Immuron Limited
ABN 80 063 114 045
Annual report
for the year ended 30 June 2017
Immuron Limited ABN 80 063 114 045
Annual report - 30 June 2017
Contents
Corporate directory
Intellectual property report
Directors' report
Financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members
Shareholder information
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Directors
Secretary
Interim Chief Executive Officer
Registered Office
Principal Place of Business
Share Registry - Australia
Share registry - United States
Auditor - Australia
Auditor - United States
Immuron Limited
Corporate directory
Dr. Roger Aston
Independent non-executive chairman
Mr. Peter Anastasiou
Executive vice chairman
Mr. Daniel Pollock
Independent non-executive director
Mr. Stephen Anastasiou
Independent non-executive director
Prof. Ravi Savarirayan (appointed 7 April 2017)
Independent non-executive director
Mr. Phillip Hains
Mr. Peter Vaughan
Dr. Jerry Kanellos
Level 3, 62 Lygon Street
Carlton VIC 3053
Australia
Telephone: +61(0)3 9824 5254
Facsimile: +61(0)3 9822 7735
Unit 10, 25 - 37 Chapman Street
Blackburn North VIC 3130
Australia
Telephone: +61 (0)3 9824 5254
Facsimile: +61 (0)3 9822 7735
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross WA 6153
Australia
Telephone: +61 (0)8 9315 2333
Facsimile: +61 (0)8 9315 2233
Bank of New York
225 Liberty Street
New York, NY 102286
United States of America
Telephone: +1 212 495 1784
William Buck
Level 20
181 William Street
Melbourne VIC 3000
Australia
+61 (0)3 9824 8555
Marcum LLP
1600 Market Street
32nd Floor,
Philadelphia PA 19103
United States of America
Telephone: +1 215 297 2524
1
Solicitors - Australia
Solicitors - United States
Bankers
Immuron Limited
Corporate directory
(continued)
Francis Abourizk Lightowlers (FAL)
Level 16
356 Collins Street
Melbourne VIC 3000
Australia
+61 (0)3 9642 2252
Carter Ledyard and Milburn LLP
2 Wall Street
New York NY 10005
United States of America
Telephone: +1 212 238 8605
National Australia Bank (NAB)
330 Collins Street
Melbourne VIC 3000
Australia
Securities exchange listings
Websites
Australian Securities Exchange (Code: IMC)
NASDAQ Exchange (Code: IMRN)
www.Immuron.com
www.travelan.com.au
2
Dear Shareholders,
Highlights
•
Fatty liver trials are on track and top-line results expected Q4 2017 for NASH, Q4 2018 for Pediatric NAFLD
and Q1 2019 for ASH
Immuron Limited
30 June 2017
Paediatric NAFALD Phase II trial recruits first patient
• NASDAQ Listing raises US$6 million
• NASDAQ Phase II Study achieves major milestones and receives new US stimulus
•
• Clostridium difficile infection trial clinical drug manufactured, ethics and regulatory approvals and site initiated
•
• US Department of Defence Research Collaboration expands
•
IMM-124E progresses to next study phase in acute colitis model
Travelan marketing strategy drives sales growth
Fatty Liver Portfolio - Three Ongoing Phase II Programs in Clinical Development (NASH, ASH and Pediatric
NAFLD)
The lead Principle Investigator for the Immuron non-alcoholic steatohepatitis (NASH) clinical study Dr Arun
Sanyal, is the former President of AASLD (American Association for the Study of Liver Diseases) and current
Chair of the Liver Study Section at the National Institute of Health (NIH).
The study achieved its recruitment goal of at least 120 patients this year and successfully enrolled 133 patients
with biopsy proven NASH. The primary endpoint is changes in liver fat content confirmed by MRI and secondary
endpoints being changes in ALT (liver enzymes). The top-line results for the study are expected to be reported by
Q4 2017.
NASH is a severe form of non-alcoholic fatty liver disease (NAFLD). It affects about 16 million people annually in
the United States alone, making it a prime opportunity for the pharmaceutical and biotechnology industries.
With 17.3 percent of Americans aged 15 - 19 suffering NAFLD, Immuron’s Phase I/II clinical trial with Emory
University is timely. Health authorities estimate paediatric NAFLD affects five to 10 percent of the US paediatric
population, with no current approved treatments.
The lead Principle Investigator for our Pediatric NAFLD study is Dr Miriam Vos, Emory University. Dr Vos
specializes in the treatment of gastrointestinal disease in children as well as fatty liver disease and obesity.
Our NIH funded Phase II double blind, placebo control, randomized clinical study of IMM-124E enrolled the first
patient into the study in February this year and has so far randomized over 10% of the targeted 40 patients into
the study. The primary endpoint is changes in ALT (liver enzymes) following 3 months of treatment with top-line
results expected in Q4 2018.
Dr Arun Sanyal is also the lead Principle Investigator of the Immuron alcoholic steatohepatitis (ASH) clinical study
which is also funded by the NIH. Over 50% of the targeted 66 patients have been randomized into the study. The
primary endpoint is changes in ALT (liver enzymes) with top-line results are expected in Q1 2019.
US Securities and Exchange Commission Registration
Immuron successfully completed its Initial Public Offering (IPO) on 9 June 2017. The Company, through its lead
broker Joseph Gunnar & Co. LLC and Rodman & Renshaw placed 610,000 ADSs and 701,500 Warrants raising
USD$6.1M before costs. The close of this raising marked a significant milestone in Immuron’s lifecycle as the
Company not only secured additional funding to process its clinical portfolio and current primary clinical trial to
completion, but it also gained international exposure to the much large US market.
The listing process had been an ongoing process of audit, legal and regulatory reviews for a number of months to
ensure Immuron’s compliance with SEC and NASDAQ regulations.
3
Immuron Limited
30 June 2017
(continued)
NASH Clinical Trial Achieves Major Milestones and Receive New US Stimulus
The Company reported the results of the planned interim analysis in July this year. The primary objective of the
interim analysis was to evaluate the safety of IMM-124E. The interim analysis was conducted by an Independent
Committee to maintain blindness of both company and investigators as required to maintain the study integrity.
The Committee also explored the data for signals of efficacy from the primary, secondary and exploratory end
points. The analysis was not powered for efficacy due to the limited sample size.
The report submitted to the Company by the Committee confirmed that there were no safety concerns or adverse
events, serum biochemistry, hematology, vital signs, or physical examination findings for both treatment groups.
We were very pleased to be able to report
the efficacy signals on liver enzymes (ALT and AST) which
demonstrated a dose related reduction in both treatment doses at 24 weeks, though not statistically different than
placebo.
As these parameters inherently fluctuate over time and are significantly affected by baseline values the interim
analysis committee also had scheduled to perform additional analyses on the data set to correct for these
inherent variations. Comparing the Area Under Curve for the ALT/AST data over time of IMM-124E to Placebo,
accounts for all the available data.
Such analysis demonstrated a significant reduction of ALT and AST over time (AUC ANCOVA analysis)
compared to placebo. A dose-related effect was reported when the greatest decrease occurred in the highest
dose group, with the low dose group decreasing by an intermediate amount compared with the placebo group.
The Company believes that this documented effect, together with a correlation between ALT and AST, is the
proof of concept for a biological effect demonstrating decrease in liver injury.
Immuron has also advanced its world-leading IMM-124E research in NASH with two new studies at Duke
IMM-124E’s unique
University and Sanyal Biotechnology. The studies should augment
mechanism of action (MOA) and expected effect on NASH. The results from these studies will supplement our
pre-clinical and clinical studies to date, including the anti-fibrotic effect seen in the CCl4 model and the metabolic
and immunological improvements seen in both the Ob-Ob mice as well as the Company's phase I clinical study.
the evidence of
The studies will attempt to generate comparable results in the two leading NASH mouse models which mimic the
full clinical spectrum of human NASH, from simple steatosis to substantial fibrosis and cirrhosis. The additional
preclinical studies will proceed under the leadership of two internationally renowned NASH researchers, Dr Arun
Sanyal, founder of Sanyal Biotechnology, and Dr Anna-Mae Diehl, Director at the Duke University Liver Centre.
The studies are ongoing and are expected to be completed by Q4 2017.
Clostridium Difficile Infection (CDI) Trial Drug Completes Manufacturing Phase
Immuron is pursuing the biopharmaceutical research and development for an effective and safe non-antibiotic
treatment of CDI which accounts for more than 450,000 patients and over 29,000 deaths per year in the United
States alone. The IMM-529 drug product for the study has been manufactured and is a first-in class oral
immunotherapeutic targeting the treatment of Clostridium difficile infection.
IMM-529 has been shown in
pre-clinical tests to be an effective treatment in all phases of the disease and success in this trial will provide
encouragement to the Board and Management that the IMM-529 drug product has significant potential for
continued clinical development.
The Company received approval from the Israeli Ministry of Health (MoH) and the Hadassah Medical Center
Ethics Committee in August of this year to perform Immuron's IMM-529 clinical study. Immuron has completed
the site initiation and the site is open for enrolment. The first of 60 patients is scheduled to be randomized by end
of September 2017. The Phase I/II randomized, double-blind, placebo-control clinical study is designed to
evaluate the safety and preliminary efficacy of Immuron’s IMM-529 drug product for the treatment of CDI.
4
Immuron Limited
30 June 2017
(continued)
Clostridium Difficile Infection (CDI) Trial Drug Completes Manufacturing Phase (continued)
Eligible patients will be randomized, in addition to their standard of care treatment, to receive either IMM-529 or
placebo three times daily for a total of 28 days which will then be followed by two months of monitoring for any
recurrence of disease. The primary objective of the study is to assess IMM-529's patient safety and tolerability,
while secondary endpoints will evaluate the preliminary efficacy of the product evaluated by duration and severity
of symptoms, and the rate of recurrence. Top-line results are anticipated in the fourth quarter of 2018.
The clinical study will be conducted under the leadership of Professor Yoseph Caraco, who is the head of the
Clinical Pharmacology Unit at Hadassah Medical Center in Jerusalem, which specializes in early stage clinical
studies. The protocol for the study was jointly developed by Immuron with Professor Caraco, Professor Allon
Moses, Chairman of the Department of Clinical Microbiology and Infectious Diseases, and Professor Jacob
Strahilevitz of the Department of Clinical Microbiology and Infectious Diseases at Hadassah.
Travelan Marketing Strategy Drives Sales Growth
Sales of Immuron’s flagship OTC travellers’ diarrhea treatment Travelan, enjoyed a strong 38 percent increase in
sales compared to the same period last year.
May 2017 saw Travelan’s highest ever monthly sales in the US, reinforcing month-on-month revenue hikes.
Much of the growth has come through our excellent partnership in the travel industry with Passport Health.
Our marketing strategy includes staff education in over 3,000 pharmacies, boosted point-of-sale advertising,
closer relations with distributors and brokers, and better shelf positions.
We also sponsored a satellite symposium at the 15th Conference of the International Society of Travel Medicine
(CISTM15). The symposium, on the overuse of antibiotics in travellers’ diarrhea, featured three renowned
gastrointestinal experts and helped gain us exposure to more than 1,500 health professionals from 60 countries.
Collaboration with the US Department of Defence Expands
Immuron this year announced that it will expand the current scope of the cooperative research and development
agreement executed in June 2016 with the Walter Reed Army Institute of Research (WRAIR), Silver Spring MD,
USA. The Company also executed a cooperative research and development agreement with the Navel Medical
Research Centre in August 2016. The current agreement will be expanded to include the development of three
fluoroquinolone-resistant Shigella specific anti-microbial therapeutics for pre-clinical evaluation.
WRAIR will fund the evaluation of the anti-Shigella specific activity of our new antibodies, including assessing
their protective capacity in established mouse and guinea pig small animal models. Joining the development
program and expanding the scope of the program even further, will be the Armed Forces Research Institute of
Medical Sciences (AFRIMS), headquartered in Bangkok, Thailand. AFRIMS will fund and perform the evaluation
of these 3 Shigella specific therapeutics in Non-Human primate (NHP) clinical studies which results in the full
clinical spectrum of the disease as seen in humans. The proposed work will be initiated once efficacy is proven in
the small animal studies.
Shigella is a highly virulent pathogenic organism that can cause disease in humans at extremely low infectious
doses. Exposure to as little as 10 to 100 bacteria can cause disease and therefore Shigella can spread easily
from person to person. Infection in humans is characterised by the ability of Shigella to invade the mucosal
epithelium, replicate intracellularly and spread intercellularly. Animal models that mimic the disease in humans
are essential tools for studying Shigella pathogenesis and product efficacy.
The World Health Organisation (W.H.O.) has identified shigella as one of 12 families of bacteria that pose the
greatest threat to human health. It estimates shigella causes about 165 million cases of dysentery a year, and
kills more than a million people, mostly children in the developing world.
5
Immuron Limited
30 June 2017
(continued)
IMM-124E Progresses to Next Study Phase in Acute Colitis Model
Successful completion of stage one of the three stage IMM-124E colitis pre-clinical program has validated
continuation of the research.
Conducted at the University of Zurich under the leadership of the renowned Professor Gerhard Rogler, the
preclinical research data showed a beneficial biological effect of IMM-124E within the model. Professor Rogler is
a leader in the field of Colitis and has authored more than 200 original peer reviewed articles.
Colitis, mostly identified with ulcerative colitis and Crohn’s disease, is a group of chronic and generally debilitating
inflammatory bowel diseases affecting millions of people globally. The market for inflammatory bowel disease
therapeutics could reach US$10 billion annually by 2021.
New Director Appointed
In April, we announced the appointment of Professor Ravi Savarirayan as a Director. Professor Savarirayan is a
consultant clinical geneticist at the Victorian Clinical Genetics Services.
He is a certified specialist in clinical genetics and a fellow of the Royal Australasian College of Physicians who
has published more than 150 peer-reviewed articles, sits on the editorial boards of
four internationally
distinguished medical journals and holds, or has held prominent office in several important international medical
societies.
Dr. Jerry Kenellos
Interim Chief Executive Officer (CEO)
Immuron Limited
Melbourne
28 September 2017
6
Immuron Limited
Intellectual property report
30 June 2017
Intellectual property report
Immuron owns a number of patent families that have been filed to protect both the vaccine that is used to
generate Immuron’s colostrum enriched with antibodies of choice, as well as methods of
treating certain
conditions with the resulting hyper-immune colostrum.
Immuron’s patent rights are supplemented by a comprehensive body of confidential and proprietary expertise that
has been developed over many years and relates to the methods of production of the hyper-immune colostrum.
These trade secrets include information relating to a low cost production system and an effective immunisation
process that is approved by an independent animal ethics committee.
During the year ended 30 June 2017, Immuron continued to progress its patent portfolio and has successfully
prosecuted patents to Grant, over various global jurisdictions.
A summary of the principal patent families owned by Immuron is set out in the table below:
Number
Country
Status
Expiry
Australia
Canada
Europe
New Zealand
USA
Granted
Pending
Accepted
Pending
Pending
Granted
Granted
Granted
Granted
Australia
Brazil
Canada
China
Europe
India
New Zealand
USA
USA
4 March 2024
4 March 2024
4 March 2024
4 March 2024
4 March 2024
4 March 2024
4 March 2024
4 March 2024
25 February 2028
Travelan: Composition and Method for the Treatment and Prevention of Enteric Bacterial Infections
2004216920
0408085-8
2,517,911
201210055406.0
EP 1605975
230664 B
542088
9,402,902
8,637,025
Immuno-Modulating Compositions for the Treatment of Immune-Mediated Disorders
2009222965
2,718,381
EP 2268669
587901
13/715,371
Method and Apparatus for the Collection of Fluids
2,527,260
2004244673
544198
Anti LPS Enriched Immunoglobulin Preparation for use in Treatment and/or Prophylaxis of a Pathologic
Disorder
2010243205
2760096
13/265,252
2424890
12103554.8
315924
5740390
10-2011-7027634
335793
201171304
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
Australia
Canada
USA
Europe
Hong Kong
Israel
Japan
Korea
Mexico
Eurasia
Granted
Pending
Pending
Pending
Published
Pending
Granted
Accepted
Pending
Pending
11 March 2029
11 March 2029
11 March 2029
11 March 2029
11 March 2029
Granted
Pending
Granted
Granted
Pending
10 June 2024
10 June 2024
10 June 2024
Canada
Australia
New Zealand
Granted
Granted
Granted
7
Number
Country
Status
Expiry
Immuron Limited
Intellectual property report
30 June 2017
(continued)
Australia
Canada
Europe
USA
Hong Kong
Anti LPS Enriched Immunoglobulin Preparation for use in Treatment and/or Prophylaxis of a Pathologic
Disorder
2011290478
2808361
2605791
13/817,414
1185016
Methods and Compositions for the Treatment and/or Prophylaxis of Clostridium Difficile Associated
Disease
2014253685
2,909,636
2986316
14/785,527
201480034857.3
713233
17 April 2034
17 April 2034
17 April 2034
17 April 2034
17 April 2034
17 April 2034
Australia
Canada
Europe
USA
China
New Zealand
27 April 2030
27 April 2030
27 April 2030
27 April 2030
27 April 2030
Pending
Pending
Pending
Pending
Pending
Pending
Granted
Pending
Pending
Pending
Published
8
Immuron Limited
Directors' report
30 June 2017
Your Directors present their report on the consolidated entity consisting of Immuron Limited and the entities it
controlled at the end of, or during, the year ended 30 June 2017. Throughout the report, the consolidated entity is
referred to as the Company.
Directors
The following persons held office as Directors of Immuron Limited during the financial year:
Dr. Roger Aston, Independent non-executive chairman
Mr. Peter Anastasiou, Executive vice chairman
Mr. Daniel Pollock, Independent non-executive director
Mr. Stephen Anastasiou, Independent non-executive director
Prof. Ravi Savarirayan, Independent non-executive director (appointed 7 April 2017)
The following persons held office as Key Management Personnel of Immuron Limited during the financial year
with the following changes subsequent to 30 June 2017:
Dr. Jerry Kenellos, Interim Chief Executive Officer (CEO) (appointed 3 August 2017) and Chief Operating &
Scientific Officer (COSO)
Mr. Thomas Liquard, Chief Executive Officer (CEO) (ceased 3 August 2017)
Principal activities
The Company's principal activity is a product development driven biopharmaceutical Company focused on the
research and development of bovine-colostrum enriched with antibodies of choice for the treatment and
prevention of a range of infectious and immune modulated diseases.
Dividends
No dividends have been paid during the financial year. The Directors do not recommend that a dividend be paid
in respect of the financial year (2016: $nil).
Operating and financial review
Consolidated statement of profit or loss and other comprehensive income
The reported after tax loss of $6,804,154 is after fully expensing all of the Company’s research and development
expenditure and patenting costs of $4,630,674 incurred during the year.
The Company has engaged a specialised R&D Tax consultant
to review the research and development
expenses of the Company for financial year 2017, to ensure the maximum rebate is received under the Australian
Government’s R&D Tax Incentive program. It is anticipated that the Company will receive substantial cash
inflows following this review process.
The total operating revenue for the year was $1,396,197, which is an increase of 39% from financial year 2016.
Gross Profit increased 5.8% to $1,058,651 compared to 2016.
Consolidated statement of financial position
At 30 June 2017 the Company’s cash position was $3,994,924 (30 June 2016: $2,290,639). The Company had
trade and other receivables of $1,768,237 (30 June 2016: $4,387,772). This receivables amount includes future
receivables from the Australian Government under the R&D Tax Incentive program mentioned above.
The Company entered into a short-term funding arrangement as a cash advance with Grandlodge Capital Pty
Ltd, an entity part-owned and operated by Immuron Directors Peter and Stephen Anastasiou, against the
anticipated refund Immuron will
the Research and
Development Income Tax Concession Incentive for the Company's eligible R&D expenditure. All drawdowns
have been repaid. Please refer to Related Party disclosure note.
receive from the Australian Taxation Office under
9
Immuron Limited
Directors' report
30 June 2017
(continued)
Operating and financial review (continued)
Consolidated statement of financial position (continued)
As announced to the market on 17 February 2016, the Company secured $1,700,000 in funding with a New
York-based Investment Fund. This facility is being used to fund the immediate start of the clinical phase for
IMM-529 in Costridium difficile which recently completed a very successful pre-clinical program. The investment
was structured in three tranches as disclosed to the market. No additional tranches or funding was received
under this agreement during financial year 2017. Immuron Limited has processed all repayments based on
agreed terms.
Consolidated statement of cash flows
The net operating and investing cash outflows for the year were $7,031,088 (2016: $5,158,336) which included
costs associated with the Company’s further development of its research and development programs, together
with significant clinical trial cost expenditure associated with the NASH and ASH clinical trials. During the
financial year $1,615,043 was received from the Australian Government’s R&D tax concession refund incentives
associated with eligible research and development expenditure and activities. The Company will continue to take
advantage of the available Australian Government Research and Development incentives available.
Material business risks
Immuron develops therapeutics and has projects in both the commercial sales and development phases. Any
investment in the development of therapeutics is considered high‐risk. The Company is also subject to risks
associated with the usual conduct of business and these risks, including interest rate movements,
labour
conditions, government policies, securities market conditions, exchange rate fluctuations, and a range of other
factors which are outside the control of the Board and Management.
More specific material risks of the sector and the Company include, but are not limited to:
•
Scientific, technical and clinical - the outcome of the development of therapeutics is inherently unknown.
Activities are experimental in nature so the risk of failure or delay is material. Key development activities,
including clinical trials and product manufacture, are undertaken by specialist contract organisations; and
there are risks in managing the quality and timelines of these activities.
• Regulatory - products and their testing, may not be approved by, or be delayed by regulatory bodies (as was
the case in Canada) whose approvals are necessary before products can be sold in market.
•
•
Financial - the Company currently, and since inception, does not receive sufficient income to cover operating
expenses. The Company may require additional capital funding in the future, and no assurance can be given
that such funding will be available, if required.
- commercial success requires the ability to develop, obtain and maintain
Intellectual Property (IP)
commercially valuable patents and, trade secrets. Gaining and maintaining the IP across multiple countries;
and preventing the infringement of the Company’s exclusive rights involves management of complex legal,
scientific and factual issues. The Company must also operate without infringing upon the IP of others.
• Commercialisation - the Company relies, and intends to rely, upon corporate partners to market, and in some
cases finalise development of its products, on its behalf. There are risks in establishing and maintaining these
relationships, and with the manner in which partners execute on these collaborative agreements.
•
•
•
Product acceptance and competitiveness - a developed product may not be considered by key opinion
leaders (eg. doctors), reimbursement authorities (eg. PBA-listing) or the end customer to be an effective
alternative to products already on market, or new superior future products may be preferred.
liability - a claim or product recall would significantly impact
Product
Insurance, at an
acceptable cost, may not be available or be adequate to cover liability claims if a marketed product is found
to be unsafe.
the Company.
Key personnel - the Company’s success and achievements against timelines depend on key members of its
highly qualified, specialised and experienced management and scientific teams. The ability to retain and
attract such personnel is important.
10
Immuron Limited
Directors' report
30 June 2017
(continued)
Material business risks (continued)
• Grant and R&D incentives - the Company may undertake R&D activities under competitive grants and be
part-funded by other incentive programs (eg R&D tax credits). There is no certainty that grants or incentive
programs will continue to be available to the Company, and changes in government policy may reduce their
applicability.
In accordance with good business practice in the pharmaceutical industry the company’s management actively
and routinely employs a variety of risk management strategies. These are broadly described in the Corporate
Governance Statement.
Biotechnology companies - inherent risks
Some of the risks inherent in the development of a pharmaceutical product to a marketable stage include the
uncertainty of patent protection and proprietary rights, whether patent applications and issued patents will offer
adequate protection to enable product development or may infringe intellectual property rights of other parties,
the obtaining of
the necessary drug regulatory authority approvals and difficulties caused by the rapid
advancements in technology. Also a particular compound may fail the clinical development process through lack
of efficacy or safety. Companies such as Immuron Limited are dependent on the success of their R&D projects
and on the ability to attract funding to support these activities. Investment in research and development projects
cannot be assessed on the same fundamentals as trading and manufacturing enterprises. Thus investment in
these areas must be regarded as speculative, taking into account these considerations.
This Report may contain forward-looking statements regarding the potential of the Company’s projects and
interests and the development of the Company’s projects and interests and the development and therapeutic
potential of the Company’s research and development projects. Any statement describing a goal, expectation,
intention or belief of the Company is a forward-looking statement and should be considered an at-risk statement.
Such statements are subject to certain risks and uncertainties, particularly those inherent in the process of
discovering, developing and commercialising drugs that are safe and effective for use as human therapeutics and
the financing of such activities. There is no guarantee that the Company’s research and development projects will
be successful or receive regulatory approvals or prove to be commercially successful in the future. Actual results
of further R&D could differ from those projected or detailed in this report.
As a result, you are cautioned not to rely on forward-looking statements. Consideration should be given to these
and other risks concerning the Company’s research and development program referred to in this Directors' report
and in the Company’s ‘Operations Report’ as contained in this Annual report for the year ended 30 June 2017.
Significant changes in state of affairs
During 2017 Immuron Limited successfully listed with NASDAQ. There have been no other significant changes in
the nature of Immuron Limited's principal activities during the financial year.
Event since the end of the financial year
28 July 2017 - The Company issued 399,045 fully paid ordinary shares for repayment of $75,333.35 Convertible
Note Security in accordance with executed funding agreement with a New York based investment funds provider
announced to the ASX on 17 February 2017.
3 August 2017 - The Company announced to the ASX the resignation of Mr Thomas Liquard and the
appointment of Dr Jerry Kanellos as the interim CEO. Immuron’s Chief Operating and Scientific Officer Dr Jerry
Kanellos assumed the role of Interim-Chief Executive Officer from 1 August 2017. For Dr Kanellos’ increased role
at Immuron his total remuneration package has increased to $230,000 per annum. Dr Kanellos’ contract has a
30-day termination notice period.
Other than the events listed above, there have not been any other matters or circumstances in the financial
statements or notes thereto, that have arisen since the end of the financial year which significantly affected, or
may significantly affect, the operations of Immuron Limited the results of those operations or the state of affairs of
Immuron Limited in future financial years.
11
Immuron Limited
Directors' report
30 June 2017
(continued)
Business strategy, future developments and prospects
Immuron aims to create value for shareholders through a two-pronged approach. In the short and medium term
Immuron sells and licenses Travelan, an over-the-counter product. Beyond the short
Immuron is
researching and developing prescription products, principally for the treatment of NASH and Clostridium difficile.
term,
The Company continues to develop its NASH, ASH and C-Diff products. These development programs are not
expected to generate revenues in the short term however,
in the longer term, and pending a successful
development outcome in particular the NASH and ASH clinical trials, each of these development programs could
increase shareholder value by many multiples.
Environmental regulation
The Company is involved in pharmaceutical research and development. Much of which is contracted out to third
parties, and it
these activities do not create any significant/material
environmental impact. To the best of the Company's knowledge, the scientific research activities undertaken by,
or on behalf of, the Company are in full compliance with all prescribed environmental regulations.
is the Directors understanding that
12
Immuron Limited
Directors' report
30 June 2017
(continued)
Information on directors
Dr Roger Aston Independent Non-Executive Chairman
Appointed to the Board
20 March 2012
Last elected by
shareholders
Experience and
expertise
13 November 2014
Dr. Aston has more than 20 years of experience in the pharmaceutical and biotech
industries. Dr. Aston was previously the Chief Executive Officer and a Director of
Mayne Pharma Group Limited.
Prior to his position at Mayne Pharma, some of his previous positions have included
CEO of Peptech Limited (Australia), Director of Cambridge Antibody Technology
Limited (UK), and Chairman of Bio Focus Plc (formally: Cambridge Drug Discovery
Limited).
Dr. Aston was also founder and CEO of Biokine Technology Ltd (UK) prior to its
acquisition by the Peptech Group. Dr. Aston was also a director of pSivida Ltd. During
the past 20 years of his career, Dr. Aston has been closely involved in the
development of many successful pharmaceutical and biotechnology companies.
Dr. Aston has extensive experience including negotiating global licence agreements,
overseeing product
the establishment and
implementation of guidelines and operating procedures for manufacturing and clinical
trials, overseeing manufacturing of human and veterinary products, private and public
fund raising activities and the introduction of corporate governance procedures.
registration activities with the FDA,
Qualifications
BSc (Hons), PhD
Directorships held in
other public entities
Dr. Aston is currently a director of:
- Pharmaust Limited (ASX:PAA) - Current Executive Chairman (12 Aug 2013)
- Oncosil Limited (ASX:OSL) - Non-Executive Chairman (stepped down 8 May 2017)
- Oncosil Limited (ASX:OSL) - Current Non-Executive Chairman (28 Mar 2013)
- Regeneus Limited (ASX:RGS) - Current Non-Executive Chairman (21 Sep 2012)
- Resapp Health Limited (ASX:RAP) - Current Chairman (2 Jul 2015)
Other listed directorships
held during the past 3
years
Dr. Aston has been a Director of the following entities in the past 3 years:
- PolyNovo Limited (ASX:PBV) (Formally: Calzada Limited (ASX:CZD))
- 15 November 2013 to 10 September 2014
- IDT Limited (ASX:IDT) - 20 March 2012 to 20 November 2013
Committees
Chairman and Member of the Company’s Remuneration Committee; and Member of
the Company’s Audit and Risk Committee.
Interests in shares and
options
Shares
Options
751,116 fully paid ordinary shares
3,282,950 options
13
Immuron Limited
Directors' report
30 June 2017
(continued)
Information on directors (continued)
Mr Daniel Pollock Independent Non-Executive Director
Appointed to the Board
11 October 2012
Last elected by
shareholders
Experience and
expertise
25 November 2015
Mr. Pollock is a lawyer admitted in both Scotland and Australia and holding Practicing
Certificates in both Jurisdictions. He is a sole practitioner in his own legal firm based
in Melbourne, Australia which operates internationally and specializes in commercial
law.
Mr. Pollock is Chairman of Amaero Pty Ltd, a company established to commercialise
laser based additive manufacturing emerging from Monash University.
He is also Executive Director and co-owner of Great Accommodation P/L a property
management business operating in Victoria.
Mr. Pollock has had historical involvement as a seed investor and Board member of a
number of small unlisted companies. The most recent of these was an e-Pharmacy
company where he was heavily involved in its commercial growth and ultimate sale to
a large listed health services company.
Qualifications
LL.B; Dip L.P
Directorships held in
other public entities
Other listed directorships
held during the past 3
years
Nil
Nil
Committees
Chairman and Member of the Company’s Audit and Risk Committee; and Member of
the Company’s Remuneration Committee.
Interests in shares and
options
Shares
Options
374,800 fully paid ordinary shares
1,134,800 options
14
Immuron Limited
Directors' report
30 June 2017
(continued)
Information on directors (continued)
Mr Stephen Anastasiou Non-Executive Director
Appointed to the Board
28 May 2013
Last elected by
shareholders
Experience and
expertise
29 November 2016
Mr. Anastasiou has over 20 years’ experience in general management, marketing and
strategic planning within the healthcare industry.
His breadth of experience incorporates medical diagnostics, pharmaceuticals,
hospital, dental and OTC products, with companies including the international
pharmaceutical company Bristol Myer Squibb.
While working with KPMG Peat Marwick as a management consultant, Mr.
Anastasiou has previously led project
teams in a diverse range of market
development and strategic planning projects in both the public and private sector. He
is also a director and shareholder of a number of unlisted private companies, covering
a variety of industry sectors that include healthcare and funds management.
Mr. Anastasiou’s companies have participated in several corporate transactions
involving business units and brands of multinational and Australian companies.
Qualifications
BSc (Hons), Grad. Dip MKTG, MBA
Directorships held in
other public entities
Other listed directorships
held during the past 3
years
Committees
Nil
Nil
Nil
Interests in shares and
options
Shares
Options
5,376,137 fully paid ordinary shares
3,247,017 options
15
Immuron Limited
Directors' report
30 June 2017
(continued)
Information on directors (continued)
Mr Peter Anastasiou Executive Vice Chairman
Appointed to the Board
21 May 2015
Last elected by
shareholders
Experience and
expertise
25 November 2015
Mr. Anastasiou is a serial entrepreneur and investor with extensive experience in
business both in Australia and overseas. Over the past 25 years, he has been
credited with rebuilding a number of companies through the implementation of various
corporate restructurings, acquisitions and solid financial management practices, with
his most recent success being managing the restructuring of SABCO to ensure the
future of this 100 year old iconic Australian company.
Mr. Anastasiou’s involvement with Immuron commenced in May 2013 following his
substantial underwriting support of the Company’s Renounceable Rights Issue, which
was surpassed by his further funding support of the $9.66M (before costs) capital
raising in February 2014 resulting in an ownership of approx. 15% of the Company via
his associated investment funds.
Mr. Anastasiou was the founding Chairman of the ACSI Group of Companies, which
has owned and managed successful consumer companies such as SABCO, Britex
Carpet care, Rug Doctor and Crystal Clear.
Mr. Anastasiou also has a number of philanthropic interests including being a patron
of the Identity Theatre for men, a prior board member and supporter of the Indigenous
Eye Health Unit at Melbourne University, a supporter of the John Fawcett Foundation
in Bali, and a founding investor and Director of Melbourne Victory Football Club.
Qualifications
B.Psych
Directorships held in
other public entities
Other listed directorships
held during the past 3
years
Committees
Nil
Nil
Nil
Interests in shares and
options
Shares
Options
15,327,746 fully paid ordinary shares
5,158,409 options
16
Immuron Limited
Directors' report
30 June 2017
(continued)
Information on directors (continued)
Prof Ravi Savarirayan Non-Executive Director
Appointed to the Board
7 April 2017
Last elected by
shareholders
Experience and
expertise
N/A
He is a consultant clinical geneticist at the Victorian Clinical Genetics Services since
August 1999, as well as Professor and Research Group Leader (Skeletal Biology and
Disease) at the Murdoch Children’s Research Institute since September 2000. Mr.
Savarirayan is a founding member of the Skeletal Dysplasia Management Consortium
since January 2011 and has been the Chair of the Specialist Advisory Committee in
Clinical Genetics, Royal Australasian College of Physicians since February 2009 . He
was president of the International Skeletal Dysplasia Society from July 2009 to June
2011 and has been an invited member of several International Working Committees
on Constitutional Diseases of Bone. Mr. Savarirayan’s primary research focus is on
inherited disorders of the skeleton causing short stature, arthritis and osteoporosis.
He has published over 150 peer-reviewed articles, collaborating with peers from over
30 countries, and has been on the editorial board of Human Mutation since January
2009, European Journal of Human Genetics since July 2007, American Journal of
Medical Genetics since December 2011 and Journal of Medical Genetics since June
2005. Mr. Savarirayan received his MBBS from the University of Adelaide in 1990 and
became a fellow of the Royal Australasian College of Physicians in December 1997.
He was certified as a specialist in clinical genetics from the Human Genetics Society
of Australasia in 1998 and received his Doctor of Medicine from the University of
Melbourne in 2004,
for his thesis “Clinical and Molecular Studies in the
Osteochondrodysplasias.”
Qualifications
MD (Melb.), BS, FRACP, ARCPA (Hon.)
Directorships held in
other public entities
Other listed directorships
held during the past 3
years
Committees
Nil
Nil
Nil
Interests in shares and
options
Shares
Options
Nil fully paid ordinary shares
1,000,000 options*
*On 22 June 201, the Company issued Professor Ravi Savarirayan, 1,000,000 unlisted options exercisable at
$0.50 on or before 27 Nov 2019. These options are currently held in escrow and cannot be exercised until
shareholder approval is granted.
Company secretary
Mr Phillip Hains Joint Company Secretary & Chief Financial Officer
Mr. Hains was appointed as Company Secretary on 19 April 2013.
Mr. Hains is a Chartered Accountant and specialist in the public company environment. He has served the
needs of a number of public company boards of directors and related committees. He has over 20 years’
experience in providing accounting, administration, compliance and general management services. He holds a
Masters of Business Administration from RMIT and a Public Practice Certificate from the Institute of Chartered
Accountants of Australia.
17
Immuron Limited
Directors' report
30 June 2017
(continued)
Company secretary (continued)
Mr Peter Vaughan Joint Company Secretary & Chief Financial Officer
Mr. Vaughan was appointed as Company Secretary on 19 April 2013.
Mr. Vaughan is a Chartered Accountant who has worked in the listed company environment for more than 10
years across a number of industries. He has served on and provided accounting, administration, compliance
and general management services to a number of private, not-for-profit and public company boards of directors
and related committees.
Chief Executive Officer
Dr Jerry Kenellos Chief Executive Officer (CEO) and Chief Operating & Scientific Officer (COSO)
Appointed as CEO
1 August 2017
Experience and
expertise
property
intellectual
development,
project management,
Dr. Jerry Kanellos has over twenty five years’ experience in the pharmaceutical and
biotechnology industry, and has held leadership roles in executive management,
portfolio
business
management research and development. From 2008 until 2012, Dr. Kanellos was the
Chief Operating Officer of TransBio Limited where he was responsible for the
strategic identification, development and maintenance of commercial partnerships
globally, along with development, management and maintenance responsibility for the
intellectual property portfolio, research and development and technology transfer.
Prior to this, Dr. Kanellos work for five years as a consultant to the biotechnology
industry and has provided development and commercialization strategies for various
bodies including academic institutes, private and publicly listed companies and
government departments both national and international. He has also been involved
in the establishment and management of several startup biotechnology companies.
During his ten years tenure in research and development at CSL Limited, a global
specialty biotherapeutics company that develops and delivers innovative biotherapies,
Dr. Kanellos gained considerable experience in the international drug development
process, formulation development through to pharmaceutical scale up and cGMP
manufacture successfully leading the Chemistry Manufacturing and Controls (CMC)
programs for the approval, manufacture and launch of several products. Dr. Kanellos
holds a PhD in Medicine from the University of Melbourne.
Qualifications
Directorships held in
other public entities
Other listed directorships
held during the past 3
years
Interests in shares and
options
PhD
Nil
Nil
Shares
Options
Nil fully paid ordinary shares
200,000 options
18
Immuron Limited
Directors' report
30 June 2017
(continued)
Meetings of directors
The numbers of meetings of the Company's board of Directors and of each board committee held during the year
ended 30 June 2017, and the numbers of meetings attended by each Director were:
Dr. Roger Aston
Mr. Peter Anastasiou
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Prof. Ravi Savarirayan
Meetings
of directors
Meetings of Committees
Audit
Remuneration
A
12
12
12
12
2
B
12
12
12
12
2
A
3
-
3
-
-
B
3
-
3
-
-
A
-
-
-
-
-
B
-
-
-
-
-
A = Number of meetings attended
B = Number of meetings held during the time the Director held office or was a member of the committee during
the year
As at the date of this report the Company had an Audit and Risk Committee and Remuneration Committee with
membership of the committees as follows:
Chairman
Members
Audit and Risk Committee
Mr. Daniel Pollock
Dr. Roger Aston
Remuneration Committee
Dr. Roger Aston
Mr. Daniel Pollock
Indemnification and Insurance of Directors and other Officers
Under the Company's constitution:
(a) To the extent permitted by law and subject to the restrictions in section 199A and 199B of the Corporations
Act 2001, the Company indemnifies every person who is or has been an officer of the Company against any
liability (other than for legal costs) incurred by that person as an officer of the Company where the Company
requested the officer to accept appointment as Director.
(b) To the extent permitted by law and subject to the restrictions in sections 199A and 199B of the Corporations
Act 2001, the Company indemnifies every person who is or has been an officer of the Company against
reasonable legal costs incurred in defending an action for a liability incurred by that person as an officer of the
Company.
The Company has insured its Directors, the Company Secretaries and executive officers for the financial year
ended 30 June 2017. Under the Company's Directors' and Officers' Liability Insurance Policy, the Company
cannot release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or
the amount of the premium. Accordingly, the Company relies on section 300(9) of the Corporations Act 2001 to
exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of
the relevant policy.
The Company also has in place a Deed of Indemnity, Access and Insurance with each of the Directors. This
Deed:
(i) indemnifies the Director to the extent permitted by law and the Constitution against certain liabilities and legal
costs incurred by the Director as an officer of the Company and subsidiary;
(ii) requires the Company to maintain, and pay the premium for, a Directors and Officers Insurance Policy in
respect of the Directors; and
(iii) provides the Director with access to particular papers and documents requested by the Director for a
Permitted Purpose;
both during the time that the Director holds office and for a seven-year period after the Director ceases to be an
officer of the Company and any subsidiary, on the terms and conditions contained in the Deed.
19
Immuron Limited
Directors' report
30 June 2017
(continued)
Indemnification and Insurance of Directors and other Officers (continued)
Indemnification and Insurance of auditor
The Company has not, during or since 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.
Shares Issued as a Result of the Exercise of Options
No fully paid ordinary shares were issued from the exercise of options during the year ended 30 June 2017.
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.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Other Audit Services
The Company’s Auditors, William Buck, did not provide any non-audit services during the 2017 financial year.
During the year, the Company had engaged its US auditor Marcum LLP to assist with filing of the F-1 application
form for listing on the NASDAQ exchange in the USA. Total fees charged for these services were AUD $470,503
(2016: $Nil). The directors are satisfied that the provision of these services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of the audit
services provided means that auditor independence was not compromised.
Auditor’s Independence Declaration
The Auditors Independence Declaration as required under section 307C of the Corporations Act 2001 for the
year ended 30 June 2017 has been received and can be found in the ‘Auditor’s Independence Declaration’
section of this Annual Report.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
Immuron support and adhere to good corporate governance practices. The Company's Corporate Governance
Statement is available on the Company’s website together with the Board Skills Matrix at www.immuron.com.
Remuneration report
This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company as
required by the Corporations Act 2001 and its Regulations.
This report details the nature and amount of remuneration of each Director of Immuron Limited and all other Key
Management Personnel.
For the purposes of this report, Key Management Personnel (KMP) are defined as those persons having
authority and responsibility for planning, directing and controlling the major activities of the Company, directly or
indirectly, including any Director (whether Executive or otherwise) of the Company.
For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives, and
secretaries of the Company. This report details the nature and amount of remuneration for each Director of
Immuron Limited, and for the other Key Management Personnel.
20
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
The Directors of Immuron Limited during the year were:
Dr. Roger Aston Independent non-executive chairman
Mr. Peter Anastasiou Executive vice chairman
Mr. Daniel Pollock Independent non-executive director
Mr. Stephen Anastasiou Independent non-executive director
Prof. Ravi Savarirayan Independent non-executive director (appointed 7 April 2017)
The following persons held office as Key Management Personnel of Immuron Limited during the financial year
with the following changes subsequent to 30 June 2017:
Dr. Jerry Kenellos Interim Chief Executive Officer (CEO), (appointed 3 August 2017) and Chief Operating &
Scientific Officer (COSO)
Mr. Thomas Liquard Chief Executive Officer (CEO) (resigned 3 August 2017)
(a) Section A: Principles used to determine the nature and amount of Remuneration
Remuneration Policy
The Remuneration Policy ensures that Directors and Senior Management are appropriately remunerated having
industry
regard to their
norms/standards and the general pay environment as appropriate. The Remuneration Policy has been
established to enable the Company to attract, motivate and retain suitably qualified Directors and Senior
Management who will create value for shareholders.
relevant experience,
the performance of
their performance,
the Company,
Remuneration Policy versus Company Performance
The Company's Remuneration Policy is not directly based on the Company's earnings. The Company's earnings
have remained negative since inception due to the nature of the Company. Shareholder wealth reflects this
speculative and volatile market sector. No dividends have ever been declared by the Company. The Company
continues to focus on the research and development of its intellectual property portfolio with the objective of
achieving key development and commercial milestones in order to add further Shareholder value.
The Company’s performance over the previous five financial years is as follows:
Financial year
Net loss ($)
Share price at
year end
2017
2016
2015
2014
2013
6,804,154
5,599,004
3,447,951
2,544,550
3,539,117
$0.27
$0.25
$0.23*
$0.20*
$0.16*
* Share prices have been adjusted to reflect a 40:1 capital consolidation which was completed on 20 Nov 2014
Remuneration Committee
The Remuneration Committee of the Board of Directors of Immuron Limited is responsible for overseeing the
Remuneration Policy of the Company and for recommending or making such changes to the policy as it deems
appropriate.
Non-Executive Director Remuneration
Objective
The Remuneration Policy ensures that Non-Executive Directors are appropriately remunerated having regard to
their relevant experience, individual performance, the performance of the Company, industry norms/standards
and the general pay environment as appropriate.
21
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(a) Section A: Principles used to determine the nature and amount of Remuneration (continued)
Non-Executive Director Remuneration (continued)
Structure
The Company's Constitution and the ASX Listing Rules specify that
the aggregate remuneration of
Non-Executive Directors shall be determined from time to time by a Meeting of Shareholders. An amount (not
exceeding the amount approved at the Shareholders Meeting) is determined by the Board and then divided
between the Non-Executive Directors as agreed. The latest determination was at the Shareholders Meeting held
on 8 November 2005 when shareholders approved the aggregate maximum sum to be paid or provided as
remuneration to Non-Executive Directors as a whole (other than the Managing Director, CEO and Executive
Directors) for their services as $350,000 per annum.
In the year ended 30 June 2017, the Non-Executive Directors and Executive Directors were remunerated an
aggregate $444,373 and $69,050, respectively per annum, including superannuation and any equity issued
during the period. Equity issued to directors were approved by shareholders as consideration for additional
services provided to the Company.
The manner in which the aggregate remuneration is apportioned amongst Non-Executive Directors is reviewed
periodically.
The Board is responsible for reviewing its own performance. Board, and Board committee performance, is
monitored on an informal basis throughout the year with a formal review conducted during the financial year.
No retirement benefits are payable other than statutory superannuation, if applicable.
Executive Director and Executive Officer Remuneration
Objective
The Remuneration Policy ensures that Executive Directors are appropriately remunerated having regard to their
relevant experience, individual performance, the performance of the Company, industry norms/standards and the
general pay environment as appropriate.
Structure
The Non-Executive Directors are responsible for evaluating the performance of the Chief Executive Officer (CEO)
who in turn evaluates the performance of the other Senior Executives. The evaluation process is intended to
assess the Company's business performance, whether long-term strategic objectives are being achieved and the
achievement of individual performance objectives.
The performance of the CEO and Senior Executives are monitored on an informal basis throughout the year and
a formal evaluation is performed annually.
Fixed Remuneration
Executives' fixed remuneration comprises salary and superannuation and is reviewed annually by the CEO, and
in turn, the Remuneration Committee. This review takes into account the Executives' experience, performance in
achieving agreed objectives and market factors as appropriate.
Variable Remuneration – Short Term Incentive Scheme
All Executives are entitled to participate in the Employee Short Term Incentive Scheme which provides for
executive employees to receive a combination of short term incentive (STI) as part of their total remuneration if
they achieve certain performance indicators as set by the Board. The STI can be paid either by cash, or a
combination of cash and the issue of equity in the Company, at the determination of the Board and Remuneration
Committee.
22
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(a) Section A: Principles used to determine the nature and amount of Remuneration (continued)
Executive Director and Executive Officer Remuneration (continued)
Variable Remuneration – Long Term Incentive Scheme
Executives may also be provided with longer-term incentives through the Company's Executive Share Option
Plan (ESOP), that was approved by shareholders at the Annual General Meeting held on 13 November 2014.
The aim of the ESOP is to allow the Executives to participate in, and benefit from, the growth of the Company as
a result of their efforts and to assist in motivating and retaining those key employees over the long term.
Continued service is the condition attached to the vesting of the options. The Board at its discretion determines
the total number of options granted to each Executive.
Voting and Comments Made at the Company’s 2016 Annual General Meeting
The Company received 99.76% of the “YES” votes on the resolution pertaining to shareholders voting on the
remuneration report for the 2016 financial year. There were no specific comments raised at the Annual General
Meeting or throughout the year on its remuneration practices.
(b) Section B: Details of remuneration
Details of remuneration for the year ended 30 June 2017
The remuneration for each Director and each of the other Key Management Personnel of the Company during
the year ended 30 June 2017 was as follows:
2017
Short-term
employee benefits
Post-
employment
benefits
Share based
payments
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Shares/
Options
$
Total
$
Directors
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Prof. Ravi Savarirayan
Total
Other key management personnel
Dr. Jerry Kenellos
Mr. Thomas Liquard
Total
Total
64,375
48,750
42,500
42,500
12,501
210,626
160,000
311,040
471,040
681,666
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,116
4,631
-
-
-
10,747
212,400
26,550
26,550
26,550
-
292,050
282,891
79,931
69,050
69,050
12,501
513,423
15,200
-
15,200
28,620
33,000
203,820
344,040
61,620
547,860
25,947
353,670
1,061,283
Details of remuneration for the year ended 30 June 2016
The remuneration for each Director and each of the other Key Management Personnel of the Company during
the year ended 30 June 2016 was as follows:
23
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Details of remuneration for the year ended 30 June 2016 (continued)
2016
Short-term
employee benefits
Post-
employment
benefits
Share based
payments
Cash
salary and
fees
$
Cash
bonus
$
Non-
monetary
benefits
$
Super-
annuation
$
Shares/
Options*
$
Total
$
Directors
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Total
Other key management personnel
Dr. Jerry Kenellos
Mr. Thomas Liquard
Dr. Leearne Hinch
Total
Total
62,500
45,000
40,000
40,000
187,500
149,744
287,485
27,785
465,014
652,514
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,938
4,275
-
-
730,125
292,050
292,050
292,050
798,563
341,325
332,050
332,050
10,213
1,606,275
1,803,988
14,226
-
1,565
15,791
-
-
-
-
163,970
287,485
29,350
480,805
26,004
1,606,275
2,284,793
An adjustment of AUD$1,209,338 was made to the Total reserves balance at 30 June 2016 as compared to the
previous statement lodged with ASX, as a result of a change in volatility assessment. Effectively, this resulted in
an increase in Consulting, Employee and Director expense and the Loss for the period on the Statement of Profit
or Loss and Other Comprehensive income. Refer to note 9(b) for more details.
Fully paid ordinary shares held
The number of shares in the Company held during the financial year by each Director and other Key
Management Personnel of the Company, including their personally related parties, are set out below.
2017
Directors
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Prof. Ravi Ssavarirayan
Total
Other key management personnel
Mr. Jerry Kenellos
Mr. Thomas Liquard
Total
Opening
balance
No.
Granted as
compensation
No.
Net change -
other
No.
Closing
balance
No.
607,116
319,640
4,067,857
13,663,364
-
18,657,977
-
-
-
-
-
-
144,000
(19,640)
1,308,280
1,308,280
-
2,740,920
751,116
300,000
5,376,137
14,971,644
-
21,398,897
-
-
-
-
134,694
134,694
-
-
-
-
134,694
134,694
Total
18,657,977
134,694
2,740,920
21,533,591
24
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Fully paid ordinary shares held (continued)
Net Change - Other No: Securities acquired or disposed of on market during the period, including securities
acquired via the Rights Issue from the NASDAQ Listing as announced to the market on 9 June 2017. No shares
were granted to Directors or Key Management in relation to remuneration during the 2017 financial year.
Post 30 June 2017, the following directors had movement in their shareholding:
• Mr Daniel Pollock acquired 74,800 shares on 6 September 2017. Mr Pollock currently holds 374,800 fully
paid ordinary shares in Immuron Limited.
• Mr Peter Anastasiou acquired 355,802 shares on various different acquisition dates. Mr P Anastasious
currently holds 15,327,746 fully paid ordinary shares in Immuron Limited.
2016
Directors
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Total
Other key management personnel
Mr. Jerry Kenellos
Mr. Thomas Liquard
Dr. Leearne Hinch
Total
Opening
balance
$
Granted as
compensation
$
Net change -
other
$
Closing
balance
$
468,166
304,640
2,035,371
10,022,360
(12,830,537)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
138,950
15,000
2,032,486
3,641,004
(5,827,440)
607,116
319,640
4,067,857
13,663,364
(18,657,977)
-
-
-
-
-
-
-
-
5,827,440
18,657,977
Total
12,830,537
Net Change - Other No: Securities acquired or disposed of on market during the period, including securities
acquired via the Rights Issue as announced to the market on 5 July 2016. No shares were granted to Directors or
Key Management in relation to remuneration during the 2016 financial year.
Shares and options may be granted to key management personnel under the various share based compensation
plans as set out in section C of this report.
Details of shares and options provided as part of the total remuneration paid to key management personnel are
set out below. When exercisable, each option is convertible into one ordinary fully paid share of Immuron Limited.
Options and rights held
The number of options over ordinary shares in the Company held during the financial year by each Director of
Immuron Limited and other Key Management Personnel of the Company, including their personally related
parties, are set out below:
25
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Options and rights held (continued)
2017
Directors
Dr. Roger Aston*
Mr. Daniel Pollock*
Mr. Stephen Anastasiou*
Mr. Peter Anastasiou*
Prof. Ravi Savarirayan**
Total
key management
Other
personnel
Mr. Thomas Liquard
Mr. Jerry Kenellos***
Total
Opening
balance
No.
Options
expired or
lapsed
No.
Net
change
- other
No.
Closing
balance
No.
Vested and
exercisable
No.
Unvested
No.
3,500,000
1,250,000
1,250,000
1,000,000
-
7,000,000
(500,000)
(250,000)
(250,000)
-
-
(1,000,000)
282,950
60,000
2,247,017
3,726,409
1,000,000
7,316,376
3,282,950
1,060,000
3,247,017
4,726,409
1,000,000
13,316,376
3,282,950
1,060,000
3,247,017
4,726,409
-
12,316,376
-
-
-
-
1,000,000
1,000,000
-
-
-
-
-
-
-
200,000
200,000
-
200,000
200,000
-
-
-
-
-
-
Total
7,000,000
(1,000,000)
7,516,376
13,516,376
12,316,376
1,000,000
*Net Change - Other No: Securities acquired or disposed of on market during the period, including securities
acquired via the Rights Issue from the NASDAQ Listing as announced to the market on 9 June 2017.
**On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are currently
held in escrow and cannot be exercised until shareholder approval is granted.
***Issue of Unlisted Options in lieu of cash payment under Immuron Limited ESOP.
Post 30 June 2017, the following directors had movement in their shareholding:
• Mr Daniel Pollock acquired 74,800 options on 6 September 2017. Mr Pollock currently holds 1,134,800
options in Immuron Limited.
• Mr Peter Anastasiou acquired 432,000 options on 18 August 2017. Mr P Anastasious currently holds
5,158,409 options in Immuron Limited.
26
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Options and rights held (continued)
2016
Directors
Dr. Roger Aston*
Mr. Daniel Pollock*
Mr. Stephen Anastasiou*
Mr. Peter Anastasiou**
Total
key management
Other
personnel
Mr. Thomas Liquard
Mr. Jerry Kenellos
Dr. Leearne Hinch
Total
Opening
balance
No.
Options
expired or
lapsed
No.
Net
change
- other
No.
Closing
balance
No.
Vested and
exercisable
No.
Unvested
No.
604,166
291,666
250,000
1,666,666
2,812,498
(104,166)
(41,666)
-
(1,110,666)
(1,256,498)
3,000,000
1,000,000
1,000,000
444,000
5,444,000
3,500,000
1,250,000
1,250,000
1,000,000
7,000,000
500,000
250,000
250,000
-
1,000,000
3,000,000
1,000,000
1,000,000
1,000,000
6,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
2,812,498
(1,256,498)
5,444,000
7,000,000
1,000,000
6,000,000
*Issue of Unlisted Options in lieu of cash payment for additional services as per Resolution 5A - 5D of the AGM
held on 25 Nov 2015.
**Issue of Unlisted Options in lieu of cash payment for additional services as per Resolution 5A - 5D of the AGM
held on 25 Nov 2015. Mr Peter Anastasiou also exercised 556,000 IMCAI Unlisted Options into Ordinary Shares
at exercise price of $0.376.
Additional information in respect of options
The terms and conditions of each grant of options over ordinary fully paid shares affecting remuneration of
directors and key management personnel in this financial year or future reporting years are as follows:
Number of
options
5,000,000
1,000,000
200,000
Grant date
a
27-Nov-15
27-Nov-15
09-Dec-16
Vesting date
and exercisable
date
Expiry date
Exercise price
$
Fair value
at grant
date
$
06-Aug-16
06-Aug-17
09-Dec-16
27-Nov-19
27-Nov-19
27-Nov-19
0.500
0.500
0.500
0.082
0.082
0.143
The above quantities and values have been adjusted to reflect a 40:1 capital consolidation which was completed
on 20 Nov 2014.
On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are currently
held in escrow and cannot be exercised until shareholder approval is granted.
Options granted carry no dividend or voting rights and the value of the grant was determined in accordance with
applicable Australian Accounting Standards.
The number of options over ordinary shares granted to and vested by directors and key management personnel
as part of compensation is set out below:
27
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Additional information in respect of options (continued)
Directors:
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Prof. Ravi Savarirayan*
Total
a
Other key management personnel:
Mr. Jerry Kenellos
Mr. Thomas Liquard
Total
a
Total
Total value of
options granted
during the year
$
2017
2016
Value of options
exercised during
the year
$
2017
2016
Value of options
lapsed during the
year
$
2017
2016
212,400 730,125
26,550 292,050
26,550 292,050
26,550 292,050
-
-
292,050 1,606,275
28,620
-
28,620
-
-
-
320,670 1,606,275
-
-
-
-
-
-
-
-
-
-
-
-
-
35,806
-
35,806
8,762
50,800
3,505
25,400
-
25,400
93,426
-
-
-
101,600 105,693
-
-
-
-
-
-
-
-
-
35,806
101,600 105,693
*On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are currently
held in escrow and cannot be exercised until shareholder approval is granted.
The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:
Directors:
Dr. Roger Aston
Mr. Daniel Pollock
Mr. Stephen Anastasiou
Mr. Peter Anastasiou
Prof. Ravi Savarirayan
a
Other key management personnel:
Mr. Jerry Kenellos
Mr. Thomas Liquard
Fixed remuneration
2017
2016
At risk - STI
2017
2016
At risk - LTI
2017
2016
25%
67%
62%
62%
100%
61%
33%
45%
45%
-
86%
90%
100%
100%
75%
33%
38%
38%
-
14%
10%
39%
67%
55%
55%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Loans to/from Directors and Other Key Management Personnel
The Company received a short term Loan from Grandlodge Capital Pty Ltd, part-owned and operated by
Immuron Directors Peter and Stephen Anastasiou.
The short-term funding is a cash advance against the anticipated refund Immuron will receive from the Australian
Taxation Office under the Research and Development Income Tax Concession Incentive for the Company's
eligible R&D expenditure incurred for financial year of 2016 and 2017.
Other transactions with Directors or Other Key Management Personnel
Services rendered by Grandlodge Pty Ltd to Immuron Ltd:
Grandlodge, and its associated entities, are marketing, warehousing and distribution logistics companies. Mr
David Plush is also an owner of Grandlodge, and its associated entities.
28
Immuron Limited
Directors' report
30 June 2017
(continued)
Remuneration report (continued)
(b) Section B: Details of remuneration (continued)
Other transactions with Directors or Other Key Management Personnel (continued)
Services rendered by Grandlodge Pty Ltd to Immuron Ltd: (continued)
Commencing on 1st June 2013, Grandlodge was verbally contracted to provide warehousing, distribution and
invoicing services for Immuron’s products for AUD$70,000 per annum. These fees will be payable in new fully
paid ordinary shares in Immuron Limited at a set price of AUD$0.16 per share representing Immuron Limited’s
share price at the commencement of the verbal agreement.
The shares to be issued to Grandlodge, or its associated entities, as compensation in lieu of cash payment for
the services rendered under this verbal agreement have been subject to the approval of Immuron shareholders at
Company shareholder meetings held over the past 18 months.
Grandlodge will also be reimbursed in cash for all reasonable costs and expenses incurred in accordance with
their scope of works under the verbal agreement, unless both parties agree to an alternative method of payment.
Premises Rental services received from Wattle Laboratories Pty Ltd to Immuron Ltd:
Wattle Laboratories Pty Ltd (Wattle) is an entity part-owned and operated by Immuron Directors Peter and
Stephen Anastasiou.
Commencing on 1 January 2016, Immuron executed a 3 year Lease Agreement with Wattle whereby Immuron
will lease part of their Blackburn office facilities for Immuron's operations at an arms-length commercial rental rate
of $38,940 per annum, payable in monthly installments.
Section C: Employment Contracts of Key Management Personnel
As at 30 June 2017, the following contracts are in place for Directors or Key Management Personnel:
Title
Dr. Jerry Kenellos
Nature of change Notice Requirements
Until
by either party.
termination
For any reason Dr
Kanellos may terminate
the agreement by
providing 30 days' notice.
Termination Requirements
Pay Dr Kenellos on termination
any unpaid salary, reimburse all
business expenses submitted
with appropriate documentation.
Section D: Additional Information
No loans have been made to any Director, any member of the Key Management Personnel, or any of their
related entities, or any executive during the 2017 financial year (2016: $Nil).
This completed the Remuneration Report of Immuron Limited for 30 June 2017
Immuron Limited Corporate Governance Statement for financial year ended 30 June 2017 can be found on
Immuron Limited website: www.immuron.com
This report is made in accordance with a resolution of Directors.
Dr. Roger Aston
Director
Melbourne
28 September 2017
29
Immuron Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2017
Revenue
Sale of goods
Total operating revenue
Cost of goods sold
Gross profit
Direct Selling Costs
Sales and marketing costs
Freight costs
Total gross profit less direct selling costs
Other income
Expenses
Consulting, employee and director
Corporate administration
Depreciation
Finance fee costs
Impairment of inventory
Marketing and promotion
Research and development
Travel and entertainment expenses
Loss before income tax
Income tax expense
Loss for the period
Consolidated entity
2017
$
Restated
2016
$
Notes
2
2
3
3
4
1,396,197
1,396,197
1,001,077
1,001,077
(337,546)
1,058,651
(301,435)
699,642
(407,751)
(135,377)
515,523
(133,781)
(134,967)
430,894
1,614,373
3,008,778
(1,689,521)
(1,381,809)
(4,922)
(24,483)
(136,494)
(789,608)
(4,630,674)
(276,539)
(6,804,154)
(2,840,037)
(1,320,570)
(3,892)
(341,600)
(4,176)
(487,591)
(3,623,961)
(416,849)
(5,599,004)
-
(6,804,154)
-
(5,599,004)
Other comprehensive income for the period, net of tax
40,017
8,846
Total comprehensive loss for the period
(6,764,137)
(5,590,158)
Cents
Cents
Earnings per share for profit attributable to the ordinary equity
holders of the Company:
Basic/diluted loss per share (cents)
18
(6.4)
(7.3)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
31
Immuron Limited
Consolidated statement of financial position
As at 30 June 2017
Notes
5(b)
5(a)
6(a)
6(b)
Consolidated entity
2017
$
Restated
2016
$
3,994,924
1,768,237
2,336,127
168,366
8,267,654
2,290,639
4,387,772
2,056,067
74,943
8,809,421
18,837
18,837
18,063
18,063
8,286,491
8,827,484
5(c)
5(d)
5(d)
6(c)
1,326,562
139,864
226,000
19,139
1,711,565
1,986,407
772,397
1,128,117
-
3,886,921
1,711,565
3,886,921
6,574,926
4,940,563
7(a)
7(b)
53,632,995
2,470,417
(49,528,486)
45,633,354
2,128,566
(42,821,357)
6,574,926
4,940,563
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Plant and equipment
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Borrowings
Other financial liabilities
Deferred revenue
Total current liabilities
Total liabilities
Net assets
EQUITY
Issued capital
Reserves
Accumulated losses
Total equity
The above consolidated statement of financial position should be read in conjunction with the accompanying
notes.
32
Immuron Limited
Consolidated statement of changes in equity
For the year ended 30 June 2017
Attributable to owners of
Immuron Limited
Consolidated entity
Notes
Issued capital
$
Reserves
$
Accumulated
losses
$
Total
$
Balance at 1 July 2015
40,335,347
548,065
(37,542,573)
3,340,839
Loss for the period
Other comprehensive income
Total comprehensive (loss) income
for the period
Transactions with owners in their
capacity as owners:
Contributions of equity, net of
transaction costs
Treasury shares
Shares to be issued
Options issued/expensed
Lapse or exercise of share options
7(a)
7(a)
7(b)
7(b)
-
-
-
-
8,846
8,846
(5,599,004)
-
(5,599,004)
8,846
(5,599,004)
(5,590,158)
1,586,629
(800,000)
4,511,378
-
-
5,298,007
-
-
-
1,891,875
(320,220)
1,571,655
-
-
-
-
320,220
320,220
1,586,629
(800,000)
4,511,378
1,891,875
-
7,189,882
Balance at 30 June 2016 (Restated)
45,633,354
2,128,566
(42,821,357)
4,940,563
Balance at 1 July 2016 (Restated)
45,633,354
2,128,566
(42,821,357)
4,940,563
Loss for the period
Other comprehensive income
Total comprehensive (loss) income
for the period
Transactions with owners in their
capacity as owners:
Contributions of equity, net of
transaction costs
Options and warrants
issued/expensed
Lapse or exercise of share options
7(a)
7(b)
7(b)
-
-
-
-
40,017
40,017
(6,804,154)
-
(6,804,154)
40,017
(6,804,154)
(6,764,137)
7,927,766
-
71,875
7,999,641
-
-
7,927,766
470,734
(168,900)
301,834
-
97,025
97,025
470,734
-
8,398,500
Balance at 30 June 2017
53,632,995
2,470,417
(49,528,486)
6,574,926
The above consolidated statement of changes in equity should be read in conjunction with the accompanying
notes.
33
Immuron Limited
Consolidated statement of cash flows
For the year ended 30 June 2017
Consolidated entity
2017
$
Restated
2016
$
Notes
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other - R&D tax concession refund and other government grants
Interest and other costs of finance paid
Net cash used in operating activities
1,413,676
(9,971,142)
8,386
1,615,043
(97,051)
(7,031,088)
1,114,596
(7,710,997)
12,165
1,469,763
(43,863)
(5,158,336)
8(a)
Cash flows from investing activities
Payments for property, plant and equipment
Net cash used from investing activities
Cash flows from financing activities
Proceeds from issues of shares and other equity securities
Proceeds from borrowings
Repayment of borrowings
Capital raising cost
Net cash provided from 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
Cash and cash equivalents at end of period
5(b)
(5,696)
(5,696)
(2,441)
(2,441)
12,525,067
500,000
(2,191,593)
(2,132,422)
8,701,052
1,664,268
2,290,639
40,017
3,994,924
2,482,861
2,950,000
(1,077,220)
(20,299)
4,335,342
(825,435)
3,116,074
-
2,290,639
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
34
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
1 Segment information
(a) Description of segments and principal activities
The entity has identified its operating segments based on the internal reports that are reviewed and used by the
executive management team in assessing performance and determining the allocation of resources.
The executive management team considers the business from both a product and a geographic perspective and
has identified three reportable segments.
Research and Development (R&D): Income and expenses directly attributable to the Company’s research and
development projects performed in Australia, Israel and United States.
HyperImmune Products: Income and expenses directly attributable to Travelan activities which occur in
Australia, New Zealand, US and Canada. In 2017, the Company earned 64%, 10% and 26% of its revenues from
customers located in Australia, Canada and US, respectively. In 2016, the Company earned 78%, 4% and 18%
of its revenues from customers located in Australia, Canada and US, respectively.
Corporate: Other items of income and expenses not directly attributable to R&D or HyperImmune Products
segment are disclosed as corporate costs. Corporate activities primarily occur within Australia. This segment
includes interest expenses from financing activities and depreciation.
(b) Segment results
Consolidated entity
2017
Research &
Development
HyperImmune
Products
Corporate
Total
$
$
$
$
Segment revenue & other income
Revenue from external customers
R&D tax concession refund
Interest income
Other income
Total Segment revenue & other
income
-
1,575,315
-
25,000
1,396,197
-
-
5,672
1,600,315
1,401,869
-
-
8,386
-
8,386
1,396,197
1,575,315
8,386
30,672
3,010,570
Segment expenses
Depreciation
Finance fee costs
Share-based payments
Other operating expenses
Total segment expenses
Income tax expense
(Loss)/profit for the year
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
-
-
(188,481)
(4,805,874)
(4,994,355)
-
(3,394,040)
-
-
-
(1,017,169)
(1,017,169)
(4,922)
(24,483)
(334,184)
(3,439,611)
(3,803,200)
(4,922)
(24,483)
(522,665)
(9,262,654)
(9,814,724)
-
384,700
-
(3,794,814)
-
(6,804,154)
1,498,112
1,498,112
2,585,755
2,585,755
4,202,624
4,202,624
8,286,491
8,286,491
(514,326)
(514,326)
(330,218)
(330,218)
(867,021)
(867,021)
(1,711,565)
(1,711,565)
(3,098,427)
(3,987,624)
(4,211,010)
(11,297,061)
35
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
1 Segment information (continued)
(b) Segment results (continued)
Consolidated entity
2016 Restated
Segment revenue & other income
Revenue from external customers
R&D tax concession refund
Interest income
Other income
Total Segment revenue & other
income
Segment expenses
Depreciation
Finance fee costs
Share-based payments
Other operating expenses
Total segment expenses
Income tax expense
(Loss)/profit for the year
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
Research &
Development
HyperImmune
Products
Corporate
Total
$
$
$
$
-
2,982,603
-
-
1,001,077
-
-
10,200
-
-
12,165
3,810
1,001,077
2,982,603
12,165
14,010
2,982,603
1,011,277
15,975
4,009,855
-
-
-
(3,623,961)
(3,623,961)
-
-
-
(570,183)
(570,183)
(3,892)
(156,000)
(2,079,375)
(3,175,448)
(5,414,715)
(3,892)
(156,000)
(2,079,375)
(7,369,592)
(9,608,859)
-
(641,358)
-
441,094
-
(5,398,740)
-
(5,599,004)
1,512,840
1,512,840
2,318,860
2,318,860
4,995,784
4,995,784
8,827,484
8,827,484
(769,434)
(769,434)
(538,806)
(538,806)
(2,578,681)
(2,578,681)
(3,886,921)
(3,886,921)
Information on major customers:
During the year ended 30 June 2017 and 2016, the Company had the following major customers (and their
respective contribution to the Company's total revenue):
(4,495,443)
(3,330,137)
(5,011,759)
(12,837,339)
Consolidated entity
2017 %
2016 %
13
34
15
15
10
-
16
43
22
-
-
-
Customer A
Customer B
Customer C
Customer D*
Customer E
Customer F*
*Less than 10% of revenue for the respective year.
No other single customers contributed 10% to the Company's revenue for the periods.
36
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
Consolidated entity
2017
$
2016
$
1,396,197
1,396,197
1,001,077
1,001,077
8,386
1,575,315
30,672
1,614,373
12,165
2,982,603
14,010
3,008,778
Consolidated entity
2017
$
Restated
2016
$
-
905,819
39,664
221,373
522,665
1,689,521
146,007
150,502
238,985
846,315
1,381,809
46,775
956,737
32,537
197,713
1,606,275
2,840,037
62,825
100,609
217,904
939,232
1,320,570
2 Revenue and other income
Revenue from operating activities
Sale of goods
Total revenue from operating activities
Other income
Interest income
R&D tax concession refund
Other income
Total other income
3 Expenses
Consulting, employee and director
Consulting expenses
Wages and salaries expenses
Superannuation and other employee related expenses
Director expenses
Share- based payments
Total consulting, employee and director expenses
Corporate administration
Audit and accounting fees
Insurances
Foreign exchange (gain) / losses
Corporate administration costs
Total corporate administration expenses
4 Income tax expense
(a) Numerical reconciliation of income tax expense to prima facie tax payable
The Company has estimated total tax losses of $34,759,770 (2016: $27,955,616), representing a Deferred Tax
Asset of $9,558,937 at 27.5% (2016: $8,386,685 at 30%) that has not been recognised in the Financial
Statements.
37
5 Financial assets and financial liabilities
(a) Trade and other receivables
Trade receivables
Subscription receivables
Accrued income
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
Consolidated entity
2017
2016
Notes
$
$
270,125
154,217
- 2,612,139
5(a)(i)
5(a)(ii) 1,498,112 1,621,416
1,768,237 4,387,772
All trade and other receivables are non-interest bearings. For further detail please refer to Note 10.
(i) Subscription receivables
Represents uncleared funds from the capital raising as at 30 June 2016. Funds received 7 July 2016 upon the
issuance of shares.
(ii) Accrued income
Primarily comprises of receivables from the Australian Tax Office in relation to R&D tax concession for the year.
(b) Cash and cash equivalents
Current assets
Cash at bank and in hand
Consolidated entity
2017
$
2016
$
3,994,924
3,994,924
2,290,639
2,290,639
The interest rates on cash at bank at 30 June 2017 was 1% (2016: between 0.95% to 0.03%)
(c) Trade and other payables
Current liabilities
Trade payables
Accrued expenses
Other payables
Consolidated entity
2017
$
2016
$
699,530
568,988
58,044
1,326,562
1,517,255
417,090
52,062
1,986,407
38
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
5 Financial assets and financial liabilities (continued)
(d) Other financial liabilities
Secured
Borrowings
Total Borrowings
Convertible notes
Total Convertible Note
Total borrowings
Consolidated entity
2017
2016
$
$
139,864
139,864
772,397
772,397
226,000 1,128,117
226,000 1,128,117
365,864 1,900,514
(i) Convertible note
On 17 February 2016, the Company secured AUD$1,700,000 in funding with a New York-based Investment
Fund. The facility was being used to fund the immediate start of the clinical phase for IMM-529 in Clostridium
difficile.
The investment was structured in 3 tranches with a mix of equity financing and convertible securities:
•
•
•
Tranche #1 - AUD$100,000 private placement of securities plus a AUD$600,000 repayable Convertible Note
with AUD$78,000 finance charge;
Tranche #2 - 45 days after issuance of the tranche 1, the Company has the right to call a second Tranche as
per Tranche 1 terms.
Tranche #3 - by mutual consent, AUD$339,000 Face Value repayable Convertible Note issued on same
terms as Tranche 1 and 2. Tranche #3 has not been issued as of the issuance date of the consolidated
financial statements.
The Convertible Notes are repayable monthly over an 18 month period with each repayment to be settled at
Immuron’s discretion by:
•
•
the issuance of new shares at a 10% discount to a 5 Day Volume Weighted Average Price (VWAP) over the
20 trading days immediately prior to a repayment due date; or
cash repayment plus a 2.5% premium to the repayment amount.
Immuron repaid AUD$902,117 in cash during the 2017 financial year.
39
6 Non-financial assets and liabilities
(a)
Inventories
Current assets
Raw materials
Work in progress
Finished goods
Prepaid inventory
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
Consolidated entity
2017
$
2016
$
1,793,882
48,425
357,478
136,342
2,336,127
1,259,445
121,513
269,156
405,953
2,056,067
As certain raw materials held by the Company at 30 June 2017 may approach their expiration date for clinical use
in the future, management has alternative options to utilise these inventories for R&D, or sale as non-clinical
products.
There was a $136,494 impairment of inventories recognised during financial year 2017 (2016: $4,176) for stock
obsolescence in the Statement of Profit or Loss and Other Comprehensive Income.
(b) Other non-financial assets
Current assets
Prepayments
(c) Other non-financial liabilities
Deferred revenue
(i) Deferred revenue
This amount represents amounts billed by the Company for undelivered goods.
Consolidated entity
2017
$
2016
$
168,366
168,366
74,943
74,943
Consolidated entity
2017
2016
$
19,139
$
-
40
7 Equity
(a) Contributed equity
Ordinary shares
Ordinary shares - fully paid
Total share capital
(i) Movements in ordinary share:
Opening balance 1 July 2015
Share issued during the year
Shares to be issued
Treasury shares*
Transactions costs
Balance 30 June 2016
Share issued during the year
Transactions costs
Exercise of options - transfer from reserve
Balance 30 June 2017
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
2017
Shares
2016
Shares
2017
$
2016
$
130,041,417
130,041,417
80,099,646
80,099,646
53,632,995
53,632,995
45,633,354
45,633,354
Notes Number of shares
$
74,964,232
5,135,414
-
-
-
80,099,646
49,941,771
-
-
130,041,417
40,335,347
1,721,789
4,511,378
(800,000)
(135,160)
45,633,354
9,965,323
(2,037,557)
71,875
53,632,995
*An adjustment was made in relation to the treasury shares which resulted in a decrease of AUD$800,000 in
Non-current assets and Equity as compared to the previous statement lodged with ASX.
During the year ended 30 June 2017, the Company issued the following ordinary shares:
Date
Details
7 July 2016
7 July 2016
29 September 2016
2 December 2016
9 June 2017
issue to oversubscribes and
Right issue*
Right issue
Right
private placement
Shares under ESOP – for 6 months
service (vesting monthly)
on
issued
Shares
(equivalent to 610,000 ADSs)**
NASDAQ
No.
18,045,512
3,275,466
3,968,916
251,877
24,400,000
49,941,771
Issue price
$
-
0.250
Total value
$
-
818,867
0.250
0.245
0.332
992,229
61,710
8,092,517
9,965,323
*As at 30 June 2016, the Company was committed to issue 18,045,512 of ordinary shares in relation to the
$4,511,378 received in capital raising. These shares were subsequently issued to respective holders on 7 July
2016. 2,418,129 of these new fully paid ordinary shares were issued to Grandlodge on the same terms and
conditions as all other subscribers.
**Grandlodge participated in the NASDAQ IPO and acquired 32,707 ADRs and 32,707 warrants over ADRs (1
ADR is equal to 40 ordinary shares).
41
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
7 Equity (continued)
(a) Contributed equity (continued)
During the year ended 30 June 2016 the Company issued the following ordinary shares:
Date
Details
18 September 2015
30 September 2015
19 October 2015
13 November 2015
27 November 2015
24 February 2016
24 February 2016
13 April 2016
18 April 2016
16 May 2016
16 May 2016
31 May 2016
30 June 2016
as
for
fund
Investment
Exercise of IMCAI Unlisted Options
Exercise of IMCAI Unlisted Options
Exercise of IMCAI Unlisted Options by
Grandlodge
Exercise of IMCAI Unlisted Options
Issue of Shares in lieu of cash
services
payment
per
the Annual General
Resolution 4 of
Meeting (AGM) held on 25 Nov 2015
Issue in accordance with executed
funding agreement with a New York
provider
based
announced to the ASX on 17 Feb
2016
Issue of fully paid escrow shares as
security for any repayment default of
the Convertible Loan in accordance
with executed funding agreement with
a New York based Investment
fund
provider and announced to the ASX
on 17 Feb 2016
Issue in accordance with executed
funding agreement with a New York
based
provider
announced to the ASX on 17 Feb
2016
First repayment of Convertible Note
Security in accordance with executed
funding agreement with a New York
based
provider
announced to the ASX on 17 Feb
2016
Exercise of IMCAI Unlisted Options
Second repayment of Convertible
Note Security in accordance with
executed funding agreement with a
fund
New York based investment
provider announced to the ASX on 17
Feb 2016
Issue of Shares in lieu of cash
payment for services received
Shares to be Issued from Capital
Raising as at 30 June 2016
Investment
investment
fund
fund
No.
218,750
93,750
556,000
41,666
Issue price
$
0.376
0.376
Total value
$
82,250
35,250
0.376
0.376
209,056
15,667
546,875
0.160
87,500
294,118
0.340
100,000
2,000,000
0.400
800,000
326,797
0.306
100,000
241,764
150,000
0.312
0.276
75,333
41,400
265,694
400,000
0.284
0.250
5,135,414
75,333
100,000
4,511,378
6,233,167
The value of all share based payments of stock is per the terms of an underlying agreement or based on the fair
value of the stock on the date of the transaction.
(ii) Ordinary shares
Ordinary shares have nil par value. They entitle the holder to participate in dividends, and to share in the
proceeds of winding up the Company in proportion to the number of and amounts paid on the shares held.
42
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
7 Equity (continued)
(a) Contributed equity (continued)
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote.
(b) Other reserves
The following table shows a breakdown of the Statement of Financial Position line item ‘other reserves’ and the
movements in these reserves during the year. A description of the nature and purpose of each reserve is
provided below the table.
Options over fully paid
ordinary shares
Consolidated entity
Notes
No. of
options
Amount
$
Balance at 1 July 2015
Options issued during the year
Options exercised during the year
Expense of vested options
Lapse of unexercised options
Other comprehensive income for the period
At 30 June 2016 Restated
16
7,188,676
7,425,532
(1,060,166)
-
(3,616,413)
-
9,937,629
560,646
285,600
(71,875)
1,606,275
(248,345)
-
2,132,301
Balance at 1 July 2016
Options/warrants issued during the year
Expense of vested options
Lapse of unexercised options
Other comprehensive income for the period
At 30 June 2017
9,937,629
56,002,894
-
(2,250,000)
-
63,690,523
2,132,301
136,784
333,950
(168,900)
-
2,434,135
Foreign
currency
translation
reserve
$
(12,581)
-
-
-
-
8,846
(3,735)
(3,735)
-
-
-
40,017
36,282
Total
$
548,065
285,600
(71,875)
1,606,275
(248,345)
8,846
2,128,566
2,128,566
136,784
333,950
(168,900)
40,017
2,470,417
An adjustment of AUD$1,209,338 was made to the total reserves balance at 30 June 2016 as compared to the
previous statement lodged with ASX, as a result of a change in volatility assessment. Effectively, this resulted in
an increase in Consulting, Employee and Director Fees expenses and the Loss for the period on the Statement
of Profit or Loss and Other Comprehensive income. Refer to note 9(b) for more details.
During the year ended 30 June 2017, the Company issued the following options:
43
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
7 Equity (continued)
(b) Other reserves (continued)
Date
Details
7 July 2016
7 July 2016
29 September 2016
9 December 2016
9 June 2017
9 June 2017
13 June 2017
22 June 2017
issue to oversubscribes and
Right issue**
Right issue
Right
private placement
Unlisted options in lieu of services
Options issued to cover equivalent of
610,000 warrants on issue with
NASDAQ
to be issued to cover
Options
equivalent of 35,075 warrants with
NASDAQ
Options issued to cover equivalent of
91,500 warrants
issue with
NASDAQ
Unlisted options in lieu of services
on
No.
18,045,512
3,275,466
3,968,916
200,000
Issue price*
$
-
-
Total value
$
-
-
-
0.143
-
28,620
24,400,000
0.00033
8,101
1,403,000
0.00033
463
3,660,000
1,050,000
56,002,894
0.00033
0.094
1,215
98,385
136,784
*Issue price has been rounded for presentation of this report.
**As at 30 June 2016, the Company was committed to issue 18,045,512 options in relation to the $4,511,378
received in capital raising. These options were subsequently issued to respective holders on 7 July 2016.
2,418,129 of these options were issued to Grandlodge on the same terms and conditions as all other subscribers.
On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are currently
held in escrow and cannot be exercised until shareholder approval is granted.
During the year ended 30 June 2016 the Company issued the following options:
Date
Details
27 November 2015
18 February 2016
31 May 2016
Issue of Unlisted Options in lieu of
cash payment for additional services
as per Resolution 5A - 5D of the AGM
held on 25 Nov 2015
Issue in accordance with executed
funding agreement with a New York
based
provider
announced to the ASX on 17 Feb
2016
Issue of Unlisted Options in lieu of
cash payment for services received
Investment
fund
No.
Issue price
$
Restated Total
value
$
6,000,000
-
1,606,275
1,000,000
425,532
7,425,532
0.186
0.235
185,600
100,000
1,891,875
44
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
8 Cash flow information
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the period
Adjustment for
Add depreciation expense
Add back share based payments expense
Add back equity issued for non-cash consideration
Add change in fair value and interest accrued on borrowings
Change in operating assets and liabilities:
(Increase) in trade debtors and bills of exchange
(Increase) in inventories
(Increase) decrease in other operating assets
(Decrease) increase in trade creditors
Net cash inflow (outflow) from operating activities
(b) Non-cash financing and investing activities
Consolidated entity
2017
$
2016
$
(6,804,154)
(5,599,004)
4,922
522,665
-
8,561
7,396
(280,060)
69,034
(559,452)
(7,031,088)
3,892
1,891,875
187,500
178,401
(1,553,767)
(909,800)
(30,015)
672,582
(5,158,336)
See Note 7 for details on the uncleared funds of $2,612,139 from capital raising as at 30 June 2016.
An amount of $162,457 of financed insurance policies and amounts in Accounts Payable as at 30 June 2017
have been charged as transactions costs.
An amount of $114,861 of capital raising costs were recognised as expenses but remained unpaid during the
period as at 30 June 2016.
See Note 16 for details regarding issues of options to employees and for details surrounding the issue of shares
to suppliers.
9 Critical estimates, judgements and errors
Management evaluates estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
are based on current trends and economic data, obtained both externally and within the group.
(a) Significant estimates and judgements
•
•
Share-based Payments:
The value attributed to share options and remunerations shares issued is an estimate calculated using an
appropriate mathematical formula based on an option pricing model. The choice of models and the resultant
option value require assumptions to be made in relation to the likelihood and timing of the conversion of the
options to shares and the value of volatility of the price of the underlying shares. Refer to note 16 for more
details.
Impairment of Inventories:
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The
level of
the ageing of
inventories and in particular the shelf life of inventories that affects obsolescence.
the provision is assessed by taking into account
the recent sales experience,
45
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
9 Critical estimates, judgements and errors (continued)
(b) Previously issued Financial Statements
Reclassification
Subsequent to the issue of the financial statements for the period ended 30 June 2016, for the purpose of the US
NASDAQ filing process, management reviewed and re-assessed it’s estimates surrounding the accounting
treatment applied to the valuation of Unlisted Options issued in lieu of cash payment during the FY2016 financial
year for additional services as per Resolution 5A-5D of the AGM held on 25 Nov 2015.
The financial statements for the 30 June 2016 valued the Unlisted Options using the recommended and accepted
Black‐Scholes methodology for determining the fair value of the options in accordance with AASB 2 - Share
Based Payments. The Company re-assessed the underlying assumptions and estimates surrounding the original
Black and Scholes inputs and it was determined that the original volatility input of 42%, was too low.
Accordingly, the Company recalculated the value of the Unlisted Options using the Black and Scholes model
including a volatility input of 100% which effectively increased the share based payment expense associated with
the Unlisted Options. This difference in this valuation pertaining to the FY2016 portion of the Unlisted Option
expense was subsequently recorded in the FY2016 financial period effectively restating the original FY2016
presented numbers.
46
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
9 Critical estimates, judgements and errors (continued)
(b) Previously issued Financial Statements (continued)
Reclassification (continued)
The impact on the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial
Position were accordingly restated, as follows:
Amounts
Reported on
ASX 30 June
2016
$
Reassessment
of Unlisted
Options
$
Amounts
reported in
these financial
statements
$
Reclassification
$
Revenue
Sale of goods
Total operating revenue
Cost of goods sold
Gross profit
Sales and marketing costs
Freight costs
Total gross profit less direct selling
costs
Other income
Expenses
Consulting, employee and director
Corporate administration
Depreciation
Finance fee costs
Impairment of inventory
Marketing and promotion
Research and development
Travel and entertainment expenses
Loss before income tax
1,155,523
1,155,523
(301,435)
854,088
(288,227)
(134,967)
430,894
3,008,778
(1,630,700)
(1,320,570)
(3,892)
(341,600)
(4,176)
(487,591)
(3,623,961)
(416,849)
(4,389,667)
-
-
-
-
-
-
-
-
(1,209,337)
-
-
-
-
-
-
-
(1,209,337)
Income tax expense
Loss for the period
-
(4,389,667)
-
(1,209,337)
Other comprehensive income/(loss) for
the period, net of tax
Total comprehensive loss for the
period
-
-
(4,389,667)
(1,209,337)
Basic/diluted loss per share (cents)
5.7
1.6
(154,446)
(154,446)
1,001,077
1,001,077
-
(154,446)
154,446
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(301,435)
699,642
(133,781)
(134,967)
430,894
3,008,778
(2,840,037)
(1,320,570)
(3,892)
(341,600)
(4,176)
(487,591)
(3,623,961)
(416,849)
(5,599,004)
-
(5,599,004)
-
(5,599,004)
7.3
47
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
9 Critical estimates, judgements and errors (continued)
(b) Previously issued Financial Statements (continued)
Reclassification (continued)
Amounts
Reported on
ASX 30 June
2016
$
Reassessment
of unlisted
options
$
Amounts
reported in
these financial
statements
$
Reclassification
$
Equity
Issued capital*
Reserves
Accumulated losses
Total comprehensive loss for the
period
46,505,229
847,353
(41,612,019)
(871,875)
1,281,213
(1,209,337)
5,740,563
(799,999)
-
-
(1)
(1)
45,633,354
2,128,566
(42,821,357)
4,940,563
* A re-classification of Escrow Treasury Shares previously recorded as an Asset has resulted in a $800,000
reduction in the Company’s Assets and a corresponding increase in Company’s equity reserves.
There has been some reclassification within the Statement of Cash Flow however, the net effect was not
impacted.
The re-classification had no impact on the overall results of the Company’s financial statement or position.
10 Financial risk management
(a) Financial instruments
The Company's financial instruments consist of cash and cash equivalents, trade and other receivables and trade
and other payables, borrowing and Convertible note:
Consolidated entity
2017
$
2016
$
2,290,639
Cash and cash equivalents
4,387,772
Trade and other receivables
(1,986,407)
Trade and other payables
(772,397)
Borrowings
(1,128,117)
Convertible notes
The fair values of cash and cash equivalents, trade and other receivables and trade and other payables
approximate their carrying amounts largely due to being liquid assets and payables will be settled within 12
months.
3,994,924
1,768,237
(1,326,562)
(139,864)
(226,000)
(b) Risk management policy
The Board is responsible for overseeing the establishment and implementation of the risk management system,
and reviews and assesses the effectiveness of the Company's implementation of that system on a regular basis.
The Board and Senior Management identify the general areas of risk and their impact on the activities of the
Company, with Management performing a regular review of:
•
•
•
•
the major risks that occur within the business;
the degree of risk involved;
the current approach to managing the risk; and
if appropriate, determine:
•
•
any inadequacies of the current approach; and
possible new approaches that more efficiently and effectively address the risk.
48
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
10 Financial risk management (continued)
(b) Risk management policy (continued)
Management report risks identified to the Board through the monthly Operations Report.
The Company seeks to ensure that its exposure to undue risk which is likely to impact its financial performance,
continued growth and survival is minimised in a cost effective manner.
(c) Significant accounting policies
Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis for
measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset, financial liability and equity instrument are disclosed in Note 20 to the financial statements.
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and
financial liabilities represents their fair values determined in accordance with the accounting policies disclosed in
Note 20. Interest income on cash and cash equivalents is disclosed in Note 5(a).
(d) Capital risk management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going
concern and to maintain an optimal capital structure so as to maximise shareholder value.
In order to maintain or achieve an optimal capital structure, the Company may issue new shares or reduce its
capital, subject to the provisions of the Company's constitution. The capital structure of the Company consists of
equity attributed to equity holders of the Company, comprising contributed equity, reserves and accumulated
losses disclosed in Notes 7(a) and 7(b).
By monitoring undiscounted cash flow forecasts and actual cash flows provided to the Board by the Company's
Management the Board monitors the need to raise additional equity from the equity markets.
(i) Financial risk management
The main risks the Company is exposed to through its operations are interest rate risk, foreign exchange risk,
credit risk and liquidity risk.
Interest rate risk
(ii)
The Company is exposed to interest rate risks via the cash and cash equivalents and borrowings that it holds.
Interest rate risk is the risk that a financial
instruments value will fluctuate as a result of changes in market
interest rates. The objective of managing interest rate risk is to minimise the Company's exposure to fluctuations
in interest rate that might impact its interest revenue and cash flow.
Interest rate risk is considered when placing funds on term deposits. The Company considers the reduced
interest rate received by retaining cash and cash equivalents in the Company's operating account compared to
placing funds into a term deposit. This consideration also takes into account the costs associated with breaking a
term deposit should early access to cash and cash equivalents be required.
There has been no change to the Company's exposure to interest rate risk or the manner in which it manages
and measures its risk in the year ended 30 June 2017.
(iii) Foreign currency risk
The Company is exposed to foreign currency risk via the trade and other receivables and trade and other
payables that it holds. Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to
changes in foreign exchange rates. The Company aims to take a conservative position in relation to foreign
currency risk hedging when budgeting for overseas expenditure however, the Company does not have a policy to
hedge overseas payments or receivables as they are highly variable in amount and timing, due to the reliance on
activities carried out by overseas entities and their billing cycle.
49
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
10 Financial risk management (continued)
(d) Capital risk management (continued)
The following financial assets and liabilities are subject to foreign currency risk:
Cash and cash equivalent (AUD/USD)
Trade and other receivable (AUD/USD)
Trade and other payables (AUD/USD)
Trade and other payables (AUD/CHF)
Trade and other payables (AUD/NZD)
Trade and other payables (AUD/ISL)
Consolidated entity
2017
$
2,770,682
126,207
502,651
-
-
20,489
2016
$
40,702
127,110
564,104
10,069
452,599
46,260
Foreign Currency purchase:
On 25 August 2016 on behalf of Immuron, Grandlodge purchased US$1,500,000 at the cost of AUD$1,968,762.
On the same day Immuron paid Grandlodge AUD$1,968,762 to settle this transaction. On 12 September 2016
Grandlodge returned the USD$1,500,000 purchase to Immuron. Grandlodge received no financial gains or
benefits from this transaction.
Foreign currency risk is measured by regular review of cash forecasts, monitoring the dollar amount and
currencies that payment are anticipated to be paid in. The Company also considers the market fluctuations in
relevant currencies to determine the level of exposure. If the level of exposure is considered by Management to
be too high, then Management has authority to take steps to reduce the risk.
Steps to reduce risk may include the acquisition of foreign currency ahead of the anticipated due date of an
invoice, or may include negotiations with suppliers to make payment in our functional currency, or may include
holding receipted foreign currency funds in a foreign currency denominated bank account to make future
payments denominated in that same currency. Should Management determine that the Company consider taking
out a hedge to reduce the foreign currency risk, they would need to seek Board approval.
The Company conducts some activities outside of Australia which exposes it
movements, where the Company is required to pay in a currency other than its functional currency.
to transactional currency
There has been no change in the manner the Company manages and measures its risk in the year ended 30
June 2017.
The Company is exposed to fluctuations in the United States dollars and Israeli Shekel. Analysis is conducted on
a currency by currency basis using sensitivity variables.
The Company has conducted a sensitivity analysis of the Company's exposure to foreign currency risk. The
analysis shows that if the Company's exposure to foreign currency risk was to fluctuate as disclosed below and
all other variables had remained constant, then the foreign currency sensitivity impact on the Company's loss
after tax and equity would be as follows:
50
10 Financial risk management (continued)
(d) Capital risk management (continued)
AUD/US: 2017 + 8.00% (2016: + 8.00%)
AUD/US: 2017 - 8.00% (2016: - 8.00%)
AUD/CHF: 2017 + 11.00% (2016: + 11.00%)
AUD/CHF: 2017 - 11.00% (2016: - 11.00%)
AUD/NZD: 2017 + 11.00% (2016: + 11.00%)
AUD/NZD: 2017 - 11.00% (2016: - 11.00%)
AUD/ISL: 2017 + 11.00% (2016: + 11.00%)
AUD/ISL: 2017 - 11.00% (2016: - 11.00%)
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
Consolidated entity
2017
(Higher) /
Lower
$
35,186
(35,186)
-
-
-
-
2,254
(2,254)
2016
(Higher) /
Lower
$
45,128
(45,128)
1,108
(1,108)
49,786
(49,786)
5,089
(5,089)
(iv) Credit risk
The Company is exposed to credit risk via its cash and cash equivalents and trade and other receivables. Credit
risk is the risk that a counter-party will default on its contractual obligations resulting in a financial loss to the
Company. To reduce risk exposure for the Company's cash and cash equivalents, it places them with high credit
quality financial institutions.
The Company’s major ongoing customers are the large pharmaceutical companies for the distribution of Travelan
and other Hyperimmune products, and Government bodies for the receipt of GST refunds and Research and
Development Tax Concession amounts due to the Company from the Australian Tax Office.
The Company has a policy that limits the credit exposure to customers and regularly monitors its credit exposure.
The Board believes that the Company does not have significant credit risk at this time in respect of its trade and
other receivables. Regarding customers with over 30-day debt balance, management has maintained on-going
communication with relevant counter parties in regard of repayment schedule, and concluded that there have
been no changes to the initial assessment of credit risk.
The Company has analysed its trade and other receivables below:
Consolidated entity
2017
Trade and other receivables
R&D tax concession refund
Total
2016
Trade and other receivables
R&D tax concession refund
Total
0 - 30 days
AUD$
31 - 60 days
AUD$
61 - 90 days
AUD$
90 + days
AUD$
Total
AUD$
173,248
-
173,248
2,822,116
-
2,822,116
33,731
-
33,731
45,687
-
45,687
419
-
419
-
-
-
62,727
-
62,727
540,250
1,498,112
2,038,362
7,129
-
7,129
5,749,864
1,512,840
7,262,704
R&D tax concession refund in each period is recovered upon finalization of the Australian Tax Office’s review of
the Company’s annual R&D tax concession claim.
(v) Liquidity risk
The Company is exposed to liquidity risk via its trade and other payables and its recurring and projected losses.
51
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
10 Financial risk management (continued)
(d) Capital risk management (continued)
Liquidity risk is the risk that the Company will encounter difficulty in raising funds to meet the commitments
associated with its financial instruments. Responsibility for liquidity risk rests with the Board who manage liquidity
risk by monitoring undiscounted cash flow forecasts and actual cash flows provided to them by the Company's
Management at Board meetings to ensure that the Company continues to be able to meet its debts as and when
they fall due.
Contracts are not entered into unless the Board believes that there is sufficient cash flow to fund the additional
activity. The Board considers when reviewing its undiscounted cash flow forecasts whether the Company needs
to raise additional funding from the equity markets.
The Company has analysed its trade and other payables below:
Consolidated entity
2017
Trade and other payables
Borrowings
Convertible note
Total
2016
Trade and other payables
Borrowings
Convertible note
Total
0 - 30 days
AUD$
31 - 60 days
AUD$
61 - 90 days
AUD$
90 + days
AUD$
Total
AUD$
1,074,569
-
-
1,074,569
1,008,089
-
-
1,008,089
102,546
-
-
102,546
659,494
-
-
659,494
72,052
-
-
72,052
299,239
-
-
299,239
77,395
-
-
77,395
19,585
-
-
19,585
1,326,562
139,864
226,000
1,692,426
1,986,407
772,397
1,128,117
3,886,921
As at 30 June 2017,
the Company maintained a cash and cash equivalents balance of AUD$3,994,924.
Additionally, the Company also recognised a total of AUD$1,768,237 in receivables, including AUD$1,498,112
related to R&D Tax Concession, which will be received in the near future. On this basis, even though the
Company has been in loss making position historically, management is satisfied that the Company is a going
concern and are of the opinion that no asset is likely to be realized for an amount lower than the amount at which
it is recorded in the Consolidated Statement of Financial Position at 30 June 2017.
11 Interests in other entities
(a) Subsidiaries
The Company's subsidiaries at 30 June 2017 are set out below. Unless otherwise stated, they have share capital
consisting solely of ordinary shares that are held directly by the Company, and the proportion of ownership
interests held equals the voting rights held by the Company. The country of incorporation or registration is also
their principal place of business.
Name of entity
Immuron Inc.
Anadis EPS Pty Ltd
Place of
business/
country of
incorporation
USA
Australia
Ownership interest held
by the Company
2017
%
100.0
100.0
2016
%
100.0
100.0
52
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
11 Interests in other entities (continued)
(a) Subsidiaries (continued)
These companies are wholly owned subsidiary of Immuron Limited and was formed for the sole purpose to act as
trustee for the Immuron Limited Executive Officer Share Plan Trust. All costs associated with the operations of
this company are borne by Immuron Limited. Consolidated accounts have not been prepared as the net assets
and trading activity of Anadis ESP Pty Ltd are not material.
12 Contingent liabilities and contingent assets
There has been no change in contingent liabilities and assets since the last annual reporting date.
13 Commitments
(a) Non-cancellable operating leases
Commitments for minimum lease payments in relation to non-cancellable operating leases are
payable as follows:
Within one year
Later than one year but not later than five years
Consolidated
entity
2017
$
39,524
19,762
59,286
The property lease is a non-cancellable lease with a 3 year term, with rent payable monthly in advance. The
minimum lease payments shall be increased by CPI per annum. An option exists to renew the lease at the end of
the 3 year term for an additional term of 3 years. The current lease period expires in December 2018.
The Group has recognised $46,082 and $25,501, of rental expenses in its Statement of Profit or Loss and Other
Comprehensive Income for the year 2017 and 2016, respectively, as Corporate Administration Expense.
14 Events occurring after the reporting period
28 July 2017 - The Company issued 399,045 fully paid ordinary shares for repayment of $75,333 Convertible
Note Security in accordance with executed funding agreement with a New York based Investment funds provider
announced to the ASX on 17 February 2017.
3 Aug 2017 - The Company announced the resignation of Mr Thomas Liquard and the appointment of Dr Jerry
Kanellos as the interim CEO. Immuron’s Chief Operating and Scientific Officer Dr Jerry Kanellos assumed the
role of Interim-Chief Executive Officer from 1 August 2017. For Dr Kanellos’ increased role at Immuron his total
remuneration package has increased to $230,000 per annum. Dr Kanellos’ contract has a 30-day termination
notice period.
Other than the events listed above, there have not been any other matters or circumstances in the financial
statements or notes thereto, that have arisen since the end of the financial year which significantly affected, or
may significantly affect, the operations of Immuron Limited.
15 Related party transactions
(a) Key management personnel compensation
This note details the nature and amount of remuneration for each Director of Immuron Limited, and for the Key
Management Personnel.
53
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
15 Related party transactions (continued)
(a) Key management personnel compensation (continued)
The Directors of Immuron Limited during the year ended 30 June 2017 were:
The following persons held office as Directors of Immuron Limited during the financial year:
Dr. Roger Aston, Independent non-executive chairman
Mr. Peter Anastasiou, Executive vice chairman
Mr. Daniel Pollock, Independent non-executive director
Mr. Stephen Anastasiou, Independent non-executive director
Prof. Ravi Savarirayan, Independent non-executive director (appointed 7 April 2017)
The following persons held office as Key Management Personnel of Immuron Limited during the financial year
with the following changes subsequent to 30 June 2017:
Dr. Jerry Kenellos, Interim Chief Executive Officer (CEO), (appointed 3 August 2017) and Chief Operating &
Scientific Officer (COSO)
Mr. Thomas Liquard, Chief Executive Officer (CEO), (resigned 3 August 2017)
The aggregate compensation made to Directors and Other Key Management Personnel of the Company is set
out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated entity
2017
$
Restated
2016
$
681,666
25,947
353,670
1,061,283
652,514
26,004
1,606,275
2,284,793
Detailed remuneration disclosures are provided in the remuneration report on pages 20 to 29.
54
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
15 Related party transactions (continued)
(b) Transactions with other related parties
The following transactions occurred with related parties:
Short-term loan from Grandlodge Capital Pty Ltd:
Grandlodge Capital Pty Ltd (Grandlodge) is an entity part-owned and
operated by Immuron Directors Peter and Stephen Anastasiou. Mr David
Plush is also an owner of Grandlodge, and its associated entities.
On 1 December 2015, 6 June 2016 and 9 May 2017, Immuron executed a
short-term funding agreement with Grandlodge for a principle amount of
$1,000,000 (interest
rate 15%) and
$500,000 (interest rate 15%) respectively.
rate 13%), $750,000 (interest
receive from the Australian Taxation Office under
The short-term funding is a cash advance against the anticipated refund
Immuron will
the
Research and Development Income Tax Concession Incentive for the
Company's eligible R&D expenditure incurred for financial year of 2016
and 2017.
Loan from December 2016, June 2016 and May 2017, plus applicable
fees and interest, was repaid to Grandlodge on 10 February 2016, 2
December 2016 and 23 June 2017, respectively. Interest expense was
approximately $57,000 and $31,000 for the years ended 30 June 2017
and 2016, respectively. In addition, the Company incurred approximately
$35,000 of loan fees for the year ended 30 June 2016.
Total paid by the Company to Grandlodge Pty Ltd during the year:
At year end the Company owed Grandlodge Pty Ltd:
Premises rental services received from Wattle Laboratories Pty Ltd
to Immuron Limited:
Wattle Laboratories Pty Ltd (Wattle) is an entity part-owned and operated
by Immuron Directors Peter and Stephen Anastasiou.
Commencing on 1 January 2016, Immuron executed a Lease Agreement
with Wattle whereby Immuron will
lease part of their Blackburn office
facilities for Immuron's operations at an arms-length commercial rental
rate of $38,940 per annum, payable in monthly instalments. The rental
agreement is subject to annual rental increases, and effective 1 January
2017, the annual rent was increased to $39,525.
The lease is for a 3 year term with an additional 3 year option period.
The lease is cancellable by either party upon 6 months written notice of
termination of the agreement.
Rental fees paid to Wattle Laboratories Pty Ltd during the year through
the issue of equity:
Total paid by the Company to Wattle Laboratories Pty Ltd during the
year:
At year end the Company owed Wattle Laboratories Pty Ltd:
55
30 June 2017
30 June 2016
$1,329,007
$Nil
$1,043,863
$772,397
30 June 2017
30 June 2016
$Nil
$Nil
$35,792
$19,470
$Nil
$21,417
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
15 Related party transactions (continued)
(b) Transactions with other related parties (continued)
Service rendered by Grandlodge Pty Ltd to Immuron Ltd:
Grandlodge, and its associated entities, are marketing, warehousing and
distribution logistics companies.
30 June 2017
30 June 2016
Commencing on 1 June 2013, Grandlodge was contracted on commercial
market arms-length terms to provide warehousing, distribution and
invoicing services for Immuron’s products for $70,000 per annum. These
fees will be payable in new fully paid ordinary shares in Immuron Limited
at a set price of $0.16 per share representing Immuron Limited’s share
price at the commencement of the agreement.
The shares to be issued to Grandlodge, or its associated entities, as
compensation in lieu of cash payment for the services rendered under this
agreement have been subject to the approval of Immuron shareholders at
Company shareholder meetings held over the past 18 months.
Grandlodge will also be reimbursed in cash for all reasonable costs and
expenses incurred in accordance with their scope of works under the
agreement, unless both parties agree to an alternative method of
payment.
The agreement is cancellable by either party upon providing the other
party with 30 days written notice of the termination of the agreement.
Service fees paid to Grandlodge Pty Ltd during the year through the issue
of equity:
Total paid by the Company to Grandlodge Pty Ltd during the year:
At year end the Company owed Grandlodge Pty Ltd:
$Nil
$87,500
$Nil
$105,000
$87,500
$35,000
Foreign Currency purchase:
On 25 August 2016 on behalf of Immuron, Grandlodge purchased US$1,500,000 at the cost of AUD$1,968,762.
On the same day Immuron paid Grandlodge AUD$1,968,762 to settle this transaction. On 12 September 2016
Grandlodge returned the USD$1,500,000 purchase to Immuron. Grandlodge received no financial gains or
benefits from this transaction.
56
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments
Executives and consultants may be provided with longer-term incentives through the Company’s Employee
Share and Option Plan (ESOP), to allow the executives and consultants to participate in, and benefit from, the
growth of the Company as a result of their efforts and to assist in motivating and retaining these key employees
over the long term.
(a) Options issued under ESOP
The following table illustrates the number and weighted average exercise price of and movement in share options
issued under the scheme during the year:
Consolidated entity
2017
2016
As at 1 July
Granted during the year
Exercised during the year
Lapse of unexercised options
As at 30 June
Vested and exercisable at 30 June
Weighted
Average
exercise price
per share
option
1.56
0.50
-
0.50
0.55
0.55
Weighted
Average
exercise price
per share
option
0.44
-
0.28
0.28
0.56
1.56
Number of
options
1,062,500
1,250,000
-
(1,000,000)
1,312,500
1,312,500
Number of
options
1,856,150
-
(150,000)
(643,650)
1,062,500
62,500
The options outstanding at 30 June 2017 have a weighted average remaining contractual life of 1.39 years (2016:
0.79 years) and exercise prices ranging from $0.50 to $1.56 (2016: from $0.50 to $1.556).
(b) Options issued to directors
The following table illustrates the number and weighted average exercise price of and movement in share options
issued to directors during the year:
Consolidated entity
2017
2016
As at 1 July
Granted during the year
Lapse of unexercised options
As at 30 June
Vested and exercisable at 30 June
Weighted
Average
exercise price
per share
option
0.46
-
0.46
0.50
0.50
Weighted
Average
exercise price
per share
option
0.46
0.50
-
0.49
0.46
Number of
options
7,000,000
-
(1,000,000)
6,000,000
5,000,000
Number of
options
1,000,000
6,000,000
-
7,000,000
1,000,000
The options outstanding at 30 June 2017 have a weighted average remaining contractual life of 2.41 years (2016:
2.94 years) and exercise price of $0.50 (2016: $0.50).
On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are currently
held in escrow and cannot be exercised until shareholder approval is granted.
57
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments (continued)
(c) Other options/warrants issued
The following table illustrates the number and weighted average exercise price of and movement in share options
issued to other parties during the year:
Consolidated entity
As at 1 July
Granted during the year
Exercised during the year
Lapse of unexercised options
As at 30 June
Vested and exercisable at 30 June
2017
Average
exercise price
per share
option
0.56
0.43
-
0.46
0.44
0.44
2016
Average
exercise price
per share
option
0.40
0.55
0.38
0.38
0.56
0.56
Number of
options
4,332,526
1,425,532
(910,166)
(2,972,763)
1,875,129
1,875,129
Number of
options
1,875,129
54,752,894
-
(250,000)
56,378,023
56,378,023
The options outstanding at 30 June 2017 have a weighted average remaining contractual life of 3.57 years (2016:
2.85 years) and exercise prices ranging from $0.30 to $1.94 (2016:from $0.30 to $1.944).
(d) Vesting terms of options
The following summarises information about options held by employees, directors and third parties as at 30 June
2017:
Grant date
a
29-Jun-12
29-Jun-12
15-Nov-12
3-Mar-14
29-May-14
27-Nov-15
18-Feb-16
31-May-16
7-Jul-16
9-Dec-16
9-Jun-17
13-Jun-17
22-Jun-17
Number of
options
Vesting
conditions
14,493
29,668
62,500
15,380
140,056
6,000,000
1,000,000
425,532
25,289,894
200,000
24,400,000
3,660,000
1,050,000
Nil
Nil
25% per
annum
Nil
Nil
See below
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Expiry date
Exercise price
$
30-Nov-21
17-Jan-22
1-Nov-17
28-Feb-19
28-May-19
27-Nov-19
24-Feb-19
27-Nov-19
30-Nov-19
27-Nov-19
13-Jun-22
13-Jun-22
1-Oct-18
1.944
1.876
1.556
1.892
0.300
0.500
0.570
0.500
0.550
0.500
0.326
0.326
0.500
58
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments (continued)
(d) Vesting terms of options (continued)
In addition, the Company accrued and issued the below equity that is not presented in the above table:
• On 9 June 2017, the Company accrued 1,403,000 Options to be issued to cover equivalent of 35,075
warrants with NASDAQ.
• On 22 June 2017, the Company issued Professor Ravi Savarirayan, a Non-Executive Director of Immuron
Limited, 1,000,000 unlisted options exercisable at $0.50 on or before 27 Nov 2019. These options are
currently held in escrow and cannot be exercised until shareholder approval is granted.
(i) November 2012 options
The options with an issue date of 15 November 2012, entitle the holder to purchase one ordinary share in
Immuron Limited at an exercise price of $1.556*. There are no performance conditions attached to the options as
the options vest accordingly to the following anniversary dates:
•
•
•
•
25% of the total quantum of these options issued vested immediately upon issue
25% of the total quantum of these options issued vest on 1 July 2013
25% of the total quantum of these options issued vest on 1 July 2014
25% of the total quantum of these options issued vest on 1 July 2015
(ii) December 2013 Options
The options with an issue date of 4 December 2013, entitle the holder to purchase one ordinary share in
Immuron Limited at an exercise price of AUD$0.456*. There are no performance conditions attached to the
options. The options were deemed to have been fully vested on their date on issue.
(iii) November 2015 options
The options with an issue date of 27 November 2015, entitle the holder to purchase one ordinary share in
Immuron Limited at an exercise price of $0.500. Options vest based on month of continuous services completed
as per the following:
•
•
5,000,000 Options which vested on 6 August 2016 - subject to completion of 12 months’ continuous services
as a Director of the Company
1,000,000 Options which vested on 6 August 2017 - subject to completion of 24 months’ continuous services
as a Director of the Company
(iv) February 2016 options
The options with an issue date of 18 February 2016, entitle the holder to purchase one ordinary share in Immuron
Limited at an exercise price of $0.570. There are no performance conditions attached to the options. The options
were deemed to have been fully vested on their date on issue.
(v) May 2016 options
The options with an issue date of 31 May 2016, entitle the holder to purchase one ordinary share in Immuron
Limited at an exercise price of $0.500. There are no performance conditions attached to the options. The options
were deemed to have been fully vested on their date on issue.
(vi) December 2016 options
Pursuant to an agreement entered between the Company and a consultant on 1 April 2015, the Company
granted 1,000,000 options, which became vested and issued on 9 December 2016, and entitled the holder to
purchase one ordinary share in Immuron Limited at an exercise price of AUD$0.500. These options were vested
and issued following the successful completion of related milestone pertaining to a minimum recruitment of 100
patients into the Company's NASH Phase IIb clinical trial.
59
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments (continued)
(d) Vesting terms of options (continued)
(vii) June 2017 options
The options with various issue dates in June 2017, entitle the holder to purchase one ordinary share in Immuron
Limited at an exercise price ranging from $0.326 to $0.500. There are no performance conditions attached to the
options. The options were deemed to have been fully vested on their date on issue.
*The above values has been adjusted for 40:1 share consolidation which was completed on 20 November 2014.
(e) Deemed valuation of options
The fair value of the options granted by the Company under the Company’s Executive Share and Option Plan
(ESOP) is estimated as at the grant date using Black-Scholes model taking into account the terms and conditions
upon which the options were granted.
(i) November 2012 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
As per above
-
70%
3.25%
5.00
$0.04
$0.017
$0.280*
*The above values have been adjusted for 40:1 share consolidation which was completed on 20 November 2014.
(ii) December 2013 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
N/A
-
62%
3.03%
3.00
$0.01
$0.01
$0.1016*
*The above values have been adjusted for 40:1 share consolidation which was completed on 20 November 2014.
(iii) November 2015 options (Restated)
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
As per above
-
100%
2.11%
4.00
$0.500
$0.465
$0.3186
60
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments (continued)
(e) Deemed valuation of options (continued)
(iv) February 2016 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
N/A
-
97%
1.73%
3.00
$0.570
$0.360
$0.1856
(v) May 2016 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
N/A
-
84%
2.11%
4.00
$0.500
$0.410
$0.235
(vi) December 2016 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
N/A
-
100%
1.61%
3.17
$0.500
$0.285
$0.1431
(vii) June 2017 options
The following table lists the inputs to the model used to determine the weighted average value of the options
expensed during the year:
Vesting date
Dividend yield
Expected volatility
Risk-free interest rate
Expected life of option (years)
Option exercise price
Weighted average share price at grant date
Value per option
n/a
-
100%
1.69%
1.33
$0.500
$0.315
$0.0937
At 30 June 2016 the Australian Securities Exchange (ASX) market share price for Immuron was $0.250.
At 30 June 2017 the Australian Securities Exchange (ASX) market share price for Immuron was $0.270.
61
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
16 Share-based payments (continued)
(e) Deemed valuation of options (continued)
The expected life of the option is based on historical data and is not necessarily indicative of exercise patterns
that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome.
17 Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Parent entity,
its related practices and non-related audit firms:
(a) Auditor firm
(i) Audit and other assurance services
Audit and other assurance services
Audit and review of financial statements - William Buck
Audit and review of financial statements - Marcum
Other assurance services
NASDAQ Listing services - Marcum
Total remuneration for audit and other assurance services
Consolidated entity
2017
$
2016
$
41,600
91,175
470,503
603,278
36,100
-
-
36,100
During the year, the Company had engaged its US auditor Marcum LLP to assist with filing of the F-1 application
form for listing on the NASDAQ exchange in the USA. Total fees charged for these services were AUD $470,503
(2016: $Nil). The directors are satisfied that the provision of these services is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of the audit
services provided means that auditor independence was not compromised.
18 Loss per share
(a) Basic/diluted loss per share
Consolidated entity
2017
Cents
Restated
2016
Cents
From continuing operations attributable to the ordinary equity holders of the
company
(6.4)
(7.3)
(b) Reconciliation of earnings used in calculating loss per share
Consolidated entity
2017
$
Restated
2016
$
Loss attributable to the ordinary equity holders of the Company used in
calculating basic/diluted loss per share:
(6,804,154)
(5,599,004)
62
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
18 Loss per share (continued)
(c) Weighted average number of shares used as the denominator
Consolidated entity
2017
Number
2016
Number*
Weighted average number of ordinary shares used as the denominator in
calculating basic/diluted loss per share
105,866,110
76,435,993
* This amount includes 182,169 of weighted average ordinary shares in relation to the $4,511,378 received in
capital raising that was not issued as of 30 June 2016.
The Company is currently in a loss making position any thus the impact of any potential shares is concluded as
anti-dilutive which includes the company’s options and Convertible Note payable and warrants. Treasury shares
are excluded from the calculation of weighted average number of ordinary shares.
19 Parent entity financial information
(a) Summary financial information
The individual financial statements for the Parent entity show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Shareholders' equity
Issued capital
Retained earnings
Profit or loss for the period
(b) Contingent liabilities of the parent entity
2017
$
2016
$
8,211,562
1,659,635
9,871,197
1,707,924
(8,163,273)
8,799,844
891,794
9,691,638
3,886,922
(5,804,716)
53,632,996
(47,903,858)
45,633,353
(41,960,938)
5,729,138
3,672,415
(6,039,941)
(4,885,381)
The Parent entity did not have any contingent liabilities as at 30 June 2017 or 30 June 2016. For information
about guarantees given by the Parent entity, please see above.
(c) Determining the parent entity financial information
The financial information for the Parent entity has been prepared on the same basis as the consolidated financial
statements, except as set out below.
Investments in subsidiaries, associates and joint venture entities
(i)
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial
statements of Immuron Limited.
63
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
19 Parent entity financial information (continued)
(c) Determining the parent entity financial information (continued)
(ii) Tax consolidation legislation
Immuron Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Immuron Limited, and the controlled entities in the tax consolidated Company account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated
Company continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Immuron Limited also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated Company.
20 Summary of significant accounting policies
(a) Corporate Information
The consolidated financial statements Immuron Limited (‘the Company’) and the entities it controlled for the year
ended 30 June 2017 was authorised for issue in accordance with a resolution of the Directors on Thursday, 28
September 2017.
Immuron Limited is a listed public company limited by shares incorporated and domiciled in Australia whose
shares are publicly traded on the Australian Securities Exchange (ASX) and NASDAQ.
The principal activity of the Company is a product development driven biopharmaceutical Company focused on
the research and development of polyclonal antibodies for the treatment and prevention of major diseases.
(b) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the
requirements of Australian Accounting Standards ("AAS's"), required for a for-profit entity.
The financial report has been prepared on an accruals basis and is based primarily on historical costs. The
financial report is presented in Australian dollars, which is the Company’s functional and presentation currency.
All values are rounded to the nearest dollar unless otherwise stated.
Management is required to make judgements, estimates and assumptions about carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based
on historical experience and various other factors that are believed to be reasonable under the circumstance, the
results of which form the basis of making the judgements. Actual results may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.
Judgements made by management in the application of IFRS that have significant effects on the financial
statements and estimates with a significant risk of material adjustments in the next year are disclosed, where
applicable, in the relevant notes to the financial statements.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information
satisfies the concepts of relevance and reliability,
the underlying
transactions or other events is reported.
thereby ensuring that
the substance of
(i) Compliance with IFRS
The consolidated financial statements of Immuron Limited also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
64
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(b) Basis of preparation (continued)
(ii) New and amended standards adopted by the Company
All accounting policies adopted are consistent with the most recent Annual Financial Report for the year ended
30 June 2016. The consolidated entity has adopted all of the new, revised or amending Accounting Standards
and Interpretation issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the
current reporting period. The adoption of these Accounting Standards and Interpretations did not have any
significant impact on the financial performance or position of the consolidated entity.
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Company for the annual reporting period ending 30 June 2017 are
outlined in the table below.
Standard
AASB 2016-1 Amendments to Australian Accounting
Standards - Recognition of Deferred Tax Assets for
Unrealised Losses
AASB 2016-2 Amendments to Australian Accounting
Standards - Disclosure Initiative: Amendments to AASB
107
AASB 2017-2 Amendments to Australian Accounting
Standards - Further Annual Improvements 2014-2016
Cycle
AASB 9 Financial Instruments and related standards
AASB 15 Revenue from Contracts with Customers and
AASB 2014-5 Amendments to Australian. Accounting
Standards arising from AASB 15
AASB 2016-3 Amendments to Australian Accounting
Standards - Clarifications to AASB 15
AASB 2016-5 Amendments to Australian Accounting
Standards
- Classification and Measurement of
Share-based Payment Transactions
IFRIC 23 Uncertainty over Income Tax Treatments
AASB 16 - Leases
Mandatory date for
annual reporting
periods (beginning
on or after)
1 January 2017
Reporting period
standard adopted by
the company
1 July 2017
1 January 2017
1 July 2017
1 January 2017
1 July 2017
1 January 2018
1 January 2018
1 July 2018
1 July 2018
1 January 2018
1 July 2018
1 January 2018
1 July 2018
1 January 2019
1 January 2019
1 July 2019
1 July 2019
Management are currently assessing the impact of these new standards on the Company and have commenced
an analysis on the impact of AASB 15 - Revenue from Contracts with Customers. At the date of writing whilst
management does not expect this standard to have a material effect on the position of the Company, the
potential impacts of this change are still being fully assessed.
(c) Accounting policies
The following is a summary of the material accounting policies adopted by the Company in the preparation of the
financial report. The accounting policies have been consistently applied, unless otherwise stated.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries) referred to as ‘the Group’ in the financial statements. Control is achieved where
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.
65
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Basis of consolidation (continued)
A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have a 30
June financial year-end.
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those
policies applied by the parent entity. Subsidiaries are accounted for at cost in the parent entity.
The results of subsidiaries acquired or disposed of during the year are included in profit or loss from the effective
date of acquisition or up to the effective date of disposal, as appropriate.
Segment reporting
The Company determines and presents operating segments using the ‘management approach’ where the
information presented is on the same basis as the internal reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM are responsible for the allocation of resources to operating segments and
assessing their performance and provide the strategic direction and management oversight of the day to day
activities of
for research and development
expenditure decisions and challenging and approving strategic planning for the business.
the entity in terms of monitoring results, providing approval
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements are measured using the currency of the primary economic environment
in which the entity operates (“the functional currency”). The financial statements are presented in Australian
dollars, which is the Company’s functional and presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are translated into the functional currency using the rates of exchange ruling at
the date of each transaction. At reporting date, amounts outstanding in foreign currencies are translated into the
functional currency using the rate of exchange ruling at the end of the financial year. Refer to Note 3 for the
foreign currency gains and losses recognized during the periods.
Foreign exchange gains and losses that relate to borrowings are presented in the statement of profit or loss and
other comprehensive income, within finance costs. All other foreign exchange gains and losses are presented in
the statement of profit or loss and other comprehensive income on a net basis within Corporate Administration
Costs.
Immuron Inc., a subsidiary of the Group, has USD as its functional currency. Accordingly, this entity’s statement
of comprehensive income and statement of financial position balances have been translated to the Group’s
presentation currency (which is AUD$) at the reporting date. A gain arising from this translation of AUD$40,017
(2016: AUD$8,846) are recognized as Other Comprehensive Income for the year.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue
are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.
The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that
future economic benefits will flow to the entity and specific criteria have been met for each of the Company's
activities as described in note 2. The amount of the revenue is not considered to be reliably measured until all
contingencies relating to the sale have been resolved.
66
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Revenue recognition (continued)
The following specific revenue criteria must be met before revenue is recognized:
(i) Sale of Goods and services
Significant risks and rewards of ownership of goods has passed to the buyer and an invoice for the goods or
services is issued;
Interest income
(ii)
Interest income is recognized using the effective interest rate method;
(iii) R & D Tax Refund
Income is recognized in the year the research and development expenses were incurred.
The Company has worked with experienced advisors to improve its internal process on advanced findings of the
R&D activities, which includes determining and evaluating the eligibility of R&D related expenditure to support its
submission of the R&D Tax Refund claim.
Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received and the Company will comply with all attached conditions.
Government grants relating to costs to be incurred are deferred or accrued such that they are recognized in the
statement of profit or loss and other comprehensive income over the period necessary to match them with the
costs that they are intended to compensate.
Income tax
The income tax expense or revenue for the period is the tax payable or tax rebate receivable on the current
period’s taxable income adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences between the tax base of assets and liabilities and their carrying amounts in the financial statements,
and to unused tax losses.
Deferred income tax is provided in full, using the liability method on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither the accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by
the end of reporting period and are expected to apply when the related deferred income tax is realized or the
deferred income tax liability is settled.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilize those temporary differences and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net
basis, or to realize the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts recognized directly in equity are also recognized
directly in equity.
67
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Impairment of non-financial assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use.
Cash and cash equivalents
For presentation purposes, cash and cash equivalents includes cash on hand.
Trade receivables
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the
effective interest rate method, less provision for impairment. Trade receivables are due for settlement no more
than 30 days from the date of recognition.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are
written off. A provision for impairment of trade receivables is established when there is objective evidence that
the Company will not be able to collect all amounts due according to the original terms of receivables.
financial difficulties of
the debtor, probability that
Significant
the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payment (more than 30 days overdue) are considered indicators that
the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate.
Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The
amount of the provision is recognized in the statement of profit or loss and other comprehensive income.
Inventories
(i) Raw materials, work in progress and finished goods
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value.
Where appropriate, cost comprises direct materials, direct labor and an appropriate proportion of variable and
fixed overheads expenditure, the latter being allocated on the basis of normal operating capacity. The Company
classifies inventory as a current asset as all amounts are held for the purpose of trading.
Costs are assigned to individual items of inventory on basis of weighted average costs. Net realisable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale.
Plant and equipment
Plant and equipment are stated at historical cost
expenditure that is directly attributable to the acquisition of the items.
less accumulated depreciation. Historical cost
includes
Repairs and maintenance are charged to the statement of profit or loss and other comprehensive income during
the financial period in which they are incurred.
Depreciation on assets is calculated using the straight line method to allocate their cost, net of their residual
values, over their estimated useful lives, as follows:
Plant & Equipment (3-15 years)
Computer Equipment (2-4 years)
Furniture & Fittings (3-15 years)
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, annually.
68
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Plant and equipment (continued)
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount
is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in the statement of profit or loss and other comprehensive income.
Intangible assets
(i) Research and development
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical
knowledge and understanding, is recognized in the statement of profit or loss and other comprehensive income
as an expense when it is incurred.
Expenditure on development activities, being the application of research findings or other knowledge to a plan or
design for the production of new or substantially improved products or services before the start of commercial
production or use, is capitalized if it is probable that the product or service is technically and commercially
feasible, will generate probable economic benefits and adequate resources are available to complete
development and cost can be measured reliably. Other development expenditure is recognized in the statement
of profit or loss and other comprehensive income as an expense as incurred.
Trade and other payables
These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial
year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade
payables are recognized initially at fair value and subsequently measured at amortized cost using the effective
interest rate method.
Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, annual leave and long service leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognized in
respect of employees’ services up to the end of the reporting period and are measured at the amounts expected
to be paid when the liabilities are settled.
(ii) Other long-term employee benefit obligations
The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months
after the end of the period in which the employees render the related service are recognized in the provision for
employee benefits and measured as the present value of expected future payments to be made in respect of
services provided by employees up to the end of the reporting period 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 end of the reporting
period of corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash
outflows. The obligations are presented as current liabilities in the Statement of financial position if the entity does
twelve months after the reporting period,
for at
not have an unconditional right
regardless of when the actual settlement is expected to occur.
to defer settlement
least
(iii) Retirement benefit obligations
Contributions to the defined contribution superannuation funds are recognized as an expense as they become
payable. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the
future payments is available.
69
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Employee benefits (continued)
(iv) Share-based payments
Share-based compensation benefits may be provided through the issue of fully paid ordinary shares under the
Immuron Employee Share and Option Plan. Options are also granted to employees and consultants in
accordance with the terms of their respective employment and consultancy agreements. Any options granted are
made in accordance with the terms of the Company’s Employee Share and Option Plan (ESOP).
The fair value of options granted under employment and consultancy agreements are recognized as an
employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date and
recognized over the period during which the employees become unconditionally entitled to the options.
The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the
exercise price,
the
non-tradeable nature of the option, 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.
the vesting and performance criteria,
the impact of dilution,
the term of
the option,
The fair value of the options granted excludes the impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. At each reporting date, the entity revises its estimate
of the number of options that are expected to become exercisable. The employee benefit expense recognized
each period takes into account the most recent estimate. The impact of the revision to original estimates, if any,
is recognized in the statement of profit or loss and other comprehensive in come with a corresponding adjustment
to equity.
Upon the exercise of options, the balance of the share-based payments reserve relating to those options is
transferred to contributed equity.
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits.
The Company recognises termination benefits when it is demonstrably committed to either terminating the
employment of current employees according to a detailed formal plan without possibility of withdrawal or
providing termination benefits as a result of an offer made to encourage voluntary redundancy.
Benefits falling due more than 12 months after reporting date are discounted to present value.
Borrowings
Generally, loans and borrowings are initially recognized at cost, being the fair value of the consideration received
net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortized cost using the effective interest method. Amortized cost is calculated by
taking into account any issue costs and any discount or premium on settlement.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the
statement of financial position, net of transaction costs.
Convertible notes are initially classified as a financial liability on the amortised cost basis until extinguished on
conversion or redemption. Any increase in the liability die to the passage of time is recognised as a finance cost.
The corresponding interest on convertible notes is expensed to the statement of profit or loss and other
comprehensive income.
Contributed equity
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 from the proceeds.
70
Immuron Limited
Notes to the consolidated financial statements
30 June 2017
(continued)
20 Summary of significant accounting policies (continued)
(c) Accounting policies (continued)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company,
excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the full year, adjusted for bonus elements in ordinary shares issued during the full
year.
(ii) 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)
Revenues, expenses and assets are recognized net of the amount of associated GST, unless the GST incurred
is not recoverable from the taxation authority. In this case it is recognized as part of the cost of acquisition of the
asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST recoverable or payable. The net amount of
GST recoverable from, or payable to, the taxation authorities is included with other receivable or payables in the
statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flow arising from investing or financing
activities which are recoverable for, or payable to, the taxation authorities are presented as operating cash flow.
Leases
Leases in which a significant portion of the risk and reward of ownership are not transferred to the Company as
lessee are classified as operating leases. Payments made under operating leases (net of any incentives received
from the lessor) are charged to the statement of profit or loss and other comprehensive income on a straight-line
basis over the period of the lease.
71
Immuron Limited
Directors' declaration
30 June 2017
In the Directors' opinion:
(a)
the financial statements and notes set out on pages 31 to 71 are in accordance with the Corporations Act
2001, including:
(i)
(ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the consolidated entity's financial position as at 30 June 2017 and of
its performance for the year ended on that date, and
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
at the date of this declaration, there are reasonable grounds to believe that the members of the extended
closed group will be able to meet any obligations or liabilities to which they are, or may become, subject
by virtue of the deed of cross guarantee.
(b)
(c)
Note 20(b) confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the chief executive officer and chief financial officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of Directors.
Dr. Roger Aston
Director
Melbourne
28 September 2017
72
The Shareholder information set out below was applicable as at 27 September 2017.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Immuron Limited
Shareholder information
30 June 2017
Class of equity security
Ordinary shares
No. of
Holders
Total Units
229
430
238
517
168
1,582
58,974
1,317,819
1,892,545
18,901,909
108,269,215
130,440,462
432
463,980
Ordinary shares
Number held
%
17,999,746
9,360,484
8,624,999
3,665,104
2,907,236
2,731,632
2,645,983
2,500,000
2,000,000
2,000,000
1,700,000
1,624,999
1,425,000
1,421,874
1,334,075
1,331,744
1,127,081
1,000,000
1,000,000
906,000
67,305,957
13.80
7.18
6.61
2.81
2.23
2.09
2.03
1.92
1.53
1.53
1.30
1.25
1.09
1.09
1.02
1.02
0.86
0.77
0.77
0.69
51.59
63,134,505
130,440,462
48.41
100.00
Holding
1 - 1000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Unmarketable parcel
B. Equity security holders
Twenty largest quoted equity security holders
Name
HSBC CUSTODY NOM AUST LTD*
GRANDLODGE PL*
AUTHENTICS AUST PL
RETZOS EXECUTIVE PL
ANASTASIOU PETER + K P*
INVERAREY PL
FIFTY-FIFTH LEPRECHAUN PL*
INSYNC INV PL
SBI INV PR LLC
ADVANCE PUBLICITY PL*
REED DALE ANTHONY
BIDDICK KENNETH + C
HAMBLETON STREET PL
ADVANCE CLINICAL SYSTEMS
PLUSH DAVID A + A L*
G & N LORD SUPER PL*
CITICORP NOM PL
TJS INV AUST PL
WESTPARK OPERATIONS PL*
BIRD WILLIAM DAVID FRANK
Total
Total balance of remaining holders
Total on issue
* Denotes merged holders.
78
B. Equity security holders (continued)
Quoted equity securities
Immuron Limited
Shareholder information
30 June 2017
(continued)
No. of
Holders
Total Units
IMCOB listed options exercisable at $0.55 on or before 30 November 2019
362
25,289,894
Unquoted equity securities
IMCSO2 unlisted options exercisable at $1.556 on or before 1 November 2016
IMCAC unlisted options exercisable at $0.500 on or before 1 October 2018
IMCAI unlisted options exercisable at $0.570 on or before 24 February 2019
IMCAI unlisted options exercisable at $1.892 on or before 28 February 2019
IMCAI unlisted options exercisable at $0.300 on or before 28 May 2019
IMCAI unlisted options exercisable at $0.500 on or before 27 November 2019
IMCRM1 unlisted options exercisable at $1.944 on or before 30 November 2021
IMCRM2 unlisted options exercisable at $1.876 on or before 17 January 2022
IMCAI unlisted options exercisable at USD$10 for every 40 options on or before
13 June 2022*
*Unlisted options held by HSBC Custody Nomination Australia Limited.
C. Substantial holders
No. of
Holders
Total Units
1
2
1
1
1
6
1
1
1
62,500
1,050,000
1,000,000
15,380
140,056
7,625,532
14,493
29,668
28,060,000
The name of substantial shareholders the Company is aware of from the register, or who have notified the
Company in accordance with Section 671B of the Corporations Act are:
HSBC CUSTODY NOM AUST LTD
GRANDLODGE PL
AUTHENTICS AUST PL
D. Shareholder enquiries
Number
held
17,999,746
15,327,446
8,624,999
41,952,191
Percentage
13.80%
11.75%
6.61%
32.16%
Shareholders with enquiries about their shareholdings should contact the Share Register:
Security Transfer Registrars
PO Box 535, Applecross, WA 6953, Australia
Telephone: +61 (0)8 9315 2333
Facsimilie: +61 (0)893152233
E. Change of address, change of name, consolidation of shareholdings
Shareholders should contact the Share Registry to obtain details of the procedure required for any of these
changes.
F. Removal from the Annual Report mailing list
Shareholders who wish to receive the Annual Report should advise the Share Registry in writing. These
shareholders will continue to receive all other shareholder information.
G. Tax File numbers
It is important that Australian resident shareholders, including children, have their tax file number or exemption
details noted by the Share Registry.
79
Immuron Limited
Shareholder information
30 June 2017
(continued)
H. CHESS (Clearing House Electronic Sub-Register System)
Shareholders wishing to move to uncertified holdings under the Australian Stock Exchange (CHESS) system
should contact their stockbroker.
I. Uncertified share register
Shareholding statement are issued at the end of each month that there is a transaction that alters the balance of
your holding.
80