Hexcel Annual Report 2014

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FY2014 Annual Report · Hexcel

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HEXIMA LIMITED
ABN 64 079 319 314

Annual Financial Report

FOR THE YEAR

ENDED 30 JUNE 2014

HEXIMA LIMITED
ABN 64 079 319 314

TABLE OF CONTENTS

Directors’ Report (including Corporate Governance Statement and Remuneration Report)

Statement of Profit or Loss and other 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

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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
2014 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 Executive Chairman of Acrux Limited and Chairman of TPI Enterprises Ltd. He is also a
Director of Origin Capital Limited, Healthfarm Fine Foods Pty Ltd and Orpharma Pty Ltd. 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, Florida and cancer at Cold Spring Harbor
Laboratory in New York.

She is a Professor of Biochemistry at La Trobe University, a Member of the La Trobe University Council 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 until 2013. 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, a Director of the Australian Broadcasting Corporation, and is a Non-
Executive Director of Next Financial Limited. 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 and
the ANZAC Centenary Advisory Board Business Group.

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, a former Trustee of the Sir Zelman Cowen
Foundation for Medical Research and a former Member of the Global Foundation and the Grievance Tribunal
of Cricket Australia. Mr Skala practised law in Brisbane, London, and in Melbourne where for almost 20

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DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

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 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, Chairman
Emeritus of the Asia Society AustralAsia Centre; President of the National Gallery of Victoria Foundation,
Chairman of the Order of Australia Association Foundation and a Member of the Anglo American plc Advisory
Board.

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 and now an Honorary Member. He is
also a Past President of the Australia Japan Business Co-operation Committee and Past Co-Chair of the
Commonwealth Business Council, and continuing Emeritus Director.

Mr Morgan was Chief Executive Officer of WMC Limited from 1990 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 (HARVARD UNIVERSITY)
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.

Dr. John Bedbrook BSC, PHD (AUCKLAND UNIVERSITY)
Non-Executive Director

Dr. John Bedbrook received his PhD in Molecular biology at Auckland University in 1974, was a Fulbright
Fellow to Harvard Medical School, a Cabot Fellow to Harvard University and an EMBO fellow to The Plant
Breeding Institute Cambridge England. Between 1979 and 2000, Dr. Bedbrook founded and or ran several
agricultural biotechnology companies including Advanced Genetic Sciences, DNA Plant Technologies, Verdia
Inc and was President of Maxygen Agriculture. He was CEO of Plant Science Ventures a venture firm
investing in Biotechnology startups. After the acquisition of Verdia Inc. by DuPont in 2004 Dr. Bedbrook
became Vice President of Research and Development for DuPont Agriculture and Nutrition, and

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DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

subsequently Vice President of DuPont Agricultural Biotechnology. He retired from full time employment in
2013 and retained a part time role as Director Strategic Growth.

Dr. Bedbrook has authored over 100 scientific papers and multiple patents. Dr. Bedbrook is Director of Plant
Biosciences LTD., Executive Chairman of Dice Molecules Inc. and a Member of the Advisory Board of the
College of Natural Resources at University of California Berkeley.

Dr. Bedbrook has been a Director of the Company since 3 June 2014.

COMPANY SECRETARY
Ms Elisha Larkin BComm(Hons) / BAgriSci(Hons), MCommercial Law (The University of Melbourne) was
appointed as Company Secretary on 4 May 2012. Ms Larkin has been with Hexima since May 2006.

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

John Bedbrook

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 the ASX Corporate Governance Council recommendations.

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 six 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 two directors who satisfy the ASX
guidelines for independence (being Professor Jonathan West and Dr. John Bedbrook). 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 bi-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.

Remuneration Committee

The Board reviews and rewards the performance of the senior management team. In doing so, they consider
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HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

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 2014, 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 2014.

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/Company Secretary 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/Company Secretary 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 2014 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 shareholders 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 filed by other companies in the same technical field. 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. All field trials conducted by Hexima have been 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.

Actual monthly 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

2014
$

2013
$

4,440,086

3,252, 087

Net loss before financing income/expense

(2,650,519)

(3,243,991)

Net financing income

Income tax expense

222,660

394,093

Net loss after tax attributable to members

(2,427,859)

(2,849,898)

Dividends

Summary

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.

Since our last report, the following has been achieved in the fungal disease control program:

a) Several new constructs have been identified that provide broad -spectrum disease resistance in

glasshouse bioassays.

b) Two new patent applications have been submitted
c) The Company entered into an extended exclusivity period with DuPont Pioneer and discussions are

continuing regarding further extension of the program.

d) Seed has been bulked up to enable the commencement of field trials to generate data on the efficacy

of the constructs in reducing fungal infections.

In addition to the fungal disease program, Hexima has commenced a new insect gene control discovery
program with DuPont Pioneer. Hexima has been able to progress existing programs and introduce the insect
gene control program without incurring an increase in budgeted expenditure. Hexima also licensed its MGEV
technology to DuPont Pioneer.

The Company has made progress on the human antifungal program for treatment of fungal nail infections.
Hexima has identified leads with potent activity against human pathogens. Through a Collaboration
Agreement with Acrux DDS Pty Ltd (a subsidiary of Acrux Limited) there was demonstrated good penetration
of a Hexima molecule through human nails. Further proof of concept data is being pursued for the non-
melanoma skin cancer program.

At 30 June 2014, the Group had $8.4million in cash and receivables, providing a solid base for the ongoing
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 cash burn rate (without impacting on the core businesses).

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HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

Operating and Financial Review

The Group had net cash outflows from operating activities of $2.5million for the year ended 30 June 2014,
compared with $2.9million for the prior year. The $0.4million variance resulted from higher R&D contract
expense offset by Pioneer Insect and Exclusivity income.

The Group recorded a loss after tax of $2.43million for the year ended 30 June 2014. A loss after tax of
$2.85million was recorded for the previous financial year.

Net finance income for the Group for the financial year ended 30 June 2014 was $0.223million
(2013:$0.394million), reflecting lower cash balances as cash was utilised in the current reporting period.

Outlook

Hexima’s lead fungal disease control technology is continuing to be developed with DuPont Pioneer. This
agreement provides a path to market for the Company’s technology in corn and soy applications. 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 continue to cause extensive damage to corn and soybeans. The Company
has initiated its insect resistance program with DuPont Pioneer and is implementing a comprehensive lead
collection program. The Company is progressing broader based commercialisation of its MGEV technology
platform.

Hexima is continuing to develop its antifungal and non-melanoma skin cancer technologies and is expecting
to provide an additional update to shareholders on the status of these programs in the first half of 2015.

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 2014.

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
2014, 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, Mr John
Bedbrook, Professor Marilyn Anderson, Dr. Nicole van der Weerden (Head of Technology
Commercialization) and Ms Elisha Larkin (Chief Operating Officer and Company Secretary). 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 agreements 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. Nicole van der Weerden
Dr. van der Weerden completed her PhD in Biochemistry at La Trobe University in 2007 and has completed
an MBA at Melbourne Business School. Dr. van der Weerden has been a member of the Executive since
2012 and was appointed Chief Operating Officer in July 2014. Dr. van der Weerden 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, Dr. van der Weerden also has an employment contract with the
Group.

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HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

REMUNERATION REPORT – Audited (Continued)

Elisha Larkin
Ms Larkin holds honours degrees in Commerce and Agricultural Science from the University of Melbourne
and holds a Masters of Commercial Law also from the University of Melbourne. Ms Larkin was appointed
Company Secretary on 4 May 2012 and held the position of Chief Operating Officer between May 2012 and
July 2014. Ms Larkin is an employee of the Group.

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 2014 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

John Bedbrook(2)

Executive Directors

Ross Dobinson

Marilyn Anderson (3)

Executive

Elisha Larkin (4)

Nicole van der Weerden
(5)

2014

2013

2014
2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

2014

2013

50,458
50,458

50,458

3,724

200,000

181,260

188,510

74,924

107,034

75,872

Total

2014

687,154

2013

646,918

-
-

50,458
50,458

50,458

3,724

200,000

181,260

188,510

74,924

107,034

75,872

687,154

646,918

-
-

22,896

44,220

22,896

44,220

-14-

-
-

Post

Employment
Benefits -
Superannuation

Total
Remuneration

Value of Options as
proportion of
Remuneration

4,542
4,542

4,542

344

16,660

16,966

6,930

9,633

7,018

44,578

40,225

55,000
55,000

55,000

4,068

222,896

244,220

197,920

205,476

81,854

116,667

82,890

754,628

731,363

-
-

10%

18%

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) Dr. John Bedbrook commenced as a non-executive director with Hexima on the 3rd June 2014.

3) 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 $390,593, comprising $197,920 paid and payable directly by the Company and $192,673 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. Professor Anderson is the Chief
Science Officer for Hexima Limited.

4) Ms Elisha Larkin was appointed Company Secretary on 4 May 2012 and is employed on a part-time basis. In addition to the amounts in the table above, Ms Elisha

Larkin has $23,718 (2013: $20,793) of long service leave entitlements.

5) Dr. Nicole van der Weerden was Vice President of Technology Commercialisation for Hexima during the reporting period and was appointed Chief Operating

Officer in July 2014. She is employed by La Trobe University. The Company engages Dr. van der Weerden’s services through a Research Agreement with the
University and through a separate direct employment agreement. Dr van der Weerden’s total remuneration from the Company and La Trobe University (in relation
to services performed for Hexima) was $177,130, comprising $82,890 paid and payable directly by the Company, and $94,240 paid by La Trobe University (for the
services performed for Hexima). The amount shown in the table above represents payments made directly to Dr. van der Weerden by the Group only.

-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
2014

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.
Tranche one
vested 15
November
2011,Tranche
two vested on
15 November
2012, Tranche
three vested
on15
November
2013 and
Tranche four
will vest 15
November
2014

Mr Ross Dobinson has 750,000 options that have vested and are exercisable.

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

John Bedbrook

1,000,000

Total

15,003,905

1,000,000

There were no movements in shares held by Directors during the year and to the date of this report.

-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

30 August 2016

15 November 2019

$1.00

$0.50

125,000

1,000,000

1,125,000

Shares issued on exercise of options

There were no options issued to, or exercised by Directors or Key Management personnel during the
financial year ended 30 June 2014.

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
In the prior year KPMG, the Company’s auditor, have performed certain non-statutory audit services in
addition to their statutory duties.

The Board has considered the non-statutory audit services provided in the prior year by the auditor and is
satisfied that the provision of those services in the prior 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-statutory 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-statutory 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 2013/2014

2014
$
26,500
12,500

2013
$
26,500
17,000

3,500

42,500

43,500

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 2014, the Company paid insurance premiums of $19,693 (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 2014.

-18-

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014

Revenue

Notes

Contracted research expenditure

Other research & development expenditure

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

Income tax expense

10(a)

Consolidated

2014

$
4,440,086

2013

$
3,252,087

(4,109,463)

(3,808,216)

(351,615)

(534,813)

(450,134)

(231,887)

(952,841)

(228,919)

(230,933)

(331,027)

(312,866)

(313,776)

(238,741)

(982,858)

(238,296)

(270,298)

(7,090,605)

(6,496,078)

(2,650,519)

(3,243,991)

222,660

394,093

(2,427,859)

(2,849,898)

Loss for the period

(2,427,859)

(2,849,898)

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

(2,427,859)

(2,849,898)

(2,427,859)

(2,849,898)

(2,427,859)

(2,849,898)

(2,427,859)

(2,849,898)

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 2014

Notes

Consolidated
2014

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

2013

7,314,541

2,846,626

10,161,167

5,044,955

3,398,956

8,443,911

2,364,818

2,586,182

2,364,818

10,808,729

1,876,503

102,934

1,979,437

8,829,292

57,659,831

1,086,600

(49,917,139)

2,586,182

12,747,349

1,425,987

87,107

1,513,094

11,234,255

57,659,831

1,063,704

(47,489,280)

8,829,292

11,234,255

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 2014

Consolidated

2014
Opening balance at
1 July 2013

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 2014

2013
Opening balance at
1 July 2012

Total comprehensive
income for the period

Net (loss) for the period
Other comprehensive income
Total comprehensive
income/(loss) for the period

Note

Ordinary
Shares
$

Equity
option
reserve
$

Equity
compen-
sation
reserve
$

Accumulated
Losses
$

Total equity
$

57,659,831

200,000

863,704

(47,489,280)

11,234,255

-
-

(2,427,859)
-

(2,427,859)

22,896

57,659,831

200,000

886,600

(49,917,139)

8,829,292

Note

Ordinary
Shares
$

Equity
option
reserve
$

Equity
compen-
sation
reserve
$

Accumulated
Losses
$

Total equity
$

57,659,831

200,000

819,484

(44,639,382)

14,039,933

-
-

(2,849,898)
-

(2,849,898)

44,220

57,659,831

200,000

863,704

(47,489,280)

11,234,255

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 2014

Consolidated

2014

2013

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)

4,003,773

3,243,513

(6,538,037)

(2,534,264)

(6,103,115)

(2,859,602)

CASH FLOWS FROM INVESTING
ACTIVITIES

Interest received
Payments for plant and equipment

Net cash from investing activities

CASH FLOWS FROM FINANCING
ACTIVITIES

272,233
(7,555)

264,678

398,224
(13,858)

384,366

Net cash from financing activities

Net (decrease)/ increase in cash and cash
equivalents
Cash and cash equivalents at 1 July

(2,269,586)

(2,475,236)

7,314,541

9,789,777

Cash and cash equivalents at 30 June

18(a)

5,044,955

7,314,541

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 2014

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 2014 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.

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) 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 26 August 2014.

(b) Basis of measurement

The financial report has been prepared on the basis of historical cost.

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.

Measurement 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. The Group engages a third party to perform fair value
calculations for share options issues which is reviewed by the finance team. Significant valuation issues are
reported to the Group Audit Committee.

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.

- 24 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

BASIS OF PREPARATION (CONTINUED)

(d) Use of estimates and judgements (continued)

Measurement of fair values (continued)

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as
possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in
the valuation techniques as follows.
•
•

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of
the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.

The Group measure the following assets/liabilities at fair value: Share-based payment transactions.

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.

Further information about the assumptions made in measuring fair values is included in the following notes:

• Note 17 – measurement of share-based payments.

(e) Changes in accounting policies

Except for the changes below, the Group has consistently applied the accounting policies set out in Note 3 to
all periods presented in these consolidated financial statements.

The Group has adopted the following new standards and amendments to standards, including any
consequential amendments to other standards, with a date of initial application of 1 July 2013.

AASB 10 Consolidated Financial Statements (2011)

AASB 13 Fair Value Measurement

AASB 119 Employee Benefits (2011)

The nature and effects of the changes are explained below.

- 25 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

BASIS OF PREPARATION (CONTINUED)

(e) Changes in accounting policies (continued)

(i)

Subsidiaries

As a result of AASB 10 (2011), the Group has changed its accounting policy for determining whether it has
control over and consequently whether it consolidates its investees. AASB 10 (2011) introduces a new
control model that focuses on whether the Group has power over an investee, exposure or rights to variable
returns from its involvement with the investee and ability to use its power to affect those returns.

This change had no impact on the Group.

(ii)

Fair value measurement

AASB 13 establishes a single framework for measuring fair value and making disclosures about fair value
measurements when such measurements are required or permitted by other AASBs. It unifies the definition
of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. It replaces and expands the disclosure
requirements about fair value measurements in other AASBs, including AASB 7. As a result, the Group has
included additional disclosures in this regard (see Notes 2(d) and 17).

In accordance with the transitional provisions of AASB 13, the Group has applied the new fair value
measurement guidance prospectively and has not provided any comparative information for new disclosures.
Notwithstanding the above, the change had no significant impact on the measurements of the Group’s assets
and liabilities.

(iii) Annual leave

In the current year, the Company adopted AASB 119 Employee Benefits (2011), which revised the definition
of short-term employee benefits to benefits that are expected to be settled wholly within 12 months after the
end of the annual reporting period in which the employees render the related service.

As a result of the change, the annual leave liability for employees can now in some instances be considered
to be an other long-term employee benefit, when previously it was a short-term benefit. The Company’s
obligation is determined as the amount of future benefit that employees have earned in return for their service
in the current and prior periods, applying actuarial assumptions, discounted to determine its present value.
Remeasurements are recognised in profit or loss in the period in which they arise.

This change had no significant impact on the measurement of the Group’s annual leave liability.

- 26 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods by Group entities, except
for the changes in accounting policies as explained in note 2(d).

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. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.

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.

- 27 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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.

(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:

2014

2013

Plant and equipment

15% - 37.5%

Office equipment

33% - 66.7%

Plant and equipment -Building

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

- 28 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

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.

- 29 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

(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.

- 30 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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 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.

- 31 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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) 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 2013, 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.
The Group does not plan to adopt any standards early and the extent of the impact has not been determined.

- 32 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

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
2014, there were no receivables or payables denominated in foreign currencies (2013 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.

- 33 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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.

- 34 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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.

REVENUE

Government Grant – Other

Government – R&D Tax Incentive

Research grants and collaboration fees

OTHER RESEARCH AND DEVELOPMENT
EXPENDITURE

Other research and development
expenditure

OTHER EXPENSES

Administration and compliance costs

Research and development recoupment charge

Other expenses

FINANCE INCOME AND EXPENSE

Interest income on term deposit and cash at bank

Finance income

Consolidated

2014

2013

62,315

207,499

2,361,526

2,323,194

2,016,245

721,394

4,440,086

3,252,087

351,615

331,027

351,615

331,027

80,560

17,755

98,677

30,148

132,618

141,473

230,933

270,298

222,660

394,093

222,660

394,093

- 35 -

Notes to the financial statements for the year ended 30 June 2014

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% (2013: 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
Tax losses utilised previously not brought to account

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:

Consolidated

2014
$

2013
$

(2,427,859)

(2,849,898)

(728,358)

(854,969)

1,616,288
(708,458)
6,869

93,404
-
(279,745)

1,453,580
(696,958)
13,266

15,676
69,405
-

Temporary differences
Tax losses
Total

530,444
10,813,254
11,343,698

437,040
11,092,999
11,530,039

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

2014

2,502

564,572

4,477,881

5,044,955

2013
$

2,672

626,988

6,684,881

7,314,541

- 36 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

12. RECEIVABLES

Current

Trade receivables

R&D Tax Incentive Receivable – ATO

Accrued interest

Prepayments

Consolidated

2014

2013

636,188

246,523

2,424,432

2,323,194

58,209

280,127

107,784

169,125

3,398,956

2,846,626

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 2013
Additions
Balance at 30 June 2014

Balance at 1 July 2012
Additions
Balance at 30 June 2013

Accumulated depreciation
Balance at 1 July 2013
Depreciation for the year
Balance at 30 June 2014

Balance at 1 July 2012
Depreciation for the year
Balance at 30 June 2013

Carrying amounts

At 1 July 2013
At 30 June 2014

Plant and
Equipment
$
3,489,372
3,920
3,493,292

3,475,514
13,858
3,489,372

921,631
217,251
1,138,882

695,167
226,464
921,631

Office
Equipment
$
111,288
3,635
114,923

111,288
-
111,288

92,847
11,668
104,515

81,015
11,832
92,847

Total
$
3,600,660
7,555
3,608,215

3,586,802
13,858
3,600,660

1,014,478
228,919
1,243,397

776,182
238,296
1,014,478

2,567,741
2,354,410

18,441
10,408

2,586,182
2,364,818

14.

TRADE AND OTHER PAYABLES

Current

Trade payables
Research & development recoupment charge – ATO
Other payables & accrued expenses

Consolidated

2014
$

417,315
17,755
1,441,433

1,876,503

2013
$

159,301
35,148
1,231,538

1,425,987

Exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 20.

- 37 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

15.

EMPLOYEE BENEFITS

Current

Superannuation

Liability for annual leave

Liability for long service leave

16. CAPITAL AND RESERVES

Consolidated

2014

27,196

52,020

23,718

102,934

2013

19,791

46,523

20,793

87,107

Reconciliation of movement in capital and reserves

Consolidated and the Parent Entity

Ordinary Shares

2014

2013

2014
$

2013
$

Number of shares

Amount

On issue at 1 July
Issued at $0.00 per share on exercise
of options

81,180,469

81,101,469

57,659,831

79,000

On issue at 30 June – fully paid

81,180,469

57,659,831

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
Issued
Lapse of share options

Number of options

Amount

2014

2013

125,000
-
-

-
125,000
-

2014
$

2013
$

200,000
-
-

On issue at 30 June – fully paid

125,000

200,000

- 38 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

16. CAPITAL AND RESERVES (continued)

Number of options

Amount

Equity compensation reserve

2014

2013

On issue at 1 July
Issued as compensation
Exercise of share options
Lapse of share options
On issue at 30 June – fully paid

1,000,000
-
-
-
1,000,000

1,090,000
-
(79,000)
(11,000)
1,000,000

2014
$

2013
$

863,704
22,896
-
-
886,600

819,484
44,220
-
-
863,704

Total reserve at 30 June

1,125,000

1,086,600

1,063,704

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 2014 are as follows. All options
are to be settled by physical delivery of shares.

Grant date / parties entitled

Number of
instruments

Vesting conditions

125,000 Past services, immediate vesting

Contractual
life of
options

3 years

1,000,000 4 tranches of 250,000 options. Tranche one vested on15

9 years

November 2011,Tranche two vested on 15 November
2012, Tranche three vested 15 November 2013 and the
final tranche will vest on 15 November 2014

Option granted to third
parties for R&D collaboration
on 30th August 2013

Option granted to key
management on 1st
December 2010

Total share options

1,125,000

- 39 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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
2014
$0.56
-
-
-
$0.56

Number of
options

2014
1,125,000
-
-
-
1,125,000

Weighted
average
exercise
price
2013
$0.46
$0.00
$0.00
$1.00
$0.56

Number of
options

2013
1,090,000
(79,000)
(11,000)
125,000
1,125,000

The options outstanding at 30 June 2014 have an exercise price in the range of $0.50 to $1.00, and a
weighted average remaining contractual life of 4.9 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. No options were granted in 2014, 125,000
share options were granted in 2013.

Employee expenses

Current

Share options granted in 2010 – equity settled

Total expense recognised as employee costs

Consolidated

2014

22,896

2013

44,220

- 40 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

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

2014
$

2013
$

Cash on hand and at bank

Note

5,044,955

7,314,541

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

2014

2013

(2,427,859)

(2,849,898)

(272,233)

228,919

22,897

(398,224)

238,296

44,220

(2,448,276)

(2,965,606)

(552,331)

466,343

(206,385)

312,389

(2,534,264)

(2,859,602)

- Audit of the annual financial report

- Review of half year financial statements

26,500

12,500

26,500

17,000

Other Services

Auditors of the Company

KPMG Australia

- Research grant audit 2013/14

3,500

42,500

43,500

- 41 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

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

Consolidated

2014

636,188

2,424,432

58,209

5,044,955

8,163,784

2013

246,526

2,323,194

107,784

7,314,541

9,992,045

Cash on hand and at bank include deposits with the National Australia Bank. The accrued interest comes
from Term Deposits.

Impairment Losses
None of the Group’s receivables are past due (2013: $NIL) and no impairment losses have been recognised
(2013: $NIL).

The Group is in the development phase of its research and development program. 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 $1,979,437
(note 14 and 15), which are payable in cash and have a maturity of less than 6 months. Long Service leave
current liability totals $23,718.

There are currently 7 term deposits totaling $4.478million, with maturity ranging from July 2014 to April 2015.

Currency risk
At 30 June 2014, 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 2014 was 4.12% (2013 : 4.84%).

Fixed rate instruments

In respect of term deposits a 100 basis points increase in interest rates would have decreased the loss by
$52,302 (2012: $76,807). A 100 basis points decrease in interest rates would have increased the loss by
$52,302 (2012: $76,807).

Variable rate instruments

In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by
$1,915 (2013: $4,451). A 100 basis points decrease in interest rates would have increased the loss by $1,915
(2013: $4,451).

- 42 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

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 2014.

Fair value hierarchy

No financial instruments are carried at fair value at 30 June 2014, 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
Dr. John Bedbrook (appointed Director 3rd June 2014)

Executives
Ms Elisha Larkin
Dr. Nicole van der Weerden

- 43 -

Notes to the financial statements for the year ended 30 June 2014

HEXIMA LIMITED
ABN 64 079 319 314

22. RELATED PARTIES (Continued)

The key management personnel compensation included in ‘employee benefits expense’ is as follows:

Short term employee benefits

Post employment benefits

Share based payments

Consolidated

2014

687,154

44,578

22,896

754,628

2013

646,918

40,225

44,220

731,363

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:

2014

Directors
R Dobinson

2013

Directors
R Dobinson

Held at 1
July 2013

Exercised

Expired at 1
July 2014

Granted as
Compensation

Held at 30
June 2014

Vested and
exercisable at
reporting date

1,000,000

Held at 1
July 2012

Exercised

1,000,000

750,000

1,000,000

750,000

Expired at 1
July 2013

Granted as
Compensation

Held at 30
June 2013

Vested and
exercisable at
reporting date

1,000,000

500,000

1,000,000

500,000

- 44 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014

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:

Held at
1 July 2013

Shares
from
converting
notes

Shares
issued
under
offer

Purchases

Received on
exercise of
options

Sales

Held at
30 June
2014

2014

Directors
Steven M Skala

Jonathan West

4,167,467

2,000,000

Hugh M Morgan

6,454,503

Marilyn Anderson

2,381,935

15,003,905

4,167,467

2,000,000

6,454,503

2,381,935

15,003,905

2013

Directors

Held at
1 July 2012

Shares
from
converting
notes

Shares
issued
under
offer

Purchases

Received on
exercise of
options

Sales

Held at
30 June
2013

Steven M Skala

4,167,467

Jonathan West

2,000,000

Hugh M Morgan

6,454,503

Marilyn Anderson

2,381,935

15,003,905

4,167,467

2,000,000

6,454,503

2,381,935

15,003,905

- 45 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014
22.

RELATED PARTIES (Continued)

Key management personnel and directors’ transactions

a) Professor Anderson and Nicole van der Weerden are employees of La Trobe University. During the course
of the financial year ended 30 June 2014, amounts (including GST) totaling $5,332,987 (2013: $4,950,711)
were paid or payable by Hexima to La Trobe University for research work carried out on behalf of the
Group. These transactions were conducted on normal commercial terms. Trade accounts and/or accruals
payable to La Trobe University at 30 June 2014 were $1,054,723 (exclusive of GST) (2013: $917,556).

b) Mr Dobinson is Executive Chairman of Acrux Limited and holds approximately 0.83% of available Acrux
Limited shares. During the period the Company entered into two Collaboration Agreements with Acrux
DDS Pty Ltd, a subsidiary of Acrux Limited, with respect to Hexima’s non-melanoma skin cancer and
human anti-fungal technologies. No commercial or research fees were paid or received under the
Agreements during the period. $8,282 (excluding GST) was paid to Acrux as direct reimbursement for
shared purchases from third parties. Trade payables and receivables and/or accruals at 30 June 2014
were nil. Entities associated with Hexima Directors Mr Hugh Morgan and Mr Steven Skala also hold
shares in Acrux Limited, with approximately 0.12% and 0.09% of available shares held respectively.

Related Party Transactions

The Company has provided an interest free loan of $2,365,709 to its subsidiary Hexima Holdings Pty Ltd.
This loan is outstanding at 30 June 2014 in the Company’s statement of financial position.

23. OPERATING LEASES

Leases as lessee

Non-cancellable operating lease rentals are payable as follows:

Less than one year

Between one and five years

2014
$
80,372

83,215

163,587

2013
$
76,109

163,587

239,696

The Group leases office premises and a glass house under an operating lease. The lease is negotiated on an
annual basis.

24. GROUP ENTITIES

Parent Entity

Hexima Limited

Significant subsidiaries

Hexima Holdings Limited

Pharmagra Pty Ltd

Country of
incorporation

Australia

Ownership Interest

2014

2013

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 2014.

- 46 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2014
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 $1,844,164 at 30 June 2014, which comprises the Hexima
glasshouse located at La Trobe University.

25.

PARENT ENTITY DISCLOSURES

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

Company

2014
$

2013
$

(2,427,859)
-
(2,427,859)

(3,127,745)
-
(3,127,745)

8,443,911
10,808,729

10,161,166
12,747,348

1,979,437
1,979,437

1,513,094
1,513,094

57,659,831
1,086,600
(49,917,139)
8,829,292

57,659,831
1,063,704
(47,489,280)
11,234,255

- 47 -