Genetic Signatures Limited Annual Report 2020

FY2020 Annual Report · Genetic Signatures Limited

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Annual Report
2020

Our Purpose
& Vision

Genetic Signatures is a molecular
diagnostics (MDx) company focused on
the development and commercialisation
of its proprietary 3base™ platform
technology. Our 3base™ technology
(the cornerstone of our EasyScreen™
Pathogen Detection Kits), reduces
the genetic complexity of infection
detection in molecular testing.

Our 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.

Our aim is to become a global leader in the
supply of diagnostic solutions for the rapid
detection of infectious diseases. 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 across the globe.

Contents

Chairman’s Letter ................................3

CEO Report ...........................................4

FY20 Results ........................................5

Commercialisation Update .................6

EasyScreenTM Kits .............................11

Market Oportunities ..........................12

Personnel ...........................................16

Financial Report 2020 .......................19

Genetic Signatures Limited – Annual Report 2020

Chairman’s
Letter

Dear Fellow Shareholder,

Thank you for your support over
the past year.

The past financial year has given rise to significant
commercial success for Genetic Signatures. In
the wake of a global pandemic, the Company has
established itself as a global supplier of COVID-19
tests. I am very proud of our employees who
have worked extremely hard to respond quickly
and effectively to the demands of the COVID-19
pandemic, leveraging our proprietary technology
and internal capabilities to develop COVID-19 test
kits to address this global health emergency.

Genetic Signatures’ revenue base grew by 131%
to $11.3 million in FY20, up from $4.9 million in
FY19. Revenue has been bolstered by the rapid
development of our COVID-19 test kit enabling
significant domestic and international sales. Our
Company established itself in Europe with sales of
both diagnostic kits and instrumentation. Pleasingly,
Genetic Signatures recorded a profit in the second
half of FY20, a very important milestone for
the Company.

International expansion is now well underway
and we are confident FY21 will see an increasing
proportion of our revenue generated from outside
our domestic market. The global COVID-19
pandemic has created opportunities to gain
traction with numerous customers in a number of
European countries, and we are focused on driving
further customer acquisitions in this region. North
America, the largest molecular diagnostics market
opportunity globally, represents our next priority
and our US sales team is actively pursuing COVID-19
opportunities under the recent FDA Emergency

Use Application (EUA) guidance of which Genetic
Signatures is uniquely positioned to combat with
our 3baseTM technology.

While our near-term focus centres on opportunities
for SARS-CoV-2 commercialisation, in FY21 Genetic
Signatures will continue to develop and launch
EasyScreen™ detection kits in new markets.

Genetic Signatures’ 3base™ technology
provides a significant competitive advantage in
capturing global market share, saving lives and
improving patient outcomes.

Genetic Signatures’ FY20 performance is a strong
testament to the work of our employees over a
number of years. Our success would not have been
possible without the dedication and commitment
provided by our personnel across all parts of the
Company. The team has demonstrated resilience
and commitment during this period of growth,
and I would like to congratulate them on their
achievements to date.

Finally, let me thank our shareholders for their
ongoing support of Genetic Signatures. The
funds raised in late 2019 to invest in product and
capability expansion enabled us to rapidly pivot to
support the COVID-19 response. I look forward to
continuing to share this exciting journey with you
going forward.

Dr Nick Samaras
Chairman

In North America, Genetic Signatures EasyScreen™
SARS-CoV-2 Detection Kit can now be marketed
under guidance provided by the FDA allowing
laboratories certified by CLIA to perform high
complexity testing using our platform to address
the ever-increasing need for COVID-19 testing in
the United States. Genetic Signatures is well placed
to assist the pandemic globally due to our 3baseTM
technology and the US sales team is actively following
a number of sales leads. North America represents the
largest diagnostics market globally and the Company
has focused on building inventory of its kits to ensure
it can facilitate new North American customer
contracts, which could represent a step change in
revenue.

The Company continued to progress the
commercialisation of further EasyScreen™ products
in new markets. The Company filed TGA and CE-IVD
submissions for the STI / Genital Pathogen Kit in
4Q FY20 and clearance is anticipated in the coming
months. Clinical trials have now commenced for the
new Enteric Protozoan kit in North America and the
Flavivirus / Alphavirus kit in Australia and Europe.
The Company is committed to achieving a number of
commercial milestones throughout FY21 and beyond
and to further accelerate revenue growth and deliver
value to our shareholders.

We expect the traction generated from new and
existing customers over the last financial year to
garner further interest in Genetic Signatures’ broader
range of EasyScreen™ multiplex kits. The pressure
worldwide to move away from lockdowns and get
back to work has prompted increased demand for
accurate testing of entire populations, highlighting
the benefits of our technology and increasing
demand for our products. We are excited about the
growth prospects of the Company, particularly in
EMEA and North America and our international sales
team are well positioned to continue to drive growth.

I look forward to updating you on all our
accomplishments in the coming year.

Dr John Melki
Managing Director and CEO

CEO
Report

In an exceptional year for Genetic
Signatures, the Company made significant
progress on its global expansion strategy,
leveraging opportunities created by the
COVID-19 pandemic and our internal
capabilities to deliver record growth.

In FY20, the Company generated sales revenue of
$11.3m, representing a 131% increase over FY19.
The revenue growth was underpinned by the fast
mobilisation and sales of our SARS-CoV-2 Diagnostic
Kit, with Genetics Signatures establishing itself as
a global supplier of COVID-19 test kits amidst rising
global demand.

With the benefit of hindsight, Genetic Signatures
went into the COVID-19 pandemic in a strong
position. In October 2019 the Company raised
a total of A$37.5m to support global expansion,
comprising an A$35m Placement to institutional and
sophisticated investors across Australia and Asia and
an oversubscribed A$2.5m share purchase plan (SPP)
from existing shareholders. The funds raised enabled
Genetic Signatures to fund its global marketing and
sales expansion in key international markets and
advance product development in a defining year for
the Company.

Following the devastating emergence of a new
deadly virus, Genetic Signatures was able to swiftly
develop and validate its new EasyScreen™
SARS-CoV-2 Detection Kit. The Company then
secured both CE-IVD and TGA registration within a
month of applying. Additionally, we have successfully
increased manufacturing capacity within our existing
infrastructure to deliver supplies to our customers
across EMEA and APAC. With a strong foothold
in the domestic market, we are pleased with the
sales traction we are building in EMEA for kits and
instrumentation, driving unprecedented revenue
growth, which is expected to continue over the
coming months.

Genetic Signatures Limited – Annual Report 2020

FY20 Results

Genetic Signatures achieved sales revenues
of $11.3 million in the financial year ended
30 June 2020, representing a 131% increase
on FY19 and 4-year CAGR of 59%. Annual revenue
growth is largely attributed to demand for the
new EasyScreen™ SARS-CoV-2 Detection kit
and increasing sales to customers in Australia
and Europe.

Revenue from operations ($m)

FY21 Sales per region

4-year CAGR
= 59%

2.8

2.0

11.3

4.9

FY17

FY18

FY19

FY20

Asia
Pacific
90%

EMEA
10%

Overall sale growth included the first significant
contribution from EMEA. Sales to European
customers ($1.1m) accounted for 10% of global sales.

FY20 financial highlights ($m)

FY21 Sales per region

11.3

2.9

7.0

(4.3)

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

Sales
revenue

Cost of
materials

Gross
profit

Other
income

(5.0)

(10.0)

O
s t o

e i p t s
p li e r p

p b
m

a l
e r r e
p
u

(12.0)

(2.1)

Net loss

Other
expenses
(incl
overhead)

Cash Movements ($m)

35.6

1.3

(0.3)

8.9

6.3

0.1

2.1

(20.6)
n t s

I n t e r e

s t

D t a
a
h

e o f P

&
u r c

(2.4)
E
&
s
a r e i s
p ti o
O

e
n e

e r c i s
e
L
“

e c
s
a
( p ri n

s t s
o
a l)”
c i p

The Company posted a net loss for FY20 of $2.1m
representing a 40% improvement on the previous year.

Cash balance was $31.2m at 30 June 2020, up from
$6.3m at 30 June 2019. Net assets stand at $45.9m
and include significant increases in inventory levels
($7.3m vs. 2019 $1.4m) to meet expected demand and
higher trade receivables ($3.9m increase) from sales
recorded late in the financial year.

5
5

Commercialisation
Update

Genetic Signatures Limited – Annual Report 2020

Genetic Signatures Limited – Annual Report 2020Commercialisation Strategy

5 Key Pillars

With the onset of COVID-19, Genetic Signatures
has repositioned its objectives accordingly. Large
demand for Genetic Signatures’ EasyScreen™
SARS-CoV-2 Detection kit has exposed the
company to various new customers in both
Australia and Europe. Genetic Signatures aims
to develop these new relationships with other

product offerings. Despite the challenges to
clinical development posed by COVID-19, Genetic
Signatures continues to progress the EasyScreen™
portfolio. This includes a multitude of formal
applications submitted during the Financial Year as
well as the continuation of clinical trials.

Commercialisation Strategy – Milestones FY21 and beyond

Focus on long-term
customer contracts

Genetic Signatures is focused on securing long-term
customer contracts with high throughput pathology
groups, hospitals or government run programs

Leverage momentum
from COVID-19

Genetic Signatures’ increasing international recognition
through the EasyScreenTM SARS-CoV-2 launch creates
new avenues to expand its customer base

Promote new tests
to existing customers

Genetic Signatures’ tests become embedded in workflow
and customers typically adopt new tests once workflow
established.

Focus on customer
satisfaction

Focus on maintaining 100% customer retention through
providing reliable and quality customer service. Genetic
Signatures favourable unit economics are expected to
underpin growth through FY21 and beyond.

Development of new
EasyScreenTM Kits

Focus on launching kits in new markets and
continuously expanding the EasyScreen™ portfolio
through the development of new kits.

Commercialisation update

Asia Pacific

Sales progress

The strong domestic demand for Genetic Signatures’
EasyScreen™ SARS-CoV-2 Detection Kit is a large
component of the Company’s record revenues in
FY20. The detection kit is currently being used
both as a standalone test and in combination with
the broader EasyScreen™ Respiratory Pathogen
Detection Kit by a number of new and existing
customers.

APAC revenue increased to $10.2 million in FY20,
up 116% from $4.7 million in FY19, and includes
instrument sales of $0.7m.

In previous years, a significant proportion of Genetic
Signatures’ domestic revenue was generated from
the sale of the EasyScreen™ Enteric product range.
While the impact of lockdowns and social distancing
has reduced demand for these kits in FY20,
the Company expects sales to return to the
pre-pandemic levels as restrictions ease.

Similarly, Australia experienced a relatively soft
flu season in FY20. Many of Genetic Signatures’
long-term customers have continued to screen
patients with the broader EasyScreen™ Respiratory
Pathogen Detection Kit along with the new
SARS-CoV-2 assay and a number of new customers
have expressed an interest and are trialing the
broader product.

Regulatory update

The Company received Australian Registration (TGA)
for its EasyScreen™ SARS-CoV-2 Detection Kit in
April 2020, allowing for marketing of the test across
Australia. During 4Q 2020, Genetic Signatures also
submitted formal applications for its EasyScreen™
STI / Genital Pathogen Detection Kit. Work is set
to recommence on the EasyScreen™ Flavivirus /
Alphavirus Detection Kit to support a future TGA
registration.

Genetic Signatures Limited – Annual Report 2020Commercialisation update

North America

Sales progress

Regulatory update

Clinical trials have recently commenced for the
EasyScreen™ Enteric Protozoan Detection Kit
FDA submission, despite disruptions caused by
COVID-19.

North America is the largest market opportunity
globally, accounting for an estimated 42% of
the global molecular diagnostics market1. The
Company’s North American sales team are
pursuing a direct sales approach with approved
laboratories. Genetic Signatures is permitted
to supply EasyScreen™ SARS-CoV-2 Detection
Kit to USA laboratories certified to perform
high complexity testing under a Section IVc
exemption2 following notification to FDA on
the Company’s intent to do so. The FDA only
grants the IVc exemption once it has reviewed
product documentation and deems it to be of the
appropriate standard.

1 Kalorama Information, Molecular Testing Markets for Infectious Diseases (Sepsis, Respiratory Diseases, HIV, Hepatitis, TB Testing, STIs and Other Tests), July 2019

2 The FDA is permitting manufacturers that have or will submit an EUA for a SARS-CoV-2 test to supply their test prior to receiving the EUA. The FDA describes
this marketing route in Section IV.C. of their Policy for Coronavirus Disease-2019 Tests During the Public Health Emergency (Revised)2 Under the exemption the
manufacturer must have validated the kit and is required to notify the FDA of their intent to supply the test. The use of the test is limited to laboratories that have
been certified under CLIA (Clinical Laboratory Improvement Amendments) to perform high complexity testing and the laboratory is required to disclaim the status
of the test on all results that are issued using the test. (https://www.fda.gov/regulatory-information/search-fda-guidance-documents/policy-coronavirus-disease-
2019-tests-during-public-health-emergency-revised)

Commercialisation update

EMEA

Sales progress

Regulatory update

EMEA represents a significant opportunity in the
global molecular diagnostics market, accounting
for close to 35% of global testing3. Europe is a key
focus for Genetic Signatures through FY21 and
beyond.

EMEA revenue increased to $1.1m in FY20, up
580% from $0.2m in FY19, including instrument
sales of $0.3m. Genetic Signatures continues to
successfully build traction across EMEA, with
the proportion of group revenues growing from
3% to 10% from FY19 to FY20. The launch of the
EasyScreen™ SARS-CoV-2 Detection Kit in
EMEA was the primary driver of FY20
revenue growth in the region, as well as new
instrumentation.

The Company remains focused on securing
long-term relationships with customers and
has strategically identified and partnered with
customers where there is potential demand for
additional products in Genetic Signatures’ broader
range of EasyScreen™ Detection Kits.

In April 2020, the Company received CE-IVD
registration for its EasyScreen™ SARS-CoV-2
Detection Kit, allowing for marketing of the test
within the European Union. During 4Q 2020, Genetic
Signatures also submitted formal applications for
its EasyScreen™ STI / Genital Pathogen Detection
Kit and CE-IVD is expected in 1H21. Work is set
to recommence on the EasyScreen™ Flavivirus /
Alphavirus Detection Kit in preparation for
CE-IVD registration.

GSS Representation around Europe

Direct and appointed distributors

Direct presence

Appointed distributors

Direct presence

Direct and appointed distributors

Appointed distributors

3 Kalorama Information, Molecular Testing Markets for Infectious Diseases (Sepsis, Respiratory Diseases, HIV, Hepatitis, TB Testing, STIs and Other Tests), July 2019

Investor Presentation August 2019

Genetic Signatures Limited – Annual Report 2020v v

Expanding range
of EasyScreen™ Kits

While laboratories, pathology groups and
hospitals around the world remain preoccupied
with the fight against COVID-19, Genetic
Signatures is focused on commercialising its
EasyScreen™ SARS-COV-2 Detection Kit as well
as a broader range of detection kits for various
infectious diseases.

Long before the onset of the COVID-19 pandemic, health
experts around the world were increasingly recognising
infectious diseases as serious and concerning global
health threats. The recent pandemic has highlighted the
importance of rapid and accurate detection of infectious
diseases. Many regions around the world that were hit the
hardest by the pandemic were slow to implement accurate,
reliable, and widespread diagnostic solutions.

Genetic Signatures is pleased to play a leading role in
the fight against infectious diseases, where its 3base™
technology allows the provision of a low cost, high
throughput solution suitable for widespread and broad-
spectrum diagnostic solution.

EasyScreenTM products

Product Outcome

Global market size4
(A$m per annum)

Enteric

Respiratory

ESBL & CPO

Detects 20 of the most common bacterial, viral and protozoan (parasitic) infections
responsible for gastroenteritis, such as Salmonella, Giardia and Norovirus.
Registered in Australia and Europe

$573

Detection kits identify 14 common respiratory diseases, including Influenza types
A&B, Rhinovirus and RSV.
Also includes the new SARS-CoV-2 Detection Kit.
Registered in Australia and Europe.

$627
$6,300 (SARS-CoV-2)5

Detection of antibiotic resistant pathogens also colloquially known as “superbugs”.
Registered for sale in Australia and Europe.

Emerging market

STI / Reproductive Health

Detects the most prevalent pathogen infections (Chlamydia, Gonorrhoeae, Syphilis
and Trichomoniasis) plus many others.
Applications submitted for registration in Australia and Europe.

Alphavirus / Flavivirus

Refers to mosquito born pathogens including Dengue fever, Zika virus,
West Nile virus and others.
In development but may be used as a research use only product.

Meningitis

Identifies 8 viral meningitis pathogens.
In development but may be used as a research use only product.

$1,900

$69

$156

Atypical Respiratory

Additional targets under the Respiratory banner.
In development but may be used as a research use only product.

See Respiratory

4 Kalorama Information, Molecular Testing Markets for Infectious Diseases (Sepsis, Respiratory Diseases, HIV, Hepatitis, TB Testing, STIs and Other Tests), July 2019,

and company estimates.

5 Molecular Diagnostics Markets in the COVID-19 Era (Markets for Molecular COVID-19 IVD Tests, Respiratory Tests, Blood Screening, Cancer Markers and Other IVD
Tests) Kalorama Information, Published: 9/7/2020

Market
Opportunities

SARS-CoV-2

The COVID-19 pandemic, caused by
the SARS-CoV-2 virus, has led to more
than 30.6 million confirmed cases,
with over 950k deaths globally
(WHO, 20 September 2020)6.

Living and working conditions of billions of people
worldwide have been disrupted as a result of various
forms of social distancing and lockdowns. While
countries’ responses to COVID-19 have differed
across the world, the recognition of the importance
of large-scale diagnostic testing is universal.

Genetic Signatures has played a leading role in the
global fight against COVID-19 by ensuring people
have access to low cost and reliable diagnostic
solutions that ultimately reduce the spread of the
virus. The Company’s EasyScreen™ SARS-CoV-2
Detection Kits in conjunction with the Company’s
highest throughput instrument, GS-1000, provides
laboratories the ability to process approximately
1,500 samples per instrument in a 24-hour period.

Testing is our window into the pandemic and
proliferation of the virus. The multiplexed real-
time PCR screening assays and high throughput
capabilities of our technology provides healthcare
workers with a valuable mechanism to diagnose
the pathogen responsible for patient symptoms. If
a patient is exhibiting cold or flu symptoms, a clear
diagnosis of the underlying pathogen empowers
both patients and healthcare workers to implement
appropriate measures to slow and reduce the
spread of the virus.

As countries move towards re-opening, widespread
testing will remain critically important. Many
countries across Europe are experiencing a
resurgence in case numbers and expanding testing
capabilities have enabled greater identification of
active cases. The UK conducted approximately 20k
tests daily in April 2020, over 200k COVID-19 tests
are now processed each day7 . In the US, over 103m
tests have been reported identifying 8.3m positive
tests8. While infection rates have been trending
down in Australia, a high testing capacity supports
our nation’s response to the pandemic, with over 7.1
million tests conducted to date9.

Testing is crucial across a range of different
scenarios to track the spread of disease. Different
types of tests enable a range of different public
health interventions including contact tracing,
isolation, quarantine, and appropriate clinical
management of afflicted individuals. As summarised
in the table over the page, each test available on the
market offers a range of benefits and applications.
Molecular (or PCR) tests that detect the virus’s
genetic material are still considered the gold
standard for infectious disease diagnosis.

6 WHO COVID-19 Dashboard (13 September 2020)

7 Public Health England (17 September 2020)

8 Centers for Disease Control and Prevention (20 September 2020)

9 Australian Government Department of Health (17 September 2020)

Genetic Signatures Limited – Annual Report 2020
Common types of SARS- Cov-2 Tests

Molecular Test

Antigen Test

Also known as… Diagnostic test, viral test,

molecular test, nucleic acid
amplification test (NAAT),
RT-PCR test, LAMP test

Rapid diagnostic test
(Some molecular tests are also rapid tests.)

How the sample is
taken…

Nasal or throat swab (most
tests)

Saliva (a few tests)

How long it takes to
get results…

Same day (some locations)
or up to a week

One hour or less

Is another test
needed…

This test is typically highly
accurate and usually does
not need to be repeated.

Positive results are usually highly accurate but negative
results may need to be confirmed with a molecular test.

What it shows… Diagnoses active

Diagnoses active coronavirus infection

coronavirus infection

Antibody Test

Serological test, serology,
blood test, serology test

Nasal or throat swab
Finger stick or blood
draw

Same day (many
locations) or 1-3 days

Sometimes a second
antibody test is needed
for accurate results.

Shows if you’ve been
infected by coronavirus
in the past

What it can’t do… Show if you ever had

COVID-19 or were infected
with the coronavirus in
the past

{

Definitively rule out active coronavirus infection. Antigen
tests are more likely to miss an active coronavirus infection
compared to molecular tests. Your health care provider may
order a molecular test if your antigen test shows a negative
result but you have symptoms of COVID-19.

Diagnose active
coronavirus infection
at the time of the test
or show that you do not
have COVID-19

3base™ technonogy is a molecular test,
which is recognised as the gold-standard
for indectious disease diagnosis

Source:
https://www.fda.gov/media/140161/download

Market
Opportunities

Enteric Protozoan

Infectious gastroenteritis remains a
worldwide health issue and is the leading
killer of children under 510.

In the United States, there are more than 350
million cases of acute gastroenteritis annually and
infections accounts for 200,000 hospital admissions
of children under 5 each year11. Early identification
of causative pathogens remains a challenge in
the clinical laboratory. Traditional diagnosis of
infectious gastrointestinal disease can be both
incomprehensive and time consuming, two factors
effectively addressed by the 3base™ real-time PCR
assays.

Genetic Signatures has identified that testing for
Enteric Protozoa (parasites) is an underserved
market in the USA, with microscopy being used by
most laboratories as the primary means used to
diagnose protozoan infections. An estimated 5.5m
samples are tested each year in USA12.

Due to the time involved in undertaking these
tests and their limited accuracy many laboratories
do not provide the test unless specifically
requested. Current molecular tests only identify
up to 4 protozoan pathogens. Conversely, Genetic
Signatures EasyScreen™ Enteric Protozoan
Detection Kit on the other hand can detect 8 of the
most common protozoa in a single sample without
losing accuracy or processing speed.

Clinical trial work has now recommenced for our
application for FDA clearance of the EasyScreen™
Enteric Protozoan Detection Kit following the
gradual easing of COVID-19 restrictions. The
Company is targeting FDA submission for the
EasyScreen™ Enteric Protozoan Detection Kit
in the new year, conditional upon clinical sites’
ability to complete the trials while the COVID-19
pandemic is progressing. Securing FDA clearance
will open of the next phase of development for
Genetic Signatures in the United States.

Genetic Signatures Limited – Annual Report 2020STI/Reproductive Health

Genetic Signatures has determined that
STIs are a significant market opportunity
and has completed development and
validation of a detection kit and submitted
applications for regulatory approvals in
both Europe (CE-IVD) and Australia (TGA)
this year.

These registrations are expected before the end
of 2020. The Company’s EasyScreen™ STI/Genital
Pathogen Detection Kit simultaneously detects 12
of the most commonly encountered STIs.

Sexually Transmitted Infections (STI’s) can have
a significant impact on sexual and reproductive
health. There are an estimated 1 million STI’s
contracted daily around the world, and the 4
most commonly reported infections (Chlamydia,
Gonorrhoea, Syphilis and Trichomoniasis) account
for approximately 376 million cases per annum13.
The testing market value is estimated to be
US$420m pa just for Chlamydia and Gonorrhoea14,
and forecast to grow at 7% p.a.

10 April 2015; Source: Zhang, H., Morrison, S., & Tang, Y. W. (2015). Multiplex polymerase chain reaction tests for detection of pathogens associated

with gastroenteritis. Clinics in laboratory medicine, 35(2), 461-486.

11 August 2020; Source: Sattar, S. B. A., & Singh, S. (2020). Bacterial gastroenteritis.

12 Bell Potter Securities Estimates (Initiation of Coverage Report) and World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease,

Oncology, Blood Screening, Pre-Natal and Other Areas) Kalorama Information, Published: 1/9/2013

13 https://www.who.int/en/news-room/fact-sheets/detail/sexually-transmitted-infections-(stis)

14 Kalorama Information, Molecular Testing Markets for Infectious Diseases (Sepsis, Respiratory Diseases, HIV, Hepatitis, TB Testing, STIs and Other Tests), July 2019

Personnel

Derek Joesting

Director of Sales,
North America
Derek joined Genetic Signatures US operations
in March 2020. He brought with him more than
20 years medical devices and diagnostics sales
experience from companies such as Thermo Fisher
Scientific and was one of the first commercial
leaders of T2 Biosystems where he was most
recently their Head of Market Development and
Strategic Sales. Derek has a small team of sales and
field support staff and is based in Minnesota.

“I see in Genetic Signatures a rare
opportunity to introduce a completely
new company to the USA and help to fill
an unmet need in the growing molecular
diagnostic market. The opportunity for our
3baseTM technology is unique as we can
provide a high-throughput solution with
a broad menu of targets that gives our
customers great flexibility and efficiency.
As a growing company we can respond
quickly to market conditions and provide
solutions that are individualized for each
of our customers.”

Genetic Signatures Limited – Annual Report 2020Genetic Signatures recognises that a key to its success lies with choosing the
best people possible then supporting them to achieve both ours and their goals.
In FY20 many new staff were employed to meet the increasing demands in all
areas of the company, but particularly in sales and production.

A key goal of the Company is to expand the international opportunities and we
have been fortunate to secure the services of 2 talented individuals to lead the
sales operations in North America and Europe.

John Buckels

Director of Sales & Support,
Europe
John has been with Genetic Signatures since
February this year. Like Derek he brings a wealth
of experience from the molecular biology field.
His previous role was Senior Director and Head
of Infectious Disease Sales for Europe at Qiagen,
where he spent 14 years. John is based in UK. His
team of sales and support staff are spread between
UK, Germany and the Netherlands.

“It is an exciting time to have joined
Genetic Signatures. Our footprint in
Europe is growing sustainably despite the
destabilisation from COVD-19 and we have a
strong trajectory for our syndromic panels in
both respiratory and enterics. Our excellent
Quality System and recently established
European Supply Chain capabilities back up
our business together with the experienced
and growing European organisation.”

For the financial year
ended 30 June 2020

Contents

Directors’ Report ...................................................20

Consolidated Statement of profit or loss
and other comprehensive income ....................... 35

Consolidated Statement of
financial position ..................................................36

Consolidated Statement of changes in equity ...37

Consolidated Statement of cash flows ...............38

Notes to the Financial Statements ....................39

Directors’ Declaration ...........................................64

Auditors Declaration ............................................ 65

Independent Audit Report ....................................66

Analysis of Holdings .............................................70

Shareholders Information ....................................71

Genetic Signatures Limited – Annual Report 2020

Financial Report 2020

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
The directors present their report, together with the financial statements, on the company and its controlled
entities for the year ended 30 June 2020. 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
Michael A Aicher
Anthony J Radford
Phillip J Isaacs (retired November 2019)

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
Genetic Signatures has had an outstanding year against the backdrop of the global COVID-19 pandemic.
Company revenues have grown materially during FY20, largely due to domestic and European demand for
the EasyScreen™ SARS-CoV-2 Detection Kit. Genetic Signatures was able to leverage its internal
capabilities to successfully develop a new test for SARS-CoV-2 and then to scale up manufacturing
capacity to meet the significant increase in customer demand. This provided an opportunity for the
Company to demonstrate its product offering to a wider range of laboratories, and to establish new users
of the EasyScreenTM tests in both Australia and Europe.

In the financial year ending 30 June 2020, Genetic Signatures’ revenue was $11,263,000 representing a
131% increase over the previous year. This revenue growth was driven by demand for EasyScreen™
SARS-CoV-2 Detection Kit, following regulatory registrations in Europe and Australia. Sales to European
customers represented approximately 10% of total sales for the year.

Revenue from operations ($m)

11.3

2.0

FY17

4.9

2.8

FY18

FY19

FY20

The Company posted a net loss of $2,086,000 in FY20, a $1,406,000 improvement over FY2019.
Genetic Signatures is pleased to report that its 2nd half result was a maiden profit for the Group of
$260,000, showing the impact of higher sales.

Gross margins were 62%, which is slightly lower than the previous year and impacted by pandemic
induced higher prices for some raw materials, product mix and significantly higher transport costs.
Margins should improve in future as the proportion of international sales rises. Employee benefits

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020
expense were up 35% vs. prior corresponding period to $6,671,000 as additional personnel were added
to the teams in Europe, USA and locally across all functions. Scientific consumables increased 50% over
prior year, reflecting the work done on SARS-CoV-2, continuing R&D projects, and initial clinical trial
activity for the US FDA Enteric Protozoan submission. Depreciation and amortisation expenses appear
high, but includes lease amortisation per the new accounting standard, AASB16.

Cash balance was $31,176,000 at 30 June 2020. A capital raise for $37.5m (placement and share
purchase plan, both oversubscribed) was completed in December 2019 to accelerate our
commercialisation strategy, and gave Genetic Signatures the funds to scale up for the increased demand
from SARS-CoV-2 testing. Net operating cash outflows for the year were $9,494,000 with a large
proportion of those funds applied to inventory purchases to ensure the Group could meet its commitment
to customers regarding supply. Genetic Signatures can proudly claim that none of its customers has been
without product to undertake testing to date. Trade receivables balances are also higher due to the higher
sales late in the year.

Commercialisation Progress by Market
Australia
Represents approximately 1-2% of the world molecular diagnostic market1

• TGA registration and launch of EasyScreen™ SARS-CoV-2 Detection Kit
• New customers adopt EasyScreen™ SARS-CoV-2 test
• Production capacity further increased to meet current demand and more production expansion

underway

• Application lodged with TGA for STI / Genital Pathogen Detection Kit to be included on ARTG
• Alphavirus / Flavivirus clinical trials deferred due to COVID-19
• Continued development of other new kits.

Europe
Europe (European Union and United Kingdom) represents ~35% of global molecular diagnostics market1

• Achieved European registration (CE-IVD) for the EasyScreen™ SARS-CoV-2 Detection Kit, and

product launched

• New customers established, including 3 new European distributors
• Additional sales and support staff appointed
• European applications for EasyScreen™ STI / Genital Pathogen Detection Kit lodged.

North America
Largest market opportunity globally, accounting for estimated 40% of test revenue1

• Emergency Use Authorisation (EUA) application submitted to the FDA for the EasyScreen™ SARS-

CoV-2 Detection Kit

• Permitted to supply EasyScreen™ SARS-CoV-2 Detection Kit to USA laboratories certified to perform

high complexity testing under a Section IVc exemption2 following notification to FDA on the
Company’s intent to do so
Initial clinical work has now commenced for FDA clearance of the EasyScreen™ Enteric Protozoan
Detection Kit

•

• New sales team appointed with strong pedigree in the industry.

1 World Market for Molecular Diagnostics, 5th. Edition (Infectious Disease, Oncology, Blood Screening, Pre-Natal
and Other Areas) Kalorama Information, Published: 1/9/2013 & company estimates
2 The FDA is permitting manufacturers that have or will submit an EUA for a SARS-CoV-2 test to supply their test
prior to receiving the EUA. The FDA describes this marketing route in Section IV.C. of their Policy for Coronavirus
Disease-2019 Tests During the Public Health Emergency (Revised)2 Under the exemption the manufacturer must
have validated the kit and is required to notify the FDA of their intent to supply the test. The use of the test is limited
to laboratories that have been certified under CLIA (Clinical Laboratory Improvement Amendments) to perform high
complexity testing and the laboratory is required to disclaim the status of the test on all results that are issued using
the test. (https://www.fda.gov/regulatory-information/search-fda-guidance-documents/policy-coronavirus-disease-
2019-tests-during-public-health-emergency-revised)

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Looking Forward
Genetic Signatures sees the year ahead as an opportunity to consolidate its gains and grow the
business, particularly in international markets. Encouragingly, first quarter FY2021 is on track to report
sales growth of more than 25% above fourth quarter FY2020.

The COVID-19 pandemic has also given the Group a chance to demonstrate its technology and broader
syndromic testing platform to a greater range of laboratories and hospitals, and the Group is already
preparing for when the COVID-19 restrictions are lifted. As such the following milestones have been set
for FY2021:

• US FDA Emergency Use Authorisation (EUA) for the EasyScreen™ SARS-CoV-2 Detection Kit
• First North American contracts
• FDA submission for the EasyScreen™ Enteric Protozoan Detection Kit
• CE-IVD and TGA registration for EasyScreen™ STI / Genital Pathogen Detection Kits
• CE-IVD and TGA registration for EasyScreen™ Flavivirus / Alphavirus Detection Kits
• Commence development of new instrumentation.

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 (2019: NIL).

EVENTS SUBSEQUENT TO THE REPORTING DATE

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive
for the consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive
or negative, after the reporting date. The situation is rapidly developing and is dependent on measures
imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Other than the above, 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.

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

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
management, 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
companies including one that was ASX-listed. For the past 16 years Dr.
Samaras has focused his efforts on facilitating the international market
expansion of a number of US biotechnology companies and developing
commercial revenue channels outside of their traditional onshore
markets.
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
qualifications which include an MBA from the School of Management at
RMIT University and is a Fellow of the Australian Institute of Company
Directors 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: 2,024,016 ordinary shares

Name:
Qualifications:
Experience:

Special responsibilities:

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 in 2003 where he was responsible for leading the
commercialisation of two research products (worldwide) and five
diagnostic products (locally and Europe) in the role of Senior
Principal Research 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 was in the sodium bisulphite conversion of DNA which
is at the core of Genetic Signatures’ technology.
Managing Director and Chief Executive Officer

Directorships of other listed
companies:

Nil

Interests in shares and options: 1,096,000 ordinary shares,

300,000 options over ordinary shares

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Name:
Qualifications:
Experience:

Special responsibilities:

Anthony J Radford AO FTSE
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. He is a Fellow of the Australian Academy of
Technology and Engineering, and a recipient of their Clunies Ross
Prize.
Non-Executive; Member of Audit & Risk Committee and Nomination &
Remuneration Committee

Directorships of other listed
companies:

Nil

Interests in shares and options: 240,000 ordinary shares

Name:
Qualifications:
Experience:

Phillip J Isaacs (retired November 2019)
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 Founding Chairman of the Australian Proteome Analysis
Facility (APAF) in Sydney.

Special responsibilities:

Directorships of other listed
companies:

Nil

Interests in shares and options: 1,602,143 ordinary shares

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

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 Laboratory Corporation of America, Inc. (LabCorp) in 2000. Mr.
Aicher led LabCorp’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 Biotechnology 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: 645,785 ordinary shares

Company Secretary
Name:

Experience:

Peter Manley

Peter Manley was appointed Company Secretary of Genetic
Signatures in March 2019. Peter is an experienced company secretary
who also holds the position of Chief Financial Officer. Previous roles
include CFO & Company Secretary for listed life sciences companies
AtCor Medical Holdings Limited (now Cardiex Ltd) and Sirtex Medical
Ltd.

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

DIRECTORS’ MEETINGS

The number of meetings of the board of directors (including board committees) held during the year
ended 30 June 2020, and the numbers of meetings attended by each director are set out below:

Name
Nickolaos Samaras
John R Melki
Anthony J Radford
Michael A Aicher
Phillip J Isaacs
(ret. Nov 2019)

Board

Audit & Risk
Committee

Nomination &
Remuneration Committee

Held
7
7
7
7
2

Attended
7
7
7
7
2

Held
2
-
2
-
1

Attended
2
-
2
-
1

Held
2
-
2
-
1

Attended
2
-
2
-
1

REMUNERATION REPORT - AUDITED

The remuneration report is set out under the following main headings:

1. Remuneration principles and key management personnel
2. Non-executive director remuneration
3. Executive remuneration
4. Equity disclosures
5. Employment agreements

The information provided includes remuneration disclosures that are required under AASB 124 – Related
Party Disclosures. These disclosures have been transferred from the financial report and have been
audited.

1 REMUNERATION PRINCIPLES AND KEY MANAGEMENT PERSONNEL
1.1 Policy for determining the nature and amount of key management personnel remuneration

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. The Board ensures that the Company’s remuneration levels are appropriate in
the markets in which it operates and are applied, and seen to be applied, fairly.

Non-executive directors
Fees and payments to non-executive directors reflect the demands which are made on, and the
responsibilities of, the directors. Non-executive directors’ fees and payments are reviewed with reference
to market rates for comparable companies. The chairman’s fees are determined independently to the
fees of non-executive directors. The Chairman is not present at any discussions relating to determination
of his own remuneration. Non-executive directors are entitled to receive share options, following approval
by the shareholders of Genetic Signatures Limited.

Non-executive directors’ fees are captured within an aggregate directors’ pool limit, which is periodically
recommended for approval by shareholders. The pool stands at $250,000 excluding share-based
payments which are subject to separate shareholder approval. The pool has not been changed since
listing in 2015.

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Executive directors and senior executives
The objective of the Group’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with
achievement of strategic objectives, and the creation of value for shareholders. The Board ensures that
executive reward satisfies the following key criteria.

Alignment to company and shareholders’ interests:

• Has company growth as a core component of plan design
• Focuses on sustained long-term growth in shareholder wealth
• Attracts and retains high calibre executives
• Total remuneration is comparable to market standards.

Alignment to program participants’ interests:
• Rewards capability and experience
• Reflects competitive reward for contribution to growth in company value
• Provides a clear structure for earning rewards
• Provides recognition for contribution.

The framework provides a mix of fixed and variable pay, and a blend of short and long-term incentives.

1.2 Key management personnel

The following persons were key management personnel of Genetic Signatures Limited during the
financial year:

Non-executive directors
Dr Nickolaos Samaras - Chairman
Dr Anthony J Radford AO
Phillip J Isaacs (retired November 2019)

Executive directors
Dr John R Melki - Managing Director & Chief Executive Officer
Michael A Aicher - Executive Director, US Operations

Other executives
Peter L Manley - Chief Financial Officer/Company Secretary

2 NON-EXECUTIVE DIRECTOR REMUNERATION
2.1 Directors’ Fees
The current remuneration is unchanged from prior year. Fees are inclusive of committee fees.

Board fees per annum

Chairman
Non-executive director (Australian based)
Non-executive director (overseas)

$60,000
$45,000
40,000 (USD, EUR or GBP depending on location)

Superannuation
Superannuation contributions for Australian-based non-executive directors are in addition to the Board
fees and are calculated at a rate of 9.5% of the base fee, as required under the statutory superannuation
guarantee. Directors may elect to salary sacrifice additional payments to their fund.

Share-based payments
Non-executive directors are not entitled to any performance related remuneration but may receive option
or equity grants if approved by shareholders.

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

2.2 Non-executive director remuneration

Non-executive directors

Nickolaos Samaras

Anthony J Radford

Phillip J Isaacs

Total

Year

2020
2019
2020
2019
2020
2019

2020

2019

Cash salary
and fees
$
60,000
60,000
45,000
29,456
18,750
45,000

123,750

134,456

Super-
annuation
$
5,700
5,700
4,275
19,819
1,781
4,275

11,756

29,794

Share-based
payments
$

-
9,724
1,553
6,934
-
1,514

1,553

18,172

Total
$
65,700
75,424
50,828
56,209
20,531
50,789

137,059

182,422

3 EXECUTIVE REMUNERATION
The executive pay and reward framework has four components:

• Base pay and benefits
• Other remuneration such as superannuation
• Short-term performance incentives, and
• Long-term incentives through participation in the Genetic Signatures Employee Incentive Plan

The combination of these comprises the executive’s total remuneration.

Base pay
Structured as a total employment cost package which may be delivered as a combination of cash and
prescribed non-financial benefits at the executive’s discretion.

Executives are offered a market competitive base pay that comprises the fixed component of pay and
rewards. Base pay for executive directors and senior executives is reviewed annually to ensure the
executive’s pay is aligned with the market. An executive’s pay is also reviewed on promotion.

There are no guaranteed base pay increases included in any executives’ contracts.

Benefits
Executives may receive benefits including parking, car allowances or health insurance.

Retirement Benefits
Statutory superannuation payments are made to a fund selected by Australian based executives.
Executives may also elect to salary sacrifice additional payments to their fund. No other retirement
benefits are offered.

Short term incentives
Each executive may have a target short-term incentive (STI) opportunity depending on the
accountabilities of the role and impact on the organisation or business unit performance.

Each year the remuneration committee considers the appropriate financial targets and KPI’s to link the
STI plan and the level of payout if targets are met. This includes setting any maximum payout under
the STI plan, and minimum levels of performance to trigger payment of STI.

For the year ended 30 June 2020, the KPI’s linked to STI plans were based on group, individual and
personal objectives. The KPI’s required performance growing sales revenue, with particular emphasis
on progress in overseas markets.

The remuneration committee is responsible for assessing whether KPI’s are met. To help make this
assessment, the committee receives detailed reports on performance from management.

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

The short-term bonus payments may be adjusted up or down in line with under or over achievement
against the target performance levels. This is at the discretion of the remuneration committee.

Long term incentives
Genetic Signatures Equity Incentive Plan (EIP)
Options are issued to executives (including the CEO) with the aim of aligning executive interests with
those of shareholders. The proportion of long-term incentives increases with the level of seniority of
the executive.

Options are granted under the EIP. The Plan is open to those employees and Directors whom the
Directors believe have a significant role to play in the continued development of the Group’s activities.

Options are granted under the Plan for no consideration. They are granted for a 15-year period, and
25% of each new tranche vests and is exercisable after each of the first four anniversaries of the date
of the grant. No options were issued in 2020 to key management personnel as at the date of this
report.

Genetic Signatures Employee Share Ownership Plan (ESOP)
Restricted shares were offered and funded by an interest free loan from the Group at the time of
listing. Restricted shares have vested and can be converted to ordinary shares following repayment of
the loan. The restricted shares are subject to a service condition of continuous employment from grant
date to the relevant vesting date, otherwise the restricted shares will lapse. Restricted shares may be
released following the payment of the outstanding loan prior to lapsing.

No new shares were issued under this Plan during the year. An offer to extend expiring loans was
offered to all participants in 2019. Three of five Directors took this option, whilst two elected to pay
their loan balance due. All loans have now been repaid and restriction removed from the shares.

Relationship between Remuneration Policy and Company Performance
The remuneration policy has been tailored to align shareholders, directors and executives’ goals. 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 to 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.

The Board is of the opinion that these results can be attributed, in part, to the previously described
remuneration 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)

2020
$
11,263
(2,086)

2019
$
4,866
(3,492)

2018
$
2,840
(3,254)

2.15
-

1.35
-

0.37
-

2017
$
2,038
(2,671)

0.395
-

2016
$
1,825
(3,027)

0.53
-

*The Company was admitted to the official list on the ASX on 30 March 2015.

Voting and Comments made at the Company’s 2019 Annual General Meeting (‘AGM’)
The Company received 93.5% of “for” votes in relation to its remuneration report for the year ended
30 June 2019. No issues were raised with Directors concerning the Report.

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

3.1 Executive director remuneration

Fixed
remuneration

Variable
remuneration

Cash
salary and
fees
$

Year

John R Melki - CEO 2020 308,137

Non-
monetary
benefits
$
16,320

Super-
annuation
$
25,047

Long-term
benefits:
Annual
and long
service
leave
$

Subtotal

Short term
incentive2
$

27,351 376,855

148,070

Share-
based
payments3
$
38,902

Total
$
563,827

2019 291,717

4,894

24,228

15,180 336,019

Michael A Aicher1
Executive Director

Peter L Manley
(commenced Oct
2018)
Total

2020 178,097

2019 167,691

2020 220,636
2019 142,788

-
-

- 178,907

- 167,691

54,366

390,385

178,907

9,724

177,415

22,778
23,289

18,051 261,465
2,531 168,608

45,000

95,981

402,446

11,782

180,390

2020 707,680

16,320

47,825

45,402 817,227

193,070

134,883 1,145,180

2019 602,196

4,894

47,517

17,711 672,318

75,872

748,190

Remuneration
proportions

John R Melki - CEO

Michael A Aicher1

Executive Director

Peter L Manley

(commenced Oct 2018)

Year

2020

2019

2020

2019

2020

2019

Fixed
%
67%

86%

100%

95%

65%

93%

At risk STI At risk LTI

%
26%

11%

14%

24%

2
3

M Aicher is paid in USD. Changes in base pay are attributable to the weaker AUD against the USD
through FY20 (Ave rate FY20: 0.6707, FY19: 0.7156).
Cash bonus is the amount paid or payable for the respective financial year.
This represents the proportional fair value of options on issue not yet vested or vested during the
reporting period. Options are valued using a Black-Scholes model as described in Note 18 to the
accounts.

Genetic Signatures Limited – Annual Report 2020

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Short term incentives

J.R. Melki
M.A. Aicher
P.L Manley

STI potential

Percentage of base

155,000
-
45,000

%
44
-
20

Paid
%
95
-
100

Forfeited

%
5
-
-

4 EQUITY DISCLOSURES
4.1 Key Management Personnel Share Movements
Details of equity instruments (other than employee share ownership plan restricted shares) held
directly, indirectly or beneficially by key management personnel are as follows:

Name

Balance at
1 July 2019

Granted as
compensation

Received on
conversion of
restricted shares

Other
changes

Balance at
30 June
2020

Balance
held
nominally

N. Samaras
J.R Melki
M.A Aicher
A.J Radford
P.J Isaacs
(ret Nov 19)
P.L Manley
Total

1,520,000
196,000
165,785
170,000
1,553,127

-
3,604,912

-
-
-
-
-

-
-

480,000
900,000
480,000
70,000
-

-
1,930,000

24,016
-
-
-
49,016

20,408
93,440

2,024,016 1,393,000
1,096,000 1,096,000
645,785
240,000
738,930

645,785
240,000
1,602,143

20,408

20,408
5,628,352 4,134,123

4.2 Share Based Payments
Details of restricted shares and options held directly, indirectly or beneficially by key management
personnel are as follows, terms and conditions are summarised in section 3 (Long term incentives):

Employee Share Ownership Plan Holdings

Converted
on
Repayment
of loan
(480,000)
(900,000)
(480,000)
(70,000)
-
-
(1,930,000)

Balance at
1 July 2019
480,000
900,000
480,000
70,000
-
-
1,930,000

Other
Changes
-
-
-
-
-
-
-

Total vested
and
convertible
at 30 June
2020
-
-
-
-
-
-
-

Unvested at
30 June
2020
-
-
-
-
-
-
-

Balance at
30 June
2020
-
-
-
-
-
-
-

Name
N. Samaras
J.R Melki
M.A Aicher
A.J Radford
P.J Isaacs
P.L Manley
Total

Directors’ Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Employee Incentive Plan

Balance at
1 July 2019

No.

Value1
$

J.R Melki

300,000 132,523
P.L Manley 200,000 188,007

Granted
during the
year

Value1
$
-

No.
-

Exercised
during the
year

Value2
$
-

No.
-

Forfeited
during the
year

Value2
$
-

No.
-

Balance at
30 June 2020

No.

Value1
$

300,000 132,523

Unvested
at 30
June
2020

No.
175,000

200,000 188,007

150,000

This represents the total value of the options over the life of the options from grant date using a Black-Scholes
valuation method. The amount is allocated against remuneration over the vesting period (total allocation vests
in 4 equal tranches from the 1st anniversary of the issue date).
Value equals the difference between the exercise price and the closing share price per the ASX on the date of
exercise/forfeiture multiplied by the number of options.

5 EMPLOYMENT AGREEMENTS
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:

John Melki

Director & Chief Executive Officer

Contract term:
Base salary:

Termination payments:

Ongoing, commenced November 2014
$350,000, 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
entitlements for three months.

Michael Aicher

Executive Director – US Operations

Contract term:
Base salary:

Termination payments:

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.

Genetic Signatures Limited – Annual Report 2020

GENETIC SIGNATURES LIMITED

ABN: 30 095 913 205

DIRECTORS’ REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

DIRECTORS’ REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

5 EMPLOYMENT AGREEMENTS

Service contracts have been entered into by the Company with key management personnel,

5 EMPLOYMENT AGREEMENTS

describing the components and amounts of remuneration applicable on their initial appointment,

Service contracts have been entered into by the Company with key management personnel,

including terms and performance criteria for performance-related cash bonuses. These contracts do

describing the components and amounts of remuneration applicable on their initial appointment,

not fix the amount of remuneration increases from year to year. Remuneration levels are reviewed

including terms and performance criteria for performance-related cash bonuses. These contracts do

generally each year by the Remuneration Committee to align with changes in job responsibilities and

not fix the amount of remuneration increases from year to year. Remuneration levels are reviewed

market salary expectations. All contracts are for an ongoing period.

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:
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:

John Melki

John Melki
Director & Chief Executive Officer

Director & Chief Executive Officer
Contract term:
Base salary:
Contract term:
for the financial year ended
Base salary:
Termination payments:
30 June 2020
Termination payments:

Ongoing, commenced November 2014
$350,000, exclusive of superannuation, to be reviewed annually by
Ongoing, commenced November 2014
the Remuneration Committee.
$350,000, exclusive of superannuation, to be reviewed annually by
Payment on early termination by the Group, other than for gross
the Remuneration Committee.
misconduct, equal to the base salary plus superannuation
Payment on early termination by the Group, other than for gross
entitlements for three months.
misconduct, equal to the base salary plus superannuation
entitlements for three months.

Michael Aicher

Michael Aicher
Executive Director – US Operations

Contract term:
Executive Director – US Operations
Base salary:
Contract term:
Base salary:
Termination payments:

Ongoing, commenced April 2014
$US120,000, to be reviewed annually by the Remuneration
Ongoing, commenced April 2014
Committee.
$US120,000, to be reviewed annually by the Remuneration
No payment on early termination. Contract is terminable by either
Committee.
party on one months’ notice.
No payment on early termination. Contract is terminable by either
party on one months’ notice.

Termination payments:

Peter Manley

Peter Manley
Chief Financial Officer

Chief Financial Officer
Contract term:
Base salary:
Contract term:
Base salary:
Termination payments:

Termination payments:

Ongoing, commenced October 2018
$225,920, exclusive of superannuation, to be reviewed annually by
Ongoing, commenced October 2018
the Remuneration Committee.
$225,920, exclusive of superannuation, to be reviewed annually by
GENETIC SIGNATURES LIMITED
Payment on early termination by the Group, other than for gross
the Remuneration Committee.
misconduct, equal to the base salary plus superannuation for three
ABN: 30 095 913 205
Payment on early termination by the Group, other than for gross
months.
misconduct, equal to the base salary plus superannuation for three
DIRECTORS’ REPORT
months.
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

This concludes the remuneration report which has been audited.

This concludes the remuneration report which has been audited.
OPTIONS
There were 3,278,750 unissued ordinary shares of the company under option outstanding at the date of
this report. During the financial year 1,145,000 new options were issued, 311,250 were exercised, and
322,500 were forfeited.

INDEMNIFICATION OF OFFICERS AND AUDITORS

Genetic Signatures Ltd paid an insurance premium during the financial year, for Directors’ & Officers
Liability insurance cover.

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:

Tax compliance services
Other non-audit services

Total fees for non-audit services

2020
$
17,340
9,300

2019
$
15,700
11,500

26,640

27,200

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.

Directors’ Report

for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

DIRECTORS’ REPORT
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

AUDITOR’S 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 65.

Rounding of Amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the ‘rounding
off’ of amounts. Amounts in this report have been rounded off in accordance with the instrument to the
nearest thousand dollars, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of directors.

John Melki
Director

Sydney
28 August 2020

Genetic Signatures Limited – Annual Report 2020Financial Report

ABN: 30 095 913 205

GENETIC SIGNATURES LIMITED

Consolidated Statement of profit or loss
and other comprehensive income

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note

Consolidated
2020
$’000s

Sales Revenue

Other income

Cost of materials used
Employee benefits expense
Directors’ and consultancy fees
Depreciation and amortisation expenses
Finance Costs
Scientific consumables
Travel and accommodation
Other expenses

Loss before income tax

Income tax benefit

11,263

2,910

(4,305)
(6,671)
(443)
(883)
(33)
(1,769)
(327)
(1,828)

(2,086)

2019
$’000s

4,866

2,327

(1,686)
(4,933)
(432)
(471)
(1)
(1,175)
(347)
(1,640)

(3,492)

Loss attributable to members of the entity

(2,086)

(3,492)

Other comprehensive income/(loss)
Items that maybe reclassified subsequently to
profit or loss:

Foreign Currency translation of foreign operations

Total comprehensive income/(loss) for the year,
net of tax

Earnings (loss) per share

Basic and diluted loss per share to ordinary equity
holders of the company

(111)

(2,197)

2020
cents

(1.64)

(14)

(3,506)

2019
cents

(3.36)

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income
should be read in conjunction with the accompanying notes

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

Consolidated Statement of
financial position

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020

Note

Consolidated
2020
$’000s

2019
$’000s

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
Right of Use Assets - Leases
Total Non-Current Assets

Total Assets

Liabilities

Current Liabilities
Trade and other payables
Lease liabilities
Provisions
Total Current Liabilities

Non-Current Liabilities
Lease liabilities
Provisions
Total Non-Current Liabilities

Total Liabilities

Net Assets

Equity
Issued capital
Reserves
Accumulated losses

Total Equity

7
8
9
10

11
12

13
12
14

12
14

15
16

31,176
5,223
7,252
2,554
46,205

2,776
734
3,510

6,312
862
1,354
2,147
10,675

1,455
-
1,455

49,715

12,130

2,368
313
657
3,338

428
20
448

1,051
-
491
1,542

19
19

3,786

1,561

45,929

10,569

84,013
1,830
(39,914)

47,028
1,369
(37,828)

45,929

10,569

The above Consolidated statement of financial position should be read in conjunction with the
accompanying notes

Genetic Signatures Limited – Annual Report 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

Consolidated Statement of
changes in equity

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Consolidated

Issued
Capital
$’000s

Share based
payments
reserve
$’000s

Foreign
currency
translation
reserve
$’000s

Accumulated
losses
$’000s

Total
$’000s

Balance at 1 July 2018

46,778

988

(30)

(34,336)

13,400

Loss attributable to members of
the entity
Other comprehensive
income/(loss)
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 15)
Forfeiture of share-based
payments (note 16)
Share-based payments
(note 16)

250

(28)

453

(3,492)

(14)

(3,492)

(3,506)

250

(28)

453

Balance at 30 June 2019

47,028

1,413

(44)

(37,828)

10,569

Loss attributable to members of
the entity
Other comprehensive
income/(loss)
Total comprehensive
income/(loss) for the year
Transactions with owners in
their capacity as owners:
Contributions of equity, net of
transaction costs (note 15)
Repayment of loans against
shares (note 15)
Share issues on conversion of
options
Forfeiture of share-based
payments (note 16)
Share-based payments
(note 16)

35,608

1,234

143

(59)

631

(2,086)

(111)

(2,086)

(2,197)

35,608

1,234

143

(59)

631

Balance at 30 June 2020

84,013

1,985

(155)

(39,914)

45,929

The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

Consolidated Statement
of cash flows

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note

Consolidated
2020

$’000s

2019

$’000s

Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Lease costs (interest)
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
Proceeds from exercise of options
Share issue costs
Lease costs (principal)
Net cash provided by financing activities

Net increase/(decrease) in cash and cash
equivalents

Cash and cash equivalents at beginning of
financial year
Exchange differences on cash and cash
equivalents

25(b)

15
15
15

8,882
(20,619)
129
(33)
2,147
(9,494)

(2,350)
(2,350)

37,500

1,234
143
(1,892)
(299)
36,686

24,842

5,229
(10,227)
168
-
2,561
(2,269)

(610)
(610)

201

(6)
-
250

(2,629)

6,312

8,955

(14)

6,312

Cash and equivalents at end of financial year 25(a)

31,176

The above consolidated statement of cash flows should be read in conjunction with the
accompanying notes

Genetic Signatures Limited – Annual Report 2020

Notes to the Financial Statements
for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

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(v).

(a) Going Concern

The Consolidated Entity incurred losses for the year to 30 June 2020 of 2,086,000 (2019:
$3,492,000), leading to net operating cash outflows of $9,494,000 (2019: $2,269,000).
The ability of the Consolidated Entity 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 year, the
Consolidated Entity has successfully grown sales by 131% and has produced a profit of
$260,000 in the second half of the financial year. At balance date the Consolidated Entity
held $31,176,000 in cash reserves and carries no debt. The directors are confident that,
given the amount of cash on hand at year-end, plus the ongoing ability of the
Consolidated Entity to increase its sales, and to raise capital as needed, 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 subsidiaries, Genetic Signatures US Ltd and Genetic
Signatures UK 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 deconsolidated 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.

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

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.

(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 measured reliably.
All other repairs and maintenance expenses are charged to the income statements during
the financial period in which are incurred.

Genetic Signatures Limited – Annual Report 2020

Notes to the Financial Statements
for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note 1: Statement of Significant Accounting Policies (continued)

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
1-10 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 comparing the net proceeds with the
carrying amount prior to disposal. Any gains or losses are included in the statement of
profit or loss and comprehensive income.

(e) Goods and Services Tax

Revenues, expenses and assets are recognised net of GST, except where the amount of
GST incurred is 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.

(f)

Financial instruments

Classification

The Group classifies financial assets as either:

• Those to be measured subsequently at fair value; or
• Those to be measured at amortised cost.

The classification depends on the entity’s business model for managing the financial
assets and the contractual terms of the cash flows. For assets measured at fair value,
gains and losses will be either recorded in profit & loss or other comprehensive income.

Recognition and derecognition

Purchases and sales of financial assets are recognised on the date the Group commits to
purchase or sell the asset. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note 1: Statement of Significant Accounting Policies (continued)

Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case
of a financial asset not at fair value through profit or loss (FVPL), transaction costs that
are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at FVPL are expensed in profit or loss.

(i)

Loans and receivables

Loans and receivables are assets held for collection of contractual cashflows where those
cashflows represent payment of principal and interest measured at amortised cost.

Loans and receivables are included in current assets, except for those which are not
expected to mature within 12 months after the end of the reporting period, which will be
classified as non-current assets.

Any interest income from these financial assets is included in finance income using the
effective interest rate method.

(ii)

Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.

(iii) Equity instruments

The group subsequently measures all equity investments at fair value. Changes in the fair
value of financial assets are recognised in other gains/(losses) in the statement of profit or
loss as applicable. Impairment losses (and reversal of impairment losses) on equity
investments are not reported separately from other changes in fair value.

The Group does not currently hold any equity investments.

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 Group assesses whether there is objective
evidence that a financial instrument has been impaired. The impairment methodology
applied depends on whether there has been a significant increase in credit risk.

The Group applies the AASB9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables and contract
assets. These assumptions include recent sales, historical collection rates and forward
looking information, including consideration for the potential impact of the COVID-19
pandemic.

Genetic Signatures Limited – Annual Report 2020

Notes to the Financial Statements
for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note 1: Statement of Significant Accounting Policies (continued)

(g) Revenue recognition

Revenue from the sale of goods is recognised when control of the goods has passed to
the buyer which usually occurs on delivery. This revenue is classified into 3 categories,
being:

Sale of Goods – Test Kits and Consumables

The Group manufactures and sells test kits for use in pathology laboratories. It also
purchases disposable items for resale that are used by the pathology laboratories in
conjunction with the test kits. Sales are recognised when control of the products has
transferred, being the point in time when the products are delivered to the customer’s
specified location, the amount of revenue can be measured reliably, and it is probable that
payment will be received by the Group.

Sale of Goods – Equipment

The consolidated entity provides equipment to customers if required which may be as an
outright sale or be a placement under a lease arrangement. Where the equipment is sold
the sale is recognised when control of the products has transferred, being the point in time
when the products are delivered to the customer’s specified location, the amount of
revenue can be measured reliably, and it is probable that payment will be received by the
Group. In the event the Group enters a lease, an assessment will be made as to the
classification of that lease. A lease will be classified as a finance lease if it transfers
substantially all of the risks and rewards associated with the underlying asset. Otherwise
the lease will be classified as an operating lease. Where the lease meets the definition of
a finance lease revenue is recognised when control of the products has transferred, being
the point in time when the products are delivered to the customer’s specified location.
Operating lease income will be recognised as income over time per the terms of the
agreement with the customer, which may be as a cost per test or a periodic rental value.

Sale of Goods – Service

If a customer has purchased or is using Group owned equipment there may be a service
charge levied to maintain the equipment. Revenue is recognised over time in the period that
the service is rendered.

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
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.

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note 1: Statement of Significant Accounting Policies (continued)

(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 include raw materials and all items available for resale, including equipment
(defined in 1(g)) and goods in transit. 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.

The Group applies the AASB9 simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables and contract
assets. Trade receivables and contract assets have shared credit risk characteristics and,
as such, the expected loss rates for trade receivables are a reasonable approximation of
loss rates for contract assets. Losses incurred in the last 3 years represent less than
0.01% of receivables and are immaterial. Therefore, no impairment has been recorded.

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 in
respect of lease liabilities.

(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 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 of low value items or for a period of less than 12
months, where substantially all the risks and benefits remain with the lessor, are charged
as expense in the period in which they are incurred.

Genetic Signatures Limited – Annual Report 2020

Notes to the Financial Statements
for the financial year ended
30 June 2020

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

Note 1: Statement of Significant Accounting Policies (continued)

(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 18.

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 26, 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.

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) New, revised or amending Accounting Standards and Interpretations adopted

AASB16 – Leases

The Group has elected to apply AASB 16 on a modified retrospective basis, and therefore,
the comparative information has not been restated and continues to be reported under
the preceding standard, AASB 117. This means AASB 16 is applied retrospectively with
an adjustment to opening equity on the initial application date, as opposed to the previous
accounting period. As a major component of the right of use assets recognised by the
Group relates to a new lease agreement which took effect in August 2019, the transition
exercise on adopting AASB 16 resulted in an immaterial adjustment to the opening
balance of equity as at 1 July 2019, and therefore, no restatement has been recognised.

Financial Report

GENETIC SIGNATURES LIMITED
ABN: 30 095 913 205

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2020

The Group leases business premises (offices and laboratories) and office equipment.
Rental contracts are typically for a fixed period of 12 months to 60 months and may include
extension options. From 1 July 2019 leases are recognised as a right of use asset and a
corresponding liability at the date at which the lease is available for use by the Group.
Assets and liabilities are measured on a present value basis.

Lease payment are discounted using the interest rate implicit in the lease. Where a rate
cannot be readily determined from the lease (generally the case) then the lessee’s
incremental borrowing rate will be used, being the rate the lessee would have to pay to
borrow the funds to obtain the equivalent asset. As the Group does not have any
borrowings the incremental borrowing rate has been determined using a build-up
approach whereby the risk-free rate is adjusted for credit risk, considering factors such as
term, country, and currency.

The Group has no variable lease payments in its leases, nor do any of the leases have an
option to extend the term.

Right of use assets are depreciated on a straight-line basis over the term of the lease.

Payments associated with short term leases (with a term <12 months), and leases of low
value (

BRISPOT NOMINEES PTY LTD

10. CAPITAL CONCERNS PTY LIMITED

11. DR NICK SAMARAS AND ASSOCIATED ENTITIES

12. BRAHAM CONSOLIDATED PTY LTD

13. MR PHILLIP ISAACS AND ASSOCIATED ENTITIES

14. MR JOHN ROBERT MELKI

15. S LOADER PTY LTD

16. BRAHAM INVESTMENTS PTY LTD

17. CS FOURTH NOMINEES PTY LIMITED

18.

IDOLLINK PTY LTD

19. QUICKINVEST PTY LTD

20. BNP PARIBAS NOMINEES PTY LTD

Balance as at
08 October 20

37,500,000

15,934,528

12,951,351

6,942,586

5,968,614

5,598,723

4,171,672

2,256,965

2,113,799

2,110,000

2,024,016

1,654,073

1,612,143

1,096,000

1,042,880

886,368

802,578

796,927

756,349

736,164

26.29%

11.17%

9.08%

4.87%

4.18%

3.92%

2.92%

1.58%

1.48%

1.42%

1.16%

1.13%

0.77%

0.73%

0.62%

0.56%

0.53%

0.52%

Total Securities of Top 20 Holdings

Total of Securities

106,955,736

74.97%

142,665,996

Shareholder Information

Substantial Holders

Shareholder

ASIA UNION INVESTMENTS PTY LTD

KARST PEAK CAPITAL LIMITED

PERENNIAL VALUE MANAGEMENT LIMITED

FIL LIMITED

On-Market Buy Back
There is no current on-market buy back.

Balance as at
08 October 2020

% of total
shares issued

37,500,000

15,934,528

13,399,698

10,984,948

26.29%

11.17%

9.40%

7.70%

Voting Rights
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:
Peter Manley

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
7 Eliza St
Newtown NSW 2042

Genetic Signatures Limited – Annual Report 2020

Driving better healthcare
through innovation

Genetic Signatures Limited – Annual Report 202075

Head Office

Genetic Signatures Ltd
7 Eliza Street Newtown
NSW 2042 Australia
Phone: +61 2 9870 7580
Email: info@geneticsignatures.com

ISO:13485:2016
certified quality management systems

www.geneticsignatures.com

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