ANNUAL REPORT 2019
Immuron Limited
0
Immuron Limited
Appendix 4E
Year ended 30 June 2019
Name of entity:
ABN:
Year ended:
Previous period:
Results for announcement to the market
Immuron Limited
Appendix 4E
30 June 2019
Immuron Limited
80 063 114 045
30 June 2019
30 June 2018
$
Revenue from ordinary activities
Loss from ordinary activities after tax attributable to members
Net loss for the period attributable to members
Up
Up
Up
29.5% to
53.9% to
53.9% to
2,387,426
(4,632,743)
(4,632,743)
Distributions
No dividends have been paid or declared by the company for the current financial year. No dividends were paid for
the previous financial year.
Explanation of results
Please refer to the review of operations and activities on pages 3 to 6 for explanation of the results.
Additional information supporting the Appendix 4E disclosure requirements can be found in the review of operations
and activities, directors' report and the financial statements for the year ended 30 June 2019.
Net tangible assets per security
Net tangible asset backing (per security)
Changes in controlled entities
2019
Cents
4.50
2018
Cents
5.91
There have been no changes in controlled entities during the year ended 30 June 2019.
Other information required by Listing Rule 4.3A
a. Details of individual and total dividends or distributions and dividend or distribution payments:
b. Details of any dividend or distribution reinvestment plans:
c. Details of associates and joint venture entities:
d. Other information
N/A
N/A
N/A
N/A
Audit
The financial statements have been audited by the group's independent auditor without any modified opinion,
disclaimer or emphasis of matter.
Immuron Limited
Appendix 4E
30 June 2019
(continued)
Immuron Limited
ABN 80 063 114 045
Annual report - 30 June 2019
Corporate directory
Review of operations and activities
Directors' report
Directors and company secretary
Principal activities
Dividends - Immuron Limited
Review of operations
Significant changes in the state of affairs
Events since the end of the financial year
Likely developments and expected results of operations
Environmental regulation
Information on directors
Company secretary
Meetings of directors
Remuneration report (audited)
Shares under option
Insurance of officers and indemnities
Proceedings on behalf of the company
Non-audit services
Auditor's independence declaration
Rounding of amounts
Corporate governance statement
Financial statements
Independent auditor's report to the members
Shareholder information
1
3
7
8
8
8
8
8
8
8
9
9
14
15
16
24
24
25
25
25
25
27
29
72
77
Directors
Secretary
Registered office
Principal place of business
Share register
Auditor
Immuron Limited
Corporate directory
Dr Roger Aston
Independent Non-Executive Chairman
Mr Peter Anastasiou
Executive Vice Chairman
Dr Gary Jacob (appointed 17 April 2019)
Executive Director and Chief Executive Officer
Mr Daniel Pollock
Independent Non-Executive Director
Mr Stephen Anastasiou
Independent Non-Executive Director
Prof. Ravi Savarirayan
Independent Non-Executive Director
Mr Richard Berman (appointed 1 July 2018)
Independent Non-Executive Director
Mr Phillip Hains
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
Bank of New York
225 Liberty Street
New York NY 102286
United States
Telephone: +1 212 495 1784
Grant Thornton Audit Pty Ltd
Collins Square
Tower 5, 727 Collins Street
Melbourne VIC 3008
Australia
Telephone: +61 (0)3 8320 2222
Immuron Limited
1
Solicitors
Bankers
Immuron Limited
Corporate directory
(continued)
Francis Abourizk Lightowlers (FAL)
Level 14, 144 William Street
Melbourne VIC 3000
Australia
Telephone: +61 (0)3 9642 2252
Carter Ledyard & Milburn LLP
2 Wall Street
New York NY 10005
United States
Telephone: +1 212 238 8605
Sheppard Mullin
30 Rockefeller Plaza
New York NY 10112
United States
Telephone: +1 212 653 8700
National Australia Bank (NAB)
330 Collins Street
Melbourne VIC 3000
Australia
Stock exchange listings
Immuron Limited shares are listed on the Australian
Securities Exchange (ASX: IMC) and NASDAQ (IMRN)
Website
www.immuron.com.au
Immuron Limited
2
Review of
operations and
activities
0
Review of operations and activities
Key highlights
• Global sales reached $2.39 million for FY 2019
•
•
•
Travelan sales exceeded $1 million milestone in the United States
Travelan hits the Canadian market
IMM-124E / Travelan US registration strategy - pre-IND meeting request
submitted to FDA
SAH study – top line results report
FDA registration strategy for clinical development of IMM-529
U.S. Clostridium difficile patent granted
U.S. Department of Defense Travelan Shigellosis study results reported
•
•
•
•
• Manufacture of three new Shigella products completed
•
Research and development tax concession refund paid
•
New director appointed
Financial review
Immuron Limited has reported a loss for the year ended 30 June 2019 of $4,632,743
(2018: $3,010,929). The group's net assets decreased to $7,351,136 compared with
$8,439,350 at 30 June 2018, including cash reserves of $5,119,887 (2018: $4,727,430).
Travelan sales surge in all markets
Global sales of Travelan, Immuron’s over-the-counter gastrointestinal and digestive
health supplement, increased by 29.5% year-on-year in the 2019 financial year, achieving
$2.39 million total sales.
Australian sales revenue recorded $1.22 million, showing continued growth and a 14%
increase against FY 2018. Increased initiatives in the pharmacy sector, including
television advertising with Chemist Warehouse and stronger merchandising in-store,
contributed to this sales momentum.
In the United States, Travelan sales also spiked dramatically with FY 2019 revenue
exceeding the $1 million milestone for the first time, as sales grew strongly by 32% year-
on-year to $1.02 million thanks to the partnership with Passport Health, America’s largest
travel medicine network, and rising sales on the Amazon platform. During FY 2019,
Immuron featured on two podcasts on the ‘Not Old, Better’ channel in the United States.
This included an interview with Dr Hailey Weerts from the U.S. Department of Defense, in
which she spoke of the ground-breaking research into Travelan by the Walter Reed Army
Institute of Research (WRAIR). Both podcasts resulted in an immediate spike in sales of
Travelan on Amazon, with this online category growing by almost 80% in FY 2019. May
2019 also represented a record-breaking month for Travelan sales with revenue climbing
to $182k in the United States.
April saw the official relaunch of Travelan in Canada, with ANB Canada managing
marketing and distribution in the retail pharmacy sector. The major Canadian pharmacy
chain Shoppers Drug Mart was the first banner to range the product. The growth
underlines the attention Immuron pays to sales expansion in North America.
FDA registration for clinical development of IMM-124E/Travelan to
prevent travellers’ diarrhea underway
In April 2019, we announced plans to pursue clinical development of IMM-124E through a
formal FDA registration pathway as a drug to prevent travellers’ diarrhea (TD). This is an
important strategic initiative towards enhancing commercialisation of the Travelan/IMM-
124E franchise. Because Travelan and IMM-124E are one and the same, the group
believes seeking FDA registration for IMM-124E as a drug to prevent travellers’ diarrhea
offers the potential for substantial sales benefits. We are moving aggressively forward to
develop IMM-124E through the FDA, and in August 2019 we filed with FDA a request for
Immuron Limited
4
a Type B meeting with the agency, with a submitted Investigational New Drug (IND)
application (IND#145362), to discuss the clinical development plan for IMM-124E to
prevent travellers’ diarrhea. We believe that a successful clinical program, followed by a
BLA filing with the Agency, and successful FDA approval of IMM-124E to specifically
prevent travellers’ diarrhea could lead to substantial increases in the marketing of an
approved drug to treat travellers’ diarrhea. Travellers’ diarrhea affects between 30 and
60% of more than a billion international travellers a year. With FDA approval as a
preventive drug for travellers’ diarrhea we predict a potential sales peak at more than
US$100 million.
Two additional clinical studies have been performed with IMM-124E: 1) a Phase II clinical
study in patients with severe alcoholic hepatitis (SAH) conducted under FDA IND
#015675 funded by the National Institute of Alcohol Abuse and Alcoholism (NIAAA), and
2) a second NIH funded Phase II clinical study in paediatric patients with non-alcoholic
fatty liver disease (NAFLD) conducted under FDA IND #017066.
Top-line results from the SAH trial with Dr Arun Sanyal of Virginia Commonwealth
University as the lead Principal Investigator were released in August 2019. The primary
objective of this study was to evaluate the safety and efficacy of IMM-124E at two oral
dosage levels as compared with a placebo in patients with severe alcoholic hepatitis and
with all patients being treated with steroids. A total of 57 patients with SAH with a model
for end stage liver disease (MELD) score ranging from 21-28 were enrolled into the
clinical study and were treated with either IMM-124E or placebo for 28 days (placebo
N=20, IMM-124E 2400 mg/day N=18, IMM-124E 4800 mg/day N=19). No suspected
unexpected serious adverse reactions (SUSAR) were reported and no differences in
serious adverse events (SAE) were observed across the three arms of the study and no
SAE was considered related to the study drug by investigators. Both doses of IMM-124E
in the study (2400 mg and 4800 mg) were well tolerated. There were nine deaths
reported over a six-month period for the entire cohort and there were no significant
differences across study groups. The data showed that IMM-124E is safe to use in
patients with SAH but does not reduce circulating lipopolysaccharide levels, mortality or
have an impact on MELD score in the study population, and we will not continue clinical
development of IMM-124E specifically to treat SAH.
The safety data generated from the 57 SAH patients along with the data generated in the
24-week treatment study of IMM-124E in non-alcoholic steatohepatitis (NASH) under
FDA IND #014933 which involved 133 patients has been summarised and submitted to
the FDA to support the registration strategy and the clinical development plan for IMM-
124E to prevent travellers’ diarrhea.
The NIH-funded Phase II double-blind, placebo-controlled, randomised clinical trial of
IMM-124E in paediatric non-alcoholic fatty liver disease (NAFLD) patients is presently
underway at Emory University, led by Dr Miriam Vos, who specialises in the treatment of
gastrointestinal disease in children, including NAFLD and obesity. The trial has presently
randomised 24 of the targeted 40 patients into the study. The top-line results for this
study are anticipated to be reported next year.
IMM-529 C. difficile infection update
In March 2019, we provided an update regarding the status of the IMM-529 clinical trial in
patients with CDI, along with a refocusing of our efforts to develop IMM-529. The Phase
I/IIa clinical trial of IMM-529 in patients with C. difficile initiated at the end of 2017 at two
clinics in Israel, had not enrolled patients’ numbers anticipated for those sites. To date,
only nine out of 60 patients have been randomised into the study and the group has
decided to close these sites and to focus further development of IMM-529 to treat CDI
patients through a formal filing of an IND with FDA, and to focus development of the drug
candidate specifically to treat patients with recurrent disease, a major unmet medical
need in treatment of patients suffering with C. difficile infections. We are planning to file a
Type B meeting request with FDA to explore further development of IMM-529 in treating
patients with CDI. We anticipate having this meeting during 1H2020.
U.S. Clostridium difficile patent granted
In March 2019, the United States Patent and Trademark Office issued a patent for a
method to treat Clostridium difficile with IMM-529. C. difficile remains a major medical
Immuron Limited
5
problem globally creating a yearly economic burden estimated at US$10 billion and killing
28,000 Americans alone. It presents as a serious and constant problem in hospitals and
long-term in-patient care facilities.
U.S. Department of Defense’s Travelan Shigellosis animal study
results reported
In June 2019, we updated the market on the latest developments arising from our
cooperative research and development efforts with the United States Department of
Defense.
The R&D initiatives focus on Shigella research. Shigella is the bacterium responsible for
the onset of dysentery. Our associates at the Armed Forces Research Institute of Medical
Sciences (AFRIMS), a Bangkok-based laboratory of the Walter Reed Army Institute of
Research (WRAIR), performed the research.
Dr Robert Kaminski, a senior scientist with WRAIR, said ‘The study results clearly
demonstrated that animals with severe inflammation in the gastrointestinal tract and high
inflammatory cytokines in fecal samples were associated with severe dysentery and that
prophylactic administration of Travelan significantly reduced the inflammatory response.
‘… the combination of our Shigella vaccine research and development efforts with
Immuron’s oral immunotherapy platform make [sic] perfect sense,’ he said.
The World Journal of Gastroenterology reports an estimated 1.5 billion annual episodes
of diarrhea worldwide. They lead to the deaths of about 2.2 million people, mostly
children in developing countries. Authorities believe Shigella causes 80 to 165 million
cases of disease worldwide, leading to about 600,000 deaths annually.
Manufacture of three new Shigella products completed
In the same June 2019 announcement, we reported the completed manufacture of three
new Shigella-specific therapeutic products using proprietary vaccines developed by
WRAIR. The immune reactivity of the three hyper-immune Shigella specific products
have been assessed by the WRAIR using ELISA and Western Blot analysis. The
antibodies in the products were shown to react with the specific antigens present in the
vaccines. The antibodies within the three products were also reactive to four different
clinical isolates of Shigella (S. flexneri 2a, S. flexneri 3a, S. flexneri 6, and S. sonnei). The
three Immuron Shigella-specific therapeutic products will now go on to evaluation in
WRAIR’s preclinical models of shigellosis.
Research and development tax concession refund paid
The Australian Government has paid Immuron a cash refund of $1.19 million as part of its
research and development tax incentive program. Immuron CEO, Dr Gary S. Jacob, said
the scheme had given Immuron ‘the opportunity to accelerate the clinical development
timelines for a number of its high-value pipeline programs.’
CEO added to board of directors
Chief Executive Officer, Dr Gary S. Jacob, has been
appointed a director on Immuron’s board. The
appointment is in line with his employment contract.
Dr Jacob became CEO in November 2018.
For and on behalf of the company
Dr Gary S. Jacob
Managing Director and Chief Executive Officer
Immuron Limited
Dr Gary S. Jacob
Managing Director and CEO
Immuron Limited
6
Directors’
report
0
Immuron Limited
Directors' report
30 June 2019
(continued)
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 2019. Throughout the report, the consolidated entity is
referred to as the group.
Directors and company secretary
Dr Roger Aston, Independent Non-Executive Chairman
Mr Peter Anastasiou, Executive Vice Chairman
Dr Gary Jacob, Executive Director (appointed 17 April 2019) and Chief Executive Officer (appointed 16 November
2018)
Mr Daniel Pollock, Independent Non-Executive Director
Mr Stephen Anastasiou, Independent Non-Executive Director
Prof. Ravi Savarirayan, Independent Non-Executive Director
Mr Richard Berman, Independent Non-Executive Director (appointed 1 July 2018)
The following persons held office as company secretary of Immuron Limited during the whole of the financial year and
up to the date of this report, except where otherwise stated:
Mr Phillip Hains
Principal activities
The group's principal activity is oral immunotherapy research and development and product sales focused on
bovine-colostrum enriched with antibodies of choice for the treatment and prevention of a range of infectious and
immune modulated diseases. Product sales comprise Travelan and Protectyn, used for the prevention of travellers’
diarrhoea.
Dividends - Immuron Limited
No dividends were declared or paid to members for the year ended 30 June 2019 (2018: nil). The directors do not
recommend that a dividend be paid in respect of the financial year.
Review of operations
Information on the operations and financial position of the group and its business strategies and prospects is set out
in the review of operations and activities on pages 3 to 6 of this annual report.
Significant changes in the state of affairs
Other than the information disclosed in the review of operations and activities on pages 3 to 6, there are no significant
changes in the state of affairs that the group has not disclosed.
Events since the end of the financial year
On 19 July 2019, the company completed a capital raising comprising 339,130 American Depositary Shares (ADS) at
US$4.00 per security. The gross proceeds to the company were US$1,356,520.
No other matter or circumstance has arisen since 30 June 2019 that has significantly affected the group's operations,
results or state of affairs, or may do so in future years.
Likely developments and expected results of operations
The group aims to create value for shareholders through a two-pronged approach. In the short- and medium-term,
Immuron Limited sells and licenses Travelan and Protectyn, over-the-counter products. Beyond this, the group is
researching and developing prescription products, principally for the treatment of NASH and Clostridium difficile.
Immuron Limited
8
Immuron Limited
Directors' report
30 June 2019
(continued)
Likely developments and expected results of operations (continued)
The group continues to develop its NASH, ASH and Clostridium difficile products. These development programs are
not expected to generate revenues in the short-term; long-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.
More information on these developments is included in the review of operations and activities on pages 3 to 6 of this
annual report.
Environmental regulation
The group is not affected by any significant environmental regulation in respect of its operations.
Information on directors
The following information is current as at the date of this report.
Dr Roger Aston Independent Non-Executive Chairman
Experience and expertise Dr Aston holds a BSc (Hons) and PhD. He has more than 20 years' experience in the
pharmaceutical and biotechnology industries. Dr Aston was previously the chief
executive officer and a director of Mayne Pharma Group Limited (ASX: MYX).
Prior to his position at Mayne Pharma, some of his previous positions have included chief
executive officer of Peptech Limited (ASX: PTD), director of Cambridge Antibody
Technology Limited (LSE: CAT and NASDAQ: CATG) and chairman of Bio Focus Plc
(formerly: Cambridge Drug Discovery Limited).
Dr Aston was also founder and chief executive officer 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.
He has extensive experience including negotiating global licence agreements,
overseeing product registration activities with the FDA, 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.
Date of appointment
20 March 2012
Other current
directorships
Former directorships in
last 3 years
Special responsibilities
Oncosil Limited (ASX: OSL), since 28 March 2013
Pharmaust Limited (ASX: PAA), since 12 August 2013
Resapp Health Limited (ASX: RAP), since 2 July 2015
Regeneus Limited (ASX: RGS), until 29 April 2019
Member of the audit and risk committee
Chair of the remuneration committee
Immuron Limited
9
Immuron Limited
Directors' report
30 June 2019
(continued)
Information on directors (continued)
Mr Peter Anastasiou Executive Vice Chairman
Experience and expertise Mr Anastasiou holds a B.Psych and is a serial entrepreneur and investor with extensive
experience in business in Australia and internationally. 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 group’s renounceable rights issue, which was
surpassed by his further funding support of the $9.66 million (before costs) capital raising
in February 2014 resulting in an ownership of approximately 15 percent 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.
Date of appointment
21 May 2015
Other current
directorships
Former directorships in
last 3 years
None
None
Special responsibilities
None
Immuron Limited
10
Information on directors (continued)
Dr Gary Jacob Executive Director and Chief Executive Officer
Experience and expertise Dr Jacob earned a Bachelor of Science cum laude in Chemistry from the University of
Immuron Limited
Directors' report
30 June 2019
(continued)
Missouri-St. Louis, and holds a PhD in Biochemistry from the University of
Wisconsin-Madison. Dr Jacob’s 30+ years' experience in the pharmaceutical and
biotechnology industries covers multiple disciplines, including research and development,
operations, business development, capital financing activities and senior management
expertise. He is the co-founder and founding chief executive officer of Synergy
Pharmaceuticals Inc. where he also served as chairman and is the co-inventor of the
FDA-approved drug Trulance for treating functional gastrointestinal disorders. On 12
December 2018, Synergy Pharmaceuticals Inc. filed a petition for relief under Chapter 11
of the U.S. Bankruptcy Code.
From May 2003 until January 2013, Dr Jacob served as chief executive officer and a
director of Callisto Pharmaceuticals, Inc. (AMEX: KAL) a publicly listed biotechnology
company focused on drugs to treat cancer. Prior to Callisto, Dr Jacob was at
Monsanto/G.D. Searle, where he served as Director of Glycobiology and Monsanto
Science Fellow, specialising in the fields of glycobiology and drug discovery. From 1986
to 1990, Dr Jacob, while located at Oxford University, England, managed the G.D. Searle
Glycobiology Group.
Dr Jacob has over 50 peer-reviewed publications in scientific journals, over 15 issued US
patents and is the co-inventor of two pharmaceutical drugs, one of which is FDA
approved. He is the recipient of an honorary Doctor of Science degree from the
University of Missouri-St. Louis, and has been honoured as a Distinguished Alumnus of
the University.
Date of appointment
17 April 2019
Other current
directorships
ContraVir Pharmaceuticals, Inc. (NASDAQ: CTRV), since May 2013
Trovagene, Inc. (NASDAQ: TROV), since 2009
Former directorships in
last 3 years
None
Special responsibilities
Chief Executive Officer
Immuron Limited
11
Immuron Limited
Directors' report
30 June 2019
(continued)
Information on directors (continued)
Mr Daniel Pollock Independent Non-Executive Director
Experience and expertise Mr Pollock holds a Bachelor of Laws and Diploma in Professional Legal Practice and is a
lawyer admitted in both Scotland and Australia and holding practising certificates in both
jurisdictions. He is a sole practitioner in his own legal firm based in Melbourne which
operates internationally and specialises in commercial law. Further, he is executive
director and co-owner of Great Accommodation Pty Ltd, 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.
Date of appointment
11 October 2012
Other current
directorships
Former directorships in
last 3 years
Special responsibilities
None
None
Chair of the audit and risk committee
Member of the remuneration committee
Mr Stephen Anastasiou Independent Non-Executive Director
Experience and expertise Mr Anastasiou holds a Bachelor of Science (Hons), Graduate Diploma in Marketing and
Master of Business Administration. He 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 over-the-counter products, with companies including the international
pharmaceutical company Bristol-Myers Squibb (NYSE: BMY).
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.
Date of appointment
28 May 2013
Other current
directorships
Former directorships in
last 3 years
None
None
Special responsibilities
None
Immuron Limited
12
Immuron Limited
Directors' report
30 June 2019
(continued)
Information on directors (continued)
Prof. Ravi Savarirayan Independent Non-Executive Director
Experience and expertise Prof. Savarirayan holds a Doctor of Medicine from the University of Melbourne, a
Bachelor of Medicine and Bachelor of Surgery from the University of Adelaide, is a
Fellow of the Royal Australasian College of Physicians (FRACP) and is a member of the
American Academy of Physician Assistants (ARC-PA, Hons). He has been a consultant
clinical geneticist at the Victorian Clinical Genetics Services since August 1999, as well
as professor and research group leader of skeletal biology and disease at the Murdoch
Children’s Research Institute since September 2000.
Prof. 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 at the 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. Prof. 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. He 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 the Journal of Medical Genetics since
June 2005.
Date of appointment
7 April 2017
Other current
directorships
Former directorships in
last 3 years
None
None
Special responsibilities
None
Immuron Limited
13
Immuron Limited
Directors' report
30 June 2019
(continued)
Information on directors (continued)
Mr Richard Berman Independent Non-Executive Director
Experience and expertise Mr Berman’s business career spans over 35 years' venture capital, senior management,
and merger and acquisition experience. Previously, Mr Berman served as a director of
the New York University Stern School of Business where he obtained his Bachelor of
Science and Master of Business Administration. He holds US and foreign law degrees
from Boston College and The Hauge Academy of International law, respectively.
Mr Berman has served as a director and/or officer of a dozen public and private
companies in the past five years. In 2016, he was elected chairman of Cevolva Biotech
Inc. From 2014 to 2016, he served as chairman of MetaStat, Inc. From 2006 to 2011, he
was chairman of National Investment Managers, a company with $12 billion in pension
administration assets. From 2002 to 2010, he was a director of Nexmed Inc. (now called
Seelos Therapeutics, Inc.) where he also served as chairman and chief executive officer
in 2008 and 2009. From 1998 to 2000, Mr Berman was employed by Internet Commerce
Corporation (now Easylink Services) as chairman and chief executive officer and was a
director from 1998 to 2012. Prior to these ventures, Mr Berman worked at Goldman
Sachs as a Senior Vice President of Bankers Trust Company, where he started the M&A
and leveraged buyout departments. He created the largest battery company in the world
in the 1980s by merging Prestolite, General Battery and Exide to form Exide
Technologies. He helped create SoHo, the lower Manhattan neighbourhood in New York
City by developing five buildings and has advised on over $4 billion M&A transactions
and completing over 300 deals.
Date of appointment
1 July 2018
Other current
directorships
Catasys, Inc (NASDAQ: CATS), since 13 February 2014
Cryoport, Inc (NASDAQ: CYRX), since 12 January 2015
Advaxis, Inc (NASDAQ: ADXS), since 1 September 2005
Former directorships in
last 3 years
None
Special responsibilities
None
Company secretary
The company secretary is Mr Phillip Hains, appointed to the position on 19 April 2013. Mr Hains is a Chartered
Accountant operating a specialist public practice, 'The CFO Solution'. The CFO Solution focuses on providing back
office support, financial reporting and compliance systems for listed public companies. A specialist in the public
company environment, Mr Hains has served the needs of a number of company boards and their related committees.
He has over 30 years' experience in providing businesses with accounting, administration, compliance and general
management services. He holds a Master of Business Administration from RMIT University and a Public Practice
Certificate from the Chartered Accountants Australia and New Zealand.
Immuron Limited
14
Immuron Limited
Directors' report
30 June 2019
(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 2019, and the numbers of meetings attended by each director were:
Dr Roger Aston
Mr Peter Anastasiou
Dr Gary Jacob
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Mr Richard Berman
A =
Number of meetings attended
Full meetings
of directors
B
A
13
13
13
12
3
3
13
13
13
13
13
13
13
13
Meetings of committees
Audit
A
5
-
-
5
-
-
-
B
5
-
-
5
-
-
-
Remuneration
B
A
2
2
-
-
-
-
2
2
-
-
-
-
-
-
B =
Number of meetings held during the time the director held office or was a member of the committee during the year
Immuron Limited
15
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited)
The directors present the Immuron Limited 2019 remuneration report, outlining key aspects of our remuneration
policy and framework, and remuneration awarded this year.
The report is structured as follows:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
Key management personnel (KMP) covered in this report
Remuneration policy and link to performance
Elements of remuneration
Link between remuneration and performance
Remuneration expenses
Contractual arrangements with executive KMPs
Additional statutory information
(a) Key management personnel covered in this report
Dr Roger Aston, Independent Non-Executive Chairman
Mr Peter Anastasiou, Executive Vice Chairman
Dr Gary Jacob, Executive Director (appointed 17 April 2019) and Chief Executive Officer (appointed 16 November
2018)
Mr Daniel Pollock, Independent Non-Executive Director
Mr Stephen Anastasiou, Independent Non-Executive Director
Prof. Ravi Savarirayan, Independent Non-Executive Director
Mr Richard Berman, Independent Non-Executive Director (appointed 1 July 2018)
Other key management personnel
Dr Jerry Kanellos, Chief Operating Officer (appointed 16 November 2018), Interim Chief Executive Officer (appointed
3 August 2017; resigned 16 November 2018)
Mr Thomas Liquard, Chief Executive Officer (resigned 3 August 2017)
(b) Remuneration policy and link to performance
Our remuneration committee is made up of independent non-executive directors. The committee reviews and
determines our remuneration policy and structure annually to ensure it remains aligned to business needs, and meets
our remuneration principles. In particular, the board aims to ensure that remuneration practices are:
•
•
•
•
competitive and reasonable, enabling the company to attract and retain key talent
aligned to the company's strategic and business objectives and the creation of shareholder value
transparent and easily understood, and
acceptable to shareholders.
Immuron Limited
16
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(b) Remuneration policy and link to performance (continued)
Element
Fixed
remuneration
(FR)
STI
LTI
Purpose
Provide competitive market
salary including
superannuation and
non-monetary benefits
Reward for in-year
performance and retention
Alignment to long-term
shareholder value
Performance metrics
Nil
Potential value
Positioned at the market rate
Company and individual
performance goals
Share price, capital raised,
company and individual
performance goals
CEO: 50% of FR
CEO: 5,000,000 unlisted
5-year options at $0.50
exercise price
Assessing performance
The remuneration committee is responsible for assessing performance against KPIs and determining the STI and LTI
to be paid. To assist in this assessment, the committee receives data from independently run surveys.
Performance is monitored on an informal basis throughout the year and a formal evaluation is performed annually.
Securities trading policy
Immuron Limited's securities trading policy applies to all directors and executives, see
www.immuron.com.au/corporate-directory-and-governance/. It only permits the purchase or sale of company
securities during certain periods.
(c) Elements of remuneration
(i) Fixed annual remuneration (FR)
Key management personnel may receive their fixed remuneration as cash, or cash with non-monetary benefits such
as health insurance and car allowances. FR is reviewed annually, or on promotion. It is benchmarked against market
data for comparable roles in companies in a similar industry and with similar market capitalisation. The committee
aims to position executives at or near the median, with flexibility to take into account capability, experience, value to
the organisation and performance of the individual.
(ii) Short-term incentives
All executives are entitled to participate in a 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 remuneration committee and board.
The company's CEO is entitled to short-term incentives in the form of cash bonus up to 50% of FR against agreed
key performance indicators (KPIs). On an annual basis, KPIs are reviewed and agreed in advance of each financial
year and include financial and non-financial company and individual performance goals.
(iii) Long-term incentives
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 2017. The aim of
the ESOP is to allow 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.
Immuron Limited
17
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(d) Link between remuneration and performance
Statutory performance indicators
We aim to align our executive remuneration to our strategic and business objectives and the creation of shareholder
wealth. The table below shows measures of the group's financial performance over the last five years as required by
the Corporations Act 2001. However, these are not necessarily consistent with the measures used in determining the
variable amounts of remuneration to be awarded to KMPs. As a consequence, there may not always be a direct
correlation between the statutory key performance measures and the variable remuneration awarded.
2019
2018
2017
2016
2015
Loss for the year attributable to owners ($)
Basic loss per share (cents)*
Share price at year end ($)*
4,632,743 3,010,929 6,804,154 5,599,004 3,447,951
4.60
0.23
6.40
0.27
7.30
0.25
2.25
0.34
3.20
0.12
* Amounts have been adjusted to reflect a 40:1 share consolidation, completed on 20 November 2014
The company's earnings have remained negative since inception due to the nature of the business. Shareholder
wealth reflects this speculative and volatile market sector. No dividends have ever been declared by Immuron
Limited. 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.
(e) Remuneration expenses
The following tables show details of the remuneration expense recognised for the group's key management
personnel for the current and previous financial year measured in accordance with the requirements of the
accounting standards.
Immuron Limited
18
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(e) Remuneration expenses (continued)
The following table shows details of remuneration expenses of each director or other key management personnel
recognised for the year ended 30 June 2019.
2019
Non-executive directors
Dr Roger Aston
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Mr Richard Berman
Executive directors
Mr Peter Anastasiou
Dr Gary Jacob
Other KMP
Dr Jerry Kanellos
Short-term benefits
Post-
employment
benefits
Cash
salary
and fees
$
70,000
60,000
50,000
50,000
136,073
50,000
311,195
Other
$
Super-
annuation
$
-
-
-
-
-
-
-
6,650
5,700
-
-
-
-
-
Long-
term
benefits
Long
service
leave
$
Share-
based
payments
Options
$
Total
$
-
-
-
-
164,400
76,650
65,700
50,000
50,000
300,473
-
50,000
975,000 1,286,195
-
-
-
-
-
-
-
210,000
15,138
19,950
3,652
157,000
405,740
Total KMP compensation
937,268
15,138
32,300
3,652
1,296,400 2,284,758
The following table shows details of remuneration expenses of each director or other key management personnel
recognised for the year ended 30 June 2018.
2018
Non-executive directors
Dr Roger Aston
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Executive directors
Mr Peter Anastasiou
Other KMP
Dr Jerry Kanellos
Mr Thomas Liquard
Total KMP compensation
Short-term benefits
Post-
employment
benefits
Cash
salary
and fees
$
70,000
60,000
50,000
50,000
50,000
207,756
82,500
570,256
Other
$
Super-
annuation
$
-
-
-
-
-
-
-
-
6,650
5,700
-
-
-
19,737
-
32,087
Long-
term
benefits
Long
service
leave
$
Share-
based
payments
Options
$
Total
$
-
-
-
-
-
-
-
-
13,275
-
-
46,700
-
-
-
89,925
65,700
50,000
96,700
50,000
227,493
82,500
59,975
662,318
Immuron Limited
19
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(f) Contractual arrangements with executive KMPs
Name:
Position:
Contract duration:
a
Notice period:
Fixed remuneration:
a
Name:
Position:
Contract duration:
Notice period:
Fixed remuneration:
Dr Gary Jacob
Executive Director and Chief Executive Officer
36 months (effective 11 February 2019), renewed annually thereafter, subject to
termination clause
60 days by either party
US$350,000 per annum
Dr Jerry Kanellos
Chief Operating Officer
Unspecified
30 days by either party
$210,000 per annum, plus statutory superannuation
(g) Additional statutory information
(i) Relative proportions of fixed vs variable remuneration expense
The following table shows the relative proportions of remuneration that are linked to performance and those that are
fixed, based on the amounts disclosed as statutory remuneration expense on page 18 above:
Name
Non-executive director
Dr Roger Aston
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Mr Richard Berman
Executive directors
Mr Peter Anastasiou
Dr Gary Jacob
Other KMP
Dr Jerry Kanellos
Mr Thomas Liquard
Fixed remuneration
2019
%
2018
%
At risk - STI
2019
%
2018
%
At risk - LTI
2019
%
2018
%
100
100
100
100
45
100
24
61
-
85
100
100
52
-
100
-
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
-
76
39
-
15
-
-
48
-
-
-
-
-
Immuron Limited
20
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(g) Additional statutory information (continued)
(ii) Terms and conditions of the share-based payment arrangements
Options
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting period
are as follows:
Grant date
2018-07-13
2018-11-26
2019-02-11
Vesting and
exercise date
.
2018-07-13
2018-11-26
2019-02-11
Expiry date Exercise price ($)
Value per option at
grant date ($)
Vested (%)
2021-07-01
2020-06-30
2024-02-11
0.50
0.50
0.50
0.1570
0.0822
0.1950
100%
100%
100%
For detailed disclosures please refer to note 17 on page 54 of the financial statements.
(iii) Reconciliation of options and ordinary shares held by KMP
Option holdings
2019
Options
Dr Roger Aston
Mr Peter Anastasiou
Dr Gary Jacob
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Mr Richard Berman
Dr Jerry Kanellos
Notes
Balance at
start of the
period1
Granted as
remuneration
Other
changes2
Balance at
end of the
period3
Vested and
exercisable
Exercised
3,282,950
5,158,409
-
1,134,800
3,247,017
1,000,000
-
200,000
14,023,176
-
-
5,000,000
-
-
-
2,000,000
1,000,000
8,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,282,950
5,158,409
5,000,000
1,134,800
3,247,017
1,000,000
2,000,000
1,200,000
22,023,176
3,282,950
5,158,409
5,000,000
1,134,800
3,247,017
1,000,000
2,000,000
1,200,000
22,023,176
1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the
balance is as at the date they became KMP.
2. Other changes incorporates changes resulting from the expiration/forfeiture of options.
3. For former KMP, the balance is as at the date they cease being KMP.
Immuron Limited
21
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(g) Additional statutory information (continued)
(iii) Reconciliation of options and ordinary shares held by KMP (continued)
Share holdings
2019
Ordinary shares
Dr Roger Aston
Mr Peter Anastasiou
Dr Gary Jacob
Mr Daniel Pollock
Mr Stephen Anastasiou
Prof. Ravi Savarirayan
Mr Richard Berman
Dr Jerry Kanellos
Notes
Balance at the
start of the
period1
Granted as
remuneration
Received on
exercise of
options Other changes2
Balance at the
end of the
period3
751,116
16,398,664
-
374,800
6,251,137
-
-
-
23,775,717
-
-
-
-
-
-
-
-
-
-
437,500
-
-
-
-
-
-
437,500
-
1,000,000
-
145,000
-
-
-
-
1,145,000
751,116
17,836,164
-
519,800
6,251,137
-
-
-
25,358,217
1. Balance may include shares held prior to individuals becoming KMP. For individuals who became KMP during the period, the
balance is as at the date they became KMP.
2. Other changes incorporates changes resulting from the acquisition or disposal of shares.
3. For former KMP, the balance is as at the date they cease being KMP.
(iv) Other transactions with key management personnel
Mr Peter and Mr Stephen Anastasiou are directors and majority shareholders of Wattle Laboratories Pty Ltd.
Immuron Limited has rented an office suite from Wattle Laboratories Pty Ltd since 1 January 2016 under a three-year
agreement, renewed for another three years on 1 January 2019. The rental agreement is based on normal
commercial terms and conditions.
Mr Peter and Mr Stephen Anastasiou are directors and majority shareholders of Grandlodge Capital Pty Ltd
(Grandlodge). Commencing 1 June 2013, Immuron Limited contracted Grandlodge on normal commercial terms and
conditions to provide warehousing, distribution and invoicing services for Immuron Limited'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 Limited shareholders. 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.
Immuron Limited
22
Immuron Limited
Directors' report
30 June 2019
(continued)
Remuneration report (audited) (continued)
(g) Additional statutory information (continued)
(iv) Other transactions with key management personnel (continued)
Aggregate amounts of each of the above types of other transactions with key management personnel of Immuron
Limited:
Amounts recognised as expense
Rental of an office suite from Wattle Laboratories Pty Ltd
Services rendered by Grandlodge Capital Pty Ltd
2019
$
2018
$
53,958
70,000
123,958
30,019
140,000
170,019
Amounts recognised as assets and liabilities
At the end of the reporting period the following aggregate amounts were recognised in relation to the above
transactions:
Current liabilities (amounts payable)
(v) Voting of shareholders at last year's annual general meeting
2019
$
2018
$
-
35,000
Immuron Limited received more than 75 percent of favourable votes on its remuneration report for the 2018 financial
year. The company did not receive any specific feedback at the 2018 annual general meeting or throughout the year
on its remuneration practices.
[This concludes the remuneration report, which has been audited]
Immuron Limited
23
Shares under option
(a) Unissued ordinary shares
Unissued ordinary shares of Immuron Limited under option at the date of this report are as follows:
Immuron Limited
Directors' report
30 June 2019
(continued)
Date options granted
2012-06-29
2012-06-29
2014-05-27
2016-12-02 (IMCOB)
2017-06-13 (warrants)
2018-03-15
2018-03-15
2018-07-13
2018-11-26
2019-02-11
Total
Notes
Expiry date
Issue price of
shares ($)
Number under
option
2021-11-30
2022-01-17
2019-11-27
2019-11-30
2022-06-13
2023-03-15
2023-03-15
2021-07-01
2020-06-30
2024-02-10
1.944
1.876
0.500
0.550
0.250
0.468
0.585
0.500
0.500
0.500
14,493
29,668
7,625,532
25,289,894
27,760,000
7,897,647
526,510
1,300,000
2,000,000
5,000,000
77,443,744
• Warrants are exercisable at US$10.00 per 40 options, i.e. US$0.25 per option.
No option holder has any right under the options to participate in any other share issue of the company or any other
entity.
(b) Shares issued on the exercise of options
No ordinary shares of Immuron Limited were issued during the year ended 30 June 2019 on the exercise of options
granted.
Insurance of officers and indemnities
(a)
Insurance of officers
During the financial year, Immuron Limited paid a premium of $254,125 to insure the directors and secretaries of the
company.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the group, and any other payments arising from
liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise
from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of
information to gain advantage for themselves or someone else or to cause detriment to the company. It is not
possible to apportion the premium between amounts relating to the insurance against legal costs and those relating
to other liabilities.
(b)
Indemnity of auditors
Immuron Limited 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.
Immuron Limited
24
Immuron Limited
Directors' report
30 June 2019
(continued)
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.
Non-audit services
During the year ended 30 June 2019, the group did not engage the external auditor to provide non-audit services.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set
out on page 26.
Rounding of amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts
in the directors' report. Amounts in the directors' report have been rounded off in accordance with the instrument to
the nearest dollar.
This report is made in accordance with a resolution of directors.
Dr Roger Aston
Independent Non-Executive Chairman
Melbourne
30 August 2019
Immuron Limited
25
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Immuron Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Immuron
Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 30 August 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Corporate
governance
statement
0
Immuron Limited
Corporate governance statement
30 June 2019
(continued)
Immuron Limited and the board are committed to achieving and demonstrating the highest standards of corporate
governance. Immuron Limited has reviewed its corporate governance practices against the Corporate Governance
Principles and Recommendations (3rd edition) published by the ASX Corporate Governance Council.
The 2019 corporate governance statement is dated as at 30 June 2019 and reflects the corporate governance
practices in place throughout the 2019 financial year. The 2019 corporate governance statement was approved by
the board on 30 August 2019. A description of the group's current corporate governance practices is set out in the
group's corporate governance statement which can be viewed at
www.immuron.com.au/corporate-directory-and-governance/.
Immuron Limited
28
Financial
statements
0
Immuron Limited
ABN 80 063 114 045
Annual financial report - 30 June 2019
Financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows (direct method)
Notes to the financial statements
Directors' declaration
31
32
33
34
35
71
These financial statements are consolidated financial statements for the group consisting of Immuron Limited and its
subsidiaries. A list of major subsidiaries is included in note 12.
The financial statements are presented in the Australian currency.
Immuron Limited is a company limited by shares, incorporated and domiciled in Australia.
Its registered office is:
Level 3, 62 Lygon Street
Carlton VIC 3053
Its principal place of business is:
Immuron Limited
Unit 10, 25-37 Chapman Street
Blackburn North VIC 3130
The financial statements were authorised for issue by the directors on 30 August 2019. The directors have the power
to amend and reissue the financial statements.
Immuron Limited
30
Immuron Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2019
Revenue from contracts with customers
Cost of sales of goods
Gross profit
Other income
Other gains/(losses) – net
General and administrative expenses
Research and development expenses
Selling and marketing expenses
Operating loss
Finance income
Finance expenses
Finance costs - net
Loss before income tax
Income tax expense
Loss for the period
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the period
Notes
2
3(a)
3(b)
3(c)
3(c)
2019
$
2018
$
2,387,426
(667,371)
1,720,055
1,842,909
(418,693)
1,424,216
532,050
38,413
1,849,163
95,167
(5,014,128)
(1,044,528)
(864,644)
(4,632,782)
(3,412,576)
(2,257,224)
(686,714)
(2,987,968)
39
-
39
1,238
(24,199)
(22,961)
(4,632,743)
(3,010,929)
4
-
(4,632,743)
-
(3,010,929)
7(b)
61,846
(4,570,897)
(79,599)
(3,090,528)
Cents
Cents
Loss per share for loss attributable to the ordinary equity holders of the
company:
Basic and diluted loss per share
19
(3.20)
(2.25)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
Immuron Limited
31
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets
Total current assets
Property, plant and equipment
Inventories
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Employee benefit obligations
Total current liabilities
Non-current liabilities
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Other reserves
Accumulated losses
Total equity
Immuron Limited
Consolidated balance sheet
As at 30 June 2019
Notes
2019
$
2018
$
5(a)
5(b)
6(a)
6(a)
5(c)
6(b)
6(b)
5,119,887
968,926
544,341
49,290
6,682,444
17,140
1,862,063
1,879,203
4,727,430
1,683,305
497,902
141,800
7,050,437
20,384
2,171,867
2,192,251
8,561,647
9,242,688
1,091,919
103,612
1,195,531
689,326
114,012
803,338
14,980
14,980
-
-
1,210,511
803,338
7,351,136
8,439,350
7(a)
7(b)
60,511,326
3,700,333
(56,860,523)
58,372,043
2,606,722
(52,539,415)
7,351,136
8,439,350
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Immuron Limited
32
Immuron Limited
Consolidated statement of changes in equity
For the year ended 30 June 2019
Attributable to owners of
Immuron Limited
Notes
Share capital
$
Other reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2017
53,632,995
2,470,417
(49,528,486)
6,574,926
Loss for the period
Other comprehensive loss
Total comprehensive loss for the period
-
-
-
-
(79,599)
(79,599)
(3,010,929)
-
(3,010,929)
(3,010,929)
(79,599)
(3,090,528)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs and
tax
Options and warrants issued/expensed
Options and warrants forteited/lapsed
7(a)
7(b)
7(b)
4,739,048
-
-
4,739,048
-
216,367
(463)
215,904
-
-
-
-
4,739,048
216,367
(463)
4,954,952
Balance at 30 June 2018
58,372,043
2,606,722
(52,539,415)
8,439,350
Attributable to owners of
Immuron Limited
Notes
Share capital
$
Other reserves
$
Accumulated
losses
$
Total
equity
$
Balance at 1 July 2018
58,372,043
2,606,722
(52,539,415)
8,439,350
Loss for the period
Other comprehensive income
Total comprehensive income/(loss) for the
period
-
-
-
-
61,846
(4,632,743)
-
(4,632,743)
61,846
61,846
(4,632,743)
(4,570,897)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction costs and
tax
Options and warrants issued/expensed
Options and warrants exercised
Options and warrants forteited/lapsed
7(a)
7(b)
7(b)
7(b)
2,139,183
-
100
-
2,139,283
-
1,343,500
(100)
(311,635)
1,031,765
-
-
-
311,635
311,635
2,139,183
1,343,500
-
-
3,482,683
Balance at 30 June 2019
60,511,326
3,700,333
(56,860,523)
7,351,136
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Immuron Limited
33
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Research and development tax incentive received
Net cash (outflow) from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Interest received
Net cash (outflow) from investing activities
Cash flows from financing activities
Proceeds from issues of shares
Share issue transaction costs
Proceeds from borrowings
Repayment of borrowings
Interest paid
Net cash inflow from financing activities
Net increase 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 year
Non-cash financing and investing activities
Immuron Limited
Consolidated statement of cash flows
For the year ended 30 June 2019
Notes
2019
$
2018
$
2,619,477
(5,608,262)
1,190,206
(1,798,579)
1,601,619
(7,262,348)
2,156,206
(3,504,523)
(2,047)
39
(2,008)
(6,594)
1,278
(5,316)
2,894,238
(825,055)
-
-
-
2,069,183
268,596
4,727,430
123,861
5,119,887
5,472,200
(733,152)
500,000
(865,864)
(24,199)
4,348,985
839,146
3,994,924
(106,640)
4,727,430
8(a)
7(a)
7(a)
5(a)
8(b)
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Immuron Limited
34
Contents of the notes to the financial statements
Immuron Limited
Notes to the financial statements
30 June 2019
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
Segment information
Revenue from contract with customers
Other income and expense items
Income tax expense
Financial assets and financial liabilities
Non-financial assets and liabilities
Equity
Cash flow information
Critical estimates, judgements and errors
Financial risk management
Capital management
Interests in other entities
Contingent liabilities
Commitments
Events occurring after the reporting period
Related party transactions
Share-based payments
Remuneration of auditors
Loss per share
Parent entity financial information
Summary of significant accounting policies
Changes in accounting policies
Page
36
37
39
40
41
43
44
47
47
48
51
51
52
52
52
53
54
56
56
57
60
68
Immuron Limited
35
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
1 Segment information
(a) Description of segments and principal activities
The group 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.
Management considers the business from both a product and a geographic perspective and has identified two
reportable segments:
Research and development (R&D): income and expenses directly attributable to the group’s R&D projects
performed in Australia, Israel and United States.
Hyperimmune products: income and expenses directly attributable to Travelan and Protectyn activities which
occur predominantly in Australia, the Unites States and Canada.
(b) Financial breakdown
The segment information for the reportable segments for the year ended 30 June 2019 is as follows:
2019
Revenue from contracts with customers
Cost of sales of goods
Gross profit
Other income
Other gains/(losses) – net
General and administrative expenses
Research and development expenses
Selling and marketing expenses
Operating profit/(loss)
Research and
development
Hyperimmune
products
Unallocated
Total
$
-
-
-
531,005
-
-
(1,044,528)
-
(513,523)
$
2,387,426
(667,371)
1,720,055
1,045
(13,394)
-
-
(864,644)
843,062
$
-
-
-
-
51,807
(5,014,128)
-
-
(4,962,321)
$
2,387,426
(667,371)
1,720,055
532,050
38,413
(5,014,128)
(1,044,528)
(864,644)
(4,632,782)
Finance income
Profit/(loss) for the year
-
(513,523)
-
843,062
39
(4,962,282)
39
(4,632,743)
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
531,828
531,828
2,705,330
2,705,330
5,324,489
5,324,489
8,561,647
8,561,647
221,520
221,520
191,836
191,836
797,155
797,155
1,210,511
1,210,511
Immuron Limited
36
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
1 Segment information (continued)
(b) Financial breakdown (continued)
The segment information for the reportable segments for the year ended 30 June 2018 is as follows:
2018
Research and
development
Hyperimmune
products
Unallocated
Total
Revenue from contracts with customers
Cost of sales of goods
Gross profit
Other income
Other gains/(losses) – net
General and administrative expenses
Research and development expenses
Selling and marketing expenses
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) for the year
Assets
Segment assets
Total assets
Liabilities
Segment liabilities
Total liabilities
$
-
-
-
1,849,123
-
-
(2,257,224)
-
(408,101)
-
-
(408,101)
$
1,842,909
(418,693)
1,424,216
40
(163,600)
-
-
(686,714)
573,942
$
-
-
-
-
258,767
(3,412,576)
-
-
(3,153,809)
$
1,842,909
(418,693)
1,424,216
1,849,163
95,167
(3,412,576)
(2,257,224)
(686,714)
(2,987,968)
-
-
573,942
1,238
(24,199)
(3,176,770)
1,238
(24,199)
(3,010,929)
1,191,029
1,191,029
3,162,045
3,162,045
4,889,614
4,889,614
9,242,688
9,242,688
174,434
174,434
26,009
26,009
602,895
602,895
803,338
803,338
2 Revenue from contract with customers
(a) Disaggregation of revenue from contracts with customers
The group derives revenue from the transfer of hyperimmune products at a point in time in the following major
product lines and geographical regions:
2019
Travelan
United
States
Australia
Protectyn
Other
Australia
Other
Total
$
$
$
$
$
$
Segment revenue
Revenue from external customers
1,162,628
1,162,628
1,016,468
1,016,468
149,283
149,283
58,683
58,683
364
364
2,387,426
2,387,426
Immuron Limited
37
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
2 Revenue from contract with customers (continued)
(a) Disaggregation of revenue from contracts with customers (continued)
2018
Travelan
United
States
$
Australia
$
Protectyn
Other
$
Australia
$
Other
$
Total
$
Segment revenue
Revenue from external customers
1,042,279
1,042,279
767,354
767,354
2,095
2,095
30,319
30,319
862
862
1,842,909
1,842,909
Information about major customers
(i)
The group had the following major customers in the hyperimmune product segment with revenues amounting to 10
percent or more of total group revenues:
Customer A
Customer B
Customer C
Customer D
Customer E
(b) Accounting policies
2019
$
2018
$
659,637
611,920
266,111
249,522
228,661
2,015,851
609,305
435,763
-
193,627
218,216
1,456,911
(i) Sale of hyperimmune products
Revenue from the sale of hyperimmune products are recognised at a point in time. The performance obligation is
satisfied when the customer has access and thus control of the product.
(ii) Financing components
The group does not expect to have any contracts where the period between the transfer of the promised goods or
services to the customer and payment by the customer exceeds one year. As a consequence, the group does not
adjust any of the transaction prices for the time value of money.
(iii) Previous accounting policy for 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. The
amount of the revenue is not considered to be reliably measured until all contingencies relating to the sale have been
resolved.
Immuron Limited
38
3 Other income and expense items
(a) Other income
Research and development tax incentive
Other items
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
2019
$
2018
$
531,005
1,045
532,050
1,849,123
40
1,849,163
(i) Fair value of R&D tax incentive
The group's research and development (R&D) activities are eligible under an Australian government tax incentive for
eligible expenditure. Management has assessed these activities and expenditure to determine which are likely to be
eligible under the incentive scheme. Amounts are recognised when it has been established that the conditions of the
tax incentive have been met and that the expected amount can be reliably measured. For the year ended 30 June
2019, the group has included an item in other income of $531,005 (2018: $1,849,123) to recognise income over the
period necessary to match the grant on a systematic basis with the costs that they are intended to compensate.
(b) Other gains/(losses)
Net foreign exchange gains/(losses)
Net impairment losses (i)
2019
$
2018
$
51,807
(13,394)
38,413
258,767
(163,600)
95,167
Inventory impairment
(i)
Net impairment losses comprises a $13,394 impairment expense recognised during year ended 30 June 2019 (2018:
$163,600) for inventory obsolescence.
(c) Breakdown of expenses by nature
General and administrative expenses
Accounting and audit
Bad debts
Consulting
Depreciation
Employee benefits
Expected credit losses
Insurance
Investor relations
Legal
Listing and share registry
Occupancy
Share-based payments
Superannuation
Notes
2019
$
2018
$
496,983
50,429
243,508
5,287
1,599,023
34,046
307,757
128,415
171,145
186,013
105,606
1,343,500
55,176
555,996
77,698
46,417
5,047
1,281,845
-
277,888
135,684
166,052
272,711
74,395
59,975
42,478
10(b)(iii)
17(b)
Immuron Limited
39
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
3 Other income and expense items (continued)
(c) Breakdown of expenses by nature (continued)
Travel and entertainment
Other
Selling and marketing expenses
Selling
Marketing
Distribution costs
4
Income tax expense
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 27.5% (2018: 27.5%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
R&D tax incentive
Accounting expenditure subject to R&D tax incentive
Share-based payments
Net impact of other amounts not deductible (taxable)
Subtotal
Difference in overseas tax rates
Tax losses and other timing differences for which no deferred tax asset is recognised
Income tax expense
(b) Tax losses
2019
$
2018
$
159,911
127,329
5,014,128
297,606
118,784
3,412,576
277,478
377,427
209,739
864,644
123,660
393,596
169,458
686,714
2019
$
2018
$
(4,632,743)
(1,274,004)
(3,010,929)
(828,005)
(146,026)
335,693
369,463
38,656
(676,218)
1,539
674,679
-
(508,509)
752,949
16,493
26,956
(540,116)
-
540,116
-
4,632,743
3,010,929
2019
$
2018
Restated
$
Unused tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 27.5%
37,202,960
10,230,814
34,749,580
9,556,135
The unused tax losses for the year ended 30 June 2018 have been restated to reflect the income tax returns lodged
for the same period.
Immuron Limited
40
5 Financial assets and financial liabilities
(a) Cash and cash equivalents
Current assets
Cash at bank and in hand
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
2019
$
2018
$
5,119,887
4,727,430
(i) Reconciliation to cash flow statement
The above figures reconcile to the amount of cash shown in the consolidated statement of cash flows at the end of
the financial year as follows:
Balances as above
Balances per statement of cash flows
2019
$
2018
$
5,119,887
5,119,887
4,727,430
4,727,430
(ii) Classification as cash equivalents
Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of
acquisition and are repayable with 24 hours notice with no loss of interest. See note 21(j) for the group’s other
accounting policies on cash and cash equivalents.
(b) Trade and other receivables
Trade receivables
Loss allowance
Accrued receivables
Other receivables
Notes
Current
$
10(b)
5(b)(ii)
332,972
(34,046)
298,926
531,828
138,172
670,000
2019
Non-
current
$
Total
$
Current
$
2018
Non-
current
$
Total
$
-
-
-
-
-
-
332,972
(34,046)
298,926
492,276
-
492,276
531,828 1,191,029
-
138,172
670,000 1,191,029
-
-
-
492,276
-
492,276
- 1,191,029
-
-
- 1,191,029
Total trade and other receivables
968,926
-
968,926 1,683,305
- 1,683,305
Immuron Limited
41
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
5 Financial assets and financial liabilities (continued)
(b) Trade and other receivables (continued)
(i) Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade
receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant
financing components, when they are recognised at fair value. The group holds the trade receivables with the
objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the
effective interest method. Details about the group’s impairment policies and the calculation of the loss allowance are
provided in note 10(b).
(ii) Accrued receivables
These amounts primarily comprise receivables from the Australian Taxation Office in relation to the R&D tax
incentive.
(iii) Fair value of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their
fair value.
(iv) Impairment and risk exposure
Information about the impairment of trade receivables and the group’s exposure to credit risk and foreign currency
risk can be found in note 10.
(c) Trade and other payables
Trade payables
Accrued expenses
Other payables
2019
Non-
current
$
Total
$
Current
$
2018
Non-
current
$
Total
$
715,115
-
355,825
-
-
20,979
- 1,091,919
216,938
435,280
37,108
689,326
-
-
-
-
216,938
435,280
37,108
689,326
Current
$
715,115
355,825
20,979
1,091,919
Trade payables are unsecured and are usually paid within 30 days of recognition.
The carrying amounts of trade and other payables are considered to be the same as their fair values, due to their
short-term nature.
Immuron Limited
42
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
6 Non-financial assets and liabilities
(a)
Inventories
2019
Non-
current
$
Current
$
Total
$
Current
$
2018
Non-
current
$
Total
$
Raw materials and stores (Colostrum)
Work in progress
Finished goods (Travelan and Protectyn)
225,765 1,862,063 2,087,828
192,399
192,399
126,177
126,177
544,341 1,862,063 2,406,404
-
-
198,585 2,171,867 2,370,452
33,625
33,625
265,692
265,692
497,902 2,171,867 2,669,769
-
-
Impairment
(i)
The provision for impairment of inventories assessment requires a degree of estimation and judgement. The level of
the provision is assessed by taking into account the recent sales experience, the ageing of inventories and in
particular the shelf life of inventories that affect obsolescence. Expected shelf-life is reassessed on a regular basis
with reference to stability tests which are conducted by an expert engaged by the group.
There was a $13,394 expired Protectyn impairment expense recognised during year ended 30 June 2019 (2018:
$163,600) for inventory obsolescence in the consolidated statement of profit or loss and other comprehensive
income.
Inventory split
(ii)
During the year ended 30 June 2019, management performed an assessment of its raw materials and utilisation
within 12 months from reporting date. Management determined $225,765 (2018: $198,585) of raw materials relating
to Colostrum will be consumed within 12 months from reporting date; the remaining balance of $1,862,063 (2018:
$2,171,867) was estimated to be consumed beyond 12 months.
(b) Employee benefit obligations
2019
Non-
current
$
Current
$
Total
$
Current
$
2018
Non-
current
$
Total
$
Leave obligations (i)
103,612
14,980
118,592
114,012
-
114,012
(i) Leave obligations
The leave obligations cover the group’s liabilities for long service leave and annual leave which are classified as
either other long-term benefits or short-term benefits, as explained in note 21(q).
The current portion of this liability includes all of the accrued annual leave, the unconditional entitlements to long
service leave where employees have completed the required period of service and also for those employees that are
entitled to pro-rata payments in certain circumstances. The entire amount of the provision of $103,612 (2018:
$114,012) is presented as current, since the group does not have an unconditional right to defer settlement for any of
these obligations. However, based on past experience, the group does not expect all employees to take the full
amount of accrued leave or require payment within the next 12 months.
Immuron Limited
43
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
Notes
7(a)(ii)
7(a)(i)
2019
Shares
2018
Shares
2019
$
2018
$
163,215,706
163,215,706
142,778,206
142,778,206
60,511,326
60,511,326
58,372,043
58,372,043
Number of
shares
Total
$
130,041,417
53,632,995
399,045
875,000
(2,000,000)
13,162,744
300,000
-
75,333
140,000
-
5,161,585
95,282
(733,152)
142,778,206
58,372,043
437,500
20,000,000
-
-
70,000
2,894,238
100
(825,055)
163,215,706
60,511,326
7 Equity
(a) Share capital
Ordinary shares
Fully paid
(i) Movements in ordinary shares:
Details
Balance at 1 July 2017
Issue at $0.19 on conversion of convertible notes (2017-07-28)
Issue at $0.16 in lieu of payment for services (2017-11-13)1
Cancellation pursuant to annual general meeting (2017-11-24)
Issue at $0.39 pursuant to placement (2018-03-15)
Issue at $0.32 on exercise of IMRNW warrants (2018-03-15)
Less: Transaction costs arising on share issues
Balance at 30 June 2018
Issue at $0.16 in lieu of payment for services (2018-11-22)1
Issue at US$0.10 pursuant to ADS public offering (2019-05-30)2
Reclassify exercised options from reserves to share capital
Less: Transaction costs arising on share issues
Balance at 30 June 2019
Notes
1. Mr Peter and Mr Stephen Anastasiou are directors and majority shareholders of Grandlodge Capital Pty Ltd (Grandlodge).
Commencing 1 June 2013, Immuron Limited contracted Grandlodge on normal commercial terms and conditions to provide
warehousing, distribution and invoicing services for Immuron Limited'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 shares price
at the commencement of the agreement.
2. On 30 May 2019, 500,000 American Depository Shares (ADS) were issued at US$4.00 each. Each ADS is equivalent to 40
ordinary shares, i.e. 20,000,000 at US$0.10 each (A$0.1447).
(ii) Ordinary shares
Ordinary shares 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.
Immuron Limited
44
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
7 Equity (continued)
(a) Share capital (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.
Ordinary shares have no par value and the company does not have a limited amount of authorised capital.
(iii) Options
Information relating to options, including details of options issued, exercised and lapsed during the financial year and
options outstanding at the end of the reporting period, is set out in notes 7(b) and 17.
(b) Other reserves
The following table shows a breakdown of the consolidated balance sheet 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.
Share-based
payments
$
Notes
Foreign
currency
translation
$
Total other
reserves
$
At 1 July 2017
2,434,135
36,282
2,470,417
Currency translation differences
Other comprehensive income
-
-
(79,599)
(79,599)
(79,599)
(79,599)
Transactions with owners in their capacity as owners
Options and warrants issued/expensed
Options and warrants lapsed
At 30 June 2018
7(b)(ii)
7(b)(ii)
216,367
(463)
2,650,039
-
-
(43,317)
216,367
(463)
2,606,722
Share-based
payments
$
Notes
Foreign
currency
translation
$
Total other
reserves
$
At 1 July 2018
2,650,039
(43,317)
2,606,722
Currency translation differences
Other comprehensive income
Transactions with owners in their capacity as owners
Options and warrants issued/expensed
Options and warrants exercised
Options and warrants lapsed
At 30 June 2019
-
-
7(b)(ii)
7(b)(ii)
7(b)(ii)
1,343,500
(100)
(311,635)
3,681,804
61,846
61,846
-
-
-
18,529
61,846
61,846
1,343,500
(100)
(311,635)
3,700,333
(i) Nature and purpose of other reserves
Share-based payments
The share-based payment reserve records items recognised as expenses on valuation of share options and warrants
issued to key management personnel, other employees and and eligible contractors.
Immuron Limited
45
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
7 Equity (continued)
(b) Other reserves (continued)
Foreign currency translation
Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive
income as described in note 21(d) and accumulated in a separate reserve within equity. The cumulative amount is
reclassified to profit or loss when the net investment is disposed of.
(ii) Movements in options and warrants:
Details
Balance at 1 July 2017
Lapse of unlisted options (2017-07-01)
Lapse of unlisted options (2017-11-01)
Issue of unlisted options at $0.468 pursuant to placement (2018-03-15)
Issue of unlisted options at $0.585 to broker for placement (2018-03-15)
Exercise of IMRNW warrants at US$0.25 (2018-03-15)
Amortisation of share-based payments for options issued in prior periods
Balance at 30 June 2018
Issue of ESOP unlisted options at $0.50 (2018-07-13)
Issue of ESOP unlisted options at $0.50 (2018-11-26)
Lapse of ESOP unlisted options at $0.50 (2018-10-01)
Issue of ESOP unlisted options at $0.50 (2019-02-11)
Lapse of unlisted options at $0.57 (2019-02-24)
Lapse of unlisted options at $1.892 (2019-02-28)
Lapse of unlisted options at $0.30 (2019-05-28)
Reclassify exercised options from reserves to share capital
Reclassify lapsed options from reserves to accumulated losses
Balance at 30 June 2019
Number of
options
Total
$
63,690,523
2,434,135
(403,000)
(62,500)
7,897,647
526,510
(300,000)
-
(463)
-
-
156,392
-
59,975
71,349,180
2,650,039
1,300,000
2,000,000
(1,050,000)
5,000,000
(1,000,000)
(15,380)
(140,056)
-
-
204,100
164,400
(98,385)
975,000
(185,601)
(1,173)
(13,390)
(100)
(13,086)
77,443,744
3,681,804
Immuron Limited
46
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
8 Cash flow information
(a) Reconciliation of profit/(loss) after income tax to net cash inflow from operating activities
Loss for the period
Adjustments for
Depreciation
Distribution costs
Expected credit losses
Finance costs
Finance income
Leave provision expense
Share-based payments
Unrealised net foreign currency (gains)/losses
Change in operating assets and liabilities:
Movement in trade and other receivables
Movement in inventories
Movement in other operating assets
Movement in trade and other payables
Net cash inflow (outflow) from operating activities
Notes
3(c)
7(a)(i)
10(b)
17(b)
2019
$
2018
$
(4,632,743)
(3,010,929)
5,287
70,000
34,046
-
(39)
4,580
1,343,500
(62,015)
680,337
263,365
92,510
402,593
(1,798,579)
5,047
-
-
24,199
(1,238)
41,110
242,950
(316,380)
438,001
(333,642)
26,561
(620,202)
(3,504,523)
(b) Non-cash investing and financing activities
Non-cash investing and financing activities disclosed in other notes are:
•
•
settlement of services rendered through the issue of shares - note 7(a)(i)
options issued for no cash consideration - note 17.
9 Critical estimates, judgements and errors
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom
equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items
which are more likely to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed
information about each of these estimates and judgements is included in other notes together with information about
the basis of calculation for each affected line item in the financial statements.
(a) Significant estimates and judgements
The areas involving significant estimates or judgements are:
•
•
•
•
•
Estimation of R&D tax incentive income accrual - note 3(a)(i)
Estimation of inventory impairment - note 6(a)(i)
Estimation of inventory split - note 6(a)(ii)
Estimation of employee benefit obligations - notes 6(b)(i), 21(q)(i) and 21(q)(ii)
Estimation of share-based payments - notes 17(a)(i) and 21(q)(iii)
Immuron Limited
47
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
9 Critical estimates, judgements and errors (continued)
(a) Significant estimates and judgements (continued)
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
10 Financial risk management
This note explains the group's exposure to financial risks and how these risks could affect the group’s future financial
performance.
The group’s risk management is predominantly controlled by the board. The board monitors the group's financial risk
management policies and exposures and approves substantial financial transactions. It also reviews the effectiveness
of internal controls relating to market risk, credit risk and liquidity risk.
(a) Market risk
(i) Foreign exchange risk
The group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk
through foreign exchange rate fluctuations.
Foreign exchange rate risk arises from financial assets and financial liabilities denominated in a currency that is not
the group's functional currency. Exposure to foreign currency risk may result in the fair value of future cash flows of a
financial instrument fluctuating due to the movement in foreign exchange rates of currencies in which the group holds
financial instruments which are other than the Australian dollar (AUD) functional currency of the group. This risk is
measured using sensitivity analysis and cash flow forecasting. The cost of hedging at this time outweighs any
benefits that may be obtained.
Exposure
The group's exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was
as follows:
USD
$
2019
CAD
$
ILS
$
USD
$
Cash and cash equivalents
Trade receivables
Trade payables
Total exposure
4,852,834
157,451
245,284
5,255,569
22,801
-
-
22,801
- 4,222,310
158,978
-
45,018
13,657
13,657 4,426,306
2018
CAD
$
-
-
10,278
10,278
ILS
$
-
-
4,320
4,320
Sensitivity
As shown in the table above, the group is primarily exposed to changes in USD/AUD exchange rates. The sensitivity
of profit or loss to changes in the exchange rates arises mainly from USD denominated financial instruments. The
impact on other components of equity arises from the translation of foreign subsidiary financial statements into AUD.
The group has conducted a sensitivity analysis of its exposure to foreign currency risk. The group is currently
materially exposed to the United States dollar (USD). The sensitivity analysis is conducted on a currency-by-currency
basis using the sensitivity analysis variable, which is based on the average annual movement in exchange rates over
the past five years at year-end spot rates. The variable for each currency the group is materially exposed to is listed
below:
• USD: 6.9% (2018: 6.2%)
Immuron Limited
48
10 Financial risk management (continued)
(a) Market risk (continued)
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
Impact on loss for the
period
2019
$
2018
$
Impact on other
components of equity
2018
$
2019
$
USD/AUD exchange rate - change by 6.9% (2018: 6.2%)*
362,634
274,431
1,334
2,694
* Holding all other variables constant
Profit is more sensitive to movements in the AUD/USD exchange rates in 2019 than 2018 because of the increased
amount of USD denominated cash and cash equivalents and the increased variability of the AUD/USD exchange
rate. Equity is less sensitive to movements in the AUD/USD exchange rates in 2019 than 2018 because of the
decreased size of the foreign currency translation reserve for the subsidiary with USD functional currency. The
group's exposure to other foreign exchange movements is not material.
(b) Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the group.
(i) Risk management
Credit risk is managed through the maintenance of procedures (such as the utilisation of systems for the approval,
granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring the financial
stability of significant customers and counterparties), ensuring to the extent possible that customers and
counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for
impairment. Credit terms are normally 30 days from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating.
(ii) Security
For some trade receivables the group may obtain security in the form of guarantees, deeds of undertaking or letters
of credit which can be called upon if the counterparty is in default under the terms of the agreement.
(iii) Impairment of financial assets
The group has one type of financial asset subject to the expected credit loss model:
•
trade receivables for sales of inventory
While cash and cash equivalents are also subject to the impairment requirements of AASB 9, the identified
impairment loss was immaterial.
Trade receivables
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
To measure the expected credit losses, trade receivables assets have been grouped based on shared credit risk
characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a period of 60 months before 30 June 2019
and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to
reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to
settle the receivables.
Immuron Limited
49
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
10 Financial risk management (continued)
(b) Credit risk (continued)
On that basis, the loss allowance as at 30 June 2019 was determined as follows for trade receivables:
30 June 2019
.
Expected credit loss rate
Gross carrying amount
Loss allowance
Current
$
1.66%
209,731
3,476
Days past due
1-30
$
31-60
$
61-90
$
91-120
$
121+
$
Total
$
6.19% 18.28% 30.06% 99.78% 91.64%
416
125
15,385
2,813
4,307
4,297
83,291
5,153
19,842 332,972
34,046
18,182
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the group, and a failure to make contractual payments for a period of greater than 121 days past due.
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent
recoveries of amounts previously written off are credited against the same line item.
Previous accounting policy for impairment of trade receivables
In the prior year, the impairment of trade receivables was assessed based on the incurred loss model. Individual
receivables which were known to be uncollectible were written off by reducing the carrying amount directly. The other
receivables were assessed collectively to determine whether there was objective evidence that an impairment had
been incurred but not yet been identified. For these receivables the estimated impairment losses were recognised in
a separate provision for impairment. The group considered that there was evidence of impairment if any of the
following indicators were present:
•
•
•
significant financial difficulties of the debtor
probability that the debtor will enter bankruptcy or financial reorganisation, and
default or late payments (more than 121 days overdue).
Receivables for which an impairment provision was recognised were written off against the provision when there was
no expectation of recovering additional cash.
(c) Liquidity risk
Liquidity risk arises from the possibility that the group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The group manages this risk through the following mechanisms:
preparing forward looking cash flow analyses in relation to its operating, investing and financing activities;
obtaining funding from a variety of sources;
•
•
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
•
•
investing cash and cash equivalents and deposits at call with major financial institutions; and
comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
(i) Maturities of financial liabilities
The tables below analyse the group's financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Immuron Limited
50
10 Financial risk management (continued)
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
(c) Liquidity risk (continued)
Contractual maturities of financial
liabilities
At 30 June 2019
Trade and other payables
Total
At 30 June 2018
Less than
6 months
$
1,091,919
1,091,919
Trade and other payables
Total
689,326
689,326
11 Capital management
(a) Risk management
The group's objectives when managing capital are to
6 - 12
months
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
Total
contractual
cash
flows
$
$
Carrying
amount
(assets)/
liabilities
$
- 1,091,919 1,091,919
- 1,091,919 1,091,919
-
-
689,326
689,326
689,326
689,326
•
safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders, and
• maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may issue new shares or reduce its capital, subject to
the provisions of the group's constitution. The capital structure of the group consists of equity attributed to equity
holders of the group, comprising contributed equity, reserves and accumulated losses. By monitoring undiscounted
cash flow forecasts and actual cash flows provided to the board by the group's management, the board monitors the
need to raise additional equity from the equity markets.
(b) Dividends
No dividends were declared or paid to members for the year ended 30 June 2019 (2018: nil). The group’s franking
account balance was nil at 30 June 2019 (2018: nil).
12 Interests in other entities
(a) Material subsidiaries
The group’s principal subsidiaries at 30 June 2019 are set out below. Unless otherwise stated, they have share
capital consisting solely of ordinary shares that are held directly by the group, and the proportion of ownership
interests held equals the voting rights held by the group. The country of incorporation or registration is also their
principal place of business.
Immuron Limited
51
12 Interests in other entities (continued)
(a) Material subsidiaries (continued)
Name of entity
Immuron Inc.
Immuron Canada Limited
Anadis EPS Pty Ltd
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
Place of business/
country of
incorporation
Ownership interest held
by the group
United States
Canada
Australia
2019
%
100
100
100
2018
%
100
100
100
Anadis EPS Pty Ltd was formed for the sole purpose to act as trustee for the lmmuron Limited Executive Officer
Share Plan Trust. Consolidated accounts have not been prepared as the net assets and trading activity of Anadis
ESP Pty Ltd are not material.
13 Contingent liabilities
The group had no contingent liabilities at 30 June 2019 (2018: nil).
14 Commitments
(a) Non-cancellable operating leases
The group leases an office under a non-cancellable operating lease expiring in December 2021. On renewal, the
terms of the leases are renegotiated.
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
2019
$
2018
$
41,389
63,462
104,851
19,470
-
19,470
15 Events occurring after the reporting period
On 19 July 2019, the company completed a capital raising comprising 339,130 American Depositary Shares (ADS) at
US$4.00 per security. The gross proceeds to the company were US$1,356,520.
No other matter or circumstance has occurred subsequent to period end that has significantly affected, or may
significantly affect, the operations of the group, the results of those operations or the state of affairs of the group or
economic entity in subsequent financial years.
Immuron Limited
52
16 Related party transactions
(a) Subsidiaries
Interests in subsidiaries are set out in note 12(a).
(b) Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
2019
$
2018
$
952,406
32,300
3,652
1,296,400
2,284,758
570,256
32,087
-
59,975
662,318
Detailed remuneration disclosures are provided in the remuneration report on pages 16 to 23.
(c) Transactions with other related parties
The following transactions occurred with related parties:
Sales and purchases of goods and services
Purchases of various goods and services from entities controlled by key
management personnel (i)
2019
$
2018
$
123,958
173,020
(i) Purchases from entities controlled by key management personnel
The group acquired the following goods and services from entities that are controlled by members of the group's key
management personnel:
•
rental of an office suite, and
• warehousing, distribution and invoicing services.
For detailed disclosures please refer to the remuneration report on page 22.
(d) Outstanding balances arising from sales/purchases of goods and services
The following balances are outstanding at the end of the reporting period in relation to transactions with related
parties:
Current payables (purchases of goods and services)
Entities controlled by key management personnel
2019
$
2018
$
-
35,000
Immuron Limited
53
16 Related party transactions (continued)
(e) Loans to/from related parties
Loans from key management personnel
Beginning of the year
Loans advanced
Loans repayments made
Interest charged
Interest paid
End of year
(f) Terms and conditions
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
2019
$
2018
$
-
-
-
-
-
-
-
515,000
(515,000)
5,342
(5,342)
-
During the year ended 30 June 2018, the group entered into a short-term loan arrangement for an amount of
$500,000 with Great Accommodation Pty Ltd, an entity controlled by Mr Daniel Pollock. The purpose of this loan was
to fund on going R&D expenditure. Interest accrued at a rate of 15% per annum in addition to a $15,000
establishment fee. The loan was repaid in full on 12 February 2018.
17 Share-based payments
(a) Executive share and option plan
The establishment of the 'executive share and option plan' (ESOP) was approved by shareholders at the 2017 annual
general meeting. The plan is designed to provide long-term incentives for executives (including directors) to deliver
long-term shareholder returns. Participation in the plan is at the board's discretion and no individual has a contractual
right to participate in the plan or to receive any guaranteed benefits.
Options issued to Dr Gary Jacob expire upon his resignation without good reason or termination. All other options
issued expire upon departure from the company if they are determined to be a 'bad leaver'.
Set out below are summaries of all listed and unlisted options, including those issued under ESOP:
As at 1 July
Granted during the year
Exercised during the year
Forfeited/lapsed during the year
As at 30 June
Vested and exercisable at 30 June
2019
Average
exercise price
per share
option
$0.45
$0.50
-
$0.53
$0.42
$0.42
2018
Average
exercise price
per share
option
$0.44
$0.48
$0.32
$0.49
$0.45
$0.45
Number of
options
63,690,523
8,424,157
(300,000)
(465,500)
71,349,180
71,349,180
Number of
options
71,349,180
8,300,000
-
(2,205,436)
77,443,744
77,443,744
Immuron Limited
54
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
17 Share-based payments (continued)
(a) Executive share and option plan (continued)
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Grant date
2012-06-29
2012-06-29
2014-03-03
2014-05-27
2014-05-29
2016-02-18
2016-12-02 (IMCOB)
2017-06-13 (warrants)
2017-06-22
2018-03-15
2018-03-15
2018-07-13
2018-11-26
2019-02-11
Total
Notes
Expiry
date
Exercise
price Share options
30 June 2019
($)
Share options
30 June 2018
2021-11-30
2022-01-17
2019-02-28
2019-11-27
2019-05-28
2019-02-24
2019-11-30
2022-06-13
2018-10-01
2023-03-15
2023-03-15
2021-07-01
2020-06-30
2024-02-10
1.944
1.876
1.892
0.500
0.300
0.570
0.550
0.250
0.500
0.468
0.585
0.500
0.500
0.500
14,493
29,668
-
7,625,532
-
-
25,289,894
27,760,000
-
7,897,647
526,510
1,300,000
2,000,000
5,000,000
77,443,744
14,493
29,668
15,380
7,625,532
140,056
1,000,000
25,289,894
27,760,000
1,050,000
7,897,647
526,510
-
-
-
71,349,180
• Warrants are exercisable at US$10.00 per 40 options, i.e. US$0.25 per option.
Weighted average remaining contractual life of options outstanding at end of
period
2.00
2.77
(i) Fair value of options granted
The assessed fair value of options at grant date was determined using the Black-Scholes option pricing model that
takes into account the exercise price, term of the option, security price at grant date and expected price volatility of
the underlying security, the expected dividend yield, the risk-free interest rate for the term of the security and certain
probability assumptions.
The model inputs for options granted under ESOP during the year ended 30 June 2019 included:
Grant date
.
2018-07-13
2018-11-26
2019-02-11
Expiry
date
Exercise
price ($)
No. of
options
2021-07-01
2020-06-30
2024-02-11
0.50 1,300,000
0.50 2,000,000
0.50 5,000,000
8,300,000
Share
price at
grant
date ($)
Expected
volatility
Dividend
yield
Risk-
free
interest
rate
Fair value
at grant
date per
option ($)
92.00%
0.32
0.34
92.00%
0.29 100.00%
0.00% 2.09%
0.00% 2.02%
0.00% 1.69%
0.1570
0.0822
0.1950
Immuron Limited
55
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
17 Share-based payments (continued)
(b) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued under ESOP
18 Remuneration of auditors
2019
$
2018
$
1,343,500
59,975
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) Grant Thornton Audit Pty Ltd
(i) Audit and other assurance services
Audit and review of financial statements
Other assurance services
Total remuneration for audit and other assurance services
Total auditor's remuneration
19 Loss per share
(a) Reconciliation of loss used in calculating loss per share
Basic and diluted loss per share
Loss attributable to the ordinary equity holders of the company used in calculating
loss per share:
From continuing operations
(b) Weighted average number of shares used as the denominator
2019
$
2018
$
131,648
76,186
207,834
145,706
-
145,706
207,834
145,706
2019
$
2018
$
4,632,743
3,010,929
2019
Number
2018
Number
Weighted average number of ordinary shares used as the denominator in calculating
basic and diluted loss per share
144,740,535
133,660,556
Immuron Limited
56
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
19 Loss per share (continued)
(b) Weighted average number of shares used as the denominator (continued)
On the basis of the group's losses, the outstanding options as at 30 June 2019 are considered to be anti-dilutive and
therefore were excluded from the diluted weighted average number of ordinary shares calculation.
20 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
Non-current liabilities
Total liabilities
Shareholders' equity
Share capital
Reserves
Share-based payments
Accumulated losses
Loss for the period
Total comprehensive loss
2019
$
2018
$
4,017,418
1,880,423
5,897,841
1,134,608
14,980
1,149,588
(9,496,506)
4,582,342
4,481,439
9,063,781
766,007
-
766,007
(16,595,548)
60,511,326
58,372,043
3,681,804
(59,444,877)
2,650,038
(52,724,307)
4,748,253
8,297,774
7,031,763
4,820,448
7,031,763
4,820,448
(b) Guarantees entered into by the parent entity
The parent entity has not entered into any guarantees in relation to debts of its subsidiaries in the year ended 30
June 2019 (2018: nil).
(c) Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
(d) Contractual commitments for the acquisition of property, plant or equipment
The parent entity has not entered into any contractual commitments for the acquisition of property, plant or equipment
in the year ended 30 June 2019 (2018: nil).
(e) 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.
Immuron Limited
57
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
20 Parent entity financial information (continued)
(e) Determining the parent entity financial information (continued)
Investments in subsidiaries
(i)
Investments in subsidiaries are accounted for at cost in the financial statements of Immuron Limited.
Immuron Limited
58
Contents of the summary of significant accounting policies
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(r)
(s)
(t)
(u)
Basis of preparation
Principles of consolidation
Segment reporting
Foreign currency translation
Revenue recognition
Government grants
Income tax
Leases
Impairment of assets
Cash and cash equivalents
Trade receivables
Inventories
Investments and other financial assets
Property, plant and equipment
Intangible assets
Trade and other payables
Employee benefits
Contributed equity
Loss per share
Rounding of amounts
Goods and services tax (GST)
Page
60
62
62
62
63
63
63
64
64
64
64
64
64
66
66
66
67
67
68
68
68
Immuron Limited
59
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated
financial statements to the extent they have not already been disclosed in the other notes above. These policies have
been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the
group consisting of Immuron Limited and its subsidiaries.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards
and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001. Immuron
Limited is a for-profit entity for the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Immuron Limited group also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) Historical cost convention
The financial statements have been prepared on a historical cost basis.
(iii) New and amended standards adopted by the group
The group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 July 2018:
•
•
•
•
•
AASB 9 Financial Instruments
AASB 15 Revenue from Contracts with Customers
AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of
Share-based Payment Transactions
AASB 2017-1 Amendments to Australian Accounting Standards - Transfers to Investment Property, Annual
Improvements 2014-2016 Cycle and Other Amendments
Interpretation 22 Foreign Currency Transactions and Advance Consideration.
The group also elected to adopt the following amendments early:
•
AASB 2018-1 Amendments to Australian Accounting Standards - Annual Improvements 2015-2017 Cycle.
The group has changed its accounting policies without making retrospective adjustments following the adoption of
AASB 9 and AASB 15. This is disclosed in note 22. Most of the other amendments listed above did not have any
impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future
periods.
(iv) New standards and interpretations not yet adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2019
reporting periods and have not been early adopted by the group. The group’s assessment of the impact of these new
standards and interpretations is set out below.
Immuron Limited
60
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
Title of
standard
Nature of
change
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the
balance sheet by lessees, as the distinction between operating and finance leases is removed.
Under the new standard, an asset (the right to use the leased item) and a financial liability to pay
rentals are recognised. The only exceptions are short-term and low-value leases.
Impact
The group has reviewed all leasing arrangements in light of the new lease accounting rules in AASB
16. The standard will affect the accounting for the group’s operating leases.
As at the reporting date, the group has non-cancellable operating lease commitments of $104,851,
see note 14(a).
The group expects to recognise right-of-use assets of approximately $96,824 on 1 July 2019 and
lease liabilities of $98,302 (after adjustments for prepayments and accrued lease payments
recognised as at 30 June 2019). Overall net assets will be approximately $1,479 lower, and net
current assets will be $56,913 lower due to the presentation of a portion of the liability as a current
liability.
The group expects that net profit after tax will decrease by approximately $1,532 for the year ended
30 June 2020 as a result of adopting the new rules.
Operating cash flows will increase and financing cash flows decrease by approximately $41,389 as
repayment of the principal portion of the lease liabilities will be classified as cash flows from
financing activities.
The group does not act in the capacity as a lessor and hence the group does not expect any lessor
impact on the financial statements.
The group will apply the standard from its mandatory adoption date of 1 July 2019.
The group intends to apply the modified retrospective transition approach and will not restate
comparative amounts for the year prior to first adoption. Right-of-use assets will be measured at the
amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
Mandatory
application
date/ Date of
adoption by
group
There are no other new standards and interpretations that are not yet effective and that would be expected to have a
material impact on the group in the current or future reporting periods and on foreseeable future transactions.
(v) Changes to presentation – classification of expenses
Immuron Limited decided in the current financial year to change the classification of its expenses in the consolidated
statement of profit or loss. We believe that this will provide more relevant information to our stakeholders as it more in
line with common practice in the industries Immuron Limited is operating in. The comparative information has been
reclassified accordingly.
As part of the expense reclassification undertaking, some amounts previously included in 'corporate administration
costs' have been re-allocated to the 'accounting and audit' and 'legal' categories as appropriate. Furthermore, the
reclassification process identified additional expenses allocated to hyperimmune products in segment information
(note 1), including comparative information. These expenses were previously not allocated to identified operating
segments.
Immuron Limited
61
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(a) Basis of preparation (continued)
(vi) Changes to presentation – classification of cash flows
Immuron Limited decided in the current financial year to change the classification of interest received and interest
paid in the consolidated statement of cash flows from operating to investing and financing activities, respectively. The
comparative information has been reclassified accordingly.
(b) Principles of consolidation
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an
entity when the group 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 group. They are deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the group.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the group.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. This has been identified as the chief executive officer.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group's entities are measured using the currency of the
primary economic environment in which the entity operates ('the functional currency'). The consolidated financial
statements are presented in Australian dollar ($), which is Immuron Limited's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are
generally recognised in profit or loss.
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement of profit or
loss, within finance costs. All other foreign exchange gains and losses are presented in the consolidated statement of
profit or loss on a net basis within other gains/(losses).
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and
liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair
value gain or loss and translation differences on non-monetary assets such as equities classified as at fair value
through other comprehensive income are recognised in other comprehensive income.
Immuron Limited
62
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(d) Foreign currency translation (continued)
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
•
assets and liabilities for each consolidated balance sheet presented are translated at the closing rate at the date
of that consolidated balance sheet
income and expenses for each consolidated statement of profit or loss and consolidated statement of profit or
loss and other comprehensive income are translated at average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
•
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
(e) Revenue recognition
The accounting policies for the group’s revenue from contracts with customers are explained in note 2.
(f) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant
will be received and the group will comply with all attached conditions. Note 3 provides further information on how the
group accounts for government grants.
(g) Income tax
The income tax expense or credit for the period is the tax payable on the current period's taxable income based on
the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end
of the reporting period in the countries where the company and its subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
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 consolidated financial statements. However, deferred
tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also 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 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 the
reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Immuron Limited
63
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(g) Income tax (continued)
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
(h) Leases
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the group as lessee
are classified as operating leases (note 14). Payments made under operating leases (net of any incentives received
from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
(i)
Impairment of assets
An impairment loss is recognised 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 of disposal and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for
possible reversal of the impairment at the end of each reporting period.
(j) Cash and cash equivalents
For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current
liabilities in the consolidated balance sheet.
(k) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less loss allowance. See note 5(b) for further information about the group’s accounting for
trade receivables and note 10(b) for a description of the group's impairment policies.
(l)
Inventories
(i) Raw materials and stores, work in progress and finished goods
Raw materials and stores, work in progress and finished goods are stated at the lower of cost and net realisable
value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead
expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual
items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after
deducting rebates and discounts. 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.
(m) Investments and other financial assets
(i) Classification
From 1 July 2018, the group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or through profit or loss), and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms
of the cash flows.
Immuron Limited
64
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(m) Investments and other financial assets (continued)
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in
equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the group has transferred substantially all the risks
and rewards of ownership.
(iii) Measurement
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
(iv) Impairment
From 1 July 2018, the group assesses on a forward looking basis the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there
has been a significant increase in credit risk.
For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables, see note 10(b) for further details.
(v) Accounting policies applied until 30 June 2018
Classification
Until 30 June 2018, the group classified its financial assets in the following categories:
•
•
•
•
financial assets at fair value through profit or loss;
loans and receivables;
held-to-maturity investments, and
available-for-sale financial assets.
The classification depended on the purpose for which the investments were acquired. Management determined the
classification of its investments at initial recognition and, in the case of assets classified as held-to-maturity,
re-evaluated this designation at the end of each reporting period.
Impairment
See note 10(b) for a description of the group's impairment policies.
(vi) Income recognition
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the group reduces
the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original
effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on
impaired loans is recognised using the original effective interest rate.
Immuron Limited
65
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(n) Property, plant and equipment
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the group and the cost of the
item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant
and equipment, the shorter lease term as follows:
•
•
Plant and equipment
Furniture, fittings and equipment
2 - 5 years
3 - 15 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
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 (note 21(i)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in
profit or loss.
(o) Intangible assets
(i) Research and development
Expenditure on research activities, undertaken with the prospect of obtaining new scientific or technical knowledge
and understanding, is recognised in the consolidated 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 capitalised if it is probable that the product or service is technically and commercially feasible,
will generate probable economic benefits, adequate resources are available to complete development and cost can
be measured reliably. Other development expenditure is recognised in the consolidated statement of profit or loss
and other comprehensive income as an expense as incurred.
(p) Trade and other payables
These amounts represent liabilities for goods and services provided to the group prior to the end of financial year
which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within 12 months after the reporting period.
They are recognised initially at their fair value and subsequently measured at amortised cost using the effective
interest method.
Immuron Limited
66
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(q) Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick 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 recognised 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. The liabilities are presented as current employee
benefit obligations in the balance sheet.
(ii) Other long-term employee benefit obligations
In some countries, the group also has 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. These
obligations are therefore 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
high-quality corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash
outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are
recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional
right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement
is expected to occur.
(iii) Share-based payments
Share-based compensation benefits are provided to employees via the 'executive share and option plan' (ESOP).
Information relating to these schemes is set out in note 17.
Employee options
The fair value of options granted under the ESOP is recognised as a share-based payment expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the
options granted:
-
-
-
including any market performance conditions (e.g. the company’s share price)
excluding the impact of any service and non-market performance vesting conditions (e.g. profitability,
sales growth targets and remaining an employee of the company over a specified time period), and
including the impact of any non-vesting conditions (e.g. the requirement for employees to save or
holdings shares for a specific period of time).
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting
conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that
are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision
to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
(r) 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, net of
tax, from the proceeds.
Immuron Limited
67
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
21 Summary of significant accounting policies (continued)
(s) Loss per share
(i) Basic loss per share
Basic loss per share is calculated by dividing:
•
•
the loss attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year.
(ii) Diluted loss per share
Diluted loss per share adjusts the figures used in the determination of basic loss 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 additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(t) Rounding of amounts
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts
in the financial statements. Amounts in the financial statements have been rounded off in accordance with the
instrument to the nearest dollar.
(u) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised 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 receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the
consolidated balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.
22 Changes in accounting policies
This note explains the impact of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts
with Customers on the group’s financial statements.
(a) AASB 9 Financial Instruments – impact of adoption
AASB 9 Financial Instruments replaces AASB 139 Financial Instruments: Recognition and Measurement for annual
periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial
instruments: classification and measurement, impairment and hedge accounting. The adoption of this standard has
not materially impacted the amounts disclosed in these financial statements.
(i) Classification and measurement
Except for certain trade receivables, under AASB 9, the group initially measures a financial asset at its fair value plus,
in the case of a financial asset not at fair value through profit or loss, transaction costs.
Immuron Limited
68
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
22 Changes in accounting policies (continued)
(a) AASB 9 Financial Instruments – impact of adoption (continued)
Under AASB 9, debt financial instruments are subsequently measured at fair value through profit or loss (FVPL),
amortised cost, or fair value through other comprehensive income (FVOCI). The classification is based on two
criteria: the group's business model for managing the assets; and whether the instruments’ contractual cash flows
represent ‘solely payments of principal and interest’ on the principal amount outstanding (the ‘SPPI criterion’).
The new classification and measurement of the group's debt financial assets are as follows:
• Debt instruments at amortised cost for financial assets that are held within a business model with the objective to
hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. This category
comprises trade and other receivables.
The assessment of the group’s business models was made as of the date of initial application, 1 July 2018 and then
applied retrospectively to those financial assets that were not derecognised before 1 July 2018. The assessment of
whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based
on the facts and circumstances as at the initial recognition of the assets. There has been no adjustment made to the
amounts disclosed as a result of the application of this standard.
Impairment of financial assets
(ii)
The adoption of AASB 9 has altered the group's accounting for impairment losses for financial assets by replacing
AASB 139’s incurred loss approach with a forward-looking expected credit loss (ECL) approach.
AASB 9 requires the group to record an allowance for ECLs for all loans and other debt financial assets not held at
FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the
cash flows that the group expects to receive. The shortfall is then discounted at an approximation to the asset’s
original effective interest rate.
For trade and other receivables, the group has applied the standard’s simplified approach and has calculated ECLs
based on lifetime expected credit losses. The group has established a provision matrix that is based on the group's
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
The adoption of the ECL requirements of AASB 9 has not resulted in any material change in impairment allowances
of the group's debt financial assets.
(b) AASB 9 Financial Instruments – accounting policies applied from 1 July 2018
Trade receivables
The accounting policies applied by the group from 1 July 2018 are set out in note 21(k).
Investments and other financial assets
The accounting policies applied by the group from 1 July 2018 are set out in note 21(m).
Immuron Limited
69
Immuron Limited
Notes to the financial statements
30 June 2019
(continued)
22 Changes in accounting policies (continued)
(c) AASB 15 Revenue from Contracts with Customers – impact of adoption
AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related interpretations and it
applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other
standards. The new standard has been applied as at 1 July 2018 using the modified retrospective approach and
establishes a five-step model to account for revenue arising from contracts with customers. Under AASB 15, revenue
is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for
transferring goods or services to a customer. The standard requires entities to exercise judgement, taking into
consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their
customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs
directly related to fulfilling a contract. The adoption of AASB 15 has not impacted the amounts disclosed within the
financial statements.
(d) AASB 15 Revenue from Contracts with Customers – accounting policies applied from 1 July 2018
Revenue recognition
The accounting policies applied by the group from 1 July 2018 are set out in note 21(e).
Immuron Limited
70
Immuron Limited
Directors' declaration
30 June 2019
In the directors' opinion:
(a)
the financial statements and notes set out on pages 29 to 70 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 2019 and of its
performance for the financial year ended on that date, and
(b)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
Note 21(a) 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
Independent Non-Executive Chairman
Melbourne
30 August 2019
Immuron Limited
71
Independent
auditor’s report
to the members
0
Collins Square, Tower 5
727 Collins Street
Melbourne VIC 3008
Correspondence to:
GPO Box 4736
Melbourne VIC 3001
T +61 3 8320 2222
F +61 3 8320 2200
E info.vic@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Immuron Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Immuron Limited (the Company) and its subsidiaries (the Group), which comprises
the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
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Liability limited by a scheme approved under Professional Standards Legislation.
Key audit matter
How our audit addressed the key audit matter
Research and development tax rebate accrual – refer to
Note 3a, 5b & 21f
Under the Research and Development (R&D) Tax Incentive
scheme, the Group receives a 43.5% refundable tax offset of
eligible expenditure if its turnover is less than $20 million per
annum, provided it is not controlled by income tax exempt
entities. An R&D plan is filed with AusIndustry in the following
financial year, and based on this filing, the Group receives the
incentive in cash. Management performed a detailed review of
the Group’s total research and development expenditure to
determine the potential claim under the R&D tax incentive
legislation.
This area is a key audit matter due to the degree of judgement
and interpretation of the R&D tax legislation required by
management to assess the eligibility of the R&D expenditure
under the scheme.
Valuation of Inventory – refer to Note 6a & 21l
At 30 June 2019, the Group held inventories of $2,406,404 on
the consolidated statement of financial position, as disclosed
in Note 6, which relates to finished products, work in progress
and raw materials.
The audit of the valuation of inventories is a key audit matter
because of the significance of the inventories balance at 30
June 2019 as well the judgement required in determining
whether it is recorded at the lower of cost and net realisable
value. The valuation of the inventories is assessed
considering forecast inventory usage and sales and expiry
dates of product.
Our procedures included, amongst others:
Obtaining and reviewing management’s FY19 R&D
calculations and assessing the reasonableness of
assumptions utilised in the calculation;
Comparing the estimates made in previous years to the
amount of cash received after lodgement of the R&D tax
claim;
Comparing the nature of the R&D expenditure included in
the current year estimate to the prior year estimate;
Considering the nature of the expenses against the
eligibility criteria of the R&D tax incentive scheme to form a
view about whether the expenses included in the estimate
were likely to meet the eligibility criteria;
Comparing the eligible expenditure used to calculate the
estimate against the expenditure recorded in the general
ledger;
Agreeing a sample of individual expenditure items included
in the estimate to underlying supporting documentation to
ensure that they have been appropriately recognised in the
accounting records and that they are eligible expenditures;
Inspecting copies of relevant correspondence with
AusIndustry and the ATO related to the claims;
Engaging with our R&D specialist to review the
reasonableness of the calculation; and
Assessing the adequacy of financial statement disclosures.
Our procedures included, amongst others:
Obtaining management’s weighted average cost calculation
and checking the accuracy of calculations;
Testing a sample of inventory items to assess the build-up
of costs;
Reviewing management’s methodology and assumptions in
quantifying stock obsolescence while considering expiry
dates, as well as future sales levels;
Obtaining the report prepared by management’s expert to
support the useful life of stock;
Assessing the qualification and independence of
management’s expert and validating assumptions utilised
within the report for reasonableness;
Testing a sample of product sales to assess whether the
margin achieved was sufficient to support the recoverable
amount of the inventory on hand; and
Assessing the adequacy of financial statement disclosures
and accuracy of financial statement classification.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 16 to 23 of the Directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Immuron Limited, for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
M A Cunningham
Partner – Audit & Assurance
Melbourne, 30 August 2019
Shareholder
information
0
Immuron Limited
Shareholder information
30 June 2019
(continued)
The shareholder information set out below was applicable as at 28 August 2019.
A. Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
Holding
1 - 1000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Class of equity security
Ordinary shares
No. of
holders
(options)
Shares
No. of
holders
(shares)
242
501
274
629
224
1,870
62,399
1,546,093
2,216,184
22,860,284
150,095,946
176,780,906
35
80
36
121
34
306
Options
17,345
211,687
268,781
5,162,572
19,629,509
25,289,894
There were 667 holders of less than a marketable parcel of ordinary shares.
B. Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted equity securities are listed below:
Name
HSBC CUSTODY NOM AUST LTD
GRANDLODGE PL
AUTHENTICS AUST PL
PEPPERTREE CUST SVCS PL
ANASTASIOU PETER + K P
INVERAREY PL
BIRD WILLIAM DAVID FRANK
REED DALE ANTHONY
INSYNC INV PL
ADVANCE CLINICAL SYSTEMS
ANASTASIOU STEPHEN + A
ADVANCE PUBLICITY PL
CITICORP NOM PL
BIDDICK KENNETH + C
HAMBLETON STREET PL
PLUSH DAVID A + A L
G & N LORD SUPER PL
CHANEY IAIN + ANTONIA
EDMUNDS THOMAS E + S R
FLAVEL KEITH + JULIE
Ordinary shares
Number held
Percentage of
issued shares
37,930,184
10,994,182
8,624,999
3,106,226
2,907,236
2,731,632
2,700,000
2,560,000
2,500,000
2,296,874
2,035,371
1,900,000
1,812,821
1,624,999
1,575,000
1,334,075
1,331,744
1,252,551
1,080,000
1,022,000
91,319,894
21.46
6.22
4.88
1.76
1.64
1.55
1.53
1.45
1.41
1.30
1.15
1.07
1.03
0.92
0.89
0.75
0.75
0.71
0.61
0.58
51.66
Immuron Limited
78
B. Equity security holders (continued)
Unquoted equity securities
Immuron Limited
Shareholder information
30 June 2019
(continued)
Number
on issue
Number
of holders
IMCRM1 unlisted options, exercisable at $1.944, expiring 2021-11-30
IMCRM2 unlisted options, exercisable at $1.876, expiring 2022-01-17
IMCAI unlisted options, exercisable at US$10 per 40 options, expiring 2022-06-13
IMCAI unlisted options, exercisable at $0.468, expiring 2023-03-15
Options issued under the executive share and option plan to take up ordinary shares
14,493
29,668
27,760,000
7,897,647
11,452,042
1
1
1
1
12
The following holders have unquoted options each representing more than 20% of these securities:
• HSBC CUSTODY NOM AUST LTD: 27,760,000
C. Substantial holders
Substantial holders in the company are set out below:
Ordinary shares
HSBC CUSTODY NOM AUST LTD
GRANDLODGE PTY LTD
D. Voting rights
Number
held
Percentage
37,930,184
10,994,182
21.46%
6.22%
The voting rights attaching to each class of equity securities are set out below:
(a)
Ordinary shares: On a show of hands every member present at a meeting in person or by proxy shall have
one vote and upon a poll each share shall have one vote.
(b)
Options: No voting rights.
Immuron Limited
79
Building 10, 25-37 Chapman Street,
Blackburn North VIC 3131
Australia
PH: +61 (0)3 8892 4802
FAX: +61 (0)3 9899 8533
Immuron Limited
8