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ANI Pharmaceuticals 2020 // ANNUAL REPORT TABLE OF
CONTENTS
1. Our Purpose
2. Patient Stories
3. Case Studies
4. Physician and Nurse Testimonials
5. New in 2021
6. Community Involvement
7. Chairman’s Letter
8. Managing Director’s Report
9. Directors’ Report
10. Lead Auditor’s Independence Declaration
11. Consolidated Statement of Profit or Loss and Other Comprehensive Income
12. Consolidated Statement of Financial Position
13. Consolidated Statement of Changes in Equity
14. Consolidated Statement of Cash Flows
15. Notes to Financial Statements
16. Directors’ Declaration
17.
18.
Independent Auditor’s Report
Investor Information
19. Corporate Directory
1
3
5
7
9
11
13
15
17
41
43
44
45
47
48
88
89
95
100
#NextScienceHeals OUR PURPOSE
1
2020 // ANNUAL REPORT OUR PURPOSE
Our primary purpose at Next Science is to heal patients and save
lives by addressing the impacts of biofilms on human health, and
to commercialise our XBIO technology platform for shareholders.
We have a unique opportunity to change the trajectory of the war
on infection by providing solutions that eliminate biofilms, and
their incumbent bacteria, fungi and viruses.
2
#NextScienceHeals #NextScienceHeals
JAMES
Vehicle Crash // Knee Surgery
THE ROAD TO RECOVERY
In July 2019, James, a 52-year-old runner and cycling enthusiast
was involved in a multi-trauma motorcycle accident and suffered
a compound tibial fracture. James had surgery on his leg and the
fracture was treated by placement of a tibial nail and an additional
plate. However, rather than healing properly, the wound oozed and
bled for two months post-surgery.
James then underwent a second surgery, only to have the wound
reopen again for another three months. Finally, James was
diagnosed with a non-union, meaning the fracture did not heal
and James would require further surgery using a graft of his own
bones to try and fix the fracture. The non-union was a result of an
underlying infection which stopped the bone from healing.
“I was terrified I would lose my life or my leg
to the infection, so I did my own research and
discovered Next Science’s BACTISURE™ and
SURGX® microbial gel.”
In May 2020, James received his third surgery to replace all
implants. Next Science’s BACTISURE™ was used to wash out the
surgery site and Intramedullary canal and SURGX® was used under
the dressing to prevent bacteria from entering the skin. By August
2020, James was back to cycling and is slowly building up strength
to start running his favourite marathons again.
*After experiencing firsthand the healing power of our BACTISURE ™ and SURGX®
Technology, James became a shareholder in Next Science.
3
2020 // ANNUAL REPORT PATIENTSTORIES
MARY
Debilitating Stroke // Unresponsive Pressure Ulcer
HOPE AND HEALING
A 67-year-old woman suffered a debilitating stroke which left
her hospitalized for many months undergoing treatment. During
her hospital stay, she developed a pressure ulcer that would not
respond to treatment. After being placed in four different treatment
facilities, and exhausting all other healthcare options, the patient
was sent home to be with her daughter on end-of-life care (hospice).
As the home healthcare worker assigned to this patient, Nurse
Karlene went through the patient’s history records and did a
thorough assessment of her wound. She discovered that the
patient had been living with this wound for more than two years
and the wound did not respond to any of the previous antibacterial
ointments that she was prescribed. Karlene, who had recently heard
about Next Science’s BLASTX® decided to give it a try as a last-
ditch attempt to bring this patient overdue relief.
“BLASTX® was our last hope to heal this patient’s
stage 3 pressure ulcer. I was able to get the MD
onboard for orders to implement treatment with
BLASTX®. I am amazed how quickly BLASTX® healed
this 2-year-old chronic wound,” said Karlene.
In just 28 days, the patient saw an 86% wound reduction and went on
to heal completely over time. But most importantly, her daughter no
longer has to fear the idea of losing her mother at such a young age.
4
#NextScienceHeals #NextScienceHeals
CASE
STUDY
Podiatry
How SURGX® treatment helped
prevent an amputation
A 51-year-old woman requested a second opinion when her
physician recommended amputating her left lower extremity due
to her toe appearing non-viable. She had an unresolving left malleolus venous statis
ulcer and a left hallux wound with underlying osteomyelitis. Additionally, she faced major
barriers to healing, including poor blood flow collateral to previous surgical attempts to
reduce varicosities and recalcitrant bone infection in her left foot.
She was referred to Dr Anthony Iorio, DPM, MPH, Director of the Surgical Department
at Metropolitan Hospital, Manhattan, NY, who ultimately helped to restore the healing
trajectory and helped her avoid amputation with an enhanced treatment approach that
included SURGX®. SURGX® is uniquely effective against biofilm as well as polymicrobial
bacterial bioburden (Miller, 2015; Thomas, 2011). The presence of biofilm is considered
ubiquitous in all diabetic ulcers and hard-to-heal chronic wounds (Atkin, 2019).
TREATMENT TIMELINE
11 June 20
Patient
transferred
care to
wound clinic
14 May 20
Initial wound
clinic visit
16 July 20
Follow-up
wound clinic
treatment
27 August 20
Treatment
scheduled
14 September 20
Surgery performed
• MRI confirmed underlying
osteomyelitis and venous
stasis ulcer to left
malleolus.
• Amputation recommended
because of non-healing
hallux wound.
• Patient started
topical oxygen
therapy with
concomitant
allograft to toe
wound.
• Continued
topical oxygen
to left hallux
and allograft to
venous stasis
ulcer.
• Patient scheduled
for left 1st MPJ
Keller arthroplasty
(bunionectomy)
with application of
antibiotic coated
bone substitute.
• Bone biopsy, left
hallux resection with
application of bone
allograft (PBA) and
OSTEOSET® (a synthetic
bone graft substitute
made of calcium sulfate).
• SURGX® applied to
both dorsal and plantar
wounds.
5
2020 // ANNUAL REPORT CASE STUDY
On 14 September 2020, the patient received a bone biopsy, left hallux resection with application of bone allograft
and OSTEOSET®. SURGX® was applied to both dorsal and plantar wounds. Within 8 days after surgery, the patient
saw a 33% reduction of hallux wound and a complete closure in 38 days. In less than two months, the venous statis
ulcer healed completely. Developed for use in operative incision management, Dr Iorio’s use of SURGX® in the post-
operative environment demonstrates the value of SURGX® for any phase of surgical intervention.
CLOSURE BEFORE
CLOSURE AFTER
17 September 20
First post-
operative visit
08 October 20
Second
post-op visit
15 October 20
Third
post-op visit
22 October 20
Fourth
post-op visit
05 November 20
Final
post-op visit
• Continued weekly
• Improvement
application of SURGX®
to surgical site and left
venous stasis ulcer.
to hallux
wound.
REFERENCES
• Continued using
SURGX®; 33%
reduction of
hallux wound in
8 days.
• Hallux wound
closed in 38
days.
• Venous stasis
ulcer healed.
Atkin L, Bućko Z, Conde Montero E, Cutting K, Moffatt C, Probst A, Romanelli M, Schultz GS, Tettelbach W. (2019). Implementing
TIMERS: the race against hard-to-heal wounds. J Wound Care 28(3 Suppl 3): S1–S49 https://www.magonlinelibrary.com/doi/
pdf/10.12968/jowc.2019.28.Sup3a.S1
Milller, K. T. H. (2014). Next Science wound gel technology, a novel agent that inhibits biofilm development by gram-positive and
gram-negative wound pathogens. Antimicrobial Agents and Chemotherapy June 58(6), 3060-3072. https://www.ncbi.nlm.nih.gov/
pubmed/24637684
Thomas N, Brook I (2011). Animal bite-associated Infections. Expert Rev Anti Infect Ther 9(2): 215-226.
https://www.medscape.com/viewarticle/739023_4
6
#NextScienceHeals #NextScienceHeals
“Since beginning SURGX®, I have had no
incisional complications, any incision site
treated with SURGX® after development
of a post-operative infection responded
rapidly with less drainage/inflammation.”
Dr Jon Minter
Orthopedic Specialist
“This patient had been taken to surgery
2 different times to have surgical
debridement. Once the BLASTX® was
started, the tissue grew and the biofilm
did not, and she closed quickly”
Janis Harrison
RN, BSN, CWOCN
“I was so excited to heal this
chronic wound! I was able
to get the MD onboard for
orders to implement treatment
with BLASTX®. She too was
extremely pleased that the
wound healed, and we were
able to meet our goals”
Karlene Wood
RN, WCC, CWS
7
2020 // ANNUAL REPORT PHYSICIAN AND NURSE
TESTIMONIALS
“On the cases I have used SURGX®
directly after closure, I have had 0%
surgical site infections; no split sutures
on breast and/or abdominal incisions,
and 0% complications rate.”
Dr Mark Crispin
Board Certified
Plastic Surgeon
“Out of 15 cases where SURGX®
was applied immediately post-op,
I have had 0% surgical site
infections.”
Dr David Strom
Board Certified
Orthopedic Surgeon
“In my experience any
incision site treated with
SURGX® has not developed
the typical surgical infection
complications”
Dr Matthew Regulski
Podiatric Surgery
Specialist
8
#NextScienceHeals #NextScienceHeals
Once FDA cleared, XPERIENCE™ will be the only no rinse antimicrobial solution
that helps prevent surgical site and post-operative infections. This non-toxic
technology breaks the metallic bonds that holds biofilm together—destroying
enveloped bacteria and defending against recolonization.
LEARN MORE AT: nextscience.com/xperience
9
2020 // ANNUAL REPORT NEW IN 2021
Surgical Need
for XPERIENCE™:
3.3 Billion
1.5 Million
3%
COST OF SURGICAL
SITE INFECTIONS
ANNUALLY
SURGICAL SITE
INFECTIONS IN
THE US PER
YEAR
MORTALITY RATE
DUE TO SURGICAL
SITE INFECTIONS
The key to
winning the
battle
against
infection
10
#NextScienceHeals COMMUNITY
INVOLVEMENT
At Next Science, we believe it is our responsibility to address the triple aim of healthcare: improving
patient outcomes, improving population health and reducing healthcare costs. We achieve this by
leveraging our innovative XBIO Technology to address a significant problem impacting both patients
and healthcare – infection.
Infections are a key driver of morbidity, mortality and increased healthcare spending.1 In the US alone,
17 million patients suffer from biofilm-related infections and the overall direct costs are an estimated
$94 Billion.2 Alongside infection rates and healthcare spending, antimicrobial resistance is also on the
rise, but we are making strides in changing this trajectory.
150,000
PATIENTS HEALED FROM CHRONIC WOUNDS
OR PREVENTED SURGICAL INFECTIONS
1,623
HOSPITALS AND AMBULATORY SURGICAL
CENTRES IN THE US USING XBIO
PRODUCTS
Next Science’s purpose to heal patients and save lives has never been more apparent – and
needed – as our world continues its collective fight against the coronavirus.
11
2020 // ANNUAL REPORT #NextScienceHeals
During the early days of the COVID-19 pandemic, we recognized that we could make a difference. We
moved quickly to set up a donation program to serve patients who were unable to get to wound care
clinics that were temporarily shut down. We also worked directly with healthcare providers, like Hampton
Ridge Healthcare and Rehabilitation, a nursing and rehabilitative care facility in Toms River, New Jersey,
where we donated $300,000 worth of BLASTX®. This enabled caregivers to better treat patients suffering
from chronic wounds.
We also supported our local community in Jacksonville, Florida, by donating another $300,000 worth of
BLASTX® to the Save A Leg, Save A Life Foundation (SALSAL), a non-profit organization whose mission
is to reduce lower extremity amputations and improve wound healing outcomes through evidence-based
methodology and community outreach. SALSAL in turn gave BLASTX® to Volunteers in Medicine, a free
healthcare clinic that provides outpatient primary and specialty medical services to Northeast Florida’s
working, low-income, uninsured adults.
Each day we make progress on improving our products and expanding our community outreach with
organizations whose mission aligns with our purpose. The work that our non-profit, research and philanthropic
partners perform is not easy, which is why it is essential that Next Science continue to support organizations
who are making a difference in improving health outcomes for the people in their communities.
1. SenCK, Gordillo GM, Roy S, Kirsner R, Lambert L, Hunt TK, Gottrup F, Gurtner GC, Longaker MT. Human skin wounds: a major
and snowballing threat to public health and the economy. Wound Repair Regen. 2009 Nov-Dec;17(6):763-71.
2. Dorion, H. & Gruber, B. (2018). Pathogenesis of surgical site infection (SSI) – The 3rd Edition: Prevention & Management.
Retrieved from, http://laparoscopy.blogs.com/prevention_management_3/2010/07/pathogenesisofsurgicalsiteinfectionssi.html
12
#NextScienceHeals 7 . C H A I R M A N ’ S L E T T E R
Dear Shareholders
In this 2020 Annual Report the company has provided an operational overview and audited
financial results for our shareholders. The board and executive team remain incredibly excited
by our purpose that underpins the opportunity that our strong and differentiated technology
platform has for healing people and saving lives. We remain dedicated to making our suite of
patented products available to doctors and patients all around the world.
Despite being a year of challenge and constraints on the development of our commercial
revenue, especially for our key distribution partners, 2020 for Next Science was also a year
of focused product development, regulatory achievements and preparation for our significant
commercial product launch of XPERIENCE™ in mid-2021.
Our financial performance is a story in two parts. Like many peer group healthcare companies in
the US, we had significantly reduced year-over-year (YOY) revenue in Q1, Q2 and Q3 due to the
Covid-19 pandemic. As those restrictions were relaxed, however, we had a very strong rebound
of revenue in Q4 through a strong 75% YOY growth for the quarter, well above the full-year
revenue growth. We have been pleased to see the Q4 revenue run rate continue into the first
half of 2021.
Against the backdrop of this extraordinary year of constraints, our Managing Director and our
R&D team based in Jacksonville, Florida, maintained throughout 2020 a busy and productive
workflow focused on our product development and regulatory approval priorities. We were
pleased to finish the year with our highest potential product opportunity to date, XPERIENCE™,
now in front of the US Food and Drug Administration (FDA) for approval. The H1 2021 approval
timeline for XPERIENCE™ remains on track pending the anticipated clearance by the FDA. The
planned launch of this unique “no rinse antimicrobial solution” provides a milestone opportunity
for Next Science, marking what the board believes could be a significant pivot toward
commercial revenues alongside a high-potential funnel of product research and development for
our medium- and long-term journey.
As a board we understand that launching a high-potential product needs to be founded
on leadership talent and bench strength. We invested heavily throughout 2020 in building
our leadership bench strength and capability in the US. We recruited sales, marketing and
commercial leadership. We invested in a senior HR capability to support our expanded
organisation. We appointed additional clinical and research team members, restructured
regulatory and built up our Clinical and Medical Advisory Boards so that we are well positioned
to take XPERIENCE™ to market. Our commercial progress rests on expanding amongst the
clinical community, the education, knowledge and advocacy of our patented XBIO Technology
and demonstrating the impact that it offers the broader health system to significantly
13
2020 // ANNUAL REPORT 7 . C H A I R M A N ’ S L E T T E R
improve the standard of care for patients by eliminating surgical infection and the associated
improvement on wound healing. The Board has appreciated the leadership shown by our senior
executives Dr Matt Myntti and Dustin Haines in engaging with our expanded advisory boards
throughout 2020.
A further achievement in the year was strengthening the Next Science balance sheet to
support the future commercialisation of our products through a successful capital raising and
a shareholder SPP offer. Both investor opportunities were over subscribed with the new funds
fully banked by November 2020.
As we exited 2020 we undertook a recalibration of our distribution strategy for BLASTX® our
antimicrobial wound gel. We decided to in-source our wound care market presence in the US.
This, along with our surgical sales team, will expand our addressable market and provide Next
Science with greater control of our product revenues over the coming years.
2020 year was quite a busy year for the Board due to the elevated risk issues relating to the
Covid-19 pandemic and the preparation required to support the capital raising in the second
half. This resulted in 20 board meetings during the year. I wish to thank each board member
for their diligent contribution to the governance of Next Science. A special thank you to our
US based board member Aileen Stockburger who has made an extraordinary effort to travel
on a regular basis to our operations centre in Jacksonville to represent the board and retain
a personal point of connection with our US team. As we move into 2021, we look forward
to replacing video conference calls with face-to-face meetings along with the opportunity to
directly engage our teams in the US.
Finally, I wish to congratulate our Managing Director Judith Mitchell for her tireless work in
leading the organisation and building and expanding our executive team. I also extend on behalf
of the board our appreciation for the tireless work of all our employees in the US and Australia.
They have been able to maintain their focus and successfully move more of our product
development portfolio through regulatory approvals in readiness for commercialisation.
Next Science enters 2021 with anticipation and excitement. The Next Science board and
executive team are dedicated to expanding the market presence of our suite of patented
products, that support our purpose of healing people and saving lives. We look forward to
updating you on these plans at the forthcoming AGM on May 5th, 2021.
George Savvides
Chairman
A Different Approach, Superior Results
14
#NextScienceHeals 8 . M A N A G I N G D I R E C T O R ‘ S R E P O R T
2020 was a challenging but fruitful year for Next Science with significant progress made on further
extending Next Science’s proprietary XBIO technology into new product platforms with large market
potential and increasing the clinical evidence base for our existing products. The organisation also
invested in new US commercial leadership. We extended our capabilities to enable strong in-market
execution to support key new product launches in 2021 and our existing product portfolio priorities.
COVID-19 impacted the uptake of several of Next Science’s key platforms in 2020 with reduced
access to health care professionals and the hospital channel. Throughout this period, the very strong
support for Next Science’s unique technologies and its ability to solve many of the challenging
areas in surgical wound management and infection control and biofilm remained unchanged.
Encouragingly, we are seeing positive signs of recovery. We look forward to 2021 being a year of
more open access to our customers and sales channels to support further revenue growth. As we
look across the Next Science business in 2020, we can examine our activities in three streams.
Partner Distributed Products – BACTISURE™ Wound Lavage
and BLASTX® Antimicrobial Wound Gel
While revenue decreased 15% on prior year, the partnership programs were two different
situations. Sales of BACTISURE™, through Zimmer Biomet, although impacted by COVID-19
particularly in Q2 and Q3, bounced back in Q4 and grew year over the year. We have strong
forward orders through the first half of 2021.
Conversely, outpatient wound clinics (which are the sites of care that 3M KCI targeted with
BLASTX®) were not considered an essential service and were closed for many months of 2020
due to COVID-19. Additionally, our partner 3M KCI sequestered its US Advanced Wound Care
sales force at home from mid March until part way through December. The end result being a
decline in sales for BLASTX®. In November we advised the market that 3M KCI and Next Science
have agreed that the distribution of BLASTX® will return to Next Science. I am pleased to report
this transition was finished by 1 April 2021 and the sales and marketing of BLASTX® is now being
carried out by Next Science. By taking direct control of BLASTX® distribution we can target an
expanded market opportunity and have greater ability to meet clients’ specific needs.
New Product Development – XPERIENCE™ No Rinse
Antimicrobial Solution
Our product development efforts were focused on our XPERIENCE™ No Rinse Antimicrobial
Solution. The recommendation for use is as the last rinse in surgery prior to the closure of the
surgical site. The product shows extensive effectiveness against a broad range of gram positive
and gram negative bacteria, viruses and fungus like golden staph, e-coli, candida and coronavirus.
At the same time, it combines the unique advantages of being active for 5 hours, non toxic and
requires no change to current surgical protocol. It can be used as a replacement for the last rinse
which is currently usually saline. We anticipate securing FDA clearance in H1 2021. The product is
submitted for FDA clearance as a 510(k) Medical Device. We have completed extensive testing in
the lab, in humans and in animals as per the FDA’s request and now await their final review. Subject
to FDA clearance, we expect to launch this product by the end of the first half of 2021. Successful
commercial launch of XPERIENCE™ is the number one priority for the Company in 2021.
15
2020 // ANNUAL REPORT
8 . M A N A G I N G D I R E C T O R ‘ S R E P O R T
Build up of the commercial organisation to support XPERIENCE™
No Rinse Antimicrobial Solution
To support this launch and ensure a strong marketing and sales program and that the necessary
working capital was available for inventory build-up and related cash requirements, we successfully
completed a $A15M capital raise in October that was a combination of institutional placements
and a Shareholder Purchase Plan. We appreciate the support for our growth strategy from existing
shareholders and we welcome new investors to the Company.
XPERIENCE™ No Rinse Antimicrobial Solution will be marketed and distributed by Next Science
directly. Accordingly, we have built up the commercial infrastructure to support a direct to market
operation including recruiting a Chief Commercial Officer (Mr Dustin Haines) based in Jacksonville,
Florida, developed all of the marketing materials, marketing websites and ordering portals to support
the product and built up and trained our surgical sales network – a combination of employees and
contracted staff. We are confident in our ability to launch XPERIENCE™ despite impacted hospital
processes and restrictions from COVID-19, as the sales network already has daily access to surgeons
and other key health care professionals who will be key decision makers in new product adoption.
Outlook
We have a confident outlook for 2021. BACTISURE™ continues to grow market support – the
product launched in Australia in Q4 of 2020 and has already launched in Europe in 2021.
Additionally, BLASTX® is now being distributed directly by Next Science with strategies for all four
sites of care in Wound Care in the US (acute care, outpatient wound care, home health and long-
term acute care). We will also take advantage of the CE Mark we received in December and we will
make the product available through specialist distribution partners in Europe.
As we move to the second half of 2021, the focus of the business will primarily be on the execution
of a successful XPERIENCE™ launch. Our first target market segment is the 5.4 million orthopaedic
surgeries that take place annually in the US market. We will then tackle additional indications,
specialty by specialty, as we grow our clinical evidence and market presence.
Despite COVID-19 restrictions, we increased the number of hospitals using XBIO products and
increased our patient treatment base to over 150,000 people. With XPERIENCE™ and the return of
BLASTX®, we expect that number will grow significantly across the year.
My sincere thanks to our customers, our research partners, our business partners, our employees
and our board of directors. 2020 showed the value of resilience for all of us and we emerge a
stronger, smarter and more motivated group, knowing the benefits our technologies can bring to
healthcare and the difference we can make in people’s lives. #NextScienceHeals
Judith Mitchell
Managing Director
16
#NextScienceHeals DIRECTORS’
REPORT
17
2020 // ANNUAL REPORT #NextScienceHeals
18
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
The Directors present their report together with the consolidated financial statements of the
Group comprising of Next Science Limited (the “Company”), and the entities it controlled at the
end of, or during, the year ended 31 December 2020. All amounts are presented in US dollars
(USD) unless otherwise stated.
Directors
The Directors of the Company at any time
during or since the end of the financial year are:
George
Savvides
(Chair)
Judith
Mitchell
Bruce
Hancox
Daniel
Spira
Significant changes in the state of affairs
and COVID-19 impact
Revenues in the year to 31 December 2020
were impacted by the COVID-19 shutdown
in the USA of elective medical procedures
and closure of outpatient wound care clinics.
Revenue recovered in the fourth quarter of 2020
and this run rate is expected to continue
through the first half of 2021 based on the sales
of existing products (excluding any additions
from new product launches).
During the pandemic, Next Science set up a
donations program to service patients who
were unable to get to wound care clinics
during the COVID-19 shut down. Over the
longer term, Next Science expects the increase
in awareness around the spread of viruses,
Mark
Compton
Aileen
Stockburger
infection and the role of biofilm to drive
increased demand for its products.
Dividends
No dividends were paid or declared since the
In January 2020, Next Science’s XPERIENCE™
No Rinse Antimicrobial Solution was submitted
for regulatory approval to the FDA. Following
the FDA’s initial review and requested additional
information, the dossier was resubmitted to the
FDA in December 2020.
commencement of the year and the directors do
In March 2020, Next Science launched its Acne
not recommend the declaration of a dividend.
cream via online skincare direct marketer, tbh
Operating and financial review
Principal activities
The principal activities of the Group during
the course of the year were the research,
development and commercialisation of
technologies which solve issues in human
health caused by biofilms. The company is
headquartered in Sydney, Australia and has a
Skincare (www.tbhskincare.com) to consumers
mainly based in Australia.
In April 2020, Next Science received CE Mark
for BACTISURE™, authorising future sales in
Europe through Next Science’s distribution
partner, Zimmer Biomet. Next Science also
received notification from the US Environmental
Protection Agency (EPA) that its Hospital
Cleaner Surface Disinfectant had been
research and development centre and sales
and marketing functions located in Florida, USA.
accepted for registration with clearance for
inclusion on the product labelling of a claim
19
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
for effectiveness against biofilm. Commercial
On 23 November 2020, Next Science
announced to the ASX that the distribution
agreement with 3M for BLASTX®, would not
be renewed at the end of 2021. Discussions
are progressing smoothly, and Next Science
anticipates the transition will be complete
prior to the end of the first half 2021. As a
result of this, there has been a change in the
time frame for recognition of the milestone
payments received from 3M. The payments
which previously would have been recognised
as revenue over the period until the end of
the contract period of 31 Dec 2021, will now
be recognised as revenue over a shorter time
period ending 1H 2021, when it is anticipated
that the full transition of BLASTX® back to
Next Science will be complete.
In the opinion of the Directors, other than
the events previously stated, there were no
further significant changes in the state of
affairs of the Group that occurred during the
financial year.
discussions regarding the licensing of
this product are ongoing, although lower
in priority to our human health product
commercialisations.
In June 2020, Next Science received TGA
approval for its BACTISURE™ product
authorising future sales in Australia through Next
Science’s distribution partner, Zimmer Biomet.
On 24 September 2020, Next Science raised
A$7,999,999 via a Placement at A$1.20
per share.
On 19 October 2020, Next Science raised
A$5,000,000 via a Share Purchase Plan at
A$1.18 per share.
On 18 November 2020, Next Science
launched its Acne cleanser via online
skincare direct marketer, tbh Skincare
(www.tbhskincare.com) to consumers based
in Australia, New Zealand, the UK and parts
of Europe.
On 19 November 2020, Next Science raised
A$2,000,000 via a Placement at A$1.20 per
share, following shareholder approval at a
general meeting held on 18 November 2020.
SHAREHOLDER RETURNS
Revenue
2020
2019
$3,440,975
$4,060,800
Loss attributable to owners of the company
($11,912,004)
($14,351,828)
Basic earnings per share (EPS) (cents)
Share price as at 31 Dec (A$)
Return on capital employed
($6.36)
AUD$1.25
(59.7%)
($8.65)
AUD$1.88
(59.6%)
20
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Operating and financial review
(cont.)
Review of operations
The loss for the Group for the financial year to 31
December 2020 after providing for income tax
amounted to $11,912,004 (2019: $14,351,828).
Revenue decreased by 15% for the period,
decreasing from $4,060,800 in the prior
corresponding period to $3,440,975, primarily
due to the impact of the COVID-19 pandemic.
Gross profit was $2,916,841 compared to
$3,510,320 in the prior corresponding period.
Gross margin as a percent of sales was
85% compared with 86% in the prior
corresponding period.
Selling and distribution expenses were
$5,670,684, a decrease of $615,216 compared
development activity including associated
product validation costs, regulatory spend and
two additional staff appointments in the research
and development department.
Finance expenses of $2,129,424 in the prior
period are mainly attributable to interest
expense recognised in the profit and loss on
the converting notes, for the period prior to their
conversion to ordinary shares on 8 April 2019.
Cash and cash equivalents at 31 December
2020 amounted to $8,100,416 compared to
$6,556,808 at 31 December 2019. Term deposits
at 31 December 2020 amounted to $7,238,986
compared to $10,353,797 at 31 December 2019.
Likely developments and expected results
of operations
Further information about likely developments
with $6,285,900 in the prior corresponding
in the operations of the Group and the
period. In the prior year, $48,147 of the expenses
expected results of those operations in future
related to IPO investor relations activity. The
financial years has not been included in this
decrease in spend in 2020 mainly relates to a
report because disclosure of the information
reduction in travel expenditure due to Covid
travel restrictions as well as a reduction in
would be likely to result in unreasonable
prejudice to the Group.
headcount. Such reductions have been partially
offset by increased partner marketing spend and
increased donations and sampling efforts.
Matters subsequent to the end of the
financial year
There has not arisen in the interval between
Administration expenses were $3,343,044,
the end of the financial year and the date of
a decrease of $1,027,317 compared with
this report any item, transaction or event of
$4,370,361 in the prior corresponding period.
a material and unusual nature likely, in the
$129,310 of the reduction in the current
opinion of the directors of the Group, to affect
period is related to reduced travel expenses
significantly the operations of the Group, the
in 2020 resulting from COVID-19. Prior period
results of those operations, or the state of
administration expenses included $312,106
affairs of the Group, in future financial years.
related directly to IPO associated expenses
and increases in compliance costs associated
with becoming a listed entity and $273,798
of brokerage costs related to the issue of
converting notes.
Research and development expenses were
$6,434,414 an increase of $1,106,839 compared
with $5,327,575 in the prior corresponding
period, reflecting an increase in product
Environmental regulation
The Group’s operations are not subject to
significant environment regulations under
either Commonwealth or State legislation. The
Board believes that the Group has adequate
systems in place for the management of its
environmental requirements.
21
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
Government regulation
The Group is subject to varying degrees of governmental regulation in the countries in which
operations are conducted, and the general trend is toward increasingly stringent regulation. In the
US, the drug, device, diagnostics and cosmetic industries have long been subject to regulation
by various federal and state agencies, primarily as to product safety, efficacy, manufacturing,
advertising, labelling and safety reporting. The exercise of broad regulatory powers by the US
Food and Drug Administration (the “FDA”) results in increases in the amounts of testing and
documentation required for FDA clearance of new drugs and devices and a corresponding
increase in the expense of product introduction. Similar trends are also evident in major markets
outside of the US.
The Group relies on global supply chains, and production and distribution processes that are
complex and are subject to increasing regulatory requirements and lengthy regulatory approval
processes that may affect sourcing, supply and pricing of materials used in the Group’s products.
Information on Directors
NAME:
Title:
GEORGE SAVVIDES AM
Chair and Independent Non-Executive Director
Special Responsibilities:
Member of the Audit and Risk Committee and Member of the Peo-
ple, Culture and Remuneration Committee
Qualifications:
Bachelor of Engineering (Honours), University of New South Wales
and MBA, University of Technology, Sydney.
Experience and expertise:
Other current directorships:
Fellow of the Australian Institute of Company Directors.
George has 30 years of experience in the Australian & New Zealand
healthcare sector. He was CEO of two successful IPO listings on the
ASX, being Sigma in 1999 and Medibank Private in 2014. He served
as Medibank CEO for 14 years.
George served as Chairman of Kings Consolidated Group Pty
Ltd (2016 to 2018) and Macquarie University Hospital (2016 to
2018) and retired as Chairman of World Vision Australia after 18
years of service in February 2018. He was a board member of the
International Federation of Health Plans for 10 years including a
period as Deputy President, retiring in 2016.
He currently serves as Non-Executive Chairman of the public
broadcaster, SBS having been appointed a Non-Executive Director
in 2017 and Chairman in 2020. He is also a Non-Executive Director
of IAG (since 2019) and NZX listed Ryman Healthcare, a large
residential aged care provider in New Zealand (since 2013).
Former listed directorships
(last 3 years):
None
22
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Information on Directors (cont.)
NAME:
Title:
JUDITH MITCHELL
Managing Director and Chief Executive Officer
Special Responsibilities:
None
Qualifications:
MBA, University of Hull
Experience and expertise:
Graduate of the Australian Institute of Company Directors
Prior to joining Next Science in 2017, Judith served as President of
DePuy Synthes Asia Pacific, the Orthopaedics Division of Johnson
& Johnson, before which Judith was President of Asia Pacific for
Synthes GmbH, the world leaders in orthopaedic trauma care.
Judith commenced her medical technology career at GE Medical
Systems, where over 14 years, she held positions in sales,
marketing and management. She also held a variety of positions at
Cochlear Limited in Product Development, Global Marketing and
Education.
Other current directorships:
Former listed directorships
(last 3 years):
None
None
NAME:
Title:
BRUCE HANCOX
Non-Executive Director
Special Responsibilities:
Chair, Audit and Risk Committee
Qualifications:
Bachelor of Commerce, Canterbury University New Zealand
Experience and expertise:
Bruce has over 35 years of corporate experience across a broad
spectrum of commerce, including 16 years with Brierley Investments
Limited in New Zealand. He held a number of senior roles at Brierley
Investments as general manager and Chairman and served on the
board of a number of their subsidiaries in New Zealand, Australia
and the US.
Bruce has been a financial advisor to interests of Mr Langley Walker
since 2008. He serves as a director of investments and wealth
management at Walker Corporation Pty Ltd and works with the
Walker group of companies to pursue investment opportunities
outside the property market.
Other current directorships:
Director of Walker Group Holdings Pty Limited.
Former listed directorships
(last 3 years):
Carbonxt Group Limited (ASX:CG1) and BTC Health Limited
(ASX: BTC)
23
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
NAME:
Title:
DANIEL SPIRA
Independent Non-Executive Director
Special Responsibilities:
Chair, People, Culture and Remuneration Committee
Qualifications:
Bachelor of Commerce, University of New South Wales
Experience and expertise:
Daniel is the CEO of iNova Pharmaceuticals (since 2017) which is
a leading multinational consumer healthcare and pharmaceutical
company with operations across Asia Pacific and Africa. Previously he
was at Bausch Health (2011-2015) as Vice President and GM-North
America (with responsibility for a portfolio of businesses spanning
Vision Care, Dermatology and Aesthetic Devices) and was also
Managing Director, Pacific region.
Prior to that, Daniel spent over 15 years at Johnson & Johnson Inc
in various roles including Vice President, Country Manager, Chief
Marketing Officer and other sales and marketing roles across the
Asia Pacific, Europe/Middle East and North American regions.
Other current directorships:
Former listed directorships
(last 3 years):
None
None
NAME:
Title:
AILEEN STOCKBURGER
Independent Non-Executive Director
Special Responsibilities:
Member, Audit and Risk Committee
Qualifications:
Bachelor of Science and MBA, The Wharton School, University of
Pennsylvania
Experience and expertise:
Graduate of the Australian Institute of Company Directors, Certified
Public Accountant (CPA – USA).
Prior to joining Next Science, Aileen was the Worldwide Vice President
of Business Development for the DePuy Synthes Group of Johnson
& Johnson, where she oversaw the group’s merger and acquisition
activities, including deal structuring, negotiations, contract design
and review, and deal terms. She led Johnson & Johnson’s efforts to
acquire Synthes for approximately $21 billion, Johnson & Johnson’s
largest medical device acquisition. She also led the efforts to divest
the DePuy Trauma business and acquire Micrus Endovascular. Aileen
was also involved in numerous other M&A transactions including
Pfizer Consumer Healthcare (US$16.5 billion), Aveeno, BabyCenter,
OraPharma, DePuy, DePuy Miket, Kodak Clinical Diagnostics and
Neutrogena.
Other current directorships:
Non-Executive Director, Microbot Medical Inc. (NASDAQ: MBOT)
Former listed directorships
(last 3 years):
None
24
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Information on Directors (cont.)
NAME:
Title:
MARK COMPTON AM
Independent Non-Executive Director
Special Responsibilities:
Member, People, Culture and Remuneration Committee
Qualifications:
Bachelor of Science (Pharmacology, Physiology and Biochemistry)
and an MBA, University of New South Wales.
Fellow of the Australian Institute of Company Directors, the
Australasian College of Health Services Management and The
Australian Institute of Management and the Royal Society (New
South Wales).
Experience and expertise:
Mark is Lord Prior of the International Order of St John and
Chairman of the Board of Trustees of St John International.
Mark is Chairman of Sonic Healthcare Limited, a global medical
diagnostics and healthcare organisation which is a Top 50 ASX
listed entity. He is also Chairman of St Luke’s Care Limited, a
not-for-profit health and aged care organisation and Chairman of
Integrated Clinical Oncology Network Pty Ltd trading as Icon Cancer
Centre. Mark has held various CEO and managing director roles,
including at St Luke’s Care Limited, Immune System Therapeutics
Limited, Royal Flying Doctor Service of Australia, SciGen Limited
and Alpha Healthcare Limited. He is an Adjunct Professor at
Macquarie University in healthcare leadership and management
(since 2012).
Other current directorships:
Chairman and Non-Executive Director of Sonic Healthcare
Limited (ASX: SHL). Chairman of the Board of Trustees of St John
International, Chairman of St Luke’s Care Limited and Integrated
Clinical Oncology Network Pty Ltd trading as Icon Cancer Centre.
Former listed directorships
(last 3 years):
None
Company Secretary
Gillian Nairn, BA/LLB, LLM, FGIA, has held the role of Company Secretary since 21 June
2018. Gillian is an experienced corporate governance professional with more than 20
years legal and governance experience gained in private practice and in various company
secretarial roles, predominantly with listed entities, in a variety of sectors including
manufacturing, oil and gas, professional services and education.
25
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
Meetings of directors
The number of meetings held and attended by each of the Directors of the Company
during the year ended 31 December 2020 were as follows:
NAME OF DIRECTOR
BOARD MEETINGS
PEOPLE, CULTURE
& REMUNERATION
COMMITTEE
AUDIT AND RISK
COMMITTEE
TRANSACTION
COMMITTEE
George Savvides
Judith Mitchell
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
A
20
20
20
20
20
20
B
20
20
19
20
20
20
A
3
–
–
3
3
–
B
3
–
–
3
3
–
A
7
–
7
–
–
7
B
7
–
7
–
–
7
A
3
–
3
–
3
–
B
3
–
3
–
3
–
A – Number of meetings held when Director was eligible to attend during the year
B – Number of meetings attended during the time the Director held office during the year
Directors’ interests
The relevant interest of each Director in shares and options over such instruments issued
by the Group, as notified by the directors to the ASX in accordance with section 205G(1)
of the Corporations Act 2001 at the date of this report is as follows:
NAME OF DIRECTOR
FULLY PAID ORDINARY SHARES
SHARE OPTIONS
George Savvides
Judith Mitchell
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Total
Number
649,876
5,000,000
530,000
49,266
137,438
44,837
6,411,417
Number
650,000
2,340,000
520,000
1,300,000
520,000
520,000
5,850,000
Shares under option
At the date of this report, and following the share split, there are 8,092,500 options over ordinary
shares on issue (2019: 9,249,500 options), representing 4.17% (2019: 5.1%) of the Company’s
undiluted total share capital, granted to employees and directors under an equity incentive plan.
26
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Indemnity and insurance of officers
general standard of independence for auditors
The Group has indemnified the directors and
executives of the Group for costs incurred,
in their capacity as a director or executive,
imposed by the Corporations Act 2001.
The Directors are of the opinion that the
services as disclosed in note 31 to the
for which they may be held personally liable,
financial statements do not compromise the
except where there is a lack of good faith.
external auditor’s independence requirements
During the financial year, the Group has paid
a premium in respect of a contract to insure
the directors and executives of the Company
against a liability to the extent permitted by
the Corporations Act 2001. The contract of
under the Corporations Act 2001 for the
following reasons:
· All non-audit services have been reviewed
and approved to ensure that they do not
impact the integrity and objectivity of the
insurance prohibits disclosure of the nature of
auditor; and
the liability and the amount of the premium.
· None of the services undermine the general
principles relating to auditor independence
Indemnity and insurance of auditor
as set out in APES 110 Code of Ethics
The Company and the Group have not,
during or since the end of the financial year,
indemnified or agreed to indemnify the
auditor of the Company or any related entity
against a liability incurred by the auditor.
During the financial year, the Company has
not paid a premium in respect of a contract
to insure the auditor of the Company or any
related entity.
Proceedings on behalf of
the company
No person has applied to a court under section
237 of the Corporations Act 2001 for leave to
bring proceedings on behalf of the Company,
or to intervene in any proceedings to which the
Company is a party for the purpose of taking
responsibility on behalf of the Company for all
or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the
for Professional Accountants issued by
the Accounting Professional and Ethical
Standards Board, including reviewing or
auditing the auditor’s own work, acting in a
management or decision-making capacity
for the Company, acting as advocate for the
Company or jointly sharing economic risks
and rewards.
Officers of the Company who
are former partners of KPMG
No officer of the Company was an audit
partner of KPMG, being the auditors during
the financial year, at a time when the audit
firm undertook an audit of the Company.
Auditor’s independence
declaration
The auditor’s independence declaration is
set out on page 42 and forms part of the
Directors’ Report for the financial year ended
31 December 2020.
auditor for non-audit services provided during
the financial year by the auditor are outlined in
Auditor
note 31 to the financial statements.
KPMG continues in office in accordance with
The Directors are satisfied that the provision of
non-audit services by the auditor during
the financial year is compatible with the
section 327 of the Corporations Act 2001.
27
2020 // ANNUAL REPORT
9 . D I R E C T O R S ’ R E P O R T
Remuneration Report (audited)
Key management personnel (KMP)
This Remuneration Report forms part of
The KMP of the Group during the financial year
the Directors’ Report for the year ended 31
and the positions held are summarised below:
December 2020. This Report outlines the
details of the remuneration arrangements for
the key management personnel of the Group,
including remuneration strategy, framework
and practices, in accordance with the
requirements of the Corporations Act 2001 and
its Regulations.
For the purposes of this Report, key
management personnel (KMP) are defined
as those persons having authority and
responsibility for planning, directing and
controlling the activities of the Group, directly
or indirectly, including any Director of the
Company (non-executive or executive).
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Managing Director
Judith Mitchell
Other KMP
The information in this Remuneration Report is
Jacqueline Butler
Chief Financial Officer
Matthew Myntti
Chief Technology Officer
Jon Swanson
Dustin Haines
Chief Operating Officer
Chief Commercial Officer
set out under the following headings:
· Key management personnel (KMP)
· Remuneration governance
· Service agreements and remuneration policy
· Non-Executive Directors’ remuneration
· Employee incentive arrangements and link
between performance and reward
· Share option plan
· KMP Remuneration
· KMP equity holdings
28
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Remuneration governance
The Board established a Remuneration
and Nomination Committee (Committee) in
August 2018 to assist the Board in fulfilling
Non-Executive Directors and a majority of
whom are independent Directors.
The Chair of the Committee should be an
independent Director who is not Chair of
its responsibilities to shareholders and other
the Board.
stakeholders in respect of remuneration
policies and practices, succession planning,
diversity policies and practices, performance
The Charter requires the Committee to meet
at least twice each year.
evaluation processes and board composition
All of the current members of the People,
including mix of skills.
During the financial year, on the
recommendation of the Committee and in
recognition of the close connection between
culture, governance and remuneration
highlighted by various stakeholders
Culture and Remuneration Committee
have been assessed by the Board as being
independent Non-Executive Directors and
the Chair of the Committee is not Chair of
the Board.
including the ASX Corporate Governance
Council and Australian Securities and
Service agreements and
remuneration policy
Investments Commission (ASIC), the Board:
i. extended the scope of the Committee’s
role to reviewing and overseeing Next
Science’s key people and organisational
culture strategies, talent and succession
and their alignment with Next Science’s
values, mission and strategy; and
ii. changed the name of the Committee
to ‘People, Culture and Remuneration
Committee’.
The People, Culture and Remuneration
Committee currently comprises of:
Daniel Spira (Chair)
George Savvides
Mark Compton
The role and responsibilities, composition,
structure and membership requirements of the
People, Culture and Remuneration Committee
are documented in the People, Culture and
Remuneration Committee Charter available at
www.nextscience.com/corp-governance.
The People, Culture and Remuneration Charter
provides that the Committee should comprise
of at least three members, all of whom are
Executives are employed under executive
employment agreements with the Group.
In determining remuneration, the Group
considers:
· industry based remuneration
benchmaking (Australia and USA);
· market developments affecting
remuneration practices;
· the remuneration expectations of an
executive whom the Company wants
to employ;
· future outlook for the Group and
market generally;
· the Company’s performance over a
performance period; and
· the link between remuneration and
the successful implementation of the
Company’s strategy and achievement
of strategic objectives.
Executive incentives comprise fixed and
variable elements linked to Company
and individual performance as detailed
in this Report.
29
2020 // ANNUAL REPORT Employment Agreements
9 . D I R E C T O R S ’ R E P O R T
NAME:
Title:
Details:
NAME:
Title:
Details:
NAME:
Title:
Details:
JUDITH MITCHELL
Managing Director
Ongoing service agreement inclusive of superannuation and to be
reviewed annually by the Company.
The Company may terminate the service agreement:
i. by giving a 3-month termination notice; or
ii. without notice, in the event of serious misconduct or for any
other reason that enables summary dismissal at law.
Judith is entitled to participate in the Company’s short-term and
long-term incentive plans.
JACQUELINE BUTLER
Chief Financial Officer (CFO)
Ongoing service agreement inclusive of superannuation and to be
reviewed annually by the Company.
The Company may terminate the service agreement:
i. by giving a 3-month termination notice; or
ii. without notice, in the event of serious misconduct or for any
other reason that enables summary dismissal at law.
Jacqueline is entitled to participate in the Company’s short-term
and long-term incentive plans.
DR. MATTHEW MYNTTI
Chief Technology Officer (CTO)
Ongoing employment agreement to be reviewed annually by
the Company.
The Company may terminate the employment agreement:
i. by giving 90 days written notice; or
ii. without notice, in the event of serious misconduct or for any
other reason that enables summary dismissal at law.
Matthew is entitled to participate in the Company’s short-term and
long-term incentive plans.
30
#NextScienceHeals
9 . D I R E C T O R S ’ R E P O R T
Employment Agreements (cont.)
JON SWANSON
Chief Operating Officer (COO)
Ongoing employment agreement to be reviewed annually by
the Company.
The Company may terminate the employment agreement:
i. by giving 90 days written notice; or
ii. without notice, in the event of serious misconduct or for any
other reason that enables summary dismissal at law.
Jon is entitled to participate in the Company’s short-term and long-
term incentive plans.
DUSTIN HAINES
Chief Commercial Officer (CCO)
Ongoing employment agreement to be reviewed annually by
the Company.
The Company may terminate the employment agreement:
i. by giving 90 days written notice; or
ii. without notice, in the event of serious misconduct or for any
other reason that enables summary dismissal at law.
Dustin is entitled to participate in the Company’s short-term and
long-term incentive plans.
BYRON DARROCH
Executive Vice President Partnerships
Employment agreement ceased on 31 August 2019.
NAME:
Title:
Details:
NAME:
Title:
Details:
NAME:
Title:
Details:
31
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
Non-Executive Directors’
Remuneration
Each of the Non-Executive Directors
have entered into appointment letters
with Next Science confirming the terms
of their appointment and their roles and
responsibilities.
Under the Constitution, the Board decides the
amount paid to each Non-Executive Director
as remuneration for their services as a Director.
However, under the ASX Listing Rules, the
amount of fees paid to all Directors for their
owned subsidiary of the Company, for at least
six months during the plan year and still be
employed until after the announcement of the
Group’s results to the ASX following the relevant
plan year. Participation is by invitation from
the Board and is not automatic. Participants
who resign or are terminated before the end of
the plan year are not eligible for any payments
under the Plan unless the Board determines
otherwise in its sole discretion.
The STI plan objectives are to:
· reward executives for their contribution in
services (excluding, the salary of any Executive
ensuring that the Group achieves its annual
Director) must not exceed in aggregate in
financial performance targets;
any financial year the amount fixed by the
Company’s shareholders in general meeting.
This amount has been fixed initially in the
Company’s Constitution at A$750,000 per
annum and may only be varied by ordinary
resolution in general meeting.
The annual fee for Non-Executive Directors
is AUD$90,000 per annum (inclusive
of superannuation) and for the Chair is
AUD$250,000 per annum (inclusive of
superannuation). The Chair’s fees reflect
the additional responsibilities of the role
particularly leading up to, and in the short-
term after, admission to ASX. An additional
fee of AUD$10,000 per annum is paid for
performing the role of Chair of the Audit and
Risk Committee and People, Culture and
Remuneration Committee.
Employee incentive arrangements
and link between performance and
reward
Short-Term Incentive (STI) Plan for Executives
The Managing Director, CFO, CTO and COO
were invited to participate in the Company’s
short-term incentive plan (STI Plan), effective
· enhance the Group’s opportunity to attract,
motivate and retain high calibre and high
performing executives; and
· link part of executive remuneration directly
to the achievement of the Group and
individual KPIs.
The making of any payment under the STI plan
is subject to the achievement of three gateway
hurdles; at least 90% of a base consolidated
revenue target; 100% of a base consolidated
EBITDA target; and an individual performance
rating of a least 3 out of 5.
The maximum STI opportunity is 100%
of Total Fixed Remuneration (TFR) for the
Managing Director and 80% of TFR for
the CFO, CTO, COO and CCO. To receive
the maximum STI opportunity, executives
must achieve performance targets for
consolidated revenue, consolidated EBITDA
and individual performance.
As a number of the members of the executive
team already have significant security holdings
in Next Science, all payments under the STI
Plan will be paid in cash to ensure that STI
opportunities operate as true incentives.
from the Company’s admission to the ASX in
No STI payments were made in respect of
April 2019. The CCO was invited to participate
the financial year ended 31 December 2020
in the STI plan following his appointment in
(2019: Nil) as revenue and EBITDA targets
June 2020. Participants of the plan, must
were not achieved.
be employed with the Company, or wholly
32
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Employee incentive arrangements
and link between performance and
reward (cont.)
Rights will automatically lapse. Participants
must still be employed by the Company or a
wholly owned subsidiary at the date of vesting.
Long-Term Incentive (LTI) Plan for Executives
At the time of the Company’s IPO in April
2019, the Board of the Company established a
long -term incentive plan, to be paid by way of
Performance Rights to eligible participants
(LTI plan). The Managing Director, CFO, CTO,
CCO and COO are entitled to participate in
the LTI plan.
Subject to Group performance hurdles being
achieved in the financial year ending 31
December 2021, and thereafter, the Managing
Director will be granted performance rights
worth 200% of her Total Fixed Remuneration
(TFR) and the other participants in the LTI
plan will be granted performance rights worth
150% of their TFR.
There will be no Performance Rights issued
in relation to the financial year ending 31
December 2020 (2019: Nil) due to targets
not having been achieved. The LTI plan will
operate in future years with grants based
on the relevant revenue and/or other Group
performance measures. It is not intended to
change the size of the grant to participants or
the vesting conditions.
In recognition of the CCO’s extensive work in
2020 to prepare the Company for the launch
of XPERIENCE™ in 2021, and to provide longer
term upside opportunity to the CCO similar
to that available to other key management
personnel from the options awarded to them
prior to the Company’s admission to ASX, the
Company granted the CCO USD$315,000
The number of Performance Rights granted
worth of performance rights in February 2021.
will be based on the volume weighted average
The vesting of the performance rights is subject
price (VWAP) of shares in the Company for
to continued tenure and the rights will vest over
the period 1 January until the day before the
three years with 1/3 vesting in 1 year, 1/3 in 2
release on ASX of the Company’s relevant
years and 1/3 in 3 years from the grant date.
preliminary full year results.
The vesting of Performance Rights issued
under the LTI Plan is dependent on satisfaction
of the following vesting conditions:
· if the compound total shareholder return
(TSR) is less than 15% per annum, no
Performance Right will vest;
· 50% of Performance Rights will vest if the
compound annual TSR is at least 15% per
annum; and
· 100% of Performance Rights will vest if
the compound annual TSR is at least 30%
per annum.
Subject to vesting conditions being satisfied,
the Performance Rights will automatically
convert to shares, on a one-for one basis,
three years after the date on which they are
granted. If the vesting conditions have not
been satisfied by this date, the Performance
33
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
Share Option Plan
Prior to the Company being admitted to the ASX, the Group established an Equity Incentive
Plan (ECP) for US employees and an Employee Share Option Plan (ESOP) for Australian
employees and directors (see note 28). With the exception of the Managing Director, Judith
Mitchell, as described below, the only vesting condition applicable to the options granted under
these earlier plans was that the individual be employed by the Company, or any wholly owned
subsidiary of the Company at the vesting date.
There were no options over ordinary shares issued as compensation to KMP during the year
ended 31 December 2020. All remaining options over ordinary shares granted to KMP in the
previous years and their status are set out below:
KMP
GRANT DATE EXPIRY DATE
VESTING
DATE
FAIR VALUE
AT GRANT DATE
EXERCISE
PRICE (USD)
Executive Director
Pre-share
Split (USD)
Post-share
Split (USD)
Judith Mitchell
16-Apr-2018
16-April-2021
Various (i)
1,284
0.20
0.42
Non-Executive Directors
George Savvides
17-Dec-2018
17-Dec-2023
17-Dec-2021
Bruce Hancox
17-Dec-2018
17-Dec-2023
17-Dec-2021
Daniel Spira (Tranche 1)
16-Apr-2018
16-Apr-2021
16-Apr-2018
Daniel Spira (Tranche 2)
17-Dec-2018
17-Dec-2023
17-Dec-2021
Mark Compton
17-Dec-2018
17-Dec-2023
17-Dec-2021
Aileen Stockburger
17-Dec-2018
17-Dec-2023
17-Dec-2021
Other KMP
Matthew Myntti
Jon Swanson
–
–
–
17-Dec-2018
17-Dec-2023
17-Dec-2020
Jacqueline Butler
16-Apr-2018
16-Apr-2021
16-Apr-2019
Dustin Haines
–
–
–
2,138
2,138
1,284
2,138
2,138
2,138
–
2,138
1,284
–
0.33
0.33
0.20
0.33
0.33
0.33
–
0.33
0.20
–
0.56
0.56
0.42
0.56
0.56
0.56
–
0.56
0.42
–
i. There are various vesting conditions, financial and non-financial, applicable to the options granted to Judith Mitchell
as Managing Director, under the Group’s pre-IPO share option plan.
34
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
Share Option Plan (cont.)
The table below provides details of movements in share options for KMP for the year ended
31 December 2020.
KMP
BALANCE AS
AT 1 JAN
2020 No.
GRANTED
No.
EXERCISED
No.
LAPSED
No.
BALANCE AS
AT 31 DEC
2020 No.
VESTED
DURING THE
YEAR
VESTED AND
EXERCISABLE
No.
UN-VESTED
No.
Executive Director
Judith Mitchell
2,340,000
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
650,000
520,000
1,300,000
520,000
520,000
–
650,000
650,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,340,000
1,560,000
–
–
–
–
–
–
–
–
–
650,000
520,000
1,300,000
520,000
520,000
–
650,000
650,000
–
–
–
–
–
–
–
–
–
–
–
–
–
780,000
650,000
520,000
1,040,000
260,000
–
–
–
650,000
650,000
–
520,000
520,000
–
–
–
–
35
2020 // ANNUAL REPORT 9 . D I R E C T O R S ’ R E P O R T
Share Option Plan (cont.)
The table below provides details of movements in share options for KMP for the year ended
31 December 2019.
KMP
BALANCE AS
AT 1 JAN
2019 No.
POST SHARE
SPLIT No.
(i)(ii)
GRANTED /
EXERCISED /
LAPSED No.
BALANCE AS
AT 31 DEC
2019 No.
VESTED AND
EXERCISABLE
No.
UN-VESTED
No.
Executive Director
Judith Mitchell
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Byron Darroch
360
2,340,000
–
2,340,000
1,560,000
780,000
100
80
200
80
80
–
100
100
–
650,000
520,000
1,300,000
520,000
520,000
–
650,000
650,000
–
–
–
–
–
–
–
–
–
–
650,000
520,000
–
–
650,000
520,000
1,300,000
1,040,000
260,000
520,000
520,000
–
650,000
–
–
–
–
650,000
650,000
–
–
520,000
520,000
–
650,000
–
–
i. On 24 January 2019, a share split was completed on the basis that every one ordinary share option on issue
in the Company be divided into 6,500 ordinary options.
ii. There were no share options granted or exercised from 1 January 2019 until the share spl it on 24 January 2019.
Exercise of options granted as compensation
During the reporting period, there were no shares issued on the exercise of options previously granted as
compensation, to KMP.
36
#NextScienceHeals 9 . D I R E C T O R S ’ R E P O R T
KMP Remuneration
The table below details remuneration for KMP based on the policies discussed in this report
for the year ended 31 December 2020.
Year ended 31 December 2020
KMP
CASH
SALARY
AND FEES (i)
OTHER
CASH
SERVICE
(ii)(iii)
LONG
SERVICE
LEAVE
SUPER-
ANNUATION
SHARE-BASED PAYMENTS
TOTAL
PERFORMANCE
RELATED (VI)
Options
(iv)
Shares in lieu
of fees (v)
$
Executive Director
Judith Mitchell
261,606
Non-Executive Directors
George Savvides
161,960
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
63,098
51,302
62,183
48,810
350,000
250,000
171,124
173,250
1,593,333
$
–
–
–
–
–
–
–
–
–
20,879
20,879
$
–
–
–
–
–
–
–
–
–
–
–
$
%
$
$
14,676
960
10,771
69,878
55,902
$
–
–
–
277,242
242,609
124,994
5,994
1,421
–
–
–
–
14,751
–
27,951
15,547
96,221
55,902
–
118,085
55,902
13,992
118,704
–
115,338
–
–
–
–
–
–
350,000
365,338
185,875
194,129
47,613
381,833
29,539
2,073,197
–
–
–
–
–
–
–
–
–
–
i. Dustin Haines was appointed Chief Commercial Officer and commenced employment on 10 June 2020.
ii. For the year ended 31 December 2020 threshold Group performance targets were not met and hence no
amounts were awarded to KMP under the STI plan or the LTI plan.
iii. Other cash benefits include an amount of $20,879 for relocation expenses paid to Dustin Haines as part of the
arrangements agreed in respect of his engagement.
iv. The value of the share options granted to KMP is calculated at the grant date using the Black-Scholes formula.
This value is allocated to each reporting period evenly over the period from grant date to vesting date. The
value disclosed is the portion of the fair value of the options recognised as an expense in each reporting period.
v. Amounts included under share-based payments for Daniel Spira and Aileen Stockburger are in relation to
shares paid in lieu of their Directors’ fees. The Company received confirmation from the ASX that a waiver of
ASX Listing Rule 10.11 had been given to allow Aileen and Daniel, as Non-Executive Directors, to elect to be
issued shares in lieu of their fees for the first 12 months after the Company’s admission to the ASX.
vi. Disclosed above are the relative proportions of each individual’s remuneration that are related to performance;
the remaining proportion being fixed remuneration.
37
2020 // ANNUAL REPORT
9 . D I R E C T O R S ’ R E P O R T
KMP Remuneration (cont.)
The table below details remuneration for KMP based on the policies discussed in this report
for the year ended 31 December 2019.
Year ended 31 December 2019
KMP
CASH
SALARY
AND FEES
OTHER
CASH
SERVICE
(i)(ii)(iii)
LONG
SERVICE
LEAVE
SUPER-
ANNUATION
SHARE-BASED PAYMENTS
TOTAL
PERFORMANCE
RELATED (VI)
$
Executive Director
Judith Mitchell
254,461
Non-Executive Directors
George Savvides
159,577
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
56,216
10,751
50,685
10,751
$
–
–
–
–
–
–
Matthew Myntti
304,911
44,665
Jon Swanson
Jacqueline Butler
250,000
166,817
–
–
Byron Darroch
120,447
69,057
1,384,616
113,722
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,453
14,649
66,820
Options
(iv)
Shares in lieu
of fees (v)
$
$
14,467
162,985
14,454
52,022
3,982
41,618
$
–
–
–
–
20,809
49,326
4,815
41,618
–
431,913
226,053
101,816
80,886
97,118
41,618
44,749
97,118
$
%
–
–
–
–
–
–
–
91,736
29,022
–
–
–
–
–
349,576
13%
341,736
210,292
204,153
–
–
–
481,428
94,075
2,140,661
i. For the year ended 31 December 2019 threshold Group performance targets were not met and hence no amounts
were awarded to KMP under the STI plan or the LTI plan.
ii.
Other cash benefits include an amount of $69,057 paid to Byron Darroch as part of the arrangements agreed in
respect of the termination of his engagement on 31 August 2019.
iii. Prior to the existence of the STI plan, Matthew Myntti was awarded a discretionary bonus of $44,665 during the
year, paid in November 2019.
iv. The value of the share options granted to KMP is calculated at the grant date using the Black -Scholes formula.
This value is allocated to each reporting period evenly over the period from grant date to vesting date. The value
disclosed is the portion of the fair value of the options recognised as an expense in each reporting period.
v.
Amounts included under share-based payments for Daniel Spira and Aileen Stockburger are in relation to shares
paid in lieu of their Directors’ fees. The Company received confirmation from the ASX that a waiver of ASX Listing
Rule 10.11 had been given to allow Aileen and Daniel, as Non-Executive Directors, to elect to be issued shares in
lieu of their fees for the first 12 months after the Company’s admission to the ASX.
vi. Disclosed above are the relative proportions of each individual’s remuneration that are related to performance; the
remaining proportion being fixed remuneration.
38
#NextScienceHeals
9 . D I R E C T O R S ’ R E P O R T
KMP Equity Holdings
The movement during the reporting period in the number of shares in Next Science Limited held
directly, indirectly or beneficially, by each KMP, including their related parties, is as follows:
Year ended 31 December 2020
KMP
Executive Director
Judith Mitchell
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
BALANCE AS AT
1 JAN 2020 No.
RECEIVED ON
EXERCISE OF
OPTIONS No.
SHARES RECEIVED IN
LIEU OF DIRECTORS
FEES No. (i)
OTHER CHANGES
DURING THE YEAR
No.*
BALANCE AS AT
31 DEC 2020 No.
4,732,000
625,000
–
36,729
125,000
33,554
20,657,000
70,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12,537
–
11,283
–
–
–
–
268,000
5,000,000
24,876
530,000
–
12,438
–
–
–
–
–
649,876
530,000
49,266
137,438
44,837
20,657,000
70,000
–
–
* Other changes represent shares that were purchased during the year.
i. The Company has been granted a waiver from Listing Rule 10.11 to the extent necessary to permit the Company
to issue shares without shareholder approval to non-executive directors, Aileen Stockburger and Daniel Spira,
in lieu of directors’ fees for the first 12 months after the Company’s admission to the official list of the ASX. The
shares issued are fully paid ordinary shares in the capital of the Company on the same terms and conditions as
the Company’s existing shares and issued at the Offer Price of AUD $1 for the first quarter after admission. For
later quarters, the shares are being issued at the 10 day Volume Weighted Average Price (VWAP) for the first 10
trading days of the relevant quarter.
39
2020 // ANNUAL REPORT
9 . D I R E C T O R S ’ R E P O R T
KMP Equity Holdings (cont.)
Year ended 31 December 2019
BALANCE AS AT
1 JAN 2019 No.
POST
SHARE-SPLIT
No. (i)(ii)
SHARES RECEIVED IN
LIEU OF DIRECTORS
FEES No. (iv)
OTHER CHANGES
DURING THE YEAR
No.(iii)
BALANCE AS AT
31 DEC 2019 No.
KMP
Executive Director
Judith Mitchell
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira (iv)
Mark Compton
Aileen Stockburger (iv)
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Byron Darroch (v)
–
4,732,000
625,000
625,000
728
4,732,000
–
–
–
–
–
–
–
–
–
–
3,178
20,657,000
–
–
100
–
–
650,000
–
–
–
36,729
–
–
–
125,000
33,554
–
–
–
–
–
–
70,000
–
–
i. On 24 January 2019, a share split was completed on the basis that every one ordinary share on issue in the Company be
divided into 6,500 ordinary shares.
ii. There were no other movements in equity holdings from 1 January 2019 until the share split on 24 January 2019.
iii. George Savvides and Mark Compton received shares on the conversion of their converting notes (see note 20) post the
share-split.
iv. The Company has been granted a waiver from Listing Rule 10.11 to the extent necessary to permit the Company to issue
shares without shareholder approval to non-executive directors, Aileen Stockburger and Daniel Spira, in lieu of directors’
fees for the first 12 months after the Company’s admission to the official list of the ASX. The shares issued are fully paid
ordinary shares in the capital of the Company on the same terms and conditions as the Company’s existing shares and
issued at the Offer Price of AUD $1 for the first quarter after admission. For later quarters, the shares are being issued at
the 10 day Volume Weighted Average Price (VWAP) for the first 10 trading days of the relevant quarter.
v. Byron Darroch held 650,000 ordinary shares which were funded through a shareholder loan. The balance of $180,357
outstanding as at 31 December 2019 (see note 13) was paid in April 2020. Byron Darroch employment ceased on 31
August 2019.
This concludes the remuneration report (audited).
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:
George Savvides
Chair
Dated at Sydney this 22nd day of February 2021
–
36,729
125,000
33,554
20,657,000
70,000
–
650,000
40
#NextScienceHeals LEAD AUDITOR’S
INDEPENDENCE
DECLARATION
41
#NextScienceHeals
2020 // ANNUAL REPORT 1 0 . L E A D A U D I T O R ’ S I N D E P E N D E N C E D E C L A R AT I O N
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Next Science Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Next Science
Limited for the financial year ended 31 December 2020 there have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations
Act 2001 in relation to the audit; and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Tony Nimac
Partner
Sydney
22 February 2021
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The
KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global
organisation. Liability limited by a scheme approved under Professional Standards Legislation.
42
#NextScienceHeals 1 1 . C O N S O L I D AT E D S TAT E M E N T O F P R O F I T O R L O S S
A N D O T H E R C O M P R E H E N S I V E I N C O M E
For the Year Ended 31 December 2020
IN USD
NOTES
Revenue
Cost of sales
Gross profit
Other income
Selling and distribution expenses
Research and development expenses
Administration expenses
Other expenses
Operating loss
Finance income
Finance costs
Net finance income / (costs)
Loss before income tax
Income tax expense
Loss for the year
5
5
7
9
10
11
2020
$
3,440,975
(524,134)
2,916,841
356,574
2019
$
4,060,800
(550,480)
3,510,320
35,365
(5,670,684)
(6,285,900)
(6,434,414)
(5,327,575)
(3,343,044)
(4,370,361)
(13,352)
(62,971)
(12,188,079)
(12,501,122)
297,254
(21,179)
276,075
278,718
(2,129,424)
(1,850,706)
(11,912,004)
(14,351,828)
–
–
(11,912,004)
(14,351,828)
Other comprehensive income, net of income tax
Foreign currency translation differences for foreign operations
396,838
(971,282)
Total comprehensive loss for the year
(11,515,166)
(15,323,110)
Earnings per share
From continuing operations
Basic earnings
Diluted earnings
32
32
Cents
(6.36)
(6.36)
Cents
(8.65)
(8.65)
The accompanying notes form part of these financial statements.
43
2020 // ANNUAL REPORT 1 2 . C O N S O L I D AT E D S TAT E M E N T O F F I N A N C I A L P O S I T I O N
As at 31 December 2020
IN USD
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other current assets - term deposits
Other current assets - other
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Contract liabilities
Lease liabilities
Employee benefits
Total current liabilities
Non-current liabilities
Contract liabilities
Lease liabilities
Employee benefits
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Common control reserve
Foreign currency translation reserve
Share option reserve
Accumulated losses
Total equity
The accompanying notes form part of these financial statements.
NOTES
12
13
14
15
15
13
16
17
18
19
21
22
23
21
22
23
24
24
24
24
2020
$
8,100,416
3,388,045
1,071,979
7,238,986
452,458
20,251,884
36,656
788,133
2,334,936
227,265
3,386,990
23,638,874
1,064,365
1,909,554
170,946
81,231
3,226,096
1,374,510
115,889
9,385
1,499,784
4,725,880
2019
$
6,556,808
1,640,382
400,360
10,353,797
332,504
19,283,851
36,656
812,587
2,164,345
402,291
3,415,879
22,699,730
1,076,672
375,106
196,442
69,552
1,717,772
1,328,809
286,012
3,691
1,618,512
3,336,284
18,912,994
19,363,446
101,281,467
(42,596,715)
(801,736)
2,125,541
(41,095,563)
18,912,994
90,693,590
(42,596,715)
(1,198,574)
1,648,704
(29,183,559)
19,363,446
44
#NextScienceHeals 1 3 . C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
For the Year Ended 31 December 2020
2020 IN USD
SHARE CAPITAL
COMMON
CONTROL
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE OPTION
RESERVE
ACCUMULATED
LOSSES
TOTAL EQUITY
$
$
$
$
$
$
90,693,590
(42,596,715)
(1,198,574)
1,648,704
(29,183,559)
19,363,446
Balance at
1 January 2020
Loss for the year
Other comprehensive
income
Foreign currency
translation differences
Total other
comprehensive income
Total comprehensive
loss for the year
Transactions with owners
in their capacity as owners
Share-based payment
Foreign exchange impact
–
–
–
–
–
–
Issue of ordinary shares
11,175,615
Conversion of partly paid
shares to ordinary shares
(199,999)
Capital raising costs
(387,739)
10,587,877
Total transactions
with owners
Balance at
31 December 2020
–
–
–
–
–
–
–
–
–
–
–
–
(11,912,004)
(11,912,004)
396,838
396,838
396,838
–
–
–
–
–
–
–
–
–
482,973
(6,136)
–
–
–
476,837
–
–
396,838
396,838
(11,912,004)
(11,515,166)
–
–
–
–
–
–
482,973
(6,136)
11,175,615
(199,999)
(387,739)
11,064,714
101,281,467
(42,596,715)
(801,736)
2,125,541
(41,095,563)
18,912,994
The accompanying notes form part of these financial statements.
45
2020 // ANNUAL REPORT 1 3 . C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y
For the Year Ended 31 December 2020
2019 IN USD
Balance at
1 January 2019
AASB 16 adjustment
(net of tax)
Restated total at the
beginning of the year
Loss for the year
Other comprehensive
income
Foreign currency
translation differences
Total other
comprehensive income
Total comprehensive
loss for the year
Transactions with owners
in their capacity as owners
Share-based payment
Foreign exchange impact
Converting notes
converted to equity
SHARE
CAPITAL
COMMON
CONTROL
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE OPTION
RESERVE
CONVERTING
NOTES
RESERVE
ACCUMULATED
LOSSES
TOTAL EQUITY
$
$
$
$
$
$
$
56,589,405 (42,596,715)
(227,292)
968,831
415,562 (14,746,054)
403,737
–
–
–
–
–
(85,677)
(85,677)
56,589,405 (42,596,715)
(227,292)
968,831
415,562 (14,831,731)
318,060
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(971,282)
(971,282)
(971,282)
–
–
–
–
– (14,351,828)
(14,351,828)
–
–
–
–
(971,282)
(971,282)
– (14,351,828)
(15,323,110)
–
–
–
–
–
–
652,826
27,047
–
–
–
–
–
(415,562)
–
–
679,873
(415,562)
–
–
–
–
–
–
652,826
27,047
(415,562)
35,626,554
(1,522,369)
34,368,496
Issue of ordinary shares
35,626,554
Capital raising costs
(1,522,369)
34,104,185
Total transactions
with owners
Balance at
31 December 2019
90,693,590 (42,596,715)
(1,198,574)
1,648,704
– (29,183,559)
19,363,446
The accompanying notes form part of these financial statements.
46
#NextScienceHeals 1 4 . C O N S O L I D AT E D S TAT E M E N T O F C A S H F L O W S
For the Year Ended 31 December 2020
NOTES
12
16
17
24
20
IN USD
Operating Activities
Receipts from customers
Payments to suppliers and employees
Payments for research and development
Interest received
Grant income and COVID-19 government assistance
Net cash used in operating activities
Investing Activities
Payments for property, plant and equipment
Payments for intangible assets
Net cash used in investing activities
Financing Activities
Proceeds from issue of ordinary shares
Proceeds from issue of converting notes
Proceeds from conversion of options to ordinary shares
Capital raising costs
Payment of lease liabilities
Net cash provided by financing activities
Net (decrease) / increase in cash and cash equivalents held
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of the year
(including bank term deposits)
2020
$
2,950,430
(12,210,609)
(3,119,907)
117,735
355,707
2019
$
3,262,752
(13,202,785)
(2,651,188)
224,299
35,365
(11,906,644)
(12,331,557)
(213,244)
(473,555)
(686,799)
(374,683)
(1,233,341)
(1,608,024)
10,831,275
25,231,169
–
489,125
(387,740)
(222,609)
10,710,051
(1,883,392)
16,910,605
312,189
70,798
310,700
(1,717,999)
(210,334)
23,684,334
9,744,753
7,211,102
(45,251)
15,339,402
16,910,605
Less bank term deposits classified as other current assets
Cash and cash equivalents at end of the year
15
12
(7,238,986)
8,100,416
(10,353,797)
6,556,808
The accompanying notes form part of these financial statements.
47
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
1. Corporate Information
Next Science Limited (the “Company”)
is a company domiciled in Australia.
The Group is a for-profit entity and
primarily involved in the research,
development and commercialisation
of technologies which solve bacterial
related issues.
These consolidated financial statements
comprise the Company and its
subsidiaries (collectively the “Group”
and individually “Group companies”) for
the year ended 31 December 2020 and
comparative information for the year
ended 31 December 2019.
2. Basis of Preparation
a. Statement of compliance
The consolidated financial statements
are general purpose financial statements
which have been prepared in accordance
with accounting standards adopted by
the Australian Accounting Standards
Board (“AASB”) and the Corporations
Act 2001. The consolidated financial
statements comply with International
the Group’s presentation currency.
Entities within the Group hold
functional currencies of AUD or USD
as appropriate to the individual entity.
d. Use of judgements and estimates
In preparing these financial statements,
management has made judgements,
estimates and assumptions that affect
the application of the Group’s accounting
policies and the reported amounts of
assets, liabilities, income, expenses and
disclosure of contingent liabilities. Actual
results may differ from these estimates.
Estimates and underlying assumptions
are reviewed on an ongoing basis.
Revisions to accounting estimates are
recognised prospectively.
The key judgements, estimates and
assumptions are discussed below:
Impairment of non-financial assets
The Group assesses impairment of
non-financial assets at each reporting
date by evaluating conditions specific
to the Group and to the particular asset
that may lead to impairment. If an
impairment trigger exists at balance date,
Financial Reporting Standards (“IFRS”)
the recoverable amount of the asset is
adopted by the International Accounting
determined. This involves value-in-use
Standards Board (“IASB”).
The financial statements were approved
by the Board of Directors and authorised
for issue on 22nd February 2021.
b. Basis of measurement
The financial statements have been
prepared on a historical cost basis.
calculations, which incorporate a number
of key estimates and assumptions.
Recoverable amount being the net
amount of discounted future cash flows
materially exceeds the carrying value
of non-current assets. The recoverable
amount of these cash generating units, at
balance date, was estimated based
on its value in use.
c. Functional and presentation currency
Value in use for the cash-generating units
The financial statements are presented
in United States Dollars, which is
(‘CGU’) was determined by discounting
the future cashflows to be generated
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For the Year Ended 31 December 2020
d. Use of judgements and estimates
Recovery of deferred tax assets
(cont.)
from the CGUs and is based on the
following key assumptions:
· Cashflows were projected based on
Deferred tax assets for tax losses are
only recognised if the Group considers
it is probable that future taxable
amounts will be available to utilise
forecast operating results over a 5 year
those tax losses against.
period plus a terminal value.
· Average annual revenue growth rates
agreed in revenue contracts with
customers and approved budgets
were used for revenue projections.
· Discount rate of 12% based on the
weighted average cost of capital.
Estimation of useful lives of assets
The consolidated entity determines
the estimated useful lives and related
depreciation and amortisation charges
for its property, plant and equipment
and finite life intangible assets. The
useful lives could change significantly
as a result of technical innovations or
some other event. The depreciation and
amortisation charge will increase where
Management has considered all the
facts and circumstances and believe
there is no material uncertainty over the
availability of the tax losses.
e. Comparative Amounts
The presentation of the consolidated
statement of profit or loss and other
comprehensive has been changed
such that expenses are now classified
based on their function, as this provides
information that is more relevant to the
Group. When required by Accounting
Standards, comparative figures have
been adjusted to conform to changes in
presentation for the current year.
the useful lives are less than previously
f. Going concern
estimated lives, or technically obsolete
or non-strategic assets that have been
abandoned or sold will be written off or
written down.
Leases
For the purpose of measuring the
right-of-use asset lease term, duration
is estimated. This requires judgement
and is based on an assessment as
to whether an option to extend or
terminate a lease will be exercised. The
Group must also consider each contract
held to assess whether a contract
The financial report has been prepared
on a going concern basis, which
assumes continuity of normal business
activities and the realisation of assets
and settlement of liabilities in the
ordinary course of business for a period
of at least twelve months from the date
this financial report is approved.
For the financial year ended 31
December 2020, the Group incurred
a loss of $11,912,004 and had net
cash outflows from operations of
$11,906,644. As at 31 December 2020,
includes a lease under AASB 16 and the
the Group had net current asset and
incremental borrowing rate is estimated.
net asset positions of $17,025,788 and
$18,912,994 respectively.
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2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
The Group raised $25,052,313 (AUD $35
the identifiable net assets acquired. Any
million) after successfully completing
goodwill that arises is tested annually
an Initial Public Offering (‘IPO’) in
for impairment. Any gain on a bargain
April 2019. The Group raised a further
purchase is recognised in profit or loss
$10,631,274 (AUD $15 million) over
immediately. Transaction costs are
the period September to November
expensed as incurred, except if related
2020 completing two Placements
to the issue of debt or equity securities.
and a Share Purchase plan. As at 31
December 2020, the Group has cash
and cash equivalents of $8,100,000
and term deposits of $7,238,986 which
is expected to be sufficient to fund its
operations and activities for a period of
at least twelve months from the date of
signing this financial report.
Common control transactions record
assets and liabilities acquired at their
book value at the date of acquisition,
rather than their fair value. The
difference between the fair value of the
consideration given and the carrying
value of the assets and liabilities
acquired is recognised as a common
After considering the above, the
control reserve.
Directors have concluded that the Group
will be able to fulfil all obligations as and
when they fall due for the foreseeable
future, being at least twelve months from
the date of signing this financial report.
3. Significant Accounting Policies
The Group has consistently applied
the following accounting policies to all
periods in these financial statements.
a. Parent entity information
The consideration transferred does
not include amounts related to the
settlement of pre-existing relationships.
Such amounts are generally recognised
in profit or loss.
ii. Subsidiaries
Subsidiaries are entities controlled by
the Group. 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
In accordance with the Corporations
affect those returns through its power
Act 2001, these financial statements
over the entity. The financial statements
present the results of the Group only.
of subsidiaries are included in the
Supplementary information about the
parent entity is disclosed in note 25.
b. Basis of consolidation
i. Business combinations
The Group accounts for business
combinations using the acquisition
method when control is transferred to
the Group, unless it is a combination
involving entities or businesses under
common control. The consideration
transferred in the acquisition is
generally measured at fair value, as are
consolidated financial statements from
the date on which control commences
until the date on which control ceases.
iii. Loss of control
When the Group loses control over a
subsidiary, it derecognises the assets
and liabilities of the subsidiary, and any
related non-controlling interest and other
components of equity. Any resulting gain
or loss is recognised in profit or loss. Any
interest retained in the former subsidiary is
measured at fair value when control is lost.
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For the Year Ended 31 December 2020
b. Basis of consolidation (cont.)
iv. Transactions eliminated
on consolidation
Intra-group balances and transactions,
and any unrealised income and expenses
arising from intra-group transactions,
are eliminated. Unrealised gains arising
from transactions with equity-accounted
investees are eliminated against the
investment to the extent of the Group’s
interest in the investee. Unrealised
losses are eliminated in the same way as
unrealised gains, but only to the extent
that there is no evidence of impairment.
are translated into the presentation
currency at the exchange rates at the
reporting date. The income and expenses
of foreign operations are translated into
the functional currency at the average
exchange rates for the period, unless
exchange rates fluctuated significantly
during that period, in which case the
exchange rates at the dates of the
transaction are used.
Foreign currency differences are
recognised in OCI and accumulated in
the translation reserve.
c. Foreign currency
customers
d. Revenue from contracts with
i. Foreign currency transactions
Transactions in foreign currencies are
translated to the functional currency of
the Group at exchange rates at the dates
of the transactions.
Monetary assets and liabilities
denominated in foreign currencies are
translated into the functional currency
at the exchange rate at the reporting
date. Non-monetary assets and liabilities
that are measured at fair value in a
foreign currency are translated into the
functional currency at the exchange rate
when the fair value was determined.
Non-monetary items that are measured
based on historical cost in a foreign
currency are translated at the exchange
rate at the date of the transaction.
Foreign currency differences are
generally recognised in profit or loss and
presented within finance costs.
ii. Foreign currency operations
The assets and liabilities of foreign
operations, including goodwill and fair
value adjustments arising on acquisition,
Revenue from contracts with customers
is recognised when a customer obtains
control of the goods or services and
when performance obligations have been
satisfied assessing the following criteria:
i. Identification of distinct elements and
separate performance obligations
In the case where the customer contract
includes a sublicense and transfer of
goods, the assessment must be made
as to whether a separate performance
obligation exists for each element. For
current contracts held, whilst a license
to specific IP has been given related to
the Group’s product, this only includes
rights to distribute, not to use the IP to
manufacture the product. Therefore, the
licence transferred is not deemed to be a
distinct element of the contract and only
one performance obligation exists to
transfer product to the distributor.
ii. Transfer of goods
Title and control pass to the distribution
customer at the point when the Group
fulfils its obligation to deliver and goods
are available at the customer’s premises.
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2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
As such, the performance obligation
be transitioned back to Next Science
(including the license) transfers at
in the first half of 2021. Discussions are
the point in time when each good
progressing smoothly, and Next
is delivered. Therefore, revenue is
Science anticipates the transition will
recognised at the point in time when the
be complete prior to the end of the first
product is delivered. For product sold
half 2021.
directly to hospitals, title and control
pass when the product is delivered
to the courier, with revenue being
recognised at this point in time.
iii. Measurement of transaction price
Consideration of the contract can
comprise a fixed element (upfront
payment plus minimum annual
purchase amounts) and variable
elements (milestone payments).
Under AASB 15 the variable
consideration is only included in the
transaction price if it is ‘highly probable
that a significant reversal in the amount
of cumulative revenue recognised will
not occur’.
In the case where milestone payments
are received upon signing the contract
and are not subject to regulatory
approval, these amounts will be initially
recognised as contract liabilities to be
recognised over the life of the contract
once product sales have commenced.
However, where the milestone
payments are subject to regulatory
approval, for the variable consideration
to be deemed ‘most likely’, this will only
be included once regulatory approval
has been received and recognised over
the remaining life of the contract.
iv. Change in estimate
On 23rd November 2020, Next
Science announced to the ASX that
the distribution agreement with 3M for
BLASTX®, would not be renewed at the
end of 2021 and that BLASTX® would
As a result of this, there has been a
change in the time frame for recognition
of the performance obligation in relation
to the milestone payments received
from 3M. The milestone payments which
previously would have been recognised
as revenue over the period until the end
of the contract period of 31 Dec 2021,
will now be recognised as revenue
over a shorter time period ending 1H
2021, when it is anticipated that the
full transition of BLASTX® back to Next
Science will be complete.
e. Government grants
Government grants are recognised where
there is reasonable assurance that the
grant will be received and all attached
conditions will be complied with.
When the grant relates to an expense
item, it is recognised as income on a
systematic basis over the periods that
the related costs, for which it is intended
to compensate, are expensed. When the
grant relates to an asset, it is recognised
as income in equal amounts over the
expected useful life of the related asset.
f. Finance income and finance costs
Finance income comprises interest
income, dividend income and foreign
currency gains. Interest income is
recognised in profit or loss as it accrues
using the effective interest method.
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For the Year Ended 31 December 2020
f. Finance income and finance costs
(cont.)
The ‘effective interest rate’ is the rate
that exactly discounts estimated future
cash payments or receipts through the
reported on a net basis as either finance
income or finance cost depending on
whether foreign currency movements are
in a net gain or net loss position.
expected life of the financial instruments
g. Income tax
to the gross carrying amount of the
financial asset or the amortised cost of
the financial asset.
In calculating income and expense, the
effective interest rate is applied to the
gross carrying amount of the asset (when
the asset is not credit impaired) or to the
amortised cost of the liability. However,
for financial assets that have become
Income tax expense comprises current
and deferred tax. It is recognised in profit
or loss except to the extent that it relates
to a business combination, or items
recognised directly in equity or in OCI.
The amount of current tax payable or
receivable is the best estimate of the tax
amount expected to be paid or received.
credit impaired subsequent to initial
i. Current tax
recognition interest income is calculated
by applying the effective interest rate to
the amortised cost of the financial asset.
If the asset is no longer credit impaired,
then the calculation of interest income
reverts to the gross basis.
Finance costs comprise interest expense
on borrowings, lease liabilities and
converting notes, foreign currency losses
and impairment losses recognised on
financial assets. Foreign exchange gains
and losses on intercompany assets
Current tax comprises the expected tax
payable or receivable on the taxable
income or loss for the year and any
adjustment to tax payable or receivable
in respect of previous years. It is
measured using tax rates enacted or
substantively enacted at the reporting
date. Current tax also includes any tax
liability arising from dividends.
Current tax assets and liabilities are
offset only if certain criteria are met.
and liabilities that are not eliminated
ii. Deferred tax
upon consolidation are recognised
in OCI. Borrowing costs that are not
directly attributable to the acquisition,
construction or production of a qualifying
asset are recognised in profit or loss
using the effective interest method.
Interest expenses includes interest
in relation to lease liabilities and is
calculated based on the bank borrowing
rate as appropriate for the lease contract,
with a range of 5.4% to 5.5% on current
leases held.
Foreign currency gains and losses are
Deferred tax is recognised in respect
of temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and the
amounts used for taxation purposes.
Deferred tax is not recognised for
temporary differences on the initial
recognition of assets or liabilities in
a transaction that is not a business
combination and that affects neither
accounting nor taxable profit or loss, or
on taxable temporary differences arising
on the initial recognition of goodwill.
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2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
Deferred tax assets are recognised
after the reporting period; or the asset is
for unused tax losses, tax credits and
cash or cash equivalent unless restricted
deductible temporary differences, to
from being exchanged or used to settle
the extent that it is probable that future
a liability for at least 12 months after the
taxable profits will be available against
reporting period. All other assets are
which they can be utilised. Deferred tax
classified as non-current.
assets are reviewed at each reporting
date and are reduced to the extent that it
is no longer probable that the related tax
benefit will be realised; such reductions
are reversed when the probability of
future taxable profits improves.
A liability is classified as current when:
it is either expected to be settled in the
Group’s normal operating cycle; it is
held primarily for the purpose of trading;
it is due to be settled within 12 months
after the reporting period; or there is no
Unrecognised deferred tax assets are
unconditional right to defer the settlement
reassessed at each reporting date and
recognised to the extent that it has
of the liability for at least 12 months after
the reporting period. All other liabilities
become probable that future taxable
are classified as non-current.
profits will be available against which they
can be used.
Deferred tax is measured at the tax
rates that are expected to be applied to
temporary differences when they reverse,
using tax rates enacted or substantively
enacted at the reporting date.
The measurement of deferred tax reflects
the tax consequences that could follow
the manner in which the Group expects,
at the reporting date, to recover or settle
the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are
offset only if certain criteria are met.
h. Current and non-current classification
Assets and liabilities are presented in the
statement of financial position based on
current and non-current classification.
An asset is classified as current when:
it is either expected to be realised or
intended to be sold or consumed in the
Group’s normal operating cycle; it is held
primarily for the purpose of trading; it is
expected to be realised within 12 months
Deferred tax assets and liabilities are
always classified as non-current.
i. Cash and cash equivalents
Cash and cash equivalents includes
cash on hand, deposits held at call with
financial institutions, other short-term,
highly liquid investments with original
maturities of three months or less
that are readily convertible to known
amounts of cash and which are subject
to an insignificant risk of changes in
value. For the statement of cash flows
presentation purposes, cash and
cash equivalents also includes bank
overdrafts, which are shown within
borrowings in current liabilities on the
statement of financial position.
j. 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.
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For the Year Ended 31 December 2020
j. Trade and other receivables (cont.)
ii. Subsequent expenditure
Trade receivables are generally due for
Subsequent expenditure is capitalised
settlement within 30 days.
The Group 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.
Other receivables are recognised at
amortised cost, less any allowance for
expected credit losses.
k. Inventories
only when it is probable that the future
economic benefits associated with the
expenditure will flow to the Group.
iii. Depreciation
Depreciation is calculated based on the
cost of property, plant and equipment
less their estimated residual values using
the straight line basis over their estimated
useful lives, and is generally recognised
in profit or loss. Right-of-use assets are
depreciated over the shorter of the lease
term and their useful lives unless it is
reasonably certain that the Group will
Inventories are measured at the lower
obtain ownership by the end of the lease
of cost and net realisable value. The
term. Land is not depreciated.
cost of inventories is based on the
first in, first out principle.
The estimated useful lives of property,
plant and equipment are as follows:
l. Property, plant and equipment
FIXED ASSET CLASS
USEFUL LIFE
i. Recognition and measurement
Items of property, plant and equipment
are measured at cost less accumulated
depreciation and accumulated
impairment losses. Cost includes
Leasehold improvements
5-15 years
Plant and equipment
Furniture and fittings
5 years
5 years
expenditure that is directly attributable to
Depreciation methods, useful lives
the acquisition of the asset. If significant
and residual values are reviewed at
parts of an item of property, plant and
equipment have different useful lives,
they are accounted for as separate items
(major components) of property, plant
and equipment.
An item of property, plant and equipment
is derecognised upon disposal or when
there is no future economic benefit to
the consolidated entity. Gains and losses
between the carrying amount and the
disposal proceeds are taken to profit
or loss. Any revaluation surplus reserve
relating to the item disposed of is
transferred directly to retained profits.
each reporting date and adjusted if
appropriate.
m. Right-of-use assets
i. Recognition and measurement
A right-of-use asset is recognised at
the commencement date of a lease.
The right-of-use asset is measured at
cost, which comprises the initial amount
of the lease liability, adjusted for, as
applicable, any lease payments made at
or before the commencement date net
of any lease incentives received,
55
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
any initial direct costs incurred, and,
amortisation and any accumulated
except where included in the cost
impairment losses.
of inventories, an estimate of costs
expected to be incurred for dismantling
and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on
a straight line basis over the unexpired
period of the lease or the estimated
useful life of the asset, whichever is
the shorter. Where the Group expects
to obtain ownership of the leased
Patents
Expenditure is capitalised in relation to
patent application costs and amortised
over the remaining life of the base patent as
relevant. Costs will be no longer capitalised
in the event that a patent application is
no longer being pursued with any existing
capitalised costs being impaired as an
expense in the profit or loss.
asset at the end of the lease term, the
Computer software
depreciation is over its estimated useful
life. Right-of-use assets are subject
to impairment or adjusted for any
remeasurement of lease liabilities.
The Group has elected not to recognise
a right-of-use asset and corresponding
lease liability for short-term leases with
terms of 12 months or less and leases
of low value assets. Lease payments on
these assets are expensed to profit or
loss as incurred.
n. Intangibles
Computer software comprises computer
application system software and
licenses. Costs incurred in developing
products or systems and costs incurred
in acquiring software and licenses
that will contribute to future period
financial benefits through revenue
generation and/or cost reduction are
capitalised to computer software. Costs
capitalised include external direct costs
of materials and services, direct payroll
and payroll related costs.
ii. Subsequent expenditure
i. Recognition and measurement
Subsequent expenditure is capitalised
Research and development expenditure
Expenditure on research activities
is recognised in profit or loss as
incurred. Development expenditure is
capitalised only if development costs
can be measured reliably, the product or
only when it increases the future
economic benefits embodied in the
specific asset to which it relates. All other
expenditure, including expenditure on
internally generated goodwill and brands,
is recognised in profit or loss as incurred.
process is technically and commercially
iii. Amortisation
feasible, future economic benefits are
probable, and the Group intends to and
has sufficient resources to complete
development and to use or sell the asset.
Otherwise it is recognised in profit or
loss as incurred. Subsequent to initial
recognition, development expenditure
is measured at cost less accumulated
Amortisation is calculated based on
the cost of intangible assets less
their estimated residual values using
the straight line method over their
estimated useful lives, and is generally
recognised in profit or loss.
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For the Year Ended 31 December 2020
iii. Amortisation (cont.)
q. Leases
The estimated useful lives of
intangible assets are as follows:
Development expenditure
8 years
i. Definition of a new lease
The determination of whether a
contract contains a lease is on the
basis of whether the customer has
Computer software
2-3 years
the right to control the use of an
Patents
8-15 years
Amortisation methods, useful lives
and residual values are reviewed at
each reporting date and adjusted if
appropriate.
Intangible assets, other than goodwill,
have finite useful lives.
o. Trade and other payables
These amounts represent liabilities
for goods and services provided to
the Group prior to the end of the
financial year and which are unpaid.
Due to their short-term nature they are
measured at amortised cost and are not
discounted. The amounts are unsecured
and are usually paid within 30 days of
recognition.
p. Contract liabilities
Contract liabilities represent the
consolidated entity’s obligation
to transfer goods or services to a
customer and are recognised when a
customer pays consideration, or when
the Group recognises a receivable
to reflect its unconditional right to
consideration (whichever is earlier)
before the Group has transferred the
goods or services to the customer.
identified asset for a period of time in
exchange for consideration. The Group
has applied this definition to all lease
contracts currently held.
ii. Lessee accounting
For all contracts determined to
constitute a lease, right-of-use assets
and lease liabilities are recognised in
the consolidated statement of financial
position, initially measured at the
present value of future lease payments.
When measuring these lease liabilities,
the Group discounted lease payments
using the interest rate implicit in the
lease contract.
Right-of-use assets are tested for
impairment in accordance with AASB
136 Impairment of assets. Lease
incentives, if relevant, are recognised
as part of the measurement of the
right-of-use assets and lease liabilities.
Depreciation is expensed on right-
of-use assets and interest on lease
liabilities, both recognised in the
consolidated statement of profit or loss.
For presentation purposes, the total
amount of cash paid in relation to
leases is separated into a principal
portion (presented within financial
activities) and interest on lease
liabilities, both recognised in the
consolidated statement of profit or loss.
57
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
For short-term leases (lease term of 12
benefits are measured at the present value
months or less) and leases of low value
of the expected future payments to be made
assets, the Group has opted to recognise
to employees. Expected future payments
a lease expense on a straight line basis.
incorporate anticipated future wage and
This expense is presented within other
salary levels, duration of service and
expenses in the consolidated statement
of profit or loss.
employee departures and are discounted
at rates determined by reference to market
r. Provisions
A provision is recognised if, as a result
of a past event, the Group has a present
legal or constructive obligation that can be
estimated reliably and if it is probable that
an outflow of economic benefits will be
required to settle the obligation. Provisions
are determined by discounting the
expected future cash flows at a pre-tax rate
that reflects current market assessments
of the time value of money and the risks
specific to the liability. The unwinding of the
discount is recognised as a finance cost.
s. Employee benefits
i. Short-term employee benefits
Short-term employee benefits are benefits
(other than termination benefits) that are
expected to be settled within 12 months
of the end of the financial year in which
employees render the related service. Short-
term employee benefits include salaries
and wages plus related on costs such as
payroll tax, superannuation and workers
compensation insurance and are measured
at the undiscounted amounts expected to
be paid when the obligation is settled.
ii. Long-term employee benefits
Long-term employee benefits include
employees’ long service leave and annual
leave entitlements not expected to be
settled within 12 months of the end of the
yields at the end of the reporting period
on corporate bonds that have maturity
dates that approximate the terms of the
obligations. Any remeasurements for
changes in assumptions of obligations for
long-term employee benefits are recognised
in profit or loss in the periods in which the
changes occur.
iii. Defined contribution plans
A defined contribution plan is a post-
employment benefit plan under which
an entity pays fixed contributions into
a separate entity and will have no legal
or constructive obligation to pay further
amounts. Obligations for contributions to
employees’ defined contribution plans are
recognised as an expense as the related
service is provided. Prepaid contributions
are recognised as an asset to the extent
that a cash refund or a reduction in future
payments is available.
iv. Share-based payment arrangements
The grant date fair value of options
granted to employees (equity settled) is
recognised as an employee expense,
with a corresponding increase in equity,
over the period in which the employees
become entitled to the options. The amount
recognised as an expense is adjusted to
reflect the number of options for which the
related service and non market performance
conditions are expected to be met, such that
the amount ultimately recognised is based
on the number of options that meet the
financial year in which employees render the
related service and non market performance
related service. Other long-term employee
conditions at the vesting date.
58
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
t. Financial instruments
i. Recognition and initial measurement
the effective interest method. Interest
expense and foreign exchange gains and
losses are recognised in profit or loss.
The Group initially recognises trade
Any gain or loss on derecognition is also
receivables issued on the date that they
recognised in profit or loss.
are originated. All other financial assets
and financial liabilities are recognised
initially on the trade date.
iii. Derecognition
Financial assets
ii. Classification and subsequent
measurement
Financial assets
On initial recognition, a financial asset
is classified as measured at amortised
cost or fair value through profit or loss
(“FVTPL”).
Financial assets at amortised cost are
subsequently measured at amortised
cost using the effective interest method.
The amortised cost is reduced by
impairment losses. Interest income,
foreign exchange gains and losses and
impairment are recognised in profit or
The Group derecognises a financial
asset when the contractual rights to
the cash flows from the asset expire,
or it transfers the rights to receive the
contractual cash flows in a transaction
in which substantially all the risks and
rewards of ownership of the financial
asset are transferred or it neither transfers
nor retains substantially all of the risks
and rewards of ownership and does not
retain control over the transferred asset.
Any interest in transferred financial assets
that is created or retained by the Group is
recognised as a separate asset or liability.
loss. Any gain or loss on derecognition is
Financial liabilities
recognised in profit or loss.
Financial assets at FVTPL are
subsequently measured at fair value. Net
gains and losses, including any interest
or dividend income, are recognised in
profit or loss.
Financial liabilities
Financial liabilities are classified as
measured at amortised cost or FVTPL. A
financial liability is classified as at FVTPL
if it is classified as held for trading, it is a
derivative or it is designated as such on
initial recognition. Financial liabilities at
FVTPL are measured at fair value and net
gains and losses, including any interest
expense, are recognised in profit or loss.
Other financial liabilities are subsequently
measured at amortised cost using
The Group derecognises a financial
liability when its contractual obligations
are discharged or cancelled, or expired.
iv. Offsetting
Financial assets and financial liabilities
are offset and the net amount presented
in the statement of financial position
when, and only when, the Group
currently has a legally enforceable right
to set off the amounts and it intends
either to settle them on a net basis or to
realise the asset and settle the liability
simultaneously.
59
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
u. Impairment
The Group recognises loss allowances
for expected credit losses (“ECL”) on
financial assets and contract assets. Loss
allowances where relevant are measured at
an amount equal to a 12 month ECL.
When determining whether the credit
risk of a financial asset has increased
significantly since initial recognition
and when estimating ECL’s, the Group
considers reasonable and supportable
information that is relevant and available
without undue cost or effort. This
includes both quantitative and qualitative
information and analysis, based on the
Group’s historical experience and informed
credit assessment and including forward
looking information.
The Group assumes that the credit risk on
a financial asset has increased significantly
if it is more than 90 days past due.
The Group considers a financial asset to
be in default when the borrower is unlikely
to pay its obligations to the Group in full or
the financial asset is more than 130 days
past due.
ECLs are a probability weighted estimate
of credit losses and are measured as
the present value of all cash shortfalls
discounted at the effective interest rate.
Loss allowances for financial assets
measured at amortised cost are deducted
from the gross carrying amount.
An impairment loss in respect of a financial
asset measured at amortised cost is
calculated as the difference between its
carrying amount and the present value of
the estimated future cash flows discounted
at the asset’s original effective interest
rate. Losses are recognised in profit or
loss and reflected in an allowance account
against loans and receivables. Interest
on the impaired asset continues to be
recognised. When a subsequent event
causes the amount of impairment loss
to decrease, the decrease in impairment
loss is reversed through profit or loss.
v. Share capital
Ordinary shares
Incremental costs directly attributable
to the issue of ordinary shares, net of
any tax effects, are recognised as a
deduction from equity.
w. Converting notes
Converting notes issued by the Company
were converted to ordinary shares in
accordance with the terms detailed in
Note 20.
The liability component of the converting
notes is initially recognised at fair value.
Any directly attributable transaction costs
are allocated against the liability.
Subsequent to initial recognition, the
liability component of a converting note
is measured at amortised cost using the
effective interest method.
Interest related to the financial liability
is recognised in profit or loss. On
conversion, the financial liability is
reclassified to equity and no gain or loss
is recognised.
x. Fair value measurement
‘Fair value’ is 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 in the principal or, in
its absence, the most advantageous
60
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
x. Fair value measurement (cont.)
market to which the Group has access
at that date. The fair value of a liability
reflects its non-performance risk.
A number of the Group’s accounting
policies and disclosures require the
measurement of fair values, for both
financial and non-financial assets and
liabilities. When one is available, the Group
measures the fair value using the quoted
price in an active market. A market is
regarded as ‘active’ if transactions for the
asset or liability take place with sufficient
frequency and volume to provide pricing
information on an ongoing basis.
bonus elements in ordinary shares
issued during the financial year.
ii. Diluted earnings per share
Diluted earnings per share adjusts the
figures used in the determination of basic
earnings per share to take into account
the after income tax effect of interest
and other financing costs associated
with dilutive potential ordinary shares
and the weighted average number of
shares assumed to have been issued for
no consideration in relation to dilutive
potential ordinary shares.
aa. Goods and Services Tax (‘GST’)
If there is no quoted price in an active
and other similar taxes
market, then the Group uses valuation
techniques that maximise the use of
relevant observable inputs and minimise
the use of unobservable inputs.
The chosen valuation technique
incorporates all of the factors that market
participants would take into account in
pricing a transaction.
y. Segment reporting
Operating segments are reported in
a manner consistent with the internal
reporting provided to the Chief Operating
Decision Maker (“CODM”). The CODM is
Revenues, expenses and assets
are recognised net of the amount
of associated GST, unless the GST
incurred is not recoverable from the tax
authority. In this case it is recognised as
part of the cost of the acquisition of the
asset or as part of the expense.
Receivables and payables are stated
inclusive of the amount of GST
receivable or payable. The net amount
of GST recoverable from, or payable
to, the tax authority is included in other
receivables or other payables in the
statement of financial position.
responsible for allocating resources and
Cash flows are presented on a gross
assessing performance of the operating
basis. The GST components of cash
segments.
i. Basic earnings per share
flows arising from investing or financing
activities which are recoverable from,
or payable to the tax authority, are
Basic earnings per share is calculated
presented as operating cash flows.
by dividing the profit or loss attributable
to the owners of the Company excluding
any costs of servicing equity other than
ordinary shares, by the weighted average
number of ordinary shares outstanding
during the financial year, adjusted for
Commitments and contingencies are
disclosed net of the amount of GST
recoverable from, or payable to, the
tax authority.
61
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
4. Standards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 January
2020 and earlier application is permitted; however, the Group has not early adopted the
new or amended standards in preparing these consolidated financial statements.
The Group plans to apply the amendments when they become effective and they are not
expected to have a significant impact on the Group’s consolidated financial statements:
i.
Interest Rate Benchmark Reform – Phase 2 (Amendments to AASB 9, IAS 39, AASB 7,
AASB 4 and AASB 16)
ii. COVID 19 – Related rent concessions (Amendment to AASB 16)
iii. Property, plant and equipment: proceeds before intended use (Amendments to IAS 16)
iv. Reference to Conceptual Framework (Amendments to AASB 3)
v. Classification of liabilities as current or non-current (Amendments to IAS 1)
62
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
5. Revenue and Other Income
In USD
Revenue from contracts with customers
2020
$
3,440,975
2019
$
4,060,800
Identification of reporting operating segments
The Group operates in one segment, based on the internal reports that are reviewed and used by the
Board of Directors (who are identified as the Chief Operating Decision Makers (CODM)) in assessing
performance and in determining the allocation of resources.
In USD
United States of America
Australia
REVENUE FROM CONTRACTS
WITH CUSTOMERS
GEOGRAPHICAL
NON-CURRENT ASSETS
2020
$
3,353,331
87,644
3,440,975
2019
$
3,973,254
87,546
4,060,800
2020
$
1,486,004
1,900,986
3,386,990
2019
$
1,681,987
1,733,892
3,415,879
Major customers
Revenues from two major customers of the Group represented 91% (2019: 97%) of the Group’s total revenue.
OTHER INCOME
In USD
Grant income
Government assistance – COVID-19
Other income
2020
$
–
318,077
38,497
356,574
2019
$
35,365
–
–
35,365
Income received in relation to grants will only be recognised when there is reasonable assurance
when all conditions attaching to the grant have been complied with.
63
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
6. Individually Significant Items
The loss from ordinary activities before income tax includes the following expenses:
In USD
Included in selling and distribution expenses
Depreciation and amortisation
Included in research and development expenses
Depreciation and amortisation
Included in administrative expenses
Depreciation and amortisation
7. Other Expenses
In USD
Loss on sale of fixed asset
Impairment loss on intangibles
Impairment loss on property, plant and equipment
8. Employee Expenses
In USD
Salaries and wages
Contributions to defined contribution funds
Share-based payments
9. Finance Income
In USD
Interest income
Interest income (loan to shareholder)
Net foreign exchange gain
2020
$
22,735
480,139
198,726
2020
$
2,796
7,605
2,951
13,352
2020
$
7,034,911
41,157
482,973
7,559,041
2020
$
105,983
1,266
190,005
297,254
2019
$
31,119
336,697
197,424
2019
$
2,368
60,603
–
62,971
2019
$
7,186,191
67,134
652,826
7,906,151
2019
$
235,821
4,567
38,330
278,718
64
#NextScienceHeals
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
10. Finance Costs
In USD
Interest expense on converting note
Notional interest expense – converting notes
Interest expense on lease liabilities
2020
$
–
–
21,179
21,179
2019
$
183,275
1,917,869
28,280
2,129,424
11. Income Tax Expense
Income tax expense comprises current and deferred tax expense and is recognised in profit or
loss, except to the extent that it relates to a business combination or items recognised directly
in equity or other comprehensive income. The components of tax expense comprise:
In USD
Current tax
Deferred tax
2020
2019
$
–
–
–
$
–
–
–
Reconciliation of income tax to accounting profit:
Loss before income tax
(11,912,004)
(14,351,828)
Prima facie tax benefit on profit from ordinary activities
before income tax at 27.5% (2019: 27.5%)
(3,275,801)
(3,946,753)
Tax effect of:
Permanent differences
Effect of tax rate in foreign jurisdictions
Tax losses not brought to account
Total income tax expense
242,329
(251,448)
3,284,920
–
993,799
68,203
2,884,751
–
The unused tax losses as at 31 December were as follows:
Australia unused tax losses (in AUD)
USD unused tax losses (in USD)
2020
$
30,652,663
21,503,856
2019
$
22,594,311
17,653,432
Tax losses are recognised only to the extent that it is probable that the future taxable profit will be
available against which the benefits can be utilised. Management has considered all the facts and
circumstances and believe there is no material uncertainty over the availability of the tax losses.
65
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
Australian entities
Movement in deferred tax assets and liabilities using the Company’s
domestic Australian tax rate of 27.5%
In USD
2020 cost
Intangibles
Employee benefits
Accrued expenses
Deferred revenue
OPENING
BALANCE
RECOGNISED IN
PROFIT OR LOSS
CLOSING
BALANCE
$
$
$
(459,833)
(60,272)
(520,105)
15,890
18,512
468,577
7,913
(9,257)
23,803
9,255
434,541
903,118
Unused tax losses carried forward
4,619,568
1,530,402
6,149,970
Other items
(28,185)
(11,299)
(39,484)
Deferred tax assets not recognised
(4,634,529)
(1,892,028)
(6,526,557)
Deferred tax assets/(liabilities)
–
–
–
2019 cost
Intangibles
Employee benefits
Accrued expenses
Deferred revenue
(169,542)
(290,291)
(459,833)
11,563
42,004
520,582
4,327
(23,492)
(52,005)
15,890
18,512
468,577
Unused tax losses carried forward
1,323,725
3,295,843
4,619,568
Other items
(48,596)
20,411
(28,185)
Deferred tax assets not recognised
(1,679,736)
(2,954,793)
(4,634,529)
Deferred tax assets/(liabilities)
–
–
–
66
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
11. Income Tax Expense (cont.)
US entities
Movement in deferred tax assets and liabilities using the US tax rate of 26.5%
In USD
2020 cost
Intangibles
Employee benefits
Accrued expenses
OPENING
BALANCE
RECOGNISED IN
PROFIT OR LOSS
CLOSING
BALANCE
$
$
$
(130,439)
4,097
77,307
12,873
(3,022)
26,811
(117,566)
1,075
104,118
Unused tax losses carried forward
4,673,389
1,025,132
5,698,521
Other items
(8,892)
(31,397)
(40,289)
Deferred tax assets not recognised
(4,615,462)
(1,030,397)
(5,645,859)
Deferred tax assets/(liabilities)
–
–
–
2019 cost
Intangibles
Employee benefits
Accrued expenses
(150,248)
19,809
(130,439)
18,267
86,627
(14,170)
(9,320)
4,097
77,307
Unused tax losses carried forward
4,951,447
(278,058)
4,673,389
Other items
(29,259)
20,367
(8,892)
Deferred tax assets not recognised
(4,876,834)
261,372
(4,615,462)
Deferred tax assets/(liabilities)
–
–
–
12. Cash and Cash Equivalents
In USD
Cash at bank
2020
$
8,100,416
8,100,416
2019
$
6,556,808
6,556,808
Term deposits have been reclassified from cash to other current assets for the prior financial
year. Refer to note 15.
67
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
12. Cash and Cash Equivalents (cont.)
Reconciliation of cash flows from operating activities
In USD
Loss for the year
Adjustments for:
Depreciation and amortisation
Interest income (Note 9)
Accrued interest on converting notes (Note 10)
Share-based payments (Note 8)
Unrealised foreign currency translation (gain) / loss
Directors fees paid as shares (Note 24)
Notional interest expense on converting notes (Note 20)
Interest expense on right-of-use assets (Note 18)
Loss on sale of fixed asset (Note 16)
Impairment of intangible assets (Note 17)
Impairment of property, plant and equipment (Note 16)
Amortisation element of capital raising fee
Operating loss before changes in working capital
and provisions
Change in operating assets and liabilities
Change in trade and other receivables
Change in inventories
Change in other current assets
Change in trade and other payables
Change in employee benefits
Change in contract liabilities
2020
$
2019
$
(11,912,004)
(14,351,828)
701,600
(1,266)
–
482,973
(72,143)
30,520
–
21,179
2,796
7,606
2,951
–
565,239
(4,567)
183,275
652,826
8,612
93,096
1,917,869
28,281
2,367
60,603
–
273,798
(10,735,788)
(10,570,429)
(2,097,048)
(629,516)
28,300
(28,011)
(24,730)
1,580,149
(1,170,856)
(578,351)
(223,094)
(833,790)
(30,736)
93,955
(189,111)
(1,761,127)
Net cash from operating activities
(11,906,644)
(12,331,556)
68
#NextScienceHeals
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
13. Trade and Other Receivables
In USD
Current
Trade receivables
Loan to shareholders
Non-Current
Security deposit
2020
$
3,388,045
–
3,388,045
36,656
36,656
2019
$
1,460,025
180,357
1,640,382
36,656
36,656
The carrying value of receivables is considered a reasonable approximation of fair value due to the
short term nature of the balances. The Group has assessed any potential credit risk associated
with these counterparties and deemed ECL to be insignificant.
14. Inventories
In USD
Finished goods - at cost
Raw materials - at cost
Less: provision for obsolete stock
15. Other Current Assets
In USD
Current
Prepayments and other assets
Term deposits (i)
2020
$
631,644
539,923
1,171,567
(99,588)
1,071,979
2020
$
452,458
7,238,986
7,691,444
2019
$
380,112
161,939
542,051
(141,691)
400,360
2019
$
332,504
10,353,797
10,686,301
i. Term deposits with a maturity of greater than 3 months have been reclassified from cash to
other current assets for the prior financial year.
69
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
16. Property, Plant and Equipment
In USD
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
Furniture, fixtures and fittings
At cost
Accumulated depreciation
Total furniture, fixtures and fittings
Leasehold Improvements
At cost
Accumulated amortisation
Total leasehold improvements
Total property, plant and equipment
2020
$
1,120,117
(572,261)
547,856
236,866
(135,140)
101,726
201,121
(62,570)
138,551
788,133
2019
$
954,375
(412,124)
542,251
207,025
(95,603)
111,422
198,975
(40,061)
158,914
812,587
Reconciliations of the written down values at the beginning and end of the current financial
year and previous financial period are set out below.
In USD
Balance at 1 January 2020
Additions
Disposals
Depreciation expense
Impairment loss
Foreign exchange movements
PLANT AND
EQUIPMENT
FURNITURE
AND FITTINGS
LEASEHOLD
IMPROVEMENTS
$
$
$
542,251
174,056
(1,144)
111,422
158,914
39,188
(1,652)
–
–
TOTAL
$
812,587
213,244
(2,796)
(167,307)
(44,281)
(20,381)
(231,969)
–
–
(2,951)
–
–
18
(2,951)
18
Balance at the end of the year
547,856
101,726
138,551
788,133
Balance at 1 January 2019
Additions
Disposals
352,322
332,422
(1,967)
106,280
180,032
42,261
–
–
(400)
638,634
374,683
(2,367)
Depreciation expense
(140,524)
(37,119)
(20,528)
(198,171)
Foreign exchange movements
(2)
–
(190)
(192)
Balance at the end of the year
542,251
111,422
158,914
812,587
An impairment loss of $2,951 (2019: Nil) was recognised during the financial year in relation to
water damage of cabinet countertops in the Jacksonville office, Florida USA.
70
#NextScienceHeals
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
17. Intangible Assets
In USD
Patents and trademarks
Cost
Accumulated amortisation
Net book value
Research and development expenditure
Cost
Accumulated amortisation
Net book value
Computer software
Cost
Accumulated amortisation
Net book value
Total Intangibles
2020
$
1,288,497
(326,387)
962,110
1,623,330
(252,141)
1,371,189
125,646
(124,009)
1,637
2,334,936
PATENTS AND
TRADEMARKS
RESEARCH AND
DEVELOPMENT
COMPUTER
SOFTWARE
2019
$
1,078,679
(231,058)
847,621
1,369,252
(81,388)
1,287,864
121,276
(92,416)
28,860
2,164,345
TOTAL
$
In USD
Balance at 1 January 2020
Additions
Impairment loss
Amortisation expense
Foreign exchange movements
$
847,621
219,477
(7,605)
(97,383)
–
$
$
1,287,864
28,860
2,164,345
254,078
–
–
–
473,555
(7,605)
(170,753)
(26,379)
(294,514)
–
(844)
1,637
(844)
2,334,936
Closing value at 31 December 2020
962,110
1,371,189
Balance at 1 January 2019
Additions
Impairment loss
Amortisation expense
Foreign exchange movements
738,944
254,269
(60,603)
(85,122)
133
378,979
976,072
–
65,567
1,183,490
3,000
1,233,341
–
(60,603)
(67,395)
(39,108)
(191,625)
208
(599)
(258)
Closing value at 31 December 2019
847,621
1,287,864
28,860
2,164,345
An impairment loss of $7,606 (2019: $60,603) was recognised during the financial year in relation
to legal costs previously capitalised for patents under application now no longer being pursued.
71
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
18. Right-of-use Assets
The Group holds leases for properties with lease terms ranging from 3 to 4.6 years. AASB
16, Leases, has been adopted with a modified retrospective transition approach.
In USD
Property – right-of-use asset
Accumulated depreciation
Amounts recognised in profit or loss
Depreciation expensed
Interest expense
Expense relating to variable lease payments not included in
the measurement of the lease liability
Total property, plant and equipment
2020
$
587,668
(360,403)
227,265
175,116
21,179
89,390
285,685
2019
$
577,734
(175,443)
402,291
175,443
28,281
84,290
288,014
The total cash outflow in relation to lease payments amounted to USD $222,609 (2019: USD $210,334).
Movement
In USD
Balance at 1 January 2020
Additions
Depreciation expense
Foreign exchange movements
Closing value at 31 December 2020
Balance at 1 January 2019
Additions
Depreciation expense
Foreign exchange movements
PROPERTY
$
402,291
–
(175,116)
90
227,265
–
577,734
(175,443)
–
Closing value at 31 December 2019
402,291
19. Trade and Other Payables
In USD
Current
Trade payables
Other payables and accrued expenses
2020
$
571,460
492,905
1,064,365
2019
$
628,035
448,637
1,076,672
All amounts are short-term and the carrying values are considered to be a reasonable approximation of fair value.
72
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1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
20. Loans and Borrowings
Converting notes
In USD
Balance at 1 January 2019
Proceeds from issue of convertible notes
Interest expense accrued
Transaction costs recognised in profit or loss
Notional interest on converting notes
Effect of movement in exchange rates
Issue of ordinary shares upon conversion in April 2019
Carrying amount of liability at 31 December 2019
2019
$
7,069,417
70,798
183,275
289,493
1,917,869
285,433
(9,816,285)
–
On 8 April 2019, the non-redeemable converting notes converted to ordinary shares following the Initial
Public Offering (IPO). The conversion price of converting notes to ordinary shares was AUD$0.80.
21. Contract Liabilities
In USD
Current
Contract liabilities
Non-Current
Contract liabilities
2020
$
2019
$
1,909,554
375,106
1,374,510
1,328,809
Contract liabilities relate to consideration received in advance from customers for which revenue
will be recognised as and when products are delivered or other performance obligations met.
73
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
22. Lease Liabilities
In USD
Current
Lease liabilities
Non-Current
Lease liabilities
Maturity analysis
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
23. Employee Benefits
In USD
Current
Liability for annual leave
Non-Current
2020
$
2019
$
170,946
196,442
115,889
286,835
170,946
115,889
–
286,835
286,012
482,454
196,442
286,012
–
482,454
2020
$
2019
$
81,231
69,552
Liability for long service leave
9,385
3,691
74
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1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
24. Capital and Reserves
a. Share capital
In number of shares
FULLY PAID
PARTLY PAID
TOTAL
Share split on 24 January 2019
129,376,000
650,000
130,026,000
Shares issued in February 2019
(on conversion of employee share options)
Shares issued in April 2019 on conversion
of converting notes to shares
Shares issued in April 2019 upon IPO
Shares issued in September 2019
(on conversion of employee share options)
Shares issued in September 2019 in lieu
of Non-Executive Director fees
Shares issued in December 2019
(on conversion of employee share options)
Shares issued in December 2019 in lieu
of Non-Executive Director fees
Shares issued in December 2019
(on conversion of employee share options)
314,502
13,824,063
35,000,010
650,000
53,441
565,500
16,842
260,000
–
–
–
–
–
–
–
–
314,502
13,824,063
35,000,010
650,000
53,441
565,500
16,842
260,000
Balance as at 31 December 2019
180,060,358
650,000
180,710,358
Shares issued in March 2020
(on conversion of employee share options) (i)
Partly paid shares converted into fully paid
shares in April 2020
Shares issued in May 2020 in lieu of Non-Executive
Director fees (ii)
Shares issued in July 2020
(on conversion of employee share options) (iii)
Shares issued in July 2020
(on conversion of employee share options) (iv)
Placement in September 2020 (v)
Share purchase plan in October 2020 (vi)
Shares issued in October 2020
(on conversion of employee share options) (vii)
Placement in November 2020 (viii)
Balance as at 31 December 2020
162,500
–
162,500
650,000
(650,000)
–
23,820
325,000
325,000
6,666,666
4,236,898
84,500
1,666,667
194,201,409
–
–
–
–
–
–
–
–
23,820
325,000
325,000
6,666,666
4,236,898
84,500
1,666,667
194,201,409
75
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
24. Capital and Reserves (cont.)
In USD
FULLY PAID
PARTLY PAID
TOTAL
$
$
$
Balance at 1 January 2019
56,389,406
199,999
56,589,405
Shares issued in February 2019
(on conversion of employee share options)
Shares issued in April 2019 on conversion
of converting notes to shares
Shares issued in April 2019 upon IPO
Shares issued in September 2019
(on conversion of employee share options)
Shares issued in September 2019 in lieu
of Non-Executive Director fees
Shares issued in December 2019
(on conversion of employee share options)
Shares issued in December 2019 in lieu
of Non-Executive Director fees
Shares issued in December 2019
(on conversion of employee share options)
Capital raising costs
178,856
9,816,285
25,052,313
201,500
60,443
175,305
32,652
109,200
(1,522,369)
–
–
–
–
–
–
–
–
–
178,856
9,816,285
25,052,313
201,500
60,443
175,305
32,652
109,200
(1,522,369)
Balance as at 31 December 2019
90,493,591
199,999
90,693,590
Shares issued in March 2020
(on conversion of employee share options) (i)
Partly paid shares converted into fully paid
shares in April 2020
Shares issued in May 2020 in lieu of Non-Executive
Director fees (ii)
Shares issued in July 2020
(on conversion of employee share options) (iii)
Shares issued in July 2020
(on conversion of employee share options) (iv)
Placement in September 2020 (v)
Share purchase plan in October 2020 (vi)
Shares issued in October 2020
(on conversion of employee share options) (vii)
Placement in November 2020 (viii)
Capital raising costs
50,377
199,999
30,520
100,750
136,500
5,627,879
3,550,085
26,195
1,453,310
(387,739)
Balance as at 31 December 2020
101,281,467
–
(199,999)
–
–
–
–
–
–
–
–
–
50,377
–
30,520
100,750
136,500
5,627,879
3,550,085
26,195
1,453,310
(387,739)
101,281,467
76
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
24. Capital and Reserves (cont.)
i. On 2 March 2020, 162,500 round 2 Equity Incentive Plan (ECP) employee share options
converted to 162,500 ordinary shares at a price of AUD$0.47.
ii. On 6 May 2020, the following ordinary shares were issued in lieu of non-executive directors fees:
‧ 12,537 ordinary shares were issued at a price of AUD$1.99 to Daniel Spira
‧ 11,283 ordinary shares were issued at a price of AUD$1.99 to Aileen Stockburger
iii. On 2 July 2020, 325,000 round 2 Equity Incentive Plan (ECP) employee share options converted
to 325,000 ordinary shares at a price of AUD$0.45.
iv. On 2 July 2020, 325,000 round 2 Equity Incentive Plan (ECP) employee share options converted
to 325,000 ordinary shares at a price of AUD$0.61.
v. On 24 September 2020, Next Science raised A$7,999,999 via a Placement at A$1.20 per share.
vi. On 19 October 2020, Next Science raised A$4,999,663 via a Share Purchase Plan at A$1.18 per share.
vii. On 23 October 2020, 84,500 round 2 Equity Incentive Plan (ECP) employee share options
converted to 84,500 ordinary shares at a price of AUD$0.44.
viii. On 19 November 2020, Next Science raised A$2,000,000 via a Placement at A$1.20, approved
by shareholders at a general meeting held on 18 November 2020.
Ordinary shares
Fully paid ordinary shares
Ordinary shares participate in dividends and the proceeds on winding up of the Company
in proportion to the number of shares held. At shareholders’ meetings, each ordinary
share is entitled to one vote when a poll is called.
Partly paid ordinary shares
The partly paid ordinary shares are called on in accordance with their underlying
arrangements (due for payment April 2020) and as required by the Company. In any case,
on winding up the company, the balance of partly paid shares, if any, may be called up. The
proceeds on winding up are proportional to the amounts paid on partly paid shares. Partly
paid shares carry equal dividend participation and voting rights as fully paid shares, although
any dividends must be first be applied to the unpaid balance on the shares.
b. Reserves
In USD
2020
$
2019
$
Foreign currency translation reserve
(801,736)
(1,198,574)
Common control reserve
(42,596,715)
(42,596,715)
Share option reserve
2,125,541
1,648,704
(41,272,910)
(42,146,585)
77
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
Foreign currency translation reserve
The translation reserve comprises all foreign currency differences arising from the
translation of the financial statements of foreign operations where their functional
currency is different to the Group’s presentation currency.
Common control reserve
The acquisition of the share capital of Microbial Defense Systems Holdings Inc (“MDS”) by
the Company on 22 December 2017 was accounted for as a common control transaction. As
a consequence, the difference between the fair value of the consideration paid ($43,862,500)
and the existing book values of assets and liabilities of MDS ($1,265,785) were debited to a
common control reserve, directly within equity.
Share option reserve
The share option reserve comprises the value of the share-based payment arrangements
recognised in equity.
c. Dividends
No dividends were paid or declared by the Company during the financial year.
d. Dividend franking account
The Company has franking credits available to shareholders of Nil.
e. Capital management
The Group’s objectives when managing capital are to safeguard its ability to continue as a
going concern so that it can continue to provide returns for shareholders and benefits for
other stakeholders, maintain sufficient financial flexibility to pursue its growth objectives
and maintain an optimal capital structure to reduce the cost of capital.
78
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
25. Parent Entity Information
As at, and throughout, the financial year to 31 December 2020 the parent entity of the
Group was Next Science Limited.
Statement of profit or loss and other comprehensive income
In USD
Loss after income tax
Other comprehensive income / (loss)
Total comprehensive loss
PARENT 2020
PARENT 2019
$
(6,081,965)
598,176
(5,483,789)
$
(13,864,920)
(1,042,968)
(14,907,888)
Statement of financial position
In USD
Assets
Total current assets
Total non-current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
Total net assets
Equity
Share capital
Common control reserve
Foreign currency translation reserve
Share option reserve
Accumulated losses
Total equity
79
PARENT 2020
PARENT 2019
$
$
2,469,478
24,305,150
26,774,628
(423,201)
–
(423,201)
26,351,427
101,281,467
(27,257,549)
(518,738)
2,125,541
(49,279,294)
26,351,427
1,407,127
19,363,446
20,770,573
(70)
–
(70)
20,770,503
90,693,590
(27,257,549)
(1,116,913)
1,648,704
(43,197,329)
20,770,503
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees as at 31 December 2020 and 31 December 2019.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2020 and 31 December 2019.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31
December 2020 and 31 December 2019.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity,
as disclosed in note 3, except for the following:
· Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
26. Group Entities
Set out below is the Group structure listing all subsidiaries as at 31 December 2020.
NEXT SCIENCE LIMITED
(Australian Parent Entity)
NEXT SCIENCE TECHNOLOGIES PTY LTD
(FORMALLY NEXT SCIENCE PTY LTD)
(Australian Entity)
100%
NEXT SCIENCE IP
HOLDINGS PTY LTD
(Australian Entity)
100%
MICROBIAL DEFENSE SYSTEMS
HOLDINGS INC
(USA Entity)
100%
NEXT SCIENCE
MANUFACTURING, LLC
(USA Entity)
100%
NEXT
SCIENCE, LLC
(USA Entity)
100%
NEXT SCIENCE
HEALTH CARE, LLC
(USA Entity)
100%
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#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
27. Related Parties
a. Key management personnel compensation
Key management personnel (“KMP”) are defined as those persons having authority and
responsibility for planning, directing and controlling the activities of the Group, directly and
indirectly, and include the Directors, executive and non executive, as well as certain other
senior executives. The totals of remuneration of the KMP of the Company included within
employee expenses are as follows:
In USD
Short-term employee benefits
Post-employment benefits
Share-based payment benefits
2020
$
1,614,212
47,613
411,372
2,073,197
2019
$
1,498,338
66,820
575,503
2,140,661
Short-term employee benefits
Short-term employee benefits include fees and benefits paid to the executive directors and other
KMP as well as salary, fringe benefits and cash bonuses awarded to the non-executive directors.
Post-employment benefits
Post-employment benefits are the cost of superannuation contributions made during the year.
b. Key management personnel transactions
KMP’s of the Company hold 13.9% (2019: 14.6%) of the issued capital of the Company as
at 31 December 2020.
81
2020 // ANNUAL REPORT
1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
28. Share-based Employee Incentive Arrangements
Equity Incentive Plan (equity settled)
Prior to listing on the ASX, the Group established an Equity Incentive Plan (ECP) and an
Employee Share Option Plan (ESOP). The purpose of the Plans is to attract and retain the
types of employees, consultants and directors who will contribute to the Company’s long-
term success; provide incentives that align the interests of Employees, Consultants and
Directors with those of the shareholders of the Company; and promote the success of the
Company’s business. As at 31 December 2020, there are 8,092,500 options over ordinary
shares on issue (2019: 9,249,500 options), representing 4.17% (2019: 5.12%) of the
Company’s total share capital, granted to the employees and Directors of the Company.
The grant dates, vesting dates and exercise prices vary and are as follows:
GRANTED
EXERCISED (II)
LAPSED
NO OF
OPTIONS AS AT
31 DEC 2020
VESTED AS AT
31 DEC 2020
–
–
–
–
–
–
–
–
–
–
–
(247,000)
(325,000)
(162,500)
(162,500)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
734,500
734,500
2,340,000
1,560,000
1,040,000
1,040,000
78,000
78,000
2,470,000
–
(260,000)
1,430,000
1,430,000
(897,000)
(260,000)
8,092,500
4,842,500
GRANT DATE
AND VESTING
CONDITIONS (I)
EXPIRY DATE
NO OF
OPTIONS AS AT
31 DEC 2019
9-Nov-16 (2)
9-Nov-20
1-Mar-7 (2)
1-Mar-21
1-Sep-17 (1)
1-Sep-20
1-Sep-17 (2)
1-Sep-21
247,000
325,000
162,500
162,500
16-Apr-18 (1)
16-Apr-21
734,500
16-Apr-18 (5)
16-Apr-21
2,340,000
16-Apr-18 (4)
16-Apr-21
1,040,000
16-Apr-18 (2)
16-Apr-22
78,000
17-Dec-18 (3)
17-Dec-23
2,470,000
17-Dec-18 (2)
17-Dec-23
1,690,000
Totals
9,249,500
i. Vesting conditions are as follows:
1. 1 year service from grant date
2. 2 years service from grant date
3. 3 years service from grant date
4. Immediately upon grant
5. Various, including financial and non-financial conditions; relating to Judith Mitchell’s share options
ii. The weighted average share price for the options exercised during the year was USD $0.35 (2019: USD $0.37).
82
#NextScienceHeals 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
28. Share-based Employee Incentive Arrangements (cont.)
As at 31 December 2020, 4,842,500 options have vested (2019: 4,231,500 post share split).
The fair value has been measured using the Black-Scholes formula. Service and non-market
performance conditions attached to the arrangements were not taken into account in
measuring fair value.
The inputs used in the measurement of the fair values at grant date and measurement date
were as follows:
FV at grant date (USD)
Share price at grant date (USD)
Exercise price (USD)
Expected volatility
Expected life
Expected dividends
Risk free interest rate
16-APR-18
0.20-0.22
0.42
0.42
GRANT DATE
17-DEC-18
19-FEB-19
0.02
0.57
0.57
0.33
0.56
0.56
91%
3-4 years
0%
2.25%-5.0%
Expected volatility is measured based on peer companies and expected life is the number
of days until expiry.
29. Commitments and Contingencies
The Group has no capital commitments or contingencies as at 31 December 2020 (2019: nil).
30. Events Occurring After the Reporting Date
There has not arisen in the interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature likely, in the opinion of
the directors of the Group, to affect significantly the operations of the Group, the results of
those operations, or the state of affairs of the Group, in future financial years.
83
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
31. Auditors’ Remuneration
In USD
Audit and assurance related services
KPMG Australia
Audit of financial statements
Total audit and assurance services
Other services
KPMG Australia
Taxation services
Other services
Total other services
Total auditor’s remuneration
2020
$
80,372
80,372
2,432
19,230
21,662
102,034
2019
$
72,825
72,825
43,335
95,829
139,164
211,989
32. Earnings Per Share
a. Reconciliation of earnings to profit or loss from continuing operations
In USD
Loss after tax
Basic and diluted earnings per share (USD cents)
Earnings used to calculate basic EPS
from discontinuing operations
2020
$
2019
$
(11,912,004)
(14,351,828)
(6.36)
(6.00)
(8.65)
(9.00)
Weighted average number of shares
187,185,169
165,978,735
33. Financial Risk Management
a. Overview
The Group’s activities expose it to various financial risks including: credit risk, liquidity
risk and market risk.
This note presents information about the Group’s exposure to each of these risks, its
objectives, policies and processes for measuring and managing risk.
84
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1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
33. Financial Risk Management (cont.)
b. Risk management framework
The Company’s board of directors has overall responsibility for the establishment and oversight of the
Group’s risk management framework with advice from the Audit and Risk Committee (as detailed below).
The Group’s risk management policies have been established to identify and analyse the risks faced by
the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions and
the Group’s activities. The Group, through its standards and procedures, aims to maintain an effective
control environment in which all employees understand their roles and obligations.
Audit and Risk Committee
The purpose of the Audit and Risk Committee is to assist the Board with:
· oversight of financial reporting and internal and external audit functions;
· oversight of accounting, business, clinical and patient risk policies and practices;
· oversight of legal and regulatory compliance;
· oversight of internal control structure and risk management procedures;
· promoting a culture of compliance across the Group companies; and
· providing a forum of communication between the Board and the Company’s external auditor,
internal auditor (if any) and Company’s management in relation to audit and risk matters.
The Audit and Risk Committee Charter has responsibility pursuant to its Charter for oversight of
the Company’s financial and risk management procedures. The Board currently considers these
processes appropriate for the size and level of operations of the Company.
c. Credit risk
Cash and cash equivalents
The Group held cash and cash equivalents of USD $8,100,416 and USD $7,238,986 in
term deposits at 31 December 2020 (2019: USD $6,556,808 in cash and USD $10,353,798
in term deposits). The cash and cash equivalents are held with credit worthy bank and
financial counterparties. The ECL of each of these banks and counterparties are considered
to be extremely low; accordingly any expected credit losses are deemed to be insignificant.
d. Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated
with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to
meet its liabilities when they are due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk
by monitoring net cash balances, actual and forecast operating cash flows.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the reporting date.
The amounts are gross and undiscounted and include estimated interest payments and exclude
the impact of netting agreements.
85
2020 // ANNUAL REPORT 1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
In USD
As 31 December 2020
Trade and other payables
As 31 December 2020
Trade and other payables
LESS THAN 6
MONTHS
BETWEEN
1 AND 5 YEARS
TOTAL CONTRACTED
AMOUNTS
$
1,064,365
$
–
$
1,064,365
1,076,672
–
1,076,672
The cash flows in the maturity analysis are not expected to occur significantly earlier or
be for a significantly different amount than contractually disclosed above.
e. Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates
and interest rates, will affect the Group’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market
risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
The Group is not exposed to any significant interest rate risk. There is minimal exposure to
the impact of adverse changes in benchmark interest rates. The Group is exposed to variable
interest rate risks at the reporting date on cash and short-term deposits. A reasonably
possible change of 100 basis points in interest rates at the reporting date would have
increased or decreased profit after tax by $122,864 (2019: $166,849). This analysis assumes
that all other variables, in particular foreign currency rates, remain constant.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates. The source and nature of this
risk arise from operations and translation risks. The Group’s reporting currency is United
States Dollars (“USD”). However, the international operations give rise to an exposure
to changes in foreign exchange rates as amounts of expenditure are from Australia and
denominated in currencies other than USD.
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1 5 . N O T E S T O T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S
For the Year Ended 31 December 2020
e. Market risk (cont.)
The carrying amounts of the Group’s foreign currency denominated financial assets (trade
and other receivables including accrued income) and financial liabilities (trade and other
payables) at the reporting date were as follows:
In USD
AUD financial assets converted to USD
AUD financial liabilities converted to USD
Net exposure in statement of financial position
2020
$
7,282,214
(137,932)
7,144,282
2019
$
3,160,154
(229,180)
2,930,974
A reasonably possible strengthening (weakening) of the Unites States Dollar against
all other currencies at 31 December would have affected the measurement of financial
instruments denominated in a foreign currency and affected profit or loss and equity by
the amounts shown below. This analysis assumes that all other variables, in particular
interest rates, remain constant and ignores any impact of forecast sales and purchases.
In USD
2020
Australian Dollars
2019
Australian Dollars
% CHANGE
PROFIT
BEFORE TAX
STRENGTHEN
PROFIT
BEFORE TAX
WEAKEN
EQUITY
STRENGTHEN
$
$
$
$
10%
(714,428)
714,428
(714,428)
EQUITY
WEAKEN
$
714,428
10%
(293,097)
293,097
(293,097)
293,097
The percentage change is the expected overall volatility of the significant currencies,
which is based on management’s assessment of reasonable possible fluctuations
taking into consideration movements over the last 12 months and the spot rate at each
reporting date.
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1 6 . D I R E C T O R S ’ D E C L A R AT I O N
1.
In the opinion of the directors of Next Science Limited (the “Company”):
a. The consolidated financial statements and notes that are set out on pages 48 to
87 and the Remuneration report on pages 28 to 40 in the Directors’ report, are in
accordance with the Corporations Act 2001, including:
i.
giving a true and fair view of the financial position of the Group as at 31
December 2020 and of its performance for the financial year ended on that
date; and
ii. complying with Australian Accounting Standards and the Corporations
Regulations 2001; and
b. there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
2. The directors have been given the declarations required by Section 295A of the
Corporations Act 2001 from the chief executive officer and chief financial officer for
the financial year ended 31 December 2020.
3. The directors draw attention to Note 2(a) to the consolidated financial statements,
which includes a statement of compliance with International Financial Reporting
Standards.
Signed in accordance with a resolution of directors:
George Savvides
Chair
Dated: 22nd February 2021
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AUDITOR’S REPORT
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#NextScienceHeals 1 7 . I N D E P E N D E N T A U D I T O R ’ S R E P O R T
Independent Auditor’s Report
To the shareholders of Next Science Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Next Science Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
giving a true and fair view of the
Group’s financial position as at 31
December 2020 and of its financial
performance for the year ended on
that date; and
complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Financial Report comprises:
Consolidated statement of financial position as at 31
December 2020
Consolidated statement of profit or loss and other
comprehensive income, Consolidated statement of
changes in equity, and Consolidated statement of
cash flows for the year then ended
Notes including a summary of significant accounting
policies
Directors’ Declaration.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during
the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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 Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with the Code.
74
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
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2020 // ANNUAL REPORT
1 7 . I N D E P E N D E N T A U D I T O R ’ S R E P O R T
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.
This matter was 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 this matter.
Revenue recognition – USD 3,440,975
Refer to Note 5 to the Financial Report
The key audit matter
How the matter was addressed in our audit
We focused on revenue recognition as a
key audit matter due to the significant
audit effort required by us to test the
Group’s revenue given the:
Significance of revenue to the
financial statements;
Varying terms and conditions within
each customer contract such as
product sales, advance deposits,
true up payments and milestone
payments. This increases the effort
required by the audit team to
evaluate the timing and
measurement of revenue recognised
by the Group, and associated
contract liabilities;
Earlier termination of a key customer
contract increasing the risk of error
in the deferred revenue calculation;
Group has manual processes and
controls which may increase the risk
of bias in recognition of revenue at
the end of the reporting period due
to differing terms of trade and
extended delivery periods of
customer contracts.
Our procedures included:
Evaluated the appropriateness of the Group’s
revenue recognition policies against the
requirements of AASB 15 Revenue from Contracts
with Customers.
For a sample of transactions, across customer
contracts including product sales, advance deposits,
true up payments and milestone payments, we:
o
o
checked the terms and conditions of the
customer contract for consistency to the Group’s
policy for timing and measurement of revenue
recognition;
checked the amount, nature and date of revenue
recognition through evaluation of the terms and
conditions in the underlying customer contract,
date of completion of freight forwarding services
from underlying freight documents such as the
waybill, underlying sales invoices and bank
statement cash receipts.
For the calculation of deferred revenue, we checked
the remaining life of the contract in the calculation of
deferred revenue to the underlying key customer
contract.
Selected a sample of revenue transactions across
differing terms of trade and extended delivery
periods for the last two weeks of the reporting
period and the first two weeks of the next reporting
period. For each sample selected, we checked the
amount and timing of revenue recorded by the Group
to the underlying customer contracts, sales invoice
and to freight documents.
Assessed the disclosures in the financial report using
our understanding obtained from our testing and
against the requirements of the accounting standards.
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1 7 . I N D E P E N D E N T A U D I T O R ’ S R E P O R T
Other Information
Other Information is financial and non-financial information in Next Science Limited’s annual reporting
which is provided in addition to the Financial Report and the Auditor's Report. The Directors are
responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’
Report and Remuneration Report. The Our Purpose page, Overview, Chairman’s Letter, Managing
Director’s Report, Our Journey page, Investor Information and Corporate Directory are expected to be
made available to us after the date of the Auditor's Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we 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.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
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2020 // ANNUAL REPORT
1 7 . I N D E P E N D E N T A U D I T O R ’ S R E P O R T
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
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 Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They 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 the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf This description forms part of our
Auditor’s Report.
Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Next Science Limited for the year
ended 31 December 2020, complies with
Section 300A of the Corporations Act
2001.
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 responsibilities
We have audited the Remuneration Report included in
pages 10 to 25 of the Directors’ report for the year
ended 31 December 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
KPMG
Tony Nimac
Partner
Sydney
22 February 2021
Tony Nimac
Partner
Sydney
22 February 2021
77
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#NextScienceHeals
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2020 // ANNUAL REPORT INVESTOR
INFORMATION
96
#NextScienceHeals 1 8 . I N V E S T O R I N F O R M AT I O N
As at 19 February 2021
Number of securityholders
At the specified date, there were 5,552 holders of ordinary shares (quoted and unquoted)
and 14 holders of options (unquoted) over ordinary shares. These were the only classes of
equity securities on issue.
SIZE OF
SHAREHOLDING
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,000 and above
Total
NUMBER OF
HOLDERS
NUMBER OF
SHARES
% OF ISSUED
CAPITAL
98
1,082
874
1,988
1,510
5,552
865,220
5,732,109
7,065,120
28,996,223
151,542,737
194,201,409
0.45
2.95
3.64
14.93
78.03
100
Twenty largest holders of ordinary shares*
NAME
Auckland Trust Company Ltd ATF Secord Pacific Master Superannuation Fund
Walker Group Holdings Pty Limited
Matthew Myntti
HSBC Custody Nominees (Australia) Limited – A/C 2
Merrill Lynch (Australia) Nominees Pty Limited
Judith Mitchell
HSBC Custody Nominees (Australia) Limited
UBS Nominees Pty Ltd
Mr Charles Robert Dirck Wittenoom
National Nominees Limited
Citicorp Nominees Ply Limited
Scone Investments Pty Ltd
G & N Lord Superannuation Pty Ltd
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