More annual reports from Cyclopharm Limited:
2023 ReportCyclopharm Limited Annual Report 2023 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 imaging. Our proprietary
product Technegas™ is a clinical market leader
in nuclear medicine diagnostic imaging and
is now available in 65 countries.
Following USFDA approval, the
Company is entering its next growth
phase from a position of strength.
Contents
01 Summary Financials
02 Our Global Footprint
04 Chairman’s Letter
06 Managing Director’s Review
14 Directors’ Report
31 Auditor’s Independence Declaration
32 Consolidated Financial Statements
36 Notes to the Consolidated Financial Statements
74 Directors’ Declaration
75 Independent Auditor’s Report
79 Shareholder Information
80 Corporate Directory
Cyclopharm delivered another solid performance
in 2023 and, following USFDA approval, access
to the US market is expected to significantly grow
sales of Technegas™ in coming years.
Summary Financials
Full year ending 31 December
Operational Sales Revenue
Loss Before Tax
Loss After Tax
Diluted Loss Per Share (cents)
Net (Loss)/Profit Before Tax
Technegas™ Division
Molecular Imaging Division
Total Net (Loss) Before Tax
2021
2022
2023
$22.88m
$9.22m
$17.31m
$4.10m
2021
$'000
2022
$'000
2023
$'000
Movement
17,312
22,878
26,339
(4,347)
(6,030)
(4,190)
(5,040)
(6,612)
(4,701)
(5.62)
(7.17)
(5.07)
(4,652)
(6,411)
(8,150)
305
381
3,960
(4,347)
(6,030)
(4,190)
Operational
sales revenue
$26.34m
up 15.1%
Third-party distribution
revenues
$11.91m
up 29.3%
1
Cyclopharm Limited | annual report 2023 Our Global Footprint
To date Technegas™ has been used in
over 4.7 million patient procedures globally
and is available in 65 countries
Technegas™
Available now
Seeking approval
CYC offices
Head office:
Sydney, Australia
Cyclopharm estimates the global COPD market is approximately
30 times the size of the pulmonary embolism market and over 500 million
patients suffering with COPD and Asthma could benefit from the use of
Technegas™ and drive shareholder value over the medium term.
2
Cyclopharm Limited | annual report 2023
Cyclopharm continued to accelerate opportunities
to develop our Beyond PE strategy with clinical trials designed to
expand the use of Technegas™ into the treatment and management
of additional and exponentially larger indications, such as COPD,
Asthma, Lung Cancer and the effects of Long-COVID
3
Cyclopharm Limited | annual report 2023 Chairman's Letter
26 March 2024
Dear Shareholders,
Achieving approval from the United States
Food and Drug Administration (USFDA) for
Technegas has been a long-sought after goal
for Cyclopharm. On 29 September 2023, we
delivered on that objective. Access to the US
market, the single largest market for Technegas™
globally, is expected to significantly grow sales
of Technegas™ in coming years and provide
another solid platform to launch our Beyond PE
growth initiatives.
Whilst focusing on USFDA approval, your
company in parallel, delivered another solid
financial performance in 2023 driven again by
strong sales of our core Technegas products and
a significant contribution from our third-party
distribution business. The overall result being
another year of record sales revenues. We
continued to make significant progress in
executing our growth objectives, highlighted
by USFDA approval to sell Technegas™ in the
US market.
In 2023, Cyclopharm continued to demonstrate
the strength of our business and the financial
benefits derived from revenue diversification,
while enhancing shareholder value by advancing
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 (PE) market.
Cyclopharm’s core Technegas™ products
used in functional lung imaging, primarily
for the detection of pulmonary embolism, are
now available in 65 countries, with seven of
our offices directly servicing 17 out of those
countries. Cyclopharm will continue to leverage
this 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.
We continue to invest in clinical trials which
support our Beyond PE strategy, by researching
expanded uses of Technegas™ into the treatment
and management of indications significantly
larger than PE, such as COPD, Asthma and
Long-COVID. Notably, the global COPD market is
approximately 30 times the size of the PE market.
The Company’s entry into the US market is
expected to accelerate this Beyond PE strategy.
Cyclopharm’s third-party distribution business
delivered significant growth in 2023, leveraging
our regulatory expertise and operational
footprint to secure additional distribution
agreements across the regions in which we
currently operate, particularly Europe and
the Asia-Pacific. This business distributes a
mix of radiopharmaceuticals products and
capital equipment with associated consumable
and service revenue. Importantly, third-party
distribution contracts support the Company’s
growth strategy by generating additional revenue
streams to complement our established and
growing Technegas business, and is emerging as
an important pillar of our business.
4
Cyclopharm Limited | annual report 2023 Chairman's Letter
In 2023, the third-party distribution business
contributed a substantial $11.91 million
in revenue made up of $4.37 million from
capital works projects and $7.54 million
from consumable sales and services, up from
$9.22 million in revenue for the prior year.
26 February 2024. Mr Smith brings a wealth of
industry experience in Financial Control and
Accounting, both at Cochlear and at a large
multinational in the United Kingdom. He is CA
qualified, gained through his time working as
an external auditor at Deloitte.
The Company’s strong balance sheet and cash
balance at year-end of $11.73 million supports the
initial launch of Technegas in the US market.
Cyclopharm has never been better placed to
extend its market leadership in lung imaging and
drive ongoing growth in revenue and earnings
across new markets and new indications.
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. On 19 February
2024, Cyclopharm announced that Mr John
Wigglesworth was appointed as a Non-Executive
Director to fill a casual vacancy on the board.
Mr Wigglesworth is a Chartered Accountant and
Company Director with 37 years professional
experience, including 24 years as a Partner at
KPMG. As Cyclopharm enters its next phase of
substantial growth, Mr Wigglesworth’s experience
will be a valuable asset to the company.
Cyclopharm’s focus on its strategic pillars
also allowed the Company to grow and build a
talented team, specifically in the US, to prepare
for the rapid roll out of Technegas™ following the
USFDA approval in September 2023. To support
this step change in the business’ financial and
operational performance Cyclopharm recently
announced the appointment of Mr Jason Smith
as Chief Financial Officer (CFO), effective
The breadth and depth of experience and the
integration of complementary skills across the
Cyclopharm management team and Board, 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.
In 2024, we expect to build on the record revenue
performance achieved in 2023 through robust
sales of Technegas™; continuing growth in
third-party distribution sales and the improved
utilisation of the Company’s sales and service
infrastructure globally.
In addition, Cyclopharm is 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
5
Cyclopharm Limited | annual report 2023
Managing Director’s Review
Key features of Cyclopharm’s financial
results for the 2023 year include:
Record group total
revenue
$32.21m
up 29.0%
Record group sales
revenue
$26.34m
up 15.1%
Technegas™ related
sales
$14.43m
up 5.6%
Third-party distribution
revenues
$11.91m
up 29.3%
Balance Sheet
$11.73m
net cash to
fund USA launch
Litigation
proceeds of
$1.28m
received
$3.16m
Reversal of
impairment to the
Cyclotron facility
Beyond PE
Dividends
Continued progress in
developing new, 'Beyond PE'
clinical applications providing
significant, long term growth
opportunities for Technegas™
with clinical trial results
published.
Total unfranked dividends
for 2023 of 0.5 cents per share.
No final dividend declared.
Dear Shareholders,
Cyclopharm delivered another solid financial
and operational performance in 2023 and the
start of our market expansion of Technegas™
following USFDA approval on 29 September
2023. Access to the US market, the single largest
market for Technegas™ globally, is expected
to significantly grow sales of Technegas™
in coming years.
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’ growth
strategy. As outputs to this initiative, two
clinical trial results were published in 2023.
The first publication by McMaster University1
located in Canada, used Technegas™ in
surgical planning for lung cancer patients.
The second publication by Australia’s Hunter
Medical Research Institute (HMRI)2 found
that imaging with Technegas™ is a predictive
indicator or ‘Treatable Trait’ for response to
therapy in patients with severe asthma.
In addition to the R&D work being conducted
in existing markets, entry to the US market
is also expected to accelerate ‘Beyond PE’
use globally.
1. Comparison of ventilation defects quantified by Technegas SPECT and hyperpolarized 129Xe MRI; Radadia et al, Frontiers in Physiology;
2023 Apr 28; doi: 10.3389/fphys.2023.1133334
2. Ventilation Heterogeneity Is a Treatable Trait in Severe Asthma, Gibson et al, The Journal of Allergy and Clinical Immunology Dec 2023;
DOI:https://doi.org/10.1016/j.jaip.2023.12.030
6
Cyclopharm Limited | annual report 2023 Managing Director's Review
Staffing costs have also increased over the
period by $2.61 million predominantly driven
by the increasing costs of global regulatory
compliance and preparations for the Company’s
rapid roll out of Technegas™ in the US market
following USFDA approval.
The results were assisted by a decrease
in distribution costs. Distribution costs of
$1.07 million were recorded in 2023, down from
$2.39 million in 2022. This decrease resulted
from the easing in inflationary pressures of
distribution and logistics costs globally as
worldwide supply chains continue to moderate.
Cyclopharm ended the financial year with a
healthy balance sheet and a cash balance of
approximately $11.73 million, reflecting prudent
expense and capital management supported
by ongoing operational cashflows. This cash
balance allows the Company to launch its rollout
of Technegas™ in the US, continue its R&D
activities and support the working capital needs
of the business.
R&D tax incentives are ongoing but now in the
form of offsets to future taxable income, rather
than refunds, as Cyclopharm has exceeded the
aggregated turnover threshold. Therefore, there
was no Research and Development Tax incentive
payment for the 2023 financial year, versus a
payment of $1.64 million from the Australian
Taxation Office in 2022.
Financial performance
Cyclopharm continued to generate record
Group revenue of $32.21 million up 29.0% from
the previous year. Revenues from direct sales
in 2023 of $26.34 million, were up 15.1% from
$22.88 million in the prior year.
Sales of our proprietary Technegas™ Systems
and PAS consumables, used in functional lung
imaging primarily for the detection of pulmonary
embolism, performed well in 2023 with revenue
from the Systems and consumables exceeding
FY2023 revenues by 5.6% to $14.43 million.
Sales revenue from third-party distribution sales
continued to grow strongly, up $2.70 million to
$11.91 million, a rise of 29.3%. This revenue, whilst
at lower margin than sales of our proprietary
Technegas™ products, is expected to continue
to complement revenues in existing markets.
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
and beyond.
Cyclopharm recorded a loss after tax of
$4.70 million in 2023, compared to $6.61 million
in 2022. This figure was assisted by $3.16 million
reversal of impairment to the Cyclotron facility
in recognition of the financial contributions
derived from Cyclotek NSW Pty Ltd. The results
included $3.49 million of expenses associated
with the USFDA approval process in 2023. In
total, $23.41 million has been expensed on the
current USFDA approval process over the past
15 years, which reflects the Board’s confidence
in the anticipated returns from Technegas™
sales in the USA market now that approval
has been granted. The net loss before tax of
approximately $4.19 million in 2023, down
30.5% from $6.03 million in 2022. This result
includes $1.28 million of recovered litigation
costs from ongoing strategies to actively protect
Cyclopharm’s commercial interests in Europe
and Australia.
7
Cyclopharm Limited | annual report 2023 Technegas™ sales ($m)
Third-party distribution
revenues ($m)
$14.43m
up 5.6%
$13.66m
$13.21m
$11.91m
up 29.3%
$9.22m
2021
2022
2023
2021
2022
2023
$4.10m
Expanding Technegas™ revenues
Technegas™ sales grew by 5.6% to $14.43 million,
matching pre-pandemic levels. Sales of Patient
Administration Sets (PAS) represented 70.7% of
Technegas™ revenue (73% in FY22). Each box of
PAS is equal to 50 patient doses of Technegas™.
PAS sales resulted in 161,700 patient procedures
in 2023 or 3,234 boxes of PAS. Despite 113 fewer
boxes sold in 2023, the result was pleasing given
the temporary shortage of global contrast media
in 2022 which benefited Technegas™ sales for
that year.
In 2023, 58 TechnegasPlus™ Systems (Systems)
were sold compared to 76 in the prior year. The
previous year’s sales were assisted by a boost in
COVID related TechnegasPlus™ System.
Sales of Systems and other service revenue
represented 29.3% of Technegas™ total revenue,
up from 26.5% in 2022. The increase was primarily
a result of the pricing increase in Systems
combined with the execution of the Company’s
direct market expansion.
Operations and strategy deliverables
During the year to 31 December 2023, 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.
Operating highlights for the 2023 calendar year
included:
— Successful USFDA manufacturing facility
inspection completed
— USFDA approval to market Technegas™ in the
US, received on 29 September.
— First US contract signed with Duke University
Hospital in December.
— Advanced preparation for US commercialization
of Technegas™, including personnel training
and inventory buildup, to facilitate a rapid
rollout in 2024.
— Ongoing support for Technegas™ continues to
build 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 with clinical
trial results published.
— Strong growth of 29.3% in third-party
distribution.
Cyclopharm also continues to prioritise employee
safety and welfare while executing our growth
strategies.
8
Cyclopharm Limited | annual report 2023Managing Director's Review Accelerated US rollout
Cyclopharm received USFDA approval to
commence commercial sales of Technegas™
in the US market on 29 September 2023. The
approval provides Cyclopharm access to the
single largest market for Technegas™ globally,
and one which the company estimates to be
initially worth approximately US$180 million
annually for the diagnosis and management of
Pulmonary Embolism (PE).
In preparation for the USFDA approval,
Cyclopharm established a rapid rollout plan
for Technegas™ into a market estimated
to represent 2,000 facilities. The company
invested in building up inventory levels and
had the necessary parts to launch with 200
systems ready to deploy. The USFDA approval
covers the complete Technegas™ product line,
including its manufacture in and distribution
from Australia.
Prior to USFDA approval, there was significant
pre-existing demand for Technegas™ in the
US healthcare market with US clinicians and their
representative bodies having lobbied heavily for
access to Technegas™. Cyclopharm had logged
over 420 individual expressions of interest
pre-approval and the company in prioritising this
strong demand for Technegas™ in US medical
facilities in the following order:
1. US Clinical trial sites involved in Technegas’™
New Drug Application (NDA), such as Duke
University Hospital, Cyclopharm’s first signed
contract in the US for Technegas™
2. Key Opinion Leaders involved in the NDA
process
3. Advocates that have supported Technegas™
during the NDA process
4. Large Government and Large Private Health
Care Groups
5. Large University affiliated teaching hospitals
Since USFDA approval in September, Cyclopharm
has specifically engaged with over 80 individual
clinical sites and buying groups aligned to over
280 individual locations. This internal process is
generally first driven by strong clinical support
from the nuclear medicine department, followed
by several interdepartmental reviews conducted
which includes an analysis of commercial terms.
Administrative approval and contract execution
then progresses to installation and training. Our
first US Technegas™ installation and sales to Yale
University was recorded in February 2024.
Installations of the first wave of Technegas™
Systems for the US will continue through H1
2024, with plans for completion, shipment and
installation of 200 Systems by the end of 2024.
Under the US sales model, based on anticipated
high volumes, Cyclopharm will provide and
install Technegas™ Systems to nuclear medicine
departments to increase adoption and use of
the single patient consumables which generate
recurring annuity-style revenue. Already in place
are agreements for third-party distribution,
System service, installation, and administrative
support for Technegas™ in the US.
Maximising the US Opportunity
To rapidly penetrate the US market, Cyclopharm
will use its experience from the successful
introduction of Technegas™ in the 64 existing
country markets globally including its largest
country market, Canada. In Canada, the
company has displaced the same competitive
products currently being used in the US to
a level where almost all of Canada’s nuclear
medicine ventilation procedures are imaged
using Technegas™.
In the US, there are approximately 4 million
procedures conducted annually to rule out
the presence of PE. Of those procedures, 85%
are imaged through Computed Tomography
Pulmonary Angiography (commonly known
as CT or CTPA). The remaining 15% of the
market (or 600,000 procedures) which utilise
nuclear medicine rather than CT to diagnose
PE, comprises patients with contraindications
including those who are pregnant, have renal
impairment, allergies to CT contrast media, or
radiation concerns.
Cyclopharm is initially targeting the existing
600,000 nuclear medicine imaging procedures
for PE, a market which it estimates to be
approximately US$90 million per annum. Based
on Cyclopharm’s experience in the Canadian
market and globally, the company reiterates
expectations it can achieve a 50% share of
this existing market over the next 2 to 3 years,
rising to more than 80% share over a 3 to
5-year period.
9
Cyclopharm Limited | annual report 2023Managing Director's Review The second stage involves increasing the
total US PE diagnostic market that is imaged
through nuclear medicine from 15% to 30%.
This target raises the total potential PE market
for Technegas™ in the US to US$180 million
annually, Cyclopharm’s confidence the
US market can be expanded to US$180 million is
based on the company’s extensive and successful
global track record, the unique properties of
Technegas™ including its ability to enhance 3-D
imaging technology and create superior clinical
outcomes to CTPA.
Underpinning the opportunity is the key fact that
US reimbursement codes are based on established
nuclear medicine procedures. Technegas™ can
therefore be immediately utilised under existing
bundled procedural codes.
Beyond PE – substantially expanding
the use of Technegas™
In 2023, Cyclopharm continued to accelerate
opportunities to develop our Beyond PE strategy
with clinical trials 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.
As outputs of these initiatives, two clinical
trial results were published in 2023. The first
publication was by McMaster University in
the use of Technegas™ as part of the surgical
planning for lung cancer patients. McMaster
University, located in Hamilton Canada
published a paper entitled “Comparison of
ventilation defects quantified by Technegas
SPECT and hyperpolarized ¹²⁹Xe MRI”1. The
publication assessed lung cancer patients
undergoing lung resection surgery. The results
of the study underscored the clinical utility
of Technegas™ in assessing more broadly
ventilation abnormalities in pulmonary
obstructive disease.
The second publication by the Hunter Medical
Research Institute (HMRI), a research institute
affiliated with the University of Newcastle in
Australia, found Technegas™ to be a predictive
indicator or ‘Treatable Trait’ for drug response
in patients with severe asthma. The HMRI
publication entitled “Ventilation Heterogeneity
Is a Treatable Trait in Severe Asthma”2 found
that Technegas™ provides an “objective
measure of response to biologic therapy in
severe asthma and as a relevant treatable
trait”. In other words, Technegas™, may be
used to predict how well a patient will respond
to therapy. This outcome has significant health
economic potential particularly in the use of
expensive biological therapies.
The US represents the largest individual market
in the world for diagnostic lung ventilation
imaging. This wide indication supports future
use across a wide range of other respiratory
disease states to include Chronic Obstructive
Pulmonary Disease (COPD), Asthma,
Long-COVID and lung cancer.
As an indication of the larger Beyond PE
markets in the US, Cyclopharm estimates
the global COPD market to be approximately
30 times the size of the PE market. Clinical
studies have supported the potential for over
500 million patients globally suffering with
COPD and a similar number with Asthma,
benefiting from the use of Technegas™ in
diagnosis and ongoing patient monitoring and
management. These respiratory disease states
represent significant opportunities to expand
sales of Technegas™, drive shareholder value
over the medium term and ultimately improve
patient outcomes.
Cyclopharm is confident that the extension
of Technegas™ into these new applications
in the US will drive substantive opportunities
globally to exponentially expand the market for
Technegas™ beyond its traditional PE market.
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 Guidelines3 and the updated
2019 European Association of Nuclear Medicine
Guidelines4. Both guidelines also reinforce
the superior use of Technegas™ particularly
in patients with COPD and the potential for
nuclear medicine imaging.
1. Comparison of ventilation defects quantified by Technegas SPECT and hyperpolarized 129Xe MRI; Radadia et al, Frontiers in Physiology;
2023 Apr 28; doi: 10.3389/fphys.2023.1133334
2. Ventilation Heterogeneity Is a Treatable Trait in Severe Asthma, Gibson et al, The Journal of Allergy and Clinical Immunology Dec 2023;
DOI:https://doi.org/10.1016/j.jaip.2023.12.030
3. Leblanc et. Al. CANM Guidelines for Ventilation/Perfusion (V/P SPECT) In Pulmonary Embolism. November 2018.
4. Bajc et. Al. EANM guideline for ventilation/perfusion single-photon emission computed tomography (SPECT) for diagnosis of pulmonary embolism
and beyond. European Journal of Nuclear Medicine and Molecular Imaging. July 2019. https://doi.org/10.1007/s00259-019-04450-0.
10
Cyclopharm Limited | annual report 2023Managing Director's Review Other businesses
Third-party distribution
The Technegas™ division benefited significantly
from the robust increase in third-party
distribution revenues to $11.91 million. Third-party
revenue was driven by a strong contribution from
Australia/NZ and a sound performance in Europe.
Cyclopharm leveraged its regulatory
expertise and operational footprint through
the establishment, in 2020, of a third-party
distribution business that continues to deliver
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 2023, the third-party
distribution revenues expanded by 29.3% to
$11.91 million, still a significant rise despite
more than doubling in 2022 at solid, albeit
lower, margins than Cyclopharm’s proprietary
Technegas™ products.
These complementary third-party revenue
streams have supported Cyclopharm’s
overall revenue performance since 2020,
particularly through 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 2023 demonstrates that
it is 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 $11.91 million third-party revenues
generated in 2023, capital works projects
equalled $4.37 million with the ongoing revenues
associated with recurring consumable sales and
service equating to $7.54 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 and
complementary part of the business.
Cyclotek NSW Pty Ltd
During the year, Cyclotek NSW Pty Ltd
(Cyclotek NSW) made a $0.80 million positive
contribution to the Group’s results. Cyclotek
NSW 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 was formed as a business
venture collaboration in late 2019. Under
the venture, Cyclopharm is required to make
available access to the cyclotron facility and to
a contribute $40k per annum, over a period of
9 years, to fund the ongoing research activities
of Cyclotek NSW. In exchange for the use of the
cyclotron facility and research contribution,
Cyclopharm receives a share of profits from the
venture and international commercialisation
rights to intellectual property developed
from the collaboration. In recognition of the
increasing annual financial distributions
received from Cyclotek NSW, Cyclopharm
booked a $3.16 million partial reversal of
impairment to the Cyclotron assets in 2023.
Litigation Progress
In August 2023, Cyclopharm advised that it had
reached a settlement with two of the parties
involved in legal proceedings initiated by
Cyclopharm in Australia, which resulted in the
Company receiving a cash settlement and asset
purchase equalling a net receipt of $0.70 million.
This settlement follows the receipt of $0.58 million
from the favourable judgment handed down in
Germany against Mr Bjorn Altmann and Almedis
Altmann GmbH in December 2022, and is a partial
settlement of the Company’s ongoing legal action
in Australia.
Cyclopharm is continuing to vigorously protect
its intellectual property by pursuing its ongoing
legal action against the remaining Australian and
German defendants. During 2024, the Company
expects to return to the NSW Supreme Court and
proceedings in Germany to progress Cyclopharm’s
claims. The Board remains confident of a
favourable outcome to these legal proceedings.
11
Cyclopharm Limited | annual report 2023Managing Director's Review 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.
On 19 February 2024, Cyclopharm announced
that Mr John Wigglesworth was appointed as a
Non-Executive Director to fill a casual vacancy
on the board. Mr Wigglesworth is a Chartered
Accountant and Company Director with 37 years
professional experience, including 24 years as a
Partner at KPMG.
As Cyclopharm enters its next phase of
substantial growth, Mr Wigglesworth’s experience
will be a valuable asset to the company.
Leadership Team
Cyclopharm’s focus on its strategic pillars
allowed the Company to grow and build a
talented team, specifically in the US, to prepare
for the rapid roll out of Technegas™ following
the USFDA approval in September this year. This
meant that the Company has hit the ground
running in the US market, which 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.
On 12 February 2024 Cyclopharm announced the
appointment of Mr Jason Smith as Chief Financial
Officer (CFO), effective 26 February 2024.
Mr Smith brings a wealth of industry experience
in Financial Control and Accounting, both at
Cochlear and at a large multinational in the
United Kingdom. He is CA qualified, gained
through his time working as an external auditor
at Deloitte.
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
In 2023 Cyclopharm has again demonstrated
the strength and resilience of the business by
delivering another record revenue performance.
We have initiated sales process of our proprietary
Technegas™ technology into the US market,
which we expect to drive an exponential change
in the growth of our core business. In addition,
we continue to grow third party sales and
cumulatively we are delivering on our strategy of
revenue diversification across the group.
Cyclopharm’s ability to initiate sales of
Technegas™ in the US is the result of the
persistence and hard work of our highly skilled
global team along with the unwavering support
of our Board and shareholders through the
process to secured USFDA approval. Importantly,
USFDA approval has also established a platform
for maximising the breadth of clinical use of
Technegas™ across a wide range of respiratory
applications going forward.
While USFDA approval for Technegas™ is a
major milestone for Cyclopharm, our ability
to now make this technology available to US
clinicians and to the patients they serve, is
where the key significance lies. Our preparation
for a rapid entry into the US market, based on
our global experience, consisted of building our
inventory along with US service and training
capabilities. The existing and substantial clinical
demand does not require a large sales force to
promote a product that has been long sought
after clinically in the US market. We look forward
to providing you with regular updates on the US
rollout of Technegas™ as we proceed with this
exciting new phase for the company.
The Company’s strong balance sheet and cash
balance at year-end of $11.73 million means
we are sufficiently funded to launch the initial
rollout of Technegas™ in the US market as well
as our growth aspirations in the rest of the
countries in which we operate.
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.
12
Cyclopharm Limited | annual report 2023Managing Director's Review Additional clinical papers are expected to be
published in 2024 focusing on obstructive
pulmonary disease. Cyclopharm estimates
there are over 500 million patients suffering
collectively with COPD and/or Asthma who may
benefit from the use of Technegas™. Notably, the
global COPD market is approximately 30 times
the size of the PE market. The Company’s entry
into the US market, the largest medical market
in the world, is also expected to accelerate this
Beyond PE strategy.
Cyclopharm has never been better placed to
extend its market leadership in lung imaging
and drive ongoing growth in revenue and
earnings. Following USFDA approval, the
Company is entering its next growth phase
from a position of strength, having delivered
record 2023 sales revenues, robust sales of
Technegas™ and continuing strong growth
in third party sales.
The Company has already commenced sales in
the USA and we expect that to continue at pace
in 2024. The US market will be a major catalyst
for our growth aspirations, alongside our well
established existing operations in 64 additional
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
13
Cyclopharm Limited | annual report 2023Managing Director's Review Directors’ Report
The Directors of Cyclopharm
submit their report for the year
ended 31 December 2023.
Directors
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
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 is a member of the
Audit and Risk Committee,
Remuneration Committee and
Board Nomination Committee.
Ms Angus has extensive executive
managerial and company director
experience in the biotechnology,
biopharmaceutical, medical device,
agritech and healthcare industries.
She has long been involved in
path to market asset development
and commercialisation in these
industries, notably including the
clinical validation of therapeutics
to create asset valuation uplift.
Ms Angus has wide expertise in
corporate strategy and innovative
product development together with
governance and compliance in
listed capital markets.
Ms Angus has held directorship
roles in a number of ASX and
NASDAQ-listed companies and is
currently Non-Executive Chair of
Argenica Therapeutics (ASX:AGN),
Non-Executive Director of Neuren
Pharmaceuticals (ASX: NEU), and
Imagion Biosystems (ASX: IBX).
She is also a council member of
Deakin University. Additionally,
Ms Angus holds a Master of
Biotechnology, Bachelor of Science
(Hons), and a Graduate Diploma
of Intellectual Property (IP) Law.
She is a registered patent attorney
and a member of the Australian
Institute of Company Directors
(AICD).
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 was
re-appointed as acting Chairman
of the Audit and Risk Committee
effective 1 December 2021 until
18 February 2024.
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.
Mr J S McBrayer
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.
14
Cyclopharm Limited | annual report 2023Directors’ Report Mr J W Wigglesworth
Non-Executive Director
(Independent)
(appointed on 19 February 2024)
BEc (MACQ), FCA, GAICD
Mr Wigglesworth is a Chartered
Accountant with 37 years
professional experience, including
24 years as a Partner at KPMG both
in Australia and internationally.
During this time, he held several
leadership positions across
operations, industry sectors
and business development.
Mr Wigglesworth has extensive
experience working with ASX listed
and leading global companies, with
specific expertise in external and
internal audit, financial reporting,
accounting systems and controls,
governance and risk management.
Mr Wigglesworth is currently the
Non-Executive Director of ASX
listed company Atlas Arteria
Limited. He is also the Non-
Executive Director of The Sydney
Children’s Hospital Network,
Independent Reserve Pty Ltd and
Grid Share Holding Group Pty Ltd.
Mr Wigglesworth has been
appointed as Chairman of the
Audit and Risk Committee and is
a member of the Remuneration
Committee and Board Nomination
Committee effective 19 February
2024.
Mr J S McBrayer
Company Secretary
Mr McBrayer was appointed
as Company Secretary on
25 March 2011.
Mr K M J Barrow
Non-Executive Director
(Independent)
M.Sc (Hons), MBA
Mr Barrow was appointed to the
Board on 1 September 2022. He
is a member of the Audit and
Risk Committee, Remuneration
Committee and Board Nomination
Committee. Mr Barrow holds a
Master of Science (with 1st Class
Honours) from Waikato University,
New Zealand. He obtained an MBA
from the Macquarie Graduate
School of Management, Sydney,
Australia and is a graduate of the
Australian Institute of Company
Directors and an Adjunct Fellow
at Macquarie University. He brings
to the Cyclopharm board more
than 20 years of experience in the
healthcare industry, which includes
numerous governance and senior
executive roles.
Mr Barrow is currently the Chief
Executive Officer of the Sydney
North Health Network. The Sydney
North Health Network is one
of 31 Primary Health Networks
established by the Australian
Government to increase the
efficiency and effectiveness
of medical services for the
community. He was the 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 was 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.
Professor G G King
Non-Executive Director
(Independent)
MB ChB, PhD, FRACP, FAPSR
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.
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.
15
Cyclopharm Limited | annual report 2023Directors’ Report 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
Mr J W Wigglesworth
Beneficial interests
BI:
NBI: Non beneficial interests
Dividends
An interim unfranked dividend of 0.5 cents per
share was paid on 11 September 2023 and a final
unfranked dividend of 0.5 cents per share in
respect of the financial year ended 31 December
2022 was paid on 4 April 2023.
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.
16
Interest
BI
BI
BI
NBI
BI
BI
As at report date
No. of
shares
No. of
options
280,000
5,309,580
10,000
11,000
–
–
5,610,580
–
–
–
–
–
–
–
Operating and Financial Review
Operating results for the year
For the financial year, Cyclopharm recorded a
consolidated loss after tax of $4,700,806. Loss after
tax from the operations of the Technegas™ division
was $8,364,315 while the Molecular Imaging
Division contributed profit after tax of $3,663,509.
Technegas™ divisional revenue of $26,339,389
was 15.1% higher than the previous year (2022:
$22,878,333) with $11,913,418 (2022: $9,215,071)
from distributing third-party products to the
diagnostic imaging sector.
Technegas™ division loss before tax of $8,149,516
(2022: $6,410,559) recorded an unfavourable
variance of $1,738,957 impacted by $2.61 million
increase in employee benefits expense. Employee
benefits expense was higher at $11,690,163 (2022:
$9,081,003) reflecting ongoing investment in human
capital to meet global regulatory requirements
which includes compliance with USFDA guidelines.
The loss was mitigated by a $1.32 million decrease
in distribution costs to $1.07 million with the
easing in inflationary pressures of distribution and
logistics costs as worldwide supply chains continue
to stabilise.
USFDA clinical trial costs totalling $3,490,346
(2022: $2,973,729) also contributed to the
Technegas™ division loss before tax.
The Molecular Imaging division’s profit after
tax comprised of $3.16 million partial reversal of
impairment to the cyclotron facility in recognition
of the financial distributions received from
Cyclotek NSW Pty Ltd which contributed $800,172
to total revenue, up from $340,464 in 2022.
Cyclopharm Limited | annual report 2023Directors’ Report Financial position
Net assets decreased to $32,259,482 at
31 December 2023 (2022: $36,536,610) impacted
by the net loss after tax of $4,700,806.
Net cash balance was $11,726,424 at
31 December 2023.
Further details of Cyclopharm’s Operating
and Financial Review are set out on pages 6 to 13
of the Managing Director’s Review.
Significant changes in state of affairs
Shares issued and cancelled during the year
(i) On 23 March 2023, 642,500 Long Term
Incentive Plan (LTIP) shares were issued at an
exercise price of $1.82 per share and 100,000
LTIP shares were issued at an exercise price of
$3.04 per share on 12 September 2023 under
the limited non-recourse loan payment plan.
(ii) On 14 April 2023, 100,000 ordinary shares were
issued at a deemed price of $2.18 per share as
part consideration to acquire 100% of the shares
in Dupharma ApS. These shares are subject to
voluntary escrow until 31 March 2025 and have
no dividend or voting rights until 1 April 2025.
(iii) On 30 November 2023, 200,000 options
issued at nil exercise price were converted
in accordance with the terms and conditions
approved by the Company’s shareholders on
21 May 2019.
There were no other shares issued and cancelled
during the year.
Options issued and cancelled during the year
On 30 November 2023, 200,000 Options issued at
nil exercise price were converted in accordance
with the terms and conditions approved by the
Company’s shareholders on 21 May 2019. After the
conversion, there were no Options (2022: 200,000)
on issue as at 31 December 2023.
No options were issued or 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
No matters or circumstances have arisen since the
end of the financial year, not otherwise disclosed
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.
Likely developments and future results
Technegas™
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.
USFDA approval to sell Technegas™ into the
USA market provides Cyclopharm with the
opportunity to significantly expand its sales
and profitability. In preparation for a rapid
entry into the US market the Company has been
building inventory along with US sales and service
capabilities and infrastructure. The USA presents
Cyclopharm with an initial transformational
market opportunity for the diagnosis of pulmonary
embolism estimated at US$180 million annually.
Ultralute™
Cyclopharm is currently progressing the
registration of 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 2023, and consequently there were
no revenues from the sale of Ultralute™.
Cyclopharm is engaging regulatory partners both in
Australia and in Europe to progress this initiative.
Third-party distribution
Cyclopharm has leveraged its regulatory expertise
and operational footprint globally 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.
17
Cyclopharm Limited | annual report 2023Directors’ Report 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 and maintains a Radiation
Management Licence from the NSW EPA to sell,
possess and 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 stringent European
Medical Device Regulations for Technegas™Plus
Technegas™ Generator and Patient
Administration Set (PAS) of the Technegas™
System;
— a Marketing Authorisation for Pulmotec™, the
carbon crucible which is the drug (medicine)
component of Technegas™ in Europe;
— a Medical Device Single Assessment Program
(MDSAP) certificate that is observed primarily by
Australia, Brazil, Canada, Japan and the USA;
— 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; and
— USFDA New Drug Approval of Technegas™ (kit
for the preparation of technetium Tc 99m labeled
carbon inhalation aerosol) for oral inhalation
use and USFDA 510K approval of the Patient
Administration Set (PAS).
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.
Cyclopet Pty Limited, which is involved in
the operations of the cyclotron, is subject to
environmental regulations under the Radiation
Control Act, 1990 by the Department of
Environment, Climate Change and Water.
Competition
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.
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™.
18
Cyclopharm Limited | annual report 2023Directors’ Report 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.
Disruption of business operations
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.
Currency and exchange rate fluctuations
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.
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.
19
Cyclopharm Limited | annual report 2023Directors’ Report Patents
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.
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
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 and its Business Venture
Collaboration Agreement with Cyclotek NSW
Pty Ltd.
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.
2.
the liability does not arise from conduct
involving a lack of good faith; or
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 2023 is
$40,000 (for the year ended 31 December 2022:
$35,076).
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.
20
Cyclopharm Limited | annual report 2023Directors’ Report 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 31.
Fees of $19,277 (2022: $26,909) for taxation services
to an associate of Nexia Sydney Audit Pty Ltd for
the year ended 31 December 2023 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 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 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.
21
Cyclopharm Limited | annual report 2023Directors’ Report
Director and Executive Remuneration 2023
Short-term employee benefits
Post
employment
benefits
Other
long-term
benefits
Share-
based
payment
Perform-
ance
related
Total
Salary
and Fees
$
Cash
Bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Consolidated
Directors
David Heaney
Non-Executive Director
Dianne Angus
Non-Executive Director
Kevin Barrow
Non-Executive Director
Professor Greg King
Non-Executive Director
John Wigglesworth*
Non-Executive Director
Executive Director
James McBrayer**
Managing Director
Total Directors’
Compensation
76,636
–
54,740
54,740
54,740
–
–
–
–
–
470,631
80,000
711,487
80,000
Key Management Personnel
Mathew Farag
Chief Operating Officer
Total Key Management
Personnel’s Compensation
360,435
360,435
–
–
Total Compensation
1,071,922
80,000
$
–
–
–
–
–
$
$
%
–
–
–
–
–
85,066
0%
60,761
0%
60,761
0%
60,761
0%
–
0%
8,430
6,021
6,021
6,021
–
56,648
16,760
269,423
893,462
39%
83,141
16,760
269,423 1,160,811
30%
39,648
32,596
51,653
484,332
11%
39,648
32,596
51,653
484,332
122,789
49,356
321,076 1,645,143
11%
24%
–
–
–
–
–
–
–
–
–
–
* Mr Wigglesworth was appointed to the Board on 19 February 2024.
** 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.
22
Cyclopharm Limited | annual report 2023Directors’ Report Director and Executive Remuneration 2022
Short-term employee benefits
Post
employment
benefits
Other
long-term
benefits
Share-
based
payment
Perform-
ance
related
Total
Salary
and Fees
$
Cash
Bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Consolidated
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
Total Directors’
Compensation
72,603
52,145
19,597
13,705
–
–
–
–
439,198
35,496
597,248
35,496
Key Management Personnel
Mathew Farag
Chief Operating Officer
Total Key Management
Personnel’s Compensation
330,033
1,000
330,033
1,000
Total Compensation
927,281
36,496
$
–
–
–
–
$
–
–
–
–
$
%
80,044
0%
57,489
0%
21,655
0%
15,144
0%
7,441
5,344
2,058
1,439
47,115
12,797
314,982
849,588
41%
63,397
12,797
314,982 1,023,920
34%
33,953
5,985
26,012
396,983
7%
33,953
5,985
26,012
396,983
7%
97,350
18,782
340,994 1,420,903
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.
23
Cyclopharm Limited | annual report 2023Directors’ Report Details of Managing Director and Key Management Personnel’s
Share-based payments 2023
Number
of LTIP
shares
granted
Fair
Value
at grant
date
Exercise
price per
LTIP share
scheme
Amount
payable –
limited
non-recourse
loan
Term
Expiry date Performance Hurdle
15,002
$1.012
$3.200
$48,006 *3.36 years 30/6/2024 Continuous employment with
the Cyclopharm Group until
31 December 2023
50,000
$1.012
$3.200
$160,000 *3.36 years 30/6/2024 50% year on year increase
in third party revenue at
minimum of 20% gross margin
for 2021, 2022 & 2023
50,000
$1.012
$3.200
$160,000 *3.36 years 30/6/2024 50% year on year increase in
third party service revenue for
2021, 2022 & 2023
149,060
$1.012
$3.200
$476,992 *3.36 years 30/6/2024 Continuous employment with
the Cyclopharm Group until
31 December 2023
3,000
$1.447
$3.200
$9,600 6.00 years 18/2/2027 Continuous employment with
the Cyclopharm Group until
31 December 2026
200,000
$0.419
$1.820
$364,000 3.00 years 22/3/2026 Continuous employment with
the Cyclopharm Group until
February 2026
442,500
$0.419
$1.820
$805,350 3.00 years 22/3/2026 Continuous employment with
the Cyclopharm Group until
February 2026
100,000
$0.594
$1.820
$182,000 2.00 years 10/9/2025 Continuous employment with
the Cyclopharm Group until
31 August 2025
Name
Mathew
Farag
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Mathew
Farag
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
1,009,562
$2,205,948
* Extended to 30 June 2024.
Vested but unexercised during the year
Name
James McBrayer
James McBrayer
James McBrayer
James McBrayer
Mathew Farag
Mathew Farag
Mathew Farag
Mathew Farag
Other non-Key Management Personnel
Other non-Key Management Personnel
Other non-Key Management Personnel
Other non-Key Management Personnel
* Extended to 30 June 2024.
Number
of LTIP
shares
granted
Fair
Value
at grant
date
Exercise
price per
LTIP share
scheme
Amount
payable –
limited
non-recourse
loan
Term
Expiry date
1,721,554
269,614
257,750
500,000
225,000
250,000
250,000
500,000
6,886
5,000
90,000
100,000
$0.235
$1.065
$1.410
$0.515
$0.349
$0.289
$0.289
$0.443
$0.235
$0.270
$0.443
$0.443
$0.900
$1,549,399
*8.81 years
30/6/2024
$0.000
$0.000
$1.830
$0.900
$1.550
$1.550
$1.220
$0.900
$1.200
$1.220
$1.220
$0
$0
*4.56 years
30/6/2024
*3.94 years
30/6/2024
$915,000
*3.94 years
30/6/2024
$202,500
7.76 years
18/4/2025
$387,500
*6.00 years
30/6/2024
$387,500
*6.00 years
30/6/2024
$610,000
*4.16 years
30/6/2024
$6,197
*8.81 years
30/6/2024
$6,000
*7.94 years
30/6/2024
$109,800
*4.16 years
30/6/2024
$122,000
*4.16 years
30/6/2024
4,175,804
$4,295,896
24
Cyclopharm Limited | annual report 2023Directors’ Report
Details of Managing Director and Key Management Personnel’s
Share-based payments 2022
Number
of LTIP
shares
granted
Fair
Value
at grant
date
Exercise
price per
LTIP share
scheme
250,000
$0.245
$1.550
Amount
payable –
limited
non-recourse
loan
Term
Expiry date Performance Hurdle
$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”)
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
500,000
$0.379
$1.220
$610,000 *3.07 years 31/5/2023 50% on approval by the USFDA
on the use and distribution of
Technegas in the United States
and 50% upon continuous
employment with the Cyclopharm
Group until 30 April 2023
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
15,002
$1.012
$3.200
$48,006
3 years 18/2/2024 Continuous employment with
the Cyclopharm Group until
31 December 2023
50,000
$1.012
$3.200
$160,000
3 years 18/2/2024 50% year on year increase in
third party revenue at minimum
of 20% gross margin for 2021,
2022 & 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 & 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
Name
Mathew
Farag
James
McBrayer
(options)
Mathew
Farag
Other non-Key
Management
Personnel
Mathew
Farag
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
Other non-Key
Management
Personnel
1,317,062
$1,974,098
* Extended to 31 May 2023.
Vested but unexercised during the year
Name
James McBrayer
James McBrayer
James McBrayer
James McBrayer
Mathew Farag
Mathew Farag
Other non-Key Management Personnel
Other non-Key Management Personnel
Number
of LTIP
shares
granted
Fair
Value
at grant
date
Exercise
price per
LTIP share
scheme
Amount
payable –
limited
non-recourse
loan
Term
Expiry date
1,721,554
269,614
257,750
500,000
225,000
250,000
24,102
45,000
$0.215
$1.065
$1.410
$0.422
$0.349
$0.245
$0.215
$0.270
$0.379
$0.900
$1,549,399
*7.73 years
31/5/2023
$0.000
$0.000
$1.830
$0.900
$1.550
$0.900
$1.200
$1.220
$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
$54,000
7 years
25/7/2023
$195,200
*3.07 years
31/5/2023
Other non-Key Management Personnel
160,000
* Extended to 31 May 2023.
3,453,020
$3,325,291
25
Cyclopharm Limited | annual report 2023Directors’ Report 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:
31 December
2022
Granted
under long
term incentive
schemes
Conversion
of options
On market
purchases
31 December
2023
Interest
No. of shares
No. of shares
No. of shares
No. of shares
No. of shares
BI
BI
BI
NBI
BI
BI
270,000
5,109,580
10,000
10,000
–
–
5,399,580
–
–
–
–
–
–
–
–
200,000
–
–
–
–
200,000
10,000
–
–
1,000
–
–
11,000
280,000
5,309,580
10,000
11,000
–
–
5,610,580
BI
1,276,002
200,000
–
2,000
1,478,002
Directors
Mr D J Heaney
Mr J S McBrayer
Ms D M Angus
Mr K M J Barrow
Professor G G King
Mr J W Wigglesworth
Key Management Personnel
Mr M Farag
BI:
Beneficial interest
NBI: Non beneficial interests
As at 31 December 2023, Mr McBrayer does not hold any share options (2022: 200,000).
26
Cyclopharm Limited | annual report 2023Directors’ Report Remuneration Committee
During the current financial year, the
Remuneration Committee comprised of Mr Heaney,
who is the Chairman of the Remuneration
Committee, Ms Angus and Mr Barrow.
Remuneration structure
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 2023 when
Shareholders approved an aggregate remuneration
increase from $350,000 to $450,000 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.
27
Cyclopharm Limited | annual report 2023Directors’ Report Executive remuneration
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
market standards.
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.
Fixed Remuneration
Objective
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.
Structure
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.
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 3 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.
28
Cyclopharm Limited | annual report 2023Directors’ Report — 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. The 257,750 ordinary shares can
be freely traded on and from the date of issue.
A strictly limited non-recourse loan was made to
Mr McBrayer to purchase 500,000 shares at the
price of $1.83 per share while 257,750 LTIP shares
are held in a holding lock until the loan on the
1,721,554 shares issued on 13 July 2015 is repaid
in full by 30 June 2024.
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 6 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
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 2023 and 2022
is disclosed in the tables on pages 24 and 25.
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
non-recourse loans under the Company’s LTIP to
purchase shares.
— On 13 July 2015, a strictly limited non-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 by 30 June 2024.
29
Cyclopharm Limited | annual report 2023Directors’ Report 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
Mr J W Wigglesworth*
Cyclopharm
Board Meetings
Audit & Risk
Committee Meetings
Board Nomination
Committee Meetings
Remuneration
Committee Meetings
Number
of Meetings
Eligible to
Attend
Number
of Meetings
Attended
Number
of Meetings
Eligible to
Attend
Number
of Meetings
Attended
Number
of Meetings
Eligible to
Attend
Number
of Meetings
Attended
Number
of Meetings
Eligible to
Attend
Number
of Meetings
Attended
8
8
8
8
8
–
8
8
8
8
8
–
3
–
3
3
–
–
3
–
3
3
–
–
1
1
1
1
–
–
1
–
1
1
–
–
6
–
6
6
–
–
6
–
6
6
–
–
* Mr Wigglesworth was appointed to the Board on 19 February 2024.
Share options
No share options (2022: 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, 26 March 2024
30
Cyclopharm Limited | annual report 2023Directors’ Report Auditor’s Independence Declaration
To the Board of Directors of Cyclopharm Limited
Auditor’s Independence Declaration under section 307C of the Corporations Act
2001
As lead auditor for the audit of the financial statements of Cyclopharm Limited for the financial year ended
31 December 2023, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(a)
(b)
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.
Yours sincerely
Nexia Sydney Audit Pty Ltd
Stephen Fisher
Director
Date: 26 March 2024
31
Cyclopharm Limited | annual report 2023
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 31 December 2023
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
2023
$
2022
$
Notes
5
5
5
5a
5e
5c
5d
5f
5g
5b
6
26,339,389
489,169
5,376,495
32,205,053
22,878,333
109,733
1,976,320
24,964,386
(10,255,757)
(11,690,163)
(979,765)
(938,834)
(1,069,613)
(3,689,115)
(7,399,820)
(155,722)
(3,973,736)
(215,992)
(4,189,728)
(511,078)
(4,700,806)
(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)
Notes
7
423,826
(4,276,980)
(131,589)
(6,743,104)
2023
cents
(5.07)
(5.07)
(5.07)
2022
cents
(7.17)
(7.17)
(7.17)
The Statement of Profit or Loss and Other Comprehensive Income is to be read in conjunction
with the notes to the financial statements.
32
Cyclopharm Limited | annual report 2023Consolidated Financial Statements Consolidated Statement of Financial Position
As at 31 December 2023
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Current tax asset
Other assets
Total current assets
Non-current assets
Inventories
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 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
2023
$
2022
$
Notes
8
9
10
6
10
11
12
13
14
6
15
16
17
6
16
17
18
19
28
28
11,726,424
7,895,053
10,122,016
170
452,102
30,195,765
33,836
5,972,888
3,213,315
–
5,736,075
762,310
15,718,424
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
45,914,189
49,542,151
6,941,912
214,465
1,475,407
37,095
8,668,879
4,012,832
71,184
901,812
4,985,828
6,502,920
209,992
1,133,574
89,198
7,935,684
4,121,592
46,453
901,812
5,069,857
13,654,707
13,005,541
32,259,482
36,536,610
63,781,302
3,765,955
(629,303)
(34,658,472)
32,259,482
63,420,810
3,241,763
(1,053,129)
(29,072,834)
36,536,610
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements.
33
Cyclopharm Limited | annual report 2023Consolidated Financial Statements Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Operating activities
Receipts from customers
Receipt from business venture collaboration
Payments to suppliers and employees
Interest received
Borrowing costs paid
Income tax (paid)/received
Net cash flows used in operating activities
Investing activities
Payments for acquisition of subsidiary
Cash acquired upon acquisition of subsidiary
Purchase of property, plant and equipment
Payments for intangible assets
Net cash flows used in investing activities
Financing activities
Settlement of loan for Long Term Incentive Plan Shares
Dividends paid
Payment for lease liabilities
Net cash flows used in financing activities
Net decrease 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
2023
$
2022
$
Notes
8
29,168,710
800,172
(36,728,860)
489,169
(215,992)
(710,831)
(7,197,632)
(31,796)
61,326
(236,823)
(301,173)
(508,466)
142,492
(884,832)
(276,426)
(1,018,766)
24,289,662
340,464
(34,557,416)
109,733
(265,923)
3,418,995
(6,664,485)
–
–
(1,274,027)
(274,371)
(1,548,398)
446,370
(882,592)
(289,422)
(725,644)
(8,724,864)
(8,938,527)
20,296,176
29,249,255
155,112
11,726,424
(14,552)
20,296,176
8
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements.
34
Cyclopharm Limited | annual report 2023Consolidated Financial Statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
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))
$
$
$
$
$
$
Total
$
68,307,598
(5,333,158) 62,974,440 (21,578,727)
(921,540)
2,593,561 43,067,734
–
–
–
446,370
–
–
446,370
–
–
–
–
–
–
–
–
–
–
(6,611,515)
–
–
(131,589)
(6,611,515)
(131,589)
446,370
–
–
(882,592)
–
–
446,370
(882,592)
–
–
–
–
–
–
–
–
–
(6,611,515)
(131,589)
(6,743,104)
446,370
(882,592)
648,202
648,202
648,202
211,980
68,753,968
(5,333,158) 63,420,810 (29,072,834) (1,053,129)
3,241,763 36,536,610
Consolidated
Balance at
1 January 2022
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
Balance at
31 December 2022
Balance at
1 January 2023
Loss for the year
Other
comprehensive income
Total comprehensive
loss for the year
68,753,968
(5,333,158) 63,420,810 (29,072,834)
(1,053,129)
3,241,763
36,536,610
–
–
–
Issue of shares
Payment of loan for
Long Term Incentive
Plan shares
Dividends paid
Cost of share based
payments
Total transactions
with owners and other
transfers
218,000
142,492
–
–
360,492
–
–
–
–
–
–
–
–
–
–
–
(4,700,806)
–
–
423,826
(4,700,806)
423,826
218,000
–
142,492
–
–
(884,832)
–
–
360,492
(884,832)
–
–
–
–
–
–
–
–
–
–
–
(4,700,806)
423,826
(4,276,980)
218,000
142,492
(884,832)
524,192
524,192
524,192
(148)
Balance at
31 December 2023
69,114,460
(5,333,158) 63,781,302 (34,658,472)
(629,303)
3,765,955 32,259,482
The Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements.
35
Cyclopharm Limited | annual report 2023Consolidated Financial Statements 1.
Corporate Information
The financial report of Cyclopharm Limited
(“Cyclopharm” or “the Company”) for the year
ended 31 December 2023 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.
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.
None of the new or amended Accounting Standards
and Interpretations has had a material impact on
the Group’s financial statements.
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 2023. These new or
amended Accounting Standards and Interpretations
are not expected to have a material impact on the
consolidated entity’s financial statements.
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 2023. 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.
36
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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 $), Cyclomedica UK Ltd is Great
British Pound (GBP) and Dupharma ApS is Danish
Kroner (DKK).
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.
Income tax
f)
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.
37
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
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.
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 areincurred.
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.
38
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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:
Plant and equipment
Basis
5 – 33%
Leasehold Improvements
7.5 – 10%
Method
Straight-line
method
Straight-line
method
Motor vehicles
16.67 – 25% Straight-line
method
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.
39
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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.
40
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
o) Interest-bearing loans and borrowings
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.
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.
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.
r) Employee entitlements
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.
41
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
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.
t) Revenue recognition
The consolidated entity recognises revenue as
follows:
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.
u) Other revenue
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 recognised at fair value
where there is reasonable assurance that the grant
will be received and all grant conditions will be met.
Grants relating to cost reimbursements are
recognised 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).
Government grants relating to assets are deferred
and recognised in profit or loss over the period
necessary to match them with the assets that they
are intended to compensate.
All revenue is stated net of the amount of goods and
services tax (“GST”).
42
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
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.
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
comprised of 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.
43
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
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.
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 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.
44
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 2.
Summary of Significant Accounting Policies (continued)
In 2023, the Group’s Cyclotron facility was
operationally restored, and whilst regulatory
approval is still pending before its commercial
use by Cyclotek NSW Pty Ltd, in recognition of
the financial contributions derived from the
Collaboration Agreement, the fair value of the
Cyclotron was written back from nil to $3,160,301
as at 31 December 2023.
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.
Useful lives of property, plant and equipment
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.
Share based payment transactions
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
Income Tax
The Group’s accounting policy for income tax
requires management’s judgement 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.
45
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
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
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 2023
Technegas
$
13,076,737
10,571,536
1,349,235
1,341,881
26,339,389
8,669,613
14,814,185
2,738,218
117,373
26,339,389
25,200,506
1,138,883
26,339,389
Molecular
Imaging
$
–
–
–
–
–
–
–
–
–
–
Total
$
13,076,737
10,571,536
1,349,235
1,341,881
26,339,389
8,669,613
14,814,185
2,738,218
117,373
26,339,389
–
–
–
25,200,506
1,138,883
26,339,389
For the year ended 31 December 2022
Technegas
$
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
22,269,365
608,968
22,878,333
Molecular
Imaging
$
–
–
–
–
–
–
–
–
–
–
Total
$
12,596,143
8,120,239
1,067,119
1,094,832
23,218,797
7,451,101
12,166,950
2,960,306
299,976
22,878,333
–
–
–
22,269,365
608,968
22,878,333
The allowance for expected credit losses on receivables at the end of the year was $100,317 (2022: $156,919).
46
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
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 2023 and 31 December
2022.
Geographical segments
The tables under the heading geographical segment present revenue and asset information regarding
geographical segments for the years ended 31 December 2023 and 31 December 2022.
Business segments
For the year ended 31 December 2023
Revenue
Sales – Technegas
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 expense
(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
$
Consolidated
Molecular
Imaging
$
Total
$
14,425,971
11,913,418
26,339,389
489,169
1,416,022
28,244,580
–
–
–
–
3,960,473
3,960,473
14,425,971
11,913,418
26,339,389
489,169
5,376,495
32,205,053
(7,933,884)
(215,632)
(8,149,516)
(214,799)
(8,364,315)
3,960,148
(360)
3,959,788
(296,279)
3,663,509
(3,973,736)
(215,992)
(4,189,728)
(511,078)
(4,700,806)
42,425,382
3,488,807
45,914,189
236,823
(13,553,709)
–
(100,998)
236,823
(13,654,707)
(938,834)
–
(938,834)
47
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 4.
Operating segments (continued)
Business segments
For the year ended 31 December 2022
Revenue
Sales – Technegas
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 expense
(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
Geographical segments
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
13,663,262
9,215,071
22,878,333
109,733
1,976,320
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)
For the year ended 31 December 2023
Asia-Pacific
Europe
Canada
$
$
$
Other
$
Total
$
Consolidated
Revenue
Sales to external customers
Finance revenue
Other revenue
Total segment revenue
Assets
Segment assets
8,669,613
489,169
4,802,722
13,961,504
14,814,185
–
573,773
15,387,958
2,738,218
–
–
2,738,218
117,373
–
–
117,373
26,339,389
489,169
5,376,495
32,205,053
33,411,607
10,758,563
1,744,019
–
45,914,189
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
7,451,101
109,733
1,976,320
9,537,154
12,166,950
–
–
12,166,950
2,960,306
–
–
2,960,306
299,976
–
–
299,976
22,878,333
109,733
1,976,320
24,964,386
38,032,765
10,650,908
858,478
–
49,542,151
48
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 5.
Revenues and expenses
Revenue
Sales revenue
Finance revenue – Interest received from other parties
Notes
Consolidated
2023
$
2022
$
26,339,389
489,169
22,878,333
109,733
Other revenue
Income from business venture collaboration
Reversal of impairment
Recoveries from litigation
Insurance recoveries
R&D tax incentive refund
Total other revenue
(Note 3 discloses the disaggregation of the Group’s revenue from contracts with customers)
800,172
3,160,301
1,279,492
136,530
–
5,376,495
340,464
–
–
–
1,635,856
1,976,320
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
(Reversal)/provision of doubtful debts
Travel and motor vehicle costs
g) Other expense
Realised foreign exchange gains
Unrealised foreign exchange gains
Other
10,255,757
7,440,608
23,935
192,057
215,992
235,042
280,971
276,426
146,395
938,834
67,434
198,489
265,923
234,806
266,704
289,422
140,552
931,484
3,490,346
49,898
148,871
3,689,115
2,973,729
126,818
339,433
3,439,980
9,942,009
981,441
242,521
524,192
11,690,163
7,712,904
545,565
174,332
648,202
9,081,003
26a
3,522,787
2,308,942
(65,191)
1,633,282
7,399,820
3,473,853
1,883,668
65,422
1,258,535
6,681,478
(8,177)
(177,266)
341,165
155,722
(63,821)
(60,751)
354,156
229,584
49
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 6.
Income tax
The components of income tax expense comprise:
Current income tax expense
Deferred tax benefit/(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% (2022: 25%)
Effects of lower rates on overseas income
Expenditure not allowable for income tax purposes
Non-assessable income
Temporary differences recognised/(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% (2022: 25%)
– arising from revenue tax losses – at 25% (2022: 25%)
– arising from capital tax losses – at 25% (2022: 25%)
2023
$
2022
$
(637,577)
126,499
(511,078)
(397,074)
(184,595)
(581,669)
(4,189,728)
(6,029,846)
1,047,434
212,420
(378,033)
–
126,499
(1,519,398)
(511,078)
12.2%
1,171,368
225,067
(1,378,865)
409,460
(184,595)
(824,104)
(581,669)
9.6%
170
37,095
–
4,947
89,198
–
(1,198,993)
1,542,655
418,648
762,310
(1,180,925)
1,384,838
431,898
635,811
635,811
126,499
762,310
820,406
(184,595)
635,811
74,120
1,802,383
19,715
567,136
1,861,215
19,715
50
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
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
2023
$
0.34
0.28
2022
$
0.39
0.33
Number
94,096,326
Number
93,053,826
2023
$
32,259,482
(5,736,075)
2022
$
36,536,610
(5,436,401)
26,523,407
31,100,209
The number of ordinary shares includes the effects of 642,500 Long Term Incentive Performance (LTIP) shares
issued on 23 March 2023 and 100,000 LTIP Shares issued on 12 September 2023 (2022: 408,059 LTIP shares
issued on 19 February 2021 and excludes 320,997 lapsed LTIP shares cancelled on 4 October 2022) 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
2023
cents
(5.07)
(5.07)
(5.07)
2022
cents
(7.17)
(7.17)
(7.17)
Number
92,663,584
92,663,584
Number
92,178,892
92,178,892
2023
$
(4,700,806)
(4,700,806)
2022
$
(6,611,515)
(6,611,515)
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, 642,500 LTIP shares issued on 23 March 2023 and 100,000 LTIP Shares
issued on 12 September 2023 set out in Note 19 as they are contingently returnable.
51
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 8.
Cash and cash equivalents
Cash at bank and in hand
Total cash and cash equivalents
Consolidated
2023
$
11,726,424
11,726,424
2022
$
20,296,176
20,296,176
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates and at fixed rates
for that portion of cash invested in short-term bank deposit accounts.
The fair value of cash and cash equivalents is $11,726,424 (2022: $20,296,176).
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
Property, plant and equipment written off
Reversal of impairment
Movement in intangible assets
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 in receivables
Increase in inventories
Decrease in other receivables
Decrease in current tax asset
(Increase)/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
2023
$
11,726,424
11,726,424
2022
$
20,296,176
20,296,176
(4,700,806)
(6,611,515)
792,439
146,395
97,388
(3,160,301)
(291,291)
366,564
268,714
524,192
(65,191)
(6,021,897)
(492,556)
(1,863,184)
421,945
4,777
(126,499)
931,885
(52,103)
–
(7,197,632)
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)
b) Non-cash financing and investing activities
All Long Term Incentive Plan (LTIP) shares as set out in Note 25 Share Based Payment Plans are issued by way
of loans.
During the year, 850,000 LTIP shares vested (2022: 660,000) and an election was made to extend the exercise
period until 30 June 2024, whilst no LTIP shares lapsed and were cancelled (2022: 320,997). Refer to Note 19
Contributed Equity and Note 25 Share Based Payment Plans.
742,500 LTIP shares were issued by way of loans during the year (2022: nil).
52
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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)
Consolidated
2023
$
2022
$
5,844,950
(100,317)
5,744,633
2,150,420
7,895,053
5,408,996
(156,919)
5,252,077
2,453,948
7,706,025
7,895,053
7,706,025
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)
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 current inventory
Non-current
Finished goods at lower of cost or net realisable value
Total non-current inventory
Total inventory
Consolidated
2023
$
156,919
(56,602)
100,317
2022
$
110,415
46,504
156,919
Consolidated
2023
$
2022
$
8,287,237
1,899,508
(64,729)
10,122,016
6,665,536
1,691,331
(64,199)
8,292,668
33,836
33,836
–
–
10,155,852
8,292,668
53
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 11.
Property, plant and equipment
Year ended 31 December 2023
Consolidated
1 January 2023 at written
down value
Additions/transfers
Written off
Reversal of impairment
Depreciation for the year
31 December 2023
at written down value
1 January 2023
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
31 December 2023
Cost value
Impairment – Molecular Imaging*
Accumulated depreciation
Net carrying amount
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
Leasehold
Land and
Buildings
Leasehold
Improvements
Plant and
Equipment
Leased
Plant and
Equipment
$
$
$
260,242
62,116
–
834,553
(10,371)
1,743,985
8,681
–
1,188,494
(280,971)
1,087,550
166,026
–
1,137,254
(224,671)
1,146,540
2,660,189
2,166,159
$
–
–
–
–
–
–
Capital
Work in
Progress
$
Total
$
97,388
–
(97,388)
–
–
3,189,165
236,823
(97,388)
3,160,301
(516,013)
–
5,972,888
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
2,445,676
(1,047,407)
(251,729)
1,146,540
5,680,362
(1,420,418)
(1,599,755)
2,660,189
8,989,744
(3,232,037)
(3,591,548)
2,166,159
10,380
–
(10,380)
–
–
–
–
–
17,126,162
(5,699,862)
(5,453,412)
5,972,888
Leasehold
Land and
Buildings
Leasehold
Improvements
Plant and
Equipment
Leased
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
$
–
–
–
–
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
* 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. The Group’s cyclotron facility has been operationally restored and is pending regulatory approval before its commercial use
by Cyclotek NSW Pty Ltd. 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).
54
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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. In 2023, the
Cyclotron facility was operationally restored, and
whilst regulatory approval is still pending, the
Cyclopharm Board in recognition of the financial
contributions derived from the Collaboration
Agreement has concluded based on their latest
valuation using the income approach, that the fair
value of the Cyclotron be written back from nil to
$3,160,301 as at 31 December 2023.
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
2023
$
834,553
1,137,254
1,188,494
3,160,301
2022
$
–
–
–
–
The highest and best use of the assets in normal
circumstances is the value in continued use, using
the income approach technique.
55
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
2023
$
5,217,008
(2,033,633)
3,183,375
158,993
(129,053)
2022
$
5,195,614
(1,820,733)
3,374,881
157,989
(122,431)
29,940
35,558
3,213,315
3,410,439
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 motor vehicles under agreements of
four years.
56
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
2023
$
–
2022
$
–
Ownership Interest
2023
20%
2022
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 profit/(loss)
Notes
Consolidated
2023
$
112,546
(13,459,097)
(13,346,551)
2022
$
4,033,133
(17,498,514)
(13,465,381)
(a)
(2,669,310)
(2,693,076)
Consolidated
2023
$
90,250
118,830
2022
$
–
(28,723)
Notes
(a)
a) The share of the associate’s profit not recognised during the year was $23,766 (2022: loss of $5,745) and the
cumulative share of the associate’s loss not recognised as at 31 December 2023 was $2,714,697 (31 December
2022: $2,738,463).
The share of profit of associate not recognised as at 31 December 2023 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 (2022: $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 2023
amounts to $3,206,657 (2022: $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
(2022: $nil).
57
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
14.
Intangible assets
Consolidated
Balance at 1 January 2023
Additions
Amortisation
Balance at 31 December
2023
31 December 2023
Non-current
Total
31 December 2022
Non-current
Total
Intellectual
Property
Goodwill on
consolidation*
$
161,985
25,308
(26,117)
$
865,273
38,240
–
Licences
$
662,344
253,051
(120,278)
Technegas
Development
$
788,588
–
–
Target
Ultralute
Total
$
27,419
–
–
$
2,930,792
129,470
–
$
5,436,401
446,069
(146,395)
161,176
903,513
795,117
788,588
27,419
3,060,262
5,736,075
161,176
161,176
903,513
903,513
795,117
795,117
788,588
788,588
27,419
27,419
3,060,262
3,060,262
5,736,075
5,736,075
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
* Goodwill on consolidation arising upon the acquisition of Cyclomedica Benelux bvba on 1 October 2017, Cyclomedica Nordic AB on 1 May 2018 and
Dupharma ApS on 1 April 2023.
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) 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.
b) The pre-tax discount rates used were between 9.01% to 25% (2022: between 5.77% 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% (2022: 3%) revenue growth rate for existing markets is prudent
and justified.
c)
No changes in estimations were made by management compared to prior years. 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 4% (2022: 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.
58
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
2023
$
2022
$
3,147,364
2,437,010
1,357,538
6,941,912
4,399,786
1,627,295
475,839
6,502,920
6,941,912
6,502,920
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.
16.
Lease liabilities
Current
Lease liabilities
Lease liabilities (current)
Non-current
Lease liabilities
Lease liabilities (non-current)
Total lease liabilities
Consolidated
2023
$
2022
$
214,465
214,465
209,992
209,992
4,012,832
4,012,832
4,121,592
4,121,592
4,227,297
4,331,584
59
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
17.
Provisions
Balance at 1 January 2023
Arising during the year
Utilised
Balance at 31 December 2023
31 December 2023
Current
Non-current
Total
Number of employees
Number of employees at year end
31 December 2022
Current
Non-current
Total
Number of employees
Number of employees at year end
Consolidated
Employee
Entitlements
$
1,180,027
1,171,255
(804,691)
1,546,591
Total
$
1,180,027
1,171,255
(804,691)
1,546,591
1,475,407
71,184
1,546,591
1,475,407
71,184
1,546,591
1,133,574
46,453
1,180,027
1,133,574
46,453
1,180,027
87
63
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
2023
$
2022
$
901,812
901,812
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.
60
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
Exercise of options
Cancellation of expired Long Term Incentive
Plan shares
Settlement of loans for Long Term Incentive
Plan shares
Balance at end of period
b) Other contributed equity
Notes
2023
Number
2022
Number
2023
$
2022
$
Consolidated
(a)
(b)
94,096,326
–
94,096,326
93,053,826
–
93,053,826
69,114,460
(5,333,158)
63,781,302
68,753,968
(5,333,158)
63,420,810
(i)
(ii)
(iii)
(iv)
(v)
93,053,826
742,500
100,000
200,000
93,374,823
–
–
–
68,753,968
–
218,000
–
68,307,598
–
–
–
–
(320,997)
–
–
–
94,096,326
–
93,053,826
142,492
69,114,460
446,370
68,753,968
Balance at the beginning and end of the period
–
–
(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 23 March 2023, 642,500 LTIP shares were issued at an exercise price of $1.82 per share and 100,000 LTIP
shares were issued at an exercise price of $3.04 per share on 12 September 2023 under the non-recourse
loan payment plan, as set out in Note 25.
(ii) On 14 April 2023, 100,000 ordinary shares were issued at a deemed price of $2.18 per share as part
consideration to acquire 100% of the shares in Dupharma ApS. These shares are subject to voluntary
escrow until 31 March 2025 and have no dividend or voting rights until 1 April 2025.
(iii) On 30 November 2023, 200,000 options issued at nil exercise price were converted in accordance with the
terms and conditions approved by the Company’s shareholders on 21 May 2019.
(iv) 320,997 lapsed Long Term Incentive Plan shares were cancelled on 4 October 2022.
(v) Proceeds from settlement of loans 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 2023, 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
2023
$
$
–
–
11,726,424
20,296,176
11,726,424 20,296,176
36,536,610
32,259,482
0.0%
0.0%
61
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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 2023 and an unfranked final dividend of 0.5 cent per share
in respect of the financial year ended 31 December 2022. During the 2022 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.
Consolidated
2023
Cents
per share
2022
Cents
per share
2023
$
2022
$
0.50
0.50
1.00
0.50
442,395
441,296
0.50
1.00
442,437
884,832
441,296
882,592
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
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.
62
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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 2023, 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
2023
$
2022
$
117,264
(58,632)
202,962
(101,481)
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:
Consolidated
Year ended 31 December 2023
Weighted
average
interest rate
Non
interest
bearing
Floating
interest
rate
Note
%
$
$
Fixed interest maturing in
1 year
or less
$
1 to 5
years
More than
5 years
$
Total
$
3.20%
–
5,640,559
6,085,865
n/a 7,895,053
–
7,895,053 5,640,559 6,085,865
–
–
11,726,424
–
7,895,053
– 19,621,477
$
–
–
–
4.50%
n/a 6,941,912
–
6,941,912
–
–
–
6,941,912
–
214,465
4,227,297
214,465 1,003,712 3,009,120 11,169,209
–
1,003,712
–
3,009,120
953,141 5,640,559 5,871,400 (1,003,712) (3,009,120)
8,452,268
Consolidated
Year ended 31 December 2022
Weighted
average
interest rate
Non
interest
bearing
Floating
interest
rate
Fixed interest maturing in
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
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
8
9
15
16
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
8
9
15
16
4.50%
n/a 6,502,920
–
6,502,920
–
–
–
–
209,992
209,992
6,502,920
–
4,331,584
812,863
812,863 3,308,729 10,834,504
–
3,308,729
1,203,105 20,296,176
(209,992)
(812,863) (3,308,729) 17,167,697
63
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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 2023.
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 2023
Trade payables, third-parties
Leases, third-party
Consolidated
Year ended 31 December 2022
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
$
6,941,912
106,086
7,047,998
–
108,379
108,379
–
1,003,712
1,003,712
–
3,009,120
3,009,120
6,941,912
4,227,297
11,169,209
Less than
6 months
$
6,502,920
103,883
6,606,803
6 months
to 1 year
$
–
106,109
106,109
1 year
to 5 years
Greater than
5 years
Total
$
–
812,863
812,863
$
–
3,308,729
3,308,729
$
6,502,920
4,331,584
10,834,504
d) Commodity price risk
The Group’s exposure to commodity price risk is minimal.
64
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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 67% (2022: 66%) of the
Group’s sales are denominated in currencies other than the functional currency of the operating unit making
the sale, whilst approximately 52% (2022: 50%) of costs are denominated in the unit’s functional currency.
At 31 December 2023, 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
2023
$
2022
$
252,594
–
252,594
–
967,145
1,548,111
229,703
1,508,591
57,118
604,682
123,666
427,871
653,943
1,228,199
634,107
1,441,833
–
–
10,104
–
82,824
163,289
(1,756,958)
55,796
245,643
(2,317,968)
Management believes 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 2023.
65
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 20.
Financial risk management objectives (continued)
e) Foreign currency risk (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 2023
Net (loss)/profit
Equity (decrease)/increase
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
CAD
31 December 2023
Net (loss)/profit
Equity (decrease)/increase
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
USD
31 December 2023
Net profit/(loss)
Equity increase/(decrease)
31 December 2022
Net profit/(loss)
Equity increase/(decrease)
SEK
31 December 2023
Net (loss)/profit
Equity (decrease)/increase
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
GBP
31 December 2023
Net (loss)/profit
Equity (decrease)/increase
31 December 2022
Net (loss)/profit
Equity (decrease)/increase
66
Consolidated
Increase in
AUD of 10%
$
Decrease in
AUD of 10%
$
(28,683)
(28,683)
31,551
31,551
(108,560)
(108,560)
119,416
119,416
(49,778)
(49,778)
(27,655)
(27,655)
54,756
54,756
30,421
30,421
2,390
2,390
(2,629)
(2,629)
22,963
22,963
(25,259)
(25,259)
(52,205)
(52,205)
(73,430)
(73,430)
57,426
57,426
80,773
80,773
(7,315)
(7,315)
8,047
8,047
(17,259)
(17,259)
18,985
18,985
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 21.
Commitments & contingencies
a) Capital commitments
Cyclopharm has entered into agreements to fund research projects with unrelated institutions. The commitments
for these projects total $262,502 (2022: $264,024) 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 2023 amounts to $3,206,657 (2022: $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 (2022: $nil).
67
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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. There were no
transactions that were entered into with related parties for the relevant financial year.
Ultimate parent entity
Cyclopharm Limited is the ultimate parent entity in the wholly owned group.
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
Dupharma ApS
Notes
Country of
Incorporation
Australia
Percentage of equity
interest held
2023
2022
Australia
Australia
Ireland
Ireland
Belgium
Sweden
Germany
Canada
United States of America
United Kingdom
New Zealand
Denmark
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
0%
Note
1,2
2
2
3
3
4
5
6
7
8
9
10
11
1. Cyclopharm Limited is the ultimate parent entity in the wholly owned group.
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. Unaudited as results are not material.
9. Audited by Saffery Champness LLP, Bristol, United Kingdom .
10. Dormant.
11. Unaudited as results are not material.
23.
Events after the balance date
No 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.
68
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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
Amounts received or due and receivable by other audit firms for:
Audit of the financial statements of controlled entities
Other services
Consolidated
2023
$
2022
$
148,095
138,138
19,277
167,372
26,909
165,047
208,251
138,026
346,277
175,905
109,206
285,111
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:
Short-term
employee benefits
Salary
and Fees
$
1,071,922
927,281
Cash
Bonus
$
80,000
36,496
Post
employment
benefits
Super-
annuation
$
122,789
97,350
Other
long-term
benefits
Share-
based
payment
Total
$
49,356
18,782
$
$
321,076
340,994
1,645,143
1,420,903
2023
2022
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.
69
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 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)
Consolidated
2023
$
524,192
2022
$
648,202
The share-based payment reserve at 31 December 2023 was $3,765,955 (2022: $3,241,763).
b) Share-based payment other than implied options
No share-based payments other than implied options were made during the year.
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.
70
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 26.
Share based payment plans (continued)
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.
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
Vested and 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)
Consolidated
2023
Number
1,317,062
742,500
(850,000)
(200,000)
–
1,009,562
4,175,804
2022
Number
2,853,059
–
(910,000)
(325,000)
(300,997)
1,317,062
3,453,020
Weighted Average
Exercise Price
2023
$
1.50
1.98
–
–
–
2.31
2022
$
1.33
–
–
–
–
1.50
(i) 850,000 LTIP shares (2022: 660,000) vested during the year.
(ii) On 30 November 2023, 200,000 Options issued at nil exercise price were converted in accordance with the
terms and conditions approved by the Company’s shareholders on 21 May 2019. After the conversion, there
are no Options (2022: 200,000) and 5,185,366 LTIP shares (2022: 4,570,082) on issue as at 31 December
2023.
e) Range of exercise price, weighted average remaining contractual life and weighted
average fair value
The weighted average exercise price for Implied Options at the end of the year was $2.31 (2022: $1.50). The
weighted average remaining contractual life for Implied Options outstanding as at 31 December 2023 is 1.72
years (2022: 0.90 years). The weighted average fair value of Implied Options granted during the year was $1.98
(2022: nil).
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 30 June 2024.
Implied
Options
Implied
Options
Implied
Options
Implied
Options
$3.20
25
264,062
19/02/21
–
61.00%
0.08%
*3.36 years
$1.012
$2.79
Black Scholes
$3.20
1
3,000
19/02/21
–
61.00%
0.37%
6 years
$1.447
$2.79
Black Scholes
$1.82
38
642,500
23/03/23
–
46.00%
3.48%
3 years
$0.419
$1.50
Black Scholes
$3.04
1
100,000
12/09/23
–
48.00%
3.90%
2 years
$0.594
$2.56
Black Scholes
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 Implied Options are not listed and as such do not have a market value.
71
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
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 loss for the year
28.
Reserves
Nature and purpose of reserves:
2023
$
2022
$
7,502,194
14,960,192
47,967,544
54,759,970
62,262,164 62,927,736
486,736
442,050
10,323,448
10,323,448
10,765,498 10,810,184
51,496,666 52,117,552
63,621,343
63,981,835
3,241,763
3,765,955
(16,251,124)
(14,745,554)
51,496,666 52,117,552
(525,440)
–
(525,440)
(1,973,802)
–
(1,973,802)
a) Employee equity benefits reserve
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.
72
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements 29.
Business combinations
Acquisition of Dupharma ApS
On 1 April 2023, the Group acquired via a Share Sale Agreement 100% of the ordinary shares of Dupharma ApS
(“Dupharma”), a company incorporated in Denmark. Dupharma is a distributor of nuclear medicine products
in Denmark and is the distributor for Technegas products in Denmark.
The acquisition has been accounted for using the acquisition method. The consolidated financial statements
include the results of Dupharma for the period between 1 April 2023 and 31 December 2023.
The fair values of identifiable net assets of Dupharma at the date of acquisition were:
Assets
Cash and cash equivalents
Inventories
Debtors
Licences (fair valued at acquisition date)
Total Assets
Liabilities
Other payables
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition
Purchase consideration transferred/transferable (i)
Net cash acquired with the subsidiary (included in cash flows from investing activities)
Cash paid
Net cash inflow
Fair value
recognised on
acquisition
$
61,326
3,251
39,035
243,351
346,963
105,503
105,503
241,460
38,240
279,700
61,326
(32,395)
28,931
The fair value of trade and other receivables at acquisition date amounts to $39,035.
(i) The purchase consideration of $279,700 included $218,000 being 100,000 ordinary shares issued at a
deemed price of $2.18 per share and future consideration of $29,305 (DKK 147,500) payable on the post
completion date. The shares are subject to voluntary escrow until 31 March 2025 and have no dividend or
voting rights until 1 April 2025.
From the date of acquisition to the end of the financial year, Dupharma contributed revenue of $444,675
and a net loss after tax of $213,330 to the continuing operations of the Group.
The goodwill recognised is primarily attributed to synergies available to the new group which will enhance
shareholder value through capturing agency commissions and providing control over distribution and
pricing. The goodwill is not deductible for income tax purposes. Transaction costs of $54,220 have been
expensed and are included in Administration expense in the Statement of Comprehensive Income and are
part of operating cash flows in the statement of cash flows.
73
Cyclopharm Limited | annual report 2023Notes to the Consolidated Financial Statements
Directors’ Declaration
In the opinion of the Directors of Cyclopharm
Limited:
1.
(a) The financial statements and notes of the
consolidated entity as set out on pages 32 to
73 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 2023 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
(b) 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 2023.
Signed in accordance with a resolution of the
Directors:
James McBrayer
Managing Director and CEO
Sydney, 26 March 2024
74
Cyclopharm Limited | annual report 2023
Independent Auditor’s Report
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 2023, 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 2023 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.
75
Cyclopharm Limited | annual report 2023
Independent Auditor’s Report
Key audit matter
How our audit addressed the key audit matter
Capitalised Development Costs for Ultralute
($3,060,262)
Refer to note 14
Included in the Group’s intangible assets are
capitalised development costs $3,060,262 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
($10,155,852)
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
subassemblies and related bill of materials.
We obtained evidence that inventory did not
exceed its net realisable value by:
76
Cyclopharm Limited | annual report 2023
Independent Auditor’s Report
Key audit matter
How our audit addressed the key audit matter
- Checking a sample of inventory items to
subsequent selling prices;
- 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 2023, 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.
77
Cyclopharm Limited | annual report 2023
Independent Auditor’s Report
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 29 of the directors’ Report for the year
ended 31 December 2023.
In our opinion, the Remuneration Report of Cyclopharm Limited for the year ended 31 December 2023,
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: 26 March 2024
78
Cyclopharm Limited | annual report 2023
ASX Additional Information
The following information is current at 29 February 2024.
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
No. of ordinary
shares held
13,211,332
11,444,962
9,754,594
9,706,764
8,005,769
6,644,758
5,309,580
Percentage held of
issued ordinary capital
14.04%
12.16%
10.37%
10.32%
8.51%
7.06%
5.64%
B. Distribution of Equity Security Holders
(i) Analysis of numbers of equity security holders by size of holding as at 29 February 2024.
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
(ii) There were 149 holders of less than a marketable parcel of ordinary shares.
C. Equity Security Holders
Ordinary
Shareholders
426
555
273
311
58
1,623
Percentage held of
issued ordinary capital
0.20%
1.75%
2.30%
9.12%
86.63%
100.00%
Chemical Overseas Limited
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
10 UBS Nominees Pty Ltd
11 Mr James McBrayer
12 Phillips River Pty Ltd
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