Medibio
Annual Report 2015

Plain-text annual report

A N N U A L R E P O R T 2 0 1 5 M e d i b i o r e d e f i n e s m e n t a l h e a l t h b y m a k i n g t h e i n t a n g i b l e , t a n g i b l e . C O N T E N T S T O T H E F I N A N C I A L R E P O R T A N N U A L R E P O R T 2 0 1 5 2. CHAIRMAN'S REVIEW 4. CEO’S REPORT 19. KEY INVESTOR QUESTIONS & ANSWERS 20. STATUATORY ACCOUNTS 21. Review of Operations 25. Director’s Report 37. Auditor's Independence Declaration 38. Corporate Governance Statement 39. Consolidated Statement of Profit or Loss and Other Comprehensive Income 40. Consolidated Statement of Financial Position 41. Consolidated Statement of Changes in Equity 42. Consolidated Statement of Cash Flows 43. Contents to Notes to the Financial Statements 44. Notes to the Financial Statements 80. Director's Declaration 81. Independent Auditor's Report to the Members of Medibio Limited and Controlled Entities 83. ASX Additional Information 85. Corporate Information M E N TA L H E A LT H L A N D S C A P E 350 million worldwide diagnosed with depression 1 suicide every 40 seconds = 1 million suicides every year 27% of adult population affected by a mental health disorder 26% of adult population affected by a mental health disorder Global cost $2.5T (2030 est. $6T) Depression and anxiety account for +50% of this burden 20% of adult population affected by a mental health disorder 1 C H A I R M A N ’ S R E V I E W Dear fellow shareholder, It is with great pleasure that I present to you the Medibio Limited annual report for the year ended 30 June, 2015. We have reached the end of a busy year for the company, during which time we moved significantly closer towards the successful commercialisation of our patented Circadian Heart Rate (CHR) diagnostic technology. Our company name change from BioProspect to Medibio signified the transition to an exciting new business focus and vision which we firmly believe will reward our shareholders in the year ahead. We are thrilled to have produced the first objective test for chronic stress over the past 12 months, representing what we believe to be a global breakthrough and new gold standard in mental health diagnosis. Our management team recently returned from a successful business development trip through the United States, where we met with several major corporates and universities to discuss synergies in the areas of partnering and research collaboration. The response was overwhelmingly positive, with four Non-Disclosure Agreements with significant US-based corporates signed including device manufacturers, integrated health and wellness providers and technology companies. We had a series of positive meetings with leading universities in the US and Canada with all institutions visited expressing a desire to collaborate on research. We expect to execute formal collaboration agreements with these universities in the coming months. Our Australian and US clinical studies in conjunction with Johns Hopkins University of Medicine and the University of New South Wales are progressing well. Following completion of these studies, we are targeting US Food and Drug Administration approvals within 12 months and have engaged US-based regulatory advisory and clinical research organisation NAMSA to assist us in satisfying these requirements. Investors can look forward to the launch of our corporate stress product this year and our consumer app next year which should generate first revenues for the company. Medibio operates in a landscape where there is significant need for disruption of current accepted practices. We have the solution to tackle a growing societal problem. More than 350 million people worldwide are diagnosed with depression annually (a US$2.5 trillion cost) with over one million suicides globally every year. Efficient and accurate diagnosis of mental illness is not only desirable - but critical. I would like to take this opportunity to thank the shareholders for their support over the past 12 months and look forward to sharing the exciting journey with you over the year ahead. Regards Chris Indermaur Chairman 30th September 2015 2 “We will no longer endorse DSM5, as it has fundamental flaws and we are actively seeking a diagnostic system that is evidence based” “It is critical to realise that we cannot succeed if we use DSM categories as the gold standard...” “We need a quantitative method for diagnosing depression” US National Institute of Mental Health May 2013 3 C E O R E P O R T Mental health is rapidly emerging as the largest issue in healthcare today. It is faced by 1 in 4 people over their lifetimes and globally, these illnesses result in costs exceeding US$2 trillion per year. We have developed the first evidence based quantitative test for all of the key mental health disorders, including depression, anxiety and chronic stress. Our defensible IP and technology has been developed based on over 15 years of research into the relationship between the autonomic nervous system and mental health disorders. We are accelerating progress with US and Australian trials underway with our FDA submission for depression due in the first half of next year. We have identified existing reimbursement codes in the US which we can leverage and this, along with our high profile trial partners, should pave the way for early clinical acceptance. Research is being undertaken by leading institutions including Johns Hopkins University, the University of NSW and the Universtiry of Ottawa. In addition we expect to announce a number of other significant research agreements in the coming year. Medibio is not just a traditional medical device company with revenue dependent upon regulatory approval. We have multiple commercialisation routes via the Medical, Corporate, and Consumer market with each vertical representing a multi-billion dollar revenue opportunity. Our Corporate and Consumer market products are based on stress, which is not dependent on regulatory approval, which means we can, and are, commercialising now. We have signed two commercial agreements for our Corporate Stress product and are in advanced discissions with a number of potential customers, many of which are multinational companies. The coming year should be a defining one for Medibio as we are targeting: The completion of both the Johns Hopkins and UNSW studies FDA approval of our depression diagnostic test Ramp up significant revenue from our Corporate Stress Product The launch of our consumer Stress App • • • • Regards Dr. Kris Knauer | Chief Executive Officer (CEO) 4 A N N U A L R E P O R T 2 0 1 5 Our technology Medibio’s research has allowed it to develop the first evidence based quantitative diagnostic test for all the key mental health disorders including: • Depression • Anxiety • Mixed Depression and Anxiety • Panic Disorder • Psychosis and Schizophrenia • PTSD – Post Traumatic Stress Disorder • Stress We have proprietary technology in which algorithms assist in the diagnosis of a number of mental health conditions utilising the analysis of Circadian Heart Rate (CHR) variability waveforms during the sleep period when external influences are absent. Algorithm development has only been possible with the introduction of state of the art machine learning techniques. C E O R E P O R T - T H E Y E A R I N R E V I E W We know past success does not mean future success but we a proud of the leap forward we have taken for our shareholders over the past 12 months. Some of the key milestones we achieved over the past 12 months include: • • • • • • Commencement of the first study with the UNSW at the Black Dog Institute clinic Agreement with Johns Hopkins University to undertake a clinical validation study in the US Lodgement of patent applications which, once granted, will provide an additional 20 years of exclusivity Produced the first objective test to measure the level of stress and its impact on health The completion of the development of our cloud based scalable Corporate Stress Platform Execution of the first commercial agreement to provide our stress product to a major corporate. United States business development meetings The company visited the United States in July to undertake a series of meetings with major corporations which had expressed an interest in partnering with Medibio and to discuss research collaboration with a number of leading universities. Medibio has executed Non-Disclosure Agreements (NDA’s) with a number of US- based corporations including device manufacturers, integrated health and wellness providers and technology companies. A series of positive meetings were also held with a number of the leading universities in the US and Canada, with all institutions visited expressing a desire to collaborate on research. We have announced the first of these agreements with the University of Ottawa and we expect to execute formal collaboration agreements with a number of other research partners in the coming months. This research will focus on using our CHR technology for the diagnosis of Depression, Post-Traumatic Stress Disorder, Anxiety Disorder, Mixed depression and anxiety, and Panic Disorder. Australian Study – University of New South Wales The first study of Medibio’s CHR technology being conducted by the University of New South Wales (UNSW) at the Black Dog Institute clinic processed its first participant during the year. With 80 planned participants, the study is due to be completed next year. The study is a comparative study of the Circadian Heart Rate patterns between patients with melancholic and non-melancholic depression. US-based clinical validation study – Johns Hopkins University of Medicine Medibio reached agreement to undertake an independent clinical validation study of its Circadian Heart Rate technology in conjunction with the Johns Hopkins University School of Medicine, located in Baltimore, Maryland, USA. The study will: • • Specifically determine whether CHR can provide objective physiological data to differentiate between individuals with clinical depression and individuals without clinical depression Assess the clinical validity of a proprietary software algorithm, developed by Medibio that detects depression by measuring CHR variability clinically. Data collected from the study will be utilised to support an application for US Food and Drug Administration (FDA) certification of the company’s proprietary software algorithm. Data collection is due to be completed towards the end of H1 2016. Appointment of Regulatory Consultants Leading US-based regulatory advisory and clinical research organisation NAMSA was appointed during the year to assist with trial design, regulatory discussions, and Medibio’s 510(k) submission to the FDA relating to its depression diagnostic. NAMSA is a global contract research organization (CRO) with a broad depth of experience in the US, EU, South America, Asia, and other geographies. NAMSA currently has a customer base of over 5000 clients and has assisted these clients with a wide variety of services, including over 300 successful 510(k) submissions. NAMSA will work with Johns Hopkins University in the USA to ensure that Medibio’s validation studies are designed to test and satisfy FDA regulatory requirements. 6 A N N U A L R E P O R T 2 0 1 5 Creation of the first evidence-based ‘stress test’ During the year we produced what we believe to be the world’s first evidence-based test to measure stress levels and its impact on health and wellbeing using our CHR technology. The product also includes a series of app based intervention (or treatment) modules tailored specifically for employees’ stress levels. We also completed the development and testing of our cloud based scalable infrastructure to deliver this Corporate Stress Product. We successfully tested end-to-end automation including streaming of live data: from a range of ECG monitors via the front end app on a range of smart phones; to our cloud based proprietary Algorithms and Data Analytics solution; and near real-time results back to the front-end app. Despite leveraging off the Amazon Web Services (AWS) platform much of the technology needed to create such a product did not exist making our commercial product unique in this category. First commercial agreements The execution our first commercial service agreement to provide our corporate stress evaluation product to a major Australian corporation was a key milestone for your company. With more than 10,000 staff/contractors. Medibio will generate revenue of $100 per participant from each pilot phase of the program with revenue anticipated this calendar year. This was followed by the launch of our Corporate Wellness Partner Program with the execution of a Commercial Service Agreement to provide our Corporate Stress product to Vital Conversations. Vital Conversations is a large mental wellness provider in Western Australia with a diverse client base. They provide proactive psychological health services to some of the largest corporates in Western Australia as well as the public and not for profit sectors. MOU with Preventice Solutions Medibio entered a memorandum of understanding (MOU) with Preventice Solutions. Preventice Solutions is a strategic combination of: eCardio Diagnostics® LLC (a leading provider of remote cardiac monitoring products and services) and Preventice (an innovator in software solutions for remote patient care and developer of the PatientCare Platform and the BodyGuardian® Remote Monitoring Sensor). Their health data platform is ideal for the commercial delivery of our CHR tests to assist clinicians with the diagnosis of mental health disorders in the medical setting. Additionally, Preventice has significant infrastructure in the US including an end to end sales and distribution chain to providers and leading medical organisations and a 24/7 patient call centre which could potentially be leveraged by Medibio. The MOU provides a framework for how both parties could collaborate, which may lead towards a strategic partnership agreement, and outlines the contemplated aspects of a definitive agreement. New patents The company lodged a series of provisional patents throughout the year, including: • • The provisional application titled “Method and System for assessing Mental State”, was filed in the US under provisional application serial no. 62/175,796. This patent covers discoveries made over the past 18 months and will, if granted, complement and extend the existing patent suite covering mental health diagnosis held by Medibio The provisional application titled “Method and System for Monitoring Stress Conditions”, has been filed in the US under provisional application serial no. 62/175,826. This patent covers Medibio’s objective test to measure the level of stress and its impact on health and wellbeing. We intend to seek patent protection in major jurisdictions including, but not limited to, Australia, the USA, the UK, EU, Japan, China, and Russia. The applications, once granted, will provide 20 years of exclusivity for the diagnosis of mental health disorders using CHR technology and assure the company’s monopoly rights in the US. 7 We are not only a test for initial diagnosis but a tool to determine the effectiveness of treatment as well as patient compliance and adherence Market fact In Australia last yearthere were 16 million GP visits for mental health related issues. Of these, GP’s only referred 1 in 10 on to a psychiatrist or psychologist while in 63% of cases they recommended antidepressant medications. 8 A N N U A L R E P O R T 2 0 1 5 C E O R E P O R T Key Management Personnel Dr. Kris Knauer | Chief Executive Officer (CEO) • • • • 20 years’ experience in Finance and Corporate Advisory Experienced CEO of ASX-listed companies Previous role as CEO in a group owning GP Centers and Radiology practices Founded and grew ASX-listed company from sub $3 million valuation to $300 million valuation prior to a $1bn takeover Sean Mathieson | Chief Operating Officer (COO) • • • Business Technology Executive with 25 years of Global Business Software experience including Oracle, SAP, Siebel Systems and UXC Reputation for technology vision enabling business outcomes Global Leadership Team of Siebel Systems, founding member of SAP Australia Dr. Matt Mesnik | Chief Medical Officer • • • Healthcare Executive with 29 years of healthcare management experience Chief Medical Officer of Aprima Medical Software, US EMR company Chief Medical Officer of MinuteClinic, which developed the concept of retail healthcare and is the largest US retail health clinic provider with over 10M annual primary care visits. • MinuteClinic grew from 80 to over 500 clinics under Matt as CMO prior to its acquisition by CVS Pharmacy. Dr. Michael Player | Head of Research • • • Research Psychologist at UNSW and Research Fellow at USYD and the BMRI. Also active patient work as a Clinical Psychologist Completed his PhD at the University of NSW, investigating and quantifying objective, biological markers of depression Research found that neuroplasticity was reduced in depression, and provided ground-breaking support for the hypothesis of impaired neuroplasticity in MDD. • Dr. Matt Flax | Head of Algorithm Development Team PhD in Electrical Engineering (BioEngineering) from UNSW Australia • • Matt specialises in Signal Processing, Machine learning and its application, Bio-engineering, and • software engineering. With over 20 years of experience in industry. Since completing his PhD he has applied his machine learning, signal processing and software engineering skills to medical device projects as for groups including Cochlear, Mimosa Acoustics, Bionic Vision Australia and the National Acoustics Laboratory 9 C E O R E P O R T Advisory Board Stephen Pearce | Chair of Advisory Board • • • • CFO of Fortescue Metals Group Ltd having joined Fortescue in March 2010. In that time he has raised approximately US$12 billion to support the growth of Fortescue’s iron ore operations. Non-Executive Chairman of the Lion’s Eye Institute, a leading Eye Research Institute based in Perth, Western Australia. Extensive experience in debt and equity markets internationally and will advise the Board through this important phase of development funding and commercialisation. Dr. Franklyn Prendergast | Advisory Board Member • • • • • Current Board of Directors member of Eli Lilly and Company Past Chair of the Board of Governors of the Mayo Foundation Past Chair, Department of Biochemistry and Molecular Biology, Mayo Foundation Guggenheim Professor of Biochemistry and Molecular Biology, Mayo Medical School (retired- January 2015) Past Director, Mayo Clinic Center for Individualised Medicine and Mayo Clinic Comprehensive Cancer Center Dr. Hans Stampfer | Advisory Board Member • • • • Professor of Psychiatry at the University of Western Australia and Head of Psychiatry at Joondalup teaching Hospital. The original inventor of Medibio’s CHR Technology for mental health diagnosis As the discoverer of the relationship between circadian heart rate and mental illness, Prof Stampfer is an invaluable addition to Advisory Board. He is highly regarded in the field of Psychiatric Research and has international publications on the relationship between circadian heart rate and mental illness. Dr. Stephen Addis | Advisory Board Member • • • • • Head of Psychiatry at Fremantle Hospital, a large university teaching hospital. Senior clinical and managerial positions in North America, the United Kingdom and Australia which has given him first-hand knowledge of health systems internationally. 15 years’ experience as Principal Investigator/Investigator on pharmaceutical trials Over a decade of clinical research into the effects of mental illness upon the circadian heart rate. Regular academic presentations at conferences both nationally and internationally. 10 A N N U A L R E P O R T 2 0 1 5 Stress What is stress? Stress is a natural human response to pressure when faced with threatening or challenging situations. A certain level of stress is normal, and can be beneficial in enabling people to achieve peak performance. The human body should revert back to its normal state after a certain period of time, following a stress-inducing experience. However, this reversion to normal can be suppressed when individuals are subjected to frequent or repetitive stressful situations. Long-lasting or overwhelming stress can have negative impacts upon human health, wellbeing, relationships, work and general quality of life. The impact of Stress It is well recognised that stress is one of the primary precursors to mental illness. Additionally, the physical problems related to chronic stress include the impairment of the immune response, increased blood pressure, and chronic muscle tension. These problems can eventually lead to serious life-threatening illnesses and studies have found that individuals who have undergone significant stress have a much higher probability of developing serious illness such as heart attacks, kidney disease, and cancer, than non-stressed individuals. Recent research at the University of Minnesota found that “for every single- point increase in test scores measuring stress levels, study participants’ risk of stroke jumped by 19%” Per the Journal of Aging Research, there is a 37% increase in a man’s risk of dying in the next 18 years if he is highly stressed 11 C E O R E P O R T Breakthrough research The autonomic nervous system (ANS) plays a key role in circadian sleep-wake regulation of physiological activity including heart rate. Our technology has been developed from extensive research into the relationship between circadian heart rate, the ANS, and psychological state. The research was initiated at the University of Western Australia to test the theory that mental state linked ANS disturbance could be observed via the cardiovascular system. The research involved the analysis of circadian heart rate data covering all major psychiatric disorders which have been compared to traditional methods of clinical diagnosis. This research involved the collection of 24 hour ECG data and corresponding clinical psychiatric diagnoses from thousands of subjects covering all the key psychopathologies. This data was collected over a 15 year period including a number of clinical studies with the key studies peer- reviewed and published. The technology was developed via the correlation of CHR waveforms with the corresponding clinical psychiatric diagnosis. Sleep is the key period for diagnosis. It is only during sleep when external influences and distractions are absent that you get a true snapshot of what is going on with the Autonomic Nervous System (ANS). Our technology has been validated both internally and externally via blinded studies with one external blinded study peer-reviewed and published showing 78-92% diagnostic accuracy. We achieve sensitivities and speficities of +80% which compares favourably to the gold standard where the current concordance between psychiatrists is around 70%. CHR is ‘state-dependent’ meaning that a change in mental state is associated with a change in CHR waveform. Thus we provide a tool to determine the effectiveness of treatment. Serial monitoring of patients under psychiatric treatment shows effective treatment is associated with normalisation of CHR within 4 weeks. 12 A N N U A L R E P O R T 2 0 1 5 CLINICAL NON-CLINICAL Medical Corporate Consumer Our business model Unlike most traditional medical device businesses which target the Clinical market, Medibio has three distinct market opportunities for commercialisation. Our three market pillars are Medical, Corporate and Consumer applications. US$ 30Bn Industry US$ 19Bn Industry Primary Care Physicians High Risk Occupations (Defence, Police, Fire) Insurance Companies Psychiatrists Psychologists Therapists Counsellors Cardiologists Figure 1 – Medibio’s Three Market Pillars US$ 26Bn Industry App Stores Wearables Wellness Corporate Wellness Digital Health Companies Professions Elite Sports 13 C E O R E P O R T Pillar 1: The medical diagnostic market It is the General Practioners and Primary Care Physician’s (PCP’s) who are bearing the burden of mental health care in Australia and the US. They are being forced to try and do in 10 minutes what it takes a specialist clinician over one hour to do, with no diagnostic aid to assist them. Our US market research shows a clear majority of clinicians surveyed (+90%) would use Medibio’s technology as a biomarker-based diagnostic once it was clinically proven and reimbursable. Following regulatory approval, Medibio’s tests will be marketed as a diagnostic aid with the early adopters to be GP’s and Primary Care Physicians (PCP) in the US. There are two primary markets for the use of the technology • Initial diagnosis • Monitoring to gauge treatment effectiveness, patient compliance and adherence “Primary Care Providers now furnish over half of mental health treatment in this country and about 25 percent of all primary care recipients have diagnosable mental disorders (most commonly, anxiety and depression). Yet many mental health problems are not identified in primary care, perhaps as many as 50 percent.” Bazelon Center for Mental Health Law, Washington, DC USA 14 5% penetration of the US market for depression diagnosis would generate revenue of $175 million annually. This revenue would generate a strong return for Medibio. No data handling and automated cloud based analysis and reporting = minimal cost per report and very high margins A N N U A L R E P O R T 2 0 1 5 Our delivery model is the “pathology style” model where the GP or PCP refers the patient to a pathology lab for a test. We are device agnostic, meaning our test will work with any ECG monitor the monitor providers already have. Figure 2 – Operation in a medical setting US medical diagnostic market opportunity: depression Last year there were 21 million annual PCP visits in the US which were mental health related: • • • 40% were prescribed psychiatric medication only 30% were presecribed medication and are referred for therapy Only 30% were referred to a psychiatrist/psychologist The table below illustrates the existing reimbursement structure for remote ECG monitoring of Cardiac Arrythmia patients in the US. Medibio intends to leverage these existing CPT Codes for commercialisation. Our market research in the US indicates that the PCP’s will be the early adopters. The 21 million annual mental health related PCP visits in the US for a circa $45 test represents almost a $1 billion revenue opportunity annually. Including the psychatrists and psychologists doubles the revenue opportunity. The ongoing monitoring market is larger with our market research showing clinicians would likely monitor existing depression patients quarterly. Based on the 16 million people with depression in US quarterly monitoring at a $22.50 rebate is a $1.6 billion revenue opportunity annually. CPT Code Medicare 93225 93226 93227 Recording (Provider) Analysis with Report (Medibio) Physician review and Interpretation (PCP) Private $26.87 $37.91 $26.87 Insurance Assumption $40 $57 $40 $45 to Medibio Table 1 – Partner and payment structure in the US for 24-hour ECG monitoring 15 C E O R E P O R T Pillar 2: Corporate stress market Medibio’s Corporate Stress Product The company has produced what it believes to be the world’s first evidence-based test to measure stress levels and their impact on health and wellbeing, using its patented Circadian Heart Rate technology. The Corporate Stress product also includes a series of app based intervention (treatment) modules tailored specifically for each employee’s determined stress level. The stress assessment test is based on a series of new algorithms that have been developed to measure the type and degree of deviation of the subject’s CHR from normal, and the diagnostic significance of this deviation. Medibio’s new algorithms accurately classify individuals into one of three categories based on the impact stress has had on their health and wellbeing: GREEN: normal to mild, where no immediate action needed AMBER: moderate, the impact of stress is approaching unhealthy levels RED: serious, stress has had an unhealthy impact and lifestyle changes are recommended The employee receives their individual stress assessment back to their phone with recommendations to undertake intervention modules tailored to their stress assessment. The employer receives a de-identified aggregated measure of stress and risks amongst its employees. This includes a number of interactive corporate dashboards (Figure 3) which are updated in real time and show how factors such as job roles and responsibilities, shift schedules, working hours and locations, working conditions might be associated with employee stress levels. The dashboards also allow management to track items such as the progress of their staff with the interventions, participation profile, change of participation and stress over time. Closed the loop from ECG monitor; to phone; to the cloud; and back to phone in real time. Algorithms are running in the cloud with Amazon Web Services. It costs us less than a cent each time we process an ECG file to produce a stress report. 16 A N N U A L R E P O R T 2 0 1 5 US Market Opportunity for our Corporate Stress Product Stress is a major health issue in the United States that impacts the vast majority of all adults to a moderate or severe degree. It is not only a health issue but a key issue for employers. Various studies of the economic impact of stress estimate the cost of stress to US employers of between US$200 billion to US$300 billion annually with workplace stress responsible for: • • • • • Over half of the 550 million working days lost annually in the U.S from absenteeism 40% of staff turn-over 60% of workplace accidents 30% of short and long term disability 55% of EAP (Employee Assist Program) cost This impact of stress is now recognised by employers, particularly in the US, where 90% of corporates with 200 or more employees now offer Corporate Wellness programs. With an annual wellness program spend of US$100-500 per employee the overall size of the workplace wellness market in the US is US$8 billion annually. We define the US market opportunity as the 54 million employees in the US in +1,000 staff firms and the 22 million US government employees. Price point is important in this market with research indicating that at $120 price point our stress product will be limited to executives and at risk employees only, but at a level of $60 per employee annually it will likely be deployed across the entire staff base. At this $60 price point the US market represents a US$4.5 billion revenue opportunity. To reach this market we intend to partner with existing participants in the Corporate Wellness market. Medibio will provide cloud based data analytics and reporting rather than try to become a wellness company. Our core competency is algorithm development and data analytics and we intend to stick to that. Figure 3 – Corporate Stress Product Dashboards 17 C E O R E P O R T Corporate Wellness - Market Overview The key commercial attributes of Medibio’s Corporate Stress product are that it is, objective, easy to administer, inexpensive and scalable. There are no other objective products in the market, with competing technologies based on questionnaires and interviews as the main measurement tools which are not only time consuming and costly but subjective. We have been overwhelmed by the market response and although we have not yet started our commercial launch we have executed our first commercial service agreement to provide our corporate stress evaluation product with a major Australian corporation with more than 10,000 staff/contractors. We have also launched our Corporate Wellness Partner Program with the execution of a Commercial Service Agreement to provide our Corporate Stress product to Vital Conversations. Vital Conversations is a large mental wellness provider in Western Australia with a diverse client base. It provides proactive psychological health services to some of the largest corporates in Western Australia as well as the public and not for profit sectors. As we move into the final stage of Commercial Launch we expect to convert advanced discussions with a number of other potential customers into executed agreements. Stress costs the average US Corporation US$3.5 million every year and they are now beginning to recognise this A 5% penetration of the US market for our Corporate Stress Product would generate $200 million in annual revenue 18 K E Y I N V E S T O R Q U E S T I O N S A N N U A L R E P O R T 2 0 1 5 What is Medibio’s technology? What is the Market Potential? Our technology is an objective, or evidence based, test for depression, other mental illnesses, and stress. It also provides a way to determine if treatment is effective. Unlike the traditional interpretive pen and paper test it relies purely on the patients biological data - in this case ECG data. Mental health disorders cost the world economy US$2.5T annually (WHO Study) with the average global cost estimated to be an average of 10% of any developed countries GDP. The World Health Organisation estimates that over 350 million people worldwide are currently suffering from depression. The medical diagnostic market for depression alone is a US$15 billion revenue opportunity. What is the scientific basis for our technology? The autonomic nervous system (ANS) plays a key role in regulation of all physiological activity including heart rate. Our technology takes a snapshot of the ANS by measuring heart rate during sleep when external influences and distractions are absent. Does the technology work? Our technology is based on over 15 years of research and internal validation involving over 4000 subjects. This is the equivalent of the completion of a Phase II trial for a new drug. The current studies are not being done to determine that the technology works. They are part of the process required for regulatory approval and to have key opinion leaders like Johns Hopkins endorse the technology. What can our technology diagnose? How is the test administered? We can diagnose all of the key mental health disorders including depression, anxiety, psychosis, and stress. Our test can also differentiate between the different types of depression, and mixed disorders such as mixed depression and anxiety which is critical in determining the appropriate treatment plan. The patient simply wears any ECG monitor overnight. Putting the monitor on an hour before going to bed and removing it an hour after waking. The test is conducted in the comfort of you own home with the next generation ECG monitors which are the size of a large bandaid and as simple to wear. 19 S T A T U A T O R Y A C C O U N T S O P E R A T I N G R E S U L T S F O R T H E Y E A R Medibio Limited (formerly BioProspect Limited) (“Medibio”, “MEB” or “the Company”) and its controlled entities (“the group”) generated a loss after tax of $7,921,702 (2014: loss of $428,332). This loss would be reduced to $2,087,826 if the effects of one off items such as the impairment of the legacy investment in Frontier Oil ($3,861,034), costs associated with the acquisition of the Circadian Heart Rate (‘CHR’) and algorithm development technology ($1,011,382 and $444,999), and the amortisation of patents ($516,461) were excluded. Key highlights include: • Restructuring the acquisition of Invatec Health Pty Ltd (‘Invatec’) and the capital structure of Medibio. This proposal was approved by shareholders on 6 March 2015 and its major components were:- - The Invatec acquisition was completed by the acquisition of all the issued capital of Invatec by the issue of 25,537,506 post consolidation shares, representing 28.4% of the company’s issued capital. - All Convertible Notes on issue were converted into the Company’s securities. - - Recent capital raisings were ratified reinstating the 15% issuing capacity. The issued capital of the company was consolidated on a 1 for 100 basis. - Approval was given to raise up to $3,000,000 by placement to professional and sophisticated investors. - The Group has incurred $1,011,382 in legal and consulting costs in relation to the acquisition of Invatec and the restructuring of Medibio capital. • Impairment of the Frontier Oil Corporation (‘FOC’) investment. This has resulted in $3,861,034 of the total loss for the year. • Impairment of the Goodwill on acquisition of a private company acquired during the year. This has resulted in $444,999 of the total loss for the year. • Amortisation of patents and intellectual property rights including licences resulted in a charge of $516,461 in the year. The Company raised additional equity of $3,477,000 from 2 capital raisings and $685,000 from Convertible Notes converted into equity. 20 R E V I E W O F O P E R A T I O N S A N N U A L R E P O R T 2 0 1 5 During the year the company continued to make excellent progress towards commercialising its unique evidence-based objective tests to assist in the diagnosis of depression, other mental health disorders, and chronic stress. Medibio’s proprietary technology comprises algorithms for the diagnosis of a number of mental health conditions utilizing the analysis of Circadian Heart Rate (“CHR”) variability waveforms. Sleep is the key measurement period when external influences are absent. The technology has multiple commercialisation routes in the medical, corporate and consumer markets, with each vertical representing a multi-billion dollar market opportunity and potential revenue stream. Key milestones achieved over the past 12 months include: The completion of the development of Medibio’s cloud-based scalable Corporate Stress Product Agreement with Johns Hopkins University to undertake a clinical validation study in the US Execution of the first commercial service agreement to provide this product to a major corporation (completed subsequent to 30 June 2015) Lodgement of two provisional patents applications which, if granted, will provide an additional 20 years of exclusivity for the diagnosis of mental health disorders and stress using CHR. Commencement of the first study with the UNSW at the Black Dog Institute clinic; 21 R E V I E W   O F   O P E R A T I O N S   Review  of  Operations  (continued)   R E V I E W O F O P E R A T I O N S agreement  with  Johns  Hopkins  University  to  undertake  a  clinical  validation  study  in  the  US;  and   lodgement   of   two   provisional   patents   applications   which,   if   granted,   will   provide   an   additional   20   years   of   exclusivity  for  the  diagnosis  of  mental  health  disorders  and  stress  using  CHR.   • • United  States  business  development  meetings   Post   the   end   of   the   financial   year   executive   management   of   the   company   visited   the   United   States   to   undertake   a   series  of  meetings  with  major  corporations  which  had  expressed  an  interest  in  partnering  with  Medibio  and  to  discuss   research  collaboration  with  a  number  of  leading  universities.   The   company   executed   Non-­‐Disclosure   Agreements   (NDA’s)   with   four   US-­‐based   corporations   including   device   manufacturers,   integrated   health   and   wellness   providers   and   technology   companies.   A   series   of   positive   meetings   were   held   with   a   number   of   the   leading   universities   in   the   US   and   Canada,   with   all   institutions   visited   expressing   a   desire  to  collaborate  on  research.     This  research  will  focus  on  using  CHR  for  the  diagnosis  of:   Post-­‐Traumatic  Stress  Disorder;   • Depression;   • • Anxiety  Disorder;   • Mixed  depression  and  anxiety;   • Panic  Disorder.   Some  institutions  have  existing  data  that  can  be  used  to  fast-­‐track  blinded  validation  trials  of  Medibio’s  technology.   Medibio   anticipates   it   will   be   in   a   positon   to   begin   to   execute   formal   collaboration   agreements   and   announce   additional  details  of  these  studies  in  the  coming  months.     Australian  trial  -­‐  University  of  New  South  Wales   The  first  study  of  Medibio’s  CHR  technology  being  conducted  by  the  University  of  New  South  Wales  (UNSW)  at  the   Black   Dog   Institute   (BDI)   clinic   processed   its   first   participant,   with   80   planned   participants   due   to   complete   the   assessment  by  the  end  of  this  year.  The  study  is  designed  to  demonstrate  that  MEB’s  Circadian  Heart  Rate  Variability   technology  is  the  first  objective  diagnostic  tool  able  to  distinguish  between  the  two  subsets  of  depression:  melancholic   and   non-­‐melancholic   depression.   The   study   will   involve   serial   monitoring   of   the   participants   before   and   after   treatment.   US-­‐based  clinical  validation  study  –  Johns  Hopkins  University  of  Medicine   Medibio  is  currently  completing  an  independent  clinical  validation  study  of  its  CHR  Technology  in  conjunction  with  the   Johns  Hopkins  University  School  of  Medicine,  located  in  Baltimore,  Maryland,  USA.   The  study  will:   • Specifically   determine   whether   CHR   can   provide   objective   physiological   data   to   differentiate   between   individuals  with  clinical  depression  and  individuals  without  clinical  depression;  and   • Assess  the  clinical  validity  of  a  proprietary  software  algorithm,  developed  by  Medibio  that  detects  depression   by  measuring  CHR  variability  clinically.   Data   collected   from   the   study   will   be   utilised   to   support   an   application   for   US   Food   and   Drug   Administration   (FDA)   certification  of  the  company’s  proprietary  software  algorithm.  Data  collection  is  due  to  be  completed  towards  the  end   of  Q1  2016.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   2   22                         A N N U A L R E P O R T 2 0 1 5   R E V I E W   O F   O P E R A T I O N S   Appointment  of  NAMSA     Leading   US-­‐based   regulatory   advisory   and   clinical   research   organisation   NAMSA   was   appointed   to   assist   with   trial   design,   regulatory   discussions,   and   Medibio’s   510(k)   submission   to   the   FDA   relating   to   its   depression   diagnostic.   NAMSA   is   a   global   contract   research   organization   (CRO)   with   a   broad   depth   of   experience   in   the   US,   EU,   South   America,  Asia,  and  other  geographies.  It  began  operations  in  Toledo  Ohio  in  1967.  NAMSA  has  over  800  associates,   with  offices  across  the  US,  UK,  France,  Germany  and  China,  and  individual  employees  in  many  other  countries.  NAMSA   currently   have   customer   base   of   over   5000   clients   and   have   assisted   these   clients   with   a   wide   variety   of   services,   including  over  300  successful  510(k)  submissions.   NAMSA  will  work  with  Johns  Hopkins  University  in  the  USA  to  ensure  that  Medibio’s  validation  studies  are  designed  to   test  and  satisfy  FDA  regulatory  requirements.     Creation  of  evidence-­‐based  ‘stress  test’   The   company   has   produced   and   validated   what   it   believes   to   be   the   world’s   first   evidence-­‐based   test   to   measure   stress  levels  and  its  impact  on  health   and  wellbeing  using  its  patented  CHR  technology.  The  product  also  includes  a   series  of  app-­‐based  intervention  (or  treatment)  modules  tailored  specifically  for  employees’  stress  levels.     A  series  of  new  algorithms  were  developed  to  measure  the  type  and  degree  of  deviation  of  the  subject’s  CHR  from   normal   and   the   significance   of   this   deviation.   The   new   algorithms   accurately   classify   individuals   into   one   of   three   categories  based  on  the  impact  stress  has  had  on  their  health  and  wellbeing:   • Normal  to  mild:   • Moderate:     • Serious:       Where  no  immediate  action  needed;   The  impact  of  stress  is  approaching  unhealthy  levels;  and   Stress  has  had  an  unhealthy  impact  &  lifestyle  changes  are  recommended.   Internal  validation  testing  returned  excellent  results  with  sensitivities  and  specificities  in  excess  of  80%  for  correctly   assessing  the  subject  into  one  of  these  three  stress  categories.  This  compares  favourably  to  the  diagnostic  accuracy  of   traditional  self-­‐report  questionnaires  for  assessing  stress  levels  that  are  typically  in  the  40-­‐60%  range.   Subsequent   to   the   end   of   the   financial   year   Medibio   announced   two   key   milestones   related   to   its   corporate   stress   product.   1) The   completion   of   the   development   and   testing   its   cloud   based   scalable   corporate   stress   product.   This   incorporates  end-­‐to-­‐end  automation  including  streaming  of  live  data  from  a  range  of  ECG  monitors  via  the   front   end   app   on   a   range   of   smart   phones;   to   its   cloud   based   proprietary   algorithms   and   data   analytics   solution;  and  near  real-­‐time  results  back  to  the  front-­‐end  app.   2) The  execution  of  the  first  commercial  service  agreement  to  provide  its  corporate  stress  evaluation  product   with  a  major  Australian  corporation  with  more  than  10,000  staff/contractors.  Medibio  will  generate  revenue   of   $100   per   participant   from   each   pilot   phase   of   the   program   with   revenue   anticipated   this   calendar   year.   Contingent  on  commercial  pilot  results,  it  is  anticipated  that  Medibio’s  corporate  stress  product  will  be  rolled   out  across  the  organisation’s  entire  staff  base.   There   are   many   potential   markets   for   the   ‘stress   test’   that   offer   significant   benefits   to   Medibio   upon   successful   commercialisation.  The  company  continues  to  develop  these  plans.  The  company  is  in  discussions  with  a  number  of   potential  customers  for  its  stress  product  ahead  of  the  commercial  launch.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   3   23                             R E V I E W O F O P E R A T I O N S R E V I E W   O F   O P E R A T I O N S   Commercialisation  Study  completed     In   February   2015,   the   Ametus   Group   delivered   a   comprehensive   independent   commercialisation   assessment   of   Medibio’s  CHR  technology  for  the  US  market.  The  Ametus  Group  is  based  in  Minnesota,  USA  and  is  one  of  the  leading   independent  medical  consulting  groups  in  the  United  States.   The  key  points  from  the  assessment  were:   • US$2.3bn  revenue  opportunity  in  the  US  which  is  likely  to  be  highly  profitable;   • Existing  reimbursement  codes  which  may  be  leveraged  for  commercialisation;   • Ready  acceptance  of  the  technology  upon  the  receipt  of  FDA  approval;   • No  competing  FDA  approved  evidence-­‐based  products  to  assist  clinicians;  and   • Potential  market  share  of  5%  within  5  years  would  generate  annual  revenue  of  approximately  US$100   million.   Intellectual  property   The  company  lodged  a  series  of  provisional  patents  throughout  the  year,  including:   • The   provisional   application   titled   “Method   and   System   for   assessing   Mental   State”,   was   filed   in   the   US   under   provisional  application  serial  no.  62/175,796.  This  patent  covers  discoveries  made  over  the  past  18  months  and   will,   if   granted,   complement   and   extend   the   existing   patent   suite   covering   mental   health   diagnosis   held   by   Medibio;  and     The  provisional  application  titled  “Method  and  System  for  Monitoring  Stress  Conditions”,  has  been  filed  in  the  US   under  provisional  application  serial  no.  62/175,826.  This  patent  covers  Medibio’s  objective  test  to  measure  the   level  of  stress  and  its  impact  on  health  and  wellbeing.     • The  company  intends  to  seek  patent  protection  in  major  jurisdictions  including,  but  not  limited  to,  Australia,  the  USA,   the   UK,   EU,   Japan,   China,   and   Russia.   The   applications,   once   granted,   will   provide   20   years   of   exclusivity   for   the   diagnosis  of  mental  health  disorders  using  CHR  technology  and  assure  the  company’s  monopoly  rights  in  the  US.   Board  Changes   During  the  year,  the  company  announced  several  key  appointments:   • Mr  Chris  Indermaur  –  Non  Executive  Chairman;   • Mr  Kris  Knauer  –  Executive  Director;   • Dr  James  Campbell  -­‐  Non  Executive  Director;   • Dr  Franklyn  G.  Prendergast  (M.D.,    Ph.D.)  -­‐  appointed  to  the  company’s  Advisory  Board;   • Mr  Stephen  Pearce  -­‐  Advisory  Board;   • Dr  Hans  Stampfer  -­‐  Advisory  Board;  and   • Dr  Stephen  Addis  -­‐  Advisory  Board.   During  the  year,  Mr  Vince  Fayad  retired  as  a  Director,  and  Non-­‐Executive  Chairman  of  the  company  as  did  Claude   Solitario,  Peter  May  and  Silvi  ElKhouri.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   4   24                     A N N U A L R E P O R T 2 0 1 5 D I R E C T O R S   R E P O R T   D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   D I R E C T O R S   R E P O R T   Your   directors   present   the   Annual   Report   on   the   consolidated   entity,   being   Medibio   Limited   (formerly   BioProspect   Limited)  and  its  controlled  entities  (“Group”)  for  the  financial  year  ended  30  June  2015.     Your   directors   present   the   Annual   Report   on   the   consolidated   entity,   being   Medibio   Limited   (formerly   BioProspect   Your   directors   present   the   Annual   Report   on   the   consolidated   entity,   being   Medibio   Limited   (formerly   BioProspect   Limited)  and  its  controlled  entities  (“Group”)  for  the  financial  year  ended  30  June  2015.     Limited)  and  its  controlled  entities  (“Group”)  for  the  financial  year  ended  30  June  2015.     Directors   Directors   Directors   The  names  and  details  of  the  company’s  directors  in  office  during  the  financial  year  and  until  the  date  of  this  report   are  as  follows.  Directors  were  in  office  for  this  entire  period  unless  otherwise  stated.   The  names  and  details  of  the  company’s  directors  in  office  during  the  financial  year  and  until  the  date  of  this  report   The  names  and  details  of  the  company’s  directors  in  office  during  the  financial  year  and  until  the  date  of  this  report   are  as  follows.  Directors  were  in  office  for  this  entire  period  unless  otherwise  stated.   are  as  follows.  Directors  were  in  office  for  this  entire  period  unless  otherwise  stated.   Names,  qualifications,  experience  and  special  responsibilities   Names,  qualifications,  experience  and  special  responsibilities   Names,  qualifications,  experience  and  special  responsibilities   Current  Directors   Current  Directors   Current  Directors   Chris  Indermaur     Chris  Indermaur     Chris  Indermaur     Qualifications:     Qualifications:     Qualifications:     Experience:     Experience:     Experience:     Chairman   Chairman   Chairman   B.  Eng.  (Mech.),  Grad  Dip  Eng.  (Chem.),  LLB,  LLM,  Grad  Dip  LP   B.  Eng.  (Mech.),  Grad  Dip  Eng.  (Chem.),  LLB,  LLM,  Grad  Dip  LP   B.  Eng.  (Mech.),  Grad  Dip  Eng.  (Chem.),  LLB,  LLM,  Grad  Dip  LP   Mr  Indermaur  was  appointed  to  the  Medibio  Board  on  7  April  2015.   Mr  Indermaur  was  appointed  to  the  Medibio  Board  on  7  April  2015.   Mr  Indermaur  was  appointed  to  the  Medibio  Board  on  7  April  2015.   Mr  Indermaur  has  over  30  years  of  experience  in  large  Australian  companies  in  Engineering   Mr  Indermaur  has  over  30  years  of  experience  in  large  Australian  companies  in  Engineering   Mr  Indermaur  has  over  30  years  of  experience  in  large  Australian  companies  in  Engineering   or   Commercial   roles.   Amongst   these   roles   he   was   the   engineering   and   Contracts   Manager   or   Commercial   roles.   Amongst   these   roles   he   was   the   engineering   and   Contracts   Manager   or   Commercial   roles.   Amongst   these   roles   he   was   the   engineering   and   Contracts   Manager   for  the  QNI  Nickel  Refinery  at  Yabulu,  Company  Secretary  for  QAL  and  General  Manager  for   for  the  QNI  Nickel  Refinery  at  Yabulu,  Company  Secretary  for  QAL  and  General  Manager  for   for  the  QNI  Nickel  Refinery  at  Yabulu,  Company  Secretary  for  QAL  and  General  Manager  for   Strategy  and  Development  at  Alinta  Ltd.   Strategy  and  Development  at  Alinta  Ltd.   Strategy  and  Development  at  Alinta  Ltd.   Mr   Indermaur   is   currently   Chairman   of   Poseidon   Nickel   Limited   (ASX:   POS)   (director   from   Mr   Indermaur   is   currently   Chairman   of   Poseidon   Nickel   Limited   (ASX:   POS)   (director   from   Mr   Indermaur   is   currently   Chairman   of   Poseidon   Nickel   Limited   (ASX:   POS)   (director   from   2009).   2009).   2009).   Kris  Knauer     Kris  Knauer     Kris  Knauer     Qualifications:     Qualifications:     Qualifications:     Experience:     Experience:     Experience:     Executive  Director   Executive  Director   Executive  Director   B.  Sc.  (Hons)  in  Geology   B.  Sc.  (Hons)  in  Geology   B.  Sc.  (Hons)  in  Geology   Mr   Knauer   was   appointed   to   the   Board   on   1   July   2014   and   he   took   on   the   role   of   CEO   in   Mr   Knauer   was   appointed   to   the   Board   on   1   July   2014   and   he   took   on   the   role   of   CEO   in   Mr   Knauer   was   appointed   to   the   Board   on   1   July   2014   and   he   took   on   the   role   of   CEO   in   September  2014.     September  2014.     September  2014.     Kris   has   20   years’   experience   in   Finance   and   Corporate   Advisory   and   he   is   an   experienced   Kris   has   20   years’   experience   in   Finance   and   Corporate   Advisory   and   he   is   an   experienced   Kris   has   20   years’   experience   in   Finance   and   Corporate   Advisory   and   he   is   an   experienced   CEO   of   ASX-­‐listed   companies.   He   has   had   a   previous   role   as   CEO   in   a   group   owning   GP   CEO   of   ASX-­‐listed   companies.   He   has   had   a   previous   role   as   CEO   in   a   group   owning   GP   CEO   of   ASX-­‐listed   companies.   He   has   had   a   previous   role   as   CEO   in   a   group   owning   GP   Centres  and  Radiology  practices.  He  also  founded  and  grew  an  ASX-­‐listed  company  from  sub   Centres  and  Radiology  practices.  He  also  founded  and  grew  an  ASX-­‐listed  company  from  sub   Centres  and  Radiology  practices.  He  also  founded  and  grew  an  ASX-­‐listed  company  from  sub   $3  million  valuation  to  $300  million  valuation  prior  to  a  $1bn  takeover.   $3  million  valuation  to  $300  million  valuation  prior  to  a  $1bn  takeover.   $3  million  valuation  to  $300  million  valuation  prior  to  a  $1bn  takeover.   Mr   Knauer   was   formerly   a   director   of   Astro   Resources   NL   (ASX   ARO)   from   2013   to   August   Mr   Knauer   was   formerly   a   director   of   Astro   Resources   NL   (ASX   ARO)   from   2013   to   August   Mr   Knauer   was   formerly   a   director   of   Astro   Resources   NL   (ASX   ARO)   from   2013   to   August   2015,  Esperance  Minerals   Limited  (ASX:  ESM)  from  2009  to  August  2015  and  of  Greenvale   2015,  Esperance  Minerals   Limited  (ASX:  ESM)  from  2009  to  August  2015  and  of  Greenvale   2015,  Esperance  Minerals   Limited  (ASX:  ESM)  from  2009  to  August  2015  and  of  Greenvale   Energy  NL  from  2014  to  May  2015.   Energy  NL  from  2014  to  May  2015.   Energy  NL  from  2014  to  May  2015.   James  Campbell     James  Campbell     James  Campbell     Non-­‐executive  Director   Non-­‐executive  Director   Non-­‐executive  Director   Qualifications:     Qualifications:     Qualifications:     PhD  MBA   PhD  MBA   PhD  MBA   Experience:     Experience:     Experience:     Dr  Campbell  was  appointed  to  the  Board  on  8  September  2014.    He  is  a  senior  biotechnology   Dr  Campbell  was  appointed  to  the  Board  on  8  September  2014.    He  is  a  senior  biotechnology   Dr  Campbell  was  appointed  to  the  Board  on  8  September  2014.    He  is  a  senior  biotechnology   in   scientific   research,   executive   with   more   than   20   years   in   scientific   research,   executive   with   more   than   20   years   in   scientific   research,   executive   with   more   than   20   years   management  consulting  and  venture  capital.  Dr  Campbell  has  held  research  positions  at  the   management  consulting  and  venture  capital.  Dr  Campbell  has  held  research  positions  at  the   management  consulting  and  venture  capital.  Dr  Campbell  has  held  research  positions  at  the   CNRS  and  the  CSIRO.  Dr  Campbell  was  a  founding  executive  at  ChemGenex  Pharmaceuticals   CNRS  and  the  CSIRO.  Dr  Campbell  was  a  founding  executive  at  ChemGenex  Pharmaceuticals   CNRS  and  the  CSIRO.  Dr  Campbell  was  a  founding  executive  at  ChemGenex  Pharmaceuticals   where  for  over  9  years  he  assisted  the  growth  of  the  company’s  market  capitalization  from   where  for  over  9  years  he  assisted  the  growth  of  the  company’s  market  capitalization  from   where  for  over  9  years  he  assisted  the  growth  of  the  company’s  market  capitalization  from   $10  million  to  the  final  $230  million  divestment  in  2011.     $10  million  to  the  final  $230  million  divestment  in  2011.     $10  million  to  the  final  $230  million  divestment  in  2011.     international   experience   international   experience   international   experience   Dr  Campbell  is  Managing  Director  of  Patrys  Limited  (ASX:  PAB)  (from  November  2014)  and   Dr  Campbell  is  Managing  Director  of  Patrys  Limited  (ASX:  PAB)  (from  November  2014)  and   Dr  Campbell  is  Managing  Director  of  Patrys  Limited  (ASX:  PAB)  (from  November  2014)  and   Non-­‐executive  director  of  the  ASX-­‐listed  biotechnology  companies  Invion  Limited  (ASX:  IVX)   Non-­‐executive  director  of  the  ASX-­‐listed  biotechnology  companies  Invion  Limited  (ASX:  IVX)   Non-­‐executive  director  of  the  ASX-­‐listed  biotechnology  companies  Invion  Limited  (ASX:  IVX)   from  2012,  and  Prescient  Therapeutics  Limited  (ASX:  PTX)  from  2014.   from  2012,  and  Prescient  Therapeutics  Limited  (ASX:  PTX)  from  2014.   from  2012,  and  Prescient  Therapeutics  Limited  (ASX:  PTX)  from  2014.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015 MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015 MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015 5 5 5 25                               D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   Former  Directors   Vincent  Fayad   Mr   Fayad   was   appointed   to   the   Medibio   Board   on   28   April   2014   and   subsequently   became   Chairman.  Mr  Fayad  resigned  on  7  April  2015.   Mr  Fayad  is  currently  a  Director  of  PKF  Lawler  Corporate  Finance  Pty  Ltd  and  has  over  30  years   of  experience  in  Corporate  Finance,  accounting  and  other  advisory  related  services.    He  also  has   had  experience  in  advising  biotech  companies  on  fund  raising  and  corporate  strategy.    He  is  also   a   member   of   the   Chartered   Accountants   Australia   and   New   Zealand   and   is   a   registered   tax   agent   and   company   auditor.   Mr   Fayad   is   a   non-­‐executive   Director   of   Ashley   Services   Grp   Ltd   (ASX:   ASH)   appointed   Aug   2014   and   former   non-­‐executive   Director   of   Esperance   Minerals   Limited  (ASX:  ESM)  from  February  2013  to  August  2015.   Peter  May   Mr  May  was  appointed  as  a  Director  on  19  November  2012,  subsequently  became  Chairman  on   15  November  2013,  stood  down  as  Chairman  on  28  April  2014  and  resigned  as  a  non-­‐executive   Director  on  1  July  2014.   Mr   May’s   career   has   included   positions   with   Incitec   and   Crop   Care   Australasia,   where   he   managed   a   multi-­‐million   dollar   product   portfolio,   toll   formulation   and   international   business   development.   Mr   May   is   an   active   member   of   the   Australian   Environmental   Pest   Managers   Association  (AEPMA)  and  has  established  excellent  contacts  within  the  pest  control  and  general   agribusiness  and  animal  health  sectors.  Mr  May  has  not  been  a  director  of  any  other  ASX  listed   company.   Silvi  Elkhouri   Ms  Elkhouri  was  appointed  to  the  Board  on  15  November  2013  and  resigned  8  September  2014.   Ms   Elkhouri   has   had   extensive   international   business   and   finance   experience   and   assisted   in   several  merger  and  acquisition  transactions  involving  listed  and  unlisted  companies.  Ms  Elkouri   has  worked  as  a  corporate  strategy  consultant  for  private  companies  in  Australia  and  the  Middle   East.  During  the  past  three  years.    Ms  Elkhouri  has  not  been  a  director  of  any  other  ASX  listed   company.   Claude  Solitario   Mr  Solitario  was  appointed  28  April  2014  and  resigned  8  September  2014.   Mr   Solitario   who   founded   Invatec   Health   Pty   Ltd,   with   Dr   Stephen   Addis   in   2005,   joined   the   board   as   an   Executive   Director.   Mr   Solitario   has   been   instrumental   in   the   growth   of   Invatec   since   its   inception   in   his   role   as   CEO.   Mr   Solitario   has   over   25   years   of   experience   in   the   development   and   commercialisation   of   intellectual   property.   During   the   past   three   years.     Mr   Solitario  has  not  been  a  director  of  any  other  ASX  listed  company.   Executive  Management     Robert  Lees   Company  Secretary   Qualifications:   B.  Bus.  (UTS),  Grad.  Dip.    DP  (UTS),  CA,  AGIA   Experience:   Mr  Lees  was  appointed  Company  Secretary  and  Chief  Financial  Officer  on  30  September  2012.   Mr  Lees  is  responsible  for  complying  with  all  the  governance  requirements  of  a  listed  company   and  preparation  of  all  financial  and  management  reports  for  the  Medibio  group  of  companies.   In   the   last   14   years   he   has   provided   Company   Secretarial   services   to   several   small   ASX   listed   companies.   This   has   included  involvement   in  10   IPO’s   and   back   door   listings.   He   is   currently   Company  Secretary  of  4  other  listed  public  companies.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   6   26           D I R E C T O R S   R E P O R T   A N N U A L R E P O R T 2 0 1 5   Interests  in  the  shares  and  options  of  the  Company  and  related  bodies  corporate   As  at  the  date  of  this  report,  the  interests  of  the  directors  in  the  shares  and  options  of  Medibio  Limited  were:   Ordinary   Shares   150,000   6,440,541   Nil   Options  over   Ordinary   Shares   Nil   3,000,000   250,000   C.  Indermaur   K.  Knauer   J.  Campbell   Dividends     No  dividends  have  been  paid  or  provided  during  the  year  ended  30  June  2015  (2014:  nil).   Principal  Activities   The  principal  activity  of  the  Group  is  conducting  research  and  development  and  early  stage  commercialisation  of  the   following:   • a  diagnostic  technology  for  mental  health  which  is  based  on  circadian  heart  rate  (CHR)  data.   Business  Review   Operating  Results   The  consolidated  loss  of  the  Group  was  $7,921,702  (2014:  loss  of  $428,332).   Significant  Changes  in  the  State  of  Affairs   With  the  exception  of  those  matters  disclosed  in  Note  24,  there  are  no  other  matters  that  are  likely  to  affect  the  state   of  affairs  or  financial  position  of  the  Group.   Future  Developments   Likely   developments   in   the   operations   of   the   Group   in   future   financial   years,   are   referred   to   in   the   Review   of   Operations.   Events  Subsequent  to  Balance  Date   Apart   from   the   matters   set   out   below   and   in   Note   24   of   the   Financial   Statements,   and   the   issue   of   $3,092,035   of   shares  (further  details  of  these  notes  can  be  found  on  Note  16)  there  are  no  matters  or  circumstances  that  have  arisen   since  the  end  of  the  financial  year  that  have  significantly  affected  either:   • • the  Group’s  operations  in  financial  year  2015;  or   future  prospects.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   7   27                                     D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   Other  Information   Options   On  1  April  2015  a  total  of  21,666,667  options  were  issued,  6,666,667  with  an  exercise  price  of  30cents  expiring  1  April   2017,   15,000,000   with   an   exercise   price   of   10cents   expiring   1   April   2018.   On   2   April   2015   136,658   options   were   exercised   for   136,658   shares   and   at   the   date   of   this   report   there   were   21,530,009   unissued   ordinary   shares   under   option.   Environmental  issues   The   Group’s   operations   are   not   regulated   by   any   significant   environmental   regulation   under   a   law   of   the   Commonwealth  or  of  a  state  or  territory.   Indemnifying  officers  or  auditors     Insurance  of  officers   During  the  financial  year,  Medibio  Limited  paid  a  premium  to  insure  the  directors  and  secretaries  of  the  Group  and  its   Australian  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  Group.  It  is  not  possible  to   apportion   the   premium   between   amounts   relating   to   the   insurance   against   legal   costs   and   those   relating   to   other   liabilities.   The   Group   has   not   otherwise,   during   or   since   the   end   of   the   financial   year,   except   to   the   extent   permitted   by   law,   indemnified   or   agreed   to   indemnify   an   officer   or   auditor   of   the   Group   or   of   any   related   body   corporate   against   a   liability  incurred  as  such  an  officer  or  auditor.   Details  of  the  premium  paid  in  respect  of  insurance  policies  are  not  disclosed  as  such  disclosure  is  prohibited  under   terms  of  the  contract.     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   Group,   or   to   intervene   in   any   proceedings   to   which   the   Group   is   a   party,   for   the   purpose   of   taking   responsibility  on  behalf  of  the  Group  for  all  or  part  of  those  proceedings.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   8   28               A N N U A L R E P O R T 2 0 1 5   D I R E C T O R S   R E P O R T   Remuneration  Report  (Audited)     This  report  outlines  the  key  management  personal  (KMP)  remuneration  arrangements  of  the  Company  and  the  Group   in  accordance  with  the  requirements  of  the  Corporations  Act  2001  and  its  regulations.  For  the  purposes  of  this  report,   KMP   of   the   Group   are   defined   as   those   persons   having   authority   and   responsibility   for   planning,   directing   and   controlling  the  major  activities  of  the  Company  and  the  Group,  directly  and  indirectly,  including  any  director  (whether   executive  or  otherwise)  of  the  parent  company.   For  the  purposes  of  this  report,  the  term  ‘executive’  encompasses  the  chief  financial  officer/  company  secretary  and   the  Marketing  Manager.   Details  of  key  management  personnel   i.   Directors                                           V.  Fayad   Chairman  (non-­‐executive)  –  appointed  28  April  2014  and  resigned  7  April  2015   C.  Indermaur   Chairman  (non-­‐executive)  –  appointed  7  April  2015   J.  Campbell   Director  (non-­‐executive)  –  appointed  8  September  2014   K.  Knauer   Director  (executive)  –  appointed  1  July  2014   C.  Solitario   Director  (executive)  –  appointed  28  April  2014  –  resigned  8  September  2014   S.  ElKhouri   Director  (non-­‐executive)  appointed  15  November  2013    –  resigned  8  September  2014   P.  D.  May   Director  (non-­‐executive)  –  appointed  19  November  2012,  appointed  Chairman     15  November  2013,  ceased  as  Chairman  24  April  2014  &  resigned  1  July  2014   ii.   Executives   S.  Stapelberg   Marketing    –  appointed  1  May  2014   R.  E.  Lees   Chief  Financial  Officer/Company  Secretary  –  appointed  30  September  2012   Remuneration  Philosophy   The  performance  of  the   Group   depends  upon  the  quality  of  its  directors  and  executives.  To  perform  to  satisfactory   levels,  the  Company  must  attract,  motivate  and  retain  highly  skilled  directors  and  executives.   The   Board   of   Directors   is   responsible   for   determining   and   reviewing   compensation   arrangements   for   the   directors,   and  the  executive  team.  The  Board  assesses  the  appropriateness  of  the  nature  and  amount  of  emoluments  of  such   officers   on   a   periodic   basis   by   reference   to   relevant   employment   market   conditions   with   the   overall   objective   of   ensuring  maximum  stakeholder  benefit  from  the  retention  of  a  high  quality  Board  and  executive  team.     To  assist  in  achieving  the  objectives,  the  Board  considers  the  nature  and  amount  of  executive  directors’  and  officers’   emoluments  in  the  context  of  the  Group’s  financial  and  operational  performance.   Remuneration  structure   In  accordance  with  best  practice  corporate  governance,  the  structure  of  non-­‐executive  director  and  senior  manager   remuneration  is  separate  and  distinct.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   9   29                               D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)   Non-­‐executive  director  remuneration   Objective   The   Board   seeks   to   set   remuneration   at   a   level   which   provides   the   Company   with   the   ability   to   attract   and   retain   directors   of   the   appropriate   calibre,   whilst   incurring   a   cost   which   is   acceptable   to   shareholders   given   the   size   and   financial  standing  of  the  Company.   Structure   The  constitution  of  the  Company  specifies  that  non-­‐executive  directors  are  entitled  to  be  paid,  out  of  the  funds  of  the   Company,  an  amount  of  remuneration  which:   does  not:   i.   ii.   a. b. in  any  year  exceed  in  aggregate  the  amount  last  fixed  by  ordinary  resolution;  or   consist  of  a  commission  on  or  percentage  of  profits  or  operating  revenue;  and   is  allocated  among  them:   i.   on  an  equal  basis  having  regard  to  the  proportion  of  the  relevant  year  for  which  each  director  held  office;   or   ii.   as  otherwise  decided  by  the  Board.   Each  director  receives  a  fee  for  being  a  director  of  the  Company.  According  to  the  constitution  of  the  Company,  if  a   director,  at  the  request  of  the  Board  performs  extra  services  or  makes  special  exertions  (including  going  or  living  away   from  the  director’s  usual  residential  address),  the  Company  may  pay  that  director  a  fixed  sum  set  by  the  Board  for   doing  so.  Remuneration  under  this  rule  may  be  either  in  addition  to  or  in  substitution  for  any  remuneration  to  which   that  director  is  entitled.     The  remuneration  of  non-­‐executive  directors  for  the  period  ended  30  June  2015  is  detailed  in  Table  1  on  page  32  of   this  report.   Senior  manager  and  executive  director  remuneration  (executives)   Objective   The   Company   aims   to   reward   executives   with   a   level   of   remuneration   commensurate   with   their   position   and   responsibilities  within  the  Company  and  taking  into  account  the  size  and  financial  standing  of  the  Company  and  so  as   to  ensure  total  remuneration  is  competitive  by  market  standards.   Structure   In  determining  the  level  and  make–up  of  executive  remuneration,  the  Board  considers  market  levels  of  remuneration   for  comparable  executive’s  roles  for  similar  sized  organisations,  and  preferably  within  the  biotech  industry.   Remuneration  consists  of  fixed  remuneration  for  all  executives  with  a  variable  element  for  the  achievement  of  both   short  term  and  long  term  objectives.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   10   30             A N N U A L R E P O R T 2 0 1 5   D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)   Fixed  and  Variable  Remuneration   Objective   The  level  of  fixed  remuneration  is  set  so  as  to  provide  a  base  level  of  remuneration,  which  is  both  appropriate  to  the   position  and  is  competitive  in  the  market.   Fixed   remuneration   is   reviewed   annually   by   the   Board   and   the   process   consists   of   a   review   of   companywide   performance  and  individual  performance,  relevant  comparative  remuneration  in  the  market  and,  where  appropriate,   external  advice  on  policies  and  practices.   Structure   Executives   are   paid   a   fixed   cash   component   consisting   of   an   annual   salary   plus   the   statutory   superannuation   and   annual  leave  and  long  service  leave  obligations.   The   fixed   remuneration   component   of   senior   management   in   the   Group   is   detailed   in   Table   1   below.   No   variable   remuneration  is  currently  payable  to  Directors  or  management.   Consequence  of  company’s  performance  on  shareholders’  wealth   The  Company  is  committed  to  maximising  the  value  of  its  biotech  and  other  assets  through  a  portfolio  of  investments   and  projects.    This  currently  comprises  of:   • a   diagnostic   technology   for   mental   health   which   is   based   on   circadian   heart   rate   data   generally   known   as   heart   rate  monitor  Heart  Rate  Variability  technology;  and   • products   associated   with   animal   health,   skincare   and   agriculture   –   AGRIPRO®,   REGEN®,   QCIDE®   and   TERMILONE®.   The  IP  is  being  maintained  while  we  look  for  purchasers.   As   critical   stages   of   projects   and   investments   are   reached   and   produce   positive   results,   significant   value   should   be   generated  to  shareholders  through  an  increase  in  the  share  price.    As  the  Company  is  at  least  several  years  away  from   generating  taxable  profits,  growth  of  shareholder  wealth  will  not  come  through  the  payment  of  dividends  but  by  an   expected  increase  in  the  average  share  price.       Shareholder  returns   30  June  2015   30  June  2014   30  June  2013   30  June  2012   30  June  2011   Share  price  -­‐cents                                                                   40.0   0.4   0.1   0.2       0.8     Shares  on  issue                                                 89,802,923   3,173,189,372   2,873,174,372   1,612,170,347   1,116,570,347       Capitalisation                                                                                              $35.9m   Loss  per  share  –cents   (8.82)   $12.6m   (0.0015)   $2.9m   (0.05)   $3.2m   (0.2)   $8.9m       (0.3)       MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   11   31               D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)   Remuneration  of  key  management  personnel   Table  1:  Remuneration  for  the  year  ended  30  June  2015                                                                                                                                                                                                                   Short  Term   Salary  &  Fees   $   Executive  director   K  Knauer   a   192,000   Non-­‐executive  directors   V  Fayad  –  Chairman                                            b   51,167   C  Indermaur  -­‐  Chairman                                                                                           5,694   c   J    Campbell                                                                                             d   29,200   P  May                                                                                                         e   C  Solitario                                                                                           f   -­‐   -­‐   S  Elkhouri                                                                                               g   33,000   Sub-­‐total  directors                                 311,061   Other  key  management  personnel  (KMP)   S  Stapelberg                                                                                 97,192   R  E  Lees                                                                                                 134,606   Sub-­‐total  executive  KMP   Totals   231,798   542,859   a. Appointed  1  July  2014  (Short-­‐term  fee  accrued);   b. Resigned  7  April  2015;   c. Appointed  7  July  2015;   d. Appointed  8  September  2014;   Non-­‐ Monetary   Benefits   Post-­‐ Employment   Super   Share   Based   Payments     $   -­‐   -­‐       -­‐   -­‐       -­‐       -­‐   -­‐        -­‐   -­‐   -­‐   -­‐   -­‐   $   -­‐   -­‐   -­‐   2,774       -­‐       -­‐   -­‐       $   -­‐   -­‐   45,000   43,600   -­‐   -­‐   -­‐   2,774                   88,600   7,808   -­‐   7,808   10,582     -­‐   -­‐   -­‐   88,600   e. Resigned  1  July  2014;   f. Resigned  8  September  2014;   g. Resigned  8  September  2014.   Termination   Payment   $   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐    Total   $   192,000   51,167   50,694   75,574   -­‐   -­‐   33,000   402,435               105,000   134,606   239,606   642,041   KMP  transaction  and  balances  are  disclosed  in  Notes  13  and  18  to  the  Financial  Statements.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   12   32                                       A N N U A L R E P O R T 2 0 1 5   D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)    Table  2:  Remuneration  for  the  year  ended  30  June  2014   Short  Term   Post-­‐Employment   Non-­‐  Monetary   Benefits   Salary  &  Fees   $   Non-­‐executive  directors   W  Willesee    -­‐  Chairman                                                                                                   22,500   a   V  Fayad                                                                                            b   B  Cooper                     C  Solitario                                   P  May                       S  Elkhouri                         Sub-­‐total  non-­‐executive   directors     c   d   e   f   12,000   32,000   -­‐   58,833   22,500   147,833   Other  key  management  personnel  (KMP)   P  May   g   R  Lees                                                                                                 Sub-­‐total  executive   KMP   Totals   18,265   96,591   114,856   262,689   a. Resigned  15  November  2013;   b. Appointed  28  April  2014;   c. Resigned  28  April  2014;   d. Appointed  28  April  2014;   Super   $   Share  Based   Payments   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   1,735   -­‐   1,735   1,735     -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   Termination   Payment   $   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   Total   $   22,500   12,000   32,000   -­‐   58,833   22,500   147,833   20,000   96,591   116,591   264,424   $   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   e. Resigned  1  July  2014;   f. Resigned  8  September  2014;   g. Appointed  1  May  2014.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   13   33                               D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)   Table  3:  Option  holdings  of  key  management  personnel  (consolidated)   Options  held  in  Medibio  Limited  (number)  (post-­‐consolidation)   30  June  2015   Directors   V  Fayad   C  Indermaur   J  Campbell   K  Knauer   P  May                           C  Solitario   S  Elkhouri     Executives   S  Stapelberg                 R  Lees                           Total   a   b   c   d   e   f   g   Balance  at     1  July  14   Granted  As   Remuneration    Options   Forfeited   Net  Change     Other   Balance  At   30  June  15   Vested  at     30  June  15         Total                                                                                                                                   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   250,000   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   250,000   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   3,000,000   -­‐ -­‐   -­‐ -­‐   -­‐   -­‐   3,000,000   -­‐   -­‐   -­‐   -­‐   -­‐   3,000,000   -­‐   -­‐   3,000,000   -­‐   -­‐   250,000   3,000,000   -­‐   -­‐   -­‐   -­‐   -­‐   3,250,000   a. Resigned  7  April  2015;   b. Appointed  7  April  2015;   c. Appointed  8  September  2014;   d. Appointed  1  July  2014;   Options  held  in  Medibio  Limited  (number)  (pre-­‐consolidation)   e. Resigned  1  July  2014;   f. Resigned  8  September  2014;   g. Resigned  8  September  2014.   Balance  at     1  July  13   Granted  As   Remuneration    Options   Forfeited   Net  Change     Other   Balance  At   30  June  14   Vested  at     30  June  14         Total                                                                                                                                   30  June  2014   Directors   W  Willesee   V  Fayad   B  Cooper   C  Solitario   P  May                           S  Elkhouri     Executives   S  Stapelberg                 R  Lees                           Total   a   b   c   d   e   f   g   15,000,00   -­‐   -­‐   -­‐   2,000,000   -­‐   -­‐   -­‐   17,000,000   a. Resigned  15  November  2013;   b. Appointed  28  April  2014;   c. Resigned  28  April  2014;   d. Appointed  28  April  2014;   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   34 -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   (15,000,000)   -­‐   -­‐   -­‐   (2,000,000) -­‐ -­‐   -­‐   (17,000,000)   e. Resigned  1  July  2014;   f. Resigned  7  September  2014;   g. Appointed  1  May  2014.   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   14                                                   A N N U A L R E P O R T 2 0 1 5   D I R E C T O R S   R E P O R T   Remuneration  Report  (audited)  (continued)   Table  4:  Shareholdings  of  key  management  personnel  (consolidated)   Shares  held  in  Medibio  Limited  (number)  (post-­‐consolidation)   Balance     1  July  14    30  June  2015                                                                                                   Directors   V  Fayad                             a   C  Indermaur                            b   c   J  Campbell                         d   K  Knauer                       e   P  May                                   f   C  Solitario                       S  Elkhouri                         g   Executives   S  Stapelberg               R  Lees                                     Total   -­‐   -­‐   -­‐   -­‐   26,522   693,424   -­‐          -­‐          -­‐   719,946   a. Resigned  7  April  2015;   b. Appointed  Chairman  7  April  2015;     c. Appointed  8  September  2014   d. Appointed  1  July  2014;    Granted  as   remuneration   On   exercise  of   options   Net  change   other   Balance     30  June  15   -­‐   150,000   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   150,000   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   6,440,541   (26,522)   (693,424)   -­‐   -­‐   -­‐   5,720,595          -­‐   150,000   -­‐   6,440,541   -­‐   -­‐   -­‐          -­‐          -­‐   6,590,541   e. Resigned  1  July  2014;   f. Resigned  7  September  2014;   g. Resigned  7  September  2014.   Shares  held  in  Medibio  Limited  (number)  (pre-­‐consolidation)   Balance     1  July  13    30  June  2014                                                                                               Directors   W  Willesee                     V  Fayad                             B  Cooper                         C  Solitario                       P  May                                   S  Elkhouri                         Executives   S  Stapelberg               R  Lees                                     Total   -­‐   -­‐   -­‐   -­‐   2,652,175   -­‐          -­‐          -­‐   2,652,175   a   b   c   d   g   e   f   a. Resigned  15  November  2013;   b. Appointed  Chairman  28  April  2014;   c. Resigned  28  April  2014;    Granted  as   remuneration   On   exercise  of   options   Net  change   other   Balance     30  June  14   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   69,342,443   -­‐   -­‐          -­‐   -­‐   -­‐   69,342,443   2,652,175   -­‐   -­‐   -­‐   69,342,443          -­‐          -­‐   71,994,618   d. Appointed  28  April  2014;   e. Appointed  15  November  2013;   f. Appointed  1  May  2014.   g. Resigned  1  July  2014   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   15   35                                                                                                                                                                                                                                                                                                                                                                             D I R E C T O R ’ S R E P O R T D I R E C T O R S   R E P O R T   D I R E C T O R S   R E P O R T   Directors’  Meetings   Directors’  Meetings   The   number   of   meetings   of   directors   (including   meetings   of   committees   of   directors)   held   during   the   year   and   the   The   number   of   meetings   of   directors   (including   meetings   of   committees   of   directors)   held   during   the   year   and   the   number  of  meetings  attended  by  each  director  was  as  follows:   number  of  meetings  attended  by  each  director  was  as  follows:   Eligible  to   Eligible  to   attend   attend   1   1   6   6   4   4   6   6   3   3   1   1   3   3   Number   Number   attended   attended   1   1   6   6   3   3   6   6   3   3   1   1   3   3   Audit  committee   Audit  committee   Eligible  to  attend   Eligible  to  attend   -­‐   -­‐   -­‐   -­‐   1   1   1   1   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   Number   Number   attended   attended   -­‐   -­‐   -­‐   -­‐   1   1   1   1   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   Chris  Indermaur   Chris  Indermaur   Kris  Knauer   Kris  Knauer   James  Campbell   James  Campbell   V  Fayad   V  Fayad   C  Solitario   C  Solitario   P  May     P  May     S  ElKhouri   S  ElKhouri   Committee  membership   Committee  membership   As  at  the  date  of  this  report,  the  Company  had  no  separate  committees,  other  than  the  audit  committee.   As  at  the  date  of  this  report,  the  Company  had  no  separate  committees,  other  than  the  audit  committee.   Auditor  Non-­‐Audit  Services   Auditor  Non-­‐Audit  Services   The  following  non-­‐audit  services  were  provided  by  the  entity’s  auditor,  William  Buck  (Qld).  The  directors  are  satisfied   The  following  non-­‐audit  services  were  provided  by  the  entity’s  auditor,  William  Buck  (Qld).  The  directors  are  satisfied   that  the  provision  of  non-­‐audit  services  is  compatible  with  the  general  standard  of  independence  for  auditors  imposed   that  the  provision  of  non-­‐audit  services  is  compatible  with  the  general  standard  of  independence  for  auditors  imposed   by  the  Corporations  Act  2001  and  APES  110  Code  of  Ethics  for  Professional  Accountants.  The  nature  and  scope  of  each   by  the  Corporations  Act  2001  and  APES  110  Code  of  Ethics  for  Professional  Accountants.  The  nature  and  scope  of  each   type  of  non-­‐audit  service  provided  means  that  auditor  independence  was  not  compromised.   type  of  non-­‐audit  service  provided  means  that  auditor  independence  was  not  compromised.   William  Buck  received  the  following  amounts  for  the  provision  of  non-­‐audit  services:   William  Buck  received  the  following  amounts  for  the  provision  of  non-­‐audit  services:   Tax  compliance   Tax  compliance   Other   Other   Auditor  Independence   Auditor  Independence   The  auditor’s  independence  declaration  has  been  received  and  can  be  found  on  page  17.   The  auditor’s  independence  declaration  has  been  received  and  can  be  found  on  page  17.   Signed  in  accordance  with  a  resolution  of  the  directors   Signed  in  accordance  with  a  resolution  of  the  directors   2015   2015   12,575   12,575   690   690   2014   2014   8,150   8,150   595   595   Chris  Indermaur   Chris  Indermaur   Chairman   Chairman   30  September  2015   30  September  2015   Sydney,  NSW Sydney,  NSW MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   16   16   36    DIRECTORS  REPORT   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015    16    Directors’  Meetings  The  number  of  meetings  of  directors  (including  meetings  of  committees  of  directors)  held  during  the  year  and  the  number  of  meetings  attended  by  each  director  was  as  follows:                                Audit  committee    Eligible  to  attend  Number  attended    Eligible  to  attend  Number  attended  Chris  Indermaur  1  1  -­‐  -­‐  Kris  Knauer  6  6  -­‐  -­‐  James  Campbell  4  3  1  1  V  Fayad  6  6  1  1  C  Solitario  3  3  -­‐  -­‐  P  May    1  1  -­‐  -­‐  S  ElKhouri  3  3  -­‐  -­‐  Committee  membership  As  at  the  date  of  this  report,  the  Company  had  no  separate  committees,  other  than  the  audit  committee.  Auditor  Non-­‐Audit  Services  The  following  non-­‐audit  services  were  provided  by  the  entity’s  auditor,  William  Buck  (Qld).  The  directors  are  satisfied  that  the  provision  of  non-­‐audit  services  is  compatible  with  the  general  standard  of  independence  for  auditors  imposed  by  the  Corporations  Act  2001  and  APES  110  Code  of  Ethics  for  Professional  Accountants.  The  nature  and  scope  of  each  type  of  non-­‐audit  service  provided  means  that  auditor  independence  was  not  compromised.  William  Buck  received  the  following  amounts  for  the  provision  of  non-­‐audit  services:    2015  2014  Tax  compliance  12,575  8,150  Other  690  595  Auditor  Independence  The  auditor’s  independence  declaration  has  been  received  and  can  be  found  on  page  17.  Signed  in  accordance  with  a  resolution  of  the  directors        Chris  Indermaur  Chairman    30  September  2015  Sydney,  NSW                                                                                                         A N N U A L R E P O R T 2 0 1 5 A U D I T O R ’ S I N D E P E N D E N C E A U D I T O R ’ S   I N D E P E N D E N C E   D E C L A R A T I O N   D E C L A R A T I O N Auditor’s  Independence  Declaration  under  Section  307C  of  the  Corporations  Act  2001  to  the  Directors  of   Medibio  Limited   I  declare  that,  to  the  best  of  my  knowledge  and  belief  during  the  year  ended  30  June  2015  there  have  been:   • no  contraventions  of  the  auditor  independence  requirements  as  set  out  in  the  Corporations  Act  2001  in  relation  to   the  audit;  and   • no  contraventions  of  any  applicable  code  of  professional  conduct  in  relation  to  the  audit.   William  Buck  (Qld)   ABN:  11  603  627  400   M.  Ayoob   A  Member  of  the  Firm   Dated  this  30th  day  of  September,  2015   Brisbane   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   17   37    INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001      INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001                       C O R P O R A T E G O V E R N A N A C E C O R P O R A T E   G O V E R N A N A C E   Medibio   Limited   (‘Medibio’)   through   its   Board   of   Directors   (‘Board’)   is   responsible   for   the   overall   corporate   governance   of   Medibio   and   has   adopted   as   a   guiding   principle   that   it   act   honestly,   conscientiously   and   fairly   in   accordance  with  the  law  and  in  the  interests  of  the  shareholders  with  a  view  to  building  sustainable  value  for  them,   the  Company’s  employees  and  other  stakeholders  in  the  Company.   The  Board  has  adopted  a  suite  of  governance  materials  which  are  available  in  the  Corporate  Governance  section  of   the   Company’s   website.     The   governance   materials   have   been   prepared   and   adopted   on   the   basis   that   corporate   governance  procedures  can  add  to  the  performance  of  the  Company  and  the  creation  of  shareholder  value,  and  help   to  engender  the  confidence  of  the  investment  market.   ASX  Corporate  Governance  Principles  and  Recommendations   This  statement  sets  out  the  material  governance  principles  and  processes  adopted  by  the  Board.    The  Board  supports   the  Corporate  Governance  Principles  and  Recommendations,  3rd  edition  as  released  by  the  ASX  Corporate  Governance   Council  (“ASX  Principles  or  “ASXCGC”).    The  Board  considers  and  applies  these  recommendations  to  the  extent  there   is   a   sound   reason   to   do   so   given   the   circumstances   of   the   Company.   The   Corporate   Governance   Statements   were   reviewed   and   approved   by   the   Board   on   19   June   2015   and   are   available   on   the   Company’s   website:     http://www.medibio.com.au/index.php/about/corporate-­‐governance MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   18   38     C O N S O L I D A T E D   S T A T E M E N T   O F   P R O F I T   O R   C O N S O L I D A T E D S T A T E M E N T O F P R O F I T O R L O S S & L O S S   &   O T H E R   C O M P R E H E N S I V E   I N C O M E   O T H E R C O M P R E H E N S I V E I N C O M E A N N U A L R E P O R T 2 0 1 5 For  the  Year  Ended  30  June  2015   Profit  on  sale  of  investment   Other  income   Revenue   Finance  costs   Amortisation  &  Depreciation   Employee  costs   Impairment  of  investments   Research  and  development  expenses   Other  expenses   Loss  before  income  tax   Income  tax    benefit     Loss  attributable  to  members  of  Medibio  Limited   Other  comprehensive  income   -­‐  items  that  may  be  reclassified  to  profit  or  loss   Total  other  comprehensive  income  for  the  period  net  of  tax   Total  comprehensive  income  attributable  to  members  of   Medibio     Basic  earnings  per  share  (cents  per  share)     Diluted  earnings  per  share  (cents  per  share)   Note   5   5   5   5   5   6   7   7   CONSOLIDATED   2015   $   -­‐   261,933   261,933   (160,622)   (516,461)   (492,435)   (4,306,033)   (210,664)   (2,497,420)   (7,921,702)   -­‐   (7,921,702)   2014   $   463,194   6,976   470,170   (107,221)   -­‐   (138,833)   -­‐   (15,091)   (637,357)   (428,332)   -­‐   (428,332)   -­‐   -­‐   -­‐   -­‐   (7,921,702)   (428,332)   (16.995)   (16.995)   (0.015)   (0.015)   The  above  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income  should  be  read  in  conjunction  with   the  accompanying  notes.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   19   39                                                         C O N S O L I D A T E D   S T A T E M E N T   O F   F I N A N C I A L   C O N S O L I D A T E D S T A T E M E N T P O S I T I O N   O F F I N A N C I A L P O S I T I O N As  at  30  June  2015   ASSETS   Current  Assets   Cash  and  cash  equivalents   Trade  and  other  receivables   Prepayments     Total  Current  Assets   Non-­‐current  Assets   Available  for  sale  investments   Intangibles  assets   Total  Non-­‐current  Assets   TOTAL  ASSETS   LIABILITIES   Current  Liabilities   Trade  and  other  payables   Borrowings   Total  Current  Liabilities   Non-­‐current  Liabilities   Borrowings   Other  payables   Total  Non-­‐current  Liabilities   TOTAL  LIABILITIES   NET  ASSETS   EQUITY   Issued  capital   Reserves   Accumulated  losses   TOTAL  EQUITY   Note   8   9   10   12   13   14   14   15   CONSOLIDATED   2015   $   2014   $   944,301   232,985   9,091   1,186,377   -­‐   13,998,137   13,998,137   15,184,514   2,380,280   197,500   2,577,780   3,495,653   -­‐   3,495,653   6,073,433   9,111,081   96,249   132,393   9,091   237,733   4,461,034   343,750   4,804,784   5,042,517   431,240   1,500,000   1,931,240   395,000   6,006   401,006   2,332,246   2,710,271            16  (a)   22   51,093,889   479,600   (42,462,408)   9,111,081   37,250,977   -­‐   (34,540,706)   2,710,271   The  above  consolidated  statement  of  financial  position  should  be  read  in  conjunction  with  the  accompanying  notes. MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   20   40                                                                                       C O N S O L I D A T E D   S T A T E M E N T   O F   C H A N G E S   C O N S O L I D A T E D S T A T E M E N T I N   E Q U I T Y   O F C H A N G E S I N E Q U I T Y A N N U A L R E P O R T 2 0 1 5 For  the  Year  Ended  30  June  2015   At  1  July  2013   Comprehensive  income   Loss  for  the  period   Other  comprehensive  income   Total  comprehensive  income   Transactions  with  owners   Shares  issued   Share  options  lapsed   Total  transactions  with  owners   At  30  June  2014   Issued  Capital   $   36,650,527   Accumulated   Losses   $   (37,024,324)   Share  Based   Payments   Reserve   $   2,911,950   -­‐   -­‐   -­‐   (428,332)   -­‐   (428,332)   -­‐   -­‐   -­‐   600,450   -­‐   600,450   37,250,977   -­‐   2,911,950   -­‐   (34,540,706)   -­‐   (2,911,950)   -­‐   -­‐   At  1  July  2014   37,250,977   (34,540,706)   Comprehensive  income   Loss  for  the  period   Other  comprehensive  income   Total  comprehensive  income   Transactions  with  owners   Shares  issued   Share  options  issued   Share  issue  costs   Total  transactions  with  owners   At  30  June  2015   -­‐   -­‐   -­‐   (7,921,702)   -­‐   (7,921,702)   -­‐   -­‐   -­‐   -­‐   14,393,862   -­‐   (550,950)   13,842,912   51,093,889   -­‐   -­‐   -­‐   -­‐   (42,462,408)   -­‐   479,600   -­‐   479,600   479,600   Total  Equity   $   2,538,153   (428,332)   -­‐   (428,332)   600,450   -­‐   600,450   2,710,271   2,710,271   (7,921,702)   -­‐   (7,921,702)   14,393,862   479,600   (550,950)   14,322,512   9,111,081   The  above  consolidated  statement  of  changes  in  equity  should  be  read  in  conjunction  with  the  accompanying  notes.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   21   41                                                                                         C O N S O L I D A T E D   S T A T E M E N T   O F   C A S H   C O N S O L I D A T E D S T A T E M E N T F L O W S   O F C A S H F L O W S For  the  Year  Ended  30  June  2015   Cash  flows  from  operating  activities   Receipts  from  customers   R&D  Grant  received   Payments  to  suppliers  and  employees   Net  cash  flows  used  in  operating  activities   Cash  flows  from  investing  activities   Interest  received   Payments  for  intangible  assets   Proceeds  from  sale  of  available  for  sale  investments   Payments  for  acquisitions   Net  cash  flows  (used  in)  provided  by  investing  activities   Cash  flows  from  financing  activities   Proceeds  from  issues  of  shares  and  options   Transaction  costs  of  issue  of  shares     Repayment  of  convertible  notes   Proceeds  from  issue  of  convertible  notes   Interest  paid   Net  cash  flows  from  (used  in)  financing  activities   Net    (decrease)  /  increase  in  cash  and  cash  equivalents   Net  cash  acquired  in  business  combinations   Cash  and  cash  equivalents  at  beginning  of  the  year   Cash  and  cash  equivalents  at  end  of  the  year   Note                        8  (a)                                8   CONSOLIDATED   2015   $   2014   $   -­‐   255,120   (1,770,203)   (1,515,083)   8,225   -­‐   (619,482)   (611,257)   6,813   (1,087,181)   -­‐   (10,000)   (1,090,368)   6,976   (343,750)   1,690,425   -­‐   1,353,651   3,432,000   (550,950)   -­‐   685,000   (112,940)   3,453,110   843,659   393   96,249   944,301   450   -­‐   (1,200,000)   395,000   (22,532)   (827,082)   (84,688)   -­‐   180,937   96,249   The  above  consolidated  statement  of  cash  flows  should  be  read  in  conjunction  with  the  accompanying  notes.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   22   42                                                                               C O N T E N T S   T O   N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   A N N U A L R E P O R T 2 0 1 5 C O N T E N T S T O N O T E S T O T H E F I N A N C I A L S T A T E M E N T S 1.   2.   3.   4.   5.   6.   7.   8.   9.   CORPORATE  INFORMATION  ....................................................................................................................................  44   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  ..............................................................................................  44   SIGNIFICANT  ACCOUNTING  JUDGEMENTS,  ESTIMATES  AND  ASSUMPTIONS  .........................................................  56   SEGMENT  REPORTING  .............................................................................................................................................  57   REVENUES  AND  EXPENSES  .......................................................................................................................................  61   INCOME  TAX  ............................................................................................................................................................  62   EARNINGS  PER  SHARE  ..............................................................................................................................................  44   CASH  AND  CASH  EQUIVALENTS  ...............................................................................................................................  64   TRADE  AND  OTHER  RECEIVABLES  ............................................................................................................................  64   10.   OTHER  FINANCIAL  ASSET  –  AVAILABLE  FOR  SALE  FINANCIAL  ASSETS  .....................................................................  65   11.   BUSINESS  COMBINATIONS  ......................................................................................................................................  66   13.   TRADE  AND  OTHER  PAYABLES  –  CURRENT  ..............................................................................................................  69   14.   BORROWINGS  ..........................................................................................................................................................  70   15.   OTHER  PAYABLES  (NON-­‐CURRENT)  .........................................................................................................................  70   16.   ISSUED  CAPITAL  .......................................................................................................................................................  71   17.   AUDITORS’  REMUNERATION  ...................................................................................................................................  74   18.   KEY  MANAGEMENT  PERSONNEL  .............................................................................................................................  74   19.   RELATED  PARTY  DISCLOSURES  .................................................................................................................................  74   20.   FINANCIAL  RISK  MANAGEMENT  OBJECTIVES  AND  POLICIES  ...................................................................................  75   21.   CONTINGENT  LIABILITIES  .........................................................................................................................................  76   22.   SHARE-­‐BASED  PAYMENT  PLANS  ..............................................................................................................................  77   23.   PARENT  ENTITY  INFORMATION  ...............................................................................................................................  78   24.     EVENTS  AFTER  THE  END  OF  THE  REPORTING  PERIOD  .............................................................................................  78   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   23   43             N OT E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 1. CORPORATE  INFORMATION     Medibio   Limited   (formerly   BioProspect   Limited)   (the   parent)   (‘Medibio’)   is   a   for   profit   company   limited   by   shares   incorporated  in  Australia  whose  shares  are  publicly  traded  on  the  Australian  Securities  Exchange.    The  nature  of  the   operations  and  principal  activities  of  the  Group  are  described  in  the  Directors’  Report.   2. SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES   a. Basis  of  preparation   These   financial   statements   are   general-­‐purpose   financial   statements   which   have   been   prepared   in   accordance   with   the   requirements   of   the   Corporations   Act   2001,   Australian   Accounting   Standards   and   other   authoritative   pronouncements  of  the  Australian  Accounting  Standards  Board.  The  financial  statements  have  also  been  prepared  on   a  historical  cost  basis,  except  for  available-­‐for-­‐sale  investments,  which  have  been  measured  at  fair  value.   The   financial   statements   have   been   prepared   on   a   going   concern   basis,   as   set   out   in   note   16(c).   Medibio   and   the   Group’s   ability   to   continue   as   a   going   concern   is   dependent   upon   its   ability   to  generate   sufficient   cash   from   future   operations  and  to  raise  additional  capital.   Australian   Accounting   Standards   set   out   accounting   policies   that   the   AASB   has   concluded   would   result   in   financial   statements  containing  relevant  and  reliable  information  about  transactions,  events  and  conditions.    Compliance  with   Australian   Accounting   Standards   ensures   that   the   financial   statements   and   notes   also   comply   with   International   Financial  Reporting  Standards.    The  following  is  a  summary  of  the  material  accounting  policies  adopted  by  the  Group   in   the   preparation   of   the   financial   statements.     The   accounting   policies   have   been   consistently   applied,   unless   otherwise  stated.   The  financial   statements  are  presented  in  Australian  dollars  and  all  values  are  rounded  to  the  nearest  dollar  unless   otherwise  stated.       b. New  and  revised  accounting  standards  for  Application  in  Future  Periods     The   AASB   has   issued   new   and   amended   accounting   standards   and   interpretations   that   have   mandatory   application   dates  for  future  reporting  periods  and  which  the  Group  has  decided  not  to  early  adopt.    A  discussion  of  those  future   requirements  and  their  impact  on  the  Group  is  as  follows:   AASB  9  Financial  Instruments  (December  2014)  and  AASB  2014-­‐7  Amendments  to  Australian  Accounting  Standards   arising  from  AASB  9  (December  2014)  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January   2018)   AASB   9   includes   requirements   for   the   classification   and   measurement   of   financial   assets,   the   accounting   requirements  for  financial  liabilities,  impairment  testing  requirements  and  hedge  accounting  requirements.   The  changes  made  to  accounting  requirements  by  these  standards  include:   • • • • simplifying  the  classifications  of  financial  assets  into  those  carried  at  amortised  cost  and  those  carried  at   fair  value  and  an  allowance  for  debt  instruments  to  be  carried  at  fair  value  through  other  comprehensive   income  in  certain  circumstances   simplifying  the  requirements  for  embedded  derivatives   allowing   an   irrevocable   election   on   initial   recognition   to   present   gains   and   losses   on   investments   in   equity  instruments  that  are  not  held  for  trading  in  other  comprehensive  income.    Dividends  in  respect  of   these   investments   that   are   a   return   on   investment   can   be   recognised   in   profit   or   loss   and   there   is   no   impairment  or  recycling  on  disposal  of  the  instrument   financial  assets  will  need  to  be  reclassified  where  there  is  a  change  in  an  entity’s  business  model  as  they   are  initially  classified  based  on  (a)  the  objective  of  the  entity’s  business  model  for  managing  the  financial   assets;  and  (b)  the  characteristics  of  the  contractual  cash  flows   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   24   44           A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   • • • amending   the   rules   for   financial   liabilities   that   the   entity   elects   to   measure   at   fair   value,   requiring   changes  in  fair  value  attributed  to  the  entity’s  own  credit  risk  to  be  presented  in  other  comprehensive   income   introducing   new   general   hedge   accounting   requirements   intended   to   more   closely   align   hedge   accounting  with  risk  management  activities  as  well  as  the  addition  of  new  disclosure  requirements   requirements  for  impairment  of  financial  assets   The  Group  has  not  yet  assessed  the  impact  of  this  standard.   ⎯ AASB  2014-­‐8  Amendments  to  Australian  Accounting  Standards  arising  from  AASB  9  (December  2014)  –  Application   of  AASB  9  (December  2009)  and  AASB  9  (December  2010)  (applicable  for  annual  reporting  periods  commencing  on   or  after  1  January  2015)   This   standard   limits   the   application   of   the   existing   versions   of   AASB   9   (AASB   9   (December   2009)   and   AASB   9   (December  2010))  from  1  February  2015.   ⎯ AASB  14  Regulatory  Deferral  Accounts  and  AASB  2014  -­‐1  Amendments  to  Australian  Accounting  Standards  [Part   D]  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2016)   AASB  14  applies  only  to  an  entity’s  first  Australian-­‐Accounting-­‐Standards  financial  statements  where  they  conduct   rate  regulated  activity  and  recognise  amounts  that  qualify  as  regulatory  deferral  account  balances.    AASB  2014-­‐1   [Part   D]   makes   consequential   amendments   to   AASB   1   First-­‐time   Adoption   of   Australian   Accounting   Standards.     This  standard  will  not  impact  the  entity.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB   15   Revenue   from   Contracts   with   Customers   and   AASB   2014-­‐5   Amendments   to   Australian   Accounting   Standards  arising  from  AASB  15  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2017)   AASB   15   establishes   a   single,   comprehensive   framework   for   revenue   recognition,   and   replaces   the   previous   revenue  Standards  AASB  118  Revenue  and  AASB  111  Construction  Contracts,  and  the  related  Interpretations  on   revenue   recognition   Interpretation   13   Customer   Loyalty   Programmes,   Interpretation   15   Agreements   for   the   Construction   of   Real   Estate,   Interpretation   18   Transfers   of   Assets   from   Customers   and   Interpretation   131   Revenue—Barter  Transactions  Involving  Advertising  Services.   AASB  15  introduces  a  five  step  process  for  revenue  recognition  with  the  core  principle  of  the  new  Standard  being   for  entities  to  recognise  revenue  to  depict  the  transfer  of  goods  or  services  to  customers  in  amounts  that  reflect   the   consideration   (that   is,   payment)   to   which   the   entity   expects   to   be   entitled   in   exchange   for   those   goods   or   services.       AASB  15  will  also  result  in  enhanced  disclosures  about  revenue,  provide  guidance  for  transactions  that  were  not   previously   addressed   comprehensively   (for   example,   service   revenue   and   contract   modifications)   and   improve   guidance  for  multiple-­‐element  arrangements.   The  Group  has  not  yet  assessed  the  impact  of  this  standard.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   25   45                               N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 ⎯ AASB  1056  Superannuation  Entities  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  July  2016)   AASB   1056   is   applicable   for   superannuation   entities   which   are   regulated   by   APRA   and   increase   the   level   of   integration  between  AASB  1056  and  other  AASB  standards.    Some  of  the  changes  in  AASB  1056  include:   • A  revised  definition  of  a  superannuation  entity   • Revised  and  consistent  content  for  the  financial  statements         • Use  of  fair  value  rather  than  net  market  value  for  measuring  assets  and  liabilities   • Revised  member  liability  recognition  and  measurement  requirements   • Revised  disclosure  principles   This  standard  is  not  expected  to  impact  the  Group.     ⎯ AASB  2014-­‐3  Amendments  to  Australian  Accounting  Standards  –  Accounting  for  Acquisitions  of  Interests  in  Joint   Operations  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2016)   This   standard   amends   AASB   11   to   provide   guidance   on   the   accounting   for   acquisitions   of   interests   in   joint   operations  in  which  the  activity  constitutes  a  business.    The  amendments  require  the  acquirer  of  an  interest  in  a   joint   operation   in   which   the   activity   constitutes   a   business   to   apply   all   of   the   principles   in   AASB   3   and   other   Australian   Accounting   Standards   except   for   those   principles   that   conflict   with   the   guidance   in   AASB   11   in   accounting  for  the  acquisition.    AASB  2014-­‐3  also  requires  disclosure  of  the  information  required  by  AASB  3  and   other  Australian  Accounting  Standards  for  business  combinations.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB   2014-­‐4   Amendments   to   Australian   Accounting   Standards   –   Clarification   of   Acceptable   Methods   of   Depreciation  and  Amortisation  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2016)   This   standard   amends   AASB   116   and   AASB   138   to   establish   the   principle   for   the   basis   of   depreciation   and   amortisation  as  being  the  expected  pattern  of  consumption  of  the  future  economic  benefits  of  an  asset  and  to   clarify  that  the  use  of  revenue-­‐based  methods  to  calculate  the  depreciation  of  an  asset  is  not  appropriate.    The   standard   also   clarifies   that   revenue   is   generally   presumed   to   be   an   inappropriate   basis   for   measuring   the   consumption   of   the   economic   benefits   embodied   in   an   intangible   asset.     This   presumption,   however,   can   be   rebutted  in  certain  limited  circumstances.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB  2014-­‐6  Amendments  to  Australian  Accounting  Standards  –  Agriculture:  Bearer  Plants  [AASB  101,  AASB  116,   AASB  117,  AASB  123,  AASB  136,  AASB  140  &  AASB  141]  (applicable  for  annual  reporting  periods  commencing  on   or  after  1  January  2016)   This  standard  amends  the  accounting  for  bearer  plants  to  now  be  the  same  as  property,  plant  and  equipment  in   AASB   116   Property,   Plant   and   Equipment,   because   their   operation   is   similar   to   that   of   manufacturing.     Consequently,  the  amendments  include  them  within  the  scope  of  AASB  116,  instead  of  AASB  141  and  therefore   entities   can   choose   to   measure   them   at   cost   or   fair   value.     The   produce   growing   on   bearer   plants   will   remain   within  the  scope  of  AASB  141.   This  standard  is  not  expected  to  impact  the  Group.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   26   46                               A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   ⎯ AASB  2014-­‐9  Amendments  to  Australian  Accounting  Standards  –  Equity  Method  in  Separate  Financial  Statements   (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2016)   This  standard  will  allow  entities  to  use  the  equity  method  to  account  for  its  interest  in  subsidiaries,  joint  ventures   and  associates  in  separate  financial  statements  and  makes  editorial  corrections  to  AASB  127.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB   2014-­‐10   Amendments   to   Australian   Accounting   Standards   –   Sale   or   Contribution   of   Assets   between   an   Investor   and   its   Associate   or   Joint   Venture   (applicable   for   annual   reporting   periods   commencing   on   or   after   1   January  2016)   The   amendments   address   an   acknowledged   inconsistency   between   the   requirements   in   AASB   10   and   those   in   AASB  128  (2011),  in  dealing  with  the  sale  or  contribution  of  assets  between  an  investor  and  its  associate  or  joint   venture.   The  main  consequence  of  the  amendments  is  that  a  full  gain  or  loss  is  recognised  when  a  transaction  involves  a   business   (whether   it   is   housed   in   a   subsidiary   or   not).   A   partial   gain   or   loss   is   recognised   when   a   transaction   involves  assets  that  do  not  constitute  a  business,  even  if  these  assets  are  housed  in  a  subsidiary.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB  2015-­‐1  Amendments  to  Australian  Accounting  Standards  –  Annual  Improvements  to  Australian  Accounting   Standards  2012–2014  Cycle  [AASB  1,  AASB  2,  AASB  3,  AASB  5,  AASB  7,  AASB  11,  AASB  110,  AASB  119,  AASB  121,   AASB  133,  AASB  134,  AASB  137  &  AASB  140]  (applicable  for  annual  reporting  periods  commencing  on  or  after  1   January  2016)   This   Standard   makes   various   amendments   to   Accounting   Standards   as   part   of   the   International   Accounting   Standards  Board  (IASB)  International  Financial  Reporting  Standards  (IFRSs)  Annual  Improvements  to  IFRSs  2012– 2014  Cycle  including:   • • • • IFRS  5  –  reclassification  from  held  for  sale  to  held  for  distribution  to  owners  or  from  held  for  distribution  to   owners  to  held  for  sale  is  considered  to  the  continuation  of  the  original  plan  of  disposal;   IFRS   7   –   adds   basis   of   conclusion   to   clarify   disclosure   requirements   for   transferred   financial   assets   and   offsetting  arrangements;   IAS   19   –   confirms   that   high   quality   corporate   bonds   or   national   government   bonds   used   to   determine   discount  rates  must  be  in  the  same  currency  as  the  benefits  paid  to  the  employee;  and   IAS  34  –  clarifies  information  about  cross  references  in  the  interim  financial  report.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB  2015-­‐2  Amendments  to  Australian  Accounting  Standards  –  Disclosure  Initiative:  Amendments  to  AASB  101   (applicable  for  annual  reporting  periods  commencing  on  or  after  1  January  2016)   The   amendments   aim   at   clarifying   IAS   1   to   address   perceived   impediments   to   preparers   exercising   their   judgement  in  presenting  their  financial  reports   This  standard  is  not  expected  to  impact  the  Group.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   27   47                                   N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 ⎯ AASB   2015-­‐3   Amendments   to   Australian   Accounting   Standards   arising   from   the   Withdrawal   of   AASB   1031   Materiality  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  July  2015)   This  Standard  completes  the  withdrawal  of  references  to  AASB  1031  in  all  Australian  Accounting  Standards  and   Interpretations,  allowing  that  Standard  to  effectively  be  withdrawn.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB  2015-­‐4  Amendments  to  Australian  Accounting  Standards  –  Financial  Reporting  Requirements  for  Australian   Groups  with  a  Foreign  Parent  [AASB  127  &  AASB  128]  (applicable  for  annual  reporting  periods  commencing  on  or   after  1  July  2015)   This   Standard   amends   AASB   128   to   require   that,   notwithstanding   paragraphs   17   and   Aus17.1   of   AASB   128,   the   ultimate   Australian   entity   shall   apply   the   equity   method   in   accounting   for   interests   in   associates   and   joint   ventures  if  either  the  entity  or  the  group  is  a  reporting  entity,  or  both  the  entity  and  group  are  reporting  entities.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ AASB  2015-­‐5  Amendments  to  Australian  Accounting  Standards  –  Investment  Entities:  Applying  the  Consolidation   Exception   [AASB   10,   AASB   12   &   AASB   128]   (applicable   for   annual   reporting   periods   commencing   on   or   after   1   January  2016)   This   Standard   amends   AASB   10,   AASB   12   and   AASB   128   to   confirm   that   the   exemption   from   preparing   consolidated   financial   statements   set   out   in   paragraph   4(a)   of   AASB   10   is   available   to   a   parent   entity   that   is   a   subsidiary   of   an   investment   entity,   to   clarify   the   applicability   of   AASB   12   to   the   financial   statements   of   an   investment  entity  and  to  introduce  relief  in  AASB  128  to  permit  a  non-­‐investment  entity  investor  in  an  associate   or  joint  venture  that  is  an  investment  entity  to  retain  the  fair  value  through  profit  or  loss  measurement  applied  by   the  associate  or  joint  venture  to  its  subsidiaries..   This  standard  is  not  expected  to  impact  the  Group.   ⎯ 2015-­‐6  Amendments  to  Australian  Accounting  Standards   –  Extending  Related  Party  Disclosures  to  Not-­‐for-­‐Profit   Public  Sector  Entities  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  July  2016)   This  standard  makes  amendments  to  AASB  124  to  specify  consistent  related  party  disclosure  requirements  for  the   Australian  Government,  State  Governments,  local  councils  and  other  not-­‐for-­‐profit  public  sector  entities.   This  standard  is  not  expected  to  impact  the  Group.   ⎯ 2015-­‐7   Amendments   to   Australian   Accounting   Standards   –   Fair   Value   Disclosures   of   Not-­‐for-­‐Profit   Public   Sector   Entities  (applicable  for  annual  reporting  periods  commencing  on  or  after  1  July  2016)   This  Standard  relieves  not-­‐for-­‐profit  public  sector  entities  from  the  certain  disclosure  requirements  contained  in   AASB  13  for  assets  within  the  scope  of  AASB  116  that  are  held  primarily  for  their  current  service  potential  rather   than  to  generate  future  net  cash  inflows.   This  standard  is  not  expected  to  impact  the  Group.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   28   48                                     A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   The  Group  does  not  anticipate  early  adoption  of  any  of  the  above  Australian  Accounting  Standards  or  Interpretations.   The   group   has   adopted   all   of   the   new   revised   or   amending   accounting   standards   and   interpretations   issued   by   the   Australian   Accounting   Standards   Board   that   are   mandatory   for   the   current   reporting   period.   The   adoption   of   these   accounting  standards  and  interpretations  did  not  have  any  significant  impact  on  the  financial  performance  or  position   of  the  group.   c. Basis  of  consolidation   The  consolidated  financial  statements  comprise  the  financial  statements  of  Medibio  Limited  and  its  controlled  entities   as  at  30  June  2015  (the  “Group”).   Subsidiaries   are   all   those   entities   (including   special   purpose   entities)   over   which   the   Group   has   control.   The   Group   controls  an  entity  when  it  is  exposed  to  or  has  rights  to  variable  returns  from  its  involvement  with  the  entity  and  has   the  ability  to  affect  those  returns  through  the  power  to  direct  the  activities  at  the  entity.   The  financial  statements  of  the  subsidiaries  are  prepared  for  the  same  reporting  period  as  the  parent  company,  using   consistent  accounting  policies.   In  preparing  the  consolidated  financial  statements,  all  inter-­‐company  balances  and  transactions,  income  and  expenses   and  profit  and  losses  resulting  from  intra-­‐group  transactions  have  been  eliminated  in  full.   Subsidiaries   are   fully   consolidated   from   the   date   on   which   control   is   transferred   to   the   Group   and   cease   to   be   consolidated  from  the  date  on  which  control  is  transferred  out  of  the  Group.   d. Foreign  currency  translation   i. Functional  and  presentation  currency   Both  the  functional  and  presentation  currency  of  Medibio  Limited  and  its  subsidiaries  is  Australian  dollars  (A$).    Each   entity  in  the  Group  determines  its  own  functional  currency  using  the  currency  of  the  primary  economic  environment   in   which   the   entity   operates   and   items   included   in   the   financial   statements   of   each   entity   are  measured   using   that   functional  currency.   ii. Transactions  and  balances   Transactions  in  foreign  currencies  are  initially  recorded  in  the  functional  currency  at  the  exchange  rates  ruling  at  the   date  of  the  transaction.  Monetary  assets  and  liabilities  denominated  in  foreign  currencies  are  retranslated  at  the  rate   of   exchange   ruling   at   the   end   of   the   reporting   period.   All   exchange   differences   are   taken   to   profit   and   loss   when   incurred.   e. Segment  reporting   Operating   segments   are   identified   and   segment   information   is   disclosed   on   the   basis   of   internal   reports   that   are   regularly  provided  to,  or  reviewed  by,  the  Group’s  chief  operating  decision  maker  which,  for  the  Group,  is  the  board  of   directors.   In   this   regard,   such   information   is   provided   using   different   measures   to   those   used   in   preparing   the   Statement  of  Profit  or  Loss  and  Other  Comprehensive  Income,  and  Statement  of  Financial  Position.  Reconciliations  of   such  management  information  to  the  statutory  information  contained  in  the   annual  financial  statements  have  been   included.   f. Revenue  recognition   Revenue   is   recognised   to   the   extent   that   it   is   probable   that   the   economic   benefits   will   flow   to   the   Group   and   the   revenue   can   be   reliably   measured.   The   following   specific   recognition   criteria   must   also   be   met   before   revenue   is   recognised:   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   29   49         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 i.     Sale  of  goods   Revenue  is  recognised  when  the  significant  risks  and  rewards  of  ownership  of  the  goods  have  passed  to  the  buyer  and   the   costs   incurred   or   to   be   incurred   in   respect   of   the   transaction   can   be   measured   reliably.   Risks   and   rewards   of   ownership  are  considered  passed  to  the  buyer  at  the  time  of  delivery  of  the  goods  to  the  customer.   ii.   Interest  income   Revenue   is   recognised   as   interest   accrues   using   the   effective   interest   method.   This   is   a   method   of   calculating   the   amortised   cost   of   a   financial   asset   and   allocating   the   interest   income   over   the   relevant   period   using   the   effective   interest  rate,  which  is  the  rate  that  exactly  discounts  estimated  future  cash  receipts  through  the  expected  life  of  the   financial  asset  to  the  net  carrying  amount  of  the  financial  asset.   All  revenue  is  stated  net  of  the  amount  of  GST.   g. Government  grants   Government   grants   are   recognised   when   there   is   reasonable   assurance   that   the   grant   will   be   received   and   all   attaching  conditions  will  be  complied  with.   When  the  grant  relates  to  an  expense  item,  it  is  recognised  as  income  over  the  periods  necessary  to  match  the  grant   on  a  systematic  basis  to  the  costs  that  it  is  intended  to  compensate.   When   the   grant   relates   to   an   asset,   the   fair   value   is   credited   to   a   deferred   income   account   and   is   released   to   the   Statement  of  Profit  or  Loss  and  Other  Comprehensive  Income  over  the  expected  useful  life  of  the  relevant  asset  by   equal  annual  instalments.   h. Borrowing  costs   Borrowing  costs  directly  attributable  to  the  acquisition,  construction  and  production  of  assets  that  necessarily  take  a   substantial  period  of  time  to  prepare  for  their  intended  use  or  sale,  are  added  to  the  cost  of  those  assets,  until  such   time  as  the  assets  are  substantially  ready  for  their  intended  use  or  sale.   All  other  borrowing  costs  are  recognised  in  the  Statement  of  Profit  or  Loss  and  Other  Comprehensive  Income  in  the   period  in  which  they  are  incurred.   i. Cash  and  cash  equivalents   Cash  and  cash  equivalents  in  the  Statement  of  Financial  Position  comprise  cash  at  bank  and  in  hand  and  short-­‐term   deposits  with  an  original  maturity  of  three  months  or  less  that  are  readily  convertible  to  known  amounts  of  cash  and   which  are  subject  to  an  insignificant  risk  of  change  in  value.  For  the  purpose  of  the  Statement  of  Cash  Flows,  cash  and   cash  equivalents  consist  of  cash  and  cash  equivalents  as  defined  above,  net  of  outstanding  bank  overdrafts.   j. Trade  and  other  receivables   Trade  receivables,  which  generally  have  30  day  terms  are  recognised  and  carried  at  original  invoice  amount  less  an   allowance  for  any  uncollectible  amounts.   Collectability   of   trade   receivables   is   reviewed   on   an   ongoing   basis.   Debts   that   are   known   to   be   uncollectible   are   written  off  when  identified.  An  allowance  for  doubtful  debts  is  made  when  there  is  objective  evidence  that  the  Group   will  not  be  able  to  collect  the  debts.   Investments  and  other  financial  assets   k. N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   Recognition  and  De-­‐recognition   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   All   regular   way   purchases   and   sales   of   financial   assets   are   recognised   on   the   trade   date   i.e.   the   date   the   Group   commits   to   purchase   the   asset.   Regular   way   purchases   or   sales   are   purchases   or   sales   of   financial   assets   under   contracts  that  require  delivery  of  the  assets  within  the  period  established  generally  by  regulation  or  convention  in  the   market  place.  Financial  assets  are  derecognised  when  the  right  to  receive  cash  flows  from  the  financial  assets  have   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   30   expired  or  been  transferred.   i.   Loans  and  receivables   50 Loans   and   receivables   including   loan   notes   and   loans   to   KMP   are   non-­‐derivative   financial   assets   with   fixed   or   determinable  payments  that  are  not  quoted  in  an  active  market.  Such  assets  are  carried  at  amortised  cost  using  the   effective   interest   method.   Gains   and   losses   are   recognised   in   the   Statement   of   Profit   or   Loss   and   Other   Comprehensive  Income  when  the  loans  and  receivables  are  derecognised  or  impaired.  These  are  included  in  current   assets,   except   for   those   with   maturities   greater   than   12   months   after   the   end   of   the   reporting   period,   which   are   classified  as  non-­‐current.   ii.        Available-­‐for-­‐sale  securities   Available-­‐for-­‐sale   investments   are   those   non-­‐derivative   financial   assets,   principally   equity   securities   that   are   designated   as   available-­‐for-­‐sale   or   are   not   suitable   to   be   classified   as   any   of   the   three   preceding   categories.   After   initial   recognition   available-­‐for-­‐sale   securities   are   measured   at   fair   value   with   gains   or   losses   being   recognised   as   a   separate   component   of   equity   until   the   investment   is   derecognised   or   until   the   investment   is   determined   to   be   impaired,  at  which  time  the  cumulative  gain  or  loss  previously  reported  in  equity  is  recognised  in  the   Statement   of   Profit  or  Loss  and  Other  Comprehensive  Income.   The  fair  value  of  investments  that  are  actively  traded  in  organised  financial  markets  are  determined  by  reference  to   quoted  market  bid  prices  at  the  close  of  business  at  the  end  of  the  reporting  period.  For  investments  with  no  active   market,   fair   values   are   determined   using   valuation   techniques.   Such   techniques   include:   using   recent   arm’s   length   market   transactions;   reference   to   the   current   market   value   of   another   instrument   that   is   substantially   the   same;   discounted  cash  flow  analysis  and  option  pricing  models  making  as  much  use  of  available  and  supportable  market  data   as  possible  and  keeping  judgemental  inputs  to  a  minimum.   v.   Impairment   l. Income  tax   (benefit).   At   the   end   of   each   reporting   period,   the   Group   assesses   whether   there   is   objective   evidence   that   a   financial   instrument  has  been  impaired.  In  the  case  of  available-­‐for  sale  financial  instruments,  a  significant  or  prolonged  decline   in   the   value   of   the   instrument   is   considered   to   determine   whether   impairment   has   arisen.     Impairment   losses   are   recognised  in  the  Statement  of  Profit  or  Loss  and  Other  Comprehensive  Income.   The   income   tax   expense   (benefit)   for   the   year   comprises   current   income   tax   expense   and   deferred   tax   expense   Current   tax   assets   and   liabilities   for   the   current   and   prior   periods   are   measured   at   the   amount   expected   to   be   recovered  from  or  paid  to  the  taxation  authorities.  The  tax  rates  and  tax  laws  used  to  compute  the  amount  are  those   that  are  enacted  or  substantively  enacted  by  the  end  of  the  reporting  period.   Deferred  income  tax  is  provided  on  all  temporary  differences  at  the  end  of  the  reporting  period  between  the  tax  bases   of  assets  and  liabilities  and  their  carrying  amounts  for  financial  reporting  purposes.      Deferred  income  tax  liabilities  are   recognised  for  all  taxable  temporary  differences  except:   • when  the  deferred  income  tax  liability  arises  from  the  initial  recognition  of  goodwill  or  of  an  asset  or  liability  in  a   transaction   that   is   not   a   business   combination   and   that,   at   the   time   of   the   transaction,   affects   neither   the   accounting  profit  nor  taxable  profit  or  loss;  or   • when   the   taxable   temporary   difference   is   associated   with   investments   in   subsidiaries,   associates   or   interests   in   joint  ventures,  and  the  timing  of  the  reversal  of  the  temporary  difference  cannot  be  controlled  and  it  is  probable   that  the  temporary  difference  will  not  reverse  in  the  foreseeable  future.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   31                 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 market  place.  Financial  assets  are  derecognised  when  the  right  to  receive  cash  flows  from  the  financial  assets  have   expired  or  been  transferred.   i.   Loans  and  receivables   Loans   and   receivables   including   loan   notes   and   loans   to   KMP   are   non-­‐derivative   financial   assets   with   fixed   or   determinable  payments  that  are  not  quoted  in  an  active  market.  Such  assets  are  carried  at  amortised  cost  using  the   effective   interest   method.   Gains   and   losses   are   recognised   in   the   Statement   of   Profit   or   Loss   and   Other   Comprehensive  Income  when  the  loans  and  receivables  are  derecognised  or  impaired.  These  are  included  in  current   assets,   except   for   those   with   maturities   greater   than   12   months   after   the   end   of   the   reporting   period,   which   are   classified  as  non-­‐current.   ii.        Available-­‐for-­‐sale  securities   Available-­‐for-­‐sale   investments   are   those   non-­‐derivative   financial   assets,   principally   equity   securities   that   are   designated   as   available-­‐for-­‐sale   or   are   not   suitable   to   be   classified   as   any   of   the   three   preceding   categories.   After   initial   recognition   available-­‐for-­‐sale   securities   are   measured   at   fair   value   with   gains   or   losses   being   recognised   as   a   separate   component   of   equity   until   the   investment   is   derecognised   or   until   the   investment   is   determined   to   be   impaired,  at  which  time  the  cumulative  gain  or  loss  previously  reported  in  equity  is  recognised  in  the   Statement   of   Profit  or  Loss  and  Other  Comprehensive  Income.   The  fair  value  of  investments  that  are  actively  traded  in  organised  financial  markets  are  determined  by  reference  to   quoted  market  bid  prices  at  the  close  of  business  at  the  end  of  the  reporting  period.  For  investments  with  no  active   market,   fair   values   are   determined   using   valuation   techniques.   Such   techniques   include:   using   recent   arm’s   length   market   transactions;   reference   to   the   current   market   value   of   another   instrument   that   is   substantially   the   same;   discounted  cash  flow  analysis  and  option  pricing  models  making  as  much  use  of  available  and  supportable  market  data   as  possible  and  keeping  judgemental  inputs  to  a  minimum.   v.   Impairment   At   the   end   of   each   reporting   period,   the   Group   assesses   whether   there   is   objective   evidence   that   a   financial   instrument  has  been  impaired.  In  the  case  of  available-­‐for  sale  financial  instruments,  a  significant  or  prolonged  decline   in   the   value   of   the   instrument   is   considered   to   determine   whether   impairment   has   arisen.     Impairment   losses   are   recognised  in  the  Statement  of  Profit  or  Loss  and  Other  Comprehensive  Income.   l. Income  tax   The   income   tax   expense   (benefit)   for   the   year   comprises   current   income   tax   expense   and   deferred   tax   expense   (benefit).   Current   tax   assets   and   liabilities   for   the   current   and   prior   periods   are   measured   at   the   amount   expected   to   be   recovered  from  or  paid  to  the  taxation  authorities.  The  tax  rates  and  tax  laws  used  to  compute  the  amount  are  those   that  are  enacted  or  substantively  enacted  by  the  end  of  the  reporting  period.   Deferred  income  tax  is  provided  on  all  temporary  differences  at  the  end  of  the  reporting  period  between  the  tax  bases   of  assets  and  liabilities  and  their  carrying  amounts  for  financial  reporting  purposes.      Deferred  income  tax  liabilities  are   recognised  for  all  taxable  temporary  differences  except:   • when  the  deferred  income  tax  liability  arises  from  the  initial  recognition  of  goodwill  or  of  an  asset  or  liability  in  a   transaction   that   is   not   a   business   combination   and   that,   at   the   time   of   the   transaction,   affects   neither   the   accounting  profit  nor  taxable  profit  or  loss;  or   • when   the   taxable   temporary   difference   is   associated   with   investments   in   subsidiaries,   associates   or   interests   in   joint  ventures,  and  the  timing  of  the  reversal  of  the  temporary  difference  cannot  be  controlled  and  it  is  probable   that  the  temporary  difference  will  not  reverse  in  the  foreseeable  future.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   31   51         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 Deferred   income   tax   assets   are   recognised   for   all   deductible   temporary   differences,   carry-­‐forward   of   deferred   tax   assets  and  unused  tax  losses,  to  the  extent  that  it  is  probable  that  taxable  profit  will  be  available  against  which  the   deductible  temporary  differences  and  the  carry-­‐forward  of  unused  deferred  tax  assets    and  unused  tax  losses  can  be   utilised,  except:   •  when   the   deferred   income   tax   asset   relating   to   the   deductible   temporary   difference   arises   from   the   initial   recognition   of   an   asset   or   liability   in   a   transaction   that   is   not   a   business   combination   and,   at   the   time   of   the   transaction,  affects  neither  the  accounting  profit  nor  taxable  profit  or  loss;  or     • when  the  deductible  temporary  difference  is  associated  with  investments  in  subsidiaries,  associates  or  interests  in   joint   ventures,   in   which   case   a   deferred   tax   asset   is   only   recognised   to   the   extent   that   it   is   probable   that   the   temporary  difference  will  reverse  in  the  foreseeable  future  and  taxable  profit  will  be  available  against  which  the   temporary  difference  can  be  utilised.   The  carrying  amount  of  deferred  income  tax  assets  is  reviewed  at  the  end  of  each  reporting  period  and  reduced  to  the   extent  that  it  is  no  longer  probable  that  sufficient  taxable  profit  will  be  available  to  allow  all  or  part  of  the  deferred   income  tax  asset  to  be  utilised.  Unrecognised  deferred  income  tax  assets  are  reassessed  at  the  end  of  each  reporting   period  and  are  recognised  to  the  extent  that  it  has  become  probable  that  future  taxable  profit  will  allow  the  deferred   tax  asset  to  be  recovered.   Deferred  income  tax  assets  and  liabilities  are  measured  at  the  tax  rates  that  are  expected  to  apply  to  the  year  when   the  asset  is  realised  or  the  liability  is  settled,  based  on  tax  rates  (and  tax  laws)  that  have  been  enacted  or  substantively   enacted  at  the  end  of  the  reporting  period.    Income  taxes  relating  to  items  recognised  directly  in  equity  are  recognised   in   equity   and   not   in   profit   or   loss.       Deferred   tax   assets   and   deferred   tax   liabilities   are   offset   only   if   a   legally   enforceable   right   exists   to   set   off   current   tax   assets   against   current   tax   liabilities   and   the   deferred   tax   assets   and   liabilities  relate  to  the  same  taxable  entity  and  the  same  taxation  authority.   Research   and   development   tax   offset   claims   are   recognised   as   a   tax   benefit   when   it   is   probable   that   the   economic   benefits  will  flow  into  the  entity  and  the  amount  can  be  reliably  measured.   Medibio  Limited  and  the  controlled  entities  in  the  tax  consolidated  Group  continue  to  account  for  their  own  current   and   deferred   tax   amounts.   The   Group   has   applied   the   Group   allocation   approach   in   determining   the   appropriate   amount  of  current  taxes  and  deferred  taxes  to  allocate  to  members  of  the  tax  consolidated  Group.   m. Other  taxes   Revenues,  expenses  and  assets  are  recognised  net  of  the  amount  of  GST  except  when  the  GST  incurred  on  a  purchase   of  goods  and  services  is  not  recoverable  from  the  taxation  authority,  in  which  case  the  GST  is  recognised  as  part  of  the   cost  of  acquisition  of  the  asset  or  as  part  of  the  expense  item  as  applicable.    Receivables  and  payables  are  stated  with   the  amount  of  GST  included.   The  net  amount  of  GST  recoverable  from,  or  payable  to,  the  taxation  authority  is  included  as  part  of  receivables  or   payables  in  the  Statement  of  Financial  Position.   Cash  flows  are  included  in  the  Statement  of  Cash  Flows  on  a  gross  basis  and  the  GST  component  of  cash  flows  arising   from  investing  and  financing  activities,  which  is  recoverable  from,  or  payable  to,  the  taxation  authority  are  classified  as   operating  cash  flows.   Commitments  and  contingencies  are  disclosed  net  of  the  amount  of  GST  recoverable  from,  or  payable  to,  the  taxation   authority.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   32   52           A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   n. Intangible  assets   Intangible   assets   acquired   separately   or   in   a   business   combination   are   initially   measured   at   cost.   The   cost   of   an   intangible   asset   acquired   in   a   business   combination   is   its   fair   value   as   at   the   date   of   acquisition.   Following   initial   recognition,  intangible  assets  are  carried  at  cost  less  any  accumulated  amortisation  and  any  accumulated  impairment   losses.   Internally   generated   intangible   assets,   excluding   capitalised   development   costs,   are   not   capitalised   and   expenditure   is   charged   to   the   statement   of   profit   or   loss   and   other   comprehensive   income   in   the   year   in   which   expenditure  is  incurred.   Intangible   assets   with   indefinite   useful   lives   are   tested   for   impairment   annually   either   individually   or   at   the   cash-­‐ generating  unit  level.  Such  intangibles  are  not  amortised.  The  useful  life  of  an  intangible  asset  with  an  indefinite  life  is   reviewed   at   the   end   of   each   reporting   period   to   determine   whether   the   indefinite   life   assessment   continues   to   be   supportable.  If  not,  the  change  in  the  useful  life  assessment  from  indefinite  to  finite  is  accounted  for  as  a  change  in  an   accounting  estimate  and  is  thus  accounted  for  on  a  prospective  basis.   Research  and  development  costs   Research   costs   are   expensed   as   incurred.   An   intangible   asset   arising   from   development   expenditure   on   an   internal   project  is  recognised  only  when  the  Group  can  demonstrate  the  technical  feasibility  of  completing  the  intangible  asset   so  that  it  will  be  available  for  use  or  sale,  its  intention  to  complete  and  its  ability  to  use  or  sell  the  asset,  how  the  asset   will  generate  future  economic  benefits,  the  availability  of  resources  to  complete  the  development  and  the  ability  to   measure  reliably  the  expenditure  attributable  to  the  intangible  asset  during  its  development.   Following  the  initial  recognition  of  the  development  expenditure,  the  cost  model  is  applied  requiring  the  asset  to  be   carried  at  cost  less  any  accumulated  amortisation  and  accumulated  impairment  losses.  Any  finite  life  expenditure  so   capitalised   is   amortised   over   the   period   of   expected   benefits   from   the   related   project.   The   carrying   value   of   an   intangible   asset   arising   from   development   expenditure   is   tested   for   impairment   annually   when   the   asset   is   not   yet   available  for  use,  or  more  frequently  when  an  indication  of  impairment  arises  during  the  reporting  period.   Gains   or   losses   arising   from   de-­‐recognition   of   an   intangible   asset   are   measured   as   the   difference   between   the   net   disposal   proceeds   and   the   carrying   amount   of   the   asset   and   are   recognised   in   profit   and   loss   when   the   asset   is   derecognised.   Impairment  of  non-­‐financial  assets  other  than  goodwill   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  its   recoverable  amount.    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  that  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  tested  for  possible  reversal   of  the  impairment  whenever  events  or  changes  in  circumstances  indicate  that  the  impairment  may  have  reversed.   o. Trade  and  other  payables   Trade   payables   and   other   payables   are   carried   at   amortised   cost   and   represent   liabilities   for   goods   and   services   provided  to  the  Group  prior  to  the  end  of  the  reporting  period  that  are  unpaid  and  arise  when  the  Group  becomes   obliged  to  make  future  payments  in  respect  of  the  purchase  of  the  goods  and  services.  The  amounts  are  unsecured   and  are  usually  paid  within  30  days  of  recognition.   Payables  to  related  parties  are  carried  at  the  principal  amount.  Interest,  when  charged  by  the  lender,  is  recognised  as   an  expense  on  an  accrual  basis.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   33   53       N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 p. Interest-­‐bearing  loans  and  borrowings   All   loans   and   borrowings   are   initially   recognised   at   the   fair   value   of   the   consideration   received   less   directly   attributable  transaction  costs.   After  initial  recognition,  interest-­‐bearing  loans  and  borrowings  are  subsequently  measured  at  amortised  cost  using  the   effective  interest  method.     Borrowings  are  classified  as  current  liabilities  unless  the  Group  has  an  unconditional  right  to  defer  settlement  of  the   liability  for  at  least  12  months  after  the  end  of  the  reporting  period.   q. Provisions   Provisions  are  recognised  when  the  Group  has  a  present  obligation  (legal  or  constructive)  as  a  result  of  a  past  event,  it   is  probable  that  an  outflow  of  resources  embodying  economic  benefits  will  be  required  to  settle  the  obligation  and  a   reliable  estimate  can  be  made  of  the  amount  of  the  obligation.   When  the  Group  expects  some  or  all  of  a  provision  to  be  reimbursed,  for  example  under  an  insurance  contract,  the   reimbursement  is  recognised  as  a  separate  asset  but  only  when  the  reimbursement  is  virtually  certain.  The  expense   relating  to  any  provision  is  presented  in  the  statement  of  profit  or  loss  and  other  comprehensive  income  net  of  any   reimbursement.   Provisions  are  measured  at  the  present  value  of  management's  best  estimate  of  the  expenditure  required  to  settle  the   present  obligation  at  the  end  of  the  reporting  period.  If  the  effect  of  the  time  value  of  money  is  material,  provisions   are  discounted  using  a  current  pre-­‐tax  rate  that  reflects  the  time  value  of  money  and  the  risks  specific  to  the  liability.   The  increase  in  the  provision  resulting  from  the  passage  of  time  is  recognised  in  finance  costs.   r. tEmployee  benefits   Wages,  salaries,  annual  leave  and  sick  leave   Liabilities  for  wages  and  salaries,  including  non-­‐monetary  benefits,  annual  leave  and  long  service  leave  expected  to  be   settled  within  12  months  of  the  reporting  date  are  recognised  in  current  liabilities  in  respect  of  employees  services  up   to  the  reporting  date  and  are  measured  at  the  amount  expected  to  be  paid  when  the  liabilities  are  settled.     Long  service  leave   A  liability  for  long  service  leave  is  recognised,  and  is  measured  as  the  present  value  of  expected  future  payments  to  be   made  in  respect  of  services  provided  by  employees  up  to  the  end  of  the  reporting  period.    Consideration  is  given  to   expected  future  wage  and  salary  levels,  experience  of  employee  departures  and  periods  of  service.    Expected  future   payments  are  discounted  using  interest  rates  attaching,  as  at  the  end  of  the  reporting  period,  to  national  government   guaranteed  securities  with  terms  to  maturity  that  match,  as  closely  as  possible,  the  estimated  future  cash  outflows.   As  of  the  30  June  2015,  the  Group  did  not  have  any  employees  with  service  to  necessitate  a  provision  for  annual  leave   or  long  service  leave.   s. Share-­‐based  payment  transactions     Equity  settled  transactions   The  Group  provides  benefits  to  its  employees  and  directors  in  the  form  of  share-­‐based  payments,  whereby  employees   and  directors  render  services  in  exchange  for  shares  or  rights  over  shares  (equity-­‐settled  transactions).   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   34   54           A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   t. 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.     u. Earnings  per  share   Basic  earnings  per  share  (EPS)  is  calculated  as  net  profit  attributable  to  members  of  the  parent,  adjusted  to  exclude   costs   of   servicing   equity   (other   than   dividends)   and   preference   share   dividends,   divided   by   the   weighted   average   number  of  ordinary  shares,  adjusted  for  any  bonus  element.     Diluted  EPS  is  calculated  as  net  profit  attributable  to  members  of  the  parent,  adjusted  for:   • costs  of  servicing  equity  (other  than  dividends);   • the   after   tax   effect   of   dividends   and   interest   associated   with   dilutive   potential   ordinary   shares   that   have   been   recognised  as  expenses;  and   • other  non-­‐discretionary  changes  in  revenues  or  expenses  during  the  period  that  would  result  from  the  dilution  of   potential  ordinary  shares;   divided  by  the  weighted  average  number  of  ordinary  shares  and  dilutive  potential  ordinary  shares,  adjusted  for  any   bonus  element.   v. Business  combinations   Business  combinations  occur  where  an  acquirer  obtains  control  over  one  or  more  businesses.   A   business   combination   is   accounted   for   by   applying   the   acquisition   method,   unless   it   is   a   combination   involving   entities   or   businesses   under   common   control.   The   business   combination   will   be   accounted   for   from   the   date   that   control   is   attained,   whereby   the   fair   value   of   the   identifiable   assets   acquired   and   liabilities   (including   contingent   liabilities)  assumed  is  recognised  (subject  to  certain  limited  exceptions).   When   measuring   the   consideration   transferred   in   the   business   combination,   any   asset   or   liability   resulting   from   a   contingent   consideration   arrangement   is   also   included.   Subsequent   to   initial   recognition,   contingent   consideration   classified  as  equity  is  not  remeasured  and  its  subsequent  settlement  is  accounted  for  within  equity.     All  transaction  costs  incurred  in  relation  to  the  business  µcombination  are  expensed  to  the  Statement  of  Profit  or  Loss   and  Other  Comprehensive  Income.   The  acquisition  of  a  business  may  result  in  the  recognition  of  goodwill  or  a  gain  from  a  bargain  purchase.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   35   55         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 w. Fair  value  measurement   When  an  asset  or  liability,  financial  or  non-­‐financial,  is  measured  at  fair  value  for  recognition  or  disclosure  purposes   the  fair  value  is  based  on  the  price  that  would  be  received  to  sell  an  asset  or  paid  to  transfer  a  liability  in  an  orderly   transaction  between  market  participants  at  the  measurement  date  and  assumes  that  the  transaction  will  take  place   either  in  the  principle  market  or  in  the  absence  of  a  principle  market,  in  the  most  advantageous  market.   Fair  value  is  measured  using  the  assumptions  that  market  participants  would  use  when  pricing  the  asset  or  liability,   assuming  they  act  in  their  economic  best  interest.  For  non-­‐financial  assets,  the  fair  value  measurement  is  based  on  its   highest  and  best  use.  Valuation  techniques  that  are  appropriate  in  the  circumstances  and  for  which  sufficient  data  is   available  to  measure  fair  value,  and  used,  maximising  the  use  of  relevant  observable  inputs  and  minimising  the  use  of   unobservable  inputs.   Assets  and  liabilities  measured  at  fair  value  are  classified,  into  three  levels,  using  a  fair  value  hierarchy  that  reflects  the   significance   of   the   inputs   used   in   making   the   measurements.   Classifications   are   reviewed   each   reporting   date   and   transfers  between  levels  are  determined  based  on  a  reassessment  of  the  lowest  level  input  that  is  significant  to  the   fair  value  measurement.   For   recurring   and   non-­‐recurring   fair   value   measurements,   external   valuers   may   be   used   when   internal   expertise   is   either  not  available  or  when  the  valuation  is  deemed  to  be  significant.  External  valuers  are  selected  based  on  market   knowledge  and  reputation.  Where  there  is  a  significant  change  in  fair  value  of  an  asset  or  liability  from  one  period  to   another,  an  analysis  is  undertaken,  which  includes  a  verification  of  the  major  inputs  applied  in  the  latest  valuation  and   a  comparison,  where  applicable,  with  external  sources  of  data.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   36   56       N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 3. SIGNIFICANT  ACCOUNTING  JUDGEMENTS,  ESTIMATES  AND  ASSUMPTIONS     In  applying  the  Group's  accounting  policies  management  continually  evaluates  judgments,  estimates  and  assumptions   based  on  experience  and  other  factors,  including  expectations  of  future  events  that  may  have  an  impact  on  the  Group.   All   judgments,   estimates   and   assumptions   made   are   believed   to   be   reasonable   based   on   the   most   current   set   of   circumstances   available   to   management.   Actual   results   may   differ   from   the   judgments,   estimates   and   assumptions.   Significant   judgments,   estimates   and   assumptions   made   by   management   in   the   preparation   of   these   financial   statements  are  outlined  below:   Significant  accounting  judgment   Impairment  of  assets  and  investments   The   Group   determines   whether   non-­‐current   assets   (excluding   goodwill   and   indefinite   useful   life   intangible   assets)   should   be   tested   for   impairment   based   on   identified   impairment   triggers.   At   the   end   of   each   reporting   period   management   assesses   the   impairment   triggers   based   on   their   knowledge   and   judgement.   Where   an   impairment   trigger  is  identified,  an  estimate  of  the  recoverable  amount  is  required.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   37   57         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 4. SEGMENT  REPORTING   Segment  Information     Identification  of  reportable  segments   The   Group   has   identified   its   operating   segments   based   on   the   internal   reports   that   are   reviewed   and   used   by   the   board   of   directors   (chief   operating   decision   makers)   in   assessing   performance   and   determining   the   allocation   of   resources.   The  Group  is  managed  primarily  on  the  basis  of  product  category  and  service  offerings  since  the  diversification  of  the   Group’s   operations   inherently   have   notably   different   risk   profiles   and   performance   assessment   criteria.   Operating   segments  are  therefore  determined  on  the  same  basis.   Reportable  segments  disclosed  are  based  on  aggregating  operating  segments  where  the  segments  are  considered  to   have  similar  economic  characteristics  and  are  also  similar  with  respect  to  the  following:   the  products  sold  and/or  services  provided  by  the  segment;   the  manufacturing  process;   • • • • the  distribution  method;  and   • external  regulatory  requirements.   the  type  or  class  of  customer  for  the  products  or  service;   Types  of  products  and  services  by  segment   i. Mining  and  Gas  Exploration   This  market  segment  includes  the  income  and  expenditures  pertaining  to  the  investment  opportunity  through  Frontier   Oil  Corporation.  This  asset  is  available  for  sale  and  fully  impaired  in  these  accounts.   ii.  Human  Diagnostics   This  market  segment  includes  the  income  and  expenditures  pertaining  to  the  investment  opportunity  through  Invatec   Health  Pty  Ltd.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   38   58           N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 Basis  of  accounting  for  purposes  of  reporting  by  operating  segments   Accounting  policies  adopted   Unless  stated  otherwise,  all  amounts  reported  to  the  Board  of  Directors  as  the  chief  decision  maker  with  respect  to   operating  segments  are  determined  in  accordance  with  accounting  policies  that  are  consistent  with  those  adopted  in   the  annual  financial  statements  of  the  Group.   Inter-­‐segment  transactions   For  the  reporting  period  there  have  not  been  any  inter-­‐segment  sales.   Salaries  for  research  and  development  employees  have  been  allocated  to  market  segments  on  the  basis  of  time  sheets   that  support  claims  for  the  research  and  development  tax  offset  credit.  Corporate  employee  costs  such  as  directors’   fees,  salaries  and  superannuation  are  allocated  to  market  segments  on  the  basis  of  direct  expenses  and  research  and   development  salaries  as  a  percentage  of  total  expenses  for  the  Group.         Inter-­‐segment   loans   payable   and   receivable   are   initially   recognised   at   the   consideration   received   net   of   transaction   costs.   Segment  assets   In   the   majority   of   instances,   segment   assets   are   clearly   identifiable   on   the   basis   of   their   nature   (i.e.   prepayments,   inventories,  sundry  debtors).  Corporate  fixed  assets  such  as  computer  equipment  and  furniture  and  fittings  have  not   been  allocated  to  market  segments.   Segment  liabilities   Liabilities  are  allocated  to  segments  where  there  is  direct  nexus  between  the  liability  incurred  and  the  operations  of   the  segment.  Segment  liabilities  include  trade  and  other  payables.   Unallocated  Items   The  following  items  of  revenue,  expense,  assets  and  liabilities  are  not  allocated  to  operating  segments  as  they  are  not   considered  part  of  the  core  operations  of  any  segment:   Interest  received;   • Cash  and  term  deposits;   • • prepayments;   • Fixed  assets;   • Borrowings;  and   • Other  payables.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   39   59         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 i. Segment  performance     Twelve  months  ended  30  June  2015   Revenue   External  sales   R  &  D  Grant   Total  segment  revenue   Inter-­‐segment  elimination   Unallocated  revenue   Total  consolidated  revenue   Twelve  months  ended  30  June  2015   Segment  net  profit/(loss)before  tax   Reconciliation  of  segment   result  to  Group  net  loss  before  tax   Amounts  not  included  in  segment   result  but  reviewed  by  the  Board:   • Amortisation   Unallocated  items:   • Interest  received   • Other  corporate  costs   Net  loss  before  tax   Mining   and  Gas   $   Human   Diagnostics   $   -­‐   -­‐   -­‐   -­‐   -­‐   255,120   -­‐   -­‐   Total   $   -­‐   255,120   255,120   -­‐   6,813   261,933   Mining   and  Gas   $   (3,861,034)   Human   Diagnostics   $   (2,244,216)   Total   $   (6,105,250)   (516,461)   -­‐   (1,306,804)   (7,921,702)   Twelve  months  ended   30  June  2014   Revenue   External  sales   Total  segment  revenue   Inter-­‐segment  elimination   Unallocated  revenue   Total  consolidated  revenue   Mining   and  Gas   $   Human   Diagnostics   $   Total   $   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   40   60                                                                                   N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 Twelve  months  ended  30  June  2014   Segment  net  loss  before  tax   Reconciliation  of  segment   result  to  group  net  loss  before  tax   Amounts  not  included  in  segment   result  but  reviewed  by  the  Board:   • Depreciation   Unallocated  items:   • Interest  received   • Other  corporate  costs   Net  loss  before  tax   i. Segment  assets   30  June  2015   Segment  assets   Unallocated  assets   • Cash   • Other   Total  assets   30  June  2014   Segment  assets   Unallocated  assets   • Cash   • Other   Total  assets   ii. Segment  Liabilities   30  June  2015   Segment  liabilities   Unallocated  liabilities   Total  liabilities   30  June  2014   Segment  liabilities   Unallocated  liabilities   Total  liabilities   Mining   and  Gas   $   463,194   Human   Diagnostics   $   (82,091)   Total   $   381,103   -­‐   6,976   (816,411)   (428,332)   Total   $   14,231,122   944,301   9,091   15,184,514   Mining   and  Gas   $   -­‐   Human   Diagnostics   $   14,231,122   $   3,861,034   $   943,750   $   4,804,784   96,249   141,484   5,042,517   Total   $   5,566,909   5,566,909   $   -­‐   2,332,246   2,332,246   Mining   and  Gas   $   Human   Diagnostics   $   5,566,909   $   $   -­‐   -­‐   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   41   61                                                                                                                                               N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 ii. Revenue  by  geographical  region   Australia   Revenue  for  the  2015  year  included  the  R&D  Grant  rebate  of  $255,120  and  bank  interest  of  $6,813.     For   the   2014   year,   revenue   included   profit   of   $463,194   from   the   sale   of   Frontier   Oil   Corporation   shares   and   bank   interest  of  $6,976.     iii. Assets  by  geographical  region   All  assets  reside  in  one  geographical  region  being  Australia,  other  than  the  investment  in  Frontier  Oil  Corporation.   5. REVENUES  AND  EXPENSES   (a)    Revenue   Bank  interest  received  and  receivable   R&D  Grant  received   Gain  on  disposal  of  Frontier  Oil  Corporation  Shares   (b)  Finance  costs   Interest  charges  payable  under  convertible  notes   (c)  Impairment   Frontier  Oil  Corporation   Goodwill    (d)  Employee  benefits  expense   Wages  and  salaries     Directors  fees   Superannuation      (e)  Other  expenses   Consulting  and  advisory  expenses   Legal  fees   Listing  fees   Share  registry  charges   Sales  and  marketing   Other  administration  expenses   CONSOLIDATED   2015   $   2014   $   6,813   255,120   -­‐   261,933   6,976   -­‐   463,194   470,170   (160,622)   (160,622)   (107,221)   (107,221)   (3,861,034)   (444,999)   (4,306,033)   (82,192)   (399,781)   (10,462)   (492,435)   (1,288,074)   (165,541)   (63,605)   (86,795)   (85,290)   (808,115)   (2,497,420)   -­‐   -­‐   -­‐   -­‐   (138,833)   -­‐   (138,833)   (253,044)   (93,160)   (23,976)   (27,435)   (23,787)   (215,955)   (637,357)   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   42   62                                                                                                                                                                                                                               N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 6. INCOME  TAX   Numerical  reconciliation  between  aggregate  tax  expense  recognised  in  the   statement  of  profit  or  loss  and  other  comprehensive  income  and  tax  expense   calculated  per  the  statutory  income  tax  rate   A   reconciliation   between   tax   expense   and   the   product   of   accounting   loss   before   income   tax   multiplied   by   the   Group’s   applicable   income   tax   rate   is   as   follows:   Accounting  loss  before  tax     At  the  statutory  tax  rate  of  30%  (2014:  30%)   Tax  effect  of  temporary  differences  and  current  year  loss  not  brought  to   account   Deferred  tax  asset  arising  from  tax  losses  not  brought  to  account  at  the  end  of   the  reporting  period  as  realisation  is  not  regarded  as  probable   The  potential  deferred  tax  asset  will  only  be  obtained  if:   CONSOLIDATED   2015   $   2014   $   (7,921,702)   (2,376,511)   (2,376,511)   (428,332)   (128,500)   (128,500)   2,376,511   128,500   251,400   6,804,040   i.   ii.   iii.   future  assessable  income  is  derived  of  a  nature  and  of  an  amount  sufficient  to  enable  the  benefit  to  be  realised;   the  conditions  for  deductibility  imposed  by  tax  legislation  continue  to  be  complied  with;  and   no  changes  in  tax  legislation  adversely  affect  the  Group  in  realising  the  benefit.   The  Group’s  tax  losses  arising  in  Australia  of  $23,211,110  at  30  June  2014  cannot  be  carried  forward  as  a  result  of  the   March  2015  acquisition  and  reconstruction  of  Medibio  Limited.    The  continued  availability  of  these  carried  forward   losses  depended  on  the  ability  of  the  parent  to  satisfy  the  requirements  of  the  continuity  of  ownership  test  (COT)  or   alternatively  the  same  business  test  (SBT).  It  is  unable  to  satisfy  either  of  these  tests.   At  30  June  2015,  there  is  no  recognised  or  unrecognised  deferred  tax  liability  (2014:  nil)  for  taxes  that  would  be   payable  on  the  unremitted  earnings  of  certain  of  the  Group’s  subsidiaries,  as  the  Group  has  no  liability  for  additional   taxation  should  such  amounts  be  remitted.   Tax  consolidation   Effective   1   July   2003,   for   the   purposes   of   income   taxation,   Medibio   Limited   and   its   100%   owned   subsidiaries   have   formed   a   tax   consolidated   group.   Members   of   the   group   have   entered   into   a   tax   sharing   arrangement   in   order   to   allocate  income  tax  expense  to  the  wholly-­‐owned  subsidiaries  on  a  pro-­‐rata  basis.  In  addition  the  agreement  provides   for   the   allocation   of   income   tax   liabilities   between   the   entities   should   the   head   entity   default   on   its   tax   payment   obligations.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   43   63                                             N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 Tax  accounting  by  members  of  the  tax  consolidated  group   Members  of  the  tax  consolidated  Group  have  entered  into  a  tax  funding  arrangement.  The  tax  funding  arrangement   provides  for  the  allocation  of  current  taxes  to  members  of  the  tax  consolidated  Group  in  accordance  with  the  available   fractions  belonging  to  each  subsidiary,  which  is  directly  linked  to  prior  year  losses  that  have  been  accumulated.  In  the   event   of   the   Company   generating   future   taxable   profits,   the   tax   losses   will   be   absorbed   according   to   the   available   fractions  within  the  Group.   The   allocation   of   taxes   under   the   tax   funding   agreement   is   recognised   as   an   increase/decrease   in   the   subsidiaries’   intercompany  accounts  with  the  tax  consolidated  Group  head  company,  Medibio  Limited.  The  Group  has  applied  the   Group  allocation  approach  in  determining  the  appropriate  amount  of  current  taxes  to  allocate  to  members  of  the  tax   consolidated  Group.   7. EARNINGS  PER  SHARE   Net  loss  attributable  to  equity  holders  of  the  Company     Weighted  average  number  of  ordinary  shares  used  in  calculating  basic  and   diluted  earnings  per  share:   8. CASH  AND  CASH  EQUIVALENTS   Cash  at  bank  and  in  hand   Short-­‐term  deposits   COMPANY   2015   $   2014   $   (7,921,702)   (428,332)   Number  of   Shares   Number  of   Shares   46,611,766   2,903,662,290   CONSOLIDATED   2015                $   210,696   733,605   944,301   2014   $   6,343   89,906   96,249   Cash  at  bank  earns  interest  at  floating  rates  based  on  daily  bank  deposit  rates.   Short-­‐term   deposits   are   made   for   varying   periods   of   between   one   month   and   three   months,   depending   on   the   immediate  cash  requirements  of  the  Group,  and  earn  interest  at  the  respective  short-­‐term  deposit  rates.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   44   64                               A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   (a)     Reconciliation  of  loss  after  tax  to  net  cash  flows  from  operations:   Net  loss     Adjustments  for:   Amortisation   Interest  received   Interest  paid  convertible  notes   Impairment  of  investments     Impairment  of  receivables   Share  based  payments   Profit  on  sale  of  investments   Changes  in  assets  and  liabilities:   (Increase)/  decrease  in  trade  and  other  receivables   (Decrease)  /  increase  in  trade  and  other  payables   (Decrease)  /  increase  in  employee  entitlements   Net  cash  used  in  operating  activities   (b)     Non  cash  financing  and  investing  activities     *Issue  of  25,000,000  shares  to  Heartlink  as  option  fee   *Issue  of  125,000,000  shares  to  Heartlink  for  exercise  of  option   *Issue  of  150,000,000  shares  to  Invatec  for  exercise  of  option   150,000  shares  issued  to  C  Indermaur   493,100  shares  issued  to  S  Pearce   250,000  options  ex  at  $0.30  issued  to  J  Campbell   1,000,000  options  ex  at  $0.30  issued  to  SEK  Investments  Limited   1,500,000  options  ex  at  $0.30  issued  to  Ausepen  Pty  Ltd   CONSOLIDATED   2015   $   (7,921,702)   516,461   (6,813)   160,622   4,306,033   100,000   524,600   -­‐   2014   $   (428,332)   -­‐   (6,976)   107,221   -­‐   -­‐   -­‐   (463,194)   (336,680)   1,142,396   8,225   171,799   28,516                                   -­‐                                   (1,515,083)   (611,257)   CONSOLIDATED   2015   $   -­‐   -­‐   -­‐   45,000   147,930   43,600   174,400   261,600   672,530   2014   $   50,000   250,000   300,000   -­‐   -­‐   -­‐   -­‐   -­‐   600,000   The  value  placed  on  the  issue  of  the  shares  was  equal  to  the  prevailing  share  price  of  Medibio  as  at  the  date  of  issue.   9. TRADE  AND  OTHER  RECEIVABLES   Trade  debtors                                                                                                                                                                                                                                                                                   Other  debtors                                                                                                                                                                                                                                                                   CONSOLIDATED   2015             $   2014   $   -­‐   232,985   232,985   -­‐   132,393   132,393   Terms  and  conditions   (i)   (ii)     Trade  debtors  are  non-­‐interest  bearing  and  generally  on  30  day  terms.  A  provision  for  impairment  is  made  when  there  is   objective  evidence  that  a  trade  receivable  is  impaired.   Other   debtors   are   non-­‐interest   bearing   and   have   repayment   terms   of   30   days.   A   provision   for   impairment   is   made   when   there  is  objective  evidence  that  a  debtor  is  impaired.     None  of  the  trade  and  other  receivables  are  contractually  overdue.   (iii)     Due  to  the  short-­‐term  nature  of  these  receivables  their  carrying  amounts  are  assumed  to  approximate  their  fair  value   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   45   65                                                                                                                                                                           N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 10. OTHER  FINANCIAL  ASSET  –  AVAILABLE  FOR  SALE  FINANCIAL  ASSETS   Frontier  Oil  Corporation  –  at  directors  valuation   Australian  listed  shares  at  fair  value                                                                                     Impairment   Invatec  Health  Pty  Ltd   (i) Frontier  Oil  Corporation   Notes   (i)   (ii)   (iii)   CONSOLIDATED   2015   $   3,861,034   2,758   (3,863,792)   -­‐   -­‐   2014   $   3,861,034   2,758   (2,758)   600,000   4,461,034   The  company  acquired  430,000,000  shares  in  Frontier  Oil  Corporation  (‘FOC’)  for  a  total  investment  cost  of  $5,188,265   during  the  year  ended  30  June  2013.    In  September  2013,  the  Company  sold  110,000,000  of  its  430,000,000  shares   held  in  FOC  for  net  funds  of  $1,690,425.   The   investment   is   carried   at   original   cost   less   disposals.   This   is   an   investment   in   an   unlisted   entity   and   is   therefore   difficult   to   obtain   fair   value.   The   directors,   after   reviewing   the   market   and   the   recent   drop   in   oil   prices,   have   fully   impaired  the  investment.   (ii) Listed  Shares   As  at  30  June  2015,  Medibio  holds  47,544  Solagran  Limited  shares.  Solagran  Limited  is  in  voluntary  suspension  and  the   investment   has   been   full   impaired.   This   is   the   residual   balance   from   a   development   agreement   to   commercialise   CGNC  terminated  in  2010.   (iii) Invatec  Health  Pty  Ltd   During   2014,   the   Company   entered   into   a   2   stage   transaction   to   acquire   an   investment   in   Invatec   Health   Pty   Ltd   (‘Invatec’).     The   first   stage   was   for   the   right   to   subscribe   for   a   35%   interest   in   Invatec   (stage   1   subscription).     The   investment  to  fund  Invatec  and  independent  validation  trials  is  capped  to  a  maximum  of  $3,500,000  over  two  years.     Accordingly,  for  every  $50,000  funded,  it  will  be  entitled  to  a  0.5%  interest  in  Invatec.      As  at  30  June  2014,  the  Group   was  entitled  to  an  approximately  6%  shareholding  in  Invatec     As  approved  by  shareholders  on  6  March  2015,  Medibio  acquired  100%  of  the  issued  capital  of  Invatec  by  the  issue  of   25,537,506  post  consolidation  shares  (28.4%  of  the  issued  capital  of  Medibio)  Refer  Note  11  -­‐  Business  Combination.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   46   66                 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 11. BUSINESS  COMBINATIONS   Principal  activity   Date  of   acquisition   Proportion   of  shares   acquired   Consideration   $   Consideration   shares  issued   Number          2015   Invatec  Health  Pty  Ltd   Annapanna  Pty  Ltd   Patent  holder  &   developer  of   Depression  Algorithm   Research  &   development  provider   2  April  2015   100%   7,661,250   25,537,500   2  April  2015   100%   445,000   1,450,000   8,106,250   26,987,500   Invatec   Health   Pty   Ltd   was   acquired   by   the   issue   of   25,537,500   fully   paid   ordinary   shares   to   its   five   shareholders.   Medibio  gained  control  of  the  patents,  research  and  the  intellectual  property  including  patent  data  files  owned  by  the   entity.  As  part  of  the  acquisition  the  Invatec  Shareholders  are  also  entitled  to  18,000,000  Milestone  shares  payable  in  3   equal  tranches.  The  Milestone  objectives  must  be  achieved  by  31  December  2019.  The  Milestones  are:   (i) (ii) (iii) Tranche   1   -­‐   Milestone   Shares   will   be   issued   on   the   completion   of   a   clinical   trial   conducted   by   a   reputable   research  organisation  either  in  Australia  or  in  the  United  States  of  America  or,  a  body  which  is  not  related  to   either  Invatec  or  the  Company  which  is  designed  to  verify  the  CHR  Technology;   Tranche  2  -­‐  Milestone  Shares  will  be  issued  on  the  completion  of  the  development  of  a  series  of  algorithms  that   are   capable   of   being   documented   and   patented   as   proprietary   intellectual   property   of   sufficient   quality,   as   determined  by  a  reputable  research  organisation  either  in  Australia  or  in  the  United  States  of  America  or  a  body   which   is   not   related   to   either   Invatec   or   the   Company   to   allow   automated   diagnosis   as   necessary   for   the   commercialisation  of  the  CHR  Technology;  and   Tranche   3   -­‐   Milestone   Shares   will   be   issued   on   the   CHR   Technology   being   granted   approval   to   commercially   exploit  the  CHR  Technology  so  as  to  commence  operations  in  either  Australia  and  New  Zealand  and/or  either  of   the:   a) b) c) US  Food  and  Drug  Administration;   Australian  Therapeutic  Goods  Association;  or   Conformitee  European  or  generally  known  as  “CE  Mark”  or  if  necessary,  European  Medicines  Agency.   Annapanna  Pty  Ltd  was  the  Invatec  Health  Pty  Ltd  due  diligence  contractor  responsible  for  initial  investigation  of  the   technology  and  contacting  the  researchers  who  performed  data  analysis  and  researched  the  algorithms  developed.  Its   purchase  secured  control  of  all  the  intellectual  property  generated  in  that  process.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   47   67                                               N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 Assets  acquired  and  liabilities  assumed  at  the  date  of  acquisition   Invatec  Health  Pty  Ltd   $   Annapanna  Pty  Ltd   $   Current  Assets   Cash  &  cash  equivalents   Trade  and  other  receivables   Non-­‐Current  Assets   Intangible  –  R&D  expenditure   Non-­‐Current  Liabilities   Trade  and  other  payables   Borrowings   Other  liabilities   Non-­‐Current  Liabilities   Borrowings   Goodwill  arising  on  acquisition   Option  to  acquire  costs   Consideration   Less:  fair  value  of  identifiable  net   assets  acquired   392   26,755   1,797,942   (280,705)   (362,843)   (13,410)   (395,000)   773,131   1   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   1   Total   $   393   26,755   1,797,942   (280,705)   (362,843)   (13,410)   (395,000)   773,132   Invatec  Health  Pty  Ltd   $   Annapanna  Pty  Ltd   $   Total   $   400,000   7,661,250   (773,131)   -­‐   400,000   445,000   8,106,250   (1)   (773,132)   Fair  value  of  intangibles  acquired   7,288,119   7,288,119   Less:  Impairment  of  goodwill   Goodwill  arising  on  acquisition   -­‐   -­‐   (444,999)   (444,999)   -­‐   -­‐   The   fair   value   of   the   shares   issued   was   determined   by   reference   to   the   current   cost   of   obtaining   the   data   files   .The   Invatec   data   files   have   been   collected   over   the   past   15   years   and   consist   of   24   hours   of   ECG   data   and   either   a   corresponding  diagnosis  or  stress  rating.  Revenue  since  acquisition  date  was  $141,367  and  the  amount  of  profit  of  the   acquisition  since  acquisition  date  included  in  the  group  loss  was  $92,627.  Had  all  business  combinations  occurred  at  the   beginning  of  the  year  the  loss  would  have  increased  by  $277,759.   These  results  all  relate  to  Invatec  Health  Pty  Ltd.  The  net  assets  of  Invatec  Health  Pty  Ltd  recognised  in  the  financial   statements  are  a  provisional  assessment  of  their  fair  value  as  the  Company  is  in  the  process  of  finalising  the  valuation  of   intangible  assets  acquired.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   48   68                                                                                                                                         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 12. INTANGIBLES   Licence   Heartlink  Limited   At  cost   Amortisation   Impairment   Net  carrying  amount   Development  Costs   At  cost   Additions   Impairment   Net  carrying  amount   Patents   At  cost   Additions   Amortisation   Impairment   Net  carrying  amount   Data  files   At  cost   Additions   Impairment   Net  carrying  amount   Goodwill   At  cost   Additions   Impairment   Net  carrying  amount   Reconciliation  of  carrying  amount   Net  carrying  amount  at  beginning  of  year   Additions   Amortisation   Impairment   Net  carrying  amount   Heartlink  Licence   CONSOLIDATED   2015   $   2014   $   300,000   (150,000)   -­‐   150,000   43,750   3,078,052   -­‐   3,121,802   -­‐   3,298,153   (366,461)   -­‐   2,931,692   -­‐   7,794,643   -­‐   7,794,643   -­‐   444,999   (444,999)   -­‐   300,000   -­‐   -­‐   300,000   -­‐   43,750   -­‐   43,750   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   343,750   14,615,847   (516,461)   (444,999)   13,998,137   -­‐   343,750   -­‐   -­‐   343,750   Heartlink  Limited  is  an  Australian  public  unlisted  company.    It  is  the  registered  holder  of  the  Patents  of  an  algorithm   associated  with  the  HRV  technology.    The  Patents  are  held  in  Australia,  Israel  and  New  Zealand.    These  Patents  are  in   relation   to   technology   that   provides   a   method   for   diagnosing   psychiatric   disorders   by   the   analysis   of   heart   rate   patterns.  This  Patented  Technology,  which  is  complementary  to  the  processes  being  developed  by  Invatec.     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   49   69                                                                                                                       N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 Development  Costs The   algorithm   and   diagnostic   system   development   costs   incurred   in   the   year   by   the   development   team   have   been   capitalised.     Patents   The   company   announced   in   April   2015,   it   acquisition   of   the   US   and   Canadian   patents   which   complete   the   consolidation  of  granted  intellectual  property  that  the  company  has  targeted  to  support  Medibio’s  commercialisation   strategy  for  its  proprietary  depression  and  mental  health  diagnostic  technologies.   13. TRADE  AND  OTHER  PAYABLES  –  CURRENT   Trade  payables               Other  creditors  and  accruals   Accrued  interest   Related  party  payables   Note   (i)   (ii)   (iii)   CONSOLIDATED   2015   $   1,541,792   388,308   12,211   1,942,311   437,969   2,380,280   2014   $   140,884   152,237   103,564   396,685   34,555   431,240   Terms  and  conditions  relating  to  the  above  financial  instruments   i.   ii.     iii.     Trade  creditors  are  non-­‐interest  bearing  and  normally  settled  on  30  day  terms.   Other  creditors  are  non-­‐interest  bearing  and  have  repayment  terms  between  30  and  90  days.   This  amount  reflects  interest  accrual  on  the  convertible  notes  that  have  been  issued  as  detailed  in  Note  14.     Interest  is  only  payable  on  the  date  of  maturity  of  notes.   Due  to  the  short  term  nature  of  these  payables  their  carrying  value  is  assumed  to  approximate  their  fair  value.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   50   70                             N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 14. BORROWINGS   Borrowings  –  Current     Borrowings  –  Non-­‐Current   Series  A  –  Convertible  Notes   Invatec  Shareholders  loan   Series  B  –  Convertible  Notes   Promissory  Note   Invatec  Shareholders  loan   CONSOLIDATED   2014   $   -­‐   197,500   197,500   2013   $   1,500,000   -­‐   1,500,000   -­‐   3,298,153   197,500   3,495,653   395,000   -­‐   -­‐   395,000   Total  Borrowings   3,693,153   1,895,000   Convertible  Notes   All  the  Series  A  and  Series  B  Convertible  Notes  were  converted  into  securities  on  2  April  2015.  This  was  approved  by   shareholders  at  the  General  Meeting  held  6  March  2015  for  the  notes  not  approved  at  the  earlier  15  November  2013   meeting.   Promissory  Note   On  21  April  2015  Medibio  announced  the  acquisition  of  US  and  Canadian  patents  which  completed  the  consolidation   of   granted   intellectual   property   that   the   company   had   targeted   to   support   the   commercialisation   strategy   of   Medibio’s  proprietary  depression  and  mental  health  diagnostic  technologies.   The   term   of   the   note   is   3   years   with   8%   interest   payable   semi-­‐annually.   Medibio   can   extend   the   period   for   an   additional  2  years  incurring  an  additional  2%  interest.  The  patent  owner  can  elect  to  be  paid  in  cash  or  Medibio  shares   at  $0.31  per  share.   Invatec  Shareholders  loan   Under  the  terms  of  the  acquisition  of  the  Invatec  Health  Pty  Ltd  (‘Invatec’)  the  outstanding  shareholder  loans  were   reduced   to   $395,000,   with   half   payable   13   months   after   completion   (due   2   May   2016)   of   the   acquisition   and   the   balance  26  months  after  completion.  The  carrying  value  is  considered  a  reasonable  approximation  to  the  fair  value  of   the  loan.   15. OTHER  PAYABLES  (NON-­‐CURRENT)   Other  creditors  and  accruals   CONSOLIDATED   2015   $   -­‐   2014   $   6,006   This  amount  reflects  the  interest  accrual  on  the  convertible  notes  that  were  on  issue,  as  detailed  in  Note  14  above.   Interest  is  only  payable  on  the  date  of  maturity  on  the  notes.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   51   71                                                                   N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 2015   $   2014   $   51,093,889   37,250,977   NUMBER  OF  SHARES   2015   2014   3,173,189,372   2,873,174,372   2015   $   37,250,977   2014   $   36,650,527   16. ISSUED  CAPITAL   Issued  and  paid  up  capital   a.   Ordinary  shares  issued  and  fully  paid   b.     Movements  in  shares  on  issue   Beginning  of  the  financial  year   Issued  during  the  year:   -­‐  options  exercised                                         -­‐  share  issues  to  Heartlink                         -­‐  share  issues  to  Invatec                         -­‐  share  placement         -­‐  Convertible  note  –  Series  B                       (i)   (ii)   Share  Consolidation  100:1   -­‐   -­‐   333,333,333   8,333,333   3,514,856,036   (3,479,707,089)   15,000   150,000,000          150,000,000   -­‐   -­‐   -­‐   -­‐   Post-­‐consolidation  shares  on  issue   35,148,947   Share  placement                     Share  issues  to  acquire  Invatec               Convertible  note  –  Series  B   Convertible  note  –  Series  A   Contractor/consultant  payments   share  issues  to  acquire  company   Convertible  note  interest                                       Option  exercise                                                                       Less:  share  issue  costs   End  of  the  financial  year   (iii)   (iv)   (v)   (v)   (vi)   (vii)   (viii)   8,256,668   25,537,500   3,516,665   15,000,000   643,100   1,450,000   113,388   136,658   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   89,802,932   3,173,189,372   -­‐   -­‐   1,000,000   25,000   -­‐   -­‐   2,477,000   7,661,250   1,055,000   1,500,000   192,930   435,000   34,016   13,666   (550,950)   51,093,889   450   300,000   300,000   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   37,250,977   Notes   (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) On  10  October  2014,  the  Company  issued  333,333,333  ordinary  shares  at  an  issue  price  of  0.03  cent  per   shares.  This  issue  raised  $1,000,000  (before  issue  costs).  This  placement  was  completed  post  the  share   consolidation  raising  a  further  $2,477,000  at  $0.30  per  share   On  24  November  2014,  a  Convertible  note  holder,  converted  $25,000  of  Notes.  All  the  Convertible  Notes   were  converted  to  securities  in  April  2015   On  2  April  2015  the  company  raised  $2,477,000  by  the  placement  of  8,256,668  shares  to  sophisticated   and  professional  investors.    Refer  to  Note  11  –  Business  combination  –  acquisition  of  Invatec  Health  Pty  Ltd   Conversion  of  All  Series  A  and  B  convertible  notes  as  approved  by  shareholder  at  a  General  Meeting  of  6   March  2015.   Refer  to  Note  11  –  Business  combination  –  acquisition  of  Annapanna  Pty  Ltd   Interest  on  Convertible  notes  paid  by  issue  of  shares  at  $0.30  per  share.   Option   exercised   on   issue   by   application   of   accrued   Convertible   Notes   interest   of   $13,666   due   to   the   holder.   All  shares  issued  above  rank  equally  in  all  respects  with  the  shares  on  issue  at  the  beginning  of  the  year.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   52   72                                                                                                                                                                                                                                                                                       A N N U A L R E P O R T 2 0 1 5 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   c.   Capital  management   When   managing   capital,   management’s   objective   is   to   ensure   the   entity   continues   as   a   going   concern   as   well   as   to   maintain   optimal   returns   to   shareholders   and   benefits   for   other   stakeholders.    The   company’s   debt   and   capital   includes  ordinary  share  capital  and  financial  liabilities,  supported  by  financial  assets.    There  are  no  externally  imposed   capital  requirements.   Going  concern  statement     As  at  30  June  2015  the  Group  had  net  asset  position  of  $9,111,081  (2014:  $2,710,271).    However,  as  at  30  June  2015,   it  had:   • incurred  a  loss  for  the  year  of  $7,921,702  (2014:  $428,332);   • cash  outflow  from  operations  of  $1,515,083  (2014:  $611,257);   • cash  at  bank  of  $944,301  (2014  $96,249);   • • borrowings  (non-­‐current)  from  the  acquisition  of  patents  of  $3,298,153,  and  shareholder  loans  of  $197,500;  and   • Current  liabilities  in  excess  of  current  assets  by  $1,391,403  (2014:  $1,693,507)   trade  creditors  of  $2,320,280  (2014  $431,240);     The   Group’s   ability   to   continue   as   a   going   concern   is   dependent   upon   the   generation   of   cash   from   operations,   the   sufficiency   of   current   cash   reserves   to   meet   existing   obligations,   the   ability   to   reschedule   planned   research   and   development  activity,  raising  of  further  equity  and  receipt  of  research  and  development  tax  incentives.   In  Note  24  the  Group  has  disclosed  that  since  year  end  it  has  raised  $3,092,035  through  the  issue  of  $7,730,087  shares   on  8  September  2015.  Accordingly,  Directors  believe  the  Group  will  be  able  to  pay  its  debts  as  and  when  they  fall  due   for  a  period  of  at  least  12  months  from  the  date  of  these  financial  statements.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   53   73         N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 d.       Share  Options   Options  over  ordinary  shares:   2015   No.  of  Options   2014   No.  of  Options   Unlisted  Options   Exercisable  on  or  before  1  April  2017  at  30  cents  per  share   Outstanding  at  beginning  of  the  year   Issued  during  the  year   Lapsed  during  the  year   Outstanding  at  end  of  the  year   Exercisable  on  or  before  1  April  2018  at  10  cents  per  share   Outstanding  at  beginning  of  the  year   Issued  during  the  year   Exercised  during  the  year   Lapsed  during  the  year   Outstanding  at  end  of  the  year   Exercisable  on  or  before  31  December  2013  at  5  cents  per  share   Outstanding  at  beginning  of  the  year   Issued  during  the  year   Lapsed  during  the  year   Outstanding  at  end  of  the  year   Exercisable  on  or  before  31  December  2013  at  3  cents  per  share     Outstanding  at  beginning  of  the  year   Issued  during  the  year   Lapsed  during  the  year   Outstanding  at  end  of  the  year   Listed  Options   Exercisable  on  or  before  31  December  2013  at  3  cents  per  share     Outstanding  at  beginning  of  the  year   *Exercised  during  the  year   Lapsed  during  the  year     Outstanding  at  end  of  the  year   Total  options  over  unissued  ordinary  shares   -­‐   6,666,667   -­‐   6,666,667   -­‐   15,000,000   (136,658)   -­‐   14,863,342   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   -­‐   29,248,571   -­‐   (29,248,571)   -­‐   19,000,000   -­‐   (19,000,000)   -­‐   -­‐   -­‐   -­‐   -­‐   21,530,009   1,270,813,556   (15,000)   (1,270,798,556)   -­‐   -­‐   Movements  in  share  options     • On  31  December  2013  2  series  of  the  unlisted  options  and  1  series  of  listed  option  expired  and  lapsed.   • On  the  2  April  2015,  all  Series  A  Convertible  Note  holders  received  an  option  attached  to  every  share  issued  in   the   conversion.   Option   terms   are:   -­‐   the   options   expire   1   April   2018   and   are   convertible   on   payment   of   10   cents.   • As   part   of   the   April   2015   capital   raising   shares,   certain   shares   were   issued   with   attached   options.     Option   terms  are:  -­‐  the  options  expire  1  April  2017  and  are  convertible  on  payment  of  30  cents.   • On  2  April  2015  a  Convertible  Note  holder  receiving  options  as  part  of  the  conversion  terms,  applied  accrued   interest  payable  of  $13,666  and  exercised  136,658  options.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   54   74                                                 N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 e.     Terms  and  conditions  of  contributed  equity   Ordinary  shares  have  the  right  to  receive  dividends  as  declared  and,  in  the  event  of  winding  up  of  the  Company,  to   participate  in  the  proceeds  from  the  sale  of  all  surplus  assets  in  proportion  to  the  number  of  and  amounts  paid  up  on   shares  held,  after  all  other  creditors  have  been  paid.   Ordinary  shares  entitle  their  holder  to  one  vote,  either  in  person  or  by  proxy,  at  a  meeting  of  the  Company.   Ordinary  shares  have  no  par  value.   17. AUDITORS’  REMUNERATION   The  auditor  of  Medibio  Limited  is  William  Buck  (Qld)    Amounts  received  or  due  and  receivable    for:    -­‐    audit  or  review  of  the  financial  report  of  the  entity  and  any  other  entity  in  the   Group   Other  services  in  relation  to  the  entity  and  any  other  entity  in  the  Group:   -­‐  tax  compliance   -­‐  AGM  attendance   18. KEY  MANAGEMENT  PERSONNEL   Short-­‐term  employee  benefits   Post-­‐employment  benefits   Share-­‐based  payments   Total  compensation   Detail’s  of  related  party  payables  can  be  found  in  Note  13.   CONSOLIDATED   2015   $   2014   $   29,161   37,184   12,575   690   42,426   8,150   595   45,929   311,061   2,774   88,600   402,435   138,833   -­‐   -­‐   138,833   19. RELATED  PARTY  DISCLOSURES   The   consolidated   financial   statements   include   the   financial   statements   of   Medibio   Limited   (the   ultimate   parent   company)  and  the  subsidiaries  listed  in  the  following  table.   Name   BioProspect  Australia  Pty  Ltd**   Australian  Phytochemicals  Pty  Ltd**   BioProspect  America  Pty  Ltd**   Re  Gen  Wellness  Products  Pty  Ltd**   Medibio  Limited  –  USA***   Invatec  Health  Pty  Ltd***   Annapanna  Pty  Ltd***   Country  of   Incorporation   Australia   Australia   Australia   Australia   USA  -­‐   Delaware   Australia   Australia   Class  of   Shares   Ord   Ord   Ord   Ord   Ord   Ord   Ord   2015   100   100   100   100   100   100   100   %  Equity                             Interest   Investment  *                                           $   2015   2014   4,024,341   4,024,341   1,323,464   1,323,464                              2                              2   50,000   50,000   -­‐   1,320   2014   100   100   100   100   -­‐   6   -­‐   8,061,250   445,000   600,000   -­‐   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   55   75  NOTES  TO  THE  FINANCIAL  STATEMENTS  FOR  THE  YEAR  ENDED  30  JUNE  2015   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015    56    *  Cost  before  provisioning.  Refer  to  Note  10  for  further  investment  disclosures.  **  Dormant  entities  ***  Human  health  –  CHR  diagnostic  development      20. FINANCIAL  RISK  MANAGEMENT  OBJECTIVES  AND  POLICIES  The  Group’s  principal  financial  instruments  comprise  receivables,  payables,  cash,  investments  and  short-­‐term  deposits.  The  main  risks  arising  from  the  Group’s  financial  instruments  are  credit  risk,  interest  rate  risk,  foreign  exchange  risk  and  liquidity  risk.  The  Group  uses  different  methods  to  measure  and  manage  different  types  of  risks  to  which  it  is  exposed.  These  include  monitoring  the  levels  of  exposure  to  interest  rates  and  assessments  of  market  forecast  for  interest  rates.  Liquidity  risk  is  monitored  through  the  development  of  future  rolling  cash  flow  forecasts  that  are  tabled  and  reviewed  at  each  board  meeting.  Risk  exposures  and  responses  Credit  risk  Credit  risk  arises  from  the  financial  assets  of  the  Group,  which  comprise  cash  and  cash  equivalents,  trade  and  other  receivables.  The  Group’s  maximum  exposures  to  credit  risk  at  the  end  of  the  reporting  period  in  relation  to  each  class  of  recognised  financial  assets  is  the  carrying  amount  of  those  assets  as  indicated  in  the  Statement  of  Financial  Position.  The  Group  minimises  concentrations  of  credit  risk  in  relation  to  trade  receivables  by  having  payment  terms  of  30  days  and  receivable  balances  are  monitored  on  an  ongoing  basis  with  the  result  that  the  Group  has  currently  never  had  an  exposure  to  bad  debts.    It  is  the  Group’s  policy  that  all  customers  who  wish  to  trade  on  credit  terms  are  subject  to  credit  verification  procedures.    Term  deposits  are  placed  with  major  financial  institutions  to  minimise  the  risk  of  default  of  counterparties.  Interest  rate  risk    The  Group’s  exposure  to  market  interest  rates  relates  primarily  to  the  Group’s  funds  held  on  term  deposit.    At  the  end  of  the  reporting  period  the  Group  had  the  following  mix  of  financial  assets  and  liabilities  exposed  to  interest  rate  risk:                                                                                                                                            CONSOLIDATED  2015  $  2014  $  Financial  assets        Cash  and  cash  equivalents  944,301  96,249    The  Group’s  policy  is  to  place  funds  on  interest-­‐bearing  term  deposit  that  are  surplus  to  immediate  requirements.  The  Group’s  interest  rate  exposure  is  reviewed  near  the  maturity  date  of  term  deposits,  to  assess  whether  more  attractive  rates  are  available  without  increasing  risk.    The  following  sensitivity  analysis  is  based  on  the  interest  rate  exposures  in  existence  at  the  end  of  the  reporting  period:  At  30  June  2015,  if  interest  rates  had  moved,  as  illustrated  in  the  table  below,  with  all  other  variables  held  constant,  post-­‐tax  loss  and  equity  would  have  been  affected  as  follows:                                           N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   *  Cost  before  provisioning.  Refer  to  Note  10  for  further  investment  disclosures.   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S **  Dormant  entities   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 ***  Human  health  –  CHR  diagnostic  development     20. FINANCIAL  RISK  MANAGEMENT  OBJECTIVES  AND  POLICIES   The   Group’s   principal   financial   instruments   comprise   receivables,   payables,   cash,   investments   and   short-­‐term   deposits.   The  main  risks  arising  from  the  Group’s  financial  instruments  are  credit  risk,  interest  rate  risk,  foreign  exchange  risk   and   liquidity   risk.   The   Group   uses   different   methods   to   measure   and   manage   different   types   of   risks   to   which   it   is   exposed.   These   include   monitoring   the   levels   of   exposure   to   interest   rates   and   assessments   of   market   forecast   for   interest  rates.  Liquidity  risk  is  monitored  through  the  development  of  future  rolling  cash  flow  forecasts  that  are  tabled   and  reviewed  at  each  board  meeting.   Risk  exposures  and  responses   Credit  risk   Credit  risk  arises  from  the  financial  assets  of  the  Group,  which  comprise  cash  and  cash  equivalents,  trade  and  other   receivables.  The  Group’s  maximum  exposures  to  credit  risk  at  the  end  of  the  reporting  period  in  relation  to  each  class   of   recognised   financial   assets   is   the   carrying   amount   of   those   assets   as   indicated   in   the   Statement   of   Financial   Position.  The  Group  minimises  concentrations  of  credit  risk  in  relation  to  trade  receivables  by  having  payment  terms   of  30  days  and  receivable  balances  are  monitored  on  an  ongoing  basis  with  the  result  that  the  Group  has  currently   never  had  an  exposure  to  bad  debts.     It   is   the   Group’s   policy   that   all   customers   who   wish   to   trade   on   credit   terms   are   subject   to   credit   verification   procedures.     Term   deposits   are   placed   with   major   financial   institutions   to   minimise   the   risk   of   default   of   counterparties.   Interest  rate  risk     The  Group’s  exposure  to  market  interest  rates  relates  primarily  to  the  Group’s  funds  held  on  term  deposit.    At  the  end   of  the  reporting  period  the  Group  had  the  following  mix  of  financial  assets  and  liabilities  exposed  to  interest  rate  risk:   Financial  assets     Cash  and  cash  equivalents   CONSOLIDATED   2015   $   2014   $   944,301   96,249   The  Group’s  policy  is  to  place  funds  on  interest-­‐bearing  term  deposit  that  are  surplus  to  immediate  requirements.  The   Group’s  interest  rate  exposure  is  reviewed  near  the  maturity  date  of  term  deposits,  to  assess  whether  more  attractive   rates  are  available  without  increasing  risk.    The  following  sensitivity  analysis  is  based  on  the  interest  rate  exposures  in   existence  at  the  end  of  the  reporting  period:   At  30  June  2015,  if  interest  rates  had  moved,  as  illustrated  in  the  table  below,  with  all  other  variables  held  constant,   post-­‐tax  loss  and  equity  would  have  been  affected  as  follows:   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   56   76                                                                                                                                                             N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 Consolidated     +  1%        (100  basis  points)   -­‐  0.5  %    (50  points)   Post  tax  loss   Higher/  (lower)   2015   $   9,443   (4,722)   2014   $   2,537   (1,903)   Equity   Higher/  (lower)   2015   $   2014   $   (9,443)   4,722   (2,537)   1,903   The  movements  in  losses  are  due  to  higher/  (lower)  interest  income  from  cash  balances.  There  is  no  impact  on  equity   other  than  impact  on  accumulated  losses.   Liquidity  risk   The  Group’s  objective  is  to  maintain  sufficient  funds  to  finance  its  current  operations  and  additional  funds  to  ensure   its  long-­‐term  survival.  The  Group  has  no  finance  facilities  in  place  and  therefore  it  is  currently  dependent  on  capital   raisings  and  government  tax  incentives  for  short  term  survival.  Refer  to  note  16  for  further  details.   Foreign  Currency  Risk   The  Group  is  exposed  to  fluctuations  in  foreign  currencies  on  purchases  of  goods  in  currencies  other  than  the  Group’s   functional  currency.  The  group  manages  the  risk  by  monitoring  the  level  of  exposure  to  foreign  currency  transactions   and  limiting  where  possible.   Fair  value   The  carrying  amount  of  all  recognised  financial  assets  and  financial  liabilities  is  considered  a  reasonable  approximation   of  their  fair  value  due  to  their  short  term  nature.   21. CONTINGENT  LIABILITIES   Other  than  disclosed  in  note  11,  there  were  no  known  contingent  liabilities  as  at  30  June  2015.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   57   77                                                                                                                                                             N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   N O T E S T O T H E F I N A N C I A L S T A T E M E N T S F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   F O R T H E Y E A R E N D E D 3 0 J U N E 2 0 1 5 22. SHARE-­‐BASED  PAYMENT  PLANS   Recognised  share-­‐based  payment  expenses   a. The  expense  recognised  for  employee  services  received  during  the  year  is  shown  below.   Expense  arising  from  equity-­‐settled  share-­‐based  payment  transactions     b. The  cost  recognised  for  consulting  services  rendered  during  the  year.   25,000,000  shares  issued  to  Heartlink  for  exercise  of  option   125,000,000  shares  issued  to  Heartlink  for  exercise  of  option   150,000,000  shares  issued  to  Invatec  for  exercise  of  option   150,000  shares  issued  to  C  Indermaur   493,100  shares  issued  to  S  Pearce    250,000  options  ex  at  $0.30  issued  to  J  Campbell   1,000,000  options  ex  at  $0.30  issued  to  SEK  Investments  Limited   1,500,000  options  ex  at  $0.30  issued  to  Ausepen  Pty  Ltd   CONSOLIDATED   2015   $   -­‐   -­‐   -­‐   -­‐   45,000   147,930   43,600   174,400   261,600   2014   $   -­‐   50,000   250,000   300,000   - -­‐ -­‐ TOTAL  SHARE-­‐BASED  PAYMENTS   672,530   600,000   Option  pricing  model   The  fair  value  of  the  equity-­‐settled  share  options  granted  is  estimated  as  at  the  date  of  grant  using  a  Black-­‐Scholes   model  taking  into  account  the  terms  and  conditions  upon  which  the  options  were  granted.   The  following  table  lists  the  inputs  to  the  model  used  for  the  year  ended  30  June  2015.   Black-­‐Scholes   B Dividend  yield  (%)   Expected  volatility  (%)   Risk-­‐free  interest  rate  (%)   Expected  life  of  options  (years)   Option  exercise  price  ($)   Weighted  average  share  price  at  measurement  date     (post-­‐consolidation  prices)   0.00%   200%   2.634%   2   $0.30   $0.30   The  reserve  records  items  recognised  as  expenses  on  valuation  of  options.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   58   78                                                                                                                                                                                             N O T E S   T O   T H E   F I N A N C I A L   S T A T E M E N T S   F O R   T H E   Y E A R   E N D E D   3 0   J U N E   2 0 1 5   A N N U A L R E P O R T 2 0 1 5 23. PARENT  ENTITY  INFORMATION   Net  loss  attributable  to  members  of  Medibio  Limited   Change  in  market  value  of  available  for  sale  financial  assets   Total  comprehensive  income  for  the  year  attributable  to  members  of   Medibio  Limited   Current  assets   Total  assets   Current  liabilities   Total  liabilities   Issued  Capital   Share  based  payments  reserve   Retained  earnings   Total  equity   Contingent  liabilities   Capital  and  other  expenditure  commitments  not  provided  for  in  the  financial   statements   2014   $   (7,374,764)   -­‐   (7,374,764)   920,651   14,470,274   1,420,273   4,718,427   51,093,889   479,600   (41,821,642)   9,751,847   -­‐   2014   $   (430,118)   -­‐   (430,118)   213,018   5,017,803   1,812,698   2,213,704   37,250,977   -­‐   (34,446,878)   2,804,099   -­‐   -­‐   3,000   24.     EVENTS  AFTER  THE  END  OF  THE  REPORTING  PERIOD   Apart  from  the  matters  set  out  below,  there  are  no  matters  or  circumstances  that  have  arisen  since  the  end  of  the   financial  year  that  have  had  significantly  affected  either:   • • the  Group’s  operations  in  financial  year  2015;  or   future  prospects.   The  key  post  balance  date  event  is  the  issue  of  7,730,087  shares  at  $0.40  to  raise  $3,092,035  on  8  September  2015.   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   59   79                           D I R E C T O R S ’   D E C L A R A T I O N   D I R E C T O R S ’   D E C L A R A T I O N   D I R E C T O R S ’ D E C L A R A T I O N In  accordance  with  a  resolution  of  directors  of  Medibio  Limited,  I  state  that:   In  accordance  with  a  resolution  of  directors  of  Medibio  Limited,  I  state  that:   1.       1.       In  the  opinion  of  the  directors:   In  the  opinion  of  the  directors:   a.   a.   b. b. c.   c.   the   financial   statements,   notes   and   additional   disclosures   included   in   the   directors’   report   designated   as   the   financial   statements,   notes   and   additional   disclosures   included   in   the   directors’   report   designated   as   audited,  of  the  Company  are  in  accordance  with  the  Corporations  Act  2001  including:   audited,  of  the  Company  are  in  accordance  with  the  Corporations  Act  2001  including:   i.   i.   giving   a   true   and   fair   view   of   the   of   the   Group’s   financial   position   as   at   30   June   2015   and   of   its   giving   a   true   and   fair   view   of   the   of   the   Group’s   financial   position   as   at   30   June   2015   and   of   its   performance  for  the  year  ended  on  that  date;  and   performance  for  the  year  ended  on  that  date;  and   ii.   ii.   complying  with  Accounting  Standards  and  Corporations  Regulations  2001,   complying  with  Accounting  Standards  and  Corporations  Regulations  2001,   on  the  basis  of  those  outlined  in  note  16,  there  are  reasonable  grounds  to  believe  that  the  Company  will  be   on  the  basis  of  those  outlined  in  note  16,  there  are  reasonable  grounds  to  believe  that  the  Company  will  be   able  to  pay  its  debts  as  and  when  they  become  due  and  payable,  and   able  to  pay  its  debts  as  and  when  they  become  due  and  payable,  and   the   financial   statements   and   notes   to   the   financial   statements   are   prepared   in   compliance   with   the   financial   statements   and   notes   to   the   financial   statements   are   prepared   in   compliance   with   International  Financial  Reporting  Standards  as  made  by  the  International  Accounting  Standards  Board.   International  Financial  Reporting  Standards  as  made  by  the  International  Accounting  Standards  Board.   2.       2.       This   declaration   has   been   made   after   receiving   the   declarations   required   to   be   made   to   the   directors   in   This   declaration   has   been   made   after   receiving   the   declarations   required   to   be   made   to   the   directors   in   accordance  with  section  295A  of  the  Corporations  Act  2001  for  the  financial  year  ended  30  June  2015.   accordance  with  section  295A  of  the  Corporations  Act  2001  for  the  financial  year  ended  30  June  2015.   On  behalf  of  the  Board   On  behalf  of  the  Board   Chris  Indermaur   Chris  Indermaur   Chairman   Chairman   30th  September  2015   30th  September  2015   Sydney  NSW   Sydney  NSW   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   60   60   80  DIRECTORS’  DECLARATION   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015    60   In  accordance  with  a  resolution  of  directors  of  Medibio  Limited,  I  state  that:  1.      In  the  opinion  of  the  directors:    a.  the  financial  statements,  notes  and  additional  disclosures  included  in  the  directors’  report  designated  as  audited,  of  the  Company  are  in  accordance  with  the  Corporations  Act  2001  including:    i.  giving  a  true  and  fair  view  of  the  of  the  Group’s  financial  position  as  at  30  June  2015  and  of  its  performance  for  the  year  ended  on  that  date;  and    ii.  complying  with  Accounting  Standards  and  Corporations  Regulations  2001,    b. on  the  basis  of  those  outlined  in  note  16,  there  are  reasonable  grounds  to  believe  that  the  Company  will  be  able  to  pay  its  debts  as  and  when  they  become  due  and  payable,  and    c.  the  financial  statements  and  notes  to  the  financial  statements  are  prepared  in  compliance  with  International  Financial  Reporting  Standards  as  made  by  the  International  Accounting  Standards  Board.    2.      This  declaration  has  been  made  after  receiving  the  declarations  required  to  be  made  to  the  directors  in  accordance  with  section  295A  of  the  Corporations  Act  2001  for  the  financial  year  ended  30  June  2015.    On  behalf  of  the  Board      Chris  Indermaur  Chairman      30th  September  2015  Sydney  NSW                                                       I N D E P E N D E N T A U D I T O R ’ S I N D E P E N D E N T   A U D I T O R ’ S   R E P O R T   T O   T H E   R E P O R T T O T H E M E M B E R S M E M B E R S   O F   M E D I B I O   L I M I T E D   A N D   O F M E D I B I O L I M I T E D A N D C O N T R O L L E D   E N T I T I E S   C O N T R O L L E D E N T I T I E S A N N U A L R E P O R T 2 0 1 5 Report  on  the  Financial  Report   We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the   entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial   report   comprises   the   consolidated   statement   of   financial   position   as   at   30   June   2015,   the   consolidated   statement   of   profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated   statement   of   cash   flows   for   the   year   then   ended,   notes   comprising   a   summary   of   significant   accounting   policies   and   other  explanatory  information,  and  the  directors’  declaration.   Directors’  Responsibility  for  the  Financial  Report   The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in   accordance   with   Australian   Accounting   Standards   and   the   Corporations   Act   2001   and   for   such   internal   control   as   the   directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is   free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with   Accounting   Standard   AASB   101   Presentation   of   Financial   Statements,   that   the   financial   statements   comply   with   International  Financial  Reporting  Standards.   Auditor’s  Responsibility   Our   responsibility   is   to   express   an   opinion   on   the   financial   report   based   on   our   audit.     We   conducted   our   audit   in   accordance   with   Australian   Auditing   Standards.     Those   standards   require   that   we   comply   with   relevant   ethical   requirements   relating   to   audit   engagements   and   plan   and   perform   the   audit   to   obtain   reasonable   assurance   about   whether  the  financial  report  is  free  from  material  misstatement.   An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial   report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material   misstatement   of   the   financial   report,   whether   due   to   fraud   or   error.     In   making   those   risk   assessments,   the   auditor   considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in   order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an   opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of   accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating   the  overall  presentation  of  the  financial  report.   We   believe   that   the   audit   evidence   we   have   obtained   is   sufficient   and   appropriate   to   provide   a   basis   for   our   audit   opinion.   Independence   In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014   61   81    INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001      INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001                   I N D E P E N D E N T A U D I T O R ’ S I N D E P E N D E N T   A U D I T O R ’ S   R E P O R T   T O   T H E   R E P O R T T O T H E M E M B E R S M E M B E R S   O F   M E D I B I O   L I M I T E D   A N D   O F M E D I B I O L I M I T E D A N D C O N T R O L L E D   E N T I T I E S   C O N T R O L L E D E N T I T I E S Auditor’s  Opinion   In  our  opinion:   a. the  financial  report  of  the  Group  is  in  accordance  with  the  Corporations  Act  2001,  including:   i.   giving  a  true  and  fair  view  of  the  Group’s  financial  position  as  at  30  June  2015  and  of  its  performance  for   the  year  ended  on  that  date;  and   ii.   complying  with  Australian  Accounting  Standards  (including  the  Australian  Accounting  Interpretations)  and   the  Corporations  Regulations  2001;  and   b. the  financial  report  also  complies  with  International  Financial  Reporting  Standards  as  disclosed  in  Note  1.   Emphasis  of  Matter  regarding  Going  Concern   Without  modifying  our  opinion,  we  draw  attention  to  Note  16(c)  in  the  financial  report  which  indicates  that  the  Group   incurred  losses  of  $7,921,702  (2014:  $428,332),  the  group’s  current  liabilities  exceeded  its  current  assets  by  $1,391,403   (2014:$1,693,507)   and   cash   outflows   from   operations   of   $1,515,083     (2014:   $611,257).     These   conditions,   along   with   other  matters  set  forth  in  Note  16(c)  indicate  the  existence  of  a  material  uncertainty  which  may  cast  significant  doubt   about  the  Group’s  ability  to  continue  as  a  going  concern  and  therefore  the  consolidated  entity  may  be  unable  to  realise   its  assets  and  discharge  its  liabilities  in  the  normal  course  of  business.   Report  on  the  Remuneration  Report   We  have  audited  the  Remuneration  Report  included  in   pages  29   to   35  of  the  directors’  report  for  the   year   ended   30   June   2015.     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.   Auditor’s  Opinion   In  our  opinion,  the  Remuneration  Report  of  Medibio  Limited  for  the  year  ended  30  June  2015,  complies  with  section   300A  of  the  Corporations  Act  2001.   Matters  Relating  to  the  Electronic  Presentation  of  the  Audited  Financial  Report     This   auditor’s   report   relates   to   the   financial   report   of   Medibio   Limited   for   the   year   ended   30   June   2015   included   on   Medibio  Limited’s  web  site.    The  company’s  directors  are  responsible  for  the  integrity  of  the  Medibio  Limited’s  web  site.     We  have  not  been  engaged  to  report  on  the  integrity  of  the  Medibio  Limited’s  web  site.    The  auditor’s  report  refers  only   to   the   financial   report.     It   does   not   provide   an   opinion   on   any   other   information   which   may   have   been   hyperlinked   to/from   these   statements.     If   users   of   this   report   are   concerned   with   the   inherent   risks   arising   from   electronic   data   communications  they  are  advised  to  refer  to  the  hard  copy  of  the  audited  financial  report  to  confirm  the  information   included  in  the  audited  financial  report  presented  on  this  web  site.   William  Buck  (Qld)   ABN  11  603  627  400   M.  Ayoob   A  Member  of  the  Firm   Dated  this  30th  day  of  September,  2015   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   62   82    INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001      INDEPENDENT  AUDITOR’S  REPORT  TO  THE  MEMBERS  OF  MEDIBIO  LIMITED  AND  CONTROLLED  ENTITIES   BIOPROSPECT  LIMITED    |    ANNUAL  REPORT  2014    61   Report  on  the  Financial  Report  We  have  audited  the  accompanying  consolidated  financial  report  comprising  of  Medibio  Limited  (the  Company)  and  the  entities  it  controlled  at  year’s  end  or  from  time  to  time  during  the  financial  year  (the  Group).    The  consolidated  financial  report  comprises  the  consolidated  statement  of  financial  position  as  at  30  June  2015,  the  consolidated  statement  of  profit  or  loss  and  other  comprehensive  income,  the  consolidated  statement  of  changes  in  equity  and  the  consolidated  statement  of  cash  flows  for  the  year  then  ended,  notes  comprising  a  summary  of  significant  accounting  policies  and  other  explanatory  information,  and  the  directors’  declaration.    Directors’  Responsibility  for  the  Financial  Report  The  directors  of  the  company  are  responsible  for  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  accordance  with  Australian  Accounting  Standards  and  the  Corporations  Act  2001  and  for  such  internal  control  as  the  directors  determine  is  necessary  to  enable  the  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  and  is  free  from  material  misstatement,  whether  due  to  fraud  or  error.    In  Note  1,  the  directors  also  state,  in  accordance  with  Accounting  Standard  AASB  101  Presentation  of  Financial  Statements,  that  the  financial  statements  comply  with  International  Financial  Reporting  Standards.    Auditor’s  Responsibility  Our  responsibility  is  to  express  an  opinion  on  the  financial  report  based  on  our  audit.    We  conducted  our  audit  in  accordance  with  Australian  Auditing  Standards.    Those  standards  require  that  we  comply  with  relevant  ethical  requirements  relating  to  audit  engagements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  financial  report  is  free  from  material  misstatement.    An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  financial  report.    The  procedures  selected  depend  on  the  auditor’s  judgement,  including  the  assessment  of  the  risks  of  material  misstatement  of  the  financial  report,  whether  due  to  fraud  or  error.    In  making  those  risk  assessments,  the  auditor  considers  internal  control  relevant  to  the  entity’s  preparation  of  the  financial  report  that  gives  a  true  and  fair  view  in  order  to  design  audit  procedures  that  are  appropriate  in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s  internal  control.    An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the  reasonableness  of  accounting  estimates  made  by  the  directors,  as  well  as  evaluating  the  overall  presentation  of  the  financial  report.    We  believe  that  the  audit  evidence  we  have  obtained  is  sufficient  and  appropriate  to  provide  a  basis  for  our  audit  opinion.    Independence  In  conducting  our  audit,  we  have  complied  with  the  independence  requirements  of  the  Corporations  Act  2001                             A N N U A L R E P O R T 2 0 1 5 A S X A D D I T I O N A L I N F O R M A T I O N A S X   A D D I T I O N A L   I N F O R M A T I O N   Additional   information   required   by   the   Australian   Stock   Exchange   Ltd   and   not   shown   elsewhere   in   this   report   is   as   follows.  The  information  is  current  as  at  23  September  2015.   b. Distribution  of  equity  securities   The  numbers  of  shareholders,  by  size  of  holding,  in  each  class  of  share  are:   1  –  1,000   1,001  –  5,000   5,001  –  10,000   10,001  –  100,000   100,001  and  over   The  number  of  shareholders  holding  less  than  a  marketable  parcel  of   shares    of  1,137  shares  are:   c. Twenty  largest  shareholders  –  ordinary  shares  quoted  on  ASX   The  names  of  the  twenty  largest  holders  of  quoted  shares  are:   1   2   ABN  Amro  Clearing  Sydney  Nominees  Pty  Ltd     Carakho  Holdings  Pty  Ltd     3   Moneybung  Pty  Ltd     4   5   6   7   Pitt  Street  Absolute  Return   Samma-­‐Vayama  Pty  Ltd     UBS  Nominees    Pty  Ltd   Jutland  Nominees  Pty  Ltd     8   Mining  Investments  Limited   9   Bond  Street  Custodians  Limited     10   Kafta  Enterprises  Pty  Ltd     11   National  Nominees  Limited   12   Ms  Diane  Phyllis  Sherwood   13   Bernard  Laverty  Pty  Ltd   14   Australian  Associated  Finance  Pty  Ltd   15   Bond  Street  Custodians  Limited     16   Mr  Brady  Peter  Scanlon   17   LQ  Super  Pty  Ltd     18   Freeman  Road  Pty  Ltd     19   Mr  Neil  Thompson   20   Bond  Street  Custodians  Limited     MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   ORDINARY  SHARES   No.  of    Holders   No.  of  Shares   1,910   626   188   324   98   3,146   1,959   488,883   1,566,847   1,473,329   11,414,045   83,278,243   98,221,347   541,924   Number  of   Shares  Held   %  Held   7,355,839   3,675,220   3,060,000   3,040,500   2,300,000   2,127,588   1,666,667   1,600,000   1,548,337   1,469,541   1,353,504   1,092,159   1,039,660   1,000,000   1,000,000   894,191   893,589   870,000   842,248   833,334   9.90   4.95   4.12   4.09   3.10   2.86   2.24   2.15   2.08   1.98   1.82   1.47   1.40   1.35   1.35   1.20   1.20   1.17   1.13   1.12   37,662,377   50.68   63   83                   A S X A D D I T I O N A L I N F O R M A T I O N A S X   A D D I T I O N A L   I N F O R M A T I O N   d. Options   There  are  21,530,009  options  currently  on  issue.  This  consists  of  14,863,342  Options  held  by  9  option  holders  expiring  1   April  2018  and  exercisable  on  the  payment  of  $0.10  and  6,666,667  Options  held  by  16  option  holders  expiring  1  April   2017  and  exercisable  on  the  payment  of  $0.30.  All  options  are  unlisted     e. Unquoted  Securities   There  are  23,929,979  ordinary  shares  in  2  holdings  subject  to  escrow  (unquoted  securities)  until  01  April  2016.   f. Voting  Rights   All  ordinary  shares  carry  one  vote  per  share  without  restriction.   g. Substantial  shareholders   The  following  shareholders  have  notified  the  company  as  being  substantial  holders  in  the  Company:   Name   Mr  Claude  Solitario   Dr  Stephen  Addis   Kris  Knauer  and  associated  entities   Number   12,580,664   12,318,734   6,440,541   Percentage   12.81   12.55   6.56   MEDIBIO  LIMITED    |    ANNUAL  REPORT  2015   64   84               C O R P O R A T E D I R E C T O R Y ABN 58 008 130 336 This annual report covers Medibio Limited as a group comprising Medibio Limited and its subsidiaries. The Group’s functional and presentation currency is AUD ($). Directors C Indermaur K Knauer J Campbell Chairman Executive Director Non-executive Director Company Secretary R Lees Registered Office Suite 605, 50 Clarence Street Sydney NSW 2000 Telephone: Facsimile: +61 2 9299 9580 +61 2 9299 9501 Legal Advisers HopgoodGanim Lawyers Level 8, Waterfront Place 1 Eagle Street Brisbane, QLD, 4000 Watermark Intellectual Asset Management Level 2, 302 Burwood Road Hawthorn VIC 3122 Bankers Westpac Banking Corporation Auditors William Buck (Qld) Level 21, 307 Queen Street Brisbane QLD 4000 Home Exchange Australian Securities Exchange Exchange Plaza, 2 The Esplanade Perth WA 6000 Internet Address www.Medibio.com.au Share Registry Computershare Investor Services Pty Limited 117 Victoria Street West End, QLD 4101 Telephone: Facsimile: 1300 850 505 (03) 9473 2500 85 A B N : 5 8 0 0 8 1 3 0 3 3 6 

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