FarmaForce Limited
A.C.N. 167 748 843
FarmaForce Limited
ACN 167 748 843
Appendix 4E and
Full Year
Financial Results
For the Year
Ended 30 June
2016
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
ASX Appendix 4E
Provided below are the results for announcement to the market in accordance with Australian Securities
Exchange (‘ASX’) Listing Rule 4.3A and Appendix 4E for FarmaForce Limited (‘FarmaForce or the ‘Company’) for
the year ended 30 June 2016 and the previous corresponding period 30 June 2015.
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Consolidated results
30 June 2016
$000
30 June 2015
$000
Movement
Up/down
Movement%
Revenue
1,951
353
up
453%
Net Profit (loss) from ordinary
activities after tax attributable to
members
Net profit (loss) for the period
attributable to members
(3,799)
(2,051)
down
(3,799)
(2,051)
down
85%
85%
For commentary on the results including changes in state of affairs and likely developments of the Company,
see comments set out in the Directors’ report (refer to page 6) and the Operating and Financial Review section
(refer to page 15) of the Annual Financial Report.
Dividends
No dividends have been paid or declared since the end of the previous financial year, nor do the directors
recommend the declaration of a dividend.
Dividends (distributions)
Franked amount per
security
Amount per security
Interim dividend
Final dividend
OTHER INFORMATION
Statement of comprehensive income
Nil
Nil
Nil
Nil
For a statement of comprehensive income together with notes to the statement, refer to page 15 of the
Annual Financial Report for details.
Statement of financial position
For a statement of financial position together with notes to the statement, refer to page 16 of the Annual
Financial Report for details.
Statement of cash flows
For a statement of cash flows together with notes to the statement, refer to page 18 of the Annual Financial
Report for details.
Statement of changes in equity
For a statement of changes in equity, refer to page 17 of the Annual Financial Report for details.
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Net tangible assets
Net tangible assets per security with the comparative figure for the previous corresponding period:
Current period:
Previous corresponding period:
1.44 cents
n/a
Control gained over entities having material effect
FarmaForce Limited has neither gained control nor lost control over an entity during the period which has had
a material effect.
Details of associates
For details of the Company’s associates, refer to page 32 of the Annual Financial Report.
Other Significant information
Apart from the information contained in the attached Annual Financial Report and elsewhere in this Appendix
4E, there is no other significant information needed by an investor to make an informed assessment of the
Company’s financial performance and financial position as at the reporting date.
Audited Accounts
The accounts have been audited by Fortunity Assurance and are not subject to dispute or qualification.
For personal use only
Annual Report
2016
FARMAFORCE LIMITED ACN 167 748 843
1
For personal use only FarmaForce Limited
2016 Annual Report
Contents
For the Year Ended 30 June 2016
FarmaForce Limited
A.C.N. 167 748 843
Page
Chairman’s Report ............................................................................................................. 1
Directors’ Business Review ................................................................................................ 2
Corporate Governance Statement ..................................................................................... 5
Directors' Report ............................................................................................................... 6
Auditor’s Independence Declaration ............................................................................... 14
Statement of Profit or Loss and Other Comprehensive Income ........................................ 15
Statement of Financial Position ....................................................................................... 16
Statement of Changes in Equity ....................................................................................... 17
Statement of Cash flows .................................................................................................. 18
Notes to the Financial Statements ................................................................................... 19
Directors’ Declaration ..................................................................................................... 35
Independent Audit Report to the members of FarmaForce Limited ................................. 36
ASX Additional Information ............................................................................................. 38
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FarmaForce Limited
A.C.N. 167 748 843
Chairman’s Report
On behalf of the board of directors, we are pleased to present the operational and financial review for
FarmaForce Limited for the year ending 30 June 2016.
After listing on the ASX on the 27 October 2015, FarmaForce has successfully laid the groundwork required to
implement the company’s strategy. This approach sees the Company becoming a fully integrated strategic
sales solution partner to both multi-national and local pharmaceutical companies in the Australian market. In
doing so the organisation has achieved the following objectives:
-
Establishment of sales teams to service our existing client contracts
- Obtained ISO Accreditation
-
-
-
Positioning the organisation for organic growth opportunities
Recruitment and retention of key people in order to effectively translate our vision into reality and
Earning a reputation as a high quality service provider to the pharmaceutical industry in a short space
of time.
The IPO raised $5.077M in capital and with the funds invested in infrastructure to further build the company,
its technology and implement the business strategy. This provided an overall strengthening of working capital
to fund future growth opportunities.
Revenue for the 12 months to June 2016 was $1.951M up 453 per cent from $0.353M for the comparative
period last year. This increase from the prior year is a result of the continued implementation of our business
development strategies. The pre-tax loss for the period was $3.799M against a pre-tax loss of $2.051M in the
prior corresponding period, and cash flow from operating activities being ($3.588M) and ($1.912M)
respectively. The expenditure in the current year represents essential expenditure to meet the business
objectives as stated in the prospectus.
Net assets as of 30 June 2016 were $1.840M compared to ($1.666M) at 30 June 2015 and cash balances were
$1.541M compared with $1.206M at the same time last year.
Our leadership team, led by an aspirational and committed group of executive management and board
members, is committed to building the FarmaForce business and consistently adding value to our clients,
shareholders and employees.
George Elias
Chairman
Date: 29th August 2016
Page 1
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FarmaForce Limited
A.C.N. 167 748 843
Directors’ Business Review
The FarmaForce story began in early 2014 with a single objective; to become the number one partner of
choice to the pharmaceutical industry for outsourced sales solutions. To achieve this, we had to ensure we
could deliver excellence and innovative solutions for the duration of the business partnership with each client.
Therefore, when we developed our business strategy, it was critical that our value proposition should not be
about providing cheaper labour to the pharmaceutical industry, but rather about delivering a more valuable,
cost effective and long term strategic solution. It’s essential to the long term success of FarmaForce that we
forge capability-driven, strategic partnerships rather than simply “spillover”, capacity driven, short term
transactions.
We were confident then, as we are now, that the FarmaForce value proposition would resonate with the
industry executives, as it did.
Pharma industry challenges
During the last few years, the pharmaceutical industry has undergone significant transformation and continues
to be in a state of flux even today. This is due to many patent protected pharmaceuticals losing their sales
exclusivity period resulting in fierce, price driven, competition with the generic manufacturers. This has
translated to significant revenue and profitability loss for the innovative pharma industry.
The FarmaForce solution
FarmaForce offers a credible and viable solution to address this challenge on a consultative basis with
FarmaForce acting as a complement to the internal team. Importantly, these sales can be achieved on behalf
of our clients, without the client needing to increase internal resourcing and/or infrastructure.
Post FarmaForce listing on the ASX in October last year, the team embarked on implementation of the
company’s strategy to become an integrated strategic partner to both the international and local
pharmaceutical companies in the Australian market place.
FarmaForce business development process
The FarmaForce business development strategy is deliberate and is built on the belief of insight based business
development practice. Our Business Development Managers lead the process with informed ideas that will
make customers aware of unknown needs. To do this, we ask ourselves - is the customer facing an emerging
need? Or are they in a state of organisational flux? Regardless of whether it’s due to external pressures,
regulatory reforms, financial conditions or internal pressures – the customer is re-examining the status quo,
they are looking for insights and are receptive to creative and disruptive ideas being brought to the table.
The FarmaForce business development team engages customers at an early stage; we seek out a very different
set of stakeholders, preferring sceptical change agents over friendly informants. We will then work with these
change agents, educating them on how to buy, rather than grill them about their company’s purchasing
process. We lead with well-informed insights leading the customer to an innovative solution as opposed to
selling a quick fix.
In most of our partnerships we realise the initial project is usually a pilot project where the client needs to
build trust and confidence in the FarmaForce team. The business development cycle within the pharmaceutical
industry is quite protracted; it is not unusual for a potential deal to take up to nine months to convert into a
contract enabling the infield deployment of the FarmaForce team. Hence, potential business deals that may
currently be under discussion will potentially convert into contracts in the next nine to twelve months. When
considering invoicing cycle timeframe, another 90 days are accrued. So actually, todays’ potential business
deals may translate into revenue in 12 to 15 months. Typically, this explains the apparent disparity between
OPEX and revenue.
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FarmaForce Limited
A.C.N. 167 748 843
FarmaForce Sales Force Effectiveness (SFE)
FarmaForce has been very confident about both its ability and capability to deliver on its value proposition and
has therefore voluntarily engaged a third party data provider, IMS health, to monitor various Sales Force
Effectiveness (SFE) metrics on a monthly basis.
Indicatively, see the results below which have been consistent across the year.
•
•
July 2016 FarmaForce ranking – #12 Overall Rep Performance (All other companies in the list of 20
are multinational pharmaceutical companies)
July 2016 FarmaForce ranking – #1 Overall Rep Performance compared to the other contract sales
organisations
FarmaForce learning and development
We acknowledge that as a company we cannot be better than our people, so we maintain a consistent and
systematic focus on learning and development. Whether it’s a new medication, biologic or synthetic chemistry,
a medical device or a patient service, we will ensure that we know everything about the product, the
therapeutic area and the competition, prior to attempting to promote it to healthcare practitioners.
Every new sales team we create and every new member that joins us must learn this curriculum. Every new
product that comes to life in our business, is a learning and development opportunity.
FarmaForce medical affairs business unit
At FarmaForce we have the aptitude and experience which goes beyond mere sales and what is formally
required of us from our clients, we routinely exceed our client’s expectations. As members of Medicines
Australia, we ensure that the highest standards of compliance and medical governance are met. We have an
in-house medical team and proactively deal with challenges such as pharmacovigilance, medical writing,
medical education to reps or compliance approval of promotional material for our clients. We also have the
ability to manage anything else that may come our way in the routine conduct of our business.
FarmaForce Human Capital Business Unit
When it comes to our people we don’t believe in virtual solutions. We have a “real” human capital business
unit with real people, bringing real world pharma experience to our enterprise. Our in-house team of human
capital specialists ensure that our human capital strategy and policies, are at least on par with our pharma
partners, with an emphasis on staff recruitment, retention, training, learning and development, talent
management and career advancement.
FarmaForce Innovative Business and Revenue Model
At FarmaForce we have transitioned beyond traditional outsourcing solutions and our business model forges
true strategic partnerships with our clients.
The novel way we structure our deals with business partners, the definition of the desired outcome and
expectations from partnership is what translates into sales effectiveness and creates bilateral value. It’s the
result that counts, not just the effort. Hence our revenue model transcends the typical fee for service model.
FarmaForce Novel and Innovative Business Tools
This freedom to operate outside the typical constraints through our service model allows us to create and
deploy innovative marketing, promotional and educational tools that result in higher return on investment,
whilst simultaneously maintaining compliance with the Medicines Australia code of conduct.
Page 3
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FarmaForce Limited
A.C.N. 167 748 843
FarmaForce Statistics
For the twelve-month period leading to Q3 2016, the FarmaForce headcount has increased 45 per cent, our
client base increased by 250 per cent and we are now working across seven therapeutic areas. We primarily
work across three channels; primary care, specialty and pharmacy. Market research that we commissioned
from an independent agency benchmarking the FarmaForce reputation has shown; awareness is good, our
handpicked high calibre team has a track record of success within the industry, we are focused on quality
and add value by offering additional services supporting the effectiveness of sales teams, we are a fresh new
face in the market and clients want FarmaForce to succeed.
At FarmaForce we make a significant financial and resource investment into quantifying the processes that
make a difference to our effectiveness and performance.
FarmaForce has now earned its place within the Australian market place and is considered a valued business
partner by industry participants and more importantly, it has built the ability to attract and retain excellent
talent in our people. The quality of potential clients and the deal flow prospects have never been better and
FarmaForce is ideally positioned to capitalise on this.
Dr George Syrmalis
Director – for and on behalf of the Board
Date: 29th August, 2016
Page 4
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FarmaForce Limited
A.C.N. 167 748 843
Corporate Governance Statement
30 June 2016
FarmaForce Limited and the board are committed to achieving and demonstrating the highest standard of
corporate governance. FarmaForce Limited has reviewed its corporate governance practices against the
Corporate Governance Principles and Recommendations (3rd edition) published by the ASX Corporate
Governance Council
The 2016 corporate governance statement is dated as at 30th June 2016 and reflects the corporate governance
practices in place throughout the 2016 financial year. The 2016 corporate governance statement was
approved by the board on 29th August 2016. A description of the Company’s current corporate governance
practices is set out in the Group’s corporate governance statement which can be viewed at
http://farmaforce.com.au/why-invest-2/
Page 5
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report
30 June 2016
The directors present their report on FarmaForce Limited for the financial year ended 30 June 2016.
1. General information
Information on directors
The names, qualifications, experience and special responsibilities of each person who has been a director
during the year and to the date of this report are:
Daniel Morato
Qualifications
Experience
General Manager (Executive Director) until 23/11/15
Bachelor of Pharmacy
Board member since 7/04/2015 until 23/11/15. Prior to joining the
Company, Daniel enjoyed a career in the pharmacy industry that spanned
over twenty years. Much of this time was spent as a pharmacy proprietor
and advisor. Establishing and managing numerous pharmacies during his
career has given Daniel an in-depth understanding of the market challenges
and drivers facing the pharmacy industry, medical services industry and
pharmaceutical industry as a whole.
Daniel has also advised a number of pharmaceutical organisations on the
management of changing market conditions.
He has consulted on effective market penetration for new products,
advised on managing competition and forming defence strategies, against
generic products.
Interest in shares and
options
500,000 Ordinary Shares and 500,000 Loyalty Options as at date of
ceasing to be director
Special responsibilities
General Manager until 23/11/15
George Elias
Qualifications
Experience
Interest in shares and
options
Special responsibilities
Director (Independent non-executive)
Bachelor of Commerce (University of New South Wales), Diploma of
Financial Planning (Dip. FP), Member CPA Australia, ASIC RG 146 Compliant
(Securities), Certified Financial Planner® member of the Financial Planning
Association of Australia.
Board member since 2/04/2015. George has over 30 years’ experience in
providing accounting and business advisory services. During this period, he
has been involved in providing taxation and business advice to small and
medium sized enterprises, including business structuring, cash-flow
forecasting, taxation and superannuation structure support and advice.
George is currently the principal at Elias Financial Services and has been
providing financial and accounting advice as principal since July 1991. His
business and financial acumen, coupled with his experience in dealing with
a variety of challenges in different business environments gives him the
necessary skills to chair the Board and provide strategic leadership to face
any challenges that may arise.
125,000 Ordinary Shares and 125,000 Loyalty Options
Chairman of the Board, Member of the Remuneration and Nomination
Committee and Audit and Risk Committee
Page 6
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Directors' Report (continued)
30 June 2016
Stamatia Tolias
Director (Independent non-executive)
FarmaForce Limited
A.C.N. 167 748 843
Qualifications
Experience
Bachelor of Science (Nursing), Masters Degree (Mental Health), Member
Nurses Association (Greece).
Board member since 2/04/2015. Stamatia currently resides in Athens,
Greece. She is a qualified nurse and has studied at a Masters level in the
field of mental health.
Stamatia currently works as a research nurse in a mental health
organisation where she has been employed for the past year and a half. She
is currently undertaking studies for her PhD at The National Kapodistrian
University of Athens and is expected to further develop expertise in Quality
Use of Medicines (QUM) principles. Although Stamatia has no experience in
managing companies, it is contemplated that the Company will be able to
benefit from her understanding of international standards of QUM
principles.
Furthermore, her understanding of the practice of the delivery of
pharmacological therapy combined with the quality use of medicine
principles creates a unique opportunity to drive the Company's strategies
and sequential service offering.
Interest in shares and
options
NIL
Special responsibilities
Member of the Remuneration and Nomination Committee and Audit and
Risk Committee
Con Tsigounis
Qualifications
Experience
Director (Non-executive)
Member of the Australian Institute of Company Directors
Board member since 28/01/2014, resigned 2/04/2015 and reappointed on
22/06/2015. Con is a current Executive Director and Head of Investor
relations at iQnovate Ltd.
Con has over 20 years of experience in business and investor relations,
specifically in the wholesale and retail sectors. As a member of the Board of
iQnovate Ltd since its inception, Con has been responsible for executing
that company's investor relations and capital raising strategy. His
experience in Shareholder relationship management gives him the
necessary skillset to assist the Company attain its corporate objectives.
Interest in shares and
options
NIL
Special responsibilities
Member of the Remuneration and Nomination Committee and Audit and
Risk Committee
Other directorships in
listed entities held in
the previous three years
iQnovate Ltd
Page 7
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report (continued)
30 June 2016
Dr George Syrmalis
Director (Non-executive)
Qualifications
Experience
Trained in Nuclear Medicine-radiation immunology
Board member from 28/01/2014 to 2/04/2015, Dr Syrmalis was
reappointed to the Company board on 24/11/15. Dr Syrmalis founded and
led as CEO and Chairman of The Bionuclear Group SA, (1995 -2005)
incorporating Antisoma SA, Bionuclear Institute of Diagnosis and Therapy
SA, Bionuclear Research and Development SA and Vitalcheck SA.
Interest in shares and
Options
Other directorships in
listed entities held in
the previous three years
10,000 ordinary shares
Chairman and Executive Director of iQnovate Ltd, Executive Director
of iQX Limited
Directors have been in office since the start of the financial year to the date of this report unless otherwise
stated.
Principal Activities
The principal activity of FarmaForce Limited during the financial year was the provision of services as a
contract sales organisation.
No significant changes in the nature of the Company's activity occurred during the financial year.
2. Operating results and review of operations for the year
Operating results
The loss of the Company after providing for income tax amounted to $3,799,018 compared to a loss of
$ 2,051,222 in 2015.
Dividends paid or recommended
There were no dividends paid or declared during the current or previous financial year.
Page 8
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report (continued)
30 June 2016
3. Other items
Significant changes in state of affairs
The Company successfully listed on the ASX on 27th October 2015 via an IPO which raised $5.077m.
Meetings of directors
During the financial year, 6 meetings of directors (including committees of directors) were held.
Attendances by each director during the year were as follows:
George Elias
Daniel Morato
StamatiaTolias
Con Tsigounis
George Syrmalis
Directors' Meetings
Number eligible
to attend
Number attended
6
5
6
6
1
6
5
5
6
1
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Directors' Report (continued)
30 June 2016
FarmaForce Limited
A.C.N. 167 748 843
Committee membership
As at the date of this report, the Company had an audit and risk management committee and a
remuneration and nomination committee.
Members acting on the committees of the board during the year were:
Audit and risk management committee
Remuneration and nomination committee
George Elias
Stamatia Tolias
Spiro Kevin Sakiris
Events after reporting date
George Elias
Stamatia Tolias
Con Tsigounis
No matters or circumstances have arisen since the end of the financial year which significantly affected or
may significantly affect the operations of the Company, the results of those operations or the state of
affairs of the Company in future financial years.
Dividends
No dividends have been paid or declared since the end of the previous financial year, nor do the directors
recommend the declaration of a dividend.
Likely Developments and Expected Results
Likely developments in the operations of the Group and the expected results of those operations in
future financial years have not been included in this report as the inclusion of such information is likely to
result in unreasonable prejudice to the Group.
Environmental issues
The Company's operations are not regulated by any significant environmental regulations under a law of
the Commonwealth or of a state or territory of Australia.
Indemnification and insurance of officers and auditors
During or since the end of the financial year, the company has entered into agreements to indemnify
Directors, and paid $16,456.45 in insurance premiums for Directors & Officers insurance which includes
cover for this indemnification.
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify
the auditor of the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the
auditor of the company or any related entity.
Auditor’s independence declaration
The lead auditor’s independence declaration in accordance with section 307C of the Corporations Act
2001, for the year ended 30 June 2016 has been received and can be found on page 14 of the financial
report.
Page 10
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report (continued)
30 June 2016
4. Remuneration Report
Remuneration Policy
The Constitution of the Company provides that the non-executive Directors are entitled to remuneration
as determined by the Company in general meetings to be apportioned among them in such manner as
the Directors agree and, in default of agreement, equally. The aggregate maximum remuneration for
non-executive Directors currently determined by the Company is $300,000 per annum at the date of this
report.
Directors who also chair the Audit Committee shall be entitled to further director’s fee of an additional
$5,000. In addition, non-executive Directors will be entitled to be reimbursed for properly incurred
expenses including time costs attending to the business of the company.
If a non-executive Director performs extra services, which in the opinion of the Directors are outside the
scope of the ordinary duties of the Director, the company may remunerate that Director by payment of a
fixed sum determined by the Directors in addition to or instead of the remuneration referred to above.
However, no payment can be made if the effect would be to exceed the maximum aggregate amount
payable to non-executive Directors. A non-executive Director is entitled to be paid travelling and other
expenses properly incurred by them in attending Director’s or general meetings of the Company or
otherwise in connection with the business of the Company.
The remuneration policy of FarmaForce Limited has been designed to align Key Management Personnel
(KMP) objectives with shareholder and business objectives by providing a fixed remuneration component
and offering specific long-term incentives based on key performance areas affecting the consolidated
group’s financial results. The Board of FarmaForce Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the high-quality KMP to run and manage the
group, as well as create goal congruence between Directors, executives and shareholders.
The performance of KMP is measured against criteria agreed biannually with each executive. All bonuses
and incentives must be linked to predetermined performance criteria. The policy is designed to attract
the highest calibre of executives and reward them for performance results leading to long-term growth in
shareholder wealth.
All remuneration paid to KMP is valued at the cost to the company and expensed.
Performance-based Remuneration
The Key Performance Indicators (KPIs) are set annually, with a certain level of consultation with KMP. The
measures are specifically tailored to the area each individual is involved in and has a level of control over.
The KPIs target areas the Company believes hold greater potential for group expansion and profit,
covering financial and non-financial as well as short term and long-term goals. The level set for each KPI is
based on budgeted figures for the Company and respective industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the
number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed, and
their efficiency is assessed in relation to the Group’s goals and shareholder wealth, before the KPIs are
set for the following year.
In determining whether or not a KPI has been achieved, FarmaForce Limited bases the assessment where
appropriate on audited figures, however, in circumstances where the KPI involves comparison of the
Company or a division within the Company to the market, independent reports may be obtained from
organisations such as Standard & Poors. The use of such figures reduces any risk of contention relating to
payment eligibility. The Board does not believe that performance conditions should include a comparison
with factors external to the Company at this time.
Page 11
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report (continued)
30 June 2016
Service Agreements
On appointment to the Board, all non-executive directors enter into a service agreement with the
Company in the form of a letter of appointment. The letter summarises the Board policies and terms,
including remuneration, relevant to the office of director.
The remuneration and other terms of employment for executive Directors and other senior executives
are set out in formal service agreements as summarised below.
In cases of resignation, no separation payment is made to the executive, except for amounts due and
payable up to the date of ceasing employment, including accrued leave entitlements.
Remuneration details for the year ended 30 June 2016
The following table of benefits and payment details, in respect to the financial year, the components of
remuneration for each member of the key management personnel of the Group.
Table of benefits and payments
short term
post
employment
cash salary
fees
$
bonus
$
car
allowance
$
director
fee
$
pension and
superannuation
$
29,669
32,487
76,847
139,003
-
-
-
-
-
-
-
-
-
-
-
-
2,818
-
7,300
10,118
$
32,487
32,487
84,147
149,121
2016
Directors
George Elias
Stamatia Tolia
Daniel Morato*
* Daniel Morato resigned from the company on 23 November 2015
short term
cash salary
fees
$
bonus
$
car
allowance
$
director
fee
$
post
employment
pension and
superannuation
$
$
-
-
168,000
168,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,960
15,960
183,960
183,960
2015
Directors
George Elias
Stamatia Tolia
Daniel Morato*
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FarmaForce Limited
A.C.N. 167 748 843
Directors' Report (continued)
30 June 2016
5. Remuneration report (continued)
Securities received that are not performance related
No members of key management personnel are entitled to receive securities which are not performance-
based as part of their remuneration package.
KMP related party transactions
The Group undertook the following transactions with:
• An entity over which the key management person or family member has, directly or indirectly,
control, joint control or significant influence, during the reporting period.
This is disclosed as under the related party disclosure note as per note 18 to the annual financial
statements.
This director's report, incorporating the remuneration report, is signed in accordance with a resolution of
the Board of Directors.
Director:
George Elias
Dated this 29th day of August 2016
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Auditor’s Independence Declaration
FarmaForce Limited
A.C.N. 167 748 843
Auditor’s Independence Declaration under Section 307C of the Corporations Act
2001 to the Directors of FarmaForce Limited
As lead auditor for the audit of FarmaForce Limited for the financial year ended 30 June, 2016, I declare that,
to the best of my knowledge and belief, there have been:
i.
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001
in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
FORTUNITY ASSURANCE
TR Davidson
Partner
Dated: 31 August, 2016
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FarmaForce Limited
A.C.N. 167 748 843
Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2016
Revenue
Other income
Cost of Goods sold
Employee benefits expense
Depreciation and amortisation expense
Office sharing costs
IPO and listing costs
Other expenses
Finance costs
Loss before income tax
Income tax benefit
Loss for the year
Other comprehensive income, net of income tax
Other comprehensive income for the year
Total comprehensive income
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
2016
$
2015
$
3
4
4
4
1,950,840
41,145
(2,670,861)
(1,008,639)
(38,538)
(691,820)
(82,754)
(1,296,452)
(1,939)
(3,799,018)
352,683
27
(595,144)
(490,548)
(19,584)
(627,705)
-
(483,390)
(187,561)
(2,051,222)
-
(3,799,018)
(2,051,222)
-
-
(3,799,018)
(2,051,222)
13
13
(4.34)
(4.34)
n/a
n/a
The accompanying notes form part of these financial statements.
Page 15
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Statement of Financial Position
As at 30 June 2016
Note
2016
$
2015
$
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and Other receivables
Property, plant and equipment
Deferred Tax Assets
Investment in Associate
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
Other liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Deferred Tax Liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS/(DEFICIENCY)
EQUITY
Issued capital
Convertible Notes
Capital raising costs
Accumulated losses
TOTAL EQUITY
6
7
7
8
17
9
10
11
12
1,541,546
368,606
1,910,152
1,206,008
294,145
1,500,153
380
240,259
-
269,000
509,639
2,419,791
-
153,179
-
-
153,179
1,653,332
579,665
-
-
579,665
265,817
2,903,961
149,579
3,319,357
-
-
579,665
-
-
3,319,357
1,840,126
(1,666,025)
8,068,859
-
-
(6,228,733)
1,840,126
1
854,463
(90,774)
(2,429,715)
(1,666,025)
The accompanying notes form part of these financial statements.
Page 16
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Statement of Changes in Equity
For the Year Ended 30 June 2016
2016
Balance at 1 July 2015
Loss for the year
Total comprehensive income for the year
Share issued during the year
Convertible notes
Capital raising costs
Shares
capital
$
763,690
-
-
5,459,545
2,903,961
(1,058,337)
Accumulated
losses
$
Total
$
(2,429,715)
(3,799,018)
(3,799,018)
(1,666,025)
(3,799,018)
(3,799,018)
-
-
-
5,459,545
2,903,961
(1,058,337)
Balance at 30 June 2016
8,068,859
(6,228,733)
1,840,126
2015
Balance at 1 July 2014
Loss for the year
Total comprehensive income for the year
Convertible notes
Capital raising costs
IPO listing costs
Balance at 30 June 2015
Shares
capital
$
134,488
-
-
Accumulated
losses
$
(378,493)
(2,051,222)
(2,051,222)
Total
$
(244,005)
(2,051,222)
(2,051,222)
719,976
(74,633)
(16,141)
763,690
-
-
-
719,976
(74,633)
(16,141)
(2,429,715)
(1,666,025)
The accompanying notes form part of these financial statements.
Page 17
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Statement of Cash flows
For the Year Ended 30 June 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest received
Net cash (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of plant and equipment
Purchase of property, plant and equipment
Investment in associates
Net cash (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issue of shares
Proceeds from the issue of convertible notes
Capital raising costs – convertible notes
IPO listing costs
Net cash provided by financing activities
Note
2016
$
2015
$
1,921,504
(5,549,008)
(1,939)
41,145
295,891
(2,208,012)
(160)
-
19
(3,588,298)
(1,912,281)
-
(125,618)
(269,000)
(394,618)
594
(77,422)
-
(76,828)
5,459,545
-
(1,058,337)
(82,754)
4,318,454
-
3,385,500
(364,109)
(16,141)
3,005,250
Net increase in cash and cash equivalents held
Cash and Cash equivalents at beginning of year
Cash and Cash equivalents at end of financial year
335,538
1,206,008
1,541,546
1,016,141
189,867
1,206,008
6
The accompanying notes form part of these financial statements.
Page 18
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements
For the Year Ended 30 June 2016
The financial report covers FarmaForce Limited as an Individual entity. FarmaForce Limited is a for-profit
Company, incorporated and domiciled in Australia.
The functional and presentation currency of FarmaForce Limited is Australian dollars.
1. Basis of Preparation
The financial statements are general purpose financial statements that have been prepared in
accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the
Australian Accounting Standards Board and International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The financial statements have been prepared on an accruals basis and are based on historical costs
modified, where applicable, by the measurement at fair value of selected non-current assets, financial
assets and financial liabilities. The company is a for-profit entity for financial reporting purposes under
Australian Accounting Standards.
Significant accounting policies adopted in the preparation of these financial statements are presented
below and are consistent with prior reporting periods unless otherwise stated.
2. Summary of Significant Accounting Policies
(a)
Income Tax
The tax expense recognised in the statement of profit or loss and other comprehensive income comprises
of current income tax expense plus deferred tax expense.
Current tax is the amount of income taxes payable/(recoverable) in respect of the taxable profit (loss) for
the year and is measured at the amount expected to be paid to (recovered from) the taxation authorities,
using the tax rates and laws that have been enacted or substantively enacted by the end of the reporting
period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered
from) the relevant taxation authority.
Deferred tax is not provided for the following
•
•
•
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 accounting profit nor taxable profit (tax loss).
Taxable temporary differences arising on the initial recognition of goodwill.
Temporary differences related to investment in subsidiaries, associates and jointly controlled
entities to the extent that the Group is able to control the timing of the reversal of the
temporary differences and it is probable that they will not reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the
extent that it is probable that taxable profit will be available against which the deductible temporary
differences and losses can be utilised.
Current tax assets and liabilities are offset where there is a legally enforceable right to set off the
recognised amounts and there is an intention either to settle on a net basis or to realise the asset and
settle the liability simultaneously.
Page 19
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
2. Summary of Significant Accounting Policies (continued)
Deferred tax assets and liabilities are offset where there is a legal right to set off current tax assets
against current tax liabilities and the deferred tax assets and the deferred tax liabilities relate to income
taxes levied by the same taxation authority on either the same taxable entity or different taxable entities
which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and
settle the liabilities simultaneously in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.
Current and deferred tax is recognised as income or an expense and included in profit or loss for the
period except where the tax arises from a transaction which is recognised other comprehensive income
or equity respectively.
(b) Leases
Lease payment for operating lease, where substantially all of the risks and benefits remain with the
lessor, are charged as expenses on a straight line basis over life of the lease term.
Lease incentives under operating leases are recognised as a liability and amortised on a straight line basis
over the life of the lease term.
(c) Revenue and other income
Revenue is recognised when the amount of the revenue can be measured reliably. It is probable that
economic benefits associated with the transaction will flow to the company and specific criteria relating
to the type of the revenue as noted below, has been satisfied.
Revenue is measured at the fair value of the consideration received or receivable and is presented net of
returns, discounts and rebates.
All revenue is stated net of the amount of goods and services tax (GST).
Other income
Other income is recognised on an accruals basis when the company is entitled to do it.
(d) Goods and Services Tax (GST)
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except
where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).
Receivables and payable are stated inclusive of GST.
The net amount of GST recoverable from, or payable to, the ATO is included as a part of receivables or
payables in the statement of the financial position.
Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash
flows arising from investing and financing activities which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
Page 20
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
2. Summary of Significant Accounting Policies (continued)
(e) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any
accumulated depreciation and impairment of losses.
Where the cost model is used, the assets is carried at its cost less any accumulated depreciation and any
impairment losses. Costs include purchase price, other directly attributable costs and the initial estimate
of the costs of dismantling and restoring the assets, where applicable.
Plant and Equipment
Plant and equipment are measured using the cost model.
Depreciation
Property, plant and equipment, excluding freehold land, is depreciated on a straight basis over the assets
useful life to the company, commencing when the assets is ready for use.
Leased assets and leasehold improvements are amortised over the shorter of either the unexpired period
of the lease or their estimated useful life.
The depreciation rates used for each class of depreciable asset are shown below:
Fixed asset class
Plant and Equipment
Furniture, Fixtures and Fittings
Leasehold improvements
Depreciation rate
10% to 33%
5% to 33%
10%
At the end of each annual reporting period, the depreciation method, useful life and residual value of
each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.
(f)
Financial Instruments
Financial instruments are recognised initially using trade date accounting, i.e. on the date that the
company becomes party to the contractual provisions of the instrument.
On the initial recognition, all financial instruments are measured at fair value plus transaction costs
(except for instruments measured at fair value through profit and loss where transaction costs are
expensed as incurred).
Financial Assets
Financial assets are divided into the following categories which are described in detail below:
•
•
•
•
loans and receivables;
financial assets at fair value through profit or loss;
available for sale financial assets; and
held-to-maturity investments.
Financial assets are assigned to the different categories on initial recognition, depending on the
characteristics of the instrument and its purpose. A financial instrument’s category is relevant to
the way it is measured and whether any resulting income and expenses are recognised in profit or loss or
in other comprehensive income.
All income and expenses relating to financial assets are recognised in the statement of profit or loss and
other comprehensive income in the ‘finance income’ or ‘finance costs’ line item respectively.
Page 21
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
2. Summary of Significant Accounting Policies (continued)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. They arise principally through the provision of goods and services to
customers but also incorporate other types of contractual monetary assets.
After initial recognition these are measured at amortised cost using the effective interest method, less
provision for impairment. Any change in their value recognised in profit or loss.
The Company’s trade and most other receivables fall into this category of financial instruments.
Discounting is omitted where the effect of discounting is considered immaterial.
Significant receivables are considered for impairment on an individual asset basis when they are past due
at the reporting date or when objective evidence is received that a specific counterparty will default.
The amount of the impairment is the difference between the net carrying amount and the present value
of the future expected cash flows associated with the impaired receivable.
In some circumstances, the Company renegotiates repayment terms with customers which may lead to
changes in the timing of the payments, the Company does not necessarily consider the balance to be
impaired, however assessment is made on a case-by-case basis.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets:
•
•
acquired principally for the purpose of selling in the near future
designated by the entity to be carried at fair value through profit or loss upon initial recognition or
• which are derivatives not qualifying for hedge accounting.
The Company has some derivatives which are designated as financial assets at fair value through profit or
loss.
Assets included within this category are carried in the statement of financial position at fair value with
changes in fair value recognised in finance income or expenses in profit or loss.
Any gain or loss arising from derivative financial instruments is based on changes in fair value, which is
determined by direct reference to active market transactions or using a valuation technique where no
active market exists.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments
and fixed maturity. Investments are classified as held-to-maturity if it is the intention of the Company's
management to hold them until maturity.
Held-to-maturity investments are subsequently measured at amortised cost using the effective interest
method, with revenue recognised on an effective yield basis. In addition, if there is objective evidence
that the investment has been impaired, the financial asset is measured at the present value of estimated
cash flows. Any changes to the carrying amount of the investment are recognised in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in
any of the other categories of financial assets or which have been designated in this category.
All available-for-sale financial assets are measured at fair value, with subsequent changes in value
recognised in other comprehensive income.
Gains and losses arising from financial instruments classified as available-for-sale are only recognised in
profit or loss when they are sold or when the investment is impaired.
Page 22
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
2. Summary of Significant Accounting Policies (continued)
In the case of impairment or sale, any gain or loss previously recognised in equity is transferred to the
profit or loss.
Losses recognised in prior period consolidated statement of profit or loss and other comprehensive
income statements resulting from the impairment of debt securities are reversed through the statement
of profit or loss and other comprehensive income, if the subsequent increase can be objectively related
to an event occurring after the impairment loss was recognised in profit or loss.
Financial liabilities
Financial liabilities are classified as either financial liabilities 'at fair value through profit or loss' or other
financial liabilities depending on the purpose for which the liability was acquired. Although the Company
uses derivative financial instruments in economic hedges of currency and interest rate risk, it does not
hedge account for these transactions.
The Company's financial liabilities include borrowings, trade and other payables (including finance lease
liabilities), which are measured at amortised cost using the effective interest rate method.
Impairment of financial assets
At the end of the reporting period the Company assesses whether there is any objective evidence that a
financial asset or group of financial assets is impaired.
Financial assets at amortised cost
If there is objective evidence that an impairment loss on financial assets carried at amortised cost has
been incurred, the amount of the loss is measured as the difference between the asset's carrying amount
and the present value of the estimated future cash flows discounted at the financial assets original
effective interest rate.
Impairment on loans and receivables is reduced through the use of an allowance accounts, all other
impairment losses on financial assets at amortised cost are taken directly to the asset.
Subsequent recoveries of amounts previously written off are credited against other expenses in profit or
loss.
Available-for-sale financial assets
A significant or prolonged decline in value of an available –for-sale asset below its cost is objective
evidence of impairment, in this case, the cumulative loss that has been recognised in other
comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment. Any
subsequent increase in the value of the asset is taken directly to other comprehensive income.
(g)
Impairment of non-financial assets
At the end of each reporting period the Company determines whether there is an evidence of an
impairment indicator for non-financial assets.
Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible
assets not yet available for use, the recoverable amount of the asset is estimated.
Where assets do not operate independently of other assets, the recoverable amount of the relevant
cash-generating unit (CGU) is estimated.
The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the
value in use. Value in use is the present value of the future cash flows expected to be derived from an
asset or cash-generating unit.
Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in
profit or loss.
Reversal indicators are considered in subsequent periods for all assets which have suffered an
impairment loss, except for goodwill.
Page 23
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
2. Summary of Significant Accounting Policies (continued)
(h) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which
are readily convertible to known amounts of cash and which are subject to an insignificant risk of change
in value.
Bank overdrafts also from part of cash equivalents for the purpose of the statement of cash flows and are
presented within current liabilities on the statement of financial position.
(i)
Employee benefits
Provision is made for the Company’s liability for employee benefits arising from services rendered by
employees to the end of the reporting period. Employee benefits that are expected to be wholly settled
within one year have been measured at the amounts expected to be paid when the liability is settled,
plus related on-costs.
Employee benefits expected to be settled more than twelve months after the end of the reporting period
have been measured at the present value of the estimated future cash outflows to be made for those
benefits. In determining the liability, consideration is given to employee wage increases and the
probability that the employee may satisfy vesting requirements. Cashflows are discounted using market
yields on national government bonds with terms to maturity that match the expected timing of
cashflows. Changes in the measurement of the liability are recognised in profit or loss.
Employee benefits are presented as current liabilities in the statement of financial position if the
Company does not have an unconditional right to defer settlement of the liability for at least 12 months
after the reporting date regardless of the classification of the liability for measurement purposes under
AASB119.
(j) Adoption of new and revised accounting standards
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and
interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the
current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have
not been early adopted.
Any significant impact on the accounting policies of the consolidated entity from the adoption of these
Accounting Standards and Interpretations are disclosed below. The adoption of these Accounting
Standards and Interpretations did not have any significant impact on the financial performance or
position of the company.
AASB 15 Revenue from Contracts with Customers
This standard and its consequential amendments to other standards are applicable to annual reporting
periods beginning on or after 1 January 2017. The core principle is that an entity recognises revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services, based on
the performance obligations associated with the provision of those goods or services. For goods, the
performance obligation is satisfied when the customer obtains control of the goods. For services, the
performance obligation is satisfied when the service has been provided.
Although the directors anticipate that the adoption of AASB15 may have an impact on the Company’s
financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.
Page 24
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
3. Revenue and Other Income
Revenue from continuing operations
Sales revenue
- provision of contract revenue
- shared services revenue
- income invoiced for services not yet completed at year end
Net Revenue Invoiced
Other Income
2016
$
2015
$
1,914,476
502,921
36,364
-
-
(150,238)
1,950,840
352,683
- Net gain on disposal of property, plant and equipment
- Finance income-Other interest received
-
41,145
27
-
4. Result for the Year
The result for the year was derived after charging/(crediting) the
following items:
Finance Costs
Financial liabilities measured at amortised cost:
- Other interest expense
- interest on convertible notes
Total finance costs
The result for the year includes the following specific expenses:
Other expenses:
Employee benefits expense
Depreciation expense
5. Income tax expense
(a) Reconciliation of income tax benefit to accounting profit:
Profit
Tax benefit
Add tax effect of:
Expenditure not allowable for income tax purposes
Fixed asset timing differences
Recognition of prior year tax losses
Adjustment to deferred tax liability
Deferred tax assets not brought to account
2016
$
2015
$
1,939
-
1,939
160
187,401
187,561
1,008,639
38,538
490,548
19,584
2016
$
2015
$
(3,799,018)
(2,051,222)
30%
30%
(1,139,706)
(753,666)
22,092
58,466
(804,773)
19,022
1,844,899
-
-
-
-
753,666
Page 25
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
6. Cash and cash equivalents
Cash at bank and on hand
7. Trade and other receivables
CURRENT
Trade receivables
Prepayments
Related party receivables
Other receivables
Total current trade and other receivables
NON-CURRENT
Deposit
Aging analysis of trade receivables:
Neither past due, nor impaired:
Current
Past due, but not impaired
1-30 days over standard terms
61+ days over standard terms
Net trade receivables
2016
$
1,541,546
2015
$
1,206,008
2016
$
216,415
99,550
29,383
23,258
368,606
2015
$
209,332
47,674
-
37,139
294,145
380
-
81,238
176,198
11,258
123,919
216,415
33,134
-
209,332
Page 26
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
8. Property, plant and equipment
PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Furniture, fixtures and fittings
At cost
Accumulated depreciation
Total furniture, fixtures and fittings
Leasehold Improvements
At cost
Accumulated depreciation
Total leasehold improvements
Total plant and equipment
Total property, plant and equipment
2016
$
2015
$
105,262
(33,658)
71,604
35,316
(4,844)
30,472
158,011
(19,828)
138,183
240,259
240,259
85,407
(10,643)
74,764
13,588
(1,844)
11,744
73,977
(7,306)
66,671
153,179
153,179
(a) Movements in carrying amounts of property, plant and equipment
Movement in the carrying amount for each class of property, plant and equipment between the
beginning and the end of the current financial year:
Year ended 30 June 2016
Balance at the beginning of year
Additions
Depreciation expense
Balance at the end of the year
Year ended 30June 2015
Balance at the beginning of year
Additions
Disposals - written down value
Depreciation expense
Balance at the end of the year
Plant and
Equipment
$
74,764
19,855
(23,015)
71,604
Furniture,
Fixtures and
Fittings
$
11,744
21,728
(3,000)
30,472
17,785
67,579
(109)
(10,491)
74,764
8,981
4,568
-
(1,805)
11,744
Improvement
$
66,671
84,034
(12,522)
138,183
69,145
5,275
(460)
(7,289)
66,671
Total
$
153,179
125,617
(38,537)
240,259
95,911
77,422
(569)
(19,585)
153,179
Page 27
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
9. Trade and other payables
CURRENT
Unsecured liabilities
Trade payables
Employee benefits
Related party payables
Sundry payables and accrued expenses
Other payables
10. Borrowings
CURRENT
Unsecured liabilities: Convertible notes
2016
$
2015
$
151,918
75,344
46,897
192,419
113,087
579,665
22,318
45,508
7,333
-
190,658
265,817
2016
$
2015
$
-
2,903,961
During the year ended 30 June 2016, the Company successfully listed on the Australian Stock Exchange.
At this date, the outstanding convertible notes were converted to ordinary shares in the Company.
11. Other liabilities
CURRENT
2016
$
2015
$
Amounts Invoiced for services not yet completed at year end
-
149,579
12. Issued Capital
(2015: 1) Ordinary shares
2016
$
2015
$
$8,068,859
$1
Movements in ordinary share capital
No.
$
Opening balance 1 July 2014
Closing balance at 30 June 2015
Shares issued during the year:
Conversion of notes previously classified as equity
Conversion of notes previously classified as a liability
Issues of shares
Less: Transaction costs arising on shares issued
1
1
-
1
1
763,689
19,302,500
2,903,961
108,198,479
5,459,545
-
(1,058,337)
127,500,980
$8,068,859
Page 28
For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
The holders of ordinary shares are entitled to participate in dividends and the proceeds on winding up of
the Company. On a show of hands at meetings of the Company, each holder of ordinary shares has one
vote in person or by proxy, and upon a poll each share is entitled to one vote.
The Company does not have authorised capital or par value in respect of its shares.
Loyalty options
The Company has 19,302,500 Loyalty options on issue exercise-able at 20c each between 24 to 36
months after the date of admission of the Company’s shares to the Official List of the ASX. The option
holders must be holding the underlying shares, being one share for one option, to be able to exercise the
option.
13. Earnings per Share
2016
$
2015
$
(a) Reconciliation of earnings to profit or loss from continuing operations
Profit from continuing operations
(3,799,018)
(2,051,222)
(b) Earnings used to calculate overall earnings per share
Earnings used to calculate overall earnings per share
(3,799,018)
(2,051,222)
(c) Weighted average number of ordinary shares outstanding during the year
used in calculating basic EPS Weighted average number of ordinary
shares outstanding during the year used in calculating basic EPS
87,439,197
1
No.
No.
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FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
14. Financial Risk Management
The Company is exposed to a variety of financial risks through its use of financial instruments.
The Company’s overall risk management plan seeks to minimise potential adverse effects due to the
unpredictability of financial markets. The Company does not speculate in financial assets.
The most significant financial risks to which the Company is exposed to are described below:
Specific risks
• Market risk – currency risk and price risk
•
•
Credit risk
Liquidity risk
Financial Instruments used
The principal categories of financial instrument used by the Company are:
•
•
•
Trade receivables
Cash at bank
Trade and other payables
The totals for each category of financial instruments, measured in accordance with AASB 139: Financial
Instruments: Recognition and Measurement as detailed in the accounting policies to these financial
statements, are as follows:
Financial assets
Cash and cash equivalents
Trade and other receivables
Total financial assets
Financial liabilities
Financial liabilities at amortised cost:
- trade and other payables
- borrowings
Total financial liabilities
Objectives, policies and processes
2016
$
2015
$
1,541,546
1,206,008
269,056
246,471
1,810,602
1,452,479
311,902
220,309
-
2,903,961
311,902
3,124,270
Risk management is carried out by the Company’s Board of Directors. The Finance Committee has
primary responsibility for the development of relevant policies and procedures to mitigate the risk
exposure of the Company. These policies and procedures are then approved and tabled by the Board of
Directors.
Reports are presented at each Board meeting regarding the implementation of these policies and any risk
exposure which the Risk Management Committee believes the Board should be aware of.
Specific information regarding the mitigation of each financial risk to which the Company is exposed is
provided below.
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For personal use only
FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
14. Financial Risk Management (continued)
Liquidity risk
Liquidity risk arises from the Company’s management of working capital and the finance charges and
principal repayments on its debt instruments. It is the risk that the Company will encounter difficulty in
meeting its financial obligations as they fall due.
The Company’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities
as and when they fall due. The Company maintains cash to meet its liquidity requirements for up to 30
days period.
At the reporting date, these reports indicate that the company expected to have sufficient liquid
resources to meets its obligations under all reasonably expected circumstances and will not need to draw
down any of the financing facilities.
Within 1 Year
Total
2016
$
2015
$
2016
$
2015
$
Financial liabilities due for payment
Trade and other payables
311,902
220,309
311,902
220,309
Borrowings
-
2,903,961
-
2,903,961
Total financial liabilities due for payment
311,902
3,124,270
311,902
3,124,270
Financial assets – cash flows realisable
Cash and cash equivalents
Trade and other receivables
1,541,546
1,206,008
1,541,546
1,206,008
269,056
246,471
269,056
246,471
Total financial assets – cash flows realisable
1,810,602
1,452,479
1,810,602
1,452,479
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a
financial loss to the company.
Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposure to wholesale and retail customers, including
outstanding receivables and committed transactions.
The company has adopted a policy of only dealing with creditworthy counterparties as a means of
mitigating the risk of financial loss from defaults.
The Board receives monthly reports summarising the turnover, trade receivables balance and aging
profile of each of the key customers individually and the Company’s other customers analysed by
industry sector as well as a list of customers currently transacting on a prepayment basis or who have
balances in excess of their credit limits.
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FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
14. Financial Risk Management (continued)
Management considers that all the financial assets that are not impaired for each of the reporting dates
under review are of goods credit quality, including those that are past due.
The credit risk of liquid funds and other short term financial assets is considered negligible, since the
counterparties are reputable banks with high quality external credit ratings.
The Company has no significant concentration of credit risk with respect to any single counterparty or
group of counterparties. The class of assets describe as ‘trade and other receivables’ is considered to be
the main source of credit risk related to the company.
Sensitivity analysis
There are currently no interest bearing loans at variable interest rates.
15. Remuneration of Auditors
-
auditing or reviewing the financial statements
2016
$
2015
$
15,000
4,000
16. Contingencies
In the opinion of the Directors, the Company did not have any contingencies at 30 June 2016 (30 June
2015: None).
17. Investment in Associate
Principal place of
business / Country
of Incorporation
Percentage
Owned (%)*
2016
Percentage
Owned (%)*
2015
New Frontier Holdings LLC 1
USA
20
-
1The Company acquired 20% interest in New Frontier Holdings. At the reporting date, the fair value of the
net assets of the investee was $1,413,338 and paid-up capital $1,413,338.00.
Consideration paid
Share of net assets acquired
$
269,000
269,000
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FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
18. Related Parties
(a) The Company’s main related parties are as follows:
(i) Entities exercising control over the company:
The ultimate parent entity, which exercises control over the company, is iQnovate Ltd which is
incorporated in Australia and owns 70.59% of FarmaForce Limited.
In relation to iQnovate Ltd, Dr. George Syrmalis is CEO, Chairman, Executive Director and a substantial
shareholder and Mr. Con Tsigounis is Executive Director and a substantial shareholder of iQnovate Ltd.
(ii) Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of
the entity directly or indirectly, including any director (whether executive or otherwise) of that entity are
considered key management personnel.
Key management personnel remuneration included within employee expenses for the year is shown
below:
Short-term employee benefits
Post-employment benefits
2016
$
139,003
10,118
149,121
2015
$
168,000
15,960
183,960
(b) Transaction with related parties
Transactions between related parties are on normal commercial terms and conditions no more
favourable than those available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Revenue -
office sharing
costs
Expenditure -
office sharing
costs
Company
secretarial
fee
Consulting fee
Other transaction and
administrative costs*
Owed by the
company
Owed to other
company
Balance Outstanding
2016
Parent
Related
parties
2015
Parent
Associates
$
18,182
18,182
627,705
-
$
$
$
$
$
$
573,232
-
-
229,324*
118,588
36,000
30,811
975,693*
-
-
-
40,000
18,000
350,958
-
-
-
5,342
940
6,392
-
28,707
-
17,600
*Transactions described as Other transactions comprise of:
Recruitment fees (parent)
Underwriting fees (related parties)
Capital raising fees (related parties)
$229,324
$150,000
$825,693
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FarmaForce Limited
A.C.N. 167 748 843
Notes to the Financial Statements (continued)
For the Year Ended 30 June 2016
19. Cash Flow Information
(a) Reconciliation of result for the year to cash flows from operating activities
Reconciliation of net income to net cash provided by operating activities:
Loss for the year
Cash flows excluded from profit attributable to operating activities
IPO listing cost
Non-cash flows in profit:
- depreciation
- net gain on disposal of property, plant and equipment
- interest on convertible notes
Changes in assets and liabilities, net of the effects of purchase and disposal
of subsidiaries:
2016
$
2015
$
(3,799,018)
(2,051,222)
82,754
-
38,538
-
-
19,584
(27)
187,401
- (increase)/decrease in trade and other receivables
(74,841)
(265,467)
- (increase) in deferred tax assets
- (decrease) in deferred tax liabilities
- increase/(decrease) in income in advance
- increase/(decrease) in trade and other payables
Net cash used in operating operations
-
-
(149,579)
313,848
149,579
47,871
(3,588,298)
(1,912,281)
20. Segment reporting
The Company has identified its operating segment based on internal reporting that is reviewed and used
by the COO in assessing the performance of the segment.
The operating segment is identified by management based on the nature of services provided. The
services provided by FarmaForce are contract sales with the business representing a strategic position
that serves a unique segment of the market in Australia.
All revenues disclosed in the Financial Statements are from external customers in current year and prior
year.
21. Events Occurring After the Reporting Date
No matters or circumstances have arisen since the end of the financial year which significantly affected or
may significantly affect the operations of the Company, the results of those operations, or the state of
affairs of the Company in future financial years.
22. Company Details
The registered office of and principal place of business of the company is:
FarmaForce Limited
Level 3, 222 Clarence Street
SYDNEY NSW 2000
Page 34
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FarmaForce Limited
A.C.N. 167 748 843
Directors’ Declaration
The directors of the Company declare that:
1.
the financial statements and notes for the year ended 30 June 2016 are in accordance with the
Corporations Act 2001 and:
a. comply with Accounting Standards, which, as stated in accounting policy note 2 to the financial
statements, constitutes explicit and unreserved compliance with International Financial Reporting
Standards (IFRS); and
b. give a true and fair view of the financial position and performance of the Company.
2.
In the director’s opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable with the continuing support of creditors.
This declaration is made in accordance with a resolution of the Board of Directors.
Director:
George Elias
Dated this 29th day of August 2016
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FarmaForce Limited
A.C.N. 167 748 843
Independent Audit Report to the members of FarmaForce Limited
ACN 167 748 843
Report on the Financial Report
We have audited the accompanying financial report of FarmaForce Limited, which comprises the consolidated
statement of financial position as at 30 June 2016, the consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year ended that
date, a summary of significant accounting policies, other explanatory notes and the directors' declaration of
the company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report
in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations), and
the Corporations Act 2001. This responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101: Presentation of Financial Statements, that the financial statements comply
with International Financial Reporting Standards (IFRS).
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgment, 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 company's preparation and fair
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001, provided to the
Directors of Iqnovate Limited would be in the same terms if provided to the Directors as at the date of this
auditor's report.
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FarmaForce Limited
A.C.N. 167 748 843
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF FARMAFORCE LIMITED
ACN 167 748 843
Auditor's Opinion
In our opinion:
(a)
the financial report of FarmaForce Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016
and of its performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001.
the financial report also complies with International Financial Reporting Standards as disclosed in
(b)
Note 1.
Report on the Remuneration Report
We have audited the remuneration Report included in the directors’ report for the year ended 30 June 2016.
The directors of the company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report based on our audit conducted in accordance with Australian Auditing
Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of FarmaForce Limited for the year ended 30 June 2016, complies
with section 300A of the Corporations Act 2001.
FORTUNITY ASSURANCE
TR Davidson
Partner
Dated: 31 August, 2016
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FarmaForce Limited
A.C.N. 167 748 843
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report
is as follows. The information is current as at 28 July 2016:
a) Distribution of equity securities
Ordinary share capital
127,500,980 fully paid ordinary shares are held by 460 individual shareholders.
All issued ordinary shares carry one vote per share and carry the rights to dividends.
The number of shareholders, by size of holding, in each class are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
b)
Substantial Shareholders
Fully paid ordinary
shares
1
11
152
207
89
460
Shareholder
iQnovate Ltd
Number
90,000,000
Percentage
70.59%
Fully Paid
Page 38
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FarmaForce Limited
A.C.N. 167 748 843
ASX Additional Information (continued)
c) Twenty largest holders of quoted equity securities
Ordinary Shareholders
iQnovate Ltd
Priority One Group Pty Ltd
BASIM Finance Pty Ltd
iQ3 Corp Ltd
Colin J. Odams Pty Ltd
Achelles Nominees Pty Ltd
Mr Yaochang Wang
Franze Holdings Pty Ltd
Jennifer Ellen Stapleton
Asgard Capital Management Ltd
Mr James Simos & Mrs Christina Simos
Pharmlou Pty Ltd
Bartlem Pty Ltd
Si Jia Corp Pty Ltd
Wade Peter Burns & Rebecca Louise Burns
Daniel Morato & Sally Morato
Lien Pty Ltd
Karantzias Investments Pty Ltd
Mr Min-Chung Yu
Mr Zhenyu He
Total
Fully Paid
Number
Percentage
90,000,000
70.59
2,775,000
1,500,000
1,275,009
1,000,000
930,000
844,333
833,333
750,000
667,000
535,890
500,000
500,000
500,000
500,000
500,000
495,000
451,000
407,500
375,000
2.18
1.18
1.00
0.78
0.73
0.66
0.65
0.59
0.52
0.42
0.39
0.39
0.39
0.39
0.39
0.38
0.35
0.32
0.29
105,339,065
82.62
d) Consistency with business objectives
In accordance with ASX Listing Rule 4.10.19 the Company states that it has used the cash and assets
in a form readily convertible to cash that it had at the time of admission in a way consistent with its
business objectives. The Company believes it has used its cash in a consistent manner to which was
disclosed under the Prospectus dated 10 August 2015.
e) Restricted Securities
Escrowed Shares
As at the date of this report, 91,575,010 of the Company’s ordinary shares are classified as restricted
and are subject to restrictions on sale and other dealings for a period of 24 months from the date of
official quotation. The 24 month period will expire on 27 October 2017.
Loyalty Options
As at the date of this report, the Company has 19,302,500 Loyalty options on issue exercisable at 20c
each between 24 to 36 months after the date of admission of the Company’s shares to the Official List
of the ASX. Out of these options, 900,000 are subject to restrictions on sale and other dealings for a
period of 24 months from official quotation of the Company’s shares on the ASX.
Page 39
For personal use only
Level 3
222 Clarence St, Sydney
NSW Australia 2000
Tel: +61 2 8239 5400
Fax: +61 2 8362 9547
info@farmaforce.com.au
farmaforce.com.au
For personal use only