Cynata Therapeutics Limited
ACN 104 037 372
and its controlled entities
Annual report for the financial year ended
30 June 2014
Corporate directory
Cynata Therapeutics Limited
Board of Directors
Dr Stewart Washer
Dr Ross Macdonald
Mr Howard Digby
Mr Peter Webse
Company Secretary
Mr Peter Webse
Executive Chairman
Managing Director/Chief Executive Officer
Non-Executive Director
Non-Executive Director
Registered and Principal Office
Suite 1, 1233 High Street
Armadale, Victoria 3143
+61 3 9824 5254
Tel:
Fax:
+61 3 9822 7735
Email: admin@cynata.com
Postal Address
PO Box 7165
Hawthorn North, Victoria 3122
Website
Website: www.cynata.com
Auditors
Stantons International
Level 2, 1 Walker Avenue
West Perth, Western Australia 6005
Share Registry
Security Transfer Registrars Pty Limited
770 Canning Highway
Applecross, Western Australia 6153
Tel:
Fax:
+61 8 9315 2333
+61 8 9315 2233
Stock Exchange
Australian Securities Exchange
Level 40, Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
ASX Code: CYP
Cynata Therapeutics Limited
Annual report for the financial year ended
30 June 2014
Contents
Directors’ report……………………………………………………………………………………………………… 1
Operating and financial review……………………………………………………………………………….. 5
Remuneration report………………………………………………………………………………………………. 10
Auditor’s independence declaration……………………………………………………………………….. 17
Independent auditor’s report…………………………………………………………………………………. 18
Directors’ declaration…………………………………………………………………………………………….. 20
Consolidated statement of profit or loss and other comprehensive income………..…
21
Consolidated statement of financial position………………………………………………….………
22
Consolidated statement of changes in equity…………………………………………………………
23
Consolidated statement of cash flows…………………………………………………………….……… 24
Notes to the financial statements………………………………………………………………….….……
25
Corporate governance statement…………………………………………………………………………..
55
Additional securities exchange information……………………………………………………………. 64
Cynata Therapeutics Limited
Directors’ report
The directors of Cynata Therapeutics Limited, formerly Eco Quest Limited (“Cynata” or “the Company”)
and its controlled entities (“the Group”) submit herewith the annual report of the Group for the
financial year ended 30 June 2014. In order to comply with the provisions of the Corporations Act 2001,
the directors report as follows:
Information about the directors
The names and particulars of the directors of the Group during or since the end of the financial year
are:
Name
Dr Stewart Washer
BSc (Hons), PhD
Dr Ross Macdonald
PhD (Biochemistry),
Grad Dip in Bus Admin
Particulars
Executive Chairman, joined the Board in August 2013. Dr Washer has 21
years of CEO and Board experience in medical technology, biotech and
agrifood companies. He is currently the Chairman of Orthocell Ltd (ASX:
OCC) and Minomic International Ltd. Dr Washer was previously the CEO of
Calzada Ltd (ASX: CZD), the founding CEO of Phylogica Ltd (ASX: PYC) and
before this, he was CEO of Celentis and managed the commercialisation of
intellectual property from AgResearch in New Zealand with 650 scientists
and $130m revenues. He was also a founder of a NZ$120m New Zealand
based life science fund and Venture Partner with the Swiss based Inventages
Nestlé Fund. He is currently the Investment Director with Bioscience
Managers. Dr Washer has held a number of Board positions in the past as
the Chairman of iSonea Ltd (ASX: ISN), Resonance Health Ltd (ASX: RHT) and
Hatchtech Pty Ltd, and as a Director of iCeutica Pty Ltd, Immuron Ltd (ASX:
IMC) and AusBiotech Ltd. He was also a Senator with Murdoch University
and is currently the Chairman of Firefly Health.
for Stiefel Laboratories
Chief Executive Officer, joined the Board in August 2013. Dr Macdonald has
over 20 years’ experience and a track record of success in pharmaceutical
and biotechnology businesses. His career history includes positions as Vice
President of Business Development for Sinclair Pharmaceuticals Ltd, a UK-
based specialty pharmaceuticals company and Vice President, Corporate
Development
independent
dermatology company in the world and acquired by GlaxoSmithKline in 2009
for £2.25b. Dr Macdonald has also served as CEO of Living Cell Technologies
Ltd, Vice President of Business Development of Connetics Corporation and
Vice President of Research and Development of F H Faulding & Co Ltd. His
other positions have included non-executive director roles at Telesso
iSonea Ltd, Hatchtech Pty Ltd and Relevare
Technologies Ltd,
Pharmaceuticals Ltd. Dr Macdonald currently serves as a member of the
Investment Committee of UniSeed Management Pty Ltd.
Inc, the
largest
Mr Howard Digby
B.Eng (Hons)
Non Executive Director, joined the Board in May 2012. Mr Digby has over 24
year career in management in Australia and the Asia Pacific region, mostly in
the information technology industry. He started out his career for IBM in
Perth and Sydney before joining Adobe (NSDQ: ADBE), Gartner (NYSE: IT)
and then serving as managing director for the Economist Group based in
Hong Kong. He was Chairman of the Business Software Alliance, an industry
lobby group and a board member of the British Chamber of Commerce
Policy Unit. Mr Digby is currently the Chairman of Sun Biomedical Limited
(ASX: SBN).
- 1 -
Cynata Therapeutics Limited
Mr Peter Webse
B.Bus, FGIA, FCIS,
FCPA, MAICD
Non Executive Director, joined the Board in May 2012. Mr Webse has over
23 years’ company secretarial experience and is the managing director of
Platinum Corporate Secretariat Pty Ltd, a company specialising in providing
company secretarial, corporate governance and corporate advisory services.
Mr Webse was a non-executive director of Blina Minerals NL (ASX: BDI). He
is currently a non-executive director of Sun Biomedical Limited (ASX: SBN).
Mr Darren Olney-
Fraser
Bsc, LLM
Appointed to the Board as Acting Managing Director in October 2012 and
appointed as Executive Chairman in May 2012. Mr Olney-Fraser resigned
during the year.
The above named directors held office during the whole of the financial year and since the end of the
financial year except for:
• Dr Stewart Washer – appointed 1 August 2013
• Dr Ross Macdonald – appointed 1 August 2013
• Mr Darren Olney-Fraser – resigned 1 August 2013
Directorships of other listed companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of
the financial year are as follows:
Name
Stewart Washer
Ross Macdonald
Howard Digby
Peter Webse
Darren Olney-Fraser
Company
iSonea Limited
Immuron Limited
iSonea Limited
Telesso Technologies Limited
Sun Biomedical Limited
Sun Biomedical Limited
Blina Minerals NL
Mariner Corporation Limited
Stanfield Funds Management Limited
Period of directorship
2012-2014
2012-2013
2012-2014
2003-2013
Since 2012
Since 2012
2012-2014
Since 2010
Since 2009
Directors’ shareholdings
The following table sets out each director’s relevant interest in shares, debentures and rights or options
in shares or debentures of the Company or a related body corporate as at the date of this report:
Directors
Stewart Washer1
Ross Macdonald1
Howard Digby
Peter Webse
Fully paid ordinary shares
Number
154,856
8,500
237,500
107,500
Share options
Number
2,500,000
2,500,000
687,500
102,500
1 Appointed 1 August 2013. The number of options is on a post consolidation basis. On 27 September 2013, 50,000,000
options were issued to each of S Washer and R Macdonald respectively pursuant to shareholder approval granted at the
General Meeting held on 27 September 2013. A 1:20 consolidation was approved and effected on 14 November 2013.
- 2 -
Share options granted to directors and senior management
During and since the end of the financial year, an aggregate 5,200,000 share options (post consolidation)
were granted to the following directors and senior management as part of their remuneration:
Cynata Therapeutics Limited
Directors and senior
management
Stewart Washer
Ross Macdonald
Kilian Kelly
Number of options
granted
Issuing entity
2,500,000 Cynata Therapeutics Limited
2,500,000 Cynata Therapeutics Limited
200,000 Cynata Therapeutics Limited
Number of ordinary
shares under option
2,500,000
2,500,000
200,000
Company Secretary
Mr Peter Webse has held the position of company secretary of Cynata Therapeutics Limited since April
2012. Peter is the Managing Director of Platinum Corporate Secretariat Pty Ltd, a company specialising in
providing company secretarial, corporate governance and corporate advisory services. Peter acts as
Company Secretary for a number of ASX listed resource and biotech companies.
Dividends
No dividends have been paid or declared since the start of the financial year and the directors have not
recommended the payment of a dividend in respect of the financial year.
Shares under option or issued on exercise of options
Details of unissued shares or interests under option as at the date of this report are:
Issuing entity
Grant date
Number of
shares
under
option
Class of
shares
Exercise
price of
option
Expiry date
of options
Cynata Therapeutics Limited1
Cynata Therapeutics Limited2
Cynata Therapeutics Limited3
Cynata Therapeutics Limited4
Cynata Therapeutics Limited5
8 May 2012
11,112,250
Ordinary
$0.20
31 Dec 2014
27 Nov 2012
500,000
Ordinary
$0.40 09 Sept 2016
27 Sept 2013
5,000,000
Ordinary
$0.40 27 Sept 2018
29 May 2014
200,000
Ordinary
$0.40
30 Nov 2015
29 May 2014
600,000
Ordinary
$0.40
30 Nov 2015
1 Listed options. The options are shown on a post consolidated basis. The options were consolidated on a 1 for 20
basis following shareholders’ approval on 29 October 2013.
2 Unlisted options issued to Mr Digby. The options are shown on a post consolidation basis (1 for 20). All the
options have now vested (refer to the 2013 annual report for more information).
3 100,000,000 unlisted options (on a pre-consolidation basis) issued to Dr Macdonald and Dr Washer following
shareholders’ approval on 27 September 2013 and were subsequently consolidated on a 1 for 20 basis.
4 Unlisted options issued to Dr Kelly on 29 May 2014 as part of his remuneration.
5 Unlisted options issued to external advisers for the provision of corporate advisory services.
The holders of these options do not have the right, by virtue of the option, to participate in any share
issue or interest issue of the Company or of any other body corporate or registered scheme.
There have been no options granted over unissued shares or interests of any controlled entity within the
Group during or since the end of the reporting period.
- 3 -
Details of shares or interests issued during or since the end of the financial year as a result of exercise of
an option are:
Cynata Therapeutics Limited
Issuing entity
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Cynata Therapeutics Limited
Number of
shares issued Class of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
475,0001
825,0001
950,0001
500,0001
589,0421
2,451
50,000
Amount paid
for shares
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
$0.20
Amount unpaid
on shares
$nil
$nil
$nil
$nil
$nil
$nil
$nil
1 These figures are shown on a post consolidation basis (1 for 20).
Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the directors of
the Company (as named above), the company secretary, and all executive officers of the Company and
of any related body corporate against a liability incurred as such a director, secretary or executive
officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
The Company has not otherwise, during or since the end of the financial year, except to the extent
permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any
related body corporate against a liability incurred as such an officer or auditor.
Directors’ meetings
The following table sets out the number of directors’ meetings (including meetings of committees of
directors) held during the financial year and the number of meetings attended by each director (while
they were a director or committee member). During the financial year, 9 board meetings were held.
Directors
Stewart Washer
Ross Macdonald
Howard Digby
Peter Webse
Darren Olney-Fraser
Board of Directors
Held
8
8
8
9
1
Attended
8
8
8
9
1
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of those proceedings.
Non-audit services
The auditors did not perform any non-audit services during the financial year.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 17 after this report
- 4 -
Cynata Therapeutics Limited
Operating and financial review
Principal activities
Following shareholder approval in October 2013 of a change in nature and scale of the Company’s
activities pursuant to the acquisition of Cynata Inc. (as described more fully below), the Group’s
principal activities in the course of the remainder of the financial year were the development and
commercialisation of a proprietary mesenchymal stem cell (MSC) technology for potential human
therapeutic use, which the Company has branded Cymerus™. Cynata’s Cymerus™ technology
represents an important breakthrough in stem cell product research that facilitates large-scale
manufacture of MSCs from a single donor and a single donation, comparing favourably to most other
MSC technologies that require multiple donors and multiple donations. This has the potential to
revolutionise commercial manufacture of MSC based therapeutic products.
Operating results
The consolidated loss of the Group for the financial year, after providing for income tax, amounted to
$3,039,663 (2013: $915,701). Further discussion on the Group’s operations is provided below:
Review of operations
Overview
During 2012, Eco Quest Limited, an Australian Securities Exchange (ASX) listed company, commenced
dialogue with Cynata Inc, the licensee of certain stem cell technology owned by Wisconsin Alumni
Research Foundation (WARF) with a view to investing in Cynata Inc to enable further development of
the technology. Accordingly, during 2012, as announced to the ASX, Eco Quest Ltd purchased
18,750,000 shares in Cynata Inc for an investment of US$750,000. On 12 July 2013, Eco Quest Ltd made
a further investment into Cynata Inc. This investment of US$250,000 was in consideration for the issue
of 6,250,000 Cynata Inc shares to Eco Quest Ltd. At that time, Eco Quest Ltd held 33.2% of the issued
capital of Cynata Inc.
Eco Quest Ltd announced on 12 July 2013 that it had also entered into a set of formal agreements
(Option Agreements) under which Eco Quest Ltd acquired the right (but not the obligation), to acquire
from shareholders in Cynata Inc all Cynata Inc’s shares that the Company did not own, in consideration
for, in aggregate, 10,000,001 Eco Quest Ltd shares after consolidating the issued capital of the Company
on a 1 for 20 basis. On 24 September 2013, the Company announced the exercise of its options to
acquire the Cynata Inc shares pursuant to the Option Agreements. Given that completion of the
exercise of the Option Agreements would result in a significant change in the nature and scale of Eco
Quest Ltd’s activities, approval of its Shareholders was required. This occurred at its Annual General
Meeting on 29 October 2013. Approval was also obtained to change the name of the Company from
Eco Quest Ltd to Cynata Therapeutics Limited. At the same meeting, shareholders approved a capital
raising of $5,000,000 though the issue of 12,500,000 shares at $0.40 per share, in respect of which a
prospectus was issued on 14 October 2013.
Part of the transaction described above involved Eco Quest Ltd undertaking a suspension of trading on
ASX and this occurred on 29 October 2013. In the weeks subsequent to the suspension, the
management team undertook an aggressive investor relations campaign to highlight the outstanding
stem cell technology licensed from WARF and its exciting therapeutic and commercial potential.
Following successful completion of the capital raising and the acquisition of Cynata Inc, the company’s
securities resumed trading on the ASX on 29 November 2013 as Cynata Therapeutics Ltd under the
ticker symbol CYP.
The transition from Eco Quest Ltd to Cynata Therapeutics Ltd involved a reshaping of the corporate
identity, reflected in the Company’s new website at www.cynata.com. The trade mark Cymerus™ has
also been registered as a means of building brand identity in the Company’s product technology.
- 5 -
Cynata Therapeutics Limited
The new management team of Dr Stewart Washer (Executive Chairman), Dr Ross Macdonald (Managing
Director and Chief Executive Officer) and Dr Kilian Kelly (Vice President, Product Development, who
commenced with the Company in March 2014), supported by the continued involvement of Dr Ian
Dixon and Professor Igor Slukvin (the founders of Cynata Inc) ensures the Company is well placed to
deliver on the expectations of stakeholders. It is expected that the management team will remain
small, with external assistance being brought in as required. The Company continues to enjoy a
consulting relationship with Dr Igor Slukvin. The product development activities described below will
largely be conducted by external providers.
Product Development
During the 2013-14 year, the Company implemented and progressed plans to develop its unique
Cymerus™ technology with a goal to commercialise therapeutic applications of stem cell based products
deriving from it.
Regulatory Review. In November 2013 the Company commissioned the international regulatory
consultancy ERA to undertake a review of the regulatory landscape for stem cell-based therapeutics.
Regulators in major jurisdictions worldwide, including the US FDA, are working to maintain abreast of
developments in the stem cell field and the Company considers it vitally important to obtain as much
clarity as possible before embarking on a product development program. From this review the
Company identified the likely pre-clinical activities and chemistry, manufacturing and control (CMC)
testing required to support an application to a regulatory agency and/or an institutional review body to
approve a plan to conduct a Phase 1 clinical trial. These studies will also form part of further regulatory
submissions, including an eventual application for marketing approval. Of particular relevance to the
regulatory review is that the Cynata product (i) will be derived from an iPS cell and (ii) it will be
allogeneic and as such the Company is seeking to ensure that the data package thoroughly addresses
these and other features of our Cymerus™ product.
The Company is presently determining the most appropriate location/jurisdiction for the proposed
Phase 1 clinical trial, giving consideration to likely approval times and duration, tax and other incentives,
recruitment issues and overall regulatory hurdles. The target indication is presently graft-versus-host
disease. This disease often follows a bone marrow transplant procedure and occurs when the immune
cells in the donor material (the graft) attack the recipient’s tissues (the host) as “foreign”. Bone marrow
transplants are used in the treatment of certain cancers including leukemia.
Proof-of-Concept Studies. During 2013 Cynata Inc conducted a proof-of-concept study in which the
efficacy of Cynata’s proprietary Cymerus™ off-the-shelf stem cell product was clearly demonstrated in a
mouse model of critical limb ischaemia (CLI), a condition that frequently arises as a complication of
diabetes. The successful outcome of this study, together with a desire to add further supportive data to
the pre-clinical data package, led to the Company entering into a collaborative arrangement with the
University of Massachusetts – Amherst, through its UMass Innovation Institute, under the supervision
of Assistant Professor Lisa M. Minter. Professor Minter will investigate, in a humanised rodent model
established in her laboratory, the effects of Cynata’s Cymerus™ mesenchymal stem cell (MSC) product
in preventing and treating graft-versus-host disease (GvHD). The study commenced in March 2014 and
is expected to conclude in early 2015.
Manufacturing Process Development. An essential element in bringing the core technology to
commercial therapeutic use is an ability to manufacture product at commercial scale. Fortunately, by
producing human MSCs from iPSC-derived mesenchymoangioblasts (MCAs), this appears to be feasible.
However, it is necessary to translate the lab-based processes to an industrial setting and so a key part of
the Cymerus™ product development program is the development of a manufacturing process,
ultimately to cGMP standard. This activity will also generate product (i.e. cells) for use in the pre-
clinical and clinical development programs in the coming 1-2 years.
- 6 -
Cynata Therapeutics Limited
To this end, in February 2014 Cynata engaged Waisman Biomanufacturing in the USA to undertake,
under contract, manufacturing process development with detailed and controlled documentation, and
MSC product manufacture. With its proximity to the laboratories of Professor Slukvin, Waisman is very
well placed to undertake this program. Waisman specialises in translating scientific discoveries for early
stage clinical trials by developing manufacturing and quality control processes in conjunction with
product development and regulatory support. Work has progressed well under this relationship and
the Company expects adequate supply of Cymerus™ cells (MSCs) of suitable quality to be available for
the formal pre-clinical and clinical programs as well as to supply the Company’s collaborators and
commercial partners.
Cymerus™ Product Characterisation. Once material has been generated pursuant to the manufacturing
program described above, Cynata intends to undertake a range of testing procedures to characterise
the product and demonstrate that it is potent, consistent and safe. The information so obtained will be
used to prepare an application to conduct a Phase 1 clinical trial. In a transaction subsequent to the
end of the 2013-14 financial year, the Company entered into a contract with an international contract
research organisation to undertake this activity.
Business Development
Cynata intends to create shareholder value by developing an “off the shelf”, allogeneic (i.e. non donor-
related), therapeutic stem cell platform, which will be further developed into specific cellular
therapeutic products to treat a range of medically and economically important disease.
Until recently, the idea of using stem cells to “repair” the human body and modulate inflammatory
processes seemed to be an optimistic expectation. However, the recent market approval of two stem
cell based products and a range of stem cell products in mid- and late-stage clinical testing, has
confirmed that stem cell regenerative medicine is becoming a reality. A number of important clinical
successes, together with some inevitable disappointments, have helped further define and understand
the parameters of stem cell therapy to ensure that it will become a new paradigm in human health.
The potential impact is shown in the observation that, in the US, around $300 billion is spent annually
on drugs that generally only treat the symptoms of disease or injury, while regenerative therapies could
actually cure the condition. A further analysis of the commercial potential of stem cells provides an
estimate of the value of the stem cells market to reach US$119billion in 2018.
The Company proposes to address two target markets for the Cymerus™ technology:
(a) development of specific therapeutics products using Cymerus™ stem cells; and
(b) licensing Cymerus™ stem cell manufacturing to other parties.
As noted above, the Company is presently targeting graft-versus-host disease for the first-in-man
indication (Phase 1) clinical study of a Cymerus™ therapeutic product. MSCs have the ability to
modulate a recipient's immune response: consequently, MSCs may be useful treatments for diseases
resulting from an immune response, such as GvHD. Numerous clinical trials of MSCs as a GvHD
treatment have been conducted, most with positive results.
Whilst the ultimate commercial potential of any Cymerus™ therapeutic product is a key driver, it is
important also to consider, for a Phase 1 study, other factors such as the potential clinical outcomes of
the target indication, current standard-of-care therapies, incidence, the likely duration of the study and
recruitment potential. Thus, the Company may choose a target indication for a Phase 1 study that has a
modest commercial potential but which provides clear and speedy endpoints and thereby facilitates a
shorter path to potentially more commercially attractive indications. Graft-versus-host disease (GvHD)
is one such potential target indication which is often clinically devastating but also relatively
uncommon.
- 7 -
Cynata Therapeutics Limited
The Company’s strategy for commercializing potential specific Cymerus™ therapeutic products is
through the formation of development and commercialization partnerships. In parallel with the
product development and regulatory activities, the Company continually assesses the optimal approach
to commercializing specific therapeutic products with the goal to maximise value and potential return
to all stakeholders. This involves ongoing evaluation and assessment of strategic issues, such as the
costs and risks associated with development of Cymerus™ products, at what development stage
partnering might occur, the resources and market access capabilities provided by potential partners and
in which markets partnering could be appropriate.
To that end, the Company has engaged with potential commercial partners and in June 2014
announced a collaboration with Grey Innovation to develop potential treatments for lung disorders
through enabling the direct delivery of Cymerus™ stem cells into the lung. The delivery of stem cells
into the lung requires a specialised nebuliser system which delivers viable cells. This specialised
nebuliser, called Respire, has been developed at Monash University and is being commercialised by a
team from RMIT, Eastern Health, and Grey Innovation. The collaboration will apply the Respire
nebuliser technology to test the delivery of Cymerus™ cells for future treatment of lung disorders.
During the 2013-14 year the Company also progressed commercial discussions with other parties
and will update the market as and when these are finalised into deals.
Financial position
The net assets of the Group have increased by $8,211,789 from 30 June 2013 to $9,854,632 in 2014
(2013: $1,642,843). This increase is mainly due to the following factors:
- proceeds from a share placement via a prospectus raising $5,000,000 (before costs);
- proceeds from a Share Purchase Plan (SPP) raising $461,273 (before costs);
- proceeds from a share placement raising $300,000 (before costs);
- proceeds from the exercise of listed options raising approximately $678,299; and
-
the recognition of the fair value attributable to interests in research and development of stem cells
arising on the acquisition of US based Cynata Incorporation (refer to note 13 for further information).
The directors believe the Group is in a strong and stable financial position to expand and grow its
current operations.
Significant changes in state of affairs
The following significant changes in the state of affairs of the Company occurred during the financial
year:
- On 7 August 2013, the Company raised $300,000 (before costs) via the issue of 30,000,000 ordinary
shares at $0.01 per share (share placement).
- On 2 September 2013, the Company raised $461,273 (before costs) via the issue of 46,127,340
ordinary shares (Share Purchase Plan).
- During the months of August 2013 and October 2013, a total of 66,780,832 ordinary shares were
issued at $0.01 as a result of the exercise of 66,780,832 listed options.
- On 24 September 2013, the Company exercised its options to acquire Cynata Inc shares pursuant to
the Options Agreements announced on 12 July 2013. 10,000,001 shares (post consolidated basis)
were issued for $0.40 for a non-cash consideration.
- On 14 November 2013, the Company consolidated its issued capital on a 1 for 20 basis.
- On 4 November 2013, the Company raised $5,000,000 (before costs) via the issue of 12,500,000
ordinary shares at $0.40 in accordance with a Prospectus dated 14 October 2013.
- During the months of December 2013 and January 2014, a total of 52,451 ordinary shares were
issued at $0.20 as a result of the exercise of 52,451 listed options.
- 8 -
Changes in controlled entities
- On 12 July 2013, the Company made a further investment of US$250,000 into Cynata Inc. This
investment was in consideration for the issue of 6,250,000 Cynata Inc shares to the Company. Upon
completion of this investment, the Company gained a combined interest of 33% in Cynata Inc.
- On 24 September 2013, the Company exercised its option to acquire all remaining shares of Cynata
Inc, increasing its interest from 33% to 100% (refer to note 13 for further information).
Cynata Therapeutics Limited
Events after the reporting period
On 14 July 2014, the Company announced that it has signed an agreement with WuXi AppTec (NYSE:
WX), a leading global biopharmaceutical contract research organisation, to conduct preclinical safety
studies with the Company’s unique Cymerus™ stem cell technology. The studies will be conducted at
WuXi AppTec’s GLP-compliant, FDA-registered facility in St Paul, Minnesota.
On 28 July 2014, the Company announced that it has signed an agreement with the University of
Wisconsin – Madison, one of the world’s leading stem cell centres, to develop a novel approach for
preserving the Cymerus™ cell therapy products to enhance their shelf life and convenience. The
development program will be overseen by internationally recognised pioneer of stem cell research and
Cynata Incorporation’s co-founder, Professor Igor Slukvin.
Other than the above, there has not been any matter or circumstance occurring subsequent to the end
of the financial year that has significantly affected, or may significantly affect, the operations of the
Group, the results of those operations, or state of affairs of the Group in future financial years.
Future developments, prospects and business strategies
The focus of the Company’s activities during the 2014-15 year and beyond is to continue development
of the Cymerus™ technology with a particular emphasis in the near term on completing the pre-clinical
safety program, completing manufacturing process scale-up and validation and commencing the clinical
(Phase 1) program. In parallel with this, the Company intends to continue its vigorous program of
engagement and dialogue with potential commercial partners with a view to executing further value-
accretive transactions.
Environmental regulations
The Group’s operations are not subject to significant environmental regulation under the Australian
Commonwealth or State law.
- 9 -
Cynata Therapeutics Limited
Remuneration report
This audited remuneration report sets out information about the remuneration of Cynata Therapeutics
Limited’s key management personnel for the financial year ended 30 June 2014. The term ‘key
management personnel’ refers to those persons having authority and responsibility for planning,
directing and controlling the activities of the Group, directly or indirectly, including any director
(whether executive or otherwise) of the Group. The prescribed details for each person covered by this
report are detailed below under the following headings:
• key management personnel
•
•
•
• key terms of employment contracts.
remuneration policy
relationship between the remuneration policy and Company performance
remuneration of key management personnel
Key management personnel
The directors and other key management personnel of the Group during or since the end of the
financial year were:
Non-executive directors
Mr Howard Digby
Mr Peter Webse
Position
Non-executive director1
Non-executive director
Executive directors
Dr Stewart Washer (appointed 1 August 2013)
Dr Ross Macdonald (appointed 1 August 2013)
Mr Darren Olney-Fraser (resigned 1 August 2013)
Position
Executive Chairman
Managing Director, Chief Executive Officer
Executive Chairman
Other key management personnel
Dr Kilian Kelly (appointed 1 March 2014)
Position
Vice President, Product Development
1 Executive director from 10 September 2012 to 28 February 2014.
Except as noted, the named persons held their current position for the whole of the financial year and
since the end of the financial year.
Remuneration policy
Cynata’s remuneration policy, which is set out below, is designed to promote superior performance and
long term commitment to the Company.
As at the date of this report, the Company has two executives – the Chairman and the Chief Executive
Officer, two non-executive directors and one Vice President, Product Development. As set out below,
total remuneration costs for the 2014 financial year were $1,896,481, up from $323,328 for the
previous financial year.
Non-executive director remuneration
Non-executive directors are remunerated by way of fees, in the form of cash, non-cash benefits,
superannuation contributions or salary sacrifice into equity and do not normally participate in schemes
designed for the remuneration of executives.
Shareholder approval must be obtained in relation to the overall limit set for the non-executive
directors’ fees. The maximum aggregate remuneration approved by shareholders for non-executive
directors is $300,000 per annum. The directors set the individual non-executive director fees within the
limit approved by shareholders.
- 10 -
Cynata Therapeutics Limited
Executive director remuneration
Executive directors receive a base remuneration which is market related, and may be entitled to
performance based remuneration, which is determined on an annual basis.
Overall remuneration policies are subject to the discretion of the board and can be changed to reflect
competitive and business conditions where it is in the interests of the Company and shareholders to do
so. Executive remuneration and other terms of employment are reviewed annually by the board having
regard to the performance, relevant comparative information and expert advice.
The board’s remuneration policy reflects
its obligation to align executive remuneration with
shareholder interests and to retain appropriately qualified executive talent for the benefit of the
Company. The main principles are:
(a) remuneration reflects the competitive market in which the Company operates;
(b) individual remuneration should be linked to performance criteria if appropriate; and
(c) executives should be rewarded for both financial and non-financial performance.
The total remuneration of executives consists of the following:
(a) salary – executives receive a fixed sum payable monthly in cash;
(b) cash at risk component – executives may participate in share and option schemes generally made in
accordance with thresholds set in plans approved by shareholders if deemed appropriate. However,
the board considers it appropriate to issue shares and options to executives outside of approved
schemes in exceptional circumstances; and
(c) other benefits – executives may, if deemed appropriate by the board, be provided with a fully
expensed mobile phone and other forms of remuneration.
The board has not formally engaged the services of a remuneration consultant to provide
recommendations when setting the remuneration received by directors or other key management
personnel during the financial year.
Equity-settled compensation
The fair value of the equity which executives and employees are granted is measured at grant date and
recognised as an expense over the vesting period, with a corresponding increase to an equity account.
The fair value of shares is ascertained as the market bid price. The fair value of options is ascertained
using a Black–Scholes pricing model which incorporates all market vesting conditions. The number of
shares and options expected to vest is reviewed and adjusted at each reporting date such that the
amount recognised for services received as consideration for the equity instruments granted shall be
based on the number of equity instruments that eventually vest.
Relationship between the remuneration policy and company performance
The board considers that at this time, evaluation of the Group’s financial performance using generally
accepted measures such as profitability, total shareholder return or per company comparison are not
relevant as the Group is at an early stage in the implementation of a corporate strategy that includes
the identification and acquisition of new business opportunities as outlined in the directors’ report.
The table below sets out summary information about the Group’s earnings and movements in
shareholder wealth for the five years to 30 June 2014:
- 11 -
30 June
2014
$
107,755
3,039,663
3,039,663
0.20
0.40
6.76
30 June
2013
$
71,021
915,701
915,701
0.20
0.20
3.80
Cynata Therapeutics Limited
323,867
30 June
2012
$
30 June
2011
$
353,499
1,582,567 2,572,297
1,542,307 2,564,979
1.80
0.60
50.4
0.60
0.20
16.2
30 June
2010
$
140,006
2,116,125
2,116,125
1.00
1.80
55.0
Revenue
Net loss before tax
Net loss after tax
Share price at start of year1
Share price at end of year1
Basic/diluted loss per share1
1 the prices are shown on a post consolidated (1 for 20) basis.
Remuneration of key management personnel
2014
Short-term
employee benefits
Salary &
fees
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
Share-
based
payment
Options
Total
$
$
Value of
options as
proportion
of
remunerat-
ion
Directors
Stewart Washer1
Ross Macdonald1
Howard Digby
Peter Webse2
Darren Olney-Fraser3
106,311
192,958
85,431
37,333
5,000
-
-
-
73,000
-
9,834
17,849
7,902
-
-
611,284
611,284
58,555
-
-
727,429
822,091
151,888
110,333
5,000
84.03%
74.36%
38.56%
-
-
-
73,000
70,175
497,208
Other KMP
Kilian Kelly4
Total
1 Appointed 1 August 2013.
2 The amount of $73,000 in ‘Other’ represents company secretarial fees of $4,000 per month and an amount of $25,000 for
additional company secretary work outside the scope of the consultancy agreement with Platinum Corporate Secretariat Pty
Ltd (Platinum). Mr Webse is the sole director of Platinum.
3
Resigned 1 August 2013.
4 Appointed 1 March 2014 as Vice President, Product Development.
3,074
42,076 1,284,197
79,740
1,896,481
3.86%
67.77%
6,491
2013
Short-term
employee benefits
Salary &
fees
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
Share-
based
payment
Options
Total
$
$
Value of
options as
proportion
of
remunerat-
ion
-
-
49,250
-
-
49,250
60,000
99,886
36,000
-
-
195,886
Directors
Darren Olney-Fraser1
Howard Digby
Peter Webse2
Stewart Washer3
Ross Macdonald3
Total
1 Mr Olney-Fraser’s services were provided by Mariner Corporation Limited (Mariner). The amounts set out above were paid
to Mariner. Mr Olney-Fraser resigned on 1 August 2013.
2 The amount of $49,250 in ‘Other’ represents company secretarial fees of $4,000 per month and an amount of $1,250 for
additional work performed outside the scope of the consultancy agreement with Platinum Corporate Secretariat Pty Ltd
(Platinum). Mr Webse is the sole director of Platinum.
3 Appointed 1 August 2013.
60,000
178,078
82,250
-
-
323,328
-
38.86%
-
-
-
21.40%
-
69,202
-
-
-
69,202
-
8,990
-
-
-
8,990
- 12 -
Cynata Therapeutics Limited
Bonuses and share-based payments granted as compensation for the current financial year
Bonuses
No bonuses were paid to key management personnel during the financial year (2013: $nil).
Incentive share-based payments arrangements
During the financial year, the following share-based payment arrangements were in existence:
Option
series
1
2
3*
4**
5***
Grant date
Expiry date
28 Mar 2011
27 Nov 2012
27 Sept 2013
29 May 2014
29 May 2014
30 Nov 2013
9 Sept 2016
27 Sept 2018
30 Nov 2015
30 Nov 2015
Exercise
price
$0.020i
$0.020i
$0.020i
$0.400ii
$0.400ii
Grant date
fair value
$0.0181i
$0.0128i
$0.0145i
$0.1844ii
$0.1844ii
Vesting date
At date of grant
19 May 2014
50% - at grant date
29 May 2015
1 Dec 2014
* Unlisted options issued to Drs Stewart Washer and Ross Macdonald. In accordance with the terms of the share-
based arrangement, 50% of the options vest immediately at grant date, 30% vest if the volume weighted average
share price over a period of 10 consecutive trading days is at least $0.04 ($0.80 post consolidation). The
remaining 20% vest if the volume weighted average share price over a period of 10 consecutive days is at least
$0.06 ($1.20 post consolidation).
** Unlisted options issued to Dr Kilian Kelly.
*** Unlisted options issued to external advisers.
i Pre consolidation option prices. The post consolidation prices are increased by a factor of twenty.
ii Post consolidated option prices.
There has been no alteration of the terms and conditions of the above share-based payment
arrangements since the grant date.
Details of share-based payments granted as compensation to key management personnel during the
current financial year:
Granted as compensation during the financial year
Name
S Washer
R Macdonald
K Kelly
Option
series
3
3
4
No.
granted
No.
vested
2,500,0001 1,250,000
2,500,0001 1,250,000
nil
200,000
% of
grant
vested
50%
50%
nil
% of
grant
forfeited
nil
nil
nil
% of compensation
for the year
consisting of options
84.03%
74.36%
3.86%
1 post consolidated basis (1 for 20) figures.
The following table summarises the value of options to key management personnel granted, exercised
or lapsed during the financial year, in relation to options granted to key management personnel as part
of their remuneration:
Value of options granted
at the grant date (1)
$
726,274
726,274
36,885
Value of options exercised
at the exercised date
$
-
-
-
Value of options lapsed
at the date of lapse
$
-
-
-
S Washer
R Macdonald
K Kelly
1 The value of the options granted during the year is recognised in compensation over the vesting period of the
grant, in accordance with Australian Accounting Standards.
- 13 -
Cynata Therapeutics Limited
Key terms of employment contracts
On 1 August 2013, Dr Stewart Washer was appointed as Executive Chairman and his remuneration and
other terms of appointment were formalised in an executive service agreement, the key terms and
conditions of which are:
• Term of agreement – the earlier of 24 months expiring 31 July 2015 or until termination by the
•
Company.
Initial salary of $48,000 p.a which increased to $96,000 p.a upon achievement of $1 million
from equity capital raisings and further increased to $150,000 p.a upon settlement of the
Company’s acquisition of US based Cynata Inc and reinstatement to trading after re-compliance
with Chapters 1 and 2 of the ASX Listing Rules. The current salary is $150,000 p.a inclusive of
statutory superannuation.
• The agreement may be terminated by either party by providing 6 months’ notice.
On 1 August 2013, Dr Ross Macdonald was appointed as Managing Director/Chief Executive Officer and
his remuneration and other terms of appointment were formalised in an executive service agreement,
the key terms and conditions of which are:
• Term of agreement – the earlier of 24 months expiring 31 July 2015 or until termination by the
•
Company.
Initial salary of $60,000 p.a which increased to $120,000 p.a upon achievement of $1 million
from equity capital raisings and further increased to $300,000 p.a upon settlement of the
Company’s acquisition of US based Cynata Inc and reinstatement to trading after re-compliance
with Chapters 1 and 2 of the ASX Listing Rules. The current salary is $300,000 p.a inclusive of
statutory superannuation.
• The agreement may be terminated by either party by providing 6 months’ notice.
On 1 March 2014, Dr Kilian Kelly was appointed as Vice President, Product Development and his
remuneration and other terms of appointment were formalised in an employment contract, the key
terms and conditions of which are:
• A salary of $230,000 p.a inclusive of statutory superannuation.
• The right to participate in the Company’s equity-based incentive scheme up to 10% of the
annual salary and based on attainment of agreed performance indicators.
• The contract may be terminated by either party providing 3 months’ notice after 3 month
interim employment period.
On 1 March 2014, Mr Howard Digby reverted to a Non-Executive Director with a salary of $40,000 p.a
inclusive of statutory superannuation. Mr Digby was previously paid a fee of $10,000 p.m inclusive of
statutory superannuation for the provision of executive Director’s services for the period 6 September
2012 to 28 February 2014. The agreement between Mr Digby and the Company is not subject to a fixed
term.
Mr Peter Webse’s services as Non-Executive Director and Company Secretary are provided through
Platinum Corporate Secretariat Pty Ltd (“Platinum”). Platinum is paid a fee of $36,000 (exc. GST) p.a for
the provision of Mr Webse’s services as a Non-Executive Director (commenced 18 May 2012). On 1
March 2014, the fee was increased to $40,000 (exc. GST) p.a. A consultancy agreement was entered
into with Platinum, commencing 3 April 2012, for the provision of company secretarial services at a fee
of $4,000 (exc. GST) p.m plus additional services charged at a rate of $250 per hour as agreed from time
to time. The agreement is subject to 2 months’ notice of termination.
- 14 -
Key management personnel equity holdings
Fully paid ordinary shares of Cynata Therapeutics Limited
Cynata Therapeutics Limited
2014
Balance at
1 July
S Washer1
R Macdonald1
H Digby
P Webse
D Olney-Fraser2
No.
-
-
3,750,000
2,150,000
-
Balance after
1:20
consolidation
(a)
No.
-
-
187,500
107,500
-
Granted as
compensation
No.
Received
on
exercise of
options
No.
-
-
-
-
-
-
-
-
-
-
Net other
change
Balance at
30 June
No.
154,856
8,500
50,000
-
-
No.
154,856
8,500
237,500
107,500
N/A
1 Appointed 1 August 2013
2 Resigned 1 August 2013
(a)
A 1 for 20 consolidation was effected on 14 November 2013
2013
Balance at
1 July
Granted as
compensation
D Olney-Fraser
H Digby
P Webse
No.
-
3,750,000
2,150,000
No.
-
-
-
Received on
exercise of
options
No.
Net other
change
Balance at
30 June
-
-
-
No.
No.
-
3,750,000
2,150,000
-
-
-
Share options of Cynata Therapeutics Limited
Balance
after
1:20
consolid-
ation
No.
2014
Balance at
1 July 2013
Granted as
compens-
ation
Exerci-
sed
Net other
change
Balance at
30 June
2014
Balance
vested at
30 June
2014
Vested and
exercisable
Options
vested
during
year
S Washer1
R Macdonald1
H Digby
P Webse2
K Kelly3
No.
No.
No.
n/a
n/a
687,500
127,500
-
-
-
13,750,000
2,550,000
-
No.
2,500,000
2,500,000
-
-
200,000
No.
1,250,000
1,250,000
687,500
102,500
-
1 Dr Washer and Dr Macdonald were granted 50,000,000 unlisted options pre-consolidation (1:20) basis
2 Amount in ‘Net other change’ represents options lapsed on 30 November 2013
3 Appointed 1 March 2014
No.
2,500,000
2,500,000
687,500
102,500
200,000
-
-
-
(25,000)
-
-
-
-
-
-
No.
1,250,000
1,250,000
687,500
102,500
-
No.
1,250,000
1,250,000
375,000
-
-
2013
Balance at
1 July
2012
No.
Balance
after
1:20
consolid-
ation
No.
Exerci-
sed
Net other
change
Granted
as
compens
-ation
Balance at
30 June
2013
Balance
vested at
30 June
2013
Vested and
exercisable
Options
vested
during
year
No.
No.
No.
No.
No.
No.
No.
D Olney
Fraser
H Digby1
P Webse
-
3,750,000
2,550,000
1 Unlisted options
n/a
n/a
n/a
-
-
-
-
-
-
-
-
10,000,000 13,750,000
2,550,000
-
-
6,250,000
-
-
6,250,000
-
-
2,500,000
-
- 15 -
Cynata Therapeutics Limited
All share options issued to key management personnel were made in accordance with the provisions of the
employee share option plan.
No share options were exercised by key management personnel during the financial year (2013: nil). Further
details of the employee share option plan and of share options granted during the 2014 and 2013 financial
years are contained in note 19 to the financial statements.
This directors’ report is signed in accordance with a resolution of directors made pursuant to s.298(2) of the
Corporations Act 2001.
On behalf of the directors
Dr Ross Macdonald
Managing Director
Perth, 26 August 2014
- 16 -
Cynata Therapeutics Limited
Directors’ declaration
The directors declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable;
(b) in the directors’ opinion, the attached financial statements are in compliance with International
Financial Reporting Standards, as stated in note 3 to the financial statements;
(c)
in the directors’ opinion, the attached financial statements and notes thereto are in accordance
with the Corporations Act 2001, including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the Group; and
(d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations
Act 2001.
On behalf of the directors
Dr Ross Macdonald
Managing Director
Perth, 26 August 2014
- 20 -
Cynata Therapeutics Limited
Consolidated statement of profit or loss and other
comprehensive income for the year ended
30 June 2014
Continuing operations
Revenue
Cost of sales
Gross profit
Other income
Share of loss of associate
Product development costs
Employee benefits expenses
Depreciation and amortisation
Share based payment expenses
Borrowing costs
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Other comprehensive income, net of income tax
Items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of income tax
Total comprehensive loss for the year
Loss for the year attributable to:
Owners of Cynata Therapeutics Limited
Total comprehensive loss for the year attributable:
Owners of Cynata Therapeutics Limited
Consolidated
Single entity
Year ended
30 June 2014
$
30 June 2013
$
Note
6
7
8
8
8
9
-
-
-
107,755
-
(502,821)
(602,166)
(208)
(1,302,639)
-
(739,584)
(3,039,663)
33,964
(8,689)
25,275
37,057
(103,618)
(90,986)
(113,991)
-
(69,202)
(981)
(599,255)
(915,701)
-
(3,039,663)
-
(915,701)
-
-
5,291
5,291
(3,034,372)
-
-
-
-
(915,701)
(3,039,663)
(915,701)
(3,034,372)
(915,701)
Loss per share:
Basic and diluted (cents per share)
10
6.76
3.80
Notes to the consolidated financial statements are included on pages 25 to 54.
- 21 -
Consolidated statement of financial position
as at 30 June 2014
Cynata Therapeutics Limited
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Investments in associates
Intangibles
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Option reserves
Foreign currency translation reserve
Accumulated losses
Total equity
Consolidated
30 June 2014
$
Single entity
30 June 2013
$
Note
22
11
12
13
14
15
16
17
5,094,582
9,547
5,104,129
1,116,587
33,261
1,149,848
-
4,821,799
4,821,799
9,925,928
642,695
-
642,695
1,792,543
53,907
17,389
71,296
71,296
51,078
98,622
149,700
149,700
9,854,632
1,642,843
22,281,642
2,846,691
5,291
(15,278,992)
9,854,632
12,338,120
1,544,052
-
(12,239,329)
1,642,843
Notes to the consolidated financial statements are included on pages 25 to 54.
- 22 -
Cynata Therapeutics Limited
Consolidated statement of changes in equity
for the year ended 30 June 2014
Single entity
Balance at 1 July 2012
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Issue of ordinary shares
Share issue costs
Share based payments
Balance at 30 June 2013
Consolidated
Balance at 1 July 2013
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Issue of ordinary shares
Issue of ordinary shares related to business combination
Share issue costs
Share based payments
Balance at 30 June 2014
Issued
Capital
$
10,913,811
-
-
-
1,750,000
(325,691)
-
12,338,120
12,338,120
-
-
-
6,439,572
4,000,000
(496,050)
-
22,281,642
Option
Reserve
$
1,263,570
-
-
-
-
-
280,482
1,544,052
1,544,052
-
-
-
-
-
-
1,302,639
2,846,691
Foreign
currency
translation
reserve
$
-
-
-
-
-
-
-
-
-
5,291
5,291
-
-
-
-
5,291
Accumulated
losses
$
(11,323,628)
(915,701)
-
(915,701)
-
-
-
(12,239,329)
(12,239,329)
(3,039,663)
-
(3,039,663)
-
-
-
-
(15,278,992)
Total
$
853,753
(915,701)
-
(915,701)
1,750,000
(325,691)
280,482
1,642,843
1,642,843
(3,039,663)
5,291
(3,034,372)
6,439,572
4,000,000
(496,050)
1,302,639
9,854,632
Notes to the consolidated financial statements are included on pages 25 to 54.
- 23 -
Consolidated statement of cash flows
for the year ended 30 June 2014
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Research and development tax refund received
Development costs paid
Net cash used in operating activities
Cash flows from investing activities
Cash acquired from acquisition of subsidiary
Payments for investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity instruments of the Company
Payment for share issue costs
Net cash provided by financing activities
Cynata Therapeutics Limited
Consolidated
Single entity
Year ended
Note
30 June 2014
$
30 June 2013
$
22
13.3
-
(1,458,627)
82,697
-
25,058
(502,821)
(1,853,693)
44,964
(846,805)
37,057
(981)
-
-
(765,765)
159,469
(271,303)
(111,834)
-
(746,313)
(746,313)
6,439,572
(496,050)
5,943,522
1,750,000
(114,411)
1,635,589
Net increase in cash and cash equivalents
3,977,995
123,511
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
1,116,587
5,094,582
993,076
1,116,587
22
Notes to the consolidated financial statements are included on pages 25 to 54.
- 24 -
Cynata Therapeutics Limited
Notes to the consolidated financial statements for the year
ended 30 June 2014
General information
1.
Cynata Therapeutics Limited (“the Company”) is a listed public company incorporated in
Australia. The addresses of its registered office and principal place of business are disclosed in
the corporate directory to the annual report.
The principal activities of the Company and its controlled subsidiaries (“the Group”) are
described in the directors’ report.
2.
2.1
Application of new and revised Accounting Standards
New and revised AASBs affecting amounts reported and/or disclosed in the financial
statements
In the current year, the Group has applied a number of new and revised accounting standards
issued by the Australian Accounting Standards Board (AASB) that are mandatorily effective for
an accounting period that begins on or after 1 January 2013.
AASB 2011-4 ‘Amendments to
Australian Accounting Standards
to Remove Individual Key
Management Personnel
Disclosure Requirements’
AASB 10 ‘Consolidated Financial
Statements’ and AASB 2011-7
‘Amendments to Australian
Accounting Standards arising from
the consolidation and Joint
Arrangements standards’
AASB 13 ‘Fair Value
Measurement’ and AASB 2011-8
‘Amendments to Australian
Accounting Standards arising from
AASB 13’
the
This standard removes
individual key management
personnel disclosure requirements in AASB 124 ‘Related Party
Disclosures’. As a result, the Group only discloses the key
management personnel management compensation in total and
for each of the categories required in AASB 124.
In the current year, the individual key management personnel
disclosure previously required by AASB 124 is now disclosed in
the remuneration report due to an amendment to Corporations
Regulations 2001 issued in June 2013.
AASB 10 replaces the parts of AASB 127 ‘Consolidated ’and
Separate Financial Statements’ that deal with consolidated
financial statements and Interpretation 112 ‘Consolidation –
Special Purpose Entities’. AASB 10 changes the definition of
control such that an investor controls an investee when a) it has
power over an investee, b) it is exposed, or has rights, to
variable returns from its involvement with the investee, and c)
has the ability to use its power to affect its returns. All three of
these criteria must be met for an investor to have control over
an investee. Previously, control was defined as the power to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
instrument
items and non-financial
The Group has applied AASB 13 for the first time in the
current year. AASB 13 establishes a single source of guidance
for fair value measurements and disclosures about fair value
measurements. The scope of AASB 13 is broad; the fair value
measurement requirements of AASB 13 apply to both
financial
instrument
items for which other AASBs require or permit fair value
measurements
value
disclosures
measurements, except for share based payment transactions
that are within the scope of AASB 2 ‘Share-based Payment’,
leasing transactions that are within the scope of AASB 117
‘Leases’, and measurements that have some similarities to
fair value but are not fair value (e.g. net realisable value for
the purposes of measuring inventories or value in use for
impairment assessment purposes).
about
and
fair
- 25 -
2.1
New and revised AASBs affecting amounts reported and/or disclosed in the financial
statements (cont’d)
Cynata Therapeutics Limited
AASB 12 ‘Disclosure of Interests in
Other Entities’
AASB 12 is a new disclosure standard and is applicable to
entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general,
the application of AASB 12 has resulted in more extensive
disclosures in the consolidated financial statements.
2.2
Standards and Interpretations in issue not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations
listed below were in issue but not yet effective.
Standard/Interpretation
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the
financial year ending
AASB 9
‘Financial
relevant amending standards1
Instruments’, and
the
1 January 2017
30 June 2018
AASB 1031 ‘Materiality’ (2013)
1 January 2017
30 June 2018
AASB 2012-3
to Australian
‘Amendments
Accounting Standards – Offsetting Financial
Assets and Financial Liabilities’
AASB 2013-3 ‘Amendments to AASB 136 –
for Non-
Recoverable Amount Disclosures
Financial Assets’
AASB 2013-4
to Australian
‘Amendments
Accounting Standards – Novation of Derivatives
and Continuation of Hedge Accounting’
AASB 2013-5
Accounting Standards – Investment Entities’
‘Amendments
to Australian
‘Amendments
AASB 2013-9
–
Accounting
Standards
and
Framework, Materiality
Instruments’
to Australian
Conceptual
Financial
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1 January 2014
30 June 2015
1
The AASB has issued the following versions of AASB 9 and the relevant amending standards;
• AASB 9 ‘Financial Instruments’ (December 2009), AASB 2009-11 ‘Amendments to Australian Accounting Standards arising
from AASB 9’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and
Transition Disclosures’
• AASB 9 ‘Financial Instruments’ (December 2010), AASB 2010-7 ‘Amendments to Australian Accounting Standards arising
from AASB 9 (December 2010)’, AASB 2012-6 ‘Amendments to Australian Accounting Standards – Mandatory Effective Date
of AASB 9 and Transition Disclosure’.
• In December 2013 the AASB issued AASB 2013-9 ‘Amendment to Australian Accounting Standards – Conceptual
Framework, Materiality and Financial Instruments’, Part C – Financial Instruments. This amending standard has amended the
mandatory effective date of AASB 9 to 1 January 2017. For annual reporting periods beginning before 1 January 2017, an
entity may early adopt either AASB 9 (December 2009) or AASB 9 (December 2010) and the relevant amending standards.
- 26 -
Cynata Therapeutics Limited
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC
Interpretations were also in issue but not yet effective, although Australian equivalent
Standards and Interpretations have not yet been issued.
Standard/Interpretation
Narrow-scope amendments to IAS 19 Employee
Benefits
entitled Defined Benefit Plans:
Employee Contributions (Amendments to IAS 19)
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the financial
year ending
1 July 2014
30 June 2015
Annual Improvements to IFRSs 2010-2012 Cycle
1 July 2014
30 June 2015
Annual Improvements to IFRSs 2011-2013 Cycle
1 July 2014
30 June 2015
IFRS 14 Regulatory Deferral Accounts
1 January 2016
30 June 2017
The Company has not yet fully assessed the impact of the new Standards not yet adopted but
does not expect a material impact on the financial statements.
3.
3.1
Significant accounting policies
Statement of compliance
These financial statements are general purpose financial statements which have been
prepared
in accordance with the Corporations Act 2001, Accounting Standards and
Interpretations and comply with other requirements of the law.
The financial statements comprise the consolidated financial statements of the Group. For the
purposes of preparing the consolidated financial statements, the Company is a for-profit
entity.
Accounting Standards include Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial statements and notes of the Company and the
Group comply with International Financial Reporting Standards (‘IFRS’).
The financial statements were authorised for issue by the directors on 26 August 2014.
3.2
Basis of preparation
The consolidated financial statements have been prepared on the basis of historical cost,
except for certain financial instruments that are measured at revalued amounts or fair values
at the end of each reporting period, as explained in the accounting policies below. Historical
cost is generally based on the fair values of the consideration given in exchange for goods and
services. All amounts are presented in Australian dollars, unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date, regardless of
whether that price is directly observable or estimated using another valuation technique. In
estimating the fair value of an asset or liability, the Group takes into account the
characteristics of the asset or liability at the measurement date. Fair value for measurement
and/or disclosure purposes in these consolidated financial statements is determined on such a
basis, except for share-based payment transactions that are within the scope of AASB 2,
leasing transactions that are within the scope of AASB 117, and measurements that have some
similarities to fair value but are not fair value, such as net realisable value in AASB 2 or value in
use in AASB 136.
- 27 -
Cynata Therapeutics Limited
In addition, for financial reporting purposes, fair value measurements are categorised into
Level 1, 2 or 3 based on the degree to which inputs to the fair value measurements are
observable and the significance of the inputs to the fair value measurement in its entirety,
which are described as follows:
•
•
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
Level 2 inputs are inputs, other than quoted prices included in Level 1, that are
observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
3.3
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company and its subsidiaries. Control is achieved when the
Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from its involvement with the investee; and
has the ability to use its power to affect its returns
The Company reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
When the Company has less than a majority of the voting rights of an investee, it has power
over the investee when the voting rights are sufficient to give it the practical ability to direct
the relevant activities of the investee unilaterally. The Company considers all relevant facts
and circumstances in assessing whether or not the Company’s voting rights in an investee are
sufficient to give it power, including:
•
•
•
the size of the Company’s holdings of voting rights relative to the size and dispersion of
holdings of the other vote holders;
potential voting rights held by the Company, other vote holders or other parties;
rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have,
the current ability to direct the relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary
and ceases when the Company loses control of the subsidiary. Specifically, income and
expenses of a subsidiary acquired or disposed of during the year are included in the
consolidated statement of profit or loss and other comprehensive income from the date the
Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the
owners of the Company and to the non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the non-controlling interests
even if this results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
- 28 -
3.4
Business combinations
Cynata Therapeutics Limited
Acquisitions of businesses are accounted for using the acquisition method. The consideration
transferred in a business combination is measured at fair value which is calculated as the sum
of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquire and the equity instruments issued by the Group in
exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss
as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are
recognised at their fair value, except that:
• deferred tax assets or liabilities and assets or liabilities related to employee benefit
arrangements are recognised and measured in accordance with AASB 112 ‘Income Taxes’
and AASB 119 ‘Employee Benefits’ respectively;
•
liabilities or equity instruments related to share-based payment arrangements of the
acquiree or share-based payment arrangements of the Group entered into to replace
share-based payment arrangements of the acquiree are measured in accordance with
AASB 2 ‘Share-based Payment’ at the acquisition date; and
• assets (or disposal groups) that are classified as held for sale in accordance with AASB 5
‘Non-current Assets Held for Sale and Discontinued Operations’ are measured in
accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of
any non-controlling interests in the acquiree, and the net fair value of the acquirer’s previously
held equity interest in the acquire (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the
acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds
the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any),
the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the entity's net assets in the event of liquidation may be initially
measured either at fair value or at the non-controlling interests' proportionate share of the
recognised amounts of the acquiree's identifiable net assets. The choice of measurement basis
is made on a transaction-by-transaction basis. Other types of non-controlling interests are
measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets
or
liabilities resulting from a contingent consideration arrangement, the contingent
consideration is measured at its acquisition-date fair value. Changes in the fair value of the
contingent consideration that qualify as measurement period adjustments are adjusted
retrospectively, with corresponding adjustments against goodwill. Measurement period
adjustments are adjustments that arise from additional information obtained during the
‘measurement period’ (which cannot exceed one year from the acquisition date) about facts
and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do
not qualify as measurement period adjustments depends on how the contingent consideration
is classified. Contingent consideration that is classified as equity is not remeasured at
subsequent reporting dates and its subsequent settlement is accounted for within equity.
Contingent consideration that is classified as an asset or liability is remeasured at subsequent
reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities
and Contingent Assets’ as appropriate, with the corresponding gain or loss being recognised in
profit or loss.
- 29 -
Cynata Therapeutics Limited
Where a business combination is achieved in stages, the Group’s previously held equity
interest in the acquire is remeasured to its acquisition date fair value and the resulting gain or
loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior
to the acquisition date that have previously been recognised in other comprehensive income
are reclassified to profit or loss where such treatment would be appropriate if that interest
were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports provisional amounts for the items
for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period (see above), or additional assets or liabilities are recognised, to reflect
new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
3.5
Goodwill
Goodwill arising on an acquisition of a business is carried at cost as established at the date of
the acquisition of the business (see 3.3 above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Groups’ cash-
generating units (or groups of cash-generating units) that is expected to benefit from the
synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to
the unit and then to the other assets of the unit pro rata based on the carrying amount of each
asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An
impairment loss recognised for goodwill is not reversed in subsequent periods.
On disposal of the relevant cash-generating unit, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
3.6
Investments in associates
An associate is an entity over which the Group has significant influence. Significant influence is
the power to participate in the financial and operating policy decisions of the investee but is
not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these consolidated
financial statements using the equity method of accounting, except when the investment, or a
portion thereof, is classified as held for sale, in which case it is accounted for in accordance
with AASB 5. Under the equity method, an investment in an associate is initially recognised in
the consolidated statement of financial position at cost and adjusted thereafter to recognise
the Group’s share of the profit or loss and other comprehensive income of the associate.
When the Group’s share of losses of an associate exceeds the Group’s interest in that
associate (which includes any long-term interests that, in substance, form part of the Group’s
net investment in the associate), the Group discontinues recognising its share of further losses.
Additional losses are recognised only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate or joint venture.
An investment in an associate is accounted for using the equity method from the date on
which the investee becomes an associate. On acquisition of the investment in an associate,
any excess of the cost of the investment over the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee is recognised as goodwill, which is included
within the carrying amount of the investment. Any excess of the Group’s share of the net fair
value of identifiable assets and liabilities over the cost of the investment, after reassessment,
is recognised immediately in profit or loss in the period in which the investment is acquired.
- 30 -
Cynata Therapeutics Limited
The requirements of AASB 139 are applied to determine whether it is necessary to recognise
any impairment loss with respect to the Group’s investment in associate. When necessary, the
entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with AASB 136 Impairment of Assets as a single asset by comparing its recoverable
amount (higher of value in use and fair value less costs to sell) with its carrying amount. Any
impairment loss recognised forms part of the carrying amount of the investment. Any reversal
of that impairment loss is recognised in accordance with AASB 136 to the extent that the
recoverable amount of the investment subsequently increases.
The Group discontinues the use of the equity method from the date when the investment
ceases to be an associate, or when the investment is classified as held for sale. When the
Group retains an interest in the former associate and the retained interest is a financial asset,
the Group measures the retained interest at fair value at that date and the fair value is
regarded as its fair value on initial recognition in accordance with AASB 139. The difference
between the carrying amount of the associate at the date the equity method was
discontinued, and the fair value of any retained interest and any proceeds from disposing of a
part interest in the associate is included in the determination of the gain or loss on disposal of
the associate.
In addition, the Group accounts for all amounts previously recognised in other comprehensive
income in relation to that associate on the same basis as would be required if that associate
had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously
recognised in other comprehensive income by that associate would be reclassified to profit or
loss on the disposal of the related assets or liabilities, the Group reclassifies the gain or loss
from equity to profit or loss (as a reclassification adjustment) when the equity method is
discontinued.
The Group continues to use the equity method when an investment in an associate becomes
an investment in a joint venture or an investment in a joint venture becomes an investment in
associate. There is no remeasurement to fair value upon such changes in ownership interests.
When the Group reduces its ownership interest in an associate but the Group continues to use
the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss
that had previously been recognised in other comprehensive income relating to that reduction
in ownership interest if that gain or loss would be reclassified to profit or loss on the disposal
of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and
losses resulting from the transactions with the associate or joint venture are recognised in the
Group’s consolidated financial statements only to the extent of interests in the associate that
are not related to the Group.
3.7
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is
reduced for estimated customer returns, rebates and other similar allowances.
3.7.1
Interest income
Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the Group and the amount of revenue can be measured reliably. Interest
income is accrued on a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts though the expected life of the financial asset to that asset’s net carrying amount on
initial recognition.
- 31 -
Cynata Therapeutics Limited
3.8
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all
the risks and rewards of ownership to the lessee. All other leases are classified as operating
leases.
3.8.1
The Group as a lessor
Amounts due from lessees under finance leases are recognised as receivables at the amount of
the Group’s net investment in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the Group’s net investment
outstanding in respect of the leases.
Rental income from operating leases is recognised on a straight-line basis over the term of the
relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are
added to the carrying amount of the leased asset and recognised on a straight-line basis over
the lease term.
3.8.2
The Group as a lessee
Assets held under finance leases are initially recognised as assets of the Group at their fair
value at the inception of the lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in the statement of financial
position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease
obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance expenses are recognised immediately in profit or loss, unless they are directly
attributable to qualifying assets, in which case they are capitalised. Contingent rentals are
recognised as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on a straight-line basis over the lease
term, except where another systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives
are recognised as liability. The aggregate benefit of incentives is recognised as a reduction of
rental expenses on a straight-line basis, except where another systematic basis is more
representative of the time pattern in which economic benefits from the leased asset are
consumed.
3.9
Foreign currencies
The individual financial statements of each group entity are presented in the currency of the
primary economic environment in which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and financial position of each
group entity are expressed in Australian dollars (‘$’), which is the functional currency of the
Company and the presentation currency for the consolidated financial statements.
In preparing the financial statements of each individual group entity, transactions in currencies
other than the entity’s functional currency (foreign currencies) are recognised at the rates of
exchange prevailing at the dates of the transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in foreign
currencies are translated at the rates prevailing at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
- 32 -
Cynata Therapeutics Limited
For the purpose of presenting these consolidated financial statements, the assets and
liabilities of the Group’s foreign operations are translated into Australian dollars using the
exchange rates prevailing at the end of the reporting period. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates fluctuated
significantly during that period, in which case the exchange rates at the dates of the
transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (and attributed to non-controlling interests
as appropriate).
Goodwill and fair value adjustments to identifiable assets acquired and liabilities assumed
through acquisition of a foreign operation are treated as assets and liabilities of the foreign
operation and translated at the rate of exchange prevailing at the end of each reporting
period. Exchange differences arising are recognised in other comprehensive income.
3.10
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period to get ready for
their intended use or sale, are added to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their
is deducted from the borrowing costs eligible for
expenditure on qualifying assets
capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are
incurred.
3.11
Employee benefits
Short-term and long-term employee benefits
A liability is recognised for benefits accrued to employees in respect of wages and salaries and
annual leave when it is probable that settlement will be required and they are capable of being
measured reliably.
Liabilities recognised in respect of short-term employee benefits are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.
Liabilities recognised in respect of long term employee benefits are measured as the present
value of the estimated future cash outflows to be made by the Group in respect of services
provided by employees up to reporting date.
3.12
Share-based payments arrangements
Equity-settled share-based payments to employees and others providing similar services are
measured at the fair value of the equity instruments at the grant date. Details regarding the
determination of the fair value of equity-settled share-based transactions are set out in note
19.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of
equity instruments that will eventually vest, with a corresponding increase in equity. At the
end of each reporting period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to the equity-settled employee benefits reserve.
- 33 -
Cynata Therapeutics Limited
Equity-settled share-based payment transactions with parties other than employees are
measured at the fair value of the goods or services received, except where that fair value
cannot be estimated reliably, in which case they are measured at the fair value of the equity
instruments granted, measured at the date the entity obtains the goods or the counterparty
renders the service.
For cash-settled share-based payments, liability is recognised for the goods or services
acquired, measured initially at the fair value of the liability. At the end of each reporting
period until the liability is settled, and at the date of settlement, the fair value of the liability is
remeasured, with any changes in fair value recognised in profit or loss for the year.
3.13
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.13.1
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from
profit before tax as reported in the consolidated statement of profit or loss and other
comprehensive income because of items of income or expense that are taxable or deductible
in other years and items that are never taxable or deductible. The Group’s current tax is
calculated using the tax rates that have been enacted or substantively enacted by the end of
the reporting period.
3.13.2
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the consolidated financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition
(other than in a business combination) of assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries and associates, and interests in joint ventures, except where the
Group is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in
the period in which the liability is settled or the asset realised, based on tax rates (and tax
laws) that have been enacted or substantively enacted by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by
the same authority and the Group intends to settle its current tax assets and liabilities on a net
basis.
- 34 -
Cynata Therapeutics Limited
3.13.3
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that
are recognised in other comprehensive income or directly in equity, in which case the current
and deferred tax are also recognised in other comprehensive income or directly in equity,
respectively. Where current tax or deferred tax arises from the initial accounting for a
business combination, the tax effect is included in the accounting for the business
combination.
3.14
Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately from goodwill
are initially recognised at their fair value at the acquisition date (which is regarded as their
cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are
reported at cost less accumulated amortisation and accumulated impairment losses, on the
same basis as intangible assets that are acquired separately.
3.15
Impairment of tangible and intangible assets other than goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment loss (if any). When it is not
possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. When a
reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent allocation basis can be
identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are
tested for impairment at least annually, and whenever there is an indication that the asset
may be impaired.
Recoverable amount is the higher of fair values less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
When an impairment loss subsequently reverses, the carrying amount of the asset (or cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
- 35 -
Cynata Therapeutics Limited
3.16
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a
result of a past event, it is probable that the Group will be required to settle the obligation,
and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, taking into account the risks
and uncertainties surrounding the obligation. When a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows (where the effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
reimbursement will be received and the amount of the receivable can be measured reliably.
3.17
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to
the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
3.17.1
Financial assets
Financial assets are classified into the following specified categories: financial assets ‘at fair
value through profit or loss’ (FVTPL), ‘held-to maturity’ investments, ‘available-for-sale’ (AFS)
financial assets and ‘loans and receivables’. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition. All regular
way purchases or sales of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the time frame established by regulation or convention in the
marketplace.
3.17.1.1 Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it
is designated as at FVTPL.
A financial asset is classified as held for trading if:
it has been acquired principally for the purpose of selling it in the near term; or
•
• on initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
•
- 36 -
Cynata Therapeutics Limited
A financial asset other than a financial asset held for trading may be designated as at FVTPL
upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial asset forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance
with the Group’s documented risk management or investment strategy and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB 139
‘Financial Instruments: Recognition and Measurement’ permits the entire combined
contract to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset and is included in the ‘other
gains and losses’ line item.
3.17.1.2 Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that
are not quoted in an active market are classified as ‘loans and receivables’. Loans and
receivables are measured at amortised cost using the effective interest method, less any
impairment. Interest income is recognised by applying the effective interest rate, except for
short-term receivables when the effect of discounting is immaterial.
3.17.1.3
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the
end of each reporting period. Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been
affected.
For financial assets that are carried at amortised cost, the amount of the impairment loss
recognised is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the financial asset’s original effective interest rate.
For financial asset that are carried at cost, the amount of the impairment loss is measured as
the difference between the asset’s carrying amount and the present value of the estimated
future cash flows discounted at the current market rate of return for a similar financial asset.
Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is considered uncollectible,
it is written off against the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously
recognised in other comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised impairment loss is reversed
through profit or loss to the extent that the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
- 37 -
In respect of AFS securities, impairment losses previously recognised in profit or loss are not
reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is
recognised
income and accumulated under the heading of
investments revaluation reserve.
in other comprehensive
3.17.1.4 Derecognition of financial assets
Cynata Therapeutics Limited
The Group derecognises a financial asset when the contractual rights to the cash flows from
the asset expire, or when it transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another party. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Group continues to recognise the financial asset
and also recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying
amount and the sum of the consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and accumulated in equity is
recognised in profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an
option to repurchase part of a transferred asset), the Group allocates the previous carrying
amount of the financial asset between the part it continues to recognise under continuing
involvement, and the part it no longer recognises on the basis of the relative fair values of
those parts on the date of the transfer. The difference between the carrying amount allocated
to the part that is no longer recognised and the sum of the consideration received for the part
no longer recognised and any cumulative gain or loss allocated to it that had been recognised
in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that
had been recognised in other comprehensive income is allocated between the part that
continues to be recognised and the part that is no longer recognised on the basis of the
relative fair values of those parts.
3.17.2
Financial liabilities and equity instruments
3.17.2.1 Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangement.
3.17.2.2 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by a group of entity are
recognised at the proceeds received, net of direct issue costs.
3.17.2.3 Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.
3.17.2.4 Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is either held for
trading or it is designated as at FVTPL.
- 38 -
Cynata Therapeutics Limited
A financial liability is classified as held for trading if:
•
it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the
Group manages together and has a recent actual pattern of short-term profit-taking; or
it is a derivative that is not designated and effective as a hedging instrument.
•
A financial liability other than a financial liability held for trading may be designated as at
FVTPL upon initial recognition if:
•
•
•
such designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise; or
the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance
with the Group’s documented risk management or investment strategy, and information
about the grouping is provided internally on that basis; or
it forms part of a contract containing one or more embedded derivatives, and AASB 139
‘Financial Instruments: Recognition and Measurement’ permits the entire combined
contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability and is included in the ‘other gains and
losses’ line item.
3.17.2.5 Other financial liabilities
Other financial liabilities, including borrowings and trade and other payables, are initially
measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective
interest method, with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial
liability and of allocating interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash payments through the expected life of
the financial liability, or (where appropriate) a shorter period, to the net carrying amount on
initial recognition.
3.17.2.6 Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are
discharged, cancelled or they expire. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and payable is recognised in profit
or loss.
3.18
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax
(GST), except:
i. where the amount of GST incurred is not recoverable from the taxation authority, it is
recognised as part of the cost of acquisition of an asset or as part of an item of expense;
or
for receivables and payables which are recognised inclusive of GST.
ii.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of
cash flows arising from investing and financing activities which is recoverable from, or payable
to, the taxation authority is classified within operating cash flows.
- 39 -
Cynata Therapeutics Limited
3.19
Comparative amounts
When current period balances have been classified differently within current period
disclosures when compared to prior periods, comparative disclosures have been restated to
ensure consistency of presentation between periods.
4.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described in note 3, the
directors of the Company are required to make judgements, estimates and assumptions about
the carrying amounts of assets and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period on which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if the
revision affects both current and future periods.
Key sources of estimation uncertainty
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the
cash-generating units to which goodwill has been allocated. The value in use calculation
requires the directors to estimate the future cash flows expected to arise from the cash-
generating unit and a suitable discount rate in order to calculate present value. Where the
actual future cash flows are less than expected, a material impairment loss may arise.
At 30 June 2014, the carrying value of goodwill was $4,821,799 (2013: nil). The directors
performed an impairment review and do not recommend an impairment.
5.
Segment information
The Company operates in one business segment and one geographical segment, namely the
development and commercialisation of therapeutic products in Australia only. AASB 8
‘Operating Segments’ states that similar operating segments can be aggregated to form one
reportable segment. However, none of the operating segments currently meet any of the
prescribed quantitative thresholds, and as such do not have to be reported separately. The
Company has therefore decided to aggregate all its reporting segments into one reportable
operating segment.
The revenue and results of this segment are those of the Group as a whole and are set out in
the consolidated statement of profit or loss and other comprehensive income. The segment
assets and liabilities are those of the Group and set out in the consolidated statement of
financial position.
6.
Revenue
Sale of goods and services
7.
Other income
Continuing operations
Interest revenue
Other income
2014
$
-
2013
$
33,964
2014
$
82,697
25,058
107,755
2013
$
37,057
-
37,057
- 40 -
8.
Loss for the year
Loss for the year has been arrived at after charging the following
items of expenses:
Employee benefits expenses
Consultancy fees
Wages and salaries
Superannuation expenses
Leave entitlements
Total employee benefits expenses
Share-based payment expenses
Other expenses
Rent
Share register fees
Director fees
Legal costs
Other administrative expenses
Total other expenses
9.
9.1
Income taxes relating to continuing operations
Income tax recognised in profit or loss
Current tax
Deferred tax
Cynata Therapeutics Limited
2014
$
45,256
500,880
43,756
12,274
602,166
1,302,639
6,326
26,010
49,753
82,441
575,054
739,584
2013
$
-
99,886
8,990
5,115
113,991
69,202
10,978
11,393
96,000
73,865
407,019
599,255
2014
$
2013
$
-
-
-
-
-
-
The income tax expense for the year can be reconciled to the accounting loss as follows:
Loss before tax from continuing operations
Income tax expense calculated at 30% (2013: 30%)
Effect of expenses that are not deductible in determining taxable
loss
Effect of unused tax losses not recognised as deferred tax assets
2014
$
(3,039,663)
2013
$
(915,701)
(911,899)
(274,710)
313,273
598,626
-
20,769
253,941
-
The tax rate used for the 2014 and 2013 reconciliations above is the corporate tax rate of 30% payable
by Australian corporate entities on taxable profits under Australian tax law.
9.2
Income tax recognised directly in equity
Current tax
Share issue costs
Deferred tax
Arising on transactions with owners:
Share issue costs deductible over 5 years
2014
$
2013
$
-
-
-
-
-
-
- 41 -
9.
9.3
Income taxes relating to continuing operations (cont’d)
Unrecognised deferred tax assets
Cynata Therapeutics Limited
2014
$
2013
$
Unused tax losses (revenue) for which no deferred tax assets have
been recognised
3,655,242
3,056,616
All unused tax losses were incurred by Australian entities.
This benefit for tax losses will only be obtained if the specific entity carrying forward the tax losses
derives future assessable income of a nature and of an amount sufficient to enable the benefit from the
deductions for the losses to be realised, and the Company complies with the conditions for deductibility
imposed by tax legislation.
10.
Loss per share
Basic and diluted loss per share (cents per share) (i)
2014
cents per
share
2013
cents per
share
6.76
3.8
(i) The basic and diluted loss per share for the 2013 year has been adjusted following a 1 for 20 consolidation on 14
November 2013.
10.1 Basic and diluted loss per share
The loss and weighted average number of ordinary shares used in the calculation of basic earnings per
share are as follows:
Loss for the year attributable to owners of the Company
2014
$
(3,039,663)
2013
$
(915,701)
2014
No.
2013
No.
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
44,942,360
23,543,990i
i The weighted average number of ordinary shares for 2013 has been adjusted by a factor of twenty as a
result of the share consolidation of 1 for 20 on 14 November 2013.
11.
Trade and other receivables
Deposits made
Other receivables
At the reporting date, none of the receivables were past due.
2014
$
3,568
5,979
9,547
2013
$
14,366
18,895
33,261
- 42 -
12.
Investment in associates
Investment in Cynata Incorporated (i)
Share of loss of associate
Cynata Therapeutics Limited
2014
$
2013
$
746,313
(103,618)
642,695
-
-
-
(i) In December 2012, the Company took a 27% stake in privately held US company Cynata Inc. for a
combined outlay of US$750,000 equivalent of AU$746,313. In accordance with AASB 128 Investments in
Associates, the carrying amount of $642,695 was recorded after recognising the investor’s share of loss of
the investee. On 12 July 2013, the Company made an additional investment of US$250,000 equivalent of
AU$271,303 in Cynata Inc. Upon completion of this investment, the Company gained a combined interest
of 33% in Cynata Inc. On 24 September 2013, the Company exercised its option to acquire all remaining
shares of Cynata Inc. (Refer to note 13 for more information).
13.
Business combinations
13.1
Subsidiaries acquired
2014
Principal activity
Date of
acquisition
Proportion
of shares
acquired
(%)
Consideration
transferred (ii)
$
Cynata
Incorporated (i)
Development of a therapeutic
stem cell platform
01/12/2013
100
5,017,616
(i) On 24 September 2013, the Company exercised its option to acquire all remaining shares in Cynata
Incorporated, increasing its interest from 33% to 100%. The acquisition became effective as from 1 December
2013.
(ii) Refer to note 13.2 below.
13.2 Consideration transferred
Cash (i)
Non-cash – issue of shares (ii)
Cynata Incorporated
$
1,017,616
4,000,000
5,017,616
(i) This represents a combined sum of US$1,000,000 transferred via three (3) stages to acquire 33% of Cynata
Incorporated. On 17 September 2012, a payment of US$250,000 was made to acquire 11% of Cynata
Incorporated (Stage 1). On 21 December 2012, a payment of US$500,000 was made via the subscription of
12,500,000 shares in Cynata Incorporated at US$0.04 per share to acquire a further 18% (Stage 2). On 12
July 2013, a payment of US$250,000 was made to bring the Company’s stake in Cynata Incorporated to
33% (Stage 3). The payments made to acquire the 33% of Cynata Incorporated have been assessed to
represent the fair value.
(ii) This represents the issue of 10,000,001 shares at $0.40 to acquire the remaining 67% of Cynata
Incorporated.
The reason for the acquisition of Cynata Incorporated is detailed in the operating and financial
review section of the annual report.
- 43 -
13.
Business combinations (cont’d)
13.3 Assets acquired and liabilities assumed at the date of acquisition
Current assets
Cash
Trade and other receivables
Non-current assets
Plant and equipment
Current liabilities
Trade and other payables
Net assets
Cynata Therapeutics Limited
Cynata Incorporated
$
159,469
2,429
208
(93,252)
68,854
The fair values of assets acquired and liabilities assumed are approximated by the carrying value.
13.4
Fair value attributable to interests in research and development of stem cells arising on
acquisition
Consideration transferred
Less: equity accounting adjustment
Less: fair value of identifiable net assets acquired
Fair value of R&D arising on acquisition
Cynata Incorporated
$
5,017,616
(126,963)
(68,854)
4,821,799
The fair value attributable to interests in research and development of stem cells is due to, and in
recognition of, the successful development activities and data generated by Cynata Incorporated as at
the acquisition date, representing progress toward the eventual commercialisation of the relevant
technology.
13.5 Net cash outflow on acquisition of subsidiaries
Consideration paid in cash
Less: cash and cash equivalent balances acquired
13.6
Impact of acquisition on the results of the Group
2014
$
1,017,616
(159,469)
858,147
2013
$
-
-
-
Loss of Cynata Incorporated and its wholly owned subsidiary Cynata Australia Pty Ltd included in
the consolidated loss of the Group since the acquisition date amounted to $174,073.
Had the results of Cynata Incorporated and Cynata Australia Pty Ltd been consolidated from 1
July 2013, consolidated loss of the Group would have been $3,163,530 for the year ended 30
June 2014.
14.
Trade and other payables
Trade payables
Accrued expenses
2014
$
34,882
19,025
53,907
2013
$
13,988
37,090
51,078
- 44 -
15.
Provisions
Provisions (for creditors in dispute) (i)
Provisions for employee entitlements
Cynata Therapeutics Limited
2014
$
-
17,389
17,389
2013
$
93,507
5,115
98,622
(i) In the year ended 30 June 2013, the Company received claims from ex-directors and services providers
of the Company totalling approximately $93,507 for services rendered and termination payments. The
whole amount was settled at the beginning of the 2014 year.
16.
Issued capital
54,959,153 fully paid ordinary shares (30 June 2013:
505,223,461 before 1 for 20 consolidation)
2014
$
2013
$
22,861,642
12,338,120
Changes to the then Corporations Law abolished the authorised capital and par value concept in relation
to share capital from 1 July 1998. Therefore, the Company does not have a limited amount of authorised
capital and issued shares do not have a par value.
Fully paid ordinary shares
Balance at beginning of period
Share placement (i)
Exercise of share options (ii)
Share purchase plan (iii)
Exercise of share options (iv)
Share purchase plan (v)
Reduced after 1 for 20 share
consolidation (vi)
Issue in business combination
(vii)
Shares issued (viii)
Exercise of share options (ix)
Exercise of share options (x)
Shares issued
Share issue costs
30 June 2014
30 Jun 2013
No.
505,223,461
30,000,000
55,000,000
45,749,030
11,780,832
378,310
$
12,338,120
300,000
550,000
457,490
117,809
3,783
No.
405,223,461
-
-
-
-
-
$
10,913,811
-
-
-
-
-
(615,724,932)
-
-
-
10,000,001
12,500,000
2,451
50,000
-
-
54,959,153
4,000,000
5,000,000
490
10,000
-
(496,050)
22,281,642
-
-
-
-
100,000,000
-
505,223,461
-
-
-
-
1,750,000
(325,691)
12,338,120
(i) Share placement at $0.01 per share on 7 August 2013.
(ii) Exercise of listed options at $0.01 each during the month of August 2013.
(iii) Share Purchase plan at $0.01 per share on 2 September 2013.
(iv) Exercise of listed options at $0.01 each on 2 October 2013.
(v) Issue of 378,310 fully paid ordinary shares at $0.01 per share on 2 October 2013. These shares were rejected
in error pursuant to the share purchase plan completed on 2 September 2013.
(vi) A 1 for 20 share consolidation was effected on 14 November 2013.
(vii) Shares issued for non-cash as consideration for the acquisition by the Company from the vendors of Cynata
Inc. for the shares that the Company did not already own pursuant to the option agreement released to the ASX
on 12 July 2013.
(viii) Issue of fully paid ordinary shares at $0.40 per share in accordance with the Prospectus dated 14 October
2013.
(ix) Exercise of listed options at $0.20 each on 17 December 2013.
(x) Exercise of listed options at $0.20 on 21 January 2014.
- 45 -
17.
Reserves
Share-based payments
Balance at beginning of year
Recognition of share-based payments (i)
Cynata Therapeutics Limited
2014
$
1,544,052
1,302,639
2,846,691
2013
$
1,263,570
280,482
1,544,052
(i) Further information about share-based payments is set out in note 19.
18.
Financial instruments
18.1 Capital management
The Group’ objective when managing capital is to safeguard its ability to continue as a going
concern so that it can continue to provide returns for shareholders and benefits to other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to
maintain or adjust the capital structure, the Group may adjust the amount of dividends paid,
return to capital to shareholders, issue new shares or sell assets to reduce debt.
Given the nature of the business, the Group monitors capital on the basis of current business
operations and cash flow requirements. There were no changes in the Company’s approach to
capital management during the year.
18.2 Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
2014
$
5,094,582
9,547
5,104,129
2013
$
1,116,587
33,261
1,149,848
53,907
53,907
13,988
13,988
The fair value of the above financial instruments approximates their carrying values.
18.3 Financial risk management objectives
In common with all other businesses, the Group is exposed to risks that arise from its use of
financial instruments. This note describes the Group’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in
respect of those risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them
from previous periods unless otherwise stated in this note.
The board has overall responsibility for the determination of the Group’s risk management
objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the effective implementation of the
objectives and policies to the Group’s finance function. The Group’s risk management policies and
objectives are therefore designed to minimise the potential impacts of these risks on the Group
where such impacts may be material. The board receives monthly financial reports through which
it reviews the effectiveness of the processes put in place and the appropriateness of the objectives
and policies it sets. The overall objective of the board is to set policies that seek to reduce risk as
far as possible without unduly affecting the Group’s competitiveness and flexibility.
- 46 -
Cynata Therapeutics Limited
18.4 Market risk
Market risk for the Group arises from the use of interest bearing financial instruments. It is the
risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in interest rate (see 18.5 below).
18.5
Interest rate risk management
Interest rate risk arises on cash and cash equivalents and receivables from related parties. The
Group does not enter into any derivative instruments to mitigate this risk. As this is not
considered a significant risk for the Group, no policies are in place to formally mitigate this risk.
Interest rate sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates for
both derivatives and non-derivative instruments at the end on the reporting period.
If interest rates had been 100 basis points higher/lower and all other variables were held constant,
the Group’s loss for the year ended 30 June 2014 would increase/decrease by $50,946 (2013:
$11,166)
18.6 Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures
to exchange rate fluctuations arise. At 30 June 2014, the Company has cash denominated in US
dollars (US$1,000,000). The AUD equivalent at 30 June 2014 is $1,059,504. A 5% movement in
foreign exchange rates would increase or decrease the Group’s loss before tax by approximately
$52,975.
18.7 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Group. The Group has adopted a policy of dealing with creditworthy
counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the
risk of financial loss from defaults. The Group only transacts with entities that are rated the
equivalent of investment grade and above. This information is supplied by independent rating
agencies where available and, if not available, the Group uses other publicly available financial
information and its own trading records to rate its major customers. The Group’s exposure and
the credit ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded is spread amongst approved counterparties.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-
ratings assigned by international credit-rating agencies.
18.8 Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the board of directors, which has
established an appropriate liquidity risk management framework for the management of the
Group’s short-, medium- and long-term funding and liquidity management requirements. The
Group manages liquidity by maintaining adequate banking facilities, by continuously monitoring
forecast and actual cash flows, and by matching the maturity profiles of financial assets and
liabilities.
Contractual cash flows
Carrying
Amount
Less than 1
month
1-3
months
3-12
months
1 year to
5 years
Total contractual
cash flows
2014
Trade and other payables
2013
Trade and other payables
$
53,907
13,988
$
-
-
$
53,907
13,988
$
-
-
$
-
-
$
53,907
13,988
- 47 -
Cynata Therapeutics Limited
19.
Share-based payments
19.1 Employee share option plan
Options may be issued to external consultants or non-related parties without shareholders’
approval, where the annual 15% capacity pursuant to ASX Listing Rule 7.1 has not been exceeded.
Options cannot be offered to a director or an associate except where approval is given by
shareholders at a general meeting.
During the financial year, the Company issued a total of 100,000,000 unlisted options (on a pre-
consolidation basis) to Dr Washer and Dr Macdonald, 200,000 unlisted options (on a post
consolidation basis) to Dr Kelly and 600,000 unlisted options (on a post consolidated basis) to
external advisers. Options issued as part of remuneration to directors and key management
personnel are included in the remuneration report.
Each option converts into one ordinary share of Cynata Therapeutics Limited on exercise. The
options carry neither rights to dividends nor voting rights. Options may be exercised at any time
from the date of vesting to the date of their expiry.
The following share-based payment arrangements were in existence at the reporting date:
Option
series
Number
Grant date
Grant date
fair value
$
Exercise
price
$
Expiry date
Vesting date
1
500,000
27 Nov 2012
0.260
0.400
9 Sept 2016
2
5,000,000
27 Sept 2013
0.290
0.400
27 Sept 2018
3
4
200,000
29 May 2014
600,000
29 May 2014
0.184
0.184
0.400
0.400
30 Nov 2015
30 Nov 2015
25% - at grant date
25% - vested upon 12 months of
continuous employment
25% - vested on 19 May 2014 upon
24 months continuous
employment
25% - vested on 19 May 2014 upon
24 months of continuous
employment
50% - at grant date
30% - if VWAP over 10 consecutive
dates is at least $0.80
20% - if VWAP over 10 consecutive
days is at least $1.20
29 May 2015
1 Dec 2014
The number of options, grant date fair values and exercise prices in the table above are represented on a
post consolidated (1 for 20) basis.
There has been no alterations to the terms and conditions of the above share-based payment
arrangements other than the consolidation of 1 for 20 basis.
- 48 -
Cynata Therapeutics Limited
19.
Share-based payments (cont’d)
19.2 Fair value of share options granted in the year
Options were priced using the Black-Scholes pricing method. Expected volatility is based on the
historical share price volatility over the past 12 months. The 1 for 20 consolidation has been taken
into consideration while determining the share price volatility.
The weighted average fair value of options granted during the year (after considering the 1 for 20
consolidation) is $0.272 (2013: $0.011 – pre-consolidation).
Where relevant, the fair value of the options has been adjusted based on management’s best
estimate for the effects of non-transferability of the options.
Inputs into the model
Input
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
Series 2i
$0.420
$0.400
126%
5 years
n/a
3.46%
Series 4
$0.355
$0.400
120%
Series 3
$0.355
$0.400
120%
1 year 187 days 1 year 187 days
n/a
2.45%
n/a
2.45%
i The amounts are shown on a post consolidation basis. No discount was applied to 50% of the options; a
discount of 40% was applied to the remaining 50%.
19.3 Movements in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year:
2014
2013
Number of
options
No.
300,574,487
15,028,743
5,800,000
-
(3,391,493)
(25,000)
17,412,250
17,412,250
Weighted
average
exercise price
$
Number of
options
No.
0.011 253,574,487
0.220
n/a
50,000,000
0.400
-
-
0.200
-
(3,000,000)
3.980
0.272 300,574,487
0.272 300,574,487
Weighted
average
exercise price
$
0.010
n/a
0.012
-
-
0.199
0.011
0.011
Balance at beginning of the year
Balance after 1:20 consolidation
Granted during the year
Forfeited during the year
Exercised during the yeari
Expired during the yearii
Balance at end of year
Exercisable at end of year
i Refer to note 19.4 below.
ii Amount is shown on a post consolidated (1 for 20) basis.
- 49 -
19.
Share-based payments (cont’d)
19.4 Share options exercised during the year
The following share options were exercised during the year (2013: nil):
Cynata Therapeutics Limited
2014
Options series
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Number
exercised
475,000i
825,000i
950,000i
500,000i
589,042i
2,451
50,000
Exercise date
16 August 2013
22 August 2013
28 August 2013
29 August 2013
2 October 2013
17 December 2013
21 January 2014
Share price at
exercise datei
$0.360
$0.340
$0.420
$0.380
$0.440
$0.400
$0.455
i These figures are shown on a post consolidation basis (1 for 20).
19.5 Share options outstanding at the end of the year
The share options outstanding at the end of the year had a weighted average exercise price of
$0.272 (2013: $0.220) and a weighted average remaining contractual life of 609 days (2013: 957
days).
20.
Key management personnel
The aggregate compensation made to directors and other members of key management
personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Short-term employee benefits
2014
$
570,208
42,076
1,284,197
1,896,481
2013
$
245,136
8,990
69,202
323,328
These amounts include fees paid to non-executive directors as well as salary and paid leave
benefits awarded to executive directors. It also includes fees paid to entities controlled by the
directors.
Post-employment benefits
These amounts are superannuation contributions made during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled
benefit schemes as measured by the fair value of the options granted on grant date.
Further information in relation to KMP remuneration can be found in the directors’ report.
- 50 -
Cynata Therapeutics Limited
21.
Related party transactions
21.1
Entities under the control of the Group
The Group consists of the parent entity, Cynata Therapeutics Limited and its wholly-owned US-
based subsidiary Cynata Incorporated, which in turn owns 100% of Cynata Australia Pty Ltd, the
operating entity of Cynata Incorporated.
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.
21.2 Key management personnel
Any person(s) having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any director (whether executive or
otherwise) of that entity, are considered key management personnel.
For details of disclosures relating to key management personnel, refer to the remuneration report
contained in the directors’ report and note 20.
21.3 Other related party transactions
Mr Olney-Fraser’s services were provided by Mariner Corporation Limited (Mariner). Mr Olney-
Fraser is the Chief Executive Officer of Mariner. The amounts set in table in the remuneration
report were paid to Mariner. Mr Olney-Fraser resigned as director of the Company on 1 August
2013.
Mr Webse’s services are provided by Platinum Corporate Secretariat Pty Ltd (Platinum). Mr
Webse is the sole director of Platinum. Company secretarial fee paid to Platinum is disclosed in
the remuneration report.
Transactions with related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
22. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash include cash on hand
and in banks, net of outstanding bank overdrafts. Cash and cash equivalents at the end of the
reporting period as shown in the consolidated statement of cash flows can be reconciled to the
related items in the consolidated statement of financial position as follows:
Cash and bank balances
2014
$
2013
$
5,094,582
1,116,587
- 51 -
22
Cash and cash equivalents (cont’d)
22.1 Reconciliation of loss for the year to net cash flows from operating activities
Cynata Therapeutics Limited
Cash flow from operating activities
Loss for the year
Adjustments for:
Share of loss of associate
Share-based payments
Depreciation and amortisation
Net liability assumed from acquisition of subsidiary
Movements in working capital
Decrease/(increase) in trade and other receivables
Increase/(decrease) in payables
Increase/(decrease) in provisions – annual leave
Decrease in provisions – creditors in dispute
Difference arising from foreign exchange
Net cash outflows from operating activities
2014
$
2013
$
(3,039,663)
(915,701)
23,345
1,302,639
208
(90,823)
103,618
69,202
-
-
23,714
2,829
12,274
(93,507)
5,291
(1,853,693)
(9,498)
(6,235)
(7,151)
-
-
(765,765)
The Company issued 10,000,001 shares at $0.40 for a non-cash consideration to acquire the
remaining 67% of Cynata Incorporated (refer to note 13 for more information). Apart from this,
there were no other non-cash financing or investing activities during the year.
23. Contingent liabilities and contingent assets
The contingent liabilities as disclosed in the annual report for the year ended 30 June 2013
amounting to $93,507 had been settled. There are no other contingent liabilities as at 30 June
2014.
24. Commitments for expenditure
The Group had the following commitments as at 30 June 2014:
Wisconsin Alumni Research Foundation (WARF)
Pursuant to a License Agreement with WARF, Cynata Incorporation (Cynata Inc.) is required to pay
a license fee of US$60,000 in March 2015 (the final instalment of the $170,000 license fee). In
addition to this, Cynata Inc. agreed to pay WARF a minimum annual royalty, starting in calendar
year 2014, against which any earned royalty paid for the same calendar year will be credited. The
annual royalty is US$50,000 per calendar year, payable by 31 December each year. The License
Agreement with WARF also includes obligations for Cynata Inc to pay WARF certain fees upon
attainment of product development milestones.
Futhermore, Cynata Inc. has agreed to reimburse WARF towards the costs incurred by WARF in
filing, prosecuting and maintaining certain of the licensed patents and patent applications outlined
in the License Agreement. If Cynata Inc. exercises its rights to sub-license certain rights under the
License Agreement, it must pay US$10,000 to WARF and also 30% of any fees received by Cynata
Inc. from such sub-licenses.
Waisman Biomanufacturing
The Company has a commitment of US$175,980 payable not later than 1 year (2013: nil). On 19
February 2014, the Company paid a 25% deposit (US$43,995). Subsequent to 19 February 2014, a
total of US$76,045 was paid. The remaining commitment as at 30 June 2014 amounts to
US$55,940.
- 52 -
24. Commitments for expenditure (cont’d)
University of Massachusetts Amherst
Pursuant to an agreement with the University of Massachusetts Amherst through the University of
Massachusetts Innovation Institute, the Company has a commitment of up to US$14,307.
Subsequent to 3 March 2014, a total of US$11,446 has been paid.
Cynata Therapeutics Limited
25.
Remuneration of auditors
Auditor of the Group
Audit or review of the financial statements
2014
$
26,144
-
26,144
2013
$
20,500
4,366
24,866
The auditor of the Group is Stantons International.
26. Events after the reporting period
On 14 July 2014, the Company announced that it had signed an agreement with WuXi AppTec
(NYSE: WX), a leading global biopharmaceutical contract research organisation, to conduct
preclinical safety studies with the Company’s unique Cymerus™ stem cell technology. The studies
will be conducted at WuXi AppTec’s GLP-compliant, FDA-registered facility in St Paul, Minnesota.
On 28 July 2014, the Company announced that it has signed an agreement with the University of
Wisconsin – Madison, one of the world’s leading stem cell centres, to develop a novel approach for
preserving the Cymerus™ cell therapy products to enhance their shelf life and convenience. The
development program will be overseen by internationally recognised pioneer of stem cell research
and Cynata Incorporation’s co-founder, Professor Igor Slukvin.
27. Parent entity information
The accounting policies of the parent entity, which have been applied in determining the financial
information shown below, are the same as those applied in the consolidated financial statements.
Refer to note 3 for a summary of significant accounting policies relating to the Group.
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Provisions
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
2014
$
2013
$
5,103,630
4,922,063
10,025,693
1,149,848
642,695
1,792,543
38,016
17,389
55,405
13,988
135,712
149,700
22,281,642
2,846,691
(15,158,045)
9,970,288
12,338,120
1,544,052
(12,239,329)
1,642,843
(2,918,716)
(915,701)
- 53 -
Cynata Therapeutics Limited
27. Parent entity information (cont’d)
Commitments and contingencies
There were no material commitments or contingencies at the reporting date for the parent
company except for those mentioned in note 24 above.
28.
Subsidiaries
Details of the Company’s subsidiaries at the end of the reporting period are as follows:
Name of subsidiary
Principal activity
Cynata Incorporated (i)
Cynata Australia Pty Ltd (ii)
Holds licences with WARF
for core IPs
Non-operating subsidiary
from date of reconstruction
Place of
incorporation
Proportion of ownership
interest and voting
power held by the Group
USA
2014
100%
Australia
100%
2013
27%
27%
(i) For more information regarding the acquisition Cynata Incorporated, refer to note 13.
(ii) Cynata Australia Pty Ltd is a wholly owned subsidiary of Cynata Incorporated.
29. Approval of financial statements
The financial statements were approved by the board of directors and authorised for issue on 26
August 2014.
- 54 -
Cynata Therapeutics Limited
Corporate Governance Statement
The Board of Directors of Cynata Therapeutics Limited (the “Company”) is responsible for the corporate governance
of the Company. The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
The Company has adopted systems of control and accountability as the basis for the administration of corporate
governance. Some of these policies and procedures are summarised in this report. Commensurate with the spirit
of the ASX Guidelines, the Company has followed each Recommendation where the Board has considered the
Recommendation to be appropriate. Where, after due consideration, the Company’s corporate governance
practices depart from the Recommendations, the Board has offered full disclosure of the nature of, and reason for,
the adoption of its own practice.
table below summarises
The
Recommendations during the reporting period.
the Company’s compliance with
the Corporate Governance Council’s
Recommendation
Companies should establish the functions reserved to the board and those delegated to senior executives
and disclose those functions.
Companies should disclose the process for evaluating the performance of senior executives.
A majority of the Board should be independent directors.
The chairperson should be an independent director.
The roles of chairperson and chief executive officer should not be exercised by the same individual.
The Board should establish a nomination committee.
Disclose the process for evaluating the performance of the board, its committees and individual directors.
Establish a code of conduct and disclose the code or a summary of the code as to:
-
-
-
the practices necessary to maintain confidence in the Company’s integrity;
the practices necessary to take into account legal obligations and the reasonable expectations of
stakeholders;
the responsibility and accountability of individuals for reporting and investigating reports of
unethical practices.
-
-
-
-
Establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should
include the requirements for the Board to establish measurable objectives for achieving gender diversity
and for the Board to assess annually both the objectives and progress in achieving them.
Disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in
accordance with the diversity policy and progress towards achieving them.
Disclose in each annual report the proportion of women employees in the whole organisation, women in
senior executive positions and women on the Board.
The Board should establish an audit committee.
The audit committee should be structure so that it:
consists only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the Board;
has at least three members.
The audit committee should have a formal charter.
Establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and
to ensure accountability at a senior executive level for that compliance and disclose those policies or a
summary of those policies.
Design a communications policy for promoting effective communication with shareholders and encouraging
their participation at general meetings and disclose the policy or a summary of that policy.
Establish policies for the oversight of risk and management of material business risks and disclose a
summary of those policies.
The Board should require management to design and implement the risk management and internal control
system to manage the Company’s material business risks and report to it on whether those risks are being
managed effectively. The Board should disclose that management has reported to it as to the effectiveness
of the Company’s management of its material business risks.
Disclose whether the Board has received assurance from the CEO (or equivalent) and Chief Financial Officer
(or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is
founded on a sound system of risk management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting risks.
The Board should establish a remuneration committee.
The remuneration committee should be structure so that it:
-
-
-
consists of a majority of independent directors;
is chaired by an independent chair;
has at least 3 members.
Comply
Yes / No
Yes
Reference /
Explanation
Page 56
Yes
No
No
Yes
No
Yes
Yes
Page 61
Pages 57,63
Pages 57,63
Pages 57,63
Pages 58,63
Page 61
Page 59
Yes
Page 59,63
No
Yes
No
No
No
Yes
Yes
Yes
Yes
Pages 59,63
Page 59
Pages 58,63
Pages 58,63
Pages 59,63
Page 59
Page 60
Page 60
Page 60
Yes
Page 60
No
No
Pages 58,63
Pages 58,63
Clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors
and senior executives.
Yes
Page 61
1.1
1.2
2.1
2.2
2.3
2.4
2.5
3.1
3.2
3.3
3.4
4.1
4.2
4.3
5.1
6.1
7.1
7.2
7.3
8.1
8.2
8.3
- 55 -
Cynata Therapeutics Limited
The Company’s corporate governance practices were in place throughout the year ended 30 June 2014 unless
stated otherwise.
Further information about the Company’s corporate governance practices is set out on the Company’s website at
www.cynata.com. In accordance with the recommendations of the ASX, information published on the Company’s
website includes charters (for the Board and its sub-committees, if any), codes of conduct and other policies and
procedures relating to the Board and its responsibilities.
Board of Directors
Role of the Board and Management
1.
1.1
The Board represents shareholders’ interests in developing and then continuing a successful business, which seeks
to optimise medium to long-term financial gains for shareholders. By not focusing on short-term gains for
shareholders, the Board believes that this will ultimately result in the interests of all stakeholders being
appropriately addressed when making business decisions.
The Board is responsible for ensuring that the Company is managed in such a way to best achieve this desired
result. Given the early development stage of this business, the Board currently undertakes an active, not passive
role.
The Board is responsible for evaluating and setting the strategic direction for the Company, establishing goals for
management and monitoring the achievement of these goals. The Managing Director is responsible to the Board
for the day-to-day management of the Company.
The Board has sole responsibility for the following:
• Appointment, evaluation and, if necessary, removal of the Managing Director, any other executive
directors, the Company Secretary and the Chief Financial Officer (if applicable) and approval of their
remuneration;
• Determining, in conjunction with management, corporate strategy, objectives, operations, plans and
investments, major capital and operating
approving and appropriately monitoring plans, new
expenditures, capital management, acquisitions, divestitures and major funding activities;
Establishing appropriate levels of delegation to the Managing Director to allow the business to be
managed efficiently;
•
• Approval of remuneration methodologies and systems;
• Monitoring actual performance against planned performance expectations and reviewing operating
information at a requisite level to understand at all times the financial and operating conditions of the
Company;
• Monitoring the performance of senior management, including the implementation of strategy and
ensuring appropriate resources are available;
• Overseeing the management of business risks, safety, occupational health and environmental issues;
•
Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board that
proper operational, financial, compliance, risk management and internal control processes are in place and
functioning appropriately;
•
• Assuring itself that appropriate audit arrangements are in place in relation to the Company’s financial
affairs;
• Authorising the issue of any shares, options, equity instruments or other securities within the constraints
•
of the Corporations Act and the ASX Listing Rules; and
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the Company
has adopted, and that its practice is consistent with, a number of guidelines including:
− Directors’ Code of Conduct;
− Corporate Code of Conduct;
− Securities Trading Policy;
− Performance Evaluation Policy;
− Remuneration Policy;
− Diversity Policy;
− Shareholder Communications Policy;
− Continuous Disclosure Policy; and
− Risk Management Policy.
- 56 -
Cynata Therapeutics Limited
The Managing Director’s responsibilities include the overall operational, business management and financial
performance of the Company, whilst also managing the Company in accordance with the strategy, plans and
policies approved by the Board to achieve agreed goals.
The Board’s role and the Company’s corporate governance practices are being continually reviewed and improved
as the Company’s business develops.
Composition of the Board and New Appointments
1.2
During the financial year and to the date of this report the Board was comprised of the following members:
Dr Stewart Washer
Dr Ross Macdonald
Mr Howard Digby
Mr Peter Webse
Mr Darren Olney-Fraser
Executive Chairman (appointed 1 August 2013);
Managing Director (appointed 1 August 2013);
Non-Executive Director (appointed as Non-Executive Director 18 May 2012,
appointed Executive Director 10 September 2012, reverted to Non-Executive
Director 1 March 2014)
Non-Executive Director (appointed 18 May 2012)
Executive Chairman (resigned 1 August 2013)
The Directors’ determine the size of the Board, with reference to the Company’s Constitution and Board Charter,
which provides that the number of Directors shall not be less than three and not more than seven. There is no
requirement for any share holding qualification.
Information on the skills, experience and expertise relevant to the position of each Director who is in office at the
date of the Annual Report and their term of office are detailed in the Directors’ Report, together with details of the
number of Board meetings held during the financial year and the attendance of the Directors at those meetings.
The Company currently has no independent Directors. Dr Stewart Washer and Dr Ross Macdonald, who were
appointed on 1 August 2013, are not considered to be independent by virtue of their positions as Executive
Chairman and Managing Director respectively. Mr Howard Digby, who is a Non-Executive Director, is not
considered to be independent as he has previously been an Executive Director of the Company. Mr Peter Webse is
a Non-Executive Director. However, the Board does not consider him to be independent due to his role as
managing director of Platinum Corporate Secretariat Pty Ltd, which provides consulting company secretarial
services to the Company. Mr Darren Olney-Fraser was not considered to be independent as he was Executive
Chairman of the Company until his resignation on 1 August 2013. However, the Directors believe that the
individuals on the Board can make, and do make, quality and independent judgments in the best interests of the
Company on all relevant issues.
The Directors are satisfied that the structure of the Board is appropriate for the size of the Company, the nature of
its operations and its current financial standing. The membership of the Board, its activities and composition is
subject to periodic review. The criteria for determining the identification and appointment of a suitable candidate
for the Board shall include quality of the individual, background of experience and achievement, compatibility with
other Board members, credibility within the Company’s scope of activities, intellectual ability to contribute to
Board duties and ability to undertake Board duties and responsibilities.
Directors are initially appointed by the full Board subject to election by shareholders at the next annual general
meeting. No member of the Board, other than the Managing Director, may serve for more than three years or past
the third annual general meeting following their appointment, whichever is the longer, without being re-elected by
the shareholders. Prior to the Board proposing re-election of Directors, their performance is evaluated by the
Board to ensure that they continue to contribute effectively. Nominations for appointment to the Board are
considered by the Board as a whole and with the objective to ensure that the Board comprises Directors with a mix
of qualifications, experience and expertise which will assist it in fulfilling its responsibilities, as well as assisting the
Company in achieving growth and delivering value to shareholders.
Subject to the requirements of the Corporations Act 2001, the Board does not subscribe to the principle of
retirement age and there is no maximum period of service as a Director. The Managing Director may be appointed
for any period and on any terms the Directors think fit and, subject to the terms of any agreement entered into, the
Board may revoke any appointment.
The appointment of the Company Secretary is a matter for the Board.
The Company’s Board Charter is available on its website.
- 57 -
Cynata Therapeutics Limited
Committees of the Board
1.3
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the
formation of separate committees at this time including audit, remuneration or nomination committees, preferring
at this stage to manage the Company through the full Board of Directors.
If the Company’s activities increase, in size, scope and nature, the appointment of separate committees will be
reviewed by the Board and implemented if appropriate.
Conflicts of Interest
1.4
In accordance with the Corporations Act 2001 and the Company’s Constitution, Directors must keep the Board
advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the
Board believes that a significant conflict exists the Director concerned does not receive the relevant board papers
and is not present at the meeting whilst the item is considered.
Independent Professional Advice
1.5
The Board has determined that individual Directors have the right in connection with their duties and
responsibilities as Directors, to seek independent professional advice at the Company’s expense. The engagement
of an outside adviser is subject to prior approval of the Executive Chairman and this will not be withheld
unreasonably. If appropriate, any advice so received will be made available to all Board members.
Ethical Standards
2.
The Board acknowledges the need for continued maintenance of the highest standard of corporate governance
practice and ethical conduct by all Directors and employees of the Company.
Directors’ Code of Conduct
2.1
The Board has adopted a Directors’ Code of Conduct to promote ethical and responsible decision-making by the
Directors. The code is based on a code of conduct for Directors prepared by the Australian Institute of Company
Directors.
The principles of the code are:
• A Director must act honestly, in good faith and in the best interests of the Company as a whole.
• A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the
powers attached to that office.
• A Director must use the powers of office for a proper purpose and in the best interests of the Company as
a whole.
• A Director must recognise that the primary responsibility is to the Company’s shareholders as a whole but
should, where appropriate, have regard for the interest of all stakeholders of the Company.
• A Director must not make improper use of information acquired as a Director.
• A Director must not take improper advantage of the position of Director.
• A Director must not allow personal interests, or the interests of any associated person, to conflict with the
interests of the Company.
• A Director has an obligation to be independent in judgment and actions and to take all reasonable steps to
•
be satisfied as to the soundness of all decisions taken by the Board.
Confidential information received by a Director in the course of the exercise of directorial duties remains
the property of the Company and it is improper to disclose it, or allow it to be disclosed, unless that
disclosure has been authorised by the Company, or the person from whom the information is provided, or
is required by law.
• A Director should not engage in conduct likely to bring discredit upon the Company.
• A Director has an obligation at all times, to comply with the spirit, as well as the letter of the law and with
the principles of the Code.
• A Director has an obligation, at all times, to adhere to the policies of the Company.
The principles are supported by guidelines as set out by the Australian Institute of Company Directors for their
interpretation. Directors are also obliged to comply with the Company’s Corporate Code of Conduct, as outlined
below.
The Company’s Directors’ Code of Conduct is available on its website.
- 58 -
Corporate Code of Conduct
2.2
The Company has implemented a Corporate Code of Conduct, which provides guidelines aimed at maintaining high
ethical standards, corporate behaviour and accountability within the Company.
Cynata Therapeutics Limited
All employees and Directors are expected to:
•
respect the law and act in accordance with it;
• maintain high levels of professional conduct;
•
•
•
•
respect confidentiality and not misuse Company information, assets or facilities;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the
respect of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace and
with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
•
•
•
An employee that breaches the Corporate Code of Conduct may face disciplinary action including, in the cases of
serious breaches, dismissal. If an employee suspects that a breach of the Corporate Code of Conduct has occurred
or will occur, he or she must report that breach to the Company Secretary. No employee will be disadvantaged or
prejudiced if he or she reports in good faith a suspected breach. All reports will be acted upon and kept
confidential.
The Company’s Corporate Code of Conduct is available on its website.
Dealings in Company Securities
2.3
The Company has adopted a Securities Trading Policy outlining when Directors, senior management and other
employees may deal in the Company’s securities and contains procedures to reduce the risk of insider trading
The Securities Trading Policy has been issued to the ASX and a copy is available on the Company’s website.
Diversity Policy
3
The Company has adopted a formal Diversity Policy and is committed to workplace diversity, with a particular focus
on supporting the representation of women at the senior level of the Company and on the Company Board.
The Company is currently in an early stage of its development and given that it currently has a limited number of
employees, the application of measurable objectives in relation to gender diversity, at various levels of the
Company’s business, is not considered to be appropriate nor practical.
The Board will review this position on an annual basis and will implement measurable objectives as and when they
deem the Company to require them.
There were no women employees during the reporting period and no women on the Board.
The Company’s Diversity Policy is available on its website.
Disclosure of Information
Continuous Disclosure to ASX
4.
4.1
The Company’s Continuous Disclosure Policy sets out the obligations under the ASX Listing Rules and the
Corporations Act for all Directors and employees in relation to continuous disclosure and the type of information
that requires disclosure. The Policy also provides procedures for internal notification and external disclosure, as
well as procedures for promoting understanding of compliance with the disclosure requirements and for
monitoring compliance.
In addition, the Board considers whether there are any matters requiring disclosure in respect of each and every
item of business that it considers in its meetings. Individual Directors are required to make such a consideration
when they become aware of any information in the course of their duties as a Director of the Company.
- 59 -
The Managing Director, in conjunction with the Board, is the person primarily responsible for ensuring that the
Company complies with its continuous disclosure obligations. The Company Secretary is responsible for all
communications with ASX.
Cynata Therapeutics Limited
The Company’s Continuous Disclosure Policy is available on its website.
Communication with Shareholders
4.2
The Company has a Shareholder Communications Policy which has been designed to promote effective
communication with shareholders and encourage shareholder participation at annual general meetings.
The Company’s Policy requires that shareholders are informed of all major developments that impact on the
Company. The Managing Director has primary responsibility for communication with shareholders.
Information is communicated to shareholders through:
• distribution of the half-yearly and annual reports (in hardcopy when requested) via the Company’s web site;
• ASX Quarterly Cash Flow Reports which are placed on the Company’s web site;
• disclosures and announcements made to the ASX, which are placed on the Company’s web site;
• notices and explanatory memoranda of Annual General Meetings and General Meetings;
• presentations at the Annual General Meeting/General Meetings; and
•
the Company’s web site www.cynata.com.
•
The Company’s Shareholder Communications Policy is available on its website.
Risk Management
5.
The Board is responsible for the oversight of the Company’s risk management and control framework.
Responsibility for control and risk management is delegated to the appropriate level of management within the
Company with the Managing Director having ultimate responsibility to the Board for the risk management and
control framework.
The Company’s process of risk and internal compliance and control includes:
•
identifying and measuring risks that might impact upon the achievement of the Company’s goals and objectives,
and monitoring the environment for emerging factors and trends that affect those risks.
formulating risk management strategies to manage identified risks, and designing and implementing
appropriate risk management policies and internal controls.
•
• monitoring the performance of, and improving the effectiveness of, risk management systems and internal
compliance and controls, including regular assessment of the effectiveness of risk management and internal
compliance and control.
The Company’s Managing Director and Chief Financial Officer (or equivalent) report annually in writing to the Board
that:
•
the financial statements of the Company present a true and fair view, in all material aspects, of the Company’s
financial condition and operating results and are in accordance with accounting standards;
the above statement is founded on a sound system of risk management and internal control; and
the risk management and internal control framework is operating effectively in all material respects in relation
to financial reporting risks.
•
•
The Company’s practice is to invite the auditor to attend the annual general meeting and be available to answer
shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report.
Management has reported to the Board as to the Company’s management of its material business risks.
A summary of the Company’s policies on risk management is available on its website.
- 60 -
Cynata Therapeutics Limited
Remuneration and Performance
Board Performance and Remuneration
6.
6.1
The Board conducts an annual review of the role of the Board, assessing its performance over the previous 12
months and examining ways of assisting the Board in performing its duties more effectively.
The annual review includes consideration of the following measures:
• comparing the performance of the Board against the requirements of its Charter;
• assessing the performance of the Board over the previous 12 months having regard to the corporate strategies,
operating plans and the annual budget;
• reviewing the Board’s interaction with management;
• reviewing the type and timing of information provided to the Board by management;
• reviewing management’s performance in assisting the Board to meet its objectives; and
•
identifying any necessary or desirable improvements to the Board Charter.
The method and scope of the performance evaluation will be set by the Board and may include a Board self-
assessment checklist to be completed by each Director. The Board may also use an independent adviser to assist in
the review.
The Executive Chairman will have primary responsibility for conducting performance appraisals of Non-Executive
Directors, in conjunction with them, having particular regard to:
• contribution to Board discussion and function;
• degree of independence including relevance of any conflicts of interest;
• availability for and attendance at Board meetings and other relevant events;
• contribution to Company strategy;
• membership of and contribution to any Board committees; and
• suitability to Board structure and composition.
There was an informal performance review of the Board conducted during the financial year.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their services, the
reimbursement of reasonable expenses and, in certain circumstances options. They do not receive any termination
or retirement benefits, other than statutory superannuation.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is $300,000 per
annum. The Directors set the individual Non-Executive Directors fees within the limit approved by shareholders.
The total fees paid to Non-Executive Directors during the reporting period were $50,667.
Executive Performance and Remuneration
6.2
The Board will annually review the performance of the Executive Chairman, the Managing Director and any other
Executive Directors. At the commencement of each financial year, the Board and Executive Chairman will agree,
where applicable, a set of generally Company specific performance measures to be used in the review of the
forthcoming year.
These will include:
(a)
(b)
(c)
(d)
(e)
financial measures of the Company’s performance;
the extent to which key operational goals and strategic objectives are achieved;
development of management and staff;
compliance with legal and Company policy requirements; and
achievement of key performance indicators.
The Managing Director is responsible for assessing the performance of the senior executives, if any, within the
Company which directly report to him. This is to be performed through a performance appraisal process and
measured against key performance indicators (where applicable), including the business performance of the
Company, and agreed at the beginning of each financial year.
There was an informal performance review of the Executive Chairman and the Executive Director conducted during
the financial year.
- 61 -
Cynata Therapeutics Limited
The Company’s remuneration policy is designed to promote superior performance and long term commitment to
the Company. Executives and employees receive a base remuneration which is market related, and may be entitled
to performance based remuneration which is determined on an annual basis.
Overall remuneration policies are subject to the discretion of the Board and can be changed to reflect competitive
and business conditions where it is in the interests of the Company and shareholders to do so.
Executive remuneration and other terms of employment are reviewed annually by the Board having regard to the
performance, relevant comparative information and expert advice.
The Board’s remuneration policy reflects its obligation to align executive remuneration with shareholder interests
and to retain appropriately qualified executive talent for the benefit of the Company. The main principles of the
policy are:
• remuneration reflects the competitive market in which the Company operates;
•
• executives should be rewarded for both financial and non-financial performance.
individual remuneration should be linked to performance criteria if appropriate; and
The total remuneration of executives consists of the following:
(a) salary – executives receive a fixed sum payable monthly in cash;
(b) cash at risk component – the executives are eligible to participate in a cash bonus plan if deemed appropriate;
share and option at risk component – executives may participate in share and option schemes generally made
(c)
in accordance with thresholds set in plans approved by shareholders if deemed appropriate. However, the
Board considers it appropriate to retain flexibility to issue shares and options to executives outside of
approved schemes in exceptional circumstances; and
(d) other benefits – executives may, if deemed appropriate by the Board, be provided with a fully expensed
mobile phone and other forms of remuneration.
The Company’s Performance and Remuneration Policies are available on its website.
- 62 -
7. Compliance with ASX Corporate Governance Recommendations
During the Company’s 2014 financial year (“Reporting Period”) the Company complied with the ASX Principles and
Recommendations other than in relation to the matters specified below.
Cynata Therapeutics Limited
Principle Ref
Recommendation
Ref
Notification
of Departure
Explanation
for Departure
2
2
2
2.1
2.2
2.3
A majority of the Board are
not independent Directors.
Given the present size and complexity of the
Company, the composition of the Board
is
considered appropriate. The Board will consider
the appointment of independent directors as
the Company increases in size and complexity.
chair
The
independent Director.
is
not
an
Given the present size and complexity of the
Company, an independent chair has not been
appointed. The Board will consider
the
appointment of an independent chair as the
Company increases in size and complexity.
The roles of the chair and
chief executive office were
exercised by
same
individual.
the
From 1 August 2013, the roles of chair and chief
executive officer have not been exercised by the
same individual with the Company having a
separate Executive Chairman and Managing
Director. Prior to that date the Company had
one executive who also performed the role of
Executive Chairman.
2 & 8
2.4, 8.1, 8.2
Nomination and
Remuneration Committees
have not been established.
3
3.2, 3.3
The Diversity Policy does not
include measurable
objectives for achieving
gender diversity.
4
4.1, 4.2, 4.3
A separate Audit Committee
has not been established.
the
full Board carries out
The
functions
associated with Nomination and Remuneration
Committees. Due to the relatively small size of
that a separate
the Board,
Nomination and Remuneration Committees
would not add efficiency to the process of
determining the
level of remuneration of
Directors and key executives.
it considers
The Board considers that due to the size of the
Company,
diversity
setting measurable
objectives is not appropriate. The Company has
a limited number of employees and utilises
external consultants and contractors as and
when required.
The Board considers that the Company is not
currently of a size, nor are its affairs of such
complexity, to justify the formation of an audit
committee. The Board as a whole considers
those matters that would usually be the
responsibility of an audit committee and
considers that, at this stage, no efficiencies or
other benefits would be gained by establishing a
separate audit committee.
- 63 -
ASX Additional Information as at 30 September 2014
Substantial Shareholders
The Company does not have any substantial shareholders.
Distribution of Ordinary Shares
Cynata Therapeutics Limited
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Distribution of Listed Options Shares (CYPO)
Category
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Voting Rights
Number of
Holders
Ordinary
Shares
% of Issued
Capital
254
264
119
403
83
1,123
116,626
740,004
964,493
13,627,685
39,524,095
54,972,903
0.21
1.35
1.75
24.79
71.90
100.00
Number of
Holders
Ordinary
Shares
% of Issued
Capital
55
30
18
54
25
182
22,259
80,321
129,667
2,537,430
8,328,823
11,098,500
0.20
0.72
1.17
22.86
75.05
100.00
(a)
(b)
(c)
at meetings of members each member entitled to vote may vote in person or by proxy or attorney;
on a show of hands each person present who is a member has one vote, and on a poll each person
present in person or by proxy or by attorney has one vote for each ordinary share held; and
no voting rights attach to the listed and unlisted options.
Number of Holders of Unlisted Options
5,000,000 unlisted $0.40 Options expiring 27/09/2018 held by 2 holders (1);
500,000 unlisted $0.40 Options expiring 09/09/2016 held by 1 holder (2); and
800,000 unlisted $0.40 Options expiring 30/11/2015 held by 2 holders (3).
Unlisted Option Holders holding 20% or more:
(1) 2,500,000 Options held in the name of Mal Washer Nominees Pty Ltd (50%) and 2,500,000 Options held in
the name of Mrs Sharon Anne Macdonald (50%).
(2) 500,000 Options held in the name of Mr Howard Digby (100%).
(3) 600,000 Options held in the name of Mrs Sara Gillian Cameron (75%) and 200,000 Options held in the
name of Mrs Tamara Angela Kelly (25%).
Shares and Options Escrowed
There are 10,000,001 ordinary shares escrowed until 22 November 2015 and 500,000 unlisted $0.40 Options
expiring 09/09/2015 and 5,500,000 unlisted $0.40 Options expiring 27/09/2018 escrowed until 29 November
2015.
ASX Listing Rule 4.10.19
The Group has used its cash and assets in a form readily convertible to cash that it had at the time of
reinstatement of the Group’s securities to quotation following compliance with Listing Rule 11.1.3 in a way
consistent with its business objectives.
- 64 -
On-Market Buy-Back
There is no current on-market buy back.
Unmarketable Parcels
The number of shareholders holding less than a marketable parcel is 305.
Cynata Therapeutics Limited
20 Largest Shareholders
Name
Ian Dixon
Igor Slukvin
Celtic Capital Pte Ltd
J K Nominees Pty Ltd
Tisia Nominees Pty Ltd
Allen Bollands
Roger Aston
Denlin Nominees Pty Ltd
Equitas Nominees Pty Limited
Webinvest Pty Ltd
Bannaby Investments Pty Ltd
Maksym Vodyanyk
Intersuisse Nominees Pty Ltd
Ardroy Securities Pty Ltd
Gregory M & L M Pinkus
Peter Barrett Capp
Aviemore Capital Pty Ltd
Cabletime Pty Ltd
ANZ Trustees Limited
Grant Thomas Paterson
20 Largest Listed Option Holders (ASX: CYPO)
Name
ELG Nominees Pty Ltd
John W King Nominees Pty Ltd
Celtic Capital Pte Ltd
Pershing Nominees Pty Ltd
Equitas Nominees Pty Limited
Ardroy Securities Pty Ltd
Emily Kate Muschol
Grant Thomas Paterson
Paul Craig Starkie
Robert W Waterhouse
Plane Sailing Trails Pty Ltd
Dead Knick Pty Ltd
Mr Howard Andrew Digby
Tisia Nominees Pty Ltd
Fiona Mary Chirnside
John Dahlsen Superannuation Fund Pty Ltd
Denlin Nominees Pty Ltd
Tempo Capital Pty Ltd
Rickenbacker Capital Investments Pty Ltd
First Investment Partners Pty Ltd
Neut Pty Ltd
Number of
Shares Held
% of Issued
Capital
2,383,317
2,383,317
2,000,000
1,993,916
1,975,000
1,787,488
1,787,488
1,646,916
1,425,500
1,325,000
1,293,916
1,191,658
1,181,257
970,000
850,000
700,000
689,046
562,500
495,000
493,916
4.34
4.34
3.64
3.63
3.59
3.25
3.25
3.00
2.59
2.41
2.35
2.17
2.15
1.76
1.55
1.27
1.25
1.02
0.90
0.90
27,135,235
49.36
Number of
Options Held
% of Listed
Options
2,005,000
1,000,000
650,000
479,941
411,800
400,000
370,000
300,000
275,000
268,099
200,000
200,000
187,500
170,059
160,000
160,000
150,000
150,000
150,000
150,000
150,000
7.787.399
18.07
9.01
5.86
4.32
3.71
3.60
3.33
2.70
2.48
2.42
1.80
1.80
1.69
1.53
1.44
1.44
1.35
1.35
1.35
1.35
1.35
70.15
- 65 -