HEXIMA LIMITED
ABN 64 079 319 314
Annual Financial Report
FOR THE YEAR
ENDED 30 JUNE 2016
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
3
20
21
22
23
24
47
48
50
-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
2016 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 Non-Executive Chairman of Gowing Bros Limited
and Non-Executive Director of Boundary Bend Limited and the Hydration Pharmaceuticals Trust.
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.
Dr. Nicole van der Weerden BSc, PhD (La Trobe University)
Executive Director, Chief Executive 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 and Chief
Executive Officer in December 2015.
Dr. van der Weerden has been a Director of the Company since 16 December 2014.
Professor Marilyn Anderson AO BSc (Hons) (The University of Melbourne), PhD (LaTrobe University)
Executive Director, Chief Science Officer
Professor Marilyn Anderson AO 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.
-3-
DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
She was appointed a Director of the Company on 23 November 2010 and was a Director between 2001 and
2007. Professor Anderson was appointed an Officer of the Order of Australia in January 2016.
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.
G. F. Dan O’Brien BSC, BVMS (Murdoch University), MBA (Harvard University)
Non-Executive Director
Dan O'Brien was a Director of Hexima between 17 May 2002 and 2 October 2009. Mr O'Brien is the founder
and Chairman of The Hydration Pharmaceuticals Trust (HPT) which established the Hydralyte range of OTC
pharmaceutical products. HPT sold the Hydralyte business in Australia and New Zealand to NYSE listed
Prestige Brands Inc during 2014. HPT retains ownership of Hydralyte outside Australia and New Zealand.
Mr O'Brien has extensive experience including executive and non-executive roles with King Island Dairy
Limited, Tasman Agriculture Limited, Colly Farms Cotton Limited, SPC Ardmona Limited, Coates Hire
Limited, Mattel Asia Pacific and BIL Limited.
Mr O’Brien has been a Director of the Company since 18 November 2015. He is Chairman of the Audit and
Risk Committee and a member of the Remuneration Committee.
Gordon S. Black BSc (University of New South Wales), MBA (Wharton)
Non-Executive Director
Gordon Black is CEO and Founder of East West Capital Limited, an investment management company
investing in early stage companies operating across the global life sciences industry.
He has extensive work experience in the U.S. and the Asia Pacific region for corporations including: Merrill
Lynch Capital Markets, New York; E.I. Du Pont de Nemours & Co. Inc (global head office Wilmington
Delaware and Asia Pacific) and Ipoh Limited, Sydney, Australia.
He currently serves on the Board at NexSteppe Inc. a US proprietary hybrid seed company developing
sorghum energy crops for the global bio-energy industry. Prior to this he served on the Board of
the ASX listed drug developer Arana Therapeutics Limited before
this company was acquired
by Cephalon Inc from the US in June 2009 for $334 million.
He has an MBA from The Wharton School of Business, University of Pennsylvania, and a Biochemistry/
Chemistry degree from the University of New South Wales, Sydney.
Mr Black has been a Director of the Company since 18 November 2015. He is a member of the Audit and
Risk Committee and of the Remuneration Committee.
-4-
DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
Steven M Skala AO BA, LL.B (HONS) (UNIVERSITY OF QLD), BCL (UNIVERSITY OF OXFORD)
Non-Executive Director – retired effective 31 December 2015
Steven Skala is Vice Chairman, Australia and New Zealand of Deutsche Bank AG. He is Chairman of
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.
He is a past Chairman of Film Australia Limited and the Australian Centre for Contemporary Art and of Wilson
Group Limited, 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 was a Director of the Company from 17 May 2002 to 31 December 2015.
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
Dan O’Brien
Gordon Black
9
9
5
9
9
5
5
9
8
5
8
9
5
5
2
2
1
2
2
1
1
2
2
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year. The
Group delisted on 17th June 2011 and during FY11 and the period after delisting, the Group has voluntarily
complied with the ASX Corporate Governance Council recommendations.
The Board of Directors
The Board is responsible for the direction and supervision of Hexima’s business on behalf of the
Shareholders, by whom they are elected and to whom they are accountable.
-5-
DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
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 six Directors in office at the date of this report and their names and qualifications are set out on
pages 3 to 5 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 three directors who satisfy the ASX
guidelines for independence (being Chairman Professor Jonathan West, Dr. John Bedbrook and Mr Gordon
Black). Mr Dan O’Brien 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
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
-6-
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
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. Hexima
currently satisfies the ASX recommendations with an independent Chairman and three independent
members. The current members are Dr. John Bedbrook (Chairman), Professor Jonathan West, Dan O’Brien
and Gordon Black.
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 2016, 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 2016.
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.
Hexima satisfies the ASX recommendations as to a majority of independent members, however the
Committee is Chaired by Non-Executive Director Mr Dan O’Brien, who does not meet the independence
definition due to his shareholding in Hexima. The current Audit and Risk Management Committee comprises
Mr Dan O’Brien (Chairman), Professor Jonathan West, Dr. John Bedbrook and Mr Gordon Black.
-7-
DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
Audit and Risk Management Committee (continued)
The Chief Executive Officer, Company Secretary, Finance Manager 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 Chief Executive Officer 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 2016
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 Dr Nicole van der Weerden, 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 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 Chief Executive Officer and the Finance Manager 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’s policy is to invest 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
Results from operating activities
Net financing income
Income tax expense
2016
2015
$
4,970,660
4,801,627
(2,059,222)
(2,216,342)
120,214
134,035
-
-
Net loss after tax attributable to members
(1,939,008)
(2,082,307)
Dividends
NIL
NIL
Summary and Outlook
Human Applications
Hexima’s antifungal technology has been the major focus for 2016 as it presents the most likely source of
increased shareholder value in the short to medium term. In the short term, Hexima is focusing its resources
on the development of its lead antifungal molecule, HXP124, as a treatment for onychomycosis (fungal nail
infections). Preclinical data indicates that HXP124 has multiple advantages over current onychomycosis
therapies, in particular the ability to rapidly penetrate the nail when applied topically.
The onychomycosis market is a large and growing market with an estimated US$3.1b of global sales in 2015.
Despite poor cure rates and onerous and expensive treatment regimes, recently released topical treatments
in the US have been rapidly adopted by the market suggesting that a more effective product such as HXP124
would be very well received.
The ability of HXP124 to rapidly penetrate nails when applied topically should allow it to accumulate in the
nail bed which is the main site of infection. While the results of nail penetration assays have been promising,
these assays are subject to a large amount of variation and are not representative of clinical infection. As
such, Hexima is progressing to an infected nail model which should provide more confidence that HXP124 is
able to penetrate infected nails and kill fungal cells at the site of infection. Results from this assay are
expected in August.
Tight management of this project has led to achievement of several key milestones in recent months within
budget. The Company has scaled up production of HXP124 under Good Manufacturing Practice (GMP)
conditions and has generated sufficient material for pre-clinical toxicology testing and clinical trials. In
collaboration with the US-based contract research organisation Tergus Pharma, formulation work has been
completed. Hexima has also initiated preclinical animal toxicology studies and expects to complete pivotal
toxicology studies by Q3 2016. These studies involve repeatedly dosing the skin of minipigs to look for signs
of skin irritation and to look for absorption of the molecule into the bloodstream. Minipigs are regarded as the
most suitable predictor of the molecule’s likely behaviour when applied topically in humans, and are a
necessary prelude to clinical trials in humans. The first of these minipig studies will be completed by August
with follow up studies to be completed by October. Positive results in these studies will allow for the initiation
of Phase I human clinical trials before the end of 2016. Hexima will not proceed with a capital raising to fund
clinical trials until results from the infected nail model and initial minipig studies are available.
During the year Hexima was awarded a $50,000 Innovations Connections grant to investigate whether
Hexima’s patented antifungal platform is useful for the treatment of vaginal thrush. Work on the
onychomycosis project has already demonstrated that Hexima’s molecules are active against a wide range of
human fungal pathogens, including the causative agent of thrush. Furthermore, Hexima’s plant defensin
-10-
DIRECTORS’ REPORT
HEXIMA LIMITED
ABN 64 079 319 314
technology is well suited to topical applications due to the high stability of the molecules and excellent
solubility characteristics.
Agricultural Applications
In order to ensure that resources are focused on the most likely source of near-term shareholder value,
Hexima has scaled-back its plant disease program. Despite this, Hexima remains committed to identifying a
suitable commercial partner willing to progress this work in the future.
Outside of the Antifungal Program, Hexima has achieved a number of significant milestones recently.
The Company executed its first commercial licence to its patented Multi-Gene Expression Vehicle (MGEV)
technology. DuPont-Pioneer has secured a non-exclusive licence to develop commercial products using the
MGEV technology. The deal represents an exciting milestone for Hexima and the Company continues to
seek other partners to further develop this versatile technology.
Hexima and DuPont-Pioneer have also announced the discovery of a novel insect control gene that is active
against certain crop-destroying insects and will help growers protect their yields. Hexima and Pioneer formed
a gene discovery research collaboration in 2014 to investigate new, untapped pools of genes that control
insect-feeding on farmer crops.
The Company continues to utilize available government support where possible. In addition to the $50,000
Innovations Grant, Hexima also received a $36,000 Grant under the Export Market Development Grant
scheme.
Hexima is in a sound financial position with cash and receivables of $4.9 million as at 30 June 2016. This
provides funding at our current spend rate until approximately June 2018, excluding clinical trial costs.
Hexima expects to proceed with a capital raising in the second half of 2016 to fund human clinical trials for
HXP124. It is likely that this will be in the form of a rights issue to existing shareholders to raise approximately
$4.0 million.
Operating and Financial Review
The Group had net cash outflows from operating activities of $1.55million for the year ended 30 June 2016,
compared with $1.65million for the prior year. The Group recorded a loss after tax of $1.94million for the year
ended 30 June 2016. A loss after tax of $2.08million was recorded for the previous financial year. Net
finance income for the Group for the financial year ended 30 June 2016 was $0.12million (2015:$0.13million).
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 2016.
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
2016, key management personnel comprised all Directors, Executives and the Company Secretary. This
included Professor Jonathan West, Dr. Nicole van der Weerden Dr. John Bedbrook, Professor Marilyn
Anderson, Mr Dan O’Brien, Mr Gordon Black and Ms Elisha Larkin. 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 AO
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 Executive Officer in December 2015. 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 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.
Effective 1 January 2015 the Non-Executive Directors agreed to suspend payment of Non- Executive
Directors’ fees. Previously fees payable to Non-Executive Directors were set at $55,000 per annum. 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)
Non-executive Directors
Jonathan West
John Bedbrook
GF Dan O’Brien
Gordon Black
Steven M Skala
(retired 31 December 2015)
Hugh M Morgan
(retired 18 November 2014)
Executive Directors
Marilyn Anderson (3)
Nicole van der Weerden
(5)
Ross Dobinson (2)
Executive
Elisha Larkin (4)
Total
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
189
25,114
-
25,114
-
-
47
-
47
25,114
-
25,114
95,480
172,599
75,967
75,872
-
50,000
96,330
56,193
268,060
455,120
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189
25,114
-
25,114
-
-
47
-
47
25,114
-
25,114
95,480
172,599
75,967
75,872
-
50,000
96,330
56,193
268,060
455,120
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
136,364
-
-
-
136,364
-14-
20,619
-
11,286
2,199
5,151
-
5,151
-
5,158
-
-
-
2,567
19,000
10,318
19,500
-
5,903
-
1,560
60,250
48,162
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Post
Employment
Benefits -
Superannuation
Total
Remuneration
Value of Options as
proportion of
Remuneration
-
2,386
-
2,386
-
-
-
-
-
2,386
-
1,643
9,071
16,393
7,208
7,208
-
-
9,151
5,338
25,430
37,740
20,808
27,500
11,286
29,699
5,151
-
5,198
-
5,205
27,500
-
26,757
107,118
207,992
93,443
102,580
-
192,267
105,481
63,091
353,690
677,386
99%
-
100%
7%
100%
-
99%
-
99%
-
-
-
2%
9%
11%
19%
-
3%
-
2%
17%
7%
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 $214,930, comprising $107,118 paid and payable directly by the Company and $107,812 paid by La Trobe University (majority of which was 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 $24,184 (2015: $16,059) of long service leave entitlements.
5) Dr. Nicole van der Weerden was appointed Chief Executive Officer in December 2015 and has been an Executive Director since 16th December 2014. She is
employed by La Trobe University. The Company engages Dr. van der Weerden’s services through a Research Agreement with the University and through a
separate direct employment agreement. Dr van der Weerden’s total remuneration from the Company and La Trobe University (in relation to services performed for
Hexima) was $211,680, comprising $93,443 paid and payable directly by the Company, and $118,237 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 granted to key management personnel and
Executives during the reporting period.
No. of Options
Granted
Exercise
Price
Grant
Date
Jonathan
West
John
Bedbrook
Nicole van der
Weerden
GF Dan
O’Brien
Gordon Black
1,000,000
$0.50
500,000
$0.50
500,000
$0.50
250,000
$0.50
250,000
$0.50
Steven Skala
250,000
$0.50
11th Dec
2015
11th Dec
2015
11th Dec
2015
11th Dec
2015
11th Dec
2015
11th Dec
2015
Fair value
per option
at grant
date
$0.026
Expiry Date
No. of options
vested during
2016
11th Dec 2020
500,000
$0.026
11th Dec 2020
250,000
$0.026
11th Dec 2020
500,000
$0.026
11th Dec 2020
$0.026
11th Dec 2020
-
-
$0.026
11th Dec 2020
250,000
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
Jonathan West
Marilyn Anderson
John Bedbrook
Nicole van der Weerden
GF Dan O’Brien
Gordon Black
Total
2,000,000
2,381,935
-
9,000
4,871,333
-
9,262,268
During the period Steven Skala retired as a Director.
-16-
1,000,000
500,000
700,000
1,000,000
250,000
250,000
3,700,000
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS’ REPORT
SHARE OPTIONS
Unissued shares under option
At the date of this report, unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number of Shares
1 July 2019
26 August 2019
18 November 2019
11 December 2020
$0.50
$0.50
$0.50
$0.50
508,000
640,000
700,000
2,750,000
4,598,000
Shares issued on exercise of options
There were 2,750,000 options issued to Directors during the financial year ended 30 June 2016.
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
Capital raising
2016
$
27,250
12,700
2015
$
26,500
12,500
6,000
-
45,950
39,000
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 2016, the Company paid insurance premiums of $20,059 (inclusive of stamp duty) 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 2016.
-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 2016.
This report is made pursuant to a resolution of the Directors.
Professor Jonathan West
Non-Executive Chairman
Dated this 29th day of July
Professor Marilyn Anderson
Executive Director
-19-
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
Consolidated
Revenue
Notes
6
Contracted research expenditure
Other research & development expenditure
7
Patent and legal expenses
Field trial expenses
Marketing & business development
expenses
Employee benefits expense
Depreciation expense
Other expenses
Results from operating activities
Financial income
Net financing income/(expenses)
Loss before income tax
8
9
Income tax expense
10(a)
2016
$
4,970,660
(3,316,897)
(1,949,584)
(344,045)
(223,282)
(63,398)
(733,819)
(205,258)
(193,599)
(7,029,882)
(2,059,222)
120,214
120,214
2015
$
4,801,627
(3,892,835)
(555,804)
(448,051)
(420,644)
(318,674)
(919,989)
(210,880)
(251,092)
(7,017,969)
(2,216,342)
134,035
134,035
(1,939,008)
(2,082,307)
-
-
Loss for the period
(1,939,008)
(2,082,307)
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
-
-
(1,939,008)
(2,082,307)
(1,939,008)
(2,082,307)
(1,939,008)
(2,082,307)
(1,939,008)
(1,939,008)
(2,082,307)
(2,082,307)
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 2016
Notes
Consolidated
2016
$
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
11
12
13
14
15
16
16
2015
$
3,574,100
2,900,959
6,475,059
2,162,812
2,162,812
8,637,871
1,665,839
153,173
1,819,012
1,819,012
6,818,859
2,053,804
2,849,599
4,903,403
2,006,405
2,006,405
6,909,808
1,847,085
165,823
2,012,908
2,012,908
4,896,900
57,659,831
1,175,523
(53,938,454)
57,659,831
1,158,474
(51,999,446)
4,896,900
6,818,859
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 2016
Consolidated
2016
Opening balance at
1 July 2015
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
Capital raising costs
Share based payment expenses
Total contributions by and
distributions to owners
Closing balance at
30 June 2016
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
Capital raising costs
Share based payment expenses
Total contributions by and
distributions to owners
Closing balance at
30 June 2015
Note
Ordinary
Shares
$
Equity
Option
reserve
$
Equity
compen-
sation
reserve
$
Capital
Raising
Reserve
$
Accumulated
Losses
$
Total
equity
$
57,659,831
200,000
958,474
(51,999,446)
6,818,859
-
-
-
-
-
-
-
-
-
-
-
-
16
-
-
-
(1,939,008)
-
(1,939,008)
-
(1,939,008)
(1,939,008)
-
(43,201)
60,250
-
-
-
(43,201)
60,250
60,250
(43,201)
(53,938,454)
4,896,900
57,659,831
200,000
1,018,724
(43,201)
(53,938,454)
4,896,900
Note
Ordinary
Shares
$
Equity
Option
reserve
$
Equity
compen-
sation
reserve
$
Capital
Raising
Reserve
$
57,659,831
200,000
886,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,874
71,874
57,659,831
200,000
958,474
16
Accumulated
Losses
$
Total
equity
$
(49,917,139)
8,829,292
(2,082,307)
(2,082,307)
-
-
(2,082,307)
(2,082,307)
-
-
-
-
71,874
71,874
(51,999,446)
6,818,859
-
-
-
-
-
-
-
-
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 2016
Consolidated
2016
$
2015
$
Notes
CASH FLOWS FROM OPERATING
ACTIVITIES
Cash receipts from government grants &
collaboration agreements
Cash paid to suppliers and employees
Foreign currency remeasurement gain
Net cash (used in) operating activities
18(b)
CASH FLOWS FROM INVESTING
ACTIVITIES
Interest received
Payments for plant and equipment
Net cash (used in) / from investing activities
CASH FLOWS (USED IN) / FROM
FINANCING ACTIVITIES
Cash paid for capital raising
Net cash (used in) financing activities
Net (decrease)/ increase in cash and cash
equivalents
Effect on movements in exchange rates on
foreign currency denominated cash at bank
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
18(a)
4,616,139
5,835,640
(6,169,451)
60,218
(1,493,094)
(7,485,012)
-
(1,649,372)
47,740
(48,851)
(1,111)
(43,201)
(43,201)
187,391
(8,874)
178,517
-
-
(1,537,406)
(1,470,855)
17,110
3,574,100
5,044,955
2,053,804
3,574,100
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 2016
1.
REPORTING ENTITY
Hexima Limited (the “Company”) is a Company domiciled in Australia and is a for-profit entity. The address of
the Company’s registered office is Level 4, LIMS 2, La Trobe University, Victoria, 3086. The consolidated
financial statements of the Company as at and for the year ended 30 June 2016 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.
2.
BASIS OF PREPARATION
(a)
Statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with
Australian Accounting Standards (AASBs) 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 28th July 2016.
(b) Basis of measurement
The financial report has been prepared on the basis of historical cost.
(c) Functional and presentation currency
The financial statements are presented in Australian dollars, which is the Group’s functional currency.
(d) Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and
expenses. The estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making the judgements about carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates. The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the
estimate is revised and in any future periods affected.
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 2016
HEXIMA LIMITED
ABN 64 079 319 314
2.
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 $1,939,008 (2015: loss after tax of
$2,082,307). 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 receipt of the R&D tax incentive from the government.
- 25 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
2.
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 2016 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.
The Group has confirmed that it plans to execute a capital raising during FY17 to fund additional
clinical trials subject to certain research milestones being achieved.
The Group has indicated it has the ability to negotiate creditor settlement terms and related funding to
assist in meeting short term liquidity shortfalls.
3.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods by Group entities.
Certain comparative amounts have been reclassified to conform with the current year’s presentation.
(a) Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. 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
- 26 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Financial instruments (continued)
(i) Non-derivative financial instruments (continued)
amortised cost using the effective interest method, less any impairment losses.
Cash and cash equivalents comprise cash balances and call term deposits. Term deposits are classified as
cash as the Group can convert the deposits as available cash in reasonable time with minimal break costs to
the Group.
(ii) Non-derivative financial liabilities
Financial liabilities are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a financial liability when its contractual
obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net
amount presented in the statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
The Group has the following non-derivative financial liabilities: trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition these financial liabilities are measured at amortised cost using the effective
interest rate method.
(iii)
Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
and share options are recognised as a deduction from equity, net of any related income tax benefit.
Dividends
Dividends are recognised as a liability in the period in which they are declared.
(c) Plant and equipment
(i)
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Where parts of an item of plant and equipment have different useful lives, they are
accounted for as separate items of plant and equipment. Cost includes expenditures that are directly
attributable to the acquisition of the asset.
(ii)
Subsequent costs
The Company recognises in the carrying amount of an item of plant and equipment the cost of replacing part
of such an item when that cost is incurred if it is probable that the future economic benefits embodied within
the item will flow to the Group and the cost of the item can be measured reliably. All other costs are
recognised in the income statement as an expense as incurred. The carrying amount of the replaced part is
derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit
or loss as incurred.
- 27 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(c)
Plant and equipment (continued)
(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:
2016
2015
Plant and equipment
15% - 37.5%
15% - 37.5%
Office equipment
33% - 66.7%
33% - 66.7%
Plant and equipment - Building
5%
5%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
(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.
- 28 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(e)
Impairment (continued)
(i) Non-derivative financial assets (continued)
In respect of assets, impairment losses recognised in prior periods are assessed at each reporting date for
any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have
been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
The recoverable amount of an asset or cost generating unit is the greater of its fair value and its fair value
less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. For the purpose of impairment testing assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that are largely independent of the
cash inflows of other assets or group of assets (the “cash generating unit”).
(f) Revenue
Grant revenue
Government grant income that compensates the Group for expenses incurred is recognised as revenue in
the income statement on a systematic basis in the same periods in which the expenses are incurred.
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.
- 29 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(i)
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or
loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised
directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for temporary differences where the initial recognition of assets and liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit. Deferred tax is
measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax
assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit will be realised.
(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.
- 30 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
3.
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l)
Employee benefits (continued)
Short term benefits (continued)
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.
(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.
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 2016
4.
FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from their use of financial instruments:
• credit risk
•
liquidity risk
• market risk
• operational risk.
This note presents information about the Group’s exposure to each of the above risks, their objectives,
policies and processes for measuring and managing risk, and the management of capital. Further
quantitative disclosures are included throughout this financial report.
The Board of Directors has overall responsibility for the oversight of risks. The Group maintains a control
environment in which all employees understand their roles and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Group’s receivables from the Government
in respect of research grants and accrued interest receivable from banks.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group prepares and monitors budgets to manage its liquidity for the short and long term.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity
prices will affect the Group’s income or the value of its holdings of financial instruments. The Board of
Directors oversee market risk exposures to optimise returns.
Currency risk
The Group’s currency risk is limited to trade and other payables that are denominated in a currency other
than the functional currency of the Group entities, primarily US dollar (USD) and Euro. Given the minimal
value of foreign currency transactions the Group does not enter into contracts to hedge currency risk. At 30
June 2016, there were receivables of $NIL and payables of $12,150 denominated in foreign currencies (2015
receivable: $NIL, payable: $NIL). At 30 June 2016 the Group had US$1,113,792 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 2016
HEXIMA LIMITED
ABN 64 079 319 314
4.
FINANCIAL RISK MANAGEMENT (continued)
Operational risk (continued)
The Group’s objective is to manage operational risk so as to balance the avoidance of financial losses and
damage to the Group’s reputation with overall cost effectiveness and to avoid control procedures that restrict
initiative and creativity.
The primary responsibility for the development and implementation of controls to address operational risk is
assigned to senior management of the Group. This responsibility is supported by the development of overall
Group standards for the management of operational risk in the following areas:
•
•
•
•
•
•
•
•
•
•
requirements for appropriate segregation of duties, including the independent authorisation of
transactions
requirements for the reconciliation and monitoring of transactions
compliance with regulatory and other legal requirements
documentation of controls and procedures
requirements for the periodic assessment of operational risks faced, and the adequacy of controls and
procedures to address the risks identified
requirements for the reporting of operational losses and proposed remedial action
development of contingency plans
training and professional development
ethical and business standards
risk mitigation, including insurance where this is effective.
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market
confidence and to sustain future development of the business. As the Group is a development stage
business, the Board of Directors monitors the Group’s performance with particular regard to the progress of
scientific programs, the commercialisation of those programs, the development of the Group’s intellectual
property and asset base and long-term share price performance. There were no changes in the Group’s
approach to capital management during the year. The Group is not subject to externally imposed capital
requirements.
- 33 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
5.
SEGMENT REPORTING
The Group primarily operates in one sector being the biotechnology industry developing and/or
commercialising biotechnology research and therefore the Group’s financial information is the same as the
operating segment information. The majority of operations are in Australia.
6.
REVENUE
Government Grant – Other
Government – R&D Tax Incentive
Research grants and collaboration fees
7.
OTHER RESEARCH AND DEVELOPMENT
EXPENDITURE
Other research and development
expenditure
8.
OTHER EXPENSES
Administration and compliance costs
Other expenses
9.
FINANCE INCOME AND EXPENSE
Interest income on term deposit and cash at bank
Foreign exchange gain
Finance income
Consolidated
2016
$
36,315
2015
$
-
2,680,108
2,263,424
2,254,237
2,538,203
4,970,660
4,801,627
1,949,584
555,804
1,949,584
555,804
96,551
97,048
88,500
162,592
193,599
251,092
42,887
77,327
134,035
-
120,214
134,035
- 34 -
Notes to the financial statements for the year ended 30 June 2016
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% (2015: 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 utilised not previously brought to account
Consolidated
2016
$
2015
$
(1,939,008)
(2,082,307)
(581,702)
(624,692)
1,775,407
(798,933)
18,075
2,061
18,670
(433,578)
1,556,462
(700,408)
21,562
4,085
74,065
(331,074)
Income tax expense/(benefit) on pre-tax net profit
-
-
(b) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in
respect of the following items:
Temporary differences
Tax losses
Total
638,353
10,186,761
10,825,114
619,683
10,620,339
11,240,022
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
2016
$
1,291
2,052,513
-
2,053,804
2015
$
1,637
1,129,849
2,442,614
3,574,100
- 35 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
12. RECEIVABLES
Current
Trade receivables
R&D Tax Incentive Receivable – ATO
Accrued interest
Prepayments
Consolidated
2016
$
2015
$
50,084
378,506
2,663,111
2,334,693
-
4,852
136,404
182,908
2,849,599
2,900,959
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 2015
Additions
Disposals
Balance at 30 June 2016
Balance at 1 July 2014
Additions
Disposals
Balance at 30 June 2015
Accumulated depreciation
Balance at 1 July 2015
Depreciation for the year
Disposals
Balance at 30 June 2016
Balance at 1 July 2014
Depreciation for the year
Disposals
Balance at 30 June 2015
Carrying amounts
At 1 July 2015
At 30 June 2016
Plant and
Equipment
$
3,489,031
47,196
-
3,536,227
Office
Equipment
$
35,884
1,655
-
37,539
3,493,292
8,295
(12,556)
3,489,031
1,332,887
202,106
-
1,534,993
1,138,882
206,552
(12,547)
1,332,887
114,923
2025
(81,064)
35,884
29,216
3,152
-
32,368
104,515
4,328
(79,627)
29,216
Total
$
3,524,915
48,851
-
3,573,766
3,608,215
10,320
(93,620)
3,524,915
1,362,103
205,258
-
1,567,361
1,243,397
210,880
(92,174)
1,362,103
2,156,144
2,001,234
6,668
5,171
2,162,812
2,006,405
- 36 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
14.
TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables & accrued expenses
Consolidated
2016
$
292,165
1,554,920
1,847,085
2015
$
93,845
1,571,994
1,665,839
Exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 20.
15.
EMPLOYEE BENEFITS
Current
Superannuation
Liability for annual leave
Liability for long service leave
16. CAPITAL AND RESERVES
Consolidated
2016
$
15,856
70,931
79,036
2015
$
45,953
52,558
54,662
165,823
153,173
Reconciliation of movement in capital and reserves
Consolidated and the Parent Entity
Ordinary Shares
2016
2015
2016
$
2015
$
Number of shares
Amount
On issue at 1 July
Issued at $0.00 per share on exercise
of options
81,180,469
81,180,469
57,659,831
57,659,831
-
-
-
-
On issue at 30 June – fully paid
81,180,469
81,180,469
57,659,831
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
2016
2015
125,000
-
125,000
125,000
-
-
2016
$
2015
$
200,000
-
-
200,000
-
-
On issue at 30 June – fully paid
-
125,000
200,000
200,000
- 37 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
16. CAPITAL AND RESERVES (continued)
Number of options
Amount
Equity compensation reserve
2016
2015
On issue at 1 July
Issued as compensation
Exercise of share options
Lapse of share options
On issue at 30 June – fully paid
1,848,000
2,750,000
-
-
4,598,000
1,000,000
1,848,000
-
1,000,000
1,848,000
2016
$
2015
$
958,474
60,250
-
-
1,018,724
886,600
71,874
-
-
958,474
Total reserve at 30 June
4,598,000
1,973,000
1,218,724
1,158,474
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.
Capital Raising Reserve
The capital raising reserve represents costs incurred to 30 June 2016 in respect of the proposed capital
raising. This will be transferred and recorded against capital raised on completion of the capital raising.
17. SHARE-BASED PAYMENTS
The terms and conditions of the grants for options outstanding at 30 June 2016 are as follows. All options
are to be settled by physical delivery of shares.
Grant date / parties entitled
Options granted to key management on
26th August 2014
Options granted to key management on
18th November 2014
Options granted to key management on
18th November 2014
Options granted to other personnel on
26th August 2014
Options granted to other personnel on 1st
July 2014
Options granted to key management on
11th December 2015
Options granted to key management on
11th December 2015
Number of
instruments
Vesting conditions
540,000
Immediate vesting
500,000
Immediate vesting
Contractual
life of options
5 years
5 years
200,000 Vesting on earlier of 31st December 2016
5 years
or sale of the company
100,000
Immediate vesting
508,000
Immediate vesting
1,500,000
Immediate vesting
1,250,000 Vesting 11th December 2016
5 years
5 years
5 years
5 years
Total share options
4,598,000
- 38 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
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
2016
$0.53
-
$1.00
$0.50
$0.50
Number of
options
2016
1,973,000
-
125,000
2,750,000
4,598,000
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
The options outstanding at 30 June 2016 have an exercise price of $0.50, and a weighted average remaining
contractual life of 4 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.
The inputs used in the measurement of the fair values at grant date of the equity-settled share-based
payment plans which were all issued to directors in FY16 were; risk-free rate 2.33%, fair value at grant date
$0.0257, estimated share price at grant date $0.084, exercise price $0.50, standard deviation (annualised)
80% and an annualised dividend rate of 0%. The inputs used in the prior year for share options issued to
directors, key management staff and other employees were; a risk free rate range of 2.8% to 3.03%, fair
value at grant date $0.038 and $0.039, estimated share price $0.11, volatility range of 78% to 79% and
dividends of nil.
Employee expenses
Current
Share options granted
Total expense recognised as employee costs
Consolidated
2016
$
60,250
60,250
2015
$
71,874
71,874
- 39 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
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
2016
$
2015
$
Cash on hand and at bank
Note
11
2,053,804
3,574,100
18b. RECONCILIATION OF CASH FLOWS FROM
OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Adjustments for:
Interest and foreign exchange received – classified as
investing activity and movement in cash
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
2016
$
2015
$
(1,939,008)
(2,082,307)
(64,849)
205,258
60,250
(187,391)
210,880
71,874
(1,738,349)
(1,986,944)
51,360
193,895
497,997
(160,425)
(1,493,094)
(1,649,372)
- Audit of the annual financial report
- Review of half year financial statements
27,250
12,700
26,500
12,500
Other Services
Auditors of the Company
KPMG Australia
- Capital Raising
6,000
45,950
-
39,000
- 40 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
20. FINANCIAL INSTRUMENTS
Credit Risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure.
The Group’s maximum exposure to credit risk at 30 June was:
Trade receivables
R&D Tax Incentive – ATO
GST receivable – ATO
Accrued interest on bank term deposits
Cash on hand and at bank
Note
12
12
12
11
Consolidated
2016
$
50,084
2,663,111
113,121
-
2,053,804
4,880,120
2015
$
378,506
2,334,693
160,216
4,852
3,574,100
6,452,367
Cash on hand and at bank include deposits with the National Australia Bank. The accrued interest comes
from term deposits.
Impairment Losses
The Group has receivables past due of $NIL (2015: $NIL) and no impairment losses have been recognised
(2015: $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 notes except for trade and other payables and employee provisions with
a carrying value of $2,012,908 (notes 14 and 15), which are payable in cash and have a maturity of less than
6 months. Long Service leave current liability which is also included in Note 15, totals $79,036.
There are currently NIL term deposits.
Currency risk
At 30 June 2016, there were receivables of $NIL and payables of AUD$12,150 denominated in foreign
currencies. Of the cash on hand at 30 June 2016, the Group held USD$1,113,792 (AUD$1,499,854) 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 cash at bank (note 11). The weighted average interest rate in respect of interest income in 2016
was 2.4% (2015: 3.46%).
Fixed rate instruments
In respect of term deposits a 100 basis points increase in interest rates would have decreased the loss by Nil
(2015: $41,370). A 100 basis points decrease in interest rates would have increased the loss by Nil (2015:
$41,370).
- 41 -
Notes to the financial statements for the year ended 30 June 2016
HEXIMA LIMITED
ABN 64 079 319 314
20. FINANCIAL INSTRUMENTS (continued)
Variable rate instruments
In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by
$8,087 (2015: $8,174). A 100 basis points decrease in interest rates would have increased the loss by
$8,087 (2015: $8,174).
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 2016.
Fair value hierarchy
No financial instruments are carried at fair value at 30 June 2016, 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:
Non-Executive Chairman
Professor Jonathan West
Executive Directors
Professor Marilyn Anderson, Chief Science Officer
Dr. Nicole van der Weerden, Chief Executive Officer
Non-Executive Directors
Dr. John Bedbrook
Mr GF Dan O’Brien (appointed as Director 18th November 2015)
Mr Gordon S Black (appointed as Director 18th November 2015)
Mr Steven M Skala AO (resigned as Director 31st December 2015)
Executives
Ms Elisha Larkin, Company Secretary
- 42 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
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
2016
$
268,060
25,430
-
60,250
353,740
2015
$
455,120
37,740
136,364
45,963
675,187
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:
Held at 1
July 2015
Exercised
Lapsed at 1
July 2016
Granted as
Compensation
Held at 30
June 2016
Vested and
exercisable at
reporting date
2016
Directors
J West
M Anderson
N van der
Weerden
E Larkin
J Bedbrook
GF O’Brien
S Skala (1)
G Black
-
500,000
500,000
40,000
200,000
-
-
-
1,240,000
2015
Held at 1
July 2014
Exercised
Directors
R Dobinson (2) 1,000,000
-
M Anderson
N van der
Weerden
-
E Larkin
S Skala
J Bedbrook
-
-
-
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
-
1,000,000
500,000
500,000
-
500,000
250,000
250,000
1,000,000
40,000
700,000
250,000
250,000
250,000
250,000
500,000
500,000
1,000,000
40,000
250,000
-
250,000
-
2,750,000
3,990,000
2,540,000
Lapsed at 1
July 2015
Granted as
Compensation
Held at 30
June 2015
Vested and
exercisable at
reporting date
1,000,000
-
-
500,000
-
500,000
-
-
-
-
500,000
500,000
40,000
40,000
-
-
200,000
200,000
-
500,000
500,000
40,000
-
-
1,000,000
1,240,000
1,240,000
1,040,000
- 43 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
22. RELATED PARTIES (Continued)
(1) Mr Steven Skala retired as a Director in December 2016 and was granted options prior to retirement
(2) Mr Ross Dobinson resigned in November 2014 and all his options lapsed in December 2014
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 2015
Shares
issued under
offer
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2016
2016
Directors
Jonathan West
Nicole van der
Weerden
2,000,000
9,000
Marilyn Anderson
2,381,935
GF Dan O’Brien
4,871,333
John Bedbrook
-
Steven M Skala (1)
4,167,467
Gordon Black
-
13,429,735
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
9,000
2,381,935
4,871,333
-
4,167,467
-
13,429,735
2015
Directors
Jonathan West
Hugh Morgan (2)
Nicole van der
Weerden
Marilyn Anderson
Steven M Skala
Held at
1 July 2014
Shares
issued under
offer
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2015
2,000,000
6,454,503
9,000
2,381,935
4,167,467
15,012,905
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
6,454,503
9,000
2,381,935
4,167,467
15,012,905
(1) Mr Steven Skala retired as a Director on the 31st December 2015.
(2) Mr Hugh Morgan retired as a Director on the 18th November 2014.
- 44 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
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 2016, amounts (including GST) totaling $4,393,914 (2015: $5,015,459)
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 2016 were $740,115 (exclusive of GST) (2015: $638,525).
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 2016 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
2016
$
-
-
-
2015
$
7,204
-
7,204
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
Australia
Australia
Ownership Interest
2016
2015
100%
100%
100%
100%
Pharmagra Pty Ltd is incorporated in Australia and is a 100% owned subsidiary of the Company. Pharmagra
Pty Ltd has total assets and net assets of $2.00 at 30 June 2016.
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 $1,600,424 at 30 June 2016, which comprises the Hexima
glasshouse located at La Trobe University.
- 45 -
HEXIMA LIMITED
ABN 64 079 319 314
Notes to the financial statements for the year ended 30 June 2016
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
2016
$
2015
$
(1,939,008)
-
(1,939,008)
(2,082,307)
-
(2,082,307)
4,903,403
6,909,807
6,475,059
8,637,871
2,012,908
2,012,908
1,819,012
1,819,012
57,659,831
1,175,523
(53,938,454)
4,896,900
57,659,831
1,158,474
(51,999,446)
6,818,859
- 46 -
HEXIMA LIMITED
ABN 64 079 319 314
DIRECTORS' DECLARATION
1.
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)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2016 and of
its performance for the financial year ended on that date;
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 Chief Executive Officer and the Company Secretary/CFO for the financial year ended 30 June
2016.
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 29th day of July 2016.
Professor Jonathan West
Non-Executive Chairman
Professor Marilyn Anderson
Executive Director
- 47 -