Annual Report 2018
Our Purpose & Vision
Genetic Signatures is a molecular
diagnostics (MDx) company focused on the
development and commercialisation of its
proprietary 3base™ platform technology.
Our aim is to become a global leader in the
supply of diagnostic solutions for the rapid
detection of infectious diseases to enable
faster treatment and facilitate improved
patient outcomes.
Our proprietary 3base™ technology (the cornerstone
of our EasyScreen™ Pathogen Detection Kits) reduces
the genetic complexity of infection detection in
molecular testing. Our simpler tests enable hospital
and pathology facilities to use standard equipment
and procedures to more accurately screen for a wide
array of infectious diseases (pathogens) and deliver
enhanced results in hours, not days, as compared to
traditional methods.
Timely accurate diagnosis improves patient
outcomes and allows the implementation of
appropriate infection control measures that reduce
costs and save lives. Through minimising work
and maximising results, Genetic Signatures drives
customer and shareholder value whilst improving
community health outcomes across the globe.
Contents
Chairman’s Letter .......................................... 3
Intellectual Property.................................... 10
CEO Operations ............................................. 4
Upcoming Activities ..................................... 11
FY18 Product Update ................................... 5
Director’s Report ......................................... 12
Company ........................................................ 6
Commercialisation Progress by Market..... 13
Results ........................................................... 6
Financial Report .......................................... 16
Executing a Global Strategy
for Commercialisation .................................. 7
Genetic Signatures Limited – Annual Report 2018
Chairman’s Letter
Dear Fellow Shareholder,
Thank you for your
continued support
over the past year.
The 2018 financial year represented another
important year of progress for Genetic Signatures.
It was an inflection point in many respects for our
expansion initiatives, with the commercial release
of several key products and new sales milestones
achieved in North America and Europe.
Genetic Signatures’ domestic revenue base continued
to grow significantly to A$2.8 million in FY18, up from
A$2.0 million in FY17. This reflects a strong foothold
in the domestic molecular diagnostics market having
secured contractual relationships with top tier
Australian customers. Our home market momentum
continues and in August 2018, closely following our
financial year end, we signed our largest domestic
contract to date with Australian Clinical Laboratories.
Internationally, we have achieved several significant
milestones that closely align with our intended FY18
commercialisation strategy. Maiden sales were
achieved in North America for our Analyte Specific
Reagent (ASR) products and we continue to work
with several US-based laboratories who are currently
assessing the overall potential of our wider product
range. Furthermore, we are on course to attain FDA
clearance for our Enteric Protozoan Detection Kit
which will unlock significant commercial market
share in North America. In Europe I am pleased to
also report that our product footprint is progressing
following similar regulatory approval advancements.
Our 3baseTM technology provides us with a significant
competitive advantage in capturing global market
share whilst leading to better patient outcomes and
ultimately, saving lives.
We also launched several new detection kits in FY18
thanks to our high calibre product development team
executing on a clear commercialisation strategy.
Genetic Signatures received TGA and CE-IVD
registrations for the Enteric Viral product and the ESBL
& CPO (antibiotic resistance) Detection Kit over the
course of the year and we also successfully released
the beta-stage of our popular second-generation
Respiratory Detection Kit in September 2017.
As the Company’s long-term strategy continues to
advance, I look forward to the opportunities that the
coming year will bring for both Genetic Signatures
and its shareholders.
None of the tremendous achievements of recent
years would have been possible without the hard
work of both our executive and support teams
across Australia, Europe and North America.
Finally, let me take this opportunity to thank our
shareholders for their continued support of our
business model that aims to unlock further
revenues and drive strategic value within the
molecular test portfolio.
Genetic Signatures’ continued
international expansion remains
a clear focus for the Company
and is central to the established
strategy of bringing our innovative
products to the world.
Dr Nick Samaras
Chairman
3
CEO Operations
Genetic Signatures
achieved sales revenues
of $2,840,115 in the
financial year ended 30
June 2018, representing
a 39% increase over the
previous year.
This strong performance reinforces our commitment
to an international commercialisation strategy
focused on product development and securing
regulatory approval and sales in the US, Europe
and Australia.
At the beginning of the 2018 financial year Genetic
Signatures laid out plans to extend its domestic and
overseas footprint whilst realising early revenue
from existing and new products. Having accelerated
our research and development program in FY17, the
Company has put commensurate effort into securing
regulatory approvals for an expanded product portfolio
in the year just ended.
As a result, Genetic Signatures successfully secured
full regulatory registration for its EasyScreenTM
Enteric and ESBL & CPO Detection Kits in Europe and
Australia. We also anticipate that our Respiratory,
STI / Genital and Flavivirus / Alphavirus Detection Kits
will secure CE-IVD and TGA registration following
the conclusion of validation work and trials that are
now underway.
Similar positive momentum has been made in the
US, where FDA work for the Company’s Enteric
Protozoan Kit are well advanced, and we expect that
it will achieve full FDA clearance during 2019. With a
robust North American infrastructure and intellectual
property measures in place, Genetic Signatures is
ready to scale up its commercial operations once US
approval is secured.
The Company again participated in several high-
profile industry events in FY18 that subsequently
helped generate further positive brand recognition and
cross portfolio interest from multiple stakeholders.
Encouragingly, this led to significant new and repeat
customer sales orders from home and abroad.
These include the first sale and repeat order of our
ASR product offering in the US, repeat orders of our
early release EasyScreenTM Respiratory and Flavivirus
/ Alphavirus Detection Kits to a US customer based
Genetic Signatures Limited – Annual Report 2018
in Kenya, and the formation of a new commercial
relationship for our second-generation Respiratory
Detection Kit with a large Australian pathology
service provider.
Over the course of the next
financial year Genetic Signatures
will continue using its home
market advantage to drive
revenue growth and market
share. There will be new products
released into the Australian
market, forming the basis for
subsequent approvals and
release in the US and Europe as
part of our overall international
commercialisation strategy.
Having moved into larger Sydney R&D facilities and
increasing our international sales team in FY18,
Genetic Signatures remains committed to ongoing
product validation and development whilst further
readying our sales and distribution networks to meet
the needs of a fast growing MDx market and improving
community health outcomes across the globe.
I look forward to updating you on all our
accomplishments in the coming year.
Dr John Melki
Managing Director and CEO
FY18 Product Update
Having received full regulatory
registration for both our EasyScreenTM
Enteric Detection range and ESBL & CPO
Detection Kit in Europe and Australia,
Genetic Signatures continues to work on
securing similar approvals for our STI and
respiratory products whilst continuing to
drive regulatory developments in the US.
Following positive early customer interest in our
EasyScreen™ Flavivirus and STI Detection Kits, the
Company is now focused on accelerated validation
and development of both our current and new
product range, including advanced research and
development of three new diagnostic products.
Several new product global trials are underway or
will shortly commence.
w Trials underway
m Approval process underway
l Fully approved
3 ASRs available for sale
USA
FY18 Key highlights
EasyScreen™ Detection Kits1
AUS
Enteric Detection Kits
Comprehensive suite that provides
combined detection for 20+ enteric
pathogens (including Salmonella,
Protozoan and C. difficile Bacteria)
ESBL & CPO Detection Kit
Detects both the Extended Spectrum
Beta-Lactamase and Carbapenemase
Producing Organisms (‘Superbugs’)
l
l
EU
l
l
m
3
Respiratory Detection Kit
Comprehensive suite that provides
combined detection test for 15
respiratory pathogens (including
Influenza A & B, Rhinovirus and M.
pneumonia)
m
m
3
STI / Genital Detection Kit
Simultaneously detects the 12 most
commonly encountered STIs (including
chlamydia, gonorrhea and syphilis)
m
m
Flavivirus / Alphavirus Pathogen
Detection Kit
Simultaneously screens for a variety of
Flavivirus and Alphavirus viral families
(including Zika and West Nile virus)
Meningitis (Viral/Bacterial) Kit
Offers rapid diagnosis for multiple
strains of life-threatening Meningitis
Atypical Respiratory Kit
Simultaneously detects leading causes
of bacterial respiratory infection
1 Pathogens detected by product in Appendix.
m
m
w
3
3
3
- Trials and regulatory approval
processes underway in the US
for Protozoan kit
- Full regulatory registration in
Europe (CE-IVD) and Australia (TGA)
- Maiden sales from large European
healthcare entity
- European regulatory registration
(CE-IVD) achieved in April 2018
- Domestic registration (TGA) in May 2018
- ASRs available in the USA
- Generated record September 2017
quarter sales following seasonal
strong domestic demand
- Continued progress towards
submission for regulatory registration
in Australia and Europe
- Supplied in international markets
- ASRs available in the USA
- Continued progress towards
regulatory registration in Europe and
Australia
- Revenue generated from sales in
Australia for research use only version
- ASRs available in the USA
- Repeat sales orders from
international customers
- Continued progress towards
submission for regulatory registration
in Europe and Australia
- Available as ASRs in the USA
- In development stages
- Selected targets available as ASRs in
the USA
- In development stages
5
Company
Results
Genetic Signatures achieved sales
revenues of $2,840,115 in the financial
year ended 30 June 2018, underscoring the
success of its market penetration strategy
and the market’s acceptance of its 3base™
EasyScreen™ Detection Kits.
The Company posted a net loss for FY18 of
$3,253,809 representing a 22% increase on the
previous year, largely driven by the acceleration of the
Company’s international commercialisation strategy
as well as an increase in employee benefits expense.
The operating loss for FY18 includes non-cash
depreciation of $631,795, up from $478,699 in FY17.
Expenses for FY18 totalled $8,477,546, a 21%
increase over last year (June 2017: $6,983,510). The
Research and Development Tax Concession resulted
in $2,015,637 received in 2017 (restated) and it is
estimated that this year’s amount will be $2,143,424.
Genetic Signatures Limited (ASX: GSS) is
a molecular diagnostics (MDx) company
operating in the global in vitro diagnostics
(IVD) market. The Company designs and
manufactures proprietary molecular
diagnostic test solutions for rapid and
specific identification of infectious diseases.
All our products are underpinned by our proprietary
3base™ technology, which is fundamentally different
from other types of molecular tests. Our portfolio of
commercial products is expanding both in breadth
of targets and international availability, with the
Company focused on driving commercialisation in
Europe and North America.
Genetic Signatures holds significant competitive
IP around its core 3base™ technology, which is
utilised in all its EasyScreen™ Detection Kits. 3base™
technology is compatible with the modern molecular
diagnostic techniques increasingly used by hospitals
and pathology laboratories to more rapidly detect
specific sequences of the genome, the DNA or RNA
that define organisms.
3base™ technology is a working example of modern
and innovative science that is effective, efficient and
allows for wider examination of possible pathogens,
which in turn saves time, money and lives.
Genetic Signatures has an experienced management
team and Board of Directors with a strong track
record of delivering shareholder returns for
companies operating in the global molecular
diagnostics industry.
Genetic Signatures Limited – Annual Report 2018
Executing a Global Strategy
for Commercialisation
In addition to growing our home market
share, Genetic Signatures’ operational focus
continues to be on ramping up our North
American and European sales efforts to
capture share of the largest expanding MDx
markets, which in 2017 were collectively
estimated to be worth US$7.6bn2 and are
forecast to grow at an above-system CAGR
of 9.3% from 2015 to 2020.
Genetic Signatures remains focused on driving sales
in both our international and domestic markets
through distribution and direct sales activities.
As such the Company has made strong progress on
executing its FY18 global growth strategy. During this
period Genetic Signatures successfully accelerated
the approval of its EasyScreen™ product range
across all key markets and over time we expect our
expanding product range to drive further revenue
in other product categories, which in turn will drive
shareholder value.
Delivering Value Through an
Expanded Footprint
Collectively Australia, Europe and the US represent
more than 80% of the global market. Our footprint
in North America and Europe grew throughout the
year as we launched a number of existing and new
products in those markets.
Genetic Signatures’ expanding product portfolio
also allows the Company to deliver more products
to a much larger global MDx market, significantly
enhancing our ability to unlock further revenue
and strategic value whilst reducing commercial
risk. Throughout FY18, the Company continued to
receive significant interest in our new products from
existing and new customers as well as other industry
stakeholders as we expanded our product range. We
expect this trend to continue into the future as global
concern for infectious diseases, including sexually
transmitted diseases and antibiotic resistant
pathogens continues to grow.
To help build awareness and ensure that Genetic
Signatures is well positioned to capitalise on the
growing MDx market the Company has continued to
focus on active attendance at key industry events.
Participation at major presentations and exhibits in
FY18 include:
• Presenting “A 3base™ Real-Time Multiplex-PCR
method for the detection of Extended-Spectrum
ß-Lactamases (ESBL) and Carbapenemase-
Producing Organisms (CPO)” at the Australian
Society for Microbiology Annual Scientific Meeting
(ASM) 2017 (Hobart, 3-5 July 2017);
• Presenting “Results on the development of a 3base™
Flavivirus and Alphavirus EasyScreen™ Detection
assay” at the 2017 ASM Tri-State Scientific
Meeting & Parasitology Masterclass (Darwin, 22-25
September 2017);
• Presenting “Rapid, Sensitive and Automated
Detection of Pathogenic Targets with the Multiplexed
EasyScreen™ 3base™ Assays” at The European
Meeting on Molecular Diagnostics (EMMD)
(Noordwijk, Netherlands, 11-13 October 2017);
• “Exhibiting at the 25th International Molecular
Medicine Tri-Conference (MMTC) (San Francisco,
12-14 February 2018);
• Presenting “Evaluation of the EasyScreen™ CPO
3base™ real-time PCR assay for detection of
carbapenemase genes directly from rectal swabs”
at ECCMID (Madrid, Spain, 21-24 April 2018),
with a summary of results presented at ASM
2018 (Brisbane, 1-4 July 2018) and the Molecular
Microbiology Meeting (Sydney, 11-12 April 2018);
• Presenting “Comparison of the performance of
three different adenovirus quantitative PCR assays
with ATCC reference strains and clinical samples”
at the American Society for Microbiology (ASM)
Clinical Virology Symposium (West Palm Beach,
Florida, 6-9 May 2018);
• Presenting “3base™ technology and application for
fast PCR detection of antibiotic resistance” at the
2018 NGS, dPCR & qPCR Symposium (Sydney,
24-25 May 2018);
• Presenting “Clinical Evaluation of the EasyScreen™
Enteric Viral Detection Kit” at the 12th International
Symposium on Molecular Diagnostics (ISMD2018)
(Graz, Austria, 31 May - 2 June 2018); and,
• Exhibiting at the ASM Microbe 2018 conference
(Atlanta, Georgia USA, 7-11 June 2018).
2 Source: World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information,
Published: 1/9/2013, page 7
7
Executing a Global Strategy
for Commercialisation cont
As we continue to drive domestic and international
sales, our ongoing focus is to drive shareholder
value through:
• Ensuring ongoing R&D commitment to validation
and development of existing and next generation
products to unlock future revenues and strategic
value within our molecular test portfolio;
• Accelerating revenue and extending our global
footprint via our growing distribution network and
international sales team;
• Securing regulatory approvals in key regions to
accelerate revenue growth across the portfolio; and,
• Continuing to build awareness for Genetic
Signatures’ brand as a unique and successful
global MDx company that is helping solve a global
problem through attendance at key industry events
and conferences.
Australia
During the past financial year, Genetic Signatures
has successfully progressed several trials with
clinical labs and large hospitals in Australia that have
further strengthened our current and future potential
domestic revenue growth. Existing and target
customers include pathology labs, hospitals and
large research laboratories. Evolving relationships
with top tier customers, particularly those in Victoria
and NSW, will increase the likelihood of domestic
new product sales.
The Company also successfully completed the
transition of our headquarters and R&D facilities to
larger Sydney premises during FY18. The move will
support our ongoing R&D focus and help accelerate the
next phase of Genetic Signatures’ operational growth.
In April 2018, we received TGA registration for our
EasyScreenTM ESBL & CPO (‘Superbug’) Detection Kit,
allowing us to sell the kit across Australia in addition
to our TGA registered Enteric range. This provides the
Company with an exciting opportunity to introduce
the kit to our existing and new customers via our
direct sales team.
Towards the end of the financial year Genetic
Signatures progressed a new commercial
relationship with a large Australian pathology
service provider. This has resulted in a new customer
contract (officially signed in early FY19) for our
EasyScreenTM Respiratory Pathogen Detection
Kit (second generation) and new laboratory
Instrumentation: Genetic Signatures Automation
System (GS1-HT). The new customer may use up to
1,000 tests per day during the peak of the Australian
flu season, depending on seasonal flu severity.
Genetic Signatures’ strong performance in Australia
has validated the commercial potential of our
products in overseas target markets where the
Company anticipates that further product expansion
will similarly drive revenue growth and market share.
Additional products will be released into the
Australian market in FY19, and these will form the
basis for subsequent approvals and release in both
the US and Europe.
Genetic Signatures Limited – Annual Report 2018
Europe
North America
With an addressable market of approximately
US$435M, representing around 20% of the global
molecular diagnostics market3 , Europe remains a key
growth opportunity for Genetic Signatures. Over the
last 12 months, the Company has made significant
progress in Europe through securing further
regulatory approvals and gaining traction
with customers.
During FY18, Genetic Signatures successfully
accelerated European regulatory registration of our
EasyScreenTM ESBL & CPO (‘Superbug’) Detection
Kit, which followed increasing customer demand in
response to the growing concern about antibiotic
resistant pathogens. In January 2018, the Company
announced it had received maiden revenue from
a large European healthcare entity who were
trialling the ‘Superbug’ Detection Kit, which went
on to achieve European CE-IVD registration in
April 2018. This followed positive trial results from
Ireland’s National CPE Reference Laboratory that
were subsequently presented at the 2018 ECCMID
event in Madrid. Commercial release of this product
is expected to alleviate challenges in detecting
superbugs and provide faster treatment solutions
while saving lives.
Genetic Signatures also made significant regulatory
progress toward the registration of its EasyScreenTM
Respiratory, STI and Flavivirus / Alphavirus Detection
Kits by advancing existing trials and establishing
several new trials across Europe. These three
products are anticipated to achieve CE-IVD approval
in FY19.
The Company has also appointed a new field scientist
to support the expanding European sales team.
Our growing team will now be able to better assist
customer trials which underpin sales for existing and
future products. A Value-Added Tax (VAT) deferment
program was also established during the year.
The US represents a significant opportunity for
Genetic Signatures, constituting a US$1,265M
addressable market4 and 50% to 60% of the global
molecular diagnostics market. The Company has
recently generated its first US revenues and is
currently on course to achieving full FDA product
clearance for its Enteric Protozoan Detection Kit
within 2019.
Genetic Signatures made its commercial launch
into the US with its initial Analyte Specific Reagents
(ASRs) at a conference in June 2016. The Company
has since rapidly expanded its product portfolio to
include reagents for Enteric, Respiratory, Flavivirus
/ Alphavirus, STI pathogens (disease causing
microorganisms), ESBL / CPO and Meningitis.
In 2018, Genetic Signatures made significant
headway with its ASR products by receiving its
first sales contract with a significant US pathology
laboratory that offers extensive pathology services
to patients. Repeat orders soon followed in May,
providing further promising validation of the
technology behind our ASR products.
The extensive range of applications of Genetic
Signatures’ 3base™ platform technology has also led
to several other clinical laboratories assessing the
potential for ASR products for commercial sale. The
Company currently has trials for the EasyScreenTM
Enteric and ESBL & CPO range underway, and
these are anticipated to conclude in 2019. Genetic
Signatures also secured repeat sales orders for
EasyScreenTM Respiratory and Flavivirus / Alphavirus
detection kits from a US customer based in Kenya.
Significant progress has been made towards
securing US regulatory clearance for the Company’s
Enteric Protozoan Detection Kit, which Genetic
Signatures anticipates will achieve full FDA listing
in 2019.
3 Source: World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information,
Published: 1/9/2013, page 94.
4 Source: World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information,
Published: 1/9/2013, page 94.
9
Intellectual Property
Genetic Signatures is dedicated to the
development and commercialisation of its
proprietary 3base™ platform technology.
The Company’s product portfolio, including its 3base™
platform technology and products, is covered by
issued patents within its target markets until 2031
and beyond in some markets.
Multiple patents have also been issued for more
specific uses of 3base™ , including in the competitive
US market. The development of Genetic Signatures’
unique intellectual property in North America
provides a strong platform for future growth into this
lucrative market and the Company is now Quality
Management System certified for Health Canada.
The diversity of experience and wealth of knowledge
within Genetic Signatures’ team also creates a
further barrier to competitors seeking to replicate
our technology and advances in the molecular
diagnostics space.
Neisseria Gonorrhoeae
Zika Virus
Genetic Signatures Limited – Annual Report 2018
Upcoming Activities
FY19 Focus
• Financial growth, product range expansion and
global market share expansion.
• New global product trials already underway or
commencing soon.
• Continued research and development on new kits
and assays, including kits for atypical respiratory
infections and meningitis.
• Securing regulatory registrations for STI and
respiratory products.
• Preparation of above products for
commercial release.
• Capitalising on recent enteric product suite
regulatory listings in Europe following Australian
growth trajectory (addressable market of
approximately US$435M5).
• Increasing Genetic Signatures’ presence in the US
market through sales of its extended ASR range
(an addressable market up to approximately
US$1,265M6) and participation at industry events.
• Progression of required scientific validation and
clinical trials for full FDA listing.
Escherichia Coli
Influenza Virus
5 Source: World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information,
Published: 1/9/2013, page 94.
6 Source: World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information,
Published: 1/9/2013, page 94.
11
Genetic Signatures Limited – Annual Report 2018
Commercialisation Progress
by Market
Australia
North America
• Recent relocation to larger facilities to accelerate
• Up to US$1,265M addressable market.
the next phase of operational growth.
• US represents 50-60% of global molecular
• Secured relationships with top tier customers
diagnostics market.
in NSW and Victoria following clinical trials and
attendance at key industry events.
• Customer base in NSW and Victoria has driven
strong revenue over last 4 years.
• Increasing traction with ASR approach leading to
first ASR sales contract received with US pathology
laboratory.
• Several labs assessing the potential for ASR
• Strong recent growth of products outside the
products available for sale in the USA.
Enteric suite following the launch of new products.
• Beta-release of 2nd generation Respiratory
Detection Kit.
• Initial trials established with local clinical labs
using Genetic Signatures supplied products in FY17:
- Trials are reaching conclusion.
• Launch and TGA approval for EasyScreen™ ESBL &
CPO ‘superbug’ Detection Kit.
• Also progressing towards securing FDA clearance
for EasyScreen™ Enteric Protozoan Detection Kit.
• 3base™ technology has patents issued in the US.
• Quality Management System certified for
Health Canada.
Europe
• Addressable market of US$435M.
• Western Europe represents 20% of global molecular
diagnostics market.
• Building traction with customers with sales order
received across several products.
• Distributors have been hired and testing
is underway.
• Field scientist appointed based in Europe and
currently adding to the European team.
• Recent CE-IVD registration for the EasyScreen™
ESBL & CPO ‘superbug’ Detection Kit.
• Sales logistics being finalised with EU-based
warehouse in final legal review.
• Established VAT deferment program.
13
Pathogens Detected
(i) Toxigenic C. difficile (targets both tcdA and tcdB)
Hypervirulent C. difficile incl. ribotype 027 & 078 targeting:
(i) tcdC gene deletion at position 117
(ii) binary toxin gene (cdtA)
(iii) gyrA gene mutation (fluoroquinolone resistance)
(i) Salmonella spp.
(ii) Campylobacter spp.
(iii) Shigella spp./Enteroinvasive E.coli (EIEC)
(iv) Yersinia enterocolitica
(v) toxigenic C. difficile
(vi) Listeria monocytogenes
(i) Cryptosporidium spp.
(ii) Giardia intestinalis
(iii) Dientamoeba fragilis
(iv) Entamoeba histolytica
(v) Blastocystis spp.
(vi) Microsporidia spp.
(i) Norovirus GI
(ii) Norovirus GII
(iii) Rotavirus
(iv) Enterovirus
(v) Astrovirus
(vi) Sapovirus
(vii) Adenovirus universal
(viii) Adenovirus 40/41
(ix) Bocavirus
(i) NDM
(ii) KPC
(iii) VIM
(iv) IMP
(v) Oxa-48
(vi) Oxa-181
(vii) Pan-TEM
(viii) Pan-SHV
(ix) Pan-CTX-M
(x) Pan-CMY
(xi) Pan-DHA
(xii) SME
(xiii) GES
(xiv) MCR-1
(xv) Oxa-23 like
(xvi) Oxa-51
Appendix
Product
EasyScreen™
C.difficile Detection Kit
(CDD001)
EasyScreen™
C.difficile Reflex Detection Kit
(CDD002)
EasyScreen™
Enteric Bacteria Detection Kit
(EB001/02)
EasyScreen™
Enteric Protozoan Detection Kit
(EP001/02/4)
EasyScreen™
Enteric Viral Detection Kit
(EV002/2-HT)
EasyScreen™
Extended Spectrum
Beta-Lactamase (ESBL) and
Carbapenemase-producing organisms
(CPO) Detection Kit
(BL001)
Genetic Signatures Limited – Annual Report 2018
Product
EasyScreen™
Respiratory
(RP004/5/7)
EasyScreen™
Respiratory
(RP003)
EasyScreen™
STI / Genital Detection Kit
(STI005)
EasyScreen™
Flavivirus / Alphavirus Pathogen
Detection Kit
(FA001)
Pathogens Detected
(i) Influenza A
(ii) Influenza B
(iii) RSV - A/B
(iv) Human Metapneumovirus
(v) Parainfluenza 1/3
(vi) Parainfluenza 2
(vii) Rhinovirus
(viii) Enterovirus
(ix) Adenovirus
(x) B. pertussis/B. parapertussis
(xi) M. pneumonia
(xii) Parainfluenza 4
(i) Coronavirus HKU-1
(ii) Coronavirus OC43
(iii) Coronavirus NL63/229E
(i) Chlamydia trachomatis
(ii) Neisseria gonorrhoeae OpaC
(iii) Neisseria gonorrhoeae PorA
(iv) Lymphogranuloma venereum (LGV)
(v) Mycoplasma genitalium
(vi) Trichomonas vaginalis
(vii) Ureaplasma urealyticum
(viii) Ureaplasma parvum
(ix) Candida spp.
(x) Mycoplasma hominis
(xi) Streptococcus agalactiae
(xii) Gardnerella vaginalis
(xiii) Treponema pallidum
(xiv) Herpes simplex virus 1
(xv) Herpes simplex virus 2
(xvi) Varicella zoster virus
(i) Pan-Flavivirus
(ii) Pan-Alphavirus
(iii) Rift Valley Fever Virus (RVFV)
(iv) Pan-Dengue 1-4 (DENV)
(v) Eastern equine encephalitis virus (EEEV)
(vi) Zika Virus (ZIKV)
(vii) West Nile Virus (WNV)
(viii) Western equine encephalitis viruses (WEEV)
(ix) Yellow Fever Virus (YFV)
(x) Venezuelan Equine Encephalitis Virus (VEEV)
(xi) St Louis Encephalitis Virus (SLEV)
(xii) Tick Borne Encephalitis Virus (TBEV)
(xiii) Ross River Virus (RRV)
(xiv) Barmah Forest virus (BFV)
(xv) Japanese Encephalitis Virus (JEV)
(xvi) O’nyong’nyong virus (ONNV)
(xvii) Murray Valley encephalitis (MVE)
(xviii) Chikungunya (CHIKV)
EasyScreen™
Meningitis (Viral/Bacterial)
EasyScreen™
Atypical Respiratory
- Under Development
- Under Development
15
Financial Report
For the financial year ended 30 June 2018
Contents
Directors’ Report ......................................... 17
Corporate Governance Statement ............ 33
Statement of Profit and Loss
and Other Comprehensive Income ............ 41
Statement of Financial Position ................ 42
Statement of Changes in Equity ................ 43
Statement of Cash Flows ........................... 44
Notes to the Financial Statements ........... 45
Directors’ Declaration ................................. 70
Independent Audit Report .......................... 71
Shareholders Information .......................... 74
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
The directors present their report, together with the financial statements, on the company and its controlled
entities for the year ended 30 June 2018. This will hereafter be referred to as company, consolidated entity
or group.
DIRECTORS
The following persons were directors of the company during the whole of the financial year and up to the
date of this report, unless otherwise stated:
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
PRINCIPAL ACTIVITIES
The principal activities of the Company during the financial year were the research and commercialisation
of identifying individual genetic signatures to aid in the diagnosis of infectious diseases and the sale of
associated products into the diagnostic and research marketplaces. There have been no significant
changes in these activities during the year.
REVIEW OF OPERATIONS
In the financial year ending 30 June 2018, Genetic Signatures’ revenue reached a total of $2,840,115
representing a 39% increase on the previous year. The strong revenue growth highlights the result of its
targeted sales strategy and focus on product development, including first sales in the US and further reg-
ulatory approvals in Australia, Europe and the USA.
The Company posted a net loss of $3,253,809 in FY18, an 22% increase on the restated prior year loss.
This was largely driven by the acceleration of the Company’s international commercialisation strategy as
well as increase in employee benefits expense. The operating loss for FY18 includes non-cash depreciation
of $631,795, up from $478,699 in FY17.
Genetic Signatures’ total expenses increased 21% to $8,477,546 in FY18 (FY17: $6,983,510), largely
driven by a 22% increase in employee benefits expense (FY18: $3,723,856) and 66% increase in cost of
goods sold (FY18: $999,699) as product sales increase and the international expansion progresses.
Current assets at 30 June 2018 have decreased by 18% to $13,458,552 (30 June 2017 restated:
$16,412,536) whilst current liabilities recorded a +1% increase to $1,198,918 (June 2017: $1,184,259).
The decrease in current assets was driven by the decrease in cash and cash equivalents to $8,954,775
(30 June 2017: $13,192,960).
Product Progress
• Validation of the ASR product offering with the first sale in the US, followed by a repeat order in May
• Received repeat orders of the EasyScreen™ Respiratory and Flavirus / Alphavirus detection kits to a
US customer based in Kenya
• Successfully accelerated European and domestic approval of the EasyScreen™ ESBL & CPO ‘super-
bug’ Detection Kit in response to increasing customer demand
• Continued progress towards submissions for regulatory approvals of EasyScreen™ Respiratory, STI /
Genital and Flavirus / Alphavirus detection kits Europe and Australia
• FDA validation work, including 3 trials for the EasyScreen™ Enteric Protozoan kit is progressing in the
USA
17
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
Products in Development
• Key products in the development pipeline include:
o EasyScreen™ Meningitis Detection Kit.
o Easyscreen™ Atypical Respiratory Detection Kit.
• Product expansion will drive revenue and market share growth.
Commercialisation Progress by Market
Australia
• Recent relocation to larger facilities to accelerate the next phase of operational growth.
• Secured relationships with top tier customers in NSW and Victoria.
• Established customer relationships significantly increase ease of new product sales.
• Platform in NSW and Victoria has driven strong revenue over last 4 years.
• Strong recent growth of products outside the Enteric suite.
Europe
• Addressable market of ~US$435M.
• Western Europe represents ~20% of global molecular diagnostics market.
• Distributors have been hired and testing is underway.
• Field scientist appointed based in Europe and currently adding to the European team.
• Recent CE-IVD registration for ESBL & CPO “superbug” detection kits.
• Sales logistics being finalised with EU-based warehouse in final legal review.
• Building traction with customers with sales order received across several products.
• Established VAT deferment program.
North America
• Up to ~US$1,265M addressable market.
• US represents 50-60% of global molecular diagnostics market.
•
Increasing traction with ASR approach leading to first ASR sales contract received with US pathology
laboratory.
• Several labs assessing the potential for ASR products available for sale in the USA.
Initial trials established with local clinical labs using GSS supplied products in FY17:
•
o Trials are reaching conclusion.
• Also progressing towards securing FDA clearance for Enteric Protozoan Detection Kit.
• 3base™ technology has patents issued in the US.
• Quality Management System certified for Health Canada.
Commercial Outlook
As a pioneer in diagnostic change, Genetic Signatures is addressing a global health problem by helping
major hospitals and pathology labs around the world more rapidly identify a wide range of infections and
deliver better health outcomes for millions of people.
Genetic Signatures’ global growth strategy continues to focus on regions with regulatory approvals (collec-
tively Australia, Europe and the US represent more than 80% of the global market), extending the Com-
pany’s overseas footprint and realising early revenue from existing and new specialist products.
3
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
Having now received full regulatory approval for the Company’s Enteric range of kits as well as the
ESBL/CPO (“Superbug”) Detection kit in Europe and Australia, we will continue to work on securing similar
approvals for our STI and respiratory products whilst continuing our regulatory FDA application in the
USA.
Wider awareness for our products also continues to grow as the Company participates in more profile
building industry forums and we are starting to see greater interest from prospective and existing custom-
ers in the complementary synergy across the breadth of our growing product range.
Through minimising work and maximising results, Genetic Signatures drives customer and shareholder
value whilst improving community health outcomes across the globe.
STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Group during the year.
DIVIDENDS
No dividends were paid or were payable during the year (2017: NIL).
EVENTS SUBSEQUENT TO THE REPORTING DATE
There has not arisen in the interval between the end of the financial year and the date of this report any
other item, transaction or event of a material and unusual nature likely in the opinion of the directors of the
Company to affect significantly the operations of the Company, the results of those operations or the state
of affairs of the Company in future financial years.
LIKELY FUTURE DEVELOPMENTS
Likely developments in the operations of the Company 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 Company.
ENVIRONMENTAL COMPLIANCE
The Company’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a State or Territory.
19
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
DIRECTORS
Name:
Qualifications:
Experience:
Special responsibilities:
Nickolaos Samaras
BSc (Hons), PhD, MBA, FAIM, FAICD
Dr. Samaras has had over 30 years’ business experience in the global
Life Sciences industry and is a recognised and respected industry
expert. He has held a number of senior executive level positions in man-
agement, marketing, sales, and research and development. His roles
have
included appointments as Managing Director of Applied
Biosystems Pty Ltd (now part of Thermo Fisher), and senior roles with
Perkin Elmer and AMRAD Corporation (now part of CSL).
Dr. Samaras is an experienced executive, non-executive and Board
Chairman, having served on the boards of several biotechnology com-
panies including one that was ASX-listed. For the past 16 years Dr. Sa-
maras has focused his efforts on facilitating the international market ex-
pansion of a number of US biotechnology companies and developing
commercial revenue channels outside of their traditional onshore mar-
kets.
Dr. Samaras holds a BSc with Honours in Pathology and Immunology
from Monash University and a PhD from the Department of Medicine at
The University of Melbourne. He also holds postgraduate business qual-
ifications which include an MBA from the School of Management at RMIT
University, and is a Fellow of the Australian Institute of Company Direc-
tors and the Australian Institute of Management.
Non-Executive Chairman; Chairman Nomination and Remuneration
Committee; Member Audit & Risk Committee
Directorships of other listed
companies:
Nil
Interests in shares and options: 1,520,000 ordinary shares and 480,000 ESOP restricted shares
5
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
Directors Cont.
Name:
Qualifications:
Experience:
Special responsibilities:
for
in 2003 where he was responsible
John R Melki
BSc (Hons), PhD
Dr. Melki has led the commercialisation efforts of Genetic Signatures as
Chief Executive Officer since 2011. Dr. Melki originally joined Genetic
Signatures
the
commercialisation of two research products (worldwide) and five diag-
nostic products (locally and Europe) in the role of Senior Principal Re-
search Scientist. He has authored 20 peer-reviewed articles and is listed
as an inventor on eight patent applications. Dr. Melki received his BSc
from the University of New South Wales and his PhD from the University
of Sydney, where his thesis was awarded the Peter Bancroft Prize from
the Medical School. His primary research focus for the last 21 years has
been in the sodium bisulphite conversion of DNA which is at the core of
Genetic Signatures’ technology.
Managing Director and Chief Executive Officer; Member Nomination and
Remuneration Committee
leading
Directorships of other listed
companies:
Nil
Interests in shares and options: 196,000 ordinary shares and 1,000,000 ESOP restricted shares
Name:
Qualifications:
Experience:
Special responsibilities:
Phillip J Isaacs
MSc JP
Mr. Isaacs holds an MSc in Biochemistry from the University of Sydney.
He commenced the operation of Beckman Instruments in Australia and
worked as Managing Director and Area Director for the Asia Pacific region,
being responsible for both the Diagnostic and Life Science equipment
markets. He was Vice President of Asia Pacific for Cytyc Corporation (now
Hologic) which developed the ThinPrep Pap Test and was responsible for
the development of the Company in Asia Pacific. He was also the Found-
ing Chairman of the Australian Proteome Analysis Facility (APAF) in
Sydney.
Non-Executive; Chairman of Audit & Risk Committee; Member
Nomination and Remuneration Committee
Directorships of other listed
companies:
Nil
Interests in shares and options: 1,298,127 ordinary shares and 250,000 ESOP restricted shares
21
Directors’ Report
DIRECTORSʼ REPORT
for the financial year ended 30 June 2018
Directors Cont.
Name:
Qualifications:
Experience:
Special responsibilities:
Michael A Aicher
BSc, MBA
Mr. Aicher has over 30 years of industry experience, and was CEO and
founder of National Genetics Institute (NGI) which was acquired by Labor-
atory Corporation of America, Inc. (LabCorp) in 2000. Mr. Aicher led Lab-
Corp’s Esoteric Business Units, which generated more than $1 billion in
annual revenue. Prior to NGI, Mr. Aicher served in a number of executive
leadership roles at Central Diagnostics Laboratory. He currently serves as
a director on boards of Alveo Technologies and Fabric Genomics. He is
certified by the University of California at Berkeley as a Global Biotechnol-
ogy Executive and is a recipient of Ernst & Young’s “Entrepreneur of the
Year” award for emerging technologies.
Mr. Aicher received a BS in Business Administration from the University
of Redlands and an MBA in Economics from Columbus University.
Executive Director – US Operations
Directorships of other listed
companies:
Nil
Interests in shares and options: 165,785 ordinary shares and 480,000 ESOP restricted shares
Name:
Qualifications:
Experience:
Special responsibilities:
Anthony J Radford AO
BSc (Hons) PhD DipCorpMan
Dr. Anthony Radford has a PhD from La Trobe University, and was a
member of the CSIRO team that invented the QuantiFERON method for
Cellular Immune based diagnostics. He later joined AMRAD in
pharmaceutical research and was Head of Development in 2000 when he
left to co-found the diagnostic company Cellestis Limited, which listed on
the ASX in 2001. Establishing offices and operations in the USA,
Europe and Japan, Cellestis developed QuantiFERON –TB Gold, the
worldwide benchmark for diagnosis of tuberculosis infection. Dr. Radford
was CEO of Cellestis from founding until its acquisition by QIAGEN NV in
2011.
Non-Executive; Member of Audit & Risk Committee
Directorships of other listed
companies:
Nil
Interests in shares and options: 107,000 ordinary shares and 240,000 ESOP restricted shares
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
DIRECTORSʼ REPORT
for the financial year ended 30 June 2018
Company Secretary
Name:
Experience:
Anna Sandham
Anna Sandham was appointed Company Secretary of Genetic Signatures
in August 2015. Anna is an experienced company secretary and
governance professional with over 16 years’ experience in various large
and small, public and private, listed and unlisted companies. Anna has
previously worked for companies including AMP Financial Services,
Westpac Banking Corporation, BT Financial Group and NRMA Limited.
DIRECTORSʼ MEETINGS
The number of meetings of the board of directors (including board committees) held during the year
ended 30 June 2018, and the numbers of meetings attended by each director are set out below:
Name
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Board
Held
6
6
6
6
6
Attended
6
6
6
6
6
REMUNERATION REPORT - AUDITED
Audit & Risk Committee Nomination and Remu-
neration Committee
Attended
Held
2
2
2
2
2
2
-
-
-
-
Attended
2
-
2
-
2
Held
2
-
2
-
2
(a) Policy for determining the nature and amount of key management personnel remuneration
The Board ensures that the Company’s remuneration levels are appropriate in the markets in which it op-
erates and are applied, and seen to be applied, fairly.
(b) Key management personnel
The following persons were key management personnel of Genetic Signatures Limited during the finan-
cial year:
Name
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Douglas S Millar
Position Held
Non-executive Chairman
Managing Director & Chief Executive Officer
Non-executive Director
Executive Director – US Operations
Non-executive Director
Chief Scientific Officer
23
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
REMUNERATION REPORT – AUDITED (Cont.)
(c) Details of Remuneration
Remuneration Policy
The Board’s remuneration policy determines the nature and amount of remuneration for Board
members and senior executives of the Company. The policy, setting the terms and conditions for the
Executive Directors and other senior executives, was developed by the Remuneration & Nomination
Committee and approved by the Board. All executives receive remuneration based on factors such as
length of service and experience. The Remuneration & Nomination Committee has structured an
executive remuneration framework that is market competitive and complementary to the reward
strategy of the company. The objective of this policy is to secure and retain the services of suitable
individuals capable of contributing to the consolidated entities’ strategic objectives. The Board policy is
to remunerate Non-Executive Directors at market rates for comparable companies for time
commitment and responsibilities. As the company is still in its development stage and has only been
listed for just over three years, remuneration for Board members and senior executives are not directly
linked to shareholder wealth.
Executive Directors and Senior Executive Remuneration
The company aims to reward the Executive Directors and Senior Executive with a level and a mix of
remuneration commensurate with their position and responsibilities within the consolidated entity and
so as to;
• Reward Executives for company and individual performance against targets set by reference to
appropriate benchmarks;
• Align the interest of Executives with those of shareholders;
• Link reward with the strategic goals and performance of the Consolidated Entity; and
• Ensure total remuneration is comparative by market standards
Details of compensation key management personnel of Genetic Signatures Limited are set out below:
Short-term employee benefits
Post-employment benefits
2018
Cash
salary
and fees
Non-
monetary
benefits
Short
term in-
centive
Super-
annuation
$
60,000
274,518
24,275
154,779
29,456
226,538
$
-
4,894
-
-
-
4,894
$
-
29,938
-
-
-
21,500
$
5,700
28,923
25,000
-
19,819
23,564
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Douglas S Millar
Total key manage-
ment personnel
compensation
Long-term
Benefits:
Annual and
long service
leave
$
-
15,296
-
-
-
12,591
Termination
benefits
Share-
based
payments
Total
$
-
-
-
-
-
-
$
8,450
22,233
4,401
8,450
13,866
19,461
$
74,150
375,802
53,676
163,229
63,141
308,548
769,566
9,788
51,438
103,006
27,887
-
76,861 1,038,546
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
REMUNERATION REPORT – AUDITED (Cont.)
Short-term employee benefits
Post-employment benefits
2017
Cash
salary
and fees
Non-
monetary
benefits
Short
term in-
centive
Super-
annuation
¤ $
60,000
255,973
14,275
159,046
14,275
209,692
$
-
-
-
-
-
-
$
-
20,000
-
-
-
12,000
$
5,700
26,217
35,000
-
35,000
21,061
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Douglas S Millar
Total key manage-
ment personnel
compensation
Long-term
Benefits:
Annual and
long service
leave
$
-
40,570
-
-
-
27,554
Termination
benefits
Share-
based
payments
Total
$
-
-
-
-
-
-
$
20,520
43,451
10,688
20,520
28,548
34,201
$
86,220
386,211
59,963
179,566
77,823
304,508
713,261
-
32,000
122,978
68,124
-
157,928 1,094,291
(d) Share-based payment
Genetic Signatures Limited (“GS”) granted restricted shares under the GS Employee Share Ownership
Plan (ESOP) and options under the GS Equity Incentive Plan. Membership of the Plans is open to those
employees and Directors of GS whom, the Directors believe have a significant role to play in the continued
development of the Group’s activities.
Restricted shares were offered and funded by an interest free loan from The Company. Restricted
shares will vest and can be converted to ordinary shares following the satisfaction of the relevant service
conditions and the repayment of the loan. The restricted shares are subject to a service condition of con-
tinuous employment from grant date to the relevant vesting date, otherwise the restricted shares will
lapse. Options vest subject to a service condition of continuous employment from grant date to the rele-
vant vesting date and vested options can be exercised by the payment of the exercise price prior to
lapsing.
Set out below are the summaries of option grants under the plan:
2018
Grant
date
19
2017
Total
2017
Grant
date
Name
Vesting date
Oct
Douglas S
Millar
25% on each anniver-
sary of the grant date
Fair value per
share at grant
date
$0.17
Value of
share at
grant date
$16,675
Name
Vesting date
30 Nov
2016
Total
John R
Melki
25% on each anniver-
sary of the grant date
Fair value per
share at grant
date
$0.52
Value of
share at
grant date
$19,092
Granted
during the year
Number
100,000
100,000
Granted
during the year
Number
100,000
100,000
25
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
REMUNERATION REPORT – AUDITED (Cont.)
(e) Equity instruments held by key management personnel
Employee Share Ownership Plan Holdings
Details of restricted shares and options held directly, indirectly or beneficially by key management per-
sonnel are as follows, terms and conditions are summarised in section (d):
2018
Name
Balance at
1 July 2017
Granted as
compensa-
tion
(Options)
Converted
on Repay-
ment of
loan
Other
Changes
Balance at
30 June
2018
Total Options Total vested
and
convertible at
30 June 2018
Unvested at
30 June 2018
480,000
Nickolaos
Samaras
John R Melki 1,000,000
250,000
Phillip J
Isaacs
Michael A
Aicher
Anthony J
Radford
Douglas S
Millar
Total
3,250,000
800,000
480,000
240,000
-
-
-
-
-
100,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
480,000
-
389,999
90,001
1,000,000
250,000
100,000
-
756,250
203,116
243,750
46,884
480,000
240,000
-
-
389,999
90,001
130,000
110,000
900,000
100,000
650,008
249,992
3,350,000
200,000
2,519,372
830,628
2017
Name
Balance at
1 July 2016
Granted as
compensa-
tion
(Options)
Converted
on Repay-
ment of
loan
Other
Changes
Balance at
30 June
2017
Total Options Total vested
and
convertible at
30 June 2017
Unvested at
30 June 2017
Nickolaos
Samaras
John R Melki
Phillip J
Isaacs
Michael A
Aicher
Anthony J
Radford
Douglas S
Millar
Total
480,000
-
900,000
250,000
100,000
-
480,000
240,000
800,000
-
-
-
3,150,000
100,000
-
-
-
-
-
-
-
480,000
-
269,999
210,001
1,000,000
250,000
100,000
-
506,250
140,622
493,750
109,378
480,000
240,000
800,000
-
-
-
269,999
210,001
70,000
170,000
450,002
349,998
3,250,000
100,000
1,706,872
1,543,128
-
-
-
-
-
-
-
11
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
REMUNERATION REPORT – AUDITED (Cont.)
Shareholdings
Details of equity instruments (other than employee share ownership plan restricted shares) held di-
rectly, indirectly or beneficially by key management personnel are as follows:
2018
Name
Balance at
1 July 2017
Granted as
compensation
Received on
conversion of
restricted shares
Other
changes
Balance at
30 June
2018
Balance
held nomi-
nally
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Douglas S Millar
Total
1,446,997
196,000
895,127
165,785
107,000
150,000
2,960,909
-
-
-
-
-
-
-
-
-
-
-
-
-
-
73,003
-
403,000
-
-
-
476,003
1,520,000
196,000
1,298,127
165,785
107,000
150,000
3,436,912
23,060
196,000
434,914
165,785
-
150,000
969,759
2017
Name
Balance at
1 July 2016
Granted as
compensation
Received on
conversion of
restricted shares
Other
changes
Balance at
30 June
2017
Balance
held nomi-
nally
Nickolaos Samaras
John R Melki
Phillip J Isaacs
Michael A Aicher
Anthony J Radford
Douglas S Millar
Total
566,000
175,000
640,213
127,570
-
150,000
1,658,783
(f) Service contracts
-
-
-
-
-
-
-
-
-
-
-
-
-
-
880,997
21,000
254,914
38,215
107,000
-
1,302,126
1,446,997
196,000
895,127
165,785
107,000
150,000
2,960,909
23,060
196,000
31,914
165,785
-
150,000
566,759
Service contracts have been entered into by the Company with key management personnel, describing
the components and amounts of remuneration applicable on their initial appointment, including terms and
performance criteria for performance-related cash bonuses. These contracts do not fix the amount of
remuneration increases from year to year. Remuneration levels are reviewed generally each year by the
Remuneration Committee to align with changes in job responsibilities and market salary expectations. All
contracts are for an ongoing period.
All contracts can be terminated by either party with 3 months’ notice (or one month in the case of Michael
Aicher), subject to termination payments as described below:
27
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
REMUNERATION REPORT – AUDITED (Cont.)
(f) Service contracts (Cont.)
John Melki
Director & Chief Executive Officer
Contract term:
Base salary:
Termination payments:
Michael Aicher
Executive Director – US Operations
Contract term:
Base salary:
Termination payments:
Douglas Millar
Chief Scientific Officer
Contract term:
Base salary:
Termination payments:
Ongoing, commenced November 2014
$286,200, exclusive of superannuation, to be reviewed annually by
the Remuneration Committee
Payment on early termination by the Group, other than for gross
misconduct, equal to the base salary plus superannuation entitle-
ments for three months.
Ongoing, commenced April 2014
$US120,000, to be reviewed annually by the Remuneration
Committee
No payment on early termination. Contract is terminable by either
party on one months’ notice.
Ongoing, commenced November 2014
$230,000, exclusive of superannuation, to be reviewed annually by
the Remuneration Committee
Payment on early termination by the Group, other than for gross
misconduct, equal to the base salary plus superannuation for three
months.
(g) Transactions with related parties
There were no related party transactions during the
year
2018
$
-
Consolidated
2017
$
-
Relationship between Remuneration Policy and Company Performance
The remuneration policy has been tailored to increase goal congruence between shareholders,
directors and executives. Two methods have been applied to achieve this aim, the first being a
performance-based bonus based on KPIs, and the second being the issue of options and ESOP
shares to the majority of directors, executives and staff to encourage the alignment of personal and
shareholder interests.
The following table shows the gross revenue, profits and dividends for the last five years for the
consolidated entity, as well as the share prices at the end of the respective financial years. Analysis of
the actual figures show ongoing losses as the consolidated entity continue to develop new products,
commercialise its existing products and develop new markets and customers
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
DIRECTORSʼ REPORT
for the financial year ended 30 June 2018
REMUNERATION REPORT – AUDITED (Cont.)
The Board is of the opinion that these results can be attributed, in part, to the previously described re-
muneration policy and is satisfied with the results over the past five years.
Revenue
Net profit/(loss) attributable to
owners of the parent entity
Share price at year end
Dividends paid (cents per share)
2018
$
2017
$
2014
$
2,840,115 2,037,659 1,825,018 1,043,269
684,277
(3,253,809) (2,670,622) (3,026,598) (2,659,120) (1,728,487)
2016
$
2015
$
0.37
-
0.395
-
0.53
-
0.497
-
-
-
*The Company was admitted to the official list on the ASX on 30 March 2015.
Performance Conditions Linked to Remuneration
The Group seeks to emphasise reward incentives for results and continued commitment to the Group
through the provision of various cash bonus reward schemes, specifically the incorporation of incen-
tive payments based on the achievement of revenue and margin targets and continued employment
with the Group. Incentive payments result where the Group returns operating revenue and margins
that are greater than the prior year. This condition provides management with a performance target
which focuses upon organic sales growth utilising existing group resources.
Voting and Comments made at the Company’s 2017 Annual General Meeting (‘AGM’)
The Company received 99.57% of “for” votes in relation to its remuneration report for the year ended
30 June 2017. The Company did not receive any specific feedback at the AGM regarding its remuner-
ation policies.
This concludes the remuneration report which has been audited.
29
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
OPTIONS
There were 1,735,000 unissued ordinary shares of the company under option outstanding at the date of
this report.
INDEMNIFICATION OF OFFICERS AND AUDITORS
No indemnities have been given or insurance premiums paid, during or since the end of the financial year,
for any person who is or has been an officer or auditor of the company.
No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any
proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company
for all or any part if those proceedings.
The company’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a state or territory.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party
for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.
NON AUDIT SERVICES
During the financial year, the following fees for non-audit services were paid or payable to the auditor,
BDO or their related practices:
Taxation services
Tax compliance services
Total fees for non-audit services
2018
$
2017
$
34,940
13,658
34,940
13,658
On the advice of the Audit and Risk Committee, the directors are satisfied that the provision of non-audit
services by the auditor, as set out above, did not compromise the auditor independence requirements of
the Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the Audit and Risk Committee to ensure that they
do not impact the integrity and objectivity of the auditor; and
• None of the non-audit services undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants.
Genetic Signatures Limited – Annual Report 2018
Directors’ Report
for the financial year ended 30 June 2018
DIRECTORSʼ REPORT
AUDITORʼS INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 17.
This report is made in accordance with a resolution of directors.
John Melki
Director
Sydney
28 August 2018
31
Directors’ Report
for the financial year ended 30 June 2018
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES
LIMITED
As lead auditor of Genetic Signatures Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the
period.
Martin Coyle
Partner
BDO East Coast Partnership
Sydney, 28 August 2018
Genetic Signatures Limited – Annual Report 2018
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
Corporate Governance Statement
Corporate Governance Statement
The Board and Management of Genetic Signatures Limited (GSS or the Company) recognise the importance
of good corporate governance within its organisation which promotes regulator and investor confidence and
adds value for GSS’s shareholders and other stakeholders alike. The Board of Directors are responsible for
establishing the corporate governance framework of the Group. The Board guides and monitors the business
and affairs of GSS on behalf of its shareholders by whom they are elected and to whom they are accountable.
GSS has adopted the following key charters and policies which are available collectively in the GSS Corporate
Governance Charter located on the GSS website under ‘Investors – Corporate Governance’ at http://geneticsigna-
tures.com/investors/corporate-governance/:
• Board Policy
• Diversity Policy
• Continuous Disclosure Policy
• Code of Conduct
• Share Trading Policy
•
Insider Trading Policy
• Risk Management Policy
This Corporate Governance Statement (Statement) reports against the 3rd edition of the ASX Corporate Gov-
ernance Councilʼs Principles and Recommendations (ASX Principles) during the reporting period between 1 July
2017 and 30 June 2018. This Statement is current as at 28 August 2018 and has been approved by the Board.
PRINCIPLE 1: Lay solid foundations for management and oversight
The Board has adopted a formal charter which sets out its role and responsibilities and that of Management.
The Board’s primary responsibilities are to set strategic objectives of the Company, review and provide over-
sight of GSS’s risk management framework, set remuneration policies and practices, and review and monitor
corporate governance framework and codes of conduct.
It is the role of Management to carry out and manage the day-to-day business and financial operations in line
with the Board’s expectations and the requisite delegation of authority by the Board. There is clear segregation
between the Board and Management. Any functions that are not reserved for the Board, and not expressly
reserved for shareholders in general meetings as set out within the Corporations Act 2001 (Cth) (Corporations
Act) and ASX Listing Rules, are reserved for senior executives of the Company.
The Board has established the following two Committees to assist it to carry out its functions and has delegated
certain authority to the Committees to empower each to carry out their role:
• Nomination and Remuneration Committee; and
• Audit and Risk Committee.
The Board requires that a majority of the members of each Committee should comprise of Non-Executive
Directors. The Board has approved that, where necessary, Non-Executive Directors should meet during the
year in absence of Management at such times as they determine necessary.
Prior to the appointment of new Directors, the Company will undertake appropriate background checks on the
candidate and provide this information to shareholders as part of the Notice of Meeting of the Company’s
Annual General Meeting (AGM) for the election and/or re-election of Directors in accordance with GSS’s Con-
stitution, the Corporations Act and ASX Listing Rules.
The Company enters into a written agreement with each Director and senior executive which sets out the
terms of their appointment, remuneration, and the expected time commitment for their role among other mat-
ters.
18
33
Corporate Governance Statement
Corporate Governance Statement (Cont.)
During the reporting period, Ms Anna Sandham held the role as Company Secretary of GSS. In accordance
with the Board Policy, the Company Secretary is directly accountable to the Board, through the chairman, on
all matters to do with the proper functioning of the Board.
The Board Policy sets out that the Board will undertake an annual performance evaluation of itself. During the
reporting period, the Board did not complete a formal assessment as it was not considered necessary given
the current nature and scale of business operations and current structure and activity of the Board, however
the Board undertakes informal assessments of its performance and the performance of its Directors on a
regular basis.
Senior executives are also subject to a formal performance review process on an annual basis. The focus of
the performance review is to set specific objectives that are aligned with the Companyʼs business objectives,
and monitor performance against those objectives. A performance review of the CEO was undertaken during
the reporting period by the Board. Performance reviews of other senior executives were undertaken by the
CEO during the reporting period.
Diversity Policy
It is the Board’s belief that a diverse workforce provides the Company with a competitive advantage and that
the Company’s success is the result of the collective quality and experience of its employees. The Board has
adopted a Diversity Policy which is designed to support the Company’s commitment to diversity which includes
gender, age, ethnicity and cultural background.
The Diversity Policy identifies several strategies to promote diversity including that the Board may set meas-
urable objectives with respect to achieving gender equality. These strategies include developing and imple-
menting programs i.e. mentoring and targeted training and development, reviewing succession plans, review-
ing recruitment practices, and providing workplace flexibility. Given the current size, scale and nature of the
Company’s operations, the Board has not currently set measurable objectives with respect to gender diversity.
However, the Board will continue to monitor its position in relation to this as the Company evolves.
PRINCIPLE 2: Structure the Board to add value
The Board is currently comprised of five Directors as detailed in the table below:
Director
Status
Appointment Date
Independent, Non-Executive
22 January 2008
of
Term
Length
1
(since ASX listing
)
~ 3 years, 5 months
Nickolaos (Nick) Sa-
maras (Chairman)
Phillip Isaacs
Anthony Radford
John Melki
Mike Aicher
Independent, Non-Executive
Independent, Non-Executive
Non-independent, Managing Di-
rector/ Chief Executive Officer
(MD/CEO)
Non-independent, Executive Di-
rector of U.S. Operations
12 December 2003
15 September 2015
4 April 2014
~ 3 years, 5 months
~ 3 years
~ 3 years, 5 months
16 May 2014
~ 3 years, 5 months
1 GSS was admitted to the Official List of the ASX on 30 March 2015.
Genetic Signatures Limited – Annual Report 2018
Corporate Governance Statement
Corporate Governance Statement (Cont.)
Details on the Board members and their qualifications are included in the Directorsʼ Report within the Annual
Report. During the reporting period, the following Directors were members of the Board Committees:
Nomination and Remuneration Committee
Audit and Risk Committee
• Nickolaos (Nick) Samaras (Committee Chair)
John Melki
•
• Phillip Isaacs
• Anthony Radford
• Phillip Isaacs (Committee Chair)
• Nickolaos (Nick) Samaras
• Anthony Radford
The Nomination and Remuneration Committee has been established to assess and make recommendations
to the Board in relation to its composition and setting fair, responsible and competitive remuneration. The
committee is currently comprised of a majority independent Directors, is chaired by an independent Director.
The committee does not operate under a separate charter. However, its function role and composition is out-
lined within the Board Policy.
Details relating to the number of meetings held, and Director attendances at those meetings, are disclosed as
part of the Directors’ Report within the Annual Report.
The Board Policy sets out that the Board will determine the number of independent Directors that it considers
appropriate to maintain. Currently the Board requires a majority of independent Directors and this has been
maintained throughout the reporting period. Directors are considered to be independent when they are inde-
pendent of Management and free from any business or other relationship that could materially interfere with
the exercise of their independent judgement. The Board assesses Director independence on an annual basis,
or more often if it feels it is warranted, depending on disclosures made by individual Directors. In the context
of Director independence, to be considered independent, a Non-Executive Director may not have a direct or
indirect material relationship with the Company. The Board has determined that a material relationship is one
which has, or has the potential to impair or inhibit a Directorʼs exercise of judgement on behalf of the Company
and its shareholders. On this basis, notwithstanding the longevity of tenure of its three Non-Executive Directors
since prior to the Company’s listing on the ASX, the Company believes that each continue to provide inde-
pendent thought and advice to the Board and therefore consider each of its Non-Executive Directors to be
independent. As such, a majority of the Board and its Chairman are independent. The role of the Chairman is
clearly separated from that of the MD/CEO.
The Company considers that the Board is appropriately structured given the breadth of experience and skill
set of each of the Directors, and their substantial experience and recognition in the MDx industry and other
industries relevant to the Companyʼs operations.
The Board continually assesses its membership and makes appointments to complement and enhance the
existing skill base of the Board. The Board has established a Nomination and Remuneration Committee to
assist it to carry out this function.
On the appointment of new Directors, the Company Secretary will arrange an induction for the new Director
which includes the provision of information related to the Company’s assets, financial strategic, operational
and risk management position as well as meetings with Directors.
Directors are entitled to access information from the Board and Management that they consider necessary to
enable them to carry out their role as a Director. Directors may also participate in professional development
activities with the prior approval of the Board.
20
35
Corporate Governance Statement
Corporate Governance Statement (Cont.)
The Board has determined that Directors are able to seek independent professional advice for Company re-
lated matters at the Companyʼs expense, subject to the instruction and estimated cost being approved by the
Chairman in advance as being necessary and reasonable.
PRINCIPLE 3: Act ethically and responsibly
The Board and Management ensure that the business processes of GSS are conducted according to sound
ethical principles. The Board has established a formal Code of Conduct in this regard which is available as
part of the Corporate Governance Charter located on the Company’s website.
All Directors, executives and employees of the Company are expected to act with the utmost integrity and
objectivity, striving at all times to enhance the reputation and performance of the Company.
All GSS Directors, the Company Secretary, executives and employees of the Company are made aware of
their obligations under the Corporations Act with regard to trading in the securities of the Company. In addition,
the Company has established a Share Trading Policy and an Insider Trading Policy which are reviewed and
updated on a regular basis as required, and sets out the Company’s policy with respect to dealing in GSS
securities. A copy of these policies are available as part of the Corporate Governance Charter located on the
Company’s website.
Board members who have, or may have, a conflict of interest in any activity of the Company or with regard to
any decision before the Board, are required to notify the Board of that conflict. Where a Director has a conflict
of interest, that Director will not be present to discuss matters relevant to that conflict, nor is entitled to vote
on the matter.
PRINCIPLE 4: Safeguard integrity in corporate reporting
The Board has established an Audit and Risk Committee which is comprised of three independent, Non-Ex-
ecutive Directors. The chair of the Audit and Risk Committee is not the Chairman of the Board.
The members of the Committee have significant financial and business backgrounds, expertise and
qualifications, full particulars of which are contained in this annual report, as are details of meetings of this
Committee.
Details relating to the number of meetings held, and Director attendances at those meetings, are disclosed as
part of the Directors’ Report within the Annual Report.
The main objective of the Committee is to assist the Board in reviewing any matters of significance affecting
financial reporting and compliance of the consolidated entity including:
•
•
•
•
exercising oversight of the accuracy and completeness of the financial statements;
making informed decisions regarding accounting and compliance policies, practices and disclosures;
reviewing the scope and results of operational risk reviews, compliance reviews, and external audits; and
assessing the adequacy of the consolidated entity’s internal control framework including accounting, com-
pliance and operational risk management controls based on information provided or obtained.
The committee does not operate under a separate charter. However, its function role and composition is out-
lined within the Board Policy.
The chair of the committee meets with the auditors without Management in attendance on a regular basis so
Genetic Signatures Limited – Annual Report 2018
Corporate Governance Statement
Corporate Governance Statement (Cont.)
that there can be open and frank communication between the committee and the external auditor.
The committee has the power to conduct or authorise investigations into, or consult independent experts on,
any matters within the committeeʼs scope of responsibility.
The committee also considers the independence of the auditor. The Company requires that the audit partner
be rotated every five years and, on an annual basis, the auditor provides a certificate to the Committee confirm-
ing their independence.
Prior to Board approval of the Company’s half year and annual financial reports, the CEO and Chief Financial
Officer (CFO) must provide the Board with declarations required under section 295A of the Corporations Act
and Recommendation 4.2 of the ASX Principles. The declarations confirm that in the opinion of the CEO and
CFO, the financial records of GSS 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 perfor-
mance of the Company.
For the financial year ended 30 June 2018, the CEO and CFO made a declaration in accordance with section
295A of the Corporations Act. The declaration was formed on the basis of a sound system of risk management
and internal control which is operating effectively. An equivalent declaration was made for the half year ended
31 December 2017.
The company ensures that its external auditor, BDO East Coast Partnership, attends the AGM and is availa-
ble to answer shareholder questions in relation to the audit.
PRINCIPLE 5: Make timely and balanced disclosure
The Board is committed to inform its shareholders and the market of any major events that influence the
Company in a timely and conscientious manner. The Board is responsible for ensuring that the Company
complies with the continuous disclosure requirements as set out in ASX Listing Rule 3.1 and the Corporations
Act. The Company has adopted a Continuous Disclosure Policy which is available as part of the Corporate
Governance Charter located on the Company’s website.
In accordance with the Continuous Disclosure Policy, market sensitive information is discussed, and ASX
announcements are reviewed and approved by the Board prior to being released on the ASX announcements
platform. The Company will also ensure that any ASX announcements are also placed on the Companyʼs
website shortly thereafter. All executives of the Company have been made aware of the Companyʼs obliga-
tions with regard to the continuous disclosure regime and it is required that employees report any material
price sensitive information to the Company Secretary if they become aware of such information.
The Company Secretary is responsible for the overall administration of the Continuous Disclosure Policy,
including communications with the ASX.
PRINCIPLE 6: Respect the rights of security holders
The Board ensures that its shareholders are fully informed of matters likely to be of interest to them. The
Company provides information about itself and its governance via its website which includes key corporate
governance policies and charters, ASX announcements, annual reports, half yearly reports, Director and Man-
agement bio’s, analyst coverage, the contact details of its Share Registry, and investor presentations.
37
Corporate Governance Statement
Corporate Governance Statement (Cont.)
Notices of shareholders meetings, annual and extraordinary, are distributed in a timely manner and are ac-
companied by all information that the Company has obtained.
Whilst the company does not have a dedicated investor relations program, it is committed to facilitating effec-
tive two-way communication with investors. This includes participation at industry events, investor presenta-
tions and meetings. The Company also encourages shareholders to contact its office in relation to any queries
by telephone (T: +61 2 9870 7580), or email (E: info@geneticsignatures.com).
The Chairman encourages questions and comments at the AGM ensuring that shareholders have a chance to
obtain direct response from the CEO and other Board members.
To encourage Shareholder engagement and participation at the AGM, Shareholders have the opportunity to
attend the AGM, ask questions, participate in voting and meet the Board in person.
Shareholders who are unable to attend the AGM are encouraged to vote on the proposed motions by appoint-
ing a proxy via the proxy form that accompanies the notice of meeting. Shareholders have the opportunity to
submit written questions to GSS and its external auditor, or make comments on the management of GSS.
Presentations and speeches made by the Chair and CEO at the AGM will be made available on the ASX
announcements platform, and the Company’s website before the commencement of the meeting. The results
of the general meeting will also be announced to the ASX immediately following the conclusion of the AGM.
Should shareholders wish to receive communications electronically including notices of general meetings,
annual reports and other communication, they are encouraged to contact GSS’s Share Registry, Boardroom
Pty Limited by telephone on +61 2 9290 9600, or by email at enquiries@boardroomlimited.com.
PRINCIPLE 7: Recognise and manage risk
The Board has delegated oversight responsibility for the risk management and internal control of risks for GSS
to the Audit and Risk Committee. The committee is comprised of three independent, Non-Executive Directors
and whilst it does not operate under a separate charter, its function, role and composition is outlined within
the Board Policy and the Company’s Risk Management Policy. The chair of the Audit and Risk Committee is
considered to be independent.
Details relating to the number of meetings held, and Director attendances at those meetings, are disclosed as
part of the Directors’ Report within the Annual Report.
The Audit and Risk Committee’s role includes:
•
•
•
•
•
•
reviewing financial reporting principles, policies, controls and procedures, integrity of financial statements,
and effectiveness of the Company’s internal control and risk management framework;
monitoring corporate risk assessment and the internal controls instituted;
monitoring the establishment of an appropriate internal control framework, including information systems,
and considering enhancements;
reviewing reports on any misappropriation of funds, fraud and theft from the Company and action taken by
Management;
reviewing policies to avoid conflicts of interest between the Company and members of Management; and
considering the security of computer systems and applications, and the contingency plans for processing
financial information in the event of a systems breakdown.
The Company’s risk management framework provides a structured and disciplined approach to the Company’s
Genetic Signatures Limited – Annual Report 2018
Corporate Governance Statement
Corporate Governance Statement (Cont.)
management of its key risks which include operational, strategic, and financial risk factors.
Due to the size, scale and nature of operations, the Board considers that an internal audit function is not required.
It is the responsibility of Management to implement the risk management framework and manage operational
and business risk. During the reporting period, the CEO and CFO have made representations to the committee
on the system of risk management and internal compliance and control which implements the policies adopted
by the Board. The CEO and CFO have also confirmed that a review of the risk management framework has
been undertaken during the reporting period and represented that, to the best of their knowledge, the Com-
panyʼs risk management and internal compliance and control system is operating efficiently and effectively in
all material respects.
GSS’s Prospectus dated 7 November 2014 (Prospectus) outlines the Company’s exposure to a number of busi-
ness, industry, and general risks identified by the Board. The Board continually monitors these risks and do not
believe the risks outlined in the Prospectus to have significantly changed since the Company’s listing to the ASX
in March 2015. This includes the following material economic and social sustainability risks as recognised by the
Company:
•
•
•
•
Product liability risks – Adverse events could expose the Company to product liability claims or litigation,
resulting in the removal of the regulatory approval for the relevant products and/or monetary damages
being awarded against the Company.
Intellectual property rights – If third party patents or patent applications contain claims infringed by the
Company’s technology and these claims are valid, the Company may be unable to obtain licenses to
these patents at a reasonable cost, if at all, and may also be unable to develop or obtain alternative
technology. If such licenses cannot be obtained at a reasonable cost, the business could be significantly
impacted. Further, the enforceability of the patents owned by the Company may be challenged and the
Company’s patents could be partially or wholly invalidated following challenges by third parties.
Infringement of third party intellectual property – A third party may accuse the Company of infringing
its intellectual property rights and the Company may incur significant costs in defending any legal action
commended against the Company. Typically, patent litigation in the pharmaceutical and biotechnology
industry is expensive. Costs that the Company incurs in defending third party infringement actions would
involve significant monetary expenses and diversion of management’s and technical personnel’s time.
Trade secrets – The Company relies on its trade secrets, which include information relating to the man-
ufacture, development and administration of its diagnostic products. The protective measures that the
Company employs may not provide adequate protection for its trade secrets. This could erode the Com-
pany’s competitive advantage and materially harm its business.
The Company does not believe that it has any material exposure to environmental sustainability risks which has
been determined having regard to its primary business operations which is the development and commercialisa-
tion of its proprietary platform technology providing high-volume hospital and pathology laboratories the ability to
screen for a wide array of infectious pathogens.
To mitigate the risks as set out above, the Board and Management continually monitor these risks at various
Board and internal Management meetings throughout the year and have established methods to mitigate the risks
which include having appropriate insurance programs in place, adequate security is in place to protect its intel-
lectual property and trade secrets, undertaking detailed due diligence with respect to product research and de-
velopment and ensuring that the appropriate patents and licences required by the Company have been obtained
and are current. Other financial risks and methods that the company has adopted to mitigate such risks are also
detailed within the Notes to the Financial Statements within the Annual Report.
39
Corporate Governance Statement
Corporate Governance Statement (Cont.)
PRINCIPLE 8: Remunerate fairly and responsibly
The Board has established a Nomination and Remuneration Committee to assess and make recommendations
to the Board regarding Board composition with a view to ensuring it is able to operate effectively and efficiently,
to adequately discharge its responsibilities and duties, and advise and assist the Board to ensure that Genetic
Signatures has fair, responsible and competitive remuneration arrangements and other employee policies and
procedures which attract, motivate and retain appropriately skilled persons.
The committee is currently comprised of a majority independent Directors and is chaired by an independent
Director. The committee does not operate under a separate charter. However, its function role and composition
is outlined within the Board Policy.
The committee has access to senior Management of the Company and may consult independent experts
where the Committee considers it appropriate to carry out its duties.
Details relating to the number of meetings held, and Director attendances at those meetings, are disclosed as
part of the Directors’ Report within the Annual Report.
The Companyʼs remuneration policy is described in the Remuneration Report as part of the Directors’ Report
within the Annual Report which sets out the structure of remuneration of Non-Executive Director’s, and that of
Executive Directors. The policy is structured to provide remuneration to Non-Executive Directors at market
rates for comparable companies for time commitment and responsibilities, and the remuneration for Executives
to be based on merit including length of service, skills and experience. Currently the Company pays set fees,
including superannuation to its Non-Executive Directors.
The Company has established an Employee Share Ownership Plan and an Equity Incentive Plan which is
open to employees and Directors who have a significant role in the continued development and success of the
Company. It is a requirement under the Share Trading Policy that the Board, Directors, Executives, Company
Secretary and any other person who is entitled to receive shares, equity performance rights and/or options as
part of the Employee Share Ownership Plan or the Equity Incentive Plan, are prohibited in entering into hedg-
ing arrangements with respect to the securities, that would operate to limit the economic risk associated with
holding those securities.
Genetic Signatures Limited – Annual Report 2018
Financial Report
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Statement of profit or loss and other comprehensive income for financial year ended
30 June 2018
Sales Revenue
Other income
Cost of goods sold
Employee benefits expense
Directors’ and consultancy fees
Depreciation and amortisation expenses
Finance Costs
Rental expenses relating to operating leases
Scientific consumables
Travel and accommodation
Other expenses
Loss before income tax
Income tax benefit
Note
2018
$
Consolidated
2017 restated
$
2,840,115
2,037,659
2,383,622
2,275,229
(999,699)
(3,723,856)
(493,523)
(631,795)
(525)
(305,433)
(983,101)
(284,073)
(1,055,541)
(602,422)
(3,055,968)
(385,309)
(478,699)
(423)
(210,590)
(1,121,118)
(258,790)
(870,191)
(3,253,809)
(2,670,622)
-
-
2
3
4
Loss attributable to members of the entity
(3,253,809)
(2,670,622)
Other comprehensive income
Items that maybe reclassified subsequently to
profit or loss:
Foreign Currency translation of foreign operations
(25,257)
(18,191)
Total comprehensive income for the year, net of
tax
(3,279,066)
(2,688,812)
Earnings (loss) per share
Basic and diluted loss per share to ordinary equity
holders of the company
2018
cents
(3.13)
2017
cents
(2.78)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be
read in conjunction with the accompanying notes
41
Financial Report
Statement of financial position as at 30 June 2018
STATEMENT OF FINANCIAL POSITION
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Government grant receivable
Total Current Assets
Non-Current Assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Consolidated
Note
2018
$
2017 restated
$
5
6
7
8
9
10
10
8,954,775
761,957
1,181,059
2,560,761
13,458,552
13,192,960
441,341
762,598
2,015,637
16,412,536
1,149,969
1,149,969
1,262,397
1,262,397
14,608,521
17,674,933
773,910
425,008
1,198,918
836,313
347,946
1,184,259
10,547
10,547
5,542
5,542
1,209,465
1,189,801
13,399,056
16,485,132
11
12
46,777,792
957,036
(34,335,772)
46,777,792
865,803
(31,158,463)
13,399,056
16,485,132
The above Consolidated statement of financial position should be read in conjunction with the
accompanying notes
Genetic Signatures Limited – Annual Report 2018
Financial Report
Statement of changes in equity for financial year ended 30 June 2018
STATEMENT OF CHANGES IN EQUITY
Consolidated
Issued
Capital
Share based
payments
reserve
$
$
Foreign
currency
translation
reserve
$
Accumulated
losses
$
Total
$
Balance at 1 July 2016
Loss attributable to members of
the entity)
Restatement of comparatives
(note 27)
Other comprehensive income
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 11)
Forfeiture of share-based pay-
ments (note 12)
Share-based payments (note
12)
Balance at 30 June 2017
restated
Loss attributable to members of
the entity
Other comprehensive income
Total comprehensive income for
the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 11)
Forfeiture of share-based pay-
ments (note 12)
Share-based payments (note
12)
32,547,402
725,052
12,949
(28,605,698)
4,679,705
-
-
-
-
-
14,230,390
-
-
-
-
-
-
-
-
(117,857)
263,850
-
-
(3,188,342)
(3,188,342)
517,720
517,720
(18,191)
-
(18,191)
(18,191)
(2,670,622)
(2,688,812)
-
-
-
-
- 14,230,390
117,857
-
-
263,850
46,777,792
871,045
(5,242)
(31,158,463) 16,485,132
-
-
-
-
-
-
-
-
-
-
-
-
(76,500)
192,990
-
(3,253,809)
(3,253,809)
(25,257)
-
(25,257)
(25,257)
(3,253,809)
(3,279,066)
-
-
-
-
-
-
76,500
-
-
-
-
192,990
Balance at 30 June 2018
46,777,792
987,534
(30,498)
(34,335,772) 13,399,056
The above consolidated statement of changes in equity should be read in conjunction with the ac-
companying notes
43
Financial Report
Statement of cash flows for financial year ended 30 June 2018
STATEMENT OF CASH FLOWS
Note
2018
$
Consolidated
2017
$
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Research and development concession received
Net cash used in operating activities
Cash flows from investing activities
Purchase of plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares, net of costs
Proceeds from conversion of employee share
ownership plan restricted shares
Share issue costs
Net cash provided by financing activities
18(b)
8
11
11
11
2,901,945
(8,446,886)
253,079
1,598,301
(3,693,561)
2,283,581
(6,505,688)
220,352
1,429,887
(2,571,868)
(519,367)
(519,367)
(1,011,625)
(1,011,625)
-
-
-
-
15,018,473
9,500
(797,583)
14,230,390
Net increase in cash and cash equivalents
(4,212,928)
10,646,897
Cash and cash equivalents at beginning of finan-
cial year
Exchange differences on cash and cash equiva-
lents
Cash and cash equivalents at end of financial
year
18(a)
13,192,960
2,564,254
(25,257)
(18,191)
8,954,775
13,192,960
The above consolidated statement of cash flows should be read in conjunction with the
accompanying notes
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board
('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These
financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board ('IASB').
The financial report has been prepared on an accrual basis and is based on historical costs,
modified, where applicable by the measurement at fair value of selected non-current assets,
financial assets and financial liabilities.
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
company'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(w).
(a) Going Concern
The company incurred losses for the year to 30 June 2018 of $3,253,809 (2017:
$2,670,622-restated), leading to net operating cash outflows of $3,693,561 (2017:
$2,571,868). The ability of the company to continue as a going concern is dependent on
the entity being able to generate sufficient revenue from successfully developing genetic
signatures research.
The financial report has been prepared on a going concern basis, as during the previous
year, the Company was able to raise $15 million (gross) in cash via the issue of ordinary
shares. At balance date the Company held $8,954,775 in cash reserves. It should also be
noted that the Company carries no debt. The directors are confident that given the amount
of cash on hand at year-end, plus the ongoing ability of the Company to increase its sales,
it has sufficient funds to operate as a going concern for the foreseeable future.
(b) Basis of Consolidation
The consolidated financial statements comprise the financial statements of Genetic
Signatures Limited and its subsidiary, Genetic Signatures US Ltd. Subsidiaries are entities
(including structured entities) over which the group has control. The group has control over
an entity when the group is exposed to, or has rights to, variable returns from its involvement
with the entity, and has the ability to use its power to affect those returns. Subsidiaries are
consolidated from the date on which control is transferred to the group and are deconsoli-
dated from the date that control ceases.
All intercompany balances and transactions, including unrealised profits arising from
intragroup transactions have been eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the asset transferred.
45
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(c)
Income tax
The income tax expenses/(benefit) for the year comprise current income tax expense/
(benefit) and deferred tax expenses/(benefit).
Current income tax expenses charged to the profit or loss is the tax payable on taxable
income calculated using applicable income tax rates enacted, or substantially enacted, as
at the end of the reporting period. Current tax liabilities/assets are therefore measured at
the amounts expected to be paid to /recovered from the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax
liability balances during the year as well as unused tax losses.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply
to the period when the asset is realised or the liability settled, based on tax rates enacted
or substantively enacted at reporting date. Their measurement also reflects the manner in
which management expects to recover or settle the carrying amount of the related asset or
liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised
only to the extent that it is probable that future taxable profit will be available against which
the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investment in subsidiaries, branches,
associates, and joint ventures, deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be controlled and it is not probable
that the reversal will occur in the foreseeable future
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists
and it is intended that net settlement or simultaneous realisation and settlement of the
respective asset and liability will occur. Deferred tax assets and liabilities are offset where
a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities where it is intended that net settlement or simultaneous realisation
and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or
settled.
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(d) Property, plant and equipment
Each class of plant and equipment is carried at cost or fair value as indicated less, where
applicable, any accumulated depreciation and impairment losses.
Plant and equipment are measured on the cost basis less depreciation and impairment
losses.
The carrying amount of plant and equipment is reviewed annually by directors of the
company to ensure it is not in excess of the recoverable amount from those assets. The
recoverable amount is assessed on the basis of the expected net cash flows which will be
received from the assets employed and subsequent to disposal. The expected net cash
flows have been discounted to their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with
the item will flow to the company and the cost of the item can be measure reliably. All other
repairs and maintenance expenses are charged to the income statements during the
financial period in which are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight line basis over their
estimated useful lives to the company commencing from the time the asset is held ready
for use.
The depreciation rates used for each class of depreciable asset are:
Class of fixed asset
Plant and equipment
Depreciation rate
2.5 – 13.5 years
The assets residual values and useful lives are reviewed, and adjusted if appropriate at
each reporting date.
Gains and losses on disposal are determined by company proceeds with the carrying
amount. These gains or losses are included in the statement of comprehensive income.
(e) Goods and Services Tax
Revenues, expenses and assets are recognised net of GST, except where the amount of
GST incurred in not recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable.
The net amount of GST recoverable from, or payable to, the ATO is included within other
receivables or payables in the statements of financial position.
Cash flows are presented on a gross basis, except for the GST component of investing and
financing activities which are recoverable from, or payable to ATO are disclosed as
operating cash flows.
47
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(f)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to
the contractual provisions to the instrument. For financial assets, this is equivalent to the
date that the company commits itself to either the purchase or the sale of the asset (i.e.
trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs except where
the instrument is not classified at fair value through profit or loss. Transaction costs related
to instruments classified at fair value through profit or loss are expensed to profit or loss
immediately. Financial instruments are classified and measured as set out below.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the
effective interest rate method or cost. Fair value represents the amount for which an asset
could be exchanged or a liability settled, between knowledgeable, willing parties. Where
available, quoted prices in an active market are used to determine fair value. In other
circumstances, valuation techniques are adopted.
Amortised cost is calculated as:
i.
ii.
iii.
iv.
the amount at which the financial asset or financial liability is measured at initial
recognition;
less principal repayments;
plus, or minus the cumulative amortisation of the difference, if any, between the
amount initially recognised and the maturity amount calculated using the effective
interest method; and
less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over
the relevant period and is equivalent to the rate that exactly discounts estimated future cash
payments or receipts (including fees, transaction costs and other premiums or discounts)
through the expected life (or when this cannot be reliably predicted, the contractual term) of
the financial instrument to the net carrying amount of the financial asset or financial liability.
Revisions to expected future net cash flows will necessitate an adjustment to the carrying
value with a consequential recognition of an income or expense in profit or loss.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are subsequently measured at
amortised cost.
Loans and receivables are included in current assets, except for those which are not ex-
pected to mature within 12 months after the end of the reporting period, which will be
classified as non-current assets.
(ii)
Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(f)
Financial instruments (continued)
Fair Value
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including recent
arm’s length transactions, reference to similar instruments and option pricing models.
Impairment
At the end of each reporting period, the company assesses whether there is objective
evidence that a financial instrument has been impaired. In the case of available-for-sale
financial instruments, a prolonged decline in the value of the instrument is considered to
determine whether an impairment has arisen. Impairment losses are recognised in the
statement of comprehensive income.
Derecognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows
expires or the asset is transferred to another party whereby the company no longer has any
significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are de-recognised where the related obligations are either discharged,
cancelled or expired. The difference between the carrying value of the financial liability,
which is extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in profit or
loss.
(g) Revenue recognition
Revenue from the sale of goods is recognised when control of the goods has passed to the
buyer, the amount of revenue can be measured reliably and it is probable that it will be
received by the company.
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets.
All revenue is stated net of the amount of goods and services tax (GST).
Grant revenue is recognised when it is received or when the right to receive payment is
established.
(h)
Trade and other payables
Accounts payable represent the principal amounts outstanding at the reporting date plus,
where applicable, any accrued interest.
(i)
Impairment
At each reporting date, the company assesses whether there is any indication that an asset
may be impaired. The assessment will include the consideration of external and internal
sources of information including dividends from subsidiaries, associates or jointly controlled
entities deemed to be out of pre-acquisition profits. If such an indication exists, an
impairment test is carried out on the asset by comparing the recoverable amount of the
49
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(i)
Impairment (continued)
asset, being the higher of the asset's fair value less costs to sell and value in use, to the
asset's carrying value. Any excess of the asset's carrying value over its recoverable amount
is expensed to the statement of profit or loss and other comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the
company estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
(j)
Cash and cash equivalents
For the purposes of the statement of cash flows, cash includes cash on hand and at call
deposits with banks or financial institutions and net of bank overdrafts.
(k)
Inventories
Inventories are measured at the lower of cost and net realisable value. Cost comprises
direct materials, direct labour and an appropriate portion of variable and fixed overheads,
the latter being allocated on the basis of normal operation capacity. Net realisable value is
the estimated selling price in the ordinary course of business less the estimated costs of
completion and the estimated costs necessary to make the sale.
(l)
Trade and other receivables
Trade receivables are initially recognized at fair value and subsequently measured at
amortised cost using the effective interest method, less any provision for impairment. Trade
receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known
to be uncollectable are written off by reducing the carrying amount directly. A provision for
impairment of trade receivables is raised when there is objective evidence that the company
will not be able to collect all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy
or financial reorgansiation and default or delinquency in payments (more than 60 days
overdue) are considered indicators that the trade receivable may be impaired. The amount
of the impairment allowance is the difference between the assets’ carrying amount and the
present value of estimated future cash flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables are not discounted if the effect of
discounting is immaterial.
Other receivables are recognized at amortised cost, less any provision for impairment.
(m) Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other
finance costs are expensed in the period in which they are incurred, including interest on
convertible notes.
(n) Employee benefits
Provision is made for the company’s liability for employee benefits arising from services
rendered by employees to the reporting date. Employee benefits that are expected to be
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 payable later than one year have
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(n) Employee benefits (continued)
been measured at the present value of the estimated future cash outflows to be made for
those benefits.
(o) Provisions
Provisions are recognised when the entity has a legal or constructive obligation, as a result
of past events, for which it is probable that an outflow of economic benefits will result and
that outflow can be reliably measured.
(p)
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain
with the lessor, are charged as expense in the period in which they are incurred.
(q) Share-based payments
Equity-settled share-based payments with employees and others providing similar services
are measured at fair value of the equity instrument at the grant date. Further details on how
the fair value of equity-settled share-based transactions has been determined can be found
in note 15.
The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Company’s estimate
of equity instruments that will eventually vest.
(r)
Parent entity financial information
The financial information for the parent entity, Genetic Signatures Limited, disclosed in note
19, has been prepared on the same basis as the consolidated financial statements.
(s)
Earnings per share
Basic earnings per share are calculated by dividing:
•
the profit attributable to owners of the Company, excluding any costs of servicing
equity other than ordinary shares; and
by the weighted average number of ordinary shares outstanding during the financial
year.
•
(t)
Foreign currency translation
The financial statements are presented in Australian dollars, which is Genetic Signatures
Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange
rates prevailing at the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at financial
year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
51
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(t)
Foreign currency translation (continued)
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using
the exchange rates at the reporting date. The revenues and expenses of foreign
operations are translated into Australian dollars using the average exchange rates, which
approximate the rates at the dates of the transactions, for the period. All resulting foreign
exchange differences are recognised in other comprehensive income through the foreign
currency reserve in equity.
(u)
Comparative figures
Comparative figures have been adjusted to conform to changes in presentation for the
current financial year where required by accounting standards or as a result of changes
in accounting policy.
Some of the amounts reported for the previous period have been restated to correct an
error. Detailed information about these adjustments can be found in note 27.
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 1: Statement of Significant Accounting Policies (continued)
(v) New accounting standards and interpretations issued but not yet effective
The Australian Accounting Standards Board has issued new and amended accounting
standards and interpretations that have mandatory application dates for future reporting
periods and which the Company has decided not to early adopt. A discussion of those future
requirements and their impact on the Company is as follows:
New/re-
vised pro-
nounce-
ment
AASB 9 Finan-
cial Instruments
AASB 15 Reve-
nue from Con-
tracts with Cus-
tomers
Nature of change
AASB 9
-
replaces AASB 139 Financial Instruments: Recognition
and Measurement;
require entities to classify financial assets and liabilities
using a new method. This is expected to result in
changes in the way the value of financial instruments are
recognised and forecasted.
Financial assets including trade receivables will be sub-
ject to a new impairment model based on the concept of
‘expected loss’. This new model will require entities to
recognise losses related to doubtful debts earlier. The
new standard also prescribes new hedging rules and
guidance on recognition and derecognition of financial
instruments.
The Group will apply the new standard for all accounting
periods starting on and after 1 July 2018 to all applicable
items recognised. The cumulative effect of the initial ap-
plication will be recognised as an adjustment to the
opening balance of retained earnings.
AASB 15:
-
replaces AASB 118 Revenue, AASB 111 Construction
Contracts and some revenue-related Interpretations;
establishes a new revenue recognition model;
changes the basis for deciding whether revenue is to be
recognised over time or at a point in time;
provides new and more detailed guidance on specific
topics (e.g., multiple element arrangements, variable
pricing, rights of return, warranties and licensing); and
expands and improves disclosures about revenue.
-
-
-
-
-
-
-
Mandatory
and antici-
pated date
of applica-
tion for the
Group
1 July 2018
1 July 2018
Likely impact on initial appli-
cation
The impact of the new standard to the
Group has been assessed based on the
financial assets and liabilities currently
recognised. It is anticipated that the
adoption may affect both the value of
trade debtors and the provision for
doubtful debts. In adopting the expected
loss model, the carrying value of trade
receivables is expected to decrease,
while the provision for doubtful debts
and the associated expense is expected
to increase. Notwithstanding the above,
the magnitude of the movement is likely
to be low and the impact is not expected
to be material.
Management has commenced assessing
the impact of AASB15 by reviewing cur-
rent arrangements with key customers.
Based on the work performed to date the
findings indicate that the application of
AASB15 will not have a material impact
on the recognition of revenue or an im-
pact on the financial statements for 30
June 2019 based on the current ar-
rangements with the Group’s major cus-
tomers. Revenues from product sales are
recognized when the customer obtains
control of the Company’s product,
which occurs at a point in time, typically
upon delivery to the customer,
Management will continue to consider
the implications of AASB15 on ac-
ceptance of any new arrangements with
the Group’s customers.
AASB 16
Leases
AASB 16:
-
replaces AASB 117 Leases and some lease-related Inter-
pretations
1 July 2019
Management has completed an assess-
ment by reviewing all leases. Based on
the work performed to date the findings
53
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
-
-
-
-
requires all leases to be accounted for ‘on-balance sheet’
by lessees, other than short-term and low value asset
leases
provides new guidance on the application of the defini-
tion of lease and on sale and lease back accounting
largely retains the existing lessor accounting require-
ments in AASB 117
requires new and different disclosures about leases.
indicate that the application of AASB16
will not have a material impact on the
recognition of expenses for rent, depre-
ciation or financing costs or on the
recognition of leased assets or lease lia-
bilities. Currently all leases are for a
term of less than 12 months.
(w) Critical Accounting Estimates and Judgments
The Directors evaluate estimates and judgements incorporated into the financial report
based on historical knowledge and best available current information. Estimates assume a
reasonable expectation of future events and are based on current trends and economic
data, obtained both externally and within the company.
Key estimates – valuation of employee share option plan shares
At each reporting date, the entity revises its estimate of the number of rights that are
expected to become exercisable. The employee benefit expense recognised each period
takes into account the most recent estimate. The impact of the revision to the original
estimates, is recognised in profit or loss with a corresponding adjustment to equity. The fair
value is measured at grant date and recognised over the period during which the employee
becomes unconditionally entitled to the restricted shares.
Judgements- research and development claim
Judgement is required in determining the amount of grant revenue relating to the research
and development claim. There are certain transactions and calculations undertake during
the ordinary course of business for which the ultimate tax determination may be subject to
change. The company calculates its research and development claim based on the
company’s understanding of the tax law. Where the final outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the profit
or loss in the year in which such determination is made.
Note 2: Other income
Interest income
Government Grant (R&D Rebate)
Other income
Total other income
Note 3: Expenses
Finance costs
Interest charges
Consolidated
2018
$
2017 restated
$
229,982
2,143,424
10,216
2,383,622
251,342
2,015,637
8,250
2,275,229
Consolidated
2018
$
2017
$
525
423
Superannuation expense
Defined contribution superannuation expense
248,723
201,438
Items included in other expenses include
Write off of assets - patents
139,076
138,445
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 4: Income tax
Consolidated
2018
$
2017 restated
$
Numerical reconciliation of income tax benefit to
prima facie tax payable
Prima facie income tax (benefit) on loss from ordinary
activities (30%)
(976,142)
(801,187)
Add/(less)tax effect of:
- non-deductible items
- tax losses not brought to account
- temporary differences not brought to account
Income tax benefit attributable to entity
1,536,121
(532,249)
(27,730)
-
1,130,327
(262,559)
(66,581)
-
Potential deferred tax assets attributable to tax losses carried forward for the company, have
not been brought to account as the directors believe it is not appropriate to regard realisation
of the deferred tax asset as probable. The benefit will only be obtained if:
• The group derives future assessable income of a nature and amount sufficient to enable
the benefits from the deductions for the losses to be realised;
• The group continues to comply with the conditions for deductibility imposed by the law:
• The losses are available under the continuity of ownership or same business tests;
• No changes in tax legislation adversely affect the company in realising the benefit from
the deductions for the losses.
The total amount of unused tax losses for which no deferred tax asset has been recognised is
$7,632,346, tax effected at 30% $2,289,704. (2017: $10,954,897– tax effected $3,286,454).
Note 5: Cash and cash equivalents
Cash at bank and on hand
Consolidated
2018
$
2017
$
8,954,775
13,192,960
Cash at bank and on hand bears floating interest rates. The interest rate relating to cash and
cash equivalents for the year was between 1.75% and 2.5% (2017: between 1.4% and 2.5%).
Genetics Signatures Limited has an unused credit card facility with the bank at the year-end
date of $60,000 (2017: $60,000).
Note 6: Trade and other receivables
Consolidated
Current
Trade debtors (a)
Other receivables (b)
2018
$
451,437
310,520
761,957
2017
$
277,574
163,767
441,341
55
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 6: Trade and other receivables (Continued)
a.
Past due but not impaired and impairment of receivables
Customers with balances past due without provisions for impairment of receivables amount to
$NIL as at 30 June 2018 ($NIL as at 30 June 2017). The company has recognised a loss of
$NIL (2017: $NIL) in profit or loss in respect of impairment of receivables for the year ended
30 June 2018.
b. Other receivables
These amounts relate to prepayments, accrued interest and net GST refunds receivable. None
of these receivables are impaired or past due but not impaired.
c.
Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approxi-
mate their fair value.
Information about the Company’s exposure to fair value and credit risk in relation to trade and
other receivables is provided in note 22.
Note 7: Government grant receivable
2018
$
Consolidated
Research & Development tax concession
2,560,761
2017 restated
$
2,015,637
Note 8: Property, plant and equipment
Plant and equipment:
At cost
Less: accumulated depreciation
Movement in plant and equipment is as follows:
Cost at 1 July 2017
Additions
Disposals
Cost at 30 June 2018
Consolidated
2018
$
2017
$
3,456,931
(2,306,962)
1,149,969
Plant & equipment
$
2,937,564
519,367
-
3,456,931
2,937,564
(1,675,167)
1,262,397
Total
$
2,937,564
519,367
-
3,456,931
Accumulated depreciation 1 July 2017
(1,675,167)
(1,675,167)
Depreciation expense
Disposal of assets
Accumulated depreciation 30 June 2018
Carrying amount 30 June 2018
(631,795)
-
(2,306,962)
(631,795)
-
(2,306,962)
1,149,969
1,149,969
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 8: Property, plant and equipment (Continued)
Cost at 1 July 2016
Additions
Disposals
Cost at 30 June 2017
Plant & equipment
$
1,925,939
1,011,625
-
2,937,564
Total
$
1,925,939
1,011,625
-
2,937,564
Accumulated depreciation 1 July 2016
(1,196,468)
(1,196,468)
Depreciation expense
Disposal of assets
Accumulated depreciation 30 June 2017
Carrying amount 30 June 2017
Note 9: Trade and other payables
Current – unsecured
Trade creditors
Other creditors
Note 10: Provisions
Current
Employee benefits
Non-Current
Employee benefits
Note 11: Issued capital
(478,699)
-
(1,675,167)
(478,699)
-
(1,675,167)
1,262,397
1,262,397
Consolidated
2018
$
2017
$
541,892
232,018
773,910
617,256
219,057
836,313
Consolidated
2018
$
2017
$
425,008
347,946
10,547
5,542
2018
$
Consolidated
2017
$
103,922,937 ordinary shares (2017: 104,282,937)
46,773,792
46,773,792
4,000 fully paid founder shares (2017: 4,000)
Movement in ordinary share capital
Opening balance
Issue of new ordinary shares
Employee Share Plan
Buy-back of employee share plan shares
Less: share issue costs
4,000
46,777,792
$
46,773,792
-
-
-
-
4,000
46,777,792
$
32,543,402
15,018,473
9,500
-
(797,583)
Closing balance
46,773,792
46,773,792
57
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 11: Issued capital (Continued)
Movement in ordinary share capital
Opening balance
Issue of new ordinary shares
Employee Share Plan
Buy-back of employee share plan shares
2018
2017
No.
104,282,937
-
-
(360,000)
No.
72,869,434
31,954,197
-
(540,694)
Closing balance
103,922,937
104,282,937
All fully paid ordinary shares and founder shares have equal voting rights, of one vote per share,
and subject to the prior rights of preference shares, have equal rights to receive dividends in pro-
portion to the number of ordinary shares and founder shares held.
Note 12: Reserves
Share based payments reserve
Balance 1 July
Transferred to accumulated losses upon forfeiture
Share-based payment expenses
Balance 30 June
Consolidated
2018
$
871,044
(76,500)
192,990
987,534
2017
$
725,051
(117,857)
263,850
871,044
The share-based payments reserve is used to recognised the fair value of equity benefits
provided to employees and Directors as part of their compensation.
Foreign currency translation reserve
Balance 1 July
Arising from translation of US subsidiary
Balance 30 June
Consolidated
2018
$
(5,241)
(25,257)
(30,498)
2017
$
12,949
(18,191)
(5,242)
The foreign currency translation reserve is used to recognise the exchange difference on the trans-
lation of the US subsidiary into AUD.
Note 13: Leasing Commitments
Operating lease commitments
Non-cancellable operation leases contracted for but not capitalised in the financial statements
Minimum lease payments payable:
-
Not later than one year
102,773
45,297
The operating lease commitment relates to the company’s currently licensed research and devel-
opment premises with The Heart Research Institute and other premises used for production and
storage. Either party can terminate the licence agreement by providing 60 days’ written notice to
the other party.
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 14: Key management personnel disclosures
Short-term employee benefits
Non-monetary benefits
Short term incentive
Post-employment benefits
Long-term benefits
Termination benefits
Share based payments
769,566
9,788
51,438
103,006
27,887
-
76,861
1,038,546
713,261
-
32,000
122,978
68,124
-
157,928
1,094,291
Key management personnel remuneration has been included in the Remuneration Report section
of the Directors’ Report.
Note 15: Share-based payments
Options were issued during the year, pursuant to the Equity Incentive Plan. Fair values at grant
date are determined using a Black-Scholes Option Pricing Model that takes into account the ex-
ercise price, the term of the option, the share price at the grant date, the expected volatility of the
underlying share, and risk free interest rate for the term of the option. The model inputs for options
granted during the year ended 30 June 2018 are noted below:
Grant date Expiry
date
Vesting
period
October
2017
October
2017
Oct
2032
Oct
2032
48
months
48
months
Conver-
sion
price
Share
price
$0.34
$0.37
Ex-
pected
volatility
75%
Expected
dividend
yield
-
Fair
value
$0.17
Average
Risk free
rate
2.76%
$0.34
$0.38
75%
-
$0.17
2.76%
The company was admitted to the official list on ASX on 30 March 2015. Historical volatility has
been the basis for determining expected share price volatility as it is assumed that this is indicative
of future movements.
59
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Value of
share at
grant date
Balance at
beginning of
the year
Granted during
the year
(Options)
Converted
during the
year
Expired/
Forfeited
during the
year
Balance at the
end of the year
Number
Vested and con-
vertible at year
end
Unvested at
year end
Weighted aver-
age fair value of
shares at year
end
Weighted aver-
age remaining
contractual life
of shares
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
455,000
-
-
250,000
$0.17
14.32 years
455,000
$0.17
14.32 years
200,000
50,000
150,000
$0.16
14.00 years
100,000
25,000
75,000
$0.18
13.43 years
730,000
182,500
547,500
$0.24
12.71 years
240,000
130,000
110,000
$0.26
1.79 years
(200,000)
-
-
-
-
-
(160,000)
3,295,000
2,677,208
617,792
$0.25
0.74 years
(360,000)
5,270,000
3,064,708
2,205,292
$0.20
2018
Grant date
Vesting date
October
2017
October
2017
June 2017
25% on each
anniversary to
October 2021
25% on each
anniversary to
October 2021
25% on each
anniversary to
June 2021
November
2016
25% on each
anniversary to
November 2020
October
2016
April 2016
25% on each
anniversary to
October 2020
25% April 2017
then monthly to
April 2020
November
2015
25% Nov 2016
then monthly to
November 2019
$0.17
$0.18
-
-
250,000
455,000
$0.38
200,000
$0.46
100,000
$0.55
730,000
$0.49
240,000
$0.45
200,000
-
-
-
-
-
-
March 2015 25% March
$0.40
3,455,000
2016 then
monthly to
March 2019
Total
4,925,000
705,000
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
2017
Grant date
Vesting date
Value of
share at
grant date
Balance at
beginning of
the year
Granted during
the year
(Options)
Converted
during the
year
Expired/
Forfeited
during the
year
Balance at the
end of the year
Number
Vested and con-
vertible at year
end
Unvested at
year end
Weighted aver-
age fair value of
shares at year
end
Weighted aver-
age remaining
contractual life
of shares
June 2017
25% on each
anniversary to
June 2021
November
2016
25% on each
anniversary to
November 2020
October
2016
April 2016
25% on each
anniversary to
October 2020
25% April 2017
then monthly to
April 2020
November
2015
25% Nov 2016
then monthly to
November 2019
$0.38
$0.46
$0.55
-
-
-
$0.49
240,000
$0.45
200,000
March 2015 25% March
$0.40
4,075,000
2016 then
monthly to
March 2019
200,000
100,000
750,000
-
-
-
-
-
-
-
-
-
-
200,000
100,000
(20,000)
730,000
-
-
-
200,000
$0.17
15.00 years
100,000
$0.19
14.43 years
730,000
$0.25
13.71 years
-
-
240,000
70,000
170,000
$0.25
2.79 years
200,000
79,169
120,831
$0.21
2.39 years
(23,750)
(596,250)
3,455,000
1,940,890
1,514,110
$0.24
1.74 years
Total
4,515,000
1,050,000
(23,750)
(616,250)
4,925,000
2,090,059
2,834,941
$0.24
61
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 16: Contingent liabilities
The company does not have any material contingent liabilities at year-end (2017: nil).
Note 17: Auditors remuneration
BDO East Coast Partnership
Audit and review of financial statements
Tax compliance
Note 18: Cash Flow Information
(a) Reconciliation of Cash
Cash at the end of the financial year as shown in the state-
ment of cash flows is reconciled to the related items in the
statement of financial position as follows:
Consolidated
2018
$
63,881
34,940
98,821
2017
$
64,400
13,658
78,058
2018
$
Consolidated
2017 restated
$
Cash on hand and at bank
8,954,775
13,192,960
(b) Reconciliation of Loss after Income Tax to net
Cash outflows from Operations
Loss after income tax
(3,253,809)
(2,670,622)
Non cash flows included within loss
Depreciation
Share based payments expenses
Changes in operating assets and liabilities:
(Increase)/decrease in trade and other receivables
(Increase)/decrease in government grant receivable
(Increase) in inventories
Increase in provisions
Decrease in payables
631,795
192,990
478,699
263,850
(320,618)
(545,123)
(418,461)
82,067
(62,402)
43,874
(585,750)
(8,262)
1,315
(94,972)
Net cash outflow from operating activities
(3,693,561)
(2,571,868)
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 19: Parent Entity Financial Information
(a) Summary financial information:
The individual financial statements for the Parent entity show the following aggregate amounts:
Assets
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventory
Government grant receivable
Total Current Assets
Non-Current Assets
Plant and equipment
Total Non-Current Assets
Total Assets
Liabilities
Current Liabilities
Trade and other payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Issued capital
Reserves
Accumulated losses
Total Equity
Loss for the year
Other comprehensive income
Total comprehensive income for the year
(b) Summary financial information:
2018
$
2017 restated
$
8,924,960
2,669,779
1,181,059
2,560,761
15,336,559
13,115,726
1,801,514
762,598
2,015,637
17,695,475
1,148,117
1,148,117
1,260,618
1,260,618
16,484,676
18,956,093
760,380
425,008
1,185,388
823,313
347,946
1,171,259
10,547
10,547
5,542
5,542
1,195,935
1,176,801
15,288,741
17,779,292
46,777,792
987,533
(32,275,818)
46,777,792
880,900
(29,879,400)
15,288,741
17,779,292
(2,683,356)
-
(2,683,356)
(2,156,266)
-
(2,156,266)
The Parent entity did not have any contingent liabilities as at 30 June 2018 or 30 June 2017.
63
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 20: Subsidiaries
Parent entity
a)
Genetic Signatures Limited
b) Controlled entities
Genetic Signatures US Ltd
Note 21: Related party transactions
Country
of incorporation
Australia
Equity holding in
subsidiaries
2018
%
2017
%
USA
100%
100%
Related parties
(a) The company's main related parties are as follows:
Key management personnel:
Any persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any director (whether executive or oth-
erwise) of that entity, are considered key management personnel.
Key Management personnel include:
Nickolaos Samaras – Director
John Melki – Director and Chief Executive Officer
Michael A Aicher – Director
Phillip J Isaacs – Director
Anthony J Radford – Director
Douglas S Millar – Chief Scientific Officer
For details of disclosures relating to key management personnel, refer to Note 14.
(b) Transactions with related parties:
There were no related party transactions during the year
2018
$
-
Consolidated
2017
$
-
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 22: Financial risk management
The company's financial instruments consist mainly of deposits with banks, and accounts receiv-
able and payable. The totals for each category of financial instruments, measured in accordance
with AASB 139 as detailed in the accounting policies to these financial statements, are shown at
their net fair value.
Net Fair Value
The fair values of financial assets and financial liabilities are presented in the following table and
can be compared to their carrying values as presented in the statement of financial position. Fair
values are those amounts at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties at arm's length transaction.
Fair values derived may be based on information that is estimated or subject to judgment, where
changes in assumptions may have material impact on the amounts estimated.
Financial assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Net Carry-
ing Value
2018
$
8,954,775
761,957
9,716,732
Net Fair
Value 2018
$
8,954,775
761,957
9,716,732
Net Carry-
ing Value
2017
$
13,192,960
441,341
13,634,301
Net Fair
Value 2017
$
13,192,960
441,341
13,634,301
Financial Liabilities
Trade creditors
Other creditors
Total Financial Liabilities
541,892
232,018
773,910
541,892
232,018
773,910
617,256
219,057
836,313
617,256
219,057
836,313
The values disclosed in the above table have been determined based on the following
methodologies:
(i) Cash and cash equivalents, trade and other receivables and trade and other payables are
short-term instruments in nature whose carrying value is equivalent to fair value.
Interest Rate Risk
The company's main interest rate risk arises from the cash balance which is invested at variable
rates.
Sensitivity
Significant changes in market interest rates may have an effect on the Company's income and
operating cash flows. The Company manages its cash flow interest rate risk by placing excess
funds in term deposits.
Based on the cash held at reporting date, the sensitivity to a 1% increase or decrease in interest
rates would increase/(decrease) after tax profit by $89,547 (2017: $131,929).
65
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 22: Financial risk management (Continued)
Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial
institutions, as well as credit exposure to domestic customers, including outstanding receivables
and committed transactions. The Company has no significant concentrations of credit risk. The
Company has policies in place to ensure that sales of products and services are made to
customers with an appropriate credit history. The majority of customers have long term
relationships with the Company and sales are secured with supply contracts. Sales are secured
by letters of credit when deemed appropriate. The Company has policies that limit the maximum
amount of credit exposure to any one financial institution.
The credit quality of financial assets that are neither past due nor impaired can be assessed by
reference to historical information about counterparty default rates. The table below summarises
the assets which are subject to credit risk.
Financial assets
Cash and cash equivalents
Trade and other receivables
Total Financial Assets
Liquidity Risk
2018
$
Consolidated
2017
$
8,954,775
761,957
9,716,732
13,192,960
441,341
13,634,301
Liquidity Risk arises from the possibility that the company might encounter difficulty in settling its
debts or otherwise meeting its obligations related to financial liabilities. The company manages
this risk through the following mechanisms
-
preparing forward-looking cash flow analysis in relation to its operational, development and
financing activities;
obtaining funding from a variety of sources either through convertible notes or equity
raisings;
only investing surplus cash with major financial institutions.
-
-
Financial liability maturity analysis
2018
Financial liabilities due for payment
Trade and other payables
Total expected outflows
2017
Financial liabilities due for payment
Trade and other payables
Total expected outflows
Within 1
Year
$
1 to 5
Years
$
773,910
773,910
Within 1
Year
$
836,313
836,313
1 to 5
Years
$
-
-
-
-
Total
$
773,910
773,910
Total
$
836,313
836,313
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 23: Capital Risk Management
The company’s objective when managing capital is to safeguard the ability to continue as a going
concern so that they can provide returns to shareholders and benefits to other stakeholders and
to maintain an optimal capital structure.
Management effectively manages the company’s capital by assessing the company’s financial
risks and adjusting its capital structure in response to changes in these risks and the market.
There were no externally imposed capital requirements during the year.
Note 24: Events Subsequent to Reporting Date
There has not arisen in the interval between the end of the financial year and the date of this report
any other item, transaction or event of a material and unusual nature likely in the opinion of the
directors of the Company to affect significantly the operations of the Company, the results of those
operations or the state of affairs of the Company in future financial years.
Note 25: Financial Reporting Segments
The company is operated under one business segment which was the research and
commercialisation of identifying individual genetic signatures to identify diseases and disabilities
predominantly based within one geographical location being Sydney, Australia.
Major customers
During the year ended 30 June 2018 there were two customers (2017: three) that each
contributed over 10% of the consolidated entity’s external revenue.
Geographic locations
North America
The Group’s North American business includes the United States and Canada. The Group pro-
poses to sell products in this region and is currently having its products evaluated by the US
FDA. Operations are currently based in California, USA.
Australia
The Group’s head office and manufacturing operation is based in Sydney, Australia.
All revenue is generated within the Australian entity and all non-current assets are held within
the Australian entity.
67
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 26. Earnings per share
Loss after income tax
Consolidated
2018
$
(3,253,809)
2017
restated
$
(2,670,622)
Loss after income tax attributable to the owners of Genetic
Signatures Limited
(3,253,809)
(2,670,622)
Weighted average number of ordinary shares used in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Options over ordinary shares
Number
Number
103,954,585
96,056,399
-
-
Weighted average number of ordinary shares used in calculating
diluted earnings per share
103,954,585
96,056,399
Basic loss per share
Diluted loss per share
Cents
Cents
(3.13)
(3.13)
(2.78)
(2.78)
Note 27. Restatement of comparatives
During the preparation of the research and development (‘R&D’) claim calculation for the current fi-
nancial year, an error was identified in respect to the prior year calculation whereby an amount of eli-
gible expenditure was incorrectly excluded from the calculation. The error has been corrected by re-
stating each of the affected financial statement line items for the prior periods as follows:
Statement of profit or loss
(Extract)
R&D Grant Income
Loss before income tax
2017
Reported
$
1,497,917
(3,188,342)
Adjustments
$
517,720
517,720
2017
Restated
$
2,015,637
(2,670,622)
Statement of comprehensive income (Extract)
Loss before income tax
Other comprehensive income
for the period
Total comprehensive income
for the period
(3,188,342)
517,720
(2,670,622)
-
(3,188,342)
-
517,720
-
(2,670,622)
Basic and diluted earnings per share for the prior year have also been restated. The amount of the
correction for both basic and diluted earnings per share was an increase of $0.52 cents per share.
Genetic Signatures Limited – Annual Report 2018
Financial Report
Notes to the financial statements for the financial year ended 30 June 2018
Note 27. Restatement of comparatives (Continued)
Statement of financial position (Extract)
Government grant receivable
Total assets
Net assets
Accumulated losses
Total Equity
1,497,917
17,157,213
15,967,412
(31,676,183)
15,967,412
517,720
517,720
517,720
517,720
517,720
2,015,637
17,674,933
16,485,132
(31,158,463)
16,485,132
69
Financial Report
Directors’ Declaration
DIRECTORS' DECLARATION
In the directors' opinion:
● the attached financial statements and notes thereto comply with the Corporations Act 2001, the Australian
Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting re-
quirements;
● the attached financial statements and notes thereto comply with International Financial Reporting Standards
as issued by the International Accounting Standards Board as described in note 1 to the financial statements;
● the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s
financial position as at 30 June 2018 and of its performance for the financial year ended on that date; and
● there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
The directors have been given the declaration required by section 295A of the Corporation Act 2001. Signed
in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
John Melki
Director
Sydney, 28 August 2018
Genetic Signatures Limited – Annual Report 2018
Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au
Level 11, 1 Margaret St
Sydney NSW 2000
Australia
Independent Auditor’s Report
INDEPENDENT AUDITOR'S REPORT
To the members of Genetic Signatures Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Genetic Signatures Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2018, 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 financial report, 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 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional 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 confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
71
Independent Auditor’s Report
Accounting for share-based payment arrangements
Key audit matter
How the matter was addressed in our audit
As disclosed in note 15, the Group has an
extensive amount of restricted shares and options
on issue to key management personnel and
employees pursuant to the Group’s Equity
Incentive Plan (‘EIP’). The restricted shares on
issue have been funded by limited recourse loans
pursuant to the employee share ownership plan
(‘ESOP’). Both issuances have been accounted for
as share-based payment arrangements.
Share-based payment arrangements are a
complex accounting area which include
assumptions utilised in the fair value calculation
and estimation regarding the number of
restricted shares and options that are ultimately
expected to vest.
Due to these factors, we considered this matter
to be significant to our audit.
To determine whether the share-based payment
arrangements had been appropriately accounted
for and disclosed, we undertook, amongst
others, the following audit procedures:
(cid:149) Considered whether the Group used an
(cid:149)
(cid:149)
(cid:149)
appropriate model in valuing the restricted
shares and options.
Reviewed the individual EIP agreements,
market announcements and board minutes
to ensure all new EIP restricted shares or
options issued during the year had been
accounted for.
Evaluated management’s assumptions used
in the calculation being interest rate,
volatility, the expected vesting period, the
probability of achievement and the number
of restricted shares and options expected
to vest.
Evaluated the adequacy and accuracy of
the disclosure of the share-based payment
arrangements within the financial report
including disclosures comprising key
management personnel remuneration.
Other information
The directors are responsible for the other information. The other information comprises the
information in the Directors’ Report (excluding the audited Remuneration Report section) for the year
ended 30 June 2018, but does not include the financial report and the auditor’s report thereon, which
we obtained prior to the date of this auditor’s report, and the Annual Report to Shareholders, which is
expected to be made available to us after that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, 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.
When we read the Annual Report to Shareholders, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and will request that it is
corrected. If it is not corrected, we will seek to have the matter appropriately brought to the
attention of users for whom our report is prepared.
Genetic Signatures Limited – Annual Report 2018
Independent Auditor’s Report
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.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report under the heading
‘Remuneration Report’ for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Genetic Signatures Limited, for the year 30 June 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
Martin Coyle
Partner
Sydney, 28 August 2018
73
Shareholder Information
Additional Information Required Under ASX Listing Rules
The additional information required by the Australian Securities Exchange (ASX) and not shown elsewhere in this
report is set out below. The information is current at 15 October 2018.
Issued Capital
As at 15 October 2018, the company had 103,926,937 fully paid shares on issue.
Distribution of Equity Securities
Analysis of numbers of equity security holders for GSS fully paid ordinary shares (including the escrowed shares)
by size of holding:
Securities
Employee Share Plan
Employee Share Plan - Restricted
Fully Paid Ordinary Shares
Fully Paid Ordinary Shares ASX Escrowed 24 Months
Fully Paid Ordinary Shares Company Escrowed until 26/03/2019
Fully Paid Ordinary Shares Vol Escrowed 24 Months
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-99,999,999,999
Totals
Holders
42
177
108
307
84
718
Unmarketable Parcel of Shares
Total Units
14,727
565,511
929,809
11,649,221
90,767,669
103,926,937
%
0.014
0.544
0.895
11.209
87.338
100.000
The number of individual shareholders holding less than a marketable parcel of shares was
31 (a total of 3,899 shares held by 31 shareholders).
807 fully paid ordinary shares comprise a marketable parcel at GSS’ closing share price
of $0.62 as at 15 October 2018.
Genetic Signatures Limited – Annual Report 2018
Shareholder Information
Equity Security Holders
The names of the twenty largest holders of quoted securities are listed below:
Name/Address 1
ASIA UNION INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
UBS NOMINEES PTY LTD
DR NICK SAMARAS AND ASSOCIATED ENTITIES
BRAHAM CONSOLIDATED PTY LTD
1.
2.
3.
4.
5.
6. MR PHILLIP ISAACS AND ASSOCIATED ENTITIES
7.
8.
9.
CAPITAL CONCERNS PTY LIMITED
DR JOHN MELKI
DOUG MILLAR
10. NATIONAL NOMINEES LIMITED
11. BRAHAM INVESTMENTS PTY LTD
12.
IDOLLINK PTY LTD
13. DAZANE PTY LTD
14. S LOADER PTY LTD
15. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
16. MR ALISTAIR DAVID STRONG
17. MIKE ANTON AICHER
18. UBEAMION APS
19. PERSHING AUSTRALIA NOMINEES PTY LTD
20. QUICKINVEST PTY LTD
Balance as at
15-10-2018
38,194,090
17,891,113
6,501,119
2,000,000
1,610,013
1,548,127
1,325,000
1,096,000
950,000
893,580
815,143
776,914
752,544
723,384
650,084
650,000
645,785
625,953
561,916
558,862
%
36.751%
17.215%
6.255%
1.92%
1.549%
1.49%
1.275%
1.05%
0.914%
0.860%
0.784%
0.748%
0.724%
0.696%
0.626%
0.625%
0.621%
0.602%
0.541%
0.538%
Total Securities of Top 20 Holdings
Total of Securities
78,769,627
75.79%
103,926,937
75
Shareholder Information
Substantial Holders
Substantial holders in the company as advised to the company via substantial shareholder notices lodged with
the ASX are set out below:
Substantial holders
Asia Union and Christopher Abbott
Deutsche Bank AG
On-Market Buy Back
There is no current on-market buy back.
Voting Rights
Number of Ordinary
Shares Held
% of total
shares issued
38,274,590
14,893,618
36.83%
14.24%
The voting rights attached to ordinary shares are set out below:
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 shares shall have one vote.
There are no other classes of equity securities.
Voluntary Escrow
There are no shares subject to voluntary escrow.
Stock Exchange Listing
GSS securities are only listed on the ASX.
Company Secretary:
Anna Sandham
Share Registry
BoardRoom Pty Limited
Level 12, 225 George Street
Sydney NSW 2000
T: 1300 737 760 (within Australia)
T: +61 2 9290 9600 (from overseas)
Principal registered office in Australia
Level 12, 680 George Street
Sydney NSW 2000
Genetic Signatures Limited – Annual Report 2018
77
Australasia and Asia Pacific
Genetic Signatures Ltd
7 Eliza Street Newtown
NSW 2042 Australia
Phone: +61 2 9870 7580
Email: info@geneticsignatures.com
Web: www.geneticsignatures.com
European and Emerging Markets
European Enquiries
Email: europe@geneticsignatures.com
European Technical Support
Email: techsupport@geneticsignatures.com
US and North America Operations
US and North America Enquiries
Email: northamerica@geneticsignatures.com
US and North America Technical Support
Email: techsupport@geneticsignatures.com
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