Annual Report 2022 Year ended 30 June 2022 Reporting period: Previous corresponding period: Year ended 30 June 2021 ABN 90 009 237 889 Annual Report 2022 Immutep Limited Corporate Directory Directors Dr Russell Howard (Non-Executive Chairman) Mr Pete Meyers (Non-Executive Director & Deputy Chairman) Mr Marc Voigt (Executive Director & Chief Executive Officer) Ms Lucy Turnbull, AO (Non-Executive Director) Company Secretaries Ms Deanne Miller Ms Indira Naidu Registered office & principal place of business Level 33 264 George Street Australia Square Sydney NSW 2000 +61 2 8315 7003 Share Registry Boardroom Pty Ltd Grosvenor Place Level 12, 225 George Street Sydney, NSW 2000 +61 2 9290 9600 Auditor PricewaterhouseCoopers One International Towers Sydney, Watermans Quay Barangaroo, NSW 2000 Banker National Australia Bank Ltd Kew Branch Melbourne, Victoria 3000 Stock exchange listings Immutep Limited shares are listed on the: Australian Securities Exchange (ASX code: IMM), and NASDAQ Global Market (NASDAQ code: IMMP) Website www.immutep.com b Annual Report 2022 Immutep Limited Table of Contents Chairman’s Letter .................................................................................................................................................................................................................................2 Review of Operations and Activities ...........................................................................................................................................................................................4 Directors’ Report ...................................................................................................................................................................................................................................9 Auditor’s Independence Declaration ......................................................................................................................................................................................27 Corporate Governance Statement ...........................................................................................................................................................................................28 Consolidated Statement of Comprehensive Income ....................................................................................................................................................30 Consolidated Balance Sheet.........................................................................................................................................................................................................31 Consolidated Statement of Changes in Equity ..................................................................................................................................................................32 Consolidated Statement of Cash Flows ................................................................................................................................................................................33 Notes to the Consolidated Financial Statements .............................................................................................................................................................34 Directors’ Declaration ......................................................................................................................................................................................................................73 Independent Auditor’s Report to the members of Immutep Limited ....................................................................................................................74 Shareholder Information ................................................................................................................................................................................................................79 1 Chairman’s Letter Our focus is on cultivating the best late-stage development strategy for efti to deliver value to our shareholders. The financial year saw considerable progress from Immutep and efti, which is being evaluated as part of combination therapies with chemotherapy and PD-1 and PD-L1 inhibitors. Efti was shown to improve overall survival in key subgroups of breast cancer patients when administered in combination with paclitaxel in the Phase IIb AIPAC study. Efti is also demonstrating encouraging efficacy through the Phase II TACTI-002 trial which evaluates efti in combination with pembrolizumab in three different cancer indications. In 1st line non-small cell lung cancer (NSCLC) a promising 38.6% of patients are responding to the combination therapy. The data are supportive of continued late-stage clinical development of efti in 1st line NSCLC. In 2nd line NSCLC interim results are showing an encouraging median overall survival of 9.7 months from the combination therapy. Lastly, in 2nd line head and neck squamous cell carcinoma (HNSCC) there is a response rate of 29.7%, along with favourable duration and depth of responses. Importantly, efti has consistently reported a good safety profile across all its trials to date. Given the encouraging results we’ve reported across these key trials in metastatic breast cancer and NSCLC, Immutep now has optionality to progress the development of efti in multiple indications. We are carefully reviewing our clinical plans to potentially prioritise one indication as we continue to progress towards commercialization of efti. From the strength of the data already presented, the unmet patient need and the significant market opportunity, the business may prioritise development in 1st line NSCLC. This would be in addition to our ongoing development program in 1st line HNSCC which has FDA Fast Track designation. Ultimately the aim would be for Immutep or its partners to obtain marketing authorisation in multiple indications to fully exploit the potential of efti with its unique mechanism of action. Dear Fellow Shareholder: I’m delighted to present Immutep’s annual report for the financial year 2022. Immutep continued to forge its leadership role in the emerging LAG-3 landscape throughout a year that saw increasing attention from industry on this exciting new immune checkpoint. As a global biotech developing immunotherapeutic products for cancer and autoimmune disease, we have more product candidates and programs focused on LAG-3 than any other drug development company and we have retained our status of being the only LAG-3 pure play. In March 2022 the first LAG-3 product, a Bristol- Myers Squibb (BMS) combination of LAG-3 inhibitor, relatlimab and PD-1 inhibitor, nivolumab (Opdualag®) received approval from the United States Food and Drug Administration for the treatment of melanoma in patients. The approval marked the validation of LAG-3 as the next most promising immune checkpoint, following the success of PD-1 and PD-L1 inhibitors, such as pembrolizumab and avelumab, and the CTLA-4 inhibitor, ipilimumab. The emergence of LAG-3 is all the more significant in light of the recent failure of anti-TIGIT clinical trials in H1 2022. BMS’s Opdualag® hit the market only a number of weeks ago and has already surprised the industry with $58 million in sales in the three months to June 2022, doubling expectations for first quarter of sales. The combination product is tipped to meet its $4 billion peak sales target across multiple cancer indications. As a pure-play LAG-3 company, this validation triggered renewed excitement in Immutep’s pipeline of four product candidates. Our lead product candidate, called eftilagimod alpha (efti) has a unique mechanism of action in the growing LAG-3 product landscape. While most LAG-3 products are blocking agents, efti is the only LAG-3 product that activates antigen-presenting cells to drive an adaptive immune response. 2 Annual Report 2022 Immutep Limited Chairman’s Letter continued With our late-stage development pipeline growing, the Company has been actively progressing upscaling of its manufacturing for efti to ensure sufficient volume of the drug is available for a Phase III trial, as well as commercial volumes. Immutep‘s positive clinical results were reported during a year of macroeconomic uncertainty stemming from supply chain disruptions, the ongoing COVID pandemic, geopolitical tensions and inflation. This broader environment has severely impacted the share prices of most companies in the biotech sector globally, including Immutep’s share price. Fortunately, Immutep’s operations have not been significantly impacted by the current macroeconomic landscape. We had enrolled a small number of patients into the TACTI-003 trial at clinical sites in the Ukraine prior to the outbreak of the war and have been able to successfully continue treating most of these patients from alternative locations. Immutep also continued its collaborations with four major pharmaceutical companies: Novartis, GSK, Merck & Co (MSD) and Merck (Germany) during the year, along with EOC Pharma and LabCorp. The breadth and depth of these partnerships confers strong validation of Immutep’s technology, product candidates and R&D competencies. We undertook a two-tranche placement and a Share Purchase Plan (SPP) at the end of FY 2021 and were delighted to be supported by multiple new and existing institutional investors from Australia and offshore. The financings raised a total of A$67.2m before transaction costs, with the second tranche and SPP shares being issued following approval by shareholders within the financial year 2022, at an EGM in July 2021. As well as supporting our ongoing efti trials, the funds raised enable us to significantly expand our clinical development and manufacturing programs and to advance our pre-clinical program in autoimmune disease. Importantly, the financings also extend our cash runway into early calendar year 2024. I would like to thank our shareholders for their continued support of the Company throughout the year. We are pleased with the encouraging clinical results from efti and are equally excited about what lies ahead for Immutep. Our focus is on cultivating the best late-stage development strategy for efti to deliver value to our shareholders. We look forward to updating you on our progress over the coming twelve months. Yours sincerely, Dr. Russell Howard Chairman Immutep Limited 31 August 2022 3 Review of Operations and Activities As LAG-3 has emerged as the next promising immune checkpoint in immunotherapy for cancer, Immutep’s technologies and clinical results have drawn increasing industry attention. PRINCIPAL ACTIVITIES Immutep is a globally active biotechnology company that is a leader in the development of LAG-3 immunotherapeutic products for cancer and autoimmune disease, with currently more product candidates and programs focused on LAG-3 than any other drug development company. The Company is dedicated to leveraging its technology and expertise to discover and develop novel immunotherapies and to partner with leading organisations to bring innovative treatment options to market for patients. Immutep has four product candidates based on the LAG- 3 immune control mechanism in development, all with different mechanisms of action. Its lead in-house product candidate is eftilagimod alpha (“efti” or “IMP321”), a soluble LAG-3Ig fusion protein, which is in late-stage clinical development for the treatment of cancer. Immutep has a second in-house product candidate (IMP761) which is in pre-clinical development for the treatment of autoimmune disease, and two clinical programs that are fully licensed to major pharmaceutical partners. In addition, there are also ongoing research activities for potential new candidates. Immutep is listed on the Australian Securities Exchange (IMM), and on the NASDAQ (IMMP) in the United States. REVIEW OF OPERATIONS As LAG-3 has emerged as the next promising immune checkpoint in immunotherapy for cancer, Immutep’s technologies and clinical results have drawn increasing industry attention. This year, the Company has continued to advance efti through key clinical trials and reported interim and final results throughout the year. Data from its metastatic breast cancer trial (AIPAC) and its metastatic head and neck squamous cell carcinoma (HNSCC) and non-small cell lung cancer (NSCLC) trial (TACTI-002) were selected for presentation at multiple prestigious cancer conferences. All data has been consistently encouraging from an efficacy perspective and importantly, has also supported efti’s good safety profile to date. 4 This encouraging data from efti in multiple cancer indications has built its value from a patient, industry and shareholder point of view. Furthermore, Immutep now has optionality to prioritise advancing efti into late-stage clinical trials in breast cancer and NSCLC. This is in addition to Immutep’s later-stage trial in HNSCC that is currently recruiting patients (TACTI-003). With the support of new and existing shareholders, Immutep completed two financings during the financial year related to the completion of a two-tranche placement and share purchase plan (SPP) that was initiated in June 2021. The Company raised in total A$67.2m before transaction costs, of which A$53.4m was completed in July 2021.The second tranche and SPP shares were issued following approval by shareholders at an EGM in July 2021. The placement was supported by high-quality institutional investors in Australia and offshore. The funds are supporting Immutep’s ongoing and planned immuno-oncology clinical development programs, its pre- clinical program in autoimmune disease and for general working capital purposes. The financings have significantly improved Immutep’s financial flexibility and extended its cash runway into the early calendar year 2024. Clinical Trials with Eftilagimod Alpha AIPAC Trials – Late-Stage Development in Metastatic Breast Cancer Immutep’s Phase IIb AIPAC trial evaluated efti in combination with paclitaxel, a standard of care chemotherapy, as a chemo-immunotherapy combination. The trial was a randomised, double blinded, placebo- controlled clinical study in 227 HR+/HER2- metastatic breast cancer patients and was conducted across more than 30 clinical sites in Germany, UK, France, Hungary, Belgium, Poland, and the Netherlands. The combination therapy aims to boost the body’s immune response against tumour cells compared to chemotherapy plus placebo. Annual Report 2022 Immutep Limited Review of Operations and Activities continued In November 2021, Immutep reported positive final Overall Survival (OS) data from AIPAC at the Society for Immunotherapy of Cancer (SITC) Annual Meeting 2021. The trial reported very encouraging OS data, including a statistically significant and clinically meaningful benefit in three prespecified subgroups representing most patients. A survival benefit of +7.5 months was observed in patients < 65 years, reflecting a > 50% improvement compared to the control group. A +19.6 months survival benefit was seen in patients with low monocytes, a benefit of > 150% compared to the control group. Lastly, a survival benefit of +4.2 months was reported in luminal B patients, reflecting a > 33% benefit compared to the control group. The Company later reported biomarker and multivariate analysis data and insights from the trial at ESMO’s Breast Cancer Congress in May 2022. The analysis showed a statistically significant increase in innate and adaptive immune response biomarkers (monocyte and CD8+ T cell counts and serum CXCL10 levels) and absolute lymphocyte count (ALC) was observed in the efti group, but not in the placebo group. These improved immune parameters correlated with improved OS of the patients, confirming efti is activating the immune system and helping patients live longer. In addition, an observed early rise in ALC in patients treated with efti may provide clinicians with a potential predictor of improved survival, helping them to determine early on if continued treatment with efti is beneficial. The exploratory analysis also identified six patient subgroups that showed improvements in OS. These subgroups are relevant for patient population selection for future late- stage studies in breast cancer. The positive results from AIPAC are supportive of further development of efti in metastatic breast cancer. However, given the encouraging results Immutep is also seeing from efti in 1st line NSCLC from TACTI-002 (see below), the Company is reviewing its clinical plans for metastatic breast cancer and NSCLC to potentially prioritise one indication. In the meantime, Immutep is continuing its regulatory interactions for the development program for efti in metastatic breast cancer. This includes dialogue with the US Food and Drug Administration (FDA) and European Medicines Agency (EMA), following feedback from the EMA regarding the efti program received in October 2021 and the FDA in March 2022. TACTI-003 - Phase IIb – Late-Stage Trial with Fast Track Designation TACTI-003 is Immutep’s multi-centre, open label, randomised Phase IIb clinical study evaluating efti in combination with KEYTRUDA® (pembrolizumab) in up to 154 patients with 1st line recurrent or metastatic HNSCC. The trial was instigated due to the robust data reported from TACTI-002 in 2nd line HNSCC but is being conducted in the more commercially relevant 1st line setting in TACTI-003. TACTI-003 was awarded Fast Track designation from the United States Food and Drug Administration (US FDA) and will take place across Australia, Europe, and the United States in up to 35 clinical sites. It is being conducted under the terms of a second clinical trial collaboration and supply agreement with Merck & Co., Inc., Kenilworth, NJ, USA (known as MSD outside the United States and Canada). Patient enrollment has been ongoing during the financial year and has already surpassed the 25% recruitment mark across the 25 trial sites that are now activated. TACTI-002 (also designated KEYNOTE-798) - Phase II TACTI-002 is Immutep’s Phase II clinical study evaluating efti in combination with KEYTRUDA® (pembrolizumab) in 189 patients with NSCLC in 1st and 2nd line (Parts A and B, respectively) and 2nd line HNSCC (Part C). The study is taking place at approximately 20 clinical sites in Australia, Europe and the United States. It is being conducted in collaboration with MSD and is called KEYNOTE-798 by MSD. 5 Review of Operations and Activities continued Recruitment was completed for all cohorts of the TACTI-002 trial in FY 2022. In addition, encouraging efficacy results were reported at prestigious cancer conferences throughout the financial year for each Part of the trial, along with a consistently good safety profile for efti which continues to be well tolerated. Part A – 1st line NSCLC – Immutep reported that TACTI-002 met its primary objective for 1st line NSCLC patients in this PD-L1 all-comer trial via a prestigious Oral Presentation at the American Society of Clinical Oncology’s (ASCO) 2022 Annual Meeting in June 2022. This Part of the trial showed an Overall Response Rate (ORR) of 38.6% to therapy with efti plus pembrolizumab. Encouraging responses were demonstrated in all PD-L1 status groups, including patients who were PD-L1 negative or PD-L1 low, and less likely to respond to anti-PD-1 monotherapy. Immutep also reported improving secondary endpoints, Disease Control Rate (DCR) and interim median Progression Free Survival (PFS), across all PD-L1 expression levels. The data are supportive of late-stage clinical development of efti in 1st line NSCLC. Part B – 2nd line NSCLC - New interim data from patients with 2nd line metastatic NSCLC was reported in a poster presentation at ESMO’s European Lung Cancer Congress in March 2022, with further updated interim data presented post financial year in August 2022 at the IASLC 2022 World Conference on Lung Cancer (WCLC). At WCLC 2022, the Company reported patients with 2nd line NSCLC had a median OS of 9.7 months from therapy with efti in combination with pembrolizumab. In addition, 25% were progression free at 6 months and 36.5% were alive at 18 months. Part C – 2nd line HNSCC – Immutep reported interim data from 2nd line HNSCC patients at the SITC 2021 conference in November 2021. The results demonstrated encouraging antitumor activity. An ORR of 29.7% was reported in patients receiving the combination therapy of efti and pembrolizumab. In addition, a favourable duration and depth of responses were observed, with five Complete Responses and a minimum duration of response extended to more than 9 months across all responding patients. The responses continue to be reported in both high and low PD-L1 expressors. Institute of Clinical Cancer Research (IKF) INSIGHT Clinical Trial Platform INSIGHT is an investigator-initiated Phase I clinical trial platform investigating efti in different combination treatments. INSIGHT consists of 5 different arms from strata A to E, with active arms outlined below. The trial is being conducted by the Institute of Clinical Cancer Research (IKF) at Northwest Hospital, Frankfurt, Germany. 6 INSIGHT-003 (Stratum C) - first triple combination therapy study with efti INSIGHT-003 is a Phase I study of efti in up to 20 patients with various solid tumours, focusing on NSCLC adenocarcinomas. It is the first time efti will be evaluated as part of a triple combination therapy consisting of efti and an approved standard of care combination of chemotherapy (carboplatin, pemetrexed) and an anti-PD-1 therapy. More than half of a total of 20 patients have been enrolled into the INSIGHT-003 trial and interim results are expected to be reported in late calendar year 2022. INSIGHT-005 (Stratum E) - in collaboration with Merck KGaA INSIGHT-005 is intended to evaluate efti in combination with bintrafusp alfa, an investigational bifunctional fusion protein immunotherapy, in 12 patients with solid tumours under Immutep’s collaboration and supply agreement with Merck KGaA, Darmstadt, Germany. However, in the light of the suboptimal results from Merck KGaA’s bintrafusp alpha in other studies, the INSIGHT-005 study is under review and may not proceed. EOC Pharma - Phase II (China) EOC Pharma (EOC) is Immutep’s partner and licensee for efti in Greater China. EOC has the exclusive development and commercialisation rights of efti in China, Hong Kong, Macau and Taiwan. These rights are retained by Immutep in all other territories. EOC is advancing plans for its expanded clinical trial pipeline for efti (designated EOC202 in China). In addition to EOC’s planned Phase II clinical trial evaluating efti in combination with chemotherapy in metastatic breast cancer patients in China, it is also planning a study of efti in combination with an anti-PD-1 therapy. Both trials will be fully funded by EOC, which has previously completed a Phase I bridging study in Mainland China. CYTLIMIC - Phase I CYTLIMIC (an affiliate of NEC) is Immutep’s Japanese collaboration partner for efti. CYTLIMIC has been conducting studies of CYT001, its lead cancer vaccine which comprises peptides designed using artificial intelligence from the HSP70 and GPC-3 proteins, plus two adjuvants, efti and Hiltonol. Immutep signed clinical collaboration, service and supply agreements with the Japanese biotech in 2019 to support the development of the therapeutic cancer vaccine. However, based on a comprehensive business evaluation, CYTLIMIC has determined to dissolve the company and Annual Report 2022 Immutep Limited Review of Operations and Activities continued accordingly, to transfer its own patents and licensing rights to NEC. Investigations into CYT001 will not be continuing whilst NEC assesses the future of this cancer vaccine program. EAT COVID - Phase II EAT COVID was an investigator-initiated Phase II clinical trial being conducted in the Czech Republic by the University Hospital Pilsen, which is the sponsor of the trial and has full control and responsibility for running and funding it. The study wa s due to evaluate efti in up to 110 hospitalised patients with COVID-19; however, recruitment into the trial has been slow. Accordingly, Immutep has decided to discontinue the supply of efti for this trial and to terminate the collaboration with the University Hospital Pilsen. Immutep incurred minimal costs for this investigator-initiated trial. Eftilagimod Alpha Manufacturing Throughout the financial year, Immutep and its manufacturing partner WuXi Biologics have been scaling up efti’s GMP manufacturing from 200L to 2,000L capacity bioreactors for potential commercial manufacturing and registration. The program is on track. Preclinical Research & Development IMP761 IMP761 is Immutep’s immunosuppressive agonist antibody to LAG-3 which aims to treat the causes of autoimmune disease, such as inflammatory bowel disease, rheumatoid arthritis, and multiple sclerosis, rather than just treating the symptoms. During the financial year, Immutep signed a Manufacturing Service Agreement with Northway Biotech, an end-to-end biopharmaceutical contract development and manufacturing organisation, to manufacture IMP761 ahead of clinical testing. Cell line development has been completed and GMP manufacturing at the 200L scale is ongoing. Licensed Programs Novartis - Ieramilimab Novartis is Immutep’s partner for the development of ieramilimab (Novartis code: LAG525), a humanised LAG-3 antagonist antibody derived from Immutep’s IMP701 antibody. Novartis continues to evaluate ieramilimab in clinical trials in multiple cancer indications in combination with its PD-1 inhibitor, spartalizumab. Novartis presented two posters at the ESMO Congress in September 2021. One poster included data from its PLATForM Phase II study of novel spartalizumab combinations in melanoma, concluding patients with LAG-3+ melanoma may be more likely to respond to spartalizumab + ieramilimab (LAG525) treatment. Novartis also presented data from its Phase II, open-label, 3-arm study, in patients with advanced triple-negative breast cancer regardless of PD-L1 status progressing after adjuvant or one prior line of systemic therapy for metastatic disease, but who had not received an immune checkpoint inhibitor. Patients were randomised 1:1:1 to LAG525 + spartalizumab, LAG525 + spartalizumab + carboplatin, or LAG525 + carboplatin. As no arms of the study met the proof of preliminary efficacy criteria, no further investigation is planned for this study. GlaxoSmithKline (GSK) - IMP731 GSK is Immutep’s partner for GSK2831781, a LAG-3 depleting antibody derived from Immutep’s IMP731 antibody. Immutep’s exclusive license with GSK remains in place for GSK2831781, while GSK determines its next steps for the GSK2831781 development program. LabCorp Immutep is collaborating with US-based Laboratory Corporation of America Holdings, known as LabCorp (NYSE: LH) to support LabCorp’s development of immuno- oncology products or services. Immutep was selected by LabCorp for its in-depth LAG-3 expertise and knowledge. Immutep has received US$145,000 in fees from LabCorp and may be eligible to receive further revenues from commercial milestones under its Licence and Collaboration Agreement with LabCorp as the collaboration progresses. Intellectual Property Immutep continues to build its patent portfolio to protect its technologies and has successfully obtained 9 new patents for eftilagimod alpha (efti), ieramilimab (LAG525) and IMP761 during the financial year. Eftilagimod Alpha Immutep was granted two new patents by the Chinese Patent Office for efti during the financial year. Both relate to combined therapeutic preparations comprising efti and either a PD-1 pathway inhibitor or a chemotherapy agent. Immutep was also granted a new Australian patent protecting its intellectual property for therapeutic preparations comprising efti and a PD-1 pathway inhibitor. These new patents in China and Australia follow the grant of corresponding patents in other key global markets announced previously. 7 Review of Operations and Activities continued Ieramilimab Immutep and its partner Novartis were granted five new patents relating to the protection of ieramilimab (LAG525), a humanised LAG-3 antagonist antibody derived from Immutep’s IMP701 antibody. The patents were granted by the Eurasian, Japanese, Chinese, Indian and Malaysian patent offices. IMP761 Immutep was also granted a new patent for its preclinical autoimmune candidate, IMP761, by the Russian Federal Service for Intellectual Property, known as Rospatent. The patent protects IMP761 and related methods of use in inflammatory and autoimmune disease for the territory of the Russian Federation. Financial Performance Licensing revenue was A$170K in FY 2022 compared with A$nil in FY 2021. In FY 2022, Immutep recognised A$1.19 million of grant income from the Australian Federal Government’s R&D tax incentive program, which was provided mainly in respect of expenditure incurred on eligible research and development activities conducted in FY 2022 for the TACTI-002 and TACTI-003 trials. The Company’s French subsidiary received A$3.42 million of grant income from the French Crédit d’Impôt Recherche scheme for expenditure incurred on eligible research and development activities conducted in calendar year 2020 and recognized accrual of grant income of A$3.26 million for FY 2022. Interest income increased from A$105K in FY 2021 to A$225K in FY 2022. The increase was mainly due to the increase in cash. Total revenue and other income increased from A$3.97 million in FY 2021 to A$6.76 million in FY 2022. Research and development and intellectual property expenses increased from A$17.24 million in FY 2021 to A$31.34 million in FY 2022. The increase is mainly attributable to increases of A$4.5 million in clinical trial costs and A$8.3 million relates to manufacturing costs. Whilst clinical trial costs related to AIPAC declined given the trial has completed, costs related to TACTI-002 rose with the expansion which included an additional 74 patients in 1st line NSCLC. Clinical trial costs related to TACTI-003 also increased significantly in FY 2022 due to the commencement of the clinical trial. Corporate administrative expenses for FY 2022 were A$7.21 million compared to A$6.28 million for FY 2021. 8 The loss after tax for FY 2022 of A$32,210,826 was higher compared to A$29,902,624 for FY 2021. This increase was mainly attributable to increase in clinical trial costs and manufacturing activities undertaken during the financial year. In FY 2022, the Company recognized a non-cash gain of A$591K from the net change in fair value of warrants, whilst in FY 2021 a loss of A$8.66 million in the net change in fair value of warrants was recognized. Outlook Over the financial year, the LAG-3 immunotherapy space saw major advancements, particularly the announcement of Phase III data in 1st line melanoma (RELATIVITY-047) by Bristol Myers Squibb which provided significant validation of the LAG-3 - MHC class II immune control mechanism. Subsequently FDA approved the drug in March 2022. Besides PD-1 and CTLA-4, LAG-3 is now considered to be the third major immune checkpoint. Against this exciting backdrop, efti is being advanced in many different trials, across multiple different cancer settings with remarkable results. Immutep has the support of its large pharma collaboration partners for much of this work, including MSD, and Merck Germany. These studies will generate further value creating data in the new financial year, potentially de-risking efti and supporting Immutep’s business development efforts. With planning underway for a late-stage development, we have already made encouraging progress during the 2022 financial year. The Company is progressing the manufacturing scale up steps to reach commercial quantities of efti and expects to provide further updates on regulatory engagements with the competent authorities throughout the year. Finally, Immutep’s financial position continues to be very strong, providing the Company with the financial means to continue to play a key role in the rapidly emerging and exciting LAG-3 space. On behalf of the Board and management team of Immutep, we thank you for your continued support and look forward to updating you with more data results in the months ahead. Sincerely, Mr Marc Voigt CEO and Executive Director Immutep Limited 31 August 2022 Annual Report 2022 Immutep Limited Directors’ Report The directors present their report on the consolidated entity (referred to hereafter as the ‘consolidated entity’ or ‘Group’) consisting of Immutep Limited (referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2022. Directors The following persons were directors of Immutep Limited during the whole of the financial year and up to the date of this report unless otherwise stated: Dr Russell Howard (Non- Executive Chairman) Mr Pete Meyers (Non-Executive Director & Deputy Chairman) Mr Marc Voigt (Executive Director & Chief Executive Officer) Mr Grant Chamberlain (Non-Executive Director) cessation due to his death on 28 January 2022 Ms Lucy Turnbull, AO (Non-Executive Director) appointed on 25 February 2022 Principal activities Immutep is a globally active biotechnology company that is a leader in the development of LAG-3 related immunotherapeutic products for cancer and autoimmune disease. It is dedicated to leveraging its technology and expertise to discover and develop novel immunotherapies, and to partner with leading organisations to bring innovative treatment options to market for patients. Its lead product candidate is eftilagimod alpha (“efti” or “IMP321”), a soluble LAG-3Ig fusion protein based on the LAG-3 immune control mechanism, which is in clinical development for the treatment of cancer. Immutep has two other clinical candidates (IMP701 and IMP731) that are fully licensed to major pharmaceutical partners, and a fourth candidate (IMP761) which is in pre-clinical development for autoimmune disease. Immutep is listed on the Australian Securities Exchange (IMM), and on the NASDAQ (IMMP) in the United States. Dividends There were no dividends paid or declared during the current or previous financial year. Review of operations The loss after tax for the consolidated entity amounted to $32,210,826 (30 June 2021: loss after tax of $29,902,624). The basic earnings per share for financial year 2022 is loss of 3.79 cents per share (30 Jun 2021: loss of 5.03 cents per share). Immutep’s operations continued with limited disruption as a result of the COVID-19 pandemic, with the Group focusing on protecting the health of patients recruited into its clinical trials and its employees. The Group is continuously monitoring the impact of COVID-19 on its operations and on the carrying value of certain assets. The Group has worked closely with the regulators and clinical trial sites and implemented measures to safeguard our patients and employees. The Group developed a comprehensive response strategy including establishing cross-functional response teams and implementing business continuity plans to manage the impact of the pandemic on our employees, patients, and our business. The Group managed to address these challenges without a material impact on its clinical program and financial performance for the year. Patient recruitment was already well underway for the TACTI-002 and finished for INSIGHT-004 in April 2020 and the Group’s largest trial, AIPAC, was fully recruited when the COVID-19 pandemic was declared. However, the extent to which the COVID-19 pandemic may impact the Group’s business moving forward will depend on future developments which are highly uncertain and cannot be predicted at this time. The Group will continue to assess the impact on every level. Further detail is contained in the Review of Operations and Activities on page 4. Significant changes in the state of affairs With the support of new and existing shareholders, Immutep completed two financings during the financial year related to the completion of a two-tranche placement and share purchase plan (SPP) that was initiated in June 2021. The Company raised in total A$67.2m before transaction costs, of which A$53.4m was completed in July 2021. The second tranche and SPP shares were issued following approval by shareholders at an EGM in July 2021. The placement was supported by high-quality institutional investors in Australia and offshore. The proceeds from the capital raisings will drive development of Immutep’s immuno-oncology and autoimmune programs including its lead product candidate, eftilagimod alpha. The capital raisings during the financial year have strengthened the Group’s balance sheet ahead of several key clinical data value inflection points, thus extending the Group’s cash reach to early calendar year 2024. There were no other significant changes in the state of affairs of the Group during the financial year. 9 Directors’ Report continued Matters subsequent to the end of the financial year No matter or circumstance has arisen since 30 June 2022, 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 Information on likely developments in the operations of the consolidated entity are included in the Review of Operations and Activities on page 4. Information on the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity. Environmental regulation Immutep’s activities in respect of the conduct of preclinical and clinical trials and the manufacturing of drugs are undertaken in accordance with applicable environment and human safety regulations in each of the jurisdictions in which the Company has operations. The Company is not aware of any matter that requires disclosure with respect to any significant regulations in respect of its operating activities and believes that there have been no issues of non-compliance during the period. The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law. Information on directors Dr Russell Howard - Non-Executive Chairman Qualifications PhD Dr. Russell Howard is an Australian scientist, executive manager, and entrepreneur. He was a pioneer in molecular parasitology and commercialisation of “DNA Shuffling”. He is an inventor of 9 patents and has over 140 scientific publications. After his PhD in biochemistry from the University of Melbourne, he held positions at several research laboratories, including the National Institutes of Health in the USA where he gained tenure. In industry, Dr. Howard worked at Schering-Plough’s DNAX Research Institute in Palo Alto, CA; was the President and Scientific Director of Affymax, Inc. and co-founder and CEO of Maxygen, Inc. After its spin-out from GlaxoWellcome, as Maxygen’s CEO, Dr. Howard led its IPO on NASDAQ and a secondary offering, raising US$ 260 million. Maxygen developed and partnered dozens of technology applications and products over 12 years of his tenure as CEO. After leaving Maxygen in 2008, he started the Cleantech company Oakbio Inc (dba NovoNutrients) and remains involved in several innovative companies in the USA and Australia. He is currently Executive Chairman of NeuClone Pty Ltd. Appointed as Non-Executive Director on 8 May 2013 and appointed as Non-Executive Chairman on 17 November 2017 None None Chair of Remuneration Committee and Member of Audit and Risk Committee Experience and expertise Date of appointment Other current directorships Former directorships (in the last 3 years) Special responsibilities 10 Annual Report 2022 Immutep Limited Directors’ Report continued Mr Pete Meyers - Non-Executive Director and Deputy Chairman Qualifications Experience and expertise Date of appointment Other current directorships Former directorships (in the last 3 years) Special responsibilities BS, MBA Pete Meyers is the Chief Financial Officer of Slayback Pharma LLC. Prior to joining Slayback, Mr. Meyers served in Chief Financial Officer roles at Eagle Pharmaceuticals, Inc., Motif BioSciences Inc. and TetraLogic Pharmaceuticals Corporation. Prior to his role at TetraLogic, Mr. Meyers spent 18 years in health care investment banking, holding positions of increasing responsibility at Dillon, Read &Co., Credit Suisse First Boston LLC and, most recently, as Co-Head of Global Health Care Investment Banking at Deutsche Bank Securities Inc. Mr. Meyers is the Chairman and President of The Thomas M. Brennan Memorial Foundation, Inc., and serves on the Board of Directors of East End Hospice, Inc. He earned a Bachelor of Science degree in Finance from Boston College and a Master of Business Administration degree from Columbia Business School. Appointed as Non-Executive Director on 12 February 2014 and appointed as Non-Executive Deputy Chairman on 17 November 2017 None None Chairman of the Audit & Risk Committee, Member of the Remuneration Committee Ms Lucy Turnbull, AO - Non-Executive Director Qualifications Experience and expertise LLB University of Sydney, MBA AGSM Ms Turnbull is a distinguished Australian businesswoman, philanthropist and former local government politician. With a background in commercial law and investment banking, she was the first female Lord Mayor of the City of Sydney from 2003 to 2004 and has served on the boards of the NSW Cancer Institute, the Sydney Children’s Hospital Foundation, the Sydney Cancer Centre and the Sydney Festival. In 2011, Ms Turnbull was appointed an Officer of the Order of Australia for her service to the community, local government and business, including through her philanthropic contributions and fundraising for a range of medical, social welfare, educational, youth and cultural organisations. From 2015 to 2020 she served as the inaugural Chief Commissioner of the Greater Sydney Commission, a NSW state government body focused on delivering strategic planning for the whole of metropolitan Sydney. Ms Turnbull rejoined Immutep’s Board in February 2022, having previously served as its Chairman from October 2010 to November 2017, stepping down from the role only due to her elevated professional and personal commitments at the time. Date of appointment 25 February 2022 Other current directorships Former directorships (in the last 3 years) Special responsibilities None None Member of Remuneration Committee and Member of Audit and Risk Committee 11 Directors’ Report continued Mr Marc Voigt - Executive Director & Chief Executive Officer (CEO) Qualifications Experience and expertise MBA Marc has more than 21 years of experience in the financial and biotech industry, having joined the Immutep team in 2011 as the General Manager, European Operations based in Berlin, Germany. In May 2012, he became Immutep ’s Chief Business Officer and in November 2012 its Chief Financial Officer, as well as continuing to focus on its European operations. Having started his career at the Allianz Group working in pension insurances and funds, he moved to net.IPO AG, a publicly listed boutique investment bank in Frankfurt where he was focused on IPOs and venture capital investments. Marc then worked for a number of years as an investment manager for a midsize venture capital fund based in Berlin, specialising in healthcare. He also gained considerable operational experience while serving in different management roles with Revotar Biopharmaceuticals, Caprotec Bioanalytics and Medical Enzymes AG respectfully, where he handled several successful licensing transactions and financing rounds. Since 2001, Marc has been a judge and coach in BPW, Germany’s largest regional start-up initiative. Date of appointment 9 July 2014 Other current directorships Former directorships (in the last 3 years) Special responsibilities None None None 12 Annual Report 2022 Immutep Limited Directors’ Report continued Mr Grant Chamberlain - Non-Executive Director Qualifications Experience and expertise LLB (Hons), BCom Mr Chamberlain was a partner of OneVentures, one of Australia’s leading venture capital firms. Prior to joining OneVentures in 2017 Mr. Chamberlain was Head of Mergers & Acquisitions and Financial Sponsors Australia at Bank of America Merrill Lynch. Prior to joining Bank of America Merrill Lynch in 2013, Mr Chamberlain held senior positions at Nomura Australia and Deutsche Bank. He had over 20 years’ experience in investment banking and advised on many of the largest mergers and acquisitions transactions in Australia during that time. He begun his career as a corporate lawyer at Freehill Hollingdale & Page. Mr Chamberlain earned a Bachelor of Laws with Honors and a Bachelor of Commerce from the University of Melbourne. Date of appointment 21 August 2017 Date of cessation due to death 28 January 2022 Other current directorships Former directorships (in the last 3 years) Special responsibilities None None Member of the Audit and Risk Committee and Remuneration Committee ‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated. ‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated. Meetings of directors The number of meetings of the Company’s Board of Directors and of each board committee held during the year ended 30 June 2022, and the number of meetings attended by each director were: Ms Lucy Turnbull, AO Dr Russell Howard Mr Pete Meyers Mr Marc Voigt Mr Grant Chamberlain Full Board Remuneration Committee Audit and Risk Committee Attended Held Attended Held Attended Held 3 5 5 5 2 3 5 5 5 2 1 1 1 – – 1 1 1 – – – 2 2 – 2 – 2 2 – 2 Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. 13 Directors’ Report continued Management directory Ms Deanne Miller, Chief Operating Officer, General Counsel & Company Secretary Ms Miller has broad commercial experience having held legal, investment banking, regulatory compliance and tax advisory positions, including, Legal Counsel at RBC Investor Services, Associate Director at Westpac Group, Legal & Compliance Manager at Macquarie Group, Regulatory Compliance Analyst at the Australian Securities and Investment Commission, and Tax Advisor at KPMG. She joined the Company as General Counsel and Company Secretary in October 2012 and was promoted to the role of Chief Operating Officer in November 2016. She has a Combined Bachelor of Laws (Honours) and Bachelor of Commerce, Accounting and Finance (double major) from the University of Sydney. She is admitted as a solicitor in NSW and member of the Law Society of NSW. Dr Frédéric Triebel, Chief Scientific Officer & Chief Medical Officer Frédéric Triebel, MD Ph.D., was the scientific founder of Immutep S.A. (2001) and served as the Scientific and Medical Director at Immutep from 2004. Before starting Immutep S.A., he was Professor in Immunology at Paris University. While working at Institut Gustave Roussy (IGR), a large cancer centre in Paris, he discovered the LAG-3 gene in 1990 and continued working on this research program since then, identifying the functions and medical usefulness of this molecule. He headed a research group at IGR while also being involved in the biological follow-up of cancer patients treated in Phase I/II immunotherapy trials. He was Director of an INSERM Unit from 1991 to 1996. First trained as a clinical haematologist, Prof. Triebel holds a Ph.D. in immunology (Paris University) and successfully developed several research programs in immunogenetics and immunotherapy, leading to 144 publications and 16 patents. 14 Annual Report 2022 Immutep Limited Directors’ Report continued Remuneration report (Audited) The Directors are pleased to present the 2022 remuneration report which sets out remuneration information for Immutep Limited’s Non-Executive Directors, Executive Directors, and key management personnel. Directors and key management personnel disclosed in this report Name Position Dr Russell Howard Non – Executive Chairman Mr Pete Meyers Mr Marc Voigt Non – Executive Director and Deputy Chairman Executive Director & Chief Executive Officer Mr Grant Chamberlain Non - Executive Director Ms Lucy Turnbull, AO Non - Executive Director Key management personnel Ms Deanne Miller Chief Operating Officer, General Counsel & Company Secretary Dr Frédéric Triebel Chief Scientific Officer & Chief Medical Officer The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Service agreements D Share-based compensation A. Principles used to determine the nature and amount of remuneration Remuneration Policy Remuneration of all Executive and Non-Executive Directors and Officers of the Company is determined by the Remuneration Committee. Remuneration Governance The Remuneration Committee is a committee of the board. It is primarily responsible for making recommendations to the board on: – – – – non-Executive Director fees remuneration levels of executive directors and other key management personnel the over-arching executive remuneration framework and operation of the incentive plan, and key performance indicators (KPI) and performance hurdles for the executive team. Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company. The Corporate Governance Statement provides further information on the role of this committee. Non-Executive Directors’ fees Non-executive directors’ remuneration are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $500,000 per annum and was approved by shareholders at the annual general meeting on 26 November 2010. The remuneration paid to each director is inclusive of committee fees. No retirement benefits are payable other than statutory superannuation, if applicable. The 4th edition of the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council (Council) specifies that it is generally acceptable for non-executive directors to receive securities as part of their remuneration to align their interest with the interests of other security holders, however non-executive directors should not receive performance-based remuneration as it may lead to bias in their decision making and compromise their objectivity. Accordingly, as a means of attracting and retaining talented individuals, given the fiscal constraints of a development stage company, the Board has chosen to grant equity in the form of performance rights which vest based only on meeting continuous service conditions. Non-Executive Directors do not receive performance-based bonuses and prior shareholder approval is required to participate in any issue of equity. 15 Directors’ Report continued Executive remuneration policy and framework In determining executive remuneration, the board aims to ensure that remuneration practices are: – – – competitive and reasonable, enabling the Company to attract and retain key talent from both the domestic and international marketplaces, aligned to the Company’s strategic and business objectives and the creation of shareholder value, transparent, and acceptable to shareholders. The executive remuneration framework has three components: – base pay and benefits, including superannuation, social security payments and health insurance – – short-term performance incentives, and long-term incentives through participation in employee option plans and the grant of performance rights. Executive remuneration mix In accordance with the Company’s objective to ensure that executive remuneration is aligned to Company performance, a portion of the executives’ target pay is “at risk”. Base pay and benefits Executives receive their base pay and benefits structured as a total employment cost (TEC) package which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion. Executives are offered a competitive base pay that comprises the fixed component of pay and rewards. Independent remuneration information is obtained from sources such as independent salary surveys to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is reviewed annually to ensure the executive’s pay is competitive with the market. In order to obtain the experience required to achieve the Company’s goals, it has been necessary to recruit management from the international marketplace. Accordingly, executive pay is also viewed in light of the market from which our executives are recruited in order to be competitive with the relevant market. An executive’s pay is also reviewed on promotion. There are no guaranteed base pay increases included in any executives’ contracts. Superannuation benefits are paid on behalf of Australian based executives. At this stage of the Company’s development, shareholder return is enhanced by the achievement of milestones in the development of the Company’s products. The Company’s Remuneration Policy is not directly based on its financial performance, rather on industry practice, given the Company operates in the biotechnology sector and the Company’s primary focus is research activities with a long-term objective of developing and commercialising the research & development results. At senior management level, performance pay is partly determined by achieving successful capital raising milestones to support its clinical programs and the achievement of clinical milestones and business development activities in a manner that aligns the executive’s performance pay with value creation for shareholders. The Company envisages its earnings will remain negative whilst the Company continues in the research and development phase. Shareholder wealth reflects this speculative and volatile market sector. Short-term incentives Executives have the opportunity to earn an annual short-term incentive (STI) depending on their accountabilities and impact on the organisation. STIs may be awarded at the end of a performance review cycle for meeting group and individual milestone achievements that align to the Company’s strategic and business objectives at the discretion of the board. The remuneration committee is responsible for determining the amount of STI to be awarded. To assist in this assessment, the committee receives reports on performance from management. The committee has the discretion to adjust short-term incentives downwards in light of unexpected or unintended circumstances. In the current pre-commercialisation stage of the Company’s development, it is the Board’s preference to issue non-cash STIs except in unusual circumstances. Non-cash STIs are granted under the Executive Incentive Plan (EIP) which was approved by shareholders at the 2021 Annual General Meeting. In light of our global operations the Board adopted the Company’s incentive arrangements to ensure that it continues to retain and motivate key executives in a manner that is aligned with shareholders’ interests. The Company’s ‘umbrella’ EIP was adopted to allow eligible executives to apply for the grant of performance rights and/or options. Equity incentives granted in accordance with the EIP Rules are designed to provide meaningful remuneration opportunities and will reflect the importance of retaining a world-class management team. The Company endeavours to achieve simplicity and transparency in remuneration design, whilst also balancing competitive market practices in the United States, France, Germany, and Australia. 16 Annual Report 2022 Immutep Limited Directors’ Report continued Long-term incentives Long-term incentives (LTI) are also provided to certain employees via the EIP. The LTI is intended to: reward high performance and to encourage a high-performance culture align the interest of executives and senior management with those of the company and shareholders – – – provide the company with the means to compete for talented staff by offering remuneration that includes an equity-based component, like many of its competitors assist with the attraction and retention of key personnel. – Executives and senior managers eligible to participate in the LTI are considered by the Board to be in roles that have the opportunity to significantly influence long-term shareholder value. The Company may issue eligible participants with performance rights which entitle the holder to subscribe for or be transferred one fully paid ordinary share of the Company for no consideration. Equity-settled performance rights carry no dividend or voting rights. The performance rights are issued to executive directors and employees for no consideration and are subject to the continuing employment and lapse upon resignation, redundancy or termination, or failure to achieve the specified performance vesting condition. The performance rights will immediately vest and become exercisable if in the Board’s opinion a vesting event occurs (as defined in the plan rules) such as a takeover bid or winding up of the Company. If the performance rights vest and are exercised, the employee receives ordinary shares in the Company for no consideration. Voting and comments made at the Company’s 2021 Annual General Meeting At the Company’s 2021 AGM 99.55% “yes” votes were cast in favour on the poll for the resolution on its remuneration report for the 2021 financial year. The Company addressed specific feedback at the AGM or throughout the year on its remuneration practices. B. Details of remuneration Amounts of remuneration Details of the remuneration of the directors and key management personnel (defined as those who have the authority and responsibility for planning, directing, and controlling the major activities of the consolidated entity) are set out in the following tables. Short-term Benefits Post- Employment Benefits Long-term Benefits Share-based Payments 30-Jun-22 Dr R Howard Mr P Meyers Mr G Chamberlain Salary and fees $ 82,192 – – Ms Lucy Turnbull 14,155 Cash bonus $ Non Monetary $ Superannuation/ Retirement benefits $ Long service leave $ Executive Performance Rights $ Non- executive Performance Rights $ Total $ – – – – – – – – 8,219 – – 1,415 – – – – – – – – – – 95,1911 185,602 102,2192 102,219 72,4703 40,3544 72,470 55,924 406,7105 – 943,296 Mr M Voigt 427,989** 84,472 24,125# Other Key Management Personnel Dr F Triebel Ms D Miller 264,212* 19,410 122,021# 242,550*** 60,000 – 5,856 32,121 – 232,7166 13,091 161,0976 – – 644,215 508,859 1,031,098 163,882 146,146 47,611 13,091 800,523 310,234 2,512,585 * ** *** # The cash salary for Dr Triebel remains the same as FY 2021. The variances are from the foreign currency translation. The cash salary for Mr Voigt increased by EUR13.1k p.a. effective July 2021. The cash salary for Ms Miller increased by AUD11.5k p.a. effective July 2021. Non-monetary benefits include compulsory employer funded social security contributions ($24,125 for Mr M Voigt and $122,021 for Dr F Triebel) which are paid directly by the Company to Government authorities in line with French and German regulations. 17 Directors’ Report continued Dr Russell Howard was issued 1,000,000 performance rights to vest over 4 tranches in accordance with shareholder approval received at the AGM on 16 November 2018. The 1,000,000 performance rights were granted in lieu of additional cash fees. As indicated in the 2018 AGM notice of meeting, the total number of performance rights proposed by the Company was calculated based on 4 years of director’s fees at $60,000 p.a. divided by $0.24 (being the 5 day VWAP up to and including 15 December 2017). However, the fair value of Dr Howard’s performance rights for the purposes of this financial report reflects the prevailing share price as at the date of shareholder approval. The first tranche of 250,000 performance rights vested on 1 December 2018 (being for continued service from 18 November 2017 to 17 November 2018). The second tranche of 250,000 performance rights vested on 1 December 2019 (being for continued service from 18 November 2018 to 17 November 2019). The third tranche of 250,000 performance rights vested on 1 December 2020 (being for continued service from 18 November 2019 to 17 November 2020). The final 250,000 rights vested on 1 December 2021 (being continued service from 18 November 2020 to 17 November 2021). On 1 December 2021, Dr Russell Howard was issued 339,621 performance rights to vest over 3 tranches in lieu of additional cash fees, in accordance with shareholder approval received at the AGM on 26 November 2021. As indicated in the 2021 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $60,000 p.a. divided by $0.53 (being the 5-day VWAP up to and including 21 September 2021). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 113,207 performance rights will vest on 1 December 2022 (being for service from 1 December 2021 to 30 November 2022). The second tranche of 113,207 performance rights will vest on 1 December 2023 (being for service from 1 December 2022 to 30 November 2023). The third tranche of 113,207 performance rights will vest on 1 December 2024 (being for service from 1 December 2023 to 30 November 2024). On 2 December 2019, Mr Pete Meyers was issued 1,500,000 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 1 November 2019. As indicated in the 2019 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $105,000 p.a. divided by $0.21 (being the closing share price on 14 August 2019). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 500,000 performance rights vested on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 500,000 performance rights due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022). The third tranche of 500,000 performance rights due to vest 1 October 2023 (being for service from 1 October 2022 to 30 September 2023). On 6 November 2020, Mr Grant Chamberlain was issued 1,350,000 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 27 October 2020. As indicated in the 2020 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $90,000 p.a. divided by $0.20 (being the closing share price on 18 August 2020). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 450,000 performance rights vested on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 450,000 performance rights that were due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022) was gifted to Grant’s estate following his death on 28 January 2022 as approved by the Board of Directors and have been recognised to be fully vested as at 30 June 2022. The third tranche of 450,000 performance rights (being for service from 1 October 2022 to 30 September 2023) have been cancelled. Ms Lucy Turnbull will be issued 457,832 performance rights to vest over 4 tranches in lieu of cash for her services as a non-executive director, subject to shareholder approval at the 2022 AGM. As indicated in the Appendix 3X released to ASX on the date of Ms Turnbull’s appointment on 25 February 2022, the number of performance rights was calculated based on 3.76 years of directors’ fees at $45,000 p.a. divided by $0.37(being the 5-day VWAP up to and including 18 February 2022). However, the future fair value of the performance rights will be revised to reflect the actual prevailing share price as at the date of shareholder approval. The first tranche of 92,966 performance rights will vest on 1 December 2022 (in recognition of service from 25 February 2022 to 30 November 2022). The second tranche of 121,622 performance rights will vest on 1 December 2023 (in recognition of service from 1 December 2022 to 30 November 2023). The third tranche of 121,622 performance rights will vest on 1 December 2024 (in recognition of service from 1 December 2023 to 30 November 2024). The fourth tranche of 121,622 performance rights will vest on 1 December 2025 (in recognition of service from 1 December 2024 to 30 November 2025). Mr Marc Voigt was issued 3,600,000 performance rights to vest over 3 tranches, in accordance with shareholder approval received at the AGM on 1 November 2019. One-third vested on 1 October 2020; One-third vested on 1 October 2021 and One-third is due to vest on 1 October 2022. Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. On 1 December 2021, Mr Marc Voigt was issued 3,600,000 performance rights to vest over 3 tranches, in accordance with shareholder approval received at the AGM on 26 November 2021. One-third will vest on 1 October 2023; one-third will vest on 1 October 2024 and one-third is due to vest on 1 October 2025. Vesting is contingent upon the employee being continuously employed in good standing through the vesting period and dependent upon Mr Voigt meeting KPIs as determined by the Board. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. For vesting details of the other Performance Rights please refer to Section D on Share-based compensation below. On 3 October 2019, Ms Deanne Miller and Dr Frederic Triebel were issued 1,800,000 and 2,700,000 performance rights respectively under the Executive Incentive Plan (EIP). The vesting date for the Performance Rights issued to Ms D Miller and Dr F Triebel during the year are as follows: One-third vested on 1 October 2020; one -third vested on 1 October 2021 and one-third is due to vest on 1 October 2022. On 1 December 2021, Ms Deanne Miller and Dr Frederic Triebel were issued 1,800,000 and 2,700,000 performance rights respectively under the Executive Incentive Plan (EIP). The vesting date for the Performance Rights issued to Ms D Miller and Dr F Triebel during the year are as follows: One-third will vest on 1 October 2023; one -third will vest on 1 October 2024 and one-third is due to vest on 1 October 2025. Vesting is contingent upon the executives being continuously employed in good standing through the vesting period and meeting KPIs. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. 1 2 3 4 5 6 18 Annual Report 2022 Immutep Limited Directors’ Report continued KPIs for executive KMPs are related to the following: Mr Marc Voigt Sourcing and conversion of business development opportunities; – – Managing and securing funds to achieve company goals; – Effective management of international stakeholder communications within an ASX & NASDAQ dual listed environment; and – Pre-clinical and clinical trials and global organisational growth. Dr Frederic Triebel – Medical objectives relating to the clinical trials, regulatory affairs and manufacturing; – – Scientific objectives relating to preclinical development and collaborations with external parties; and Investor relations objectives to assist with raising awareness and understanding of the Company’s LAG-3 candidates. Ms Deanne Miller – Compliance objectives relating to management of legal and regulatory obligations and communications within an ASX & NASDAQ dual listed environment; – Corporate development objectives relating to the management of key relationships and communications with collaboration partners; and Investor relations and financial objectives to support execution of company goals. – For vesting details of the other Performance Rights please refer to Section D on Share-based compensation below. Short-term Benefits Post- Employment Benefits Long-term Benefits Share-based Payments 30-Jun-21 Dr R Howard Mr P Meyers Mr G Chamberlain Salary and fees $ 82,192 – – Cash bonus $ Non Monetary $ Super- annuation $ Long service leave $ Executive Performance Rights* $ Non- executive Performance Rights*** $ Total $ – – – – – – 7,808 – – – – – – – – – – 53,4521 143,452 113,5082 113,508 164,9483 164,948 437,8854 – 994,587 Mr M Voigt 408,593** 123,942 24,167# Other Key Management Personnel Dr F Triebel Ms D Miller 271,522* – 163,620# 118,270 – 305,2185 225,500*** 100,000 – 30,923 9,059 203,4795 – – 858,630 568,961 987,807 223,942 187,787 157,001 9,059 946,582 331,908 2,844,086 * The cash salary for Dr Triebel remains the same as FY 2020. The variances are from the foreign currency translation. ** The cash salary for Mr Voigt increased by EUR12.5k p.a. effective January 2021. *** The cash salary for Ms Miller increased by AUD 11k p.a. effective January 2021. # 1 Non-monetary benefits include compulsory employer funded social security contributions ($24,167 for Mr M Voigt and $163,620 for Dr F Triebel) which are paid directly by the Company to Government authorities in line with French and German regulations. Dr Russell Howard was issued 1,000,000 performance rights to vest over 4 tranches in accordance with shareholder approval received at the AGM on 16 November 2018. The 1,000,000 performance rights were granted in lieu of additional cash to compensate Dr Howard for his additional responsibilities due to his elevation to the role of Chairman following the retirement of the previous Chairman from the date of the 2017 AGM. As explained in the Appendix 3Y for Dr Howard released to ASX on 22 December 2017 and the 2018 AGM notice of meeting, the total number of performance rights proposed by the Company was calculated based on 4 years of director’s fees at $60,000 p.a. divided by $0.24 (being the 5 day VWAP up to and including 15 December 2017). However, the fair value of Dr Howard’s performance rights for the purposes of this financial report reflects the prevailing share price as at the date of shareholder approval of his performance rights, in accordance with the applicable accounting standards. The first tranche of 250,000 performance rights vested on 1 December 2018 (being for continued service from 18 November 2017 to 17 November 2018). The second tranche of 250,000 performance rights vested on 1 December 2019 (being for continued service from 18 November 2018 to 17 November 2019). The third tranche of 250,000 performance rights vested on 1 December 2020 (being for continued service from 18 November 2019 to 17 November 2020). The final 250,000 rights will vest on 1 December 2021 (being continued service from 18 November 2020 to 17 November 2021). 19 Directors’ Report continued 2 3 4 5 Mr Pete Meyers was issued 1,002,335 performance rights to vest over 4 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 25 November 2016. As indicated in the 2016 AGM notice of meeting, the number of performance rights was calculated based on 3.67 years of directors’ fees at $105,000 p.a. divided by $0.384 (being the 5-day VWAP up to and including 9 September 2016). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 181,425 performance rights vested on 1 October 2017 (being for service from 1 February 2017 to 30 September 2017). The second tranche of 273,636 performance rights vested on 1 October 2018 (being for service from 1 October 2017 to 30 September 2018). The third tranche of 273,637 performance rights vested on 1 October 2019 (being for service from 1 October 2018 to 30 September 2019). The final 273,637 performance rights vested on 1 October 2020 (being for service from 1 October 2019 to 30 September 2020). On 2 December 2019, Mr Pete Meyers was issued 1,500,000 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 1 November 2019. As indicated in the 2019 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $105,000 p.a. divided by $0.21 (being the closing share price on 14 August 2019). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 500,000 performance rights (Post share consolidation) will vest on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 500,000 performance rights due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022). The third tranche of 500,000 performance rights due to vest 1 October 2023 (being for service from 1 October 2022 to 30 September 2023). Mr G Chamberlain was issued 1,327,236 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 17 November 2017. As indicated in the 2017 AGM notice of meeting, the number of performance rights was calculated based on 3.12 years of directors’ fees at $90,000 p.a. divided by $0.2111 (being the 5-day VWAP up to and including 21 August 2017). However, the fair value of the performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 473,929 performance rights vested on 1 October 2018 (being for service from 21 August 2017 to 30 September 2018). The second tranche of 426,653 performance rights vested on 1 October 2019 (being for service from 1 October 2018 to 30 September 2019). The third tranche of 426,654 performance rights vested on 1 October 2020 (being for service from 1 October 2019 to 30 September 2020). On 6 November 2020, Mr Grant Chamberlain was issued 1,350,000 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 27 October 2020. As indicated in the 2020 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $90,000 p.a. divided by $0.20 (being the closing share price on 18 August 2020). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 450,000 performance rights will vest on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 450,000 performance rights due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022). The third tranche of 450,000 performance rights due to vest 1 October 2023 (being for service from 1 October 2022 to 30 September 2023). On 2 December 2019, Mr Marc Voigt was issued 3,600,000 performance rights to vest over 3 tranches, in accordance with shareholder approval received at the AGM on 1 November 2019. One-third vested on 1 October 2020; One-third is due to vest on 1 October 2021 and One-third is due to vest on 1 October 2022. Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. For vesting details of the other Performance Rights please refer to Section D on Share-based compensation below. On 3 October 2019, Ms Deanne Miller and Dr Frederic Triebel were issued 1,800,000 and 2,700,000 performance rights respectively under the Executive Incentive Plan (EIP). The vesting date for the Performance Rights issued to Ms D Miller and Dr F Triebel during the year are as follows: One-third vested on 1 October 2020 to Ms D Miller and Dr F Triebel; One -third is due to vest on 1 October 2021 to Ms D Miller and Dr F Triebel and one-third is due to vest on 1 October 2022 to Ms D Miller and Dr F Triebel. Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. For vesting details of the other Performance Rights please refer to Section D on Share-based compensation below. The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Name 2022 2021 2022 2021 2022 2021 Fixed remuneration At risk – STI At risk – LTI Non-Executive directors Dr R Howard Mr Pete Meyers Ms Lucy Turnbull Executive directors Mr M Voigt Other Key Management Personnel 100% 100% 100% 100% 100% 100% – – – – – – 48% 44% 9% 12% 43% 44% Dr F Triebel Ms D Miller 60% 57% 51% 47% 3% 12% – 17% 37% 31% 49% 36% C. Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. 20 Annual Report 2022 Immutep Limited Directors’ Report continued The service agreements specify the components of remuneration, benefits, and notice periods. Participating in the STI and LTI plans is subject to the Board’s discretion. Compensation paid to key management personnel is determined by the Remuneration Committee on an annual basis with reference to market salary surveys. Determination of compensation for Non-Executive Directors is detailed on pages 15, 16, and 17 of the directors’ report. Details of the current terms of these agreements are below. Unless stated otherwise, all salaries quoted below are as at 30 June 2022. Mr Marc Voigt - Executive Director & CEO Agreement commenced: 9 July 2014 Details The initial term was for a period of 3 years. This term was subsequently extended for a further 3 years and extended again for an additional term that will expire on 9 July 2026, unless terminated earlier by either party in accordance with the Agreement. Each party is to provide at least 6 months’ notice of its intention to extend the term of the contract. The contract can be terminated by the company giving 12 months’ notice or by Marc giving 6 months’ notice. Immutep may make payments in lieu of the period of notice, or for any unexpired part of that notice period. Base salary EUR 275,625 Ms Deanne Miller - Chief Operating Officer, General Counsel & Company Secretary Agreement commenced: 17 October 2012 Details The agreement can be terminated with 6 months’ notice. The termination terms are payment of base salary in lieu of notice period. Base salary AUD 242,550 Dr Frédéric Triebel - Chief Scientific Officer & Chief Medical Officer Agreement commenced: 12 December 2014 Details Each of the parties may terminate the employment contract and the present Amendment, subject to compliance with the law and the Collective Bargaining Agreement (“CBA”) and notably to a 6-month notice period as set forth in the CBA. The party which fails to comply with the notice period provisions shall be liable to pay the other an indemnity equal to the salary for the remainder of the notice period. Base salary EUR 170,040 Under the cash bonus scheme approved by the Board of directors in February 2020, Mr Marc Voigt, Dr Frederic Triebel and Ms Deanne Miller are each entitled to a cash bonus of A$300,000 conditional on meeting predetermined KPIs that are designed to support our corporate strategy to develop product candidates to sell, license or partner with large pharmaceutical companies at key value inflection points or on a change of control. As at 30 June 2022, no obligation has arisen for recognition. Key management personnel have no entitlement to termination payments in the event of removal for misconduct or gross negligence. D. Share-based compensation Issue of shares There were no shares issued to directors and key management personnel as part of compensation during the year ended 30 June 2022. During the year 3,200,000 performance rights and options were exercised and converted into ordinary shares. Options There are no options which were granted in prior years which affected remuneration in this financial year or future reporting years. Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share. Shares provided on exercise of remuneration options No ordinary shares in the Company have been issued as a result of the exercise of remuneration options by a director. 21 Directors’ Report continued Performance rights The terms and conditions of each grant of performance rights affecting remuneration of key management personnel in this financial year or future reporting years are as follows. All performance rights movement and fair value in the table are shown on post share consolidation basis. Grant date ** 25 Nov 16(b) 17 Nov 17(b) 16 Nov 18(b) 16 Nov 18(b) 3 Oct 19(b) 3 Oct 19(b) 3 Oct 19(b) 1 November 19(b) 1 November 19(b) 1 November 19(b) 1 November 19(b) 1 November 19(b) 1 November 19(b) 27 October 20 (b) 27 October 20 (b) 27 October 20 (b) 1 Dec 21(a) 1 Dec 21(a) 1 Dec 21(a) 1 Dec 21(b) 1 Dec 21(b) 1 Dec 21(b) 1 Dec 21(a) 1 Dec 21(a) 1 Dec 21(a) Type of performance right granted Vesting date and exercisable date Number of performance rights*** Value per right at grant date*** $ % Vested and exercised 30 June 2022 Fixed short-term benefits 1 Oct 2020 273,637 LTI – Tranche 4 1 Oct 2020 426,654 LTI – Tranche 3 1 Dec 2020 250,000 LTI – Tranche 4 1 Dec 2021 250,000 LTI – Tranche 1 1 Oct 2020 1,500,000 LTI – Tranche 2 1 Oct 2021 1,500,000 LTI – Tranche 3 1 Oct 2022 1,500,000 LTI – Tranche 1 1 Oct 2021 500,000 LTI – Tranche 2 1 Oct 2022 500,000 LTI – Tranche 3 1 Oct 2023 500,000 LTI – Tranche 1 1 Oct 2020 1,200,000 LTI – Tranche 2 1 Oct 2021 1,200,000 LTI – Tranche 3 1 Oct 2022 1,200,000 LTI – Tranche 1 1 Oct 2021 450,000 LTI – Tranche 2 1 Oct 2022 450,000* LTI – Tranche 3 1 Oct 2023 450,000* LTI – Tranche 1 1 Oct 2023 1,500,000 LTI – Tranche 2 1 Oct 2024 1,500,000 LTI – Tranche 3 1 Oct 2025 1,500,000 LTI – Tranche 1 LTI – Tranche 2 LTI – Tranche 3 1 Dec 2022 1 Dec 2023 1 Dec 2024 113,207 113,207 113,207 LTI – Tranche 1 1 Oct 2023 1,200,000 LTI – Tranche 2 1 Oct 2024 1,200,000 LTI – Tranche 3 1 Oct 2025 1,200,000 0.380 0.240 0.390 0.390 0.260 0.260 0.260 0.280 0.280 0.280 0.280 0.280 0.280 0.255 0.255 0.255 0.490 0.490 0.490 0.490 0.490 0.490 0.490 0.490 0.490 100 100 100 100 100 100 – 100 – – 100 – – 100 – – – – – – – – – – – Performance hurdles based on individual KPIs have been set for performance rights granted. (a) (b) No performance hurdles have been set with respect to these performance rights granted. * The second tranche of 450,000 performance rights that were due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022) was gifted to Grant’s estate following his death on 28 January 2022 as approved by the Board of Directors and have been recognised to be fully vested as at 30 June 2022. The third tranche of 450,000 performance rights (being for service from 1 October 2022 to 30 September 2023) have been cancelled. In addition to the performance hurdles set, the participant must be employed by the company on the vesting date. Performance rights granted under the plan carry no dividend or voting rights. When exercisable, each performance right is convertible into one ordinary share. On 5 November 2019, there was a 10 to 1 share consolidation. All performance rights and fair value in the table above have therefore been adjusted accordingly. * *** 22 Annual Report 2022 Immutep Limited Directors’ Report continued Details of bonuses and share-based compensation Details of performance rights over ordinary shares in the Company provided as remuneration to each director and each of the key management personnel are set out below. The table further shows the percentages of the options granted under the Employee Option Plan that vested and/or were forfeited during the year. For each cash bonus and grant of performance rights included in the tables on pages 17 to 21, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the vesting criteria is set out below. Cash bonus Share-based compensation benefits (performance rights) For- feited % Paid % Year granted No Granted (A) Value of rights at grant date $ Vested % Number of rights vested/ exercised during the year (A) Value of rights at exercise date***** $ – 2018* 1,000,000 390,000 100% 250,000 118,750 2021* 339,621 166,414 – – – 2019** 1,500,000 420,000 33% 500,000 267,500 Name Mr R Howard Mr R Howard Mr P Meyers Mr G Chamberlain – – – – – – Mr M Voigt 100% 2019*** 3,600,000 1,008,000 67% Mr M Voigt 2021**** 3,600,000 1,764,000 – – – – – Dr F Triebel 100% – 2019*** 2,700,000 702,000 67% 900,000 481,500 Dr F Triebel 2021**** 2,700,000 1,323,000 Ms D Miller 100% – 2019*** 1,800,000 468,000 67% 600,000 321,000 Ms D Miller 2021**** 1,800,000 882,000 For- feited % Financial years in which rights may vest – – – 2019, 2020, 2021 2022, 2023, 2024 2021, 2022 & 2023 – – – 2021, 2022 & 2023 2023, 2024, 2025 2021, 2022 & 2023 2023, 2024, 2025 2021, 2022 & 2023 2023, 2024, 2025 2020 1,350,000 344,249 33% 450,000 240,750 33.3% 2022# * ** Dr Russell Howard was issued 1,000,000 performance rights in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 16 November 2018. The first tranche of 250,000 performance rights vested on 1 December 2018 (being for continued service from 18 November 2017 to 17 November 2018). The second tranche of 250,000 performance rights vested on 1 December 2019 (being for continued service from 18 November 2018 to 17 November 2019). The third tranche of 250,000 performance rights vested on 1 December 2020 (being for continued service from 18 November 2019 to 17 November 2020). The final 250,000 rights vested on 1 December 2021 (being continued service from 18 November 2020 to 17 November 2021). On 1 December 2021, Dr Russell Howard was issued 339,621 performance rights in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 26 November 2021. The first tranche of 113,207 performance rights will vest on 1 December 2022 (being for continued service from 1 December 2021 to 30 November 2022). The second tranche of 113,207 performance rights will vest on 1 December 2023 (being for continued service from 1 December 2022 to 30 November 2023). The third tranche of 113,207 performance rights will vest on 1 December 2024 (being for continued service from 1 December 2023 to 30 November 2024). Mr Pete Meyers was issued 1,500,000 performance rights to vest over 3 tranches in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 1 November 2019. As indicated in the 2019 AGM notice of meeting, the number of performance rights was calculated based on 3 years of directors’ fees at $105,000 p.a. divided by $0.21 (being the closing share price on 14 August 2019). However, the fair value of his performance rights reflects the prevailing share price as at the date of shareholder approval. The first tranche of 500,000 performance rights vested on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 500,000 performance rights will vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022). The third tranche of 500,000 performance rights will vest on 1 October 2023 (being for service from 1 October 2022 to 30 September 2023). 23 Directors’ Report continued *** Performance rights were granted under the EIP. Long-term incentive performance rights vest in three tranches as follows: – – – 1/3 vested on 1 October 2020 1/3 vested on 1 October 2021 1/3 are due to vest on 1 October 2022 Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. **** Performance rights were granted under the EIP. Long-term incentive performance rights vest in three tranches as follows: – 1/3 are due to vest on 1 October 2023 – – 1/3 are due to vest on 1 October 2024 1/3 are due to vest on 1 October 2025 Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s contract. ***** The value at the exercise date of performance rights that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the performance rights at that date. # The first tranche of 450,000 performance rights vested on 1 October 2021 (being for service from 1 October 2020 to 30 September 2021). The second tranche of 450,000 performance rights that were due to vest on 1 October 2022 (being for service from 1 October 2021 to 30 September 2022) was gifted to Grant’s estate following his death on 28 January 2022 as approved by the Board of Directors and have been recognised to be fully vested as at 30 June 2022. The third tranche of 450,000 performance rights (being for service from 1 October 2022 to 30 September 2023) have been cancelled. Equity instruments held by key management personnel The tables on the following page show the number of: (i) Options over ordinary shares in the company (ii) Performance rights over ordinary shares in the company Shares in the company that were held during the financial year by key management personnel of the Group, including their close family members and entities related to them. There were no shares granted during the reporting period as compensation. (i) Option holdings There were no options holdings held and no movements during the financial year ended 30 June 2022. (ii) Performance Rights holdings Balance at start of the year Granted Exercised Other Changes Balance at end of the year Vested and exercisable Unvested 2022 Performance rights over ordinary shares Dr Russell Howard 250,000 339,621 (250,000) Mr Pete Meyers 1,500,000 – (500,000) Mr Marc Voigt 2,400,000 3,600,000 – – – – 339,621 1,000,000 – – 339,621 1,000,000 6,000,000 1,200,000 4,800,000 Mr Grant Chamberlain 1,350,000 – (450,000) (900,000)* – Ms Deanne Miller 1,200,000 1,800,000 (600,000) Dr Frédéric Triebel 1,800,000 2,700,000 (900,000) – – 2,400,000 3,600,000 – – – – 2,400,000 3,600,000 8,500,000 8,439,621 (2,700,000) (900,000) 13,339,621 1,200,000 12,139,621 * The change during the year represents derecognition due to the cessation of the director’s position. 24 Annual Report 2022 Immutep Limited Directors’ Report continued (iii) Ordinary Share holdings 2022 Ordinary shares Dr Russell Howard Mr Pete Meyers Mr Marc Voigt Mr Grant Chamberlain Ms Lucy Turnbull Ms Deanne Miller Dr Frédéric Triebel Total ordinary shares ADRs Mr Marc Voigt Total ADR Received during the year on exercise of performance rights Received during the year on the exercise of options Balance at start of the year Other changes during the year# Balance at end of the year 750,000 250,000 1,774,395 500,000 8,847,445 – 1,728,023 450,000 – – 2,963,892 600,000 6,853,764 900,000 22,917,519 2,700,000 45 45 – – – – – – – – – – – – – – – 1,000,000 2,274,395 8,847,445 (2,178,023)* – 3,284,126** 3,284,126 (796,587) 2,767,305 – 7,753,764 309,516 25,927,035 – – 45 45 # * ** Other changes during the year includes on market acquisitions and/or disposals The change during the year represents derecognition due to the director’s position. The change during the year represents Ms Lucy Turnbull’s shareholding before she became director on 25 February 2022. The shareholding including 302,500 shares held indirectly. This concludes the remuneration report, which has been audited. Shares under option Unissued ordinary shares of Immutep Limited under option at the date of this report are as follows: Date options granted 5 August 2015 4 July 2017 Expiration Date 4 August 2025 5 January 2023 Exercise Price Number** Listed/ Unlisted Options $0.248 847,600 Unlisted US$0.249* 2,065,070* Unlisted 2,912,670 No option holder has any right under the options to participate in any other share issue of the Company or any other entity. * 1 American Depository Shares (ADS) listed on NASDAQ equals 10 ordinary shares listed on ASX thus the number of warrants on issue has been grossed up and the exercise price adjusted accordingly in the above table to be comparable. Indemnity and insurance of officers During the financial year, the Company paid a premium to insure the directors and officers of the Company and its controlled entities. 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. 25 Directors’ Report continued Indemnity and insurance of auditor The Company has not during or since the end of this 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. 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 The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. The board of directors has considered the position and, in accordance with advice received from the Audit and Risk Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: – – all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants. During the financial year 2022 and 2021, no fee was paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms. 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 27. Auditor PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors. On behalf of the directors Dr Russell Howard Chairman Sydney 31 August 2022 26 Annual Report 2022 Immutep Limited Auditor’s Independence Declaration 27 Corporate Governance Statement CORPORATE GOVERNANCE STATEMENT The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and improve the governance framework and practices in place to ensure they meet the interests of shareholders. The Company complies with the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations – 4th edition (the Principles). A copy of the company’s Corporate Governance Statement is available at the company’s website at the following address https://www.immutep.com/about-us/corporate- governance.html. ESG REPORT At Immutep we are committed to improving the lives of our patients, employees and communities. Whilst our product candidates and the industry we work within have the potential to make a real difference to people’s lives, we are mindful that the paths we take to develop our candidates and how we conduct our business are just as important. Hence, we are progressing our ESG initiatives and have implemented this ESG report to explain to our stakeholders how we are addressing and tracking on a range of Environmental, Social and Governance matters. A copy of the company’s ESG Report is available at the company’s website at the following address https://www.immutep. com/about-us/corporate-governance.html. 28 Annual Report 2022 Immutep Limited Contents Consolidated Statement of Comprehensive Income ...... 30 16 Non-current liabilities – convertible note ................ 57 Consolidated Balance Sheet ..........................................................31 17 Current liabilities – employee benefits ......................59 Consolidated Statement of Changes in Equity ....................32 18 Non-current liabilities – employee benefits ...........59 Consolidated Statement of Cash Flows ..................................33 19 Leases .........................................................................................59 Notes to the Consolidated Financial Statements ...............34 20 Equity – contributed ............................................................61 1 Significant Accounting Policies.....................................34 21 Equity – reserves and retained earnings ...................63 2 Financial Risk Management............................................44 22 Equity - dividends.................................................................64 3 Critical Accounting Judgements, Estimates and Assumptions .................................................................. 47 4 Segment reporting ..............................................................48 5 Expenses .................................................................................. 50 6 Income tax ............................................................................... 50 7 Current assets – cash and cash equivalents ...........52 8 Current receivables .............................................................52 9 Other current assets ..........................................................52 23 Key management personnel disclosures .................64 24 Remuneration of auditors ................................................66 25 Contingent liabilities ...........................................................66 26 Commitments for expenditure .....................................66 27 Related party transactions ...............................................66 28 Subsidiaries ..............................................................................66 29 Events occurring after the reporting date ............... 67 30 Reconciliation of loss after income tax to 10 Other non-current assets .................................................53 net cash used in operating activities .......................... 67 11 Non-current assets – plant and equipment ............53 31 Earnings per share ............................................................... 67 12 Non-current assets – intangibles .................................54 32 Share-based payments .....................................................68 13 Deferred tax balances ........................................................55 33 Parent entity information ................................................. 72 14 Current liabilities – trade and other payables ........56 Directors’ Declaration ........................................................................ 73 15 US warrant liability ................................................................56 Independent Auditor’s Report to the members of Immutep Limited ............................................................................ 74 General information These financial statements are the consolidated financial statements of the consolidated entity consisting of Immutep Limited and its subsidiaries. The financial statements are presented in the Australian currency. Immutep Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 33 264 George Street Australia Square Sydney NSW 2000 The financial statements were authorised for issue by the directors on 31 August 2022. The directors have the power to amend and reissue the financial statements. A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities on pages 4 to 8 and in the directors’ report on pages 9 to 26, both of which are not part of these financial statements. Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.immutep.com. 29 Consolidated Statement of Comprehensive Income for the year ended 30 June 2022 Revenue License revenue Other income Research material sales Grant income Net gain on foreign exchange Net gain on fair value movement of warrants Interest income Total revenue and other income Expenses Research & development and intellectual property expenses Corporate administrative expenses Finance costs Net loss on foreign exchange Net change in fair value of warrants Net change in fair value of convertible note liability Loss before income tax expense Income tax (expense) / benefit Loss after income tax expense for the year Other Comprehensive Income/(Loss) Items that may be reclassified to profit or loss Exchange differences on the translation of foreign operations Other comprehensive income/(loss) for the year, net of tax Total comprehensive loss for the year Loss for the year is attributable to Owners of Immutep Limited Total comprehensive loss for the year is attributable to Owners of Immutep Limited Basic loss per share Diluted loss per share Consolidated Note 30 June 2022 $ 30 June 2021 $ 170,369 – 84,018 312,841 4,459,974 3,549,965 1,228,122 591,070 224,520 – – 105,327 6,758,073 3,968,133 (31,341,576) (17,236,780) (7,210,123) (6,282,105) (92,430) (9,825) – – (507,042) (8,663,013) (324,736) (1,171,959) (32,210,792) (29,902,591) (34) (33) (32,210,826) (29,902,624) (922,327) (580,408) (922,327) (580,408) (33,133,153) (30,483,032) (32,210,826) (29,902,624) (33,133,153) (30,483,032) Cents Cents (3.79) (3.79) (5.03) (5.03) 15 5 5 15 16 6 31 31 The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 30 Annual Report 2022 Immutep Limited Consolidated Balance Sheet as at 30 June 2022 ASSETS Current assets Cash and cash equivalents Current receivables Other current assets Total current assets Non-current assets Plant and equipment Intangibles Right of use assets Other non-current assets Total non-current assets TOTAL ASSETS Current liabilities Trade and other payables Employee benefits Warrant liability Lease liability Total current liabilities Non-current liabilities Convertible note liability Warrant liability Employee benefits Lease liability Deferred tax liability Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses Equity attributable to the owners of Immutep Limited TOTAL EQUITY Consolidated Note 30 June 2022 $ 30 June 2021 $ 7 8 9 11 12 19 10 14 17 15 19 16 15 18 19 13 79,995,129 60,593,191 8,373,607 6,124,231 2,443,004 1,701,969 90,811,740 68,419,391 37,933 40,891 10,554,070 12,847,248 270,147 495,660 268,813 454,190 11,357,810 13,611,142 102,169,550 82,030,533 5,752,188 4,781,729 357,029 350,135 131,896 173,377 – 208,194 6,414,490 5,340,058 1,452,950 2,526,870 – 722,966 117,252 107,492 – 88,915 80,113 – 1,677,694 3,418,864 8,092,184 8,758,922 94,077,366 73,271,611 20 21 21 367,407,757 313,422,305 29,004,818 34,491,526 (302,335,209) (274,642,220) 94,077,366 73,271,611 94,077,366 73,271,611 The above consolidated balance sheet should be read in conjunction with the accompanying notes. 31 Consolidated Statement of Changes in Equity for the year ended 30 June 2022 Consolidated Balance at 1 July 2020 Other comprehensive income for the year, net of tax Loss after income tax expense for the year Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Contributed equity $ Reserves $ Accumulated losses $ Total equity $ 242,990,507 66,014,899 (275,706,061) 33,299,345 – – – (580,408) – (580,408) – (29,902,624) (29,902,624) (580,408) (29,902,624) (30,483,032) Contributions of equity, net of transaction costs 41,172,232 – – 41,172,232 Conversion of Convertible Notes 12,092,937 (31,073,830) 26,415,084 7,434,191 Exercise of Warrants net of transaction costs 15,595,335 – 4,551,381 20,146,716 Employee share-based payment Exercise of vested performance rights Balance at 30 June 2021 – 1,702,159 1,571,294 (1,571,294) – – 1,702,159 – 313,422,305 34,491,526 (274,642,220) 73,271,611 Other comprehensive income for the year, net of tax (922,327) – (922,327) Loss after income tax expense for the year Total comprehensive income/(loss) for the year – – – (32,210,826) (32,210,826) (922,327) (32,210,826) (33,133,153) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs 51,053,411 – – 51,053,411 Conversion of Convertible Notes 2,059,791 (5,178,972) 4,517,837 1,398,656 Exercise of Warrants net of transaction costs Employee share-based payment – – – 1,486,841 Exercise of vested performance rights 872,250 (872,250) – – – – 1,486,841 – Balance at 30 June 2022 367,407,757 29,004,818 (302,335,209) 94,077,366 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 32 Annual Report 2022 Immutep Limited Consolidated Statement of Cash Flows for the year ended 30 June 2022 Cash flows related to operating activities Payments to suppliers and employees (inclusive of goods and services tax) (33,838,950) (19,514,293) Cash receipts from grant income and government incentives 3,302,200 1,313,997 Consolidated Note 30 June 2022 $ 30 June 2021 $ Cash receipts from license revenue Other income Interest received Advance from customers Income taxes paid Payment for interest expenses 87,816 – 86,990 322,586 224,656 112,243 – 138,312 (34) (33) (92,430) (13,154) Net cash outflows from operating activities 30 (30,229,752) (17,640,342) Cash flows related to investing activities* Payments for plant and equipment Net cash outflows from investing activities Cash flows related to financing activities* Proceeds from issue of shares Proceeds from exercising of warrants Share issue transaction costs Principal elements of lease payments Advance payment from shareholders for SPP Net cash inflows from financing activities Net increase in cash and cash equivalents Effect of exchange rate on cash and cash equivalent Cash and cash equivalents at the beginning of the year 11 (22,914) (15,601) (22,914) (15,601) 20 15 20 19 52,975,330 43,307,232 – 11,266,430 (2,427,155) (2,144,359) (222,536) (214,378) – 465,000 50,325,639 52,679,925 20,072,973 35,023,982 (671,035) (752,838) 60,593,191 26,322,047 Cash and cash equivalents at the end of the year 7 79,995,129 60,593,191 * Non-cash financing activities relate mainly to the following: – – – Fair value movement of convertible notes disclosed in Note 16 to the financial statements Fair value movement of warrant liability disclosed in Note 15 to the financial statements Exercise of vested performance rights for no cash consideration disclosed in Note 21 to the financial statements The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 33 Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of the Company and its subsidiaries. Whilst COVID-19 pandemic has continued to result in significant disruptions to the global economy during the financial year ended 30 June 2022, substantial uncertainty remains over the ultimate duration and the extent of the pandemic as well as the corresponding economic impacts. These uncertainties have been incorporated into the judgements and estimates used by management in the preparation of this report, including the carrying values of the assets and liabilities, contracts and potential liabilities have been made, with no material impact to the consolidated financial statements. For the Group, the ongoing COVID-19 pandemic has not significantly increased the estimation of uncertainty in the preparation of the consolidated financial statements. The Group has business continuity procedures in place and is addressing health and safety risks whilst continuing to carry out ongoing clinical trials. The Group’s operations have been maintained with minimal disruption and have undertaken extensive additional measures to ensure the safety and wellbeing of its people, patients, suppliers, and stakeholders. (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 (‘AASB’) and the Corporations Act 2001. Immutep Limited is a for-profit entity for the purpose of preparing the financial statements. (i) Compliance with IFRS The consolidated financial statements of the Immutep Limited Group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) New standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2022 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. AASB 101 Presentation of Financial Statements The AASB issued a narrow-scope amendment to AASB 101 Presentation of Financial Statements to clarify those liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the expectations of the entity or events after the reporting date (e.g., the receipt of a waiver or a breach of covenant). The amendment also clarifies what AASB 101 means when it refers to the ‘settlement’ of a liability. Entities should reconsider their existing classification in light of the amendment and determine whether any changes are required. The Amendment should be applied for annual periods beginning on or after 1 January 2022. There is no significant impact on adopting the amendment to AASB 101. (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 2021; – AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform Phase 2 This amends AASB 9 Financial Instruments, AASB 139 Financial Instruments: Recognition and Measurement, AASB 7 Financial Instruments: Disclosures, AASB 4 Insurance Contracts and AASB 16 Leases to address issues that arise during the reform of an interest rate benchmark (IBOR), including the replacement of one benchmark with an alternative one. A number of temporary reliefs are provided for hedging relationships that are directly affected by the interest rate benchmark reform. These amendments have no impact on the financial statements as the company does not have any interest rate hedge relationships nor exposures to interest rates that are dependent on IBORs. The Group also elected to adopt the following standards and amendments early: – AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective from 1 January 2025) This amends AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures to address an inconsistency between the requirements of AASB 10 and AASB 128 in dealing with the sale or contribution of assets between an investor and its associate or joint venture. This amendment is not expected to have a significant impact on the financial statements on application. 34 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (a) Basis of preparation (continued) (iv) Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, financial assets and liabilities (including derivative financial instruments), which are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. (v) Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3. (b) Principles of consolidation 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. 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. The chief operating decision maker (CODM), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. (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 dollars, which is the Immutep Limited’s functional and presentation currency. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation. Foreign exchange gains and losses that relate to borrowings are presented in the statement of comprehensive income, within finance costs. All other foreign exchange gains and losses are presented separately in the statement of comprehensive income on a net basis. 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 available-for-sale financial assets are recognised in other comprehensive income. 35 Notes to the Consolidated Financial Statements 30 June 2022 1 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 balance sheet presented are translated at the closing rate at the date of that balance sheet income and expenses for each statement of 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 Revenue is recognised when (or as) the Group satisfies a performance obligation by transferring a promised good or service to a customer. Revenue is presented net of GST, rebates, and discounts. Performance obligations are completed at a point in time and over time. Revenue is recognised for the major business activities of the Group as follows: (i) License revenue At present, the Group is in the research and development phase of operations and license revenue earned is through milestone payments as communicated by third party research collaborators based on the progress of their on-going clinical trials and research. The Group recognizes revenues from license fees for intellectual property (IP) both at a point in time and over a period of time. The Group must make an assessment as to whether such a license represents a right-to-use the IP (at a point in time) or a right to access the IP (over time). Revenue for a right-to-use license is recognized by the Group when the licensee can use and benefit from the IP after the license term begins, e.g., the Group has no further obligations in the context of the out-licensing of a drug candidate or technology. A license is considered a right to access the intellectual property when the Group undertakes activities during the license term that significantly affect the IP, the customer is directly exposed to any positive or negative effects of these activities, and these activities do not result in the transfer of a good or service to the customer. Revenues from the right to access the IP are recognized on a straight-line basis over the license term. Milestone payments for research and development are contingent upon the occurrence of a future event and represent variable consideration. The Group’s management estimates at the contract’s inception that the most likely amount for milestone payments is zero. The most likely amount method of estimation is considered the most predictive for the outcome since the outcome is binary; e.g. achieving a specific success in clinical development (or not). The Group includes milestone payments in the total transaction price only to the extent that it is highly probable that a significant reversal of accumulated revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The transaction price is allocated to separate performance obligations based on relative standalone selling prices. If the transaction price includes consideration that varies based on a future event or circumstance (e.g., the completion of a clinical trial phase), the Group would allocate that variable consideration (and any subsequent changes to it) entirely to one performance obligation if both of the following criteria are met: – – The payment terms of the variable consideration relate specifically to the Group’s efforts to satisfy that performance obligation or transfer the distinct good or service (or to a specific outcome from satisfying that separate performance obligation). Allocating the variable amount entirely to the separate performance obligation or the distinct good or service reflects the amount of consideration to which the Group expects to be entitled in exchange for satisfying that particular performance obligation when considering all of the performance obligations and payment terms in the contract. Variable consideration is only recognised as revenue when the related performance obligation is satisfied, and the Group determines that it is probable that there will not be a significant reversal of cumulative revenue recognised in future periods. 36 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (e) Revenue recognition (continued) Other income (ii) Grant income Grants from the governments, including Australian Research and Development Rebates, France’s Crédit d’Impôt Recherche are recognised at their fair value when there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to operating costs are recognised in the Statements of Comprehensive Income as grant income. Government grants were received by the Group under various government stimulus packages (both Australian and overseas) in relation to the impacts of COVID-19. (iii) Research material sales Revenue from the sale of materials supplied to other researchers in order to conduct further studies on LAG-3 technologies is recognised at a point in time when the materials are delivered, the legal title has passed and the other party has accepted the materials. (iv) Research collaboration income Revenue from services provided in relation to undertaking research collaborations with third parties are recognised over time in the accounting period in which the services are rendered. Revenue is measured based on the consideration specified in the agreement or contract with a third party. Income tax (f) The income tax expense or benefit 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’s subsidiaries 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 for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Immutep Limited and its wholly owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. Foreign subsidiaries are taxed individually by the respective local jurisdictions. For the purposes of preparation of the financial statements, the tax position of each entity is calculated individually and consolidated as consolidated tax entity. 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. 37 Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (g) Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds it recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell 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 impairment are reviewed for possible reversal of the impairment at the end of each reporting period. (h) Cash and cash equivalents For the purpose of presentation in the 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 balance sheet. (i) Current receivables Current receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Collectability of current receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectible are written off by reducing the carrying amount. An allowance account is used when there is objective evidence that the Group will not be able to collect all amounts due. (j) Financial Instruments Recognition and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below. Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled, or expires. Classification and initial measurement of financial assets All financial assets are initially measured at fair value adjusted for transaction costs (where applicable), except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with AASB 15. Subsequent measurement of financial assets For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition: – – – financial assets at amortised cost financial assets at fair value through profit or loss financial assets at fair value through other comprehensive income Classifications are determined by both: – – The entity’s business model for managing the financial asset The contractual cash flow characteristics of the financial assets All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses. 38 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (j) Financial Instruments (continued) Financial assets at amortised cost Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL): – – they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Financial assets at fair value through profit or loss (FVPL) and financial assets at fair value through other comprehensive income (FVOCI) The Group does not hold any financial assets at fair value through profit or loss or fair value through comprehensive income. Impairment of financial assets AASB 9 requires more forward-looking information to recognise expected credit losses - the ‘expected credit losses (ECL) model’. Accordingly, the impairment of financial assets including trade receivables is being assessed using an expected credit loss model. Classification and measurement of financial liabilities The Group’s financial liabilities comprise trade and other payables, convertible notes and US warrant liabilities. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss. Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for convertible note and US warrants liabilities. All interest-related charges and, if applicable, changes in an instruments’ fair value that are reported in profit or loss are included. (k) 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 from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. (l) Compound instruments Convertible notes, including the attached options and warrants, issued to Ridgeback Capital Investments are accounted for as share based payments when the fair value of the instruments are higher than the consideration received, representing intangible benefits received from the strategic investor. The difference between the fair value and consideration received at issuance of the convertible notes and attached options and warrants is recognised immediately in profit and loss as a share-based payment charge. If options or warrants contain a settlement choice between cash or shares, this settlement choice constitutes a compound feature of the convertible notes, which triggers the separation of debt and equity components to be accounted for separately. The liability component is measured at fair value at initial recognition and subsequent changes in fair value are recognised in profit and loss. The difference between the fair value of the convertible notes and the liability component at inception is accounted as an equity element and not remeasured subsequently. (m) US warrant liability The US warrant liabilities which are viewed as debt instruments, are measured at fair value through profit or loss. These are classified as liabilities because these warrants exercise price are in a currency other than functional currency of the Company. The liability has been designated as at fair value through profit or loss on initial recognition and subsequent changes in fair value are recognised in the profit or loss. This liability is considered a derivative financial liability. Finance costs Finance costs are expensed in the period in which they are incurred. 39 Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (n) Plant and equipment Plant and equipment are stated at historical cost less depreciation less impairment (if any). Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows: – Computers – 3 years – Plant and equipment – 3-5 years – Furniture and fittings – 3-5 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 1(g)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. (o) Intangible assets Intellectual property (i) Costs incurred in acquiring intellectual property are capitalised and amortised on a straight-line basis over a period not exceeding the life of the patents, which averages 14 years. Where a patent has not been formally granted, the company estimates the life of the granted patent in accordance with the provisional application. Costs include only those costs directly attributable to the acquisition of the intellectual property. 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 1(g)). (ii) Research and development Research expenditure on internal projects is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure that could be recognised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other expenditures that do not meet these criteria are recognised as an expense as incurred. As the Company has not met the requirement under the standard to recognise costs in relation to development, these amounts have been expensed. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life. (iii) Goodwill The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The excess of the consideration transferred and the amount of any non-controlling interests in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised, but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. 40 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (p) Employee benefits (i) Short-term obligations Liabilities for wages and salaries, including non-monetary benefits and accumulating annual 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. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. (ii) Other long-term employee benefit obligations The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured at the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments 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) Retirement benefit obligations The Group does not maintain a Group superannuation plan. The Group makes fixed percentage contributions for all Australian resident employees to complying third party superannuation funds. The Group has no statutory obligation and does not make contributions on behalf of its resident employees in the USA and Germany. The Group’s legal or constructive obligation is limited to these contributions. Contributions to complying third party superannuation funds are recognised as an expense as they become payable. (iv) Share-based payments Share-based compensation benefits are provided to employees via the Executive Incentive Plan (EIP). Information relating to these schemes is set out in Note 32. The fair value of performance rights and options granted under the EIP are recognised as an employee benefits 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, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. 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-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity. (v) Termination benefits Termination benefits are payable when employment is terminated before the normal employment contract expiry date. The Group recognises termination benefits when it is demonstrably committed to terminating the employment of current employees. (vi) Bonus plan The Group recognises a liability and an expense for bonuses. The Group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation. (q) 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. 41 Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (r) Earnings per share (i) Basic earnings per share Basic earnings per share is calculated by dividing: – – the profit or loss attributable to owners of the Company by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Bonus elements have been included in the calculation of the weighted average number of ordinary shares and has been retrospectively applied to the prior financial year. (ii) Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: – – the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. (s) Goods and Services Tax (‘GST’) and other similar taxes Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the 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 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. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. (t) Leases The Group leases various offices and printer equipment. Rental contracts are typically made for fixed periods of 1 to 3 years and typically have extension options of 3 months to 1 year minimum at the discretion of either the Lessor or the Lessee. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices, wherever practicable. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes. Operating leases with a term of less than 12 months are considered as short-term leases and leases below threshold of A$12,000 are considered as low value leases. Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. During the financial year ended 30 June 2022, the expense recognised for short term leases was A$2,376 and the expense recognised for low value leases was A$9,518. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: – – – – – fixed payments (including in-substance fixed payments), less any lease incentives receivable variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date amounts expected to be payable by the Group under residual value guarantees the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. 42 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 1 Significant Accounting Policies (continued) (t) Leases (continued) The lease payments are discounted using an incremental borrowing rate as calculated by management at the commencement date and taking into consideration feedback from surveyed financial institutions on incremental borrowing rates available for the Group as a lessee and nature of each lease portfolio. Incremental borrowing rates are re-assessed on a half yearly basis and is deemed equivalent for the Group’s specific circumstances to a rate that an individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period. Right-of-use assets are measured at cost comprising the following: – – – – the amount of the initial measurement of lease liability any lease payments made at or before the commencement date less any lease incentives received any initial direct costs, and restoration costs. Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. Extension and termination options are included in a number of property and equipment leases across the Group. These are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The Group does not provide residual value guarantees in relation to leases. (u) Parent entity financial information The financial information for the parent entity, Immutep Limited, disclosed in Note 33 has been prepared on the same basis as the consolidated financial statements, except as set out below. Investments in subsidiaries (i) As disclosed in Note 33, non-current assets represent solely the investments of Immutep Limited, investments in its wholly owned subsidiaries. Investments in subsidiaries held by Immutep Limited are accounted for at cost in the separate financial statements of the parent entity. (ii) Tax consolidation legislation Immutep Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Immutep Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right. The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate for any current tax payable assumed and are compensated by the head entity for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the head entity under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements. The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the Group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities. (iii) Share-based payments The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. 43 Notes to the Consolidated Financial Statements 30 June 2022 2 Financial Risk Management The Group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group hedges its foreign exchange risk exposure arising from future commercial transactions and recognised assets and liabilities using natural hedging by holding currency that matches forecast expenditure in each of the major foreign currencies used (AUD, EUR, USD). The Group may use derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures when the Group expects a major transaction in the currency other than the major foreign currencies used by the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis and cash flow forecasting in the case of foreign exchange and aging analysis for credit risk. Risk management is carried out by senior management under policies approved by the board of directors. Management identifies, evaluates, and hedges financial risks in close co-operation with the Group’s operating units. The board provides the principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity. (a) Market risk Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and Euro. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. Management has set up a policy to manage the Company’s exchange risk within the Group companies. The Group may hedge its foreign exchange risk exposure arising from future commercial transactions and recognised assets and liabilities using forward contracts or natural hedging. The Group considers using forward exchange contracts to cover anticipated cash flows in USD and Euro periodically. This policy is reviewed regularly by directors from time to time. There were no outstanding foreign exchange contracts as at 30 June 2022 and 30 June 2021. The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows: Cash in bank Trade and other receivables Trade and other payables 30 June 2022 30 June 2021 USD EUR USD EUR 11,897,759 42,964,345 14,016,277 14,320,386 15,568 4,094,262 49,880 4,312,691 (1,068,539) (1,717,675) (690,847) (663,196) Sensitivity Based on the financial assets and liabilities held at 30 June 2022, had the Australian dollar weakened/ strengthened by 10% against the US dollar with all other variables held constant, the Group’s post-tax loss for the year would have been $1,084,479 lower/$1,084,479 higher (2021 - $1,337,531 lower/$1,337,531 higher). Based on the financial instruments held at 30 June 2022, had the Australian dollar weakened/ strengthened by 10% against the Euro with all other variables held constant, the Group’s post-tax loss for the year would have been $4,534,092 lower/$4,534,092 higher (2021 – $1,796,988 lower/$1,796,988 higher), mainly as a result of foreign exchange gains/losses on translation of Euro denominated financial instruments. Any changes in post-tax loss will have an equivalent change to equity. The US warrants financial liability will be equity settled upon exercise of the US warrants. However, as the exercise will be done with an exercise price in US dollars, there is a foreign exchange risk due to the subsequent translation to Australian dollars. Currently the Group’s exposure to other foreign exchange movements is not material. 44 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 2 Financial Risk Management (continued) (b) Credit risk Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents and receivables. Cash and cash equivalents consist primarily of deposits with banks for only independently rated parties with a minimum rating of ‘A’ according to ratings agencies are accepted. Receivables consist primarily of amounts recoverable from governments, where risk of non-recoverability is minimal. The credit quality of cash and cash equivalents and receivables are neither past due nor impaired can be assessed by reference to external credit ratings: 30 June 2022 $ 30 June 2021 $ Cash at bank and short-term bank deposits excluding restricted cash Minimum rating of A 79,995,129 60,127,906 (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash to meet obligations when due. At the end of the reporting period the deposits at call and short term deposits which mature within three months from acquisition of $79,995,129 (2021: $60,127,906 ) that are expected to readily generate cash inflows for managing liquidity risk. Management monitors rolling forecasts of the Group’s liquidity reserve cash and cash equivalents (Note 7) on the basis of expected cash flows. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these. As outlined in Note 3, the Company’s monitoring of its cash requirements extends to the consideration of potential capital raising strategies and an active involvement with its institutional and retail investor base. Maturities of financial liabilities The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for: a. all non-derivative financial liabilities, and b. net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. Contractual maturities of financial liabilities At 30 June 2022 Non-Derivatives Less than 12 months $ Between 1 and 5 years $ > 5 years $ Total contractual cash flows $ Carrying Amount $ Trade and other payables 5,752,188 – Convertible note liability (refer Note 16) – 2,234,510 178,510 108,706 5,930,698 2,343,216 – – – – 5,752,188 5,752,188 2,234,510 1,452,950 287,216 280,869 8,273,914 7,486,007 Less than 12 months $ Between 1 and 5 years $ > 5 years $ Total contractual cash flows $ Carrying Amount $ Lease liability At 30 June 2021 Non-Derivatives Trade and other payables 4,781,729 – Convertible note liability (refer Note 16) – 4,469,019 Lease liability 215,005 78,455 4,996,734 4,547,474 – – – – 4,781,729 4,781,729 4,469,019 2,526,870 293,460 288,307 9,544,208 7,596,906 45 Notes to the Consolidated Financial Statements 30 June 2022 2 Financial Risk Management (continued) (d) Fair value measurements The following table presents the Group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2022 and 30 June 2021 on a recurring basis: At 30 June 2022 Liabilities Convertible note liability Warrant liability Total liabilities At 30 June 2021 Liabilities Convertible note liability Warrant liability Total liabilities Level 1 $ Level 2 $ Level 3 $ Total $ – – – – 1,452,950 1,452,950 131,895 – 131,895 131,895 1,452,950 1,584,845 Level 1 $ Level 2 $ Level 3 $ Total $ – – – – 2,526,870 2,526,870 722,966 – 722,966 722,966 2,526,870 3,249,836 (i) Valuation techniques used to determine fair values Level 1: The fair value of financial instruments trade in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Level 2: The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities. Specific valuation techniques used to value financial instruments include: – – – – The use of quoted market prices or dealer quotes for similar instruments The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date The fair value of the remaining financial instruments is determined using discounted cash flow analysis. (ii) Fair value measurements using value techniques – – – There are no financial instruments as at 30 June 2022 under Level 1. Level 2 financial instruments consist of warrant liabilities. Refer to Note 15 for details of fair value measurement. Level 3 financial instruments consist of convertible notes. Refer to Note 16 for details of fair value measurement. 46 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 2 Financial Risk Management (continued) (d) Fair value measurements (continued) (iii) Valuation inputs and relationships to fair value For US warrant valuation inputs under Level 2, please refer to Note 15. The following table summarises the quantitative information about the significant inputs used in level 3 fair value measurements: Description Convertible note Fair value at 30 June 2022 $ Unobservable inputs 1,452,950 Face value Interest rate of note Risk adjusted interest rate Range of inputs 1,718,854 3% 15% (iv) Valuation process The convertible note has continued to be valued using a discounted cashflow model. 3 Critical Accounting Judgements, Estimates and Assumptions Estimates and judgements are continually evaluated and 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. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Grant income Grant income is based on judgements of management when determining the amount of grant income to recognise based on an assessment of qualifying expenditure and relevant rules and regulations in each tax jurisdiction. (b) Development expenditure The consolidated entity has expensed all internal development expenditure incurred during the year as the costs relate to the initial expenditure for development of biopharmaceutical products and the generation of future economic benefits is not considered probable given the current stage of development. It was considered appropriate to expense the development costs as they did not meet the criteria to be capitalised under AASB 138 Intangible Assets. (c) Liquidity The Group has experienced significant recurring operating losses and negative cash flows from operating activities since its inception. As at 30 June 2022, the Group holds cash and cash equivalents of $79,995,129 (2021: $60,593,191). In line with the Company’s financial risk management, the directors have carefully assessed the financial and operating implications of the above matters, including the expected cash outflows of ongoing research and development activities of the Group over the next 12 months. Based on this consideration, the directors are of the view that the Group will be able to pay its debts as and when they fall due for at least 12 months following the date of these financial statements and that it is appropriate for the financial statements to be prepared on a going concern basis. Monitoring and addressing the ongoing cash requirements of the Group is a key focus of the directors. This involves consideration of future funding initiatives such as potential business development opportunities, for example an out- licensing transaction, capital raising initiatives, and the control of variable spending on research and development activities of the Group. (d) Assessment on the carrying value of intellectual property Costs incurred in acquiring intellectual property are capitalised and amortised on a straight-line basis over a period not exceeding the life of the patents. Where a patent has not been formally granted, the company estimates the life of the granted patent in accordance with the provisional application. Costs include only those costs directly attributable to the acquisition of the intellectual property. 47 Notes to the Consolidated Financial Statements 30 June 2022 3 Critical Accounting Judgements, Estimates and Assumptions (continued) (d) Assessment on the carrying value of intellectual property (continued) An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Intellectual property represents the largest asset of the Group as at 30 June 2022 and the most significant asset given the current research and development phase of operations. Accordingly, as commercial production has not yet commenced there is some judgment required in assessing the continued viability on the use of the intellectual property. Refer to Note 1(g). In March 2020, the novel coronavirus (COVID-19), was declared a world-wide pandemic by the World Health Organisation. This has spread rapidly throughout the world, including Australia, causing significant disruption to business and economic activity. The Group implemented business continuity procedures in place and implemented measures and safeguards to address health and safety risks whilst continuing to carry out ongoing clinical trials. To date, the Group’s operations have been maintained with limited disruption and the Group has undertaken additional measures to protect the health of its employees and patients. However, the ongoing pandemic has increased the estimation uncertainty in the preparation of the consolidated financial statements. The estimation uncertainty associated with the magnitude and duration of COVID-19 is as follows: – – – The continued pandemic has led to volatility in the global capital markets, which could adversely affect the company’s ability to access the capital markets. It is possible that the continued spread of COVID-19 could delay the future recruitment of clinical trials and therefore could lead to an indication of impairment in the intangible assets. The continued pandemic could cause the delay of clinical trials conducted by our partners, which could potentially have an adverse impact on the future license income. The consolidated entity has applied accounting estimates in the consolidated financial statements based on forecasts of economic conditions which reflect expectations and assumptions as at 30 June 2022 about future events, including COVID-19 that management believe are reasonable in the circumstances. While there was not a material impact to our consolidated financial statements as of and for the year ended 30 June 2022, resulting from our assessments, our future assessment of our current expectations at that time of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial statements in future reporting periods. (e) Investment in subsidiaries Investments in subsidiaries held by Immutep Limited are accounted for at cost in the separate financial statements of the parent entity. Given the current phase of operations, management has recognised these assets to the extent of the value of tangible assets and liabilities consisting of the following adjusting for any impairment loss: – Cash held with bank – Intellectual property – Accounts receivables and payables with external parties (f) Fair value estimates of convertible note and warrant liability Fair value estimation of convertible note and warrant liability is included in the Notes 1(l) and (m) and Notes 15 and 16 of the financial statements. 4 Segment reporting Identification of reportable operating segments Operating segments are reported in a manner consistent with internal reports which are reviewed and used by Management and the Board of Directors, who is identified as the Chief Operating Decision Maker (‘CODM’). The Group operates in one operating segment, being Immunotherapy. 48 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 4 Segment reporting (continued) Operating segment information 30 June 2022 Revenue License revenue Other Income Research material sales Grant income Net gain on fair value movement of warrants Net gain on foreign exchange Interest income Total revenue and other income Result Segment result Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Total segment assets Total segment liabilities 30 June 2021 Revenue License revenue Other Income Research material sales Grant income Net gain on fair value movement of warrants Net gain on foreign exchange Interest income Total revenue and other income Result Segment result Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Total segment assets Total segment liabilities Immunotherapy $ Unallocated $ Consolidated $ 170,369 84,018 4,459,974 – – – – – – 591,070 1,228,122 224,520 170,369 84,018 4,459,974 591,070 1,228,122 224,520 4,714,361 2,043,712 6,758,073 (33,929,768) 1,718,976 (32,210,792) (33,929,768) 1,718,976 (32,210,792) 102,169,550 8,092,184 (34) (32,210,826) 102,169,550 8,092,184 – – Immunotherapy $ Unallocated $ Consolidated $ – 312,841 3,549,965 – – – – – – – – – 312,841 3,549,965 – – 105,327 105,327 3,862,806 105,327 3,968,133 (19,665,904) (10,236,687) (29,902,591) (19,665,904) (10,236,687) (29,902,591) 82,030,533 8,758,922 (33) (29,902,624) 82,030,533 8,758,922 – – 49 Notes to the Consolidated Financial Statements 30 June 2022 5 Expenses Breakdown of expenses by nature Research and development* Employee benefits expenses Amortisation of Intellectual property Employee share-based payment expenses Intellectual property management Auditor’s remuneration Depreciation Other administrative expenses Total Research & Development and Corporate & administrative expenses Consolidated 30 June 2022 $ 30 June 2021 $ 25,337,538 12,020,714 4,966,304 3,856,038 1,814,199 1,866,067 1,486,841 1,702,159 814,133 759,041 561,485 289,202 249,276 204,049 3,321,923 2,821,615 38,551,699 23,518,885 * Research and development expense consists of expenditure incurred with third party vendors mainly related to contract research and contract manufacturing activities. Consolidated 30 June 2022 $ 30 June 2021 $ 34 34 33 33 244,144 358,825 (244,144) (358,825) – 34 – 33 6 Income tax (a) Income Tax Expense Current tax Current tax on results for the year Total current tax expense Deferred income tax Decrease in deferred tax assets Decrease in deferred tax liabilities Total deferred tax benefit Income tax expense 50 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 6 Income tax (continued) (b) Numerical reconciliation of income tax expense to prima facie tax expense Loss before income tax expense Tax at the Australian tax rate of 25% (2021: 26%) Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Non-deductible share-based payments Other non-deductible expenses Non-assessable income Capital listing fee Adjustment of current tax for prior period Difference in overseas tax rates* Net adjustment to deferred tax assets and liabilities for tax losses and temporary differences not recognised Income tax expense** Consolidated 30 June 2022 $ 30 June 2021 $ (32,210,792) (29,902,591) (8,052,698) (7,774,674) 371,710 464,324 1,485,059 1,239,756 (783,318) (541,122) (368,398) (259,458) 148,303 – 4,118,372 2,132,187 (3,080,970) (4,738,987) 3,080,936 4,738,954 (34) (33) * ** Difference in overseas tax rate is largely as a result of the corporate income tax rate of 10% applicable to the Immutep subsidiary in France for financial year 2022 and 2021. Income tax expense relates to tax payable for the Immutep subsidiary in the United States. (c) Tax Losses Deferred tax assets for unused tax losses not recognised comprises: Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit Consolidated 30 June 2022 $ 30 June 2021 $ 206,764,587 195,098,009 43,688,958 43,593,823 The above potential tax benefit for tax losses has not been recognised in the consolidated balance sheet as the recovery of this benefit is not probable. There is no expiration date for the tax losses carried forward. The estimated amount of cumulative tax losses at 30 June 2022 was $206,764,587 (2021: $195,098,009). Utilisation of these tax losses is dependent on the parent entity and its subsidiaries satisfying certain tests at the time the losses are recouped and in generating future taxable profits against which to utilise the losses. 51 Notes to the Consolidated Financial Statements 30 June 2022 7 Current assets – cash and cash equivalents Cash on hand Cash at bank Restricted cash Cash on deposit Consolidated 30 June 2022 $ 30 June 2021 $ 74 285 79,693,054 51,845,320 – 465,000 302,001 8,282,586 79,995,129 60,593,191 The above cash and cash equivalent are held in AUD, USD, and Euro. The interest rates on these deposits which have been acquired three months of maturity, range from 0% to 1.15 % in 2022 (0% to 0.4% in 2021). Restricted cash At 30 June 2021, the cash and cash equivalents disclosed above and in the statement of cash flows included $465,000 which were advance payments from shareholder for Share Purchase Plan (SPP). These deposits are held by Boardroom Pty Ltd in trust for Immutep Limited, which were transferred to Immutep bank account when SPP was completed in July 2021. The deposit was therefore not available for general use by any entity within the Group. 8 Current receivables GST and VAT receivables Receivable for grant income Accounts receivables Consolidated 30 June 2022 $ 30 June 2021 $ 2,088,394 775,400 6,267,855 5,297,521 17,358 51,310 8,373,607 6,124,231 Due to the short-term nature of these receivables, the carrying value is assumed to be their fair value at 30 June 2022. No receivables were impaired or past due. 9 Other current assets Consolidated 30 June 2022 $ 30 June 2021 $ 2,377,901 1,663,213 65,060 38,577 43 179 2,443,004 1,701,969 Prepayments Security deposit Accrued income 52 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 10 Other non-current assets Prepayments Consolidated 30 June 2022 $ 30 June 2021 $ 495,660 454,190 495,660 454,190 Prepayments are largely in relation to prepaid insurance and deposits paid to organisations involved in the clinical trials. 11 Non-current assets – plant and equipment At 30 June 2020 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2021 Opening net book amount Exchange differences Additions Disposals Depreciation charge Closing net book amount At 30 June 2021 Cost or fair value Accumulated depreciation Net book amount Year ended 30 June 2022 Opening net book amount Exchange differences Additions Disposals Depreciation charge Closing net book amount At 30 June 2022 Cost or fair value Accumulated depreciation Net book amount Plant and equipment $ Computers $ Furniture and fittings $ Total $ 557,872 85,738 22,258 665,868 (533,403) (68,621) (14,488) (616,512) 24,469 17,117 7,770 49,356 24,469 (737) 552 – (8,363) 15,921 17,117 (207) 15,049 – 7,770 49,356 (447) – – (1,391) 15,601 – (9,799) (4,513) (22,675) 22,160 2,810 40,891 549,961 98,985 21,552 670,498 (534,040) (76,825) (18,742) (629,607) 15,921 22,160 2,810 40,891 15,921 22,160 2,810 40,891 (504) 2,343 – (458) 14,671 – (54) 5,900 – (1,016) 22,914 – (7,703) (14,112) (3,041) (24,856) 10,057 22,261 5,615 37,933 535,749 108,827 26,350 670,926 (525,692) (86,566) (20,735) (632,993) 10,057 22,261 5,615 37,933 53 Notes to the Consolidated Financial Statements 30 June 2022 12 Non-current assets – intangibles At 30 June 2020 Cost or fair value Accumulated amortisation Net book amount Year ended 30 June 2021 Opening net book amount Exchange differences Amortisation charge Closing net book amount At 30 June 2021 Cost or fair value Accumulated amortisation Net book amount Year ended 30 June 2022 Opening net book amount Exchange differences Amortisation charge Closing net book amount At 30 June 2022 Cost or fair value Accumulated amortisation Net book amount Patents $ Intellectual Property $ Goodwill $ Total $ 1,915,671 25,730,602 109,962 27,756,235 (1,915,671) (10,645,757) – (12,561,428) – 15,084,845 109,962 15,194,807 – – – – 15,084,845 109,962 15,194,807 (481,492) (1,866,067) – – (481,492) (1,866,067) 12,737,286 109,962 12,847,248 1,915,671 24,880,102 109,962 26,905,735 (1,915,671) (12,142,816) – (14,058,487) – 12,737,286 109,962 12,847,248 – – – – 12,737,286 109,962 12,847,248 (478,979) (1,814,199) – – (478,979) (1,814,199) 10,444,108 109,962 10,554,070 1,915,671 23,864,364 109,962 25,889,997 (1,915,671) (13,420,256) – (15,335,927) – 10,444,108 109,962 10,554,070 Amortisation methods and useful lives The Group amortises intangible assets with a limited useful life using the straight-line method over the following periods: – Patents, trademark, and licenses – 13-21 years Intellectual property assets – 13-14 years – 54 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 13 Deferred tax balances (i) Deferred tax assets The balance comprises temporary differences attributable to: Employee benefits Accruals Unrealised exchange loss Unused tax loss Consolidated 30 June 2022 $ 30 June 2021 $ 71,205 202,824 63,507 125,814 342,222 321,363 428,171 777,882 Set-off of deferred tax liabilities pursuant to set-off provisions (1,044,422) (1,288,566) Net Deferred tax assets – – (ii) Deferred tax liabilities The amount of deferred tax liability represents the temporary difference that arose on the recognition of Intangibles recorded in the subsidiary Company in France. This has been set-off against deferred taxes in the subsidiary Company, accordingly, hence reducing the unrecognised tax losses for both the France subsidiary and the consolidated Group. The balance comprises temporary differences attributable to: Intangible assets Unrealised exchange gain Accrued income Total deferred tax liabilities Set-off of deferred tax liabilities pursuant to set-off provisions Net deferred tax liabilities (iii) Movements in deferred tax balances Movements At 30 June 2021 (Charged)/credited to profit or loss At 30 June 2022 Consolidated 30 June 2022 $ 30 June 2021 $ 1,044,411 1,273,729 – 11 14,790 47 1,044,422 1,288,566 (1,044,422) (1,288,566) – – Deferred Tax Asset $ Deferred Tax Liability $ 1,288,566 (1,288,566) (244,144) 244,144 1,044,422 (1,044,422) Total $ – – – 55 Notes to the Consolidated Financial Statements 30 June 2022 14 Current liabilities – trade and other payables Trade payables Other payables and accruals 15 US warrant liability Opening balance Fair value movements Exercising of warrants* Closing balance** Consolidated 30 June 2022 $ 30 June 2021 $ 2,866,144 1,824,901 2,886,044 2,956,828 5,752,188 4,781,729 30 June 2022 $ 30 June 2021 $ 722,966 949,600 (591,070) 8,663,013 – (8,889,647) 131,896 722,966 * ** During the FY 2021 year, US investors exercised 3,427,211 warrants at an exercise price of US$ 2.49 each. Immutep received US$8.53 million (A$11.3 million) cash payment in total. In total, 206,507 warrants from the warrant issuance in July 2017 remain unexercised at the reporting date. All of the warrants which were issued in December 2018 were exercised during the financial year 2021. Balance as at 30 June 2022 is presented as current liability since the US Warrants will expire on 5 January 2023, i.e. within 12 months. Balance as at 30 June 2021 is presented as non-current liability since it was due to expire after 12 months from balance sheet date of 30 June 2021. In July 2017, the Group completed its first US capital raise after it entered into a securities purchase agreement with certain accredited investors for the Group to issue American Depositary Shares (ADSs) and Warrants of Immutep for cash consideration totaling A$6,561,765. In this private placement, the Company agreed to issue unregistered warrants to purchase up to 1,973,451 of its ADSs. The warrants were issued with an exercise price of US$2.50 per ADS, are exercisable immediately and will expire on 5 January 2023. The warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant. During the financial year 2021, 1,347,211 of these warrants were exercised at US$2.49 each and 206,507 of these warrants remain as at 30 June 2021. In December 2018, the Group completed its second US capital raise after it entered into a securities purchase agreement with certain accredited investors to purchase American Depositary Shares (ADSs) and Warrants of Immutep for cash consideration totaling A$7,328,509. In this private placement, the Group agreed to issue unregistered warrants to purchase up to 2,080,000 of its ADSs. The warrants were issued with an exercise price of US$2.50 per ADS. The Warrants were able to be exercised in whole or in part at any time or times up until the Warrant Expiry Date of 12 February 2022. The warrants did not confer any rights to dividends or a right to participate in a new issue without exercising the warrant. In December 2020, 2,080,000 of these warrants were exercised at US$2.49 each, hence none of these warrants remain as at 30 June 2021. Both US warrant issues represent a written option to exchange a fixed number of the Group’s own equity instruments for a fixed amount of cash that is denominated in a foreign currency (US dollars) and is thus classified as a derivative financial liability in accordance with AASB 132. The US warrants liability is initially recorded at fair value at issue date and subsequently measured at fair value through profit and loss at each reporting date. Capital raising costs have been allocated proportionately between issued capital and the US warrant issues in accordance with their relative fair values. The 10 for 1 share consolidation in November 2019 did not change the number of US warrants nor the exercise price of those warrants as the American Depository Receipt (ADR) ratio was also changed from 1 ADS representing 100 shares to 1 ADS representing 10 shares. The effective date of the change was 5 November 2019. However, under the anti-dilution clause of share purchase agreements, the exercise price was adjusted due to the entitlement offer the Group conducted in August 2019. As a result, the exercise price for the remaining warrants is now US$2.49. 56 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 15 US warrant liability (continued) Fair value of warrants The warrants granted are not traded in an active market and the fair value has thus been estimated by using the Black-Scholes pricing model based on the following assumptions. Key terms of the warrants are included above. The following assumptions were based on observable market conditions that existed at the issue date and at 30 June 2022: July 2017 warrants Assumption At issue date At 30 June 2022 Rationale Historic volatility 58.0% 100.43% Based on 12-month historical volatility data for the Company Exercise price Share price US$2.50 US$2.17 US$2.49 As per subscription agreement US$2.03 Closing share price on valuation date from external market source Risk-free interest rate 1.930% 2.44% Based on the US Government securities yields which match the term of the warrant Dividend yield 0% 0% Based on the Company’s nil dividend history Fair value per warrant US$1.0716 US$0.4400 Fair value A$1.3962 A$2,755,375 A$0.6387 A$131,896 Determined using Black-Scholes models with the inputs above Fair value of 1,973,251 warrants as at issue date and fair value of 206,507 warrants at 30 June 2022 * Exercising price has been adjusted as per anti-dilution clause in the share purchase agreement. 16 Non-current liabilities – convertible note Convertible note at fair value at beginning of reporting period Net change in fair value Transfer to contributed equity on conversion of Convertible Notes Transfer to accumulated losses on conversion of Convertible Notes Convertible note at fair value at end of reporting period Consolidated 30 June 2022 $ 30 June 2021 $ 2,526,870 8,789,113 324,736 1,171,959 (893,379) (5,094,465) (505,277) (2,339,737) 1,452,950 2,526,870 On 11 May 2015, the Company entered into a subscription agreement with Ridgeback Capital Investments (Ridgeback) to invest in Convertible Notes and Warrants of the Company for cash consideration totaling $13,750,828, which was subject to shareholder approval at an Extraordinary General Meeting. Shareholder approval was received on 31 July 2015. During FY2021, 75% of the Convertible Notes have been converted to ordinary shares. These have been done in three issuances of 25% each between March 2021 and June 2021. During FY2022, further 12.5% of the Convertible Notes have been converted to ordinary shares in March 2022. At the reporting date, 12.5% of the original Convertible Note balance remains outstanding. The outstanding notional amount of the Convertible Notes (including the accrual of 3% p.a interest) as at 30 June 2022 was $2,075,151, which can be converted into 12,206,768 ordinary shares at an exercise price of $0.17 per share if Ridgeback elects to convert the Convertible Notes into ordinary shares. All Notes have been converted to ordinary shares at $nil consideration per the original subscription agreement. 57 Notes to the Consolidated Financial Statements 30 June 2022 16 Non-current liabilities – convertible note (continued) The 13,750,828 Convertible Notes issued have a face value of $1.00 per note which are exercisable at a price of approximately $0.17 per share (adjusted for post share consolidation and anti-dilution clause), mature on 4 August 2025 and accrue interest at a rate of 3% per annum which may also be converted into shares. Conversions may occur during the period (i) at least 3 months after the Issue Date and (ii) at least 15 business days prior to the maturity date into 50 ordinary shares of the Company per note (subject to customary adjustments for rights or bonus issues, off market buybacks, issues at less than current market price, share purchase plan, dividend reinvestment plan at a discount, return of capital or dividend or other adjustment). If a change of control event, delisting event or event of default has occurred, Ridgeback may elect to convert the notes into shares or repayment of principal and interest. The Convertible Notes rank at least equal with all present and future unsubordinated and unsecured debt obligations of the Company and contain customary negative pledges regarding financial indebtedness, dividend payments, related party transaction and others. Details of the warrants granted together with the convertible note at initial recognition date are as follows: – 8,475,995 warrants were granted which are exercisable at a price of A$0.025 per share on or before 4 August 2025 – 371,445,231 warrants were granted which are exercisable at a price of A$0.0237 per share on or before 4 August 2020 All warrants may be settled on a gross or net basis and the number of warrants or exercise price may be adjusted for a pro rata issue of shares, a bonus issue or capital re-organisation. The Warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant. As a result of the 10 to 1 share consolidation in November 2019, the above cited warrants have been restated in accordance with the subscription agreement. The exercise prices have been adjusted for the capital raising during the financial year under the anti-dilution clause of share purchase agreements. The warrant expiry dates remain unchanged. The restated terms are as follows: – 847,600 warrants with an exercise price of A$0.248 per share – 37,144,524 warrants with an exercise price of A$0.235 per share 37,144,524 warrants with an exercise price of A$0.235 per share lapsed unexercised on 4 August 2020. None of the other warrants specified above have been exercised since initial recognition up to 30 June 2022. Fair value of convertible notes The following assumptions were used to determine the initial fair value of the debt component of the convertible note which were based on market conditions that existed at the grant date: Assumption Convertible notes Rationale Historic volatility Share price Risk free interest rate 85.0% $0.051 2.734% Risk adjusted interest rate 15.0% Based on the Company’s historical volatility data Closing market share price on 31 July 2015 Based on Australian Government securities yields which match the term of the convertible note An estimate of the expected interest rate of a similar non-convertible note issued by the company Dividend yield 0.0% Based on the Company’s nil dividend history The fair value of the convertible note was allocated between a financial liability for the traditional note component of the convertible note and into equity which represents the conversion feature. The traditional note component of the convertible note was initially recorded at fair value of $4.4m, based on the present value of the contractual cash flows of the note discounted at 15%. 58 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 16 Non-current liabilities – convertible note (continued) After initial recognition, the liability component of the convertible note has been measured at fair value as required by AASB 2. The remaining value of the convertible note was allocated to the conversion feature and recognised as equity. Fair value at issuance Fair value movements Conversion to ordinary shares Balance at 30 June 2022 17 Current liabilities – employee benefits Annual leave Note – Liability $ Conversion feature – Equity $ 4,419,531 41,431,774 5,866,277 – (8,832,858) (36,252,802) 1,452,950 5,178,972 Consolidated 30 June 2022 $ 30 June 2021 $ 357,029 350,135 The current provision for employee benefits is in relation to accrued annual leave and covers all unconditional entitlements where employees have completed the required period of service. The entire amount of the provision is presented as current, since the Group does not have an unconditional right to defer settlement for any of these obligations. 18 Non-current liabilities – employee benefits Long service leave Provision for retirement payment 19 Leases The consolidated balance sheet shows the following amount relating to leases: Right-of-use Assets Buildings Lease Liabilities Current Non-current Balance at 30 June 2022 Consolidated 30 June 2022 $ 30 June 2021 $ 108,140 9,112 117,252 85,448 3,467 88,915 Consolidated 30 June 2022 $ Consolidated 30 June 2021 $ 270,147 270,147 268,813 268,813 Consolidated 30 June 2022 $ Consolidated 30 June 2021 $ 173,377 208,194 107,492 80,113 280,869 288,307 59 Notes to the Consolidated Financial Statements 30 June 2022 19 Leases (continued) The recognised ROU assets are comprised solely of property leases in Germany and France. Movements during the financial year ended 30 June 2022 and 30 June 2021 are as follows: ROU asset Initial value of ROU asset recognised as at 1 July 2019 Less: lease incentives Net ROU asset recognised under AASB 16 as at 1 July 2019 Depreciation for the financial year ended 30 June 2020 Foreign exchange differences Closing balance of ROU asset as at 30 June 2020 Closing balance of ROU asset as at 1 July 2020 Lease addition and modification for the financial year ended 30 June 2021 Depreciation for the financial year ended 30 June 2021 Foreign exchange differences Closing balance of ROU asset as at 30 June 2021 Closing balance of ROU asset as at 1 July 2021 Lease addition and modification for the financial year ended 30 June 2022 Lease disposals for the financial year ended 30 June 2022 Depreciation for the financial year ended 30 June 2022 Foreign exchange differences Closing balance of ROU asset as at 30 June 2022 $ 336,090 (12,215) 323,875 (126,712) 4,052 201,215 201,215 254,461 (181,374) (5,489) 268,813 268,813 306,667 (74,782) (224,406) (6,145) 270,147 For the year ended 30 June 2022 and 30 June 2021, movement of lease liabilities and aging presentation are as follows: Consolidated 30 June 2022 $ Consolidated 30 June 2021 $ 288,307 262,383 292,126 248,063 10,462 13,382 (76,123) – (222,536) (214,378) (9,712) (1,655) (13,154) (7,989) 280,869 288,307 Lease Liabilities Reconciliation Opening Balance Lease additions and modifications Interest charged for the year Disposals Principal paid for the year Interest expense paid for the year Foreign exchange adjustments Closing Balance 60 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 19 Leases (continued) Maturities of Lease Liabilities The table below shows the Group’s lease liabilities in relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cashflows. Lease Liabilities 2022 2021 20 Equity – contributed Fully paid ordinary shares Options over ordinary shares – listed Less than 1 year $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Total contractual cashflows Carrying amount $ 178,510 108,706 215,005 78,455 – – – – 287,216 280,869 293,460 288,307 Consolidated Note 30 June 2022 $ 30 June 2021 $ 20(a) 357,745,803 303,760,351 9,661,954 9,661,954 367,407,757 313,422,305 In November 2019, the shareholders approved a 10 to 1 share consolidation during the FY 2019 Annual General Meeting. Refer to Notes 15 and 16 for impact of the 10 to 1 share consolidation to US warrants and convertible notes, respectively. (a) Ordinary shares 30 June 2022 30 June 2021 Note No. $ No. $ At the beginning of reporting period 748,152,935 303,760,351 487,630,938 233,328,553 Shares issued during the year 20(b) 102,769,866 53,440,330 149,630,586 43,307,232 Transaction costs relating to share issues – (2,386,919) – (2,135,000) 20(b) 3,200,000 872,250 5,487,851 1,571,294 20(b) 12,117,014 2,059,791 71,131,450 12,092,937 20(b) – – – – 34,272,110 15,604,694 – (9,359) 866,239,815 357,745,803 748,152,935 303,760,351 Exercise of performance rights - (shares issued during the year) Conversion of Convertible Notes (shares issued during the period) Exercise of warrants (shares issued during the period) Transaction costs relating to exercise of warrants At reporting date (b) Shares issued 2022 Details Shares issued under Securities Purchase Plan Share placement July 2021 Performance rights exercised (transfer from share-based payment reserve) Convertible Notes exercised Number Issue Price $ Total $ 13,799,149 0.52 7,175,557 88,970,717 0.52 46,264,773 3,200,000 12,117,014 118,086,880 0.27 0.17 872,250 2,059,791 56,372,371 61 Notes to the Consolidated Financial Statements 30 June 2022 20 Equity – contributed (continued) (b) Shares issued (continued) 2021 Details Share placement November 2020 Share placement June 2021 Performance rights exercised (transfer from share-based payment reserve) * Convertible Notes exercised Exercise of warrants * All number of shares have been adjusted for the 10 to 1 share consolidation. Number Issue Price $ Total $ 123,216,687 0.24 29,572,005 26,413,899 0.52 13,735,227 5,487,851 71,131,450 0.29 1,571,294 0.17 12,092,937 34,272,110 0.46 15,604,694 260,521,997 72,576,157 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. 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. Options Information relating to the Company’s Global Employee Share Option Plan, 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 Note 32. Unlisted options Expiration Date 4 August 2025 5 January 2023 Exercise Price Number* $0.248 847,600 US$0.249* 2,065,070* 2,912,670 * 1 American Depository Shares (ADS) listed on NASDAQ equals 10 ordinary shares listed on ASX thus the number of warrants on issue has been grossed up and the exercise price adjusted accordingly in the above table to be comparable. Share buy-back There is no current on-market share buy-back. Capital risk management The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current parent entity’s share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. 62 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 21 Equity – reserves and retained earnings (a) Reserves Options issued reserve Conversion feature of convertible note reserve Foreign currency translation reserve Share-based payments reserve Movements in options issued reserve were as follows: Opening balance and closing balance Movements in conversion feature of convertible note reserve Opening balance Transfer to accumulated losses on conversion of Convertible Notes Transfer to contributed equity on conversion of Convertible Notes Ending balance Movements in foreign currency translation reserve were as follows: Opening balance Currency translation differences arising during the year Ending balance Movements in share-based payments reserve were as follows: Opening balance Options and performance rights expensed during the year Exercise of vested performance rights transferred to contributed equity Ending balance (b) Accumulated losses Movements in accumulated losses were as follows: Opening balance Net loss for the year Conversion of Convertible Notes* Exercise of warrants Ending balance Consolidated 30 June 2022 $ 30 June 2021 $ 19,116,205 19,116,205 5,178,972 10,357,944 252,005 1,174,332 4,457,636 3,843,045 29,004,818 34,491,526 19,116,205 19,116,205 10,357,944 41,431,774 (4,012,560) (24,075,358) (1,166,412) (6,998,472) 5,178,972 10,357,944 1,174,332 1,754,740 (922,327) (580,408) 252,005 1,174,332 3,843,045 3,712,180 1,486,841 1,702,159 (872,250) (1,571,294) 4,457,636 3,843,045 Consolidated 30 June 2022 $ 30 June 2021 $ (274,642,220) (275,706,061) (32,210,826) (29,902,624) 4,517,837 26,415,084 – 4,551,381 (302,335,209) (274,642,220) * The conversion of convertible notes to accumulated losses amounted to $4,517,837 (FY2021: $26,415,084). This amount is comprised of: $4,012,560 (FY2021: $24,075,358) related to the fair value feature of the converted convertible notes and $505,277 (FY2021: $2,339,726) related to the unwinding of the discount (fair value adjustment). 63 Notes to the Consolidated Financial Statements 30 June 2022 21 Equity – reserves and retained earnings (continued) (i) Conversion feature of convertible note reserve This amount relates to the conversion feature of the convertible note issued to Ridgeback Capital Investments which has been measured at fair value at the time of issue as required by AASB 2. (ii) Foreign currency translation reserve Exchange differences arising on translation of the foreign controlled entities are recognised in other comprehensive income as described in Note 1(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. (iii) Share-based payments reserve The share-based payments reserve is used to recognise the grant date fair value of options and performance rights issued to employees and other parties but not exercised. For a reconciliation of movements in the share-based payment reserves refer to Note 32. 22 Equity - dividends There were no dividends paid or declared during the current or previous financial year. 23 Key management personnel disclosures (a) Directors and key management personnel compensation Short-term employee benefits Long-term employee benefits Post-employment benefits Share-based payments Consolidated 30 June 2022 $ 30 June 2021 $ 1,341,126 1,399,536 13,091 47,611 9,059 157,001 1,110,757 1,278,490 2,512,585 2,844,086 Further remuneration disclosures are set out in the audited Remuneration Report within the Directors’ Report on pages 17 to 25. (b) Equity instrument disclosures relating to key management personnel (i) Options provided as remuneration and shares issued on exercise of such options There were no options provided as remuneration during the financial year ended 30 June 2022 and 30 June 2021. (ii) Shareholding The numbers of shares in the Company held during the financial year by each director of the Company and other key management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation. 64 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 23 Key management personnel disclosures (continued) (b) Equity instrument disclosures relating to key management personnel (continued) 2022 Ordinary shares Dr Russell Howard Mr Pete Meyers Mr Marc Voigt Mr Grant Chamberlain Ms Lucy Turnbull Ms Deanne Miller Dr Frédéric Triebel Total ordinary shares ADRs Mr Marc Voigt Received during the year on exercise of performance rights Received during the year on the exercise of options Balance at start of the year Other changes during the year# Balance at end of the year Number Number Number Number Number 750,000 250,000 1,774,395 500,000 8,847,445 – 1,728,023 450,000 – – 2,963,892 600,000 6,853,764 900,000 22,917,519 2,700,000 45 – – – – – – – – – – – – – 1,000,000 2,274,395 8,847,445 (2,178,023)* – 3,284,126** 3,284,126 (796,587) 2,767,305 – 7,753,764 309,516 25,927,035 – 45 # Other changes during the year includes on market acquisitions and/or disposals * ** This change during the year represents derecognition due to the cessation of the director’s position This change during the year represents Ms Lucy Turnbull’s shareholding before she became director on 25 February 2022. The shareholding includes 2,981,626 shares held directly and 302,500 shares held indirectly. (iii) Option holdings There were no options holdings held and no movements during the financial year ended 30 June 2022. (iv) Performance rights holdings The number of performance rights over ordinary shares in the parent entity held during the financial year by each director of the parent entity and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at start of the year Number Granted Number Exercised Number Other Changes Number Balance at end of the year Vested and exercisable Number Number Unvested Number 2022 Performance rights over ordinary shares Dr Russell Howard 250,000 339,621 (250,000) Mr Pete Meyers 1,500,000 – (500,000) 2,400,000 3,600,000 – – – – 339,621 1,000,000 – – 339,621 1,000,000 6,000,000 1,200,000 4,800,000 Mr Marc Voigt Mr Grant Chamberlain 1,350,000 – (450,000) (900,000)* – Ms Deanne Miller 1,200,000 1,800,000 (600,000) Dr Frédéric Triebel 1,800,000 2,700,000 (900,000) – – 2,400,000 3,600,000 – – – – 2,400,000 3,600,000 8,500,000 8,439,621 (2,700,000) (900,000) 13,339,621 1,200,000 12,139,621 * The change during the year represents derecognition due to the cessation of the director’s position. 65 Notes to the Consolidated Financial Statements 30 June 2022 24 Remuneration of auditors During the year, the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms. PricewaterhouseCoopers Australia Audit or review of the financial report Other audit and assurance services in relation to regulatory filings overseas Total remuneration of PricewaterhouseCoopers Australia Consolidated 30 June 2022 $ 30 June 2021 $ 561,485 289,202 – – 561,485 289,202 25 Contingent liabilities There were no material contingent liabilities in existence at 30 June 2022 and 30 June 2021. 26 Commitments for expenditure There were no material commitments for expenditure in existence at 30 June 2022 and 30 June 2021. 27 Related party transactions Parent entity Immutep Limited is the parent entity. Subsidiaries Interests in subsidiaries are set out in Note 28. Key management personnel Disclosures relating to key management personnel are included in the Remuneration Report and Note 23. Transactions with related parties There is no transaction occurred with related parties for financial year ended 30 June 2022 and financial year ended 30 June 2021. Receivable from and payable to related parties There were no trade receivables from or trade payables due to related parties at the reporting date. Loans to/from related parties There were no loans to or from related parties at the reporting date. 28 Subsidiaries The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in accordance with the accounting policy described in Note 1: Immutep USA Inc PRR Middle East FZ LLC Immutep GmbH Immutep Australia Pty Ltd Immutep IP Pty Ltd Immutep S.A.S. 66 Country of incorporation Class of Shares 30 June 2022 % 30 June 2021 % Equity holding USA UAE Ordinary Ordinary Germany Ordinary Australia Ordinary Australia Ordinary France Ordinary 100 100 100 100 100 100 100 100 100 100 100 100 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 29 Events occurring after the reporting date No matter or circumstance has arisen since 30 June 2022, that has significantly affected the Group’s operations, results, or state of affairs, or may do so in future years. 30 Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year Adjustments for: Depreciation and amortisation Share-based payments Changes in fair value of US investor warrants Unrealised gain on exchange through the profit and loss Net change in fair value of convertible note liability Change in operating assets and liabilities: (Increase) in current receivables (Increase) in other operating assets Increase in trade and other payables Increase in employee benefits provision Net cash used in operating activities 31 Earnings per share Loss after income tax attributable to the owners of Immutep Limited Consolidated 30 June 2022 $ 30 June 2021 $ (32,210,826) (29,902,624) 2,063,462 2,070,116 1,486,841 1,702,159 (591,070) 8,663,013 258,296 646,630 324,736 1,171,959 (2,249,376) (2,830,539) (782,505) (620,024) 1,435,459 1,382,362 35,231 76,606 (30,229,752) (17,640,342) Consolidated 30 June 2022 $ 30 June 2021 $ (32,210,826) (29,902,624) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share (EPS) 848,968,068 594,927,440 Weighted average number of ordinary shares used in calculating diluted earnings per share (EPS) 848,968,068 594,927,440 Basic earnings per share Diluted earnings per share Cents Cents (3.79) (3.79) (5.03) (5.03) 67 Notes to the Consolidated Financial Statements 30 June 2022 31 Earnings per share (continued) Information concerning other notes and options issued: The following table summarises the convertible notes, performance rights, listed options and unlisted options that were not included in the calculation of weighted average number of ordinary shares because they are anti-dilutive for the periods presented. Unlisted options Convertible notes Non-executive director performance rights Performance rights US warrants* 30 June 2022 30 June 2021 Number Number 847,600 847,600 12,206,768 23,806,883 1,339,621 3,100,000 16,769,906 7,563,502 2,065,070 2,065,070 * 1 American Depository Shares (ADS) listed on NASDAQ equals 10 ordinary shares listed on ASX thus the number of warrants on issue has been grossed up. 32 Share-based payments (a) Executive incentive plan (EIP) Equity incentives are granted under the Executive Incentive Plan (EIP) which was approved by shareholders at the 2018 Annual General Meeting. In light of our increasing operations globally the Board reviewed the Company’s incentive arrangements to ensure that it continued to retain and motivate key executives in a manner that is aligned with members’ interests. As a result of that review, an ‘umbrella’ EIP was adopted to which eligible executives are invited to apply for the grant of performance rights and/or options. Equity incentives granted in accordance with the EIP Rules are designed to provide meaningful remuneration opportunities and will reflect the importance of retaining a world-class management team. The Company endeavours to achieve simplicity and transparency in remuneration design, whilst also balancing competitive market practices in France, Germany, and Australia. The company grants Short Term Incentives (STIs) and Long-Term Incentives (LTIs) under the EIP. All the performance rights granted under the Executive Incentive Plan (EIP) exercisable into ordinary shares with nil exercise price. The weighted average remaining contractual life of performance rights outstanding at the end of the period was 3.62 years. Set out below are summarises of all STI and LTI performance rights granted under the EIP excluding the performance rights issued to non-executive directors: Financial year ended 30 June 2022 Grant date Fair value Balance at start of the year Granted during the year Exercised during the year Lapsed during the year Balance at end of the year Vested and exercisable at end of the year Number Number Number Number Number Number 3 October 2019 1 November 2019 2 January 2020 2 October 2020 1 October 2021 26 November 2021 26 November 2021 26 November 2021 0.260 3,000,000 0.280 2,400,000 0.260 1,900,000 0.235 263,502 – – – – 0.550 0.490 0.490 0.490 – 206,404 – 3,600,000 – 4,500,000 – 2,900,000 (1,500,000) – 1,500,000 – – – 2,400,000 1,200,000 (500,000) – – – – – 1,400,000 450,000 263,502 263,502 – – – 206,404 – 3,600,000 – 4,500,000 – 2,900,000 – – – – 7,563,502 11,206,404 (2,000,000) – 16,769,906 1,913,502 The weighted average share price on the exercising date during the financial year 2022 is $0.535. 68 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 ☺32 Share-based payments (continued) (a) Executive in☻centive plan (EIP) (continued) Financial year ended 30 June 2021 Grant date Fair value Balance at start of the year Granted during the year Exercised during the year Lapsed during the year Balance at end of the year Vested and exercisable at end of the year Number Number Number Number Number Number 28 November 2017 2 October 2018 3 October 2019 1 November 2019 2 January 2020 2 October 2020 0.230 500,000 0.470 387,560 0.260 4,500,000 0.280 3,600,000 0.260 2,850,000 – – – – – (500,000) (387,560) – – – – (1,500,000) – 3,000,000 (1,200,000) – 2,400,000 (950,000) 0.235 – 263,502 – 11,837,560 263,502 (4,537,560) – – – 1,900,000 263,502 7,563,502 – – – – – – – The weighted average share price on the exercising date during the financial year 2021 is $0.235. The fair value at grant date for short term incentive (STI) and long-term incentives (LTI) performance rights are determined using a Black-Scholes option pricing model that takes into account the exercise price, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The model inputs for STI performance rights granted during the year ended 30 June 2022 included: Grant date Share price at grant date Expected price volatility of the Company’s shares Expected dividend yield Risk-free interest rate 30 June 2022* $0.290 75% Nil 3.28% 26 November 2021* $0.490 105% Nil 1.39% * Tranches 2 and 3 of performance rights granted during the year ended 30 June 2022 have not met the definition of grant date under AASB 2 - Share Based payments. Accordingly, the share based expense recognised was using an estimate of the grant date fair value at 30 June 2022. The value will be re-assessed at each reporting date until grant date has been identified. The model inputs for STI performance rights granted during the year ended 30 June 2021 included: Grant date Share price at grant date Expected price volatility of the Company’s shares Expected dividend yield Risk-free interest rate 2 October 2020 $0.235 88% Nil 0.12% There are no outstanding options under EIP at the beginning of the financial year 2022 and no option was granted during the year ended 30 June 2022. Fair value of options granted No options were granted during the year ended 30 June 2022 and 30 June 2021. 69 Notes to the Consolidated Financial Statements 30 June 2022 ☺32 Share-based payments (continued) (b) Performance rights issued to non-executive directors with shareholders’ approval At the 2021 annual general meeting, shareholders approved the issue of 339,621 performance rights to Russell Howard in lieu of cash for his services as a non-executive director and non-executive Chairman. When exercisable, each performance right is convertible into one ordinary share. All the performance rights issued to non-executive directors are exercisable into ordinary shares with $nil exercising price. The weighted average remaining contractual life of performance rights outstanding at the end of the period was less than 2.43 years. 2022 Grant date Type of performance right granted Fair value* Balance at start of the year Granted during the year Exercised during the year Changes during the year Balance at end of the year Vested and exercisable at end of the year Number* Number Number Number Number Number 16 Nov 2018 Director rights 0.390 250,000 1 Nov 2019 Director rights 0.280 1,500,000 27 Oct 2020 Director rights 0.255 1,350,000 – – – (250,000) (500,000) – – – 1,000,000 (450,000) (900,000)* – 1 December 2021 Total Director rights 0.490 – 339,621 – – 339,621 3,100,000 339,621 (1,200,000) (900,000) 1,339,621 – – – – – * The change during the year represents derecognition due to the cessation of the director. The weighted average share price on the exercising date during the financial year 2022 is $0.523. 2021 Grant date Type of performance right granted Fair value* Balance at start of the year Granted during the year Exercised during the year Lapsed during the year Balance at end of the year Vested and exercisable at end of the year Number* Number Number Number Number Number 25 Nov 2016 Director rights 0.380 273,637 17 Nov 2017 Director rights 0.210 426,654 16 Nov 2018 Director rights 0.390 500,000 1 Nov 2019 Director rights 0.280 1,500,000 – – – – 27 Oct 2020 Director rights 0.255 – 1,350,000 (273,637) (426,654) (250,000) – – – – – – – – – 250,000 1,500,000 1,350,000 Total 2,700,291 1,350,000 (950,291) – 3,100,000 – – – – – – The weighted average share price on the exercising date during the financial year 2021 is $0.276. Fair value of performance rights granted The fair value at grant date for the performance rights issued to non-executive directors with shareholders’ approval are determined using a Black-Scholes option pricing model that takes into account the exercise price, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. 70 Annual Report 2022 Immutep Limited Notes to the Consolidated Financial Statements 30 June 2022 ☺32 Share-based payments (continued) (b) Performance rights issued to non-executive directors with shareholders’ approval (continued) The model inputs for STI performance rights granted during the year ended 30 June 2022 included: Grant date Share price at grant date Expected price volatility of the Company’s shares Expected dividend yield Risk-free interest rate 30 June 2022* $0.290 75% Nil 3.28% 26 November 2021* $0.490 105% Nil 1.39% * Tranches 2 and 3 of performance rights granted during the year ended 30 June 2022 have not met the definition of grant date under AASB 2 - Share Based payments. Accordingly, the share based expense recognised was using an estimate of the grant date fair value at 30 June 2022. The value will be re-assessed at each reporting date until grant date has been identified. The model inputs for STI performance rights granted during the year ended 30 June 2021 included: Grant date Share price at grant date Expected price volatility of the Company’s shares Expected dividend yield Risk-free interest rate 27 October 2020 $0.255 92% Nil 0.14% (c) Options issued to other parties During the financial year ended 30 June 2016, options were issued to Ridgeback Capital Investments and Trout Group LLC and these are eligible to be exercised. The weighted average remaining contractual life of performance rights outstanding at the end of the period was less than 3.1 year. Set out below is a summary of the options granted to both parties: 2021 Grant date Expiry date Exercise price Balance at start of the year Granted during the year Exercised during the year Forfeited during the year Balance at end of the year Vested and exercisable at end of the year Number Number Number Number Number Number 31 Jul 2015 5 Aug 2020 0.235 – 31 Jul 2015 5 Aug 2025 0.248 847,600 30 Oct 2015 30 Oct 2020 7 Mar 2016 7 Mar 2021 0.568 0.398 Total – – 847,600 – – – – – – – – – – – – – – – – 847,600 – – 847,600 – – – – – Fair value of options granted No options were granted during the year ended 30 June 2022 (2021 – nil). The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. 71 Notes to the Consolidated Financial Statements 30 June 2022 ☺32 Share-based payments (continued) (d) Expenses arising from share-based payment transactions Total expenses arising from share-based payment transactions recognised during the period were as follows: Employee share-based payment expense Consolidated 30 June 2022 $ 30 June 2021 $ 1,486,841 1,702,159 1,486,841 1,702,159 Share-based payment transactions with employees are recognised during the period as a part of corporate and administrative expenses. 33 Parent entity information Set out below is the supplementary information about the parent entity. Statement of comprehensive income Loss after income tax Total comprehensive income Statement of financial position Total current assets Total non current assets Total assets Total current liabilities Total non current liabilities Total liabilities Equity – Contributed equity – Reserves – Accumulated losses Total equity Parent 30 June 2022 $ 30 June 2021 $ (30,284,020) (29,227,163) (30,284,020) (29,227,163) Parent 30 June 2022 $ 30 June 2021 $ 55,353,360 51,560,979 42,570,439 25,908,877 97,923,799 77,469,856 1,296,679 1,309,609 2,654,636 4,314,029 3,951,315 5,623,638 367,407,757 313,422,305 28,752,813 34,845,815 (302,188,086) (276,421,902) 93,972,484 71,846,218 Guarantees of financial support There are no guarantees entered into by the parent entity. Contingent liabilities of the parent entity Refer to Note 25 for details in relation to contingent liabilities as at 30 June 2022 and 30 June 2021. Capital commitments - Property, plant, and equipment The parent entity did not have any capital commitments for property, plant, and equipment at as 30 June 2022 and 30 June 2021. 72 Annual Report 2022 Immutep Limited Directors’ Declaration In the directors’ opinion: (a) the financial statements and notes set out on pages 29 to 72 are in accordance with the Corporations Act 2001, including: (i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2022 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 1(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 the directors. On behalf of the directors Dr Russell Howard Chairman Immutep Limited Sydney 31 August 2022 73 Independent Auditor’s Report 74 Annual Report 2022 Immutep Limited Independent Auditor’s Report continued 75 Independent Auditor’s Report continued 76 Annual Report 2022 Immutep Limited Independent Auditor’s Report continued 77 Independent Auditor’s Report continued pwc Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 15 to 25 of the directors' report for the year ended 30 June 2022. In our opinion, the remuneration report of lmmutep Limited for the year ended 30 June 2022 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. PricewaterhouseCoopers Sydney 31 August 2022 Page 181 78 Annual Report 2022 Immutep Limited Shareholder Information as at 29 August 2022 The shareholder information set out below was applicable as at 29 August 2022. There is a total of 866,239,815 ordinary fully paid shares on issue held by 13,429 holders. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over Total Holding less than a marketable parcel Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Top 20 holders of ordinary shares HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED NATIONAL NOMINEES LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED UBS NOMINEES PTY LTD BNP PARIBAS NOMS PTY LTDHSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 MARC VOIGT FREDERIC TRIEBEL BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM BNP PARIBAS NOMINEES PTY LTD SANDHURST TRUSTEES LTD MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED BRISPOT NOMINEES PTY LTD SISTERS PALM BEACH PTY LTD MACENROCK PTY LTD HB BIOTECHNOLOGY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA LUCY TURNBULL DEANNE MILLER Total Number of holders of ordinary shares 2,826 4,605 1,923 3,447 628 13,429 1,423 Ordinary shares held Number held 286,082,880 87,165,593 48,604,998 26,676,650 16,590,359 14,299,600 10,209,005 8,791,695 7,753,764 7,164,814 5,397,365 5,254,304 4,866,819 3,804,292 3,800,000 3,622,897 3,236,122 3,080,656 2,981,626 2,667,305 % of total shares Issued 33.026 10.063 5.611 3.080 1.915 1.651 1.179 1.015 0.895 0.827 0.623 0.607 0.562 0.439 0.439 0.418 0.374 0.356 0.344 0.308 552,050,744 63.732 79 Shareholder Information as at 29 August 2022 Unquoted equity securities Unquoted equity securities Options and warrants Warrants over NASDAQ listed American Depository Shares Performance Rights Convertible Notes Number on issue Number of holders 847,600 2,065,070* 19,009,527 1,718,854 1 1 9 1 * 1 American Depository Shares (ADS) listed on NASDAQ equals 10 ordinary shares listed on ASX thus the number of warrants on issue has been grossed up. Substantial holders Substantial holders in the company are set out below: Substantial holder Ordinary shares held Number held % of total shares held Date of Notice The Bank of New York Mellon Corporation (BNYM) 241,093,169 27.83% 8 April 2022 FIL Limited 63,312,462 7.41% 16 November 2021 * BNYM has a relevant Interest In 241,093,169 securities as depositary for Immutep Limited ADR program administered under the Deposit Agreement. BNYM’s relevant interest in these securities arises as a result of the Deposit Agreement containing rights for BNYM to dispose of securities held under the ADR program in limited circumstances. Under the Deposit Agreement, ADR holders retain their rights to dispose of those securities and to give voting Instructions for the exercise of voting rights attached to the securities. BNYMC Group’s power to vote or dispose of these securities is qualified accordingly. By an instrument of relief dated 29 April 2019, ASIC has granted certain relief to BNYM and its related bodies corporate from certain provisions of Chapter 6 of the Corporations Act in relation to the acquisition of, or increase in, voting power in securities held by BNYM as depositary under the ADR program. Voting rights The voting rights attached to ordinary shares are set out below: 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. Options No voting rights. Performance rights No voting rights. 80 Annual Report 2022 Immutep Limited Immutep Limited Level 12, 95 Pitt Street, Sydney, NSW 2000 Telephone: + 61 (0) 2 8315 7003 Facsimile: + 61 (0) 2 8569 1880 www.immutep.com ABN: 90 009 237 889 Immutep Limited Level 33, Australia Square, 264 George Street, Sydney, NSW 2000 Level 12, 95 Pitt Street, Sydney, NSW 2000 Telephone : + 61 (0) 2 8315 7003 Facsimile : + 61 (0) 2 8569 1880 www.immutep.com ABN : 90 009 237 889