Hexcel Annual Report 2015

← All annual reports

FY2015 Annual Report · Hexcel

Loading PDF…

HEXIMA LIMITED
ABN 64 079 319 314

Annual Financial Report

FOR THE YEAR

ENDED 30 JUNE 2015

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

-2-

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
2015 and the auditor’s report thereon.

DIRECTORS
The Directors of Hexima at any time during or since the end of the financial year are:

Professor Jonathan West BA (UNIVERSITY OF SYDNEY), PHD (HARVARD UNIVERSITY)
Non-Executive Chairman

Professor Jonathan West was the founding Director of the Australian Innovation Research Centre. Prior to
assuming that 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 was 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 Boundary Bend
Limited.

Professor West has been a Director of the Company since 7 November 2005 and was appointed Non-
Executive Chairman on 18 November 2014. He is a member of the Remuneration Committee and the Audit
and Risk Management Committee.

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 40 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 and of City West Water
from 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
Group Limited and BlueChilli Technology Pty Ltd, and a Director of the Australian Broadcasting Corporation
and 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, a Director of the Centre for
Independent Studies, and a Founding Panel Member of Adara Advisors Pty Ltd. He is a Member of the
International Council of the Museum of Modern Art (MoMA) in New York.

-3-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

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 Advisory Council of the Australian Innovation
Research Centre and the ANZAC Centenary Advisory Board Business Group, the Global Foundation and the
Grievance Tribunal of Cricket Australia. Mr Skala practised law in Brisbane, London, and in Melbourne
where for almost 20 years he was a Partner and Head of the Corporate and Commercial Practice of Arnold
Bloch Leibler, Solicitors. He was appointed an Officer in the Order of Australia in January 2010 for service to
the 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 Chairman of the Audit and Risk Management Committee and a member of the
Remuneration 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
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. He is Chairman of the Remuneration
Committee and a member of the Audit and Risk Management Committee.

Dr. Nicole van der Weerden BSC, PHD (LA TROBE UNIVERSITY)
Executive Director, Chief Operating Officer

Dr. Nicole van der Weerden completed her PhD in Biochemistry at La Trobe University in 2007. Her PhD
research on the antifungal properties and mechanism of action of plant defensins led to the award of a
prestigious Victoria Fellowship in 2006. Since completing her PhD, Dr. van der Weerden has worked for
Hexima Limited and has led the gene discovery program for the Pioneer partnership on control of fungal
diseases in corn. Dr. van der Weerden has completed an MBA at Melbourne Business School. Dr. van der
Weerden is an inventor on nine patent applications. Dr. van der Weerden completed an MBA in 2013 at
Melbourne Business School and was appointed Hexima’s Chief Operating Officer in 2014.

Dr. van der Weerden has been a Director of the Company since 16 December 2014.

Hugh M Morgan AC, LLB, BCOMM (THE UNIVERSITY OF MELBOURNE)
Non-Executive Director – Resigned from Hexima 18 November 2014.

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

-4-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

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 was a Director of the Company from 10 May 2007 until 18 November 2014.

Ross Dobinson BBus, (QLD UNIVERSITY OF TECHNOLOGY)
Executive Chairman – Resigned from Hexima 17 November 2014.

Mr 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 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 a Director of the Company from 21 July 2010 until 17 November 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

Jonathan West

Marilyn Anderson

Steven Skala

John Bedbrook

Nicole van der
Weerden
Hugh Morgan

Ross Dobinson

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

-5-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

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.

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
Directors and executive management. Responsibilities are delineated by formal authority delegations.

Directors and Executive Education

Incoming Directors and Executives participate in informal meetings to increase their understanding of the
Company, its key assets and the competitive market in which it operates. Through these meetings, Directors
and Executives review the Company’s policies and procedures for good corporate governance, including
delegations and reservations of authority and the roles of key personnel and Board committees. They have
access to continuing education to update and enhance their skills and knowledge. A review of the
performance of the Board will be undertaken annually by the Chairman, in consultation with the Board.

Composition of the Board

The Constitution of the Company provides that the number of Directors shall not be less than three. There
are currently five Directors in office at the date of this report and their names and qualifications are set out on
pages 3 to 4 of this Directors’ Report.

The ASX best practice recommendations require a majority of the Board to be independent Directors and the
chairperson to be an independent director. Currently, the Board has two directors who satisfy the ASX
guidelines for independence (being Chairman Professor Jonathan West and Dr. John Bedbrook). Mr Steven
Skala AO is a Non-Executive Director but does not qualify as independent because of his shareholdings in
Hexima. Professor Marilyn Anderson and Dr van der Weerden do not qualify as independent as they are
Executive Directors. The Board considers their significant commitment as share and option holders (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 and an Audit and Risk Management
Committee. These Committees have written mandates and operating procedures, which are reviewed on a
regular basis.

The full Board has monthly meetings scheduled for the coming year. Extraordinary meetings will be convened
at such other times as may be necessary to address any specific significant matters that may arise.

The agenda for meetings is prepared in conjunction with the Chairman. Submissions are circulated in
advance. Executives are regularly involved in Board discussions.

Nomination Committee

The Board has in place a Nomination Committee to assist it in ensuring the Board has an effective
composition, size and commitment.

The Nomination Committee develops criteria for Board membership, identifies specific individuals for
nomination as Directors and establishes processes for the review of the performance of individual Directors

-6-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

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.

Remuneration Committee

The Board reviews and rewards the performance of the senior management team. In doing so, they consider
recommendations from the Remuneration Committee.

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages
and policies applicable to Key Executives and Directors. The Remuneration Committee Charter forms part of
the Board Charter, which is available on the Company’s website.

The Remuneration Committee will consist of at least three Directors, a majority of whom are Non-Executive
Directors and at least one of whom is an independent director. This differs from the ASX best practice
recommendations which require a majority of independent Directors and an independent Chairman. Given
the current composition of the Board, Hexima does satisfy the ASX recommendations as to independence.
The current members are Dr. John Bedbrook (Chairman), Professor Jonathan West and Mr Steven Skala
AO.

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 2015, the Remuneration Committee
met separately on one occasion and also addressed remuneration issues 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 16 and forms part of the Directors’ Report for the financial year ended 30 June 2015.

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, 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 ASIC, 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 Steven Skala AO
(Chairman), Professor Jonathan West and Dr. John Bedbrook.

-7-

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 Director and the Company Secretary / CFO 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 2015
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.

-8-

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

Financial Reporting

The Executive Director and the Company Secretary 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.

-9-

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 plant-derived proteins and peptides for applications as human therapeutics and for the
genetic modification of crops.

OPERATING AND FINANCIAL REVIEW OF THE GROUP

Revenue

2015
$

2014
$

4,801,627

4,440,086

Net loss before financing income/expense

(2,216,342)

(2,650,519)

Net financing income

Income tax expense

134,035

222,660

Net loss after tax attributable to members

(2,082,307)

(2,427,859)

Dividends

Summary

NIL

Activity on the human fungal disease program has increased during FY2015 and significant progress has
been made toward clinical trials. Hexima has identified the novel antifungal peptide, HXP124, which kills
fungal pathogens that cause fungal nail infections (onychomycosis) at low concentrations and penetrates
human toenails far more effectively than current marketed products. Hexima initiated large-scale
manufacture of HXP124 under Good Manufacturing Practice (GMP) conditions with the Australian company,
Pharmasynth, for use in pre-clinical toxicology studies and clinical trials. Hexima expects to begin toxicology
testing in Q3 2015. Two new patent applications were submitted to cover the use of HXP124 as a treatment
for onychomycosis and other human fungal infections.
Excellent progress was made on the insect gene discovery program conducted in collaboration with DuPont
Pioneer. Hexima has collected several thousand plant and bacterial samples and screening of these samples
for novel insect actives is taking place in Australia and the United States. While the prospective timelines for
generating commercial products from this project are long (12-15 years), this work is funded by DuPont
Pioneer and does not represent a drain on Hexima’s cash reserves.
The corn fungal disease program has progressed well during the year although significant challenges remain
to prove the commercial viability of this technology. Several constructs that provide greater than 70%
disease reduction in glasshouse testing were field-tested by DuPont Pioneer during the 2014 growing
season. These plants exhibited sub-optimal agronomic performance indicating further work will be required to
generate commercially viable plants. Hexima extended its exclusive agreement with DuPont Pioneer to the
end of December 2015. During FY2015 work has focussed on generating additional constructs that retain
antifungal activity but do not impact plant growth. Several promising new constructs have been identified and
are in the final stages of glasshouse testing. DuPont Pioneer do not plan to field-test these plants at this
time, however glasshouse results will be a valuable indicator of their commercial potential. Two new patent
applications were submitted relating to this work.
Hexima is continuing to search for a commercial partner for its non-melanoma skin cancer technology and is
working with several groups to enhance the penetration of its lead actives through skin.
During the period the Company relocated its head office from the Melbourne CBD to La Trobe University.
This move will result in significant cost savings as well as benefits in having all staff located together.
At 30 June 2015, the Group had $6.5million in cash and receivables, providing a solid base for the ongoing
development activity.

Operating and Financial Review

The Group had net cash outflows from operating activities of $1.6million for the year ended 30 June 2015,
compared with $2.5million for the prior year. The $0.9million variance resulted from both lower R&D
contracted expense, and higher income from Dupont Pioneer due to the favourable exchange rate. The
Group recorded a loss after tax of $2.082million for the year ended 30 June 2015. A loss after tax of

-10-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

$2.43million was recorded for the previous financial year. Net finance income for the Group for the financial
year ended 30 June 2015 was $0.134million (2014:$0.223million), reflecting lower cash balances as cash
was utilised in the current reporting period.

Outlook

The Board believes the HXP124 onychomycosis project is the most likely prospect for a significant return to
shareholders in the short to medium term and is therefore focussing resources on this project. The global
onychomycosis market was valued at US$2.34 billion in 2012 and is projected to reach US$3.1 billion by
2016. Hexima’s technology has several advantages over current therapies including better nail penetration
(to reach the site of infection) and the ability to kill fungal cells rather than merely preventing new growth.
Hexima will begin preclinical toxicology studies in the second half of 2015 and is aiming to begin phase I
clinical trials in the first half of 2016.
Hexima is continuing to work with DuPont Pioneer on both its plant fungal disease control technology and its
insect gene discovery program. Significant challenges remain to prove the commercial viability of the fungal
disease technology and the program will be reassessed at the end of December 2015. The insect gene
discovery program remains an important program for Hexima with the global transgenic insect trait market
being US $6.5 billion in 2012 and representing 43% of the GM trait market. However, this project remains
high-risk and the timeline for royalties from this project is approximately 12-15 years.
The Company continues to pursue commercialisation of its non-melanoma skin cancer technology and its
MGEV technology platform.
The Company expects a further reduction in administration costs in the 2015-16 financial year due to
changes made during the reporting period. These changes include the relocation of head office to La Trobe
University, the suspension of director’s fees and a reduction in executive salaries.

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 2015.

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.

-11-

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

REMUNERATION REPORT

The remuneration report set out on pages 12 to 16 are not required under the Corporations Act 2001 as the
Group is an unlisted disclosing entity. The Group has voluntarily complied with these disclosures.

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
2015, key management personnel comprised all Directors, Executives and the Company Secretary. This
included Professor Jonathan West, Mr Steven Skala AO, Dr. John Bedbrook, Professor Marilyn Anderson,
Dr. Nicole van der Weerden and Ms Elisha Larkin. Mr Ross Dobinson and Mr Hugh Morgan AC resigned as
Directors during the period. Remuneration levels for key management personnel are set to attract and retain
appropriately qualified and experienced Directors and Executives. The Remuneration Committee obtains
independent advice on remuneration packages and reviews remuneration at least on an annual basis.

Remuneration structures take into account the capability and experience of key management personnel.
Remuneration includes a mix of fixed and variable remuneration as well as short and long term incentives.

Fixed Remuneration
Fixed remuneration consists of base remuneration, which is calculated on a total cost basis and includes any
FBT charges related to employee benefits, as well as employer contributions to superannuation funds.

Performance Linked Remuneration
Performance linked remuneration may include short and long term incentives.

Short term incentive bonuses are based on the satisfaction of specified performance criteria, which may
include financial or non-financial objectives. The Remuneration Committee approves the offer and payment of
short term incentive bonuses to key management personnel and to other employees.

Long term incentives may be provided as options over the Company’s ordinary shares and other securities.
Details are provided on page 16 of the Directors’ Report.

Consequences of Performance on Shareholder Wealth
Hexima is a development stage company and the remuneration of key management personnel is not
determined by the level of revenue, profit or dividends. Instead, consideration is given to the progress of
scientific programs, the commercialisation of those programs, the development of the Company’s intellectual
property and asset base and long-term share price performance.

Service Contracts
The Group has entered into service contracts with key management personnel, which outline the components
of compensation paid to key management personnel, but do not prescribe how compensation levels are
modified from year to year. Compensation levels are reviewed each year to take into account cost-of-living
changes, any change in scope of the role performed by the senior Executive, and any changes required to
meet the principles of the compensation policy.

All employment contracts may be terminated immediately for cause or for material underperformance.

Professor Marilyn A Anderson
Executive Director 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.

Dr. Nicole van der Weerden
Executive Director 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.

-12-

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

REMUNERATION REPORT – (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. Additional “per diem” fees may be paid where services
rendered are above normal requirements.

Fees payable to Non-Executive Directors for the financial year ended 30 June 2015 were set at $55,000 per
annum however effective 1 January 2015 the Non-Executive Directors agreed to suspend payment of such
fees. There has been no increase 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.

-13-

DIRECTORS’ REPORT

REMUNERATION REPORT – (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

Final Payment

Share Options

Issued

Share based payments
Converting
Notes Issued

(1)

Post

Employment
Benefits -
Superannuation

Total
Remuneration

Value of Options as
proportion of
Remuneration

Non-executive Directors

Steven M Skala

Jonathan West

Hugh M Morgan

John Bedbrook

Executive Directors

Ross Dobinson (2)

Marilyn Anderson (3)

Nicole van der Weerden
(5)

Executive

Elisha Larkin (4)

2015

2014

2015
2014

2015

2014

2015

2014

2015

2014

2015
2014

2015

2014

2015

2014

25,114
50,458

25,114

50,458

25,114

3,724

50,000
200,000

172,599
181,260

75,872
75,872

56,193

74,924

Total

2015

455,120

2014

687,154

-
-

25,114
50,458

25,114

50,458

25,114

3,724

50,000
200,000

172,599
181,260

75,872
75,872

56,193

74,924

-
-

136,364
-

-
-

2,199

5,903
22,896

19,000
-

19,500
-

1,560

455,120

136,364

48,162

687,154

22,896

-14-

-
-

2,386
4,542

1,643

4,542

2,386

344

-
-

16,393
16,660

7,208
7,018

5,338

6,930

37,740

44,578

27,500
55,000

26,757

55,000

29,699

4,068

192,267
222,896

207,992
197,920

102,580
82,890

63,091

81,854

677,386

754,628

-
-

3%
10%

-
-

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

REMUNERATION REPORT – (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) Mr Ross Dobinson resigned from the position of Chairman on the 17th November 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 $432,687, comprising $207,992 paid and payable directly by the Company and $224,695 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 as well as an Executive Director of the company.

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 $16,059 (2014: $23,718) of long service leave entitlements.

5) Dr. Nicole van der Weerden was appointed Chief Operating Officer in July 2014. On the 16th December 2014 she was elected to the Board as an Executive

Director. 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 $217,681, comprising $102,580 paid and payable directly by the Company, and $115,101 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 – (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.

No. of Options
Granted

Exercise
Price

Grant
Date

Ross
Dobinson

1,000,000

$0.50

1st
December
2010

Fair value
per option
at grant
date
Tranche 1
$0.16
Tranche 2
$0.20
Tranche 3
$0.23
Tranche 4
$0.25

Marilyn
Anderson

John
Bedbrook

500,000

$0.50

200,000

$0.50

Nicole van der
Weerden

500,000

$0.50

Elisha Larkin

40,000

$0.50

$0.039

18th
November
2014
18th
November
2014
26th
August
2014
26th
August
2014

Expiry Date

4 Tranches of
250,000
options.
Tranche one
vested 15
November
2011,Tranche
two vested on
15 November
2012, Tranche
three vested
on 15
November
2013 and
Tranche four
vested 15
November
2014
18th November
2019

No. of options
vested during
2015

250,000

500,000

18th November
2019

26th August
2019

500,000

40,000

Mr Ross Dobinson had 1,000,000 options that had vested and were exercisable, however these options
expired during December 2014.

-16-

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS’ REPORT

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 Skala

Jonathan West

Marilyn Anderson

John Bedbrook

Nicole van der Weerden

4,167,467

2,000,000

2,381,935

9,000

500,000

200,000

500,000

Total

8,558,402

1,200,000

During the period Hugh Morgan retired as a Director and Dr Nicole van der Weerden was appointed.

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

1 July 2019

26 August 2019

18 November 2019

31 December 2021

$1.00

$0.50

125,000

508,000

640,000

500,000

200,000

1,973,000

Shares issued on exercise of options

There were 1,240,000 options issued to Directors or Key Management personnel during the financial year
ended 30 June 2015. There were 608,000 options issued to employees during this period also.

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

2015
$
26,500
12,500

2014
$
26,500
12,500

3,500

39,000

42,500

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 2015, the Company paid insurance premiums of $19,315 (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 2015.

-18-

DIRECTORS’ REPORT

HEXIMA LIMITED
ABN 64 079 319 314

LEAD AUDITORS’ INDEPENDENCE DECLARATION UNDER SECTION 370C OF THE CORPORATIONS
ACT 2001

The Lead Auditor’s Independence Declaration is set out on page 50 and forms part of the Directors’ Report
for the ended 30 June 2015.

This report is made pursuant to a resolution of the Directors.

Professor Jonathan West
Non-Executive Chairman

Dated this 24th day of August

Professor Marilyn Anderson
Executive Director

-19-

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015

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

2015

$
4,801,627

2014

$
4,440,086

(3,892,835)

(4,109,463)

(555,804)

(448,051)

(420,644)

(318,674)

(919,989)

(210,880)

(251,092)

(7,017,969)

(2,216,342)

134,035

(351,615)

(534,813)

(450,134)

(231,887)

(952,841)

(228,919)

(230,933)

(7,090,605)

(2,650,519)

222,660

(2,082,307)

(2,427,859)

Loss for the period

(2,082,307)

(2,427,859)

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

(2,082,307)

(2,427,859)

(2,082,307)

(2,427,859)

(2,082,307)

(2,427,859)

(2,082,307)

(2,427,859)

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 2015

Notes

Consolidated
2015

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

2014

5,044,955

3,398,956

8,443,911

2,364,818

10,808,729

1,876,503

102,934

1,979,437

8,829,292

3,574,100

2,900,959

6,475,059

2,162,812

8,637,871

1,665,839

153,173

1,819,012

6,818,859

57,659,831

1,158,474

(51,999,446)

57,659,831

1,086,600

(49,917,139)

6,818,859

8,829,292

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 2015

Consolidated

2015
Opening balance at
1 July 2014

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 2015

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

Note

Ordinary
Shares
$

Equity
option
reserve
$

Equity
compen-
sation
reserve
$

Accumulated
Losses
$

Total equity
$

57,659,831

200,000

886,600

(49,917,139)

8,829,292

-
-

(2,082,307)
-

(2,082,307)

71,874

57,659,831

200,000

958,474

(51,999,446)

6,818,859

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

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 2015

Consolidated

2015

2014

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)

5,835,640

4,003,773

(7,485,012)

(1,649,372)

(6,538,037)

(2,534,264)

CASH FLOWS FROM INVESTING
ACTIVITIES

Interest received
Payments for plant and equipment

Net cash from investing activities

CASH FLOWS FROM FINANCING
ACTIVITIES

187,391
(8,874)

178,517

272,233
(7,555)

264,678

Net cash from financing activities

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

(1,470,855)

(2,269,586)

5,044,955

7,314,541

Cash and cash equivalents at 30 June

18(a)

3,574,100

5,044,955

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 2015

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 4, LIMS 2, La Trobe University, Victoria, 3086. The consolidated
financial statements of the Company as at and for the year ended 30 June 2015 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, and the treatment of disease in
humans.

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 24 August 2015.

(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 2015

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

The Group has consistently applied the accounting policies set out in Note 3 to all periods presented in these
consolidated financial statements.

(f)

Going concern basis of accounting

The financial report is prepared on a going concern basis, which contemplates continuity of normal
operations and the realisation of assets and settlement of liabilities in the ordinary course of operations. In
making this assessment, the directors have considered future events and conditions for a period of at least
12 months following the approval of these financial statements.

The Group has a history of losses and incurred a loss after tax of $2,082,307 (2014: loss after tax of
$2,427,859). Given the history of losses and the decrease of cash and cash equivalents over the years, the
going concern assumption of the Group is dependent on the continued income from collaboration fees and
the R&D tax incentive from the government.

- 25 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

BASIS OF PREPARATION (CONTINUED)

(f)

Going concern basis of accounting (continued)

Notwithstanding the history of operating losses and the decrease in cash and cash equivalents compared to
prior years, the Directors consider that it is appropriate to prepare the financial statements on a going
concern basis based on the following mitigating factors:

The Group has sufficient cash and receivables at 30 June 2015 to meet its obligations at that date

•
and for a period of at least 12 months following the approval of these financial statements.

The Group has not entered into any long term contractual commitments and its major expenditure

•
(R&D) can be curtailed in line with the cash resources available.

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods by Group entities.
Certain comparative amounts have been reclassified to conform with the current year’s presentation.

(a) Basis of Consolidation

Subsidiaries
Subsidiaries are entities controlled by the Group. 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.

- 26 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(b)

Financial instruments (continued)

(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.

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:

2015

2014

Plant and equipment

15% - 37.5%

Office equipment

33% - 66.7%

Plant and equipment - Building

- 27 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(c)

Plant and equipment (continued)

(iii) Depreciation (continued)

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

(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”).

- 28 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(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.

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,

- 29 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i)

Income Tax (continued)

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.

(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 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 biotechnology industry, developing and/or
commercialising 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.

- 30 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

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 2015, 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.

- 31 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

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
2015, there were no receivables or payables denominated in foreign currencies (2014 receivable: $NIL,
payable: $NIL). At 30 June 2015 the Group had US$499,970 in a US dollar denominated account.

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.

- 32 -

Notes to the financial statements for the year ended 30 June 2015

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.

- 33 -

Notes to the financial statements for the year ended 30 June 2015

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

2015

2014

62,315

2,263,424

2,361,526

2,538,203

2,016,245

4,801,627

4,440,086

555,804

351,615

555,804

351,615

88,500

80,560

17,755

162,592

132,618

251,092

230,933

134,035

222,660

134,035

222,660

- 34 -

Notes to the financial statements for the year ended 30 June 2015

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% (2014: 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

2015
$

2014
$

(2,082,307)

(2,427,859)

(624,692)

(728,358)

1,556,462
(700,408)
21,562
4,085
74,065
-
(331,074)

1,616,288
(708,458)
6,869
-
93,404
-
(279,745)

Temporary differences
Tax losses
Total

585,299
10,482,180
11,067,479

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

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

2015

1,637

1,129,849

2,442,614

3,574,100

2014
$

2,502

564,572

4,477,881

5,044,955

- 35 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

12. RECEIVABLES

Current

Trade receivables

R&D Tax Incentive Receivable – ATO

Accrued interest

Prepayments

Consolidated

2015

2014

378,506

636,188

2,334,693

2,424,432

4,852

182,908

58,209

280,127

2,900,959

3,398,956

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 2014
Additions
Disposals
Balance at 30 June 2015

Balance at 1 July 2013
Additions
Balance at 30 June 2014

Accumulated depreciation
Balance at 1 July 2014
Depreciation for the year
Disposals
Balance at 30 June 2015

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

Carrying amounts

At 1 July 2014
At 30 June 2015

Plant and
Equipment
$
3,493,292
8,295
(12,556)
3,489,031

3,489,372
3,920
3,493,292

1,138,882
206,552
(12,547)
1,332,887

921,631
217,251
1,138,882

Office
Equipment
$
114,923
2025
(81,064)
35,884

111,288
3,635
114,923

104,515
4,328
(79,627)
29,216

92,847
11,668
104,515

Total
$
3,608,215
10,320
(93,620)
3,524,915

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

1,243,397
210,880
(92,174)
1,362,103

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

2,354,410
2,156,144

10,408
6,668

2,364,818
2,162,812

14. TRADE AND OTHER PAYABLES

Current

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

Consolidated

2015
$

93,845
-
1,571,994

1,665,839

2014
$

417,315
17,755
1,441,433

1,876,503

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

- 36 -

Notes to the financial statements for the year ended 30 June 2015

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

2015

45,953

52,558

54,662

2014

27,196

52,020

23,718

153,173

102,934

Reconciliation of movement in capital and reserves

Consolidated and the Parent Entity

Ordinary Shares

2015

2014

2015
$

2014
$

Number of shares

Amount

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

81,180,469

57,659,831

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

2015

2014

125,000
-
-

2015
$

2014
$

200,000
-
-

On issue at 30 June – fully paid

125,000

200,000

- 37 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

16. CAPITAL AND RESERVES (continued)

Number of options

Amount

Equity compensation reserve

2015

2014

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
1,848,000
-
1,000,000
1,848,000

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

2015
$

2014
$

886,600
71,874
-
-
958,474

863,704
22,896
-
-
886,600

Total reserve at 30 June

1,973,000

1,125,000

1,158,474

1,086,600

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 2015 are as follows. All options
are to be settled by physical delivery of shares.

Grant date / parties entitled

Number of
instruments

Vesting conditions

Option granted to third
parties for R&D collaboration
on 30th August 2012

Option granted to key
management on 26th August
2014

Option granted to key
management on 18th
November 2014

Option granted to other
personnel on 26th August
2014

Option granted to other
personnel on 1st July 2014

125,000 Past services, immediate vesting

540,000

Immediate vesting

500,000

Immediate vesting

Contractual
life of
options

3 years

5 years

200,000 Vesting on earlier of 31st December 2016 or sale of the

5 years

company

100,000

Immediate vesting

508,000

Immediate vesting

5 years

Total share options

1,973,000

- 38 -

Notes to the financial statements for the year ended 30 June 2015

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
2015
$0.56
-
$0.50
$0.50
$0.53

Number of
options

2015
1,125,000
-
1,000,000
1,848,000
1,973,000

Weighted
average
exercise
price
2014
$0.56
-
-
-
$0.56

Number of
options

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

The options outstanding at 30 June 2015 have an exercise price in the range of $0.50 to $1.00, and a
weighted average remaining contractual life of 4.2 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. 1,848,000 options were granted in 2015,
nil share options were granted in 2014.

Employee expenses

Current

Share options granted in 2010 – equity settled

Total expense recognised as employee costs

Consolidated

2015

71,874

2014

22,896

- 39 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

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

2015
$

2014
$

Cash on hand and at bank

Note

3,574,100

5,044,955

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

2015

2014

(2,082,307)

(2,427,859)

(187,391)

210,880

71,874

(272,233)

228,919

22,897

(1,986,944)

(2,448,276)

497,997

(160,425)

(552,331)

466,343

(1,649,372)

(2,534,264)

- Audit of the annual financial report

- Review of half year financial statements

26,500

12,500

26,500

12,500

Other Services

Auditors of the Company

KPMG Australia

- Research grant audit 2013/14

39,000

3,500

42,500

- 40 -

HEXIMA LIMITED
ABN 64 079 319 314

Notes to the financial statements for the year ended 30 June 2015

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

2015

378,506

2,334,693

4,852

3,574,100

6,292,151

2014

636,188

2,424,432

58,209

5,044,955

8,163,784

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 (2014: $NIL) and no impairment losses have been recognised
(2014: $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 and employee provisions with a
carrying value of $1,819,012 (note 14 and 15), which are payable in cash and have a maturity of less than 6
months. Long Service leave current liability totals $54,662.

There are currently 4 term deposits totaling $2.443million, with maturity ranging from July 2015 to September
2015.

Currency risk
At 30 June 2015, there were no receivables or payables denominated in foreign currencies. Of the cash on
hand at 30 June 2015, the Group held $499,970 in a US dollar denominated account.

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 2015 was 3.46% (2014: 4.12%).

Fixed rate instruments

In respect of term deposits a 100 basis points increase in interest rates would have decreased the loss by
$41,370 (2014: $52,302). A 100 basis points decrease in interest rates would have increased the loss by
$41,370 (2014: $52,302).

Variable rate instruments

In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by
$5,732 (2014: $1,915). A 100 basis points decrease in interest rates would have increased the loss by
$10,616 (2014: $1,915).

- 41 -

Notes to the financial statements for the year ended 30 June 2015

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 2015.

Fair value hierarchy

No financial instruments are carried at fair value at 30 June 2015, 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 (resigned effective 17th November 2014)

Non-Executive Chairman
Professor Jonathan West (appointed Non-Executive Chairman 18th November 2014)

Executive Directors
Professor Marilyn Anderson, Chief Science Officer
Dr. Nicole van der Weerden, Chief Operating Officer (appointed Director 16th December 2014)

Non-Executive Directors
Mr Steven M Skala AO
Mr Hugh M Morgan AC (resigned as Director 18th November 2014)
Dr. John Bedbrook

Executives
Ms Elisha Larkin, Company Secretary

- 42 -

Notes to the financial statements for the year ended 30 June 2015

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

Final Payment

Share based payments

Consolidated

2015

455,120

37,740

136,364

45,963

675,187

2014

687,154

44,578

22,896

754,628

Individual Directors and Executive compensation disclosures
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:

2015

Held at 1
July 2014

Exercised

Lapsed at 1
July 2015

Granted as
Compensation

Held at 30
June 2015

Directors
R Dobinson (1) 1,000,000
M Anderson
-
N van der
Weerden (2)
E Larkin

-
-

J Bedbrook

1,000,000

2014

Directors
R Dobinson

Held at 1
July 2013

Exercised

1,000,000

-
-

Vested and
exercisable at
reporting date

-
500,000

500,000
40,000

1,000,000
-

-
500,000

-
-
-

500,000
40,000

200,000

1,000,000

1,240,000

1,040,000

Lapsed at 1
July 2014

Granted as
Compensation

Held at 30
June 2014

Vested and
exercisable at
reporting date

1,000,000

750,000

1,000,000

750,000

(1) Mr Ross Dobinson resigned in November 2014 and all his options lapsed in December 2014
(2) Dr Nicole van der Weerden was appointed director on 16 December 2014

- 43 -

2015

Directors
Steven M Skala

Jonathan West

Hugh Morgan

4,167,467

2,000,000

6,454,503

Marilyn Anderson

2,381,935

Nicole van der
Weerden (1)

9,000

15,012,905

2014

Directors

Steven Skala

Jonathan West

Hugh Morgan

4,167,467

2,000,000

6,454,503

Marilyn Anderson

2,381,935

15,003,905

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

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 2014

Shares
from
converting
notes

Shares
issued
under
offer

Purchases

Received on
exercise of
options

Sales

Held at
30 June
2015

4,167,467

2,000,000

6,454,503

2,381,935

9,000

15,012,905

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

4,167,467

2,000,000

6,454,503

2,381,935

15,003,905

(1) Dr Nicole van der Weerden was appointed director on 16 December 2014 and this represents shares

held at that date.

- 44 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

22.

RELATED PARTIES (Continued)

Key management personnel and directors’ transactions

Professor Anderson and Dr. van der Weerden are employees of La Trobe University. During the course of
the financial year ended 30 June 2015, amounts (including GST) totaling $5,015,459 (2014: $5,332,987)
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 2015 were $638,525 (exclusive of GST) (2014: $1,054,723).

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 2015 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

2015
$
7,204

7,204

2014
$
80,372

83,215

163,587

The Group leases a glass house facility and office equipment under operating leases. The Company vacated
leased office space in March 2015.

24. GROUP ENTITIES

Parent Entity

Hexima Limited

Significant subsidiaries

Hexima Holdings Limited

Pharmagra Pty Ltd

Country of
incorporation

Australia

Ownership Interest

2015

2014

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 2015.
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 $1,722,284 at 30 June 2015, which comprises the Hexima
glasshouse located at La Trobe University.

- 45 -

Notes to the financial statements for the year ended 30 June 2015

HEXIMA LIMITED
ABN 64 079 319 314

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

2015
$

2014
$

(2,082,307)
-
(2,082,307)

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

6,475,059
8,637,871

8,443,911
10,808,729

1,819,012
1,819,012

1,979,437
1,979,437

57,659,831
1,158,474
(51,999,446)
6,818,859

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

- 46 -

HEXIMA LIMITED
ABN 64 079 319 314

DIRECTORS' DECLARATION

In the opinion of the Directors of Hexima Limited (“the Company”):

(a)

The consolidated financial statements and notes that are set out on pages 20 to 46, are in accordance
with the Corporations Act 2001, including:

(i)

giving a true and fair view of the Group’s financial position as at 30 June 2015 and of its
performance for the financial year ended on that date;

(ii)

complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b)

there are reasonable grounds to believe that the Company will be able pay its debts as and when they
become due and payable.

2. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the

Executive Director and the Company Secretary/CFO for the financial year ended 30 June 2015.

3. The Directors draw attention to Note 2(a) to the financial statements, which includes a statement of compliance with

International Financial Reporting Standards.

Signed in accordance with a resolution of the Directors:

Dated at Melbourne 24th day of August 2015.

Professor Jonathan West
Non-Executive Chairman

Professor Marilyn Anderson
Executive Director

- 47 -