A N N U A L
R E P O R T 2 0 1 6
I N N O V A T I O N
I N M I N D
Corporate Directory
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
Chairman
C Indermaur
Executive Director
K Knauer
J Campbell
Non-executive Director
Dr. F Prendergast 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
Contents
2. CHAIRMAN’S REVIEW
4. CEO’S REPORT
16. STATUATORY ACCOUNTS
16. Review of Operations
22. Director’s Report
33. Auditor’s Independence Declaration
34. Corporate Governance Statement
35. Consolidated Statement of Profit or Loss and Other Comprehensive Income
36. Consolidated Statement of Financial Position
37. Consolidated Statement of Changes in Equity
38. Consolidated Statement of Cash Flows
39. Contents to Notes to the Financial Statements
40. Notes to the Financial Statements
68. Director’s Declaration
69. Independent Auditor’s Report to the Members of Medibio Limited and Controlled Entities
71. ASX Additional Information
73. Corporate Information
1
We also completed the first commercial pilot
study of our Workplace Stress Test with corporate
wellness partner Vital Conversations, on behalf
of an organisation with more than 200,000
employees worldwide. The pilot successfully
demonstrated one of the core competencies of
Medibio’s objective Workplace Stress Test – the
ability to identify employees at risk of high levels of
stress, where traditional subjective measures often
fail due to inaccurate self-reports.
During the second half of CY2016, we expect to
receive feedback on the clinical trial conducted
by Johns Hopkins University School of Medicine.
This study will support our application for FDA
approval to market Medibio’s Clinical Test in the
United States. It will also further validate the ability
of Medibio’s technology to differentiate between
depressed and non-depressed individuals.
On behalf of the board and senior management
team, I would like to take this opportunity to thank
our shareholders for their ongoing support.
Regards
Chris Indermaur
Chairman
I N N O V A T I O N
I N M I N D
Chairman’s Review
Dear fellow shareholder,
I am pleased to present you
with Medibio Limited’s Annual
Report for the financial year
ended 30 June, 2016.
The landscape of mental
health is evolving and we are excited to be bringing
to market what we hope will be a new gold standard
in mental health diagnosis – the first FDA-approved,
quantitative method for diagnosing depression and
other mental health disorders.
Psychiatric assessment of mental health states,
through interview and observing patient behaviour
(the ‘DSM5 protocol’), has long been the clinical
standard for diagnosing and monitoring mental
illness. For too long, we have been relying on a
diagnostic process limited by human bias and error
and associated with high rates of over-diagnosis,
under-diagnosis and misdiagnosis. It is our hope,
that in the not too distant future, Medibio will be able
remove the subjectivity from diagnosis through the
analysis of circadian heart rate (CHR) patterns to
differentiate psychological states.
We are extremely pleased with our Company’s
progress in this area over the past 12 months.
In August, we completed a study retrospectively
analyzing 326 patients from The University of
Ottawa which achieved accuracy of 83% in
distinguishing individuals with Major Depressive
Disorder (MDD) from non-depressed individuals.
This result was significant for Medibio as it
exceeded the current clinical standard of
33-50% accuracy at the primary care level and
70% concordance in diagnosis achieved by
experienced psychiatrists.
2
We believe
individuals,
families and
carers affected
by mental health
can live full,
happy and
healthy lives.
3
I N N O V A T I O N
I N M I N D
CEO Report - The Year in Review
The misdiagnosis of
depression and other mental
illnesses continues to place
a significant cost burden
on our healthcare system,
sufferers and their families.
We believe the time is right for
an objective clinical diagnostic
for depression and other mental illnesses.
In fact, the market research we commissioned in the
US indicated not only the need but a strong desire at
the primary care level (Australian GP equivalent) for
an objective tool to aid in diagnosis of mental health
conditions.
Like Australian GPs, primary care physicians are
doing the bulk of the heavy lifting in the diagnosis of
mental health conditions in the US. They are being
asked to do this not only without the specialist
training of a clinician but in a 15-minute consult
compares to the average hour allowed for an initial
psychiatric consult.
In our pursuit to provide better tools to diagnose,
monitor and help treat mental health conditions,
FY16 proved a pivotal year with key milestones
posted including:
• A study with The University of Ottawa
which achieved classification accuracy of
83% in distinguishing individuals with Major
Depressive Disorder (MDD) from non-
depressed individuals,
•
The University of Sydney’s Brain and
Mind Centre commenced the Corporate
Workplace Stress assessment,
• Medibio developed a new sleep staging
•
First commercial pilot study successfully
completed as part of our Corporate
Wellness Program,
• Key patents acquired for the use of
24-hour heart rate data and circadian heart
rate technology for diagnosing psychiatric
conditions,
•
Leading US institutions provided Medibio
more than 10,000 new physiological data
sets, more than trebling the size of our
database, and
• Trial success with Apple Watch® and Fitbit®
for Medibio’s Workplace Stress app.
Underpinning our progress, Medibio also significantly
built its intangible asset and intellectual property
base over the last 12 months. We now have the
world’s largest database of overnight ECG data
with corresponding mental health assessments
which will continue to drive new insights and clinical
indications. More importantly, this database is
expanding as more research partners approach us
to collaborate, adding to this valuable resource.
The coming 12 months promises to be just
as exciting as last with a number of key
milestones to be met.
I look forward to keeping shareholders
informed of our progress.
Yours faithfully,
algorithm using ECG data, able to distinguish
sleep stages with accuracies of 86-95%,
Kris Knauer
Chief Executive Officer (CEO)
4
Redefining
mental health
NORMAL
by making the
intangible,
DEPRESSION
tangible.
ANXIETY
24 hour heart-rate
5
SLEEP I N N O V A T I O N
I N M I N D
CEO Report - The Year in Review
Commercialisation – what our potential
customers have told us
Distilling this, there are two keys to
commercialisation:
As a listed company our reason for being is to make
profits and return dividends to our shareholders. To
do this we need to commercialise our technology.
What are the keys to commercialise our technology?
To define this better, we commissioned a Voice
of Customer survey in the US. The results are
summarised below.
• Sufficient clinical data (demonstrating
good reliability, validity) and education.
This relies primarily on quality research
done by leading universities and Key
Opinion Leaders.
•
Insurance coverage or reimbursement
after the requisite FDA approval.
Quality Research
As we started to commercialise this new and
revolutionary technology we took the view the only
way to achieve our goals was to undertake quality
research with the world’s foremost institutions and
universities.
We are proud of the quality of our research and
data partners and the work we are conducting
with them. With the help of its partners, Medibio
has developed a unique and valuable asset. The
world’s largest database of overnight ECG data
with corresponding mental health assessments
which will continue to drive new insights and clinical
indications. This database is growing and the next
12 months should see your company consummate
collaborations with a number of new research
partners and data providers.
Use of our device as a diagnostic tool:
1. The majority (91%) surveyed are likely to
consider using the device as a supportive
diagnostic tool.
2. Primary care physicians and psychiatrists
were seen as likely first users as they are
more likely to see patients first before
referring them to therapists.
3. Primary care physicians are also seen as
more likely to be largest users for this device
as a diagnostic tool followed by psychiatrists.
4. The majority (82%) of clinicians would use the
device to monitor effectiveness of therapy.
Factors influencing decision to use device:
1.
Insurance coverage (reimbursement) was
the most significant factor influencing the
decision to use the device.
2. Ease of use, price and clinical evidence were
the next most important factors.
3. Diagnostic accuracy, reliability and validity of
the device also ranked high in the clinical use
decision.
Factors highlighted as being important in driving
broad adoption of this device in the US:
1. Sufficient clinical data to demonstrate good
reliability and validity for the device.
2. Education of providers, payers and patients.
3. Coverage by Medicare, Medicaid and
insurance companies.
6
Clinical Work Flow
Clinician
orders test
Wearable device
(holter) collects
CHR data from
patient
Medibio App
connects with device
& data transmitted to
HIPAA compliant
Cloud
Data processed
by machine learning
algorithms in
the Cloud
Clinician has
secure access to
results – anywhere /
anytime
7
I N N O V A T I O N
I N M I N D
CEO Report - The Year in Review
Medibio continues
Our collaborative research and
development effort
building its broad base of
collaborators to increase
its data assets. Combined
with its advanced machine
learning analytics cloud
solution, this will allow the
Company to extract new
insights regarding the link
between mental health
and circadian heart-rate
architecture.
Medibio announced its collaborative research
and development effort with leading international
universities in March this year. Under this collaboration,
Medibio has secured in excess of 120,000 hours
of overnight physiological (ECG, EEG and other
biometrics) data files. All physiological data files have
either corresponding clinical psychiatric diagnoses
undertaken by the partner universities or self-report
data covering mental health and/or mental wellbeing.
The Universities which supplied the bulk of the new
data are Johns Hopkins School of Medicine, Emory
University, Washington University and The Royal’s
Institute of Mental Health Research which is affiliated
with the University of Ottawa. The list of collaboration
and research data partners is growing with a recent
agreement with Monash University and discussions
underway with other prominent institutions.
This data set allows Medibio and its research partners
to generate proxy-clinical trial outcomes and meta-
data analyses from more than 15,000 patients
retrospectively. The significant increase in the volume
of available data allowing us to apply more advanced
machine learning techniques to accelerate the
optimisation of our suite of algorithms. The ability to
utilise independently acquired data and corresponding
clinical psychiatric diagnoses adds significantly more
weight to the Company’s research findings and
technology within the medical community.
8
Johns Hopkins School of Medicine
The Johns Hopkins University School of Medicine,
headquartered in Baltimore, Maryland, is a $7 billion
integrated global health enterprise and one of the
leading health care institutions in the United States.
The Johns Hopkins Hospital, opened in 1889, has
been ranked number one in the nation by US. News
& World Report for 22 years of the survey’s 26-year
history.
The aim of our study with Johns Hopkins University
is twofold:
1. validate our technology to differentiate
between individuals with clinical depression
and individuals without clinical depression,
and
2. collect the data to support FDA certification
of our technology for use as an objective
method to assist clinicians in the diagnosis of
depression
The study is split into three phases.
1. A pilot phase involving 20 participants
designed to test the study workflows and
protocol.
2. An exploratory phase (involving 60
participants, 30 depressed and 30 normal
controls) designed to validate our technology.
It’s anticipated to be underway around the
time you receive this annual report.
3. This will then roll into a clinical performance
phase to collect the data required to support
FDA certification.
The study is simple and quick. It involves patient
assessment by two independent clinicians from
Johns Hopkins University in order to overcome
the limitation of subjective diagnoses. Research
has shown only 70% concordance between
psychiatrists(1). So only those individuals where
both clinicians’ assessment agree are included
in the study. Johns Hopkins University collect
overnight ECG data which is sent to Medibio on a
blinded basis. Medibio will generate a diagnosis of
depressed or non-depressed based on CHR data
which Johns Hopkins University compares with its
clinical psychiatric diagnosis.
The co-principal investigators are Dr Naresh Punjabi
and Dr Francis M Mondimore. Dr Mondimore is
Associate Professor in the Department of Psychiatry
and Behavioural Sciences and Director of the Mood
Disorders Clinic. He leads a clinical team specializing
in the care of persons with mood disorders. Dr
Punjabi is Professor of Medicine and Epidemiology in
the Division of Pulmonary and Critical Care Medicine
Associate Director of Graduate Training Program in
Clinical Investigation at Johns Hopkins University.
Dr Punjabi was instrumental in the early studies
undertaken by ResMed in the US that led to their
regulatory approvals.
Under the supervision of Dr Punjabi, Diablo
Research will provide the second and third US
centres required by the FDA for regulatory approval.
Diablo Research is a San Francisco based clinical
research organisation our US team has worked
with previously. Diablo has an extensive network
of feeder hospitals and has indicated it can recruit
approximately 5 depressed and 5 non-depressed
participants per week. This will facilitate us keeping
to our previously announced timelines.
(1) Psychiatry (Edgmont). 2006 Jan; Vol 3(1): 41–50
9
I N N O V A T I O N
I N M I N D
CEO Report - The Year in Review
We reported a classification accuracy of 83% for
distinguishing individuals with Major Depressive
Disorder (MDD) from non-depressed individuals on
the smaller subset of data. This study included 326
patients from The University of Ottawa database with
the second stage to include a much larger sample.
The results compare favourably with the “clinical
gold standard” diagnostic accuracy of 33-50% at
the primary care level (2) and only 70% concordance
among experienced psychiatrists. This provided
the first validation of Medibio’s proposition that
psychiatric conditions differentially affect the
autonomic system resulting in condition specific
heart rate morphology and sleep patterns using
independent clinical data.
Table of Results
Sensitivity Specificity Accuracy
Blind assessment
83%
82%
83%
In light of these remarkable results, The University of
Ottawa has provided data for approximately 1300
patients for further study. This is extremely useful as
Medibio’s technology exploits advanced machine
learning techniques, enhancing detection of mental
health disorders with additional data.
Following this Medibio will expand and validate its
diagnostic algorithm for depression to identify the
different grades of depression, increasing the clinical
utility of its offering. The University of Ottawa will
provide additional patient data files including anxiety
disorders and psychosis, allowing the study to be
expanded to cover other common mental health
disorders.
“Excellent first results with
a classification accuracy
of 83% for distinguishing
individuals with Major
Depressive Disorder from
non-depressed”
Ottawa University and The Royal’s Institute of
Mental Health Research
Our study with Ottawa University is part of a larger
program investigating sleep biomarkers of mental
health disorders across multiple age groups. While
initially focusing on depression, the study will be
Medibio’s first to expand beyond depression,
evaluating subjects with anxiety, bipolar and
psychotic disorders.
The Royal Institute of Mental Health Research
(IMHR) is one of Canada’s foremost mental health
care and academic health science centers. It
strives continuously to improve mental health
and well-being through leadership, collaborative
discoveries and innovation in research, patient
care and education. The IMHR is affiliated with
the University of Ottawa. The University of Ottawa
Department of Psychiatry comprises 231 faculty
members and has continually shown its commitment
to the development of improved mental health
care and mental health research on a national and
international scale.
This study contains two stages of investigation. In the
first stage, Medibio was required to demonstrate the
performance of its technology on a smaller subset of
data, prior to the full study involving assessment of all
the IMHR’s available depressed and non-depressed
data. The results of which will be published in peer-
reviewed papers.
10
(2) Depression in Primary Care Vol 1: US Department of Health
University of Sydney
Our partnership with The University of Sydney
Brain and Mind Centre (BMC) involves using one of
Medibio’s existing commercial trials to undertake
a ‘Workplace Stress Assessment’ clinical
research study.
The BMC is a part of The University of Sydney with
more than 500 academic, clinical and professional
staff and students. Its mission is to find solutions
leading to generational change and not only improve
the lives of people with brain and mind disorders
but the whole of society through collaborative and
interdisciplinary enquiry, the sharing of knowledge
and focused implementation.
This study provides the opportunity to fast track
independent validation of Medibio’s objective Mental
Wellness solution. We are experiencing considerable
success in the workplace wellness market. However,
results showing successful stress detection in an
externally run clinical trial will allow us to confidently
target markets such as the public service, health
insurance providers, the military, aviation and the
public health system. We believe independent
validation is a prerequisite for widespread take-up.
The two phases of this clinical study will both
incorporate our stress assessment algorithm
which will categorises 150 employees in a range
of stress spanning from ‘normal’ to ‘severely
stressed’. Participant’s mood will be assessed
through self-report, trained clinician interview and
through Medibio’s CHR pattern analyses. Data will
be compared cross-sectionally, and longitudinally,
as there will be two assessment points providing
researchers with additional reliability measures. Phase
2 involves the same mood assessments before and
after the employee’s use of Medibio’s online stress-
reduction training programme “Unwind”.
The Principal Researcher for the study is Professor
Nick Glozier, Professor of Psychological Medicine
and Psychiatry, Central Clinical School and Brain &
Mind Centre at the University of Sydney. Professor
Glozier’s research focuses upon common mental
disorders and multimorbidity, psychosocial and
work related disability research, stress, stigma and
discrimination. Professor Glozier currently heads the
largest workplace stress study ever conducted in
Australia funded by Beyond Blue.
In a recent paper, titled “Work and Psychiatric
Disorder – an evidence based approach”, Professor
Glozier concluded: “Whilst the use of pen and
paper / technology based questionnaires is
commonplace to screen for stress there are
concerns over their false positive rate and
predictive ability”(1).
(1) Psychiatry (Edgmont). 2006 Jan; Vol 3(1): 41–50
11
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CEO Report - The Year in Review
Emory University
Emory University, located in Atlanta, USA, is
internationally renowned for its focus on medical
research and teaching, supporting the Southeast’s
leading health care systems and serving over a
million people. With more than $572 million in
research funding in the last fiscal year, Emory
University is 19th among universities in the world by
endowment and 21st in US News & World Report’s
2016 National Universities Rankings.
Medibio has undertaken preparatory work with
a view to participating in a study to differentiate
between individuals with and without post-traumatic
stress disorder (PTSD). Initial work focussed on
the CHR assessment of a subset of retrospective
data from a US Department of Veterans Affairs
sponsored study of 562 twins, one twin with PTSD
and the other without. The proposed study would
be an adjunct to an existing Emory University study
awaiting final approval.
Sleep Staging Algorithm
The sleep staging results were generated and
validated using data supplied by the US National
Institutes of Health (NIH) sponsored Sleep Heart
Health Study. Using ECG data only, Medibio
distinguished sleep stages with accuracies of 86-
95%. The best published historical results have been
in the range of 70% for all stages of sleep.
Under the project Medibio used advanced machine
learning techniques on 55,000 hours of overnight
ECG files (with corresponding sleep staging
information from The Sleep Heart Health Study) to
develop an algorithm using ECG data only to place
the individual into one of the sleep stages. This
algorithm was validated using an additional 13,000
hours of randomly selected files.
The prospect of automatic sleep stage classification
using ECG data has attracted increasing attention
in medical research with numerous attempts being
made to find an accurate method to sleep-score
using ECG data. In contrast to the traditional manual
scoring based on polysomnography, ECG data
can be measured using unobtrusive techniques,
promising the application for personal and
continuous home sleep monitoring.
While not a core focus for Medibio, it opens a
potential stand-alone commercial opportunity in the
area of home sleep monitoring. More importantly
to Medibio, its existing algorithms for mental health
will be improved by allowing investigation of new
analytical metrics specific to sleep stages. The study
also provides a demonstration of the power of our
advanced machine learning solution when combined
with our large proprietary database of physiologic
data. The study will allow us to incorporate more
detailed analysis of sleep into our corporate stress
product.
5 min interval sleep stage classification
Sleep Stage
Training sample size
Test sample size
Test Accuracy
Test F1-score
0
1
2
3
4
5
331,108
17,675
214,292
15,775
534
82,831
141,904
7,575
91,840
6,761
230
35,499
0.86
0.95
0.90
0.95
0.99
0.93
0.86
0.95
0.89
0.95
0.99
0.93
12
University of New South Wales
Measures collected include:
The study with UNSW was aimed at identifying a
CHR biomarker to distinguish between melancholic
and non-melancholic depression. As melancholic
depression is not recognised in the DSM (Diagnostic
and Statistical Manual of Mental Disorders) the
study has minimal commercial value. As less than
25% of the planned number of participants have
completed the study and the commercial upside is
limited, Medibio does not intend to extend the study
agreement which expires in October 2016. UNSW
and Medibio are in the process of finalising an
arrangement that will see Medibio refunded $60,000
of unexpended study funds.
Internal Stress Study
In June this year Medibio received Human
Research Ethics Committees (HREC) approval for
its internal stress study. The study aims to collect
a sufficiently large set of overnight heart rate data
and corresponding traditional stress assessments to
allowing Medibio to calibrate and validate its stress
algorithm.
The approval was for the collection of overnight
heart rate data, clinician administered mental
health assessments and various self-reports from
300 participants twice over a 3-week period. The
mental health and general health assessments
are designed to evaluate the participant’s current
physical and emotional state and measure crucial
factors such as emotional resilience, physical activity
and sleeping patterns. All of which are known to be
related to an individual’s coping and perception of
stress in their lives.
• Stress, Anxiety and Depression - DASS-21
• Stress – Perceived Stress Scale
• Sleep – Sleep measure (Bergen
Insomnia Scale)
• Resilience – Brief Resilience Scale
• Wellbeing - Warwick-Edinburgh Mental Well-
being Scale
• General demographic questions,
• Physical activity - Brief Physical activity
assessment scale (Marshall et al., 2005)
Medibio commenced processing participants in
early July and data collation is approximately 50%
complete. Interpretation of this available data
indicates results consistent with the first stress pilot
where there was good agreement between CHR
and traditional stress measures at the lower risk
end of the spectrum, comprises the majority of the
population.
The study data also highlights the inherent problem
with the traditional self-report methods of stress
assessment - the lack of a consistent gold standard.
The two most widely accepted stress self-report
measures (the DASS and Perceived Stress Scale)
showed only a 55% concordance and a Kappa of
0.26. The concordance of these self-reports with the
clinical interview is also in the 50-70% range.
Given the concordance amongst these traditional
self-report measures and clinical interviews to
achieve our aim of using the data to calibrate a
statistically defensible six category stress algorithm,
a larger data set will be required. Medibio has
received approval to double the size of the study to
600 participants.
13
I N N O V A T I O N
I N M I N D
CEO Report - The Year in Review
The FDA Process for a medical device
Pre—submission Requirements; Purpose
In order to market our depression test to the medical
market in the US we need to gain approval from the
United States Food and Drug Administration or FDA.
We are consistently questioned by shareholders
along the lines of:
“Where we are with trials? Are we at Phase 1,
or hopefully Phase 3? How much longer will the
process take given we have seen other drugs
take 5 years or longer?”
The short answer is that Phase 1, 2, and 3 relate to
drugs and our technology is classified as a device
rather than a drug. As a device there is a clearly
defined and far quicker route to FDA approval.
At the moment the average timeframe
for the approval of a 510(k) submission is
approximately 110 days.
Regulatory Strategy Overview
The regulatory strategy for MediBio is to obtain
market clearance by submitting a 510(k) Premarket
Notification Application (PMA) to the FDA for our
Depression Diagnosis algorithm. For a novel product
such as this, the FDA requires a clinical study to
support market clearance. An overview of this
process for a diagnostic algorithm such as Medibio’s
is outlined below.
Presubmission
mee,ng
request
Presubmission
mee,ng
Prior to the pre-submission meeting, a packet of
materials needs to be assembled, typically including:
a. Background and design history,
b.
Indications for use,
c. Target population,
d. A summary of the work completed to date
to establish the “proof of concept” that the
algorithm performs as intended and therefore
constitutes a viable product to bring to
market, and
e. Testing & Validation Strategy
i.
Internal validations,
ii. External validations,
iii. Clinical Trial proposed.
At a pre-submission meeting, it is not essential all
of the above are completed and in their final form
(unlike the actual submission). Although the more
robust and finalized the materials are, the more value
will be derived from the FDA meeting and feedback.
Certain elements, such as the type of algorithm and
its performance in development to date, clinical
background of how and why it was developed,
internal/external validations should be as robust as
possible; whereas the target population, proposed
indication, clinical evaluations can be less so and,
indeed, may change after FDA feedback.
Clinical
trial
The overarching purpose of the meeting is to get the
FDA’s feedback on recommended changes to support
the Company’s 510(k) submission for the algorithm,
510K
obviously increasing the probability of gaining market
Decision
submission
clearance. The feedback will be subsequently adopted
into the final design of the algorithm and the clinical
trial.
Presubmission
mee,ng
request
Presubmission
mee,ng
Clinical
trial
510K
submission
The pre-submission meeting is the only avenue to
Decision
solicit FDA feedback for this purpose.
Presubmission
mee,ng
request
Presubmission
mee,ng
Clinical
trial
510K
submission
Decision
14
Medibio had a positive
510K Submission
Following completion of any data gathering and
reporting requirements associated with the clinical
study (in Medibio’s case the Johns Hopkins Study),
the full 510K submission is made. At this point
all design history, background, quality system,
instructions for use and other documentation
must be in its final form. The FDA has a statutory
requirement to respond to the device manufacturer
within 90 days of submission.
These processes can be depicted in overview form
thus –
Pre-Submission
meeting with the United
States Food and Drug
Administration on its
proposed diagnostic
for depression and
confirmed the proposed
regulatory pathway of the
Company’s depression
test with the FDA.
Source: FDA Website
MDUFA means Medical Device User Fee Amendments
15
Medibio Limited (“Medibio”, “MEB” or “the
Company”) and its controlled entities (“the group”)
generated a loss after tax of $5,824,371 (2015: loss
of $7,921,702).
The Company raised $3.1M in September 2015
enabling acceleration of a number of studies and
initiatives including: PSTD, Anxiety Disorder and
commercialisation of the Corporate Stress Product.
The company received $1,738,631 from the
Australian Taxation Office under the Research and
Development Tax Incentive Program over the year.
The cash refund is related to expenditure on eligible
Australian R&D activities conducted during the
2014/15 financial year.
The highly distinguished US medical expert and Eli
Lilly Director Franklyn Prendergast (M.D., PhD) joined
the Medibio Board in January 2016
I N N O V A T I O N
I N M I N D
Review of Operations
Operating Results for the Year
Key highlights include:
•
First validation of Medibio’s depression
classification algorithm using independent
clinical data achieved an accuracy of 83%
for distinguishing individuals with Major
depressive disorder (MDD) from non-
depressed individuals subsequent to year
end
• Successful pre-submission meeting with
the US United States Food and Drug
Administration (FDA) for Medibio’s
depression classification algorithm
•
•
First commercial agreements executed
and first revenue achieved from Medibio’s
Corporate Stress Product
First validation of the Corporate Stress
Product, achieving 86% agreement with
psychological measures and successful
identification of “at-risk” cases not picked up
by conventional psychological screening
• Entered into an MOU with Medtronic - a
subsidiary of Medtronic plc. (NYSE: MDT) to
explore business opportunities and synergies
across both companies
• Acquired key patents covering the use of
24-hour heart rate data and circadian heart
rate (CHR) technology for the diagnosis of
psychiatric conditions
•
Lodged PCT applications over two
provisional patents which, if granted, will
provide an additional 20 years of exclusivity
for the diagnosis of mental health disorders
and stress using CHR
16
Review of Operations
The year was a watershed for the company. It
started with the development of our Corporate
Stress Product and was followed with the execution
of first commercial agreements and the receipt of
revenue from this product. The year culminated
with the first validation of Medibio’s proposition
that psychiatric conditions differentially affect the
autonomic system resulting in condition specific
heart rate morphology and sleep patterns using
independent clinical data.
Key operational milestones achieved over the past
12 months include:
• Completed the development and testing of
its Corporate Stress Product - a world first,
cloud- based scalable product including
real-time ECG Data Streaming and Algorithm
Processing with results back to the Medibio
App in real time
•
•
First agreement for this Corporate Stress
Product executed with an Australian
foundation customer (10,000+ employees–
with potential to roll out across entire
workforce) and first revenue achieved.
Launched Corporate Wellness Partner
Program with agreements signed with
two partners, Vital Conversations and
WellNovation, and discussions progressing
well with a number of other potential
partners.
• Successful completion of commercial pilot
with Vital Conversations and internal Pilot
with a second large Australian Corporate
Wellness provider
• Successful integration of the Apple Watch®
and FITBIT® into Medibio’s Corporate Stress
Product in partnership with Swinburne
Software Innovation Lab
•
Four leading US universities provided
10,000 physiological data files to Medibio to
undertake joint research and development
into various mental health conditions which
has allowed Medibio to rapidly advance its
technology
• Development of a new sleep staging
algorithm which, using ECG data only, can
distinguish between the stages of sleep with
diagnostic accuracies of 86-95% compared
to current algorithms which perform with
diagnostic accuracies of 71-79%. This opens
the US$4B sleep testing market as a second
stand-alone opportunity for Medibio
• Consolidation of a world class team with
the appointment of a COO, Head of US/
Algorithm development, Clinical/Regulator
Director, and Head of wellness sales.
17
I N N O V A T I O N
I N M I N D
Review of Operations
1.
MEDICAL DIAGNSOTICS
2.
CORPORATE STRESS
Successful pre-submission meeting
with the US FDA
The Company had a positive pre-submission
meeting on its proposed diagnostic for depression in
March this year. It confirmed the proposed regulatory
pathway of Medibio’s depression test. Additionally,
the FDA confirmed the Company’s proposed
indications for use, clinical study protocols and data
requirements.
At the meeting, the FDA confirmed (based on the
information provided in Medibio’s pre-submission
dossier):
•
•
The Medibio Depression Algorithm is eligible
for the de novo (1) regulatory pathway
The FDA expressed no significant concerns
with the proposed indications for use
• Medibio’s proposed Level of Concern (2) for
its Depression Algorithm is acceptable to the
FDA.
Medibio was pleased with the high level of
engagement from the FDA and the collaborative nature
of the meeting. The confirmation of the regulatory
pathway is an important milestone for the Company.
(1) de novo Pathway - The de novo pathway
was designed for innovative medical devices
(ie, those without predicate devices) where
controls provide a reasonable assurance
of safety and effectiveness. The de novo
process leads to a Class I, or in Medibio’s
case, a Class II classification. It has a 120-
day review cycle compared with a 90-day
review period for a 510(k).
(2) Level of Concern - the FDA guidelines
recommend submissions state the Level of
Concern determined for a Software Device.
The Level of Concern is based on how
the operation of the software associated
with device function affects the patient or
operator. The extent of the documentation
required in an FDA pre-market submission
depends on the device’s Level of Concern.
During the year the Company completed the
development and testing of its world first, cloud-
based scalable Digital Mental Health Platform.
The platform includes real-time ECG Data
Streaming, Algorithm Processing and Data Analytics.
The Company 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 its cloud-based
proprietary Algorithms and Data Analytics solution
and near real-time results back to the front-end App.
Medibio’s corporate stress product is the first
objective test to measure the level of stress and its
impact on health and wellbeing. During the year
Medibio expanded the original 3 stress category
rating system to 6 categories. The expansion to 6
categories was done in conjunction with Medibio’s
wellness channel partners as it allows them to better
target interventions and provides a finer grained tool
to objectively measure change in stress over time.
Normal
– No indication of stress
Slight
Mild
– Minor markers of stress, ongoing monitoring
– Specific indications, action to prevent escalation
Moderate
– Multiple signs of stress, action recommended
Severe
– Signs of significant stress, action required
Very Severe – Signs of extreme stress, immediate action required
First Commercial Agreement Signed with major
Australian Corporation
Following completion of development of its
corporate stress evaluation product, the Company
signed its first commercial service agreement with
a major Australian corporation with in excess of
10,000 employees. The service agreement covers
the application of two Phases within the overall
stress evaluation and intervention program and
will initially be conducted on a pilot population
of employees. Phase 1 will involve an objective
measurement of employee stress symptoms through
the use of Medibio’s Circadian Heart Rate (CHR)
patented technology.
18
Normal
– No indication of stress
Slight
Mild
– Minor markers of stress, ongoing monitoring
– Specific indications, action to prevent escalation
Moderate
– Multiple signs of stress, action recommended
Severe
– Signs of significant stress, action required
Very Severe – Signs of extreme stress, immediate action required
Phase 2 will involve the development of an online
mental health training program/app. This intervention
will be specifically designed for the corporation’s
workforce, and aimed to reduce stress and improve
coping skills based upon workplace data and
information provided by employees. Stress levels
will be assessed twice in Phase 2, at baseline and
following the completion of the intervention. Phase 2
will thus provide an objective assessment of changes
to stress levels following this purpose-built intervention.
Medibio will generate revenue of $100 per
participant from each Phase of the program.
Following completion of Phase 2 of the Commercial
Pilot, contingent on Pilot results, it is anticipated that
Medibio’s Corporate Stress product will be rolled out
across the organisation’s entire staff base.
Launch of Corporate Wellness Partner Program
The Company launched its Corporate Wellness Partner
Program with the execution of a Commercial Service
Agreement to provide its Corporate Stress Product
to mental wellness provider Vital Conversations. As
part of this Corporate Wellness Partner program
the company also entered into an agreement with
WellNovation Ltd.
Vital Conversations provides proactive psychological
health services to some of the largest corporates in
Western Australia as well as the public and not for
profit sectors. It will offer Medibio’s Corporate Stress
product to its existing executive and private customers
and will also seek to roll out the Company’s Corporate
Stress product to Corporate and Public sector clients
on a pilot basis.
Under the service agreement, Vital Conversations will
be responsible for the acquisition of the ECG monitors,
any other hardware and the implementation of the
test to its client base, while Medibio will provide data
analytics and reporting and will be paid on a
per- test basis.
WellNovation is a healthcare development company
focused on bringing innovative healthcare technologies
to Saudi Arabia and the Gulf Cooperation Council
(GCC). Under the MOU, Medibio and WellNovation will
collaborate to introduce Medibio’s innovative mental
health diagnostics to WellNovation’s existing network
in Saudi Arabia and the Gulf region. The initial focus
will be on the introduction of Medibio’s Corporate
Stress product to the state-owned enterprise and
military clients of WellNovation.
1
4
5
6
7
2
3
5
1 Nervous System
2 Musculoskeletal System
3 Respiratory System
4 Cardiovascular System
5 Endocrine System
6 Gastrointestinal System
7 Reproductive System
19
Swinburne Software Labs partnership - trial
success with Apple Watch® and FITBIT® for
Medibio’s Stress app
Medibio partnered with Swinburne Software
Innovation Lab (SSIL) to evaluate the market-leading
wrist-based wearable devices as an alternative to ECG
monitors in Medibio’s Corporate Stress Product. SSIL
confirmed the Apple Watch and Fitbit Surge met
all performance requirements, with both devices’
heart rate data providing a high level of accuracy for
Medibio’s stress diagnostics and analytics.
In addition to validating the quality of data generated
by the Apple Watch and Fitbit Surge, SSIL
successfully:
• Completed the work required to collect the
data seamlessly from the Apple Watch and
Fitbit Surge in Medibio’s cloud-based Digital
Mental Health Platform (DMHP);
• Assisted in the calibration of Medibio’s stress
algorithm to utilise optical pulse rate data,
from wearables in addition to ECG data, for
stress analysis; and
• Benchmarked the heart-rate data quality of
the Apple Watch and Fitbit Surge against a
leading medical-grade ECG monitor.
The trial’s success with SSIL paves the way for
Medibio to integrate these wearables into its
Corporate Stress offering and significantly expands
the market opportunity for Medibio’s stress analytics
in the corporate and consumer space. This will
capitalize on the growing trend of wearables being
offered to employees as part of the Corporate
Wellness package. It also opens the way for the
release of a Consumer Stress App.
I N N O V A T I O N
I N M I N D
Review of Operations
Successful commercial pilot studies
Medibio’s first commercial pilot study commenced
with corporate wellness partner, Vital Conversations.
During the quarter, 66 employees of one of Vital
Conversations clients have undertaken a stress
assessment with Medibio’s Corporate Stress
Product. Vitals’ client for the commercial pilot is a
leading international professional services company
with more than 5,000 employees in Australia. As
well as objectively measuring the impact of stress on
the participants, the pilot study aimed to measure:
usability; employee acceptance and satisfaction;
the delivery of Medibio’s corporate stress product in
a workplace setting; and ability to scale. The study
allowed the product to be fine-tuned for commercial
launch.
The results were extremely encouraging, validating
Medibio’s Corporate Stress product. The ‘normal’
to ‘mild’ scan results comprised approximately
63% of the pilot population. These results
demonstrated an 86% agreement with traditional
self-report stress measures at this low risk end of
the wellness continuum, where self-report bias is
not generally an issue. At the high-risk end, this
pilot successfully demonstrated one of the core
competencies of Medibio’s objective Workplace
Stress Test. That is, the ability to identify “at-risk”
employees where the traditional subjective measures
often fail due to misleading self-reports. Feedback
from the participants in the pilot study and Vital
Conversations was positive. Vital Conversations
reported that, 2 participants who returned ‘severe’
stress results regarded their participation in the pilot
as “life changing” and “a wake-up call”.
The company has also undertaken a successful
internal pilot with a second potential wellness
partner. This potential partner has in excess of
15,000 staff in Australia and is one of the leading
Corporate Wellness providers in Australia. The pilot
involved 30 key staff from the potential partner and
was conducted over a period of 3 weeks with one
scan undertaken weekly. The aim of the trial was to
provide feedback on any changes recommended
prior to a commercial rollout of the product. These
recommendations are currently being incorporated
with the next steps a commercial pilot involving one
of this potential partner’s external clients prior to a
decision on a larger scale rollout.
Medibio is in active dialogue with a number of
potential wellness partners and customers both in
Australia and internationally.
20
3.
INTELLECTUAL PROPERTY
During the year Medibio acquired (from Heartlink Limited) the Australian, New Zealand and Israeli patents it
held under exclusive license on the ‘method for diagnosing psychiatric disorders’. The method covers the
use of 24-hour heart rate data and circadian heart rate (CHR) technology for the diagnosis of psychiatric
conditions and the determination of the effectiveness of treatment.
The acquisition is in line with Medibio’s intellectual property (IP) strategy of creating and protecting a dominant,
defensible position in the use of CHR technology in the areas of stress and mental health.
The table below summarises Medibio’s current patent coverage.
Country
Patent #
Status
Title
720226
Australia
Israel
132186
New Zealand 337833
USA
Canada
USA
USA
6245021
228553
pending
pending
Granted
Granted
Granted
Granted
Granted
Application
Application
Method for diagnosing psychiatric disorders
Method for diagnosing psychiatric disorders
Method for diagnosing psychiatric disorders by
analysis of heart rate patterns
Method for diagnosing psychiatric disorders
Method for diagnosing psychiatric disorders
Method and System for Monitoring Stress Conditions
Method and System for assessing Mental State
The company also lodged PCT applications for it provisional patents during the year. These provisional
patents include:
•
•
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 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.
21
I N N O V A T I O N
I N M I N D
Directors’ Report
Your directors present the Annual Report on the consolidated entity, being Medibio Limited and its controlled
entities (“Group”) for the financial year ended 30 June 2016.
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.
Names, qualifications, experience and special responsibilities
Current Directors
Chris Indermaur
Chairman
Qualifications:
B. Eng. (Mech.), Grad Dip Eng. (Chem.), LLB, LLM, Grad Dip LP
Experience:
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 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 Strategy and Development at Alinta Ltd.
Mr Indermaur is currently Chairman of Poseidon Nickel Limited (ASX: POS)
(director from 2009) and Austin Engineering Ltd (ASX: AHG) from 8 July 2016.
Kris Knauer
Executive Director
Qualifications:
B. Sc. (Hons) in Geology
Experience:
Mr Knauer was appointed to the Board on 1 July 2014 and he took on the role of
CEO in September 2014.
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 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.
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 Energy NL from 2014 to May 2015.
James Campbell
Non-executive Director
Qualifications:
PhD MBA
Dr Campbell was appointed to the Board on 8 September 2014. He is a senior
biotechnology executive with more than 20 years international experience in
scientific research, 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 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.
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) from 2012, and Prescient Therapeutics Limited (ASX:
PTX) from 2014.
Experience:
22
Frank G. Prendergast
Non-executive Director
Qualifications:
PhD MD
Experience:
Dr Prendergast was appointed to the Board on 27 January 2016. He is the former
Chair of the Department of Biochemistry and Molecular Biology and the former
director for research at Mayo Clinic from 1989-1992. From 1989-1996, he was a
member of the Board of Governors for Mayo Clinic, Rochester. From 1999-2007
inclusive, he was member of Mayo Clinic’s Executive Committee, the senior most
internal governance committee for the entire Mayo system. He served on Mayo
Clinic’s Board of Trustees continuously between1992-2009. He was recognized
as a Mayo Distinguished Investigator in 1988 and is the director emeritus, Mayo
Clinic Cancer Center (1995-2006) and director emeritus for the Mayo Clinic Center
for Individualized Medicine (2008-2012). Dr Prendergast retired from Mayo Clinic
in December of 2014.
Dr Prendergast has been a member of the Eli Lilly Company Board of Directors
since 1995. He served extensively for the National Institutes of Health (NIH) on
numerous study section review groups; as a charter member of the Board of
Advisors for the Division of Research Grants, now the Center for Scientific Review;
the National Advisory General Medical Sciences Council; the Board of Scientific
Advisors of the National Cancer Institute. He held a Presidential Commission for
service on the National Cancer Advisory Board. Dr Prendergast also has served
in numerous other advisory roles for the NIH. He was a member of the board
of directors of the Translational Genomics Research Institute and the Infectious
Disease Research Institute (IDRI).
Executive Management
Sean Mathieson
Chief Operating Officer
Qualifications:
B. Science (Monash University)
Experience:
Over 25 years’ experience in the business technology domain involving strategy,
sale and service in Australia, New Zealand, Asia and Europe.
Robert Lees
Qualifications:
Experience:
Company Secretary
B. Bus. (UTS), Grad. Dip. DP (UTS), CA, AGIA
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 four other listed public companies.
23
I N N O V A T I O N
I N M I N D
Directors’ Report
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:
C. Indermaur
K. Knauer
J. Campbell
DIvIDENDS
Ordinary Shares
Options over Ordinary Shares
150,000
6,440,541
Nil
Nil
3,000,000
250,000
No dividends have been paid or provided during the year ended 30 June 2016 (2015: nil).
PRINCIPAL ACTIvITIES
The principal activity of the Group is conducting research and development and early stage commercialisation
of 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 $5,824,371 (2015: loss of $7,921,702).
Significant Changes in the State of Affairs
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
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 2016; or
future prospects.
OTHER INFORMATION
Options
On 28 January 2016 a total of 6,000,000 options were issued with an expiry date of 29 January 2019. 3,000,000
with an exercise price of 40 cents, 1,500,000 with an exercise price of 60 cents and 1,500,000 with an exercise
price of 80 cents. On 1 April 2015 a total of 21,666,667 options were issued, 6,666,667 with an exercise price
of 30 cents expiring 1 April 2017, 15,000,000 with an exercise price of 10 cents expiring 1 April 2018. On 22
June 2016, the group issued 500,000 shares on the exercise of 500,000 10 cent options. On 5 September
2016, the group issued 863,342 shares on the exercise of 863,342 10 cent options.
At the date of this report there were 27,030,009 unissued ordinary shares under option.
24
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.
25
I N N O V A T I O N
I N M I N D
Directors’ Report
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 Operating Officer, Chief Financial
Officer/ Company Secretary and the Marketing Manager.
Details of key management personnel
i.
Directors
C. Indermaur
Chairman (non-executive) – appointed 7 April 2015
J. Campbell
K. Knauer
Director (non-executive) – appointed 8 September 2014
Director (executive) – appointed 1 July 2014
F Prendergast
Director (non-executive) – appointed 27 January 2016
ii.
Executives
S. Mathieson
Chief Operating Officer – appointed 7 July 2015.
S. Stapelberg
Marketing – appointed 1 May 2014 and resigned 8 September 2015.
R. 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.
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.
26
REMUNERATION REPORT (AUDITED) (continued)
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:
a. does not:
i.
in any year exceed in aggregate the amount last fixed by ordinary resolution; or
ii.
consist of a commission on or percentage of profits or operating revenue; and
b.
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 2016 are detailed in Table 1 on
page 28 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.
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.
27
I N N O V A T I O N
I N M I N D
Directors’ Report
REMUNERATION REPORT (AUDITED) (continued)
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. Accordingly the relationship between
remuneration policy and company performance has not yet been established.
Shareholder returns
30 June 2016
30 June 2015
30 June 2014
30 June 2013
30 June 2012
Share price - cents
32.5
40.0
0.4
0.1
0.2
Shares on issue
105,446,807
89,802,932 3,173,189,372 2,873,174,372 1,612,170,347
Capitalisation
Loss per share - cents
$34.3m
(5.916)
$35.9m
(16.995)
$12.6m
(0.0015)
$2.9m
(0.05)
$3.2m
(0.2)
Remuneration of key management personnel
Table 1: Remuneration for the year ended 30 June 2016
Short Term
Salary
& Fees
Non-
Post-
Monetary Employment
Benefits
Super
Share Termination
Based
Payments #
Payment
Total
$
$
$
$
$
$
Executive director
K Knauer
Non-executive directors
C Indermaur - Chairman
J Campbell
F Prendergast
340,000
45,833
36,000
69,133
a
-
-
-
-
-
-
3,420
-
-
4,167
-
50,000
Sub-total directors
490,966
-
3,420 54,167
Other key management personnel (KMP)
S Mathieson
S Stapelberg
R E Lees
b
c
392,020
65,000
125,873
Sub-total executive KMP
582,893
Totals
1,073,859
28
-
-
-
-
-
-
-
-
-
50,000
115,000
-
165,000
3,420
219,167
-
-
-
-
-
-
-
-
-
-
340,000
50,000
39,420
119,133
548,553
422,020
180,000
125,873
747,893
1,296,446
REMUNERATION REPORT (AUDITED) (continued)
a.
b.
c.
Appointed 27 January 2016;
Appointed 7 July 2015;
Resigned 8 September 2015;
.
# Represents payment of directors fees by issue of ordinary shares.
S Mathieson has a 12 month contract commencing 1 October 2015. It is to operate on a project basis and can
be terminated with 3 months written notice from either party.
Table 2: Remuneration for the year ended 30 June 2015
Short Term
Salary
& Fees
Non-
Post-
Monetary Employment
Benefits
Super
Share Termination
Based
Payments #
Payment
Total
$
$
$
$
$
$
Executive director
K Knauer
Non-executive directors
V Fayad – Chairman
C Indermaur - Chairman
J Campbell
P May
C Solitario
S Elkhouri
a
b
c
d
e
f
g
192,000
51,167
5,694
29,200
-
-
33,000
-
-
-
-
-
-
-
-
-
-
2,774
-
-
-
-
-
45,000
43,600
-
-
-
Sub-total directors
311,061
-
2,774 88,600
Other key management personnel (KMP)
S Stapelberg
R E Lees
97,192
134,606
Sub-total executive KMP
231,798
Totals
542,859
-
-
-
-
7,808
-
7,808
-
-
-
10,582
88,600
-
-
-
-
-
-
-
-
-
-
-
-
192,000
51,167
50,694
75,574
-
-
33,000
402,435
105,000
134,606
239,606
642,041
a.
b.
c.
d.
e.
f.
g.
Appointed 1 July 2014 (Short-term fee accrued);
Resigned 7 April 2015;
Appointed 7 April 2015;
Appointed 8 September 2014;
Resigned 1 July 2014;
Resigned 8 September 2014;
Resigned 8 September 2014.
29
I N N O V A T I O N
I N M I N D
Directors’ Report
REMUNERATION REPORT (AUDITED) (continued)
Table 3: Option holdings of key management personnel (consolidated)
Options held in Medibio Limited (number)
30 June 2016
Balance
at 1 July
2015
Granted
as
remuneration
Options
forfeited change at 30 June and exercis-
Balance
vested
Net
other
2016
able at 30
June 2016
Total
Directors
C Indermaur
J Campbell
K Knauer
F Prendergast
Executives
S Mathieson
S Stapelberg
R Lees
-
250,000
3,000,000
-
-
-
-
a
b
c
Total
3,250,000
a.
b.
c.
Appointed 27 January 2016;
Appointed 7 July 2015
Resigned 8 September 2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
3,000,000
-
-
250,000
3,000,000
-
-
-
-
-
-
3,250,000
3,250,000
Options held in Medibio Limited (number)
30 June 2015
Balance
at 1 July
2014
Granted
as
remuneration
Options
forfeited
Net
change
other
Balance
vested
at 30 June and exercis-
2015
able at 30
June 2015
Total
-
-
-
-
-
-
3,000,000 3,000,000
-
-
-
-
-
-
-
-
250,000
3,000,000
-
-
-
-
-
-
-
-
-
3,000,000
3,000,000
3,250,000
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
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
-
-
Resigned 7 April 2015;
Appointed 7 April 2015;
Appointed 8 September 2014;
Appointed 1 July 2014;
Resigned 1 July 2014;
Resigned 8 September 2014;
Resigned 8 September 2014.
a.
b.
c.
d.
e.
f.
g.
30
REMUNERATION REPORT (AUDITED) (continued)
Table 4: Shareholdings of key management personnel (consolidated)
Shares held in Medibio Limited (number)
30 June 2016
Balance
at 1 July
2015
Granted
as
remuneration
On
exercise
of options
Net
change
other
Balance
at 30 June
2016
Directors
C Indermaur
J Campbell
K Knauer
F Prendergast
Executives
S Mathieson
S Stapelberg
R Lees
150,000
-
6,440,541
-
-
-
-
a
b
c
10,417
-
-
166,667
150,000
350,000
-
Total
6,590,541
677,084
-
-
-
-
-
-
-
-
-
-
-
-
160,417
-
6,440,541
166,667
-
(350,000)
-
150,000
-
-
(350,000)
6,917,625
a.
b.
c.
Appointed 27 January 2016
Appointed 7 July 2015
Resigned 8 September 2015
Shares held in Medibio Limited (number)
30 June 2015
Balance
at 1 July
2014
Granted
as
remuneration
On
exercise
of options
Net
change
other
Balance
at 30 June
2015
Directors
V Fayad
C Indermaur
J Campbell
K Knauer
P May
C Solitario
S Elkhouri
Executives
S Stapelberg
R Lees
a
b
c
d
g
f
e
-
-
-
-
26,522
693,424
-
-
-
-
150,000
-
-
-
-
-
-
-
Total
719,946
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
6,440,541
(26,522)
(693,424)
-
-
150,000
-
6,440,541
-
-
-
-
-
-
-
5,720,595
6,590,541
a.
b.
c.
d.
e.
f.
g.
Resigned 7 April 2015;
Appointed 7 April 2015;
Appointed 8 September 2014
Appointed 1 July 2014;
Resigned 1 July 2014;
Resigned 7 September 2014;
Resigned 7 September 2014.
END OF AUDITED REMUNERATION REPORT
31
I N N O V A T I O N
I N M I N D
Directors’ Report
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:
Eligible to attend
Number attended
Eligible to attend
Number attended
Audit committee
Chris Indermaur
Kris Knauer
James Campbell
F Prendergast
7
7
7
3
7
7
7
2
2
-
2
-
2
-
2
-
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:
Tax compliance
Accounting advice
Other
Auditor Independence
2016
15,400
5,000
650
2015
12,575
-
690
The auditor’s independence declaration has been received and can be found on page 33.
Signed in accordance with a resolution of the directors
Chris Indermaur
Chairman
30 September 2016
Sydney, NSW
32
Auditor’s Independence Declaration
33
I N N O V A T I O N
I N M I N D
Corporate Governance
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 acts 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
34
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
for the year ended 30 June 2016
Sales
Other income
Revenue
Amortisation
Employee costs
Finance 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)
Consolidated
Notes
2016
$
2015
$
18,500
-
1,786,532
261,933
5
1,805,032
261,933
11
(1,261,825)
(810,532)
(313,455)
(516,461)
(492,435)
(160,622)
5
5
5
5
6
7
7
-
(4,306,033)
(1,853,268)
(210,664)
(3,390,324)
(2,497,420)
(5,824,371)
(7,921,702)
-
-
(5,824,371)
(7,921,702)
-
-
-
-
(5,824,371)
(7,921,702)
(5.916)
(5.916)
(16.995)
(16.995)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
35
I N N O V A T I O N
I N M I N D
Consolidated Statement of Financial Position
As at 30 June 2016
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-current Assets
Intangibles assets
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Borrowings
Employee liabilities
Total Current Liabilities
Non-current Liabilities
Borrowings
Total Non-current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Consolidated
Notes
2016
$
2015
$
8
9
14
11
12
13
1,039,944
263,181
2,620,256
944,301
232,985
9,091
3,923,381
1,186,377
13,997,693
13,997,693
13,998,137
13,998,137
17,921,074
15,184,514
5,668,770
2,380,280
395,000
64,843
197,500
-
6,128,613
2,577,780
13
3,298,153
3,495,653
3,298,153
3,495,653
9,426,766
6,073,433
8,494,308
9,111,081
15 (a)
55,756,237
51,093,889
21
1,024,850
479,600
(48,286,779)
(42,462,408)
8,494,308
9,111,081
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
36
Consolidated Statement of Changes in Equity
For the year ended 30 June 2016
Issued Capital
$
Accumulated
Losses
$
Share Based
Payments Reserve
$
Total
Equity
$
At 1 July 2014
37,250,977
(34,540,706)
Comprehensive income
Loss for the period
Other comprehensive income
Total comprehensive income
-
-
-
(7,921,702)
-
(7,921,702)
Transactions with owners
Shares issued
Share options issued
Share issue costs
14,393,862
-
(550,950)
Total transactions with owners
13,842,912
-
-
-
-
-
-
-
-
-
479,600
-
2,710,271
(7,921,702)
-
(7,921,702)
14,393,862
479,600
(550,950)
479,600
14,322,512
At 30 June 2015
51,093,889
(42,462,408)
479,600
9,111,081
At 1 July 2015
51,093,889
(42,462,408)
479,600
9,111,081
Comprehensive income
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owners
Shares issued
Share options issued
Share issue costs
-
-
-
(5,824,371)
-
(5,824,371)
5,411,672
-
(749,324)
-
-
-
-
-
-
-
-
545,250
-
(5,824,371)
-
(5,824,371)
5,411,672
545,250
(749,324)
545,250
5,207,598
Total transactions with owners
4,662,348
At 30 June 2016
55,756,237
(48,286,779)
1,024,850
8,494,308
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
37
I N N O V A T I O N
I N M I N D
Consolidated Statement of Cash Flows
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
R&D grant received
Payments to suppliers and employees
Consolidated
Notes
2016
$
2015
$
18,500
-
1,738,631
255,120
(4,458,093)
(1,770,203)
Net cash flows used in operating activities
8 (a)
(2,700,962)
(1,515,083)
Cash flows from investing activities
Interest received
Payments for intangible assets
Payments for acquisitions
25,306
6,813
(61,381)
(1,087,181)
-
(10,000)
Net cash flows (used in) provided by investing activities
(36,075)
(1,090,368)
Cash flows from financing activities
Proceeds from issues of shares and options
Transaction costs of issue of shares
Proceeds from issue of convertible notes
Interest paid
3,416,769
3,432,000
(204,074)
-
(380,015)
(550,950)
685,000
(112,940)
Net cash flows from (used in) financing activities
2,832,680
3,453,110
Net (decrease) / increase in cash and cash equivalents
Net cash acquired in business combinations
Cash and cash equivalents at beginning of the year
95,643
-
944,301
Cash and cash equivalents at end of the year
8
1,039,944
847,659
393
96,249
944,301
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
38
Contents to Notes to the Financial Statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
Corporate Information
Summary of Significant Accounting Policies
Significant Accounting Judgements, Estimates and Assumptions
Segment Reporting
Revenues and Expenses
Income Tax
Earnings per Share
Cash and Cash Equivalents
Trade and Other Receivables
Other Financial Asset – Available For Sale Financial Assets
Intangibles
Trade and Other Payables – Current
Borrowings
Other Current Assets
Issued Capital
Auditors’ Remuneration
Key Management Personnel
Related Party Disclosures
Financial Risk Management Objectives and Policies
Contingent Liabilities
Share-Based Payment Plans
Parent Entity Information
23.
Events after the End of the Reporting Period
40
40
49
49
53
54
55
55
57
57
58
59
60
60
60
64
64
64
65
66
66
67
67
39
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
For the year ended 30 June 2016
1.
CORPORATE INFORMATION
Medibio 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.
a.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 15(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
40
•
•
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
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 2018)
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.
Given that the Group is not yet earning revenue from operating activities the Group has not yet assessed
the impact of this standard.
• 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.
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.
41
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
c.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Medibio Limited and its controlled
entities as at 30 June 2016 (the “Group”).
Subsidiaries are all those 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 of 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 in these financial statements.
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:
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 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.
42
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.
k.
Investments and other financial assets
Recognition and De-recognition
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 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.
43
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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 other 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.
iii. 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.
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.
44
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.
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.
Patents and licences are amortised over their term being 2 to 3 years.
45
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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.
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.
46
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.
Employee 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
Corporate bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.
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).
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility
of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option,
together with non-vesting conditions that account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in previous periods.
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.
47
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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 combination 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.
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.
48
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.
Capitalisation of development costs
The Group capitalises development costs when it is probable that the project will be a success; the group is
able to use or sell the asset; has sufficient resources; the intent to complete the development and costs can be
measured reliably. This involves significant judgement.
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 type or class of customer for the products or service;
the distribution method; and
external regulatory requirements.
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 and Medibio’s development of the Stress Algorithm.
49
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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:
• Cash and term deposits;
•
Interest received;
• Prepayments;
•
Fixed assets;
• Borrowings; and
• Other payables.
50
i.
Segment performance
Twelve months ended 30 June 2016
Revenue
External sales
R & D Grant
Total segment revenue
Inter-segment elimination
Unallocated revenue
Total consolidated revenue
Mining and Gas
$
Human Diagnostics
$
Total
$
-
-
-
-
18,500
1,738,631
1,757,131
-
18,500
1,738,631
1,757,131
-
47,901
1,805,032
Twelve months ended 30 June 2016
Mining and Gas
$
Human Diagnostics
$
Total
$
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
-
(2,732,605)
(2,732,605)
(1,261,825)
25,306
(1,855,247)
(5,824,371)
Twelve months ended 30 June 2015
Mining and Gas
$
Human Diagnostics
$
Total
$
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
-
-
-
-
-
255,120
255,120
-
-
255,120
255,120
-
6,813
261,933
Mining and Gas
$
Human Diagnostics
$
Total
$
(3,861,034)
(2,244,216)
(6,105,250)
(516,461)
6,813
(1,306,804)
(7,921,702)
51
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
Mining and Gas
$
Human Diagnostics
$
Total
$
-
16,881,130
16,881,130
1,039,944
-
17,921,074
Mining and Gas
$
Human Diagnostics
$
Total
$
-
14,231,122
14,231,122
944,301
9,091
15,184,514
Mining and Gas
$
Human Diagnostics
$
Total
$
-
9,426,766
9,426,766
9,426,766
Mining and Gas
$
Human Diagnostics
$
Total
$
-
6,073,433
6,073,433
6,073,433
i.
Segment assets
30 June 2016
Segment assets
Unallocated assets
• Cash
• Other
Total assets
30 June 2015
Segment assets
Unallocated assets
• Cash
• Other
Total assets
ii.
Segment Liabilities
30 June 2016
Segment liabilities
Unallocated liabilities
Total liabilities
30 June 2015
Segment liabilities
Unallocated liabilities
Total liabilities
52
iii.
Revenue by geographical region
Australia
Revenue for the 2016 year included the R&D Grant rebate of $1,738,631 and bank interest of $25,306.
For the 2015 year, revenue included the R&D Grant of $255,120 and bank interest of $6,813.
iv.
Assets by geographical region
All assets reside in one geographical region being Australia.
5. REvENUES AND EXPENSES
(a) Revenue
Sales
Bank interest received and receivable
Currency gains
R&D Grant received
(b) Finance costs
Consolidated
2016
$
2015
$
18,500
25,306
22,595
-
6,813
-
1,738,631
255,120
1,805,032
261,933
Interest charges payable under convertible notes
(313,455)
(160,622)
(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
(313,455)
(160,622)
-
-
-
(3,861,034)
(444,999)
(4,306,033)
(242,914)
(545,133)
(22,222)
(82,192)
(399,781)
(10,462)
(810,532)
(492,435)
(2,037,951)
(1,288,074)
(42,325)
(61,907)
(78,888)
(193,932)
(975,320)
(165,541)
(63,605)
(86,795)
(85,290)
(808,115)
(3,390,324)
(2,497,420)
53
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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
Consolidated
2016
$
2015
$
(5,824,371)
(7,921,702)
At the statutory tax rate of 30% (2015: 30%)
(1,747,311)
(2,376,511)
Tax effect of temporary differences and current year loss
not brought to account
1,747,311
2,376,511
-
-
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
43,351
251,400
The potential deferred tax asset will only be obtained if:
i.
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to
be realised;
ii.
the conditions for deductibility imposed by tax legislation continue to be complied with; and
iii. no changes in tax legislation adversely affect the Group in realising the benefit.
At 30 June 2016, there is no recognised or unrecognised deferred tax liability (2015: 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.
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.
54
Company
2016
$
2015
$
7. EARNINGS PER SHARE
Net loss attributable to equity holders of the Company
(5,824,371)
(7,921,702)
Weighted average number of ordinary shares used in calculating
basic and diluted earnings per share:
98,445,508
46,611,766
Number
of Shares
Number
of Shares
8. CASH AND CASH EQUIvALENTS
Cash at bank and in hand
Short-term deposits
Consolidated
2016
$
2015
$
78,599
961,345
1,039,944
210,696
733,605
944,301
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.
55
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
(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
Changes in assets and liabilities:
(Increase)/ decrease in trade and other receivables
(Increase)/ decrease in other current assets
(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
25,000 shares issued to B McNaught
166,667 shares issued to F Prendergast
10,417 shares issued to C Indermaur
75,000 shares issued to M Player
150,000 shares issued to S Mathieson
350,000 shares issued to S Stapelberg
1,000,000 shares issued to Brooke Starbuck Corporate Advice
130,000 shares issued to Andrew Mortimer
203,235 shares issued to Matthew Flax
4,000,000 shares issued to Heartlink Limited for acquisition of Patents
75,000 shares issued to Duncan Groenewald
105,000 shares issued to Colorado Investments Pty Ltd
6,000,000 options issued to Fosters Stockbrokers
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
2016
$
2015
$
(5,824,371)
(7,921,702)
1,261,825
(25,306)
313,455
-
-
754,904
516,461
(6,813)
160,622
4,306,033
100,000
479,600
9,804
(336,680)
(2,544,606)
3,288,490
-
1,142,396
64,843 28,516
(2,700,962)
(1,515,083)
7,500
50,000
4,167
30,000
50,000
115,000
350,000
44,000
68,237
1,200,000
15,000
21,000
545,250
-
-
-
-
-
2,500,154
-
-
-
-
-
-
-
-
-
-
-
-
45,000
147,930
43,600
174,400
261,600
672,530
The value placed on the issue of the shares was equal to the prevailing share price of Medibio as at the date
of issue.
Refer to note 15 and 21 for further detail in respect of share issues.
56
9.
TRADE AND OTHER RECEIvABLES
Share proceeds receivable
Other debtors
Consolidated
2016
$
2015
$
40,000
223,181
263,181
-
232,985
232,985
Terms and conditions
(i)
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.
(ii)
(iii)
Due to the short-term nature of these receivables their carrying amounts are assumed to approximate their
fair value.
Consolidated
Notes
2016
$
2015
$
10.
OTHER FINANCIAL ASSET – AvAILABLE FOR SALE FINANCIAL ASSETS
Frontier Oil Corporation – at directors valuation
Australian listed shares at fair value
Impairment
(i)
(ii)
3,861,034
3,861,034
2,758
2,758
(3,863,792)
(3,863,792)
Frontier Oil Corporation
(i)
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, have fully impaired the investment at 30 June 2015.
(ii)
Listed Shares
As at 30 June 2016, Medibio holds 47,544 Solagran Limited shares. Solagran Limited was delisted from the
ASX on 31 December 2015 and the investment has been fully impaired. This is the residual balance from a
development agreement to commercialise CGNC terminated in 2010.
57
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
11.
INTANGIBLES
Licence
Heartlink Limited
At cost
Amortisation
Net carrying amount
Development Costs
At cost
Additions
Net carrying amount
Patents
At cost
Additions
Amortisation
Net carrying amount
Data files
At cost
Additions
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
2016
$
2015
$
300,000
(300,000)
300,000
(150,000)
-
150,000
3,121,802
61,382
43,750
3,078,052
3,183,184
3,121,802
3,298,153
1,200,000
(1,478,286)
-
3,298,153
(366,461)
3,019,867
2,931,692
7,794,643
-
-
7,794,643
7,794,643
7,794,643
444,999
-
(444,999)
-
444,999
(444,999)
-
-
13,998,137
1,261,381
(1,261,825)
-
343,750
14,615,847
(516,461)
(444,999)
13,997,693
13,998,137
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, is complementary to the processes being developed
by Invatec. These Patents were acquired for $1,200,000 by the issue of 4 million shares to Heartlink Limited.
58
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, the 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.
12.
TRADE AND OTHER PAYABLES – CURRENT
Trade payables
Other creditors and accruals
Accrued interest
Related party payables
Consolidated
Notes
2016
$
2015
$
(i)
(ii)
(iii)
516,757
5,152,013
-
1,541,792
388,308
12,211
5,668,770
1,942,311
-
437,969
5,668,770
2,380,280
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 330 days.
This amount reflects interest accrual on the convertible notes that have been issued as detailed in
Note 13. 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.
59
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
13.
BORROWINGS
Borrowings – Current
Invatec Shareholders loan
Consolidated
2016
$
2015
$
395,000
395,000
197,500
197,500
Borrowings – Non-Current
Promissory Note
Invatec Shareholders loan
3,298,153
-
3,298,153
197,500
Total Borrowings
3,693,153
3,693,153
3,298,153
3,495,653
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. The Invatec shareholders have agreed to extend the repayment of the total $395,000
to 26 months after the completion date.
14.
OTHER CURRENT ASSETS
Prepayments
Costs incurred in relation to future research and development
15.
ISSUED CAPITAL
a. Issued and paid up capital
Ordinary shares issued and fully paid
Consolidated
2016
$
2015
$
77,374
2,542,882
2,620,256
9,091
-
9,091
55,756,237
51,093,889
60
Number of shares
Notes
2016
2015
2016
$
2015
$
15.
ISSUED CAPITAL (continued)
Movements in shares on issue
b.
Beginning of the financial year
Issued during the year:
- share placement
- Convertible note – Series B
Share Consolidation 100:1
Post-consolidation shares on issue
Issue of Shares
Issue of Shares to investors
Issue of Shares to investors
Contractor/consultant payments
Patent acquisition
Contractor/consultant payments
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Option exercise
(vii)
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
(viii)
(ix)
(x)
(x)
(xi)
(xii)
(xiii)
Option exercise
(xiv)
Less: share issue costs
89,802,932
3,173,189,372
51,093,889
37,250,977
-
-
-
-
-
333,333,333
8,333,333
3,514,856,036
(3,479,707,089)
35,148,947
688,333
7,730,087
502,641
1,743,628
4,000,000
479,186
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,256,668
25,537,500
3,516,665
15,000,000
643,100
1,450,000
113,388
136,658
-
-
-
-
-
206,500
3,092,034
139,734
623,878
1,200,000
99,526
50,000
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
-
(749,324)
(550,950)
End of the financial year
105,446,807
89,802,932
55,756,237
51,093,889
Notes
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
On 10 July 2015, the Company issued 683,333 ordinary shares at an issue price of 0.30 cents per share. This issue raised
$206,500 (before issue costs).
On 8 September 2015 the Company raised $3,092,035 through the issue of 7,730,087 shares
On 4 January 2016 the Company issued 502,641 shares at $0.278 to a US based investor
On 28 January 2016 the company settled $623,878 of contractor & consultancy costs through the issue of 1,743,628 shares
On 19 April 2016 the Company acquired Heartlink patents for $1,200,000 settled by the issue of 4,000,000 ordinary shares.
On 19 April 2016 the Company settled $99,526 contractor & consultancy costs through the issue of 479,186 ordinary shares.
On 22 June 2016 the Company issued 500,000 shares on the exercise of 500,000 10 cent options raising $50,000
On 2 April 2015 the company raised $2,477,000 by the placement of 8,256,668 shares to sophisticated and professional
investors.
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.
Shares issued in settlement of advisors fees.
Shares issued to acquire 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.
61
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
15.
ISSUED CAPITAL (continued)
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 2016 the Group had net asset position of $8,494,308 (2015: $9,111,081). However, as at 30
June 2016, it had:
•
•
•
•
•
incurred a loss for the year of $5,824,371 (2015: $7,921,702);
cash outflow from operations of $2,700,962 (2015: $1,515,083);
cash at bank of $1,039,944 (2015: $944,301);
borrowings (non-current) from the acquisition of patents of $3,298,153 (2015: $3,495,653); and
current liabilities in excess of current assets by $2,205,232 (2015: $1,391,403)
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.
On 8 September 2015 the Group raised $3,092,034 through the issue of 7,730,087 shares on 8 September
2015. The Directors of Medibio Limited are confident that the company is able to raise further equity from its
shareholders and sophisticated and professional investors, if required.
The Directors of Medibio Limited expect to receive an R&D grant refund of $3,074,224 in the next quarter.
As part of the April 2015 capital reconstruction, Medibio issued 15,000,000 options exercisable on the payment
of 10 cents on or before 1 April 2018 and 6,666,667 options exercisable on the payment of 30 cents on or
before 1 April 2017. At the date of this report 1,500,000 (10% of the total) of the 1 April 2018 10 cents options
have been exercised. The 6,666,667 30 cent options expire 1 April 2017 and the Directors expect they will be
exercised subject to the share price remaining above 30 cents and that the 10 cent options will continue to be
exercised. Based on the Company’s historical ability to raise new capital and public announcements made (as
disclosed in the Directors Review of Operations) the Directors believe it is reasonable to expect the share price
to remain above 30 cents.
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.
62
15.
ISSUED CAPITAL (continued)
d.
Share Options
Options over ordinary shares:
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 29 January 2019 at 40 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 29 January 2019 at 60 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 29 January 2019 at 80 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
2016
Number
of Options
2015
Number
of Options
6,666,667
-
-
-
6,666,667
-
6,666,667
6,666,667
14,863,342
-
-
15,000,000
(500,000)
(136,658)
-
-
14,363,342
14,863,342
-
3,000,000
-
-
3,000,000
-
1,500,000
-
-
1,500,000
-
1,500,000
-
-
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total options over unissued ordinary shares
27,030,009
21,530,009
Movements in share options
• On 22 June 2016 a holder of 10 cent unlisted options exercised 500,000 options
• On 2 April 2015 a holder of 10 cent unlisted options exercised 136,658 options.
63
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
15.
ISSUED CAPITAL (continued)
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.
Consolidated
2016
$
2015
$
16.
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
38,150
29,161
Other services in relation to the entity and any other entity in the Group:
• tax compliance
• accounting advice
• AGM attendance
17.
KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payments
Total compensation
15,400
5,000
650
59,200
1,053,859
3,420
219,167
1,276,446
12,575
-
690
42,426
542,859
10,582
88,600
642,041
18.
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
Incorporation of shares
2016
2015
2016
2015
% Equity Interest Investment *
Country of
Class
BioProspect Australia Pty Ltd**
Australian Phytochemicals Pty Ltd**
BioProspect America Pty Ltd**
Re Gen Wellness Products Pty Ltd**
Australia
Australia
Australia
Australia
Medibio Limited – USA***
Invatec Health Pty Ltd***
Annapanna Pty Ltd***
USA - Delaware
Australia
Australia
Ord
Ord
Ord
Ord
Ord
Ord
Ord
100
100
100
100
100
100
100
100
100
100
100
100
100
100
4,024,341
1,323,464
2
50,000
1,320
8,061,250
445,000
4,024,341
1,323,464
2
50,000
1,320
8,061,250
445,000
* Cost before provisioning. Refer to Note 10 for further investment disclosures.
** Dormant entities
*** Human health – CHR diagnostic development
64
19.
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
2016
$
2015
$
1,039,944
944,301
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 2016, 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:
Post tax loss
Higher/ (lower)
Equity
Higher/ (lower)
Consolidated
+ 1% (100 basis points)
- 0.5 % (50 points)
2016
$
10,400
(5,200)
2015
$
9,443
(4,722)
2016
$
(10,400)
5,200
2015
$
(9,443)
4,722
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.
65
I N N O V A T I O N
I N M I N D
Notes to the Financial Statements
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.
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.
20.
CONTINGENT LIABILITIES
There were no known contingent liabilities as at 30 June 2016.
21.
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.
Consolidated
2016
$
2015
$
25,000 shares issued to B McNaught
166,667 shares issued to F Prendergast
10,417 shares issued to C Indermaur
75,000 shares issued to M Player
150,000 shares issued to S Mathieson
350,000 shares issued to S Stapelberg
1,000,000 shares issued to Brooke Starbuck Corporate Advice
130,000 shares issued to Andrew Mortimer
203,235 shares issued to Matthew Flax
4,000,000 shares issued to Heartlink Limited for acquisition of Patents
75,000 shares issued to Duncan Groenewald
105,000 shares issued to Colorado Investments Pty Ltd
3,000,000 Options ex at $0.40 issued to Fosters Stockbroking
1,500,000 Options ex at $0.60 issued to Fosters Stockbroking
1,500,000 Options ex at $0.80 issued to Fosters Stockbroking
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 $0.30 issued to Ausepen Pty Ltd
7,500
50,000
4,167
30,000
50,000
115,000
350,000
44,000
68,237
1,200,000
15,000
21,000
343,800
117,150
84,300
-
-
-
-
-
Total Share-Based Payments
2,500,154
66
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45,000
147,930
43,600
174,400
261,600
672,530
21.
SHARE-BASED PAYMENT PLANS (continued)
Option pricing model
The fair value of the equity-settled share options granted is estimated as at the date of grant using a Black-
Scholes model taking into account, the terms and conditions upon which the options were granted.
The following table lists the inputs to the model used for the year ended 30 June 2016.
Dividend yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Option exercise price ($)
Weighted average share price at measurement date
(post-consolidation prices)
Black-Scholes
0.00%
60%
2.0%
3
$0.40
$0.325
0.00%
60%
2.0%
3
$0.60
$0.325
0.00%
60%
2.0%
3
$0.80
$0.325
The reserve records items recognised as expenses on valuation of options - $1,024,850 (2015: $479,600).
22.
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
Consolidated
2016
$
2015
$
(5,665,354)
(7,374,764)
-
-
(5,665,354)
(7,374,764)
3,907,713
920,651
17,767,760
14,470,274
5,175,515
1,420,273
8,473,668
4,718,427
55,756,237
51,093,889
1,024,850
479,600
(47,486,996)
(41,821,642)
9,294,091
9,751,847
-
-
23. EvENTS AFTER THE END OF THE REPORTING PERIOD
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 2016; or
future prospects.
67
I N N O V A T I O N
I N M I N D
Directors’ Declaration
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 2016 and
of its performance for the year ended on that date; and
ii.
complying with Accounting Standards and Corporations Regulations 2001,
b.
c.
on the basis of those outlined in note 15, there are reasonable grounds to believe that the Company
will be able to pay its debts as and when they become due and payable, and
the 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 2016.
On behalf of the Board
Chris Indermaur
Chairman
30th September 2016
Sydney NSW
68
Independent Auditor’s Report to the Members of
Medibio Limited and Controlled Entities
69
I N N O V A T I O N
I N M I N D
Independent Auditor’s Report to the Members of
Medibio Limited and Controlled Entities
70
ASX Additional Information
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 15 September 2016.
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
Ordinary shares
No. of Holders
No. of Shares
1,870
649
201
354
125
468,083
1,659,907
1,590,016
12,841,387
89,750,756
3,199
106,310,149
The number of shareholders holding less than a marketable parcel
of shares of 1,250 shares are:
1,950
558,293
c.
Twenty largest shareholders – ordinary shares quoted on ASX
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Dr Stephen Robert Desmond Addis
Mr Claude Solitario
UBS Nominees Pty Ltd
Metavone Limited
ABN Amro Clearing Sydney Nominees Pty Ltd
Moneybung Pty Ltd
Pitt Street Absolute Return Fund Pty Limited
Domaevo Pty Ltd
Covelane Gold Coast Pty Ltd
Samma-Vayama Pty Ltd
Freeman Road Pty Ltd
Bond Street Custodians Limited
Mining Investments Limited
Bernard Laverty Pty Ltd
HSBC Custody Nominees (Australia) Limited
Ms Diane Phyllis Sherwood
Mr Nigel Robert Strong
Ms Alison Catherine Round
Starbuck Group Pty Ltd
Sparta Nominees Pty Ltd
Number of
Shares Held
12,318,734
11,964,703
4,666,863
4,000,000
3,151,749
3,060,000
3,040,500
2,698,098
2,000,000
1,930,909
1,625,000
1,548,337
1,400,000
1,372,993
1,292,881
1,092,159
1,057,711
1,000,000
1,000,000
930,000
% Held
11.59
11.25
4.39
3.76
2.96
2.88
2.86
2.56
1.88
1.82
1.53
1.46
1.32
1.29
1.22
1.03
0.99
0.94
0.94
0.87
61,650,637
57.54
71
I N N O V A T I O N
I N M I N D
ASX Additional Information
d. Options
There are 27,030,009 options currently on issue. This consists of 14,363,342 Options held by 8 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. A further 6,000,000 Options expiring 19 January
2019 with 3,000,000 exercisable on the payment of $0.40, 1,500,000 exercisable on the payment of $0.60 and
1,500,000 exercisable on the payment of $0.80.
All options are unlisted.
e. Unquoted Securities
There are currently no shares.
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
Dr Stephen Addis
Mr Claude Solitario
Kris Knauer and associated entities
(Moneybung & Pitt Street Absolute Return Fund)
Number
Percentage
12,318,734
11,964,703
6,440,541
11.59
11.25
6.06
72
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