HEXIMA LIMITED
ABN 64 079 319 314
Annual Financial Report
FOR THE YEAR
ENDED 30 JUNE 2012
HEXIMA LIMITED
ABN 64 079 319 314
TABLE OF CONTENTS
Directors’ Report (including Corporate Governance Statement and Remuneration Report)
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independence Declaration
3
20
21
22
23
24
46
47
49
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DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
The Directors present their report together with the financial report of Hexima Limited (“the Company” or
“Hexima”) and of the Group, being the Company and its subsidiaries for the financial year ended 30 June
2012 and the auditor’s report thereon.
DIRECTORS
The Directors of Hexima at any time during or since the end of the financial year are:
Ross Dobinson BBus, (QLD UNIVERSITY OF TECHNOLOGY)
Executive Chairman
Ross Dobinson has extensive corporate advisory and investment banking experience. He has taken two
highly successful biotechnology companies from pre-seed stage to listed status with a combined current
market capitalisation of over $1 billion. In addition, he has been involved in successful venture capital
initiatives in Australia, Europe and the United States.
Mr Dobinson is Chairman of Acrux Limited, Micronix Pty Ltd, Diagnotech Pty Ltd, Farm By Nature Pty Ltd,
and TPI Enterprises Ltd. He is also a Director of Starpharma Holdings Limited, Origin Capital Limited,
Healthfarm Fine Foods Pty Ltd and Racing Victoria Limited. He was formerly a director of the listed
stockbroking firm of Jacksons Limited, Head of Corporate Advisory Services at the stockbroking firm
operated by National Australia Bank Limited (A.C. Goode & Co. Ltd), Director of National Australia Corporate
Advisory Limited, and Director of Corporate Advisory of Dresdner Australia Proprietary Limited.
Mr Dobinson was appointed Chairman on 21 July 2010. He is a member of the Audit and Risk Management
and Remuneration Committees.
Professor Marilyn Anderson BSC (HONS) (THE UNIVERSITY OF MELBOURNE), PHD (LATROBE
UNIVERSITY)
Executive Director, Chief Science Officer
Professor Marilyn Anderson is a founding scientist of Hexima. She has over 30 years experience in scientific
research in the area of plant biochemistry and genetics. After completing a BSc Honours at The University of
Melbourne and a PhD in Biochemistry at La Trobe University, Professor Anderson spent seven years in the
United States working on diabetes at the University of Miami and oncogenes at Cold Spring Harbor
Laboratory.
She is a Professor of Biochemistry at La Trobe University and an Associate Professorial Fellow in the Botany
School at The University of Melbourne. She was appointed Hexima’s Chief Science Officer in July 2009.
Professor Anderson was a director at South East Water Limited for over 10 years prior to her appointment to
the board of City West Water in 2008. She is a Fellow of the Australian Academy of Science, of the
Australian Academy of Technological Sciences and Engineering and of the Australian Institute of Company
Directors.
She was appointed a Director of the Company on 23 November 2010.
Steven M Skala AO BA, LL.B (HONS) (UNIVERSITY OF QLD), BCL (UNIVERSITY OF OXFORD)
Non-Executive Director
Steven Skala is Vice Chairman, Australia and New Zealand of Deutsche Bank AG. He is Chairman of Wilson
HTM Investment Group Limited, and is a Director of the Australian Broadcasting Corporation. Mr Skala is
Vice President of the Board of the Walter & Eliza Hall Institute of Medical Research, Deputy Chairman of the
General Sir John Monash Foundation and a Director of the Centre for Independent Studies. He is a Member
of the International Council of the Museum of Modern Art (MoMA) in New York, the Advisory Council of the
Australian Innovation Research Centre, the Global Foundation and the Grievance Tribunal of Cricket
Australia.
He is a past Chairman of Film Australia Limited and the Australian Centre for Contemporary Art, a former
director of Max Capital Group Limited, the Channel Ten Group, The King Island Company Limited, Rothschild
Australia e-Fund Investors Pty Ltd and The Australian Ballet, and a former Trustee of the Sir Zelman Cowen
Foundation for Medical Research. Steven practised law in Brisbane, London, and in Melbourne where for
almost 20 years he was a Partner and Head of the Corporate and Commercial Practice of Arnold Bloch
Leibler, Solicitors. He was appointed an Officer in the Order of Australia in January 2010 for service to the
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
arts, education, business and commerce.
Mr Skala has been a Director of the Company since 17 May 2002. He was Chairman of the Company from
2002 until 30 June 2008. He was reappointed as Chairman on 2 October 2009 and resigned as Chairman on
21 July 2010. He is also a member of the Audit and Risk Management and Remuneration Committees.
Hugh M Morgan AC, LLB, BCOMM (THE UNIVERSITY OF MELBOURNE)
Non-Executive Director
Hugh Morgan is Principal of First Charnock Pty Ltd, Chairman of Biodiem Limited and a member of the
Lafarge International Advisory Board. He is also a Trustee Emeritus of The Asia Society New York, President
of the National Gallery of Victoria Foundation and Chairman of the Order of Australia Association Foundation.
Mr Morgan was a Director of the Board of the Reserve Bank of Australia for 14 years retiring in 2007 and he
was President of the Business Council of Australia from 2003-2005. He is also immediate Past President of
the Australia Japan Business Co-operation Committee and immediate Past Co-Chair of the Commonwealth
Business Council, and continuing Emeritus Director.
Mr Morgan was Chief Executive Officer of WMC Limited from 1986 to 2003. He was a Director of Alcoa of
Australia from 1977 to 1998 and a Director of Alcoa Inc from 1998 to 2001.
Mr Morgan has been a Director of the Company since 10 May 2007. He is Chairman of the Audit and Risk
Management Committee and a member of the Remuneration Committee.
Professor Jonathan West BA (UNIVERSITY OF SYDNEY), PHD (HARVARDUNIVERSITY)
Non-Executive Director
Professor Jonathan West is the Director of the Australian Innovation Research Centre. Prior to assuming his
current appointment, he taught for 18 years at the Harvard University Graduate School of Business
Administration, where he was Associate Professor, founding Director of the Harvard University Life Sciences
Initiative, and from 1998-1999 the Novartis Faculty Research Fellow. He has been Visiting Professor at
Hitotsubashi University and the Nomura School of Advanced Management in Tokyo, Japan and Visiting
Professor at the University de Paris IX-Dauphine, Sorbonne.
Professor West is also Chairman of the Asia Advisory Council of Bunge Ltd, one of the world’s largest
agribusiness processing and trading companies, and has served as an advisor to other major corporations
and several Governments around the world, including in the life sciences field, DuPont, Roche, Novartis,
Syngenta and the J.R. Simplot Company, along with the Governments of Singapore, Japan, Hong Kong and
France. He was a member of the Scientific Advisory Board of the Novartis Agricultural Discovery Institute in
La Jolla, California. In Australia, he has served on the Prime Minister’s Science, Engineering, Innovation
Council’s Working Group on Science and Technology in China and India and in 2006 was ‘Eminent Thinker
in Residence’ with the Premier of NSW. Professor West is a non-executive director of Thomas and Coffey
Limited.
Professor West has been a Director of the Company since 7 November 2005. He is Chairman of the
Remuneration Committee and a member of the Audit and Risk Management Committee.
COMPANY SECRETARY
Ms Elisha Larkin BComm(Hons) / BAgriSci(Hons) (The University of Melbourne) was appointed as Company
Secretary on 4 May 2012. Ms Larkin has been with Hexima since May 2006. She replaces Ms Justine Heath
who had held the position since December 2007. Ms Heath left the Company on 4 May 2012.
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DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees of Directors) and the number of
meetings attended by each of the Directors of the Company during the financial year are:
BOARD
MEETINGS
AUDIT AND RISK
MANAGEMENT
COMMITTEE
REMUNERATION
COMMITTEE
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
Ross Dobinson
Marilyn A Anderson
Steven M Skala
Hugh M Morgan
Jonathan West
8
8
8
8
8
7
7
8
6
8
2
2
2
2
2
2
-
-
2
-
-
-
-
-
-
-
-
-
-
-
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year. The
Group delisted on 17th June 2011 and during FY11 and the period after delisting, the Group has voluntarily
complied with ASX Corporate Governance Council recommendations, unless otherwise stated.
The Board of Directors
The Board is responsible for the direction and supervision of Hexima’s business on behalf of the
Shareholders, by whom they are elected and to whom they are accountable.
The Board’s responsibilities include:
• protecting and enhancing the value of Hexima’s assets;
• setting strategies and directions, then monitoring and reviewing progress against these strategic
objectives;
• reviewing and ratifying internal controls, codes of conduct and legal compliance;
• ensuring the significant risks facing Hexima have been identified and adequate control, monitoring and
reporting mechanisms are in place;
• approving transactions relating to acquisitions, divestments and capital expenditure above delegated
authority limits; and
• approving and monitoring financial and other reporting.
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DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
The Board has adopted a Board Charter, which sets out values and business behaviours necessary to
maintain confidence in Hexima’s integrity. It details the respective roles and responsibilities of the Board and
management.
The Board has delegated responsibility for operation and administration of the Company to the Executive
Chairman and executive management. Responsibilities are delineated by formal authority delegations.
Directors and Executive Education
Incoming Directors and Executives participate in informal meetings to increase their understanding of the
Company, its key assets and the competitive market in which it operates. Through these meetings, Directors
and executives review the Company’s policies and procedures for good corporate governance, including
delegations and reservations of authority and the roles of key personnel and Board committees. They have
access to continuing education to update and enhance their skills and knowledge. A review of the
performance of the Board will be undertaken annually by the Chairman, in consultation with the Board.
Composition of the Board
The Constitution of the Company provides that the number of Directors shall not be less than three. There
are currently five Directors in office at the date of this report and their names and qualifications are set out on
pages 3 to 4 of this Directors’ Report.
The ASX best practice recommendations require a majority of the Board to be independent Directors and the
chairperson to be an independent director. Currently, the Board has one director who satisfies the ASX
guidelines for independence (being Professor Jonathan West). Mr Steven Skala AO and Mr Hugh Morgan AC
are Non-Executive Directors but do not qualify as independent because of their shareholdings in Hexima. Mr
Ross Dobinson and Professor Marilyn Anderson do not qualify as independent as they are executive
Directors. The Board considers their significant commitment as shareholders (which aligns their interests with
those of other shareholders) and broad experience as directors of other companies provide advantages to
the Board which outweigh any disadvantage in them not satisfying the ASX guidelines for independence. The
Board will review this position at least annually.
Board Committees
To assist in the execution of its responsibilities, the Board has established a number of board committees
including a Nomination Committee, a Remuneration Committee, an Audit and Risk Management Committee
and a Communications Committee. These committees have written mandates and operating procedures,
which are reviewed on a regular basis.
The full Board has monthly meetings scheduled for the coming year. Extraordinary meetings will be convened
at such other times as may be necessary to address any specific significant matters that may arise.
The agenda for meetings is prepared in conjunction with the Chairman. Submissions are circulated in
advance. Executives are regularly involved in Board discussions.
Nomination Committee
The Board has in place a Nomination Committee to assist it in ensuring the Board has an effective
composition, size and commitment.
The Nomination Committee develops criteria for Board membership, identifies specific individuals for
nomination as Directors and establishes processes for the review of the performance of individual Directors
and the Board as a whole. In addition, it is the policy of the Nomination Committee to meet as early as
practicable prior to the expiration of the term of office of a Director to consider suitably skilled and
experienced individuals for nomination as Directors.
Further details of the Nomination Committee’s charter form part of the Board Charter, which is available on
the Company’s website.
Each of the non-executive Directors are currently on the Nomination Committee.The Board reviewed the
structure of the Board and senior executive teams throughout the current financial year within existing
scheduled Board meetings. Formal meetings of the Nomination Committee will be scheduled for the coming
financial year as required.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
Remuneration Committee
The Board reviews and rewards the performance of the senior management team. In doing so, they consider
recommendations from the Remuneration Committee.
The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages
and policies applicable to Key Executives and Directors. The Remuneration Committee Charter forms part of
the Board Charter, which is available on the Company’s website.
The Remuneration Committee will consist of at least three Directors, a majority of whom are Non-Executive
Directors and at least one of whom is an independent director. This differs from the ASX best practice
recommendations which require a majority of independent Directors and an independent Chairman. Given
the current composition of the Board, it is not possible for Hexima to satisfy the ASX recommendations as to
independence. The current members are Professor Jonathan West (Chairman), Mr Ross Dobinson, Mr
Steven Skala AO and Mr Hugh Morgan AC.
The Remuneration Committee meets as necessary, generally once a year in order to review and make
recommendations to the Board. During the financial year ended 30 June 2012, the Remuneration Committee
did not meet separately, as remuneration issues were addressed at meetings of the full Board.
The Remuneration Committee may invite any executive management team members or other individuals to
attend meetings of the Remuneration Committee as it considers appropriate. The Remuneration Report is set
out on pages 12 to 17 and forms part of the Directors’ Report for the financial year ended 30 June 2012.
Audit and Risk Management Committee
The Board has in place an Audit and Risk Management Committee to assist it in verifying and safeguarding
the integrity of Hexima’s financial reporting. The Audit and Risk Management Committee Charter forms part
of the Board Charter, which is available on the Company’s website.
The Audit and Risk Management Committee reviews the financial information which is provided to
shareholders and others, the systems of internal controls which management and the Board have established
and the audit process.
The Audit and Risk Management Committee also reviews the performance of the external auditors on an
annual basis and normally meets with them during the year to:
• discuss the external audit and internal audit plans, identifying any significant changes in structure,
operations, internal controls or accounting policies likely to impact the financial statements and to review
the fees proposed for the audit work to be performed;
• review the half-year and preliminary final report prior to lodgment with the ASX, and any significant
adjustments required as a result of the auditor’s findings, and to recommend board approval of these
documents, prior to announcement of results;
• review the draft annual and half-year financial report, and recommend board approval of the financial
report; and
• review the results and findings of the auditor, the adequacy of accounting and financial controls, and to
monitor the implementation of any recommendations made.
Audit and Risk Management Committee meetings are to be held periodically throughout the year. It is the
policy of the Board that the members of the Audit and Risk Management Committee should be Non-
Executive Directors, at least one of whom should also be independent. This differs from the ASX best
practice recommendations which require a majority of independent Directors and an independent Chairman.
Given the current composition of the Board, it is not possible for Hexima to satisfy the ASX recommendations
as to independence. The current Audit and Risk Management Committee comprises Mr Hugh Morgan AC
(Chairman), Mr Ross Dobinson, Mr Steven Skala AO and Professor Jonathan West.
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DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
Audit and Risk Management Committee (continued)
The Chief Operating Officer/ Chief Financial Officer and external auditors will generally attend all Audit and
Risk Management Committee meetings. The Audit and Risk Management Committee met twice during the
year and the committee members’ attendance record is disclosed in the table of Directors’ meetings on page
5.
The Executive Chairman and the Chief Operating Officer/ Chief Financial Officer have declared in writing that
the records for the year have been properly maintained, the Company’s financial reports for the year ended
30 June 2012 comply with accounting standards and present a true and fair view of the Company’s financial
condition and operating results. This statement is required annually.
Communication with Shareholders
Hexima’s policy is to provide timely, open and accurate information to all stakeholders, including
shareholders, regulators and the wider investment community. The Board Charter includes a continuous
disclosure protocol to ensure compliance with the Corporations Act 2001.
In summary, the Company’s continuous disclosure protocol operates as follows:
•
• the full Annual Financial Report and Half-Yearly results commentary are available on the Company’s
website and are sent to all shareholders who request them; and
• the Annual Financial Report and the Half-Yearly Accounts are sent to any shareholder on request.
Hexima’s communications strategy is set out in the Board Charter and is designed to promote effective
communication with shareholders and encourage effective participation at general meetings.
Risk Management
The Board is responsible for the assessment of risk.
Intellectual Property
Intellectual Property is Hexima’s most important asset and protection of its IP portfolio is critical to the
Company’s ability to implement its business strategy. Hexima has consistently invested significant amounts in
the development and maintenance of this IP portfolio.
Hexima’s IP Committee, chaired by Professor Marilyn Anderson, meets regularly to identify and monitor the
creation of IP and to monitor and review claims in the same technical field filed by other companies. The
Committee works closely with Hexima’s US and Australian patent attorneys.
The Committee also develops and maintains appropriate protocols for recording research results and
maintaining the confidentiality of know-how and information associated with Hexima’s trials and technology.
Regulatory Framework (including Environmental Regulation)
The use of ag-biotechnology is regulated in the majority of countries in which Hexima will seek to
commercialise its technology. The regulatory framework, which varies from country to country, is generally
based on an assessment of the risk associated with the technology.
In Australia, the use of ag-biotechnology is regulated by the Gene Technology Act 2000. Hexima’s gene
technology research at The University of Melbourne and La Trobe University is overseen by the Office of the
Gene Technology Regulator and all field trials conducted by Hexima have been specifically licensed by the
Office of the Gene Technology Regulator.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
Financial Reporting
The Executive Chairman and the Chief Operating Officer have declared in writing to the Board that the
Company’s financial reports are founded on a sound system of risk management and internal compliance
and control which implements the policies adopted by the Board.
Monthly actual results are reported against budgets approved by Directors and revised forecasts for the year
are prepared regularly.
Funds Management
The Company has considerable funds on deposit following its successful IPO in 2007. The Company’s policy
is to invest these funds in term deposits or bank bills.
Ethical Standards
All Directors, executives and employees are expected to act with the utmost integrity at all times to enhance
the reputation and performance of the Company. Every employee has a supervisor to whom they may refer
any issues arising from their employment.
Conflicts of Interest
Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with
those of the Company. The Board has procedures to assist Directors to disclose potential conflicts of interest.
Independent Advice
Each Director has the right of access to all relevant Company information and to the Company’s executives
and, subject to prior consultation with the Chairman, may seek independent professional advice at the
Company’s expense. A copy of the advice received by the Director will be made available to all members of
the Board.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was the research, development and
commercialisation of technology for the genetic modification of crops, primarily to enhance their resistance to
insects and fungal pathogens.
OPERATING AND FINANCIAL REVIEW OF THE GROUP
Revenue
Net loss before financing income/expense
Net financing income
Income tax expense
Net loss after tax attributable to members
Dividends
Summary
2012
$000
2,961
(3,918)
712
-
(3,206)
NIL
2011
$000
727
(7,480)
1,145
-
(6,335)
NIL
The Board is pleased with the progress made on the lead fungal disease control program. The Company
entered its first development and commercialisation agreement for fungal disease control in corn and soy with
DuPont Pioneer (previously Pioneer Hi-Bred International - a DuPont subsidiary) in 2008.
The program is progressing as planned:
a) A library of proprietary anti-fungal proteins has been developed.
b) An effective corn transformation program has been established in the Company’s glasshouse and
tissue culture facilities, with GM corn plants expressing a range of anti-fungal proteins.
Transformation efficiency rates compare favourably with those achieved by our commercial partner in
their US facilities.
c) The glasshouse program has entered full scale disease testing, with bioassays performed on corn
plants against targeted fungal diseases.
d) DuPont Pioneer is carrying out equivalent research in the US on soybeans using leads developed by
Hexima in the corn program.
The Company has been able to accelerate these programs without incurring an increase in budgeted
expenditure. At 30 June 2012, the Group had $12.4m in cash and receivables, providing a solid base for the
remaining development activity.
The Company has also expanded into fee for service contract work, with a project managing GM canola field
trials for a multinational partner progressing in three Australian states. Further opportunities for fee for service
work will be pursued to reduce the Company’s burn rate (without impacting on the core businesses).
Operating and Financial Review
The Group had net cash outflows from operating activities of $6.2m for the year ended 30 June 2012
compared with $8.5m for the prior year. Lower R&D costs were the reason for the variance.
The Group received revenue of $2.961m for the year ended 30 June 2012 compared with revenue of
$0.727m for the previous year due to the introduction of the R&D Tax Incentive.
The Group recorded a loss after tax of $3.206 million for the year ended 30 June 2012. A loss after tax of
$6.335 million was recorded for the previous financial year.
Net finance income for the Group for the financial year ended 30 June 2012 was $0.712 million (2011:$1.144
million), reflecting lower cash balances as cash was utilised in the current reporting period, and lower interest
rates.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
Outlook
Hexima’s lead fungal disease control technology is being developed with DuPont Pioneer. This agreement
provides a path to market for the Company’s technology in corn and soy applications, which are two of the
current lead GM crops, accounting for more than 80% of the area planted to GM crops globally. The initial
target of the program is broad-spectrum fungal disease resistance in corn, which is the market dominant GM
crop by value. Fungal pathogens cause extensive damage to corn,which is a growing concern as intensive
farming techniques and reduced crop rotations encourage fungal growth. Fungal disease is estimated to
cause yield losses in corn costing approximately US$8 billion each year in the Americas alone. The Company
is continuing to develop and commercialise its insect resistance technology and the MGEV technology
platform.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group that occurred during the financial year.
DIVIDENDS
The Company has not paid or declared any dividends during or since the end of the financial year ended 30
June 2012.
LIKELY DEVELOPMENTS
Further disclosure of information regarding likely developments in the operations of the Group and the
expected results of those operations in future financial years has not been included in this report because, in
the opinion of the Directors, disclosure of the information may prejudice the interests of the Group.
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any significant environmental regulations under either
Commonwealth or State legislation. However, the Board believes that the Group has adequate systems in
place for the management of its environmental requirements and is not aware of any breach of those
environmental requirements as they apply to the Group.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
REMUNERATION REPORT – Audited
Principles of Remuneration
Key management personnel (including Directors of the Company and other executives) have authority and
responsibility for planning and controlling the activities of the Group. For the financial year ended 30 June
2012, key management personnel comprised all Directors, executives and the Company Secretary. This
included Mr Ross Dobinson, Mr Steven Skala AO, Professor Jonathan West, Mr Hugh Morgan AC, Professor
Marilyn Anderson, Dr Robyn Heath (resigned effective 31 December 2011), Ms Justine Heath (resigned
effective 4 May 2012) and Ms Elisha Larkin (appointed Chief Operating Officer and Company Secretary 4
May 2012). Remuneration levels for key management personnel are set to attract and retain appropriately
qualified and experienced directors and executives. The Remuneration Committee obtains independent
advice on remuneration packages and reviews remuneration at least on an annual basis.
Remuneration structures take into account the capability and experience of key management personnel.
Remuneration includes a mix of fixed and variable remuneration as well as short and long term incentives.
Fixed Remuneration
Fixed remuneration consists of base remuneration, which is calculated on a total cost basis and includes any
FBT charges related to employee benefits, as well as employer contributions to superannuation funds.
Performance Linked Remuneration
Performance linked remuneration may include short and long term incentives.
Short term incentive bonuses are based on the satisfaction of specified performance criteria, which may
include financial or non-financial objectives. The Remuneration Committee approves the offer and payment of
short term incentive bonuses to key management personnel and to other employees.
Long term incentives may be provided as options over the Company’s ordinary shares and other securities.
Details are provided on page 16 of the Directors’ Report.
Consequences of Performance on Shareholder Wealth
Hexima is a development stage company and the remuneration of key management personnel is not
determined by the level of revenue, profit or dividends. Instead, consideration is given to the progress of
scientific programs, the commercialisation of those programs, the development of the Company’s intellectual
property and asset base and long-term share price performance.
Service Contracts
The Group has entered into service contracts with key management personnel, which outline the components
of compensation paid to key management personnel, but do not prescribe how compensation levels are
modified from year to year. Compensation levels are reviewed each year to take into account cost-of-living
changes, any change in scope of the role performed by the senior executive and any changes required to
meet the principles of the compensation policy.
All employment contracts may be terminated immediately for cause or for material underperformance.
Professor Marilyn A Anderson
Professor Anderson was appointed Chief Science Officer from 1 July 2009. She was formerly Senior Vice
President Research and Discovery. Professor Anderson is an employee of La Trobe University and Hexima
contracts her services through a Research Agreement with the University. In addition to her employment by
the University, Professor Anderson also has an employment contract with the Group. This employment
contract has a term of two years from 1 January 2012 and may be terminated with six months’ notice by the
employee.
Dr Robyn L Heath
Dr Heath, was Senior Vice President Product Development until 31 December 2011, and was also an
employee of The University of Melbourne. Hexima contracted her services through a Research Agreement
with the University. In addition to her employment by the University, Dr Heath also had an employment
contract with the Group. This employment contract had a term of two years from 1 January 2010 and expired
on the 31 December 2011.
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HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
REMUNERATION REPORT – Audited (Continued)
Justine C Heath
Ms Heath was Company Secretary and Chief Operating Officer until 4 May 2012. Six months payment in lieu
of notice was made in May 2012.
Elisha Larkin
Ms Larkin was appointed Company Secretary on 4 May 2012.
Non-Executive Directors
The Constitution provides that Non-Executive Directors may be paid or provided fees or other remuneration
for their services as a Director of Hexima (including as a member of any Directors’ committee). The total
amount or value of this remuneration must not exceed $500,000 (including mandatory superannuation) per
annum or such other maximum amount determined by the Company in a general meeting.
A Non-Executive Director may be paid remuneration for services outside the scope of ordinary duties of the
Director. Non-Executive Directors may also be paid expenses properly incurred in attending meetings or
otherwise in connection with the Company’s business.
Fees payable to Non-Executive Directors for the financial year ended 30 June 2012 were set at $55,000 per
annum. Additional “per diem” fees are paid where services rendered are above normal requirements. There
has been no change to fees paid to non-executive Directors since 2007.
Details of the nature and amount of each major element of the remuneration of each Director of the Company
and each of the named officers of the Company, which is consistent with that of the consolidated entity,
(including key management personnel) receiving the highest remuneration are included in the table following.
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DIRECTORS’ REPORT
REMUNERATION REPORT – Audited (Continued)
Directors’ and Executive Officers’ Remuneration
HEXIMA LIMITED
ABN 64 079 319 314
Details of the nature and amount of each major element of remuneration of each Director of the Company and each key management personnel are:
Short term employee benefits
Fixed
Remuneration
(Salary & Fees)
Short
Term
Incentive
(cash)
Total
Short-term
employee
benefits
Termination
Benefits
Share Options
Issued
Share based payments
Converting
Notes Issued
(1)
Non-executive Directors
Steven M Skala
Jonathan West
Hugh M Morgan
Adrienne E Clarke
(Retired. 23 Nov 10)
Executive Directors
Ross Dobinson
Marilyn A Anderson (2)
(Chief Science Officer)
Joshua T Hofheimer
(Resigned Non Exec Dir. 23
Nov 10)
Executives
Robyn L Heath (3)
(Senior VP Product
Development – Resigned 31
Dec 2011)
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
50,458
53,370
50,458
50,458
50,458
50,458
-
-
200,000
200,000
174,157
143,620
-
200,000
31,471
2011
46,532
Justine C Heath
2012
239,412
(COO,Co. Secretary –
Resigned 4 May 2012)
Elisha Larkin (4)
(Appointed COO and
Company Secretary 4 May
2012)
Total
Total
2011
2012
2011
2012
2011
250,000
25,112
-
821,526
994,438
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,458
53,370
50,458
50,458
50,458
50,458
-
-
200,000
200,000
174,157
143,620
-
200,000
31,471
46,532
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
239,412
125,000
250,000
25,112
-
-
-
-
-
-
-
-
-
-
-
-
75,302
58,414
-
-
-
-
-
-
-
-
-
-
821,526
125,000
994,438
-
75,302
58,414
-14-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post
Employment
Benefits -
Superannuation
Total
Remuneration
Value of Options as
proportion of
Remuneration
4,542
5,939
4,542
4,542
4,542
4,542
-
22,917
-
-
15,639
12,936
-
50,000
18,500
30,643
20,819
22,500
2,260
-
55,000
59,309
55,000
55,000
55,000
55,000
-
22,917
275,302
258,414
189,796
156,556
-
250,000
49,971
77,175
385,231
272,500
27,372
-
-
-
-
-
-
-
-
-
27%
23%
-
-
-
-
-
-
-
-
-
-
70,844
154,019
1,092,672
1,206,871
7%
5%
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
REMUNERATION REPORT – Audited (Continued)
Directors’ and Executive Officers’ Remuneration (Continued)
Notes in relation to the table of directors’ and executive officers’ remuneration
1) The fair value of options is calculated at grant date using the Binomial Approximation Option Pricing model and allocated to each period evenly over the period from
grant date to vesting date. The value disclosed is the portion of the fair value of the options recognized in this reporting period.
2) Professor Anderson is employed by La Trobe University. The Company engages her services through a Research Agreement with the University and through a
separate direct employment agreement. Professor Anderson’s total remuneration from the Company and La Trobe University (in relation to services performed for
Hexima) was $358,622, comprising $189,796 paid and payable directly by the Company and $168,826 paid by La Trobe University (for the services performed for
Hexima). The amount shown in the table above represents payments made directly to Professor Anderson by the Group only.
3) Dr Heath was employed by The University of Melbourne. The Company engaged her services through a Research Agreement with the University and through a
separate direct employment agreement. Dr Heath’s total remuneration from the Company and The University of Melbourne was $146,106, comprising $49,971
paid and payable directly by the Company and $96,135 paid by The University of Melbourne. The amount shown in the table above represents payments made
directly to Dr Heath by the Group only. Dr Heath resigned from Hexima Limited effective 31st December 2011.
4) Ms Elisha Larkin was promoted to Chief Operating Officer and Company Secretary on 4 May 2012. Amounts disclosed relate to the period she was COO and
Company Secretary.
-15-
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
REMUNERATION REPORT – Audited (Continued)
Equity instruments
All options refer to options over ordinary shares of Hexima Limited, which are exercisable on a one-for-one
basis under the employee share option plan.
Options over equity instruments granted as compensation
Details on options over ordinary shares in the company held by key management personnel and executives
during the reporting period.
Executive
Chairman
No. of Options
Granted
Exercise
Price
Grant
Date
Ross
Dobinson
1,000,000
$0.50
1st
December
2010
No. of options
vested during
2012
250,000
Fair value
per option
at grant
date
Tranche 1
$0.16
Tranche 2
$0.20
Tranche 3
$0.23
Tranche 4
$0.25
Expiry Date
4 Tranches of
250,000
options. One
tranche vested
15 November
2011, the
others to vest
15 November
2012, 15
November
2013 and 15
November
2014
DIRECTORS’ INTERESTS
Set out below are details of the interests of the Directors at the date of this report in the shares of the
Company, rights or options over such instruments. Interests include those held directly and indirectly.
Director
Total shares
Options over shares
Steven M Skala
4,167,467
Jonathan West
2,000,000
Hugh M Morgan
6,454,503
Marilyn A Anderson
2,381,935
-
-
-
-
Ross Dobinson
-
1,000,000
Total
15,003,905
1,000,000
-16-
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
SHARE OPTIONS
Unissued shares under option
At the date of this report, unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number of Shares
16 May 2013
15 November 2019
$0.00
$0.50
90,000
1,000,000
1,090,000
Shares issued on exercise of options
The following options lapsed during the financial year ended 30 June 2012.
Options over shares
Exercised
Lapsed
1 July 2011
Options over
shares at date
of this report
Balmoral
1,600,000
-
1,600,000
-
The Group’s policies prohibit those that are granted share-based payments as part of their remuneration from
entering into other arrangements that limit their exposure to losses that would result from share price
decreases. The Group requires all executives and Directors to sign annual declarations of compliance with
this policy throughout the period.
-17-
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
AUDITORS
Non-Audit Services
During the year KPMG, the Company’s auditor, has performed certain services in addition to their statutory
duties.
The Board has considered the non-audit services provided during the year by the auditor and is satisfied that
the provision of those services during the year by the auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
• all non-audit services were subject to the corporate governance procedures adopted by the Company
and have been reviewed by the Audit and Risk Management Committee to ensure they do not impact
the integrity and objectivity of the auditor; and
the non-audit services provided by the auditor do not undermine the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they
did not involve reviewing or auditing the auditor’s own work, acting in a management or decision
making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and
rewards.
Details of the amount paid or payable to the auditor of the Company, KPMG, and its related practices for
audit and non-audit services provided during the year are set out below.
Audit Services
Audit of the annual financial report
Review of half year financial report
Services other than statutory audit
Special Grant Audit 2011/2010
Special Grant Audit 2012
2012
$
40,000
25,000
6,900
5,175
77,075
2011
$
47,800
25,000
6,900
-
79,700
INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS
No indemnities were given or insurance premiums paid during the financial year for any person who was an
auditor of the Company. The Company has not indemnified any Directors. During the financial year ended 30
June 2012, the Company paid insurance premiums of $47,359 (inclusive of taxes) in respect of Directors’ and
Officers’ liability and legal expenses insurance contracts. This covered both current and former Directors and
Officers of the Company. The insurance premiums relate to:
•
costs and expenses incurred by the relevant officers in defending proceedings, whether civil or
criminal and whatever their outcome; and
• other liabilities that may arise from their position, with the exception of conduct involving a willful
breach of duty or improper use of information or position to gain personal advantage.
EVENT SUBSEQUENT TO REPORTING DATE
There have been no events subsequent to balance date which would have a material effect on the Group’s
financial statements as at 30 June 2012.
-18-
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
Revenue
Notes
6
Contracted research expenditure
Other research & development expenditure
7
Patent and legal expenses
Field trial expenses
Marketing & business development
expenses
Employee benefits expense
Depreciation expense
Other expenses
Results from operating activities
Financial income
Net financing income/(expenses)
Loss before income tax
8
9
Income tax expense
10(a)
2012
$
2,960,602
(4,023,880)
(309,385)
(290,766)
(82,977)
(265,534)
(1,354,846)
(241,169)
(309,974)
(6,878,531)
(3,917,929)
712,358
712,358
(3,205,571)
-
2011
$
727,104
(4,797,596)
(389,995)
(370,564)
(91,413)
(594,365)
(1,350,153)
(239,115)
(373,697)
(8,206,898)
(7,479,794)
1,144,476
1,144,476
(6,335,318)
-
Loss for the period
(3,205,571)
(6,335,318)
Other comprehensive income for the
period, net of income tax
Total comprehensive income/(loss) for
the period
Loss attributable to:
Owners of the Company
Loss for the period
Total comprehensive loss attributable
to:
Owners of the Company
Total comprehensive loss for the period
-
-
(3,205,571)
(6,335,318)
(3,205,571)
(3,205,571)
(3,205,571)
(3,205,571)
(6,335,318)
(6,335,318)
(6,335,318)
(6,335,318)
The accompanying notes form part of these financial statements
-20-
HEXIMA LIMITED
ABN 64 079 319 314
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2012
Notes
11
12
13
14
15
16
16
CURRENT ASSETS
Cash and cash equivalents
Receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefits
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
2012
$
9,789,777
2,640,240
2011
$
15,314,971
545,930
12,430,017
15,860,901
2,810,620
2,873,100
2,810,620
15,240,637
1,143,438
57,267
1,200,705
1,200,705
2,873,100
18,734,001
1,452,437
111,363
1,563,800
1,563,800
14,039,932
17,170,201
57,659,830
1,019,484
(44,639,382)
57,659,830
944,182
(41,433,811)
14,039,932
17,170,201
The accompanying notes form part of these financial statements
- 21 -
HEXIMA LIMITED
ABN 64 079 319 314
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
2012
Opening balance at
1 July 2011
Total comprehensive
income for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive
income/(loss) for the period
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
Share based payment
expenses
Total contributions by and
distributions to owners
Closing balance at
30 June 2012
2011
Opening balance at
1 July 2010
Total comprehensive
income for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive
income/(loss) for the period
Transactions with owners
recorded directly in equity
Contributions by and
distributions to owners
Share based payment
expenses
Total contributions by and
distributions to owners
Closing balance at
30 June 2011
Note
Ordinary
Shares
$
Equity
option
reserve
$
Equity
compen-
sation
reserve
$
Accumulated
Losses
$
Total equity
$
57,659,830
200,000
744,182
(41,433,811)
17,170,201
-
-
-
-
-
-
-
-
-
-
16
-
-
-
(3,205,571)
-
(3,205,571)
-
(3,205,571)
(3,205,571)
75,302
75,302
-
-
75,302
75,302
57,659,830
200,000
819,484
(44,639,382)
14,039,932
Note
Ordinary
Shares
$
Equity
option
reserve
$
Equity
compen-
sation
reserve
$
Accumulated
Losses
$
Total equity
$
57,659,830
200,000
685,768
(35,098,493)
23,447,105
-
-
-
-
-
-
-
-
-
-
16
-
-
-
(6,335,318)
-
(6,335,318)
-
(6,335,318)
(6,335,318)
58,414
58,414
-
-
58,414
58,414
57,659,830
200,000
744,182
(41,433,811)
17,170,201
The accompanying notes form part of these financial statements
- 22 -
HEXIMA LIMITED
ABN 64 079 319 314
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
Consolidated
2012
$
2011
$
Notes
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash receipts from government grants &
collaboration agreements
Cash paid to suppliers and employees
Net cash (used in) operating activities
18(b)
628,914
727,104
(6,820,371)
(6,191,457)
(9,182,113)
(8,455,009)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest received
Payments for plant and equipment
Net cash ( used in ) investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
844,952
(178,689)
666,263
1,289,743
(205,937)
1,083,806
Net cash from financing activities
-
-
Net (decrease)/ increase in cash and cash
equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
18(a)
(5,525,194)
(7,371,203)
15,314,971
22,686,174
9,789,777
15,314,971
The accompanying notes form part of these financial statements
- 23 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
1.
REPORTING ENTITY
Hexima Limited (the “Company”) is a Company domiciled in Australia and is a for-profit entity. The address of
the Company’s registered office is Level 1, 379 Collins Street, Melbourne, Victoria, 3000. The consolidated
financial statements of the Company as at and for the year ended 30 June 2012 comprises the Company and
its subsidiaries (together referred to as the “Group” and individually as “Group entities”). The Group is actively
engaged in the research and development of technology for the protection and enhancement of commercial
crops, primarily to enhance their resistance to insects and fungal pathogens.
2.
BASIS OF PREPARATION
(a)
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the
Group complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the
International Accounting Standards Board (IASB).
The financial statements were approved by the Board of Directors on 31 August 2012.
(b) Basis of measurement
The financial report has been prepared on the basis of historical cost.
(c) Functional and presentation currency
The financial statements are presented in Australian dollars, which is the Group’s functional currency.
(d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amounts recognised in the financial
statements are described in the following notes:
• Note 17 – measurement of share-based payments.
- 24 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods by Group entities.
Certain comparative amounts have been reclassified to conform with the current year’s presentation.
(a) Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that currently are exercisable are taken into account. The financial statements of
subsidiaries are included in the consolidated financial statements from the date that control commences until
the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to
align them with the policies adopted by the Group.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements.
(b) Financial Instruments
(i) Non-derivative financial instruments
The Group initially recognises receivables and deposits on the date that they are originated. All other financial
assets (including assets designated at fair value through profit or loss) are recognised initially on the trade
date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire,
or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in
transferred financial assets that is created or retained by the Group is recognised as a separate asset or
liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, trade
and other payables.
Non-derivative financial instruments are recognised initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured at
amortised cost using the effective interest method, less any impairment losses.
Cash and cash equivalents comprise cash balances and call term deposits. Term deposits are classified as
cash as the Group can convert the deposits as available cash in reasonable time with minimal break costs to
the Group.
(ii) Non-derivative financial liabilities
Financial liabilities are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a financial liability when its contractual
obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net
amount presented in the statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
- 25 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial Instruments (continued)
(ii) Non-derivative financial liabilities (continued)
The Group has the following non-derivative financial liabilities: trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective
interest rate method.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any related income tax benefit.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(c) Plant and equipment
(i)
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Where parts of an item of plant and equipment have different useful lives, they are
accounted for as separate items of plant and equipment. Cost includes expenditures that are directly
attributable to the acquisition of the asset.
(ii)
Subsequent costs
The Company recognises in the carrying amount of an item of plant and equipment the cost of replacing part
of such an item when that cost is incurred if it is probable that the future economic benefits embodied within
the item will flow to the Group and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred. The carrying amount of the replaced part is
derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit
or loss as incurred.
(iii)
Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset.
Depreciation is recognised in profit or loss on a straight-line or diminishing value basis over the estimated
useful lives of each part of an item of property, plant and equipment. The estimated useful lives for the
current and comparative periods are as follows:
2012
2011
Plant and equipment
15% - 37.5%
15% - 37.5%
Office equipment
33% - 66.7%
33% - 66.7%
Plant and equipment -Building
5%
5%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
- 26 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Foreign Currency
Transactions in foreign currencies are translated to the functional currency of Group entities at exchange
rates at the dates of the transactions.
(e)
Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to
determine whether there is any objective evidence that it is impaired. A financial asset is considered to be
impaired if objective evidence indicates that one or more events have had a negative effect on the estimated
future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount, and the present value of the estimated future cash flows discounted at the
original effective interest rate.
Individually significant financial assets are tested for impairment on a individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
All impairment losses are recognised in profit or loss.
An impairment loss is reversed if the reversal can be related objectively to an event occurring after the
impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised
in profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at
each reporting date to determine whether there is any indication of impairment. If any such indication exists
then the asset’s recoverable amount is estimated.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in
respect of cash-generating units reduce the carrying amount of the other assets in the unit (group of units) on
a pro rata basis.
In respect of assets, impairment losses recognised in prior periods are assessed at each reporting date for
any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
The recoverable amount of an asset or cost generating unit is the greater of its fair value and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For the purpose of impairment testing assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or group of assets (the “cash generating unit”).
(f)
Revenue
Grant revenue
Government grant income that compensates the Group for expenses incurred is recognised as revenue in
the income statement on a systematic basis in the same periods in which the expenses are incurred.
- 27 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
3.
(f)
SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue (continued)
Research grants and collaboration fees
Research grants and collaboration fees represents revenue received from entities who fund and/or participate
in the collaborative research initiatives of the Group. When services in respect of collaborative research
activities are performed by an indeterminate number of acts over a specified period of time, revenue is
recognised on a straight line basis over the period of the collaborative research agreement. Unrecognised
revenue, representing payments received during the year for services to be provided in the future, is
recognised as deferred income.
(g) Research and development expenditure
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical
knowledge and understanding is recognised in the income statement as an expense as incurred. Patent
costs relating to research activities are expensed as incurred. Plant and equipment acquired to perform
research activities are capitalised where the plant and equipment are not specific in nature to the Group’s
research activities and can be sold or leased to third parties. Plant and equipment specific to the research
activities of the Group are expensed on acquisition.
Development expenditure is capitalised only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable, and the Group
intends to and has sufficient resources to complete development and to use or sell the asset. The
expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly
attributable to preparing the asset for its intended use. No costs were capitalised during the period. Other
development expenditure is recognized in the profit and loss as incurred.
(h) Finance income and expenses
Finance income comprises interest income on term deposits. Interest income is recognised as it accrues in
profit or loss, using the effective interest method.
(i)
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or
loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised
directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for temporary differences where the initial recognition of assets and liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit. Deferred tax is
measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
- 28 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except
where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the
GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable
from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.
Cash flows are included in the statements of cash flows on a gross basis. The GST components of cash
flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are
classified as operating cash flows.
(k) Segment Reporting
The Group determines and presents operating segments based on the information that internally is provided
to the Executive Chairman, who is the Group’s chief operating decision maker. An operating segment is a
component of the Group that engages in business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to transactions with any of the Group’s other
components.
The Group primarily operates in one sector, being the agricultural biotechnology industry, developing and/or
commercialising agricultural biotechnology research. The majority of operations are in Australia. All assets
are located in Australia.
(l) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit under which the entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as a personnel expense in profit or loss when they
are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in
future payments is available.
Short term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Long term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on costs; that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The
maturity discount rate is the yield at the reporting date on AA credit-rated or government bonds that have
dates approximating the terms of the Group’s obligations.
- 29 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Share based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an
employee expense, with a corresponding increase in equity, over the period that the employees
unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect
the number of awards for which the related service and non-market vesting conditions are expected to be
met, such that the amount ultimately recognised as an expense is based on the number of awards that do not
meet the related service and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual
outcomes.
(n) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over
the term of the lease.
(o) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. Where applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
Share-based payment transactions
The fair value of employee share options at grant date is measured using the Binomial Approximation Option
Pricing method. Measurement inputs include share price on measurement date, exercise price of the
instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected life of the instruments (based on historical
experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based
on government bonds). Service and non-market performance conditions attached to the transactions are not
taken into account in determining fair value.
(p) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 July 2011, and have not been applied in preparing these consolidated financial statements.
None of these are expected to have a significant effect on the consolidated financial statements of the Group,
except for AASB9 Financial Instruments which becomes mandatory for the Groups 2014 consolidated
financial statements and could change the classification and measurement of financial assets. The Group
does not plan to adopt this standard early and the extent of the impact has not been determined.
- 30 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
4.
FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their use of financial instruments:
• credit risk
•
liquidity risk
• market risk
• operational risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital. Further quantitative
disclosures are included throughout this financial report.
The Board of Directors has overall responsibility for the oversight of risks. The Group maintains a control
environment in which all employees understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Group’s receivables from the Government
in respect of research grants and accrued interest receivable from banks.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group prepares and monitors budgets to manage its liquidity for the short and long term.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The Board of
Directors oversee market risk exposures to optimise returns.
Currency risk
The Group’s currency risk is limited to trade and other payables that are denominated in a currency other
than the functional currency of the Group entities, primarily US dollar (USD). Given the minimal value of
foreign currency transactions the Group does not enter into contracts to hedge currency risk. At 30 June
2012, there were no receivables or payables denominated in foreign currencies (2011 receivable: $NIL,
payable: $NIL).
Interest rate risk
The Group does not have any interest expenses. Interest income is earned on term deposits and cash at
bank, which are based on prevailing market rates.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the
Group’s processes, personnel, technology and infrastructure, and from external factors other than credit,
market and liquidity risks such as those arising from legal and regulatory requirements and generally
accepted standards of corporate behaviour. Operational risks arise from all of the Group’s operations.
- 31 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
4.
FINANCIAL RISK MANAGEMENT (continued)
Operational risk (continued)
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and
damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict
initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is
assigned to senior management of the Group. This responsibility is supported by the development of overall
Group standards for the management of operational risk in the following areas:
•
•
•
•
•
•
•
•
•
•
requirements for appropriate segregation of duties, including the independent authorisation of
transactions
requirements for the reconciliation and monitoring of transactions
compliance with regulatory and other legal requirements
documentation of controls and procedures
requirements for the periodic assessment of operational risks faced, and the adequacy of controls and
procedures to address the risks identified
requirements for the reporting of operational losses and proposed remedial action
development of contingency plans
training and professional development
ethical and business standards
risk mitigation, including insurance where this is effective.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. As the Group is a development stage
business, the Board of Directors monitors the Group’s performance with particular regard to the progress of
scientific programs, the commercialisation of those programs, the development of the Group’s intellectual
property and asset base and long-term share price performance. There were no changes in the Group’s
approach to capital management during the year. The Group is not subject to externally imposed capital
requirements.
- 32 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
5.
SEGMENT REPORTING
The Group primarily operates in one sector being the agricultural biotechnology industry developing and/or
commercialising agricultural biotechnology research and therefore the Group’s financial information is the
same as the operating segment information. The majority of operations are in Australia.
6.
REVENUE
Government Grant – Other
Government – R&D Tax Incentive
Research grants and collaboration fees
7.
OTHER RESEARCH AND DEVELOPMENT
EXPENDITURE
Other research and development
expenditure
8.
OTHER EXPENSES
Administration and compliance costs
Research and development recoupment charge
Other expenses
Consolidated
2012
$
2011
$
382,326
502,104
2,331,688
-
246,588
225,000
2,960,602
727,104
309,385
389,995
309,385
389,995
89,723
75,865
196,913
-
144,386
176,784
309,974
373,697
9.
FINANCE INCOME AND EXPENSE
Interest income on term deposit and cash at bank
Finance income
712,358 1,144,476
712,358 1,144,476
- 33 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
10.
INCOME TAX
(a) Income tax expense
Loss before tax
Income tax using the domestic corporation tax rate
of 30% (2011: 30%)
Increase/(decrease) in income tax expense due to:
R & D adjustment
Non-assessable R&D tax incentive
Non-deductible share based payment
Other
Temporary differences not brought to account
Tax losses not brought to account
Consolidated
2012
$
2011
$
(3,205,571)
(6,335,318)
(961,671)
(1,900,596)
1,554,458
(699,506)
22,591
28,231
(132,688)
188,585
(395,783)
-
17,443
-
(72,122)
2,351,058
Income tax expense/(benefit) on pre-tax net profit
-
-
(b) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in
respect of the following items:
Temporary differences
Tax losses
Total
435,243
11,257,710
11,692,953
567,931
11,069,125
11,637,056
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax
assets have not been recognised in respect of these items because it is not probable that future taxable profit
will be available against which the Group could utilise the benefits. Comparative amounts have been restated
to reflect assessed balances.
11. CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
Term deposits
Consolidated
2012
$
3,259
451,637
9,334,881
9,789,777
2011
$
4,000
326,090
14,984,881
15,314,971
- 34 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
12. RECEIVABLES
Current
Trade receivables
R&D Tax Incentive Receivable - ATO
Accrued interest
Prepayments
Consolidated
2012
$
2011
$
39,784
24,208
2,331,688
111,914
156,854
2,640,240
-
244,508
277,214
545,930
The Group’s exposure to credit and currency risks and impairment losses related to trade receivables is
disclosed in note 20.
13. PLANT AND EQUIPMENT
Consolidated
Cost
Balance at 1 July 2011
Additions
Balance at 30 June 2012
Balance at 1 July 2010
Additions
Balance at 30 June 2011
Accumulated depreciation
Balance at 1 July 2011
Depreciation for the year
Balance at 30 June 2012
Balance at 1 July 2010
Depreciation for the year
Balance at 30 June 2011
Carrying amounts
At 1 July 2011
At 30 June 2012
Plant and
Equipment
$
3,320,326
155,188
3,475,514
3,124,985
195,341
3,320,326
465,134
230,033
695,167
232,372
232,762
465,134
Office
Equipment
$
87,787
23,501
111,288
77,191
10,596
87,787
69,879
11,136
81,015
63,526
6,353
69,879
Total
$
3,408,113
178,689
3,586,802
3,202,176
205,937
3,408,113
535,013
241,169
776,182
295,898
239,115
535,013
2,855,192
2,780,347
17,908
30,273
2,873,100
2,810,620
14.
TRADE AND OTHER PAYABLES
Current
Trade payables
Research & development recoupment charge – ATO
Other payables & accrued expenses
Consolidated
2012
$
62,275
75,865
1,005,298
1,143,438
2011
$
591,253
-
861,184
1,452,437
Exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 20.
- 35 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
15.
EMPLOYEE BENEFITS
Current
Superannuation
Liability for annual leave
16. CAPITAL AND RESERVES
Consolidated
2012
$
23,124
34,143
57,267
2011
$
27,808
83,555
111,363
Reconciliation of movement in capital and reserves
Consolidated and the Parent Entity
Ordinary Shares
2012
2011
2012
$
2011
$
Number of shares
Amount
On issue at 1 July
Issued at $0.00 per share on exercise
of options
81,067,469
80,059,469
57,659,830
57,659,830
34,000
1,008,000
-
-
On issue at 30 June – fully paid
81,101,469
81,067,469
57,659,830
57,659,830
The Company does not have authorised capital or par value in respect of its issued shares. The holders of ordinary shares
are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the
Company
Equity option reserve
On issue at 1 July
Lapse of share options
Number of options
Amount
2012
2011
2012
$
2011
$
1,600,000
(1,600,000)
1,600,000
-
200,000
-
200,000
-
On issue at 30 June – fully paid
-
1,600,000
200,000
200,000
- 36 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
16. CAPITAL AND RESERVES (continued)
Number of options
Amount
Equity compensation reserve
2012
2011
2012
$
2011
$
On issue at 1 July
Issued as compensation
Exercise of share options
Lapse of share options
2,724,000
-
(34,000)
(1,600,000)
3,132,000
1,000,000
(1,008,000)
(2,000,000)
944,182
75,302
-
-
On issue at 30 June – fully paid
1,090,000
1,124,000
1,019,484
685,768
58,414
-
-
744,182
Total reserve at 30 June
1,090,000
2,724,000
1,019,484
944,182
Equity Option Reserve
The equity option reserve comprises the accumulated amount of share options issued to other parties.
Equity Compensation Reserve
The equity compensation reserve represents the accumulated amount of share options granted to key
management personnel and other personnel under compensation schemes.
17. SHARE-BASED PAYMENTS
The terms and conditions of the grants for options outstanding at 30 June 2012 are as follows. All options
are to be settled by physical delivery of shares.
Grant date / parties entitled
Number of
instruments
Vesting conditions
90,000 3 months service
Contractual
life of
options
5 years
1,000,000 4 tranches of 250,000 options. 1 tranche vested 15
8 years
November 2011, others to vest on 15 November 2012, 15
November 2013 and 15 November 2014
Option granted to non-key
management personnel on
16 May 2008
Option granted to key
management on 1st
December 2010
Total share options
1,090,000
- 37 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
17. SHARE-BASED PAYMENTS (continued)
The number and weighted average exercise prices of share options are as follows:
Outstanding at 1 July
Exercised during the period
Lapsed during period
Granted during the period
Outstanding at 30 June
Weighted
average
exercise
price
2012
$1.36
$0.00
$0.00
-
$0.46
Number of
options
2012
2,724,000
(34,000)
(1,600,000)
-
1,090,000
Weighted
average
exercise
price
2011
$1.20
$0.00
$1.25
$0.50
$1.36
Number of
options
2011
4,732,000
(1,008,000)
(2,000,000)
1,000,000
2,724,000
The options outstanding at 30 June 2012 have an exercise price in the range of $nil to $0.50 and a weighted
average remaining contractual life of 7.7 years.
The fair value of services received in return for share options granted is based on the fair value of share
options granted, measured using a binomial approximation option pricing model, incorporating the probability
of the relative total shareholder return vesting condition being met, with the following inputs. No share options
were granted in 2012, one million share options were granted in 2011.
Fair value of share options and assumptions
Key management personnel and employees
Fair value at grant date (weighted average)
Share price at grant date
Exercise price (weighted average)
Expected volatility (weighted average volatility)
Option life (expected weighted average life)
Expected dividends
Risk-free interest rate (weighted average based on government bonds)
2012
-
-
-
-
-
-
-
2011
$0.21
$0.35
$0.50
98.31%
7.96 yrs
0.00%
5.05%
Employee expenses
Current
Share options granted in 2010 – equity settled
Total expense recognised as employee costs
Consolidated
2012
$
75,302
75,302
2011
$
58,414
58,414
- 38 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
18. NOTES TO THE STATEMENT OF CASHFLOW
18a. RECONCILIATION OF CASH
Reconciliation of cash at the end of the period
(as shown in the statement of cash flows) to the
related items in the accounts is as follows:
Consolidated
2012
$
2011
$
Cash on hand and at bank
Note
11
9,789,777
15,314,971
18b. RECONCILIATION OF CASH FLOWS FROM
OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Adjustments for:
Interest received – classified as investing activity
Depreciation
Equity settled share based payment expense
Operating loss before changes to working capital
(Increase)/decrease in trade and other receivables and
prepayments
Increase/(decrease) in payables and employee benefits
Net cash from/(used in) operating activities
19. AUDITORS’ REMUNERATION
Audit Services
Auditors of the Company
KPMG Australia
Consolidated
2012
$
2011
$
(3,205,571)
(6,335,318)
(844,952)
241,169
75,302
(1,289,743)
239,115
58,414
(3,734,052)
(7,327,532)
(2,094,310)
(363,095)
(6,191,457)
(60,122)
(1,067,355)
(8,455,009)
- Audit of the annual financial report
- Review of half year financial statements
40,000
25,000
47,800
25,000
Other Services
Auditors of the Company
KPMG Australia
- Research grant audit 2011/2010
- Research grant audit 2012
6,900
5,175
77,075
6,900
-
79,700
- 39 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
20. FINANCIAL INSTRUMENTS
Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure.
The Group’s maximum exposure to credit risk at 30 June was:
Trade receivables
R&D Tax Incentive - ATO
Accrued interest on bank term deposits
Cash on hand and at bank
Note
12
12
12
11
Consolidated
2012
$
39,784
2,331,688
111,914
9,789,777
12,273,163
2011
$
24,208
-
244,508
15,314,971
15,583,687
Cash on hand and at bank include deposits with the National Australia Bank and Bankwest. The accrued
interest comes from Term Deposits with both of these banks.
Impairment Losses
None of the Group’s receivables are past due (2011: $NIL) and no impairment losses have been recognised
(2011: $NIL).
The Group is in the development phase of its research and development programme. The Group’s income is
currently limited to interest on cash and term deposits, Australian government grants and collaborative
research agreements where income is received in advance. Accordingly, risk of impairment losses is minimal.
Liquidity Risk
The Group has no financial liabilities except for trade and other payables with a carrying value of $1,124,840
(note 14,15), which are payable in cash and have a maturity of less than 6 months.
Term deposits included in cash at bank above have maturities as follows: $2m maturing 16th July 2012, and
$7.3m maturing on the 15th October 2012.
Currency risk
At 30 June 2012, there were no receivables or payables denominated in foreign currencies.
Interest Risk
Exposure to interest rate risks arises in the normal course of the Group’s business in respect of interest
income on term deposit (note 11) and cash at bank (note 11). The weighted average interest rate in respect
of interest income in 2012 was 5.96% (2011 : 6.12%).
Fixed rate instruments
In respect of term deposits a 100 basis points increase in interest rates would have decreased the loss by
$117,724 (2011: $186,023). A 100 basis points decrease in interest rates would have increased the loss by
$117,724 (2011: $186,023).
Variable rate instruments
In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by
$6,696 (2011: $9,036). A 100 basis points decrease in interest rates would have increased the loss by $6,696
(2011: $9,036).
- 40 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
20. FINANCIAL INSTRUMENTS (continued)
Estimation of fair values
The fair value of a financial asset or a financial liability is the amount at which the asset could be exchanged,
or liability settled in a current transaction between willing parties after allowing for transaction costs. The
carrying value of financial assets and liabilities approximates their fair value at 30 June 2012.
Fair value hierarchy
No financial instruments are carried at fair value at 30 June 2012, however, as noted above the carrying
amounts approximate fair value in respect of financial assets and liabilities.
21. CONTINGENCIES
The Directors are of the opinion that provisions are not required in respect of these matters, as it is not
probable that a future sacrifice of economic benefits will be required or the amount is not capable of reliable
measure.
Guarantee and Indemnification
The Company has an Institutional Biosafety Committee (IBC) to advise on certain aspects of the Group’s field
trial applications. The Group has agreed to indemnify, release and forever discharge the members of the IBC
from and against any claim or liability, incurred by the members, arising in connection with the conduct of field
trials and related applications being undertaken by the Group. The financial exposure from this arrangement
is expected to be nil.
22. RELATED PARTIES
Directors
The following were key management personnel of the Group and the Company at any time during the
reporting period and unless otherwise indicated were Directors for the entire period:
Executive Chairman
Mr Ross Dobinson, Executive Chairman
Executive Directors
Professor Marilyn Anderson, Chief Science Officer and Executive Director
Non-Executive Directors
Mr Steven M Skala AO
Professor Jonathan West
Mr Hugh M Morgan AC
Executives
Dr Robyn L Heath (resigned 31 December 2011)
Ms Justine C Heath (resigned 4 May 2012)
Ms Elisha Larkin (appointed Chief Operating Officer and Company Secretary 4 May 2012)
The key management personnel compensation included in ‘employee benefits expense’ is as follows:
Short term employee benefits
Post employment benefits
Termination benefits
Share based payments
- 41 -
Consolidated
2012
$
821,526
70,844
125,000
75,302
1,092,672
2011
$
994,438
154,019
-
58,414
1,206,871
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
22. RELATED PARTIES (Continued)
Individual directors and executive compensation disclosures
Information regarding individual directors and executives compensation disclosures as permitted by
Corporations Regulation 2M.3.03 is provided in the remuneration report section of the Directors’ Report.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Group
and the Company since the end of the previous financial year and there were no material contracts involving
Directors’ interests existing at year end.
Options and rights over equity instruments
The movement during the reporting period in the number of options over ordinary shares in the Company
held directly, indirectly or beneficially, by each key management person including their related parties, is as
follows:
Held at 1
July 2011
Exercised
Expired at 1
July 2011
Granted as
Compensation
Held at 30
June 2012
Vested and
exercisable at
reporting date
1,000,000
-
20,000
(20,000)
1,020,000
(20,000)
-
-
-
-
1,000,000
250,000
-
-
-
-
1,000,000
250,000
Held at 1
July 2010
Exercised
Expired at 1
July 2011
Granted as
Compensation
Held at 30
June 2011
Vested and
exercisable at
reporting date
2012
Directors
R Dobinson
Executives
J Heath
2011
Directors
R Dobinson
-
-
20,000
20,000
-
-
-
1,000,000
1,000,000
J Hofheimer
3,000,000
(1,000,000)
(2,000,000)
Executives
J Heath
20,000
-
-
-
-
-
20,000
3,020,000
(1,000,000)
(2,000,000)
1,000,000
1,020,000
- 42 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2012
22. RELATED PARTIES (Continued)
Movement in shares
The movement during the reporting period in the number of ordinary shares in the Company held directly,
indirectly, or beneficially by each key management person, including their related parties, is as follows:
2012
Directors
Held at
1 July 2011
Shares
from
converting
notes
Shares
issued
under
offer
Purchases
Received on
exercise of
options
Sales
Held at
30 June
2012
Steven M Skala
4,167,467
Jonathan West
2,000,000
Hugh M Morgan
6,454,503
Marilyn Anderson
2,381,935
Executives
Robyn L Heath(1)
2,381,935
Justine Heath(2)
-
17,385,840
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,167,467
2,000,000
6,454,503
2,381,935
-
(54,060)
2,327,875
20,000
-
20,000
-
(54,060)
17,331,780
(1) Robyn Heath resigned effective 31 December 2011
(2) Justine Heath resigned effective 4 May 2012
2011
Directors
Held at
1 July 2010
Shares
from
converting
notes
Shares
issued
under
offer
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2011
Steven M Skala
4,167,467
Jonathan West
1,611,702
Hugh M Morgan
6,454,503
Adrienne E Clarke(1)
5,417,919
Marilyn Anderson
2,381,935
Joshua Hofheimer(2)
50,000
Executives
Robyn L Heath
2,381,935
22,465,461
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
388,298
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,167,467
2,000,000
6,454,503
5,417,919
2,381,935
1,000,000
(400,000)
650,000
-
-
2,381,935
388,298
1,000,000
(400,000)
23,453,759
(1) Adrienne Clarke retired on 23 November 2010
(2) Joshua Hofheimer resigned as CEO and MD on 1 July 2010 and continued as a non-executive Director
until November 23, 2010.
- 43 -
Notes to the financial statements for the year ended 30 June 2012
HEXIMA LIMITED
ABN 64 079 319 314
24. GROUP ENTITIES
Parent Entity
Hexima Limited
Significant subsidiaries
Hexima Holdings Limited
Pharmagra Pty Ltd
Country of
incorporation
Australia
Australia
Australia
Ownership Interest
2012
2011
100%
100%
100%
100%
Pharmagra Pty Ltd is incorporated in Australia and is a 100% owned subsidiary of the Company. Pharmagra
Pty Ltd has total assets and net assets of $2.00 at 30 June 2011.
Hexima Holdings Pty Ltd is incorporated in Australia and is a 100% owned subsidiary of the Company.
Hexima Holdings Pty Ltd has total assets of $2,087,884 at 30 June 2012, which comprises the Hexima
glasshouse located at La Trobe University.
25.
PARENT ENTITY DISCLOSURES
Company
2012
$
2011
$
(3,083,705)
-
(3,083,705)
(6,216,703)
-
(6,216,703)
12,430,017
15,518,483
15,860,901
18,889,981
1,200,705
1,200,705
1,563,800
1,563,800
57,659,830
1,019,484
(44,361,535)
14,317,779
57,659,830
944,182
(41,277,831)
17,326,181
Result of the Parent Entity
Loss for the period
Other Comprehensive income
Total Comprehensive income for the period
Financial Position of the Parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the Parent entity comprising of:
Share capital
Reserves
(Accumulated losses)
Total Equity
- 45 -