IMAGION BIOSYSTEMS LIMITED
ANNUAL REPORT – FOR THE YEAR ENDED 31 DECEMBER 2018
For personal use only
TABLE OF CONTENTS
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit & 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
3
4
19
20
21
22
23
24
46
47
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Imagion Biosystems Limited
Directors’ report
31 December 2018
CORPORATE DIRECTORY
DIRECTORS
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Ms. Bronwyn Le Grice
Dr John Hazle
COMPANY SECRETARY
Ms. Jovanka Naumoska
Executive Chairman/President
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Resigned 26 April 2018
Appointed 26 April 2018
Appointed 30 July 2018
REGISTERED OFFICE
c/o- Holding Redlich
Level 8, 555 Bourke Street
MELBOURNE VIC 3000 AUSTRALIA
PRINCIPAL PLACE OF BUSINESS
10355 Science Center Drive
Suite 210
SAN DIEGO CA 92121 USA
SHARE REGISTER
Boardroom Pty Limited
Level 12, 225 George Street
SYDNEY NSW 2000 AUSTRALIA
AUDITOR
RSM Australia Partners
Level 21, 55 Collins Street
MELBOURNE VIC 3000 AUSTRALIA
AUSTRALIAN LEGAL ADVISOR
Holding Redlich
Level 8, 555 Bourke Street
MELBOURNE VIC 3000 AUSTRALIA
UNITED STATES LEGAL ADVISOR
The Grafe Law Office, PC
PO BOX 2689
Corrales, NM 87048
UNITED STATES OF AMERICA
STOCK EXCHANGE
Imagion Biosystems Limited shares are list on the Australian Securities Exchange (ASX Code: IBX).
The directors present their report, together with the financial statements, on the consolidated entity (referred to
hereafter as the 'consolidated entity') consisting of Imagion Biosystems Limited (referred to hereafter as the
'Company' or 'parent entity' or ‘Imagion’) and the entities it controlled at the end of, or during, the year ended 31
December 2018.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Directors
The following persons were directors of Imagion Biosystems Limited during the whole of the financial year and up to
the date of this report, unless otherwise stated:
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Ms. Bronwyn Le Grice
Dr John Hazle
Executive Chairman President
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Resigned 26 April 2018
Appointed 26 April 2018
Appointed 30 July 2018
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of:
Nanotechnology;
Biotechnology;
Cancer Diagnostics; and
Superparamagnetic Relaxometry.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
Revenue and Other Income comprised interest income, and sales of nanoparticles. The Company markets
nanoparticles to customers through its website and expects to continue to do so, though revenue from this activity is
not material and not expected to be material in the future.
Operating loss of $8,340,013 was materially in line with projections.
In 2018, the Company successfully raised $4,285,904 in stock to prepare the Company’s technology for human trials.
Significant changes in the state of affairs
Mr Peter Di Chiara resigned as a director on 26 April 2018 and Ms Bronwyn Le Grice was appointed a director at the
same date. Dr John Hazle was appointed a director on 30 July 2018. Dr Hazle has been an adviser to the board and
the Company for several years. His appointment as a Director was subject to clearance from the MD Anderson
Cancer Center Conflict of Interest Committee. Dr Hazle is the Professor and Chair of a department at the MD
Anderson Center.
On 6 June 2018, the Company issued an additional 10,529,053 shares (approximately 5% of ordinary shares) to the
University of Texas MD Anderson Cancer Center (MDACC), as payment for the ongoing research being conducted
by MDACC.
On 6 June 2018, the Company granted performance rights to the following directors:
Director
Bronwyn Le Grice
Jovanka Naumoska
Mark Van Asten
David Ludvigson
Michael Harsh
No of performance shares
150,000
50,000
50,000
50,000
50,000
Start date
6 June 2019
6 June 2019
6 June 2019
6 June 2019
6 June 2019
Vesting date
26 April 2020
6 June 2020
6 June 2020
6 June 2020
6 June 2020
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Significant changes in the state of affairs (continued)
The terms of these performance shares are set out in the accompanying financial statements. On 6 June 2018, the
Company issued 3,000,000 options to a 3rd party which has provided general advisory and equity raising services.
The options vested upon issue and expire on 30 June 2021, with a strike price of 20c.
The Company completed a rights issue that ultimately raised $4,285,904 (before costs) in two tranches:
• $411,524 raised on 24 October 2018, through a non-renounceable rights issue to existing shareholders;
and
• $3,874,380 raised on 28 November 2018, through a placement to sophisticated and professional investors.
As part of the costs of the capital raising, the Company issued 34,420,000 options to the lead manager on 28
November 2018. These options vested immediately at a strike price of $0.06 and expire 24 months from the date of
issue.
On 17 December 2018 the Company announced the signing of a master service agreement with US and Australian
based company, Planet Innovation, to assist in the commercialisation of Imagion’s Magsense™ technology. There
were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
No other matters or circumstances have arisen since 31 December 2018 that has significantly affected, or may
significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's
state of affairs in future financial years.
Likely developments and expected results of operations
Management expects spending to remain constant in future periods except for contracts and collaborations
agreements to advance our progress toward human trials. These agreements would include, manufacturing for our
formulated nanoparticle, design and prototype production of our instrument, clinical consultants among other things.
Environmental Regulation
The Consolidated Entity is not subject to any significant environment regulation under Australian Commonwealth or
State Law.
Information on Directors
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
device
through
products
development
Mr. Robert Romeo Proulx
Executive Chairman/President
- Master of Arts and Bachelor of Arts, The State University of
New York at Albany;
- Executive Master of Business Administration, Penn State
Smeal College of Business.
Robert has over 25 years’ experience bringing life science and
medical
and
commercialisation and joined the predecessor company, Senior
Scientific as President and Chief Operating Officer.
Quantapore, Inc.
PGXL Diagnostics Laboratories, Inc.
(2009 – 2017)
None
352,500 Shares
Nil
8,700,000 performance rights
8,700,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s loan term
incentive plan and will vest into an ordinary share subject to
achievement of prescribed performance conditions.
for 24 months
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Information on Directors (continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Mr. Michael John Harsh
Non-Executive Director
- Bachelor’s degree in Electrical Engineering, Marquette
University
With almost 36 years’ service to GE, mostly with GE Healthcare
on his résumé, Michael Harsh is extraordinarily fluent in the
complex processes of
transforming high-potential platform
technologies into successful medical diagnostic products.
ENDRA Life Sciences (2016 – present);
FloDesign Sonics (2015 – present);
EmOpti, Inc. (2015 – present);
Nil
Audit and Risk
Nil
Nil
200,000 performance rights
150,000 performance rights which are subject to ASX escrow
from official quotation. The
restrictions
Performance rights are issued under the company’s long-term
incentive plan and will each vest into an ordinary share 24 months
after official quotation
for 24 months
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
Mr. David Gerald Ludvigson
Non-Executive Director
- Bachelor of Science in Accounting, University of Illinois
- Masters in Accounting Science, University of Illinois.
David is President and CEO of Nanomix, Inc, a mobile diagnostics
company. Previously, David held executive leadership positions
with Nanogen, Matrix Pharmaceutical, IDEC Pharmaceuticals,
MIPS Computer Systems, and other high-tech companies. He
began his career at Price Waterhouse.
China Stem Cells Ltd (2010-present);
Nanōmix Inc. (2014-present).
Nil
Audit and Risk Committee
Nil
Nil
200,000 performance rights
150,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s long-term
incentive plan and will each vest into an ordinary share 24 months
after official quotation
for 24 months
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Information on Directors (continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
in Applied Corporate Governance,
Ms. Jovanka Naumoska
Non-Executive Director
- Bachelor of Science degree, University of Wollongong;
- Bachelor of Law degree and the Graduate Diploma in Legal
Practice, University of Wollongong;
-Graduate Diploma
Governance Institute of Australia.
Jovanka Naumoska is an Australian-qualified corporate lawyer
with board-level experience in legal issues pertaining to medical
imaging technology. Jovanka has served as Senior Corporate
Lawyer and Policy Advisor for Australian Nuclear Science and
Technology Organisation (ANSTO), and currently holds the
position of Manager, Business Excellence.
Security Matters Limited
Nil
Remuneration and Nomination Committee
Nil
Nil
200,000 performance rights
150,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s long-term
incentive plan and will each vest into an ordinary share 24 months
after official quotation.
for 24 months
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
Mark Gerald Van Asten
Non-Executive Director
Bachelor of Science, University of New South Wales
As the Managing Director and founder of Diagnostic Technology
Pty Ltd, Mark has been responsible for the development,
introduction, and mainstream healthcare adoption of technologies
throughout Australia and Asia. Mark has also held several director-
level business development positions with US and Australian
diagnostics corporations.
Nil
Nil
Audit and Risk, Remuneration and Nomination
Nil
Nil
200,000 performance rights
150,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s long-term
incentive plan and will each vest into an ordinary share 24 months
after official quotation
for 24 months
50,000 Performance Rights each will automatically vest into one
Share on the vesting date of 6 June 2020.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Information on Directors (continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
preparation,
Ms. Bronwyn le Grice
Non-Executive Director
- Master’s Degree, Commercial Law University of Melbourne;
- Bachelor’s Degree, Communications, Marketing, General
Management, Business Law and Human Resources The
University of Western Australia.
Bronwyn has over 15 years senior executive experience in health
technology spanning venture capital, transaction management,
capital raising, corporate development, investor relations and
industry advocacy. She is currently Founder & CEO of
ANDHealth, providing Australia’s only accelerator programs
focused specifically on de-risking and commercialising
technologies in digital health. Previously Bronwyn held the role of
Investment Director BioScience Managers and has advised both
public and private companies in Australia and New Zealand on
deal
investor
engagement. Bronwyn is a Member of Women on Boards and the
Australian Institute of Company Directors. In addition, she holds
a number of advisory roles, including the RMIT University Health
and BioMedical Sector Expert Research Advisory Group,
Swinburne University Innovation Precinct Advisory Board, La
Trobe University Digital Health Advisory Committee, PCH
Alliance Global Innovation Task Force and Australia New Zealand
Leadership Forum Health Technologies Sector Advisory Group.
ANDHealth Limited
None
None
Nil
Nil
150,000 performance rights
150,000 Performance Rights each will automatically vest into one
Share on the vesting date of 26 April 2020.
structuring,
execution
and
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Information on Directors (continued)
Name:
Title:
Qualifications:
Experience & Expertise:
Other Current Directorships:
Former Directorships (last 3 years):
Membership of Committees
Interest in Shares:
Interest in Options:
Interest in Rights:
Contractual rights to Shares:
Dr John Hazle
Non-Executive Director
- Bachelors, Physics University of Kentucky;
- Master’s Degree, Medical Physics University of Kentucky;
- Ph.D. Biophysics The University of Texas.
Dr. Hazle is a medical physicist with over 25 years of experience.
He is board-certified and licensed in Texas for both therapeutic
and diagnostic medical physics. His primary research interests
are image-guided therapy, pre-clinical imaging and novel early
detection technologies. Dr. Hazle has been the Director of the
NCI funded Small Animal Cancer Imaging Research Facility and
was the Director of the NCI funded Experimental Cancer Imaging
Research Program.
None
None
None
Nil
Nil
150,000 performance rights
150,000 performance rights which are subject to ASX escrow
restrictions
from official quotation. The
Performance rights are issued under the company’s long-term
incentive plan and will each vest into an ordinary share 24 months
after official quotation.
for 24 months
Other current directorships quoted above are current directorships for listed entities only and excludes directorships
of all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Ms. Jovanka Naumoska has held the role of Company Secretary since 6 December 2016. She holds a Graduate
Diploma in Applied Corporate Governance from the Governance Institute of Australia as well as Bachelor of Science
degree from the University of Wollongong, Bachelor of Law degree and the Graduate Diploma in Legal Practice, also
from the University of Wollongong.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held
during the year ended 31 December 2018, and the number of meetings attended by each director were:
Full Board Audit & Risk Management
Committee
Remuneration &
Nomination Committee
Attended
Number of
meetings
eligible to
attend
Attended
Number of
meetings
eligible to
attend
Attended
5
3
5
5
5
5
1
1
1
2
2
2
1
1
2
2
1
1
1
1
1
1
Number of
meetings
eligible to
attend
5
3
5
5
5
5
2
2
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara*
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Dr. John Hazle***
Ms. Bronwyn Le Grice **
*resigned on 26 April 2018
**appointed on 26 April 2018
***appointed on 30 July 2018
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated
entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly, including all directors.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
principles used to determine the nature and amount of remuneration
details of remuneration
service agreements
share-based compensation
additional information
additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement
of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best
practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the
following key criteria for good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board has determined the remuneration arrangements for the directors and executives with the appointment of
the Nomination and Remuneration Committee they will be responsible for determining and reviewing remuneration
arrangements for its directors and executives.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Principles used to determine the nature and amount of remuneration (continued)
The performance of the consolidated entity depends on the quality of its directors and executives. The remuneration
philosophy is to attract, motivate and retain high performance and high-quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered
that it should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and del
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive
director remuneration is separate.
Non-executive director’s remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice
from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate
and in line with the market.
Shareholders approve the maximum aggregate remuneration for non-executive directors at the Annual General
Meeting on 31 May 2018. The Board recommends the actual payments to directors and shareholders are responsible
for ratifying any recommendations, if appropriate. ASX listing rules require the aggregate non-executive director’s
remuneration be determined periodically by a general meeting. The aggregate approved remuneration for non-
executive directors is $250,000.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
health care benefits
The combination of these comprises the executive's total remuneration.
Fixed remuneration, consisting of base salary and non-monetary benefits, are reviewed annually by the Nomination
and Remuneration Committee based on individual and business unit performance, the overall performance of the
consolidated entity and comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance
indicators ('KPI's') being achieved.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Principles used to determine the nature and amount of remuneration (continued)
The long-term incentives ('LTI') include share-based payments. Shares are awarded to executives over a period of
three years based on long-term incentive measures. These include increase in shareholders’ value relative to the
entire market and the increase compared to the consolidated entity's direct competitors.
Consolidated entity performance and link to remuneration
Remuneration for certain individuals is directly linked to the performance of the consolidated entity. A portion of cash
bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining portion
of the cash bonus and incentive payments are at the discretion of the Nomination and Remuneration Committee.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following
tables.
The key management personnel of the consolidated entity consisted of the following directors of Imagion Biosystems
Limited:
Executive Directors:
Robert Romeo Proulx – Executive Chairman/President
Other Key Management:
Giulio Paciotti – Vice President – Research & Development, resigned 1 July 2018
Brian Conn – Chief Financial Officer
Details of Remuneration
2018
Non-Executive Directors
Mr. Peter Di Chiara*
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Ms. Bronwyn Le Grice**
Dr John Hazle ***
Executive Directors
Robert Romeo Proulx
Other Key Management
Giulio Paciotti****
Brian Conn
Total
Cash
Salary &
Fees
$
2,576
12,500
12,500
12,500
12,500
8,333
12,500
347,942
272,000
200,480
893,831
Short Term Benefits
Share-Based Payments
Cash
Bonus
Non-
Monetary
$
$
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
20,895
23,815
23,815
23,815
23,815
10,864
23,019
18,319
11,315
11,315
11,315
11,315
2,531
10,519
610,096
958,038
(64,386)
119,214
207,614
319,694
741,553
1,635,384
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*
**
***
****
Represents remuneration from 1 January 2018 to 26 April 2018.
Represents remuneration from 26 April 2018 to 31 December 2018.
Represents remuneration from 30 July 2018 to 31 December 2018.
Represents remuneration from 1 January 2018 to 1 July 2018.
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Imagion Biosystems Limited
Directors’ report
31 December 2018
Details of Remuneration (continued)
Short Term Benefits
Share-Based Payments
2017
Non-Executive Directors
Mr. Peter Di Chiara*
Mr. Michael John Harsh**
Mr. David Gerald Ludvigson***
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Executive Directors
Robert Romeo Proulx
Other Key Management
Giulio Paciotti
Brian Conn
Total
Cash
Salary &
Fees
$
5,178
5,178
5,178
5,178
5,178
309,675
238,035
176,458
750,058
Cash
Bonus
Non-
Monetary
$
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
Equity-
settled
shares
$
Equity-
settled
options
$
Total
$
10,859
10,859
10,859
10,859
10,859
5,681
5,681
5,681
5,681
5,681
329,504
639,179
64,386
64,386
302,421
240,844
486,681
1,236,739
-
-
-
-
-
-
-
-
-
*
**
***
Represents remuneration from 28 April 2017 to 31 December 2017.
Represents remuneration from 28 February 2017 to 31 December 2017.
Represents remuneration from 8 March 2017 to 31 December 2017.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Name:
Title:
Agreement Commenced
Term of Agreement
Details
Name:
Title:
Agreement Commenced
Term of Agreement
Details
Mr. Robert Romeo Proulx
Executive Chairman/President
1 May 2017
3 years, unless extended by mutual agreement
- Base salary of $US200,000 per annum, to be
the Nomination and
reviewed annually by
Remuneration Committee;
- Entitled to up to 8,700,000 Shares under the Long-
Term Incentive Plan (subject to certain milestones
being met) as an initial grant upon Listing;
12 months termination notice by either party,
-
Giulio Paciotti (resigned on 15 June 2018)
Vice President Research & Development
1 May 2017
3 years, unless extended by mutual agreement
- Base salary of $US165,000 per annum, to be
the Nomination and
reviewed annually by
Remuneration Committee.
- Entitled to up to 1,700,000 Shares under the Long-
Term Incentive Plan (subject to certain milestones
being met) as an initial grant upon Listing.
6 months termination notice by either party.
-
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Directors’ report
31 December 2018
Service agreements (continued)
Name:
Title:
Agreement Commenced
Term of Agreement
Details
Brian Conn
Chief Financial Officer
1 May 2017
3 years, unless extended by mutual agreement
- Base salary of $US120,000 per annum, to be
the Nomination and
reviewed annually by
Remuneration Committee.
- Entitled to up to 1,700,000 Shares under the Long-
Term Incentive Plan (subject to certain milestones
being met) as an initial grant upon Listing.
6 months termination notice by either party
-
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of Shares
There were no shares issued to Directors and other key management personnel as part of compensation during the
year ended 31 December 2018.
Options
There were no options issued to Directors and other key management personnel as part of compensation during the
year ended 31 December 2018.
Performance Rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of Directors
and other key management personnel in this financial year or future reporting are as follows:
Name
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara*
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Ms. Browyn Le Grice
Dr John Hazle**
Mr. Mark Gerald Van Asten
Giulio Paciotti
Brian Conn
Number of
rights
granted
8,700,000
150,000
150,000
50,000
150,000
50,000
150,000
50,000
150,000
150,000
150,000
50,000
1,700,000
1,700,000
Grant date
Expiry date
Exercise
price $
Fair value
per right at
grant date
22-Jun-17
22-Jun-17
22-Jun-17
6-Jun-18
22-Jun-17
6-Jun-18
22-Jun-17
6-Jun-18
6-Jun-18
22-Jun-17
22-Jun-17
6-Jun-18
22-Jun-17
22-Jun-17
22-Jun-19
22-Jun-19
22-Jun-19
6-Jun-20
22-Jun-19
6-Jun-20
22-Jun-19
6-Jun-20
26-Apr-20
22-Jun-19
22-Jun-19
6-Jun-20
22-Jun-19
22-Jun-19
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
0.16
0.16
0.16
0.06
0.16
0.06
0.16
0.06
0.06
0.16
0.16
0.06
0.16
0.16
*
**
Resigned 26 April 2018. The performance rights were forfeited upon resignation.
Appointed 30 July 2018. The performance rights were granted to Dr Hazle when he was an advisor to the
Company.
14
For personal use only
Imagion Biosystems Limited
Directors’ report
31 December 2018
Share-based compensation (continued)
Performance rights granted carry no dividend or voting rights.
Additional information
The earnings of the Consolidated Entity for the year ended 31 December 2017 is summarised below:
Revenue
Net loss before tax
Net loss after tax
2018
2017
371,489
8,340,013
8,340,013
339,057
7,794,602
7,794,602
The factors that are considered to affect total shareholders return (‘TSR’) are summarised below:
Share Price at start of financial year ($)
Share price at financial year end ($)
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Additional disclosures relating to key management personnel
2018
0.110
0.030
(0.0378)
(0.0378)
2017
0.200
0.110
(0.0507)
(0.0507)
Shareholding
The number of shares in the company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Name
Balance
start of year
Received
Remuneration
Additions
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara
Mr. Michael John Harsh
Mr. David Gerald Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Ms. Browyn Le Grice
Dr John Hazle
Giulio Paciotti
Brian Conn
Total
235,000
-
-
-
-
-
-
-
-
-
235,000
-
-
-
-
-
-
-
-
-
-
-
117,500
-
-
-
-
-
-
-
-
250,000
367,500
Disposals Balance at
the end of
the year
352,500
-
-
-
-
-
-
-
-
250,000
602,500
-
-
-
-
-
-
-
-
-
-
-
15
For personal use only
Imagion Biosystems Limited
Directors’ report
31 December 2018
Additional disclosures relating to key management personnel (continued)
Performance Rights Holding
The number of performance shares in the company held during the financial year by each Director and other
members of key management personnel of the Consolidated Entity, including their personally related parties, is set
out below:
Name
Mr. Robert Romeo Proulx
Mr. Peter Di Chiara*
Mr. Michael John Harsh
Mr. David Gerald
Ludvigson
Ms. Jovanka Naumoska
Mr. Mark Gerald Van Asten
Ms. Browyn Le Grice
Dr John Hazle**
Giulio Paciotti***
Brian Conn
Total
Balance start
of year
8,700,000
150,000
150,000
150,000
150,000
150,000
-
150,000
1,700,000
1,700,000
13,000,000
Granted
-
-
50,000
50,000
50,000
50,000
150,000
-
-
-
350,000
Vested Expired/forfeit
ed/other
-
(150,000)
-
-
-
-
-
-
Balance at
end of year
8,700,000
-
200,000
200,000
-
-
-
-
-
-
-
-
-
-
(1,700,000)
-
(1,850,000)
200,000
200,000
150,000
150,000
-
1,700,000
11,500,000
*
**
***
Resigned 26 April 2018. The performance shares were forfeited upon resignation.
Appointed 30 July 2018. The performance rights were granted to Dr Hazle when he was an adviser to the
Company
Resigned 1 July 2018. The performance shares were forfeited on resignation.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Imagion Biosystems Limited under option at the date of this report are as follows:
Grant date
Expiry date
Exercise
Number
price under option
6 June 2018
28 November 2018
30 June 2021
27 November 2020
$0.20
$0.06
3,000,000
34,700,000
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share
issue of the company or of any other body corporate.
Indemnity and insurance of officers
The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the company paid a premium in respect of a contract to insure the directors and executives
of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance
prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of
the company or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the
company or any related entity.
16
For personal use only
Imagion Biosystems Limited
Directors’ report
31 December 2018
Proceedings on behalf of the company
No person has applied to the Court under Section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of
taking responsibility on behalf of the company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the
auditor are outlined in note 14 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by
another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001.
Proceedings on behalf of the company (continued)
The directors are of the opinion that the services as disclosed in note 15 to the financial statements do not
compromise the external auditor's independence requirements of the Corporations Act 2001 for the following
reasons:
● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
● none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board,
including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for
the company, acting as advocate for the company or jointly sharing economic risks and rewards.
Officers of the company who are former partners of RSM Australia Partners
There are no officers of the company who are former partners of RSM Australia Partners.
Rounding of amounts
The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with
that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out immediately after this directors' report.
17
For personal use only
Imagion Biosystems Limited
Directors’ report
31 December 2018
Auditor
RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Robert Proulx
Director
29 March 2019
18
For personal use only
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Imagion Bio Systems Limited for the year ended 31 December
2018, I declare that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Dated: 29 March 2019
Melbourne, Victoria
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
19
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Imagion Biosystems Limited
Consolidated Statement of Profit and Loss and Other Comprehensive Income
For the year ended 31 December 2018
Revenue and other income
4
371,489
339,057
Note
2018
$
2017
$
Expenses
Research & development costs
Employee salaries and expenses
Professional fees
General expenses
Share based payments expense
Depreciation
Foreign exchange gain/(loss)
Interest
Finance costs
Loss before income tax expense
Income tax expense
Loss after income tax expense
Other comprehensive income
Items that may be reclassified subsequently to profit or
loss
Foreign currency translation reserve
Income tax relating to these items
Other comprehensive income/(loss) for the year, net of
tax
(3,295,676)
(3,128,280)
(525,302)
(1,148,459)
(837,133)
(213,791)
444,892
-
(7,753)
(8,340,013)
(2,155,714)
(2,100,536)
(1,084,342)
(1,026,512)
(623,927)
(206,834)
(529)
(858,583)
(76,682)
(7,794,602)
-
(8,340,013)
-
(7,794,602)
(411,997)
61,575
-
-
(411,997)
61,575
Total comprehensive income/(loss) for the year
(8,752,010)
(7,733,027)
Loss attributable to:
Owners of Imagion Biosystems Limited
Loss per share attributable to the owners of
Imagion Biosystem Limited
Basic loss per share
Diluted loss per share
(8,752,010)
(7,733,027)
Cents
Cents
20
20
(0.0378)
(0.0378)
(0.0507)
(0.0507)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
20
For personal use only
Imagion Biosystems Limited
Consolidated Statement of Financial Position
As at 31 December 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liability
Employee benefits
Total current liabilities
Non-current liabilities
Lease liability
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
2018
$
2017
$
5
6
7
8
4,367,097
140,481
408,021
4,915,599
6,872,829
8,704
387,690
7,269,223
271,860
271,860
372,103
372,103
5,187,459
7,641,326
1,187,992
36,082
75,723
1,299,797
564,663
30,684
44,094
639,441
18,434
18,434
49,329
49,329
1,318,231
688,770
3,869,228
6,952,556
10
11
12
33,182,325
1,899,938
(31,213,035)
28,686,708
1,138,870
(22,873,022)
3,869,228
6,952,556
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
21
For personal use only
Imagion Biosystems Limited
Consolidated Statement of Changes in Equity
As at 31 December 2018
Consolidated
Balance at 1 January 2017
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity
Cost of contributions of equity
Share-based payments
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total Equity
$
2
-
-
-
453,368
(15,078,420)
(14,625,050)
-
61,575
(7,794,602)
-
(7,794,602)
61,575
61,575
(7,794,602)
(7,733,027)
32,610,259
(3,923,553)
-
-
-
623,927
-
-
-
32,610,259
(3,923,553)
623,927
Balance at 31 December 2017
28,686,708
1,138,870
(22,873,022)
6,952,556
Consolidated
Balance at 1 January 2018
Issued
Capital
$
Reserves
$
Accumulated
Losses
$
Total Equity
$
Loss after income tax expense for the year
Other comprehensive income for the year, net of tax
28,686,708
-
-
1,138,870
-
(411,997)
(22,873,022)
(8,340,013)
-
6,952,556
(8,340,013)
(411,997)
Total comprehensive income for the year
-
(411,997)
(8,340,013)
(8,752,010)
Transactions with owners in their capacity as owners:
Contributions of equity
Cost of contributions of equity
Share-based payments
5,146,705
(651,088)
-
-
-
1,173,065
-
-
-
5,146,705
(651,088)
1,173,065
Balance at 31 December 2018
33,182,325
1,899,938
(31,213,035)
3,869,228
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
22
For personal use only
Imagion Biosystems Limited
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Consolidated
Note
2018
$
2017
$
Cash flows from operating activities
Receipts from customers (inclusive of sales and other taxes)
Payments to suppliers and employees (inclusive of sales and other taxes)
Interest received
Interest and other finance costs paid
154,457
(6,786,076)
67,078
(2,669)
125,158
(7,017,667)
51,213
(136,089)
Net cash from operating activities
19
(6,567,210)
(6,977,385)
Cash flows from investing activities
Payment for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Lease repayments
Proceeds from financing arrangements
Proceeds from the issue of shares
Share issue costs
Proceeds from note issue
Repayment of notes
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(83,565) (369,606)
(83,565) (369,606)
(128,493)
-
(99,294)
213,375
4,285,884 18,208,278
(1,109,420)
(54,189)
81,169
-
- (3,108,683)
4,103,202 14,185,425
(2,547,573)
6,872,829
41,841
6,838,434
27,641
6,754
Cash and cash equivalents at the end of the financial year
4,367,097
6,872,829
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
23
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by
the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from 1 January 2018. The standard introduced new classification and
measurement models for financial assets and financial liabilities.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 1 January 2018. The standard provides a single comprehensive
model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict
the transfer of promised goods or services to customers at an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based
revenue recognition model with a measurement approach that is based on an allocation of the transaction price.
There is currently no impact on the consolidated entity when adopting both AASB 9 and AASB 15 and therefore no
subsequent adjustments were necessary.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business. As
disclosed in the financial statements, the consolidated entity incurred a loss of $8,340,013, and had net cash outflows
from operating activities of $6,567,210 for the year ended 31 December 2018. The consolidated entity is dependent
on the need for additional funding to cover ongoing product development and has forecast losses for the next
financial year.
These factors indicate a material uncertainty which may cast significant doubt as to whether the consolidated entity
will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report.
The Directors believe that there are reasonable grounds to believe that the consolidated entity will be able to continue
as a going concern after considering the following factors:
- The Directors are confident that additional funds can be raised through further capital raisings to support
ongoing research and development activities;
- The Company successfully raised $4,285,904 (before costs) during October and November 2018.
Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it
is appropriate to adopt the going concern basis in the preparation of the financial report.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or
liabilities that might be necessary if the consolidated entity does not continue as a going concern.
24
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations
Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The
areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements, are disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated
entity only. Supplementary information about the parent entity is disclosed in note 16.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Imagion Biosystems
Limited ('company' or 'parent entity') as at 31 December 2018 and the results of all subsidiaries for the year then
ended. Imagion Biosystems Limited and its subsidiaries together are referred to in these financial statements as the
'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an
entity when the consolidated entity 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 to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity
are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership
interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or
loss and other comprehensive income, statement of financial position and statement of changes in equity of the
consolidated entity. Losses incurred by the consolidated entity are attributed to the non-controlling interest in full,
even if that results in a deficit balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities
and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in
equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any
investment retained together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Imagion Biosystems Limited's functional and
presentation currency.
25
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the
average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting
foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve
in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed
of.
Revenue recognition
The consolidated entity recognises revenue as follows:
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods,
which is generally at the time of delivery.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities
attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied
when the assets are recovered, or liabilities are settled, based on those tax rates that are enacted or substantively
enacted, except for:
●
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability
in a transaction that is not a business combination and that, at the time of the transaction, affects neither the
accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures,
and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date.
Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will
be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised
to the extent that it is probable that there are future taxable profits available to recover the asset.
26
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same
taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current
classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified
as non-current.
A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating
cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period;
or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.
All other liabilities are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value. For the statement of cash flows presentation
purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current
liabilities on the statement of financial position.
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for
settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped
based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends
on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of
the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently
measured at either amortised cost or fair value depending on their classification. Classification is determined based
on both the business model within which such assets are held and the contractual cash flow characteristics of the
financial asset unless, an accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and
the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no
reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.
27
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified
as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading,
where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative;
or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or
loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated
entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial
recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses
that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become
credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on
the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis
of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at
the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised
within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss.
Property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and
equipment (excluding land) over their expected useful lives as follows:
Plant and equipment
3-10 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each
reporting date.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit
to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all
the risks and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor
effectively retains substantially all such risks and benefits.
28
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if
lower, the present value of minimum lease payments. Lease payments are allocated between the principal
component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining
balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the
asset's useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain
ownership at the end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-
line basis over the term of the lease.
Research and development
Research costs for the development of intellectual property are expenses in the period in which they are incurred.
Development costs are capitalised when it is probable that the project will be a success considering its commercial
and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient
resources; and intent to complete the development and its costs can be measured reliably. Following the initial
recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less
any accumulated amortisation and accumulated impairment losses. Any expenditure is capitalised and is amortised
on a straight-line basis over the period of expected benefits from the related project.
Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs.
They are subsequently measured at amortised cost using the effective interest method.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are
expensed in the period in which they are incurred.
Employee Benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled wholly
within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are
settled.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date
are measured at the present value of expected future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services,
where the amount of cash is determined by reference to the share price.
29
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Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with
non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the
employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period.
The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying
either the Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on
which the award was granted.
The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at
the reporting date.
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market
conditions are considered to vest irrespective of whether or not that market condition has been met, provided all
other conditions are satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been
made. An additional expense is recognised, over the remaining vesting period, for any modification that increases
the total fair value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the
condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee
and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining
vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled
and new award is treated as if they were a modification.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes,
the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date; and assumes that the transaction will take place
either: in the principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming they act in their economic best interests.
30
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used,
maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects
the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date
and transfers between levels are determined based on a reassessment of the lowest level of input that is significant
to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is
either not available or when the valuation is deemed to be significant. External valuers are selected based on market
knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to
another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation
and a comparison, where applicable, with external sources of data.
Issued Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from the proceeds
Dividends
Dividends are recognised when declared during the financial year and no longer at the discretion of the company.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Imagion Biosystems Limited,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary
shares and the weighted average number of shares assumed to have been issued for no consideration in relation to
dilutive potential ordinary shares
Goods and Services Tax (‘GST’) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is
not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement
of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
31
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 1. Significant accounting policies (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted Australian
Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the Consolidated Entity for the annual reporting period ended 31 December 2018.
The Consolidated Entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the Consolidated Entity, are set out below.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces
AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject
to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present
value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term
leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture)
where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are
expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised,
adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future
restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a
depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised
lease liability (included in finance costs. The Consolidated Entity will adopt this standard from 1 January 2019, and
it is not expected to have a material impact on the Consolidated Entity’s financial performance due to the short-term
nature of its leases.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions
that affect the reported amounts in the financial statements. Management continually evaluates its judgements and
estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its
judgements, estimates and assumptions on historical experience and on other various factors, including expectations
of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are discussed below.
Fair value measurement hierarchy
The consolidated entity is required to classify all assets and liabilities, measured at fair value, using a three level
hierarchy, based on the lowest level of input that is significant to the entire fair value measurement, being: Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly; and Level 3: Unobservable inputs for the asset or liability. Considerable
judgement is required to determine what is significant to fair value and therefore which category the asset or liability
is placed in can be subjective.
Share-based payment transactions
The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value is determined by using either the
Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no
impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit
or loss and equity.
The carrying amounts of cash and cash equivalents, trade receivables and trade payables are assumed to
approximate their fair values due to their short-term nature.
32
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 3. Operating Segments
Identification of reporting operating segments
The consolidated entity is organised into one operating segment being Research & Development. This operating
segment is based on internal reports that are reviewed and used by the Board of Directors (who are identified as the
Chief Operating Decision Makers (CODM) in assessing performance and in determine the allocation of resources.
Note 4. Revenue
Sales revenue
Sale of goods
Other revenue
Interest
Other income
Fair value of financial derivative movement
Consolidated
2018
$
191,477
191,477
36,955
143,057
-
180,012
2017
$
20,102
20,102
81,620
109,459
127,876
318,955
Revenue
371,489
339,057
Note 5. Current assets - cash and cash equivalents
Cash on hand
Cash at bank
Cash on deposit
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end of the
financial year as shown in the statement of cash flows as follows:
Balances as above
Balance as per statement of cash flows
Note 6. Current assets - other
Prepayments
Other assets
Accrued interest income
33
Consolidated
2018
$
2017
$
16
4,367,081
-
2
837,320
6,035,507
4,367,097
6,872,829
4,367,097
6,872,829
4,367,097
6,872,829
Consolidated
2018
$
2017
$
52,885
355,136
-
340,555
16,974
30,161
408,021
387,690
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 7. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: accumulated depreciation
Consolidated
2018
$
2017
$
1,328,260
(1,056,400)
1,123,017
(750,914)
271,860
372,103
Reconciliation
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated – Plant & Equipment
Opening Balance
Additions
Disposals
Foreign currency revaluation movements
Depreciation expense
Closing Balance
Note 8. Current liabilities - trade and other payables
Trade payables
Other payables
Note 9. Contingent liabilities
Consolidated
2018
$
2017
$
372,103
87,181
-
26,367
(213,791)
218,477
369,606
-
(9,460)
(206,520)
271,860
372,103
Consolidated
2018
$
2017
$
983,680
204,312
401,658
163,005
1,187,992
564,663
As of 31 December 2018, the Company was not party to any material litigation, claims or suit whose outcome could
have a material effect on the financial statements (31 December 2017: Nil).
34
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 10. Equity - issued capital
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the company does not have a limited amount of authorised capital.
Ordinary shares - fully paid
203,766,163
322,7432,824
28,686,708
33,248,127
2017
Shares
Consolidated
2018
Shares
2017
$
2018
$
Movements in ordinary share capital
Details
Balance at 1 January 2017
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Issue of shares
Date
1 January 2017
7 February 2017
7 February 2017
7 February 2017
22 June 2017
22 June 2017
Shares
20
29,629,637
32,553,959
64,099,456
3,333,091
74,150,000
Issue Price
0.10
0.09
0.11
0.15
0.52
0.20
Sub total
31 December 2017
203,766,163
Costs of capital raising
Closing balance
Movements in ordinary share capital
Details
Issue of shares (share-based payment)
Issue of shares (rights issue)
Issue of shares (rights issue)
Issue of shares (performance shares)
Date
6 June 2018
24 October 2018
28 November 2018
28 November 2018
Shares
10,529,053
10,288,098
96,859,510
1,300,000
Issue Price
0.062
0.04
0.04
0.16
Sub total
31 December 2018
322,742,824
Costs of capital raising
Closing balance
$
2
2,666,667
3,580,935
9,797,733
1,734,924
14,830,000
32,610,261
(3,923,553)
28,686,708
$
652,801
411,524
3,874,380
208,000
33,833,413
(651,088)
33,182,325
On 6 June 2018, the consolidated entity issued an additional 10,529,053 shares to the University of Texas MD
Anderson Cancer Center, as payment for the consolidated entity’s contribution to ongoing research being conducted
by the Cancer Center. The shares have been valued at the fair value on the date of issue.
The consolidated entity completed a rights issue that ultimately raised $4,285,904 (before costs) in two tranches:
• $411,524 raised on 24 October 2018, through a non-renounceable rights issue of 10,288,098 shares at $0.04
to existing shareholders.
• $3,874,380 raised on 28 November 2018, through a placement of 96,859,510 shares at $0.04 to
sophisticated and professional investors.
On 28 November 2018, 1,300,000 vested performance shares were converted into ordinary shares. The performance
shares were issued to current and previous employees.
35
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 10. Equity - issued capital (continued)
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid
to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen
as value adding relative to the current consolidated entity's share price at the time of the investment. The consolidated
entity is not actively pursuing additional investments in the short-term as it continues to integrate and grow its existing
businesses in order to maximise synergies.
Note 11. Equity - reserves
Share based payment reserve – options
Foreign currency translation reserve
Total
Foreign currency translation reserve
Consolidated
2018
$
2017
$
1,796,992
102,946
623,927
514,943
1,899,938
1,138,870
The reserve is used to recognise exchange differences arising from the translation of the financial statements of
foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments
in foreign operations.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 January 2017
Movements in revaluation of foreign currency through translation reserve
Share based payments for key management, non-executive directors and
employees
Balance at 31 December 2017
Movements in revaluation of foreign currency through translation reserve
Share based payments for key management, non-executive directors and
employees
Share
based
payment
reserve
$
-
-
623,927
Foreign
currency
reserve
$
Total
$
453,368 453,368
61,575
61,575
623,927
-
623,927
514,943
1,138,870
-
(411,997)
(411,997)
1,173,065
-
1,173,065
Balance at 31 December 2018
1,796,992
102,946
1,899,938
36
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 12. Accumulated Losses
Accumulated Losses at the beginning of the financial year
Losses after income tax expense for the year
Dividends paid
Consolidated
2018
$
2017
$
(22,873,022) (15,078,420)
(7,794,602)
(8,340,013)
-
-
Accumulated Losses at the end of the financial year
(31,213,035) (22,873,022)
Note 13. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Share-based payments
Note 14. Remuneration of auditors
Consolidated
2018
$
2017
$
893,831
741,553
750,058
486,681
1,635,384
1,236,739
During the financial year the following fees were paid or payable for services provided by RSM Australia Partners,
the auditor of the company, its network firms and unrelated firms:
Audit services – RSM Australia Partners
Audit or review of the financial statements
Other services – RSM Australia Pty Ltd
Investigating accountants report
Consolidated
2018
$
2017
$
60,000
60,000
-
61,720
60,000
121,720
37
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 15. Commitments
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year**
One to five years
Lease commitments - finance
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
Representing:
Lease liability - current
Lease liability - non-current
Consolidated
2018
$
2017
$
17,132
-
1,250,126
158,439
17,312
1,408,565
38,507
18,971
57,478
(2,963)
34,844
52,009
86,853
(6,840)
54,515
80,013
36,082
18,433
30,684
49,329
54,515
80,013
Finance lease commitments includes contracted amounts for various plant and equipment with a written down
value of $59,766 (2017: $77,257) secured under finance leases expiring within one to five years. Under the terms
of the leases, the consolidated entity has the option to acquire the leased assets for predetermined residual values
on the expiry of the leases.
The consolidated entity has no capital expenditure commitments as at 31 December 2018 (2017: Nil).
Note 16. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
(Loss) after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
38
Parent
2018
$
2017
$
(28,436,906)
(2,333,573)
(28,436,906)
(2,333,573)
Parent
2018
$
2017
$
4,705,440
6,263,838
4,705,453 26,652,192
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 16. Parent entity information (continued)
Total current liabilities
Total liabilities
Equity
Issued capital
Reserves
Retained earnings
Total equity
Contingent liabilities
2018
$
2017
$
687,789
167,165
687,789
167,165
33,182,325 28,686,708
610,182
(2,811,863)
2,084,119
(31,248,780)
4,017,664 26,485,027
The parent entity had no contingent liabilities as at 31 December 2018 and 31 December 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2018 and 31
December 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in
note 1, except for the following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 17. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned
subsidiaries in accordance with the accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Ownership interest
2018
%
2017
%
Imagion Biosystems Inc
United States of America
100
100
Note 18. Events after the reporting period
No other matters or circumstances have arisen since the end of the financial period that has significantly affected or
may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs
of the consolidated entity in future financial years.
39
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Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 19. Reconciliation of loss after income tax to net cash flows from operating activities
Loss after income tax expense for the year
(8,340,013)
(7,794,602)
Consolidated
2018
$
2017
$
Adjustments for:
Depreciation expense
Refundable Deposit
Fair value adjustment
Foreign exchange loss
Share based payments expense
Direct Equity Raising Costs
Collaboration Expenses
Interest
Changes in operating assets and liabilities:
Trade and other receivables
Prepayments
Trade and other payables
Monies in trust
213,791
(123,112)
(140,036)
(444,892)
837,133
(57,894)
869,811
-
(7,185,212)
206,834
-
(127,877)
529
623,927
-
-
858,582
(6,232,607)
(44,583)
287,670
371,450
3,465
(66,046)
(331,332)
(364,374)
16,974
Net cash used in operating activities
(6,567,210)
(6,977,385)
Note 20. Earnings per share
Loss after income tax
Consolidated
2018
$
2017
$
(8,340,013)
(7,794,602)
Loss after income tax attributable to the owners of Imagion Biosystems Limited
(8,340,013)
(7,794,602)
Weighted average number of ordinary shares used in calculating basic earnings per
share
220,883,627 153,835,959
Weighted average number of ordinary shares used in calculating diluted earnings per
share
220,883,627 153,835,959
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.0378)
(0.0378)
(0.0507)
(0.0507)
40
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 21. Share based payments
Performance Shares
Upon listing on the Australian Stock Exchange, the consolidated entity established various incentive arrangements
to assist in the attraction, retention and motivation of its employees and management group.
Employees
A total of 2,550,000 rights over shares were issued to employees of the consolidated entity under the LTI plan, which
vest quarterly over the two years following the listing on 22 June 2017 to 22 June 2019 and are not subject to
performance milestones. Each right is convertible into one ordinary share upon vesting. Performance rights are
unquoted.
During the current financial year and the previous financial year, rights vested on a quarterly basis in accordance
with the rules of the LTI Plan and, upon cessation of employment, unvested rights either lapsed or fully vested.
On 28 November 2018, 1,300,000 rights were converted into ordinary shares.
Key Management and Directors
A total of 13,350,000 rights over shares have been issued to Key management personnel and directors. These
shares vest two years after the date of issue, and are not subject to performance milestones, apart from continuation
of employment. Each right is convertible into one ordinary share upon vesting . Performance rights are unquoted.
During the current financial year 350,000 performance rights were issued to directors, (2017: 13,000,000) and
1,850,000 rights (2017: Nil) lapsed due to cessation of employment
During the current financial year, no rights were issued to employees (2017: 2,550,000), and 656,250 (2017:
468,750) lapsed.
Other rights to employees vested in 2018 were 818,750 (2017: 543,750).
The number of performance shares at the end of the financial year and movements are shown below:
Employees
Directors & Key
Management
2017
1 January 2017
Issued
Vested based on employment
Vested – due to resignation
Lapsed – due to resignation
Unvested Vested Unvested Vested
-
-
-
- 13,000,000
-
-
-
-
2,550,000
(543,750)
-
(468,750)
543,750
-
-
-
-
-
Balance 31 December 2017
1,537,500
543,750 13,000,000
2018
Issued
Vested based on employment
Vested – due to resignation
Lapsed – due to resignation
Converted to shares
-
(412,500)
(406,250)
(656,250)
-
-
412,500
406,250
350,000
-
-
- (1,850,000)
-
(1,300,000)
Balance 31 December 2018
62,500
62,500 11,500,000
41
-
-
-
-
-
-
-
Total
Total
Unvested
-
15,550,000
(543,750)
-
(468,750)
Vested/not
exercised
-
-
543,750
-
-
14,537,500
543,750
350,000
(412,500)
(406,250)
(2,506,250)
-
-
412,500
406,250
-
(1,300,000)
11,562,500
62,500
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 22. Financial Instruments
The consolidated entity’s activities expose it to a variety of financial risks: market risk (including foreign currency risk,
price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity’s overall risk management
program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the
financial performance of the consolidated entity. The consolidated entity uses different methods to measure different
types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign
exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios
to determine market risk.
Derivatives are not currently used by the consolidated entity for hedging purposes. The consolidated entity does not
speculate in the trading of derivative instruments.
Market Risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations, in particular United States dollars.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial
liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
The consolidated entity had net liabilities denominated in foreign currencies of $148,423 (assets of $482,019 less
liabilities of $630,442) as at 31 December 2018 (2017: Net Assets $855,909 (assets of $137,514 less liabilities of
$521,605)). Based on this exposure, had the Australian dollar weakened by 5%/strengthened by 5% (2017:
weakened by 5%/strengthened by 5%) against these foreign currencies with all other variables held constant, the
consolidated entity's loss before tax for the year would have been $7,421 lower/$7,421 higher (2017: $42,795
lower/$42,795 higher) .
The carrying amount of the consolidated entity’s foreign currency denominated financial assets and financial liabilities
at the reporting date were as follows (holdings are shown in AUD equivalent):
Consolidated
US dollars
Assets
2018
2017
Liabilities
2018
2017
482,019
1,377,514
630,442
521,605
482,019
1,377,514
630,442
521,605
Price risk
The Consolidated Entity is not exposed to any significant price risk.
Credit risk
Credit risk refers to the risk that the counter party will default on its contractual obligations resulting in financial loss
to the consolidated entity. Credit risk is the risk of financial loss to the consolidated entity if a customer or counterparty
to a financial instrument fails to meet its contractual obligations and arises principally from the consolidated entity’s
receivables from customers and investment securities. The consolidated entity has only minimal sales revenue and
consequently does not have credit exposure to outstanding receivables.
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Interest rate risk arises from fluctuations in interest bearing financial
assets and liabilities that the consolidated entity uses. Interest bearing assets comprise cash and cash equivalents
which are considered to be short-term liquid assets and investment decisions are governed by the monetary policy.
42
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 22. Financial Instruments (continued)
During the year, the consolidated entity had no variable rate interest bearing liability. It is the consolidated entity's
policy to settle trade payables within the credit terms allowed and therefore not incur interest on overdue balances.
Liquidity risk
Liquidity risk is the risk that the consolidated entity will not be able to meet its financial obligations as they fall due.
The consolidated entity’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 consolidated entity’s reputation. The Consolidated Entity’s objective is
to maintain a balance between continuity of funding and flexibility. The consolidated entity’s exposure to financial
obligations relating to corporate administration and projects expenditure, are subject to budgeting and reporting
controls, to ensure that such obligations do not exceed cash held and known cash inflows for a period of at least 1
year.
Remaining contractual maturities
The following tables detail the consolidated entity’s remaining contractual maturity for its financial instrument
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal
cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying
amount in the statement of financial position.
Weighted
average
interest rate
%
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
Consolidated - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
Total non-derivatives
Derivatives
Promissory and Convertible
Notes
Total derivatives
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Interest-bearing - fixed rate
Lease liability
-
-
-
6.317%
983,680
204,312
-
38,507
1,226,499
-
-
-
18,971
18,971
-
-
-
-
-
Weighted
average
interest rate
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
983,680
204,312
-
57,478
1,245,470
-
-
1 year or
less
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
-
-
401,658
163,005
-
-
-
-
6.279%
34,844
34,844
17,165
Total non-derivatives
599,507
34,844
17,165
Derivatives
Promissory and Convertible
Notes
-
Total derivatives
-
-
43
-
-
-
-
-
-
-
-
-
-
401,658
163,005
86,853
651,516
-
-
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 22. Financial Instruments (continued)
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually
disclosed above.
Note 23. Fair value measurement
Fair value hierarchy
The following tables detail the consolidated entity’s assets and liabilities, measured or disclosed at fair value, using
a three-level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement,
being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly
Level 3: Unobservable inputs for the asset or liability.
The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their
fair values due to their short-term nature.
The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current
market interest rate that is available for similar financial liabilities.
Valuation techniques for fair value measurements categorised within level 2.
Unquoted investments have been valued using a discounted cash flow model.
Derivative financial instruments have been valued using quoted market rates. This valuation technique maximises
the use of observable market data where it is available and relies as little as possible on entity specific estimates.
Note 24. Income tax benefit
Tax losses not recognised
Consolidated
2018
$
2017
$
Unused tax losses for which no deferred tax asset has been recognised (Australia)
6,332,140 1,053,419
Potential tax benefit @ 27.5% for 2018 and 27.5% for 2017
1,741,338
289,690
Potential unused tax losses for which no deferred tax asset has been recognised
(United States of America)
8,854,777
5,972,199
The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These
tax losses can only be utilised in the future if the company satisfies the relevant tax loss rules in the relevant
jurisdictions and the Company earns sufficient taxable profit to absorb the losses.
44
For personal use only
Imagion Biosystems Limited
Notes to the financial statements
31 December 2018
Note 25. Related party transactions
Parent Entity
Imagion Biosystems Limited is the parent entity.
Subsidiaries
Interest in subsidiaries are set out in note 17.
Key management personnel
Disclosures relating to key management personnel are set out in note 13 and the remuneration report included in
the directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for goods and services:
Payment for contracting services – Bronwyn Le Grice
Consolidated
2018
$
18,012
2017
$
-
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Trade payables to Giulio Paciotti
Trade payables to Brian Conn
Loans to/from related parties
The following loan movements occurred with related parties:
Loan from Related Parties – Interim Notes – Brian Conn and Robert Proulx
Repayment of Loan from Related Parties - Interim Notes - Brian Conn and Robert
Proulx
Interest paid (8%) on Interim Notes for Brian Conn and Robert Proulx
Consolidated
2018
$
-
-
2017
$
14,496
9,421
Consolidated
2018
$
-
2017
$
-
-
-
352,564
15,513
45
For personal use only
Imagion Biosystems Limited
Director’s Declaration
31 December 2018
Directors Declaration
In the directors' opinion:
•
•
•
•
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position
as at 31 December 2018 and of its performance for the financial year ended on that date;
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Robert Proulx
Director
29 March 2019
46
For personal use only
RSM Australia Partners
Level 21, 55 Collins Street Melbourne VIC 3000
PO Box 248 Collins Street West VIC 8007
T +61 (0) 3 9286 8000
F +61 (0) 3 9286 8199
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
To the Members of Imagion Biosystem Limited
Opinion
We have audited the financial report of Imagion Biosystems Limited (the Company) and its subsidiaries (the
Consolidated Entity), which comprises the consolidated statement of financial position as at 31 December 2018,
the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors' declaration.
In our opinion the accompanying financial report of the Consolidated Entity is in accordance with the Corporations
Act 2001, including:
(I) giving a true and fair view of the Consolidated Entity’s financial position as at 31 December
2018 and of its financial performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 Consolidated Entity in accordance with the auditor independence
requirements of 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 (the Code) that are relevant to
our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1 in the financial report, which indicates that the Consolidated Entity incurred a net loss
of $8,340,013 during the period ended 31 December 2018 and reported negative operating cash flows of
$6,567,210 during the year ended 31 December 2018. As stated in Note 1, these events or conditions, along with
other matters as set forth in Note1, indicate that a material uncertainty exists that may cast significant doubt on
the Consolidated Entity’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
47
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the
RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have
determined the matters described below to be the key audit matters to be communicated in our report.
Key Audit Matter
How our audit addressed this matter
Fair Value of the share-based payments
Refer to Note 21 in the financial statements
have
accounted
During the year, performance rights were issued to
key management personnel and options were
issued to consultants of the Consolidated Entity.
Management
these
arrangements in accordance with AASB 2 Share-
based payments and used a Black Scholes option
pricing model to value the options issued in the year.
We considered the valuation of these instruments to
be a key audit matter, as it involves management
estimates and judgments in determining the relevant
inputs to the valuation model.
for
Our audit procedures included, among others:
- Reviewing the minutes of directors' meetings
and ASX announcements for the approvals in
relation to the granting of the instruments;
- Reviewing the key terms and conditions of the
share-based payment arrangements;
- Challenging
the
reasonableness of key
assumptions used by management relative to
the valuation at the grant date;
- Verifying the mathematical accuracy of the
computation; and
- Reviewing the adequacy and accuracy of the
financial
disclosures
the
in
relevant
statements.
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Consolidated Entity’s annual report for the year ended 31 December 2018 but does not include the financial
report and the auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, 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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
48
For personal use only
Responsibilities of the Directors for the Financial Report (Continued.)
In preparing the financial report, the directors are responsible for assessing the ability of the Consolidated Entity
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Consolidated Entity or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our objectives are 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 the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and 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 this financial report.
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/ar2.pdf.
This description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors' report for the year ended 31 December 2018.
In our opinion, the Remuneration Report of Imagion Biosystems Limited., for the year ended 31 December 2018,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
RSM AUSTRALIA PARTNERS
R B MIANO
Partner
Dated: 29 March 2019
Melbourne, Victoria
49
For personal use only