HEXIMA LIMITED
2020 ANNUAL REPORT
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CHAIRMAN AND CEO LETTER
Dear Shareholders,
2019-2020 has been an exciting year for Hexima and we are pleased to update you on our progress.
During 2019-2020, Hexima substantially progressed development of its lead molecule, HXP124, as a topical
treatment for nail fungus (onychomycosis). We completed our phase I/IIa clinical trial and commenced a
multi-centre phase IIb clinical trial in Australia and New Zealand. HXP124 is an easy to apply solution that is
simply painted onto nails, not requiring any other treatment, that rapidly clears fungus from the nail bed.
Nail fungus (onychomycosis) is a very common nail infection, affecting approximately 23 million people in the
USA and more than 500 million globally. Independent market researchers have estimated the global
onychomycosis market at US$3.7 billion in 2018. However, available treatments all have serious limitations
including low efficacy rates, long treatment durations or the potential for severe toxic side effects.
During 2019-2020, Hexima announced positive clinical results from its phase I/IIa trial which compared
HXP124 against its vehicle. After daily treatment for just six weeks, patients treated with HXP124 saw greater
clearing of the infected nail area and were more likely to have fungus cleared from the nail than patients
treated with the vehicle (formulation not containing HXP124). Hexima’s clinical trial results to date indicate
that HXP124 is safe and well tolerated and has an industry-leading rate of improvement of infected nails:
eliminating the fungal infection in >50% of nails after only 6 weeks of daily treatment (approximately twice as
effective as the next best topical product in that time frame).
If HXP124 achieves its target product profile of superior efficacy (as compared to the best-in-class currently
available topical product) with a short treatment duration, primary US market research commissioned by
Hexima with physicians and patients supports our goal that HXP124 would become the treatment-of-choice
and outperform existing branded topical treatments.
Hexima is now conducting an Australian Phase IIb clinical trial for HXP124 at up to nine clinical sites in
Australia and New Zealand. This trial will compare the activity of HXP124 against its vehicle in longer periods
of daily dosing and a longer follow-up period to allow time for the infected nail to grow out and resolve the
infection. Hexima is pleased to report that this clinical trial was recently given Australian and New Zealand
ethics approval to proceed and we have begun screening for eligible patients. Approximately 132 patients
are targeted to be enrolled and the results are expected by the 4th quarter of 2021. Details of the trial can be
found on the Australia and New Zealand Clinical Trial Register (ACTRN12620000697987).
The Hexima board is very pleased to be transitioning HXP124 into mid-stage clinical development which it
believes will add substantial value over the coming 18 months.
To fund the phase IIb clinical trial and ongoing development of HXP124, Hexima recently completed a private
placement of ordinary equity to raise $5.5 million at a pre-money valuation of AU$17.5 million. The
completion of this placement provides Hexima sufficient capital to complete the Phase IIb clinical trial. This
placement also triggers conversion of the convertible notes which Hexima issued in 2019.
In FY2021, Hexima intends to continue scale-up of manufacturing and commence long-term animal
toxicology studies to support opening an Investigational New Drug (IND) application with FDA for late-stage
clinical trials in the US. Hexima recently initiated scale-up of HXP124 manufacturing with a commercial-scale
manufacturer in Europe. This process is progressing well and Hexima expects to be able to produce the large
quantities of HXP124 required for long-term toxicology and clinical studies at a highly competitive cost of
goods.
We look forward to updating you on progress over the coming year and progressing HXP124 closer towards
the market.
Jonathan West
Nicole van der Weerden
Hexima Limited
ANNUAL FINANCIAL REPORT
For the year ended 30 June 2020
Hexima Annual Report
ABN 64 079 319 314
TABLE OF CONTENTS
Directors’ Report (including Corporate Governance Statement and Remuneration Report)
Consolidated Statement of Profit or Loss and other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Lead Auditor’s Independence Declaration
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59
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DIRECTORS’ REPORT
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 2020 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 is an
inventor on nine patent applications. Dr. van der Weerden completed an MBA in 2013 at Melbourne Business School
and is a graduate of the Australian Institute of Company Directors. She 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 and a Member of the Australian Academy of Science Council.
She was a Member of the La Trobe University Council until 2017. Professor Anderson was appointed Hexima’s Chief
Science Officer in July 2009.
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DIRECTORS’ REPORT
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.
Professor Anderson was appointed an Officer of the Order of Australia in January 2016.
She was appointed a Director of the Company on 23 November 2010 and was a Director between 2001 and 2007.
Michael Aldridge BSc (Hons) (University of Canterbury), M.A. Applied Finance (Macquarie University)
Executive Director, Chief Business Officer
Mr Aldridge most recently served as Senior Vice President, Corporate & Strategic Development of Codexis from
October 2016 until August 2018. Prior to that, from January 2012 to September 2014, Mr. Aldridge served as Senior
Vice President, Corporate Strategic Development for Questcor Pharmaceuticals, Inc., a publicly-traded
biopharmaceutical company acquired by Mallinckrodt Pharmaceuticals in 2014. From May 2010 to September 2012,
Mr. Aldridge served as Chief Executive Officer and a member of the board of directors for Xenome Limited, a privately-
held biopharmaceutical company headquartered in Australia.
Between 2003 and 2009, Mr. Aldridge served as Chief Executive Officer and a member of the board of directors and a
strategic consultant of Peplin, Inc., a publicly-traded drug development company acquired by LEO Pharma A/S in 2009.
Prior to that, Mr. Aldridge held investment banking positions at various financial firms, including Wilson HTM
Investment Group, Bear, Stearns & Co., Volpe, Brown, Whelan & Company and S.G. Warburg Group. Mr. Aldridge
received a B.S. with honours in Chemistry from the University of Canterbury in Christchurch, New Zealand and an M.A.
in Applied Finance from Macquarie University in Sydney, Australia.
Mr Aldridge has been a Director of the Company since 21 May 2019.
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 recently
secured a highly valuable partnership for Dice Molecules Inc., where he is Executive Chairman, with global pharma
company Sanofi targeting potential new small molecule therapeutics across a range of diseases.
Dr. Bedbrook has authored over 100 scientific papers and multiple patents. Dr. Bedbrook is Director of Plant
Biosciences LTD., Executive Chairman of Dice Molecules Inc. and a Member of the Advisory Board of the College of
Natural Resources at University of California Berkeley.
Dr. Bedbrook has been a Director of the Company since 3 June 2014. He is Chairman of the Remuneration Committee
and a member of the Audit and Risk Management Committee.
Dr John Bedbrook resigned as a Director on the 22nd September 2020.
G. F. Dan O’Brien BSC, BVMS (Murdoch University), MBA (Harvard University)
Non-Executive Director
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.
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DIRECTORS’ REPORT
Dan O'Brien was a Director of Hexima between 17 May 2002 and 2 October 2009 and was reappointed to the Board on
18 November 2015. He is Chairman of the Audit and Risk Committee and a member of the Remuneration Committee.
Mr Dan O’Brien resigned as a Director on the 22nd September 2020.
Justin Yap BCom (University of New South Wales)
Non-Executive Director
Mr Yap is an Executive Director of CathRx Limited, an Australian medical device company commercialising novel
cardiac electrophysiology catheters for the treatment of heart rhythm disorders. He is a cofounder and Non-Executive
Director of Wilhelm Integrated Solutions Pty Ltd, a leading supplier of integrated OR solutions to hospitals around
Australia. Prior to this, he began his career in investment banking for Mosaic Risk Management Pty Ltd, a wholly
owned subsidiary of Wilson HTM Limited specialising in derivatives risk management. He is a member of the
Remuneration committee and the Audit and Risk Committee.
Mr Yap has been a Director since 17th July 2018.
Scott Robertson BSBA (University of Southern California), MBA (University of California)
Non-Executive Director
Mr. Robertson is currently Chief Financial Officer at DiCE Molecules. Prior to DiCE Molecules, Mr. Robertson served at
DuPont where he was Business Development Director for DuPont Pioneer with responsibility for the business unit’s
crop genetics and precision agriculture M&A activity. He also held the position of portfolio manager with DuPont
Ventures where he focused on strategic investment opportunities in production agriculture and the intersection of
agriculture and downstream renewable technologies. Prior to joining DuPont, Mr. Robertson was an investment
professional at MPM Capital, a life sciences-dedicated venture capital fund, and previous to that a member of the
Healthcare Investment Banking groups at Merrill Lynch & Co. and Thomas Weisel Partners. He received a Bachelor of
Science in Business Administration from the University of Southern California and an M.B.A. from the Haas School of
Business at the University of California, Berkeley.
Mr Robertson has been a Director since 21 November 2018, and is a member of the Audit and Risk committee from
November 2018 and the Remuneration committee.
Steven M Skala AO BA, LL.B (Hons) (University of Qld), BCL (University of Oxford)
Non-Executive Alternate Director
Steven Skala is Vice Chairman, Australia of Deutsche Bank AG, a position he has held since 2004 and is Chairman of the
Commonwealth Government’s Clean Energy Finance Corporation. Among public companies, he is a former Chairman
of Wilson Group Limited, the Island Food Company Limited and is a former Director of the Channel TEN Group of
companies and Max Capital Group Limited. Between 1982 and 2004, he was a Partner of Australian law firms, Morris
Fletcher & Cross (now Minter Ellison) and Arnold Bloch Leibler.
Active beyond banking and commerce, Mr Skala is Chairman of the Heide Museum of Modern Art, Deputy Chairman of
the General Sir John Monash Foundation, a Director of the Centre for Independent Studies and a Member of the
International Council of the Museum of Modern Art (MoMA) in New York. He was previously Chairman of Film
Australia Limited, Chairman of the Australian Centre for Contemporary Art, Vice President (Deputy Chairman) of The
Walter & Eliza Hall Institute of Medical Research, a Director of the Australian Broadcasting Corporation and a Director
of the Australian Ballet. He was appointed an Officer of the Order of Australia in January 2010 for service to the arts,
education, business and commerce.
Mr Skala was appointed Alternate Director for Mr Scott Robertson on the 10 March 2020. He had been a Director of
the Company previously from 17 May 2002 until 31 December 2015, and had been Chairman of the Company for 7
years during this time.
Company Secretary
Ms Elisha Larkin BComm(Hons) / BAgriSci(Hons), MCommercial Law (The University of Melbourne) was appointed
Company Secretary on 4 May 2012, until her departure from the Company 21 November 2019.
Ms Helen Molloy BBus Federation University, ASCPA, was appointed sole company secretary on 21 November 2019
and has been with the Company since February 2010.
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DIRECTORS’ REPORT
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
John Bedbrook
Nicole van der Weerden
Dan O’Brien
Scott Robertson
Justin Yap
Michael Aldridge
Steven Skala (2)
12
12
12
12
12
12
12
12
4
(1) Attended by invitation
(2) Attended as Alternate Director
12
-
-
12
-
-
-
-
4
2
2(1)
2
2(1)
2
2
2
-
-
2
2
2
2
2
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
CORPORATE GOVERNANCE STATEMENT
This statement outlines the main corporate governance practices in place throughout the financial year.
The Board of Directors
The Board is responsible for the direction and supervision of Hexima’s business on behalf of the Shareholders, by
whom they are elected and to whom they are accountable.
The Board’s responsibilities include:
• protecting and enhancing the value of Hexima’s assets;
•
•
setting strategies and directions, then monitoring and reviewing progress against these strategic objectives;
reviewing and ratifying internal controls, codes of conduct and legal compliance;
• ensuring the significant risks facing Hexima have been identified and adequate control, monitoring and
reporting mechanisms are in place;
•
•
approving transactions relating to acquisitions, divestments and capital expenditure above delegated
authority limits; and
approving and monitoring financial and other reporting.
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.
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DIRECTORS’ REPORT
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 and one Alternate Director in office at the date of this report. Directors Dan O’Brien and Dr
Joohn Bedbrook were also Directors throughout the financial year, both resigning on the 22nd September 2020. The
names and qualifications of all 8 directors are set out on pages 3 to 5 of this Directors’ Report.
The company is no longer listed on the ASX but the Board continues to consider the ASX corporate governance
principles. The ASX best practice recommendations require a majority of the Board to be independent Directors and
the chairperson to be an independent director. The Board has directors who satisfy the ASX guidelines for
independence being 1) Chairman Professor Jonathan West, 2) John Bedbrook, 3) Mr Justin Yap and 4) Mr Scott
Robertson). Mr Dan O’Brien is a Non-Executive Director but does not qualify as independent because of his
shareholdings in Hexima. Professor Marilyn Anderson, Dr van der Weerden and Mr Michael Aldridge 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 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 team throughout the current financial year within existing scheduled Board meetings.
No meetings were held during the year for the Nomination Committee.
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 has satisfied the ASX
recommendations with an independent Chairman and three independent members. The members are Dr. John
Bedbrook (Chairman), Professor Jonathan West, Dan O’Brien, Justin Yap and Scott Robertson.
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 2020, the Remuneration Committee did not
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DIRECTORS’ REPORT
meet separately, however 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 13
to 18 and forms part of the Directors’ Report for the financial year ended 30 June 2020.
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 has satisfied 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 Audit and Risk Management
Committee comprises Mr Dan O’Brien (Chairman), Professor Jonathan West, Dr. John Bedbrook, Mr Justin Yap and Mr
Scott Robertson.
The Chief Executive Officer, Company Secretary, Financial Controller 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 6.
The Chief Executive Officer and the Financial Controller 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 2020 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 by the Board.
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.
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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 group is subject to environmental regulations and other licenses in respect of its research and development
facilities. There are adequate systems in place to ensure compliance with relevant Federal, State and Local
environmental regulations and the Board is not aware of any breach of applicable environmental regulations by the
group. There were no significant changes in laws or regulations during the 2020 financial year or since the end of the
year affecting the business activities of the group, and the Board is not aware of any such changes in the near future.
Financial Reporting
The Chief Executive Officer and the Financial Controller 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.
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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. Hexima’s lead drug candidate is the plant
defensin, HXP124, which is being developed for treatment of fungal nail infections (onychomycosis). Hexima’s principle
activities in 2019-2020 included successfully completing a first-in-human clinical trial for HXP124 and producing a new
expression strain to increase the yield of HXP124 in the manufacturing process.
OPERATING AND FINANCIAL REVIEW OF THE GROUP
Financial performance
Revenue
Results from operating activities
Net financing (expense)/income
Income tax expense
2020
$
2019
$
2,568,341
3,431,535
(3,534,291)
(2,914,607)
(91,471)
-
23,129
(4,054)
Net loss after tax attributable to members
(3,625,762)
(2,895,532)
Dividends
NIL
NIL
Summary and Outlook
The Group had net cash outflows from operating activities of $2,099,064 for the year ended 30 June 2020, compared
with $1,639,073 for the prior year. The variance is a combination of both lower cash receipts and lower cash
payments. The cash receipts differ between the years as 2019 included a large debtor receipt from the 2018 year. The
cash payments have decreased from the prior year as there has been a movement of a major creditor to long term
liability in 2020. The Group recorded a loss after tax of $3,625,762 for the year ended 30 June 2020. A loss after tax of
$2,895,532 was recorded for the previous financial year. Net finance expense for the Group for the financial year
ended 30 June 2020 was $91,471 (2019: income of $23,129). The variance in net finance income/expense from the
prior year is largely due to the movement of the exchange rate affecting the USD denominated bank account.
Financial position
Hexima has cash and receivables of $3,649,727 at 30 June 2020 (2019: $4,314,281).
Operational update
During 2019-2020, Hexima substantially progressed development of its lead molecule, HXP124, as a topical treatment
for nail fungus (onychomycosis). We completed our phase I/IIa clinical trial and commenced a phase IIb clinical trial in
Australia and New Zealand. HXP124 is an easy to apply solution that is simply painted onto nails, not requiring any
other treatment, that rapidly clears fungus from the nail bed.
Nail fungus (onychomycosis) is a very common nail infection, affecting approximately 23 million people in the USA and
more than 500 million globally. Independent market researchers have estimated the global onychomycosis market at
US$3.7 billion in 2018. However, available treatments all have serious limitations including low efficacy rates, long
treatment durations or the potential for severe toxic side effects.
During 2019-2020, Hexima announced positive clinical results from its phase I/IIa trial for HXP124. After daily
treatment for just six weeks, patients treated with HXP124 saw greater clearing of the infected nail area and were
more likely to have fungus cleared from the nail than vehicle-treated patients. Hexima’s clinical trial results to date
indicate that HXP124 is safe and well tolerated and has an industry-leading rate of improvement of infected nails:
eliminating the fungal infection in >50% of nails after only 6 weeks of daily treatment (approximately twice as effective
as the next best product in that time frame).
Hexima Limited Annual Report
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DIRECTORS’ REPORT
If HXP124 achieves its target product profile of superior efficacy (as compared to the best-in-class currently available
topical product) with a short treatment duration, primary US market research commissioned by Hexima with
physicians and patients supports our goal that HXP124 would become the treatment-of-choice and outperform
existing branded topical treatments.
Hexima is now conducting an Australian Phase IIb clinical trial for HXP124 at up to nine clinical sites in Australia and NZ.
This trial will assess the activity of HXP124 after longer periods of daily dosing and follow-up period to allow time for
the infected nail to grow out and resolve the infection. Hexima is pleased to report that this trial was recently given
Australian ethics approval to proceed and we have begun screening for eligible patients. Approximately 132 patients
are targeted to be enrolled and the results are expected by the 4th quarter of 2021. Details of the trial can be found on
the Australia and New Zealand Clinical Trial Register (ACTRN12620000697987).
To fund the phase IIb clinical trial and ongoing development of HXP124, Hexima is conducting a capital raising and
seeking to re-list on the ASX. The capital raising will be conducted in two tranches at a pre-money valuation for Hexima
of AU$17.5m. The first tranche will be a private placement to sophisticated investors to raise a minimum AU$5m. The
placement will trigger the automatic conversion of the existing Convertible Notes into ordinary shares. The board plans
to immediately follow this placement with a public offer of shares to raise approximately AU$2m and to seek re-listing
on the ASX. In preparation for this re-listing, Hexima will hold an Extraordinary General Meeting on 5 October 2020 to
vote on the adoption of a new constitution and a 1 for 2 share consolidation.
Capital raised will also fund the scale-up of manufacturing and additional animal toxicology studies to support opening
an Investigational New Drug (IND) application with FDA for late-stage clinical trials in the US. Hexima recently initiated
scale-up of HXP124 manufacturing with a commercial-scale manufacturer in Europe. This process is progressing well
and Hexima expects to be able to produce the large quantities of HXP124 required for long-term toxicology studies at a
highly competitive cost of goods.
Hexima has also continued discussions with potential partners for HXP124 in Japan. The Japan market for
onychomycosis products is well developed with the leading topical product, Clenafin® (equivalent to Jublia®) selling
>US$220 million in 2017. Given the unique dynamics of the Japanese market, Hexima is seeking a collaborative
development and commercialization relationship in Japan. Hexima has received strong interest in HXP124 from
potential partners, reflecting strong demand for novel, effective topical products to treat onychomycosis.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Convertible notes of $1,400,000 have been issued during the 2020 financial year. There were no other 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 2020.
LIKELY DEVELOPMENTS
Further disclosure of information regarding likely developments in the operations of the Group and the expected
results of those operations in future financial years has not been included in this report because, in the opinion of the
Directors, disclosure of the information may prejudice the interests of the Group.
ENVIRONMENTAL REGULATION
The Group’s operations are not subject to any significant environmental regulations under either Commonwealth or
State legislation. However, the Board believes that the Group has adequate systems in place for the management of
its environmental requirements and is not aware of any breach of those environmental requirements as they apply to
the Group.
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DIRECTORS’ REPORT
UNAUDITED REMUNERATION REPORT
The remuneration report set out on pages 13 to 18 is not required under the Corporations Act 2001 as the Group is an
unlisted disclosing entity. The Group has voluntarily included some of the 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 2020, 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
Justin Yap, Mr Scott Robertson, Mr Michael Aldridge, Mr Steven Skala, Ms Elisha Larkin and Ms Helen Molloy.
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 18 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.
Hexima Limited Annual Report
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DIRECTORS’ REPORT
UNAUDITED REMUNERATION REPORT – (Continued)
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.
Elisha Larkin
Ms Larkin was appointed Company Secretary on 4 May 2012, leaving the company on 21 November 2019. Ms Larkin
held the position of Chief Operating Officer between May 2012 and July 2014. Ms Larkin was an employee of the
Group.
Helen Molloy
Ms Molloy was appointed sole Company Secretary on 21 November 2019. Ms Molloy is an employee of the Group and
is also Financial Controller.
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.
Non-Executive directors have not received any cash payments since 1 January 2015, and have instead received equity
compensation.
Post 30 June 2020, both Steven Skala and Jonathan West are to receive $100,000 as they have performed duties over
and above that expected from a non-executive director in the lead up to the $5million placement occurring in
September 2020.
Hexima Limited Annual Report
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DIRECTORS’ REPORT
UNAUDITED REMUNERATION REPORT – (Continued)
Directors’ and Executive Officers’ Remuneration
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
Share based payments
Post employment
Other
Fixed Remuneration
(Salary & Fees)
Share Options Issued
(1)
Employment Benefits
– Super/Health cover
Leave Benefits
Total
Remuneration
Value of options as
proportion of
remuneration
Non-executive Directors
Jonathan West
John Bedbrook
GF Dan O’Brien
Scott Robertson
Justin Yap
Steven Skala AO
Executive Directors
Marilyn Anderson AO (2)
Nicole van der Weerden (4)
Michael Aldridge
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
-
-
-
-
-
-
-
-
-
-
-
-
75,404
75,404
81,398
87,218
386,529
34,433
15,280
16,300
14,701
28,710
7,641
8,150
12,514
8,062
9,017
6,099
-
-
3,543
10,280
7,085
20,560
94,717
9,067
-
-
-
-
-
-
-
-
-
-
-
-
7,163
7,163
8,643
8,286
29,942
-
-
-
-
-
-
-
-
-
-
-
-
-
8,421
17,521
10,163
21,540
-
-
15,280
16,300
14,701
28,710
7,641
8,150
12,514
8,062
9,017
6,099
-
-
94,531
110,368
107,289
137,604
511,188
43,500
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
4%
9%
7%
15%
19%
21%
Hexima Limited Annual Report
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ABN 64 079 319 314
DIRECTORS’ REPORT
UNAUDITED REMUNERATION REPORT – (Continued)
Directors’ and Executive Officers’ Remuneration (Continued)
Executive
Elisha Larkin (3)
Helen Molloy (5)
Total
2020
2019
2020
2019
2020
2019
(4,286)
98,081
143,891
-
682,936
295,136
2,370
2,056
2,207
-
169,075
109,310
3,686
9,318
13,670
-
63,104
24,767
-
24,715
22,939
-
41,523
63,776
1,770
134,170
182,707
-
956,638
492,989
134%
2%
1%
-
18%
22%
Hexima Limited Annual Report
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DIRECTORS’ REPORT
UNAUDITED 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 Black-Scholes Pricing model, and allocated to each period evenly over the period from grant date to vesting
date. The value disclosed is the portion of the fair value of the options recognized in this reporting period.
2. Professor Anderson is employed by La Trobe University. The Company engages her services through a Research Agreement with the University and through a separate direct
employment agreement. Professor Anderson’s total remuneration from the Company and La Trobe University (in relation to services performed for Hexima) was $136,259,
comprising $94,531 paid and payable directly by the Company and $41,728 paid by La Trobe University (for 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.
3. Ms Elisha Larkin was appointed Company Secretary on 4 May 2012, and resigned effective 19 November 2019. Elisha was employed on a part-time basis.
4. 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 $256,816, comprising
$116,870 paid and payable directly by the Company, and $139,946 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.
5. Ms Molloy was appointed sole Company Secretary on 21 November 2019. Ms Molloy is an employee of the Group and is also Financial Controller.
Hexima Limited Annual Report
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DIRECTORS’ REPORT
UNAUDITED 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.
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.
30 June 2020:
No. of
Options
Granted
Exercise
Price
Grant Date
Fair value
per option
at grant
date
Expiry Date
No. of options
vested during
2020
Jonathan West
500,000
John Bedbrook
250,000
GF Dan O’Brien
250,000
Justin Yap
250,000
Scott Robertson
250,000
Elisha Larkin
Helen Molloy
50,000
60,000
Total
1,610,000
30 June 2019:
$0.50
$0.50
$0.50
$0.50
$0.50
28/1/2020
$0.037
27/1/2025
28/1/2020
$0.037
27/1/2025
28/1/2020
$0.037
27/1/2025
28/1/2020
$0.037
27/1/2025
28/1/2020
$0.037
27/1/2025
$0.50
15/11/2019
$0.037
15/11/2024
$0.50
15/11/2019
$0.037
15/11/2024
-
-
-
-
-
50,000
60,000
110,000
No. of
Options
Granted
Exercise
Price
Grant Date
Fair value
per option
at grant
date
Expiry Date
No. of options
vested during
2019
Jonathan West
500,000
John Bedbrook
250,000
GF Dan O’Brien
250,000
Justin Yap
125,000
250,000
Scott Robertson
1,000,000
Michael Aldridge
5,000,000
Total
7,375,000
$0.50
$0.50
$0.50
$0.20
$0.50
$0.50
$0.50
01/01/2019
$0.027
01/01/2024
01/01/2019
$0.027
01/01/2024
01/01/2019
$0.027
01/01/2024
07/07/2018
$0.033
01/01/2023
01/01/2019
$0.027
01/01/2024
22/02/2019
$0.037
18/06/2019
$0.141
22/02/2024
18/06/2029
-
-
-
-
-
-
-
Hexima Limited Annual Report
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ABN 64 079 319 314
DIRECTORS’ REPORT
DIRECTOR’S 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
Justin Yap
Scott Robertson
Michael Aldridge
Steven Skala
Total
6,000,000
4,561,096
500,000
289,400
30,318,705
-
-
-
9,960,057
51,629,258
3,000,000
250,000
2,500,000
1,500,000
1,250,000
625,000
1,350,000
5,000,000
250,000
15,725,000
A related party of Justin Yap holds 29,431,579 shares in the Company.
Entities associated with Steven Skala will subscribe for 1,000,000 shares.
Hexima Limited Annual Report
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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
11 December 2020
12 February 2022
12 February 2022
31 December 2022
1 January 2023
1 January 2024
22 February 2024
18 June 2029
15 July 2024
28 January 2025
Exercise Price
Number of Shares
$0.50
$0.08
$0.20
$0.20
$0.20
$0.50
$0.50
$0.50
$0.50
$0.50
2,750,000
2,325,000
1,250,000
200,000
1,759,000
1,250,000
1,000,000
5,000,000
571,000
1,500,000
17,605,000
Conversion of convertible notes to shares and the subsequent share price are dependent on the event causing
conversion. Refer to Note 15 for the conversion terms.
Shares issued on exercise of options
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.
Hexima Limited Annual Report
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DIRECTORS’ REPORT
AUDITORS
Audit Services
Audit of the annual financial report
Review of half year financial report
2020
$
28,866
19,362
2019
$
37,950
13,100
48,228
51,050
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. During the financial year ended 30 June 2020, the Company paid insurance premiums 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
Subsequent to year end, the Group has completed a Placement of $5.5million during September 2020. The placement
has triggered the conversion of the convertible notes on issue. A Public Offering is planned for November 2020 where
the capital raise is expected to be $3million.
Other than the matters noted above, 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 2020.
Hexima Limited Annual Report
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DIRECTORS’ REPORT
LEAD AUDITORS’ INDEPENDENCE DECLARATION UNDER SECTION
370C OF THE CORPORATIONS ACT 2001
The Lead Auditor’s Independence Declaration is set out on page 59 and forms part of the Directors’ Report for the year
ended 30 June 2020.
This report is made pursuant to a resolution of the Directors.
Professor Jonathan West
Non-Executive Chairman
Dr Nicole van der Weerden
Executive Director and Chief Executive Officer
Dated this 30th day of September 2020
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
Notes
2020
$
2019
$
2,568,341
3,431,535
(2,180,959)
(2,719,090)
6
7
8
9
9
9
Revenue
Contracted research expenditure
Other research and development
expenditure
Patent and legal expenses
Marketing and business development
Employee benefits expense
Depreciation expense
Other expenses
Results from operating activities
Finance income
Finance expense
Net financing (expense) / income
Loss before income tax
Income tax expense
Loss for the period
(1,839,169)
(264,998)
(126,749)
(1,103,154)
(162,359)
(425,244)
(6,102,632)
(3,534,291)
89,308
(180,779)
(91,471)
(3,625,762)
10(a)
-
(3,625,762)
(1,791,307)
(259,016)
(392,189)
(760,064)
(172,484)
(251,992)
(6,346,142)
(2,914,607)
40,307
(17,178)
23,129
(2,891,478)
(4,054)
(2,895,532)
Other comprehensive income for the
period, net of income tax
-
-
Total comprehensive loss for the period
(3,625,762)
(2,895,532)
Loss attributable to:
Owners of the Company
Loss for the period
(3,625,762)
(3,625,762)
(2,895,532)
(2,895,532)
Total comprehensive loss attributable to:
Owners of the Company
Total comprehensive loss for the period
Basic EPS (cents per share)
Diluted EPS (cents per share)
17
17
(3,625,762)
(3,625,762)
(2.78)
(2.76)
(2,895,532)
(2,895,532)
(2.22)
(2.21)
The accompanying notes form part of these financial statements
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Consolidated
Notes
11
12
CURRENT ASSETS
Cash and cash equivalents
Receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
13
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Loans and borrowings
Employee benefits
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
(DEFICIENCY IN NET ASSETS) / NET
ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
14
15
16
17
17
2020
$
1,357,647
2,292,080
3,649,727
1,275,586
1,275,586
4,925,313
3,353,137
3,022,372
170,079
6,545,588
6,545,588
2019
$
1,950,569
2,363,712
4,314,281
1,436,522
1,436,522
5,750,803
1,975,098
1,603,900
353,444
3,932,442
3,932,442
(1,620,275)
1,818,361
61,006,378
1,640,525
(64,267,178)
(1,620,275)
61,006,378
1,453,399
(60,641,416)
1,818,361
The accompanying notes form part of these financial statements
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
2020
Opening balance at
1 July 2019
Total comprehensive loss for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded
directly in equity
Contributions by and distributions to
owners
Share based payment expenses
Amount received on issue of options
Issue of shares on exercise of options
Total contributions by and distributions
to owners
Transfer of capital raising costs to share
capital
Consolidated
Note
Ordinary
Shares
$
Equity
Option
reserve
$
Equity
compensation
reserve
$
Capital
Raising
Reserve
$
61,006,378
200,000
1,253,399
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
187,026
100
-
187,126
-
-
-
-
-
-
-
-
-
-
-
Closing balance at 30 June 2020
61,006,378
200,000
1,440,525
2019
Opening balance at
1 July 2018
Total comprehensive loss for the period
Net (loss) for the period
Other comprehensive income
Total comprehensive loss for the year
Transactions with owners recorded
directly in equity
Contributions by and distributions to
owners
Share based payment expenses
Amount received on issue of options
Issue of shares on exercise of options
Total contributions by and distributions
to owners
Transfer of capital raising costs to share
capital
Closing balance at 30 June 2019
Note
Ordinary
Shares
$
Equity
Option
reserve
$
Equity
compensation
reserve
$
Capital
Raising
Reserve
$
60,976,378
200,000
1,138,021
-
-
-
-
30,000
30,000
-
-
-
-
-
-
-
-
-
115,278
100
-
115,378
-
61,006,378
-
200,000
-
1,253,399
-
-
-
-
-
-
-
-
-
-
Accumulated
Losses
$
Total equity
$
(60,641,416)
1,818,361
(3,625,762)
-
(3,625,762)
(3,625,762)
-
(3,625,762)
-
-
-
-
-
187,026
100
-
187,126
-
(64,267,178)
(1,620,275)
Accumulated
Losses
$
Total equity
$
(57,745,884)
4,568,515
(2,895,532)
-
(2,895,532)
-
(2,895,532)
(2,895,532)
-
-
-
115,278
100
30,000
145,378
-
(60,641,416)
-
1,818,361
The accompanying notes form part of these financial statements
All amounts are shown net of tax.
Hexima Limited Annual Report
24
ABN 64 079 319 314
HEXIMA LTD
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Consolidated
2020
$
2019
$
Notes
CASH FLOWS USED IN OPERATING ACTIVITIES
Cash receipts from government grants &
collaboration agreements
Cash paid to suppliers and employees
2,689,709
3,538,065
(4,788,773)
(5,177,138)
Net cash used in operating activities
19(b)
(2,099,064)
(1,639,073)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received
Payments for plant and equipment
Net cash from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payments received on issue of options
Receipt of Paycheck Protection Program from the US
Government
Issue of shares on exercise of options
Cash from Convertible note issue
Net cash from 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
2,551
(1,738)
813
10,478
(1,081)
9,397
100
63,991
-
1,400,000
1,464,091
100
-
30,000
1,603,900
1,634,000
(634,160)
4,324
41,238
1,950,569
29,828
1,916,417
Cash and cash equivalents at 30 June
19(a)
1,357,647
1,950,569
The accompanying notes form part of these financial statements
Hexima Limited Annual Report
25
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 20 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 plant-derived proteins for applications as human therapeutics. It’s lead drug candidate,
HXP124 is in phase I/IIa clinical trials for the treatment of fungal toenail infections (onychomycosis).
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 30th September 2020.
This is the first set of the Group’s annual financial statements in which AASB 16 Leases has been applied. Changes
to significant accounting policies are described in Note 2(e).
(b) Basis of measurement
The financial report has been prepared on the basis of historical cost, except for share options and the embedded
derivative in respect of convertible debt which has been measured at fair value.
(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.
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 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
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 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.
Hexima Limited Annual Report
26
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. BASIS OF PREPARATION (continued)
(d) Use of estimates and judgements (continued)
Measurement of fair values (continued)
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 and
convertible notes.
Convertible notes
The fair value of the embedded derivative within the convertible note as at reporting date is measured using the
Monte Carlo Model. Measurement inputs was based on the terms and conditions of the convertible note.
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 15 – convertible notes. Refer to Note 15.
Note 18 – measurement of share-based payments
(e) Changes in accounting policies
The Group initially applied AASB 16 Leases from 1 July 2019. A number of other new standards are also effective
from 1 July 2019 but they do not have a material effect on the Group’s financial statements.
The details of the changes in accounting policies are disclosed below. Additionally, the disclosure requirements in
AASB 16 have not been applied to comparative information.
A.
Definition of a lease
Previously, the Group determined at contract inception whether an arrangement was or contained a lease under
AASB Interpretation 4 Determining whether an Arrangement contains a Lease. The Group now assesses whether
a contract is or contains a lease based on the definition of a lease, as explained in Note 3 (n).
On transition to AASB 16, the Group elected to apply the practical expedient to grandfather the assessment of
which transactions are leases. The Group applied AASB 16 only to contracts that were previously identified as
leases. Contracts that were not identified as leases under AASB 117 and AASB interpretation 4 were not
reassessed for whether there is a lease under AASB 16. Therefore, the definition of a lease under AASB 16 was
applied only to contracts entered into or changed on or after 1 July 2019.
B. As a lessee
The Group previously classified leases as operating or finance leases based on its assessment of whether the
lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the
Group.
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone price. However, for
leases of property the Group has elected not to separate non-lease components and account for the lease and
associated non-lease components as a single lease component.
C. As a lessor
The Group leases out its own property (glasshouse).
The Group is not required to make any adjustments on transition to AASB 16 for leases in which it acts as a lessor.
Hexima Limited Annual Report
27
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2. BASIS OF PREPARATION (continued)
(e) Changes in accounting policies (continued)
D.
Impact on financial statements
There was no material impact on retained earnings at 1 July 2019, the statement of financial position or the
Group’s statement of cash flows as a result of adopting AASB 16.
Refer to note 3 (n) on the Group’s accounting policies for leases.
(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 for the year ended 30 June 2020 of $3,625,762
(2019: loss after tax of $2,895,532) and as at 30 June 2020 has a deficiency in net current assets of $2,895,861
(2019: surplus of net current assets of $381,839) and an overall net asset deficiency of $1,620,275 (2019: net
asset surplus of $1,818,361).
Notwithstanding the net current asset deficiency, net asset deficiency and history of operating losses, 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 finalised a $5,500,000 placement. Binding subscription agreements for the full amount of the
placement were received by 22 September 2020 and funds were received in the bank account within 5
business days from the 22 September 2020.
Included in current liabilities as at 30 June 2020 are convertible notes with a carrying value of $2,958,381
and associated accrued interest of $197,957. As set out in Note 15, these notes and any accrued interest
are mandatorily convertible to equity in the event of a fund raise greater than $5million and therefore have
converted in September 2020. Current note holders, will receive new shareholding statements from 28
September 2020. Excluding these instruments, the Group has a net current asset position at 30 June 2020 of
$260,477 and a net asset position of $1,536,063;
The Group has demonstrated it has the ability to negotiate creditor settlement terms with its major research
service provider to align with cash resources available to it, and has a commitment post year end to allow
the Group to defer $1,522,492 of amounts payable and recorded as a trade payable in current liabilities as
at 30 June 2020 and instead repay this amount on 31 December 2022. Additionally, the provider has
committed in principle that should the Company be unable to pay this amount as it becomes due, it will
accept conversion of the liability into equity of the Company instead;
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; and
A cash flow forecast has been prepared by management based on the Group’s approved budget,
incorporating the points noted above and assuming that COVID-19 continues not to have a significant
impact on the operation of the Group. This cash flow forecast demonstrates that the Group has sufficient
resources to meet its obligations as at 30 June 2020 and that it will continue to meet its obligations for a
period of at least 12 months following the approval of these financial statements.
The Group’s ability to continue to operate as a going concern is dependent upon successful capital raisings
sufficient to continue the planned development of HXP124 through the phase IIb study, the completion of which
is uncertain at the date of approval of these financial statements. These conditions give rise to a material
uncertainty as to whether the Group will be able to continue as a going concern. Should the Group be unable to
continue as a going concern it may be required to realise assets at an amount different to that recorded in the
statement of financial position, settle liabilities other than in the ordinary course of business and make provisions
for other costs which may arise.
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 to the current year’s presentation.
Hexima Limited Annual Report
28
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
(a) Basis of Consolidation (continued)
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)
Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial
assets and financial liabilities are initially recognised when the Group becomes a party to the contractual
provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its
acquisition or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.
(ii)
Classification and subsequent measurement
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment;
FVOCI – equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:
•
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at
FVTPL:
•
•
it is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to
present subsequent changes in the investment’s fair value in OCI. This election is made on an investment-by-
investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at
FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL
if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Hexima Limited Annual Report
29
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Financial Instruments (continued)
(ii)
Classification and subsequent measurement (continued)
Financial assets – Subsequent measurement and gains and losses (continued):
Debt investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated using the effective interest
method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and
losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or
loss. There were no debt investment at FVOCI during or at year end.
Financial Liabilities:
The group issued convertible notes denominated in AUD that will be converted to ordinary shares. The value and
number of shares to be issued is dependent on the event triggering the conversion.
Equity investments at FVOCI
These asset are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless
the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are
recognized in OCI and are never reclassified to profit or loss. There were no equity investment at FVOCI during or
at year end.
(iii)
Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers
nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial
asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position,
but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the
transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is
recognised at fair value.
Convertible notes are derecognised and converted to equity when a triggering event occurs as detailed in Note
15.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
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.
Hexima Limited Annual Report
30
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Plant and equipment
(i)
Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses. Where parts of an item of plant and equipment have different useful lives, they are accounted for as
separate items of plant and equipment. Cost includes expenditures that are directly attributable to the
acquisition of the asset.
(ii)
Subsequent costs
The Company recognises in the carrying amount of an item of plant and equipment the cost of replacing part of
such an item when that cost is incurred if it is probable that the future economic benefits embodied within the
item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in
the income statement as an expense as incurred. The carrying amount of the replaced part is derecognised. The
costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset. Depreciation is recognised
in profit or loss on a straight-line or diminishing value basis over the estimated useful lives of each part of an item
of property, plant and equipment. The estimated useful lives for the current and comparative periods are as
follows:
Plant and equipment
Office equipment
Plant and equipment - Building
2020
15% - 37.5%
33% - 66.7%
5%
2019
15% - 37.5%
33% - 66.7%
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
Financial instruments and contract assets
The Group recognises loss allowances for ECLs on:
•
•
•
financial assets measured at amortised cost;
debt investments measured at FVOCI. The Group did not have any debt investment of FVOCI during and as
at 30 June 2020; and
contract assets.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
measured at 12-month ECLs:
•
•
debt securities that are determined to have low credit risk at the reporting date; and
other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the
expected life of the financial instrument) has not increased significantly since initial recognition.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime
ECLs.
Hexima Limited Annual Report
31
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Impairment (continued)
(i)
Non-derivative financial assets (continued)
Financial instruments and contract assets (continued)
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and
available without undue cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessment and including forward-looking
information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 90 days
past due.
The Group considers a financial asset to be in default when:
•
•
the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to
actions such as realising security (if any is held); or
the financial asset is more than 180 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months
after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group
is exposed to credit risk.
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and
the cash flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities
at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data:
•
•
•
•
•
significant financial difficulty of the borrower or issuer;
a breach of contract such as a default or being more than 90 days past due;
the restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
it is probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for a security because of financial difficulties.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of
the assets.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
Hexima Limited Annual Report
32
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Impairment (continued)
Write-off
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of
writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience
of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect
to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group
expects no significant recovery from the amount written off. However, financial assets that are written off could
still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts
due.
(f) Revenue
Revenue recognition under AASB 15
Performance obligations and revenue recognition polices
Type of product/service
Research and collaboration
fees – recognised over time
Nature and timing of satisfaction of
performance obligations, including
significant payment terms
Customer obtains control as the
underlying research services are
performed. This usually occurs when
the underlying activities are undertaken
by the Group over time.
Where an agreement contains a right to
access the Group’s IP this is also
recognised over time.
Revenue recognition under AASB
15
Revenue is recognised when the
underlying expenses underpinning
the delivery of services are
incurred.
(g) Research and development expenditure
Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge
and understanding is recognised in the income statement as an expense as incurred. Patent costs relating to
research activities are expensed as incurred. Plant and equipment acquired to perform research activities are
capitalised where the plant and equipment are not specific in nature to the Group’s research activities and can be
sold or leased to third parties. Plant and equipment specific to the research activities of the Group are expensed
on acquisition.
Development expenditure is capitalised only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are probable, and the Group intends to
and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalised
includes the cost of materials, direct labour and overhead costs that are directly attributable to preparing the
asset for its intended use. No costs were capitalised during the period. Other development expenditure is
recognized in the profit and loss as incurred.
(h) Finance income and expenses
Finance income comprises interest income on term deposits. Interest income is recognised as it accrues in profit
or loss, using the effective interest method.
(i)
Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or loss
except to the extent that it relates to items recognised directly in equity, in which case it is recognised directly in
equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Hexima Limited Annual Report
33
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i)
Income tax (continued)
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.
The Company and its Australian subsidiaries are part of a Tax Consolidated Group and subject to tax as a single
entity. The US subsidiary is tax a single entity in the US.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realised.
(j) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from,
or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows
are included in the statements of cash flows on a gross basis. The GST components of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating
cash flows.
(k) Segment Reporting
The Group determines and presents operating segments based on the information that internally is provided to
the Group’s chief operating decision maker. An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur expenses, including revenues and expenses that
relate to transactions with any of the Group’s other components.
The Group primarily operates in one sector, being the biotechnology industry, developing and/or commercialising
biotechnology research. The majority of operations are in Australia. All assets are located in Australia.
(l) Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit under which the entity pays fixed contributions into a
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as a personnel expense in profit or loss when they are
due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future
payments is available.
Short term benefits
Short-term employee benefit obligations are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if
the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by
the employee and the obligation can be estimated reliably.
Long term employee benefits
The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that
employees have earned in return for their service in the current and prior periods plus related on costs; that
benefit is discounted to determine its present value, and the fair value of any related assets is deducted.
Hexima Limited Annual Report
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HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Share based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees unconditionally become
entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that do not meet the related service and
non-market performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there
is no true-up for differences between expected and actual outcomes.
(n) Leases
Policy applicable from 1 July 2019
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Group uses the definition of a lease in AASB 16.
This policy is applied to contracts entered into, on or after 1 July 2019.
(i)
As a lessor
At inception or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of their relative standalone prices.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of
the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance
lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such
as whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the
Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
The Group recognises lease payments received under operating leases as income on a straight-line basis over the
lease term as part of ‘rental income’.
Generally, the accounting policies applicable to the Group as a lessor in the comparative period were not
different from AASB 16.
Policy applicable before 1 July 2019
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 2020, however the Group has not early applied the following new or amended standards in
preparing these financial statements.
• Amendments to References to Conceptual Framework in IFRS Standards.
• Definition of a Business (Amendments to IFRS 3).
• Definition of Material (Amendments to IAS 1 and IAS 8).
The Group does not plan to adopt this standard early and the extent of the impact has not been determined.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 and
University 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 receivables, payables and cash and cash equivalents that
are denominated in a currency other than the functional currency of the Group entities, primarily US dollar, Euro
and GBP. Given the minimal value of foreign currency transactions the Group does not enter into contracts to
hedge currency risk. At 30 June 2020, there were receivables of $NIL and payables of $270,125 denominated in
foreign currencies (2019 receivable: $NIL, payable: $309,943). At 30 June 2019 the Group had US $25,645 in the
two group US dollar denominated bank accounts.
Interest rate risk
The Group’s interest expense relates to the convertible notes detailed in note 15. 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.
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.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
4.
FINANCIAL RISK MANAGEMENT (continued)
Operational risk (continued)
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 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.
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.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
6. REVENUE
Government Grant – Other
Government – R&D Tax Incentive
Rental Income
Collaboration and Service fees
Government Grant – COVID - 19
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
Interest expense on convertible note issue
Foreign exchange gain/(loss)
Derivative instrument gain
Finance (expense)/income
Consolidated
2020
$
88,364
2019
$
88,364
1,905,621
2,136,058
409,172
88,184
77,000
409,434
797,679
-
2,568,341
3,431,535
Consolidated
2020
$
2019
$
1,839,169
1,791,307
1,839,169
1,791,307
Consolidated
2020
$
365,468
59,776
425,244
2019
$
180,439
71,553
251,992
Consolidated
2020
$
2,551
2019
$
10,478
(180,779)
(17,178)
41,238
45,519
29,829
-
(91,471)
23,129
Hexima Limited Annual Report
38
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
10. INCOME TAX
(a)
Income tax expense
Loss before tax
(3,625,762)
(2,895,532)
Consolidated
2020
$
2019
$
Income tax benefit using the domestic
corporation tax rate of 27.5% (2019: 27.5%)
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 and tax losses not
brought to account
Adjustment to prior year tax
Income tax expense/(benefit) on pre-tax net
profit
(997,085)
(796,271)
1,208,864
(524,055)
51,432
14,076
246,768
-
-
1,345,082
(587,416)
31,701
17,912
(11,008)
4,054
4,054
Income tax expense can arise due to the add-back of R&D expenses which is claimed under the R&D Tax Incentive
Scheme. Tax losses are not fully available to offset against all taxable income arising as a result of the available
fraction rules.
(b) Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items
Temporary differences
Tax losses
Total
612,789
9,207,399
707,747
8,865,673
9,820,188
9,573,420
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax
assets have not been recognized in respect of these items because it is not yet probable that future taxable profit
will be available against which the group could utilize the benefits subject to passing the continuity of ownership
and/or same business test. The Group has not yet assessed the impact of the planned Capital Raisings post year-
end which may impact its ability to recover some or all of these losses in the future. Comparative amounts have
been restated to reflect assessed balances.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11. CASH AND CASH EQUIVALENTS
Cash on hand
Cash at bank
12. RECEIVABLES
Current
Trade receivables
R&D Tax Incentive Receivable – ATO
Prepayments and other receivables
Consolidated
2020
$
952
2019
$
852
1,356,695
1,949,717
1,357,647
1,950,569
Consolidated
2020
$
2019
$
215,528
1,907,568
168,984
114,389
2,129,622
119,701
2,292,080
2,363,712
The Group’s exposure to credit and currency risks and impairment losses related to trade receivables is disclosed
in Note 21.
Hexima Limited Annual Report
40
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
13. PLANT AND EQUIPMENT
Consolidated
Cost
Balance at 1 July 2019
Additions
Disposals
Balance at 30 June 2020
Balance at 1 July 2018
Additions
Disposals
Balance at 30 June 2019
Accumulated depreciation
Balance at 1 July 2019
Depreciation for the year
Disposals
Balance at 30 June 2020
Balance at 1 July 2018
Depreciation for the year
Disposals
Balance at 30 June 2019
Carrying amounts
At 1 July 2019
At 30 June 2020
Plant and Equipment
$
Office
Equipment
$
3,424,934
-
-
3,424,934
3,424,934
-
-
3,424,934
1,992,286
159,771
-
2,152,057
1,823,019
169,267
-
1,992,286
19,737
1,738
(1,805)
19,670
18,656
1,081
-
19,737
15,863
2,588
(1,490)
16,961
12,646
3,217
-
15,863
Total
$
3,444,671
1,738
(1,805)
3,444,604
3,443,590
1,081
-
3,444,671
2,008,149
162,359
(1,490)
2,169,018
1,835,665
172,484
-
2,008,149
1,432,648
1,272,877
3,874
2,709
1,436,522
1,275,586
The glasshouse facility forming part of plant and equipment which has a cost of $2,365,709 and accumulated
depreciation of $1,252,351 has been wholly leased to a third party. Refer to Note 24.
14. TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables & accrued expenses
Rental income received in advance
Customer contract liability
Consolidated
2020
$
2019
$
2,567,376
1,069,312
687,794
97,967
-
713,867
103,735
88,184
3,353,137
1,975,098
The majority of trade payables relate to La Trobe University. In September 2020 La Trobe University agreed that
this debt of $1,522,492 would be reclassified as Long Term debt.
Exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 21.
Hexima Limited Annual Report
41
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
15. LOANS AND BORROWINGS
Current
Convertible Note
US Government Loan - Paycheck Protection Program
Consolidated
2020
$
2,958,381
63,991
3,022,372
2019
$
1,603,900
-
1,603,900
Terms and Repayment Schedule
30 June 2020
30 June 2019
Type
Currency
Convertible Notes
AUD
Interest
rate
6%
Year of
Maturity
2021
Face Value Carrying
Amount
2,958,381
3,003,900
Face Value Carrying
Amount
1,603,900
1,603,900
The convertible notes may be paid prior to maturity date should certain conditions be satisfied, refer to conversion
terms below.
Convertible Notes
Beginning balance
Proceeds from issue
Less: gain on the fair value movement of derivative
liability
Carrying amount of Liability
Conversion terms:
Consolidated
2020
$
1,603,900
1,400,000
(45,519)
2,958,381
2019
$
-
1,603,900
-
1,603,900
The convertible note carries a fixed coupon rate of 6%. The convertible note, including any accrued interest, is
mandatorily convertible from issue date through to the maturity date of 30 December 2020 in the event of (a)
additional finance being raised above $5,000,000 or (b) a transaction occurring in relation to funding and development
of HXP124 with a third party. The conversion price is $0.50 per share, however reduces over time to $0.20 per share
under scenario (a) depending on the number of months that have elapsed prior to the additional finance being raised
from 30 June 2019 (through to the maturity date). Under a third scenario (c), in the event of a sale of all, or
substantially all of the shares in the Company prior to maturity, the face value of the notes and any accrued interest
will be repaid in cash at 250%. In the event that the maturity date is reached with none of the events (a), (b) or (c)
occurring, the instrument (comprising the face value and any accrued interest) will be mandatorily converted at a rate
of $0.20 per share. Should an insolvency event occur prior to 31 December 2020, the instrument becomes immediately
payable.
The convertible note has been recorded including the fair value of embedded derivative. The Monte Carlo valuation
approach has been used to determine the fair value of the embedded derivative. Key inputs include volatility at 100%,
face value of $3,003,900, risk free rate of 1.5% and probabilities of 60%, 10%, 10% and 20% respectively for the events
a) to d) listed above occurring.
Reconciliation of movements of liabilities to cash flows arising from financing activities
Proceeds from issue of convertible notes of $1,400,000 have been included as a financing activity in the statement of
cash flows.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
16. EMPLOYEE BENEFITS
Current
Accrued salary and wages
Superannuation
Liability for annual leave
Liability for long service leave
17. CAPITAL AND RESERVES
Reconciliation of movement in capital and reserves
Consolidated and the Parent Entity
Consolidated
2020
$
15,000
7,551
30,610
116,918
170,079
2019
$
130,201
17,557
48,168
157,518
353,444
Ordinary Shares
Number of shares
2020
2019
Amount
2020
$
2019
$
On issue at 1 July
130,238,789
129,888,789
61,006,378
60,976,378
Issued via rights issue for cash
Issue of shares on exercise of
options
Transfer of capital raising costs to
share capital
On issue at 30 June – fully paid
-
-
-
-
350,000
-
-
-
-
-
30,000
-
130,238,789
130,238,789
61,006,378
61,006,378
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.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17. CAPITAL AND RESERVES (continued)
Number of options
Amount
Equity option reserve
2020
2019
On issue at 1 July
Issued
Lapse of share options
On issue at 30 June – fully paid
-
-
-
-
-
-
-
-
2020
$
2019
$
200,000
200,000
-
-
-
-
200,000
200,000
Number of options
Amount
Equity compensation reserve
2020
2019
2020
$
2019
$
On issue at 1 July
17,407,000
10,507,000
1,253,399
1,138,021
Issued as compensation
Exercise of share options
Lapse of share options
2,071,000
-
(1,873,000)
7,375,000
(350,000)
(125,000)
187,126
115,378
-
-
-
-
On issue at 30 June – fully paid
17,605,000
17,407,000
1,440,525
1,253,399
Total reserves at 30 June
Equity Option Reserve
2020
$
2019
$
1,640,525
1,453,399
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.
Earnings per Share
The Group’s basic and diluted EPS are shown below:
Net loss
Basic EPS (cents per share)
Weighted average number of ordinary shares
Diluted EPS (cents per share)
Adjusted weighted average number of ordinary shares,
represented by:
Weighted average number of ordinary shares
Plus:
2020
2019
$3,625,762
$2,895,532
(2.78)
(2.22)
130,238,789
130,238,789
(2.76)
(2.21)
131,318,789
130,747,789
130,238,789
130,238,789
Employee and director share options
1,080,000
509,000
Hexima Limited Annual Report
44
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. SHARE-BASED PAYMENTS
The terms and conditions of the grants for options outstanding at 30 June 2020 are as follows. All options are to
be settled by physical delivery of shares.
Grant date / parties entitled
Number of
instruments
Vesting conditions
Contractual life
of options
Options granted to key management
on 11th December 2015
Options granted to key management
on 11th December 2015
Options granted to key management
on 12th February 2017
1,500,000
Immediate vesting
5 years
1,250,000
Vesting 11th December 2016
5 years
1,250,000
Vesting 31st December 2017
5 years
Options granted to key management
on 12th February 2017
2,325,000
Vesting on earlier of 25% at the
completion of each year post grant
or on completion of deal meeting
specified criteria
Options granted to other personnel
on 1st January 2018
364,000
Vested 1st January 2018
Options granted to other personnel
on 1st January 2018
145,000
Vesting upon successful
completion of various milestones
5 years
5 years
5 years
Options granted to key management
on 1st January 2018
1,125,000
Vesting 31st December 2018
5 years
Options granted to other personnel
on 1st January 2018
Options granted to other personnel
on 15th February 2018
100,000
100,000
Vesting on completion and delivery
of deliverables on 30th June 2019
5 years
Vesting on completion and delivery
of deliverables on 30th June 2019
5 years
Options granted to key management
on 7th July 2018
Options granted to key management
on 1st January 2019
125,000
Vesting 31st December 2019
5 years
1,250,000
Vesting 31st December 2019
5 years
Options granted to key management
on 22nd February 2019
1,000,000
Options granted to key management
on 18th June 2019
5,000,000
250,000 vesting on 31st December
2019 with the remainder vesting
on completion and delivery of
deliverables
Partially vesting on 1st April 2020
with remaining in monthly
increments
Options granted to other personnel
on 15th November 2019
571,000
Immediate vesting
Options granted to key management
on 28th January 2020
1,500,000
Remain as a Director as at 31st
December 2020
Total share options
17,605,000
5 years
10 years
5 years
5 years
Hexima Limited Annual Report
45
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. SHARE-BASED PAYMENTS (continued)
The number and weighted average exercise prices of share options are as follows:
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
2020
$0.39
-
$0.49
$0.50
$0.39
2020
17,407,000
-
(1,873,000)
2,071,000
17,605,000
2019
$0.30
$0.09
$0.20
$0.49
$0.39
Number of
options
2019
10,507,000
(350,000)
(125,000)
7,375,000
17,407,000
Outstanding at 1 July
Exercised during the period
Lapsed during period
Granted during the period
Outstanding at 30 June
The options outstanding at 30 June 2020 have various exercise prices ($0.08, $0.20 and $0.50) and a weighted
average remaining contractual life of 4.2 years.
Measurement of fair values
The fair value of services received in return for share options granted is based on the fair value of share options
granted, measured using the Black Scholes Model. This model is generally used to calculate a theoretical price of
an option on a stock that does not pay dividends using the five key variables of an option's price being the current
spot price, future exercise price, volatility, time to expiration, and the risk-free interest rate.
The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payment
plans issued to directors (key management personnel) in FY20 were;
Non executive Directors; 1,500,000 options with Risk-free rate 0.71%, exercise price of $0.50, fair value at grant
date $0.0367, expected volatility (annualised) 100.00%, expected life of 5 years, and an annualised dividend rate
of 0%.
Management Personnel; 110,000 options with Risk-free rate 0.85%, exercise price of $0.50, fair value at grant
date $0.0368, expected volatility (annualised) 100.00%, expected life of 5 years, and an annualised dividend rate
of 0%.
Hexima Limited Annual Report
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ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18. SHARE-BASED PAYMENTS (continued)
Employee expenses
Current
Share options expense
Total expense recognised as employee costs
19. NOTES TO THE STATEMENT OF CASHFLOW
19a. RECONCILIATION OF CASH
Consolidated
2020
$
187,026
187,026
2019
$
115,278
115,278
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:
2020
$
2019
$
Note
Consolidated
Cash on hand and at bank
11
1,357,647
1,950,569
19b. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the period
Adjustments for:
Interest received and foreign exchange differences –
classified as investing activity and movement in cash
Derivative instrument gain
Depreciation
Equity settled share based payment expense
Consolidated
2020
$
2019
$
(3,625,762)
(2,895,532)
(43,789)
(45,519)
162,359
187,126
(23,129)
-
172,484
115,278
Operating loss before changes to working capital
(3,365,585)
(2,630,899)
Decrease in trade and other receivables and prepayments
Increase in payables and employee benefits
Net cash used in operating activities
71,632
1,194,889
701,393
290,433
(2,099,064)
(1,639,073)
Hexima Limited Annual Report
47
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20. AUDITOR’S REMUNERATION
Audit Services
Auditors of the Company
KPMG Australia
- Audit of the annual financial report
- Review of half year financial statements
Consolidated
2020
$
28,866
19,362
48,228
2019
$
37,950
13,100
51,050
21. 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 and other receivables
R&D Tax Incentive – ATO
GST receivable – ATO
Cash on hand and at bank
Note
12
12
11
Consolidated
2020
$
215,528
1,907,568
82,144
1,357,647
3,562,887
2019
$
114,389
2,129,622
77,803
1,950,569
4,272,383
Cash on hand and at bank include deposits with the National Australia Bank.
Impairment Losses
The Group has receivables past due of $NIL (2019: $NIL) and no impairment losses have been recognised (2019:
$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 rental income where
income is received in advance. Accordingly, risk of impairment losses is minimal.
Liquidity Risk
The Group has trade and other payables and employee provisions with a carrying value of $3,523,216 (2019:
$2,328,542) (notes 14 and 16), 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 16, totals $116,918 (2019: $157,518). The Group also has
convertible notes with a face value of $3,003,900 with accrued interest totalling $197,956 (2019: $1,603,900 and
accrued interest $15,846) (note 15). The Group also has a US Government, Small Business Administration Payroll
Protection Program loan totalling AUD $63,991. This is part of the US government Covid 19 program, part of
which is expected to be forgiven.
There are currently NIL term deposits.
Currency risk
At 30 June 2020, there were no receivables of another currency, and payables of EUR 117,925 (2019: EUR 375),
USD $472 (2019: USD $215,483) and SEK 25,000 (2019: NIL). Of the cash on hand at 30 June 2020, the Group
held USD $25,645 (AUD $36,761) (2019: USD $574,801; AUD equivalent of $810,606) in a US dollar denominated
account.
Hexima Limited Annual Report
48
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
21. FINANCIAL INSTRUMENTS (continued)
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 2019 was 0.85%
(2018: 1.23%).
Fixed rate instruments
In respect of term deposits held during the year a 100 basis points increase in interest rates would have
decreased the loss by $0 (2019: $2,167). A 100 basis points decrease in interest rates would have increased the
loss by $0 (2019: $2,167).
Variable rate instruments
In respect of cash at bank a 100 basis points increase in interest rates would have decreased the loss by $15,918
(2019: $9,877). A 100 basis points decrease in interest rates would have increased the loss by $15,918 (2019:
$9,877).
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 2020.
Fair value hierarchy
No financial instruments are carried at fair value at 30 June 2020, however, as noted above the carrying amounts
approximate fair value in respect of financial assets and liabilities.
22. 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.
Hexima Limited Annual Report
49
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. 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
Mr Michael Aldridge – Chief Business Officer
Non-Executive Directors
Dr. John Bedbrook
Mr GF Dan O’Brien
Mr Justin Yap
Mr Scott Robertson
Mr Steven Skala AO (alternate director appointed 10th March 2020)
Executives
Ms Elisha Larkin, Company Secretary (resigned 21st November 2019)
Ms Helen Molloy, Company Secretary (appointed sole Company Secretary 21st November 2019)
The key management personnel compensation included in ‘employee benefits expense’ is as follows:
Short term employee benefits
Post employment benefits
Share based payments
Other leave benefits
Consolidated
2020
$
682,936
63,104
169,075
41,523
956,638
2019
$
295,136
24,767
109,310
63,776
492,989
Individual Directors and Executive compensation disclosures
The fixed remuneration and superannuation that La Trobe university pay to Dr van der Weerden and Professor
Anderson is not included in this note.
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.
Hexima Limited Annual Report
50
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. RELATED PARTIES (continued)
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:
Key
Management
Personnel
2020
Held at 1
July 2019
Exercised
Lapsed
Granted as
compensation
Net
movement
other
Held at 30
June 2020
Vested and
exercisable at
reporting date
J West
2,500,000
M Anderson
750,000
N van der
Weerden
2,000,000
E Larkin**
140,000
J Bedbrook
2,450,000
GF O’Brien
1,000,000
J Yap
375,000
S Robertson
1,100,000
M Aldridge
5,000,000
S Skala****
H Molloy*
-
-
15,315,000
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
(500,000)
(500,000)
-
-
-
-
-
3,000,000
2,500,000
250,000
125,000
1,500,000
1,250,000
(65,000)
50,000
(125,000)
-
-
(200,000)
-
-
-
-
-
250,000
250,000
250,000
250,000
-
-
-
-
-
-
-
2,500,000
1,250,000
1,250,000
1,000,000
625,000
1,350,000
375,000
350,000
5,000,000
1,250,000
250,000
250,000
250,000
(16,000)
60,000
31,000
75,000
75,000
(1,281,000)
1,610,000
156,000
15,800,000
8,425,000
Key
Management
Personnel
2019
Held at 1
July 2018
Exercised
Lapsed
J West
2,000,000
-
M Anderson
1,000,000
(250,000)
N van der
Weerden
E Larkin
2,000,000
140,000
J Bedbrook
2,200,000
G Black***
GF O’Brien
J Yap
S Robertson *
M Aldridge *
750,000
750,000
-
-
-
-
-
-
-
-
-
-
-
Granted as
Compensation
500,000
-
-
-
250,000
Net
movement
other
Held at 30
June 2019
Vested and
exercisable at
reporting date
-
-
-
-
-
2,500,000
2,000,000
750,000
500,000
2,000,000
1,500,000
140,000
90,000
2,450,000
1,200,000
-
-
-
-
-
(125,000)
-
(625,000)
-
-
-
-
-
250,000
375,000
-
-
1,000,000
375,000
1,000,000
100,000
1,100,000
5,000,000
-
5,000,000
-
750,000
125,000
100,000
-
8,940,000
(250,000)
(125,000)
7,375,000
(525,000)
15,315,000
6,265,000
*Scott Robertson was appointed a Director on 21 November 2018, and Michael Aldridge appointed on 21 May
2019. Helen Molloy was appointed Company Secretary on 21 November 2020.
**Elisha Larkin departed the Company on 21 November 2019.
***G. Black departed the Company on 17 July 2018.
****Steven Skala was appointed as Alternate Director on 10 March 2020.
Hexima Limited Annual Report
51
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. RELATED PARTIES (continued)
Movement in shares
The movement during the reporting period in the number of ordinary shares in the Company held directly,
indirectly, or beneficially by each key management personnel, including their related parties, is as follows:
Held at
1 July 2019
Net
movement
other
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2020
2020
Key Management
Personnel
Jonathan West
4,000,000
Nicole van der
Weerden
214,400
-
-
Elisha Larkin**
115,142
(115,142)
Marilyn Anderson
4,061,096
GF Dan O’Brien
15,035,894
John Bedbrook
Gordon Black
Justin Yap
Scott Robertson*
Michael Aldridge*
Steven Skala****
Helen Molloy*
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
6,667,947
32,000
23,926,532
6,584,805
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
214,400
-
4,061,096
15,035,894
500,000
-
-
-
-
6,667,947
32,000
30,511,337
Held at
1 July 2018
Net
movement
other
Purchases
Received on
exercise of
options
Sales
Held at
30 June 2019
2019
Key Management
Personnel
Jonathan West
Nicole van der
Weerden
Elisha Larkin
4,000,000
214,400
115,142
Marilyn Anderson
3,811,096
GF Dan O’Brien
15,035,894
John Bedbrook
500,000
Gordon Black***
Justin Yap
Scott Robertson*
Michael Aldridge*
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
214,400
115,142
4,061,096
15,035,894
500,000
-
-
-
-
23,926,532
Dato Lim Sen Yap, a major shareholder (10.86% shareholding as of 30 June 2020), became a related party on the
17th July 2018 when his son Justin Yap became a director of the Company.
23,676,532
250,000
-
-
-
*Scott Robertson was appointed a Director on 21 November 2018, and Michael Aldridge appointed on 21 May
2019. Helen Molloy was appointed Company Secretary on 21 November 2020.
**Elisha Larkin departed the Company on 21 November 2019.
***G. Black departed the Company on 17 July 2018.
****Steven Skala was appointed as Alternate Director on 10 March 2020.
Hexima Limited Annual Report
52
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
23. 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 2020, amounts (including GST) totalling $3,825,043 (2019: $3,133,808) 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 2020 were $2,419,228 (exclusive of GST) (2019: $1,252,171).
24. OPERATING LEASES
Leases as lessor
Lease rentals are receivable as follows:
Less than one year
Between one and five years
25. GROUP ENTITIES
Parent Entity
Hexima Limited
Significant subsidiaries
Hexima Holdings Limited
Pharmagra Pty Ltd
Hexima Operations USA, Inc
2020
$
391,868
685,832
1,077,700
2019
$
300,000
-
300,000
Country of
incorporation
Australia
Australia
Australia
USA
Ownership Interest
2020
2019
100%
100%
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 2020.
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 $1,113,358 at 30 June 2020, which comprises the Hexima glasshouse located
at La Trobe University.
Hexima Operation USA, Inc was incorporated in the USA on 23 May 2019 and has a net asset of $61,887 as at 30
June 2020.
Hexima Limited Annual Report
53
ABN 64 079 319 314
HEXIMA LTD NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
26. PARENT ENTITY DISCLOSURES
Company
2020
$
2019
$
(3,817,835)
(2,765,331)
-
-
(3,817,835)
(2,765,331)
3,595,983
4,314,245
4,871,569
5,750,803
6,553,716
3,802,242
6,553,716
3,802,242
61,006,378
61,586,496
1,640,525
873,280
(64,329,050)
(60,511,215)
(1,682,147)
1,948,561
Result of the Parent Entity
Loss for the period
Other Comprehensive income
Total Comprehensive loss 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
Parent entity contingent liabilities
Refer to note 22.
27. SUBSEQUENT EVENTS
Subsequent to year end, the Group will complete a Placement of $5.5million during September 2020. The
placement will trigger the conversion of the convertible notes on issue. A Public Offering is planned for
November 2020 where the capital raise is expected to be $3million.
Other than the matters noted above, 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 2020.
Hexima Limited Annual Report
54
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 22 to 54, are in accordance with
the Corporations Act 2001, including:
i)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its performance for
the financial year ended on that date;
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b) There are reasonable grounds to believe that the Company will be able pay its debts as and when they
become due and payable.
2) The Directors 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 this 30th day of September 2020.
Professor Jonathan West
Non-Executive Chairman
Dr Nicole van der Weerden
Executive Director and Chief Executive Officer
Hexima Limited Annual Report
55
ABN 64 079 319 314
Independent Auditor’s Report
To the shareholders of Hexima Limited
Opinion
We have audited the Financial Report of
Hexima Limited (the Company).
In our opinion, the accompanying
Financial Report of the Company is in
accordance with the Corporations Act
2001, including:
• giving a true and fair view of the
Group's financial position as at 30 June
2020 and of its financial performance for
the year ended on that date; and
• complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
• Consolidated statement of financial position as at 30 June
2020
• Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of cash
flows for the year then ended
• Notes including a summary of significant accounting
policies
• Directors' Declaration.
The Group consists of Hexima Limited (the Company) and
the entities it controlled at the year end or from time to
time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
Code.
Material uncertainty related to going concern
We draw attention to Note 2(f), “Going Concern” in the Financial Report. The conditions disclosed in Note
2(f), indicate a material uncertainty exists that may cast significant doubt on the Group’s ability to continue
as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal
course of business, and at the amounts stated in the Financial Report. Our opinion is not modified in
respect of this matter.
56
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.
Other Information
Other Information is financial and non-financial information in Hexima Limited’s annual reporting which is
provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the
Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
• implementing necessary internal control to enable the preparation of a Financial Report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate the
Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
• to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
• to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of the Financial Report.
57
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar3.pdf.
This description forms part of our Auditor’s Report.
58
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Hexima Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Hexima Limited for the
financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
59
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme approved
under Professional Standards
Legislation.