Cynata Therapeutics Limited
ACN 104 037 372
and its controlled entities
Annual report for the financial year ended
30 June 2016
Peter Webse
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Confirmation of Release - CYP - Annual Report to Shareholders
1604640.pdf
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Release Time: 13‐OCT‐2016 17:56:48
ASX Code: CYP
Related ASX Codes:
Announcement Title: Annual Report to Shareholders
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1
Corporate directory
Cynata Therapeutics Limited
Board of Directors
Dr Stewart Washer
Dr Ross Macdonald
Dr John Chiplin
Mr Peter Webse
Dr Paul Wotton
Company Secretary
Mr Peter Webse
Executive Chairman
Managing Director/Chief Executive Officer
Non-Executive Director
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
Automic Registry Services
Level 1, 7 Ventnor Avenue
West Perth, Western Australia 6005
Tel:
Fax:
+61 8 9324 2099
+61 8 9321 2337
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 2016
Contents
Directors’ report……………………………………………………………………………………………………… 1
Operating and financial review……………………………………………………………………………….. 6
Remuneration report………………………………………………………………………………………………. 9
Auditor’s independence declaration……………………………………………………………………….. 16
Independent auditor’s report…………………………………………………………………………………. 17
Directors’ declaration…………………………………………………………………………………………….. 19
Consolidated statement of profit or loss and other comprehensive income………..…
20
Consolidated statement of financial position………………………………………………….………
21
Consolidated statement of changes in equity…………………………………………………………
22
Consolidated statement of cash flows…………………………………………………………….……… 23
Notes to the financial statements………………………………………………………………….….……
24
Corporate governance statement…………………………………………………………………………..
50
Additional securities exchange information……………………………………………………………. 57
Cynata Therapeutics Limited
Directors’ report
The directors of Cynata Therapeutics 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
2016. 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
Dr John Chiplin
BPharm, PhD,
MRPharmS
Particulars
Executive Chairman, joined the Board in August 2013. Dr Washer has over
20 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, 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 a Director of Zelda Therapeutics.
Chief Executive Officer, joined the Board in August 2013. Dr Macdonald has
over 22 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 (now
Sinclair IS Pharma), a UK-based specialty pharmaceuticals company and Vice
President, Corporate Development for Stiefel Laboratories Inc, the largest
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 Technologies Ltd, iSonea Ltd, Hatchtech Pty Ltd and
Relevare Pharmaceuticals Ltd. Dr Macdonald currently serves as a member
of the Investment Committee of UniSeed Management Pty Ltd.
Non-Executive Director, joined the Board in November 2014. Dr. Chiplin is
Managing Director, Newstar Ventures Ltd and has significant international
experience in the life science and technology industries. Recent transactions
that Dr. Chiplin has been instrumental in include US stemcell company
Medistem (acquired by
Intrexon), Arana Therapeutics (acquired by
Cephalon) and Domantis (acquired by GSK).
- 1 -
Mr Peter Webse
B.Bus, FGIA, FCIS,
FCPA, MAICD
Dr Paul Wotton
MBA, PhD
Cynata Therapeutics Limited
Dr Chiplin is also a director of Adalta Pty Ltd, Benitec Biopharma Ltd (ASX:
BLT), Batu Biologics Inc., The Coma Research Institute, Prophecy Inc
(Chairman), ScienceMedia Inc and Scancell Holdings plc (SCLP.L, Executive
Chairman). Dr Chiplin’s Pharmacy and Doctoral degrees are from the
University of Nottingham, UK.
Non-Executive Director, joined the Board in May 2012. Mr Webse has over
25 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 4DS Memory Limited (ASX: 4DS).
Non-Executive Director, joined the Board in June 2016. Dr Wotton is
currently the President and CEO (since May 2016) of Sigilon Inc. and was
previously President and CEO of Ocata Therapeutics Inc. (NASDAQ: OCAT)
taking the company through a take-over by Atellas Pharma Inc., in a US$379
million all cash transaction. Prior to Ocata, Dr Wotton had served as
President and CEO of Anteres Pharma Inc. (NASDAQ: ATRS), since October
2008. Prior to joining Antares, Dr Wotton was the CEO of Topigen
Pharmaceuticals and prior to Topigen, he was the Global Head of Business
Development of SkyePharma PLC. Dr Wotton has held senior level positions
at Eurand International BV, Penwest Pharmaceuticals, Abbott Laboratories
and Merck, Sharp and Dohme. Dr Wotton is a member of the board of
Vericel Corporation, a US company developing autologous cellular therapies
and also past Chairman of the Emerging Companies Advisory Board of
BIOTEC Canada. Dr Wotton received his PhD in pharmaceutical sciences
from the University of Nottingham and an MBA from Kingston Business
School. In 2014, he was named New Jersey EY Entrepreneur of the Year in
Life Sciences.
The above named directors held office during the whole of the financial year and since the end of the
financial year except for:
Dr Paul Wotton – appointed 9 June 2016.
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
John Chiplin
Peter Webse
Paul Wotton
Company
iSonea Limited
Immuron Limited
Orthocell Limited
iSonea Limited
Telesso Technologies Limited
Benitec Biopharma Limited
Dimerix Limited (formerly Sun Biomedical
Limited)
4DS Memory Limited (formerly Fitzroy
Resources Ltd)
Blina Minerals NL
Ocata Therapeutics Inc. (formerly Advanced
Cell Technology Inc.)
Antares Pharma Inc.
Period of directorship
2012-2014
2012-2013
Since 2014
2012-2014
2003-2013
Since 2010
2012-2015
May to Dec 2015
2012-2014
2014-2016
2008-2014
- 2 -
Directors’ shareholdings
The following table sets out each director’s relevant interest in shares, rights or options in shares or
debentures of the Company or a related body corporate as at the date of this report:
Cynata Therapeutics Limited
Directors
Stewart Washer
Ross Macdonald
John Chiplin
Peter Webse
Paul Wotton1
1 Appointed 9 June 2016.
Fully paid ordinary shares
Number
174,856
8,500
10,000
210,000
-
Share options
Number
2,500,000
2,500,000
-
-
-
Remuneration of key management personnel
Information about the remuneration of key management personnel is set out in the remuneration
report section of this directors’ report. 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.
Share options granted to directors and senior management
During and since the end of the financial year, an aggregate 750,000 share options were granted to the
following key management personnel:
Key management
personnel
K. Kelly
Number of
options granted
750,000
Issuing entity
Cynata Therapeutics Ltd
Number of ordinary shares
under option
750,000
Company Secretary
Peter Webse B.Bus, FGIA, FCIS, FCPA, MAICD
Mr Webse held the position of company secretary of Cynata Therapeutics Limited at the end of the
financial year. He joined Cynata in April 2012. Mr Webse 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 biotech,
technology and resource 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.
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Cynata Therapeutics Limited
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
Cynata Therapeutics Limited6
27 Nov 2012
500,000
Ordinary
$0.40
09 Sept 2016
27 Sept 2013
5,000,000
Ordinary
$0.40
27 Sept 2018
17 July 2015
3,333,336
Ordinary
17 July 2015
333,333
Ordinary
16 Dec 2015
750,000
Ordinary
22 Feb 2016
600,000
Ordinary
$1.00
$1.00
$0.49
$0.53
17 Jul 2020
17 Jul 2020
16 Dec 2018
22 Feb 2019
1 Unlisted options issued to Mr Digby. The options are shown on a post-consolidation basis (1 for 20). Mr Digby
resigned as a Director on 18 November 2014.
2 100,000,000 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.
3 Unlisted options issued to institutional investors pursuant to a private placement on 17 July 2015.
4 Unlisted options issued to placement agent pursuant to the mandate for the private placement on 17 July 2015.
5 Unlisted employee incentive options issued to Dr Kelly on 16 December 2015 pursuant to an existing
employment agreement.
6 Unlisted options issued to external advisers on 22 February 2016 pursuant to an advisory services agreement.
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.
- 4 -
Shares issued on the exercise of options
No shares were issued as a result of the exercise of options during or since the end of the financial year
(2015: 11,112,250 shares issued on exercise of options).
Cynata Therapeutics Limited
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
John Chiplin
Peter Webse
Paul Wotton
Board of Directors
Held
9
9
9
9
1
Attended
9
9
9
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 auditor did not perform any non-audit services during the financial year.
Auditor’s independence declaration
The auditor’s independence declaration is included on page 16 of this annual report.
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Cynata Therapeutics Limited
Operating and financial review
Principal activities
The Group’s principal activities in the course 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 expense,
amounted to $4,939,471 (2015: $3,712,077). Further discussion on the Group’s operations is provided
below:
Review of operations
In the field of stem cells and regenerative medicine, mesenchymal stem cells (MSCs) have emerged as
one of the most promising candidates for mainstream medical use in a wide variety of economically
important diseases and as such have very exciting commercial potential. Cynata’s business focus is the
development and commercialisation of a novel, proprietary technology that addresses a critical
shortcoming in existing methods of production of MSCs for therapeutic use, which is the ability to
achieve economic manufacture at commercial scale. With its Cymerus™ process, which involves the use
of induced pluripotent stem cells (iPSC’s) as starting material, Cynata is the only company in the world
with technology for the manufacture of therapeutic allogeneic MSCs without reliance upon multiple
stem cell donors. This represents cost-effective, scalable production of stem cells, essential for the
future of stem cell medicine.
Substantial progress was made in the Company’s product development program during the year. This
was particularly recognised in the outcome of the formal Scientific Advice meeting in January with the
UK Medicines and Healthcare product Regulatory Agency (MHRA). The advice from the MHRA provided
clear direction toward commencing a Phase 1 clinical trial in patients with graft-versus-host disease
(GvHD) at study centres in the UK and potentially also in Australia. The information submitted to the
MHRA comprised an extensive body of data attesting to the manufacturability, safety and proposed
efficacy of Cynata’s lead MSC product, CYP-001, in GvHD. This data was supported by the inclusion of
the results from the proof-of-concept study at the University of Massachusetts Amherst in a humanised
mouse model of severe acute graft-versus-host disease (GvHD) that clearly demonstrated that CYP-001
treatment substantially prolonged survival in this model.
Several new collaborations were entered into during the year, all of which are intended to expand the
profile of the Cymerus™ technology among the international stem cell community and to validate
potential clinical applications of therapeutic Cymerus™ products. The Company now has ongoing
collaborations with Massachusetts General Hospital (MGH), part of Harvard Medical School, Westmead
Hospital (The University of Sydney) and with The University of Western Australia’s Centre for Cell
Therapy and Regenerative Medicine (CCTRM). These relationships are in addition to Cynata’s
longstanding co-operation with Professor Igor Slukvin, one of the Company’s founders, at the University
of Wisconsin - Madison. Cynata’s unique, induced pluripotent stem cell (iPSC) derived MSCs are
attracting more and more attention as the Company meets key milestones and as the sector looks to
newer and better ways to manufacture therapeutic MSCs.
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Cynata Therapeutics Limited
Cynata’s business strategy began to yield results with announced relationships with Japanese
regenerative medicine company Regience K.K. and with apceth GmbH & Co. KG. In June, Regience K.K.
advised the Company that it was ready to make the initial investment of AUD$400,000 in new ordinary
shares in Cynata pursuant to the agreement for the Strategic Alliance, such shares to be based on a 25%
premium to the 10-day Volume Weighted Average Price (VWAP) and subject to a 12-month escrow
period. The Company is considering the investment offer having regard to the opportunities which are
currently available to the Company in Japan and ultimately what the Board considers to be in the
overall best interests of the Company’s shareholders. A license option agreement with apceth GmbH &
Co. KG., a German company developing a range of stem cell technologies to treat cancer and other
devastating diseases, attracted an immediate upfront cash payment. Should the relationship progress,
apceth will make certain additional near term cash payments to Cynata, followed by a series of success-
based milestones, resulting in payments to Cynata potentially totalling more than A$40m, in addition to
royalties on product sales. apceth recognised the very attractive advantages of Cynata’s Cymerus™
technology and has seen merit in accessing a truly scalable manufacturing technology for therapeutic
MSCs for the commercialisation of future off-the-shelf therapeutic products. apceth is presently
evaluating Cynata’s technology in its in-house cell culture and genetic modification systems as part of
an initial collaboration that is expected to reach a conclusion toward the end of 2016. At that point,
apceth will decide whether to exercise the option and enter into a license agreement with Cynata. The
Company intends to continue its business development activities with the aim of expanding the range
and number of revenue-bearing partnering deals.
Equities research analysts in both Australia and the USA have published very positive research on
Cynata. SeeThruEquity, a leading US-based independent equity research and corporate access firm
focused on smallcap and microcap public companies, initiated coverage on Cynata with a price target of
$1.55 per share. Research coverage was also initiated by leading US investment bank, Rodman &
Renshaw, with a near term price target of $1. Australian firms Shaw and Partners and CPS Capital have
published research notes on Cynata and continue to actively follow the Company’s progress.
The Company substantially strengthened its balance sheet during the year with the placement on 17
July 2015, to institutional investors in the United States of America, of 6,666,672 fully paid ordinary
shares plus one attaching 13-month option for every 2 ordinary shares issued and one attaching 5-year
option for every 2 ordinary shares issued, for gross proceeds of A$5,000,004 (before costs). The
Company also issued 333,333 5-year options to the placement agent. The Company’s operating runway
was further extended by the receipt of a non-dilutive R&D Tax Incentive refund of $932,580.65 for the
2014/2015 financial year.
In June this year, the Company welcomed Dr Paul Wotton to the Board of Directors. Dr Wotton has
more than 30 years’ experience in the pharmaceuticals and biotech industry and an outstanding track
record of leading companies to clinical, financial and commercial success. This was most recently
demonstrated in his stewardship of Ocata Therapeutics, Inc, a US-based stem cell therapy company,
culminating in the recent acquisition of that company by Astellas Pharma, Inc., in a US$379 million all
cash transaction. Dr Wotton’s direct experience in driving commercial transactions and broad exposure
to the stem cell and regenerative medicine sector is particularly pertinent to Cynata’s business model
and ongoing partnership discussions.
Financial position
The net assets of the Group have decreased by $166,821 from 30 June 2015 to $8,583,138 in 2016
(2015: $8,749,959). This decrease is mainly due to the following factors:
-
-
-
substantial increase in costs incurred in product research and development;
increase in cash and cash equivalents resulting from a capital raising of $5,000,004; and
an amortisation of intangibles as a result of an allocation of the carrying value of the patents to the
different categories of research based on their estimates (refer note 11 for further information).
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Cynata Therapeutics Limited
Notwithstanding this, the Company successfully completed a capital raising of $5,000,004 (before costs)
via a private placement to institutional investors in the United States of America. 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 Group occurred during the financial year:
- On 15 July 2015, the Company announced a private placement for aggregate gross proceeds of
$5,000,004 (“Placement”). The Placement was to institutional investors in the United States via the
issue of 6.67 million fully paid ordinary shares plus one attaching 13-month option for every 2 shares
issued and one attaching 5-year option for every 2 shares issued.
- On 30 July 2015, the Company announced it had initiated a collaboration with the University of
Sydney to test the potential therapeutic efficacy of its Cymerus™ mesenchymal stem cells (MSCs) in
animal models of myocardial infarction (heart attack) and associated heart rhythm abnormalities.
- On 14 October 2015, the Company announced
it had commenced a collaboration with
Massachusetts General Hospital/Harvard Medical School to develop modified MSCs to treat cancer,
using its proprietary Cymerus™ platform technology.
- On 17 December 2015, the Company announced it had signed a Letter of Intent (LOI) regarding a
future option and license agreement with apceth GmbH & Co. KG, a leading company using modified
MSCs to treat cancer and other life-altering conditions.
- On 28 January 2016, the Company announced it had received favourable advice from the UK
Medicines and Healthcare products Regulatory Agency (MHRA). The MHRA confirmed that Cynata’s
Cymerus™ MSC product, CYP-001, is considered to be suitable for use in a proposed Phase 1 clinical
trial in patients with graft-versus-host disease (GvHD).
- On 5 May 2016, the Company announced that its contract manufacturer in the USA, Waisman
Biomanufacturing, has commenced manufacture of supplies of CYP-001 product for specific use in
the clinical trial in graft-versus-host disease (GvHD).
- On 30 June 2016, the Company announced that Regience K.K. of Japan offered to make an initial
investment of A$400,000 in new ordinary shares in Cynata pursuant to an agreement for the
Strategic Alliance.
Subsequent events
On 1 August 2016, the Company announced it had filed a Clinical Trial Authorisation application for CYP-
001, its lead Cymerus mesenchymal stem cell (MSC) product, with the UK Medicines and Healthcare
products Regulatory Agency (MHRA). The proposed Phase 1 study will be conducted in patients with a
graft-versus-host disease (GvHD).
On 17 August 2016, the Company announced the expiry of 3,333,336 unlisted options. These options
were issued to institutional investors pursuant to a private placement on 17 July 2015.
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 Group’s activities during the 2016-17 year and beyond is to continue development of
the Cymerus™ technology with a particular emphasis in the near term on commencing the clinical
(Phase 1) program and progressing the existing commercial relationships. In parallel with this, the
Group intends to continue its vigorous program of engagement and dialogue with additional 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.
- 8 -
Cynata Therapeutics Limited
Remuneration report (audited)
This remuneration report, which forms part of the directors’ report, sets out information about the
remuneration of Cynata Therapeutics Limited’s key management personnel for the financial year ended
30 June 2016. 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
remuneration policy
relationship between the remuneration policy and Company performance
remuneration of key management personnel
key terms of employment contracts.
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
Dr John Chiplin
Mr Peter Webse
Dr Paul Wotton (appointed 9 June 2016)
Position
Non-executive director
Non-executive director
Non-executive director
Executive directors
Dr Stewart Washer
Dr Ross Macdonald
Position
Executive Chairman
Managing Director, Chief Executive Officer
Other key management personnel
Dr Kilian Kelly
Position
Vice President, Product Development
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, three non-executive directors and one Vice President, Product Development. As set out below,
total remuneration costs for the 2016 financial year were $1,069,386 down from $1,193,552 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.
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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.
its obligation to align executive remuneration with
The board’s remuneration policy reflects
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 development of a novel life sciences (i.e. therapeutic stem cell) manufacturing technology and the
identification and execution of 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 2016:
- 10 -
Revenue
Net loss before tax
Net loss after tax
Share price at start of year
Share price at end of year
Basic/diluted loss per share (cents)
Cynata Therapeutics Limited
30 June
2016
$
1,247,397
4,939,471
4,939,471
0.93
0.31
6.82
30 June
2015
$
374,889
3,712,077
3,712,077
0.40
0.93
6.12
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
30 June
2012
$
323,867
1,582,567
1,542,307
0.60
0.20
16.2
Remuneration of key management personnel
Short-term
employee benefits
Salary &
fees
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
Share-
based
payment
Options
$
164,384
319,635
50,000
50,000
3,056
15,000
5,832
-
51,750
-
15,616
35,000
-
-
-
-
-
-
-
-
Total
$
195,000
360,467
50,000
101,750
3,056
Value of
options as
proportion of
remunerat-
ion
-
-
-
-
-
2016
Directors
Stewart Washer3
Ross Macdonald3
John Chiplin
Peter Webse1
Paul Wotton2
(696)
71,886
23,973
74,589
228,311
815,386
Other KMP
Kilian Kelly3
Total
1 The amount of $51,750 in ‘Other’ represents company secretarial fees of $4,000 per month and an amount of $3,750 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.
2 Appointed 9 June 2016.
3 Amounts in ‘Other’ represent annual leave accrued in accordance with AASB 119 Employee Benefits.
4 During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the
company secretary and all executive officers of the Company. The contract of insurance prohibits disclosure of the nature of the
liability and the amount of the premium.
359,113
1,069,386
107,525
107,525
29.94%
10.05%
Short-term
employee benefits
Salary &
fees
$
Other
$
Post-
employment
benefits
Superannua-
tion
$
136,986
273,973
24,778
40,000
14,003
30,000
60,000
-
48,000
-
15,864
31,727
-
-
1,330
Share-
based
payment
Options
$
114,994
114,994
-
-
-
Total
$
297,844
480,694
24,778
88,000
15,333
2015
Directors
Stewart Washer1
Ross Macdonald1
John Chiplin2
Peter Webse3
Howard Digby4
216,134
705,874
Other KMP
Kilian Kelly
Total
1 Amounts in ‘Other’ represents accrued bonus entitlements which were paid subsequent to year end.
2 Appointed 18 November 2014.
3 The amount of $48,000 in ‘Other’ represents company secretarial fees of $4,000 per month.
4 Resigned 18 November 2014.
15,000
153,000
33,811
263,799
21,958
70,879
286,903
1,193,552
Value of
options as
proportion
of
remunerat-
ion
38.61%
23.92%
-
-
-
11.78%
22.10%
- 11 -
Bonuses and share-based payments granted as compensation for the current financial year
Bonuses
A performance bonus entitlement of 20% of total remuneration was paid to Dr Ross Macdonald
($60,000) and Dr Stewart Washer ($30,000) during the financial year. These amounts were accrued in
the 2015 financial year.
Cynata Therapeutics Limited
No other cash bonuses were granted during 2016.
Incentive share-based payments arrangements
During the financial year, the following share-based payment arrangements were in existence:
Option series
1
2*
3**
Grant date
27 Nov 2012
27 Sept 2013
16 Dec 2015
Expiry date
9 Sept 2016
27 Sept 2018
16 Dec 2018
Exercise
price
$0.040
$0.400
$0.490
Grant date
fair value
$0.2560
$0.2900
$0.2370
Vesting date
Vested
Vested
33.3% at grant date
* Unlisted options issued to Drs Stewart Washer and Ross Macdonald. In accordance with the terms of the share-
based arrangement, 100% of the options have vested following achievements of vesting conditions.
** Unlisted options issued to Dr Kilian Kelly. In accordance with the share-based arrangement, 250,000 options
vest at grant date, 250,000 vest in 12 months and 250,000 vest in 24 months (subject to continuing employment).
There are no further services or performance criteria that need to be met in relation to options granted
under series (1), (2) and (3) above, and as a consequence the beneficial interest has vested to the
recipients. 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 to key management personnel during the current financial
year:
During the financial year
Name
Kilian Kelly
Option series
Series 3
No. granted
750,000
No. vested
250,000
% of grant
vested
33.33%
% of grant
forfeited
n/a
No share options were exercised by key management personnel during the year (2015: 102,500).
Each option converts into one ordinary share of Cynata Therapeutics Limited.
- 12 -
Cynata Therapeutics Limited
Key terms of employment contracts
The key terms and conditions of the renewed executive service agreement of Dr Stewart Washer are as
follows:
Term of agreement – the earlier of 23 months expiring 30 June 2017 or until termination by the
Company.
A salary of $180,000 p.a inclusive of statutory superannuation.
The Company may (but is not bound) pay additional performance based remuneration.
The agreement may be terminated by either party by providing 6 months’ notice.
The key terms and conditions of the renewed executive service agreement of Dr Ross Macdonald are as
follows:
Term of agreement – the earlier of 23 months expiring 30 June 2017 or until termination by the
Company.
A salary of $350,000 p.a inclusive of statutory superannuation.
The Company may (but is not bound) pay additional performance based remuneration.
The agreement may be terminated by either party by providing 6 months’ notice.
The key terms of appointment of Dr Kilian Kelly are formalised in an employment agreement and are as
follows:
A salary of $250,000 p.a inclusive of statutory superannuation.
The right to participate in the Company’s equity-based incentive scheme and an incentive
payment of up to 10% of the annual salary and based on attainment of agreed performance
indicators.
The Company may (but is not bound) pay additional performance based remuneration.
The contract may be terminated by either party providing 3 months’ notice.
The key terms of appointment of Dr John Chiplin are formalised in an appointment letter, the key terms
and conditions of which are:
Effective 1 July 2015, a fee of $50,000 p.a (not subject to GST).
The appointment letter may be terminated immediately by the Company if Dr Chiplin becomes
disqualified or is prohibited by law from being or acting as a director or from being involved in
the management of a company.
On 9 June 2016, Dr Paul Wotton was appointed as non-executive director and his remuneration and
other terms of appointment were formalised in an appointment letter, the key terms and conditions of
which are:
A fee of $50,000 p.a (not subject to GST).
The appointment letter may be terminated immediately by the Company if Dr Wotton becomes
disqualified or is prohibited by law from being or acting as a director or from being involved in
the management of a company.
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 $50,000 (exc. GST) p.a for
the provision of Mr Webse’s services as a Non-Executive Director (effective 1 July 2015). 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) per month 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.
- 13 -
Cynata Therapeutics Limited
Key management personnel equity holdings
Fully paid ordinary shares of Cynata Therapeutics Limited
2016
S Washer
R Macdonald
J Chiplin
P Webse
P Wotton1
K Kelly
Balance at
1 July 2015
No.
Granted as
compensation
No.
Received on
exercise of options
No.
Net other change
Balance at
No.
30 June 2016
No.
174,856
8,500
10,000
210,000
-
16,640
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
174,856
8,500
10,000
210,000
-
16,640
1 Appointed 9 June 2016
2015
S Washer
R Macdonald
J Chiplin1
P Webse
K Kelly
H Digby2
Balance at
1 July 2014
No.
Granted as
compensation
No.
Received on
exercise of options
No.
154,856
8,500
-
107,500
16,640
237,500
-
-
-
-
-
-
-
-
-
102,500
-
-
Net other change
Balance at
No.
20,000
-
10,000
-
-
(237,500)3
30 June 2015
No.
174,856
8,500
10,000
210,000
16,640
-
1 Appointed 18 November 2014
2 Resigned 18 November 2014
3 Balance on date of resignation
Share options of Cynata Therapeutics Limited
2016
Balance at
1 July 2015
Granted as
compens-
ation
Exerci-
sed
Net other
change
Balance at
30 June
2016
No.
No.
No.
S Washer
R Macdonald
J Chiplin
P Webse
P Wotton1
K Kelly2
No.
2,500,000
2,500,000
-
-
-
200,000
1 Appointed 9 June 2016
2 Amount in ‘Net other change’ represents options which expired on 30 November 2015
3 Options which expired during the year were granted during the financial year ended 30 June 2014.
No.
2,500,000
2,500,000
-
-
-
750,000
-
-
-
-
-
(200,000)3
-
-
-
-
-
750,000
-
-
-
-
-
-
Balance
vested at
30 June
2016
No.
2,500,000
2,500,000
-
-
-
250,000
Vested and
exercisable
No.
2,500,000
2,500,000
-
-
-
250,000
Options
vested
during
year
No.
-
-
-
-
-
250,000
- 14 -
Share options of Cynata Therapeutics Limited (cont’d)
Cynata Therapeutics Limited
2015
Balance at
1 July 2014
Granted as
compens-
ation
Exerci-
sed
Net other
change
S Washer
R Macdonald
J Chiplin1
P Webse
K Kelly
H Digby2
No.
2,500,000
2,500,000
-
102,500
200,000
687,500
No.
No.
No.
-
-
-
-
-
-
-
-
-
(102,500)
-
-
-
-
-
-
-
(687,500)
Balance at
30 June
2015
No.
2,500,000
2,500,000
-
-
200,000
-
Balance
vested at
30 June
2015
No.
2,500,000
2,500,000
-
-
200,000
-
Vested and
exercisable
No.
2,500,000
2,500,000
-
-
200,000
-
Options
vested
during
year
No.
1,250,000
1,250,000
-
-
200,000
-
1 Appointed 18 November 2014
2 Resigned 18 November 2014. Amount in ‘Net other change’ represents options held on resignation
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 (2015: 102,500).
Further details of the employee share option plan and of share options are contained in note 17 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
Melbourne, 19 August 2016
- 15 -
PO Box 1908
West Perth WA 6872
Australia
Level 2, 1 Walker Avenue
West Perth WA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
19 August 2016
Board of Directors
Cynata Therapeutics Limited
PO Box 7165
Hawthorn North,
Victoria 3122
Dear Directors
RE: CYNATA THERAPEUTICS LIMITED
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Cynata Therapeutics Limited.
As the Audit Director for the audit of the financial statements of Cynata Therapeutics Limited for the year
ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no
contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
Yours sincerely
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(Authorised Audit Company)
Samir Tirodkar
Director
Liability limited by a scheme approved
under Professional Standards Legislation
16
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
CYNATA THERAPEUTICS LIMITED
Report on the Financial Report
PO Box 1908
WestPerthWA 6872
Australia
Level 2, 1 Walker Avenue
WestPerthWA 6005
Australia
Tel: +61 8 9481 3188
Fax: +61 8 9321 1204
ABN: 84 144 581 519
www.stantons.com.au
We have audited the accompanying financial report of Cynata Therapeutics Limited, which comprises the
consolidated statement of financial position as at 30 June 2016 and the consolidated statement of profit
or loss and other comprehensive income, consolidated statement of changes in equity and the
consolidated statement of cashflows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information and the directors’ declaration of the consolidated
entity comprising the company and the entities it controlled at the year’s end or from time to time during
the financial year.
Directors’ responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001 and for such internal controls as the directors determine is
necessary to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In note 3.1, the directors also state, in accordance with Australian
Accounting Standard AASB 101: Presentation of Financial Statements that the financial statements
comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Liability limited by a scheme approved
under Professional Standards Legislation
17
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of Cynata Therapeutics Limited is in accordance with the Corporations Act 2001,
including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June
2016 and of its performance for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001;
and
(b)
the financial report of the Company also complies with International Financial Reporting Standards
as disclosed in note 3.1.
Report on the Remuneration Report
We have audited the remuneration report included in pages 9 to 15 of the directors’ report for the year
ended 30 June 2016. The directors of the Company are responsible for the preparation and presentation
of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the remuneration report, based on our audit conducted in
accordance with Australian Auditing Standards.
Auditor’s opinion
In our opinion the remuneration report of Cynata Therapeutics Limited for the year ended 30 June 2016
complies with section 300 A of the Corporations Act 2001.
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
West Perth, Western Australia
19 August 2016
18
Cynata Therapeutics Limited
Directors’ declaration
The directors declare that:
(a)
(b)
(c)
in the directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay
its debts as and when they become due and payable;
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;
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
Melbourne, 19 August 2016
- 19 -
Cynata Therapeutics Limited
Consolidated statement of profit or loss and other
comprehensive income for the year ended
30 June 2016
Continuing operations
Other income
Product development costs
Employee benefits expenses
Amortisation expenses
Share based payment expenses
Other expenses
Loss before income tax
Income tax expense
Loss for the year
Consolidated
Year ended
30 June 2016
$
30 June 2015
$
Note
6
7
11
7
7
8
1,247,397
(4,155,013)
(783,681)
(280,732)
(238,122)
(729,320)
(4,939,471)
374,889
(1,919,778)
(830,544)
(447,945)
(429,457)
(459,242)
(3,712,077)
-
(4,939,471)
-
(3,712,077)
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 (loss)/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
-
-
-
(815)
-
(4,939,471)
(815)
(3,712,892)
(4,939,471)
(3,712,077)
(4,939,471)
(3,712,892)
Loss per share:
Basic and diluted (cents per share)
9
(6.82)
(6.12)
Notes to the consolidated financial statements are included on pages 24 to 49.
- 20 -
Consolidated statement of financial position
as at 30 June 2016
Cynata Therapeutics Limited
Current assets
Cash and cash equivalents
Trade and other receivables
Total current assets
Non-current assets
Intangibles
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Option reserves
Foreign currency translation reserve
Accumulated losses
Total equity
Consolidated
30 June 2016
$
30 June 2015
$
Note
20
10
11
12
12
13
14
15
15
4,879,173
58,220
4,937,393
4,703,689
47,809
4,751,498
4,093,122
4,093,122
9,030,515
4,373,854
4,373,854
9,125,352
393,762
-
53,615
447,377
447,377
313,691
32,691
29,011
375,393
375,393
8,583,138
8,749,959
28,791,762
3,717,440
4,476
(23,930,540)
8,583,138
24,460,404
3,276,148
4,476
(18,991,069)
8,749,959
Notes to the consolidated financial statements are included on pages 24 to 49.
- 21 -
Consolidated statement of changes in equity
for the year ended 30 June 2016
Cynata Therapeutics Limited
Balance at 1 July 2014
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive income/(loss) for the year
Issue of ordinary shares (refer to note 14)
Share issue costs
Share based payments
Balance at 30 June 2015
Balance at 1 July 2015
Loss for the year
Other comprehensive income for the year, net of tax
Total comprehensive loss for the year
Issue of ordinary shares (refer to note 14)
Share issue costs
Share based payments
Balance at 30 June 2016
Issued
Capital
$
22,281,642
-
-
-
2,222,450
(43,688)
-
24,460,404
24,460,404
-
-
-
5,000,004
(668,646)
-
28,791,762
Option
Reserve
$
2,846,691
-
-
-
-
-
429,457
3,276,148
3,276,148
-
-
-
-
203,170
238,122
3,717,440
Foreign
currency
translation
reserve
$
5,291
-
(815)
(815)
-
-
-
4,476
4,476
-
-
-
-
-
-
4,476
Accumulated
losses
$
(15,278,992)
(3,712,077)
-
(3,712,077)
-
-
-
(18,991,069)
(18,991,069)
(4,939,471)
-
(4,939,471)
-
-
-
(23,930,540)
Total
$
9,854,632
(3,712,077)
(815)
(3,712,892)
2,222,450
(43,688)
429,457
8,749,959
8,749,959
(4,939,471)
-
(4,939,471)
5,000,004
(465,476)
238,122
8,583,138
Notes to the consolidated financial statements are included on pages 24 to 49.
- 22 -
Consolidated statement of cash flows for the year ended 30
June 2016
Cynata Therapeutics Limited
Cash flows from operating activities
Grants and other income received
Payments to suppliers and employees
Interest received
Research and development tax refund received
Development costs paid
Net cash (used in) operating activities
Cash flows from investing activities
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
Consolidated
Year ended
Note
30 June 2016
$
30 June 2015
$
167,132
(1,584,332)
137,394
932,581
(3,979,128)
(4,326,353)
-
(1,053,446)
89,305
281,573
(1,919,778)
(2,602,346)
20.1
-
-
5,000,004
(465,476)
4,534,528
2,222,450
(43,688)
2,178,762
Net increase/(decrease) in cash and cash equivalents
208,175
(423,584)
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
4,670,998
4,879,173
5,094,582
4,670,998
20
Notes to the consolidated financial statements are included on pages 24 to 49.
- 23 -
Cynata Therapeutics Limited
Notes to the consolidated financial statements for the year
ended 30 June 2016
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
Amendments to AASBs and the new Interpretation that are mandatorily effective for the
current year
In the current year, the Group has applied one amendment to AASBs issued by the Australian
Accounting Standards Board (AASB) that are mandatorily effective for an accounting period
that begins on or after 1 July 2015, and therefore relevant for the current year end.
AASB 2015-4 ‘Amendments to
Australian Accounting Standards
arising from the Withdrawal of
AASB 1031 Materiality’
This amendment completes the withdrawal of references to
AASB 1031
in all Australian Accounting Standards and
Interpretations, allowing that Standard to effectively be
withdrawn.
The application of this amendment does not have any material impact on the disclosures or
the amounts recognised in the Group’s 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 that
were issued but not yet effective are listed below.
Standard/Interpretation
AASB 9
‘Financial
relevant amending standards
Instruments’, and
the
‘Revenue
from Contracts with
AASB 15
Customers’, AASB 2014-5
‘Amendments to
Australian Accounting Standards arising from
AASB 15’, AASB 2015-8
‘Amendments to
Australian Accounting Standards – Effective
date of AASB 15’
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the
financial year ending
1 January 2018
30 June 2019
1 January 2018
30 June 2019
AASB 16 ‘Leases’
1 January 2019
30 June 2020
‘Amendments
to Australian
AASB 2014-4
Standards – Clarification of
Accounting
Acceptable Methods of Depreciation and
Amortisation’
‘Amendments
AASB 2014-9
Accounting Standards – Equity Method
Separate Financial Statements’
to Australian
in
1 January 2016
30 June 2017
1 January 2016
30 June 2017
- 24 -
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 control 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.
- 26 -
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 acquiree and the equity instruments issued by the Group in
exchange for control of the acquiree. 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 fair value of the acquirer’s previously
held equity interest in the acquiree (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.
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Cynata Therapeutics Limited
Where a business combination is achieved in stages, the Group’s previously held equity
interest in the acquiree 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 3.4 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
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.
3.6.1
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.
- 28 -
3.7
Foreign currencies
Cynata Therapeutics Limited
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.
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,
in other
comprehensive income and accumulated in equity (and attributed to non-controlling interests
as appropriate).
if any, are recognised
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.
3.8
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will
comply with the conditions attaching to them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the periods in
which the Group recognises as expenses the related costs for which the grants are intended to
compensate. Specifically, government grants whose primary condition is that the Group
should purchase, construct or otherwise acquire non-current assets are recognised as deferred
revenue in the consolidated statement of financial position and transferred to profit or loss on
a systematic and rational basis over the useful lives of the related assets.
Government grants that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Group with no future
related costs are recognised in profit or loss in the period in which they become receivable.
- 29 -
Cynata Therapeutics Limited
3.9
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.
3.10
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
17.
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.
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.
3.11
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
3.11.1
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.
R&D rebates are accounted for on a cash basis.
- 30 -
3.11.2
Deferred tax
Cynata Therapeutics Limited
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.
3.11.3
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.
- 31 -
Cynata Therapeutics Limited
3.12
Intangible assets
3.12.1
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).
Intangibles have been identified as all granted patents and patent applications. They have a
finite useful life and are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method over the expected life of the assets, as follows:
Patents 20 years
3.12.2
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are
expected from use or disposal. Gains or losses arising from derecognition of an intangible
asset, measured as the difference between the net disposal proceeds and the carrying amount
of the asset are recognised in profit or loss when the asset is derecognised.
3.13
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.
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Cynata Therapeutics Limited
3.14
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.
3.15
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.
3.15.1
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.
3.15.1.1 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.
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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.
3.15.1.2 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.
3.15.1.3
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.
- 34 -
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
3.15.1.4 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.
3.15.2
Financial liabilities and equity instruments
3.15.2.1 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.
3.15.2.2 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.
3.15.2.3 Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial
liabilities’.
3.15.2.4 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.
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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.
3.15.2.5 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.
3.15.2.6 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.
3.16
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.
- 36 -
Cynata Therapeutics Limited
3.17
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.
4.1
Key sources of estimation uncertainty
4.1.1
Recoverability of intangible assets acquired in a business combination
During the year, the directors reconsidered the recoverability of the Group’s intangible assets
arising from the acquisition of Cynata Incorporated, which is included in the consolidated
statement of financial position at 30 June 2016 with a carrying value of $4,093,122 (2015:
$4,373,854) after accounting for amortisation.
The directors have allocated the carrying value of the patents (before amortisation) to the
different categories of the research based on their estimates. The resulting allocation has
given rise to an amortisation expense of $280,732 for the year ended 30 June 2016 (2015:
$447,945).
The directors performed an impairment testing and concluded that no further impairment of
the intangible assets is required for the year (2015: nil).
5.
Segment information
The Group operates in one business segment and one geographical segment, namely the
development and commercialisation of therapeutic products . 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 Group 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.
Other income
Continuing operations
Interest revenue
Other income and grants
Research and development rebate
Option fee from apceth GmbH & Co. KG
2016
$
147,684
42,132
932,581
125,000
1,247,397
2015
$
89,305
4,011
281,573
-
374,889
- 37 -
7.
Loss for the year
Loss for the year has been arrived at after charging the following
items of expenses:
Employee benefits expenses
Wages and salaries
Superannuation expenses
Leave entitlements
Total employee benefits expenses
Share-based payment expenses
Other expenses
Share register fees
Director fees
Legal costs
Other administrative expenses
Effect of foreign exchange
Total other expenses
8.
8.1
Income taxes relating to continuing operations
Income tax recognised in profit or loss
Current tax
Deferred tax
Cynata Therapeutics Limited
2016
$
692,945
66,130
24,606
783,681
238,122
9,156
107,222
121,465
486,085
5,392
729,320
2015
$
746,096
71,048
13,400
830,544
429,457
17,369
82,778
39,445
493,633
(173,983)
459,242
2016
$
2015
$
-
-
-
-
-
-
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% (2015: 30%)
Effect of expenses that are not deductible in determining taxable
income
Effect of unused tax losses not recognised as deferred tax assets
2016
$
(4,939,471)
2015
$
(3,712,077)
(1,481,841)
(1,113,623)
126,978
1,354,863
-
252,650
860,973
-
The tax rate used for the 2016 and 2015 reconciliations above is the corporate tax rate of 30% payable
by Australian corporate entities on taxable profits under Australian tax law.
8.2
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
2016
$
2015
$
-
-
-
-
-
-
- 38 -
8.
8.3
Income taxes relating to continuing operations (cont’d)
Unrecognised deferred tax assets
Cynata Therapeutics Limited
2016
$
2015
$
Unused tax losses (revenue) for which no deferred tax assets have
been recognised
4,987,702
4,233,008
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. There are no deferred tax liabilities.
9.
Loss per share
Basic and diluted loss per share (cents per share)
9.1
Basic and diluted loss per share
2016
cents per
share
2015
cents per
share
(6.82)
(6.12)
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
2016
$
(4,939,471)
2015
$
(3,712,077)
2016
No.
2015
No.
Weighted average number of ordinary shares for the purposes of
basic and diluted loss per share
72,446,636
60,615,937
10.
Trade and other receivables
Deposits made
Other receivables
2016
$
3,568
54,652
58,220
2015
$
3,568
44,241
47,809
At the reporting date, none of the receivables were past due/impaired.
- 39 -
11.
Intangibles
Fair value of research and development (i)
Amortisation (ii)
Net book value of research and development
Cynata Therapeutics Limited
2016
$
4,373,854
(280,732)
4,093,122
2015
$
4,821,799
(447,945)
4,373,854
(i) 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 (1 December 2013), representing progress toward the eventual commercialisation of
the relevant technology.
(ii) An amortisation expense of $280,732 has been recognised in profit or loss (2015: $447,945). Refer to
note 3.13 for more information on the Group’s accounting policy on intangibles and amortisation.
Cost
Balance at 1 July
Additions
Disposals
Balance at 30 June
Accumulated amortisation
Balance at 1 July
Amortisation expense
Balance at 30 June
12(a) Trade and other payables
Trade payables
Accrued expenses
(b) Borrowings
Bank overdraft
13.
Provisions
Provisions for employee entitlements
2016
$
4,821,799
-
-
4,821,799
2016
$
447,945
280,732
728,677
2016
$
133,526
260,236
393,762
2016
$
-
2015
$
4,821,799
-
-
4,821,799
2015
$
-
447,945
447,945
2015
$
152,635
161,056
313,691
2015
$
32,691
2016
$
53,615
2015
$
29,011
- 40 -
14.
Issued capital
72,738,075 fully paid ordinary shares (30 June 2015:
66,071,403)
Cynata Therapeutics Limited
2016
$
28,791,762
2015
$
24,460,404
Fully paid ordinary shares
Balance at beginning of period
Share Placement (i)
Exercise of share options (ii)
Exercise of share options (iii)
Exercise of share options (iv)
Exercise of share options (v)
Exercise of share options (vi)
Share issue costs
30 June 2016
30 Jun 2015
No.
66,071,403
6,666,672
-
-
-
-
-
-
72,738,075
$
24,460,404
5,000,004
-
-
-
-
-
(668,646)
28,791,762
No.
54,959,153
-
13,750
456,250
20,157
6,173,987
4,448,106
-
66,071,403
$
22,281,642
-
2,750
91,250
4,032
1,234,797
889,621
(43,688)
24,460,404
(i) Share placement at $0.75 per share on 17 July 2015 to institutional investors in USA.
(ii) Exercise of listed options at $0.20 each during the month of September 2014.
(iii) Exercise of listed options at $0.20 each during the month of October 2014.
(iv) Exercise of listed options at $0.20 each during the month of November 2014.
(v) Exercise of listed options at $0.20 each during the month of December 2014.
(vi) Exercise of listed options at $0.20 each during the month of January 2015.
15.
Reserves
15.1
Share-based payments
Balance at beginning of year
Recognition of share-based payments (i)
Balance at end of year
2016
$
3,276,148
441,292
3,717,440
2015
$
2,846,691
429,457
3,276,148
(i) Total expenses arising from share-based payment transactions recognised during the year ended 30
June 2016 was $441,292 (2015: $429,457). In 2016, the share-based payment expense includes $203,170
(2015: nil) charged to capital raising costs.
Further information about share-based payments is set out in note 17.
15.2
Foreign currency translation reserve
Balance at beginning of year
Exchange differences arising on translating the foreign operations
Balance at end of year
2016
$
4,476
-
4,476
2015
$
5,291
(815)
4,476
Exchange differences relating to the translation of results and net assets of the Group’s foreign
operations from their functional currencies to the Group’s presentation currency (i.e. Australian dollars)
are recognised directly in other comprehensive income and accumulated in the foreign currency
translation reserve.
- 41 -
Cynata Therapeutics Limited
16.
Financial instruments
16.1 Capital management
The Group’s 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 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 Group’s approach to capital
management during the year.
16.2 Categories of financial instruments
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Borrowings
2016
$
4,879,173
58,220
4,937,393
393,762
-
393,762
2015
$
4,703,689
47,809
4,751,498
313,691
32,691
346,382
Net financial assets
4,543,631
4,405,116
The fair value of the above financial instruments approximates their carrying values.
16.3 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.
16.4 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 16.5 below).
- 42 -
Cynata Therapeutics Limited
16.
Financial instruments (cont’d)
16.5
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 2016 would decrease/increase by $48,792 (2015:
$47,037)
16.6 Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently, exposures
to exchange rate fluctuations arise. At 30 June 2016, the Company has cash denominated in US
dollars (US$674,412 (2015: US$23,132)). The AUD equivalent at 30 June 2016 is $908,299 (2015:
$30,208). A 5% movement in foreign exchange rates would increase or decrease the Group’s loss
before tax by approximately $45,415 (2015: $1,510).
16.7 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.
16.8 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
2016
Trade and other payables
2015
Trade and other payables
Borrowings
$
$
393,762
393,762
313,691
32,691
313,691
32,691
$
-
-
-
$
-
-
-
$
-
-
-
$
393,762
313,691
32,691
- 43 -
Cynata Therapeutics Limited
17.
Share-based payments
17.1 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.
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 options arrangements were in existence at the reporting date:
Option
series
Number
Grant date
Grant date
fair value
$
Exercise
price
$
Expiry date
Vesting date
1
2
3
4
5
500,000i
5,000,000ii
750,000
27 Nov 2012
27 Sept 2013
16 Dec 2015
333,333
17 July 2015
600,000
22 Feb 2016
0.260
0.290
0.237
0.610
0.222
0.400
9 Sept 2016
0.400
27 Sept 2018
0.490
1.000
0.530
16 Dec 2018
17 July 2020
22 Feb 2019
Vested
Vested
Vested*
Vested
Vested
i Balance held by Mr Howard Digby (former director) at resignation on 18 November 2014.
ii This represents 100,000,000 unlisted options after a 1:20 consolidation issued to Drs Washer and Macdonald.
* 1/3 vested on grant date, 1/3 vest in 12 months, 1/3 vest in 24 months (subject to continuous employment).
There has been no alterations to the terms and conditions of the above share-based payment
arrangements.
17.2 Fair value of share options granted in the year
Options were priced using the Black-Scholes pricing model. Expected volatility is based on the
historical share price volatility over the past 12 months.
The weighted average exercise price of options granted during the year is $0.61 (2015: $0.40).
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 3
$0.340
$0.490
129%
3 years
n/a
2.28%
Series 4
$0.750
$1.000
122%
5 years
n/a
2.28%
Series 5
$0.385
$0.530
103%
3 years
n/a
1.72%
- 44 -
17.
Share-based payments (cont’d)
17.3 Movements in share options during the year
The following reconciles the share options outstanding at the beginning and end of the year:
Cynata Therapeutics Limited
2016
2015
Number of
options
No.
6,700,000
1,683,333
-
-
(1,200,000)
7,183,333
7,183,333
Weighted
average
exercise price
$
0.400
0.605
-
-
0.400
0.448
0.448
Number of
options
No.
17,412,250
400,000
-
(11,112,250)i
-
6,700,000
6,700,000
Weighted
average
exercise price
$
0.272
0.400
-
0.200
-
0.400
0.400
Balance at beginning of the year
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Balance at end of year
Exercisable at end of year
i Refer to note 17.4 below.
17.4 Share options exercised during the year
No share options were exercised during the year (2015: 11,112,250) (refer to table below for breakdown).
2015
Options series
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Listed
Number
exercised
3,750
10,000
21,250
435,000
20,157
412,300
578,431
892,813
1,872,631
2,417,812
4,054,119
393,987i
Exercise date
9 September 2014
26 September 2014
22 October 2014
12 November 2014
14 November 2014
5 December 2014
11 December 2014
18 December 2014
24 December 2014
31 December 2014
6 January 2015
14 January 2015
Share price at
exercise date
$0.420
$0.390
$0.370
$0.350
$0.350
$0.375
$0.390
$0.340
$0.340
$0.340
$0.380
$0.360
i Issued pursuant to underwriting shortfall on expiry of Listed 31/12/2014 Options (refer to ASX
Announcement dated 14 January 2015).
17.5 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
$0.448 (2015: $0.400) and a weighted average remaining contractual life of 818 days (2015: 944
days).
- 45 -
18.
Key management personnel
The aggregate compensation made to directors and other members of key management
personnel of the Group is set out below:
Cynata Therapeutics Limited
Short-term employee benefits
Post-employment benefits
Share-based payments
Short-term employee benefits
2016
$
887,272
74,589
107,525
1,069,386
2015
$
858,874
70,879
263,799
1,193,552
These amounts include fees paid to non-executive directors as well as salary and paid leave
benefits awarded to executive directors, 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 key management personnel
in equity-settled benefit schemes as measured by the fair value of the options granted on grant
date.
Further information in relation to key management personnel remuneration can be found in the
Remuneration Report contained in the directors’ report.
19.
Related party transactions
19.1
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
non-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.
19.2 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 18.
19.3 Other related party transactions
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.
- 46 -
20. Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, cash and cash equivalents include
cash on hand and in banks. 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:
Cynata Therapeutics Limited
Cash and bank balances
Bank overdraft
2016
$
4,879,173
-
4,879,173
2015
$
4,703,689
(32,691)
4,670,998
20.1 Reconciliation of loss for the year to net cash flows from operating activities
Cash flow from operating activities
Loss for the year
Adjustments for:
Share-based payments
Amortisation expenses
Movements in working capital
(Increase) in trade and other receivables
Increase in trade and other payables
Increase in provisions – annual leave
Difference arising from foreign exchange
Net cash outflows from operating activities
2016
$
2015
$
(4,939,471)
(3,712,077)
238,122
280,732
429,457
447,945
(10,411)
80,071
24,604
-
(4,326,353)
(38,262)
259,784
11,622
(815)
(2,602,346)
21. Contingencies
In 2015, a subsidiary of the Group (Cynata Inc) was in the process of filing an appeal with the US
Department of Treasury Internal Revenue Service (“Department of Treasury”) in relation to
penalties arising from the late lodgement of information returns for US fiscal years 2012 and 2013.
An agreement was reached with the Department of Treasury in April 2016 and a total of US$10,000
representing penalties for late lodgement of the 2012 and 2013 information returns was paid.
The directors are not aware of any other contingencies at balance date.
- 47 -
Cynata Therapeutics Limited
22. Commitments for expenditure
The Group has entered into a number of agreements related to research and development
activities. As at 30 June 2016, under these agreements, the Company is committed to making
payments over future periods, as follows:
- During the period 1 July 2016 – 30 June 2017
- During the period 1 July 2017 – 30 June 2018
- During the period 1 July 2018 – 30 June 2020
A$
2,018,196
541,901
437,909
Where commitments are denominated in foreign currencies, the amounts have been converted to
Australian dollars based on exchange rates prevailing as at 30 June 2016.
23.
Remuneration of auditors
Auditor of the Group
Audit or review of the financial statements
2016
$
31,074
2015
$
37,574
The auditor of the Group is Stantons International Audit and Consulting Pty Ltd.
24. Events after the reporting period
On 1 August 2016, the Company announced it had filed a Clinical Trial Authorisation application for
CYP-001, its lead Cymerus mesenchymal stem cell (MSC) product, with the UK Medicines and
Healthcare products Regulatory Agency (MHRA). The proposed Phase 1 study will be conducted in
patients with a graft-versus-host disease (GvHD).
On 17 August 2016, the Company announced the expiry of 3,333,336 unlisted options. These
options were issued to institutional investors pursuant to a private placement on 17 July 2015.
Other than the above, there has not been any matter or circumstance that has arisen since the end
of the year that has significantly affected, or may significantly affect, the operations of the Group,
the results of those operations, or the state of affairs of the Group in future financial years.
- 48 -
25. 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.
Cynata Therapeutics Limited
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Provisions
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Commitments and contingencies
2016
$
2015
$
4,937,394
4,890,653
9,828,047
393,762
53,615
447,377
9,380,670
4,751,498
4,890,653
9,642,151
346,382
29,011
375,393
9,266,758
28,791,762
3,717,440
(23,128,532)
9,380,670
24,460,404
3,276,148
(18,469,794)
9,266,758
(4,658,738)
(3,311,749)
There were no material commitments or contingencies at the reporting date for the parent
company except for those mentioned in note 21 and note 22 above.
26.
Subsidiaries
Details of the Company’s subsidiaries at the end of the reporting period are as follows:
Name of subsidiary
Principal activity
Cynata Incorporated
Cynata Australia Pty Ltd (i)
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
2016
100%
2015
100%
Australia
100%
100%
(i) Cynata Australia Pty Ltd is a wholly owned subsidiary of Cynata Incorporated.
27. Approval of financial statements
The financial statements were approved by the board of directors and authorised for issue on 19
August 2016.
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Cynata Therapeutics Limited
Corporate Governance Statement
This Corporate Governance Statement (“Statement”) outlines the key aspects of Cynata Therapeutics Limited
(‘Cynata’ or ‘the Company’) governance framework and main governance practices. The Company’s charters,
policies, and procedures are regularly reviewed and updated to comply with law and best practice. These charters
and policies can be viewed on Cynata’s website located at www.cynata.com.
This Statement is structured with reference to the Australian Securities Exchange Corporate Governance Council’s
(“the Council’s”) “Principles of Good Corporate Governance and Best Practice Recommendations 3rd Edition” (“the
Recommendations”).
The Board of Directors has adopted the Recommendations to the extent that is deemed appropriate considering
current the size and operations of the Company. Therefore, considering the size and financial position of the
Company, where the Board considers that the cost of implementing a recommendation outweighs any potential
benefits, those recommendations have not been adopted.
This Statement was approved by the Board of Directors and is current as at 31 July 2016.
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
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 principal functions and responsibilities of the Board include, but are not limited to, 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
approving and appropriately monitoring plans, new investments, major capital and operating 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;
Identifying areas of significant business risk and ensure that the Company is appropriately positioned to
manage those risks;
Overseeing the management of 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;
Ensuring that appropriate internal and external audit arrangements are in place and operating effectively;
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:
Code of Conduct;
Continuous Disclosure Policy;
Diversity Policy;
Performance Evaluation Policy;
Procedures for Selection and Appointment of Directors;
Remuneration Policy;
Risk Management and Internal Compliance and Control Policy;
Securities Trading Policy; and
Shareholder Communications Policy.
- 50 -
Cynata Therapeutics Limited
Subject to the specific authorities reserved to the Board under the Board Charter, the Board has delegated to the
Managing Director responsibility for the management and operation of Cynata. The Managing Director is
responsible for the day-to-day operations, financial performance and administration of Cynata within the powers
authorised to him from time-to-time by the Board. The Managing Director may make further delegation within the
delegations specified by the Board and is accountable to the Board for the exercise of those delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter on the Cynata
Website.
Board Committees
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, risk, remuneration or nomination committees,
preferring at this stage of the Company’s development, to manage the Company through the full Board of
Directors. The Board assumes the responsibilities normally delegated to the audit, risk, remuneration and
nomination Committees.
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.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a director, or putting that person
forward as a candidate to ensure that person is competent, experienced, and would not be impaired in any way
from undertaking the duties of director. The Company provides relevant information to shareholders for their
consideration about the attributes of candidates together with whether the Board supports the appointment or re-
election.
The terms of the appointment of a non-executive director, executive directors and senior executives are agreed
upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with the
proper functioning of the Board, including agendas, Board papers and minutes, advising the Board and its
Committees (as applicable) on governance matters, monitoring that the Board and Committee policies and
procedures are followed, communication with regulatory bodies and the ASX and statutory and other filings.
Diversity
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.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
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Cynata Therapeutics Limited
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 has 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.
The Board conducts an annual performance assessment of the Managing Director against agreed key performance
indicators.
Board and management performance reviews were conducted during the financial year in accordance with the
above processes.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in fulfilling their
duties and responsibilities, to obtain independent professional advice on any matter connected with the discharge
of their responsibilities, with prior notice to the Chairman, at Cynata’s expense.
Principle 2: Structure the board to add value
Board Composition
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 Peter Webse
Dr John Chiplin
Dr Paul Wotton
Executive Chairman (appointed 1 August 2013);
Managing Director (appointed 1 August 2013);
Non-Executive Director (appointed 18 May 2012);
Independent Non-Executive Director (appointed 18 November 2014);
Independent Non-Executive Director (appointed 9 June 2016).
The Board currently consists of two Executive Directors being the Chairman and Managing Director, and three Non-
Executive Directors, one of whom is also the Company Secretary.
Cynata has adopted a definition of ’independence’ for Directors that is consistent with the Recommendations.
The Company’s Chairman, Dr Stewart Washer, is not an independent director. The Board believes it is important to
have the Chairman engaged in an executive capacity at this critical stage of the Company’s development. The
Board values the insight and advice provided by Dr Washer and considers that the materiality of his relationship is
such that it does not interfere with his capacity to bring an independent judgement on issues before the Board and
to act in the best interests of Cynata and its security holders generally.
The Board does not consist of a majority of independent directors, Dr John Chiplin and Dr Paul Wotton are the only
current directors considered to be independent. Given the size of the Board and the nature and scale of the
Company’s current operations the Board believes the presence of two independent directors on the Board is
sufficient.
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Cynata Therapeutics Limited
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required in order to
effectively govern Cynata. The Board believes that orderly succession and renewal contributes to strong corporate
governance and is achieved by careful planning and continual review.
The Board is responsible for the nomination and selection of directors. The Board reviews the size and composition
of the Board regularly and at least once a year as part of the Board evaluation process. The Board has a skills
matrix covering the competencies and experience of each member. When the need for a new director is identified,
the required experience and competencies of the new director are defined in the context of this matrix and any
gaps that may exist.
Generally a list of potential candidates is identified based on these skills required and other issues such as
geographic location and diversity criteria. Candidates are assessed against the required skills and on their
qualifications, backgrounds and personal qualities. In addition, candidates are sought who have a proven track
record in creating security holder value and the required time to commit to the position.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions of their
appointment, including Director’s duties, rights and responsibilities, the time commitment envisaged, and the
Board’s expectations regarding involvement with any Committee work.
An induction program is in place and new Directors are encouraged to engage in professional development
activities to develop and maintain the skills and knowledge needed to perform their role as Directors effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides guidelines aimed at maintaining high ethical
standards, corporate behaviour and accountability within the Company.
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 Code of Conduct may face disciplinary action including, in the cases of serious
breaches, dismissal. If an employee suspects that a breach of the 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.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfils the functions normally delegated to the Audit Committee as detailed in the Audit
Committee Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a new external
auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete
independence from the Company through the engagement period. The Board may otherwise select an external
auditor based on criteria relevant to the Company’s business and circumstances. The performance of the external
auditor is reviewed on an annual basis by the Board.
The Board receives regular reports from management and from external auditors. It also meets with the external
auditors as and when required.
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Cynata Therapeutics Limited
The external auditors attend Cynata’s AGM and are available to answer questions from security holders relevant to
the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor. There are
qualitative limits on this non-audit work to ensure that the independence of the auditor is maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for more than
five years.
CEO and CFO (Equivalent) Certifications
The Board has received certifications from the CEO and CFO (Equivalent) in connection with the financial
statements for the Cynata for the Reporting Period. The certifications state that the declaration provided in
accordance with Section 295A of the Corporations Act as to the integrity of the financial statements is founded on a
sound system of risk management and internal control which is operating effectively.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the Company as
required under the ASX Listing Rules and Corporations Act. The policy is designed to ensure that procedures are in
place so that the market is properly informed of matters which may have a material impact on the price at which
Company securities are traded.
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.
The Company is committed to ensuring all investors have equal and timely access to material information
concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with the ASX. The
Executive Chairman, Managing Director and the Company Secretary are responsible for ensuring that:
a)
Company announcements are made in a timely manner, that announcements are factual and do not omit any
material information required to be disclosed under the ASX Listing Rules and Corporations Act; and
Company announcements are expressed in a clear and objective manner that allows investors to assess the
impact of the information when making investment decisions.
b)
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the
Company is committed to:
communicating effectively with shareholders through releases to the market via ASX, the company website,
information mailed to shareholders and the general meetings of the Company;
giving shareholders ready access to clear and understandable information about the Company; and
making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to make enquiries of
the Company. These contact details are available on the “contact us” page of the Company’s website.
Shareholders may elect to, and are encouraged to, receive communications from Cynata and Cynata’s securities
registry electronically.
The Company maintains information in relation to its Constitution, governance documents, Directors and senior
executives, Board and committee charters, annual reports and ASX announcements on the Company’s website.
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout Cynata’s business
activities.
- 54 -
The Board is responsible for the oversight of the Company’s risk management and internal compliance and control
framework. The Company does not have an internal audit function. 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 internal compliance and control framework.
Cynata has established policies for the oversight and management of material business risks.
Cynata Therapeutics Limited
Cynata’s Risk Management and Internal Compliance and Control Policy recognises that risk management is an
essential element of good corporate governance and fundamental in achieving its strategic and operational
objectives. Risk management improves decision making, defines opportunities and mitigates material events that
may impact security holder value.
Cynata believes that explicit and effective risk management is a source of insight and competitive advantage. To
this end, Cynata is committed to the ongoing development of a strategic and consistent enterprise wide risk
management program, underpinned by a risk conscious culture.
Cynata accepts that risk is a part of doing business. Therefore, the Company’s Risk Management and Internal
Compliance and Control Policy is not designed to promote risk avoidance. Rather Cynata’s approach is to create a
risk conscious culture that encourages the systematic identification, management and control of risks whilst
ensuring we do not enter into unnecessary risks or enter into risks unknowingly.
Cynata assesses its risks on a residual basis; that is it evaluates the level of risk remaining and considering all the
mitigation practices and controls. Depending on the materiality of the risks, Cynata applies varying levels of
management plans.
The Board has required management to design and implement a risk management and internal compliance and
control system to manage Cynata’s material business risks. It receives regular reports on specific business areas
where there may exist significant business risk or exposure. The Company faces risks inherent to its business,
including economic risks, which may materially impact the Company’s ability to create or preserve value for
security holders over the short, medium or long term. The Company has in place policies and procedures, including
a risk management framework (as described in the Company’s Risk Management and Internal Compliance and
Control Policy), which is developed and updated to help manage these risks. The Board does not consider that the
Company currently has any material exposure to environmental or social sustainability risks
The Company’s process of risk management 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; and
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 Board reviews the Company’s risk management framework at least annually to ensure that it continues to
effectively manage risk.
Management reports to the Board as to the effectiveness of Cynata’s management of its material business risks on
at each Board meeting.
Principle 8: Remunerate fairly and responsibly
The Board as a whole fulfils the functions normally delegated to the Remuneration Committee as detailed in the
Remuneration Committee Charter.
Cynata has implemented a Remuneration Policy which was designed to recognise the competitive environment
within which Cynata operates and also emphasise the requirement to attract and retain high calibre talent in order
to achieve sustained improvement in Cynata’s performance. The overriding objective of the Remuneration Policy is
to ensure that an individual’s remuneration package accurately reflects their experience, level of responsibility,
individual performance and the performance of Cynata.
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Cynata Therapeutics Limited
The key principles are to:
link executive reward with strategic goals and sustainable performance of Cynata;
apply challenging corporate and individual key performance indicators that focus on both short-term and
long-term outcomes;
motivate and recognise superior performers with fair, consistent and competitive rewards;
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
through employee ownership of Cynata shares, foster a partnership between employees and other security
holders.
The Board determines the Company’s remuneration policies and practices and assesses the necessary and desirable
competencies of Board members. The Board is responsible for evaluating Board performance, reviewing Board and
management succession plans and determines remuneration packages for the CEO, Non-Executive Directors and
senior management based on an annual review.
Cynata’s executive remuneration policies and structures and details of remuneration paid to directors and senior
managers are set out in the Remuneration Report.
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 $103,056.
Executive directors and other senior executives are remunerated using combinations of fixed and performance
based remuneration. Fees and salaries are set at levels reflecting market rates and performance based
remuneration is linked directly to specific performance targets that are aligned to both short and long term
objectives.
In accordance with the Company’s Securities Trading Policy, participants in an equity based incentive scheme are
prohibited from entering into any transaction that would have the effect of hedging or otherwise transferring the
risk of any fluctuation in the value of any unvested entitlement in the Company’s securities to any other person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report,
within the Directors’ report.
- 56 -
ASX Additional Information as at 5 October 2016
Cynata Therapeutics Limited
Substantial Shareholders
The Company does not have any substantial shareholders.
Distribution of Ordinary Shares
Category
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Number of
Holders
Ordinary Shares
% of Issued
Capital
351
562
274
606
127
1,920
180,222
1,592,904
2,221,117
21,164,460
47,579,372
72,738,075
0.25
2.19
3.05
29.10
65.41
100.00
Voting Rights
(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 unlisted options.
Number of Holders of Unlisted Options
5,000,000 unlisted $0.40 Options expiring 27/09/2018 held by 2 holders (1);
750,000 unlisted $0.49 Options expiring 16/12/2018 held by 1 holder (2);
600,000 unlisted $0.53 Options expiring 22/02/2019 held by 2 holders (3); and
3,666,669 unlisted $1.00 Options expiring 17/07/2020 held by 7 holders (4).
Unlisted Option Holders holding 20% or more:
(1) 2,500,000 Options held in the name of Mrs Sharon Anne MacDonald (50%) and 2,500,000 Options held by
Mal Washer Nominees Pty Ltd (50%).
(2) 750,000 Options held in the name of Dr Kilian Kelly (100%).
(3) 300,000 Options held in the name of Pegari Pty Limited (50%) and 300,000 Options held in the name of
Shaw and Partners Limited (50%).
(4) 2,222,224 Options held in the name of Merrill Lynch (Australia) Nominees Pty Limited (60.60%) and
1,111,112 Options held in the name of Citicorp Nominees Pty Limited (30.30%).
Restricted Securities
There are no restricted securities or securities subject to voluntary escrow on issue.
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 279.
- 57 -
20 Largest Shareholders
Name
Pershing Australia Nominees Pty Ltd
Professor Igor Slukvin
John W King Nominees Pty Ltd
Celtic Capital Pte Ltd
Tisia Nominees Pty Ltd
Dr Maksym Vodyanyk
Mr Ian Edward Dixon
Helium Management Pty Ltd
Dr Roger Aston
Perrihall Pty Ltd
J P Morgan Nominees Australia Limited
Mr Jon Nicolai Herringstad Bjarnason
Strategic Vision Equities Pty Ltd
C M Cook Superannuation Pty Ltd
Dr Allen Bollands
Mr Peter James Nixon
ABN Amro Clearing Sydney Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
John Dahlsen Superannuation Fund Pty Ltd
Jamber Investments Pty Ltd
Cynata Therapeutics Limited
Number of
Shares Held
3,619,677
2,383,317
2,261,433
2,190,000
1,365,059
1,191,658
1,140,717
1,092,600
1,000,000
830,000
816,866
775,000
739,000
700,000
700,000
683,000
667,755
643,839
630,000
603,304
24,033,225
% of Issued
Capital
4.98
3.28
3.11
3.01
1.88
1.64
1.57
1.50
1.37
1.14
1.12
1.07
1.02
0.96
0.96
0.94
0.92
0.89
0.87
0.83
33.06
- 58 -