegas™ Generator and
the Patient Administration Set (radio-aerosol
administration set);
¥ CE Mark approvals under the more stringent
European Medical Device Regulations for
Technegas™Plus Technegas™ Generator
and Patient Administration Set (PAS) of the
Technegas™ System;
¥ a Marketing Authorisation for the Pulmotec™
carbon crucible, which is the drug (medicine)
aspect of Technegas™ in Europe;
¥ a Medical Device Single Assessment Program
(MDSAP) certificate; and
¥ Notified Body recognition that our Quality
Management System (QMS) complies with the
requirements of ISO13485:2016 for the design,
manufacture, installation and repair service of
the Technegas™ System.
Ongoing regulatory audits/inspections are
necessary for the retention and re-certification
of the above-named certificates/licences for
continued international distribution of the
Technegas™ System.
In 2022, the Company renewed its Technegas™
CE mark under the updated European Medical
Device (MDR) Regulations. This achievement
demonstrates Technegas™ conforms to rigorous
European health and safety standards and
may continue to be sold freely in any part of the
European Economic Area.
In addition, during 2022 Cyclopharm renewed
licensing under the Medical Device Single Audit
Process (MDSAP) for participating countries
to include Canada, Australia, Brazil, Japan and
the USA.
Cyclopet Pty Limited, which is involved in
the operations of the cyclotron, is subject to
significant environmental regulations under the
Radiation Control Act, 1990 by the Department
of Environment, Climate Change and Water.
24
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Competition
Disruption of Business Operations
To date, Cyclopharm has demonstrated that
it can compete effectively in the medical
equipment/drug market in Australia and many
other parts of the world.
The medical equipment/drug industry is
very competitive and characterised by large
international companies supplying much of the
global market requirements. The emergence of
new and/or unauthorised generic technologies
could in certain circumstances make the
Technegas™ System redundant or negatively
impact on the Cyclopharm Group’s plans to
develop its Ultralute™ business.
Accordingly, there is a business risk in that
Cyclopharm’s key revenue source from the
Technegas™ System could be severely disrupted
or reduced. There are products that do compete
with Technegas™, in particular Computed
Tomography and DTPA. These products could
replace Technegas™ and therefore negatively
impact Cyclopharm Group’s revenue and
profitability. The Directors note that the lengthy
periods it takes to achieve regulatory approval
and gain medical practitioners’ approval
and acceptance of new or generic products,
Cyclopharm Group’s reputation for timely and
quality service, the safety record of Technegas™
and its competitive pricing, mitigate these risks.
In addition, the Cyclopharm Group’s business
plan and stated strategy is to continue to
develop sales in new and existing international
markets and to develop new diagnostic purposes
for Technegas™.
Reputation
The performance of Cyclopharm Group’s
products is critical to its reputation and to its
ability to achieve market acceptance of these
products. Any product failure could have a
material adverse effect on Cyclopharm Group’s
reputation as a supplier of these products.
Technegas™ has had no contraindications or
serious attributable adverse patient events since
the commencement of sales.
As a manufacturer, the Cyclopharm Group is
exposed to a range of operational risks relating
to both current and future operations. Such
operational risks include supply chain disruptions,
equipment failures, IT system failures, external
services failure (including energy supply),
industrial action or disputes and natural disasters.
If one or more such operational risks materialize,
they may have an adverse impact on the operating
and financial performance of Cyclopharm.
Reliance on Distributors/Loss of
key customers
The Cyclopharm Group operates through a series
of contractual relationships with customers,
suppliers, distributors and independent
contractors. To date, the Cyclopharm Group has
generally provided products and services on the
basis of tenders submitted to customers, followed
by purchase orders incorporating the customer’s
standard terms and conditions of trade as a
condition of the acceptance.
Cyclopharm Group maintains a spread of
customers through direct and indirect sales
channels. The loss of a major distributor could
have a significant, adverse impact on Cyclopharm’s
projected earnings. The majority of sales through
distributors or agents are managed through
contractual arrangements. Whilst the Cyclopharm
Group has distribution agreements in place, some
may be terminated by the distributor with up to six
months’ notice prior to the expiration of the current
terms (which vary). Other sales arrangements are
not in writing and depend on the ongoing goodwill
of the parties. The Directors are concerned to
ensure that all such relationships are formalised.
All contracts, including those entered into by the
Cyclopharm Group, carry a risk that the respective
parties will not adequately or fully comply with
their respective contractual rights and obligations
or that these contractual relationships may be
terminated.
Cyclopharm’s financial result could be adversely
affected by the loss of large customers, a change
in the terms of business with a large customer,
or by such customers not adequately or fully
complying with their respective contractual rights
and obligations. However, the risks are mitigated
by the existence of numerous alternatives
available given that Technegas™ is a highly
sought after product.
25
Cyclopharm Limited | annual report 2022 Currency and Exchange Rate Fluctuations
Patents
The financial contribution to the Cyclopharm
Group of the Technegas™ System will depend
on the movement in exchange rates between
the Australian dollar and a number of foreign
currencies, particularly the Euro.
Unless challenged, the validity of a patent or
trademark may be assumed. Any patent or
trademark may be challenged on a number of
grounds but the onus is on the party seeking
revocation to establish those grounds.
The exchange rate between various currencies
may fluctuate substantially and the result of these
fluctuations may have a material adverse impact
on Cyclopharm’s operating results and financial
position. In the long term, Cyclopharm’s ability
to compete against imported products may be
adversely affected by an expectation of a sustained
period of a high Australian dollar that would reduce
the Cyclopharm Group’s price competitiveness.
The majority of the Cyclopharm Group’s
operational expenses are currently payable in
Australian dollars. The Cyclopharm Group also
supplies its product to overseas markets and hence
is exposed to movements in the A$ exchange rate.
The Cyclopharm Group does not enter into forward
exchange contracts to hedge its anticipated
purchase and sale commitments denominated in
foreign currencies. As such, Cyclopharm is exposed
to exchange rate fluctuations.
Doing Business Internationally
As the Cyclopharm Group is and will continue
operating in numerous countries, the Cyclopharm
Group will be exposed to risks such as unexpected
changes in regulatory requirements (including
taxation), longer payment cycles, problems in
collecting debts, fluctuation in currency exchange
rates, foreign exchange controls which restrict
or prohibit repatriation of funds and potentially
adverse tax consequences, all of which could
adversely impact on Cyclopharm.
The Cyclopharm Group currently requires, and
in the future may require further, licenses to
operate in foreign countries which may be difficult
to obtain and retain depending on government
policies and political circumstances.
Intellectual Property Rights
The Cyclopharm Group’s success may be affected
by its ability to maintain patent protection for
products and processes, to preserve its trade
secrets and to operate without infringing the
proprietary rights of third parties.
All patents and trademarks require renewal at
regular dates and if not renewed will expire. It
is the Cyclopharm Group’s practice to renew its
patents and trademarks as required. The Directors
note that whilst some patents have expired or have
not been renewed, or remain to be transferred or
licensed to Cyclopharm Group companies, there
remains sufficient protection in these countries
through other patent arrangements in place or
being put in place.
The validity and breadth of claims covered
in patents involve complex legal and factual
questions and therefore may be highly uncertain.
No assurance can be given that the pending
applications will result in patents being issued,
that such patents or the current patents
will provide a competitive advantage or that
competitors of the Cyclopharm Group will not
design around any patents issued. Further, any
information contained in the patent applications
will become part of the public domain, so that it
will not be protected as confidential information.
As legal regulations and standards relating to the
validity and scope of patents evolve, the degree
of future protection of the Cyclopharm Group’s
proprietary rights is uncertain. However, those
regulations and standards in the field of nuclear
medicine (in which the Cyclopharm Group’s
technology resides) are relatively well established
and non-controversial.
Environmental Regulations
Cyclopet Pty Limited, a member of the
consolidated group’s operations is subject to
significant environmental regulations under the
Radiation Control Act, 1990 by the Department
of Environment, Climate Change and Water. The
Board believe that the consolidated group has
adequate systems in place for the management
of its environmental requirements as they apply
to the consolidated group.
26
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Retirement, Election and
Continuation in Office of Directors
In accordance with the Company’s Constitution,
all Directors have been elected by members at the
Annual General Meeting (AGM) with the exception
of Mr McBrayer. Mr McBrayer was appointed as
Managing Director on 3 June 2008 and under the
Constitution is exempt from election by members.
Indemnification and
Insurance of Officers
In accordance with clause 49.1 of Cyclopharm’s
constitution and section 199A of the
Corporations Act 2001 the Company has
resolved to indemnify its Directors and Officers
for a liability to a third-party provided that:
1. the liability does not arise from conduct
involving a lack of good faith; or
2. the liability is for costs and expenses incurred
by the Director or Officer in defending
proceedings save as not permitted by law.
During or since the financial year, the Company
has paid premiums in respect of a contract
insuring all the Directors against legal costs
incurred in defending proceedings for conduct
involving:
a) a wilful breach of duty; or
b) a contravention of sections 182 or 183 of the
Corporations Act 2001, as permitted by section
199B of the Corporations Act 2001.
The total amount of insurance contract
premiums paid for the year ending 31 December
2022 is $35,076 (for the year ended 31 December
2021: $32,132).
The Officers of the Company covered by the
insurance policy include the Directors, the
Company Secretary and Executive Officers. The
indemnification of the Directors and Officers will
extend for a period of at least 6 years in relation
to events taking place during their tenure (unless
the Corporations Act 2001 otherwise precludes
this time frame of protection.)
The liabilities insured include costs and expenses
that may be brought against the Officers in their
capacity as Officers of the Company that may be
incurred in defending civil or criminal proceedings
that may be brought against the Officers of the
Company or a controlled entity.
Auditor’s Independence Declaration
A copy of the Auditor’s Independence Declaration
as required under section 307C of the Corporations
Act 2001 is set out on page 37.
No fees (2021: $40,222) have been paid for share
registry services and fees of $26,909 (2021:
$18,982) for taxation services to an associate
of Nexia Sydney Audit Pty Ltd for the year
ended 31 December 2022 for non-audit related
services. The Board of Directors is satisfied that
the provision of non-audit services during the
year is compatible with the general standard
of independence for auditors imposed by the
Corporations Act 2001. The nature and scope
of each type of non-audit service 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.
The Company has not otherwise, during or
since the financial year, indemnified or agreed
to indemnify an auditor of the Company or any
related body corporate.
Remuneration Report (Audited)
The Remuneration Report (pages 27-35)
outlines the director and executive remuneration
arrangements of the Company and the group
and the remuneration disclosures required
in accordance with the requirements of the
Corporations Act 2001 and its Regulations. For
the purposes of this report Key Management
Personnel of the group are defined as those
persons having authority and responsibility for
planning, directing and controlling the major
activities of the Company and the group, directly
or indirectly, including any Director (whether
executive or otherwise) of the parent Company.
For the purposes of this report, the term ‘executive’
encompasses the Chief Executive, senior
executives, general managers and secretaries of
the parent and the group.
27
Cyclopharm Limited | annual report 2022 Director and Executive Remuneration Table 2022
Short-term employee benefits
Non-
monetary
benefits
$
Cash
Bonus
$
Salary
and Fees
$
72,603
Consolidated
2022
Directors
David Heaney
Non-Executive Director
Dianne Angus
Non-Executive Director
Kevin Barrow*
Non-Executive Director
Professor Greg King**
Non-Executive Director
Executive Director
James McBrayer***
Managing Director
439,198
Total Directors’ Compensation 597,248
13,705
52,145
19,597
–
–
–
–
35,496
35,496
Key Management Personnel
Mathew Farag
Chief Operating Officer
Total Key Management
Personnel’s Compensation
Total Compensation
330,033
1,000
330,033
1,000
927,281
36,496
Post
employment
benefits
Other
long-term
benefits
Share-
based
payment
Perform-
ance
related
Total
Super-
annuation
$
7,441
5,344
2,058
1,439
$
–
–
–
–
$
–
–
–
–
$
%
80,044
57,489
21,655
15,144
0%
0%
0%
0%
47,115
63,397
12,797
12,797
314,982
314,982
849,588
1,023,920
41%
34%
33,953
5,985
26,012
396,983
7%
33,953
5,985
26,012
396,983
97,350
18,782
340,994 1,420,903
7%
27%
* Mr Barrow was appointed to the Board on 1 September 2022.
** Professor King was appointed to the Board on 27 September 2022.
*** Mr McBrayer is employed on a rolling contract. He may be entitled to receive additional amounts up to a maximum of 20% of base remuneration
based on the Company’s performance and achieving certain Key Performance Indicator thresholds.
Director and Executive Remuneration Table 2021
Short-term employee benefits
Non-
monetary
benefits
$
Cash
Bonus
$
Salary
and Fees
$
Consolidated
2021
Directors
David Heaney
Non-Executive Director
Tom McDonald*
Non-Executive Director
Dianne Angus**
Non-Executive Director
Executive Director
James McBrayer***
Managing Director
426,920
Total Directors’ Compensation 566,113
19,607
69,517
50,069
–
–
–
30,000
30,000
Key Management Personnel
Mathew Farag
Chief Operating Officer
Total Key Management
Personnel’s Compensation
Total Compensation
300,033
300,033
866,146
–
–
30,000
Post
employment
benefits
Other
long-term
benefits
Share-
based
payment
Perform-
ance
related
Total
Super-
annuation
$
3,476
–
1,961
$
–
–
–
$
–
–
–
72,993
50,069
21,568
$
%
42,914
48,351
8,512
8,512
448,589
956,935
448,589 1,101,565
29,253
5,908
97,336
432,530
29,253
77,604
5,908
97,336
432,530
14,420
545,925 1,534,095
0%
0%
0%
50%
43%
23%
23%
38%
* Mr McDonald ceased as a member of the Board on 1 December 2021.
** Ms Angus was appointed to the Board on 10 August 2021.
*** Mr McBrayer is employed on a rolling contract. His bonus (which relates to the previous year’s performance), up to a maximum of $50,000,
is based on achieving certain benchmarks and targets, which in the absence of any formal agreement will default to achieving the budgeted
underlying operating EBITDA approved by the Board of Directors effective 2017.
28
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Details of Managing Director and Key Management Personnel’s
Share-based payments 2022
Name
Number
of LTIP
shares
granted
Fair
Value
at grant
date
Exercise
price per
LTIP share
scheme
Amount
payable
– limited
recourse loan
Term
date Performance Hurdle
Expiry
Mathew Farag
250,000
$0.245
$1.550
$387,500 *4.92 years 31/5/2023 Approval of Technegas’ use and
distribution in the United States by
the United States Food and Drug
Administration ("USFDA")
James McBrayer
(options)
200,000
$1.310
$0.000
$0 6.18 years 31/7/2025 The Company receiving
approval from the USFDA for
the distribution of Technegas™
products in the United States
Mathew Farag
500,000
$0.379
$1.220
$610,000 *3.07 years 31/5/2023 50% on approval by the
United States Food and Drug
Administration on the use and
distribution of Technegas™ in
the United States and 50% upon
continuous employment with the
Cyclopharm Group until 30 April
2023
Other non-Key
Management
Personnel
100,000
$0.379
$1.220
$122,000 3.07 years 31/5/2023 25% on achievement of 2020
revenue and gross margin
budget, 25% on achievement of
2021 revenue and gross margin
budget and 50% upon continuous
employment with the Cyclopharm
Group until 30 April 2023
Mathew Farag
15,002
$1.012
$3.200
$48,006
3 years 18/2/2024 Continuous employment with
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
50,000
$1.012
$3.200
$160,000
3 years 18/2/2024 50% year on year increase in
the Cyclopharm Group until
31 December 2023
third-party revenue at minimum of
20% gross margin for 2021, 2022
and 2023
50,000
$1.012
$3.200
$160,000
3 years 18/2/2024 50% year on year increase in
third-party service revenue for
2021, 2022 and 2023
149,060
$1.012
$3.200
$476,992
3 years 18/2/2024 Continuous employment with
the Cyclopharm Group until
31 December 2023
3,000
$1.447
$3.200
$9,600
6 years 18/2/2027 Continuous employment with
the Cyclopharm Group until
31 December 2026
1,317,062
$1,974,098
* Extended to 31 May 2023
Vested but
unexercised during
the year
James McBrayer
James McBrayer
James McBrayer
James McBrayer
Mathew Farag
Mathew Farag
Other non-Key Management
Personnel
Other non-Key Management
Personnel
Other non-Key Management
Personnel
* Extended to 31 May 2023
Number
of LTIP
shares
granted
1,721,554
269,614
257,750
500,000
225,000
250,000
24,102
Fair
Value
at grant
date
$0.215
$1.065
$1.410
$0.422
$0.349
$0.245
$0.215
Exercise
price per
LTIP share
scheme
Amount
payable
– limited
recourse loan
Term
Expiry
date
$0.900
$0.000
$0.000
$1.830
$0.900
$1.550
$0.900
$1,549,399
*7.73 years
31/5/2023
$0
$0
*3.47 years
31/5/2023
*2.85 years
31/5/2023
$915,000
*2.85 years
31/5/2023
$202,500
7.76 years
18/4/2025
$387,500
*4.92 years
31/5/2023
$21,692
*7.73 years
31/5/2023
45,000
$0.270
$1.200
$54,000
7 years
25/7/2023
160,000
$0.379
$1.220
$195,200
*3.07 years
31/5/2023
3,453,020
$3,325,291
29
Cyclopharm Limited | annual report 2022 Details of Managing Director and Key Management Personnel’s
Share-based payments 2021
Name
Mathew Farag
Number
of LTIP
shares
granted
250,000
Fair
Value
at grant
date
$0.201
Exercise
price per
LTIP share
scheme
$1.550
Amount
payable
– limited
recourse loan
$387,500
Expiry
Term
date Performance Hurdle
4 years 1/7/2022 Approval of Technegas’ use and
distribution in the United States by
the United States Food and Drug
Administration ("USFDA")
Mathew Farag
250,000
$0.201
$1.550
$387,500
4 years 1/7/2022 Continuous employment with
the Cyclopharm Group until
31 March 2021
Other non-Key
Management
Personnel
James McBrayer
(options)
Other non-Key
Management
Personnel
Mathew Farag
Other non-Key
Management
Personnel
200,000
$0.392
$1.500
$300,000
3 years 29/5/2022 The USFDA has approved the use
and distribution of Technegas™ in
the United States and continuous
employment with the Cyclopharm
Group until 23 May 2021
200,000
$1.310
$0.000
$0
6 years 31/7/2025 The Company receiving
215,000
$0.308
$1.220
$262,300
approval from the USFDA for
the distribution of Technegas™
products in the United States
2 years 3/5/2022 Continuous employment with the
Cyclopharm Group until 30 April
2022
500,000
$0.380
$1.220
$610,000
3 years 3/5/2023 50% on approval by the
United States Food and Drug
Administration on the use and
distribution of Technegas™ in
the United States and 50% upon
continuous employment with the
Cyclopharm Group until 30 April
2023
330,000
$0.380
$1.220
$402,600
3 years 3/5/2023 1. 25% on achievement of 2020
revenue and gross margin
budget, 25% on achievement
of 2021 revenue and gross
margin budget and 50% upon
continuous employment with the
Cyclopharm Group until 30 April
2023
2. USFDA Approval and
Continuous employment with
the Cyclopharm Group until 30
April 2023
James McBrayer
500,000
$0.315
$1.830
$915,000 1.85 years 31/5/2022 Continuous employment with
Cyclopharm Limited as Managing
Director for 2 years until the
Annual General Meeting held in
2022
Mathew Farag
15,002
$1.012
$3.200
$48,006
3 years 18/2/2024 Continuous employment with
50,000
$1.012
$3.200
$160,000
3 years 18/2/2024 50% year on year increase in
the Cyclopharm Group until
31 December 2023
third-party revenue at minimum of
20% gross margin for 2021, 2022
and 2023
100,000
$1.012
$3.200
$320,000
3 years 18/2/2024 Global harmonisation
documentation submitted by June
2023 for Europe, North America,
China and ANZ
50,000
$1.012
$3.200
$160,000
3 years 18/2/2024 50% year on year increase in
third-party service revenue for
2021, 2022 and 2023
190,057
$1.012
$3.200
$608,182
3 years 18/2/2024 Continuous employment with
the Cyclopharm Group until
31 December 2023
3,000
$1.447
$3.200
$9,600
6 years 18/2/2027 Continuous employment with
the Cyclopharm Group until
31 December 2026
2,853,059
$4,570,688
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
30
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Details of Managing Director and Key Management Personnel’s
Share-based payments 2021 (continued)
Vested but
unexercised during
the year
James McBrayer
James McBrayer
James McBrayer
Mathew Farag
Other non-Key
Management Personnel
Other non-Key
Management Personnel
Number
of LTIP
shares
granted
1,721,554
269,614
257,750
225,000
41,318
Fair
Value
at grant
date
$0.061
$1.065
$1.410
$0.349
$0.061
Exercise
price per
LTIP share
scheme
$0.900
$0.000
$0.000
$0.900
$0.900
Amount
payable
– limited
recourse loan
$1,549,399
$0
$0
$202,500
Term
5 years
2.41 years
1.80 years
5 years
Expiry
date
9/5/2022
9/5/2022
9/5/2022
18/4/2025
$37,186
5 years
31/8/2022
75,000
$0.270
$1.200
$90,000
5 years
25/7/2023
2,590,236
$1,879,085
Interests in the shares and options of the Company and related bodies corporate
The movement during the reporting period in the number of ordinary Cyclopharm shares and options on
issue held directly, indirectly or beneficially, by Directors and key management personnel, including their
personally-related entities is as follows:
Directors
Mr D J Heaney
Mr J S McBrayer
Ms D M Angus
Mr K M J Barrow
Professor G G King
Key Management Personnel
Mr M Farag
BI: Beneficial interest
NBI: Non beneficial interests
31 December
2021
No. of shares
On market
purchases
No. of shares
31 December
2022
No. of shares
Interest
BI
BI
BI
NBI
BI
244,500
5,109,580
–
–
–
5,354,080
25,500
–
10,000
10,000
–
45,500
270,000
5,109,580
10,000
10,000
–
5,399,580
BI
1,272,002
4,000
1,276,002
As at 31 December 2022, Mr McBrayer holds 200,000 share options (2021: 200,000).
31
Cyclopharm Limited | annual report 2022 Remuneration Committee
Remuneration structure
The Remuneration Committee currently
comprises of Mr Heaney, who is the Chairman
of the Remuneration Committee, Ms Angus and
Mr Barrow.
In accordance with best practice corporate
governance, the structure of non-executive
Director and executive remuneration is separate
and distinct.
The Remuneration Committee is responsible for:
¥ reviewing and approving the remuneration of
Directors and other senior executives; and
¥ reviewing the remuneration policies of the
Company generally.
Remuneration philosophy
The performance of the Company depends upon
the quality of its Directors and executives. To
prosper, the Company must attract, motivate and
retain highly skilled Directors and executives.
To this end, the Company embodies the following
principles in its remuneration framework:
¥ provide competitive rewards to attract high
calibre executives;
¥ link executive rewards to shareholder value;
¥ have a significant portion of executive
remuneration 'at risk'; and
¥ establish appropriate, demanding performance
hurdles for variable executive remuneration.
Non-executive Director remuneration
Objective
The Board seeks to set aggregate remuneration
at a level that provides the Company with the
ability to attract and retain Directors of the
highest calibre, whilst incurring a cost that is
acceptable to Shareholders.
Structure
The Constitution and the ASX Listing Rules specify
that the aggregate remuneration of non-executive
Directors shall be determined from time to time by
a general meeting. The latest determination was at
the Annual General Meeting held in May 2021 when
Shareholders approved an aggregate remuneration
increase from $250,000 to $350,000 per year.
The amount of aggregate remuneration sought to
be approved by Shareholders and the fee structure
is reviewed annually. The Board considers advice
from external consultants as well as the fees paid to
non-executive Directors of comparable companies
when undertaking the annual review process.
Each director receives a fee as set out in the
Director and Executive Remuneration Table
for being a director of the Company. Directors’
fees cover all main Board activities and the
membership of committees. There are no
additional fees for committee membership.
These fees exclude any additional ‘fee for service’
based on arrangements with the Company,
which may be agreed from time to time. Agreed
out of pocket expenses are payable in addition
to Directors’ fees. There is no retirement or
other long service benefits that accrue upon
appointment to the Board. Retiring non-executive
Directors are not currently entitled to receive a
retirement allowance.
32
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Executive remuneration
Fixed Remuneration
Objective
Objective
The Company aims to reward executives with
a level and mix of remuneration commensurate
with their position and responsibilities within the
Company so as to:
¥ reward executives for Company, business unit
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
Fixed remuneration is reviewed annually by
the Remuneration Committee. The process
consists of a review of Company, business unit
and individual performance, relevant comparative
remuneration in the market and internally and,
where appropriate, external advice on policies
and practices. As noted above, the Committee
has access to external advice independent
of management.
market standards.
Structure
In determining the level and make-up of executive
remuneration, the Remuneration Committee
engages external consultants as needed to
provide independent advice.
The Remuneration Committee has entered into
a detailed contract of employment with the
Managing Director and a standard contract with
other executives. Details of these contracts are
provided below.
Remuneration consists of the following key
elements:
¥ Fixed remuneration (base salary,
superannuation and non-monetary benefits);
and
¥ Variable remuneration
» short term incentive (STI); and
» long term incentive (LTI).
The proportion of fixed remuneration and variable
remuneration (potential short term and long term
incentives) for each executive is set out in the
Director and Executive Remuneration Table.
Executives are given the opportunity to receive
their fixed (primary) remuneration in a variety
of forms including cash and fringe benefits.
It is intended that the manner of payment
chosen will be optimal for the recipient without
creating undue cost for the Group. All forms
of executive remuneration are detailed in the
Remuneration Report.
Variable remuneration –
Short Term Incentive (STI)
The objective of the STI is to link the achievement
of the Group’s operational targets with
remuneration received by the executives charged
with meeting those targets. The total potential
STI available is set at a level so as to provide
sufficient incentive to the executive to achieve the
operational targets and such that the cost to the
Group is reasonable in the circumstances.
Actual STI payments granted to each executive
depends on the extent to which specific targets set
at the beginning of the year are met. The targets
consist of a number of Key Performance Indicators
(KPI’s) covering both financial and non-financial,
corporate and individual measures of performance.
Typically included measures are sales, net profit
after tax, customer service, risk management and
leadership/team contribution. These measures
were chosen as they represent the key drivers for
short term success of the business and provide a
framework for long term value.
33
Cyclopharm Limited | annual report 2022 The Group has predetermined benchmarks
that must be met in order to trigger payments
under the STI scheme. On an annual basis, after
consideration of performance against KPI’s,
the Remuneration Committee, in line with their
responsibilities, determine the amount, if any,
of the short term incentive to be paid to each
executive. This process usually occurs within
three months of reporting date.
The aggregate of annual STI payments available
for executives across the Group is subject to
the approval of the Remuneration Committee.
Payments are delivered as a cash bonus in the
following reporting period. Participation in the
Short Term Incentive Plan is at the Directors’
discretion.
Variable remuneration -
Long Term Incentive (LTI)
Long Term incentives are delivered under the Long
Term Incentive Plan (LTIP), which is designed to
reward sustainable, long-term performance in a
transparent manner. Under the LTIP, individuals
are granted LTIP shares, which have a two or three
year performance periods (Term). The number
of LTIP shares is determined by the Board. The
number of LTIP shares that an individual will
be entitled to at the end of the Term will depend
on the extent to which the hurdle has been met.
Performance hurdles are determined by the
Board to align individual performance with the
Company’s performance.
At the Annual General Meeting held on 8 May
2007, Shareholders approved the Company’s Long
Term Incentive Plan (“Plan”). An updated Plan
was approved by Shareholders on 29 May 2018 and
4 May 2021.
The purpose of the Plan is to encourage employees,
Directors and officers to share in the ownership of
the Company and therefore retain and motivate
senior executives to drive performance at both
the individual and corporate level. Performance
hurdles have been determined by the Board to
align individual performance with the Company’s
key success factors.
Employment contracts
Managing Director
The Managing Director, Mr McBrayer, is
employed under a rolling contract. Mr McBrayer’s
current contract was executed on 3 May 2021.
Mr McBrayer’s remuneration for 2022 and 2021
is disclosed in the tables on page 28. Under the
terms of the present contract:
¥ Each year from 1 January to 31 December,
Mr McBrayer may be entitled to receive
additional amounts up to a maximum of 20%
of base remuneration based on the Company’s
performance and achieving certain Key
Performance Indicator thresholds. This amount
is entirely performance based and seeks to
strengthen the alignment of the Managing
Director’s interests with those of the Company’s
shareholders.
¥ Mr McBrayer may resign from his position and
thus terminate this contract by giving 6 months
written notice unless a mutually agreeable date
can be agreed upon.
¥ The Company may terminate this employment
agreement by providing 6 months written notice
or providing payment in lieu of the notice period.
¥ The Company may terminate the contract at
any time without notice if serious misconduct
has occurred. Where termination with cause
occurs the Managing Director is only entitled to
that portion of remuneration that is fixed, and
only up to the date of termination.
¥ Mr McBrayer is entitled to receive strictly
limited recourse loans under the Company’s
LTIP to purchase shares.
¥ On 13 July 2015, a strictly limited recourse loan
was made to Mr McBrayer under the Company’s
LTIP to purchase shares for a period of 2 years.
The loan was to enable the purchase of 1,721,554
shares at the price of 90 cents per share. The
LTIP shares vested on 9 May 2017, the date of
the 2017 AGM.
¥ On 9 May 2017, Mr McBrayer exercised his
rights to purchase 1,721,554 LTIP shares and the
Company extended a loan totalling $1,549,398.60
for the purchase of the Plan Shares. The loan is
repayable in full within 5 years.
34
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 ¥ As approved by shareholders at the May 2019
AGM, 200,000 options were granted on 27 May
2019 and 539,525 shares comprising 269,911
ordinary shares and 269,614 LTIP shares were
issued in accordance with the Company’s Long
Term Incentive Plan on 11 December 2019 to
Mr McBrayer.
¥ As approved by shareholders at the July 2020
AGM, 1,015,500 shares comprising 257,750
ordinary shares and 757,750 LTIP shares were
issued in accordance with the Company’s
Long Term Incentive Plan on 24 July 2020 to
Mr McBrayer.
Other Executives (standard contracts)
All executives have rolling contracts. The
Company may terminate the executive's
employment agreement by providing (depending
on the individual’s contract) between 1 to
3 months’ written notice or providing payment
in lieu of the notice period. Where termination
with cause occurs the executive is only entitled
to that portion of remuneration that is fixed,
and only up to the date of termination.
Related Parties
The Directors disclose any conflict of interests
in Directors’ meetings as per the requirements
under the Corporations Act (2001). Any
disclosures that are considered to fall under the
definition of related parties as per AASB 124
‘Related Party Disclosures’ are made in the
Directors’ meetings and minuted.
End of Remuneration Report
35
Cyclopharm Limited | annual report 2022 Cyclopharm
Board Meetings
A
H
9
9
9
4
2
9
8
9
4
2
Audit & Risk
Committee
Board Nomination
Committee
Remuneration
Committee
H
3
–
3
1
–
A
3
–
3
1
–
H
2
2
2
1
–
A
2
2
2
1
–
H
1
–
1
–
–
A
1
–
1
–
–
Directors’ Meetings
The number of meetings of Directors (including
meetings of committees of Directors) held during
the year and the numbers of meetings attended
by each director were as follows:
Director
Mr D J Heaney
Mr J S McBrayer
Ms D M Angus
Mr K M J Barrow
Professor G G King
H: Held and eligible to attend, A: Attended
Share Options
200,000 share options (2021: 200,000) are on issue
as at year end.
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 Company,
or to intervene in any proceedings to which the
Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or
part of those proceedings.
No proceedings have been brought or intervened in
on behalf of the Company with leave of the Court
under section 237 of the Corporations Act 2001.
This report is made and signed in accordance with
a resolution of the Directors:
James McBrayer
Managing Director and CEO
Sydney, 31 March 2023
36
Directors’ Report (CONTINUED)Cyclopharm Limited | annual report 2022 Auditor’s Independence Declaration
To the Board of Directors of Cyclopharm Limited
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
To the Board of Directors of Cyclopharm Limited
As lead audit director for the audit of the financial statements of Cyclopharm Limited for the financial year
ended 31 December 2022, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
Auditor’s Independence Declaration under section 307C of the Corporations Act 2001
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(a)
As lead audit director for the audit of the financial statements of Cyclopharm Limited for the financial year
ended 31 December 2022, I declare that to the best of my knowledge and belief, there have been no
(b)
contraventions of:
any applicable code of professional conduct in relation to the audit.
Yours sincerely
(a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
any applicable code of professional conduct in relation to the audit.
(b)
Nexia Sydney Audit Pty Ltd
Yours sincerely
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Date: 31 March 2023
Stephen Fisher
Director
Date: 31 March 2023
37
Cyclopharm Limited | annual report 2022
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the year ended 31 December 2022
Continuing Operations
Sales revenue
Finance revenue
Other revenue
Total revenue
Cost of materials and manufacturing
Employee benefits expense
Advertising and promotion expense
Depreciation and amortisation expense
Freight and duty expense
Research and development expense
Administration expense
Other expense
Loss before tax and finance costs
Finance costs
Loss before income tax
Income tax
Loss for the year
Other comprehensive income after income tax
Items that will be re-classified subsequently to profit and loss
when specific conditions are met:
Exchange differences on translating foreign controlled entities (net of tax)
Total comprehensive loss for the year
Loss per share (cents per share)
– basic loss per share from continuing operations
– basic loss per share
– diluted loss per share
Consolidated
Consolidated
Notes
2022
$
2021
$
5
5
5
5a
5e
5c
5d
5f
5g
5b
6
Notes
7
23,218,797
109,733
1,635,856
24,964,386
17,704,574
3,950
2,432,578
20,141,102
(7,440,608)
(9,081,003)
(538,338)
(931,484)
(2,385,834)
(3,439,980)
(6,681,478)
(229,584)
(5,763,923)
(265,923)
(6,029,846)
(581,669)
(6,611,515)
(5,042,295)
(8,848,778)
(298,143)
(758,731)
(724,029)
(1,660,167)
(6,806,880)
(259,636)
(4,257,557)
(89,314)
(4,346,871)
(693,295)
(5,040,166)
(131,589)
(6,743,104)
(225,440)
(5,265,606)
2022
cents
(7.17)
(7.17)
(7.17)
2021
cents
(5.62)
(5.62)
(5.62)
The Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction
with the notes to the financial statements.
38
Cyclopharm Limited | annual report 2022 Consolidated Statement of
Financial Position
As at 31 December 2022
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Other assets
Total Current Assets
Non-current Assets
Property, plant and equipment
Right-of-use assets
Investments
Intangible assets
Deferred tax assets
Total Non-current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Lease liabilities
Provisions
Tax liabilities
Total Current Liabilities
Non-current Liabilities
Lease liabilities
Provisions
Deferred tax liabilities
Deferred income liabilities
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Employee equity benefits reserve
Foreign currency translation reserve
Accumulated losses
Total Equity
Consolidated
Consolidated
2022
$
2021
$
Notes
8
9
10
6
11
12
13
14
6
15
16
17
6
16
17
6
18
19
28
28
20,296,176
7,706,025
8,292,668
4,947
570,519
36,870,335
3,189,165
3,410,439
–
5,436,401
635,811
12,671,816
29,249,255
8,040,708
5,511,375
58,761
392,284
43,252,383
2,416,648
3,829,204
–
5,422,263
820,406
12,488,521
49,542,151
55,740,904
6,502,920
209,992
1,133,574
89,198
7,935,684
4,121,592
46,453
–
901,812
5,069,857
5,907,628
178,265
1,234,259
98,132
7,418,284
4,331,502
25,929
–
897,455
5,254,886
13,005,541
12,673,170
36,536,610
43,067,734
63,420,810
3,241,763
(1,053,129)
(29,072,834)
36,536,610
62,974,440
2,593,561
(921,540)
(21,578,727)
43,067,734
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements.
39
Cyclopharm Limited | annual report 2022 Consolidated Statement of
Cash Flows
For the year ended 31 December 2022
Operating activities
Receipts from customers
Receipt from business venture collaboration
Payments to suppliers and employees
Interest received
Borrowing costs paid
Income tax received
Net cash flows used in operating activities
Investing activities
Purchase of property, plant and equipment
Payments for intangible assets
Net cash flows used in investing activities
Financing activities
Proceeds from issue of shares
Share issue cost (net of tax)
Settlement of loan for Long Term Incentive Plan Shares
Dividends paid
Payment for lease liabilities
Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents
– at beginning of the period
– net foreign exchange differences from translation of cash and
cash equivalents
– at end of the year
Consolidated
Consolidated
2022
$
2021
$
Notes
8
24,289,662
340,464
(34,557,416)
109,733
(265,923)
3,418,995
(6,664,485)
21,244,553
392,483
(25,910,356)
3,950
(89,314)
2,729,274
(1,629,410)
(1,274,027)
(274,371)
(1,548,398)
(842,845)
(318,179)
(1,161,024)
–
–
446,370
(882,592)
(289,422)
(725,644)
33,000,003
(1,657,782)
–
(881,319)
(288,707)
30,172,195
(8,938,527)
27,381,761
29,249,255
1,874,285
(14,552)
20,296,176
(6,791)
29,249,255
8
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements.
40
Cyclopharm Limited | annual report 2022
Consolidated Statement of
Changes in Equity
For the year ended 31 December 2022
Contributed
Equity
Other
Contributed
Equity
Total
Contributed
Equity
Retained
Earnings/
(Accumulated
Losses)
Foreign
Currency
Translation
Reserve
(Note 28(b))
Employee
Equity
Benefits
Reserve
(Note 28(a))
Consolidated
$
$
$
$
$
$
Total
$
Balance at 1 January 2021
36,965,377
(5,333,158) 31,632,219 (15,657,242)
(696,100)
1,836,973 17,115,850
Loss for the year
Other comprehensive loss
Total comprehensive loss
for the year
Issue of shares
Share issue cost (net of tax)
Dividends paid
Cost of share based payments
Total transactions with
owners and other transfers
–
–
–
33,000,003
(1,657,782)
–
–
–
–
–
–
–
–
–
33,000,003
(1,657,782)
–
–
–
–
(881,319)
–
–
–
–
–
–
–
–
–
756,588
33,000,003
(1,657,782)
(881,319)
756,588
756,588 31,217,490
31,342,221
– 31,342,221
(881,319)
–
–
(5,040,166)
–
–
(225,440)
–
–
(5,040,166)
(225,440)
–
(5,040,166)
(225,440)
–
(5,265,606)
Balance at 31 December 2021 68,307,598
(5,333,158) 62,974,440 (21,578,727)
(921,540)
2,593,561 43,067,734
Contributed
Equity
Other
Contributed
Equity
Total
Contributed
Equity
Retained
Earnings/
(Accumulated
Losses)
Foreign
Currency
Translation
Reserve
(Note 28(b))
Employee
Equity
Benefits
Reserve
(Note 28(a))
Consolidated
$
$
$
$
$
$
Total
$
Balance at 1 January 2022
68,307,598
(5,333,158) 62,974,440 (21,578,727)
(921,540)
2,593,561 43,067,734
Loss for the year
Other comprehensive loss
Total comprehensive loss
for the year
–
–
–
Payment of loan for Long Term
Incentive Plan shares
Dividends paid
Cost of share based payments
Total transactions with
owners and other transfers
446,370
–
–
446,370
–
–
–
–
–
–
–
–
–
(6,611,515)
–
–
(131,589)
–
–
(6,611,515)
(131,589)
–
(6,611,515)
(131,589)
–
(6,743,104)
446,370
–
–
–
(882,592)
–
446,370
(882,592)
–
–
–
–
–
–
648,202
446,370
(882,592)
648,202
648,202
211,980
Balance at 31 December 2022 68,753,968
(5,333,158) 63,420,810 (29,072,834) (1,053,129)
3,241,763 36,536,610
The Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements.
41
Cyclopharm Limited | annual report 2022 Notes to the Consolidated
Financial Statements
For the year ended 31 December 2022
1. Corporate information
The financial report of Cyclopharm Limited
(“Cyclopharm” or “the Company”) for the year ended
31 December 2022 was authorised for issue by a
resolution of the Directors as at the date of this report.
Cyclopharm is a Company limited by shares
incorporated and domiciled in Australia. The shares
are publicly traded on the Australian Securities
Exchange (“ASX”) under the code “CYC”.
During the year, the principal continuing activities
of the consolidated entity (“the Group”) consisted of
the manufacture and sale of medical equipment and
radiopharmaceuticals, including associated research
and development, and installation and distribution of
third-party products to the diagnostic imaging sector.
2.
Summary of significant accounting policies
(a) Basis of Preparation
The financial statements are general purpose financial
statements that have been prepared in accordance with
Australian Accounting Standards, Australian Accounting
Interpretations, other authoritative pronouncements
of the Australian Accounting Standards Board (AASB)
and the Corporations Act 2001. The Group is a for-profit
entity for financial reporting purposes under Australian
Accounting Standards.
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result in
financial statements containing relevant and reliable
information about transactions, events and conditions.
Compliance with Australian Accounting Standards
ensures that the financial statements and notes
also comply with International Financial Reporting
Standards as issued by the IASB. Material accounting
policies adopted in the preparation of these financial
statements are presented below and have been
consistently applied unless stated otherwise.
Except for cash flow information, the financial
statements have been prepared on an accruals basis
and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial
liabilities.
The financial report is presented in Australian dollars.
42
(b) New and Amended Accounting Policies
Adopted by the Group
Consolidated financial statements
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.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted.
(c) New Accounting Standards and Interpretations
Not Yet Mandatory or Early Adopted
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
31 December 2022. The Group has not yet assessed the
impact of these new or amended Accounting Standards
and Interpretations.
(d) Basis of consolidation
Cyclopharm Limited is the ultimate parent entity (“the
Parent”) in the wholly owned group. The consolidated
financial statements comprise the financial statements
of Cyclopharm and its subsidiaries as at 31 December
each year ('the Group').
The Group’s financial statements consolidate those
of the parent company and all of its subsidiaries as of
31 December 2022. All subsidiaries have a reporting
date of 31 December.
Subsidiaries
Subsidiaries are consolidated from the date on
which control is transferred to the Group and cease
to be consolidated from the date on which control is
transferred out of the Group. Where there is loss of
control of a subsidiary, the consolidated financial
statements include the results for the part of the
reporting period during which the Parent has control.
The financial statements of subsidiaries are prepared
for the same reporting period as the parent Company,
using consistent accounting policies. Adjustments
are made to bring into line any dissimilar accounting
policies that may exist.
Cyclopharm Limited | annual report 2022 2.
Summary of significant accounting policies (continued)
Transactions eliminated on consolidation
Intercompany transactions, balances and unrealised
gains on transactions between entities in the
consolidated entity are eliminated. Unrealised losses
are also eliminated unless the transaction provides
evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the consolidated entity.
For business combinations involving entities under
common control, which are outside the scope of AASB 3
Business Combinations, the Company applies the
purchase method of accounting by the legal parent.
(e) Foreign currency translation
Functional and presentation currency
The functional currency of each of the group’s entities
is measured using the currency of the primary economic
environment in which that entity operates. The
consolidated financial statements are presented in
Australian dollars (AUD $) which is the parent entity’s
functional and presentation currency.
Transactions and balances
Transactions in foreign currencies are initially recorded
in the functional currency at the exchange rates ruling at
the date of the transaction. Foreign currency monetary
items are translated at the year-end exchange rate. Non-
monetary items that are measured in terms of historical
cost continue to be carried at the exchange rate at the
date of the transaction. Non-monetary items measured
at fair value are reported at the exchange rate when the
fair value was determined.
Exchange differences arising on the translation of
monetary items are recognised in the Statement of
Profit or Loss and Other Comprehensive Income, except
where deferred in equity as a qualifying cash flow hedge
or net investment hedge. On disposal of a foreign entity
the deferred cumulative amount in equity is recognised
in the Statement of Comprehensive Income.
Group companies
The functional currency of the overseas subsidiaries
Cyclomedica Ireland Limited, Cyclomedica Germany
GmbH, Cyclomedica Europe Limited, and Cyclomedica
Benelux bvba, is European Euro (Euro €), Cyclomedica
Nordic AB is Swedish Kroner (SEK), Cyclomedica
Canada Limited is Canadian dollars (Can $) and
Cyclomedica UK Ltd is Great British Pound (GBP).
The financial results and position of foreign operations
whose functional currency is different from the group’s
presentation currency are translated as follows:
¥ Assets and liabilities are translated at year-end
exchange rates prevailing at the reporting date.
¥ Income and expenses are translated at the average
exchange rates for the period.
¥ Retained profits/equity are translated at the
exchange rates prevailing at the date of the
transaction.
Exchange differences arising on the translation
of foreign operations are recognised in other
comprehensive income and are transferred directly to
the Group’s foreign currency translation reserve in the
Statement of Financial Position. On disposal of a foreign
operation, the related cumulative translation differences
recognised in equity are reclassified to profit or loss and
are recognised as part of the gain or loss on disposal.
Exchange differences are charged or credited to other
comprehensive income and recognised in the currency
translation reserve in equity.
(f) Income tax
Income tax on the profit and loss for the year comprises
current and deferred tax. Income tax is recognised in
the Statement of Comprehensive Income, except to the
extent that it relates to items recognised directly to
equity, in which case it is recognised in equity. Current
tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantially
enacted at the Statement of Financial Position date,
and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided using the Statement of
Financial Position liability method, providing for
temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The
amount of deferred tax provided is based on the
expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates
enacted or substantially enacted at the Statement of
Financial Position date and are expected to apply when
the deferred tax asset is realised or the deferred tax
liability is settled. A deferred tax asset is recognised
only to the extent that it is probable that future taxable
profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent
that it is no longer probable that the related tax benefit
will be realised.
43
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
Tax consolidation
Cyclopharm Limited is the head entity of the tax
consolidated group comprising all the Australian wholly
owned subsidiaries. The implementation date for the
tax consolidated group was 31 May 2006. Current tax
expense/income, deferred tax liabilities and deferred
tax assets arising from temporary differences of the
members of the tax consolidated group are recognised
in the separate financial statements of the members
of the tax consolidated group using a "stand-alone
basis without adjusting for intercompany transactions"
approach by reference to the carrying amounts of assets
and liabilities in the separate financial statements
of each entity and the tax values applying under
consolidation.
Any current Australian tax liabilities (or assets) and
deferred tax assets arising from unused tax losses of
the subsidiaries is assumed by the head entity in the
tax consolidated group and are recognised as amounts
payable (receivable) to (from) other entities in the tax
consolidated group. Any difference between these
amounts is recognised by the head entity as an equity
contribution or distribution.
Cyclopharm Limited recognises deferred tax assets
arising from unused tax losses of the tax consolidated
group to the extent that it is probable that future
taxable profits of the tax consolidated group will be
available against which the asset can be utilised.
Any subsequent period adjustments to deferred tax
assets arising from unused tax losses as a result of
revised assessments of the probability of recoverability
is recognised by the head entity only.
(g) Right-of-use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-use asset
is measured at cost, which comprises the initial amount
of the lease liability, adjusted for, as applicable, any
lease payments made at or before the commencement
date net of any lease incentives received, any initial
direct costs incurred, and, except where included in the
cost of inventories, an estimate of costs expected to be
incurred for dismantling and removing the underlying
asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line
basis over the unexpired period of the lease or the
estimated useful life of the asset, whichever is the
shorter. Where the Group expects to obtain ownership
of the leased asset at the end of the lease term,
the depreciation is over its estimated useful life.
Right-of-use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use
asset and corresponding lease liability for short-term
leases with terms of 12 months or less and leases of
low-value assets. Lease payments on these assets are
expensed to profit or loss as incurred.
(h) Property, plant and equipment
Plant and equipment is measured at cost less
accumulated depreciation and impairment losses.
The cost of fixed assets constructed within the
economic entity includes the cost of materials,
direct labour, borrowing costs and an appropriate
proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the group and the cost of the item can be
measured reliably. All other repairs and maintenance
are charged to the Statement of Comprehensive
Income during the financial period in which they
are incurred.
Impairment
The carrying amount of plant and equipment
is reviewed annually by Directors to consider
impairment. The recoverable amount is assessed on
the basis of the expected net cash flows that will be
received from the assets employment and subsequent
disposal. The expected net cash flows have been
discounted to their present values in determining
recoverable amounts.
44
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
Depreciation
The depreciable amount of all fixed assets including
capitalised lease assets are depreciated on a straight-line
basis over their useful lives 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.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the asset as follows:
Method
Basis
Plant and equipment
Straight-line method
5 – 33%
Leasehold Improvements 7.5 – 10% Straight-line method
16.67 – 25% Straight-line method
Motor vehicles
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset.
Any gain or loss arising on de-recognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included
in the Statement of Comprehensive Income in the year
the item is derecognised.
(i)
Investments accounted for using the
equity method
Associates are companies in which the Group has
significant influence through holding, directly or
indirectly, 20% or more of the voting power of the
Group. Investments in associates are accounted for
in the financial statements by applying the equity
method of accounting, whereby the investment is
initially recognised at cost and adjusted thereafter
for the post-acquisition change in the Group’s share
of net assets of the associate company. In addition,
the Group’s share of the profit or loss of the associate
company is included in the Group’s profit or loss.
The carrying amount of the investment includes
goodwill relating to the associate. Any discount on
acquisition whereby the Group’s share of the net fair
value of the associate exceeds the cost of investment
is recognised in profit or loss in the period in which the
investment is acquired. The carrying amount of the
investment also includes loans made to the associate
which are not expected to be repaid in the short term.
Profit and losses resulting from transactions between
the Group and the associate are eliminated to the
extent of the Group’s interest in the associate.
When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, the Group
discontinues recognising its share of further losses unless
it has incurred legal or constructive obligations or made
payments on behalf of the associate. When the associate
subsequently makes profits, the Group will resume
recognising its share of those profits once its share of the
profits equals the share of the losses not recognised.
Details of the Group’s investments in associates are
provided in Note 13.
(j) Intangibles
Intangible assets
Intangible assets acquired as part of a business
combination other than goodwill, are initially measured
at their fair value at the date of the acquisition.
Intangible assets acquired separately are initially
recognised at cost.
Indefinite life intangible assets are not amortised and
are subsequently measured at cost less any impairment.
Finite life intangible assets are subsequently measured
at cost less amortisation and any impairment.
The gains and losses recognised in profit or loss
arising from the derecognition of intangible assets
are measured as the difference between net disposal
proceeds and the carrying amount of the intangible
assets. The method and useful lives of finite life
intangible assets are reviewed annually.
Internally generated intangible assets, excluding
development costs, are not capitalised and are recorded
as an expense in the Statement of Profit or Loss.
Intangible assets are tested for impairment where
an indicator of impairment exists, and in the case
of indefinite life intangibles, at each reporting date,
either individually or at the cash generating unit level.
Useful lives are also examined on an annual basis
and adjustments, where applicable, are made on a
prospective basis.
45
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
Expenditure on the development of the
Technegas™Plus and Ultralute™ generator has been
capitalised. Costs will be amortised once the asset
development is completed and the asset ready for use.
No impairment provision has been deemed appropriate.
The Directors are satisfied that the future economic
benefits will eventuate to justify the capitalisation of
the expenditure incurred. Development expenditure
is tested annually for impairment or more frequently
if events or changes in circumstances indicate that it
might be impaired.
Useful lives
Method used
New Patents
and licences
Patents – Finite
Licenses – Finite
8–10 years –
Straight-line
Impairment test/
Recoverable
Amount testing
Annually and
where an indicator
of impairment
exists
Technegas
Development costs
Finite
9 years –
Straight-line
Amortisation
method reviewed at
each financial year-
end;
Reviewed annually
for indicator of
impairment
Research and development costs
Expenditure on research activities is recognised as an
expense when incurred.
Expenditure on development activities is capitalised
only when it is probable that the project will be a
success considering its commercial and technical
feasibility; the Group is able to use or sell the asset; the
Group has sufficient resources; and intend to complete
the development and its costs can be measured
reliably. Development expenditure is measured at cost
less any accumulated amortisation and impairment
losses. Amortisation is calculated using a straight-
line method to allocate the costs over a period during
which the related benefits are expected to be realised.
(k) Inventories
Inventories are valued at the lower of cost and net
realisable value where net realisable value is the
estimated selling price in the ordinary course of
business, less estimated costs of completion and the
estimated costs necessary to make the sale.
Costs incurred in bringing each product to its present
location and conditions are accounted for as follows:
¥ Raw materials: purchase cost on a first-in, first-out
basis;
¥ Finished goods and work-in-progress: cost of direct
materials and labour and an appropriate portion of
manufacturing overheads based on normal operating
capacity but excluding borrowing costs.
(l) Trade and other receivables
Trade receivables are initially recognised at fair value
and subsequently measured at amortised cost using
the effective interest method, less any allowance for
expected credit losses. Trade receivables are generally
due for settlement within 90 days. The Group has
applied the simplified approach to measuring expected
credit losses, which uses a lifetime expected loss
allowance. To measure the expected credit losses, trade
receivables have been grouped based on days overdue.
(m) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
deposits held at call with banks, short-term deposits
with an original maturity of three months or less and
bank overdrafts. For the purposes of the Statement of
Cash Flows, cash and cash equivalents consist of cash
and cash equivalents as defined above.
(n) Trade and other payables
Trade payables and other payables are carried at
amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the
financial year that are unpaid and arise when the
Group becomes obliged to make future payments in
respect of the purchase of these goods and services.
Trade payables are normally settled within 30 to
60 days.
46
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
(o) Interest-bearing loans and borrowings
(r) Employee entitlements
All loans and borrowings are initially recognised at cost,
being the fair value of the consideration received net of
issue costs associated with the borrowing. After initial
recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using
the effective interest rate method. Amortised cost is
calculated by taking into account any issue costs and
any discount or premium on settlement. Gains and losses
are recognised in the Statement of Comprehensive
Income when the liabilities are derecognised and as well
as through the amortisation process.
(p) Lease liabilities
A lease liability is recognised at the commencement
date of a lease. The lease liability is initially recognised
at the present value of the lease payments to be made
over the term of the lease, discounted using the interest
rate implicit in the lease or, if that rate cannot be
readily determined, the Group’s incremental borrowing
rate. Lease payments comprise of fixed payments
less any lease incentives receivable, variable lease
payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees,
exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any
anticipated termination penalties. The variable lease
payments that do not depend on an index or a rate are
expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using
the effective interest method. The carrying amounts are
remeasured if there is a change in the following: future
lease payments arising from a change in an index or a
rate used; residual guarantee; lease term; certainty of
a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to
the corresponding right-of-use asset, or to profit or loss
if the carrying amount of the right-of-use asset is fully
written down.
(q) Provisions
Provisions are recognised when the Group has a
present obligation (legal or constructive) as a result of
past events, for which it is probable that an outflow of
economic benefits will result and that an outflow can
be reliably measured. Where the Group expects some or
all of a provision to be reimbursed, for example under
an insurance contract, the reimbursement is recognised
as a separate asset but only when the reimbursement is
virtually certain. The expense relating to any provision
is presented in the Statement of Comprehensive
Income net of any reimbursement.
Provision is made for employee benefits accumulated
as a result of employees rendering services up to the
reporting date. These benefits include wages and
salaries, annual leave and long service leave.
Employee benefits expected to be settled within twelve
months of the reporting date are measured at their
nominal amounts based on remuneration rates which
are expected to be paid when the liability is settled plus
related on-costs. All other employee benefit liabilities
are measured at the present value of the estimated
future cash outflow (after applying probability) to be
made in respect of services provided by employees up
to the reporting date. In determining the present value
of future cash outflows, the market yield as at the
reporting date on national government bonds, which
have terms to maturity approximating the terms of the
related liability, are used.
Employee benefit expenses and revenues arising in
respect of wages and salaries, non-monetary benefits,
annual leave, long service leave and other leave benefits;
and other types of employee benefits are recognised
against profits on a net basis in their respective
categories.
(s)
Employee share and performance share
schemes
The fair value of performance rights issued under the
Cyclopharm Long Term Incentive Plan are recognised
as a personnel expense over the vesting period with a
corresponding increase in Employee Equity Benefits
Reserve.
The fair value of the implied option attached to shares
granted is determined using a pricing model that
takes into account factors that include exercise price,
the term of the performance option, the vesting and
performance criteria, the share price at grant date and
the expected price volatility of the underlying share.
The fair value calculation excludes the impact of any
non-market vesting conditions. Non-market vesting
conditions are included in assumptions about the
number of performance options that are expected to
become exercisable. At each balance date, the entity
revises its estimate of the number of performance rights
that are expected to become exercisable. The personnel
expense recognised each period takes into account the
most recent estimate.
Shares issued under employee and executive share
plans are held in trust until vesting date. Unvested
shares held by the trust are consolidated into the group
financial statements.
47
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
(t) Revenue recognition
(u) Other Revenue
The consolidated entity recognises revenue as follows:
Interest
Interest revenue is recognised as interest accrues
using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and
allocating the interest income over the relevant period
using the effective interest rate, which is the rate
that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the
net carrying amount of the financial asset.
Research & Development Tax Incentive
Government grants, including Research and
Development incentives, are recognized at fair value
where there is reasonable assurance that the grant will
be received and all grant conditions will be met.
Grants relating to cost reimbursements are recognized
as other income in profit or loss in the period when the
costs were incurred or when the incentive meets the
recognition requirements (if later).
All revenue is stated net of the amount of goods and
services tax (“GST”).
(v) Other taxes
Revenues, expenses and assets are recognised net of
the amount of GST except where the GST incurred is
not recoverable from the Australian Taxation Office
(“ATO”) and is therefore recognised as part of the asset’s
cost or as part of the expense item. Receivables and
payables are stated inclusive of GST. The net amount of
GST recoverable from, or payable to, the ATO is included
as part of receivables or payables in the Statement of
Financial Position. Cash flows are presented in the
Statement of Cash Flows on a gross basis and the
GST component of cash flows arising from investing
and financing activities, which is recoverable from,
or payable to the taxation authority are classified as
operating cash flows.
Revenue from contracts with customers
Revenue is recognised at an amount that reflects
the consideration to which the consolidated entity is
expected to be entitled in exchange for transferring
goods or services to a customer. For each contract
with a customer, the consolidated entity: 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 each distinct good or service to be
delivered; and recognises revenue when or as each
performance obligation is satisfied in a manner that
depicts the transfer to the customer of the goods or
services promised.
Variable consideration within the transaction price, if
any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses
receivable from the customer and any other contingent
events. Such estimates are determined using either
the 'expected value' or 'most likely amount' method.
The measurement of variable consideration is subject
to a constraining principle whereby revenue will only
be recognised to the extent that it is highly probable
that a significant reversal in the amount of cumulative
revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated
with the variable consideration is subsequently resolved.
Amounts received that are subject to the constraining
principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the
point in time when the customer obtains control of the
goods, which is generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is
recognised over time as the services are rendered based
on either a fixed price or an hourly rate.
48
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
(w) Financial instruments
Financial assets and liabilities are recognised when
the entity becomes a party to the contractual provisions
to the instrument.
Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market and are stated
at amortised cost using the effective interest
rate method.
Derivative financial instruments
Derivatives are initially recognised at fair value on
the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each
reporting date. The accounting for subsequent changes
in fair value depends on whether the derivative is
designated as a hedging instrument, and if so, the
nature of the item being hedged.
De-recognition of financial instruments
Financial liabilities
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced
by another from the same lender on substantially
different terms, or the terms of an existing liability
are substantially modified, such an exchange or
modification is treated as a de-recognition of the
original liability and the recognition of a new liability,
and the difference in the respective carrying amounts
is recognised in profit or loss.
Impairment of financial assets
The Group assesses at each Statement of Financial
Position date whether a financial asset or group of
financial assets is impaired.
(x) Contributed equity
Share capital
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.
Other contributed equity
In accordance with AASB112 Income Taxes, additional
contributed equity was recorded to recognise the
transfer of tax liabilities from Vita Medical Limited
to Vita Life Sciences Limited, being the parent of the
Australian tax consolidated group at the relevant
time. This event occurred prior to Cyclopharm
Limited acquiring its interests in the net assets of
Vita Medical Limited.
As part of the restructure a subsidiary of Cyclopharm
Limited, Vita Medical Australia Pty Ltd acquired all
the assets, liabilities and business from Vita Medical
Limited, the former group parent.
With effect from 31 May 2006, Cyclopharm Limited also
acquired 100% of the other group operating subsidiaries
from the ultimate holding company, Vita Life Sciences
Limited. Accordingly, the group comprises Cyclopharm
Limited and the following wholly owned subsidiaries:
¥ Cyclomedica Australia Pty Ltd (formerly Vita Medical
Australia Pty Ltd)
¥ Cyclomedica Ireland Ltd (formerly Vitamedica
Europe Ltd)
¥ Cyclomedica Europe Ltd
¥ Cyclomedica Canada Limited (formerly Vita Medical
Canada Ltd)
¥ Cyclomedica Germany GmbH
¥ Allrad 28 Pty Ltd (deregistered 16 July 2017)
¥ Allrad 29 Pty Ltd (deregistered 16 July 2017)
These entities collectively comprise the medical
diagnostic equipment and associated consumables
business formerly operated as the Vita Medical Group –
now known as the Cyclopharm Group. The transaction
has been accounted for as a ‘reverse acquisition’
as defined in AASB 3 Business Combinations
whereby Cyclopharm Limited is the legal parent and
Cyclomedica Australia Pty Limited is the financial
parent, which for accounting purposes is deemed to be
the acquirer.
The consideration for the minority interests of the
controlled entities and costs of acquisition have been
charged to other contributed equity in accordance with
AASB 10 Consolidated Financial Statements.
49
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
and transport costs). For non-financial assets, the fair
value measurement also takes into account a market
participant’s ability to use the asset in its highest and
best use or to sell it to another market participant that
would use the asset in its highest and best use.
(aa) Significant Accounting Judgements
and Estimates
The preparation of financial statements requires
management to make judgements, estimates and
assumptions that effect the application of accounting
policies and the reported amounts of assets, liabilities,
income and expenses.
The following are the critical judgements and estimates
that the directors have made in the process of applying
the Group’s accounting policies and that have the most
significant effect on the amounts recognised in the
financial statements.
Key Estimates
Impairment – general
The Group assesses impairment at the end of each
reporting period by evaluating conditions and events
specific to the Group that may be indicative of
impairment triggers. Recoverable amounts of relevant
assets are reassessed using value-in-use calculations
which incorporate various key assumptions.
The Group’s property, plant and equipment relating
to the Cyclotron facility have been fully impaired,
based on management’s assessment that the fair
value of those assets is nil in the current industry
circumstances and the condition of the damaged assets.
Extensive damage to the Cyclotron facility caused by
substantial water damage in June 2014, delayed any
decisions about the future use of the Cyclotron facility
until it is restored to its former operational status. In
2019, the Company entered into a Business Venture
Collaboration Agreement with Cyclotek Australia Pty
Ltd and Pettech, a wholly owned subsidiary of ANSTO.
In parallel the Company entered into a Business Sale
Transfer agreement for the operations conducted at
the Company’s Cyclotron facility located at Macquarie
University Hospital.
The assumptions used in the estimation of recoverable
amount and the carrying amount of intangible assets
are discussed in Note 14. No impairment has been
recognised in respect of intangible assets at the end
of the reporting period.
(y) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing
the net profit/(loss) after income tax attributable to
members of the Company by the weighted average
number of ordinary shares outstanding during the
financial year. Where there is a change in the number
of ordinary shares on issue without a corresponding
change in recognised resources during the year, the
number of ordinary shares for all periods presented
are correspondingly adjusted as if the event had
occurred at the beginning of the earliest period
presented.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account the after-income tax effect of interest
and other financing costs associated with dilutive
potential ordinary shares and the weighted average
number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares. Where there is a change in the number of
ordinary shares on issue without a corresponding
change in recognised resources during the year, the
number of ordinary shares for all periods presented are
correspondingly adjusted as if the event had occurred
at the beginning of the earliest period presented.
(z) Fair Value
The Group subsequently measures some of its assets
at fair value on a non-recurring basis. Fair value is the
price the Group would receive to sell an asset in an
orderly (i.e. unforced) transaction between independent,
knowledgeable and willing market participants at the
measurement date.
As fair value is a market-based measure, the closest
equivalent observable market pricing information is
used to determine fair value. Adjustments to market
values may be made having regard to the characteristics
of the specific asset. The fair values of assets that are
not traded in an active market are determined using
one or more valuation techniques. These valuation
techniques maximise, to the extent possible, the use
of observable market data.
To the extent possible, market information is
extracted from either the principal market for the
asset (i.e. the market with the greatest volume and
level of activity for the asset) or, in the absence of such
a market, the most advantageous market available to
the entity at the end of the reporting period (i.e. the
market that maximises the receipts from the sale of
the asset after taking into account transaction costs
50
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 2.
Summary of significant accounting policies (continued)
Useful lives of property, plant and equipment
Share based payment transactions
The estimation of the useful lives of assets has been
based on historical experience as well as lease terms
and turnover policies. In addition, the condition of the
assets is assessed at least once per year and considered
against the remaining useful life. Adjustments to useful
lives are made when considered necessary.
Lease term
The lease term is a significant component in the
measurement of both the right-of-use asset and
lease liability. Judgement is exercised in determining
whether there is reasonable certainty that an option
to extend the lease or purchase the underlying asset
will be exercised, or an option to terminate the lease
will not be exercised, when ascertaining the periods
to be included in the lease term. In determining the
lease term, all facts and circumstances that create
an economical incentive to exercise an extension
option, or not to exercise a termination option, are
considered at the lease commencement date. Factors
considered may include the importance of the asset
to the Company's operations; comparison of terms
and conditions to prevailing market rates; incurrence
of significant penalties; existence of significant
leasehold improvements; and the costs and disruption
to replace the asset. The Company reassesses whether
it is reasonably certain to exercise an extension
option, or not exercise a termination option, if
there is a significant event or significant change
in circumstances.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be
readily determined, an incremental borrowing rate is
estimated to discount future lease payments to measure
the present value of the lease liability at the lease
commencement date. Such a rate is based on what the
Company estimates it would have to pay a third-party
to borrow the funds necessary to obtain an asset of
a similar value to the right-of-use asset, with similar
terms, security and economic environment.
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 accounting estimates and
assumptions relating to equity-settled share-based
payments would have no impact on the carrying
amounts of assets and liabilities within the next annual
reporting period but may impact expenses and equity.
The Group measures the cost of share-based payments
at fair value at the grant date using the Black-Scholes
formula, taking into account the terms and conditions
upon which the instruments were granted. Refer to
Note 26 for details of the Company’s Share Based
Payment Plan.
Key Judgements
Taxation
The Group's accounting policy for taxation requires
management's judgement as to the types of
arrangements considered to be a tax on income in
contrast to an operating cost. Judgement is also required
in assessing whether deferred tax assets and certain
deferred tax liabilities are recognised on the statement
of financial position. Deferred tax assets, including
those arising from unrecouped tax losses, capital losses
and temporary differences, are recognised only where
it is considered more likely than not that they will be
recovered, which is dependent on the generation of
sufficient future taxable profits.
Judgements are also required about the application
of income tax legislation. These judgements and
assumptions are subject to risk and uncertainty, hence
there is a possibility that changes in circumstances will
alter expectations, which may impact the amount of
deferred tax assets and deferred tax liabilities recognised
on the statement of financial position and the amount
of other tax losses and temporary differences not yet
recognised. In such circumstances, some or all of the
carrying amounts of recognised deferred tax assets
and liabilities may require adjustment, resulting in
a corresponding credit or charge to the consolidated
statement of comprehensive income.
51
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 3. Revenue from contracts with customers
Set out below is the disaggregation of the Group’s revenue from contracts with customers:
Segments
Type of goods or service
Sales of equipment and consumables – Technegas
Sales of equipment and consumables – third-party products
Income from business venture collaboration
After sales services – Technegas
After sales services – third-party products
Total revenue from contracts with customers
Geographical markets
Asia-Pacific
Europe
Canada
Other
Total revenue from contracts with customers
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
Segments
Type of goods or service
Sales of equipment and consumables – Technegas
Sales of equipment and consumables – third-party products
Income from business venture collaboration
After sales services – Technegas
After sales services – third-party products
Total revenue from contracts with customers
Geographical markets
Asia-Pacific
Europe
Canada
Other
Total revenue from contracts with customers
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
Total revenue from contracts with customers
For the year ended 31 December 2022
Technegas
$
Molecular
Imaging
$
Total
$
12,596,143
8,120,239
–
1,067,119
1,094,832
22,878,333
7,451,101
12,166,950
2,960,306
299,976
22,878,333
–
–
340,464
–
–
340,464
12,596,143
8,120,239
340,464
1,067,119
1,094,832
23,218,797
340,464
–
–
–
340,464
7,791,565
12,166,950
2,960,306
299,976
23,218,797
22,269,365
608,968
22,878,333
340,464
–
340,464
22,609,829
608,968
23,218,797
For the year ended 31 December 2021
Technegas
$
Molecular
Imaging
$
Total
$
11,591,344
3,773,257
–
1,621,761
325,729
17,312,091
3,237,027
11,510,851
2,456,613
107,600
17,312,091
–
–
392,483
–
–
392,483
11,591,344
3,773,257
392,483
1,621,761
325,729
17,704,574
392,483
–
–
–
392,483
3,629,510
11,510,851
2,456,613
107,600
17,704,574
17,097,962
214,129
17,312,091
392,483
–
392,483
17,490,445
214,129
17,704,574
The allowance for expected credit losses on receivables at the end of the year was $156,919 (2021: $110,415).
52
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 4. Operating segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board
of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The
Group is managed primarily on the basis of product category as the Group's risks and returns are affected predominantly
by differences in the products and services produced. The Group also monitors the performance of the business on a
geographical basis.
The operating businesses are organised and managed separately according to the nature of the products and services
provided, with each segment representing a strategic business unit that offers different products and serves different
markets.
The Technegas™ segment is a supplier of diagnostic equipment and consumables used by physicians in the detection of
pulmonary embolism and a distributor of products to the diagnostic imaging sector.
The Molecular Imaging segment will produce radiopharmaceuticals to be used by physicians in the detection of cancer,
neurological disorders and cardiac disease.
Transfer prices between business segments are set on an arm's length basis in a manner similar to transactions with
third parties. Segment revenue, segment expense and segment result include transfers between business segments.
Those transfers are eliminated on consolidation.
Business segments
The tables under the heading business segments present revenue and profit information and certain asset and liability
information regarding business segments for the years ended 31 December 2022 and 31 December 2021.
Geographical segments
The tables under the heading geographical segment present revenue and asset information regarding geographical
segments for the years ended 31 December 2022 and 31 December 2021.
Business Segments
For the year ended 31 December 2022
Revenue
Sales – Technegas
Income from business venture collaboration
Sales – third-party products
Sales to external customers
Finance revenue
Other revenue
Total revenue
Result
(Loss)/profit before tax and finance costs
Finance costs
(Loss)/profit before income tax
Income tax
(Loss)/profit after income tax
Assets and liabilities
Segment assets
Segment asset increases for the period:
– capital expenditure
Segment liabilities
Other segment information
Depreciation and amortisation
Technegas
$
13,663,262
–
9,215,071
22,878,333
109,733
1,635,856
24,623,922
(6,145,066)
(265,493)
(6,410,559)
(549,484)
(6,960,043)
Consolidated
Molecular
Imaging
$
Total
$
–
340,464
–
340,464
–
–
340,464
13,663,262
340,464
9,215,071
23,218,797
109,733
1,635,856
24,964,386
381,143
(430)
380,713
(32,185)
348,528
(5,763,923)
(265,923)
(6,029,846)
(581,669)
(6,611,515)
48,524,326
1,017,825
49,542,151
1,274,027
(12,950,439)
–
(55,102)
1,274,027
(13,005,541)
(931,484)
–
(931,484)
53
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 4. Segment reporting (continued)
Business Segments (continued)
For the year ended 31 December 2021
Revenue
Sales – Technegas
Income from business venture collaboration
Sales – third-party products
Sales to external customers
Finance revenue
Other revenue
Total revenue
Result
(Loss)/profit before tax and finance costs
Finance costs
(Loss)/profit before income tax
Income tax
Loss after income tax
Assets and liabilities
Segment assets
Segment asset increases for the period :
– capital expenditure
Segment liabilities
Other segment information
Depreciation and amortisation
Geographical Segments
Technegas
$
13,213,106
–
4,098,985
17,312,091
3,624
2,432,578
19,748,293
Consolidated
Molecular
Imaging
$
Total
$
–
392,483
–
392,483
326
–
392,809
13,213,106
392,483
4,098,985
17,704,574
3,950
2,432,578
20,141,102
(4,565,182)
(86,395)
(4,651,577)
(237,237)
(4,888,814)
307,625
(2,919)
304,706
(456,058)
(151,352)
(4,257,557)
(89,314)
(4,346,871)
(693,295)
(5,040,166)
54,549,989
1,190,915
55,740,904
842,845
(12,567,046)
–
(106,124)
842,845
(12,673,170)
(758,731)
–
(758,731)
For the year ended 31 December 2022
Asia-Pacific
Europe
Canada
$
$
$
Other
$
Total
$
Consolidated
Revenue
Sales to external customers
Finance revenue
Other revenue
Total segment revenue
Assets
Segment assets
7,791,565
109,733
1,635,856
9,537,154
12,166,950
–
–
12,166,950
2,960,306
–
–
2,960,306
299,976
–
–
299,976
23,218,797
109,733
1,635,856
24,964,386
38,032,765
10,650,908
858,478
–
49,542,151
For the year ended 31 December 2021
Asia-Pacific
Europe
Canada
$
$
$
Other
$
Total
$
Consolidated
Revenue
Sales to external customers
Finance revenue
Other revenue
Total segment revenue
Assets
Segment assets
54
3,629,510
2,794
2,291,383
5,923,687
11,510,851
1,156
141,195
11,653,202
2,456,613
–
–
2,456,613
107,600
–
–
107,600
17,704,574
3,950
2,432,578
20,141,102
46,467,809
8,745,806
527,289
–
55,740,904
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
5. Revenues and expenses
Revenue
Sales revenue
Income from business venture collaboration
Total revenue
Finance revenue – Interest received from other parties
Other Revenue
Insurance recoveries
R&D Tax incentive refund
Total other revenue
(Note 3 discloses the disaggregation of the Group’s revenue from contracts with customers)
Expenses
(a) Cost of materials and manufacturing
Cost of materials and manufacturing
(b) Finance costs
Interest paid on loans from external parties
Interest on leased assets (AASB 16)
Total finance costs
(c) Depreciation and amortisation
Depreciation of plant and equipment
Depreciation of leasehold improvements
Depreciation of leased assets (AASB 16)
Amortisation of intangibles
(d) Research & development expense
FDA expenses
Pilot Clinical Trial expenses
Research expenses
(e) Employee benefits expense
Salaries and wages
Defined contribution superannuation expense
Non-Executive Director fees
Share-based payments expense
(f) Administration expense
Legal and professional costs
Office and facility costs
Provision/(Reversal) of doubtful debts
Travel and motor vehicle costs
(g) Other expense
Realised Foreign exchange gains
Unrealised Foreign exchange gains
Other
Notes
Consolidated
2022
$
2021
$
22,878,333
340,464
23,218,797
17,312,091
392,483
17,704,574
109,733
3,950
–
1,635,856
1,635,856
141,195
2,291,383
2,432,578
7,440,608
5,042,295
67,434
198,489
265,923
234,806
266,704
289,422
140,552
931,484
16,515
72,799
89,314
161,276
168,050
288,707
140,698
758,731
2,973,729
126,818
339,433
3,439,980
1,303,372
214,893
141,902
1,660,167
7,712,904
545,565
174,332
648,202
9,081,003
3,473,853
1,883,668
65,422
1,258,535
6,681,478
7,395,884
548,200
148,106
756,588
8,848,778
4,868,162
1,453,745
(5,427)
490,400
6,806,880
(63,821)
(60,751)
354,156
229,584
(26,377)
(232,134)
518,147
259,636
26a
55
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
6. Income tax
The components of income tax expense comprise:
Current income tax expense
Deferred tax expense
A reconciliation of income tax expense applicable to accounting loss before income
tax at the statutory income tax rate to income tax expense at the Group's effective
income tax rate is as follows:
Accounting loss before income tax
Statutory income tax rate of 25% (2021: 26%)
Effects of lower rates on overseas income
Expenditure not allowable for income tax purposes
Non-assessable income
Temporary differences (reversed) in Australian group
Tax losses not recognised in Australia
Total income tax expense
Effective income tax rate
Current income tax asset
Current income tax liability
Deferred tax relating to capital raising costs, credited directly to equity
Deferred tax assets
Deferred tax assets from temporary differences on:
Investments
Provisions and accruals
Other
Total deferred tax assets
Movements in deferred tax assets
Opening balance
Temporary differences brought to account (reversed)
Closing balance
Deferred tax assets for which no benefit has been recognised:
– arising from temporary differences – at 25% (2021: 25%)
– arising from revenue tax losses – at 25% (2021: 25%)
– arising from capital tax losses – at 25% (2021: 25%)
2022
$
2021
$
(397,074)
(184,595)
(581,669)
(324,005)
(369,290)
(693,295)
(6,029,846)
(4,346,871)
1,171,368
225,067
(1,378,865)
409,460
(184,595)
(824,104)
(581,669)
9.6%
1,674,705
232,616
(1,221,402)
595,760
(369,290)
(1,605,684)
(693,295)
15.9%
4,947
89,198
–
58,761
98,132
–
(1,180,925)
1,384,838
431,898
635,811
(1,228,684)
1,460,084
589,006
820,406
820,406
(184,595)
635,811
1,189,696
(369,290)
820,406
567,136
1,861,215
19,715
582,288
2,581,039
19,715
56
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 7. Net tangible assets and loss per share
Net Tangible Assets per share
Net assets per share
Net tangible assets per share
Number of ordinary shares for net assets per share
Net assets
Less: Intangible assets
Net tangible assets
Consolidated
2022
$
0.39
0.33
2021
$
0.46
0.40
Number
93,053,826
Number
93,374,823
2022
$
36,536,610
(5,436,401)
2021
$
43,067,734
(5,422,263)
31,100,209
37,645,471
The number of ordinary shares includes the effects of 408,059 Long Term Incentive Plan (LTIP) shares issued on
19 February 2021 and excludes 320,997 lapsed LTIP shares cancelled on 4 October 2022 (2021: nil) as set out in Note 19.
The net assets includes both right-of-use assets and lease liabilities accounted for in accordance with AASB 16 Leases.
Loss per share
Basic loss per share for continuing operations
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares for basic loss per share
Weighted average number of ordinary shares for diluted loss per share
Loss used to calculate basic earnings per share
Loss used to calculate diluted earnings per share
Consolidated
2022
cents
(7.17)
(7.17)
(7.17)
2021
cents
(5.62)
(5.62)
(5.62)
Number
92,178,892
92,178,892
Number
89,690,122
89,690,122
2022
$
(6,611,515)
(6,611,515)
2021
$
(5,040,166)
(5,040,166)
The weighted average number of ordinary shares for basic loss per share excludes the effects of 267,062 LTIP shares
issued on 19 February 2021, 600,000 LTIP shares issued on 4 May 2020 and 250,000 LTIP Shares issued on 2 July 2018
set out in Note 19 as they are contingently returnable.
57
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 8. Cash and cash equivalents
Cash at bank and in hand
Total cash and cash equivalents
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
The fair value of cash equivalents is $20,296,176 (2021: $29,249,255).
Reconciliation of Statement of Cash Flows
For the purpose of the Statement of Cash Flows, cash and cash equivalents
comprise the following:
Cash at bank and in hand
(a) Reconciliation of net loss after tax to net cash flows from operations
Net loss after tax
Adjustments for non-cash income and expense items:
Depreciation
Amortisation
Movement provision for employee benefits
Movement in foreign exchange
Movement in employee benefits reserve
Movement in other provisions
Increase/decrease in assets and liabilities:
(Increase)/Decrease in receivables
Increase in inventories
Decrease in other receivables
Decrease in current tax asset
Decrease in deferred tax assets
Increase in creditors
Decrease in current tax liabilities
Increase in deferred income liability
Net cash flow used in operating activities
Consolidated
2022
$
2021
$
20,296,176
20,296,176
29,249,255
29,249,255
Consolidated
2022
$
2021
$
20,296,176
20,296,176
29,249,255
29,249,255
(6,611,515)
(5,040,166)
790,932
140,552
(80,161)
(117,037)
648,202
65,422
(5,163,605)
(587,987)
(2,781,293)
744,435
53,814
184,595
890,133
(8,934)
4,357
(6,664,485)
618,033
140,698
214,908
(218,649)
756,588
(5,427)
(3,534,015)
685,026
(775,358)
16,745
175,143
369,290
1,445,425
(15,921)
4,255
(1,629,410)
(b) Non-cash financing and investing activities
All Long Term Incentive Plan (LTIP) shares as set out in Note 26 Share Based Payment Plans are issued by way of loans.
During the year, 660,000 LTIP shares vested (2021: nil) and an election was made to extend the exercise period for up to
1 year, whilst 320,997 LTIP shares lapsed and were cancelled (2021: nil). Refer to Note 19 Contributed Equity and Note 25
Share Based Payment Plans.
No LTIP shares were issued by way of loans during the year (2021: 408,059 LTIP shares issued on 19 February 2021).
58
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 9. Trade and other receivables
Current
Trade receivables, third-parties
Allowance for expected credit loss
Net Trade receivables, third-parties
Other receivables
Total Current trade and other receivables
Total trade and other receivables
Notes
(i)
(ii), (iii)
Consolidated
2022
$
2021
$
5,408,996
(156,919)
5,252,077
2,453,948
7,706,025
4,774,505
(110,415)
4,664,090
3,376,618
8,040,708
7,706,025
8,040,708
Terms and conditions
Terms and conditions relating to the above financial instruments
(i) Trade receivables are non-interest bearing and generally on 30 and 60-day terms.
(ii) Other receivables are non-interest bearing and have repayment terms between 30 and 90 days.
(iii) The prior year’s Other receivables included accrued R&D Tax Incentive of $2,295,638 which was received in
January 2022.
(iv) Related party details are set out in the Note 22 Related Party Disclosures.
Movements in the allowance for expected credit losses are as follows:
Opening balance
Additional provisions recognised
Closing balance
10. Inventories
Current
Raw materials at cost
Finished goods at lower of cost or net realisable value
Provision for obsolescence
Total inventory
Consolidated
2022
$
110,415
46,504
156,919
2021
$
104,412
6,003
110,415
Consolidated
2022
$
2021
$
6,665,536
1,691,331
(64,199)
8,292,668
3,870,499
1,692,090
(51,214)
5,511,375
59
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 11. Property, plant and equipment
Year ended 31 December 2022
Consolidated
1 January 2022
at written down value
Additions/Transfers
Depreciation for the year
31 December 2022
at written down value
1 January 2022
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
31 December 2022
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
Year ended 31 December 2021
Consolidated
1 January 2021
at written down value
Additions/Transfers
Depreciation for the year
31 December 2021
at written down value
1 January 2021
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
31 December 2021
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
Leasehold
Land and
Buildings
$
Leasehold
Improvements
Plant and
Equipment
$
$
320,755
(50,767)
(9,746)
1,287,438
723,251
(266,704)
711,067
601,543
(225,060)
260,242
1,743,985
1,087,550
Leased
Plant and
Equipment
$
–
–
–
–
Capital
Work in
Progress
$
97,388
–
Total
$
2,416,648
1,274,027
(501,510)
97,388
3,189,165
2,435,293
(1,881,960)
(232,578)
320,755
5,326,216
(2,608,912)
(1,429,866)
1,287,438
9,014,767
(4,369,291)
(3,934,409)
711,067
120,901
–
(120,901)
–
97,388
–
–
97,388
16,994,565
(8,860,163)
(5,717,754)
2,416,648
2,384,043
(1,881,960)
(241,841)
260,242
5,860,574
(2,608,912)
(1,507,677)
1,743,985
9,220,014
(4,369,291)
(3,763,173)
1,087,550
10,380
–
(10,380)
–
97,388
–
–
97,388
17,572,399
(8,860,163)
(5,523,071)
3,189,165
Leasehold
Land and
Buildings
$
Leasehold
Improvements
Plant and
Equipment
$
$
289,866
40,960
(10,071)
1,001,216
454,272
(168,050)
520,326
341,946
(151,205)
320,755
1,287,438
711,067
Leased
Plant and
Equipment
$
–
–
–
–
Capital
Work in
Progress
$
91,721
5,667
–
Total
$
1,903,129
842,845
(329,326)
97,388
2,416,648
2,394,333
(1,881,960)
(222,507)
289,866
4,871,944
(2,608,912)
(1,261,816)
1,001,216
8,672,821
(4,369,291)
(3,783,204)
520,326
120,901
–
(120,901)
–
91,721
–
–
91,721
16,151,720
(8,860,163)
(5,388,428)
1,903,129
2,435,293
(1,881,960)
(232,578)
320,755
5,326,216
(2,608,912)
(1,429,866)
1,287,438
9,014,767
(4,369,291)
(3,934,409)
711,067
120,901
–
(120,901)
–
97,388
–
–
97,388
16,994,565
(8,860,163)
(5,717,754)
2,416,648
*
Impairment arising from the Group’s decision to cease commercial production at its cyclotron facility at the end of April 2014. A collaboration
agreement was signed in 2019 between the Group, Cyclotek (Aust) Pty Ltd and the Australian Nuclear Science and Technology Organisation
whereby Cyclotek NSW Pty Ltd, a wholly owned subsidiary of Cyclotek (Aust) Pty Ltd, will leverage the cyclotron facility to manufacture
new PET diagnostics and undertake research and development activities. However, extensive damage to the cyclotron facility was caused
by substantial water damage in June 2014. Restoration to its former operational status has been delayed due to the COVID-19 pandemic.
Accordingly, the suspended cyclotron business is not considered to be a discontinued operation pending completion of the restoration. The
Group initially recognises and measures its Land and Buildings, Plant and Equipment and Leasehold Improvements at cost. The Group
subsequently measures some of its Buildings, Plant and Equipment and its Leasehold Improvements at fair value on a non-recurring basis in
accordance with AASB 136: Impairment of Assets. Refer Note 2 (aa).
60
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 11. Property, plant and equipment (continued)
Fair Value Measurement
AASB 13 Fair Value Measurement requires the
disclosure of fair value information by level of the
fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on
the lowest level that an input that is significant to the
measurement can be categorised into, as follows:
¥ Level 1: Measurements based on quoted prices in
active markets for identical assets that the entity can
access at the measurement date.
¥ Level 2: Measurements based on inputs other than
the quoted prices included in Level 1, but that are
observable for the asset, either directly or indirectly.
¥ Level 3: Measurements based on unobservable inputs
for the asset or liability.
Cyclopharm’s management considers that the inputs
used for the fair value measurement are Level 2 inputs.
Valuation techniques
AASB 13 requires the valuation technique used to
be consistent with one of the following valuation
approaches:
¥ Market approach: techniques that use prices and
other information generated by market transactions
for identical or similar assets.
¥ Income approach: techniques that convert future
cash flows or income and expenses into a single
discounted present value.
¥ Cost approach: techniques that reflect the current
replacement cost of an asset at its current service
capacity.
The Cyclopharm Board decided to cease commercial
production at its Cyclotron facility at the end of
April 2014 due to the impact on the Group’s profits
of the government-owned competition. In making
that decision, the Board valued the Cyclotron facility,
comprised of buildings, leasehold improvements and
plant and equipment at a fair value of nil, using the
market approach and income approach techniques.
The market technique predominantly used recent
observable market data for similar new equipment
in Australia, adjusted for loss in value caused by
physical deterioration, functional obsolescence,
economic obsolescence and the industry specific
aspects affecting this highly specialised asset i.e. the
government-owned competition which had rendered
further participation in the molecular imaging industry
uneconomic and its future use uncertain. The same
industry specific factors were applied to the income
approach technique. Both techniques resulted in a fair
value of nil being recognised for the Cyclotron facility
as at 31 December 2014. Cyclopharm considers that the
same conditions still apply at 31 December 2022 as the
Cyclotron facility, although now repaired and largely
restored, has not been fully restored to its former
functionality as intended, after substantial water
damage in June 2014. Accordingly, Cyclopharm has
concluded that the fair value of the Cyclotron remains
at nil as at 31 December 2022.
Inputs used in the market approach technique to
measure Level 2 fair values were:
¥ current replacement cost of the property being
appraised less the loss in value caused by physical
deterioration, functional obsolescence and economic
obsolescence, and industry specific factors set
out above.
¥ historical cost and relevant market data and
industry expertise.
¥ sales comparison for assets where available.
The assessments of the physical condition, functional
obsolescence and economic obsolescence are considered
Level 3 inputs.
Non-Recurring fair value measurements:
Buildings
Plant and equipment
Leasehold improvements
Total non-financial assets
recognised at fair value
Level 2
Level 2
2022
$
–
–
–
–
2021
$
–
–
–
–
The highest and best use of the assets in normal
circumstances is the value in continued use, using the
income approach technique. However, in the current
unusual circumstances as set out above, the fair value
using this approach is nil.
12. Right-of-use assets
Land and buildings –
right-of-use
Less: Accumulated depreciation
Motor vehicle –
right-of-use
Less: Accumulated depreciation
Total right-of-use assets
Consolidated
2022
$
2021
$
5,195,614
(1,820,733)
3,374,881
5,195,492
(1,538,421)
3,657,071
157,989
(122,431)
35,558
3,410,439
287,747
(115,614)
172,133
3,829,204
The Group leases land and buildings for its offices,
manufacturing facilities and warehouse under
agreements of between two to ten years with, in some
cases, options to extend. The leases have various
escalation clauses. On renewal, the terms of the leases
are negotiated. The Group also leases plant and
equipment under agreements of four years.
61
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 13. Investments accounted for using the equity method
Equity accounted investments
Associated companies
Name
Macquarie Medical
Imaging Pty Ltd
Principal
Activities
Imaging
centre
Principal
place of
business
Sydney,
Australia
Measurement
Method
Equity
method
Notes
(a)
Consolidated
2022
$
–
2021
$
–
Ownership Interest
2022
20%
2021
20%
Macquarie Medical Imaging Pty Ltd (“MMI”) is a private entity that provided medical imaging facilities for Macquarie
University Hospital. From 7 December 2019, the business operations of MMI have been transferred to MQ Health, an
entity associated with Macquarie University Hospital.
Extract from the associate’s
statement of financial position:
Current Assets
Current Liabilities
Net Liabilities
Share of associate’s Net Liabilities
Extract from the associate’s
statement of comprehensive income:
Revenue
Net Loss
Notes
Consolidated
2022
$
4,033,133
(17,498,514)
(13,465,381)
2021
$
4,058,487
(17,495,145)
(13,436,658)
(a)
(2,693,076)
(2,687,332)
Consolidated
2022
$
–
(28,723)
2021
$
–
(33,289)
Notes
(a)
(a)
The share of the associate’s loss not recognised during the year was $5,745 (2021: loss of $6,657) and the cumulative
share of the associate’s loss not recognised as at 31 December 2022 was $2,738,463 (31 December 2021: $2,732,718).
The share of loss of associate not recognised as at 31 December 2022 is extracted from the unaudited financial
report of the associate, and it may be revised when that financial report has been audited.
The fair value of the Group’s investment in Macquarie Medical Imaging Pty Ltd was $nil (2021: $nil). It is anticipated
that MMI will be de-registered upon the finalisation of its accounts payable and receivables.
Contingent liabilities
(b)
In December 2019, a business venture collaboration agreement combined CycloPet Pty Ltd and Pettech Solutions
Limited’s cyclotron facilities under a single operating enterprise known as Cyclotek NSW Pty Limited (Cyclotek
NSW). Cyclopharm and Cyclotek NSW have entered into a sub-lease agreement as tenants in common whereby
Cyclotek NSW is solely responsible for the tenant’s obligations except for make good obligations until such time
as it exercises the right to transfer its interest as tenant in common to Cyclopharm. Being a tenant in common,
Cyclopharm’s contingent liabilities as at 31 December 2022 amounts to $3,366,657 (2021: $3,366,657) if Cyclotek
NSW is unable to fulfil its obligations as tenant. The amount comprises payments under a sub-lease agreement
commencing 1 January 2020 until the expiry of two options to renew expiring on 31 December 2039 with a rent-free
period until 31 December 2022.
There were no other contingent liabilities as at the date of this report in respect of MMI or Cyclotek NSW (2021: $nil).
62
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
14. Intangible assets
Consolidated
Balance at 1 January 2022
Additions
Transfers
Amortisation
Balance at 31 December 2022
Intellectual
Property
Goodwill on
consolidation*
$
451,343
–
(264,875)
(24,483)
161,985
$
865,273
–
–
–
865,273
Licences
$
492,667
20,871
264,875
(116,069)
662,344
Technegas
Development
$
788,588
–
–
–
788,588
Target
Ultralute
Total
$
27,419
–
–
–
27,419
$
2,796,973
133,819
–
–
2,930,792
$
5,422,263
154,690
–
(140,552)
5,436,401
31 December 2022
Non-Current
Total
31 December 2021
Non-Current
Total
161,985
161,985
865,273
865,273
662,344
662,344
788,588
788,588
27,419
27,419
2,930,792
2,930,792
5,436,401
5,436,401
451,343
451,343
865,273
865,273
492,667
492,667
788,588
788,588
27,419
27,419
2,796,973
2,796,973
5,422,263
5,422,263
* Goodwill on consolidation arising upon the acquisition of Cyclomedica Benelux bvba on 1 October 2017 and Cyclomedica Nordic AB on 1 May 2018.
The following assumptions are noted in respect of the following intangible assets: (a) Goodwill, (b) Technegas™
Development and (c) Ultralute™.
The recoverable amount of intangible assets have been assessed using a discounted cash flow methodology forecasting
five years of pre-tax cash flows.
The following describes each key assumption on which management has based its value in use calculations:
(a)
(b)
(c)
Five-year pre-tax cash flow projections, based upon management approved budgets and growth rates covering a
one year period, with the subsequent periods based upon management expectations of growth excluding the impact
of possible future acquisitions, business improvement capital expenditure and restructuring, together with a
terminal value.
The pre-tax discount rates used were between 5.77% to 25% (2021: between 5.92% to 25%). The discount rates
reflect management’s estimate of the time value of money and the Group’s adjusted weighted average cost of capital
to reflect the current market risk–free rate but also price for the uncertainty inherent in the assets.
Management believes the projected 3% (2021: 4%) revenue growth rate for existing markets (2021: no sales to the
US market is assumed) is prudent and justified, based on the rebound in Technegas™ sales after the prior year
pandemic impact.
No changes in estimations were made by management compared to prior years other than the change in projected
revenue growth rate for existing markets and the inclusion of sales to the US market. The key assumptions used for
assessing the carrying value of intangible assets reflects the risk estimates of the business and respective assets.
There were no other key assumptions for Goodwill, Technegas™ Development costs and Ultralute™ costs.
The Directors have concluded that the recoverable amount of Goodwill, Technegas™ Development costs, and Ultralute™
costs exceed their carrying values. Based on the above, no impairment charge was recognised.
Sensitivity
As disclosed in note 2(aa), the Directors have made judgements and estimates in respect of impairment. Should these
judgements and estimates not occur the resulting carrying amounts may change.
Goodwill
All other assumptions remaining constant, the sensitivity in the value of goodwill is that revenue would need to decrease
by more than 7%.
Management believes that other reasonable changes in the key assumptions on which the recoverable amount of
Goodwill is calculated would not cause the carrying amount to exceed its recoverable amount.
Technegas™ development and Ultralute™ development costs
Sensitivity analysis has been performed by adjusting underlying assumptions by up to 10%. The analysis indicated that
headroom exists in the cash flow projections to support the carrying value of the intangible assets.
63
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 15. Trade and other payables
Current
Trade payables, third-parties
Other payables and accruals
Deposits from customers
Total current trade and other payables
Total trade and other payables
Notes
(i)
(ii)
Consolidated
2022
$
2021
$
4,399,786
1,627,295
475,839
6,502,920
2,174,047
1,521,898
2,211,683
5,907,628
6,502,920
5,907,628
Terms and conditions
Terms and conditions relating to the above financial instruments:
(i) Trade payables are non-interest bearing and are normally settled on 30-60 day terms.
(ii) Other payables and accruals are non-interest bearing and have an average term of 4 months.
(iii) Related party details are set out in the Note 22 Related party disclosures.
Consolidated
2022
$
2021
$
209,992
209,992
178,265
178,265
4,121,592
4,121,592
4,331,502
4,331,502
4,331,584
4,509,767
16. Lease liabilities
Current
Lease liabilities
Lease liabilities (current)
Non-current
Lease liabilities
Lease liabilities (non-current)
Total lease liabilities
64
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 17. Provisions
Balance at 1 January 2022
Arising during the year
Utilised
Balance at 31 December 2022
31 December 2022
Current
Non-Current
Total
Number of employees
Number of employees at year end
31 December 2021
Current
Non-Current
Total
Number of employees
Number of employees at year end
Consolidated
Employee
Entitlements
$
Total
$
1,260,188
724,530
(804,691)
1,180,027
1,260,188
724,530
(804,691)
1,180,027
1,133,574
46,453
1,180,027
1,133,574
46,453
1,180,027
1,234,259
25,929
1,260,188
1,234,259
25,929
1,260,188
63
51
A provision has been recognised for employee entitlements relating to long service and annual leave. The measurement
and recognition criteria relating to employee benefits have been disclosed in Note 2(r).
18. Deferred income liabilities
Deferred income liabilities
2022
$
2021
$
901,812
897,455
A portion of the Research & Development Grant refund received during the year has been recognised as deferred income
liabilities and will be amortised over the same period as the amortisation of the related intangible development asset.
65
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
19. Contributed equity
Issued and paid up capital
Ordinary shares
Other contributed equity
Total issued and paid up capital
(a) Ordinary shares
Balance at the beginning of the period
Issue of Long Term Incentive Plan shares
Issue of shares to Managing Director
Share issue cost (net of tax)
Cancellation of expired Long Term Incentive Plan shares
Settlement of loan for Long Term Incentive Plan shares
Balance at end of period
(b) Other contributed equity
Balance at the beginning and end of the period
Notes
2022
Number
2021
Number
2022
$
2021
$
Consolidated
(a)
(b)
93,053,826
–
93,053,826
93,374,823
–
93,374,823
68,753,968
(5,333,158)
63,420,810
68,307,598
(5,333,158)
62,974,440
(i)
(ii)
(iii)
(iv)
93,374,823
–
–
–
(320,997)
–
93,053,826
80,274,455
408,059
12,692,309
–
–
–
93,374,823
68,307,598
–
–
–
–
446,370
68,753,968
36,965,377
–
33,000,003
(1,657,782)
–
–
68,307,598
–
–
(5,333,158)
(5,333,158)
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
(i)
On 19 February 2021, 408,059 LTIP shares were issued at an exercise price of $3.20 per share under the non-recourse
loan payment plan, as set out in Note 25.
(ii) On 1 February 2021, 11,538,462 ordinary shares were issued at a price of $2.60 per share in connection with an
institutional share placement and on 19 February 2021, 1,153,847 ordinary shares were issued at a price of $2.60 per
share in connection with a share purchase plan to eligible shareholders.
(iii) 320,997 lapsed Long Term Incentive Plan shares were cancelled on 4 October 2022.
(iv) Proceeds from settlement of loan to acquire LTIP shares.
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to
maintain optimal returns for shareholders and benefits for other stakeholders. Management also aims to maintain a
capital structure that ensures the lowest cost of capital available to the entity.
Management constantly assesses the capital structure to take advantage of favourable costs of capital and/or high
returns on assets. As the market is continually changing, management may issue dividends to shareholders, issue new
shares, increase the entity’s short or long term borrowings or sell assets to reduce borrowings.
As at 31 December 2022, the Group has no interest bearing loans and borrowings.
Total interest bearing loans and borrowings
Add: cash and cash equivalents
Net cash
Total equity
Gearing ratio
Notes
8
Consolidated
2022
$
–
20,296,176
20,296,176
36,536,610
0.0%
2021
$
–
29,249,255
29,249,255
43,067,734
0.0%
66
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 19. Contributed equity (continued)
Dividends
During the current financial year, the Directors declared an unfranked interim dividend of 0.5 cent per share in respect
of the financial year ended 31 December 2022 and an unfranked final dividend of 0.5 cent per share in respect of the
financial year ended 31 December 2021. During the 2021 financial year, the Directors declared an unfranked interim
dividend of 0.5 cent per share in respect of the financial year ended 31 December 2021 and an unfranked final dividend
of 0.5 cent per share in respect of the financial year ended 31 December 2020.
The final unfranked dividend of 0.5 cent per share in respect of the financial year ended 31 December 2022 has not been
recognised in these consolidated financial statements as it was declared subsequent to 31 December 2022.
Fully paid ordinary shares
Final dividend in respect of the previous financial year
– No franking credits attached
Interim dividend in respect of the current financial year
– No franking credits attached
Consolidated
2022
Cents
per share
2021
Cents
per share
2022
$
2021
$
0.50
0.50
441,296
440,659
0.50
1.00
0.50
1.00
441,296
882,592
440,660
881,319
20. Financial risk management objectives
The Group’s principal financial instruments comprise receivables, payables, cash and short-term deposits. The Group
manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s
financial risk management policy. The objective of the policy is to support the delivery of the Group’s financial targets
while protecting future financial security.
The Group uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate, foreign exchange risk and assessments of market forecasts for interest rate,
foreign exchange and commodity prices. Ageing analysis and monitoring of specified credit allowances are undertaken
to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts.
The Board review and agrees policies for managing each of these risks as summarised below.
Primary responsibility for identification and control of financial risks rests with the Audit and Risk Committee under
the authority from the Board. The Board reviews and agrees policies for managing each of the risks identified below,
including for interest rate risk, credit allowances and cash flow forecast projections. It is, and has been throughout the
year under review, the Group’s policy that no trading in financial instruments shall be undertaken.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in Note 2.
67
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 20 Financial risk management objectives (continued)
(a) Interest rate risk
As the Group has moved into a no debt, strong cash position, the main interest rate risk is now in cash assets exposure.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the Statement of Financial
Position date.
At 31 December 2022, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
pre-tax profit would have been affected as follows:
Judgements of reasonably possible movements:
Loss before income tax
+1.0% (100 basis points)
–0.5% (50 basis points)
Consolidated
2022
$
2021
$
202,962
(101,481)
292,493
(146,246)
The movements in profit/(loss) are due to possible higher or lower interest income from cash balances.
At balance date, the Group had the following mix of financial assets and liabilities exposed to variable interest rate risk:
Weighted
average
interest rate
Non
interest
bearing
Fixed interest maturing in
Floating
interest rate
1 year
or less
1 to 5
years
More than
5 years
Note
%
$
$
1.37%
– 20,296,176
n/a 7,706,025
–
7,706,025 20,296,176
$
–
–
–
$
–
–
–
Total
$
$
– 20,296,176
–
7,706,025
– 28,002,201
4.50%
n/a 6,502,920
–
6,502,920
–
209,992
–
–
– 209,992 812,863 3,308,729 10,834,504
6,502,920
4,331,584
–
3,308,729
–
812,863
1,203,105 20,296,176 (209,992)
(812,863) (3,308,729)17,167,697
8
9
15
16
Weighted
average
interest rate
Non
interest
bearing
Fixed interest maturing in
Floating
interest rate
1 year
or less
1 to 5
years
More than
5 years
$
–
–
–
$
–
–
–
Total
$
$
– 29,249,255
–
8,040,708
– 37,289,963
Note
%
$
$
8
9
15
16
0.03%
– 29,249,255
n/a 8,040,708
–
8,040,708 29,249,255
4.50%
n/a 5,907,628
–
5,907,628
–
–
–
–
178,265
178,265 812,760 3,518,742 10,417,395
5,907,628
4,509,767
–
3,518,742
–
812,760
2,133,080 29,249,255 (178,265)
(812,760) (3,518,742)26,872,568
Consolidated
Year ended 31 December 2022
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade payables, third-parties
Leases, third-party
Total financial liabilities
Net exposure
Consolidated
Year ended 31 December 2021
Financial Assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial Liabilities
Trade payables, third-parties
Leases, third-party
Total financial liabilities
Net exposure
68
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 20 Financial risk management objectives (continued)
(b) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and
other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a
maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each
applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties and as such collateral is not requested nor is it the
Group’s policy to scrutinise the counterparty’s trade and other receivables. It is the Group’s policy that all customers who
wish to trade on credit terms are subject to credit verification procedures such as reviewing their industry reputation,
financial position and credit rating. In addition, receivable balances are monitored on an ongoing basis with the result
that the Group’s exposure to bad debts is constantly managed.
There are no significant unprovided concentrations of credit risk within the Group.
(c) Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank
overdrafts and bank loans. The Group has no borrowings as at 31 December 2022.
Refer to the table above in Note 20(a) Interest Rate Risk, which reflects all contractually fixed pay-offs for settlement of
financial liabilities and collection of financial assets. Trade payables and other financial liabilities generally originate
from the financing of assets used in our ongoing operations such as investments in working capital e.g. inventories and
trade receivables and investment in property, plant and equipment. These assets are considered in the Group’s overall
liquidity risk. To monitor existing financial assets and liabilities as well as to enable an effective controlling of future
risks, the Board and management monitor the Group’s expected settlement of financial assets and liabilities on an
ongoing basis.
The Group monitors the rolling forecast of liquidity reserves based on expected cash flow.
Consolidated
Year ended 31 December 2022
Trade payables, third-parties
Leases, third-party
Consolidated
Year ended 31 December 2021
Trade payables, third-parties
Leases, third-party
Note
15
16
Note
15
16
Less than
6 months
6 months
to 1 year
1 year
to 5 years
Greater than
5 years
$
$
$
$
Total
$
6,502,920
103,883
6,606,803
–
106,109
106,109
–
812,863
812,863
–
3,308,729
3,308,729
6,502,920
4,331,584
10,834,504
Less than
6 months
$
5,907,628
88,188
5,995,816
6 months
to 1 year
$
–
90,077
90,077
1 year
to 5 years
Greater than
5 years
Total
$
–
812,760
812,760
$
–
3,518,742
3,518,742
$
5,907,628
4,509,767
10,417,395
(d) Commodity price risk
The Group’s exposure to commodity price risk is minimal.
69
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 20 Financial risk management objectives (continued)
(e) Foreign currency risk
As a result of significant investment operations in Europe, the Group’s Statement of Financial Position can be affected
significantly by movements in the EURO/A$ exchange rates. The Group does not hedge this exposure but mitigates this
risk by maintaining bank accounts in Australia denominated in USD.
The Group also has transactional currency exposures. Such exposure arises from sales or purchases by an operating
unit in currencies other than the unit’s functional currency. Approximately 66% (2021: 79%) of the Group’s sales are
denominated in currencies other than the functional currency of the operating unit making the sale, whilst approximately
50% (2021: 53%) of costs are denominated in the unit’s functional currency.
At 31 December 2022, the Group had the following financial instrument exposure to foreign currency fluctuations:
United States dollars
Amounts payable
Amounts receivable
Euros
Amounts payable
Amounts receivable
Canadian dollars
Amounts payable
Amounts receivable
Swedish Kroners
Amounts payable
Amounts receivable
Japanese Yen
Amounts payable
Amounts receivable
Great British Pound
Amounts payable
Amounts receivable
Net exposure
Consolidated
2022
$
2021
$
252,594
–
237,136
–
229,703
1,508,591
147,022
1,909,390
123,666
427,871
80,011
237,393
634,107
1,441,833
355,769
923,908
10,104
–
10,104
5,771
55,796
245,643
(2,317,968)
8,054
244,716
(2,483,082)
Management believe the balance date risk exposures are representative of the risk exposure inherent in the financial
instruments.
Forward Exchange Contracts
The Company has not entered into foreign exchange forward contracts as at 31 December 2022.
Fair values
All of the Group’s financial instruments recognised in the Statement of Financial Position have been assessed at their
fair values using Level 1 inputs: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date.
70
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 20 Financial risk management objectives (continued)
Foreign currency sensitivity
Currency risk is measured using sensitivity analysis. A portion of Cyclopharm’s receivables and payables are exposed to
movements in the values of those currencies relative to the Australian dollar. Cyclopharm management have determined
that it is not cost effective to hedge against foreign currency fluctuations.
Cyclopharm is most exposed to European Euro (Euro), Canadian Dollar (CAD), US Dollar (USD), Swedish Kroner (SEK)
and Great British Pound (GBP) movements. The following table details Cyclopharm’s sensitivity to a 10% change in
the Australian dollar against those respective currencies with all other variables held constant as at reporting date for
unhedged foreign exposure risk. A positive number indicates an increase in net profit/equity.
A sensitivity has been selected as this is considered reasonable given the current level of exchange rates and the volatility
observed on a historic basis and market expectation for future movement.
Euro
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
31 December 2021
Net (loss)/profit
Equity (decrease)/increase
CAD
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
31 December 2021
Net (loss)/profit
Equity (decrease)/increase
USD
31 December 2022
Net profit/(loss)
Equity increase/(decrease)
31 December 2021
Net profit/(loss)
Equity increase/(decrease)
SEK
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
31 December 2021
Net (loss)/profit
Equity (decrease)/increase
GBP
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
31 December 2021
Net (loss)/profit
Equity (decrease)/increase
Consolidated
Increase in
AUD of 10%
$
Decrease in
AUD of 10%
$
(108,560)
(108,560)
119,416
119,416
(130,113)
(130,113)
143,125
143,125
(27,655)
(27,655)
(14,307)
(14,307)
22,963
22,963
21,558
21,558
(73,430)
(73,430)
(51,649)
(51,649)
(17,259)
(17,259)
(21,515)
(21,515)
30,421
30,421
15,738
15,738
(25,259)
(25,259)
(23,714)
(23,714)
80,773
80,773
56,814
56,814
18,985
18,985
23,666
23,666
71
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 21. Commitments & contingencies
(a) Capital commitments
The Company has the following capital expenditure commitments contracted for property, plant and equipment:
Not later than one year
Total
Consolidated
2022
$
–
–
2021
$
879,772
879,722
During the prior year, Cyclomedica Australia Pty Ltd entered into contracts to upgrade the cleanroom, ventilation and
air conditioning facilities at its Kingsgrove manufacturing premises.
Cyclopharm has entered into agreements to fund research projects with unrelated institutions. The commitments for
these projects total $264,024 (2021: $326,211) and will be expensed when incurred. Payments will be made based on the
achievement of certain milestones.
There were no other capital commitments as at the date of this report.
(b) Contingent liabilities
In December 2019, a business venture collaboration agreement combined CycloPet Pty Ltd and Pettech Solutions
Limited’s cyclotron facilities under a single operating enterprise known as Cyclotek NSW Pty Limited (Cyclotek NSW).
Cyclopharm and Cyclotek NSW have entered into a sub-lease agreement as tenants in common whereby Cyclotek NSW is
solely responsible for the tenant’s obligations except for make good obligations until such time as it exercises the right to
transfer its interest as tenant in common to Cyclopharm. Being a tenant in common, Cyclopharm’s contingent liabilities
as at 31 December 2022 amounts to $3,366,657 (2021: $3,366,657) if Cyclotek NSW is unable to fulfil its obligations as
tenant. The amount comprises payments under a sub-lease agreement commencing 1 January 2020 until the expiry of
two options to renew expiring on 31 December 2039 with a rent-free period until 31 December 2022.
There were no other contingent liabilities as at the date of this report (2021: $nil).
72
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED)
22. Related party disclosures
The consolidated financial statements include the financial statements of Cyclopharm and its subsidiaries as listed
below. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company
have been eliminated on consolidation and are not disclosed in this note.
The following table provides the total amount of transactions that were entered into with related parties for the relevant
financial year (for information regarding outstanding balances at year-end, refer to Note 9 Trade and Other Receivables
and Note 15 Trade and Other Payables):
Cell Structures Pty Ltd
Cell Structures Pty Ltd
Ultimate parent entity
Purchases
from
related parties
Amounts
owed to
related parties
2022
2021
$
–
50,069
$
–
–
Cyclopharm Limited is the ultimate parent entity in the wholly owned group.
Terms and conditions of transactions with related parties
¥ During the prior year, payments of $50,069 were made to Cell Structures Pty Ltd (an entity controlled by a former
Director, Mr. Tom McDonald). All payments related to Mr. McDonald’s role as a non-executive director including
consultancy services provided by him prior to his cessation on 1 December 2021.
Transactions between related parties are at normal commercial prices and on normal commercial terms and conditions
no more favourable than those available to other parties unless otherwise stated.
Controlled Entities
Name
Cyclopharm Limited
Controlled entities
CycloPET Pty Ltd
Cyclomedica Australia Pty Limited
Cyclomedica Ireland Limited
Cyclomedica Europe Limited
Cyclomedica Benelux bvba
Cyclomedica Nordic AB
Cyclomedica Germany GmbH
Cyclomedica Canada Limited
Cyclomedica USA LLC
Cyclomedica UK Ltd
Cyclomedica New Zealand Limited
Country of
Incorporation
Australia
Percentage of equity
interest held
2022
2021
Australia
Australia
Ireland
Ireland
Belgium
Sweden
Germany
Canada
United States of America
United Kingdom
New Zealand
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note
1,2
2
2
3
3
4
5
6
7
8
9
10
Cyclopharm Limited is the ultimate parent entity in the wholly owned group.
Notes
1.
2. Audited by Nexia Sydney Audit Pty Ltd, Australia.
3. Audited by Andrew P. Quinn & Associates Limited, Republic of Ireland.
4. Audited by VGD Gent, Belgium.
5. Audited by Nexia Revision, Stockholm, Sweden.
6. Audited by Bilanzia GmbH Wirtschaftsprufungsgesellschaft, Germany.
7. Audited by Schwartz Levitsky & Feldman LLP, Toronto, Canada.
8. Dormant.
9. Audited by Saffery Champness LLP, Bristol, United Kingdom .
10. Dormant.
73
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 23. Events after the balance date
Final dividend
On 20 February 2023, the Directors declared a final unfranked dividend of 0.5 cent per share in respect of the financial
year ended 31 December 2022, payable on 4 April 2023.
Shares issued
On 23 March 2023, 642,500 long term incentive plan shares were issued at an exercise price of $1.82 per share.
Ongoing litigation
A further judgement totalling approximately Euro 0.4 million in favour of Cyclopharm was handed down in Germany
against Mr Altmann in December 2022. Given the timing of receipt of the official judgment and further consequential
court actions required to be taken in January 2023 to enable enforcement of the judgment award, this favourable outcome
is an event subsequent to the close of 2022 financials. As a consequence, the financial benefit will be recorded in 2023.
No other matters or circumstances have arisen since the end of the financial year, not otherwise dealt with in the financial
report, which significantly affected or may significantly affect the operations of the economic entity, the results of those
operations, or the state of affairs of the economic entity in future financial periods.
24. Auditors’ remuneration
The following total remuneration was received, or is due and receivable, by auditors of the Company in respect of:
Amounts received or due and receivable by the auditor of the parent entity
and associated entities for:
Audit and review of the financial statements
Other services:
– tax compliance
– share registry
Amounts received or due and receivable by other audit firms for:
Audit of the financial statements of controlled entities
Other services
Consolidated
2022
$
2021
$
138,138
140,670
26,909
–
165,047
175,905
109,206
285,111
18,982
40,222
199,874
133,471
113,159
246,630
74
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 25. Director and key management personnel disclosure
Individual Directors and executives compensation disclosures
Information regarding individual Directors and executives’ compensation and some equity instruments disclosures as
required by Corporations Regulation 2M.3.03 are provided in the Remuneration Report Section of the Directors’ report.
Summary of remuneration of Directors & Key Management Personnel:
2022
2021
Short-term
employee benefits
Post
employment
benefits
Other
long-term
benefits
Share-
based
payment
Salary
and Fees
$
927,281
866,146
Cash
Bonus
$
36,496
30,000
Super-
annuation
$
97,350
77,604
$
18,782
14,420
$
340,994
545,925
Total
$
1,420,903
1,534,095
Short-term salary, bonus, fees and leave
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as salary,
paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other Key Management
Personnel.
Post-employment benefits
These amounts are the current-year’s estimated cost of providing for superannuation contributions made during the
year.
Other long term benefits
These amounts represent long service leave benefits accruing during the year.
Termination benefits
These amounts represent termination benefits paid out during the year (where applicable).
Share based payment expense
These amounts represent the expense related to the participation of Key Management Personnel in equity-settled
benefit schemes as measured by the fair value of the Implied Options granted on grant date.
Further information in relation to Key Management Personnel remuneration can be found in the Directors’ Report.
75
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 26. Share based payment plans
(a) Recognised share-based payment expenses
The expense recognised for employee services received in relation to share based payments during the year is shown
in the table below:
Expense arising from equity-settled share-based payment transactions (note 5)
The share-based payment reserve at 31 December 2022 was $3,241,763 (2021: $2,593,561).
(b) Share-based payment other than implied options
No share-based payments other than implied options were made during the year.
Consolidated
2022
$
648,202
2021
$
756,588
(c) Type of share based payment plans
The share-based payment plan is described below. An updated Plan was approved by members at the Annual General
Meetings held on 29 May 2018 and 4 May 2021.
Shares
Long Term Incentive Plan (“Plan”) Shares (“Shares”) are granted to certain Directors and certain employees.
In valuing transactions settled by way of issue of shares, performance conditions and market conditions linked to the
price of the shares of Cyclopharm Limited are taken into account. All shares issued have market performance conditions
so as to align shareholder return and reward for the Company’s selected management and staff (“Participants”).
The Shares vest upon the satisfaction of certain performance conditions (“Hurdles”) within the term (“Term”) specified
for Participants in the Plan. The Board has residual discretion to accelerate vesting (i.e. reduce or waive the Hurdles) and
exercise of Shares in the event of a takeover or merger or any other circumstance in accordance with the terms of the
Plan.
Shares in relation to which Hurdles have not been satisfied (i.e. that do not vest) will lapse and will not be able to be
exercised, except in the circumstances described below. However, the Board may at any time amend any rules governing
the operation of the Plan or waive or modify the application of the rules in relation to any Participant. Shares which have
not vested will lapse where a Participant ceases employment with Cyclopharm other than on retirement, redundancy,
death or total and permanent disablement or unless as otherwise determined by the Board in its absolute discretion.
Where a Participant has ceased employment with Cyclopharm as a result of resignation, retirement, redundancy, death
or total and permanent disablement prior to the end of a performance period, only shares that have vested may be
retained by the Participant on a pro-rata basis. If a Participant ceases employment for any reasons mentioned above
prior to the first anniversary of the grant date, the Participant forfeits all entitlement to Shares.
LTIP Shares issued
At the Annual General Meeting held on 8 May 2007, Shareholders approved the Company’s Plan with an updated Plan
approved by Shareholders on 29 May 2018 and 4 May 2021.
Implied Options
AASB 2 Share Based Payments requires that the benefit to an employee arising from an employee share scheme such
as the Cyclopharm Long Term Incentive Plan be treated as an expense over the vesting period. All of the issues of
Plan shares have been treated as Plan Share Options (“Implied Options”) in accordance with AASB 2. The employee
benefit is deemed to be the Implied Option arising from the Plan. Consequently, the value of the discount which has been
determined using the Black Scholes option pricing model will be charged to the Statement of Comprehensive Income and
credited to the Employee Equity Benefits Reserve over the vesting period.
Where employee shares are issued under a non-recourse loan payment plan, the loan assets and the increments to
Contributed Equity are not recognised at grant date but rather the increments to Contributed Equity are recognised
when the share loans are settled by the relevant employees.
76
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 26. Share based payment plans (continued)
(d) Summary of Options and Implied Options granted
The following table summarises the movements in Options and Implied Options during the current year:
Balance at the beginning of the year
Granted during the year
Vested but unexercised during the year
Exercised during the year
Lapsed during the year
Balance at the end of the year
Vested but unexercised at the end of the year
(i) 660,000 LTIP shares (2021: nil) vested during the year.
(i)
Consolidated
2022
Number
2,853,059
–
(910,000)
(325,000)
(300,997)
2021
Number
2,445,000
408,059
–
–
–
1,317,062
3,453,020
2,853,059
2,590,236
Weighted Average
Exercise Price
2022
$
1.33
–
–
–
–
1.50
2021
$
1.34
3.20
–
–
–
1.33
(e) Range of exercise price, weighted average remaining contractual life and weighted average fair value
The weighted average exercise price for Options and Implied Options at the end of the year was $1.50 (2021: $1.33). The
weighted average remaining contractual life for the Options and Implied Options outstanding as at 31 December 2022
is 0.90 years (2021: 0.91 years). The weighted average fair value of Options and Implied Options granted during the year
was $nil (2021: $1.02).
(f) Option pricing models
The following assumptions were used to derive a value for the Options and Implied Options granted using the Black Scholes
Option model as at the grant date, taking into account the terms and conditions upon which the Shares were granted:
Exercise price per Option
Number of recipients
Number of Options
Grant date
Dividend yield
Expected annual volatility
Risk-free interest rate
Expected life of Option (years)
Fair value per Option
Share price at grant date
Model used
* Extended to 31 May 2023.
Options
$0.00
1
Implied
Options
$1.22
2
Implied
Options
$1.55
1
Implied
Options
$3.20
25
Implied
Options
$3.20
1
600,000
4/5/2020
–
51.00%
0.22%
3.07 years
$0.379
$1.16
3,000
19/2/2021
–
61.00%
0.37%
6 years
$1.447
$2.79
Black Scholes Black Scholes Black Scholes Black Scholes
250,000
2/7/2018
–
41.00%
2.09%
*4.92 years
$0.245
$0.99
264,062
19/2/2021
–
61.00%
0.08%
3 years
$1.012
$2.79
200,000
27/5/2019
–
42.99%
1.23%
6.18 years
$1.310
$1.31
Expensed at
market price
at grant date
over expected
life of Option
Expected volatility percentages used for the Option pricing calculations were determined using historic data over 24
months and were adjusted to reflect comparable companies in terms of industry and market capitalisation. The Options
and Implied Options are not listed and as such do not have a market value.
77
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) 27. Parent entity disclosure
(i) Financial Position
Assets
Current Assets
Non-current Assets
Total Assets
Liabilities
Current Liabilities
Non-current Liabilities
Total Liabilities
Net assets
Equity
Contributed equity
Employee equity benefits reserve
Accumulated Losses
Total Equity
(ii) Financial Performance
Loss for the year
Other comprehensive income
Total comprehensive income for the year
28. Reserves
Nature and purpose of reserves:
(a) Employee equity benefits reserve
2022
$
2021
$
14,960,192
47,967,544
62,927,736
22,779,449
41,677,103
64,456,552
486,736
10,323,448
10,810,184
253,730
10,323,448
10,577,178
52,117,552
53,879,374
63,621,343
3,241,763
(14,745,554)
52,117,552
63,174,973
2,593,561
(11,889,160)
53,879,374
(1,973,802)
–
(1,973,802)
(23,761)
–
(23,761)
The employee share based payments reserve is used to record the value of share based payments provided to employees,
including key management personnel, as part of their remuneration.
(b) Foreign currency Translation Reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
78
Cyclopharm Limited | annual report 2022Notes to the Consolidated Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2022 (CONTINUED) Directors’ Declaration
In the opinion of the Directors of
Cyclopharm Limited:
1. (a)
(b)
The financial statements and notes of
the consolidated entity as set out on
pages 38 to 78 are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the
consolidated entity’s financial position
as at 31 December 2022 and of its
performance for the year ended on that
date; and
(ii) complying with Accounting Standards
which, as stated in accounting policy
Note 2(a) to the financial statements,
constitutes explicit and unreserved
compliance with International Financial
Reporting Standards (IFRS); and
There are reasonable grounds to believe
that the consolidated entity will be able to
pay its debts as and when they become due
and payable.
2. The Directors have been given the declarations
required by section 295A of the Corporations Act
2001 from the chief executive officer and chief
financial officer for the financial year ended
31 December 2022.
Signed in accordance with a resolution of
the Directors:
James McBrayer
Managing Director and CEO
Sydney, 31 March 2023
79
Cyclopharm Limited | annual report 2022
Independent Auditor’s Report to the Members of Cyclopharm Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Cyclopharm Limited (the Company and its subsidiaries (the Group)),
which comprises the consolidated statement of financial position as at 31 December 2022, the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
and consolidated statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
i) giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its
financial performance for the year then ended; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the ‘auditor’s responsibilities for the audit of the financial report’ section
of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the
ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit
of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our
audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
80
Cyclopharm Limited | annual report 2022
Key audit matter
How our audit addressed the key audit matter
Capitalised Development Costs for Ultralute
($2,930,792)
Refer to note 14
Included in the Group’s intangible assets are
capitalised development costs $2,930,792 in
respect of the Ultralute product. Capitalised
Ultralute development costs are considered to be
a key audit matter due to the quantum of the
asset; the degree of management judgement and
assumptions applied in measuring the carrying
value of the asset; and assessing the presence of
impairment of a development phase asset.
The most significant and sensitive judgments
incorporated into the assessment for impairment
of capitalised development costs include
projections of cash flows, discount rates applied
and assumptions regarding the Group’s ability to
exploit new markets.
Other considerations and judgments include
whether the capitalised costs qualify for
capitalisation as development phase costs in
accordance with AASB 138 Intangible Assets.
This includes an understanding of the Group’s
process for recording and measuring internally
developed assets and the Group's ability to
complete the development and demonstrate its
ability to generate future cash flows from that
asset.
Inventory Valuation and existence
($8,292,668)
Refer to note 10
The Group holds a significant amount of inventory
which are complex medical machines with
significant useful lives. Inventory may be held for
long periods of time before sale making it
vulnerable to obsolescence or theft. Further,
deterioration in global economic conditions can
potentially lead to this inventory being sold at
reduced prices or lead to a reduction in revenue.
The inventory is considered to be a key audit
matter due to the significant increase of inventory
at year end in anticipation of entering new
markets. As a result, there is a risk that inventory
is carried in excess of its net realisable value.
Our procedures included, amongst others:
We assessed the project against the
requirements for capitalisation contained in
AASB 138 Intangible Assets.
We tested material expenditure capitalised
during the year and checked that they were
appropriately allocated to the development
asset.
We assessed management’s determination of
the Group’s cash generating units based on
our understanding of the nature of the
Group’s business and how earnings streams
are monitored and reported.
We tested the Group’s assumptions and
estimates used to determine the recoverable
value of its assets, including those relating to
forecast revenue, cost, capital expenditure,
and discount rates by corroborating the key
market related assumptions to external data
and by reference to our understanding of the
business.
We performed sensitivity analysis in two main
areas to assess whether the carrying value of
the capitalised development costs exceeded
its recoverable amount. These were the
discount rate and growth assumptions.
Our procedures included, amongst others:
We performed stocktake procedures on a
sample of inventory items to ascertain their
existence at balance date.
We agreed a sample of inventory items to
purchase invoices to test that costs assigned
to inventories are appropriate.
We agreed a sample of raw materials
through to the assembled finished good to
determine whether these were assembled in
accordance with the underlying sub-
assemblies and related bill of materials.
We obtained evidence that inventory did not
exceed its net realisable value by:
- Checking a sample of inventory items to
subsequent selling prices;
81
Cyclopharm Limited | annual report 2022
Key audit matter
How our audit addressed the key audit matter
- Reviewing aged inventory report for any
slow moving items; and
- Considering management’s plans for
entering new markets.
Other information
The directors are responsible for the other information. The other information comprises the information
in Cyclopharm Limited’s annual report for the year ended 31 December 2022, but does not include the
financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the
other information and we do not express any form of assurance conclusion thereon. In connection with
our audit of the financial report, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of the other
information we are required to report that fact. We have nothing to report in this regard.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibility for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at The Australian
Auditing and Assurance Standards Board website at:
www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor’s
report.
82
Cyclopharm Limited | annual report 2022
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 35 of the directors’ Report for the year
ended 31 December 2022.
In our opinion, the Remuneration Report of Cyclopharm Limited for the year ended 31 December 2022,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Dated: 31 March 2023
83
Cyclopharm Limited | annual report 2022
ASX Additional Information
The following information is current at 28 February 2023.
A. Substantial Shareholders
The following have advised that they have a relevant interest in the capital of Cyclopharm Limited. The holding of a
relevant interest does not infer beneficial ownership . Where two or more parties have a relevant interest in the same
shares, those shares have been included for each party.
Shareholder
Anglo Australian Christian and Charitable Fund
Barings Acceptance Limited
HSBC Custody Nominees (Australia) Limited - A/c 2
National Nominees Limited
Chemical Overseas Limited
CVC Limited
Mr James McBrayer
B. Distribution of Equity Security Holders
(i) Analysis of numbers of equity security holders by size of holding as at 28 February 2023.
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
(ii) There were 133 holders of less than a marketable parcel of ordinary shares.
C. Equity Security Holders
Twenty largest quoted equity security holders
Anglo Australian Christian and Charitable Fund
Barings Acceptance Limited
National Nominees Limited
Chemical Overseas Limited
CVC Limited
Citicorp Nominees Pty Limited
1
2
3 HSBC Custody Nominees (Australia) Limited - A/c 2
4
5
6
7
8 McBrayer Reid Investments Pty Ltd - LTIP 6
9
UBS Nominees Pty Ltd
10 Chemical Overseas Limited
11 Phillips River Pty Ltd
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