Annual Report
2020
myriad data.
individual care.
We use novel interventions, build new
technologies and develop decision
support tools to elevate care and
deliver valuable insights for unmet
medical needs.
Contents
Emyria Ltd Annual Report
Letter from the Chairman
Meet the team
Company snapshot
Review of operations
Emerald Clinics
Openly
Directors’ Report
Financial Report
Audit Opinion
Corporate Governance Statement
Additional ASX Information
Corporate Directory
4
6 – 7
8 – 9
10 – 11
12 – 13
14 – 15
16 - 35
36 - 75
76 - 81
82 - 93
94 - 97
98
From the Chairman
We started the year as Emerald Clinics Limited, successfully listed on the ASX and have ticked off a number of
milestones in just six months – with some of our most significant projects launched in response to a drastically
changing world and healthcare system, in the age of COVID-19.
Our innovative business model is allowing us to respond to these emerging challenges as opportunities,
and to set the pace for this work, I am proud to say we are starting the new fiscal year with a new name
and fresh identity.
Welcome to Emyria Limited (Emyria).
Our ticker code (ASX:EMD) remains unchanged, but our new brand will focus on positioning and growing our
company on the world stage – beyond our network of physical clinics and the vital treatments we offer – to a
leadership role in digitally-connected and patient-centric healthcare. Care that also generates high quality
clinical evidence where it matters most, in the real world.
Emyria is emerging as a leader in the generation of real-world evidence (RWE) – which works squarely at the
intersection of understanding and improving the whole patient experience and clinical outcomes (for patients),
whilst meeting the need for quality clinical evidence to progress the development of superior and novel
treatments (for researchers, clinicians, and regulators). Emyria’s world-class technology systems are a powerful
vehicle through which we can capture, measure and translate RWE into meaningful and credible clinical insights.
So, what does this look like in practice?
In our clinics, still Emerald Clinics, we remain committed to providing access to medicinal cannabis and other
unregistered treatments for patients who have failed standard of care. Our team has done an exceptional
job adapting to COVID-19 – more appointments are being conducted online, patients’ health status tracked
remotely, and we are collecting meaningful data at multiple touchpoints with our service. I’m pleased to say
that demand for our clinical services, and collaboration with strategic partners, has never been greater and we
are developing valuable insights from the data that will inform future therapies.
Our Openly screening service, in development, is a considered investment in our long-term vision to bring a
new model of healthcare to people in their homes and in the community. This technology has the potential to
help people get back to work, study and leisure activities, safely. It is designed to measure vital signs, heart
rate and blood oxygen levels, in less than a minute, using just a smartphone. Our clinical team will be on
standby to monitor and learn from this information, ready to guide our clients on how to manage the health
and well-being of their people.
These are examples of what can be accomplished by combining an innovative clinical team with great
technology in response to changing health needs.
In the 2020/21 fiscal year, Emyria will be working to find our first corporate customers for Openly as we move
forward with refining and testing the technology.
We will be investigating options for expanding Emerald Clinics generally, including establishing a clinical
service in the UK as part of our contract with Spectrum Biomedical UK, in addition to our four clinics in Australia.
We also intend to partner with more groups and organisations interested in our increasingly valuable
real-world data as we work to develop multiple, growing revenue streams and invest in developing our own
intellectual property from our data assets.
COVID-19 has changed a number of industries, especially healthcare. Digital health tools, remote patient
monitoring and RWE are firmly the future of medicine – a future Emyria is uniquely positioned to lead.
Thanks to our shareholders, partners, fellow Board members, management team and clinical teams for your
support during the financial year. You are valued partners in our innovation and our success.
Dr Stewart Washer
EMYRIA CHAIRMAN
4
Thank you. Our shareholders, business
associates and supporters are valued partners
in Emyria’s continued innovation and success.
Dr Stewart Washer
EMYRIA EXECUTIVE CHAIRMAN
A world-class team
Our Board
Medical Key Opinion Leaders
Dr Stewart Washer
EXECUTIVE CHAIRMAN
Dr Jennifer Morgan
MEDICAL ADVISOR
Dr Michael Winlo
MANAGING DIRECTOR
Dr Philip Finch
MEDICAL ADVISOR
Prof Alistair Vickery
MEDICAL DIRECTOR
Dr Nik Zeps
MEDICAL ADVISOR
Mr Matthew Callahan
NON-EXECUTIVE DIRECTOR
Prof David Putrino
MEDICAL ADVISOR
Prof Sir John Tooke
NON-EXECUTIVE DIRECTOR + MEDICAL ADVISOR
Visit our website emyria.com to view the full credentials of our Board, Medical Advisory Board
and Management Team.
6
We’re on a great mission. We’ve deliberately put ourselves at
the front line of care delivery, as well as evidence generation
for patients with high unmet needs, which means our unique
insights can improve the care we provide and the speed of
development for the novel treatments we work with.
Dr Michael Winlo
EMYRIA MANAGING DIRECTOR
Welcome to Emyria
Caring. Curious. Courageous.
Emyria’s primary goal is to improve the efficacy of novel treatments and therapies – and to provide more
effective and personalised healthcare.
We do this by developing technology-powered health services and data products, which are designed to help
us learn from every patient in order to deliver deeper clinical insights.
People are at the centre of everything we do.
We listen with great care to each and every person we set out to help, and leverage the power of technology to
accurately capture their clinical outcomes and experiences. We use novel interventions and new technologies
to elevate and personalise their standard of care.
Our business model, underpinned by sophisticated data systems, allows us to simultaneously capture valuable
clinical insights – quality evidence that helps to empower clinicians, regulators and our partners to service
unmet healthcare needs in a variety of clinical and real-world settings.
Emyria’s intuitive model of healthcare performs, well beyond the clinic.
Our team has invested energy in a number of important programs this year and has formed three primary
clinical services for Emyria.
Maritime
Health
Clinic
Health screening, powered
by a smartphone and
backed by a clinical team.
Improving treatments
for chronic pain with
multidimensional RWE.
Under devopment, our clinician-
led remote health screening
and monitoring app, Openly,
is designed to measure heart
rate and blood oxygen levels
in less than a minute, using just
the camera on a smartphone.
Openly has potential to be
used to support proactive
health screening in response
to COVID-19, so people can
safely gather together for work,
study and play – and is a fine
example of Emyria’s long-term
commitment to delivering care,
well beyond the clinic.
GP clinic Maritime Health has
been using Emryia’s research
platform to manage, monitor
and improve the safety and
efficacy of novel treatments for
chronic pain. The practice is also
using our platform to generate
dynamic patient data to
improve treatments for a range
of other debilitating and costly
health issues, including mental
health, sleep, addiction and
musculoskeletal conditions and
problems. We currently have two
clinics in NSW.
Testing and validating
unregistered medicines
including cannabinoids
using live, real-world
patient data.
There is an immense volume
of anecdotal support for
cannabinoid-based medicines
(CBMs), but a dearth of
high-quality, product-specific
clinical evidence. Our purpose-
built clinics, Emerald Clinics,
and leading clinicians provide
access to novel CBMs, with the
support of technology designed
to capture real-world clinical
evidence in partnership with
every single patient. We are
developing opportunities with
partners wanting to test other
unregistered therapeutics,
leveraging the unique capabilities
of our clinics and data team.
8
We deliver great care and insights
High quality care and data
Health services
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Data quality emphasis
Maritime
Health
Clinic
Real World Evidence, at a glance
47% of FDA approvals
currently leverage RWE
RWE market worth
USD $1.64 billion by 20241
From the US Food and Drug Administration (FDA)2
Real-world data (RWD) are the data relating to patient health status and/
or the delivery of health care routinely collected from a variety of sources.
RWD can come from a number of sources, for example: electronic health
records (EHRs); claims and billing activities; product and disease registries;
patient-generated data including in home-use settings; and data gathered
from other sources that can inform on health status, such as mobile devices.
Real-world evidence (RWE) is the clinical evidence regarding the usage and
potential benefits or risks of a medical product derived from analysis of RWD.
RWE can be generated by different study designs or analyses, including but
not limited to, randomised trials, including large simple trials, pragmatic
trials, and observational studies (prospective and/or retrospective).2
1 Source: Meticulous Market Research (meticulousresearch.com) 2 Source: FDA.gov
9
Review of operations
Emerald Clinics, now Emyria Limited, listed on the Australian Securities Exchange (ASX) on 12 February 2020
after raising AU$6 million in an initial public offering, as a company consisting of patient-focused medical
clinics across Australia gathering real-world evidence (RWE) on the efficacy of cannabinoid medicines.
Just weeks later, the COVID-19 crisis escalated across the globe and changed dynamics in the healthcare
sector significantly.
Emyria accelerated the development and expansion of its telehealth services rather than in-person visits.
In addition to engaging with patients over the phone or via video conference, the Emyria platform allowed
clinicians to integrate patient monitoring tools and medical records.
The Company’s telehealth service also allowed it to gather valuable RWE on the efficacy of cannabinoid-based
medicine on patients remotely.
As the pandemic worsened, Emyria was appointed as Program Manager to develop a national clinical data
and analytics platform of COVID-19 patient cases in a partnership between NSW Health, Queensland Health,
QUT, the University of Sydney, Monash University and the Federal Government.
The Company also worked to enrol patients in a Phase 1 dose escalation trial for Zelira Therapeutics, serving as
a second site for tests of its medicinal cannabinoid oil formulation in patients with non-cancer pain.
In June, Emyria developed the Openly service to provide remote vital signs monitoring using just the camera
on a smart phone. While the technology is still in development, if successful, it will allow Emyria’s platform to
capture and measure vital signs such as heart rate and blood oxygen levels using just a smartphone camera.
Debut on the ASX – and beyond
FEBRUARY 2020
MAY 2020
JUNE 2020
AUGUST 2020
Emerald Clinics
listed on the
Australian Securities
Exchange (ASX),
ticker code EMD,
raising AU$6m.
Signed research
agreement to
accelerate
Zelira Therapeutics’
opioid sparing
clinical trial.
Emerald Clinics
appointed program
manager of
National Clinical
Data and Analytics
Platform (CDAP)
targeted at
COVID-19 response.
Professor
Sir John Tooke
was appointed to
the Board at listing.
Professor Sir Tooke is
a highly respected
thought leader in
learning health
systems and
clinical research.
Professor Sir Tooke
was knighted for his
services to medicine
in 2007.
Emerald Clinics
announced a
collaboration
to bring their
AI-powered,
contactless vital
sign technology
into its RWE
platform. This
deep integration,
once validated,
will allow Emerald
to capture vital
signs, alongside
important symptom
data, using
just a patient’s
smartphone. This
project is now
branded as Openly.
10
Debut on the ASX – and beyond
In early FY2021, Emyria signed a RWE contract with
Spectrum Biomedical UK to develop a RWE asset in the
United Kingdom. Spectrum is the UK subsidiary of the
world’s largest cannabis company, Canopy Growth, and
under the contract the Company will receive an upfront
fee of £150,000, with the capability to earn as much as
£400,000 (~A$723,000).
The Company finished the financial year
with revenues of $1.5 million,
a 987% increase from the previous
year, and $3.7 million in cash and cash
equivalents. A $2.2 million institutional
placement in August 2020 further
strengthened Emyria’s capital position.
Under the contract, the company will maintain independence in how it delivers the clinical care to patients,
allowing the ability to establish a UK-based clinic or partner with existing services.
Since the end of the financial year Emyria announced it had achieved record appointments for its clinical
services in Australia, despite the majority of health services trending downwards due to COVID-19. As a result,
the Company is actively hiring clinicians to meet growing demand for its clinical services, expanding its remote
monitoring capabilities and increasing its data insight platforms.
The Company is also well positioned to benefit from an interim decision delivered by the Therapeutic Goods
Administration (TGA) on 9 September 2020, which is recommending that low dose cannabinoid products (CBD)
be made available in Australian pharmacies without a prescription as a Schedule 3 medicine.
Registration of “low dose CBD” products would require a full submission to the TGA and the type of high-quality
evidence to support safety and effectiveness that it is Emyria’s business to provide.
JUNE 2020
AUGUST 2020
SEPTEMBER 2020
Emerald Clinics
signs contract
with the UK-based
biopharmaceutical
arm of the largest
cannabis company,
Canopy Growth UK,
to develop RWE
system in the UK.
Emerald Clinics
successfully raise
AU$2.2m
in placement.
The Openly app is
registered with the
Therapeutic Goods
Administration
(TGA) as a Class 1
medical device.
Emerald signs
professional services
agreement with
Mt Sinai Hospital’s
Precision Recovery
Team.
Emerald Clinics
finalises name
change to
Emyria Ltd
(ASX:EMD)
and breaks out
Emerald Clinics as
patient-services
arm of the business.
11
Emerald Clinics
Novel treatments, quality data
Emerald Clinics is focused on the development of
high-quality real-world evidence (RWE) around
the safe and effective use of unregistered
medicines such as pharmaceutical-grade
cannabinoid-based medicines (CBMs).
While the medicinal cannabis sector has gained
significant momentum globally, an almost
complete lack of high-quality, product specific
clinical data has constrained the uptake of
CBMs by clinicians, restrained approval by
regulators and prevented reimbursement by
insurance companies.
Emyria has opened patient-focused medical
clinics in NSW, VIC and WA to provide safe access
to novel treatments for suitably qualified patients,
in collaboration with referring doctors. These
clinics will remain trading as Emerald Clinics in
market and continue to serve a diverse patient
population, highly motivated to access novel
treatments and evidence-based care.
“Since opening our first clinic in December 2018,
Emerald Clinics has grown its patient base to
over 1000 within the first 12 months. Our data
model is now providing new insights into how
best to prescribe and use CBMs and is already
demonstrating patient benefits by enabling
reduced use of opioids and improved health
outcomes,” said Emyria MD, Dr Michael Winlo.
12
Clinical leadership, in real world settings
The Emerald Clinics’ data-centric business model has gained attention in the age of COVID-19.
In March 2020, following leadership in the conversation and technological shift to telehealth
internationally, Emerald Clinics was appointed program manager for the development of a national
Clinical Data and Analytics Platform (CDAP) of COVID-19 patient cases.
CDAP aims to capture clinical and real-world data to provide real-time clinical decision support for
COVID-19 patients. This is supported by Emerald’s real-world evidence platform, clinician-monitored
alert systems and telehealth service.
The platform was established by the Digital Health Cooperative Research Centre, a partnership between
NSW Health, Queensland Health, QUT, the University of Sydney, and Monash University.
“We are very pleased to have been chosen to help coordinate the development of this platform as it
is a recognition of Emerald’s unique expertise in real-world evidence and building learning health
systems,” said Emryia MD, Dr Michael Winlo.
The reach and impact of Emerald’s data platform will continue to grow, with multiple clinical trial and
collaboration opportunities now secured in addition to this CDAP opportunity.
Addressing challenges in RWE
Regulators are increasingly accepting of real-world evidence (RWE), realising it can fill crucial knowledge
gaps for clinicians, regulators and drug developers eager to learn whether treatments are safe and effective
in diverse patient populations. We founded Emyria to address major RWE challenges – as shown in the figure
below. Our Company is committed to the highest standards of RWE, at every stage of the process, as we
collect, curate and contextualise valuable clinical insights, in partnership with our patients.
Challenges in RWE
Access to quality data
35%
Applying data correctly to evidence strategy
30%
Selecting the right data sets
25%
Data integration and management
Proper analysis of data
Validating RWE generated
10%
20%
20%
SHYFT Analytics recently commissioned in-depth interviews with RWE decision-makers across biopharma
companies. This graph represents the percentage of respondents who identified challenges in different
areas of RWE.
13
Openly featured
on The Today Show
The Openly app is being developed at a time
when industries of all shapes and sizes are
deeply committed to monitoring the health
of communities.
Channel 9’s Today Show broadcast a three-minute
feature story on the technology in late August,
showing an example of how it could work in
practice and a demonstration onsite at the Emyria
headquarters in Perth, WA.
“The team of GPs is what sets this system apart,”
said Today Show reporter, Michael Genovese in his
story to preview the potential capabilities of
this technology.
Openly
Connect your people
Healthcare models have been pushed to new,
often devastating, limits during the COVID-19
crisis. What the pandemic has shown, at speed, is
the importance of real-world evidence (RWE) and
Emyria’s commitment to providing patient-centric
healthcare at home and in the community.
Emyria is in the process of developing a new app
called Openly, which aims to make meeting and
working on the frontline, safer.
The technology harnesses video and artificial
intelligence (AI) to support the capture of
vital signs in a completely contactless manner
by measuring subtle changes in colour
(micro-blushes) of the skin, pixel by pixel, in less
than a minute. Combining this technology with
data monitoring and telehealth consultations,
will create the potential for people to be actively
screened prior to meeting up in groups.
“Vital signs, such as heart rate and blood oxygen
levels, provide clinically relevant data, but are
often difficult to obtain from patients remotely.
Openly collects this information using a smart
phone camera and it is then processed and
analysed, remotely, with the help of our RWE
platform and clinical team,” said Emyria MD,
Dr Michael Winlo.
“Openly was registered by the TGA in September
2020. Its fast tracked success is a prime example
of what can happen when you bring together
an agile clinical service, which understands
patient needs and risks, with world-class
technology partners. We are immensely proud
of this innovation.”
Openly is being designed to help people get
back to work and communities to reconnect.
14
Openly workflow
App
1.
Risks & Symptoms
Participants prompted by
SMS, email or notification
to complete a “One Minute
Daily Review” of risk
factors and symptoms
2.
Vital Signs
Vital sign information
collected to improve
objective clinical
assessment
Control Centre
3.
Alerts
Evidence-based risk
scoring applied based on
patient inputs
Wellness Triage
HIGH
MEDIUM
LOW
Status
Optional: Based on
results, a ‘status’ and other
educational information
can be delivered to
participants
Control Centre
4.
5.
Clinical Screening
Management
Clinical team monitors
alerts and responds
with direct tele-health
consultation or coordinates
referral to appropriate
service
DATA
LOW
= Continue daily
review
< 24 hours
HIGH
Immediate
MEDIUM
Telehealth
Testing?
COVID-19+ve
Referral into supportive
monitoring program
COVID-19-ve
Continue with
15
The directors present their report for Emerald Clinics Limited (“Emerald” or “the Company”) and its subsidiaries
(“the Group”) for the financial year ended 30 June 2020.
Directors
The names of the directors in office at any time during or since the end of the year ended are:
Dr Stewart Washer
Executive Chairman
Dr Michael Winlo
Managing Director
(appointed on 26 November 2019 and was previously Chief Executive Officer)
Professor Alistair Vickery
Executive Medical Director
Dr Patrizia Derna Washer Research Director
(resigned on 28 October 2019)
Mr Matthew Callahan
Non-Executive Director
Professor Sir John Tooke
Non-Executive Director
(appointed on 10 February 2020)
Review of operations
During the financial year ended 30 June 2020, the Company became listed on the Australian Securities
Exchange on 12 February 2020 and its initial public offering raised $6 million (before costs). The Group
continued to provide a high level of care for its patients through Emerald’s specialist clinics whilst gathering
Real-World-Evidence (“RWE”) insights for unregistered treatments such as cannabinoid-based medicines. To
enhance the Group’s digital health platform, Emerald has invested in monitoring technology to enable remote
data capture from its patients.
Significant changes in state of affairs
On 10 July 2019, the Company issued 3,500,000 options to Dr Michael Winlo for an exercise price of $0.45 per
share and expiring on 13 June 2023. The vesting conditions are:
• One third immediately on issue;
• One third one year from date of issue subject to continued employment or service and;
• One third two years from date of issue subject to continued employment or service.
On 18 July 2019, the Company entered into a strategic collaborative agreement with Zelira Therapeutics
Limited where licence fees were payable in exchange for the provision of dose dependent efficacy insights.
On 7 August 2019, the Company incorporated four wholly owned subsidiaries namely:
•
•
•
•
Emerald Clinical Network Pty Ltd
Emerald Clinical Research Pty Ltd
Emerald Data Management Pty Ltd
Emerald IP Holdings Pty Ltd
16
Directors’ Report
On 26 September 2019, the Company entered into a heads of agreement with Australian Medical Research
and as part of the agreement was issued 600,000 options for an exercise price of $0.45 per share and expiring
on 13 June 2023. The vesting conditions are:
•
•
•
200,000 options vested immediately on date of issue;
200,000 options vest after 12 months after date of issue and;
200,000 options vest after 18 months after date of issue.
On 30 September 2019, the Company entered into a strategic collaborative agreement with
Canopy Growth Australia Pty Ltd where licence fees are payable in exchange for the provision of
product specific insights.
On 30 September 2019, the Company appointed Su-Mei Sain as Chief Financial Officer of the Company.
On 24 October 2019, the Company issued 1,000,000 options to Dr Phil Finch for an exercise price of
$0.45 per share and expiring on 13 June 2023. The vesting conditions are:
• One third immediately on issue;
• One third one year from date of issue subject to continued employment or service and;
• One third two years from date of issue subject to continued employment or service.
On 11 November 2019, the Company issued 1,000,000 options to Mrs Su-Mei Sain for an exercise price of
$0.45 per share and expiring on 13 June 2023. The vesting conditions are:
• One third immediately on issue;
• One third one year from date of issue subject to continued employment or service and;
• One third two years from date of issue subject to continued employment or service.
On 5 December 2019, the Company issued 2,777,778 fully paid ordinary shares at $0.18 per share raising
$500,000 of funds.
On 12 February 2020, the Company became listed on the Australian Securities Exchange (“ASX”) issuing
30 million ordinary shares at $0.20 per share giving the Company market capitalisation of $36.8 million. On
the date of the Company’s listing, the Convertible Note Subscription Deed expired and all notes outstanding
were converted to ordinary shares and have been issued. The Convertible Note value of $3,300,000 was
converted to 20,625,000 ordinary shares at $0.16 per share.
On 12 February 2020, Professor Sir John Tooke was appointed as Non-Executive Director of the Company.
On 27 February 2020, the Company commenced a sponsored Opioid Sparing Clinical Trial with
Zelira Therapeutics Limited.
On 1 April 2020, the Company entered into an agreement with University of Sydney to provide project advisory
services for the Clinical Data Analytics Platform targeted at COVID-19 patients.
On 30 April 2020, the Company entered into a Radium Capital loan agreement of $240,000 as a partial
advance against its accrued R&D tax rebate for the financial year ended 30 June 2020.
On 14 May 2020, the Company incorporated Openly Care Inc. in the United States of America
17
Directors’ Report Events after reporting date
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially neutral for the
Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the
reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
Government and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
On 10 August 2020, the Group announced on the ASX that it would be entering into a Real-World Evidence
contract with Spectrum Biomedical UK (“SBUK”) which is a subsidiary of Canopy Growth Corp (a Toronto
Exchange Security listed company TSX:TSE). Emerald will be responsible for collection of specific data points
including de-identified patient information, use of concomitant medicines, prescribed usage and diagnoses,
and a rate of patient reported outcome measures. This data will then be provided to SBUK as a per patient
pricing model. The contract value is up to GBP 400,000 (~AUD 723,000 and the Group is expected to receive
GBP 150,000 (~AUD 270,000) up front plus GBP 300 (~AUD 542) per patient. The contract term is 24 months.
On 14 August 2020, The Group announced on the ASX that it would be proposing a name change from
“Emerald Clinics Limited” to “Emyria Limited”. The name change is subject to approval by shareholder on
18 September 2020 and a notice of meeting was issued on 14 August 2020 on the ASX.
Apart from the above, there are no other matters or circumstances that have arisen since the end of the
financial year which have 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 periods.
Future development, prospects and business strategy
The Group will focus on developing its business which combines the treatment of patients and the capture of
high-quality clinical data to transform the way novel therapies are understood and researched. The Group will
then combine this data with health records and published information to generate powerful data sets that
provide actionable insights for physicians, drug developers, research groups and government departments.
The data asset developed, and associated technologies, will form the primary source of income for the Group,
generating license usage fees and royalties from third parties via a data-insights-as-a-service offerings while
also developing more effective clinical models internally.
Dividend paid and recommended
No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2020
(30 June 2019: nil).
18
Directors’ Report Information On Directors And Company Secretary
Dr Stewart Washer – Executive Chairman (Appointed on 1 July 2018)
Stewart has 25 years of CEO and Board experience in medical and agrifood biotech companies. He is currently
the Executive Chairman of Emerald Clinics Ltd, Chairman of Orthocell Ltd (ASX:OCC), a regenerative medicine
company and Director of Cynata Therapeutics Ltd (ASX:CYP) stem cell therapies.
Stewart has held a number of Board positions in the past, including Chairman of Hatchtech Pty Ltd that was
sold in 2015 for A$279m and was a Director of iCeutica that was sold to a US Pharma. He was also a Senator
with Murdoch University and was a Director of AusBiotech Ltd. Stewart was previously Chairman of Minomic
International Ltd cancer diagnosis and treatment and previously Director of Zelira Therapeutics Ltd (ASX:ZLD)
medical cannabis clinical studies and research.
Other current directorships of a public listed company
Cynata Therapeutics Limited – appointed as Director on 1 August 2013
Orthocell Limited – appointed as Chairman on 7 April 2014
Botanix Pharmaceuticals Limited – appointed as Director on 21 February 2019
Former directorships in last three years of a public listed company
Zelira Therapeutics Limited – from 17 November 2016 to 2 December 2019
Interest in shares and options
Shareholding – 48,550,499 (28,950,499 shares are in the control of Dr Stewart Washer and Dr Patrizia Washer)
Option holding – 1,500,000 (options held are in the control of Dr Stewart Washer and Dr Patrizia Washer)
Dr Michael Winlo – Managing Director (Appointed on 17 June 2019)
Michael has a Bachelor of Medicine and Bachelor of Surgery with Honours from the University of Western
Australia as well as a Master of Business Administration from Stanford University. Prior to Emerald, Michael was
CEO at Linear Clinical Research Ltd (Linear) until October 2019 –a company providing clinical trial services for
US- and Asia-based biotech companies. Linear was the first site in Australia and one of only a few in the world
to successfully adopt electronic data capture technology. Under Michael’s leadership, Linear’s revenues grew
over 300% in just over three years (to over $23 million per year). Michael retains a Directorship at Linear. Prior to
Linear, Michael was Health Lead at Palantir Technologies – a Big Data company based in Silicon Valley, California.
Other current directorships of a public listed company
None
Former directorships in last three years of a public listed company
None
Interest in shares and options
Shareholding - nil
Option holding – 3,500,000
19
Directors’ Report
Professor Alistair Vickery – Executive Medical Director (Appointed on 18 March 2019)
Alistair is the medical director of Emerald Clinics and has a wealth of expertise in clinical practice, health
service management, clinical and educational research and board director skills. He is adjunct Clinical
Professor of Primary Health Care at the University of Western Australia and Notre Dame University and an
active specialist general practitioner. He is the clinical lead of the research group CHASM (The Collaborative
for Health Care Analysis and Statistical Modelling) - providing high-level analysis and statistical modelling to
inform clinical service planning and service evaluation. Alistair is Board Chair of Black Swan Health, one of the
largest NFP primary health care service providers in Western Australia, and a Fellow of the Australasian College
of Health Service Management and an AICD graduate.
Other current directorships of a public listed Group
None
Former directorships in last three years of a public listed Group
None
Interest in shares and options
Shareholding - nil
Option holding – 2,000,000
Dr Patrizia Derna Washer – Research Director
(Appointed on 1 July 2018 and resigned as a Director on 28 October 2019)
Dr Washer holds a doctorate in microbiology from The University of Western Australia with postdoctoral
experience in cancer research. She has over ten years’ experience in business development managing the
commercialisation of technologies from early stage research and development through to clinical development
within the university and medical technology sector. Patrizia has previously worked as a clinical trial consultant
for a medical device Group, a medical cannabis research and development Group and has been a board
member of two medical start-up companies.
Other current directorships of a public listed Group
None
Former directorships in last three years of a public listed Group
None
Interest in shares and options
Shareholding – 28,950,499
Option holding – 1,500,000
The shares and options held by Dr Patrizia Washer are also in the control of Dr Stewart Washer.
20
Directors’ Report Mr Matthew Callahan – Non -Executive Director (Appointed on 1 July 2018)
Matthew is an experienced life sciences executive based in Philadelphia. He is a founding director of Emerald
and has been the founding CEO or Executive Director of a number of pharmaceutical and health tech
companies including Botanix Pharmaceuticals Ltd (ASX:BOT), iCeutica Inc, Churchill Pharma Inc. Dimerix
Biosciences (ASX:DXB) and Orthocell (ASX:OCC). He has led the development of four pharmaceutical products
that have received FDA approval and he has more than 25 years legal, IP and investment management
experience. Mr Callahan has worked as an investment director for two venture capital firms investing in
lifesciences, technology and other sectors, and was general manager of Australian listed technology and
licensing company ipernica (now Nearmap ASX:NEA), where he was responsible for the licensing programs that
generated more than $120M in revenue.
Other current directorships of a public listed Group
Botanix Pharmaceuticals Limited – re-appointed as Director on 10 February 2020
Orthocell Limited – re-appointed as Director on 10 February 2020
Former directorships in last three years of a public listed Group
Botanix Pharmaceuticals Limited – from 1 July 2016 to 23 August 2019
Orthocell Limited – from 30 May 2006 to 23 August 2019
Interest in shares and options
Shareholding – 19,600,000
Option holding - nil
21
Directors’ Report Professor Sir John Tooke – Non-Executive Director (Appointed on 10 February 2020)
Sir John is Executive Chairman of Academic Health Solutions, a start-up Group offering expert advice to clients
internationally on medical research and innovation strategy and health service transformation. He is Senior
Independent Director at BUPA Chile and was until 2019 non-executive director of the BUPA main Board and
the Chair of the Medical Advisory Council. He has recently been appointed as non-executive director of the
Northern Health Science Alliance in the UK. He is the Chair of Collaboration for the Advancement of Sustainable
Medical Innovation (CASMI) UCL and Chaired the Oversight Group for the Academy of Medical Sciences project
‘How we best use scientific evidence to judge the benefits and harms of medicines’. He also served as an
Independent Review Board Member for Google DeepMind Health (UK). Sir John was Head of the School of Life
and Medical Sciences at University College London (UCL) as Vice Provost (Health) and Academic Director of
UCL Partners from 2010 - 2015. He is the Immediate Past President of the Academy of Medical Sciences in
the UK.
Sir John is a clinician scientist with 30 years’ experience as a consultant physician specialising in diabetes,
endocrinology, vascular medicine and internal medicine with broad research experience (basic biomedical,
experimental medicine, and applied health research including improvement science) recognised through
Fellowship of the Academy of Medical Sciences. He held a Board position at the Francis Crick Institute
(2011 -2015) and was a Member of the Council for Science & Technology (2011-2015) reporting to the
Prime Minister (UK).
Other current directorships of a public listed company
None
Former directorships in last three years of a public listed company
None
Interest in shares and options
Shareholding – nil
Option holding – 500,000
Mr Simon Robertson – Company Secretary
Simon gained a Bachelor of Business from Curtin University in Western Australia and a Master of Applied
Finance from Macquarie University in New South Wales. He is a member of the Institute of Chartered
Accountants and Chartered Secretaries Australia. Simon currently holds the position of company secretary for a
number of publicly listed companies and has experience in corporate finance, accounting and administration,
capital raising and ASX compliance and regulatory requirements.
Principal activities
During the financial year ended 30 June 2020, the Group continued to provide a high level of care for its
patients through Emerald’s specialist clinics whilst gathering Real-World-Evidence (“RWE”) insights in relation
to novel therapies such as medicinal cannabinoids.
22
Directors’ Report Meeting of Directors
During the financial year ended 30 June 2020, the following table outlines the number of meetings held:
Full meetings of directors
Full meetings of directors
A
8
7
7
7
5
3
B
8
8
7
8
5
3
A
*
2
2*
2
2
*
B
*
2
2*
2
2
*
Stewart Washer
Chairman
Matthew
Callahan
Non-Executive Director
Michael Winlo
Managing Director
Alistair Vickery
Executive Director
Sir John Tooke
Non-Executive Director
Patty Washer
Executive Director
A = Number of meetings attended
B = Number of meetings held during the time the director held office or was a member of the committee during
the year
* = Not a member of the relevant committee
At the date of this report the Group has the following options on issue:
Exercise Price
Grant Date
Number
11,250,000
1,000,000
3,500,000
600,000
1,000,000
1,000,000
18,350,000
$0.45
$0.45
$0.45
$0.45
$0.45
$0.45
13 June 2019
19 June 2019
10 July 2019
Expiry Date
13 June 2023
13 June 2023
13 June 2023
26 September 2019
26 September 2023
24 October 2019
13 June 2023
11 November 2019
13 June 2023
No shares were issued during or since the end of the year as a result of the exercise of an option over unissued
shares of interest.
For details of options issued to directors and other key management personnel, please refer to the
remuneration report.
23
Directors’ Report Remuneration Report (audited)
This Remuneration Report, which has been audited, outlines the Key Management Personnel (as defined in
AASB 124 Related Party Disclosures) (“KMP”) remuneration arrangements for the Group, in accordance with the
requirements of the section 308 (3c) of the Corporations Act 2001 and its Regulations.
The KMP covered in this remuneration report are:
•
Stewart Washer – Executive Chairman
• Michael Winlo – Managing Director
(appointed on 26 November 2019 and was previously Chief Executive Officer)
• Alistair Vickery – Executive Medical Director
• Mr Matthew Callahan – Non-Executive Director
•
•
Sir John Tooke – Non-Executive Director (appointed on 10 February 2020)
Patrizia Washer – Research Director
(Dr Washer was a non-executive director of the Company until 28 October 2019)
• Adam James – Chief Operating Officer
•
Su-Mei Sain – Chief Financial Officer
The principles adopted have been approved by the Board and have been set out in this Remuneration Report.
This audited Remuneration Report is set out under the following main headings:
1. Principles used to determine the nature and amount of remuneration
2. Details of remuneration
3. Service agreements
4. Share-based compensation
The information provided under headings 1 to 4 above includes remuneration disclosures that are required
under Accounting Standard AASB 124, Related Party Disclosures.
1. Principles used to determine the nature and amount of remuneration
The objective of the Group’s executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework which has been set out in detail under the
remuneration structure in this Remuneration Report aligns executive reward with achievement of strategic
objectives and the creation of value for shareholders, and conforms to markets best practice for delivery
of reward. The Board ensures that executive reward satisfies the following key criteria for good reward
governance practices:
(i) competitiveness and reasonableness;
(ii) aligns shareholders and executive interests;
(iii) performance based and aligned to the successful achievement of strategic and tactical
business objectives; and
(iv) transparency.
24
Directors’ Report
Executive Directors
Remuneration to Executive Directors reflects the demands which are made on, and the responsibilities of, the
Executive Directors. Executive Directors’ remuneration is reviewed annually to ensure it is appropriate and in
line with the market. There are no retirement allowances or other benefits paid to Executive Directors other
than superannuation guarantee amounts as required.
The executive remuneration and reward framework has three components:
(i) base pay;
(ii) share-based payments; and
(iii) other remuneration such as superannuation and long service leave.
The combination of these comprises the Executive Director’s total remuneration.
Fixed remuneration, consisting of base salary and superannuation will be reviewed annually by the board,
based on individual contribution to corporate performance and the overall relative position of the Group to its
market peers.
Non - Executive Directors
Remuneration to Non-Executive Directors reflects the demands which are made on, and the responsibilities
of, the Non-Executive Directors. Non-Executive Directors’ remuneration is reviewed annually. The maximum
aggregate for remuneration of Non-Executive Directors is $500,000 and was approved by the board on
18 April 2018. For the year ended 30 June 2020, exclusive of superannuation guarantee the annual cash
remuneration for the Non-Executive Director was $50,000 per annum.
Company Performance
As an early stage health technology company, the Board does not consider the operating loss after tax as
one of the performance indicators when implementing an incentive-based remuneration policy. The board
considers that identification and securing of new business growth opportunities, the securing of funding
arrangements and responsible management of cash resources and the Company’s other assets as more
appropriate performance indicators to assess the performance of management.
Short-term incentives
During the financial year ended 30 June 2020 and in accordance with executive agreements between
the Company, the Managing Director and Medical Director were paid bonuses of $50,000 and $100,000
respectively for the successful listing of the Company on the Australian Securities Exchange on 12 February 2020.
No other short-term incentives were provided to the Directors or key management personnel of the Company.
The Company’s approach in regard to the use of short term cash incentives will be assessed by the board on an
ongoing basis as the company evolves.
Long-term incentives
To align the board and management with shareholder’s interests and with market practices of peer companies
and to provide a competitive total remuneration package, the Board introduced a long-term incentive (“LTI”)
plan to motivate and reward Executives and Non-Executive Directors. The LTI is provided as options over
ordinary shares of the Group under the rules of the Employee Securities Incentive Plan as approved on
12 February 2020. During the year ended 30 June 2020, there were 3,500,000 options issued to the
Managing Director and 1,000,000 options issued to the Chief Financial Officer of the Group.
25
Directors’ Report Group performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Group
performance as it is an early stage health care technology Group.
The table below shows the losses and earnings per share of the Company for the current and last two
financial years.
Net loss
(5,238,040)
(2,682,928)
Share price at year end (cents)
Loss per share (cents)
4.80
(3.04)
2.34
(2.06)
2020
2019
2018
(64,340)
2.34
(0.05)
2. Details of Remuneration
The amount of remuneration paid and entitlements owed to KMP is set out below.
YEAR ENDED 30 JUNE 2020
CASH REMUNERATION
Salary and
other fees
Bonus
Post–employment
benefits
(superannuation)
Annual leave
entitlement
movement
Total cash
payments and
entitlements
$
$
$
$
$
Directors
S Washer
M Winlo*
259,944
-
361,693
50,000
A Vickery*
354,786
100,000
M Callahan
50,000
Sir J Tooke***
124,248
Other Key
Management
Personnel
A James
S Sain**
P Washer****
197,256
118,904
267,217
-
-
-
-
-
1,734,048
150,000
-
25,000
16,625
-
-
18,842
11,357
25,000
96,824
-
26,624
24,231
-
-
12,307
8,723
-
259,944
463,317
495,642
50,000
124,248
228,405
138,984
292,217
71,885
2,052,757
* During the financial year ended 30 June 2020 and in accordance with their executive agreements,
Dr Winlo and Professor Vickery received a cash bonus in relation to the successful listing of the Company on
12 February 2020.
** Mrs Sain was appointed Chief Financial Officer on 30 September 2019.
*** In addition to Professor Tooke’s director’s fee, he also received a consultancy fee of $105,082 during the year.
**** Dr P Washer was Research Director until 28 October 2019.
26
REMUNERATION REPORT (AUDITED) Directors’ Report
YEAR ENDED 30 JUNE 2019
CASH REMUNERATION
Salary and
other fees
Bonus
Post–employment
benefits
(superannuation)
Annual leave
entitlement
movement
Total cash
payments and
entitlements
$
$
$
$
$
Directors
S Washer
A Vickery
300,000
125,254
M Callahan
-
P Washer
201,827
Other Key
Management
Personnel
A James
160,000
787,081
-
-
-
-
-
-
-
9,564
-
19,174
-
7,744
-
-
300,000
142,562
-
221,001
15,200
43,938
13,844
21,588
189,044
852,607
2020 TOTAL REMUNERATION
Options expensed
Total
Total cash
remuneration and
entitlements
$
$
$
LTI
% of
remuneration
259,944
463,317
495,642
50,000
124,248
228,405
138,984
292,217
2,052,757
-
42,624
528
-
-
396
27,073
396
71,017
259,944
505,941
496,170
50,000
124,248
228,801
166,057
292,613
2,123,774
0%
8.4%
0.1%
0%
0%
0.2%
16.3%
0.1%
Directors
S Washer
M Winlo*
A Vickery
M Callahan
Sir J Tooke
Other Key
Management
Personnel
A James
S Sain**
P Washer
* During the financial year ended 30 June 2020, Dr Winlo was issued 3,500,000 options.
** During the financial year ended 30 June 2020, Mrs Sain was issued 1,000,000 options.
27
Directors’ Report
2019 TOTAL REMUNERATION
Options expensed
Total
Total cash
remuneration and
entitlements
$
$
$
LTI
% of
remuneration
300,000
142,562
-
221,001
189,044
852,607
-
551
-
413
300,000
143,113
-
221,414
413
1,377
189,457
853,984
0%
0.4%
0%
0.2%
0.2%
Directors
S Washer
A Vickery
M Callahan
P Washer
Other Key
Management
Personnel
A James
There were no non-monetary benefits paid to the Directors or KMP for the year ended 30 June 2020.
Other than those disclosed above, there were no transactions with related parties to the KMP for the year
ended 30 June 2020.
3. Service Agreements
For the year ended 30 June 2020, the following service agreements were in place with the Directors and
KMP of Emerald Clinics:
On 27 July 2018, a Consultancy Agreement was entered into between the Company and Biologica Ventures
Pty Ltd nominating Dr Stewart Washer as Executive Chairman. Under the terms of the Agreement:
• Dr Washer was paid an annual consultancy fee of $300,000 per annum. On 2 December 2019, Dr
Washer’s Agreement was amended to reflect that his annual consultancy fee to be $200,000 per annum
commencing 12 February 2020.
• Dr Washer’s fees were paid to Biologica Ventures Pty Ltd.
• Under the general termination of consultancy provision, the Company may terminate the Agreement by
giving Dr Washer six months’ notice or payment in lieu of notice.
• Under the general termination of consultancy provision, Dr Washer may terminate the Agreement by giving
the Company three months’ notice or payment in lieu of notice.
•
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Executive is not entitled to any payment.
28
REMUNERATION REPORT (AUDITED) Directors’ Report On 3 May 2019, a Chief Executive Employment Agreement was entered into between the Company and
Managing Director Dr Michael Winlo. Under the terms of the Agreement:
• Dr Winlo was paid a base salary of $350,000 per annum plus statutory superannuation.
On 26 November 2019, Dr Winlo amended his employment agreement to consent and change his position
from Chief Executive Officer to Managing Director.
• Dr Winlo received a $50,000 bonus payable on the Company’s successful listing on the ASX which was
satisfied on 12 February 2020.
• Under the general termination of employment provision, the Company may terminate the Agreement by
giving Dr Winlo three months’ notice or payment in lieu of notice.
• Under the general termination of employment provision, Dr Winlo may terminate the Agreement by giving
the Company six months’ notice or payment in lieu of notice.
•
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Executive is not entitled to any payment.
On 18 March 2019, a Senior Executive Employment Agreement was entered into between the Company and
Medical Director Professor Alistair Vickery. Under the terms of the Agreement:
•
•
Professor Vickery was paid a base salary of $350,000 per annum plus statutory superannuation.
Professor Vickery received a $100,000 bonus payable on the Company’s successful listing on the ASX which
was satisfied on 12 February 2020.
• Under the general termination of employment provision, the Company may terminate the Agreement by
giving Professor Vickery twenty-four months’ notice or payment in lieu of notice.
• Under the general termination of employment provision, Professor Vickery may terminate the Agreement
by giving the Company twelve months’ notice or payment in lieu of notice.
•
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Executive is not entitled to any payment.
On 1 July 2018, a Consultancy Agreement was entered into between the Company and Research Director Dr
Patrizia Washer. Under the terms of the Agreement:
• Dr Washer was paid a consultancy fee of a minimum of $3,000 per week for 2 days a week inclusive of
statutory superannuation.
• Under the general termination of consultancy provision, the Company may terminate the Agreement by
giving Dr Washer one month’s notice or payment in lieu of notice.
• Under the general termination of consultancy provision, Dr Washer may terminate the Agreement by giving
the Company one months’ notice or payment in lieu of notice.
•
The Group may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Consultant will be paid up to the date of termination.
• Dr Washer resigned as a director of the Group on 28 October 2019 but remained as a consultant.
29
Directors’ Report On 14 November 2019, an Agreement was entered into between the Group and Mr Matthew Callahan for his
on-going appointment as Non-Executive Director. Under the terms of the Agreement:
• Mr Callahan was paid a remuneration package of $50,000 per annum base salary plus statutory
superannuation.
•
Termination of this Agreement will be upon the date provided by either party. There is no notice period
applicable to this Agreement.
• Mr Callahan has a consultancy agreement with the Group that commenced on 4 November 2019 for a
period of three years. Under the terms of the consultancy agreement:
•
The consultancy services include an hourly rate of USD $300 per hour and it will be subject to review on an
annual basis.
• Under the general termination of consultancy provision, the Group may terminate the Agreement by giving
Mr Callahan six month’s notice or payment in lieu of notice.
• Under the general termination of consultancy provision, Mr Callahan may terminate the Agreement by
giving the Group six months’ notice or payment in lieu of notice.
•
The Group may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Consultant will be paid up to the date of termination.
On 4 November 2019, an Agreement was entered into between the Group and Professor Sir John Tooke as
Non-Executive Director. Under the terms of the Agreement:
• Appointed as Non-Executive Director effective from 12 February 2020.
•
•
•
Professor Tooke was paid a remuneration package of $50,000 per annum base salary.
Termination of this Agreement will be upon the date provided by either party. There is no notice period
applicable to this Agreement.
Professor Tooke has a consultancy agreement with the Group that commenced on 1 April 2020 for a period
of three years. Under the terms of the Agreement:
•
The consultancy services include a rate of GBP $2,500 per day.
• Under the general termination of consultancy provision, the Group may terminate the Agreement by giving
Professor Tooke one month’s notice or payment in lieu of notice.
• Under the general termination of consultancy provision, Professor Tooke may terminate the Agreement by
giving the Group one months’ notice or payment in lieu of notice.
•
The Group may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, the Consultant will be paid up to the date of termination.
30
REMUNERATION REPORT (AUDITED) Directors’ Report On 1 July 2018, the Group entered into an Executive Services Agreement with Mr Adam James and
subsequently made an amendment to his Agreement on 22 November 2019. Under the terms of
the Agreement:
• Mr James was appointed in the capacity of Chief Operating Officer and paid a remuneration package of
$200,000 per annum base salary plus statutory superannuation.
•
•
•
The Group or Mr James may terminate the contract at any time by giving the other party six months’
notice or payment in lieu of notice.
The Group may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, Mr James is not entitled to any payment.
If there are monies owed by Mr James to the Group, the Group is entitled to offset this against Mr James’
termination payment.
On 30 September 2019, the Group entered into an employment contract with Mrs Su-Mei Sain and
subsequently made an amendment to her Agreement on 3 February 2020. Under the terms of
the Agreement:
• Mrs Sain was appointed in the capacity of Chief Financial Officer and paid a remuneration package of
$190,000 per annum base salary plus statutory superannuation.
•
•
The Group or Mrs Sain may terminate the contract at any time by giving the other party three months’
notice or payment in lieu of notice.
The Group may terminate the Agreement at any time without notice if serious misconduct has occurred.
On termination with cause, Mrs Sain is not entitled to any payment.
31
Directors’ Report 4. Share-Based Compensation
Option holdings
The numbers of options in the Group held during the year ended by each KMP of Emerald Clinics, including their
related parties, are set out below:
2020
Directors
S Washer
M Winlo
A Vickery
M Callahan
Sir J Tooke
Other Key Management
Personnel
A James
S Sain
P Washer
TOTAL
Balance at
the start of
the year
Granted
during the
year
Expired
during the
year
Other
changes
Balance at
the year
ended
-
-
-
3,500,000
2,000,000
-
500,000
-
-
-
2,500,000
3,500,000
1,500,000
-
-
1,000,000
1,500,000
-
5,500,000
4,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,500,000
2,000,000
-
500,000
6,000,000
1,500,000
1,000,000
1,500,000
10,000,000
As at 30 June 2020, the number of options that have vested and exercisable were 5,333,333 and the number
of options yet to vest and un-exercisable were 4,666,667.
The option terms and conditions of each grant of options over ordinary shares affecting remuneration of
Directors and other KMP in the year ended or future reporting years are as follows:
Options issued
Grant Date
Expiry date
10 Jul 2019
13 Jun 2023
11 Nov 2019
13 Jun 2023
0.45
0.0497
Exercise
price
Fair value
per option
$
0.45
$
0.0185
Vested
%*
33%
33%
Employee Securities
Incentive Plan
Employee Securities
Incentive Plan
* The vesting conditions are:
• One third immediately on issue;
• One third one year from date of issue subject to continued employment or service and;
• One third two years from date of issue subject to continued employment or service.
32
REMUNERATION REPORT (AUDITED) Directors’ Report The options issued to the during the financial year ended 30 June 2020 were valued using a Black-Scholes
model and were priced as follows:
Series 4
Series 7
0.10
0.45
70%
4 years
0.00%
0.97%
0.18
0.45
70%
4 years
0.00%
0.84%
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest rate
Shareholdings
The numbers of shares in the Group held during the year ended by each KMP of Emerald Clinics, including their
related parties, are set out below:
2020
Directors
S Washer*
M Winlo
A Vickery
M Callahan
Sir J Tooke
Other Key Management
Personnel
A James
S Sain
P Washer*
Balance at the start of
the year
Other changes during
the year
Balance for the year
ended
48,000,000
550,499
48,550,499
-
-
19,600,000
-
1,960,000
-
-
69,560,000
-
-
-
-
-
20,000
-
570,499
-
-
19,600,000
-
1,960,000
20,000
-
70,130,499
* Dr Stewart Washer and Dr Patrizia Washer both control 28,950,499 Emerald shares.
There were no shares granted to KMP’s during the reporting year as remuneration.
33
Directors’ Report Use of remuneration consultants
No remuneration consultants were engaged or used for the Group during the year ended 30 June 2020.
Voting and comments made at the Company’s Annual General Meeting
At the AGM held in 2019, the Company was a public unlisted entity therefore was not required to approve a
Remuneration report for its financial year ended 30 June 2019.
Share trading policy
The trading of shares issued to participants under any of the Group’s employee equity plans is subject to, and
conditional upon, compliance with the Group’s employee security trading policy as per the Group’s Corporate
Governance Policy. Directors and executives are prohibited from entering into any hedging arrangements over
unvested options under the Group’s employee option plan. The Group would consider a breach of this policy as
gross misconduct which may lead to disciplinary action and potentially dismissal.
This concludes the Remuneration Report, which has been audited.
34
REMUNERATION REPORT (AUDITED) Directors’ Report Indemnifying officers
During the financial year, the Company has paid a premium of $37,186 excluding GST (2019: $25,000) to insure
the Directors and secretary of the Company. The liabilities insured are legal costs that may be incurred in
defending civil or criminal proceedings that may be brought against the officers in their capacity as officers
of the Company, and any other payments arising from liabilities incurred by the officers in connection with
such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of
duty by the officers or the improper use by the officers of their position or of information to gain advantage for
themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium
between amounts relating to the insurance against legal costs and those relating to other liabilities.
Proceedings on behalf of the Group
No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any
proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all
or any part of those proceedings.
The Group was not a party to any such proceedings during the year.
Auditor
Stantons International was appointed as auditors for the Group in office in accordance with section 327 of the
Corporations Act 2001.
Audit Services
During the year ended 30 June 2020, $36,679 was paid or is payable for audit services provided by the
auditors. There were no non-audit services performed during the financial year.
Auditor’s independence declaration
The auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
included on page 76 of the financial report.
Corporate Governance
The Directors support and adhere to the principles of corporate governance, recognising the need for the
highest standard of corporate behaviour and accountability.
Signed in accordance with a resolution of the Board of Directors:
__________________
Dr Michael Winlo
Managing Director
35
Directors’ Report Financial Report
EMERALD CLINICS LIMITED
ABN 96 625 085 734
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
FOR THE YEAR ENDED 30 JUNE 2020
RReevveennuuee
Sales revenue
Operating costs
GGrroossss lloossss
OOtthheerr rreevveennuuee
Interest and other income
Research and Development grant received
TToottaall OOtthheerr rreevveennuuee
EExxppeennsseess
Research and Development expenses
Employee wages and director fees
Travel and conference expenses
Corporate compliance costs
Administration costs
IT consultancy fees
Consultancy fees
Finance costs
Share based payments
Depreciation and amortisation expense
Intangible assets written off
TToottaall eexxppeennsseess
NNoottee
1.2(xiv)
GGrroouupp
22002200
CCoommppaannyy
22001199
((AAss RReessttaatteedd))
$$
$$
2
2
13
6,7,8
8
1,013,452
(1,938,477)
((992255,,002255))
109,909
(646,301)
((553366,,339922))
25,046
468,177
449933,,222233
28,747
-
2288,,774477
(1,505,164)
(1,478,501)
(294,541)
(624,200)
(63,727)
(107,528)
(169,646)
(59,544)
(79,328)
(383,481)
(221,487)
(685,177)
(224,574)
(462,815)
(219,310)
(165,297)
(92,997)
(4,045)
(4,735)
(94,846)
(40,578)
((44,,880066,,223388))
-
((22,,117755,,228833))
LLoossss bbeeffoorree iinnccoommee ttaaxx eexxppeennssee
((55,,223388,,004400))
((22,,668822,,992288))
Income tax expense
3
-
-
LLoossss aafftteerr iinnccoommee ttaaxx ffoorr tthhee yyeeaarr//ppeerriioodd
((55,,223388,,004400))
((22,,668822,,992288))
Other Comprehensive Income for the year/period:
Items that may be reclassified subsequently to profit or loss
Other Comprehensive income for the year/period, net of tax
-
-
-
-
TToottaall CCoommpprreehheennssiivvee LLoossss ffoorr tthhee yyeeaarr//ppeerriioodd
((55,,223388,,004400))
((22,,668822,,992288))
BBaassiicc aanndd ddiilluutteedd lloossss ppeerr sshhaarree ((cceennttss))
16
((33..0044))
(2.06)
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
36
Page 19
Financial Report
EMERALD CLINICS LIMITED
ABN 96 625 085 734
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
AASSSSEETTSS
CCuurrrreenntt aasssseettss
Cash and cash equivalents
Trade and other receivables
Prepayments
TToottaall ccuurrrreenntt aasssseettss
NNoonn--ccuurrrreenntt aasssseettss
Restricted cash
Right-of-use assets
Plant and equipment
Intangible assets
TToottaall NNoonn--ccuurrrreenntt aasssseettss
TToottaall AAsssseettss
LLIIAABBIILLIITTIIEESS
CCuurrrreenntt LLiiaabbiilliittiieess
Trade and other payables
Borrowings
Provisions
Lease liabilities
TToottaall CCuurrrreenntt LLiiaabbiilliittiieess
NNoonn--CCuurrrreenntt LLiiaabbiilliittiieess
Convertible notes
Provisions
Lease liabilities
TToottaall NNoonn--CCuurrrreenntt LLiiaabbiilliittiieess
TToottaall LLiiaabbiilliittiieess
NNeett AAsssseettss
EEQQUUIITTYY
Contributed equity
Reserves
Accumulated losses
TToottaall EEqquuiittyy
NNoottee
GGrroouupp
CCoommppaannyy
22002200
$$
22001199
$$
4
5
6
7
8
9
9
11
9
10
11
9
12
14
3,686,333
2,608,814
121,615
31,433
59,883
-
33,,883399,,338811
22,,666688,,669977
156,558
323,390
598,305
147,310
11,,222255,,556633
106,258
-
706,485
43,468
885566,,221111
55,,006644,,994444
33,,552244,,990088
461,124
247,154
142,088
152,689
231,089
-
41,659
-
11,,000033,,005555
227722,,774488
-
68,000
210,972
2,752,621
-
-
227788,,997722
22,,775522,,662211
11,,228822,,002277
33,,002255,,336699
33,,778822,,991177
449999,,553399
11,751,953
2,872,738
84,063
374,069
(8,053,099)
(2,747,268)
33,,778822,,991177
449999,,553399
The accompanying notes form part of these financial statements
Page 20
37
Financial Report
EMERALD CLINICS LIMITED
ABN 96 625 085 734
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
FOR THE YEAR ENDED 30 JUNE 2020
GGRROOUUPP
CCoonnttrriibbuutteedd
EEqquuiittyy
RReesseerrvveess
AAccccuummuullaatteedd
LLoosssseess
TToottaall EEqquuiittyy
$$
$$
$$
$$
Balance at 1 July 2019
Loss after income tax for the year
2,872,738
374,069
(2,747,268)
499,539
-
-
(5,238,040)
(5,238,040)
Other comprehensive income for the year, net of tax
TToottaall CCoommpprreehheennssiivvee lloossss
Adjustment on initial application of AASB 16
Proceeds from issued capital
Transaction costs from issued capital
Conversion of Convertible Notes to shares
Transaction cost from conversion of Convertible Note
Issue of options
-
-
-
6,500,000
(742,740)
3,300,000
(178,045)
-
-
-
-
-
-
(369,334)
-
79,328
-
(5,238,040)
(67,791)
-
-
-
-
-
-
(5,238,040)
(67,791)
6,500,000
(742,740)
2,930,666
(178,045)
79,328
BBaallaannccee aatt 3300 JJuunnee 22002200
1111,,775511,,995533
8844,,006633
((88,,005533,,009999))
33,,778822,,991177
CCOOMMPPAANNYY
CCoonnttrriibbuutteedd
EEqquuiittyy
$$
Balance at 1 July 2018
Loss after income tax for the year
Other comprehensive income for the year, net of tax
TToottaall CCoommpprreehheennssiivvee lloossss
Issue of options
Convertible Note – equity component
2,872,738
-
-
-
-
-
RReesseerrvveess
$$
-
-
-
4,735
369,334
AAccccuummuullaatteedd
LLoosssseess
$$
(64,340)
(2,682,928)
-
(2,682,928)
-
-
TToottaall EEqquuiittyy
$$
2,808,398
(2,682,928)
-
(2,682,928)
4,735
369,334
BBaallaannccee aatt 3300 JJuunnee 22001199
22,,887722,,773388 337744,,006699
((22,,774477,,226688))
449999,,553399
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
38
Page 22
Financial Report
EMERALD CLINICS LIMITED
ABN 96 625 085 734
STATEMENT OF CASH FLOWS
STATEMENT OF CASH FLOWS
FOR THE YEAR 30 JUNE 2020
FOR THE YEAR 30 JUNE 2020
CCaasshh ffllooww ffrroomm ooppeerraattiinngg aaccttiivviittiieess
Receipts from customers
Interest received
Payments to suppliers and employees
Interest and other finance costs paid
R&D refund received
NNeett ccaasshh ((uusseedd iinn)) ooppeerraattiinngg aaccttiivviittiieess
CCaasshh fflloowwss ffrroomm iinnvveessttiinngg aaccttiivviittiieess
Payments for plant and equipment
Payments for security deposits
NNeett ccaasshh ((uusseedd iinn)) iinnvveessttiinngg aaccttiivviittiieess
CCaasshh ffllooww ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
Proceeds from issue of shares
Transaction costs paid from the issue of shares
Net proceeds from convertible note
Proceeds from Borrowings
Repayment of lease liabilities
Net payments cash backed guarantees
NNeett ccaasshh ggeenneerraatteedd ffrroomm ffiinnaanncciinngg aaccttiivviittiieess
NNoottee
GGrroouupp
22002200
CCoommppaannyy
22001199
$$
$$
1,021,047
21,436
109,909
28,747
(5,937,031)
(2,731,878)
(26,100)
-
468,177
((44,,445522,,447711))
-
((22,,559933,,222222))
(201,806)
-
((220011,,880066))
(844,800)
(56,258)
((990011,,005588))
6,500,000
(742,740)
-
-
-
3,113,602
240,221
(215,385)
(50,300)
55,,773311,,779966
-
-
(50,000)
33,,006633,,660022
15
9
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
1,077,519
(430,678)
2,608,814
3,039,492
CCaasshh aanndd ccaasshh eeqquuiivvaalleennttss aatt tthhee eenndd ooff tthhee yyeeaarr
4
33,,668866,,333333
22,,660088,,881144
The accompanying notes form part of these financial statements
The accompanying notes form part of these financial statements
Page 23
39
Financial Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2020
Emerald Clinics Limited (“Emerald” or “the Company”) is a Company incorporated in Australia whose shares
are publicly traded on the Australian Securities Exchange (“ASX”). The consolidated financial statements of
the Group as at and for the year ended 30 June 2020 comprise the Company and its subsidiaries (together
referred to as the “Group” or “consolidated entity” and individually as a “Group entity”).
The separate financial statements of the parent entity, Emerald Clinics Limited, have not been presented with
this financial report. Summary parent information has been included in note 18.
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board (“AASB”) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to
which they apply. The financial statements and notes also comply with International Financial Reporting
Standards as issued by the International Accounting Standard Board (IASB). Material accounting policies
adopted in the preparation of this financial report are presented below. They have been consistently applied
unless otherwise stated.
The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. The
consolidated financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and the settlement of liabilities in the
ordinary course of business.
The financial statements are presented in Australian Dollars (“AUD”).
(i) Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where
applicable, the revaluation of financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
(ii) Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the consolidated entity’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are disclosed in note 1.1(vi).
40
Financial Report
(iii) Operating segments
Operating segments are presented using the ‘management approach’, where the information presented is on
the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The CODM is
responsible for the allocation of resources to operating segments and assessing their performance.
(iv) Going Concern
The spread of novel coronavirus (COVID-19) was declared a public health emergency by the World Health
Organisation on 31 January 2020 and upgraded to a global pandemic on 11 March 2020. The rapid rise of
the virus has seen an unprecedented global response by Governments, regulators and industry sectors. The
Australian Federal Government enacted its emergency plan on 29 February 2020 which has seen the closure
of Australian borders from 20 March 2020, an increasing level of restrictions on corporate Australia’s ability to
operate, significant volatility and instability in financial markets and the release of a number of government
stimulus packages to support individuals and businesses as the Australian and global economies face
significant slowdowns and uncertainties.
For the year ended 30 June 2020, COVID-19 has impacted the Group, specifically as follows:
•
Implications on the current period financial performance and cash flows (particularly operating cash flows).
• Details of financing facilities sought and now available at balance date, potentially to cover any working
capital deficiency, including expiry periods and any significant requirements under the facility agreements
i.e. debt covenants.
• Details of financial support received from the Australian government.
As of 30 June 2020, the Group had net working capital surplus of $2,836,326 and cash balance of $3,686,333.
The Group did not have any capital commitments of as of 30 June 2020.
The Directors have prepared projected cash flow information for the twelve months from the date of approval
of these financial statements taking into consideration the estimation of the continued business impacts of
COVID-19. In response to the uncertainty arising from this, the Directors have considered severe but plausible
downside forecast scenarios.
These forecasts indicate that, taking account of reasonably possible downsides, the Group is expected to
continue to operate, with headroom and within available cash levels. Key to the forecasts are relevant
assumptions regarding the business, business model, any legal or regulatory restrictions and shareholder
support, in particular:
• Description of the different scenarios modelled including length of government-imposed lockdowns and
recovery periods, risks, conditions or dependencies for these to occur.
•
Key assumptions related to the impact of government-imposed lockdowns on patient revenues.
• Details of the results of the key scenario modelling on the entity’s ability to meet its obligations over the
forecast period.
• Mitigating actions undertaken or planned by directors and group to manage and respond to cash flow
uncertainties or potential risks of shortfall in financing and the implementation status and uncertainties
that arise from them.
41
The Directors are satisfied they will be able to raise additional funds as required and thus it is appropriate to
prepare the financial statements on a going concern basis. Despite COVID-19 affecting socio-economic factors
in Australia and worldwide, the Group’s clinic operations and collection of insights had not been drastically
impacted. The Directors are confident that the operations of the Group will continue to grow with the
assistance of raising additional funds.
If necessary, the Group can delay research and development expenditures and Directors can also institute cost
saving measures to further reduce corporate and administrative costs or explore other opportunities to sell
data and/or its clinics. In the event that the Group is unable to obtain sufficient funding for ongoing operating
and capital requirements, there is a material uncertainty that may cast significant doubt as to whether
the Group will continue as a going concern and therefore proceed with realising its assets and discharging
its liabilities in the normal course of business at the amounts stated in the financial report. The financial
statements do not include any adjustment relating to the recoverability or classification of recorded asset
amounts or to the amounts or classification of liabilities that may be necessary should the Group not be able to
continue as a going concern.
(v) New and amended standards adopted by the entity
The Group has adopted AASB 16: Leases using modified retrospective approach with the cumulative effect of
initially applying AASB 16 recognised as at 1 July 2019. In accordance with AASB 16, the comparatives for the
2019 reporting period have not been restated. The impact of the adoption of this standard and the respective
account policies is disclosed below.
Changes in accounting policy
The Group has recognised a lease liability and right-of-use asset for all leases (with exception of short-term
and low value leases) recognised as operating leases under AASB 117: Leases where the Group is a lessee.
Lease liabilities are measured at the present value of the remaining lease payments. The Group’s incremental
borrowing rate as at 1 July 2019 was used to discount the lease payments.
The right-of-use assets were measured at their carrying values as if AASB 16 Leases had been applied since the
commencement date but discounted using the Group’s incremental borrowing rate per lease term as at 1 July
2019. The right-of-use assets have been recognised in the statement of financial position as at 1 July 2019.
The following practical expedients have been used by the Group in applying AASB 16 for the first time:
•
•
•
•
For a portfolio of leases that have been reasonably similar characteristics, a single discount rate has
been applied.
Leases that have remaining lease term of less than 12 months as at 1 July 2019 have been accounted for
in the same way as short-term lease.
The use of hindsight to determine lease terms or contracts that have options to extend or terminate.
The Group’s weighted average incremental borrowing rate on 1 July 2019 applied to the lease
liabilities was 6%.
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report (vi) Use of estimates and judgements
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually evaluates
its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgements, estimates and assumptions on historical experience and on other various
factors, including expectations of future events, management believes to be reasonable under the circumstances.
The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements,
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts
of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting
estimates and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss
and equity. Refer to note 13.
Provision for impairment of receivables
Included in trade and other receivables at the end of the reporting period is an amount of $40,455 that is
outstanding for more than 30 days. While there is inherent uncertainty, the directors understand that the full
amount of debt is likely to be received and therefore no provision for impairment has been made.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit (“CGU”) exceeds its recoverable
amount, which is the higher of its fair value less costs of disposal and its value in use.
The fair value less costs of disposal calculation is based on available data from binding sales transactions,
conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of
the asset.
The value in use calculation is based on a Discount Cash Flow (“DCF”) model. The cash flows are derived
from the budget for the next five years and do not include restructuring activities that the Group is not
yet committed to or significant future investments that will enhance the asset’s performance of the CGU
being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the
expected future cash-inflows and the growth rate used for extrapolation purposes.
Determining the lease term of contract with renewal and termination options – Group as lessee
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by
an option to terminate the lease, if it is reasonably certain not to be exercised. The Group has a lease contract
that includes an extension option. The Group applies judgement in evaluating whether it is reasonably certain
whether or not to exercise the option to renew the lease. That is, it considers all relevant factors that create
an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is within its control and affects
its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant
leasehold improvements or significant customisation to the leased asset).
43
Financial Report Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has
had, or may have, on the Group based on known information. This consideration extends to the nature of
the products and services offered, customers, supply chain and staffing . Other than as addressed in specific
notes, there does not currently appear to be either any significant impact upon the financial statements or any
significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at
the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.
(vii) Principles of consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by
Emerald at the end of the reporting year. A controlled entity is any entity over which Emerald has the ability
and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities.
Where controlled entities have entered or left the Group during the year, the financial performance of those
entities is included only for the period of the year that they were controlled. A list of controlled entities is
contained in note 23 to the financial statements.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities
in the consolidated Group have been eliminated in full on consolidation.
(viii) New Accounting Standards and Interpretations not yet mandatory or early adopted
Certain new accounting standards and interpretations have been published that are not mandatory for
30 June 2020 reporting periods and have not been early adopted by the Group. The Group’s assessment of
the impact of these new standards and interpretations is set out below. These standards are not expected
to have a material impact on the entity in the current or future reporting periods and on foreseeable
future transactions.
1.2 Significant Accounting Policies
(i) Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity operates (“the functional currency”). The
consolidated financial statements are presented in the Australian dollar ($), which is the Group’s functional
and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange
rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow
hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign
operation.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss,
within finance costs. All other foreign exchange gains and losses are presented in the statement of profit or
loss on a net basis within other income or other expenses.
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchanges
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried
at fair value are reported as part of the fair value gain or loss. For example, translation difference on non-
monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit
or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities
classified as financial assets are recognised in other comprehensive income.
Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
•
•
assets and liabilities for each statement of financial position presented are translated at the closing rate
at the date of that statement of financial position,
income and expenses for each statement of profit or loss and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the dates of the transactions), and
•
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net
investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain
or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
(ii) Revenue from Contracts with Customers
AASB 15 establishes a five-step model to account for revenue arising from contracts with customers and
requires that revenue to be recognised at an amount that reflects the consideration to which an entity expects
to be entitled in exchange for transferring goods or services to a customer. The five-step process outlined in
AASB 15 are as follows:
•
•
•
•
•
identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
Revenue is recognised when or as a performance obligation in the contract with customer is satisfied, i.e. when
the control of the goods or services underlying the particular performance obligation is transferred to the
customer. A performance obligation is a promise to transfer a distinct goods or service (or a series of distinct
goods or services that are substantially the same and that have the same pattern of transfer) to the customer
that is explicitly stated in the contract and implied in the Group’s customary business practices.
45
Financial Report Revenue is measured at the amount of consideration to which the Group expects to be entitled in exchange for
transferring the promised goods or services to the customers, excluding amounts collected on behalf of third
parties such as sales taxes or services taxes. If the amount of consideration varies due to discounts, rebates,
refunds, credits, incentives, penalties or other similar items, the Group estimates the amount of consideration to
which it will be entitled based on the expected value or the most likely outcome. If the contract with customer
contains more than one performance obligation, the amount of consideration is allocated to each performance
obligation based on the relative stand-alone selling prices of the goods or services promised in the contract.
Revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration
is subsequently resolved.
The control of the promised goods or services may be transferred over time or at a point in time. The control
over the goods or services is transferred over time and revenue is recognised over time if:
•
•
•
the customer simultaneously receives and consumes the benefits provided by the Group’s performance as
the Group performs;
the Group’s performance creates or enhances an asset that the customer controls as the asset is created or
enhanced; or
the Group’s performance does not create an asset with an alternative use and the Group has an
enforceable right to payment for performance completed to date.
Revenue for performance obligation that is not satisfied over time is recognised at the point in time at which
the customer obtains control of the promised goods or services.
(a) Sales of service
Revenue from rendering of service is recognised upon the delivery of service to the customers.
(b) Research and development tax incentive
Refund amounts receivable under the Federal Government’s Research and Development Tax Incentives are
recognised as other income in the period it is received.
(c)
Interest Income
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 through the
expected life of the financial asset to that assets’ net carrying amount on initial recognition.
(d) Government grants
Government grants are assistance by the government in the form of transfers of resources to the Group in
return for past or future compliance with certain conditions relating to the operating activities of the entity.
Government grants include government assistance where there are no conditions specifically relating to the
operating activities of the Group other than the requirement to operate in certain regions or industry sections.
Government grants relating to income are recognised as income over the periods necessary to match them
with the related costs and grants relating to assets are regarded as a reduction in asset. 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 net of expenses.
46
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report (iii) Cash and cash equivalents
Cash and cash equivalents include cash on hand and deposits with banks and highly liquid investments with
original maturities of three months or less.
(iv) Trade and other payables
Trade and other payables represent the liability outstanding at reporting date for goods and services received
by the Group during the reporting year, which remain unpaid. The balance is recognised as a current liability
with the amounts normally paid within 30 days of recognition of the liability.
(v) Income Tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and
liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases
of the assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except where the deferred
income tax arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of transaction, affects neither the accounting profit nor taxable profit or loss.
Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused
tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused tax assets and unused tax losses
can be utilised except where the deferred income tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not a business combination and,
at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
when the asset is realised or the liability is settled, based on tax rates of (and tax laws) that have been enacted
or substantially enacted at the balance sheet date. Income taxes relating to items recognised directly in equity
are recognised in equity and not in the statement of comprehensive income.
(vi) Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Basic earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing:
•
•
The profit/(loss) attributable to owners of the Group, excluding any costs of servicing equity other than
ordinary shares
By the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.
47
Financial Report (vii) Impairment of assets
At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether there
is an indication that those assets have been impaired. If such an indication exists, the recoverable amount
of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the
asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
statement of comprehensive income.
(viii)
Financial Instruments
Classification and measurement
Under AASB 9, the Group initially measures a financial asset as its fair value plus, in the case of financial asset
not at fair value through profit or loss, transaction costs. Financial assets are then subsequently measured
at fair value through profit or loss (“FVTPL”), amortised cost, or fair value through other comprehensive
income (“FVOCI”).
Initial recognition and measurement
Financial assets are classified at initial recognition and subsequently measured at amortised cost, fair value
through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow
characteristics and the Group’s business model for managing them. With the exception of trade receivables
that do not contain a significant financing component or for which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant
financing component or for which the Group has applied the practical expedient are measured at the
transaction price determined under AASB 15.
Subsequent measurement
The Group’s financial assets at amortised cost includes trade and other receivables.
Impairment of financial assets
For trade receivables, the Group applies a simplified approach in calculating expected credit losses (“ECLs”).
Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on
lifetime ECLs at each reporting date.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss,
loans and borrowings, payables or as derivatives designated as hedging instruments in an effective hedge, as
appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, borrowings and lease liabilities.
48
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report (viii) Financial Instruments
Subsequent measurement
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost
using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are
derecognised as well as through the effective interest rate amortisation process. Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
effective interest rate. The effective interest rate amortisation is included as finance costs in the statement of
profit or loss. This category generally applies to interest-bearing loans and borrowings.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of profit or loss.
Compound instruments
The component parts of compound instruments (convertible bonds) issued by the Group are classified
separately as financial liabilities and equity in accordance with the substance of the contractual arrangements
and the definitions of a financial liability and an equity instrument. Conversion options that will be settled by
the exchange of a fixed amount of cash or another financial asset for a fixed number of the Group’s own equity
instruments is an equity instrument.
At the date of issue, the fair value of the liability component is estimated using the prevailing market interest
rate for similar non-convertible instruments. This amount is recognised as a liability on an amortised cost basis
using the effective interest method until extinguished upon conversion or at the instrument’s maturity date.
The conversion option classified as equity is determined by deducting the amount of the liability component
from the fair value of the compound instrument as a whole. This is recognised and included in equity, net of
income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity
will remain in equity until the conversion option is exercised, in which case, the balance recognised in equity
will be transferred to share capital. Where the conversion option remains unexercised at the maturity date of
the convertible note, the balance recognised in equity will be transferred to retained earnings. No gain or loss
is recognised in profit or loss and other comprehensive income upon conversion or expiration of the conversion
option. Transaction costs that relate to the issue of the convertible notes are allocated to the liability and
equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the
equity component are recognised directly in equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are amortised over the lives of the convertible
notes using the effective interest method.
49
Financial Report (ix) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended use, the costs of dismantling and removing the
items and restoring the site on which they are located and capitalised borrowing costs.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net
within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation
reserve are transferred to retained earnings.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits embodied within the part will flow to the Group,
and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of
the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount
substituted for cost, less its residual value.
Depreciation is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each
part of an item of property, plant and equipment, since this most closely reflects the expected pattern of
consumption of the future economic benefits embodied in the asset. Right-of-use assets are generally
depreciated over the shorter of the assets useful life and the lease term on a straight-line basis.
The depreciation rates used for each class of asset are:
•
•
•
fixtures and fittings
22.5% - 40%
leasehold improvements
20%
computer equipment and software
22.5% - 40%
• Right-of-use assets
20%
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate.
50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
(x) Intangible Assets
(a) Software
Costs associated with maintaining software programmes are recognised as an expense as incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software
products controlled by the Group are recognised as intangible assets where the following criteria are met:
•
it is technically feasible to complete the software so that it will be available for use,
• management intends to complete the software and use or sell it,
•
•
•
there is an ability to use or sell the software,
it can be demonstrated how the software will generate probable future economic benefits,
adequate technical, financial and other resources to complete the development and to use or sell the
software are available, and
•
the expenditure attributable to the software during its development can be reliably measured.
Directly attributable costs that are capitalised as part of the software include employee costs and an
appropriate portion of relevant overheads. Capitalised development costs are recorded as intangible assets
and amortised from the point at which the asset is ready for use.
The Group amortises software with a limited useful life using the straight-line method between 2-5 years.
(xi) Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects
some or all of a provision to be reimbursed the reimbursement is recognised as a separate asset but only when
the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of
Profit or Loss and Other Comprehensive Income net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the reporting date. The discount rate used to determine the present value
reflects current market assessments of the time value of money and the risks specific to the liability.
The increase in the provision resulting from the passage of time is recognised in finance costs.
(xii) Employee Benefits
(a) Equity Settled Compensation
The Group operates equity-settled share-based payment employee share and option schemes. The fair
value of the equity to which employees become entitled 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.
51
Financial Report (b) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled
within 12 months after the end of the period in which the employees render the related service are recognised
in respect of employees’ services up to the end of the reporting period and are measured at the amounts
expected to be paid when the liabilities are settled.
The liability for annual leave is recognised in the provision for employee benefits. All other short-term employee
benefit obligations are presented as payables.
(c) Other long-term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months
after the end of the period in which the employees render the related service is recognised in the provision for
employee benefits and measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and
periods of service. Expected future payments are discounted using market yields at the end of the reporting
period on national government bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
(d) Share-based payments
Share-based compensation benefits are provided to directors, employees and consultants via the option terms
and conditions set out by the Group.
The fair value of options granted under the option terms and conditions set out by the Group is recognised as
a share based payments expense with a corresponding increase in equity. The total amount to be expensed
is determined by reference to the fair value of the options granted, which includes any market performance
conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-
market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of options that are expected to
vest. The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number
of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of
the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
When the options are exercised, the Group transfers the appropriate amount of shares to the director,
employee or consultant. The proceeds received net of any directly attributable transaction costs are credited
directly to equity.
(e) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when
an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminating the employment of current employees
according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a
result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the
end of the reporting period are discounted to present value.
52
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report (xiii) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, except where the amount
of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statements of financial position are stated inclusive of the amount of GST
receivable or payable. Cash flows are presented in the statement of cash flows on a gross basis, except for
the GST component of investing and financing activities, which are disclosed as operating cash flows. The net
amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or
payables in the statements of financial position.
(xiv)
Comparative Figures
Where necessary, comparatives have been re-classified and re-positioned for consistency with current year
disclosures. The following items have been re-classified within the Consolidated Statement of Profit or Loss and
Other Comprehensive Income:
COMPANY 2019
As previously stated
Reclassification
As restated
Employee wages and director fees
Corporate compliance costs
Administration costs
Consultancy Fees
Occupancy costs for head office*
Travel and conference expenses
985,177
207,383
182,330
38,982
46,484
224,517
(300,000)
255,432
36,980
54,015
(46,484)
57
685,177
462,815
219,310
92,997
-
224,574
*This relates to rent expenses accounted for under the new accounting standard AASB 16 from 1 July 2019.
53
Financial Report
EMERALD CLINICS LIMITED
EMERALD CLINICS LIMITED
ABN 96 625 085 734
ABN 96 625 085 734
NOTE 2: REVENUE AND OTHER REVENUE
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2020
RReevveennuuee
RReevveennuuee
Revenue from customers
Revenue from customers
OOtthheerr rreevveennuuee
OOtthheerr rreevveennuuee
Interest and other income
Interest and other income
Research and Development grant received
Research and Development grant received
TToottaall OOtthheerr rreevveennuuee
TToottaall OOtthheerr rreevveennuuee
((aa)) IInnccoommee ttaaxx
((aa)) IInnccoommee ttaaxx
Current tax
Current tax
Current income tax expense
Current income tax expense
Deferred tax
Deferred tax
Relating to the origination and reversal of previously unrecognised
temporary deferred tax differences
Relating to the origination and reversal of previously unrecognised
temporary deferred tax differences
Net deferred tax assets not brought to account
Net deferred tax assets not brought to account
((bb)) RReeccoonncciilliiaattiioonn ooff ttaaxx eexxppeennssee ttoo nneett pprrooffiitt bbeeffoorree ttaaxx
((bb)) RReeccoonncciilliiaattiioonn ooff ttaaxx eexxppeennssee ttoo nneett pprrooffiitt bbeeffoorree ttaaxx
Loss before income tax expense
Loss before income tax expense
Tax at the statutory rate of 27.5% (2019: 27.5%)
Tax at the statutory rate of 27.5% (2019: 27.5%)
Tax effect of:
Tax effect of:
Non-deductible expenses/timing differences
Effect of tax losses and tax offsets not recognised as deferred tax assets
Income tax expense
Non-deductible expenses/timing differences
Effect of tax losses and tax offsets not recognised as deferred tax assets
Income tax expense
[Intentional blank space]
((cc)) AAmmoouunnttss rreeccooggnniisseedd iinn eeqquuiittyy
((cc)) AAmmoouunnttss rreeccooggnniisseedd iinn eeqquuiittyy
Aggregate current and deferred tax arising in the reporting period and
not recognised in statement of profit or loss and other comprehensive
income but directly debited or credited to equity
Aggregate current and deferred tax arising in the reporting period and
not recognised in statement of profit or loss and other comprehensive
income but directly debited or credited to equity
Current tax
Current tax
Net deferred tax
Net deferred tax
Unrecognised deferred tax asset
Unrecognised deferred tax asset
Prior year tax losses not recognised
Prior year tax losses not recognised
Current year tax losses
Current year tax losses
Capital raising costs and transaction costs in equity
Capital raising costs and transaction costs in equity
Plant and equipment
Plant and equipment
Right-of-use asset lease liability
Right-of-use asset lease liability
Other temporary differences
Other temporary differences
Off-set deferred tax liabilities
Off-set deferred tax liabilities
Net deferred tax assets unrecognised
Net deferred tax assets unrecognised
54
Page 40
Page 40
GGrroouupp CCoommppaannyy
GGrroouupp CCoommppaannyy
22002200
22001199
22002200
$$
$$
22001199
$$
$$
11,,001133,,445522
11,,001133,,445522
109,909
109,909
25,046
25,046
468,177
468,177
449933,,222233
449933,,222233
28,747
28,747
-
-
28,747
28,747
GGrroouupp
22002200
GGrroouupp
22002200
CCoommppaannyy
22001199
CCoommppaannyy
22001199
$$
--
$$
--
$$
-
$$
-
((880055,,114444))
((880055,,114444))
(846,518)
(846,518)
880055,,114444
880055,,114444
846,518
846,518
--
--
-
-
((55,,223388,,004400))
((55,,223388,,004400))
(1,440,461)
(2,682,928)
(2,682,928)
(737,805)
(1,440,461)
(737,805)
24,323
1,416,138
--
24,323
1,416,138
--
19,839
717,966
-
19,839
717,966
-
--
--
253,216
253,216
225533,,221166
225533,,221166
846,518
846,518
849,336
849,336
172,087
172,087
65,940
65,940
100,007
100,007
47,660
47,660
(176,670)
(176,670)
11,,990044,,887788
11,,990044,,887788
-
-
-
-
-
-
15,829
15,829
725,988
725,988
67,510
67,510
20,510
20,510
-
16,681
16,681
-
-
-
846,518
846,518
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
EMERALD CLINICS LIMITED
ABN 96 625 085 734
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2020
RReevveennuuee
Revenue from customers
OOtthheerr rreevveennuuee
Interest and other income
Research and Development grant received
TToottaall OOtthheerr rreevveennuuee
NOTE 3: INCOME TAX
((aa)) IInnccoommee ttaaxx
Current tax
Current income tax expense
Deferred tax
Relating to the origination and reversal of previously unrecognised
temporary deferred tax differences
Net deferred tax assets not brought to account
((bb)) RReeccoonncciilliiaattiioonn ooff ttaaxx eexxppeennssee ttoo nneett pprrooffiitt bbeeffoorree ttaaxx
Loss before income tax expense
Tax at the statutory rate of 27.5% (2019: 27.5%)
Tax effect of:
GGrroouupp CCoommppaannyy
22002200
$$
22001199
$$
11,,001133,,445522
109,909
25,046
468,177
28,747
-
449933,,222233
28,747
GGrroouupp
22002200
CCoommppaannyy
22001199
$$
--
$$
-
((880055,,114444))
(846,518)
880055,,114444
846,518
--
-
((55,,223388,,004400))
(1,440,461)
(2,682,928)
(737,805)
Non-deductible expenses/timing differences
Effect of tax losses and tax offsets not recognised as deferred tax assets
Income tax expense
24,323
1,416,138
--
19,839
717,966
-
((cc)) AAmmoouunnttss rreeccooggnniisseedd iinn eeqquuiittyy
Aggregate current and deferred tax arising in the reporting period and
not recognised in statement of profit or loss and other comprehensive
income but directly debited or credited to equity
Current tax
Net deferred tax
Unrecognised deferred tax asset
Prior year tax losses not recognised
Current year tax losses
Capital raising costs and transaction costs in equity
Plant and equipment
Right-of-use asset lease liability
Other temporary differences
Off-set deferred tax liabilities
--
253,216
225533,,221166
846,518
849,336
172,087
65,940
100,007
47,660
(176,670)
-
-
-
15,829
725,988
67,510
20,510
-
16,681
-
Net deferred tax assets unrecognised
11,,990044,,887788
846,518
Deferred tax assets have not been brought to account at 30 June 2020 because the directors do not believe it
is appropriate to regard realisation of the future tax benefit as probable. These benefits will only be obtained if:
Page 40
(i)
the Group derives future assessable income of a nature and of an amount sufficient to enable the
benefit from the deduction for the loss to be realised;
(ii) the Group complies with the conditions for the deductibility imposed by law including the continuity of
ownership and/or business tests; and
(iii) no changes in tax legislation adversely affect the Group in realising the benefit from the deduction for
the loss.
55
Financial Report
NOTE 4: CASH AND CASH EQUIVALENTS
Group
2020
$
Cash at bank
3,686,333
Notes to the statement of cash flows:
Company
2019
$
2,608,814
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and at bank
and term deposits that has original maturity of less than 3 months.
NOTE 5: TRADE AND OTHER RECEIVABLES
Current:
Trade Debtors (1)
GST paid
Other
Group
2020
$
93,750
24,256
3,609
121,615
Company
2019
$
-
59,091
792
59,883
The Group measures its trade and other receivables at amortised cost.
(1) The ageing of the Group’s Trade Debtors as at 30 June 2020 are as follows:
Debtor type
<30 days past
due $
30-60 days
past due $
90+ days past
due $
Patient fees
Project advisory fees
Data collaboration revenue
Gross carrying amount
Less allowing provision
Net carrying amount
9,861
11,041
32,393
53,295
-
53,295
2,428
18,333
17,090
37,851
-
37,851
2,604
-
-
2,604
-
2,604
Total $
14,893
29,374
49,483
93,750
-
93,750
The Group applies the simplified approach in providing for expected credit losses prescribed by AASB 9. The
expected credit losses on trade receivables are estimated using a provision matrix by reference to past
defaults experience and analysis of the debtors’ current financial position. There has been no change in the
estimation process used during the current reporting period.
56
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
NOTE 6. RIGHT-OF-USE ASSETS
The Group’s lease portfolio includes office and clinic leases. The average term of these leases are 1-4 years.
(a) Carrying value
Balance at inception of lease
Accumulated depreciation
Carrying value as at 30 June 2020
Reconciliation
Net carrying amount as at 1 July 2019
Depreciation expense during the financial year
Net carrying amount as at 30 June 2020
Premises
$
735,372
(411,982)
323,390
Premises
$
541,304
(217,914)
323,390
(b) AASB 16 related amounts recognised in Consolidated Statement of Profit and Loss and Other
Comprehensive Income
Reversal of operating lease expenditure previously recognised under AASB 117
Interest expense for the financial year ended 30 June 2020
(c) Total financial year end cash outflows for leases
Repayment of lease liabilities
(d) Options to extend or terminate
$
(204,933)
27,498
(177,435)
$
215,385
The Group uses hindsight in determining the lease term where the contract contains options to extend or
terminate the lease.
57
Financial Report
NOTE 7: PLANT AND EQUIPMENT
Leasehold Improvements
At cost
Accumulated Depreciation
Computer, office furniture and equipment
At cost
Accumulated depreciation
Total
At cost
Accumulated depreciation
Group
2020
$
653,196
(203,421)
449,775
198,666
(50,136)
148,530
851,862
(253,557)
598,305
Company
2019
$
734,907
(83,215)
651,692
61,007
(6,214)
54,793
795,914
(89,429)
706,485
58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report Reconciliation
Leasehold Improvements
Carrying amount at beginning of the year
Additions
Reclassification
Depreciation
Carrying amount at the end of the year
Computer, office furniture and equipment
Carrying amount at beginning of the year
Additions
Reclassification
Depreciation
Carrying amount at the end of the year
Total
Carrying amount at beginning of the year
Additions
Reclassification from software
Depreciation
Carrying amount at the end of the year
Group
2020
$
651,692
-
(74,365)
(127,552)
449,775
54,793
52,367
77,256
(35,886)
148,530
706,485
52,367
2,891
(163,438)
598,305
Company
2019
$
-
734,907
-
(83,215)
651,692
-
61,007
-
(6,214)
54,793
-
795,914
-
(89,429)
706,485
59
Financial Report
Group
2020
$
149,439
(2,129)
147,310
43,468
149,439
(40,577)
(2,891)
(2,129)
147,310
Group
2020
$
149,049
312,075
461,124
247,154
152,689
860,967
210,972
210,972
Company
2019
$
48,885
(5,417)
43,468
-
48,885
-
-
(5,417)
43,468
Company
2019
$
148,378
82,711
231,089
-
-
231,089
-
-
NOTE 8: INTANGIBLE ASSETS
Software
At cost
Accumulated Depreciation
Reconciliation
Software
Carrying amount at beginning of the year
Additions
Write offs
Reclassification to plant and equipment
Depreciation
Carrying amount at the end of the year
NOTE 9: FINANCIAL LIABILITIES CARRIED AT AMORTISED COSTS
Current:
Trade payables
Accrued expenses and other
Total Trade and Other payables (1)
Borrowing at amortised cost (2)
Lease liabilities (3)
Non-Current:
Lease liabilities (3)
60
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report (1) Trade and other payables are measured at amortised cost. None of the outstanding balance are past due
at reporting date.
(2) During the year ended 30 June 2020, the Group secured a credit facility from Radium Capital. The Group
drew down on this facility in accordance with Radium Capital processes. The facility is secured against the
R&D refund to be received. The interest rate is 15% per annum and repayable on 30 November 2020.
The breakdown of the borrowing as at 30 June 2020 is as follows:
Principal amount of the facility
Less: application fees
Net cash received
Add: accrued interest
(3) The carrying value and reconciliation of the Group’s lease liabilities are as follows:
Carrying value
Current liabilities
Non-current liabilities
Carrying value as at 30 June 2020
Reconciliation
Recognised on 1 July 2019 on adoption of AASB 16
Less: principal repayments
Add: Unwinding of interest expense on lease liability
Closing Balance as at 30 June 2020
$
241,000
(779)
240,221
6,933
247,154
Premises
$
152,689
210,972
363,661
Premises
$
541,096
(204,933)
27,498
363,661
At initial recognition, the lease liabilities were measured at the present value of minimum lease payment using
the Group’s incremental borrowing rate of 6%. The incremental borrowing rate was based on the unsecured
interest rate that will apply if finance was sought for an amount and time period equivalent to the lease
requirements of the Group.
61
Financial Report
NOTE 10: CONVERTIBLE NOTES
In prior year, the Group entered into a Convertible Note Subscription Deed (“the Deed”) for $3,300,000 with
various noteholders (before costs). These Convertible Notes (“Notes”) had a face value of $1 per note and a
24 month redemption period with the following terms:
•
Each Note is payable after the redemption period if the Notes:
- are not redeemed during the redemption period;
- converted as a result of an Initial Public Offering or;
- converted as a result of a trade sale with a third party.
•
Interest is payable for each Note from and including the first business day after the redemption period of
that Note. Interest is incurred from the first business day after the redemption period to the date of actual
payment.
•
There is no option for early repayment of Notes.
During the financial year ended 30 June 2020, the Notes were converted into shares as the Group entered into
an Initial Public Offering on 5 December 2019 and subsequently listed on the ASX on 12 February 2020. The
Notes did not meet the criteria of the redemption period, so interest was not payable upon conversion which
occurred on listing date.
Opening Balance
Proceeds of issue
Less transaction costs incurred
Conversion of Convertible Notes on 12 February 2020
Transfer of transaction costs incurred to capital raising costs
Closing Balance
Liability component
Equity component
Group
2020
$
3,121,955
-
-
(3,300,000)
178,045
-
-
-
Company
2019
$
-
3,300,000
(178,045)
3,121,955
2,752,621
369,334
The equity component of $369,334 was recognised in reserves (see note 1). The liability component was
measured at amortised cost.
62
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
NOTE 11: PROVISIONS
Current:
Employee benefits
Non-Current:
Make good provision (1)
Group
2020
$
142,088
142,088
68,000
68,000
Company
2019
$
41,659
41,659
-
-
(1) This relates to the estimated cost of making good the premises in relation to the leases entered into by
the Group in prior years.
NOTE 12: ISSUED CAPITAL
(a) Issued and Paid Up Capital
2020
Number
2020
$
2019
Number
2019
$
Fully paid ordinary shares
183,902,778
11,751,953
130,500,000
2,872,738
(b) Movements in fully paid shares on issue
Opening Balance
130,500,000
2,872,738
Shares issued at $0.18 per share
2,777,778
500,000
Shares issued at $0.20 per share
30,000,000
6,000,000
Convertible Notes issued at $0.16 per share
20,625,000
3,300,000
-
-
-
-
-
-
-
-
-
-
Capital raising costs
Closing Balance*
-
(920,785)
183,902,778
11,751,953
130,500,000
2,872,738
* Of the total shares on issue as at 30 June 2020, 100,097,478 shares were in escrow from 24 months from
the date of quotation being 12 February 2020.
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Group
in proportion to the number of and amounts paid on the shares held.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
63
Financial Report
NOTE 13: SHARE BASED PAYMENTS
The following share-based payments arrangements were in existence during the current reporting year:
OPTIONS
Options Series
Number
Grant Date
Expiry Date
Exercise
Price $
Fair value
at Grant
Date $
(1) Issued at 7 June 2019
1,500,000
13/06/2019
13/06/2023
(2) Issued at 7 June 2019
9,750,000
13/06/2019
13/06/2023
(3) Issued at 19 June 2019
1,000,000
19/06/2019
13/06/2023
(4) Issued at 10 July 2019
3,500,000
10/07/2019
13/06/2023
(5) Issued at 26 September 2019
600,000
26/09/2019
26/09/2023
(6) Issued at 7 June 2019
1,000,000
24/10/2019
13/06/2023
(7) Issued at 11 November 2019
1,000,000
11/11/2019
13/06/2023
0.45
0.45
0.45
0.45
0.45
0.45
0.45
0.0008
0.0008
0.0008
0.0185
0.0188
0.0008
0.0496
(1) The 1,500,000 options in series 1 which vests immediately were issued to consultants under the option
terms and conditions issued by the Company.
(2) The 9,750,000 options in series 2 which one third vests immediately on date of issue, one third vests after
one year of employment and one third vests after two years of employment, were issued under the option
terms and conditions issued by the Company.
(3) The 1,000,000 options in series 3 which vests immediately were issued to consultants under the option
terms and conditions issued by the Company.
(4) The 3,500,000 options in series 4 where one third vests immediately on date of issue, one third vests after
one year of service and one third vests after two years of service from date of issue, were issued to a
Director under the option terms and conditions issued by the Company.
(5) The 600,000 options in series 5 where one third vests immediately on date of issue, one third vests after
12 months from date of issue and one third vests after 18 months from date of issue, were issued to a third
party under the terms outlined in a licence agreement with the Company.
(6) The 1,000,000 options in series 6 where one third vests immediately on date of issue, one third vests after
one year of service and one third vests after two years of service from date of issue, were issued to a
consultant under the option terms and conditions issued by the Company.
(7) The 1,000,000 options in series 7 where one third vests immediately on date of issue, one third vests after
one year of service and one third vests after two years of service from date of issue, were issued to an
employee under the option terms and conditions issued by the Company.
The weighted average contractual life for options outstanding at the end of the year was 3 years. The share
based payments expense was $79,328 for the year ended 30 June 2020 (30 June 2019: $4,735).
64
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
Options were priced using a Black-Scholes option pricing model using the inputs below:
Series 1
Series 2
Series 3
Series 4
Series 5
Series 6
Series 7
Grant date share price
$0.023
$0.023
$0.023
Exercise price
$0.45
$0.45
$0.45
Expected volatility
70.00%
70.00%
70.00%
$0.10
$0.45
70%
$0.10
$0.023
$0.45
$0.45
70%
70%
$0.18
$0.45
70%
Option life
4 years
4 years
4 years
4 years
4 years
4 years
4 years
Dividend yield
0.00%
0.00%
0.00%
0%
0%
0%
0%
Interest rate
1.08%
1.08%
1.08%
0.97%
0.70%
1.08%
0.70%
The following reconciles the outstanding share options granted in the year ended 30 June 2020:
2020
No. of Options
2019
No. of Options
2020
Weighted
average
exercise price
$
2019
Weighted
average
exercise price
$
Balance at the beginning of the year
12,250,000
Granted during the year
6,100,000
Exercised during the year
Expired during the year
-
-
0.45
0.45
-
-
-
12,250,000
-
-
-
0.45
-
-
Balance at the end of the year
18,350,000
0.45
12,250,000
0.45
Un-exercisable at the end of the year
9,816,667
Exercisable at end of the year
8,533,333
0.45
0.45
6,500,000
5,750,000
0.45
0.45
No amounts are unpaid on any of the shares. No person entitled to exercise an option had or has any rights by
virtue of the option to participate in any share issue of any other body corporate.
65
Financial Report NOTE 14: RESERVES
Convertible notes reserve (1)
Share-based payments reserve (2)
Group
2020
$
-
84,063
84,063
Company
2019
$
369,334
4,735
374,069
(1) The Convertible notes reserve represents the equity component (conversion rights) of the Convertible Notes
issued in the prior year set out in note 10.
(2) The share-based payments reserve relates to share options granted by the Company to its employees,
consultants and Directors under the option terms and conditions issued by the Company. Further
information about share based payments are set out in note 13.
NOTE 15: RECONCILIATION OF THE LOSS FROM ORDINARY ACTIVITIES AFTER INCOME TAX TO THE NET CASH
FLOWS USED IN OPERATING ACTIVITIES:
Loss for the year
Share based payments expense
Depreciation and amortisation
Intangible asset write off
Changes in assets and liabilities:
(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Group
2020
$
Company
2019
$
(5,238,040)
(2,682,928)
79,328
383,481
40,578
(61,732)
243,485
100,429
4,735
94,846
-
(32,194)
(19,340)
41,659
Net cash flows (used in) operating activities
(4,452,471)
(2,593,222)
Non-cash financing and investing activities
The Group did not engage in any non-cash financing and investing activities during the year (2019: nil).
Changes in liabilities arising from financing activities
The Group secured a credit facility from Radium Capital. The Group drew down on this facility in accordance
with Radium Capital processes. The facility is secured against the R&D refund to be received. The interest rate
is 15% per annum. (2019: nil) and repayable on 30 November 2020.
66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
NOTE 16: LOSS PER SHARE
(a) Reconciliation of loss used in calculating Loss Per Share
Loss attributable to the ordinary equity holders used in calculating
basic loss per share
(b) Weighted average number of shares used as the Denominator
Ordinary shares used as the denominator in calculating basic loss
per share
(c) Loss per share
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Group
2020
$
Company
2019
$
(5,238,040)
(2,682,928)
2020
Number
2019
Number
172,504,781
130,500,000
2020
Cents
(3.04)
(3.04)
2019
Cents
(2.06)
(2.06)
There is no dilution of shares due to options as the potential ordinary shares are not dilutive, therefore not
included in the calculation of diluted loss per share.
NOTE 17: RELATED PARTY TRANSACTION
Key Management Personnel Compensation
The aggregated compensation paid to Directors and Key Management Personnel of the Group is as follows:
Short term employee benefits
Post-employment benefits
Non-monetary benefits
Share based payment
Group
2020
$
1,884,048
96,824
71,885
71,017
Company
2019
$
787,081
43,938
21,588
1,377
2,123,774
853,984
During the financial year ended 30 June 2020, Biologica Ventures Pty Ltd of which Dr Stewart Washer is a
related party, was paid consulting fees of $243,277.
Also, during the year ended, Academic Health Solutions UK of which Professor Sir John Tooke is a related party
was paid consulting fees of $105,082.
67
Financial Report
2020
$
2019
$
3,269,139
1,463,187
4,732,326
783,818
13,000
796,818
3,935,508
11,751,953
84,063
(7,900,508)
3,935,508
2,668,697
856,211
3,524,908
272,748
2,752,621
3,025,369
499,539
2,872,738
374,069
(2,747,268)
499,539
2020
$
2019
$
(5,085,449)
(2,682,928)
-
-
(5,085,449)
(2,682,928)
NOTE 18: PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
68
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report NOTE 19: COMMITMENTS AND CONTINGENCIES
At reporting date, there are no commitments or contingent liabilities outstanding for the Group or
the Company.
NOTE 20: SEGMENT INFORMATION
AASB 8 ‘Operating Segments’ requires a “management approach” under which segment information is
presented on the same basis as that useful for internal reporting purposes by the chief operating decision
maker (“CODM”).
For management purposes, the Group is organised into one main operating segment, being the research
and development where the Group is a health care technology and clinical research company focused on
generating high quality real-world evidence (RWE) data. The chief operating decision makers of the Group are
the Executive Directors and Officers.
All the Group’s activities are interconnected, and all significant operating decisions are based on analysis of
the Group as one segment. The financial results of the segment are the equivalent of the financial statements
as a whole. At 30 June 2020, all revenues and material assets are considered to be derived and held in one
geographical area being Australia.
NOTE 21: FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable.
The Group’s activities expose it to a variety of financial risks: market risk (ie. interest rate risk), credit risk
and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group
uses different methods to measure different types of risk to which it is exposed.
The Group’s Risk Committee (“the Committee) performs the duties of risk management in identifying and
evaluating sources of financial and other risks. The Committee provides written principles for overall risk
management which balance the potential adverse effects of financial risks on Group’s financial performance
and position with the “upside” potential made possible by exposure to these risks and by considering the costs
and expected benefits of the various methods available to manage them.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because
of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates
primarily to the Group’s Australian Dollar current and non-current debt obligations with floating interest rates.
The Group is also exposed to interest rate risk on its cash and short-term deposits.
69
Financial Report Floating
interest
rate
$
Fixed
interest
rate
maturing in
1 year
or less
$
Fixed
interest
rate
maturing
greater
than 1 year
$
Total
Non-
interest
bearing
Weighted
average
effective
interest
rate
$
$
%
1,686,069
2,000,000
-
-
-
150,558
1,686,069
2,150,558
-
-
-
-
-
-
264
3,686,333
0.57
121,615
121,615
-
6,000
156,558
1.00
127,879
3,964,506
461,124
461,124
-
-
-
-
247,154
363,661
-
15.00
6.00
-
-
247,154
152,689
210,972
-
-
-
-
-
-
-
399,843
210,972
461,124
1,071,939
2,608,814
-
-
-
-
100,258
2,608,814
100,258
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,608,814
0.70
59,883
59,883
-
6,000
106,258
1.65
65,883
2,774,955
231,089
231,089
2,752,621
2,752,621
2,983,710
2,983,710
-
-
-
2020
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Restricted cash
Financial liabilities
Trade and other
payables
Borrowings
Lease liabilities
Convertible Notes
2019
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Restricted cash
Financial liabilities
Trade and other
payables
Convertible Notes
70
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
Sensitivity Analysis – Interest Rate Risk
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at the reporting
date. This sensitivity analysis demonstrates the effect on the current period results and equity which could
result from a change in interest rates.
30 June
2020
$
34,792
(34,792)
30 June
2019
$
27,151
(27,151)
Change in loss:
Increase by 1%
Decrease by 1%
Credit risk
The Group has no significant concentrations of credit risks.
Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as
credit exposures to customers. The maximum exposure to credit risk at the reporting date is the carrying
amount of the financial assets as summarised above of this note.
As at 30 June 2020, all cash and cash equivalents were held with National Australia Bank with an A (Standard
and Poor’s) credit rating. In relation to trade receivables, management assesses the credit quality of the
customer, taking into account its financial position, past experience and other factors.
The credit risk on other receivables is limited as it is comprised of GST recoverable from the Australian Taxation
Office. The credit risk on liquid funds is limited because the counter party is a bank with high credit rating.
Liquidity risk
Prudent liquidity risk management involves the maintenance of sufficient cash, committed credit facilities and
access to capital markets. It is the policy of the Board to ensure that the Group is able to meet its financial
obligations and maintain the flexibility to pursue attractive investment opportunities through keeping
committed credit lines available where possible, ensuring the Group has sufficient working capital. The Group
manages liquidity risk by continuously monitoring forecast and actual cash flows.
Contractual maturities of financial liabilities
As at the reporting date the Group had total financial liabilities of $1,071,939 (2019: $2,983,710) which
comprised of trade and other payables and borrowings with a maturity of less than 6 months and lease
liabilities maturing within the next four years.
Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising
the potential return to shareholders. The capital structure of the Company consists of equity attributable to
equity holders, comprising issued capital and reserves as disclosed in notes 12 and 14.
71
Financial Report Fair value of financial assets and liabilities
The fair value of financial assets and liabilities approximate carrying values due to their short-term nature.
NOTE 22: FAIR VALUE MEASUREMENT
Fair value hierarchy
The following table details the Group’s assets and liabilities, measured or disclosed at fair value, using a
three level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
•
•
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly or indirectly.
•
Level 3: Unobservable inputs for the asset or liability.
The following table details the Group’s assets and liabilities measured or disclosed at fair value.
2020
Liabilities
Convertible Notes
Total Liabilities
2019
Liabilities
Convertible Notes
Total Liabilities
Level 1
$
Level 2
$
Level 3
$
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
2,752,621
2,752,621
2,752,621
2,752,621
Estimates of fair value take into account factors and market conditions evident at balance date. Uncertainty
and changes in global market conditions in the future may impact fair values in the future.
Transfers between level 1, 2 and 3
There were no movements between different fair value measurement levels during the financial year
(2019: none).
72
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report
NOTE 23: SUBSIDIARIES
Name of entity
Country of
incorporation
Class of
Shares
2020
2019
Emerald Clinical Network Pty Ltd*
Emerald Clinical Research Pty Ltd*(1)
Australia
Australia
Emerald Data Management Pty Ltd*(1)
Australia
Emerald IP Holdings Pty Ltd*(1)
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Openly Care Inc.**
United States
Ordinary
100%
100%
100%
100%
100%
-
-
-
-
-
*
These entities were incorporated on 7 August 2019.
** This entity was incorporated on 14 May 2020.
(1) These entities have been dormant during the financial year.
NOTE 24: EVENTS AFTER REPORTING DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially neutral for the
Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the
reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian
Government and other countries, such as maintaining social distancing requirements, quarantine, travel
restrictions and any economic stimulus that may be provided.
On 10 August 2020, the Group announced on the ASX that it would be entering into a Real-World Evidence
contract with Spectrum Biomedical UK (“SBUK”) which is a subsidiary of Canopy Growth Corp (a Toronto
Exchange Security listed company TSX:TSE). Emerald will be responsible for collection of specific data points
including de-identified patient information, use of concomitant medicines, prescribed usage and diagnoses,
and a rate of patient reported outcome measures. This data will then be provided to SBUK as a per patient
pricing model. The contract value is up to GBP 400,000 (~AUD 723,000 and the Group is expected to receive
GBP 150,000 (~AUD 270,000) up front plus GBP 300 (~AUD 542) per patient. The contract term is 24 months.
On 14 August 2020, The Group announced on the ASX that it would be proposing a name change from
“Emerald Clinics Limited” to “Emyria Limited”. The name change is subject to approval by shareholder on
18 September 2020 and a notice of meeting was issued on 14 August 2020 on the ASX.
Apart from the above, there are no other matters or circumstances that have arisen since the end of the
financial year which have 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 periods.
73
Financial Report NOTE 25: REMUNERATION OF AUDITORS
Auditor fees incurred during the financial year are as follows:
Group
2020
$
36,679
36,679
Company
2019
$
15,000
15,000
Audit services – Stantons International
[Intentional blank space]
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - for the year ended 30 June 2020Financial Report In the Directors’ opinion:
a) the financial statements and notes set out on pages 36 to 74, and are in accordance with the Corporations
Act 2001, including:
i. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance,
as represented by the results of its operations, changes in equity and its cash flows, for the year ended
on that date; and
ii. complying with Australian Accounting Standards, Corporations Regulations 2001 and other mandatory
professional reporting requirements;
b) there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable.
c) the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
This declaration is made after receiving the declarations required to be made to the Directors in accordance
with section 295A of the Corporations Act 2001 for the year ended 30 June 2020.
This declaration is made in accordance with a resolution of the Directors.
__________________
Dr Michael Winlo
Managing Director
Dated 31 August 2020
75
Financial Report
Audit Declaration
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
31 August 2020
Board of Directors
Emerald Clinics Limited
Level 1, 50 Angove Street
North Perth. WA 6006
Dear Directors
RE:
EMERALD CLINICS LIMITED
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
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Emerald Clinics Limited.
As Audit Director for the audit of the financial statements of Emerald Clinics Limited for the year ended
30 June 2020, 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 faithfully
STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD
(Trading as Stantons International)
(An Authorised Audit Company)
Samir Tirodkar
Director
Liability limited by a scheme approved
under Professional Standards Legislation
76
Audit Opinion
Stantons International Audit and Consulting Pty Ltd
trading as
Chartered Accountants and Consultants
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
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
EMERALD CLINICS LIMITED
Report on the Audit of the Financial Report
Our Opinion
We have audited the financial report of Emerald Clinics Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2020, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion:
the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group's financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board's APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1.1(iv) to the financial report, which describes the financial report being prepared
on a going concern basis. The Group incurred loss of $5,238,040 and net cash outflows from operating
activities of $4,452,471 for the financial year ended 30 June 2020.
We also draw attention to the recent market uncertainty arising from the spread of the COVID-19 virus and
its effects on the business environment in Australia. Management is reviewing what impact, if any, this will
have on their business.
Liability limited by a scheme approved
under Professional Standards Legislation
77
Audit Opinion
The ability of the Group to continue as a going concern is subject to the future profitability of the Group
and/or successful in raising further capital. In the event that the Group is not successful in commencing
profitable operations and/or in raising further capital, the Group may not be able to meet their liabilities as
and when they fall due and the realisable value of the Group’s assets may be significantly less than its book
values.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit of
the financial report as a whole and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key Audit Matters
How the matter was addressed in the audit
Inter alia, our audit procedures included the
following:
i. Obtained an understanding and evaluated the
Group’s implementation process, including
the review of the updated accounting policy
and policy elections in accordance with AASB
16;
ii. Evaluated management
assumptions,
specifically
to
determine the discount rates, lease terms and
measurement principles;
the assumptions used
iii. Tested the factual inputs and calculation of
the ROU asset and lease liability calculated
by the management for each material lease
contract; and
iv. Assessed the retrospective application and
adequacy of the Group’s disclosures of the
impact of
the
consolidated financial statements.
the new standard
in
Adoption of AASB 16: Leases effective from 1
July 2019
The Group adopted AASB 16 Leases effective 1
July 2019 using
the modified retrospective
approach. AASB 16 introduces a new lease
accounting model, where lessees are required to
recognise a right-of-use (ROU) asset and a lease
liability arising from a lease on its balance sheet.
The cumulative effect of adopting AASB 16
recognised as an adjustment to the opening
balance of accumulated losses at 1 July 2019
amounted to $67,791. As at 30 June 2020, the
carrying amount of the Group’s ROU asset
amounted to $323,390 (refer to Note 6 to the
financial statements) and the current and non-
current lease liabilities amounted to $152,689
and $210,972, respectively (refer to Note 9 to the
financial statements).
We consider the first-time application of the
standard as a key audit matter due to the
significance of
in
the Group’s
determining the assumptions used such as
discount rate and the lease terms, including
termination and renewal options.
judgments
78
Audit Opinion
Key Audit Matters
Revenue recognition
The Group’s revenue comprises revenue from the
sale of services to its customers. Revenue is
recognised when the service is rendered to the
customer. There is an inherent risk around the
accuracy of revenue recorded given the nature of
the Group’s activities.
The risk of revenue being recognised in an incorrect
period presents a key audit matter due to the
financial significance and nature of revenue in the
consolidated financial statements.
Share-based payments – share options
The Group awarded share-based payments in the
form of share options. The awards vest subject to
the achievement of certain vesting conditions.
The Group used the Black-Scholes model in valuing
the share-based awards, based on the vesting
conditions attached to each tranche.
The share-based payment expenses recognised in
the consolidated statement of profit or loss and
other comprehensive
the year
income during
amounted to $79,328 and is recognised.
Due to the complex nature of transaction and
estimates used in determining the valuation of the
share-based payment arrangement and vesting
expense, we consider the Group’s calculation of the
share-based payment expense to be a key audit
matter.
In determining the fair value of the awards and
related expense, the Group used assumptions in
respect of future market and economic conditions.
Refer to Note 13 to the financial report for the share-
based payment expenses recognised for the year
ended 30 June 2020 and related disclosures.
Other Information
How the matter was addressed in the audit
Inter alia, our audit procedures included the
following:
i. Reviewed and analysed significant sales
contracts to verify correct accounting treatment;
ii. Performed
substantive
analytical
procedures and cut-off tests to verify that sales
transactions are correctly recognised during the
year; and
tests,
iii. Tested accounts
receivable by
requesting
confirmations from the Group’s customers and
by reconciling cash payments received after
receivable
year-end against
balance at year-end.
the accounts
Inter alia, our procedures included the following:
i. Assessed the assumptions used in the Group’s
valuation of share options being the share price
of the underlying equity, interest rate, volatility,
dividend yield, time to maturity (expected life)
and grant date;
ii. Assessed the fair value of the calculation
the Black
re-performance using
through
Scholes model; and
iii. Assessed the accuracy of the share- based
payments expense and
the adequacy of
disclosures made by the Group in the financial
report.
The directors are responsible for the other information. The other information comprises the information
included in the Group's annual report for the year ended 30 June 2020 but does not include the financial
report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
79
Audit Opinion
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. 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 of the financial report
that gives a true and fair view 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.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
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 conclude on the appropriateness of the Directors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
80
Audit Opinion
We evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that achieves
fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial report. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in Internal control that we identify
during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the consolidated financial report of the current period and are therefore key audit
matters. We describe these matters in our auditor's report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 11 to 19 of the directors’ report for the year
ended 30 June 2020. 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.
Opinion on the Remuneration Report
In our opinion, the Remuneration Report of Emerald Clinics Limited for the year ended 30 June 2020
complies with section 300A 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
31 August 2020
81
Corporate Governance Statement
The Board of Directors of Emyria Limited (“Company”) is responsible for the corporate governance of
the Company. The Board guides and monitors the business and affairs of the Company on behalf of the
shareholders by whom they are elected and to whom they are accountable.
This statement sets out the main corporate governance practices in place throughout the financial year
in accordance with 4th edition of the ASX Principles of Good Corporate Governance and Best Practice
Recommendations.
This Statement was approved by the Board of Directors and is current as at 8 October 2020.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
ASX Recommendation 1.1: A listed entity should have and disclose a board charter setting out:
a) the respective roles and responsibilities of its board and management; and
b) those matters expressly reserved to the board and those delegated to management
The Board has adopted a formal charter that details the respective Board and management functions and
responsibilities. A copy of this Board charter is available in the corporate governance section of the Company’s
website at www.emyria.com.
ASX Recommendation 1.2: A listed entity should:
a) undertake appropriate checks before appointing a director or senior executive or putting someone
forward for election as a director; and
b) provide security holders with all material information in its possession relevant to a decision on whether
or not to elect or re-elect a director.
The Company admitted to the Official List of ASX on 10 February 2020 and commenced trading on 12 February
2020. Appropriate checks were carried out for Directors and senior executives prior to admission.
Information in relation to Directors seeking reappointment is set out in the Directors’ report and is included in
the Notice of Annual General Meeting.
ASX Recommendation 1.3: A listed entity should have a written agreement with each Director and Senior
Executive setting out the terms of their appointment.
The Company has in place written agreements with each Director and Senior Executive.
ASX Recommendation 1.4: The Company Secretary of a listed company should be accountable directly to
the Board, through the Chair, on all matters to do with the proper functioning of the Board.
The Board Charter provides for the Company Secretary to be accountable directly to the Board through the Chair.
83
Corporate Governance Statement
ASX Recommendation 1.5: A listed entity should:
a) have and disclose a diversity policy;
b) through its board or a committee of the board set measurable objectives for achieving gender
diversity in the composition of its board, senior executives and workforce generally; and
c) disclose in relation to each reporting period:
(i) the measurable objectives set for that period to achieve gender diversity;
(ii) the entity’s progress towards achieving those objectives; and
(iii) either:
•
•
the respective proportions of men and women on the board, in senior executive positions and
across the whole workforce (including how the entity has defined “senior executive” for
these purposes); or
if the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as defined in and published under that Act.3.
The Company has adopted a Diversity Policy which is available in the corporate governance section of the
Company’s website at www.emyria.com.
The Board considers that, due to the size, nature and stage of development of the Company, setting
measurable objectives for the Diversity Policy at this time is not practical. The Board will consider setting
measurable objectives as the Company increases in size and complexity.
As at 30 June 2020, the Company does not have any female Board members and has one female senior
manager (2019:1). Of the balance of the Company’s employees 63% are female (2019: 58%). 49% (2019: 44%)
of the Company’s employees in total, including Directors, are female.
ASX Recommendation 1.6: A listed entity should:
a) have and disclose a process for periodically evaluating the performance of the board, its committees
and individual directors; and
b) disclose for each reporting period whether a performance evaluation has been undertaken in
accordance with that process during or in respect of that period.
The Board has adopted a self-evaluation process to measure its own performance and the performance
during each financial year. The Chairperson is also responsible for conducting an annual review of overall
board performance during a regular meeting of the board. A performance review was undertaken during the
reporting period.
ASX Recommendation 1.7: A listed entity should:
a) have and disclose a process for evaluating the performance of its senior executives at least once every
reporting period; and
b) disclose for each reporting period whether a performance evaluation has been undertaken in
accordance with that process during or in respect of that period.
The Managing Director’s performance is considered as part of the Board review process.
84
Corporate Governance Statement
The performance of other executives was reviewed and monitored by the Managing Director on an ongoing
basis throughout the year.
The Board reviews the business performance of the Company and its subsidiaries, whether strategic objectives
are being achieved and the development of management and personnel at each formal board meeting.
A performance review was undertaken during the reporting period.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
ASX Recommendation 2.1: The Board of a listed entity should:
a) have a nomination committee which:
(i) has at least three members, a majority of whom are independent directors; and
(ii) is chaired by an independent director,
and disclose:
(i) the charter of the committee;
(ii) the members of the committee; and
(iii) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
b)
if it does not have a nomination committee, disclose that fact and the processes it employs to
address board succession issues and to ensure that the board has the appropriate balance of skills,
knowledge, experience, independence and diversity to enable it to discharge its duties and
responsibilities effectively.
Due to the size and nature of the existing Board and the magnitude of the Company’s operations, the
Company does not currently have a Nomination Committee. The full Board considers Board composition and
identifies and assesses candidates to fill any casual vacancy which may arise from time to time. The Board
considers that at this stage no efficiencies or other benefits would be gained by establishing a separate
Nomination Committee.
ASX Recommendation 2.2: A listed entity should have and disclose a Board skills matrix setting out the mix
of skills and diversity that the Board currently has or is looking to achieve in its membership.
On a collective basis the Board’s skills matrix indicates the mix of skills, experience and expertise that are
considered necessary at Board level for optimal performance of the Board. The matrix reflects the Board’s
objective to have an appropriate mix of specific industry and professional experience including skills such
as medical expertise, drug development, RWE capture, leadership, governance, strategy, finance, risk
management, Government and international business operations.
A profile of each Director setting out their skills, experience and period of office is set out in the
Directors’ Report.
85
Corporate Governance Statement
ASX Recommendation 2.3: A listed entity should disclose:
a) the names of the directors considered by the board to be independent directors;
b)
if a director has an interest, position or relationship of the type described in Box 2.3 (Factors relevant
to assessing the independence of a director) but the board is of the opinion that it does not
compromise the independence of the director, the nature of the interest, position or relationship in
question and an explanation of why the board is of that opinion; and
c) the length of service of each director.
The Board currently consists of Executive Directors Dr Stewart Washer, Dr Michael Winlo and
Professor Alistair Vickery and Non-Executive Directors Mr Matthew Callahan and Professor Sir John Tooke.
Mr Callahan is not considered an independent Director due to an associated entity being a substantial
shareholder in the Company. Professor Sir John Tooke is considered an independent Director. As the Company’s
activities develop in size, nature and scope, the composition of the Board and the implementation of
additional corporate governance policies and structures, including further independent Directors will
be reviewed.
Dr Stewart Washer and Mr Mathew Callahan were appointed directors on 19 March 2018.
Professor Alistair Vickery was appointed on 18 March 2019. Dr Michael Winlo was appointed on 7 November
2019 and Professor Sir John Tooke was appointed on 10 February 2020.
ASX Recommendation 2.4: The majority of the Board of a listed entity should be independent Directors.
Due to the size and scale of the Company’s current activities, the Board does not consist of a majority of
independent directors. The Board considers the composition of the Board, is appropriate given the size and
current operations of the Company. To further facilitate independent decision-making, the Board has agreed
procedures for Directors to have access in appropriate circumstances to independent professional advice.
As the Company grows, the Board will consider the appointment of additional independent Directors.
ASX Recommendation 2.5: The Chair of a listed entity should be an independent Director and, in particular,
should not be the same person as the CEO of the entity.
The Board has formed the view that, given the size and nature of the business of the Company, and the
knowledge and experience Dr Stewart Washer brings to the Company, that Dr Washer is the most appropriate
person to hold the position of Chairman of the Company even though he is not independent by reason of
being an Executive Director. The Chairman is not the same person as the CEO of the entity, with
Dr Michael Winlo performing this role. As the Company grows, the Board will consider the appointment of
additional independent Directors.
ASX recommendation 2.6: A listed entity should have a program for inducting new directors and for
periodically reviewing whether there is a need for existing directors to undertake professional development
to maintain the skills and knowledge needed to perform their role as directors effectively.
Upon appointment to the Board new Directors will be provided with Company policies and will be provided an
opportunity to discuss the Company’s operations with senior management and the Board.
The Company encourages its Directors to participate in professional development opportunities presented to
the Company and provides appropriate industry information to its Board members on a regular basis.
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Corporate Governance Statement
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
ASX Recommendation 3.1: A listed entity should articulate and disclose its values.
The Board has approved a statement of values and charges the Directors with the responsibility of inculcating
those values across the Company.
A copy of the Company’s statement of values is available on the Company’s website,
www.emyria.com.
ASX Recommendation 3.2: A listed entity should:
a) have and disclose a code of conduct for its directors, senior executives and employees; and
b) ensure that the board or a committee of the board is informed of any material breaches of that code.
The Company has established a Code of Conduct that sets out the principles covering appropriate conduct
in a variety of contexts and outlines the minimum standards of behavior expected from its Directors and
employees. The Code of Conduct sets out policies in relation to various corporate and personal behavior
including safety, discrimination, respecting the law, anti-corruption, interpersonal conduct and conflict
of interest.
The Code contains a procedure tor reporting material breaches of the code.
A copy of the Company’s code of conduct is available in the corporate governance section of the Company’s
website at www.emyria.com.
ASX Recommendation 3.3: A listed entity should:
a) have and disclose a Whistleblower policy; and
b) ensure that the board or a committee of the board is informed of any material incidents reported under
that policy.
The Board has adopted a Whistleblower Protection Policy to ensure concerns regarding unacceptable conduct
including breaches of the Company’s code of conduct can be raised on a confidential basis, without fear of
reprisal, dismissal or discriminatory treatment. The purpose of this policy is to promote responsible whistle
blowing about issues where the interests of others, including the public, or of the organisation itself are at risk.
The policy contains a procedure tor reporting material breaches of the policy.
A copy of the Company’s Whistleblower Protection Policy is available on the Company’s website,
www.emyria.com.
ASX Recommendation 3.4: A listed entity should:
a) have and disclose an anti-bribery and corruption policy; and
b) ensure that the board or a committee of the board is informed of any material breaches of that policy.
The Board has adopted an Anti-Bribery and Anti-Corruption Policy for the purpose of setting out the
responsibilities in observing and upholding the Company’s position on bribery and corruption provide
information and guidance to those working for the Company on how to recognise and deal with bribery and
corruption issues.
The policy contains a procedure tor reporting material breaches of the policy.
A copy of the Company’s Anti-Bribery and Anti-Corruption Policy is available on the Company’s website,
www.emyria.com.
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Corporate Governance Statement
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
ASX Recommendation 4.1: The Board of a listed entity should:
a) have an audit committee which:
(i) has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director, who is not the chair of the board,
and disclose:
(i) the charter of the committee;
(ii) the relevant qualifications and experience of the members of the committee; and
(iii) in relation to each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b)
if it does not have an audit committee, disclose that fact and the processes it employs that
independently verify and safeguard the integrity of its corporate reporting, including the processes for
the appointment and removal of the external auditor and the rotation of the audit engagement partner.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity requiring
the formation of a separate Audit Committee.
The full Board carries out the duties that would ordinarily be assigned to the Audit Committee.
ASX Recommendation 4.2: The Board of a listed entity should, before it approves the entity’s financial
statements for a financial period, receive from its CEO and CFO (or equivalent) a declaration that, in
their opinion, the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial
position and performance of the entity and that the opinion has been formed on the basis of a sound
system of risk management and internal control which is operating effectively.
The Board has received the assurance required by ASX Recommendation 4.2 in respect of the financial
statements for the half year ended 31 December 2019 and the full year ended 30 June 2020. The Board has
formed the view that, given the size and nature of the business of the Company, such a process is not required
in relation to the Company’s quarterly cash flow reports.
ASX Recommendation 4.3: A listed entity should disclose its process to verify the integrity of any periodic
corporate report it releases to the market that is not audited or reviewed by an external auditor.
When preparing periodic corporate reports for release to the market including the quarterly activity and cash
flow reports, these reports are prepared and reviewed by the Managing Director before being presented to
the Board for review. Such reports are not be released to market without the review process by the managing
Director and the Board.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
ASX Recommendation 5.1: A listed entity should have and disclose a written policy for complying with its
continuous disclosure obligations under ASX Listing Rule 3.1.
The Company has established a Continuous Disclosure Policy which is designed to guide compliance with ASX
Listing Rule disclosure requirements, and to ensure that all Directors, senior executives and employees of the
Company understand their responsibilities under the policy.
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Corporate Governance Statement
In accordance with the Company’s continuous disclosure policy, all information provided to ASX for release to
the market is posted to its website at www.emyria.com after ASX confirms an announcement has been made.
Information in relation to the Company’s continuous disclosure requirements is set out in the Company’s
corporate governance policy available at www.emyria.com.
ASX Recommendation 5.2: A listed entity should ensure that its board receives copies of all material market
announcements promptly after they have been made.
The Board has appointed the Company Secretary as the person responsible for communicating with ASX and
overseeing and coordinating the timely disclosure of information to ASX. When the confirmation of a release is
received from the ASX the Company Secretary promptly forwards a copy to the Board.
ASX Recommendation 5.3: A listed entity that gives a new and substantive investor or analyst presentation
should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of
the presentation.
The Board has appointed the Company Secretary as the person responsible for communicating with ASX and
overseeing and coordinating the timely disclosure of information to ASX. The Company Secretary releases any
new and substantive presentation to the ASX Market Announcements Platform ahead of the presentation, a
copy of which is available on the Company’s website, www.emyria.com when released.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
ASX Recommendation 6.1: A listed entity should provide information about itself and its governance to
investors via its website.
The Company’s website at www.emyria.com contains information about the Company’s projects, Directors
and management and the Company’s corporate governance practices, policies and charters. All ASX
announcements made to the market, including annual, half year and quarterly reports are posted on the
website as soon as they have been released by the ASX. The full text of all notices of meetings and explanatory
material, the Company’s Annual Report and copies of all investor presentations are posted on the
Company’s website.
ASX Recommendation 6.2: A listed entity should have an investor relations program that facilitates
effective two-way communication with investors.
The Company has adopted a Shareholder Communication Policy, which encourages shareholder participation
and engagement with the Company. This policy has nominated the Chair, Managing Director and Company
Secretary for having the primary responsibility for communicating with shareholders.
The Company actively promotes communication with shareholders through a variety of measures, including the
use of the Company’s website and email. The Company’s reports and ASX announcements may be viewed
and downloaded from its website, www.emyria.com, or the ASX website, www.asx.com.au under the
ASX code “[EMD]”.
Contact with the Company can be made via an email address provided on the website and investors can
subscribe to the Company’s electronic mailing list.
89
Corporate Governance Statement
ASX Recommendation 6.3: A listed entity should disclose how it facilitates and encourages participation at
meetings of security holders.
The Shareholder Communication Policy encourages shareholder participation at shareholders’ meetings.
Shareholders are provided with all notices of meeting prior to meetings. The Company’s auditor is also made
available for questions at the annual general meeting. Shareholders are also always given the opportunity to
ask questions of the Directors and management, either during or after shareholders’ meetings.
The full text of all notices of meetings and explanatory material are posted on the Company’s website at
www.emyria.com.
ASX Recommendation 6.4: A listed entity should ensure that all substantive resolutions at a meeting of
security holders are decided by a poll rather than by a show of hands.
The Company will conduct a poll at meetings of security holders to decide each resolution.
ASX Recommendation 6.5: A listed entity should give security holders the option to receive communications
from, and send communications to, the entity and its security register electronically.
Contact with the Company can be made via an email address provided on the website and investors can
subscribe to the Company’s electronic mailing list.
The Company’s share register provides a facility whereby investors can provide email addresses to receive
correspondence from the Company electronically and investors can contact the share register via telephone,
facsimile or email.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
ASX Recommendation 7.1: The Board of a listed entity should:
a) have a committee or committees to oversee risk, each of which:
(i) has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director, who is not the chair of the board,
and disclose:
(i) the charter of the committee;
(ii) the relevant qualifications and experience of the members of the committee; and
(iii) in relation to each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b)
if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk management framework.
The Board’s collective experience will assist in the identification of the principal risks that may affect the
Company’s business. Key operational risks and their management will be recurring items for deliberation at
Board meetings.
A Risk Committee has been established by the Board. Members of the Risk Committee are
Professor Sir John Tooke (Chair), Mr Matthew Callahan and Professor Alistair Vickery.
90
Corporate Governance Statement
The qualifications and experience of the members of the Risk Committee, and the number of times the
committee met during the financial year are disclosed in the Directors’ Report.
As a consequence of the size and composition of the Company’s Board the Risk Committee does not have a
majority of independent Directors, however the Bord considers the composition of the Risk Committee to be
appropriate for the current size and activities of the Company.
ASX Recommendation 7.2: The Board or a committee of the Board, of a listed entity should:
a) review the entity’s risk management framework at least annually to satisfy itself that it continues
to be sound and review the entity’s risk management framework at least annually to satisfy itself that
it continues to be sound and that the entity is operating with due regard to the risk appetite set by the
board; and
b) disclose, in relation to each reporting period, whether such a review has taken place. The Board
conducted such a review during the reporting period.
The Company is committed to the identification; monitoring and management of risks associated with its
business activities and has established policies in relation to the implementation of practical and effective
control systems. The Company has established a Risk Management Framework and Policy.
A review of the Company’s Risk Management Framework and Policy was carried out by the Board during the
reporting period to satisfy itself that it continues to be sound and applicable to the Company’s activities.
ASX Recommendation 7.3: A listed entity should disclose:
a)
if it has an internal audit function, how the function is structured and what role it performs; or
b)
if it does not have an internal audit function, that fact and the processes it employs for evaluating
and continually improving the effectiveness of its governance, risk management and internal
control processes.
The Company does not have an independent internal audit function. Due to the nature and size of the
Company’s operations, and the Company’s ability to derive substantially all of the benefits of an independent
internal audit function in the manner disclosed below, the expense of an independent internal auditor is not
considered to be appropriate.
The Board, in conjunction with the Risk Committee, oversees the Company’s risk management systems,
practices and procedures to ensure effective risk identification and management and compliance with internal
guidelines and external requirements and monitors the quality of the accounting function.
ASX Recommendation 7.4: A listed entity should disclose whether it has any material exposure to
environmental and social risks and if it does, how it manages or intends to manage those risks.
The Company identifies and manages material exposure to environmental and social risks in a manner
consistent with its Risk Management Framework and Policy.
Environmental: The Company is subject to, and responsible for, ensuring compliance with various regulations,
licenses, approvals and standards so that its activities do not cause unauthorised environmental harm.
Through its ongoing management of environmental activities, the Company has been able to operate in an
environmentally sustainable and responsible manner.
Social: The Company recognises that a failure to manage stakeholder expectations may lead to disruption to
the Company’s operations. The Company’s Corporate Code of Conduct outlines the Company’s commitment to
integrity and fair dealing in its business affairs and to a duty of care to all employees, clients and stakeholders.
91
Corporate Governance Statement
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBILY
ASX Recommendation 8.1: The Board of a listed entity should:
a) have a remuneration committee which:
(i) has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director,
and disclose:
(i) the charter of the committee;
(ii) the members of the committee; and
(iii) as at the end of each reporting period, the number of times the committee met throughout the
period and the individual attendances of the members at those meetings; or
b)
if it does not have a remuneration committee, disclose that fact and the processes it employs for
setting the level and composition of remuneration for directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
The Board as a whole performs the function of a remuneration committee which includes setting the
Company’s remuneration structure, determining eligibilities to incentive schemes, assessing performance and
remuneration of senior management and determining the remuneration and incentives of the Board.
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity requiring
the formation of a separate remuneration committee.
The Board may obtain external advice from independent consultants in determining the Company’s
remuneration practices, including remuneration levels, where considered appropriate.
ASX Recommendation 8.2: A listed entity should separately disclose its policies and practices regarding
the remuneration of Non-Executive Directors and the remuneration of Executive Directors and other senior
executives.
The remuneration of any Executive Director will be decided by the Board, without the affected Executive
Director participating in that decision-making process.
A Non-Executive Director may be paid fees or other amounts in accordance with any consultancy agreement in
which they have an interest or as the Directors determine from time to time where a Director performs special
duties or otherwise performs services outside the scope of the ordinary duties of a Director or any consultancy
agreement in place.
In addition, subject to any necessary Shareholder approval Directors may receive non-cash performance
incentives such as options or performance rights. Directors are also entitled to be paid reasonable travel and
other expenses incurred by them in the course of the performance of their duties as Directors.
The Board reviews and approves the Company’s remuneration policy in order to ensure that the Company is
able to attract and retain executives and Directors who will create value for Shareholders, having regard to the
amount considered to be commensurate for an entity of the Company’s size and level of activity as well as the
relevant Directors’ time, commitment and responsibility.
The Board is also responsible for reviewing any employee incentive and equity-based plans including the
appropriateness of performance hurdles and total payments proposed.
92
Corporate Governance Statement
ASX Recommendation 8.3: A listed entity which has an equity-based remuneration scheme should:
a) have a policy on whether participants are permitted to enter into transactions (whether through the
use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and
b) disclose that policy or a summary of it.
The Company’s Trading Policy prohibits the use of Derivatives in relation to unvested equity instruments,
including performance share rights, and vested Company Securities that are subject to disposal restrictions
(such as a “Holding Lock”).
Derivatives may be used in relation to vested positions which are not subject to disposal restrictions subject to
compliance with the law and the other provisions of the Trading Policy.
93
ASX Additional Information
Twenty largest shareholders as at 6 October 2020
"STEWART JAMES WASHER &
PATRIZIA DERNA WASHER
"
"MR CRAIG LAWRENCE DARBY
"
"MAL WASHER NOMINEES PTY LTD
"
"MERCATOR SHIPWRIGHTS PTY LTD
"
"LAKEWEST PTY LTD
"
MR STEPHEN PETER SOMERVILLE
MR PAK LIM KONG
NATIONAL NOMINEES LIMITED
"MR ANDREW WARREN SIMMONS &
MRS PETA SARAH LLOYD-HARRIS
"
MR CRAIG LAWRENCE DARBY
ALEXANDER HOLDINGS (WA) PTY LTD
PAC PARTNERS SECURITIES PTY LTD
D SCHECTER MEDICINE PROFESSIONAL CORPORATION
"ADAM JAMES
"
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CANN GROUP LIMITED
CANOPY GROWTH CORPORATION
"BAZA HIGH CONVICTION PTY LTD
"
MR PAK LIM KONG
"LIDDLE INVESTMENTS GROUP PTY LTD
"
Units
% of
Units
28,400,000
13.43%
19,600,000
9.27%
19,600,000
9.27%
19,600,000
9.27%
5,160,532
2.44%
4,900,000
2.32%
3,416,667
1.62%
2,600,000
1.23%
2,513,431
1.19%
2,000,000
0.95%
2,000,000
0.95%
1,990,000
0.94%
1,960,000
0.93%
1,960,000
0.93%
1,828,167
0.86%
1,562,500
0.74%
1,562,500
0.74%
1,398,431
0.66%
1,250,027
0.59%
1,250,000
0.59%
Totals: Top 20 holders
124,552,255
58.92%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
94
ASX Additional Information
Distribution of shareholders as at 6 October 2020
Holding Ranges
Holders
Total Units
Above 0 up to and including 1,000
Above 1,000 up to and including 5,000
Above 5,000 up to and including 10,000
Above 10,000 up to and including 100,000
Above 100,000
Totals
7
23
187
374
221
812
1,071
89,705
1,628,628
16,682,025
193,001,349
211,402,778
100.00%
% Issued
Share Capital
0.00%
0.04%
0.77%
7.89%
91.30%
The number of shareholders holding less than a marketable parcel is 24.
Substantial shareholders as at 6 October 2020
Shareholder
STEWART JAMES WASHER & PATRIZIA DERNA WASHER
MERCATOR SHIPWRIGHTS PTY LTD
MR CRAIG LAWRENCE DARBY
MAL WASHER NOMINEES PTY LTD
Number
48,550,499
19,600,000
22,709,790
19,600,000
Class of shares and voting rights
At meetings of members or classes of members each member entitled to vote may vote in person or by proxy
or attorney; and on a show of hands every person present who is a member has one vote, and on a poll every
person present in person or by proxy or attorney has one vote for each ordinary share held.
On-market buy-back
There is no current on-market buy-back.
Unlisted Options as at 6 October 2020
Unlisted options on issue
Exercisable at
$0.45
Exercisable at
$0.45
expiring 13 June 2023
expiring 26 September 2023
Total on issue
Number of holders (>100,000)
17,750,000
14
600,000
1
20% or more held by:
Australian Medical Research Pty Ltd - 600,000
95
ASX Additional Information
Restricted securities as at 6 October 2020
Shareholder
Ordinary Shares
Unlisted Options
Ordinary Shares – 24 Months from requotation
100,097,478
Unlisted Options exercisable at $0.45 on or before 13 June 2023
– 24 Months from requotation
Unlisted Options exercisable at $0.45 on or before 13 June 2023
– 13 June 2020
Unlisted Options exercisable at $0.45 on or before 13 June 2023
– 26 September 2020
Unlisted Options exercisable at $0.45 on or before 13 June 2023
– 24 October 2020
Unlisted Options exercisable at $0.45 on or before 13 June 2023
– 11 November 2020
10,500,000
5,250,000
600,000
1,000,000
1,000,000
100,097,478
18,350,000
Listing Rule 4.10.19 confirmation
The Company has used the cash and assets readily convertible to cash that it had at the time of admission to
ASX in a way consistent with the business objectives set out in the prospectus.
96
Corporate Directory
Directors
Dr Stewart Washer, Executive Chairman
Share Registry
Automic Pty Ltd
Dr Michael Winlo, Managing Director
Level 2, 267 St Georges Terrace
Prof Alistair Vickery, Executive Medical Director
Perth WA 6000
Mr Matthew Callahan, Non-Executive Director
Prof Sir John Tooke, Non-Executive Director
Auditors
Company Secretary
Simon Robertson
Stantons International
Level 2, 1 Walker Avenue
West Perth WA 6005
Principal and Registered Office
Bankers
Suite 3, 43 Oxford Close
West Leederville WA 6007
PO Box 1442
West Leederville
WA 6901 Australia
Telephone: +61 8 6559 2800
Website: www.emyria.com
Email: info@emyria.com
National Australia Bank
Level 14, 100 St Georges Terrace
Perth WA 6000
Securities Exchange
Australian Securities Exchange (ASX)
Code: EMD
98
To provide fantastic care we need to learn from the person in
front of us and personalise treatment. This means taking the
time to understand what’s important, what’s working and the
full range of options available.
Prof Alistair Vickery
EMYRIA MEDICAL DIRECTOR
Join our journey of
clinical discovery and
transformative care.
emyria.com