ABN: 58 008 130 336
Annual Report
For the Year Ended 30 June 2019
MEDIBIO LIMITED | ANNUAL REPORT 2019
Corporate Information
ABN 58 008 130 336
The annual report covers Medibio Limited as a group comprising of Medibio Limited and its subsidiaries.
The Group’s functional and presentation currency is AUD ($).
Directors
Mr David Kaysen (Managing Director, CEO and
Chairman)
Mr Peter Carlisle (Lead Independent Director)
Mr Claude Solitario (Non-Executive Director)
Ms Melanie Leydin (Director)
Ms Lisa Wipperman Heine (Non-Executive Director)
Dr. Lisa Ragen Ide (Non-Executive Director)
Ms Liwanag Ojala (Non-Executive Director)
Share Registry
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street
Sydney, NSW, 2000
Telephone: 1300 850 505
Company Secretaries
Ms Melanie Leydin
Mr Mathew Watkins
Registered Office
Level 4, 100 Albert Road
South Melbourne VIC 3205
Telephone: +61 3 9692 7222
Facsimile: +61 3 9077 9233
Legal Advisors
Gadens
Level 25 Bourke Place
600 Bourke Street
Melbourne VIC 3000
Telephone: +61 3 9252 2555
Facsimile: +61 3 9252 2500
Auditors
William Buck (QLD)
Level 21, 307 Queen Street
Brisbane QLD 4000
Telephone: +61 7 3229 5100
Facsimile: +61 7 3221 6027
Home Exchange
ASX Limited
20 Bridge Street
Sydney NSW 2000
Website
www.medibio.com.au
Global Headquarters
Minneapolis, Minnesota
8696 Eagle Creek Circle
Savage, MN 55378
Telephone: 952-222-0551
Notice of Annual General Meeting
The Company will hold its annual general meeting of
shareholders on 22 November 2019.
Corporate Governance Statement
Corporate governance statement are available on the
Company’s website. Please refer to
https://medibio.com.au/corporate-governance/
Bankers
Westpac Banking Corporation
C O N T E N T S
T O F I N A N C I A L
R E P O R T
REVIEW OF OPERATIONS ...............................................................................................................................3
DIRECTORS REPORT .......................................................................................................................................9
AUDITOR'S INDEPENDENCE DECLARATION ..............................................................................................26
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .......... 27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ......................................................................... 28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ..........................................................................29
CONSOLIDATED STATEMENT OF CASH FLOWS....................................................................................... 30
NOTES TO THE FINANCIAL STATEMENTS ..................................................................................................31
DIRECTOR'S DECLARATION .........................................................................................................................56
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MEDIBIO LIMITED AND CONTROLLED
ENTITIES ..........................................................................................................................................................57
ASX ADDITIONAL INFORMATION ..................................................................................................................62
Chairman’s Letter to Shareholders
Dear Shareholders:
It is my honour to write my first annual report letter to the Medibio Limited shareholders. Fiscal year 2019 has been a year
of significant change, with many challenges and a full restart of Medibio. We have thoroughly re-evaluated our
organisational structure and operations, making several changes in personnel and implementing significant cost
reductions. The format of this Annual Report is one of the many ways we are working to reduce operational expenses. The
glossy, high-production style of previous annual reports has given way to a more modest approach. We are also grateful
so many of you are willing to receive this report electronically. This allows us to focus those funds on areas that will move
the company forward. We have developed a laser focus on the core Intellectual Property of Medibio. These changes have
not come easily for any of us, especially you shareholders. We are emerging from these challenging times and we are
working hard to execute against our goals and move Medibio forward.
Organisational Changes
During this fiscal year we have implemented a number of organisational changes involving personnel transitions and the
Board of Directors. Today, we are a much smaller organization with all of our people focused on re-positioning Medibio for
success. At the Board level, in this fiscal year, we welcomed two new Non-Executive Directors to the company. Mr
Claude Solitario, one of the founding shareholders of the company, and Ms Melanie Leydin, our Joint Company Secretary.
They replaced Mr Christopher Indermaur and Mr Andrew Maxwell. In February of 2019, I assumed the role of Chairman of
the Board in addition to my position as Managing Director and CEO. At that time, Mr Peter Carlisle stepped aside as
Acting Chairman and assumed the position of Lead Non-Executive Director.
Post fiscal year we announced additional changes to our board structure welcoming three superbly qualified individuals as
Non-Executive Directors: Ms Lisa Wipperman Heine, Dr Lisa Ragen Ide and Ms Liwanag Ojala joined effective 29 August
2019. At the same time, Mr Michael Phelps and Mr Patrick Kennedy transitioned from their Non-executive Director roles to
the newly created Growth & Advocacy Board. And Dr Franklyn Prendergast resigned from his Non-executive Director role
effective 29 August 2019 to focus on personal and business obligations. It is my strong belief that our Board is dedicated
to work closely with the management team as we execute our newly focused strategies and to provide the proper
governance for the company. The management team is now staffed with highly skilled individuals who are committed to
our re-startup strategy. We are driving for successful performance now and into the future. In terms of overall staff, we
have a total of 12 dedicated full-time and fractional employees. As needed, we contract with some of the best consultants
available to support the research and development of our technology and regulatory efforts.
Clinical and Research Relationships
During the year, we entered into a sponsored Research Agreement with the Department of Biomedical Sciences of
Humanitas University in Milan, Italy. Dr Giampaolo Perna, a Medibio Scientific Advisory Board member is overseeing this
collaboration. This Research Agreement supports the company’s continued development of mental health software
products based on Medibio’s Intellectual Property. We are working to develop other collaborations with additional world-
renowned institutions.
Regulatory Strategy
In July of 2018 we submitted a De Novo application to the U.S. FDA. In October 2018 we received a Major Deficiency
Letter from FDA outlining a list of questions and deficiencies regarding that submission. In March of 2019 we met with the
FDA to discuss this De Novo submission, the deficiencies they identified, and our proposed thoughts on how to best move
forward. Based on the considerable positive dialog we had with FDA at that meeting, we voluntarily withdrew that original
De Novo submission in April of 2019.
Shortly after our meeting with the FDA, we engaged new regulatory counsel to assist and work with us to move forward on
the regulated path here in the U.S. Based on their considerable experience and expertise related to De Novo
submissions, we determined to pursue a new De Novo application for submission to the FDA. We have now embarked on
that effort with a strong focus and strategy to submit a new De Novo with FDA guidance. We believe this new De Novo
MEDIBIO LIMITED | ANNUAL REPORT 2019
1
will meet the key criteria required for their review process. We expect that submission to occur in late calendar year 2019
or early calendar year 2020. Of utmost importance is not the timing of our submission, but rather the quality of the
submission which will hopefully lead to FDA clearance of this new De Novo.
Commercialisation – U.S. Regulated
The basis of a U.S. commercialisation effort will be informed by our De Novo submission. The core of this technology will
be driven by capturing specific data from physician-prescribed overnight inpatient sleep studies. This high-quality output,
when run through our proprietary algorithms, will provide a physician with objective data to better asses a patient’s
depressive burden. The physician can use this objective data to compare to validated subjective data collected as part of
the sleep study from the patient. We believe this will provide the physician a superior screening method with which to
analyse the patient’s overall depressive burden. It will also allow the physician to better direct the treatment paths for
those patients presenting higher on the diagnostic scale for depressive burden. The commercial opportunity for Medibio
will be based on licensing opportunities with manufacturers of sleep study equipment as well as with major commercial
sleep centres.
Commercialisation with ilumenTM
Medibio continues to work to integrate ilumenTM into organisations with global reach and impact. During fiscal 2019 and
shortly thereafter, we announced six pilot trials in Australia and the United Kingdom with major corporations. These pilot
trials have provided significant input and learning for our development team and have helped to identify the commercial
strategy and pricing for ilumenTM moving forward. There is a tremendous call-to-action for corporations to provide their
employees with programs to evaluate, address, and improve their overall wellbeing. With ilumenTM we are finding great
interest from corporations and their employees. Our revenue mix will be generated from program setup fees, annual
check-in program fees, licensing fees and royalty fees. Our various efforts related to this significant opportunity will evolve
over the next fiscal year and beyond.
To broaden our approach and appeal for ilumenTM, post fiscal year-end we announced a partnership agreement with
WellteQ Limited, a digital corporate wellness solution company for employers and insurers. The initial geographic focus for
this partnership will be the fast-growing APAC region of the world. Together we will create an integrated solution,
incorporating ilumen’s wellbeing assessment into WellteQ’s digital wellness platform. We believe that this integrated
solution will offer a unique value proposition to existing and new WellteQ clients.
Looking Forward
We believe that many of the challenges we faced in FY2019 are behind us now and the re-start of Medibio is well
underway. We are very focused on two key business opportunities – the U.S. regulated path and the growth of ilumenTM
on a global basis. We have begun, and will continue, to build relationships with world-class research institutions as well as
corporate partners. Our entire team of personnel, consultants and Board members are focused on this clear path forward
and we are committed to success. We continue to believe that Medibio will play a key role in transforming how mental
healthcare is delivered by medical practitioners and to individuals.
I am proud to be a part of this talented group of people. We are excited for the future of Medibio Limited. I want to thank
our employees, our consultants, the Board of Directors and most importantly you, our shareholders, for your ongoing
support of our mission to bring objective solutions to mental health.
My very best regards,
David B. Kaysen
Chairman, Managing Director and CEO
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
OPERATING RESULTS FOR THE YEAR
Medibio Limited (“Medibio”, “MEB” or “the Company”) and its controlled entities (“the Group”) generated a
comprehensive loss after tax of $6,596,941 (2018: loss of $16,432,656). Key highlights include:
• Received $3,146,835 from the Australian Taxation Office under the Research and Development Tax
Incentive Program and raised $923,465 through Non-Renounceable Entitlement Issue
Implemented significant cost reduction measures in both the U.S. and Australia
•
o Eliminated certain staff positions in the U.S. and Perth, Australia through a redundancy program
o Outsourced Corporate Health Psychology Services
• Refined Regulatory and Commercialisation Strategy
• Launched Corporate Health Product ilumenTM
o Successfully completed a number of ilumenTM pilot programs
• Announced a Sponsored Research Agreement with the Department of Biomedical Sciences of Humanitas
University
• Restructured board and management team
In October 2018, the Company received $3,146,835 from the Australian Taxation Office under the Research and
Development Tax Incentive Program. The cash refund was related to expenditure on eligible R&D activities conducted
during the financial year ended 30 June 2018.
In March 2019, the Company announced the closing of its Non-Renounceable Entitlement Issue (Entitlement Issue) offer
raising $923,465 (before costs).
We continue to be mindful of the cash position and have taken cost-reduction actions throughout the fiscal year, including
termination of vendor contracts and reductions in staff, to reduce net future quarterly cash outlays. The Company will
continue to evaluate spending at all levels of the organisation while maintaining an adequate infrastructure to support
organisational goals.
As part of these efforts, in March 2019, Medibio announced the outsourcing of psychology services in support of ilumen™
and the collaboration with a new corporate psychology group. This reorganisation addressed Medibio’s need to further
reduce costs and streamline the organization. Medibio and Alta Corporate Psychology (Alta), led by former Medibio
employees, entered into a Services Agreement allowing collaboration between the two entities to support existing and
future corporate ilumen™ customers. Psychology services are outsourced as needed to Alta as part of ongoing cost
reduction strategy.
REGULATORY
Medibio announced a new regulatory and commercialisation strategy during fiscal 2019. Effective 29 April 2019, Medibio
withdrew the initial De Novo submission filed in July 2018. The decision to withdraw the submission was made after
considering input from the FDA, ascertained through the Company’s ongoing and positive dialogue with the agency. The
decision was also informed by newly engaged regulatory counsel, the well-known and respected regulatory law firm of
DuVal & Associates. The firm, led by proven industry leader Mark DuVal J.D., counsels companies in the medical device,
pharmaceutical, biotech and other industries. The firm has specialised expertise doing submission work with the FDA, has
worked on many De Novo applications and participated in the first-ever De Novo panel meeting held by the FDA.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
With the expertise from DuVal & Associates Medibio identified a revised regulatory strategy which includes filing a new De
Novo submission in late CY2019 or early CY2020. The Company determined at that time not to pursue a parallel path
through 510(k) submission. The revised strategy follows an extensive evaluation, review and analysis of all FDA regulatory
pathways available with these key findings:
• Further analysis on a proposed 510(k) submission revealed limited commercialisation
opportunity with the 510(k) due to the limited indications for use that would be obtained.
• Upon extensive review and analysis, these limited indications ultimately did not fit with the Company’s strategy.
Medibio is better served by building a longer-term FDA strategy for a robust and sustainable commercial pathway
in the U.S., which includes a more attractive indications for use statement only obtainable through the De Novo
path.
• Further, the resources required to pursue the parallel paths, De Novo and 510(k), would be prohibitive for the
Company, including limiting its ability to respond to increased global interest in the Corporate Health ilumen™
product.
CLINICAL
During April, the Company announced a Sponsored Research Agreement with the Department of Biomedical Sciences of
Humanitas University, Milan, Italy. This research agreement supports the Company’s continued development of mental
health software products based on Medibio’s Intellectual Property. The collaboration extends the Company’s clinical team
and reinforces clinical relevance needed to align with regulatory guidance and market needs. Medibio will maintain
ownership of intellectual property generated under this agreement. Throughout CY2019 Medibio will work closely with this
highly skilled team of researchers and data-scientists who have clinical backgrounds in Psychiatry and Psychology. The
team’s depth of expertise is impressive, including collectively publishing 177 peer-reviewed articles focusing on subjects
like panic attacks, anxiety disorders and general Psychiatry. The Humanitas team will support the development of the
regulated product as well as work to identify a clinical use case for the ilumenTM product.
As disclosed to the ASX during June 2019, Medibio received a writ of summons issued in the Supreme Court of Western
Australia. The writ relates to a joint venture agreement for research and development of a clinical diagnostic tool that was
executed in April 2017. Of note, the writ did not specify the amount of any damages being sought.
The Company announced in late June 2019 that a clinical research article by Saad et al titled ‘Using heart rate profiles
during sleep as a biomarker of depression’ has been published by BMC Psychiatry, an open access, peer-reviewed
journal that considers articles on all aspects of the prevention, diagnosis and management of psychiatric disorders. The
article states, “This study demonstrates, for the first time, that changes in heart rate across sleepwake states may be valid
physiological markers for the identification of depression in a sample of people with sleep complaints. The heart rate
profiling algorithm classified individuals with an accuracy of 79.9%. Specifically, the algorithm was able to detect 82.8% of
the depression cases and rule out 77.0% of healthy controls (these results are in line with the preliminary analyses
conducted for CE marking). In comparison, the detection rate of depression amongst primary care practitioners is thought
to be approximately 47%.” (Saad et al., 2019).
BOARD AND MANAGEMENT CHANGES
Throughout the year, the Company has seen a number of changes that has strengthened the management team of the
organization.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
Lindsey Hagan joined Medibio as VP of Integrated Health Systems in September 2018 to partner with the technology and
clinical teams on product strategy and lead business development initiatives. Ms Hagan has more than 13 years of sales
experience working with medical device, technology, pharmaceutical, and healthcare organizations. With the company’s
increased efforts to refine business and product strategy, Ms Hagan’s title was changed to VP of Strategy and Business
Development to better reflect her role in leading product strategy and business development for future commercialisation
efforts.
Also, in September 2018, the Company appointed Jennifer Solitario as Senior Vice President of Corporate Health. Ms
Solitario is a proficient leader with more than 20 years of experience in the health insurance industry and brings proven
and extensive contract negotiation skills. Ms Solitario is located in Perth, Australia. She joined the Company upon
departure of Peta Slocombe, formerly SVP Corporate Health.
In November 2018, Medibio welcomed David B. Kaysen as CEO and Managing Director. Mr Kaysen brings more than 35
years of experience leading and managing both domestic and international emerging growth companies. He has achieved
consistent and solid results with biopharmaceutical, medical device, and clinical software/IT companies. Mr Kaysen is
experienced in the FDA approval process, leading products to revenue growth, and has experience working with
companies that have operations based in Australia.
In December 2018 and February 2019, the Company announced changes to its Board of Directors. On 31 December 2018
Mr Chris Indermaur resigned from his position as Chairman with immediate effect. On this date Mr Claude Solitario joined
the Board Directors. The Medibio Board appointed Mr Peter Carlisle, at that time Vice Chairman of the Board, as Interim
Chairman. On 22 February 2019 Mr Andrew Maxwell resigned from his position as Non-Executive Director of Medibio
with immediate effect due to family commitments and workload related to other endeavours. The Medibio Board appointed
Ms Melanie Leydin to an Australian Director position. Ms Leydin is a principal of the chartered accounting firm, Leydin
Freyer and is Medibio’s Joint Company Secretary.
In February 2019, the Company also elected David B. Kaysen to the position of Chairman in addition to his CEO and
Managing Director positions. Given Medibio’s current size, and the level of engagement of the board members, combining
the CEO and Chairman roles allowed for increased efficiency, stability and cost savings. In connection with its decision to
combine the role of CEO and Chair, the Board considered it prudent to establish a Lead Independent Director and
appointed Mr Peter Carlisle to undertake this role.
Post balance date, in August 2019, the Company announced further changes to the structure of the Board of Directors
with the appointment of three new Non-executive Directors and establishment of a Growth & Advocacy Advisory Board.
Mr Michael Phelps and Mr. Patrick Kennedy tendered their resignations as Non-Executive Directors of Medibio Limited
effective 29 August 2019 as part of a planned transition to a newly formed Growth & Advocacy Advisory Board which will
enable them to take a more active role in public awareness and advocacy for Medibio.
Dr. Franklyn Prendergast also tendered his resignation as Non-Executive Director of Medibio effective 29 August 2019
due to personal and other business obligations.
The Board of Directors, as part of a thorough review of necessary skills, background and expertise to guide Medibio
forward with its business and commercial strategies has appointed Ms Lisa Wipperman Heine, Dr Lisa Ragen Ide, and Ms
Liwanag Ojala as new Non-Executive Directors effective 29 August 2019.
From 28 August 2018, Jack Cosentino ceased as CEO and Managing Director and resigned as a Director from 20
September 2018.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
COMMERCIALISATION AND PARTNERSHIPS
In October 2018, the Company released ilumenTM, the second generation of the company’s corporate health product.
ilumenTM uses biometric data and subjective assessments to provide individuals with a ‘well-being snapshot’ that they use
to monitor and make improvements over time; whilst also providing management with de-identified aggregate data to
better support and manage the mental well-being of their workforce.
Since that time, the Company has successfully demonstrated the stability of its ilumenTM product through its pilot program
implemented with a number of corporations with a global presence. Medibio continues to advance and consider
unsolicited approaches from major global companies. Medibio will work to integrate ilumen™ into organisations with global
distribution channels.
In July 2019 the Company announced a partnership agreement with WellteQ Limited (WellteQ), a digital corporate
wellness solution for employers and insurers. Under the partnership agreement the parties will create an integrated
solution by incorporating Medibio’s ilumenTM mental well-being assessment into WellteQ’s digital wellness platform.
Medibio and WellteQ have identified that the Integrated Solution will offer a unique value proposition and enter into this
Partnership Agreement to design, develop and implement a Minimum Viable Product (MVP). Teams will begin work
immediately on the integration in anticipation of the platform being available by the end of CY2019. The initial geography
will be specific to the rapidly growing Asia Pacific (APAC) Region with potential for additional geographical areas upon
mutual agreement.
For the planned U.S. Regulated Product, the initial commercialisation and licensing opportunities will focus primarily on
physician-prescribed inpatient sleep studies.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
INTELLECTUAL PROPERTY
During the year Medibio further solidified its intellectual property position through the filing of new patents. The
filings and license are in line with Medibio’s intellectual property (IP) strategy and protecting a dominant, defensible
broad position in the use of physiologic biomarkers to characterize mental state.
The following table summarises Medibio’s current patent coverage.
COUNTRY
OFFICIAL NO. TITLE
CASE STATUS
PCT
AU98/00252
Method diagnose psychiatric disorders Granted
Australia
720226
Method diagnose psychiatric disorders Granted
Canada
2284553
Method diagnose psychiatric disorders Granted
Israel
132186
Method diagnose psychiatric disorders Granted
New Zealand
337833
Method diagnose psychiatric disorders Granted
USA
USA
6245021
Method diagnose psychiatric disorders Granted
9861308
Method/System for Monitoring Stress Registered
Australia
2016278357
Method/System for Monitoring Stress
Application Filed
PCT
China/Europe/Japan
AU2016/050491
Method/System for Monitoring Stress
Application Filed
New Zealand
738067
Method/System for Monitoring Stress
Application Filed
USA
USA
15/736445
Method/System for Monitoring Stress
Application Filed
15/403494
Method/system assessing mental State Accepted
Australia
2016278356
Method/system assessing mental State Application filed
PCT
China/Europe/Japan
AU2016/050490
Method/system assessing mental State
Application filed
New Zealand
738185
Method/system assessing mental State Application filed
USA
USA
USA
USA
USA
15/736652
Method/system assessing mental State Application filed
62/518389
Mental State Indicator
Application Filed
62/534526
Medication Monitoring System
Application Filed
62/574527
Risk Indicator
Application Filed
62/573940
Breathing State Indicator
Application Filed
MEDIBIO LIMITED | ANNUAL REPORT 2019
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REVIEW OF OPERATIONS
COUNTRY
OFFICIAL NO. TITLE
USA
PCT
62/433066
Using ECG to Classify PTSD
WO2018/111428
Using Heartrate to classify PTSD
CASE STATUS
World-wide exclusive
license from Emory
University
World-wide exclusive
license from Emory
University
The applications, once granted, will provide 20 years of exclusivity for the diagnosis of mental health disorders using CHR
technology and assure the Company rights in the US.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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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 2019.
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, role and experience
Current Directors
David B. Kaysen
Experience:
Managing Director, Chairman and CEO
Appointed 5 November 2018; appointed Chairman 31 December 2018.
Mr Kaysen has 35+ years of experience leading and managing both domestic
and international emerging growth companies. He has achieved consistent
and solid results with bio-pharmaceutical, medical device and clinical
software/IT companies. Mr Kaysen is experienced in the FDA approval
process, leading products to revenue growth, and has experience working
with companies that have operations based in Australia.
Peter Carlisle
Experience:
Lead Non-Executive Director
Appointed Lead Non-Executive Director 22 February 2019.
Mr Carlisle serves as Managing Director of Olympics & Action Sports at
global sports marketing agency, Octagon. Mr Carlisle oversees an
international business
through
commercial, public relations, and cause-related activities. He has served on
numerous non-profit boards and has worked to develop and promote
programs focused on a variety of mental health issues.
focused on athlete brand-building
Claude Solitario
Experience:
Non-Executive Director
Appointed 31 December 2018
Mr Solitario brings 30 years of experience in the development of new and
emerging technology, with a deep understanding of licensing and
commercialisation of intellectual property. As a founding shareholder of
Medibio he is one the Company’s major shareholders and brings an
extensive financial background having served as a financial executive for
many public and private companies.
Melanie Leydin
Experience:
Director
Appointed 22 February 2019
Ms Leydin is a principal of the chartered accounting firm, Leydin Freyer and
is Medibio’s Joint Company Secretary. She has 25 years’ experience in the
accounting profession and 15 years’ experience in Company Secretarial
services. Ms Leydin is a Chartered Accountant, a Registered Company
Auditor and a graduate of Swinburne University in 1997 (B.Bus(Acc)(Corp
law)).
MEDIBIO LIMITED | ANNUAL REPORT 2019
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DIRECTORS’ REPORT
Lisa Wipperman Heine
Experience:
Non-Executive Director
Appointed 29 August 2019
Ms Wipperman Heine is currently President & CEO of PreCardia, Inc., an
early stage medtech company developing an innovative catheter-based
intervention for the treatment of acute decompensated heart failure. Prior to
PreCardia, Lisa was Chief Operating Officer at Mitralign, Inc., a venture
backed company focused on development of transcatheter heart valve
technologies. Lisa has also served in multiple leadership roles at Covidien,
Inc., including Global Vice President of Medical Affairs for Vascular
Therapies. During her tenure at Covidien, she helped drive the strategy in
support of a $1.7B business and was also responsible for leading the
strategy and operations of Clinical Affairs, Healthcare Economics, Policy and
Reimbursement and Medical Education functions. Lisa also currently serves
as an independent member of the Board of Directors of Surmodics Inc.
(NASDAQ: SRDX) and Natus Medical (NASDAQ: NTUS).
Lisa Ragen Ide, MD,
MPH
Experience:
Non-Executive Director
Appointed 29 August 2019
Dr Ide is the Chief Medical Officer of Zipnosis, a Minneapolis, Minnesota
based leading virtual care software company that pairs traditional
telemedicine with next-generation online virtual care tools, where she holds
clinical and leadership roles in sales, digital health and directs the regulatory
department reviewing state and federal telemedicine legislation.
Liwanag Ojala
Experience:
Non-Executive Director
Appointed 29 August 2019
Ms Ojala is the CEO of CaringBridge, leading management and operations.
More than 16 years of experience has given Liwanag the business skills and
knowledge needed to lead an organization. Before joining CaringBridge as
chief operating officer at the end of 2014, she was vice president of
ecommerce at Meijer. Liwanag was elected to the Minnesota Public Radio
board of trustees in 2016, and she remains a member of the Minnesota State
Bar and a trustee emeritus of the Blandin Foundation.
Former Directors
Chris Indermaur
Experience:
Non-Executive Chairman
Resigned 31 December 2018.
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. He is also a director of Centrex Metals (ASX:
CXM) from 29 June 2017.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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DIRECTORS’ REPORT
Andrew Maxwell
Experience:
Non-Executive Director
Resigned 22 February 2019
Mr. Maxwell is the chair of TMS Australia, which owns a network of out-
patient clinics treating depression using transcranial magnetic stimulation.
He is Chair of Agersens the global market leader in virtual fencing technology
for beef and dairy cattle, a director of BioMelbourne Network and a member
of the Bond University School of Health, Science and Medicine advisory
board.
Frank G. Prendergast,
MD
Experience:
Non-Executive Director
Resigned 29 August 2019
Patrick Kennedy
Experience:
Dr Prendergast 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 between 1992-2009. Dr Prendergast retired from Mayo Clinic in
December of 2014.
Non-Executive Director
Resigned 29 August 2019
The Honourable Patrick J. Kennedy is a former member of the U.S. House
of Representatives and a leading U.S. political voice on mental illness,
addiction, and other brain diseases. Mr. Kennedy was a chief sponsor of one
of the major pieces of legislation of 2008, the Mental Health Parity Act, a bill
requiring most group health plans to provide coverage for the treatment of
mental illnesses that is comparable to what they provide for physical
illnesses. Mr. Kennedy was also appointed
to President Trump’s
Commission on Combating Drug Addiction and the Opioid Crisis.
Michael Phelps
Experience:
Non-Executive Director
Resigned 29 August 2019
Mr Phelps is an advocate for Mental Health and since retiring from
competitive swimming has dedicated his time, fame, and focus to raise
awareness around mental health.
Jack Cosentino
Experience:
Non-Executive Director
Resigned 20 September 2018
Mr. Cosentino ceased as CEO and Managing Director on 28 August 2018.
Mr Cosentino was appointed to the Board on 16 February 2017 as CEO and
Managing Director.
MEDIBIO LIMITED | ANNUAL REPORT 2019
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DIRECTORS’ REPORT
Executive Management and Company Secretary
Brian Mower
Experience:
Melanie Leydin
Experience:
Appointed Interim CEO 28 August 2018, Resigned 1 January 2019
Mr Mower has over 21 years of experience in senior finance positions,
including 17 years in commercializing innovative medical technologies. Prior
to joining Medibio, he was VP Finance and International at Torax Medical
Inc. (acquired by Johnson & Johnson) for 8 years, where he helped guide
the company from early clinical stages through regulatory stages and to
commercialization in Europe and the U.S.
Joint Company Secretary
Ms Leydin is responsible for complying with all the governance requirements
of a listed company. She has over 25 years of experience in the accounting
profession and 13 years of experience as a Company Secretary for ASX
listed companies. Her extensive experience
in public company
includes ASX and ASIC compliance, control and
responsibilities
implementation of corporate governance, statutory financial reporting,
reorganisation of companies and shareholder relations.
Mathew Watkins
Experience:
Joint Company Secretary
Appointed 16 November 2018
Mr Watkins is a Company Secretariat with the chartered accounting firm,
Leydin Freyer. Mathew completed a Bachelor of Business (Accounting) with
a minor in Advanced Finance at Swinburne University of Technology and is a
member of the Institute of Chartered Accountants of Australia and New
Zealand. He specialises in Company Secretarial and Accounting Services for
ASX listed and unlisted public companies in the mining, biotech and industrial
sectors.
His skillset includes ASX statutory reporting, ASX compliance, Corporate
Governance and board and secretarial support.
Interests in the shares and options of the Company and related bodies corporate
As at 30 June 2019, the interests of the directors in the shares, options and convertible notes of Medibio
Limited were:
D Kaysen
P Carlisle
F Prendergast
M Phelps
P Kennedy
C Solitario
M Leydin
Ordinary
Shares
-
125,500
374,075
-
-
11,479,536
-
Options over
Ordinary
Shares
-
4,559,556
2,759,556
2,759,556
3,159,556
3,000,000
-
Convertible
Notes
-
-
-
-
-
15,166,520
-
MEDIBIO LIMITED | ANNUAL REPORT 2019
12
DIRECTORS’ REPORT
Dividends
No dividends have been paid or provided during the year ended 30 June 2019 (2018: nil).
Principal Activities
The principal activity of the Group is conducting clinical research, product development and early stage
commercialisation of a mental health technology using objective biomarkers to assist in the screening,
diagnosing, monitoring, and management of depression and other mental health conditions.
Business Review
Operating Results
The consolidated comprehensive loss of the Group was $6,596,941 (2018: loss of $16,432,656).
Significant Changes in the State of Affairs
On 15 October 2018, the Group announced that it had received a refund in relation to its Research and
Development Tax Incentive Grant amounting to $3,146,835 for its activities conducted during the year ended
30 June 2018.
On 18 December 2018, the Group issued 30,394,240 convertible notes at a face value of $0.02 (2 cents) per
note raising $607,885 (before costs). The Convertible Notes expire 18 months after their issue date
unless converted earlier.
On 31 January 2019, the Group issued following shareholder approval 107,272,280 convertible notes at a face
value of $0.02 (2 cents) per note raising $2,145,446 (before costs). The Convertible Notes expire 18 months
after their issue date unless converted earlier.
On 14 March 2019, the Group completed an Entitlement Offer to existing shareholders as announced on 10
December 2018 issuing a total of 46,173,228 fully paid ordinary shares at $0.02 (2 cents) raising $923,465
(before costs).
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
On 19 July 2019, the Group completed Placement to sophisticated investors as announced on 10 July 2019
issuing a total of 35,000,000 fully paid ordinary shares at $0.01 (1 cents) raising $350,000 (before costs).
On 29 August 2019, the Group completed a Share Purchase Plan and a Placement to sophisticated investors
issuing 120,995,500 and 315,000,000 fully paid ordinary share respectively. Upon completion of the two offers
a total of $4,359,955 (before costs) was raised. These two transactions were approved by shareholders on 19
August 2019. For each share subscribed to as part of the two offers one free attaching quoted option was
granted exercisable at $0.03 (3 cents) per option expiring on 1 December 2021.
MEDIBIO LIMITED | ANNUAL REPORT 2019
13
DIRECTORS’ REPORT
Also on 29 August 2019, the Group issued 275,333,040 fully paid ordinary shares following early conversion
of 137,666,520 convertible notes. For each share issued upon conversion of the convertible notes one free
attaching quoted option was granted exercisable at $0.03 (3 cents) per option expiring on 1 December 2021.
On 30 August 2019, the Group issued 90,000,000 quoted options to CPS Capital Group Pty Ltd for services
provided as Lead Manager for the capital raisings completed. The options are exercisable at $0.03 (3 cents)
per option expiring on 1 December 2021.
On 26 September 2019, Group announced that following a thorough review of the circumstances around the
purported issue of the partly paid shares and having obtained legal advice, the Board has concluded that the
partly paid shares were not validly issued and has requested agreement from the respective holders to rectify
the Company's register of members accordingly. The holders of a significant majority of the partly paid shares
have agreed to the Board's request.
As a result, the 4,650,000 partly paid shares will be eliminated from the Company’s Capital Table and the
outstanding receivable on the Company’s Balance Sheet as of 30 June 2019 has been removed.
Apart from the matters set out above, 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 2019 or
future prospects.
Other Information
Options
On 13 June 2019 14,500,000 unlisted options were issued, as approved at the 15 May 2019 General Meeting.
These options vest immediately, are exercisable at $0.014, and expire 13 June 2023.
At the date of this report there were 906,915,653 unissued ordinary shares under option.
Environmental issues
The Group’s operations are not regulated by any significant environmental regulation under a law of the
Commonwealth or of a state or territory.
Indemnifying officers or auditors
Insurance of officers
During the financial year, Medibio Limited paid a premium to insure the directors and officers of the Group and
its Australian and U.S. 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
14
DIRECTORS’ REPORT
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 other than those
disclosed in this 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 Financial Officer and Company
Secretary.
Details of key management personnel
i.
Directors
D Kaysen
P Carlisle
F Prendergast
Chairman, Managing Director & CEO (appointed 5 November 2018)
Non-Executive & Lead Independent Director (appointed Lead Independent Director 22
February 2019)
Director (Non-Executive)
M Phelps
Director (Non-Executive)
P Kennedy
Director (Non-Executive)
C Solitario
Director (Non-Executive) – appointed 31 December 2018
M Leydin
Director – appointed 22 February 2019
C Indermaur
Non-Executive Chairman (resigned 31 December 2018)
A Maxwell
Non- Executive Director – resigned 22 February 2019
J Cosentino
Managing Director & CEO – ceased as Managing Director and CEO on 28 August 2018,
resigned as Director on 20 September 2018
ii.
Executives
B Mower
S Sathre
M Leydin
Chief Financial Officer – appointed Interim CEO 28 August 2018, resigned 1
January 2019
Appointed Interim CFO 1 January 2019; resigned 8 February 2019
Joint Company Secretary
M Watkins
Appointed Joint Company Secretary 16 November 2018
MEDIBIO LIMITED | ANNUAL REPORT 2019
15
DIRECTORS’ REPORT
First strike at Company’s 2018 Annual General Meeting (AGM)
At the 2018 AGM of shareholders held on 16 November 2018, a total of 70.06% of the votes were in favour
of the adoption of the remuneration report for the year ended 30 June 2018. As the votes against the
adoption of the remuneration report represented more that 25% against the Company recorded its first strike
to the Remuneration Report. The Company did not receive any specific feedback at the AGM regarding its
remuneration practices.
In response to the first strike noted at the 2018 AGM, the Remuneration and Nomination Committee in
conjunction with the Board of Directors have reviewed the Company’s remuneration practices.
It is noted that the Company has undertaken a significant Board and management restructure in the last 12
months which has included a review of the remuneration practices of the Company. The Remuneration and
Nomination Committee in conjunction with the Board of Directors has undertaken the following initiatives with
the aim of managing the short and medium-term remuneration of the non-executive directors and key
management personnel:
• Non-Executive Directors cash remuneration ceased effective from 1 January 2019;
• Non-Executive Directors are currently remunerated by means of options to align the interests of
shareholders and Non-Executive Directors; and
• Setting measurable objectives for KPI’s for management.
The Company will continue to monitor the remuneration practices of the Board and management in line with
market practices and benchmarks however it will continue to review its outflows of cash remuneration in line
with its scrutinised budget in order to best manage its financial resources.
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.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive director, 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.
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:
MEDIBIO LIMITED | ANNUAL REPORT 2019
16
DIRECTORS’ REPORT
a.
does not:
i.
in any year exceed in aggregate the amount last fixed by ordinary resolution (2017: $750,000);
or
consist of a commission on or percentage of profits or operating revenue; and
b.
ii.
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
as otherwise decided by the Board.
ii.
Up until 1 January 2019 each Director received 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.
Effective 1 January 2019 the Non-Executive Directors the Company announced that directors will no longer
receive any cash compensation for their services. The Board implemented an equity-based compensation plan
for all Non-Executive Directors for their services.
The remuneration of non-executive directors for the period ended 30 June 2019 are detailed in Table 1 within
the remuneration 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.
No key management personnel appointed during the period received a payment as part of his or her
consideration for agreeing to hold the position.
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 and variable remuneration is reviewed annually by the Remuneration and Nomination Committee in
conjunction with 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
17
DIRECTORS’ REPORT
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. In addition, executives participate in a short-term incentive
program that provides for variable remuneration for achievement of key performance indicators.
The remuneration component of senior management in the Group is detailed in Table 1 below. No variable
remuneration is currently payable to Directors.
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 objective digital biomarker technology and scientific platform
used to assist in the screening, diagnosing, monitoring, and management of mental health conditions, which is
delivered using web- based Artificial Intelligence to evaluate mental illness phenotypes, combined with
dimensional circadian heart – sleep biometrics and physiological biomarkers.
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. The 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 2019 30 June 2018 30 June 2017 30 June 2016 30 June 2015 30 June 2014
Share price – cents
0.9
13.5
36.0
32.5
40.0
0.4
Shares on issue
248,801,499 202,628,271
148,718,619 105,446,807
89,802,932 3,173,189,372
Capitalisation
Loss per share –
cents
$2.2m
(3.045)
$27.4m
(8.805)
$53.5m
(7.443)
$34.3m
(5.916)
$35.9m
(16.995)
$12.6m
(0.0015)
MEDIBIO LIMITED | ANNUAL REPORT 2019
18
DIRECTORS’ REPORT
Remuneration of key management personnel
Table 1: Remuneration for the year ended 30 June 2019
Short-term employee
benefits (i)
Post
Share-based
Payments
Salary
& Fees
$
Cash
Bonu
s
$
Accrued
Bonus
2019
$
Emplo
yment
Super
$
Share
s
$
Executive director
D Kaysen
J Cosentino
a 310,873
b
66,914
Non-executive directors
C Indermaur
c
F Prendergast
A Maxwell
M Phelps
P Kennedy
P Carlisle
C Solitario
41,063
48,910
d
28,743
30,986
30,986
30,986
e
-
Sub-total directors
Other key management personnel (KMP)
B Mower
162,008
589,461
f
M Leydin & M
Watkins
S Sathre
Sub-total executive
KMP
Totals
g
147,631
h 133,364
443,003
1,032,464
-
-
-
-
-
-
-
-
Termin
ation
Pay
$
Value of
Vested
Stock
Options
(j)
$
Total
$
310,873
414,973
481,887
30,621
3,105
30,621
33,105
41,799
18,630
41,063
79,531
31,848
61,607
64,091
72,785
18,630
47,028
209,036
147,631
16,903 150,267
-
63,931 506,934
157,881 478,904 1,669,249
-
-
-
157,881 414,973 1,162,315
a. Appointed 5 November 2018. Per Mr. Kaysen’s employment contract he is paid US$360,000 salary and is eligible
for a 50% bonus based on performance.
b. Per Mr. Cosentino’s employment contract, he was paid US$300,000 salary and was eligible for a 50% bonus
based on performance. Mr. Cosentino ceased employment 28 August 2018 and resigned as Director 20
September 2018.
c. Non-executive Chairman from 1 July 2018 to 31 December 2018
d. Resigned 22 February 2019
e. Appointed 31 December 2018
f. Resigned 1 January 2019. Per Mr. Mower’s employment contract, he was paid US$250,000 salary and was eligible
for a 40% bonus based on performance.
g. Fees paid to Leydin Freyer, of which Melanie Leydin is a director, in respect of the Company Secretarial Services.
No additional fees were paid in respect of Mr Watkins Joint Company Secretarial appointment.
h. Appointed Interim CFO 1 January 2019. Per Mr. Sathre’s employment contract, he was paid US$170,000 and
was eligible for a 20% bonus based on performance.
MEDIBIO LIMITED | ANNUAL REPORT 2019
19
DIRECTORS’ REPORT
i. Amounts in Australian dollars, conversion rate varies based on timing of payment for U.S. dollar payments.
j.
The value of the options granted to key management personnel as part of their remuneration is calculated as at the
grant date using a binomial or black-scholes pricing model. The amounts disclosed as part of remuneration for the
financial year have been determined by allocating the grant date value on a straight-line basis over the period from
grant date to vesting date.
Remuneration of key management personnel
Table 2: Remuneration for the year ended 30 June 2018
Short-term employee
Post
benefits (h)
Salary
& Fees
$
Cash
Bonu
s
$
Accrued
Bonus
2018 (i)
$
Emp
loy
men
t
Sup
er
$
Share-based
Payments
Shares
(j)
$
Value of
Vested
Stock
Options
(k)
$
Termin
ation
Pay
$
Total
$
Executive director
J Cosentino
a
379,500 71,156
189,750
415,000
1,055,406
Non-executive directors
C Indermaur
K Knauer
F Prendergast
A Maxwell
M Phelps
P Kennedy
A Darkins
P Carlisle
b
c
d
82,125
24,579
88,894
55,932
54,750
54,750
29,129
54,750
Sub-total directors
Other key management personnel (KMP)
B Mower
316,250 26,354
824,409 71,156
e
M Leydin
R E Lees
f
g
12,350
153,416
23,333
25,432
16,955
16,955
16,955
16,955
16,955
107,557
24,579
129,182
72,887
71,705
71,705
29,129
71,705
189,750
-
23,333
525,207
- 1,633,855
126,500
209,200
678,304
12,350
153,416
Sub-total executive
KMP
Totals
482,016 26,354
126,500
1,306,426 97,510
316,250
-
-
-
209,200
-
844,070
23,333
734,407
- 2,477,925
a. Per Mr. Cosentino’s employment contract, he is paid US$300,000 salary and is eligible for a 50% bonus based
on performance. Mr. Cosentino ceased employment 28 August 2018 and resigned as Director 20 September
2018.
b. Non-executive director from 1 May 2017 to 13 October 2017
c. Appointed 4 July 2017
d. Appointed 19 July 2017 and resigned 19 January 2018
e. Per Mr. Mower’s employment contract, he is paid US$250,000 salary and is eligible for a 40% bonus based on
MEDIBIO LIMITED | ANNUAL REPORT 2019
20
DIRECTORS’ REPORT
performance.
f. Appointed 6 June 2018
g. Resigned 6 June 2018
h. Amounts in Australian dollars, conversion rate varies based on timing of payment for U.S. dollar payments.
i. Bonus for performance in fiscal year 2018 was approved by the remuneration committee
j. Represents payment of director’s fees by issue of ordinary shares.
k. The value of the options granted to key management personnel as part of their remuneration is calculated as at
the grant date using a binomial or black-scholes pricing model. The amounts disclosed as part of remuneration
for the financial year have been determined by allocating the grant date value on a straight-line basis over the
period from grant date to vesting date.
Table 3: Option holdings of key management personnel (consolidated)
Options held in Medibio Limited (number)
Balance at 1
July 18
Granted as
Remuneration (h)
Options
Forfeited
Net Change
Other
Vested and
exercisable
at 30 June
19 Total
Balance At
30 June 19
30 June 2019
Directors
D Kaysen
C Indermaur
F Prendergast
A Maxwell
J Cosentino
M Phelps
P Kennedy
P Carlisle
C Solitario
Executives
B Mower
M Leydin
Total
a
b
c
d
e
f
g
-
839,333
559,556
559,556
10,000,000
559,556
559,556
559,556
-
5,000,000
-
18,637,113
-
-
2,200,000
500,000
-
2,200,000
2,600,000
4,000,000
3,000,000
-
-
(839,333)
-
-
-
-
(1,059,556)
- (10,000,000)
-
-
-
-
-
-
-
-
-
-
2,759,556
-
-
2,759,556
3,159,556
4,559,556
3,000,000
-
-
2,759,556
-
-
2,759,556
3,159,556
4,559,556
3,000,000
-
-
14,500,000
-
-
-
(5,000,000)
-
-
-
(16,898,889) 16,238,224
-
-
16,238,224
a. Appointed 5 November 2018
b. Resigned 31 December 2018
c. Resigned 22 February 2019
d. Ceased employment 28 August 2018; resigned as Director 20 September 2018
e. Appointed 31 December 2018
f. Resigned 1 January 2019
g. Appointed Company Secretary 2019
h. During the year 14,500,000 unlisted options were issued to the directors of the company, as approved at the 15
May 2019 General Meeting. These options vest immediately, are exercisable at $0.014, and expire 13 June 2023.
There has been no alteration of the terms and conditions of the above share-based payment arrangements since the grant
date.
MEDIBIO LIMITED | ANNUAL REPORT 2019
21
DIRECTORS’ REPORT
Options held in Medibio Limited (number)
Balance at 1
July 17
Granted as
Remuneration
Options
Forfeited
Net Change
Other
Vested and
exercisable
at 30 June
18 Total
Balance
At 30
June 18
a
b
c
d
e
-
3,000,000
-
-
-
-
-
-
-
-
-
-
3,000,000
839,333
-
559,556
559,556
10,000,000
559,556
559,556
-
559,556
5,000,000
-
-
18,637,113
-
-
-
-
-
-
-
-
-
-
-
-
-
839,333
-
-
(3,000,000)
559,556
-
-
559,556
- 10,000,000
559,556
-
559,556
-
-
-
559,556
-
-
-
-
(3,000,000)
5,000,000
-
-
18,637,113
419,667
-
279,778
279,778
2,000,000
279,778
279,778
-
279,778
1,166,667
-
-
4,985,224
30 June 2018
Directors
C Indermaur
K Knauer
F Prendergast
A Maxwell
J Cosentino
M Phelps
P Kennedy
A Darkins
P Carlisle
Executives
B Mower
M Leydin
R Lees
Total
a. Resigned 13 October 2017
b. Appointed 4 July 2017
c. Appointed 19 July 2017 and resigned 19 January 2018
d. Appointed 6 June 2018
e. Resigned 6 June 2018
Table 4: Shareholdings of key management personnel (consolidated)
Shares held in Medibio Limited (number)
30 June 2019
Directors
D Kaysen
C Indermaur
F Prendergast
A Maxwell
J Cosentino
M Phelps
P Kennedy
P Carlisle
C Solitario
Executives
B Mower
M Leydin
S Sathre
Total
a
b
c
d
e
f
g
h
Balance 1
July 18
Granted as
remuneration
On exercise
of
options
Net change
other
Balance 30
June 19
-
271,260
374,075
26,000
200,000
5,500
-
-
-
876,835
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(271,260)
-
(26,000)
(200,000)
-
-
120,000
11,479,536
-
-
374,075
-
-
-
-
125,500
11,479,536
-
-
-
11,102,276
-
-
-
11,979,111
MEDIBIO LIMITED | ANNUAL REPORT 2019
22
DIRECTORS’ REPORT
a. Appointed 5 November 2018
b. Resigned 31 December 2018
c. Resigned 22 February 2019
d. Ceased employment 28 August 2018; resigned as Director 20 September 2018
e. Appointed 31 December 2018
f. Resigned 1 January 2019
g. Appointed Company Secretary 2019
h. Appointed Interim CFO 1 January 2019 and resigned 8 February 2019
Shares held in Medibio Limited (number)
30 June 2018
Directors
C Indermaur
K Knauer
F Prendergast
A Maxwell
J Cosentino
M Phelps
P Kennedy
A Darkins
P Carlisle
Executives
B Mower
M Leydin
R Lees
Total
Balance 1
July 17
Granted as
remuneration
On
exercise of
options
Net change
other
Balance 30
June 18
a
b
c
d
e
f
215,877
6,540,541
296,297
-
200,000
-
-
-
-
-
-
-
7,252,715
55,383
-
77,778
-
-
-
-
-
-
-
-
-
133,161
-
3,000,000
-
-
-
-
-
-
-
-
-
-
3,000,000
-
(9,540,541)
-
26,000
-
-
-
-
5,500
-
-
-
(9,509,041)
271,260
-
374,075
26,000
200,000
-
-
-
5,500
-
-
-
876,835
Employment ceased 28 August 2018 and resigned as Director 20 September 2018
a. Resigned 13 October 2017
b.
c.
d.
e.
f.
Appointed 6 June 2018
Resigned 6 June 2018
Appointed 4 July 2017
Appointed 19 July 2017 and resigned 19 January 2018
MEDIBIO LIMITED | ANNUAL REPORT 2019
23
DIRECTORS’ REPORT
Table 5: Convertible Note holdings of key management personnel (consolidated)
Convertible Notes held in Medibio Limited (number)
30 June 2019
Directors
C Solitario
Total
Balance at
1 July 18
Net other change
Converted
to Shares
Balance At 30
June 19
a
-
-
15,166,520
15,166,520
-
-
15,166,520
15,166,520
a) Convertible Notes issued as announced on 19 December 2018 and 31 January 2019.
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service
agreements. Details of these agreements are as follows:
Name:
Title:
Agreement commenced: 5 November 2018
Details:
Mr David Kaysen
Chairman, Managing Director and CEO
The Company or Executive may terminate the agreement by giving four
(4) weeks' notice in writing.
Key management personnel have no entitlement to termination payments in the event of removal for
misconduct.
End of Audited Remuneration Report
MEDIBIO LIMITED | ANNUAL REPORT 2019
24
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:
Board meetings
Audit and Risk
committee
Remuneration and
Nomination committee
Eligible
to attend
16
24
24
24
24
18
19
12
10
-
Number
attended
15
10
7
6
22
12
16
8
7
-
Eligible to
attend
1
-
-
-
4
3
-
1
-
2
Number
attended
1
-
-
-
4
3
-
1
-
1
Eligible to
attend
-
-
-
2
2
1
-
-
-
-
Number
attended
-
-
-
2
2
1
-
-
-
-
Christopher Indermaur
Franklyn Prendergast
Michael Phelps
Patrick Kennedy
Peter Carlisle
Andrew Maxwell
David Kaysen
Claude Solitario
Melanie Leydin
Jack Cosentino
Committee membership
As at the date of this report, the Company had no separate committees, other than the audit and risk committee
and remuneration and nomination committee.
Auditor Non-Audit Services
The details of non-audit services were provided by the entity’s auditor, William Buck (Qld) are set out in note
17. 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.
Auditor Independence
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001
is set out immediately after this directors' report.
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the
Corporations Act 2001.
On behalf of the Directors
David B. Kaysen
Chairman, Managing Director and CEO
27th September 2019
MEDIBIO LIMITED | ANNUAL REPORT 2019
25
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF MEDIBIO LIMITED
I declare that, to the best of my knowledge and belief during the year ended 30 June 2019
there have been:
— no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
— no contraventions of any applicable code of professional conduct in relation to the
audit.
William Buck (Qld)
ABN 21 559 713 106
M J Monaghan
Director
Dated this 27th day of September 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER
COMPREHENSIVE INCOME
For the Year Ended 30 June 2019
Note
CONSOLIDATED
Sales
Contract milestone achievement
Other income
Revenue
Cost of sales
Gross profit
Amortisation
Employee costs
Finance costs
Research and development expenses
Other expenses
Loss before income tax
Income tax benefit
Loss attributable to members of Medibio Limited
Other comprehensive income/(loss)
- items that may be reclassified to profit or loss
Foreign currency translations
Total other comprehensive income/(loss) for the period
net of tax
Total comprehensive income/(loss) attributable to
members of Medibio
Basic earnings/(loss) per share (cents per share)
Diluted earnings/(loss) per share (cents per share)
5
5
5
5
6
7
7
2019
$
2018
$
364,628
-
3,767,663
4,132,291
204,878
226,000
2,169,714
2,600,592
(226,092)
(75,669)
3,906,199
2,524,923
-
(4,535,179)
(13,928)
(394,906)
(5,549,225)
(6,587,039)
-
(6,587,039)
(1,329,461)
(6,621,282)
(8,139)
(3,255,245)
(7,611,178)
(16,300,382)
-
(16,300,382)
(9,902)
(9,902)
(132,274)
(132,274)
(6,596,941)
(16,432,656)
(3.0)
(3.0)
(8.8)
(8.8)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
MEDIBIO LIMITED | ANNUAL REPORT 2019
27
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
ASSETS
Current Assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total Current Assets
Non-current Assets
Other assets
Intangible assets
Goodwill
Total Non-current Assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
Trade and other payables
Convertible Notes
Borrowings
Employee liabilities
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
CONSOLIDATED
2019
$
2018
$
8
9
14
10
10
11
12
13
15
16
1,333,090
14,874
184,054
1,532,018
107,228
11,664,252
-
11,771,480
13,303,498
6,123,187
1,669,026
93,954
7,886,167
111,186
10,757,785
309,100
11,178,071
19,064,238
1,808,382
2,753,331
-
137,315
4,699,028
3,969,225
-
120,000
988,525
5,077,750
4,699,028
8,604,470
5,077,750
13,986,488
84,424,838
4,678,933
(80,499,301)
8,604,470
83,642,250
4,256,500
(73,912,262)
13,986,488
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
MEDIBIO LIMITED | ANNUAL REPORT 2019
28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Year Ended 30 June 2019
Issued
Capital
$
Foreign
Currency
Translation
Reserve $
Accumulated
Losses
$
At 1 July 2017
68,999,845
-
(58,071,851)
Share
Based
Payments
Reserve
$
2,386,086
Total Equity
$
13,314,080
Comprehensive income
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owners
Shares issued
Share options issued
Transfers from reserve to
accumulated losses
Share issue costs
Total transactions with
owners
At 30 June 2018
-
-
-
-
(132,274)
(132,274)
(16,300,382)
-
(16,300,382)
-
-
-
(16,300,382)
(132,274)
(16,432,656)
16,314,739
-
(1,672,334)
14,642,405
-
-
-
-
-
-
-
2,462,659
16,314,739
2,462,659
459,971
(459,971)
-
-
-
(1,672,334)
459,971
2,002,688
17,105,064
83,642,250
(132,274)
(73,912,262)
4,388,774
13,986,488
At 1 July 2018
83,642,250
(132,274)
(73,912,262)
4,388,774 13,986,488
Comprehensive income
Loss for the period
Other comprehensive income
Total comprehensive income
Transactions with owners
FX Translation
Shares issued
Share options issued
Share issue costs
Total transactions with
owners
At 30 June 2019
-
-
-
-
(9,902)
(9,902)
(6,587,039)
-
(6,587,039)
-
-
-
(6,587,039)
(9,902)
(6,596,941)
-
923,465
-
(140,877)
782,588
-
-
-
-
-
-
-
-
-
-
46,880
-
385,455
-
46,880
923,465
385,455
(140,877)
432,335
1,214,923
84,424,838
(142,176)
(80,499,301)
4,821,109
8,604,470
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
MEDIBIO LIMITED | ANNUAL REPORT 2019
29
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Year Ended 30 June 2019
Cash flows from operating activities
Receipts from operations
Contract milestone achievement
R&D grants received
Payments to suppliers and employees
Net cash flows used in operating activities
Note
CONSOLIDATED
2019
$
2018
$
550,610
-
3,146,335
(10,554,619)
(6,857,674)
111,716
226,000
3,294,498
(15,900,614)
(12,268,400)
8(a)
Cash flows from investing activities
Interest received
Payment for intangible assets
Deposits (net)
Acquisition of Vital Conversations
Net cash flows provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issues of shares
Proceeds from issues of convertible notes
Transaction costs of issue of shares
Repayment of borrowings
Interest paid
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
8
54,013
(1,111,220)
-
-
(1,057,207)
923,465
2,342,200
(140,877)
-
(4)
3,124,784
(4,790,097)
6,123,187
1,333,090
85,394
-
(85,009)
(400,000)
(399,615)
14,845,190
-
(1,051,540)
(12,500)
-
13,781,150
1,113,135
5,010,052
6,123,187
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
MEDIBIO LIMITED | ANNUAL REPORT 2019
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
1.
CORPORATE INFORMATION
Medibio Limited (‘Medibio’, ‘the Company’, or ‘the Parent’) 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 Medibio Limited and the entities it controlled (‘the Group’) are
described in the Directors’ Report.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of preparation
These financial statements are general-purpose financial statements that 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(d). 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
AASB 16 Leases (for reporting periods beginning after 1 January 2019)
Under the new AASB 16 standard, a lessee is in essence required to:
• Recognise all right of use assets and lease liabilities, with the exception of short term (under 12
months) and low value leases, on the Statement of Financial Position. The liability is initially
measured at the present value of future lease payments for the lease term. Where a lease
contains an extension option, the lease payments for the extension period will be included in the
AASB 16 liability if the Group is reasonably certain that it will exercise the option. The liability
includes variable lease payments that depend on an index or rate but excludes other variable
lease payments. The right of use asset reflects the lease liability, initial direct costs and any lease
payments made before the commencement date of the lease less any lease incentives and, where
applicable, provisions for dismantling and restoration.
• Recognise depreciation of right of use assts and interest on lease liabilities in the Statement of
Profit or Loss and Other Comprehensive Income over the lease term.
• Separate the total amount of cash paid into a principal portion (presented within financing
activities) and interest portion (presented in operating activities) in the Statement of Cash Flows.
MEDIBIO LIMITED | ANNUAL REPORT 2019
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
AASB 16 will therefore result in higher assets and liabilities on the Statement of Financial Position. Information
on the undiscounted amount of the Group’s non-cancellable operating lease commitments is disclosed in note
24. The present value of the Group’s operating lease payments as defined under the new standard will be
recognised as lease liabilities on the balance sheet and included in net debt.
Operating cash flow will increase under AASB 16 as the element of cash paid attributable to the repayment of
principal will be included in financing cash flow. The net increase/decrease in cash and cash equivalents will
remain the same.
This standard must be implemented retrospectively, either with the restatement of comparatives or with the
cumulative impact of application recognized as at 1 January 2019 under the modified retrospective approach.
The Group currently expects to use the modified retrospective approach.
The Group has adopted all of the new revised or amending accounting standards and interpretations issued
by the Australian Accounting Standards Board that are mandatory for the current reporting period. The
adoption of these accounting standards and interpretations did not have any significant impact on the
financial performance or position of the Group.
c. Basis of consolidation
The consolidated financial statements comprise the financial statements of Medibio Limited and its controlled
entities as at 30 June 2019 (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, except for Medibio USA
which is USD, 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
e.
Revenue recognition
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected
to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer,
the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the
contract; determines the transaction price which takes into account estimates of variable consideration and
the time value of money; allocates the transaction price to the separate performance obligations on the basis
of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue
when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of
the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such
as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other
contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount'
method. The measurement of variable consideration is subject to a constraining principle whereby revenue
will only be recognised to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty
associated with the variable consideration is subsequently resolved. Amounts received that are subject to the
constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the
goods, which is generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on
either a fixed price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant period
using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
f. 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 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.
g. 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
h. Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any allowance for expected credit losses. Trade receivables are generally due
for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been
grouped based on days overdue.
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 credit losses is made when there is objective evidence that
the Group will not be able to collect the debts.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
i.
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.
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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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 revenue 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.
j. 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.
k. Goodwill and intangible assets
Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business
combination. Intangible assets acquired separately or in a business combination are initially measured at cost.
Goodwill is not amortised, but is instead subject to impairment testing. 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 useful lives.
MEDIBIO LIMITED | ANNUAL REPORT 2019
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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.
l. 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.
m. 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.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in
the statement of financial position, net of transaction costs.
MEDIBIO LIMITED | ANNUAL REPORT 2019
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
On the issue of the convertible notes the fair value of the liability component is determined using the price at
the date of issue.
n.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract,
the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the statement of profit or loss and other comprehensive
income net of any reimbursement.
Provisions are measured at the present value of management's best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. If the effect of the time value of money is
material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the
risks specific to the liability. The increase in the provision resulting from the passage of time is recognised in
finance costs.
o. 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 wholly settled within 12 months of the reporting date are recognised in current liabilities in
respect of employee 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.
p. 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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.
q.
Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
r.
Earnings per share
Basic earnings per share (EPS) is calculated as net loss 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.
s.
Fair value measurement
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure
purposes the fair value is based on the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date and assumes that the
transaction will take place either in the principle market or in the absence of a principle market, in the most
advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement
is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for
which sufficient data is available to measure fair value, and used, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that
reflects the significance of the inputs used in making the measurements. Classifications are reviewed each
reporting date and transfers between levels are determined based on a reassessment of the lowest level input
that is significant to the fair value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal
expertise is either not available or when the valuation is deemed to be significant. External valuers are selected
based on market knowledge and reputation. Where there is a significant change in fair value of an asset or
liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs
applied in the latest valuation and a comparison, where applicable, with external sources of data.
MEDIBIO LIMITED | ANNUAL REPORT 2019
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
t.
Reclassification
Certain amounts reported in prior years in the financial statements have been reclassified to conform to the
current year’s presentation.
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.
Share based payments
The Group measures the cost of equity-settled transactions with employees, directors and advisors with
reference to the fair value of the equity instruments at the date at which they are granted. The fair value is
determined using the Binomial or Black-scholes method taking into account the terms and conditions upon
which they were granted. These calculations can involve significant estimates and judgements.
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 Company has one operating segment, being the research, development and commercialisation of its
Software as a Service product, and two geographical locations, being Australia and the United States. The
US based subsidiary
to support US and Canadian research, development, and
commercialisation activities.
is maintained
All revenue earned during 2019 and 2018 was sourced from Australia.
All assets reside in two geographical regions being Australia $11,374,791 (2018: $18,164,407) and USA
$1,928,707 (2018: $899,831).
MEDIBIO LIMITED | ANNUAL REPORT 2019
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
5.
REVENUES AND EXPENSES
(a) Revenue
Sales
Contract milestone achievement
Bank interest received and receivable
Research grant
R&D Grant received
(b) Finance costs
Leasing costs
(c) Employee benefits expense
Wages and salaries
Share-based compensation expense
Payroll taxes and benefits
Other employee expenses
Superannuation
(d) Other expenses
Consulting and advisory expenses
Legal fees
Listing fees and share registry charges
Sales and marketing
Impairment expense
Other administration expenses
CONSOLIDATED
2019
$
2018
$
364,628
-
30,077
25,000
3,712,586
4,132,291
(13,928)
(13,928)
(3,429,379)
(385,455)
(430,060)
(234,931)
(55,354)
(4,535,179)
(1,593,127)
(1,158,589)
(106,784)
(119,426)
(541,678)
(2,029,621)
(5,549,225)
204,878
226,000
138,501
25,000
2,006,213
2,600,592
(8,139)
(8,139)
(4,633,419)
(761,071)
(615,037)
(521,531)
(90,224)
(6,621,282)
(3,463,810)
(577,638)
(178,328)
(521,526)
-
(2,869,876)
(7,611,178)
MEDIBIO LIMITED | ANNUAL REPORT 2019
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
6.
INCOME TAX
Numerical reconciliation between aggregate tax expense recognised in the
statement of profit or loss and other comprehensive income and tax expense
calculated per the statutory income tax rate.
A reconciliation between tax expense and the product of accounting loss
before income tax multiplied by the Group’s applicable income tax rate is as
follows:
Accounting loss before tax
At the statutory tax rate of 27.5% (2018: 27.5%)
Tax effect of temporary differences and current year loss not brought to
account
Deferred tax asset arising from tax losses not brought to account at the end
of the reporting period as realisation is not regarded as probable
The potential deferred tax asset will only be obtained if:
CONSOLIDATED
2019
$
2018
$
(6,587,039)
(1,811,436)
(16,300,383)
(4,482,605)
1,811,436
4,482,605
-
-
3,236,239
2,618,467
i.
future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be
realised;
the conditions for deductibility imposed by tax legislation continue to be complied with; and
no changes in tax legislation adversely affect the Group in realising the benefit.
ii.
iii.
At 30 June 2019, there is no recognised or unrecognised deferred tax liability (2018: 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.
MEDIBIO LIMITED | ANNUAL REPORT 2019
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
7.
EARNINGS PER SHARE
Net loss attributable to equity holders of the Company
Weighted average number of ordinary shares used in calculating basic
earnings per share:
Weighted average number of ordinary shares used in calculating diluted
earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
8.
CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
CONSOLIDATED
2019
$
(6,587,039)
Number of
Shares
2018
$
(16,300,382)
Number of
Shares
216,290,486
185,130,043
216,290,486
185,130,043
(3.0)
(3.0)
(8.8)
(8.8)
CONSOLIDATED
2019
$
833,090
500,000
1,333,090
2018
$
1,123,187
5,000,000
6,123,187
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.
(a)
Reconciliation of loss after tax to net cash flows from operations:
Net loss
Adjustments for:
Amortisation
Interest received
Impairment expense
Share-based payments and share-based compensation expense
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
CONSOLIDATED
2019
$
(6,587,039)
2018
$
(16,300,382)
-
(54,013)
541,678
385,455
1,329,461
(85,394)
-
3,482,776
1,654,152
(86,142)
(1,860,555)
(851,210)
(1,448,749)
2,026,090
(2,156,449)
884,247
(6,857,674) (12,268,400)
MEDIBIO LIMITED | ANNUAL REPORT 2019
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
CONSOLIDATED
2019
$
2018
$
9.
TRADE AND OTHER RECEIVABLES
Trade debtors
Share proceeds receivable
Other debtors
14,874
-
-
14,874
136,331
1,375,101
157,594
1,669,026
Terms and conditions
(i)
(ii)
Trade debtors are carried at amortised cost, 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.
Share proceeds receivable are related to the binding agreements with partly paid shareholders. The
binding agreements were cancelled by both parties subsequent to year-end, and the receivable balance
was offset in its entirety by the equity owed under the agreement, resulting in a $0 balance as of 30 June
2019.
10.
INTANGIBLES & GOODWILL
ilumen Application Development
Additions at cost
Net carrying amount
MEB-001 Application Development
Additions at cost
Net carrying amount
Development Costs
At cost
Additions
Foreign currency changes to asset cost
Impairment
Accumulated amortisation
Net carrying amount
Data files
At cost
Net carrying amount
Total Intangible assets
Goodwill
At cost
Acquisition of Vital Conversations Pty Ltd
Accumulated impairment losses
Net carrying amount
CONSOLIDATED
2019
$
541,616
541,616
549,255
549,255
2018
$
-
-
-
-
2,963,142
20,349
27,825
(232,578)
-
2,778,738
2,782,317
183,200
19,192
-
(21,567)
2,963,142
7,794,643
7,794,643
7,794,643
7,794,643
11,664,252
10,757,785
754,099
-
(754,099)
-
444,999
309,100
(444,999)
309,100
MEDIBIO LIMITED | ANNUAL REPORT 2019
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Reconciliation of carrying amount
Net carrying amount at beginning of year
Additions
Foreign currency changes to asset cost
Impairment
Amortisation
Net carrying amount
ilumenTM Application Development
11,066,885
1,111,220
27,825
(541,678)
-
11,664,252
11,884,855
492,300
19,192
-
(1,329,462)
11,066,885
Multiple pilot programs were launched during the financial year, each of which provided valuable data to the
users and to the Company as it worked to improve the application before the full commercial launch. The
application has met technological feasibility and other AASB requirements for capitalisation of costs incurred,
which include compensation costs incurred for both Company developers and external tech vendors.
MEB-001 System Development
Costs incurred in the development of the MEB-001 System Development and associated De Novo 510K (FDA)
submission are being capitalised as they have met the requirements of the AASB 138 for intangible assets,
including technological feasibility and demonstrated market need. The Company has acquired and committed
resources to continued improvements to the application that supports research and development needed to
successfully file a De Novo submission.
The core of this technology will be driven by capturing specific data from physician-prescribed overnight
inpatient sleep studies. This high-quality output, when run through our proprietary algorithms, will provide a
physician with objective data to better assess patients’ depressive burden. The physician can use this
objective data to compare to validated subjective data collected as part of the sleep study from the patient.
Development Costs
Certain historical algorithm and diagnostic system development costs incurred have been capitalised.
Data files
Consists of all the data collected by Invatec Health Pty Ltd including 24-hour ECG data and corresponding
diagnosis.
Goodwill
The financial year 2018 addition related to the acquisition of Vital Conversations Pty Ltd in April 2018. The
revenue generated by this business segment in particular the psychology consulting services have fallen short
of expectations, and the related goodwill of $309,100 has been adjusted to reflect the impairment and its effect
on expected future returns. Impairment losses are recognised in the Statement of Profit or Loss and Other
Comprehensive Income.
Impairment
Based on an impairment assessment conducted on the intangible assets, the carrying amount of both the
Invatec App Development and Vital Conversations Pty Ltd would be impaired in full. No further impairment
was required on the remaining intangible assets.
MEDIBIO LIMITED | ANNUAL REPORT 2019
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
11. TRADE AND OTHER PAYABLES – CURRENT
Trade payables
Other creditors and accruals
Note
(i)
(ii)
CONSOLIDATED
2019
$
1,011,300
797,082
1,808,382
2018
$
1,235,393
2,733,832
3,969,225
Terms and conditions relating to the above financial instruments
i.
Trade creditors are carried at amortised cost, are non-interest bearing and normally settled on 30-day
terms.
ii. Other creditors are carried at amortised cost, are non-interest bearing and have repayment terms between
30 and 330 days.
12. CONVERTIBLE NOTES
Convertible notes
CONSOLIDATED
2019
$
2,753,331
2018
$
-
On 18 December 2018, the Group issued a total of 30,394,240 Convertible Notes at an issue price of $0.02 (2
cents) per Note. On 31 January 2019, the Group subsequently issued a total of 107,272,280 Convertible Notes
as the same issue price, as approved by shareholders at the 21 January 2019 General Meeting.
Key terms attaching to the notes:
• Conversion is at the holder’s discretion up to the maturity date, when all remaining notes will be
automatically converted
• Converted at the lower of $0.02 and the issue price per share under any subsequent equity capital
raising undertaken by Medibio during the conversion period
• Maturity date of the notes is 18 months after issue
• Under the terms of the Convertible Note Deed, there is no option for Medibio to repay the noteholders
in cash, except in an insolvency event. However, as there is the potential under the Convertible Note
Deed for a variable number of shares to be issued, the value of the convertible notes issued as at 30
June 2019 are classified as a liability until they are converted into shares.
13. BORROWINGS
Borrowings – Current
Invatec Shareholders loan
Total Borrowings
CONSOLIDATED
2019
$
-
-
2018
$
120,000
120,000
MEDIBIO LIMITED | ANNUAL REPORT 2019
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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, payable 26 months after completion (due 2 May 2017) of the acquisition. During
the year $120,000 was repaid by means of an issue of convertible notes, eliminating the loan balance
outstanding at 30 June 2019.
14. OTHER CURRENT ASSETS
Prepayments
15.
ISSUED CAPITAL
a. Fully Paid Ordinary Shares
CONSOLIDATED
2019
$
184,054
184,054
2018
$
93,954
93,954
2019
Shares
CONSOLIDATED
2018
Shares
2019
$
2018
$
Ordinary shares - fully paid
248,801,499 202,628,271 84,424,838 83,642,250
MEDIBIO LIMITED | ANNUAL REPORT 2019
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Movements in ordinary share capital
Details
Balance
Shares issued
Shares issued
Exercise of options
Shares issued
Exercise of options
Shares issued
Exercise of options
Shares issued
Shares issued
Share issue costs
Balance
Shares issued
Share issue costs
Date
Shares
Issue price
$
1 July 2017
24 August 2017
28 September 2017
28 September 2017
23 October 2017
13 November 2017
4 December 2017
16 January 2018
2 March 2018
17 April 2018
148,718,619
329,803
1,648,136
5,500,000
38,736,640
3,000,000
1,974,297
500,000
1,836,512
384,264
30 June 2018
14 March 2019
202,628,271
46,173,228
68,999,845
0.31*
101,077
0.34*
555,088
0.10
550,000
0.36 13,945,190
0.10
300,000
0.35
675,622
0.10
50,000
0.02
45,462
0.24
92,300
(1,672,334)
0.02
83,642,250
923,465
(140,877)
Balance
30 June 2019
248,801,499
84,424,838
* Average of issue prices
b.
Partly paid shares
On 5 April 2017, the Company announced it had entered into binding agreements with the holders of 4,650,000
options exercisable at $0.30, which expired on 1 April 2017. These Agreements were presented to each option
holder to exchange the options to Partly Paid Shares. Under the agreements the Company exchanged each
unexercised relevant option into a partly paid share with an expected paid-up capital of $0.30 per share subject
to ASX review and Shareholder approval. ASX, upon review, indicated to the Company that the Partly Paid
Shareholders should pay at least $0.01 per share with a balance owed of $0.29 per share. At an Extraordinary
Shareholder meeting held in September of 2017 the Shareholders approved payment of $0.01 per share by
the Partly Paid Shareholders with a balance of $0.29. Subsequent to year end the Board finalised their review
on the matter and concluded that the partly paid shares were not validly issued and has requested agreement
from the respective holders to rectify the Company's register of members accordingly. The holders of a
significant majority of the partly paid shares have agreed to the Board's request.
As a result, the 4,650,000 partly paid shares will be eliminated from the Company’s Capital Table and the
outstanding receivable and liability on the Company’s Balance Sheet as of 30 June 2019 has been removed.
MEDIBIO LIMITED | ANNUAL REPORT 2019
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
d.
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 2019, the Group had a net asset position of $8,604,470 (30 June 2018: $13,986,488). However,
as at 30 June 2019 it had:
Incurred a comprehensive loss for the period of $6,596,941 (30 June 2018: $16,432,656)
•
• Net cash outflows from operations of $6,857,674 (30 June 2018: $12,268,400)
• Cash at bank of $1,333,090 (30 June 2018: $6,123,187)
• Current liabilities exceed current assets by $3,167,010 (30 June 2018: current assets exceed current
liabilities by $2,808,417)
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 grant funding and research and development
tax incentives.
The Management Team has assessed the operating and research costs along with future research and
development activities in order to establish future funding requirements. Additional staff cuts were made after
year-end that will enable the hiring of technology vendors who possess the specific skills needed for R&D
work, thereby providing more flexibility in how funds are spent.
Subsequent to year the end Group completed the following:
• On 19 July 2019, the Group completed Placement to sophisticated investors as announced on 10 July
2019 issuing a total of 35,000,000 fully paid ordinary shares at $0.01 (1 cents) raising $350,000 (before
costs).
• On 29 August 2019, the Group completed a Share Purchase Plan and a Placement to sophisticated
investors issuing 120,995,500 and 315,000,000 fully paid ordinary share respectively. Upon
completion of the two offers a total of $4,359,955 (before costs) was raised.
• Also on 29 August 2019, the Group issued 275,333,040 fully paid ordinary shares following early
conversion of 137,666,520 convertible notes. As such the convertible note liability has been
extinguished subsequent to year end.
These funds will provide the financial runway required to carry the Group through the 2019-2020 fiscal year
and to the ilumen product launch and corresponding sales. The Group also intends to seek additional funding
through non-dilutive government grants for which the Group is eligible, along with R&D tax incentives.
The Management Team is confident that the Group will be able to raise further equity from its shareholders
and sophisticated and professional investors, if required. Accordingly, the Management Team believes the
Group will be able to pay its debts as and when they fall due for a period of at least 12 months from the date
of these financial statements.
MEDIBIO LIMITED | ANNUAL REPORT 2019
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
16. RESERVES
Foreign currency translation reserve
Share Based payments reserve
CONSOLIDATED
2019
$
2018
$
(142,176)
(132,274)
4,821,109 4,388,774
4,678,933 4,256,500
Foreign currency translation reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements
of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net
investments in foreign operations.
Share-based payments reserve
This reserve is used to recognise the value of equity benefits provided to employees and directors as part of
their remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Foreign
currency
translation
reserve
$
Share Based
payments
reserve
$
Total
$
Balance at 1 July 2017
FX translation
Share options issued
Transfers from reserves to accumulated losses
-
(132,274)
2,386,086
2,462,659
(459,971)
2,386,086
(132,274)
2,462,659
(459,971)
Balance at 30 June 2018
FX translation
Share options issued
(132,274)
(9,902)
4,388,774
46,880
385,455
4,256,500
36,978
385,455
Balance at 30 June 2019
(142,176)
4,821,109
4,678,933
MEDIBIO LIMITED | ANNUAL REPORT 2019
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
17. AUDITORS’ REMUNERATION
The auditor of Medibio Limited is William Buck (Qld)
Amounts received or due and receivable for:
- audit or review of the financial report of the entity and any other entity in the
Group
Other services in relation to the entity and any other entity in the Group:
- Tax compliance
- Tax and other advice
- EGM and AGM attendance
18. KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Termination benefits
Share-based payment and share-based compensation expense
Total compensation
19. RELATED PARTY DISCLOSURES
CONSOLIDATED
2019
$
2018
$
38,500
42,500
12,000
1,940
439
52,879
10,900
12,445
900
66,745
1,032,464
478,904
157,881
1,669,249
1,720,185
-
757,740
2,477,925
The consolidated financial statements include the financial statements of Medibio Limited (the ultimate parent
company) and the subsidiaries listed in the following table.
Name
BioProspect Australia Pty Ltd*
Australian Phytochemicals Pty Ltd*
BioProspect America Pty Ltd*
Re Gen Wellness Products Pty Ltd***
Medibio Limited – USA**
Invatec Health Pty Ltd
Annapanna Pty Ltd**
Country of
Incorporation
Australia
Australia
Australia
Australia
USA - Delaware
Australia
Australia
Class of
Shares
Ord
Ord
Ord
Ord
Ord
Ord
Ord
% Equity Interest
2019
100
100
100
-
100
100
100
2018
100
100
100
100
100
100
100
* Dormant entities
**Human health – CHR diagnostic development
*** The Group sold the entity during the year
20. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise receivables, payables, cash, investments and short-term
deposits.
The main risks arising from the Group’s financial instruments are credit risk, interest rate risk, foreign exchange
risk and liquidity risk. The Group uses different methods to measure and manage different types of risks to
which it is exposed. These include monitoring the levels of exposure to interest rates and assessments of
market forecast for interest rates.
MEDIBIO LIMITED | ANNUAL REPORT 2019
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Risk exposures and responses
Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and 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 financial asset exposed to interest rate risk.
Financial assets
Cash and cash equivalents
CONSOLIDATED
2019
$
2018
$
1,333,090
6,123,187
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 2019, 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:
Consolidated - 2019
% change
Increase
Effect on
profit
before tax
Effect on
equity
% change
Decrease
Effect on
profit
before tax
Effect on
equity
Cash and cash equivalents
Cash and cash equivalents
1%
0.5%
13,331
6,665
13,331
6,665
(1%)
(0.5%)
(13,331)
(6,665)
(13,331)
(6,665)
Consolidated - 2018
% change
Increase
Effect on
profit
before tax
Effect on
equity
% change
Decrease
Effect on
profit
before tax
Effect on
equity
Cash and cash equivalents
Cash and cash equivalents
1%
0.5%
61,232
30,616
61,232
30,616
(1%)
(0.5%)
(61,232)
(30,616)
(61,232)
(30,616)
MEDIBIO LIMITED | ANNUAL REPORT 2019
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
The movements in losses are due to higher/ (lower) interest income from cash balances. There is no impact
on equity other than impact on accumulated losses.
Liquidity risk
The Group’s objective is to maintain sufficient funds to finance its current operations and additional funds to
ensure its long-term survival. The Group has no finance facilities in place and therefore it is currently dependent
on capital raisings and government tax incentives for short-term survival. Liquidity risk is monitored through
the development of future rolling cash flow forecasts that are tabled and reviewed at each board meeting. All
liabilities are due and payable within 12 months. The following table details the remaining contractual liabilities
fir its financial liabilities:
Weighted
average
interest rate
%
Less than 6
months
$
Between 6
and 12
months
$
Between 1
and 5 years
$
Remaining
contractual
maturities
$
-
2,753,331
2,753,331
-
-
-
-
2,753,331
2,753,331
Consolidated - 2019
Non-derivatives
Non-interest bearing
Convertible Notes
Total non-derivatives
Foreign Currency Risk
The Group is exposed to fluctuations in foreign currencies on purchases of goods in currencies other than the
Group’s functional currency. The Group manages the risk by monitoring the level of exposure to foreign
currency transactions and limiting where possible.
Fair value
The carrying amount of all recognised financial assets and financial liabilities is considered a reasonable
approximation of their fair value due to their short-term nature.
21. CONTINGENT LIABILITIES
The Company is currently a party to a claim in the Supreme Court of Western Australia in relation to a joint
venture agreement executed in April 2017. The claim alleges that the Company wrongfully terminated the
joint venture agreement and as a result the joint venture partner was unable to perform its obligations under
the agreement. The Company has filed a notice of appearance as well as a defence to the claimant’s
statement of claim. The Company is unable to estimate a timing of any outflows of economic benefits as no
date has been set for a substantive hearing. Further, the Company is unable to provide a reasonable
estimate of the likely financial impact to the Company, as there is currently insufficient information for the
Company to assess the merits of the claim and whether the amount claimed is supportable by evidence. As
such the Company is unable to quantify an amount for the Contingent Liability.
MEDIBIO LIMITED | ANNUAL REPORT 2019
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
22. SHARE-BASED PAYMENT PLANS
Recognised share-based payment expense
a.
The expense recognised for employee services received during the year is shown below.
Expense arising from equity-settled share-based payment transactions
CONSOLIDATED
2019
$
-
2018
$
114,789
b.
The expense recognised for consulting services rendered during the year.
1,888,911 shares issued to consultants
77,778 shares issued to director
TOTAL SHARE-BASED PAYMENTS
-
-
-
62,962
23,333
201,084
Recognised share-based compensation expense
c.
The expense recognised for employee services received during the year is shown below.
Share-based compensation related to options granted to employees
CONSOLIDATED
2019
$
227,574
2018
$
761,071
d.
The expense recognised for consulting services rendered during the year.
Share-based compensation related to options granted to advisors
Share-based compensation related to options granted to consultants
Share-based compensation related to options granted to directors
-
-
157,881
1,497,775
93,583
110,230
TOTAL SHARE-BASED COMPENSATION EXPENSE
385,455
2,462,659
MEDIBIO LIMITED | ANNUAL REPORT 2019
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Set out below are summaries of options granted under share-based compensation:
2019
Balance at
Exercise the start of
Grant date
Expiry date
price
the year
Granted
Expired/ Balance at
the end of
the year
forfeited/
other
Exercised
29/01/2016
29/01/2016
29/01/2016
05/11/2016
11/09/2017
30/11/2017
30/11/2017
06/06/2018
21/06/2018
21/06/2018
15/05/2019
28/01/2019
28/01/2019
28/01/2019
30/11/2019
11/10/2022
30/11/2019
30/11/2020
18/06/2022
18/06/2023
11/10/2020
13/06/2023
-
-
3,000,000
$0.40
1,500,000
$0.60
1,500,000
$0.80
3,500,000
$0.48
$0.45 10,000,000
$0.40 3,000,000
$0.40 3,000,000
$0.44 3,637,113
$0.45 12,225,000
$0.80 3,000,000
$0.01
-
-
-
-
-
-
-
- 14,500,000
- (3,000,000)
- (1,500,000)
- (1,500,000)
-
-
-
3,500,000
- (8,000,000) 2,000,000
- 3,000,000
-
- 3,000,000
-
- 3,637,113
-
- (3,350,000) 8,875,000
- 3,000,000
-
- 14,500,000
-
44,362,113
14,500,000
-
(17,350,000)
41,512,113
For the options granted during the current financial year, the valuation model inputs used to determine the fair
value at the grant date, are as follows:
Grant date
15/05/2019
Expiry date
13/06/2023
Share price
at grant date
$0.010
Exercise
price
$0.014
Expected
volatility
97.59%
Dividend
yield
-
Risk-free
interest rate
1.01%
23. PARENT ENTITY INFORMATION
Net profit (loss) attributable to members of Medibio Limited
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
2019
$
1,208,217
2018
$
(9,448,754)
1,208,217
1,319,491
33,076,377
3,934,269
10,083,832
84,424,838
3,742,584
(65,174,877)
22,992,545
-
(9,448,754)
7,303,463
30,068,677
3,076,495
9,226,058
83,642,250
3,583,455
(66,383,086)
20,842,619
-
MEDIBIO LIMITED | ANNUAL REPORT 2019
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
24. OPERATING LEASE COMMITMENTS
The Group is under lease for one (1) Australian-based facility and two (2) United States facilities, with
approximate lease terms of three years. Commitments for facilities include base rental fees and an estimate
for common-area-maintenance (CAM) fees, where applicable. Future minimum rentals payable under non-
cancellable operating leases at 30 June 2019 are as follows.
Within one year
After one year but not more than five
More than five years
CONSOLIDATED
2019
$
247,785
125,530
-
373,315
2018
$
242,000
392,000
-
634,000
25. RELATED PARTY TRANSACTIONS
Disclosures relating to key management personnel are set out in note 18 and the remuneration report included
in the Directors’ report.
Other transactions with related parties:
Convertible notes issued to Claude Solitario
CONSOLIDATED
2019
$
$303,330
2018
$
-
During the year, a total of 15,166,520 convertible notes at $0.02 per note were issued to the Company’s founding
shareholder and Non-executive Director Claude Solitario. These were partly issued to settle historical liabilities
in previous financial years. These liabilities related to consulting fees of $183,330 owed to Hill View Consulting,
an entity owned Mr Solitario, and a $120,000 loan provided to Invatec, a subsidiary of Medibio.
26. EVENTS AFTER THE END OF THE REPORTING PERIOD
On 19 July 2019, the Group completed Placement to sophisticated investors as announced on 10 July 2019
issuing a total of 35,000,000 fully paid ordinary shares at $0.01 (1 cents) raising $350,000 (before costs).
On 29 August 2019, the Group completed a Share Purchase Plan and a Placement to sophisticated investors
issuing 120,995,500 and 315,000,000 fully paid ordinary share respectively. Upon completion of the two offers
a total of $4,359,955 (before costs) was raised. These two transactions were approved by shareholders on 19
August 2019. For each share subscribed to as part of the two offers one free attaching quoted option was
granted exercisable at $0.03 (3 cents) per option expiring on 1 December 2021.
Also on 29 August 2019, the Group issued 275,333,040 fully paid ordinary shares following early conversion of
137,666,520 convertible notes. For each share issued upon conversion of the convertible notes one free
attaching quoted option was granted exercisable at $0.03 (3 cents) per option expiring on 1 December 2021.
On 30 August 2019, the Group issued 90,000,000 quoted options to CPS Capital Group Pty Ltd for services
provided as Lead Manager for the capital raisings completed. The options are exercisable at $0.03 (3 cents)
per option expiring on 1 December 2021.
Apart from the matters set out above, 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 2019 or
future prospects.
MEDIBIO LIMITED | ANNUAL REPORT 2019
55
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 2019 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 15d, 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 2019.
On behalf of the Board
David B. Kaysen
Chairman, Managing Director and CEO
27th September 2019
MEDIBIO LIMITED | ANNUAL REPORT 2019
56
Medibio Limited
Independent auditor’s report to members
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Medibio Limited. (the Company and its subsidiaries
(the Group)), which comprises the consolidated statement of financial position as at 30
June 2019, the consolidated statement of profit or loss and other comprehensive income,
the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary
of significant accounting policies and other explanatory information, and the directors’
declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of
its financial performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations
2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our
responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of
the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 15(d) in the financial report, which indicates that the Group
incurred a total comprehensive loss of $6,596,941 during the year ended 30 June 2019
and had net cash outflows from operations of $6,857,674. As stated in Note 15(d), these
events or conditions, along with other matters as set forth in Note 15(d), indicate that a
material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
VALUATION OF IDENTIFIABLE INTANGIBLE ASSETS
Refer also to note 1(k), 3, and 10
How our audit addressed it
The group has $11.66 million of identifiable
intangible assets (2018: $11.07 million)
including Development Costs of $3.87million
and Data Files of $7.79 million. During the
year ended 30 June 2019 it capitalised
$1.11m in development costs.
The carrying values of the identifiable
intangible assets calls for significant
judgement by the directors as the technology
behind each component is still in
development. The development costs and
data files are not yet available for use.
Accounting standards require that these
assets be tested for amortisation and
impairment annually by comparing its
carrying amount with its recoverable amount
and useful life.
The estimated recoverable amount has been
calculated based on the fair value less costs
to sell based on the cost approach with the
recoverable amount based on the cost to
collect further data files from recent studies
and consideration has also been given to the
outcomes of the studies and the progress in
developing the technology.
An assessment is also required against the
criteria in AASB 138 Intangible Assets to be
able to capitalise internally generated
intangible assets.
Overall due to the high level of judgement
involved, and the significant carrying
amounts involved, we have determined that
this is a key judgemental area that our audit
concentrated on.
Our audit procedures included:
— Agreeing the cost of studies to
supporting invoices from the external
bodies conducting the studies;
— Agreeing the cost per data file calculation
based on the number of data files
obtained;
— Confirming that the recoverable amount
based on the amounts calculated was in
excess of the carrying amount;
— Reviewed management’s impairment
assessments
— Reviewed whether intangible assets
were eligible for capitalisation by
examining and re-calculating the
remuneration of employees conducting
work on application development as well
as the nature of the asset.
— Reviewed announcements to the market
and held discussions with management
to confirm the progress of the
development of the technology and
outcomes of studies to determine if there
were any other indicators of impairment
for the intangible assets.
We also considered the adequacy of the
Group’s disclosures in relation to identifiable
intangible assets.
SHARE BASED PAYMENTS
Refer also to note 1(p) and 22
The group grants options to its Directors,
service providers and key management
personnel by way of share-based payment
arrangements, including the issue of shares
and options.
The arrangements require significant
judgments and estimations by management,
including the following:
— The evaluation of the grant date of each
arrangement, and the evaluation of the fair
value of the underlying share price of the
company as at that grant date;
— The evaluation of the vesting charge taken
to the profit or loss in-respect of the
accrual of service and performance
conditions attached to those share-based
payment arrangements;
— The evaluation of key inputs into the
Binomial and Black Scholes option pricing
models, including the significant judgment
of the forecast volatility of the share option
over its exercise period.
The results of these share-based payment
arrangements materially affect the disclosures
in the financial statements.
How our audit addressed it
Our audit procedures included:
— Evaluating the fair values of share-
based payment arrangements by
agreeing assumptions to third party
evidence. In determining the grant
dates, we evaluated what were the
most appropriate dates based on the
terms and conditions of the share-
based payment arrangements.
— Reviewing the qualifications of the
independent valuer and the inputs into
the valuation of the Options conducted
at 30 June 2019.
— For the specific application of the
valuation models, we re-tested the key
assumptions used in the model and
recalculated those fair values using the
skill and know-how of our in-house
specialists. We considered that the
forecast volatility applied in the model
to be appropriately reasonable and
within industry norms.
We also considered the adequacy of the
Group’s disclosures in relation to Share
Based Payments.
Other Information
The directors are responsible for the other information. The other information comprises the information in
the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and
the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the financial
report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with the Australian Auditing Standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this financial report.
A further description of our responsibilities for the audit of these financial statements is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our independent auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of Medibio Limited, for the year ended 30 June 2019, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
William Buck (Qld)
ABN 21 559 713 106
M J Monaghan
Director
Brisbane, 27 September 2019
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 17 September 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Number
of holders
of ordinary
shares
Number
of holders
of listed
options
Number
of holders
of unlisted
options
259
476
200
572
583
2,090
1,273
1
-
-
38
288
327
1
-
-
-
-
27
27
-
MEDIBIO LIMITED | ANNUAL REPORT 2019
62
ASX ADDITIONAL INFORMATION
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
Number held
issued
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HOPERIDGE ENTERPRISES PTY LTD
MR CLAUDE SOLITARIO
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
CABLETIME PTY LTD
TISIA NOMINEES PTY LTD
DR STEPHEN ROBERT DESMOND ADDIS + MS CORINNE MAY WHOLAGAN
MR CLAUDE SOLITARIO
ARIS NOMINEES PTY LTD
CABLETIME PTY LTD
DENLIN NOMINEES PTY LTD
DENLIN NOMINEES PTY LTD
OAKTONE NOMINEES PTY LTD
SMICON PTY LTD
MR MEL SPARTA
TISIA NOMINEES PTY LTD
ROOKHARP CAPITAL PTY LIMITED
MR KEVIN DANIEL LEARY + MRS HELEN PATRICIA LEARY
102,102,508
96,842,423
40,000,000
30,933,040
27,307,199
25,000,000
20,000,000
20,000,000
11,500,000
10,697,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
9,500,000
8,721,228
10.26
9.73
4.02
3.11
2.74
2.51
2.01
2.01
1.16
1.07
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
0.95
0.88
482,603,398
48.50
MEDIBIO LIMITED | ANNUAL REPORT 2019
63
ASX ADDITIONAL INFORMATION
Options over ordinary
shares
% of total
options
issued
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HOPERIDGE ENTERPRISES PTY LTD
MR CLAUDE SOLITARIO
UBS NOMINEES PTY LTD
CPS CAPITAL NO 3 PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-GSCO ECA
MR BRENT JOSEPH EVITT
CABLETIME PTY LTD
TISIA NOMINEES PTY LTD
VENUS ANETAC PTY LTD
FIRST INVESTMENT PARTNERS PTY LTD
BROWN BRICKS PTY LTD
ARIS NOMINEES PTY LTD
CABLETIME PTY LTD
DENLIN NOMINEES PTY LTD
DENLIN NOMINEES PTY LTD
MR KEVIN DANIEL LEARY + MRS HELEN PATRICIA LEARY
OAKTONE NOMINEES PTY LTD
SMICON PTY LTD
Number held
100,000,000
51,300,000
40,000,000
30,333,040
26,057,200
25,650,000
25,000,000
24,671,500
20,000,000
20,000,000
20,000,000
16,480,789
15,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
10,000,000
11.96
6.13
4.78
3.63
3.12
3.07
2.99
2.95
2.39
2.39
2.39
1.97
1.79
1.20
1.20
1.20
1.20
1.20
1.20
1.20
Unquoted equity securities
Options over ordinary shares issued
484,492,529
57.93
Number
on issue
Number
of holders
70,587,113
26
MEDIBIO LIMITED | ANNUAL REPORT 2019
64
ASX ADDITIONAL INFORMATION
Substantial holders
The Company has received the following substantial Shareholder notices as at the date of this report:
Ordinary shares
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
Voting rights
All ordinary shares carry one vote per share without restriction.
% of total
shares
issued
11.96
6.13
Number held
100,000,000
51,300,000
MEDIBIO LIMITED | ANNUAL REPORT 2019
65