Genetic Signatures Limited Annual Report 2023

Plain-text annual report

Annual Report 2023 Strategy Statement We will be the trusted global partner for driving improved patient outcomes using our innovative 3base® technology to provide configurable, clinically relevant molecular diagnostic solutions for infectious diseases. Contents Chairman’s Letter .......................... 4 Annual Review – CEO Report ....... 6 Full Year Results Highlights ....... 12 Strategic Global Presence ......... 14 Marketing & Events .................... 16 Product Pipeline .......................... 20 Upcoming Milestones ................. 21 Our People ................................... 22 Financial Report 2023 ................ 24 Analysis of Holdings ................... 86 Shareholder Information ............ 87 Company Directory ...................... 88 2 Genetic Signatures Limited – Annual Report 20233 Chairman’s Letter Dear Shareholders, it is a pleasure to present Genetic Signatures’ annual report for the financial year ending 30 June 2023. Since its inception 22 years ago, Genetic Signatures has experienced substantial growth, transitioning from a modest Australian start-up to a well-respected global player in the field of molecular diagnostics for infectious diseases. Our patented 3base® technology offers distinct advantages for multiplex PCR testing, now a fundamental workflow in diagnostic laboratories. During the COVID-19 pandemic, Genetic Signatures saw robust demand for the EasyScreen™ SARS-CoV-2 Detection Kit, leading to heightened awareness of the Genetic Signatures brand and the unique advantages of 3base® technology in key markets. Subsequently, following a decrease in public health molecular SARS-CoV-2 testing, the 2023 fiscal year saw revenue contract to $16.9 million. However, this decline had been anticipated by the Company, with a planned strategic focus to transition both existing and newly acquired customers to our well-established syndromic testing solutions. This syndromic methodology employs multiplex PCR testing to identify an array of pathogens causing similar symptoms in patients, within a single test. Indeed, the Company experienced subsequent revenue expansion from these established non- COVID testing solutions, serving as a testament to our sustainable growth trajectory and showcased 4 Genetic Signatures’ advantageous position to capitalise on the escalated global demand for syndromic testing. The revenue generated during the COVID-19 pandemic was invested into product development, with at least five new product groupings now in various stages of development. In addition, the Company continues to work towards future registration of key syndromic solutions in Australia, Europe and North America. We have also progressed development of our next generation, fully automated sample-to- answer instrument for high-volume testing. This instrument is expected to further drive demand for EasyScreen™ kits in targeted markets, and further embed 3base® technology in the workflow of our existing customer base. This demonstrates Genetic Signatures' steadfast dedication to meet our customers' diagnostic requirements, and underscores our enduring dedication to long-term growth, ultimately delivering lasting value to our shareholders. This year, we continued to deliver high- impact sales and marketing initiatives to further increase awareness and positioning of Genetic Signatures as a leading competitor in global molecular diagnostics in the lucrative United States (US) and European markets. Genetic Signatures Limited – Annual Report 2023In the US, Genetic Signatures remains focused on the commercial launch of the EasyScreen™ Gastrointestinal Parasite Detection Kit. With the goal of capturing 40% of the estimated addressable market of 5.5 million tests per annum, this innovative diagnostic solution offers faster and more accurate detection of a comprehensive range of gastrointestinal parasites in a single test. This advanced approach not only facilitates early patient management but also presents substantial cost efficiencies within the healthcare system. Despite facing challenges along the way, I'm excited about the Company's first 510(k) FDA submission, planned for Q1 FY2024. This will mark a very significant step forward as we anticipate clearance of the first EasyScreen™ 3base® detection kit for sale in the US. Bolstered by an established and highly experienced team in North America, we have secured a select group of pre-qualified sites poised to commence validating the EasyScreen™ Gastrointestinal Parasite Detection Kit. These sites will also have the potential to adopt the kit for routine use upon FDA clearance. To support sales in the North American region, this product was also cleared for sale in Canada, further extending our reach and sales potential in this market. In order to maintain a continuous flow of FDA-registered products within the US, we have also commenced a clinical trial for the EasyScreen™ Essentials Respiratory Detection Kit. This product is a syndromic test designed to detect the most common, clinically relevant respiratory infections, including SARS-CoV-2. 3base® technology is particularly well-suited for the detection of seasonal viral respiratory pathogens, as the tests are more resilient to genetic changes that occur with the emergence of new strains. This trial has progressed quickly with 510(k) FDA submission for this detection kit and workflow targeted in 2024. In Europe, Genetic Signatures is well-positioned to further lift sales across the existing portfolio of registered detection kits and automated systems. This year has seen further expansion of Genetic Signatures’ laboratory facility at the BioHub in Birmingham, United Kingdom, and the establishment of the German subsidiary. This will provide further support for European sales and marketing activities, as well as technical support for our European customers and Channel partners. Genetic Signatures is actively broadening its presence in international markets, as evidenced by the appointment of two additional channel partners to drive the promotion of the 3base® product portfolio in the Middle East. These selected channel partners possess specialised knowledge in marketing molecular diagnostic products, along with strong established networks within crucial diagnostic laboratories across the region. Managing the transition of the Company after the global pandemic, and prioritisation of the ongoing product development and registration pipeline has required focused governance. The Board of Directors and Management have risen to these challenges during the year. I would like to express my thanks to my fellow directors including; Director and Chief Executive, Dr John Melki; Executive Director, Michael Aicher, who heads US operations; and my fellow Non-Executive Directors, Dr Tony Radford, Dr Neil Gunn and Caroline Waldron. I would like to express my sincere appreciation for the dedicated efforts of our employees. Genetic Signatures' corporate strategy finds its foundation in the skills of our global team, whose unwavering commitment to our core values propels the Company forward. I am proud of the lived values that resonate in our daily working environment, and the celebration of individual differences and diversity that fuels Genetic Signatures’ innovation and success. Equally, I thank Genetic Signatures’ principal advisors, our growing team of global partners, and our long-standing and new shareholders. You enable us to realise our vision: To reduce infectious disease burden and improve patient health by using novel 3base® technology to enable configurable solutions that simplify molecular diagnostics. Our collective drive has empowered us to embrace new opportunities and leverage our expertise to deliver a uniquely configurable and diversified product portfolio, underpinned by our patented 3base® technology. With an unwavering enthusiasm for the future, and a robust strategic plan to support long term growth, we look forward to continuing to shape the landscape of molecular diagnostics and making lasting positive contributions to the field. Dr Nick Samaras Chair 5 Building The Foundations for Long Term Growth In FY2023, Genetic Signatures achieved a robust year of sales performance, driven by its diverse array of 3base® assays and automated instruments, resulting in revenue of $16.9 million. Notably, this achievement was attained despite the decline and eventual cessation of public health molecular SARS-CoV-2 (COVID-19) testing during the year. The prior strong commercial demand for the EasyScreen™ SARS-CoV-2 Detection Kit over the preceding two fiscal years significantly bolstered the Company's financial standing, enabling investments in long-term growth initiatives – a central priority for Genetic Signatures throughout FY2023. The key pillars of Genetic Signatures’ long-term growth strategy include: • Increasing brand presence and sales in key European and US markets • Supporting Genetic Signatures’ existing customer base and driving additional uptake of EasyScreen™ syndromic testing solutions • Continued expansion of the EasyScreen™ syndromic testing portfolio to other key disease areas impacting health • Embedding 3base® technology in high- volume customer sites by developing a fully automated, sample-to-answer Next Generation Instrument Preparing for Market entry into the US A key focus for Genetic Signatures during FY2023 was the completion of clinical testing and data validation for a 510(k) submission to the US FDA in Q1 2024, for regulatory clearance of the EasyScreen™ Gastrointestinal Parasite Detection Kit. The US is a significant commercial opportunity for Genetic Signatures’ EasyScreen™ Gastrointestinal Parasite Detection Kit with an estimated Total Addressable Market (TAM) of 5.5 million tests per annum. Currently in the US, the diagnosis of gastrointestinal (GI) protozoan infections 2023 Annual Review CEO Report Sales of $16.9 million in FY2023 Completion of clinical testing and data validation to support a 510(k) submission to the US FDA for regulatory clearance of the EasyScreen™ Gastrointestinal Parasite Detection Kit Established European subsidiary and expanded Australian coverage to include key customers in Western Australia Completed first stage of development of new, sample-to-answer instrument which has now progressed to building of a prototype 6 Genetic Signatures Limited – Annual Report 2023primarily relies on sample culture and microscopy, supported by antigen detection and pathogen- specific molecular tests. This approach is well recognised as being time-consuming, of variable reliability, labour-intensive, and can take several days to provide a result. By comparison, Genetic Signatures’ EasyScreen™ Gastrointestinal Parasite Detection Kit offers a simple and rapid molecular test for the eight most common, clinically relevant GI parasites, providing results within 2-4 hours. The EasyScreen™ Gastrointestinal Parasite Detection Kit includes a number of GI pathogen targets that are currently unavailable in other existing commercial products. This underscores the distinctive and competitive advantages this product offers in the market. The absence of available predicate tests for specific pathogen targets also necessitated Genetic Signatures to develop new validation methodologies for the FDA 510(k) submission. While this led to a delay in the timeline, with submission now planned for Q1 FY2024, the additional testing data is projected to fortify the submission's strength. This will mark a noteworthy milestone for the Company, with carefully selected User Experience Sites in the US ready to initiate the evaluation of this unique syndromic testing solution and workflow. During FY2023, Genetic Signatures also commenced clinical testing of its second 3base® product for the US market. The EasyScreen™ Essentials Respiratory Detection Kit is a syndromic test designed to detect the most common and clinically important respiratory infections, including the SARS-CoV-2 virus. Clinical testing has already commenced, with completion expected during H2 CY2023, and subsequent FDA 510(k) submission in H1 CY2024. Genetic Signatures patented 3base® technology is particularly well-suited for the detection of seasonal respiratory viral pathogens as the tests are more resilient than traditional PCR to genetic mutation and the emergence of new strains. There is significant market opportunity for this syndromic solution with the diagnostic advantages well understood. A recent publication reporting a meta-analysis of over 17,000 subjects across 27 different studies demonstrated that use of syndromic PCR tests for respiratory viruses can reduce the time to result by 24 hours, leading to shorter hospital stays and improvements in infection control management1. 1 https://doi.org/10.1016/j.jinf.2023.03.005 7 7 Gaining Momentum in Established Markets Strategic Partnerships for Entry into New Markets During FY2023, Genetic Signatures expanded its Australian footprint to include two pathology laboratories in Western Australia. These customers are intending to adopt a range of EasyScreen™ detection kits into their diagnostic workflow and have already installed Genetic Signatures’ automated instruments to improve the throughput and efficiency of testing. Genetic Signatures has Australian TGA registrations in place for 3base® EasyScreen™ detection kits for the syndromic testing of respiratory and gastrointestinal infections, as well as antimicrobial drug resistance (AMR). While the Company has generated material sales of these products in Australia over the past four years, these have primarily been to high volume customers in New South Wales, Victoria and Queensland. In line with Genetic Signatures' drive to enhance its presence in key European markets, the Company formally established a subsidiary in Germany, solidifying its commitment to offer direct sales and technical assistance to its European customers. This German arm bolsters the existing EMEA subsidiary, which is already well established. Local support was further enhanced by expansion of Genetic Signatures’ laboratory space at the BioHub in Birmingham, United Kingdom. Notably, several European sites embraced 3base® technology for SARS-CoV-2 testing during the pandemic. Building on this experience, a number of these customers have integrated, or are evaluating or preparing to integrate, the 3base® syndromic solutions into their laboratory workflow. In the first half of FY2023 Genetic Signatures lodged a submission for registration of the EasyScreen™ Gastrointestinal Parasite Detection with Health Canada. This registration was confirmed in October 2022 and is the 3rd EasyScreen™ Detection Kit to be registered for the Canadian market. Genetic Signatures is supported by a channel partner in the region. 8 Genetic Signatures recently signed an exclusive agreement with two channel partners, securing rights to promote its 3base® technology and syndromic testing solutions in the United Arab Emirates, the Kingdom of Saudi Arabia, Bahrain, Qatar, and Israel. These strategic partnerships will support Genetic Signatures' expansion into the Middle East by increased brand recognition and market penetration through the channel partners' existing networks, and customer base. Moreover, these collaborations provide invaluable local insights and support in the region. Expanding the Syndromic Testing Portfolio In line with Genetic Signatures’ long-term growth strategy, during FY2023 the Company continued to diversify and expand its product offering and range of EasyScreen™ detection kits available in priority international markets. Genetic Signatures has established assays for the detection of over 100 clinically relevant pathogens, across a broad range of infectious diseases. The simplified multiplexing process, enabled by Genetic Signatures' 3base® technology, has allowed the detection of multiple pathogens that may be responsible for an infection in a single test. Syndromic testing's clinical advantage lies in pinpointing the cause of infection among numerous potential pathogens, determined by patient symptoms. Genetic Signatures has a number of established syndromic tests developed for a range of infectious diseases with regulatory clearance for sale in Australia and Europe. These include EasyScreen™ detection kits for gastrointestinal and respiratory infections, and key gene targets associated with antimicrobial resistance. A range of research use only (RUO) syndromic solutions are also available. Genetic Signatures also has CE-IVD registration in Europe for syndromic testing for 10 of the most prevalent sexually transmitted diseases. The Company continues to work towards future registration of key syndromic solutions in Australia and North America, and is currently transitioning key EasyScreen™ detection kits through the new European IVDR regulatory pipeline, as new compliance requirements for in vitro diagnostics progressively come into effect over the coming years. Genetic Signatures Limited – Annual Report 2023In addition, the Company’s research and development program continues to progress, with a range of syndromic tests for 5 other disease areas in varying stages of development. These forthcoming products will expand the Company’s product portfolio, enabling laboratories to offer a diverse array of tests to cater to their diagnostic needs. Answering Customer Need for a Fully Automated Syndromic Workflow Genetic Signatures' existing automated workflow seamlessly integrates with EasyScreen™ detection kits, empowering diagnostic laboratories to efficiently test for a wide spectrum of infectious disease targets. Three instruments offer flexible, automated medium and high- throughput nucleic acid extraction and PCR set up on a single system. Additionally, a fourth instrument caters for simple, rapid extraction for lower throughput requirements. In FY2022, Genetic Signatures initiated a strategic project aimed at addressing a distinct market requirement: the creation of a fully automated sample-to-answer instrument tailored for high-throughput testing within diagnostic laboratories. This Next Generation Instrument’s design and specifications were developed through extensive market analysis and customer insight to meet the demands of high-volume customers. Encompassing the entire diagnostic testing workflow – from sample extraction to result reporting – the system minimises operator intervention, streamlines the laboratory workflow, and provides laboratories with the flexibility to run multiple EasyScreen™ detection kits in a single run. By facilitating seamless adoption of 3base® technology, this fully automated solution will embed our technology into the daily laboratory workflow to foster lasting commercial partnerships with our customers. 9 During FY2023, the first of the four phased- development program for the Next Generation Instrument was completed, with a working prototype successfully demonstrating the sample-to-answer workflow, a significant milestone in the instruments’ development. A full prototype is expected to be delivered to carefully selected customer sites for beta testing in the near future. Conclusion I take great pride in the accomplishments of the Genetic Signatures team during FY2023, as we lay the groundwork for our sustained long-term growth and remain steadfast in pursuing our strategic goals. A pivotal milestone has been the preparation of a solid FDA submission for clearance of the EasyScreen™ Gastrointestinal Parasite Detection Kit and its diagnostic workflow. Submission is expected in Q1 2024 and will be our first product for regulatory clearance in the US market. This achievement bears substantial commercial promise, given the sizable market potential in the US and the unmet need for this diagnostic solution. In parallel, we have made significant progress towards submission of our second syndromic product in the US for the detection of leading respiratory infections, the EasyScreen™ Essentials Respiratory Detection Kit. Our North American team have been instrumental in the ongoing success of the clinical trials and preparing the market for the future launch of these products. We continue to expand our global presence in Europe with the establishment of the German subsidiary, two new channel partners in the Middle East, and the unwavering commitment of our EMEA team to drive brand awareness and sales in the broader region. Our research and development, validation and production team's commendable efforts have propelled the ongoing development, enhancement and commercial delivery of our EasyScreen™ detection kits, and workflow to the global market. Moving into FY2024, the Genetic Signatures Board of Directors and our global team maintain a resolute commitment to executing our long-term growth strategies to deliver promising commercial outcomes for the Company, and its Shareholders. We are excited about the future as we strengthen our value proposition and expand our global reach. We sincerely thank our valued Shareholders for their ongoing support and unwavering belief in our mission to advance innovation and excellence in molecular diagnostics through our unique 3base® technology. Dr John Melki Managing Director and CEO 10 Genetic Signatures Limited – Annual Report 202311 Full Year Results Highlights Revenue from operations ($m) FY23 financial highlights ($m) 35.4 28.3 16.9 5.1 (8.0) 11.3 16.9 (14.1) (28.1) FY20 FY21 FY22 FY23 In the year ended 30 June 2023, Genetic Signatures’ revenue was $16.9 million. During the year the Company increased revenue from the sale of non-COVID detection kits after the cessation of public health SARS-CoV-2 testing, reducing demand of this type of testing. 12 Sales revenue Cost of materials & freight Other income Net loss Other expenses (incl overhead) The net loss for the year ended 30 June 2023 was $14.1 million compared to a net profit of $3.1 million in FY2022. Gross profit on materials reduced to 60% compared to 70% in the prior year. This reduction was primarily attributable to lower sales volumes during the year. Freight costs continue to be significant due to global logistics challenges and inflation. Overall, other expenses have grown 40% year on year as investments in people, R&D, clinical trials, and marketing have been made to take advantage of future opportunities, particularly in the US and European target markets. Fundamental investment in building and testing upgraded products also continues to support the Company's product pipeline. Genetic Signatures Limited – Annual Report 2023Cash movements ($m) 19.1 36.9 0.6 (32.1) (1.9) 0.0 (6.2) (0.0) 16.3 n t s e m y a c e i p t s p li e r p a l g b e r r e m p u S n i n s t o O e u p C e r a s h a O t h h u r c u r c P P E & e o f P e o f I n t a s n s g i b l e p ti o O n e x L e e p ri n e r c i s s a e c i p a l C I o s i n a l g b The cash balance at 30 June 2023 was $16.3 million. Net operating cash outflows for the year was $12.5 million and included collections from customers of $19.1 million. During the year, investments in instrumentation for use at customer sites, production and manufacturing facilities, and research facilities were $1.9m. In addition, $6.2 million was invested in capitalised intangible assets, which was primarily related to the Next Generation Instrument development. 13 Strategic Global Presence Genetic Signatures is expanding its global presence to accommodate future growth in key markets With direct presence in Australia, the UK, Germany, and the US, the Company has strategically positioned laboratory and warehousing facilities to ensure swift product delivery. These facilities also serve as hubs for comprehensive training and technical assistance for both channel partners and customers. Australia Headquarters Headquartered in Sydney, Australia, Genetic Signatures occupies a large, three-story building with commercial office space and a core laboratory for research and development, validation, and quality assurance testing. The production facility is located on a separate site in Sydney, where the EasyScreen™ detection kits are manufactured and stored before shipping to global warehousing facilities. Europe Operations In Europe, the Company maintains multiple warehousing facilities to support its operations, including a partnership with The BioHub Birmingham in the UK for access to their outstanding laboratory and business facilities. This year, Genetic Signatures expanded its laboratory space at The BioHub to accommodate growth, with enhanced instrumentation for technical support and training. The Company's commitment to the European market is further solidified by the establishment of a subsidiary in Germany. North America Operations In North America, multiple warehousing facilities also ensure timely product supply, and laboratory space at BioLabs at the Lundquist in Los Angeles, supports research and development, and training for the North American region. 14 Genetic Signatures Limited – Annual Report 2023BioLabs Los Angeles United States The BioHub Birmingham United Kingdom 6 4 5 3 2 1 3 Headquarters Sydney Australia 1 2 UAE, Kingdom of Saudi Arabia, Bahrain, Qatar Israel 3 Greece 4 5 6 Ireland Netherlands Canada An Expanding Global Distributor Network Genetic Signatures’ has a strong global network of dedicated channel partners in Europe, North America and more recently, the Middle East. These partners each possess unique market insight and strong local presence to amplify Genetic Signatures’ brand visibility, stimulate sales growth, and provide local customer support. Genetic Signatures recently announced two new strategic channel partnerships in the Middle East; with Integrated Gulf Biosystems (IGB) and Almog Diagnostic. This marks a significant milestone in the Company's expansion into the region, presenting exciting opportunities and advantages for stakeholders involved. Integrated Gulf Biosystems (IGB) is a long-established partner for the distribution of life science and clinical solutions in the Middle East. This exclusive partnership allows Genetic Signatures to tap into the promising market of United Arab Emirates, Kingdom of Saudi Arabia, Bahrain and Qatar. Leveraging IGB’s extensive expertise with Genetic Signatures' current OEM partners, and bolstered by IGB’s in-house technical assistance and training capabilities, IGB is poised to seamlessly introduce the Company’s proprietary 3base® syndromic workflow to their established customer networks. “Our association with Genetic Signatures, is aligned with their mission to deliver the most advanced applications for molecular diagnostic screening assays. IGB, being an end-to-end solution provider for automated workflows in the region, the association with Genetic Signatures… will be a great asset, for our foray into serving the clinical diagnostics area, thereby helping to deliver faster and accurate patient results,” said Prabhu Sampath, Co-Founder and CEO, Integrated Gulf Biosystems LLC. Almog Diagnostic, based in Tel Aviv, was founded in 1987, brings extensive expertise in distributing innovative and high-quality products for research, diagnostics, and clinical use. Their focused approach in introducing new innovative and niche technologies to the Israeli market aligns well with Genetic Signatures' patented 3base® syndromic solutions for infectious diseases. Bolstered by an in-house applications laboratory and skilled engineers to support Genetic Signatures' automated systems, Almog Diagnostic is aptly positioned to provide robust sales and service support. “In our continuous growth we always seek for the next ‘big thing’, cutting-edge technologies, that we can bring to the Israeli market. We strongly believe that our new collaboration with Genetic Signatures, the 3base® syndromic multiplex testing solutions, and the coming sample-to-result automation, can make a change in the diagnostic market,” said Nitsan Levi, VP New Technologies and Implementation, Almog Diagnostics. 15 Marketing & Events Elevating brand recognition: Genetic Signatures' prominent event sponsorship 2023 saw significant investment to represent a strong brand presence at prominent international conferences, positioning Genetic Signatures as a leading global brand in syndromic testing for infectious diseases. These events were very successful, notably elevating the Company's brand visibility and fostering valuable engagements with prospective customers and channel partners who were keen to understand the benefits of Genetic Signatures' patented 3base® technology and flexible syndromic workflow. Key events sponsored for FY2023 included: The 97th Annual Meeting of the American Society of Parasitologists (ASP), Texas, United States, 9th - 12th July 2022 74th Annual Meeting of the German Society for Hygiene and Microbiology (DGHM), Berlin, Germany, 5th - 7th September 2022 European Society for Clinical Virology (ESCV), Manchester, United Kingdom, 7th - 10th September 2022 Institute for Biomedical Science Congress, Birmingham, United Kingdom, 25th - 28th September 2022 38th NRL Workshop on Infectious Disease Testing 2023, Melbourne, Australia, 10th - 12th October, 2022 12th European Meeting on Molecular Diagnostics (EMMD), Noordwijk, Netherlands, 12th - 14th October 2022 32nd Annual Meeting of the Society for Virology (gFV)- Ulm, Germany, 28th - 31st March 2023 33rd European Congress of Clinical Microbiology and Infectious Diseases (ECCMID), Copenhagen, Denmark, 15th - 18th April 2023 Berufsverband der Ärzte für Mikrobiologie, Virologie und Infektionsepidemiologie (BÄMI), Göttingen, Germany, 11th - 13th May 2023 American Society of Microbiology (ASM) Microbe, Texas, United States, 16th - 18th June 2023 16 Genetic Signatures Limited – Annual Report 2023The European Congress of Clinical Microbiology and Infectious Diseases (ECCMID) The 33rd ECCMID conference was held from 15-18 April 2023 in Copenhagen. This premier global event in clinical microbiology and infectious diseases, showcased cutting-edge research and diagnostics, and emerging trends in this field. Attended by over 16,000 delegates from 146 countries, Genetic Signatures had a solid presence with a 50m2 booth and high impact advertising at the event. This successfully positioned the Company as a prominent global supplier of innovative, flexible syndromic testing for infectious disease. NRL Workshop on Infectious Disease Testing Australia's National Reference Laboratory (NRL) run the NRL Workshop on Infectious Disease Testing to unite professionals including scientists, IVD manufacturers, regulators, clinicians, and laboratory staff. This event facilitates discussions on current opportunities and challenges in the field, along with showcasing technological advancements and diagnostic tests for infectious diseases. Genetic Signatures has long sponsored and presented at this event, exhibiting their latest product innovations and enhancements. Australian Investor Roadshows Genetic Signatures regularly presents at leading investment events in Australia, such as the TechKnow Invest Roadshows. These events provide opportunities to connect directly with investors, brokers, and shareholders, facilitating insightful discussions about the Company’s unique diagnostic solutions, competitive strengths, and strategic advancements to support long-term growth and deliver shareholder value. Visit www.geneticsignatures.com/au/investors to access the latest presentations and reports. 17 Ron's ability to translate scientific concepts into tangible solutions for diagnostic laboratories is a hallmark of his expertise. His talent in anticipating and addressing customer needs has led to the establishment of enduring relationships, both with clients and industry partners. He attributes much of his success to the support of colleagues and senior managers who championed individual growth and development, fostering a culture of collaboration and shared success. “My relationships in the market with both companies and clients have created great support for my growth and the partnerships needed for success. No one is successful alone,” Ron said. This collaborative leadership style remains at the core of Ron's approach, characterised by a growth mindset, unwavering enthusiasm, and confidence in taking on challenges. Ron’s commitment to a positive company culture aligns seamlessly with Genetic Signatures' values, as he believes that culture is the heart of any successful business. Ron's decision to join Genetic Signatures was driven by the Company's "all in" culture, coupled with its cutting-edge proprietary 3base® technology and supportive leadership. Over the past 2 years, Ron has formed a North American team comprised of experts in Sales, Marketing, Technical Support, Clinical and Commercial Operations. “We have built a cohesive and motivated team in North America who are well equipped to overcome challenges and launch Genetic Signatures into the US market. A group of highly experienced individuals who now bring their expertise and knowledge to Genetic Signatures.” “We have a fantastic strategy for growth in the short and longer term with unique, customer-centric solutions that will place Genetic Signatures on the world stage,” Ron said. “Combine this with our local and global team's collective spirit and expertise, we are well positioned for a resounding success in North America.” North America A team prepared for success Ron Gonzales leads Genetic Signatures' North American endeavours Genetic Signatures local North American team has grown rapidly over the past year, driven by the Company’s strategic efforts to establish a robust brand identity in the region, in preparation for the future launch of the EasyScreen™ Gastrointestinal Parasite Detection Kit and automated workflow. At the helm of this highly experienced and diversely skilled team is Ron Gonzales. After joining the Company in 2021, Ron’s leadership has been pivotal in generating momentum, energy, and interest amongst highly targeted customers in the region. Ron Gonzales is a seasoned veteran in the diagnostic and medical device industry with an impressive career spanning various senior leadership roles at Abbott Laboratories, Merrill Lynch, and QIAGEN. Ron's extensive background equips him with a solid understanding of the healthcare and diagnostic sector. His passion for the diagnostics industry was ignited during his tenure at Abbott Laboratories, where he embarked on a journey of professional growth and knowledge acquisition. His fearless approach to tackling challenges and his mantra of remaining “green and growing” allowed him to gain exposure across diverse product areas and business units. 18 Genetic Signatures Limited – Annual Report 2023Elevating Market Presence in the US The Company has recently initiated a series of impactful sales and marketing initiatives to establish brand recognition in the US. These endeavours encompass strong representation at prominent events, the delivery of a comprehensive three-part educational webinar series featuring eminent thought leaders in the parasitology field, the additional promotion of an aligned white paper, and the impactful delivery of a focus group with key opinion leaders in clinical diagnostics. Sponsorship of Leading Industry Events Genetic Signatures recently exhibited at leading events in the US including the American Society for Microbiology (ASM Microbe) and the Association for Diagnostics and Laboratory Medicine (formerly AACC). These prominent events in the field of microbiology, clinical chemistry, and diagnostics served as a platform for Genetic Signatures to demonstrate the Company's strong local presence. 3base® technology, the attractiveness of uniform PCR test conditions, and suggestions on future product development and diagnostic workflow. This research initiative enabled a deeper understanding of diagnostic laboratory needs in the US, aiding informed decision-making, refined strategic direction, and the shaping of effective communication strategies. Educational Webinar Series: ‘Advances in Gastrointestinal Parasite Testing’ In June 2023, Genetic Signatures delivered an educational webinar, the third in a 3-part series featuring molecular solutions for detecting gastrointestinal parasites. Experts in parasitology highlighted the advantages of a syndromic workflow that identifies multiple pathogens in one test, delivering results within hours, compared to weeks seen with conventional methods. The speakers also emphasised the unique pathogen targets in Genetic Signatures' EasyScreen™ Gastrointestinal Parasite Detection Kit. Hosted by 360Dx, a leading clinical diagnostics platform, this virtual event generated robust participation and an expanding opportunity pipeline for Genetic Signatures. This webinar series, together with an aligned white paper, are now available on-demand and will support future marketing efforts as the Company prepares to launch the EasyScreen™ Gastrointestinal Parasite Detection Kit. Shaping Diagnostic Excellence: Insights from Leaders in Clinical Diagnostics In March 2023, the Company held a focus group with influential Key Opinion Leaders (KOLs) from leading diagnostic laboratories in the US. The focus group provided a forum to discuss the key challenges facing clinical diagnostics and future requirements for infectious disease testing. The KOLs also provided valuable feedback on 19 A Robust Pipeline with Multiple Products Cleared for Sale Genetic Signatures has an extensive range of regulatory cleared EasyScreen™ detection kits for syndromic testing for respiratory, gastrointestinal, sexually transmitted diseases, and antimicrobial resistance. Diagnostic solutions for five other disease areas are also at various stages of the development pipeline, supporting future growth opportunities for the Company. Genetic Signatures is currently transitioning key EasyScreen™ Detection Kits through the recently established European IVDR regulatory pipeline. This is to ensure the EasyScreen™ detection kits meet the new European compliance criteria for in vitro diagnostics, which will be progressively implemented in the years ahead. Additionally, the Company is dedicated to securing IVD registration for the existing research use only (RUO) products to expand the availability of syndromic testing solutions and integrate 3base® technology into laboratory workflows. Regulatory approval is being pursued for two syndromic solutions targeting gastrointestinal parasite infections and leading respiratory infections in the US. The Company's product pipeline envisions the introduction of more solutions in the future. Genetic Signatures remains committed to continuous improvement of the diagnostic workflow to meet their customer needs, with a range of initiatives in development. This includes the development of a fully automated sample-to- answer instrument tailored for high-throughput testing. This Next Generation Instrument minimises operator intervention, streamlines the laboratory workflow, and provides the flexibility to run multiple EasyScreen™ detection kits in a single run. CONCEPT IN DEVELOPMENT RUO IVD REGISTRATION TGA CE MARK FDA In progress: In clinical testing In progress: Submission in Q1 2024 Planned Planned Converting to new protocol In development 20 Genetic Signatures Limited – Annual Report 2023Upcoming Milestones US: EasyScreen™ Gastrointestinal Parasite Detection Kit Planned 510(k) FDA submission in Q1 2024 Customer Experience Sites initiated with select diagnostic laboratories in the US Receive FDA approval Launch product once clearance is granted Contracts with new customers Completion of US clinical trial for second FDA submission EasyScreen™ Essentials Respiratory Detection Kit R&D initiatives for new products New tests for EasyScreen™ detection kits Continued technology and workflow improvements Further progression for the development of the Next Generation Instrument Quarterly sales updated and progress reports 21 Our People One of Genetic Signatures’ great strengths is its people. All team members live a set of core values that guide their approach to work, problem solving, and communication, and form the cornerstones of Genetic Signatures’ culture. All in We are passionate about making a real and positive difference to patient health outcomes and we give every day our all, supporting each other and our customers to achieve our collective goals. Recent employee engagement survey 97% of staff are motivated to see Genetic Signatures succeed 100% of staff understand how their role contributes to what we are trying to achieve as a company 91.5% agree that Genetic Signatures is an open and accepting workplace Truth We conduct ourselves with honesty and integrity and seek and speak the truth. Empowerment We are clear on our responsibilities and see the road to our success, and we are given ownership to achieve this. Evolution We are passionate about continuously evolving our professional capability and molecular diagnostic solutions. Diversity We understand that each individual is unique, and we recognise our individual differences and unique perspectives fuel the innovation of our solutions. Staff allocation by function Staff gender profile ADMIN & SUPPORT 16% SALES & MARKETING 32% PRODUCTION QUALITY CONTROL 23% 22 R&D/VALIDATION 30% MALE 43% FEMALE 57% Genetic Signatures Limited – Annual Report 2023Introducing Karl Pechmann Chief Financial and Operating Officer (CFO & COO) and Company Secretary In the brief time since assuming his role at Genetic Signatures in June 2023, Karl Pechmann has made an indelible impact as Chief Financial and Operating Officer (CFO & COO) and Company Secretary. With extensive experience as a Chartered Accountant and governance expert within ASX and NASDAQ listed companies, his proficiency in financial management, strategic planning, and capital raising within medical technology, biotechnology, and healthcare sectors positions Genetic Signatures for successful global expansion under his adept leadership. Karl's early interest in finance and business strategy was ignited during his cadetship program at KPMG, starting at just 18 years old. Karl was immediately exposed to diverse industries and high-net worth businesses at various stages of development. This rapidly accelerated Karl’s career to senior management roles at multi-national companies including OncoSil Medical Limited, Kyckr Limited and Immutep Limited. Throughout this journey, Karl assumed responsibilities spanning finance, investor relations, treasury, operations, and information technology. An advocate for adaptability and market responsiveness, Karl's transformative mindset has streamlined operations, enhanced efficiency, and strategically driven organisational growth. “Regardless of the type of industry you are working in, the biggest learning has been that teams need to be adaptable and responsive to changes in market dynamics, or to know when to pivot to meet market demand,” Karl said. His affinity for companies driving positive societal impact led him to Genetic Signatures, where innovation in molecular diagnostics for infectious diseases resonated deeply. “The Board, management and staff are dedicated to excellence in molecular diagnostics to improve patient health. Genetic Signatures has deep roots in research and development and product development, and continuous improvement to our product offering brings confidence for the future growth of the company, globally,” Karl explained. Karl's extensive expertise in driving organisational change and enhancing operations will fortify Genetic Signatures' expansion into targeted international markets. "In my role, I closely collaborate with the business to not only interpret financial data but also make data-driven decisions to enhance operational performance. I foster the understanding among team members about their collective impact on operational excellence, and how this can translate to enhanced company performance to further invest in improving patient outcomes, as well as supporting improved financial results for shareholders," said Karl. With a career marked by astute financial acumen, business planning and strategic leadership, Karl has already emerged as a driving force to support Genetic Signatures' financial stability and future growth objectives. “My main goal for the Company is to be the trusted business partner to the Board, management and the Genetic Signatures team to facilitate the growth of the business and continued improvements to the Company’s product offering, which will ultimately improve treatment decisions for patients." Welcome to the team! 23 For the financial year ended 30 June 2023 Contents Directors’ Report ..............................................................26 Auditors Declaration ........................................................45 Financial Report Consolidated Statement of Profit or Loss and other Comprehensive Income ..........................46 Consolidated Statement of Financial Position ....................................................47 Consolidated Statement of Changes in Equity .....48 Consolidated Statement of Cash Flows ................49 Notes to the Financial Statements ........................50 Directors’ Declaration ......................................................80 Independent Audit Report ...............................................81 Analysis of Holdings ........................................................86 Shareholder Information .................................................87 24 Genetic Signatures Limited – Annual Report 2023 Financial Report 2023 25 25 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 The directors present their report, together with the financial statements, on the company and its controlled entities for the year ended 30 June 2023. This will hereafter be referred to as company, consolidated entity or group. DIRECTORS The following persons were directors of the group during the whole of the financial year and up to the date of this report, unless otherwise stated: Nickolaos Samaras Michael A Aicher Neil Gunn PRINCIPAL ACTIVITIES John R Melki Anthony J Radford Caroline C Waldron The principal activities of the group during the financial year were the research into identifying and commercialisation of 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 generated solid sales of 3base® EasyScreen™ for the year ended 30 June 2023. During the year the group was successful in opening new customer sites in both Australia and Europe and continuing to expand the range of tests undertaken using 3base® EasyScreen™ beyond SARS-CoV-2. In the financial year ending 30 June 2023, Genetic Signatures’ revenue was $16.939 million representing a 52% decrease over the previous year. This reduction in revenue was due to the reduction of public health molecular testing for SARS-CoV- the year, Genetic 2. During Signatures revenue increased from non-COVID kits to partially offset the reduction in SARS- CoV-2 revenue. 11.3 1.1 10.2 Genetic Signatures posted a full year net loss of $14.052 million, compared prior the corresponding period profit of $3.063 million. to FY20 Revenue from operations ($m) 35.4 3.8 31.6 16.9 1.6 15.4 FY22 FY23 International 28.3 6.0 22.2 FY21 APAC Gross margins on materials were 60%, compared to 70% in the prior year. The reduction in gross margin is attributable to the reduction in production volumes during the year. Freight and warehousing continues to be a significant expense due to increased logistics costs that have been widely reported in the media. Margins are expected to be maintained or improved as the proportion of international sales rises. 26 2 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Significant investments have been made over the year to prepare to take advantage of future growth opportunities, and this has been shown in the increase in expenses from the previous year. Employee benefits expense were up 31% vs. prior corresponding period to $15.037 million due to growth in headcount globally, primarily in Research & Development. This also includes share-based payments expense of $1.972 million, a non-cash item. Scientific consumables increased 63% over prior year, reflecting the work on continuing and new R&D projects and clinical trial costs for the US FDA Enteric Parasite submission. Costs for the development phase of the Next Generation project is now being capitalised. Marketing & travel expenses increased over the prior year as restrictions on travel ease and markets, particularly the US, are being prepared for the launch of new products. Cash on hand was $16.349 million at 30 June 2023 and the group remains debt free. Genetic Signatures has reported net operating cash outflows for the year of $12.451 million which includes collections from customers of $19.093 million. During the year, the group made $1.932 million in investments in instrumentation for use at customer sites and machinery for production or research work, and $6.162 million in capitalised intangible assets, mostly related to development of the Next Generation instrument referred to above. Inventory balances reduced through the year to reflect the reduction in sales and supply chains eased. Commercialisation Progress by Market Australia During the year, Genetic Signatures expanded its Australian footprint to include two pathology laboratories in Western Australia. Genetic Signatures has Australian TGA registrations in place for 3base® EasyScreen™ syndromic test kits for the evaluation of respiratory infections, enteric gastrointestinal pathogens and antimicrobial drug resistance (AMR). During the year, Genetic Signatures completed the first of four phases of its program to develop a fully- automated, high-throughput, sample-to-answer instrument specifically designed for 3base® technology. This program has now progressed into the development of a working prototype prior to building the commercial instrument. The design, requirements, and specifications for this instrument has been informed by extensive customer research which highlighted the attractiveness of a fully-automated, high-throughput, sample-to-answer instrument for high-volume sites wanting to routinely adopt 3base® technology as part of their molecular testing offering. EMEA During the year Genetic Signatures registered a subsidiary in Germany to provide sales, marketing and technical support for its European customer base. A number of European sites initially adopted the 3base® technology to assist with testing for SARS-CoV-2 during the pandemic. Following this experience, many of these customers are now either evaluating or have started to purchase 3base® syndromic kits for other indications. The region contributed 9.4% of total sales revenue in FY2023. As with Australia, SARS-CoV-2 testing has reduced as governments withdraw support for population-wide screening. The Genetic Signatures’ sales & support teams, based in UK and Germany, are using the opportunity to sell the benefits of the other CE-IVD marked diagnostic kits in the portfolio. 3 27 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 A key focus for Genetic Signatures during FY2023 was the completion of clinical testing, data validation, and the preparation of the submission of a 510(k) application for regulatory clearance for our EasyScreen™ Gastrointestinal Parasite Detection Kit in the United States. This is the first product using our 3base® technology to go in front of the US Food and Drug Administration. The US is a significant commercial opportunity for Genetic Signatures’ EasyScreen™ Gastrointestinal Parasite Detection Kit with an estimated Total Addressable Market (TAM) of 5.5 million tests per annum. During the financial year, Genetic Signatures also commenced clinical testing of its second 3base® product for the US market. This product is a syndromic test designed to detect the most common respiratory infections, including the SARS-CoV-2 virus. In the first half of FY2023 Genetic Signatures lodged an application for registration of this its Enteric testing kit with Health Canada. This registration was confirmed in October and is the 3rd EasyScreen™ Detection Kit to be registered for the Canadian market. Looking Forward Genetic Signatures has an exciting year ahead as it manages the transition from SARS-CoV-2 to expanding the range of EasyScreen™ tests that current and new customers use day to day. The group is focused on its goal of being a solution of choice for pathology laboratories. Key goals over the next 12 months include: • Anticipating US FDA clearance and successfully launching the product once clearance is granted. • Completing regulatory clinical trials for the next product to be put through the US FDA. • Progressing the Next Generation instrument through its development phases with early-stage prototypes available for comprehensive testing. • Expanding the European customer base and the range of tests adopted by customers. This includes establishing distributor-based sales teams in markets not currently served. • Continuing R&D activity and moving new products from the development phase towards commercialisation. The above milestones will again broaden Genetic Signatures’ applicability to pathology testing laboratories and will secure further growth, particularly in the target regions of Europe and the US. 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 (2022: NIL). EVENTS SUBSEQUENT TO THE REPORTING DATE Subsequent to the reporting date the group received a report of inconsistencies in the detection of the influenza B virus when employing the EasyScreen™ Respiratory Pathogen Detection Kit. The group has undertaken an investigation and found that this season’s influenza B virus is not being consistently detected in a small proportion of low viral concentration samples. The group is well-advanced in 28 4 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 resolving this issue, which is specific to the influenza B virus. Genetic Signatures has advised the regulatory authorities of the reported detection inconsistencies, and the group’s ability to implement a solution in a relatively short timeframe. As a result, revenue from the sale of the EasyScreen™ Respiratory Pathogen Detection Kit has impacted Q1 FY2024 revenue with no expected impact in following quarterly revenue periods. 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 group to affect significantly the operations of the group, the results of those operations or the state of affairs of the group in future financial years. LIKELY FUTURE DEVELOPMENTS Likely developments in the operations of the group and the expected results of those operations in future financial years are: • A submission for US FDA clearance for its EasyScreen™ Enteric Parasite Detection Kit is expected to be lodged in Q1 FY2024. If clearance is granted the group will be able to sell a fully cleared product in the USA for the first time. The group cannot forecast the potential positive financial impact at this stage. • Work is underway on development of a new instrument. This project has been estimated to cost between $10-12 million, including external consultancy, prototyping and other internal costs. BUSINESS RISKS The following is a summary of material business risks that could adversely affect our financial performance and growth potential in future years and how we propose to mitigate such risks. Product Pipeline The group’s long-term sustainable viability will be determined in part by its ability to continue to identify and successfully develop and fund a pipeline of products capable of commercialisation and will need to be successful in this in the context of a dynamic and changing competitive landscape. The group will also need to protect and enhance the intellectual property position surrounding its portfolio. The commercial team remains alert to scientific and market developments and dedicates resources to intellectual property protection strategy and implementation. Competitive Risk The molecular diagnostic industries are highly competitive, and includes companies with significantly greater financial, technical, human, research and development, and marketing resources than the group. There are companies that compete with the group’s efforts to discover, validate and commercialise molecular diagnostic products or product candidates. The group’s competitors may discover and develop products in advance of the group and/or products that are more effective than those developed by the group. As a consequence, the group’s current and future technologies and products may become obsolete or uncompetitive, resulting in adverse effects on revenue, margins and profitability. 5 29 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Regulatory Risk The group operates under a broad range of legal, regulatory, tax and political systems. The continued viability of the group, including its ability to have products successfully approved or commercialised in its operating regions, as well as maintaining a competitive advantage, may be adversely impacted by regional specific regulatory regimes (which may result in delays or rejections of applications or regulatory sanctions if not appropriately managed), changes in regulatory or fiscal regimes, difficulties in interpreting or complying with local laws and reversal of current political, judicial or administrative policies, including as a result of geopolitical tensions. Regulatory risk includes changes in reimbursement regulation. The group has developed and seeks to continuously improve its regulatory compliance frameworks, including those for risk area identification and management, training, monitoring, reporting and remediation. Reliance on key personnel The group currently employs a number of key management and scientific personnel, and the group’s future depends on retaining and attracting suitably qualified personnel. The group has included in its employment with key personnel provisions aimed at providing incentives and assisting in the recruitment and retention of such personnel. It has also, as far as legally possible, established contractual mechanisms through employment and consultancy contracts to limit the ability of key personnel to join a competitor or compete directly with the group. Despite these measures, however, there is no guarantee that the group will be able to attract and retain suitably qualified personnel, and a failure to do so could materially and adversely affect the value of the group's technologies. ENVIRONMENTAL COMPLIANCE The group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory. Climate risk The Board is considering on an ongoing basis the potential response to climate risk and considering potential implementation of a formal review and policy response in future years. 30 6 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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. 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. 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 7 31 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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 over 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’ 3base® technology. Managing Director and Chief Executive Officer Directorships of other listed companies: Interests in shares and options: 1,096,000 ordinary shares, Nil 800,000 options over ordinary shares 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 Director; Member of Audit & Risk Committee and Nomination & Remuneration Committee Directorships of other listed companies: Nil Interests in shares and options: 240,000 ordinary shares 32 8 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Name: Qualifications: Experience: Special responsibilities: Neil Gunn BSc, Msc, PhD Dr Gunn holds a PhD and Master of Science from Portsmouth Polytechnic, UK. He has over 30 years’ experience in medical devices and diagnostics. Most recently Dr Gunn was CEO of IDbyDNA, a metagenomics company based in the US that was acquired by Illumina in 2022. Prior to this he was the President of Roche Sequencing Solutions where he oversaw all aspects of the business and managed a team of approximately 900 people. His team developed and launched more than 20 products per year. Dr Gunn was also previously Vice President of Roche’s Molecular Diagnostics business and was responsible for over 120 diagnostic product launches principally into the IVD clinical market. Dr Gunn is based in San Francisco, USA. Non-Executive Director Directorships of other listed companies: Nil Interests in shares and options: 250,000 options over ordinary shares 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 Roswell Biotechnologies, Techcyte and CytoBay. 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. Executive Director – US Operations Directorships of other listed companies: Interests in shares and options: 645,785 ordinary shares Nil 9 33 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Name: Qualifications: Experience: Special responsibilities: Caroline C Waldron LLB (Hons), GAICD, FGIA Ms Waldron is a cross-border advisor and director with over 30 years expertise in governance, marketing, human resources, and digital transformation across a range of sectors. Her formal training is in law and she has been admitted to the Bar of England and Wales and the courts of other jurisdictions including Australia and New Zealand. Ms Waldron holds an LLB (Hons) from the University of London, is a Graduate of the AICD, and a Fellow of the Governance Institute of Australia. Non-Executive Director; Chair - Audit & Risk Committee Directorships of other listed companies: Non-executive Director – Resimac Group Ltd Non-executive Director – AMA Group Ltd Interests in shares and options: 16,700 ordinary shares Company Secretary Name: Qualifications: Experience: Karl Pechmann B Bus, CA, AGIA Mr Pechmann is a senior executive with extensive experience in ASX- listed companies and multi-national organisations. In these roles, Mr Pechmann has been responsible for numerous operational areas including finance, investor relations, treasury, operations, and information technology. He is a qualified Chartered Accountant and Chartered Secretary. Mr Peter Manley was the group’s former Company Secretary, resigning from this role on 27 March 2023. Mr Anthony Rule was appointed interim Company Secretary from this date until the appointment of Mr Karl Pechmann as Company Secretary on 28 June 2023. 34 10 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 DIRECTORS’ MEETINGS The number of meetings of the board of directors (including board committees) held during the year ended 30 June 2023, and the numbers of meetings attended by each director are set out below: Board Audit & Risk Committee Nomination & Remuneration Committee Name Nickolaos Samaras John R Melki Anthony J Radford Michael A Aicher Neil Gunn Caroline C Waldron Held 8 8 8 8 8 8 Attended 8 8 8 8 8 8 Held 2 - 2 - - 2 Attended 2 - 2 - - 2 Held 1 - 1 - - - Attended 1 - 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 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 group. 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 group’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 $450,000 excluding share-based payments which are subject to separate shareholder approval. 11 35 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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 Dr Neil Gunn Ms Caroline C Waldron Executive directors Dr John R Melki - Managing Director & Chief Executive Officer Michael A Aicher - Executive Director, US Operations Other executives Peter Manley - Chief Financial Officer/Company Secretary until his resignation on 27 March 2023 where he ceased to be Key Management Personnel. 36 12 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 2 NON-EXECUTIVE DIRECTOR REMUNERATION 2.1 Directors’ Fees The current remuneration was increased for Directors in recognition of business growth and resulting extra time and commitment from Non-executive Directors. Fees are inclusive of committee fees. Board fees per annum Chairman Non-executive director (Australian based) Non-executive director (overseas) $117,500 $65,542 60,000 (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 10.5% of the base fee, having increased from 10% in FY 2022 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. A non-executive director, Dr Neil Gunn received options as approved by shareholders at the 2021 Annual General Meeting. 2.2 Non-executive director remuneration Non-executive directors Nickolaos Samaras Anthony J Radford Neil Gunn1 Caroline C Waldron Total Year 2023 2022 2023 2022 2023 2022 2023 2022 2023 2022 Cash salary and fees $ 117,500 108,000 65,542 60,000 89,206 82,426 65,542 7,955 337,790 Super- annuation $ 12,337 10,800 6,882 6,000 - - 6,882 795 Share-based payments $ - - - - 100,557 86,937 - - Total $ 129,837 118,800 72,424 66,000 189,763 169,363 72,424 8,750 26,101 100,557 464,448 258,381 17,595 86,937 362,913 1 N Gunn is paid in USD. Changes in base pay are attributable to the stronger AUD against the USD through FY23 (Average rate FY23: 0.6726, FY22: 0.7283). 13 37 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 EXECUTIVE REMUNERATION 3 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. 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 2023, 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 advancement in overseas markets, securing US FDA clearance for the group’s first product and progress on the next generation instrument development. 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. 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. 14 38 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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. 300,000 options were issued in 2023 to key management personnel as at the date of this report. 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 significant growth by the consolidated entity and a transition from a loss maker to a profitable group that continues 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 (Loss)/Profit attributable to owners of the parent entity Share price at year end Dividends paid (cents per share) 2023 $’000 16,939 (14,052) 2022 $’000 35,421 3,062 2021 $’000 28,284 1,756 2020 $’000 11,263 (2,086) 2019 $’000 4,866 (3,492) 0.525 - 1.16 - 1.10 - 2.15 - 1.35 - Voting and Comments made at the Company’s 2022 Annual General Meeting (‘AGM’) The Company received 86.6% of “for” votes in relation to its remuneration report for the year ended 30 June 2022. No issues were raised with Directors concerning the Report. 15 39 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 3.1 Executive director remuneration Fixed remuneration Variable remuneration Remuneration proportions Cash salary and fees $ Non- monetary benefits $ Year John R Melki CEO Michael A Aicher1 Executive Director Peter L Manley4 Former CFO Total 2023 391,087 2022 366,906 2023 178,416 2022 178,907 2023 184,688 2022 233,273 2023 754,191 2022 779,086 - - - - - - - - Super- annuation $ 25,292 25,384 - - 18,685 27,373 43,977 52,757 Long-term benefits: Annual and long service leave $ Subtotal Short term incentive2 $ Share-based payments3 $ Total $ 15,514 431,894 29,683 421,973 38,749 39,535 126,297 596,940 151,379 612,887 Fixed 72% 69% - - - 178,416 178,907 203,372 - - - 19,181 279,827 15,514 813,682 48,864 880,707 26,000 38,749 65,535 - - 178,416 100% 178,907 100% 98,588 301,960 139,248 445,075 67% 63% 224,885 1,077,316 290,627 1,236,869 At risk STI At risk LTI 7% 6% 0% 0% 0% 6% 21% 25% 0% 0% 33% 31% 1 2 3 4 M Aicher is paid in USD. Changes in base pay are attributable to the weaker AUD against the USD through FY23 (Ave rate FY23: 0.6726, FY22: 0.7283). The short term incentive represents a cash bonus which 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. P Manley resigned as CFO on 21 March 2023 and ceased as Key Management Personnel of the group as at this date. The remuneration above includes his remuneration until the date of ceasing to be a KMP. 16 40 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Short term incentives STI potential Percentage of base Paid Forfeited J.R. Melki M.A. Aicher P.L. Manley $ 156,435 - - 40% - - 24.8% - - 75.2% - - EQUITY DISCLOSURES Key Management Personnel Share Movements 4 4.1 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 2022 Granted as compensation N. Samaras J.R Melki M.A Aicher A.J Radford N Gunn C. Waldron P.L Manley Total 2,024,016 1,096,000 645,785 240,000 - - 70,408 4,076,209 - - - - - - - - Employee Incentive Plan - Options Received on conversion of restricted shares - - - - - - - - Other changes - - - - - 16,700 (70,408) (53,708) Balance at 30 June 2023 2,024,016 1,096,000 645,785 240,000 - 16,700 - 4,022,501 Balance held nominally 1,393,000 1,096,000 645,785 240,000 - 16,700 - 3,391,485 KMP Name Balance at 1 July 2022 Granted during the year Exercised during the year Other changes Balance at 30 June 2023 Unvested at 30 June 2023 No. 550,000 No. 250,000 Value1 $ 151,110 350,000 50,000 36,598 250,000 - - Value2 $ - - - No. - - - J.R Melki P.L Manley N Gunn No. - No. 800,000 No. 375,000 (400,000)3 - - - 250,000 187,500 1 2 3 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. P.L Manley ceased to be Key Management Personnel as at 27 March 2023 due to resignation. 17 41 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 EMPLOYMENT AGREEMENTS 5 Service contracts have been entered into by the group 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 $391,087, 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. This concludes the remuneration report which has been audited. 42 18 Genetic Signatures Limited – Annual Report 2023 for the financial year ended 30 June 2023 GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 OPTIONS There were 8,164,750 unissued ordinary shares of the group under option outstanding at the date of this report. During the financial year 2,735,000 new options were issued, 20,000 were exercised, and 240,000 were forfeited. INDEMNIFICATION OF OFFICERS AND AUDITORS Genetic Signatures Ltd has indemnified the directors and executives of the group for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the group paid a premium in respect of a contract to insure the directors and executives of the group against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. 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 2023 $ 33,735 - 2022 $ 43,180 - 33,735 43,180 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. 19 43 Directors’ Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 DIRECTORS’ REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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 45. 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 31 August 2023 44 20 Genetic Signatures Limited – Annual Report 2023Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia Auditor’s Declaration Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret Street Sydney NSW 2000 Australia DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF GENETIC SIGNATURES LIMITED Level 11, 1 Margaret St Sydney NSW 2000 Australia Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au As lead auditor of Genetic Signatures Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF GENETIC SIGNATURES 2. No contraventions of any applicable code of professional conduct in relation to the audit. LIMITED DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the LIMITED period. As lead auditor of Genetic Signatures Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in best of my knowledge and belief, there have been: relation to the audit; and relation to the audit; and 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in 2. No contraventions of any applicable code of professional conduct in relation to the audit. Gareth Few 2. No contraventions of any applicable code of professional conduct in relation to the audit. Director This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the period. period. BDO Audit Pty Ltd Sydney, 31 August 2023 Martin Coyle Gareth Few Director Director BDO Audit Pty Ltd BDO Audit Pty Ltd Sydney, 28 August 2020 Sydney, 31 August 2023 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 45 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Financial Report GENETIC SIGNATURES LIMITED Consolidated Statement of Profit or Loss and Other Comprehensive Income ABN: 30 095 913 205 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Revenue Other income Cost of materials used Freight on materials & finished goods Employee benefits expense Directors’ and consultancy fees Depreciation and amortisation expenses Finance costs Scientific consumables & clinical trials Software expenses Travel and marketing Other expenses (Loss)/profit before income tax Income tax 2 4 5 6 Note Consolidated 2023 $’000s 2022 $’000s 35,421 217 (10,465) (1,524) (11,471) (477) (1,616) (19) (3,133) (87) (849) (2,934) 16,939 5,116 (6,712) (1,284) (15,037) (983) (1,526) (1) (5,119) (507) (1,633) (3,305) (14,052) 3,063 - - (Loss)/profit attributable to members of the entity (14,052) 3,063 Other comprehensive (loss)/income Items that maybe reclassified subsequently to profit or loss: Foreign Currency translation of foreign operations Total comprehensive (loss)/income for the year, net of tax Earnings (loss) per share Basic (Loss)/earnings per share to ordinary equity holders of the group Diluted (Loss)/earnings per share to ordinary equity holders of the group 30 30 181 (13,871) 2023 cents (9.80) (9.80) 220 3,283 2022 cents 2.14 2.11 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes 23 46 Genetic Signatures Limited – Annual Report 2023 Financial Report Consolidated Statement of Financial Position GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023 Note Consolidated 2023 $’000s 2022 $’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 Intangible assets Right of use assets 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 14 13 15 13 15 16 17 16,349 4,386 8,753 6,877 36,365 7,224 5,489 - 12,713 49,078 4,803 - 1,266 6,069 - 95 95 36,897 4,133 10,202 - 51,232 6,733 1,646 43 8,422 59,654 3,665 33 1,107 4,805 1 46 47 6,164 4,852 42,914 54,802 84,438 7,623 (49,147) 84,428 5,469 (35,095) 42,914 54,802 The above Consolidated statement of financial position should be read in conjunction with the accompanying notes 24 47 Financial Report Consolidated Statement of Changes in Equity GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Consolidated Share based payments reserve Foreign currency translation reserve Accumulated losses $’000s $’000s $’000s Issued Capital $’000s Total $’000s Balance at 1 July 2021 84,164 3,469 (135) (38,158) 49,340 Profit attributable to members of the entity Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Share issues on conversion of options, net of costs (note 16) Forfeiture of share-based payments (note 17) Share-based payments (note 17) - - - 264 - - Balance at 30 June 2022 84,428 (Loss)/Profit attributable to members of the entity Other comprehensive income Total comprehensive income for the year Transactions with owners in their capacity as owners: Share issues on conversion of options, net of costs (note 16) Forfeiture of share-based payments (note 17) Share-based payments (note 17) - - - 10 - - Balance at 30 June 2023 84,438 - - - - (245) 2,160 5,384 - - - - (137) 2,110 7,357 - 220 220 - - - 3,063 - 3,063 220 3,063 3,283 - - - 264 (245) 2,160 85 (35,095) 54,802 - 181 181 (14,052) (14,052) - 181 (14,052) (13,871) - - - - - - 10 (137) 2,110 266 (49,147) 42,914 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 48 25 Genetic Signatures Limited – Annual Report 2023 Financial Report Consolidated Statement of Cash Flows GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note Consolidated 2023 $’000s 2022 $’000s Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees (inclusive of GST) Interest and other income received Interest paid Net cash provided by/(used in) operating activities 19,093 (32,108) 565 (1) 13 26(b) (12,451) Cash flows from investing activities Purchase of plant and equipment Purchase of intangible assets Net cash (used in) investing activities Cash flows from financing activities Proceeds from exercise of options Share issue costs Lease costs (principal) Net cash (used in) financing activities 12 16 16 (1,932) (6,162) (8,094) 11 (1) (33) (23) 39,405 (29,706) 126 (19) 9,806 (1,714) (1,275) (2,989) 273 (9) (365) (101) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of financial year Exchange differences on cash and cash equivalents (20,568) 6,716 36,897 30,121 20 60 36,897 Cash and equivalents at end of financial year 26(a) 16,349 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 26 49 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 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 group has adopted all the amendments to Australian Accounting Standards issued by the Australian Accounting Standards Board, which are relevant to and effective for the group’s financial statements for the financial year beginning 1 July 2022. There was no material impact on the financial statements from the adoption of these new accounting standards. 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 group'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). Going concern During the financial year ended 30 June 2023 the group has reported a loss after tax of $14.052 million (2022: profit of $3.28 million) and a decline in cash flows from operative activities of $12.45 million. As at 30 June 2023, the group holds cash and cash equivalents of $16.349 million. The directors have assessed the financial and operating implications of the above matters, including the expected net cash outflows over the next 12 months. Should forecasted revenue not be achieved, the group can flexibly manage cash outflows by reducing discretionary expenditure. Based on this consideration, the directors are of the view that the group will be able to pay its debts as and when they fall due for at least 12 months following the date of these financial statements and that it is appropriate for the financial statements to be prepared on the going concern basis. (a) Basis of Consolidation The consolidated financial statements comprise the financial statements of Genetic Signatures Limited and its subsidiaries, Genetic Signatures US Ltd, Genetic Signatures UK Ltd and Genetic Signatures GmbH. 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. 50 27 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (b) Income tax income The tax expenses/(benefit) expense/(benefit) and deferred tax expenses/(benefit). for the year comprise current income tax 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. (c) 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 group 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. 28 51 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) 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 group 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 they are incurred. Depreciation The depreciable amount of all fixed assets is depreciated on a straight-line basis over their estimated useful lives to the group 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 5 years The assets residual values and useful lives are reviewed and adjusted if appropriate at each reporting date. Gains and losses on disposal are determined by 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. (d) 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 and are disclosed as operating cash flows. (e) 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. 52 29 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) 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. 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. 30 53 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (f) 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 – Reagents 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 and rental 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 by applying the interest rate within the lease arrangement to the future lease payments and the estimated value of any unguaranteed end of term earnings or secondary income. 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. (g) Trade and other payables Accounts payable represent the principal amounts outstanding at the reporting date plus, where applicable, any accrued interest. 54 31 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (h) Impairment At each reporting date, the group 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 group estimates the recoverable amount of the cash-generating unit to which the asset belongs. (i) 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. (j) Inventories Inventories include raw materials, work in progress and all items available for resale, including equipment (defined in 1(f)) 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. (k) 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 30-60 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 1% of receivables and are immaterial. The group has made a provision for impairment against an invoice that is in dispute and is considered to be at reasonable risk. Other receivables are recognized at amortised cost, less any provision for impairment. (l) 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. 32 55 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (m) Employee benefits Provision is made for the group’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. (n) 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. (o) Leases 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 payments 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. 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. Refer to note 13 for further information pertaining to the group’s right of use assets and liabilities. (p) 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 19. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the group’s estimate of equity instruments that will eventually vest. (q) Parent entity financial information The financial information for the parent entity, Genetic Signatures Limited, disclosed in note 27, has been prepared on the same basis as the consolidated financial statements. 56 33 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (r) Earnings per share Basic earnings per share are calculated by dividing: • • the profit attributable to owners of the group, excluding any costs of servicing equity other than ordinary shares; and by the weighted average number of ordinary shares outstanding during the financial year. Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account dilutive potential ordinary shares. (s) 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. (t) Intangibles Intangibles comprise costs incurred in developing or acquiring new knowledge that will contribute future financial benefits and are therefore capitalised. This currently comprises software development for the GS-Call software, which can be in the form of software, licences or systems; and costs associated with development of a new Instrument Development that will be unique to the PCR testing market. They include external direct costs of materials and service. Development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility, where the group has the intention and ability to use the asset. No amortisation of intangibles is recorded until the development work is in a form from which future economic benefit may be derived. As the software and instrument development is not yet advanced to this stage, no amortisation has been recorded to date. 34 57 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) (u) Research and development Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources and intent to complete the development; and its costs can be measured reliably. Once the development phase is completed, capitalised development costs will be amortised on a straight-line basis over the period of their expected benefit, being their finite life of 10 years. (v) New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2023. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. (w) Critical Accounting Estimates and Judgments The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group. Key estimates – valuation of employee share option plan shares At each reporting date, the entity revises its estimate of the number of rights that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. The impact of the revision to the original estimates, is recognised in profit or loss with a corresponding adjustment to equity. The fair value is measured at grant date and recognised over the period during which the employee becomes unconditionally entitled to the restricted shares or options. Key judgements capitalisation of development costs Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility, the group is able to use or sell the assets, the group has sufficient resources, and intent to complete the development and its costs can be measured reliably. Judgements - research and development claim Judgement is required in determining the value of the research and development claim. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination may be subject to change. The group calculates its research and development claim based on the group’s understanding of the tax law. Where the final outcome of these matters is different from the amounts that were initially recorded, such differences will impact the tax payable in the year in which such determination is made. 58 35 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 1: Statement of Significant Accounting Policies (continued) Judgements – provisioning for inventory Inventories generally have expiry dates and the group provides for product that have expired or are close to expiry. Expiry dates for raw material are no longer relevant once the materials are used in production. At this stage the relevant expiry date is that applicable to the resultant intermediate or finished product. Various factors affect the assessment of recoverability of the carrying value of inventory, including regulatory approvals and future demand for the group’s products. These factors are taken into consideration in determining the appropriate level of provisioning for inventory. Judgements – availability of prior tax losses Judgement has been exercised with regards to the availability of carry forward tax losses. The group must apply the Same Business Test which examines the business that was carried on during the year in which losses are being applied compared to the business which was carried on immediately before the failure of the Continuity of Ownership Test (“COT”), requiring the same business to be carried on between both times. Consideration by independent experts assessed that, upon a review of the historic business of Genetic Signatures, the identity of its core technology, strategic direction and essential characteristics of the business activities remain similar during the whole test period. 36 59 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 2: Revenue Disaggregation of revenue The group derives revenue from the transfer of goods and services over time and at a point in time in the following major product and geographical regions: Consolidated - 2023 Revenue lines Reagents & consumables Equipment sales & rental Service contracts Timing of revenue recognition Goods transferred at a point in time Services transferred over time Consolidated - 2022 Revenue lines Reagents & consumables Equipment sales & rental Service contracts Timing of revenue recognition Goods transferred at a point in time Services transferred over time Asia Pacific $’000s EMEA $’000s $’000s Americas Total $’000s 14,989 362 - 15,351 1,507 81 - 1,588 15,351 - 1,588 - 15,351 1,588 - - - - - - - 16,496 443 - 16,939 16,939 - 16,939 Asia Pacific $’000s EMEA $’000s Americas $’000s Total $’000s 30,714 742 127 31,583 31,092 491 31,583 3,319 420 99 3,838 3,646 192 3,838 - - - - - - - 34,033 1,162 226 35,421 34,738 683 35,421 Note 3: Financial Reporting Segments The group is operated under one business segment which was the research and commercialisation of identifying individual genetic signatures to diagnose diseases and disabilities. Major customers During the year ended 30 June 2023 there were two customers (2022: two) that each contributed over 10% of the consolidated entity’s external revenue. Geographic locations Asia Pacific The group’s head office and manufacturing operation is based in Sydney, Australia. 91% of the revenue was generated within the Australian entity. 37 60 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 3: Financial Reporting Segments (continued) EMEA This business comprises Eastern and Western Europe, Middle East including Israel, and Africa. The group is represented by employees in UK and Germany. Americas The group’s North American business includes the United States and Canada. The group proposes to sell products in this region and is currently having its products evaluated by the US FDA. Operations are currently based in California, USA. Consolidated - 2023 Asia Pacific $’000s EMEA $’000s Americas Total $’000s Segment revenue Intersegment sales Total sales from external customers Other revenue Segment revenue from external customers 16,231 (880) 15,351 - 15,351 1,621 (33) 1,588 - 1,588 393 (393) - - - 18,245 (1,306) 16,939 - 16,939 Segment result from external customers (11,577) (2,204) (3,692) (17,473) Unallocated revenue less unallocated expenses Loss before income tax Income tax Net loss after tax Consolidated - 2022 3,421 (14,052) - (14,052) Segment revenue Intersegment sales Total sales from external customers Other revenue Segment revenue from external customers 34,798 (3,215) 31,583 - 31,583 4,194 (356) 3,838 - 3,838 135 (135) - - - 39,127 (3,706) 35,421 - 35,421 Segment result from external customers 7,434 375 (2,788) 5,021 Unallocated revenue less unallocated expenses Profit before income tax Income tax Net profit after tax Consolidated – 2023 Segment assets Segment liabilities Consolidated – 2022 Segment assets Segment liabilities (1,958) 3,063 - 3,063 Total $’000 49,078 (6,164) Asia Pacific $’000 67,177 (5,911) EMEA $’000s Americas Inter company $’000s $’000s 3,347 (9,381) 2,800 (16,202) (24,246) 25,330 70,952 (5,383) 4,374 (5,882) 2,265 (10,796) (17,937) 17,209 59,654 (4,852) 38 61 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Consolidated 2023 $’000s 2022 $’000s Note 4: Other income Interest income Export Market Development Grant Research & Development Tax Incentive Other income Total other income 543 - 4,421 152 5,116 132 75 - 10 217 Note 5: Expenses Finance costs Interest charges Superannuation expense Defined contribution superannuation expense (including non- executive Directors) Consolidated 2023 $’000s 2022 $’000s 1 19 878 580 Write-down of inventory to net realisable value* 644 - Items included in other expenses include: Patents – lodgement and maintenance Foreign exchange loss 187 124 196 92 * Write-down of inventory to net realisable value: included in Cost of materials used in the statement of profit or loss and other comprehensive income. Refer to Note 9 for details of inventories. 62 39 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 6: Income tax Consolidated 2023 $’000s 2022 $’000s Numerical reconciliation of income tax benefit to prima facie tax payable Prima facie income tax (benefit) on profit/(loss) from ordinary activities (2023: AU 26% US 21% UK 19% Germany 23%; 2022: 26% US 21% UK 19%) (3,102) 1,229 Add/(less)tax effect of: - non-deductible items - tax losses not brought to account - tax losses applied - research and development tax credit - temporary differences not brought to account Income tax 3,243 1,653 (320) (1,105) (369) 2,946 946 (673) (3,781) (667) - - The consolidated entity has recorded a loss during the year ended 30 June 2023. The consolidated entity currently has carried forward losses of $5,312,273 from prior years in respect to its Australian operations, approximately US$6,247,347 in respect to its North American operations, and GBP 1,427,113 from its UK operations. The utilisation of these carried forward losses is conditional on the consolidated entity meeting the conditions for deductibility imposed by the law in the period in which the consolidated entity derives sufficient taxable income in order to utilise these losses. For the year ended 30 June 2023, management has reviewed the deductibility of these losses in comparison to the estimated taxable income derived by the consolidated entity and are confident that sufficient losses are available to offset the taxable income for the financial year ended 30 June 2023. It is currently not known with sufficient certainty how the consolidated entity’s trade will transpire for the FY24 period and beyond. As a consequence, the consolidated entity has elected not to recognise any deferred tax assets or carried forward income tax losses until the probability of recoupment is sufficiently certain. Note 7: Cash and cash equivalents Cash at bank and on hand Cash on deposit (maturity < 12 months) Consolidated 2023 $’000s 6,349 10,000 16,349 2022 $’000s 11,897 25,000 36,897 Cash at bank and on hand bears floating interest rates. The interest rate relating to cash and cash equivalents for the year was between nil% and 1.35% (2022: between nil% and 0.4%). Genetics Signatures Limited has an unused credit card facility with the bank at the year-end of $57,000 (2022: $57,000). 40 63 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 8: Trade and other receivables Consolidated Current Trade debtors (a) Provision for expected credit losses Other receivables (b) 2023 $’000s 3,194 - 3,194 1,192 4,386 2022 $’000s 3,900 (258) 3,642 491 4,133 a. Past due but not impaired and impairment of receivables Customers with balances past due amount to $88,686 at 30 June 2023 ($1,112,200 as at 30 June 2022). Among which the group has recognised a provision for expected credit losses of $Nil (2022: $258,000) in profit or loss in respect of impairment of receivables for the year ended 30 June 2023. b. Other receivables These amounts relate to prepayments and accrued interest. None of these receivables are impaired or past due but not impaired. c. Fair value and credit risk Due to the short-term nature of these receivables, their carrying value is assumed to approximate their fair value. Information about the group’s exposure to fair value and credit risk in relation to trade and other receivables is provided in note 28. Note 9: Inventory Consolidated Raw materials Work in progress Finished goods Stock in transit Provision for obsolescence 2023 $’000s 5,536 600 3,347 4 (734) 8,753 Note 10: Government grant receivable Consolidated Research & Development tax concession 2023 $’000s 6,877 2022 $’000s 6,245 305 3,865 94 (307) 10,202 2022 $’000s - During the year, the group qualified for Research & Development tax concessions to be a refundable tax offset, compared to the prior year where this concession was non-refundable. 64 41 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 11: Property, plant and equipment Consolidated Plant and equipment: At cost Less: accumulated depreciation Movement in plant and equipment is as follows: Cost at 1 July 2021 Additions Disposals FX difference Cost at 30 June 2022 Accumulated depreciation 1 July 2021 Depreciation expense Disposal of assets Accumulated depreciation 30 June 2022 2023 $’000s 12,688 (5,464) 7,224 Plant & equipment $’000s 9,540 2,310 (967) 59 10,942 (3,880) (1,289) 960 (4,209) 2022 $’000s 10,942 (4,209) 6,733 Total $’000s 9,540 2,310 (967) 59 10,942 (3,880) (1,289) 960 (4,209) Carrying amount 30 June 2022 6,733 6,733 Cost at 1 July 2022 Additions Disposals FX difference Cost at 30 June 2023 Accumulated depreciation 1 July 2022 Depreciation expense Disposal of assets FX difference Accumulated depreciation 30 June 2023 10,942 1,932 (357) 171 12,688 (4,209) (1,509) 279 (25) 5,464 10,942 1,932 (357) 171 12,688 (4,209) (1,509) 279 (25) 5,464 Carrying amount 30 June 2023 7,224 7,224 42 65 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 12: Intangibles Consolidated At cost Less: accumulated amortisation Movement in intangibles is as follows: Cost at 1 July 2021 Additions Disposals Cost at 30 June 2022 Accumulated amortisation 1 July 2021 Amortisation expense Accumulated amortisation 30 June 2022 Carrying amount 30 June 2022 Cost at 1 July 2022 Additions R&D tax incentive Disposals Cost at 30 June 2023 Accumulated amortisation 1 July 2022 Amortisation expense Accumulated amortisation 30 June 2023 2023 $’000s 5,701 (212) 5,489 Instrument Development $’000s - 978 - 978 - - - 978 978 5,055 (1,924) - 4,109 - - - Software $’000s 583 297 - 880 (212) - (212) 668 880 1,244 (532) - 1,592 (212) - (212) Carrying amount 30 June 2023 1,380 4,109 The software relates to the development of improvements to GS-Call software which will be incorporated in the instrument currently being developed. No amortisation of software is recorded until the development work is in a form from which future economic benefit may be derived. Capitalised R&D tax incentives are directly attributable to capitalised development costs during the year. 2022 $’000s 1,858 (212) 1,646 Total $’000s 583 1,275 - 1,858 (212) - (212) 1,646 1,858 6,299 (2,456) - 5,701 (212) - (212) 5,489 66 43 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 13: Right of use assets Consolidated 2023 $’000s 2022 $’000s (i) Amounts recognised in the statement of financial position Right of use assets Buildings Equipment Lease liabilities Current Non-current (ii) Amounts recognised in the statement of profit or loss Amortisation charge of right of use assets Buildings Equipment Interest expense (included in finance costs) Expenses related to short-term leases (included in other expenses) - - - - - - 41 1 42 1 730 41 2 43 33 1 34 344 2 346 19 264 Note 14: Trade and other payables Consolidated Current – unsecured Trade creditors Other creditors 2023 $’000s 2022 $’000s 3,770 1,033 4,803 3,417 248 3,665 44 67 Financial Report GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 Notes to the Consolidated Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 15: Provisions Current Employee benefits Non-Current Employee benefits Note 16: Issued capital Opening balance at 1 July 2021: Movement in ordinary share capital Exercise of employee share options Less: Share issue costs Consolidated 2023 $’000s 2022 $’000s 1,266 1,107 95 46 Number $’000s 142,907,246 84,164 478,750 273 (9) Closing balance at 30 June 2022 143,385,996 84,428 Movement in ordinary share capital Exercise of employee share options Less: Share issue costs 20,000 11 (1) Closing balance as at 30 June 2023 143,405,996 84,438 All fully paid ordinary shares and founder shares have equal voting rights, of one vote per share, and subject to the prior rights of preference shares, have equal rights to receive dividends in proportion to the number of ordinary shares held. 45 68 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 17: Reserves Share based payments reserve Balance 1 July Transferred to accumulated losses upon forfeiture Share-based payment expenses Consolidated 2023 $’000s 5,384 (137) 2,110 2022 $’000s 3,469 (245) 2,160 Balance 30 June 7,357 5,384 The share-based payments reserve is used to recognise the fair value of equity benefits provided to employees and Directors as part of their compensation. Foreign currency translation reserve Balance 1 July Arising from translation of foreign subsidiaries Balance 30 June Consolidated 2023 $’000s 85 181 266 2022 $’000s (135) 220 85 The foreign currency translation reserve is used to recognise the exchange difference on the translation of the US, UK and German subsidiaries into Australian Dollars. Note 18: Related party transactions Related parties (a) The company's main related parties are as follows: Key management personnel: Any persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity, are considered key management personnel. Key Management personnel include: Nickolaos Samaras – Director John R Melki – Director and Chief Executive Officer Michael A Aicher – Director Anthony J Radford – Director Neil Gunn – Director Caroline C Waldron – Director Peter Manley – Chief Financial Officer/Company Secretary (ceased to be a KMP upon his resignation on 27 March 2023) For details of disclosures relating to key management personnel, refer to Note 19. 46 69 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 (b) Transactions with related parties: There were no related party transactions during the year other than transactions with key management personnel as part of their remuneration. Note 19: Share-based payments Options were issued during the year, pursuant to the Equity Incentive Plan. Fair values at grant date are determined using a Black-Scholes Option Pricing Model that takes into account the exercise price, the term of the option, the share price at the grant date, the expected volatility of the underlying share, and risk-free interest rate for the term of the option. The model inputs for options granted during the year ended 30 June 2023 are noted below: Grant date Expiry date Vesting period (mths) Exercise price Est. volatility Expected dividend yield Average risk-free rate Share price at issue date $0.89 Fair value at issue date $0.73 Sep 22 Sep 37 Nov 22 Nov 37 48 48 $0.93 61.73% $0.93 $0.75 $0.60 61.73% - - 3.68% 3.73% Historical 12-month volatility has been the basis for determining expected share price volatility as it is assumed that this is indicative of future movements. 70 47 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Employee Share Ownership Plan Shares Set out below are the summaries of restricted shares and options granted under the plan: 2023 Grant date Options October 2016 November 2016 October 2017 August 2018 November 2018 February 2019 May 2019 November 2019 March 2020 September 2020 November 2020 September 2021 November 2021 November 2021 June 2022 September 2022 November 2022 Exercise price Balance at beginning of the year Granted during the year Converted during the year Expired/ Forfeited during the year Balance at the end of the year Vested and convertible at year end $0.52 $0.52 $0.34 $0.53 $0.53 $0.84 $1.10 $0.98 $1.13 $2.30 $2.30 $1.44 $1.44 $1.39 $1.51 $0.93 $0.93 181,000 100,000 272,500 492,500 200,000 150,000 150,000 737,750 50,000 1,200,000 250,000 1,520,000 250,000 100,000 36,000 - - - - - - - - - - - - - - - - 2,485,000 - - - (20,000) - - - - - - - - - - - - - - - - - - - - - - (80,000) - (70,000) - - - (90,000) - (240,000) 181,000 100,000 272,500 472,500 200,000 150,000 150,000 737,750 50,000 1,120,000 250,000 1,450,000 250,000 100,000 36,000 2,395,000 250,000 8,164,750 $1.21 12.5 181,000 100,000 272,500 472,500 200,000 150,000 150,000 541,500 37,500 560,000 125,000 362,500 62,500 25,000 36,000 - - 3,276,000 $1.14 Total Weighted average option exercise price Weighted average remaining contractual life of options (years) - GENETIC SIGNATURES LIMITED 2,735,000 5,689,750 ABN: 30 095 913 205 (20,000) 250,000 $1.36 $0.93 $0.53 $1.54 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 2022 Grant date Options October 2016 November 2016 October 2017 October 2017 August 2018 November 2018 February 2019 May 2019 November 2019 March 2020 September 2020 November 2020 April 2021 September 2021 November 2021 November 2021 June 2022 Total Weighted average option exercise price 48 Exercise price Balance at beginning of the year Granted during the year Converted during the year Expired/ Forfeited during the year Balance at the end of the year Vested and convertible at year end $0.52 $0.52 $0.34 $0.38 $0.53 $0.53 $0.84 $1.10 $0.98 $1.13 $2.30 $2.30 $1.56 $1.44 $1.44 $1.39 $1.51 181,000 100,000 325,000 250,000 550,000 200,000 150,000 200,000 809,000 100,000 1,230,000 250,000 15,000 - - - - - - - - - - - - - - - - - 1,565,000 250,000 100,000 36,000 - - (52,500) (250,000) (50,000) - - (50,000) (51,250) (25,000) - - - - - - - - - - - (7,500) - - - (20,000) (25,000) (30,000) - (15,000) (45,000) - - - 181,000 100,000 272,500 - 492,500 200,000 150,000 150,000 737,750 50,000 1,200,000 250,000 - 1,520,000 250,000 100,000 36,000 181,000 100,000 272,500 - 340,000 150,000 112,500 100,000 345,250 25,000 300,000 62,500 - - - - - 4,360,000 1,951,000 (478,750) (142,500) 5,689,750 1,988,750 Weighted average remaining contractual life of options (years) $1.25 $1.44 $0.57 $1.47 $1.36 12.7 $0.96 49 71 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 20: Key management personnel disclosures Short-term employee benefits Non-monetary benefits Short term incentive Post-employment benefits Long-term benefits Termination benefits Share based payments 2023 $ 1,091,980 - 38,749 70,078 15,514 - 325,442 1,541,763 2022 $ 1,037,467 - 65,535 70,352 48,864 - 377,564 1,599,782 Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report. Note 21: Commitments There were no material capital commitments at the reporting date (2022: Nil). Note 22: Events Subsequent to Reporting Date There has not arisen in the interval between the end of the financial year and the date of this report any other item, transaction, or event of a material and unusual nature likely in the opinion of the directors of the Company to affect significantly the operations of the Company, the results of those operations or the state of affairs of the Company in future financial years. Note 23: Subsidiaries Country of incorporation Equity holding in subsidiaries 2023 % 2022 % a) Parent entity Genetic Signatures Limited Australia b) Controlled entities Genetic Signatures USA Ltd Genetic Signatures UK Ltd Genetic Signatures GmbH USA UK Germany 100% 100% 100% 100% 100% - Note 24: Auditors’ remuneration Consolidated BDO Audit and review of financial statements Other non-audit services Tax compliance services Total non-audit services Total audit and non-audit services 2023 $ 114,500 33,735 33,735 148,235 2022 $ 100,637 43,180 43,180 143,817 72 50 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 25: Contingent liabilities The group does not have any material contingent liabilities at year-end (2022: nil). Note 26: Cash Flow Information (a) Reconciliation of Cash Consolidated 2023 $’000s 2022 $’000s Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position as follows: Cash on hand and at bank 16,349 36,897 (b) Reconciliation of Profit after Income Tax to net Cash inflows/(outflows) from Operations (Loss)/Profit after income tax (14,052) 3,063 Non cash flow items included in profit/(loss) Depreciation Share based payments expenses Loss/(profit) on disposal of assets Inventory provision for obsolescence Bad debts provision Amortisation of leases Transfers between inventory and fixed assets Changes in operating assets and liabilities: Decrease in trade and other receivables (Increase) in government grant receivable Decrease in inventories Increase in provisions Increase in payables 1,484 1,973 - 426 (258) 42 119 496 (4,421) 1,027 207 506 Net cash (outflow)/inflow from operating activities (12,451) 1,270 1,915 60 37 115 346 (683) 1,240 - 1,932 198 313 9,806 51 73 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 27: Parent Entity Financial Information (a) Summary financial information: Assets Current Assets Cash and cash equivalents Trade and other receivables Inventory Government grant receivable Total Current Assets Non-Current Assets Plant and equipment Intangible assets Right of use assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Provisions Leases Total Current Liabilities Non-Current Liabilities Leases Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity (Loss)/Profit for the year Other comprehensive income/(loss) Total comprehensive income/(loss) for the year 74 52 2023 $’000s 15,987 5,080 7,715 6,877 35,659 3,446 5,489 - 8,935 2022 $’000s 36,348 10,163 9,424 - 55,935 4,207 - 43 4,250 44,594 60,185 4,108 1,099 - 5,207 - 95 95 4,284 1,019 33 5,336 1 46 47 5,302 5,383 39,292 54,802 84,438 7,355 (52,501) 39,292 (17,492) - (17,492) 84,428 5,383 (35,009) 54,802 3,284 - 3,284 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 (b) Summary financial information: The Parent entity did not have any contingent liabilities as at 30 June 2023 or 30 June 2022. (c) Significant accounting policies: The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: • Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Note 28: Financial risk management The group's financial instruments consist mainly of deposits with banks, accounts receivable and payable, and lease liabilities. The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies to these financial statements, are shown at their net fair value. Net Fair Value The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying values as presented in the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties at arm's length transaction. Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have material impact on the amounts estimated. Financial assets Cash and cash equivalents Trade and other receivables Total Financial Assets Net Carrying Value 2023 Net Fair Value 2023 Net Carrying Value 2022 $’000s 16,349 4,386 20,735 $’000s 16,349 4,386 20,735 $’000s 36,897 4,133 41,030 Net Fair Value 2022 $’000s 36,897 4,133 41,030 Financial Liabilities Trade creditors Other creditors Lease liabilities Total Financial Liabilities 3,770 1,033 - 4,803 3,770 1,033 - 4,803 3,031 633 34 3,698 3,031 633 34 3,698 The values disclosed in the above table have been determined based on the following methodologies: Cash and cash equivalents, trade and other receivables and trade and other payables are short- term instruments in nature whose carrying value is equivalent to fair value. The fair value of lease liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities. 53 75 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Interest Rate Risk The group's main interest rate risk arises from the cash balance which is invested at variable rates. Sensitivity Significant changes in market interest rates may have an effect on the group's income and operating cash flows. The group manages its cash flow interest rate risk by placing excess funds in term deposits. Based on the cash held at reporting date, the sensitivity to a 1% increase or decrease in interest rates would increase/(decrease) after tax loss by $163,000 (2022 profit: $369,000). Credit risk Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposure to domestic and international customers, including outstanding receivables and committed transactions. The group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The majority of customers have long term relationships with the group and sales are secured with supply contracts. Sales are secured by letters of credit when deemed appropriate. The group has policies that limit the maximum amount of credit exposure to any one financial institution. The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about counterparty default ratesThe table below summarises the assets which are subject to credit risk. Financial assets Cash and cash equivalents Trade and other receivables Total Financial Assets Consolidated 2023 $’000s 16,349 4,386 20,735 2022 $’000s 36,897 4,133 41,030 The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for trade receivables. Further detail is explained in Note 1(k). 54 76 Genetic Signatures Limited – Annual Report 2023 Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Liquidity Risk Liquidity Risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages this risk through the following mechanisms: - preparing forward-looking cash flow analysis in relation to its operational, development and financing activities; obtaining funding from a variety of sources including equity issues; only investing surplus cash with major financial institutions. - - Financial liability maturity analysis (undiscounted payments) Weighted average interest rate % Within 1 Year $’000s 1 to 5 Years $’000s Total contractual cash flows Total Carrying amount $’000s $’000s 2023 Financial liabilities due for payment Trade and other payables - Lease liabilities 4.5% Total expected outflows 4,803 - 4,803 - - - 4,803 - 4,803 4,803 - 4,803 Weighted average interest rate % Within 1 Year $’000s 1 to 5 Years $’000s Total contractual cash flows $’000s Total Carrying amount $’000s 2022 Financial liabilities due for payment Trade and other payables - Lease liabilities 4.5% Total expected outflows 3,665 33 3,698 - 1 1 3,665 34 3,699 3,665 34 3,699 Note 29: Capital Risk Management The group’s objective when managing capital is to safeguard the ability to continue as a going concern so that they can fund future growth and provide returns to shareholders and benefits to other stakeholders and to maintain an optimal capital structure. Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and the market. There were no externally imposed capital requirements during the year. 55 77 Financial Report Notes to the Consolidated Financial Statements GENETIC SIGNATURES LIMITED ABN: 30 095 913 205 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2023 Note 30. Earnings per share (Loss)/Profit after income tax Consolidated 2023 $’000s 2022 $’000s (14,052) 3,063 (Loss)/Profit after income tax attributable to the owners of Genetic Signatures Limited (14,052) 3,063 Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Number Number 143,399,640 143,102,251 Options over ordinary shares 553,500 2,333,750 Weighted average number of ordinary shares used in calculating diluted earnings per share 143,953,140 145,436,001 Basic (Loss)/Profit per share Diluted (Loss)/Profit per share Cents Cents (9.80) (9.80) 2.14 2.11 78 56 Genetic Signatures Limited – Annual Report 2023 79 Directors’ Declaration DIRECTORS' DECLARATION In the directors' opinion: ● ● ● ● the attached financial statements and notes thereto comply with the Corporations Act 2001, the Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at 30 June 2023 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the group will be able to pay its debts as and when they become due and payable. The directors have been given the declaration required by section 295A of the Corporation Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors John Melki Director Sydney, 31 August 2023 80 Genetic Signatures Limited – Annual Report 2023 Independent Auditor’s Report Level 11, 1 Margaret Street Sydney NSW 2000 Australia Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia INDEPENDENT AUDITOR'S REPORT To the members of Genetic Signatures Limited Report on the Audit of the Financial Report Opinion DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES We have audited the financial report of Genetic Signatures Limited (the Company) and its subsidiaries LIMITED (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the to the financial report, including a summary of significant accounting policies and the directors’ best of my knowledge and belief, there have been: declaration. relation to the audit; and 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in In our opinion the accompanying financial report of the Group, is in accordance with the Corporations Act 2001, including: 2. No contraventions of any applicable code of professional conduct in relation to the audit. Giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its (i) financial performance for the year ended on that date; and Complying with Australian Accounting Standards and the Corporations Regulations 2001. This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the (ii) period. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report. We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s Martin Coyle APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) Director that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been BDO Audit Pty Ltd given to the directors of the Company, would be in the same terms if given to the directors as at the Sydney, 28 August 2020 time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 81 Independent Auditor’s Report Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia Key audit matters Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. a separate opinion on these matters. Inventory valuation Inventory valuation Key audit matter DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES Key audit matter LIMITED How the matter was addressed in our audit How the matter was addressed in our audit • • As disclosed in Note 9, the Group held As disclosed in Note 9, the Group held inventory with a carrying value of inventory with a carrying value of As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the $8,753,000 as at 30 June 2023. $8,753,000 as at 30 June 2023. best of my knowledge and belief, there have been: Our audit procedures for addressing this key audit matter included, but Our audit procedures for addressing this key audit matter included, but were not limited to, the following: were not limited to, the following: Inventory valuation was considered a 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in Inventory valuation was considered a key audit matter due to the significant relation to the audit; and key audit matter due to the significant value of these assets in the 2. No contraventions of any applicable code of professional conduct in relation to the audit. value of these assets in the Consolidated Statement of Financial Consolidated Statement of Financial Position, the various locations that Position, the various locations that This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the inventory was held, and the key inventory was held, and the key period. estimates and judgements applied by estimates and judgements applied by management in assessing the net management in assessing the net realisable value (‘NRV’) of inventory. realisable value (‘NRV’) of inventory. • • • • • • Observed the inventory count procedures at key locations Observed the inventory count procedures at key locations around the year-end and performed detailed test counts and around the year-end and performed detailed test counts and compared these to the underlying inventory records. compared these to the underlying inventory records. Evaluated the assumptions applied by management in assessing Evaluated the assumptions applied by management in assessing potential obsolescence for near-expiry and slow-moving potential obsolescence for near-expiry and slow-moving inventory. inventory. Analysed inventory turnover by product group in comparison to Analysed inventory turnover by product group in comparison to prior periods and to expectations. prior periods and to expectations. Reviewed management’s processes and estimates for Reviewed management’s processes and estimates for calculating the overhead and labour costs included within calculating the overhead and labour costs included within manufactured finished goods inventory. manufactured finished goods inventory. Performed various analytical procedures in relation to Performed various analytical procedures in relation to inventory including an analysis of monthly gross margins and inventory including an analysis of monthly gross margins and inventory turnover, comparing to prior years and expectations. inventory turnover, comparing to prior years and expectations. Tested a sample of inventory items on hand to initial supplier Tested a sample of inventory items on hand to initial supplier invoices and subsequent sales invoices to ascertain whether invoices and subsequent sales invoices to ascertain whether inventory was being correctly recognised at the lower of cost inventory was being correctly recognised at the lower of cost and NRV. and NRV. Martin Coyle Director BDO Audit Pty Ltd Sydney, 28 August 2020 • • • • Revenue recognition Revenue recognition Key audit matter Key audit matter As disclosed in Note 2, the Group As disclosed in Note 2, the Group recognised revenue of $16,939,000 recognised revenue of $16,939,000 during the financial year ended 30 during the financial year ended 30 June 2023 (2022: $35,421,000). June 2023 (2022: $35,421,000). Given the overall significance of Given the overall significance of revenue to the Group as a key revenue to the Group as a key performance indicator, we considered performance indicator, we considered this area to be a key audit matter. this area to be a key audit matter. How the matter was addressed in our audit How the matter was addressed in our audit To determine whether revenue was appropriately accounted for and To determine whether revenue was appropriately accounted for and disclosed within the financial statements, we performed, amongst disclosed within the financial statements, we performed, amongst others, the following audit procedures: others, the following audit procedures: • • Critically evaluated the revenue recognition policies for all Critically evaluated the revenue recognition policies for all material revenue sources including reviewing any new sales material revenue sources including reviewing any new sales agreements entered during the year to identify any variable agreements entered during the year to identify any variable consideration / multiple performance obligation arrangements consideration / multiple performance obligation arrangements to ensure revenue was recognised in accordance with to ensure revenue was recognised in accordance with 82 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Genetic Signatures Limited – Annual Report 2023 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia Key audit matter How the matter was addressed in our audit accounting standard AASB 15 Revenue from Contracts with Customers. • Tested the operating effectiveness of key internal controls surrounding the existence and occurrence of revenues. DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES LIMITED Performed substantive analytical procedures over the key revenue streams, comparing against expectations developed • As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: Substantively testing a sample of revenue transactions • from discussions with management and supporting information. throughout the financial year by tracing sales invoices to 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in supporting sales documentation, shipping documentation and relation to the audit; and cash receipts. 2. No contraventions of any applicable code of professional conduct in relation to the audit. • Performed detailed cut-off testing to ensure that revenue transactions around the year-end had been recorded in the This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the period. correct period. Capitalisation of software and development costs Key audit matter Martin Coyle Director As disclosed in Note 12, the Group has How the matter was addressed in our audit To determine whether costs were appropriately capitalised and capitalised software and development disclosed within the financial statements, we performed, amongst costs of $5,489,000 for the year ended BDO Audit Pty Ltd 30 June 2023 (2023: $1,646,000). Sydney, 28 August 2020 Given the judgements involved in the recognition criteria and the financial significance to the group, we considered this area to be a key audit matter. others, the following audit procedures: • • • Reviewed if the internally generated intangible assets arising from the development have met the recognition criteria under AASB 138 Intangible Assets; Agreed a sample of development costs and software to supporting documentation, ensuring any research expenditure was recognised as an expense when incurred; and Reviewed for any indicators of impairment of the intangible assets. BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 83 Independent Auditor’s Report Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES and, in doing so, consider whether the other information is materially inconsistent with the financial LIMITED report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: Responsibilities of the directors for the Financial Report relation to the audit; and 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 2. No contraventions of any applicable code of professional conduct in relation to the audit. and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the period. In preparing the financial report, the directors are responsible for assessing the ability of the group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the Financial Report Martin Coyle Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free Director from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material BDO Audit Pty Ltd misstatement when it exists. Misstatements can arise from fraud or error and are considered material Sydney, 28 August 2020 if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Genetic Signatures Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. 84 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Genetic Signatures Limited – Annual Report 2023 Tel: +61 2 9251 4100 Fax: +61 2 9240 9821 www.bdo.com.au Level 11, 1 Margaret St Sydney NSW 2000 Australia Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. BDO Audit Pty Ltd DECLARATION OF INDEPENDENCE BY MARTIN COYLE TO THE DIRECTORS OF GENETIC SIGNATURES LIMITED As lead auditor of Genetic Signatures Limited for the year ended 30 June 2020, I declare that, to the best of my knowledge and belief, there have been: Gareth Few Engagement Partner 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. Sydney, 31 August 2023 This declaration is in respect of Genetic Signatures Limited and the entities it controlled during the period. Martin Coyle Director BDO Audit Pty Ltd Sydney, 28 August 2020 BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 85 Analysis of Holdings Genetic Signatures Limited Analysis of Holdings as at 28 August 2023 Additional Information Required Under ASX Listing Rules The additional information required by the Australian Securities Exchange (ASX) and not shown elsewhere is set out below. The information is current at 28 August 2023. Issued Capital As at 28 August 2023 the Company had 143,405,996 fully paid ordinary shares on issue. Distribution of Equity Securities Analysis of numbers of equity security holders for GSS fully paid ordinary shares by size of holding: Holdings Ranges Holders 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-9,999,999,999 Totals 524 570 239 451 119 1,903 Total Units 258,406 1,604,942 1,915,654 16,446,540 123,180,454 143,405,996 % 0.180 1.120 1.340 11.470 85.900 100.000 Unmarketable parcel of shares The number of individual shareholders holding less than a marketable parcel of shares was 534 (a total of 268,611 shares held by 534 shareholders). 1,042 fully paid ordinary shares comprise a marketable parcel at GSS' closing share price of $0.48 on 28 August 2023. 86 Genetic Signatures Limited – Annual Report 2023Shareholder Information Equity Security Holders The names of the twenty largest shareholders of quoted securities are listed below: Shareholder ASIA UNION INVESTMENTS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED UBS NOMINEES PTY LTD J P MORGAN NOMINEES AUSTRALIA PTY LIMITED CAPITAL CONCERNS PTY LIMITED BNP PARIBAS NOMS PTY LTD BRAHAM CONSOLIDATED PTY LTD BUTTONWOOD NOMINEES PTY LTD BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM MR JOHN ROBERT MELKI RIDDLER FAMILY INVESTMENTS PTY LTD IDOLLINK PTY LTD QUICKINVEST PTY LTD EIGHTEEN HOLDINGS PTY LTD NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT> MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED BRAHAM INVESTMENTS PTY LTD JULEYU PTY LTD Total Securities of Top 20 Holdings Total of Securities Substantial Holders Shareholder ASIA UNION INVESTMENTS PTY LTD PERENNIAL VALUE MANAGEMENT LIMITED FIL LIMITED Balance as at 28 August 2023 % 37,500,000 17,395,196 26.150 12.130 9,855,824 8,267,504 3,775,944 3,470,046 3,200,000 2,107,405 1,828,463 1,662,607 1,575,614 1,096,000 1,053,846 1,029,890 1,020,000 976,403 916,659 883,314 871,517 863,213 6.873 5.765 2.633 2.420 2.231 1.470 1.275 1.159 1.099 0.764 0.735 0.718 0.711 0.681 0.639 0.616 0.608 0.602 99,349,445 143,405,996 69.278 100.00 Balance as at 28 August 2023 37,500,000 21,462,703 9,876,864 % 0.2615 0.1497 0.0689 87 Company Directory Directors Nickolaos Samaras – Non-Executive Chairman John R Melki – CEO & Managing Director Anthony J Radford Michael A Aicher Neil Gunn Caroline Waldron Company Secretary Karl Pechmann Annual General Meeting 2023 The 2023 Annual General Meeting will be held on 29 November 2023. Further details about the AGM will be released with the Notice of Meeting. Registered office and principal place of business Share register Auditor 7 Eliza Street Newtown NSW 2042 Phone: +61 2 9870 7580 Boardroom Pty Limited Level 8 210 George Street Sydney NSW 2000 Phone: +61 2 9290 9600 BDO Audit Pty Ltd Level 11 1 Margaret Street Sydney NSW 2000 Stock exchange listing Genetic Signatures shares are listed on the Australian Securities Exchange (ASX code: GSS) Website www.geneticsignatures.com Corporate Governance Statement Genetic Signatures Ltd and the Board of Directors are committed to achieving and demonstrating the highest standards of corporate governance. Genetic Signatures Ltd has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations (4th Edition) published by the ASX Corporate Governance Council. Details of the corporate governance report is available on the Group website at: https://geneticsignatures.com/au/investors/corporate-governance/ 88 Genetic Signatures Limited – Annual Report 202389 Contact Us www.geneticsignatures.com Australasia and Asia Pacific (Head Office) A: 7 Eliza Street Newtown, NSW, 2042 Australia E: apac@geneticsignatures.com P: +61 2 9870 7580 Europe, Middle East and Africa E: EMEA@geneticsignatures.com P +44 330 828 0813 (English) P +49 32 22109 2834 (German) Americas E: americas@geneticsignatures.com P: +1 800 687 4118

Continue reading text version or see original annual report in PDF format above