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Myokardia Inc2021 // ANNUAL REPORT
NEXT SCIENCE LIMITED ACN 622 382 549
#NextScienceHeals
TABLE OF
CONTENTS
1. Our Purpose
2. Patient Case Study
3. Physician Testimonials
4. XPERIENCETM Launch
5. New Partnerships
6. Chair Message
7. CEO Message
8. Directors’ Report
9. Lead Auditor’s Independence Declaration
10. Consolidated Statement of Profit or Loss and Other Comprehensive Income
11. Consolidated Statement of Financial Position
12. Consolidated Statement of Changes in Equity
13. Consolidated Statement of Cash Flows
14. Notes to Financial Statements
15. Directors’ Declaration
16.
17.
Independent Auditor’s Report
Investor Information
18. Corporate Directory
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#NextScienceHeals2021 // ANNUAL REPORT Next Science team in action OUR PURPOSE
See the innovative
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.
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#NextScienceHeals2021 // ANNUAL REPORT #NextScienceHeals
PATIENTCASE STUDY
Podiatry
CASE
STUDY
SURGX®: A Practical Application in a Post-
Operative Setting
Approximately 4.5 million dog bites occur each year in the U.S.,
accounting for 1% of injury-related emergency department (ED)
visits and $53.9 million in estimated inpatient costs (Holmquist,
2008). Nearly 1 in 5 of these wounds becomes infected (CDC, 2015). When patients
wait more than 24 hours to visit the ED, they often have clinically evident infection and
inflammation (Kramer, 2010), which typically include a polymicrobial mixture of animal
oral flora (Thomas, 2011). The biofilm forming bacteria in the oral cavity of dogs can
be inoculated into the bite wound and plays a major factor in delayed wound healing
(Zambori, 2013). SURGX® has proven uniquely effective for mitigating the risks of these
types of surgical infections.
The patient, a frail 61-year-old female tripped over her elderly dog and was bitten on
her left foot at the site of a previous bunion surgery. She attempted self-care at home,
exceeding the 24-hour window to obtain early anti-biofilm intervention. By day four, the
bacteria had developed into an infection, when she went to the ED for urgent care.
TREATMENT TIMELINE
25 July 20
• Patient
sustains
dog bite
30 July 20
• Infection unresolved
• Patient transferred to surgery
team for surgical intervention
1 August 20
• Surgical wound
debridement and
irrigation under
anesthesia
29 July 20
31 July 20
10 August 20
• Patient went to the
ED for urgent care
• Initial wound incision
and drainage attempt
• Patient admitted to the
hospital for management
and IV antibiotics
• Second and third
wound incision and
drainage attempts
• Patient discharged
10 days after surgical
debridement
• Infection unresolved
• Clinical improvements
with only redness
remaining at the
incision site
By this time, the patient was in pain, her foot red, swollen, and filled with fluid. The ED team performed an
incision and drained the wound infection, because of her age and poor health state, admitting the patient to
hospital for management and IV antibiotics. The initial treatment failed to resolve the infection, the patient was
transferred to the surgery team for further intervention to clean and drain the wound. Two additional bedside
incision and drainage attempts were performed.
However, by day seven her condition had worsened , requiring a more thorough wound debridement and
irrigation under anesthesia. Post-operative treatment included 14 days of Augmentin and topical EO2 oxygen
therapy, tissue grafting (Epi-Fix). She was discharged to home. However, by the end of the month during
outpatient follow-up, her wound had begun to degrade despite multiple types of therapies, including surgical
debridement, IV and oral antibiotics, topical oxygen, and wound grafting. This cycle, where a wound appears
to respond, then leads to a worsening infection, is a cardinal sign of a biofilm infection.
In mid-Sept. – more than one month after the dog bite – Dr. Anthony Iorio, DPM, MPH, Director of Surgical
Department applied SURGX® to the patient’s wound and continued each week during her follow-up wound visits,
noting clinical improvement each week until by October 22, the wound was completely closed.
Developed for incision management, Dr. Iorio’s use of SURGX® in the post-operative environment demonstrates
the value of SURGX® as a compelling resource in surgical infection management.
17 September 20
22 October 20
• Weekly applications
of SURGX® begin in
mid-Sept.
• Wound healed
and completely
closed
26 August 20
• Outpatient follow-
up visits revealed
degradation of the
wound, a clinical
photo of a biofilm
infection
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#NextScienceHeals2021 // ANNUAL REPORT #NextScienceHeals
“I use SURGX® on my polytrauma patients and have seen a tremendous difference in
the outcome of both surgical and open wounds. Several of the patients I see also have
co-morbidities such as diabetes and hypertension, that can delay healing and increase
the risk for infection. With the use of SURGX® I’ve been able to prevent biofilms and
bioburdens on incisions and deep wound.”
Dr. Robert M Harris, MD
Orthopedic traumatologist
“Chronic ulcerations can have serious negative consequences to patients. Patients with
diabetic foot ulcers have 47% mortality rate and if they have the comorbid condition of
peripheral vascular disease, mortality rises up to 64%. BLASTX® is an amazing product
that has no known antimicrobial resistance, it attacks biofilm and prevents it from
reforming. Importantly, it destroys biofilm without harming healthy human tissue. I have
applied BLASTX® to over 20,000 patients with no adverse effects. As a physician it is
important to me to have the best tools in my toolkit so that I can treat these problems,
because when we save their limbs, we save their lives.”
Dr. Matthew Regulski
Podiatric Surgery Specialist
PHYSICIAN
TESTIMONIALS
“Patients come to see me and have an expectation that I can help improve their
situation, whether that be a hip replacement or a knee replacement. There is an
expectation that I can help improve their quality of life. I take this responsibility very
seriously and look to do everything within my powers to provide this outcome. All
surgical procedures come with an element of risk, and as a surgeon I do everything
I can to minimize this risk. My biggest concern with any procedure is infection, my
second biggest concern is infection, and my third biggest concern is infection. While
there are often a number of risk factors outside of a physician’s control, such as
co-morbidities, BMI, smoking etc, we typically control all other factors to ensure a
successful outcome. XPERIENCETM is a product that I routinely use during my surgical
procedures to help reduce the risk of infection. I know that with XPERIENCETM my
patients receive ongoing protection against bacteria over an extended period of time
compared to other irrigation solutions. My personal view is that the irrigation landscape
has evolved and I that with the new technologies available, physicians need to irrigate
with purpose.”
Dr. Ravi Bashyal
Orthopaedic Surgeon
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#NextScienceHeals2021 // ANNUAL REPORT #NextScienceHeals
XPERIENCE™
LAUNCH
In April 2021, XPERIENCE™ No Rinse Antimicrobial Solution received FDA clearance to be sold
as a medical device in the United States. This non-toxic technology does not need to be rinsed from
the surgical site after closure, offering up to five hours of protection in helping to prevent surgical site
and post-operative infections.
XPERIENCE™ is designed for use in virtually every open orthopedic surgical
case, with an initial focus on shoulder, hip, knee, trauma and podiatry.
XPERIENCE™ is being championed by leading orthopaedic surgeons, four
of whom hosted a panel discussion at the American Academy of Orthopaedic
Surgeons (AAOS) annual conference in September 2021.
IMMEDIATE IMPACT
(APRIL TO FEBRUARY 2021):
SURGEONS
USED
BY
196
IN
100
HOSPITALS*
LEARN MORE AT: nextscience.com/xperience
Watch a presentation from
Dr. Ravi Bashyal,Orthopaedic Surgeon,
at AAOS
* As of 17 Feb. 2022
7
This novel irrigant
demonstrates
high efficacy
against both
planktonic
bacteria and
bacterial biofilms
Ravi K. Bashyal, MD
Orthopaedic Surgeon,
NorthShore University HealthSystem,
Chicago, IL
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#NextScienceHeals2021 // ANNUAL REPORT
NEW PARTNERSHIPS
In 2021, Next Science announced two additional partnerships:
Tela Bio, Inc. and Triad Life Sciences, Inc.
#NextScienceHeals
The distribution agreement grants TELA Bio, Inc.
The agreement term is 10 years and automatically
The agreement grants Triad Life Sciences, Inc. exclusive rights for the sale and marketing of a white labelled
exclusive rights across the US plastic reconstructive
extends for an additional period of 10 years unless
version of TORRENTXTM (TridentXTM Wound Wash) across the US wound care market, excluding use in a
surgery market for the sale and marketing of a
notice is given by either party that they do not wish
sterile operating environment. The agreement term is 5 years and includes minimum purchase amounts to
white labelled version of XPERIENCETM (Site Guard
to extend.
Surgical Solution). The agreement also grants
TELA Bio, Inc. a first right of negotiation for the
In the US alone, over 5 million plastic reconstructive
EU market, upon successful CE approval for
procedures are done each year. TELA Bio, Inc.’s
XPERIENCETM. The agreement includes an annual
immediate point of focus will be the breast
licensing fee plus transfer price arrangements and
augmentation and reconstruction market of over
minimum purchase amounts to retain exclusivity.
400,000 procedures per year.
retain exclusivity.
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#NextScienceHeals2021 // ANNUAL REPORT 6 . C H A I R M E S S A G E
6 . C H A I R M E S S A G E
Dear Fellow Shareholders,
I am pleased to present Next Science’s Annual Report for the financial year ended 31
December 2021.
It was an honour for me to be elected by the Board as Chair of Next Science Limited in May
As we move through 2022, we are expanding our BLASTX® coverage into acute care using our
direct sales network.
Throughout 2021, and continuing into 2022, Next Science has prioritised minimising the
impacts of COVID19 on the business and safeguarding the health and welfare of our staff.
2021. Next Science has a unique opportunity to make a real difference to the lives of people
With the US healthcare sector playing such an important role for our business and our
across the globe with its unique patented products proven to be effective in preventing
main office being located in Jacksonville, Florida we were delighted that travel restrictions
and treating biofilm-based bacteria. Our people (including the Board) are committed to our
eased during 2021 allowing our CEO and Managing Director, Judith Mitchell, to temporarily
purpose, to heal people and save lives, and they are dedicated in pursuing our objective of
relocate to the US and be present on the ground in leading our US team. The Board is greatly
making our products available worldwide.
appreciative to Judy for making this commitment.
2021 was a record sales year for us with sales contributions across all Next Science in-market
With the emerging recovery in the US surgery market, there is much to be excited about for
products. We made good progress in executing our strategy to accelerate market adoption of
our products despite disruptions resulting from the Covid-19 pandemic including significant
reductions in the number of surgical procedures conducted in our principal market of the
United States.
The securing of FDA approval for XPERIENCETM our advanced no rinse surgical irrigation
solution, in April 2021, was an important milestone for Next Science. The Board continues to
believe that XPERIENCETM offers Next Science the greatest product opportunity to date with
the potential to accelerate the Company’s revenue growth.
Next Science in 2022. We expect to benefit from our significantly expanded sales coverage in
the US for XPERIENCETM and SURGX® as well as the launch of TORRENTXTM in the US under
the TridentX Wound Wash brand and the launches of XPERIENCETM and BLASTX® in Australia
and New Zealand.
We have recently strengthened our balance sheet, having successfully completed a placement
of new shares to institutional and sophisticated investors supplemented by a share purchase
plan, to enable all eligible shareholders to participate at the same offer price. These funds
ensure we have the working capital to support our growth plans.
Optimising our distribution partnerships as well as our manufacturing relationships was a
We are also looking forward to further strengthening our US leadership structure in 2022 with
significant focus during 2021 and in early 2022. The company was able to convert a legal
the anticipated recruitment of a President, US to lead the US business.
complaint from our longstanding distribution partner, Zimmer Inc. over commercialisation
and distribution rights to XPERIENCETM, into an improved and enhanced relationship
encompassing a new US distribution arrangement for XPERIENCETM as well as a refreshed
BactisureTM distribution arrangement.
The new US distribution arrangement for XPERIENCETM means Zimmer’s 2,600 specialist joint
reconstruction sales team will be selling XPERIENCETM.
In 2022, the company will be focused on continuing to expand doctor and patient access to
our suite of patented products and accelerate broader market adoption, as we pursue our
purpose of healing people and saving lives.
On behalf of the Board, I wish to thank all our employees for their continued loyalty and
dedication during a challenging year. I also wish to thank our shareholders, many of
whom have been with us since our listing on the ASX, for their continued encouragement,
In the second half of 2021, we established a new exclusive distribution relationship with
excitement and support.
TELA Bio, Inc., a NASDAQ listed company focused on commercial stage medical technologies in
the soft tissue reconstruction market, for the sale of XPERIENCETM in the US plastic surgery market.
In addition to expressing thanks to our people, I would like to add my thanks to my colleague
Directors on the Board for their dedicated commitment to Next Science, its shareholders and
Combined with our contracted commissioned sales force primarily focused on the
our purpose of healing people and saving lives.
orthopaedic market, we are well placed to generate an uplift in the representation of Next
Science’s products to the US market.
To support anticipated sales growth, we supplemented our manufacturing capacity and
diversified our supply chains by broadening our relationship with Holopak in Germany to
include XPERIENCETM. We also focused on developing all our manufacturing relationships to
ensure they continue to meet our business requirements as we grow.
We successfully transitioned BLASTX® distribution back to Next Science in April 2021 creating
opportunities for us to sell to a wider customer set. Customer responses have been positive,
enabling us to expand the BLASTX® customer base under the direct sales model.
Professor Mark Compton AM
Chair
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A Different Approach, Superior Results
#NextScienceHeals2021 // ANNUAL REPORT 7 . C E O M E S S A G E
In 2021, Next Science achieved record sales with revenues increasing by 160% on the prior year.
This result was driven primarily by growth in Bactisure TM sales and a combination of surgical market
recovery, the return to Next Science of distribution responsibility for BLASTX®, and the new product
launch of XPERIENCETM which was approved by the FDA for sale in the US in late April.
We also made further progress in building market awareness for our prevention and treatment
products for the health care market. The benefits of our product range are compelling. Our products
deliver better patient outcomes, without driving up antimicrobial resistance (ie. their use does not
contribute to the development of medicine resistant ‘superbugs’) and allow physicians to treat more
patients and reduce complications such as surgical site infection. As a result, we reduce the overall
cost of healthcare.
To support sales of BLASTX® and launch XPERIENCETM, we expanded our sales and marketing
resources to more than 20 full time employees in field sales, sales administration and marketing.
Throughout 2021, additional regulatory approvals were received – a 510(k) clearance for TORRENTXTM
in the US, a wound wash that will go to market with Triad Life Sciences in Q2 of 2022, and TGA
clearance for XPERIENCETM in Australia which will also be launched in 2022.
Our core research efforts continued in 2021 and we expanded our patent assets to 42 patents across
a range of technologies.
As the year progressed, Next Science faced into a contract dispute with Zimmer, Inc (our BactisureTM
distributor), a wholly owned Zimmer Biomet subsidiary. This dispute was resolved in January of 2022,
and we announced the execution of a distribution contract with Zimmer for XPERIENCETM in the US.
The XPERIENCETM product will be sold through their 2600 hip and knee reconstruction sales force.
Zimmer expect to launch in H2 of 2022.
To further strengthen the distribution network for XPERIENCETM, the company granted US distribution
rights for plastics and reconstruction to TELA Bio, Inc. This partnership is in line with our strategy to
drive wide market adoption across many surgical specialities while expanding our own direct sales
force which currently focuses on orthopaedics.
These partnerships provide outstanding representation for XPERIENCETM in the surgical irrigation
market in the US.
Moving into 2022, the rate of adoption of XPERIENCETM has continued to grow and we now have 100
hospitals online with over 196 surgeons using the product.
A key goal for us now is to move the XPERIENCETM product into the position of standard of care. To
deliver on this, we have a series of clinical studies underway and in planning, designed to provide the
evidence needed to support our position as a market leading advanced irrigation brand.
To ensure adequate resources are available to execute on our plans and provide for a very expanded
selling network through Zimmer, we successfully undertook a capital raise of A$10M in February 2022
and followed this with a share purchase plan for eligible shareholders.
7 . C E O M E S S A G E
Outlook
The outlook for Next Science is positive and exciting. We continue to grow our customer base through
our presence in the market. With an expanded distribution force, we expect this base to multiply and
move to accelerated growth when our planned clinical studies are completed.
Key highlights of our outlook for 2022 include:
· we expect surgery activity to continue to grow back to pre-pandemic levels, increasing
demand for our products
· the activation of new arrangements with Zimmer where their 2600 sales force can sell
XPERIENCETM and BactisureTM and provide a strong, well-connected channel to thousands of
joint reconstruction surgeons across the US
· further expansion of the Next Science direct sales team rounding out any coverage gaps and
the Next Science marketing and science team leading the messaging and driving the clinical
study activity across the US market
· a series of product launches in Australia and New Zealand and then ASEAN
We know the difference our technologies can make in people’s lives. I give my sincere thanks to our
customers, research partners, business partners, employees, investors and Board of Directors for your
roles in supporting the pursuit of our mission of healing patients and saving lives.
Judith Mitchell
CEO and Managing Director
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#NextScienceHeals2021 // ANNUAL REPORT DIRECTORS’
REPORT
#NextScienceHeals
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#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
8 . 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 (Next Science/Company), and the entities it controlled
at the end of, or during, the year ended 31 December 2021 (Group). 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:
Mark
Compton
Chair
Judith
Mitchell
CEO and
Managing
Director
Bruce
Hancox
Non-Executive
Director
Daniel
Spira
Non-Executive
Director
Aileen
Stockburger
Non-Executive
Director
George
Savvides
Chair
Retired
5 May 2021
Dividends
No dividends were paid or declared since the
commencement of the year and the Directors do
not recommend the declaration of a dividend.
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
research and development centre and sales and
marketing functions located in Florida, USA.
Significant changes in the state of affairs
and COVID-19 impact
Revenues grew by 160% in 2021 with sales
contributions across all of Next Science’s
products in market and good progress was
made in building market awareness for our
XBIO™ brand as an answer to the biofilms
and bacteria that directly lead to the need for
revision (repeat) joint replacement surgeries and
for our newly launched product, XPERIENCE™.
Revenues showed some early signs of recovery
from the negative impacts during 2020 brought
about by the COVID-19 shutdown in the USA
of elective medical procedures and closure
of outpatient wound care clinics. COVID-19
continued to have impact on revenues
and establishing relationships with clients,
distributors and others in 2021. Whilst COVID-19
is likely to continue to provide a level of
disruption during 2022, we expect our customer
following to continue to grow across all of our
direct product lines as we continue to partner
with our customers to provide them with the best
tools to serve their patients.
The Group made progress in expanding our
is covered by TELA Bio, Inc’s distribution
addressable market opportunities and taking
agreement detailed below).
more direct control of distribution. During
March/April 2021, the global distribution rights
to BLASTX® transitioned back to Next Science
from 3M and Next Science resumed a direct
distribution model, selling BLASTX® directly to
US hospitals and wound care clinics.
The distribution agreement with Zimmer for
XPERIENCE™ has a 5 year term plus a 5 year
renewal option and confirms Next Science’s
intellectual property ownership and rights
in respect of XPERIENCE™. In conjunction
with the signing of the new distribution
On 23 April 2021, Next Science received
agreement, Zimmer withdrew its District Court
510(k) clearance from the U.S. Food and
proceedings. The complaint was dismissed
Drug Administration (FDA) for the sale of
“with prejudice” (meaning that Zimmer cannot
XPERIENCE™ in the USA and soon thereafter,
reassert the claims) with each party paying its
Next Science began selling XPERIENCE™
own costs.
directly to US hospitals and Ambulatory
Service Centres.
The former Chair of Next Science, George
Zimmer’s joint replacement sales team of
approximately 2600 staff are responsible
for selling Zimmer’s white label version of
Savvides AM, did not seek re-election at the
XPERIENCE™, with Zimmer’s US product
Company’s 2021 Annual General Meeting on 5
launch expected in H2 2022. Next Science’s
May 2021 and retired at the conclusion of the
commercial team is continuing its own
meeting. Mark Compton AM was elected by
XPERIENCE™ commercialisation efforts as is
the Board to the role of Chair thereafter.
their partner, TELA Bio, Inc., in the US plastic
On 26 May 2021, Next Science received
Therapeutic Goods Administration (TGA)
clearance for BLASTX® permitting sales
in Australia.
In June 2021, Next Science agreed to open
negotiations with Zimmer, Inc (Zimmer), Next
Science’s distribution partner for the Bactisure
product, in relation to the commercialisation
and distribution rights to XPERIENCE™. The
negotiations followed the filing of a complaint
by Zimmer in the United States District Court,
Northern District of Indiana, alleging that
surgery market with its white labelled product
‘Site Guard Surgical Solution’.
On 30 August 2021, Irrimax Corporation, a
competitor of Next Science in the wound
irrigation sector, served a complaint on Next
Science which it had filed in the United
States District Court for the Northern District
of Georgia alleging common law unfair
competition and false advertising regarding
XPERIENCE™. Next Science denies the
allegations and is vigorously defending
Irrimax’s complaint.
they had global commercial exclusivity rights
On 8 November 2021, Next Science received
over XPERIENCE™. Next Science denied the
TGA clearance for XPERIENCE™ permitting
allegations and advised that it would defend the
sales in Australia.
complaint if and when it was served on Next
Science by Zimmer.
In November 2021, Next Science signed a
10 year exclusive distribution agreement with
Next Science and Zimmer reached agreement
NASDAQ listed medical technology company,
in January 2022, in respect of a new US
TELA Bio, Inc., in relation to the supply of
distribution agreement in relation to the supply
of a white labelled version of XPERIENCE™
under Zimmer’s own labelling (excluding the
a white labelled version of Next Science’s
proprietary XPERIENCETM across the US plastic
reconstructive surgery market.
US plastic reconstructive surgery market which
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#NextScienceHeals2021 // ANNUAL REPORT
8 . D I R E C T O R S ’ R E P O R T
8 . D I R E C T O R S ’ R E P O R T
Operating and financial review (cont.)
Significant changes in the state of affairs and COVID-19 impact (cont.)
TELA Bio, Inc. has begun marketing and selling the white labelled version of XPERIENCETM
under a proprietary brand name – Site Guard Surgical Solution. The agreement includes an
annual licensing fee plus transfer price arrangement and minimum purchase amounts that must
be met to retain exclusivity.
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.
SHAREHOLDER RETURNS
Revenue
Loss attributable to owners of the company
Basic earnings per share (EPS) (cents)
Share price as at 31 Dec (A$)
Return on capital employed
2021
2020
$8,947,591
($9,349,639)
($4.75)
AUD$1.245
(77.8%)
$3,440,975
($11,912,004)
($6.36)
AUD$1.25
(59.7%)
Review of operations
The loss for the Group for the financial year
to 31 December 2021 after providing for
income tax amounted to $9,349,639 (2020:
$11,912,004).
Revenue increased by 160% for the period,
increasing from $3,440,975 in the prior
corresponding period to $8,947,591, reflecting
as well as increases in advertising and
promotional spend on BLASTX® (associated
with the resumption of direct sales of BLASTX®
following the termination of the 3M distribution
agreement), as well as promotional spend
associated with the launch of XPERIENCE™
in April 2021 and the post launch awareness
campaign thereafter.
some of the recovery from the impacts of the
Administration expenses were $4,105,918,
COVID-19 pandemic during the 2020 financial
an increase of $762,874 compared with
year across surgical procedures and in wound
$3,343,044 in the prior corresponding period.
care clinics.
Gross profit for FY21 was $6,940,122
compared to $2,916,841 in the prior
corresponding period. Gross margin as a
$524,564 of the increase related to legal fees
with the majority of the increase related to
defending the legal suits brought by Zimmer,
Inc and Irrimax Corporation referred to above.
percent of sales was 78% compared with 85%
Research and development expenses
in the prior corresponding period as a result of
were $5,046,875 a decrease of $1,387,539
a change in composition of revenue.
compared with $6,434,414 in the prior
Selling and distribution expenses were
$7,394,871, an increase of $1,724,187
compared with $5,670,684 in the prior
corresponding period. The increase in spend
in 2021 mainly related to an increase in
headcount, with corresponding increases in
corresponding period. 2020 was a year of
significant research and development and
regulatory investment to bring XPERIENCE™
through the FDA 510(k) clearance process,
with FDA 510(k) clearance being successfully
obtained in April 2021.
travel and other employee related expenditure
Cash and cash equivalents at 31 December
Cash and cash equivalents at 31 December
this report any item, transaction or event,
2021 amounted to $7,000,869 compared
other than those matters detailed above, of
to $8,100,416 at 31 December 2020. Term
a material and unusual nature likely, in the
deposits at 31 December 2021 amounted
opinion of the directors of the Company, to
to $367,129 compared to $7,238,986 at 31
affect significantly the operations of the Group,
December 2020 as a result of capital raisings
the results of those operations, or the state of
in Q4 2020.
affairs of the Group, in future financial years.
Likely developments and expected results
Environmental regulation
of operations
Further information about likely developments
in the operations of the Group and the
expected results of those operations in future
financial years has not been included in this
report because disclosure of the information
would be likely to result in unreasonable
prejudice to the Group.
Matters subsequent to the end of the
financial year
As detailed above, in January 2022, Next
Science and Zimmer reached agreement in
respect of a new US distribution agreement
in relation to the supply of a white labelled
version of XPERIENCE™ under Zimmer’s
own labelling (excluding the US plastic
reconstructive surgery market which is
covered by TELA Bio, Inc’s distribution
agreement detailed below), and Zimmer
withdrew its District Court proceedings.
In conjunction with agreeing the new
XPERIENCE™ distribution agreement, Next
Science and Zimmer also agreed a refreshed
distribution arrangement for Bactisure. The
revised Bactisure arrangements include a
revised agreement term. The agreement term
will end on 31 December 2026 with Zimmer
having the option to extend the agreement for
an additional five year period by providing 6
months’ prior notice.
The Group announced on 23 February 2022
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
environmental requirements.
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 U.S., 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 available to the U.S.
Food and Drug Administration (the “FDA”)
can result 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 U.S.
The Group relies on global supply chains, and
production and distribution processes that are
complex and are subject to lengthy regulatory
approval processes and ongoing regulatory
requirements which can affect sourcing,
supply and pricing of materials used in the
that it was undertaking a capital raising by way
Group’s products.
of placement and a share purchase plan.
There has not arisen in the interval between
the end of the financial year and the date of
19
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#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
Information on Directors
NAME:
Title:
MARK COMPTON AM
Chair and Independent Non-Executive Director
Special Responsibilities:
Member of the Audit and Risk Committee and Member
of the People, Culture and Remuneration Committee
Qualifications:
Experience and expertise:
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).
Mark is Lord Prior of the International Order of St John and Chair of
the Board of Trustees of St John International.
Mark is Chair of Sonic Healthcare Limited, a global medical
diagnostics and healthcare organisation which is a Top 50 ASX
listed entity. He is also Chair of St Luke’s Care Limited, a not-for-
profit health and aged care organisation. 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:
Chair and Non-Executive Director of Sonic Healthcare Limited (ASX:
SHL). Chair of the Board of Trustees of St John International, Chair
of St Luke’s Care Limited.
Former listed directorships
(last 3 years):
None
8 . D I R E C T O R S ’ R E P O R T
NAME:
Title:
JUDITH MITCHELL
Chief Executive Officer and Managing Director
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 many 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 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)
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#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
Information on Directors (cont.)
8 . D I R E C T O R S ’ R E P O R T
NAME:
Title:
DANIEL SPIRA
Independent Non-Executive Director
NAME:
Title:
GEORGE SAVVIDES AM (RETIRED 5 MAY 2021)
Chair and Independent Non-Executive Director
Special Responsibilities:
Chair, People, Culture and Remuneration Committee
Special Responsibilities:
Member of the Audit and Risk Committee and Member of the
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, Member of the People,
Culture and Remuneration Committee
Qualifications:
Experience and expertise:
Bachelor of Science and MBA, The Wharton School, University
of Pennsylvania, 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 drive
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
23
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 Chair of Kings Consolidated Group Pty Ltd (2016
to 2018) and Macquarie University Hospital (2016 to 2018) and
retired as Chair 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 Chair of the public
broadcaster, SBS having been appointed a Non-Executive Director
in 2017 and Chair 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
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 healthcare,
manufacturing, oil and gas, professional services and education.
24
#NextScienceHeals2021 // ANNUAL REPORT 8 . 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 2021 were as follows:
NAME OF DIRECTOR
BOARD MEETINGS
PEOPLE, CULTURE
& REMUNERATION
COMMITTEE
AUDIT AND RISK
COMMITTEE
Mark Compton
Judith Mitchell
Bruce Hancox
Daniel Spira
Aileen Stockburger
George Savvides
A
19
19
19
19
19
7
B
19
19
19
18
18
7
A
2
–
–
2
1
1
B
2
–
–
2
1
1
A
3
–
6
–
6
3
B
3
–
6
–
6
3
A – Number of meetings held when Director was eligible to attend
B – Number of meetings attended during the time the Director held office
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
Mark Compton
Judith Mitchell
Bruce Hancox
Daniel Spira
Aileen Stockburger
Total
Number
137,438
6,560,000
530,000
723,437
44,837
7,995,712
Number
520,000
-
520,000
260,000
520,000
1,820,000
Shares under option
At the date of this report, there are 2,890,000
options over ordinary shares on issue (2020:
in their capacity as a director or executive,
for which they may be held personally liable,
except where there is a lack of good faith.
8,092,500 options), representing 1.46% (2020:
During the financial year, the Group has paid
4.17%) of the Company’s undiluted total share
a premium in respect of a contract to insure
capital, granted to employees and directors
the directors and executives of the Company
under an equity incentive plan.
Indemnity and insurance of officers
The Group has indemnified the directors and
executives of the Group for costs incurred,
against a liability to the extent permitted by
the Corporations Act 2001. The contract of
insurance prohibits disclosure of the nature of
the liability and the amount of the premium.
8 . D I R E C T O R S ’ R E P O R T
Indemnity and insurance of auditor
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
auditor for non-audit services provided during
the financial year by the auditor are outlined
in note 30 to the financial statements.
The Directors are satisfied that the provision
of non-audit services by the auditor during the
set out in APES 110 Code of Ethics for
Professional Accountants (including
Independence Standards) 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 40 and forms part of the
Directors’ Report for the financial year ended
31 December 2021.
Auditor
KPMG continues in office in accordance with
section 327 of the Corporations Act 2001.
financial year is compatible with the general
Remuneration Report (audited)
standard of independence for auditors imposed
by the Corporations Act 2001.
This Remuneration Report forms part of
the Directors’ Report for the year ended 31
The Directors are of the opinion that the
December 2021. This Report outlines the
services as disclosed in note 30 to the
details of the remuneration arrangements for
financial statements do not compromise the
the key management personnel of the Group,
external auditor’s independence requirements
including remuneration strategy, framework
under the Corporations Act 2001 for the
and practices, in accordance with the
requirements of the Corporations Act 2001
and its Regulations.
following reasons:
· All non-audit services have been reviewed
and approved to ensure that they do not
impact the integrity and objectivity of the
auditor; and
· None of the services undermine the general
principles relating to auditor independence
25
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#NextScienceHeals2021 // ANNUAL REPORT
8 . D I R E C T O R S ’ R E P O R T
Remuneration Report (audited)
(cont.)
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).
The information in this Remuneration Report
is 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
Other KMP
Jacqueline Butler
Chief Financial Officer
Matthew Myntti
Chief Technology Officer
Jon Swanson
Dustin Haines
Chief Operating Officer
Chief Commercial Officer
Remuneration governance
The People, Culture and Remuneration
Committee currently comprises of:
Daniel Spira (Chair)
Mark Compton
Aileen Stockburger
The role and responsibilities, composition,
structure and membership requirements of the
People, Culture and Remuneration Committee
· Share option plans and performance rights
are documented in the People, Culture and
over equity instruments
· KMP Remuneration
· KMP Equity Holdings
Remuneration Committee Charter available at
www.nextscience.com/corp-governance.
The People, Culture and Remuneration Charter
provides that the Committee should comprise
at least three members, all of whom are Non-
Key management personnel (KMP)
Executive Directors and a majority of whom are
The KMP of the Group during the financial year
independent Directors.
and the positions held are summarised below:
The Chair of the Committee should be an
Non-Executive Directors
Mark Compton
Bruce Hancox
Daniel Spira
Aileen Stockburger
George Savvides Retired 5 May 2021
independent Director who is not Chair of
the Board.
The Charter requires the Committee to meet
at least twice each year.
All of the current members of the People,
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
CEO and Managing Director
the Board.
Judith Mitchell
8 . D I R E C T O R S ’ R E P O R T
Service agreements and remuneration policy
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.
Employment Agreements
NAME:
Title:
Details:
NAME:
Title:
Details:
JUDITH MITCHELL
CEO and 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.
27
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#NextScienceHeals2021 // ANNUAL REPORT
8 . D I R E C T O R S ’ R E P O R T
Employment Agreements
NAME:
Title:
Details:
NAME:
Title:
Details:
NAME:
Title:
Details:
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.
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.
8 . D I R E C T O R S ’ R E P O R T
Non-Executive Directors’ Remuneration
of the Company, for at least six months during
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, the Constitution and the ASX Listing
Rules stipulate that the total amount of fees
paid to Non-Executive Directors (excluding any
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 a 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
special exertion fees) must not exceed the amount
ensuring that the Group achieves its annual
approved by the Company’s shareholders. This
financial performance targets;
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. An additional fee of AUD$10,000 per
annum is paid for performing the role of Chair of
the Audit and Risk Committee or People, Culture
and Remuneration Committee. The Company paid
· 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.
special exertion fees to Aileen Stockburger during
The maximum STI opportunity is 100% of Total
2021. These exertions were to assist the Board
Fixed Remuneration (TFR) for the Managing
in ensuring the Company’s activities in the US
Director and 80% of TFR for the CFO, CTO,
received appropriate oversight and support whilst
COO and CCO. To receive the maximum STI
the Managing Director was unable to visit the US
opportunity, executives must achieve performance
due to COVID-19 travel and isolation restrictions.
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, any payments under the STI
Plan will be paid in cash to ensure that the STI
opportunities operate as true incentives.
No STI payments were made in respect of
the financial year ended 31 December 2021
(2020: Nil) as revenue and EBITDA targets
were not achieved.
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 from the
Company’s admission to the ASX in April 2019.
The CCO was invited to participate in the STI plan
following his appointment in June 2020.
Participants in the STI Plan, must be employed
with the Company, or wholly owned subsidiary
29
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#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
8 . 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.)
No Performance Rights have been issued in
relation to the financial year ending 31 December
2021 (2020: Nil) as vesting conditions were not met.
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 under which incentives are
issued in the form of Performance Rights to eligible
participants (LTI Plan).
The Managing Director, CFO, CTO, CCO and COO
are entitled to participate in the LTI Plan. If Group
performance hurdles are achieved in the financial
year ending 31 December 2022, and thereafter,
the Managing Director has the opportunity to be
granted performance rights worth 200% of her
Total Fixed Remuneration (TFR) and the other
participants in the LTI Plan have the opportunity
to be granted performance rights worth 150% of
their TFR.
The number of Performance Rights granted will
be based on the volume weighted average price
(VWAP) of shares in the Company for the period 1
January until the day before the release on ASX of
the Company’s relevant preliminary full year results.
The vesting of Performance Rights issued under
the LTI Plan is dependent on satisfaction of the
following vesting conditions:
· 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.
If compound TSR is less than 15% per annum,
no Performance Right will vest.
The Company’s 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 the other executive KMPs from the
options awarded to them prior to the Company’s
admission to ASX, in February 2021, the
Company granted the CCO USD$315,000 worth
of performance rights. The vesting of the CCO’s
performance rights was subject to continued
tenure and was to be over three years with 1/3
vesting in 1 year, 1/3 in 2 years and 1/3 in 3 years
from the grant date. However, due to employment
ceasing on 20 April 2022 the performance rights in
year 2 and 3 will not vest.
Options and rights over
equity instruments
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 27). With the exception of the CEO
and 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
Subject to vesting conditions being satisfied,
owned subsidiary of the Company at the
Performance Rights automatically convert to
vesting date.
shares, on a one-for one basis, three years
after the date on which they are granted. If
vesting conditions have not been satisfied, the
Performance Rights will automatically lapse.
Participants must be employed by the Company
or a wholly owned subsidiary at the date of vesting.
There were no options over ordinary shares
issued as compensation to KMP during the
year ended 31 December 2021 (2020: Nil).
Details of the options over ordinary shares
issued under the ECP or ESOP which were
held by KMP as at 31 December 2021 are set
out on the following page:
31
KMP
GRANT DATE EXPIRY DATE
VESTING
DATE
FAIR VALUE
AT GRANT DATE
EXERCISE
PRICE (USD)
Non-Executive Directors
Pre-share
Split (USD)
Post-share
Split (USD)
Mark Compton
17-Dec-2018
17-Dec-2023
17-Dec-2021
Bruce Hancox
17-Dec-2018
17-Dec-2023
17-Dec-2021
Daniel Spira
17-Dec-2018
17-Dec-2023
17-Dec-2021
Aileen Stockburger
17-Dec-2018
17-Dec-2023
17-Dec-2021
2,138
2,138
2,138
2,138
0.33
0.33
0.20
0.33
0.56
0.56
0.56
0.56
Other KMP
Jon Swanson
17-Dec-2018
17-Dec-2023
17-Dec-2020
2,138
0.33
0.56
There were 340,602 rights over ordinary shares issued as compensation to KMP during the year
ended 31 December 2021 (2020: Nil). There were no previous rights issues.
KMP
Other KMP
NUMBER
OF RIGHTS
GRANTED
GRANT DATE
EXPIRY DATE
Dustin Haines
340,602
22-Feb-2021
22-Feb-2024
VESTING
CONDITION
FAIR VALUE
AT GRANT
DATE
Continued
employment
0.92
The rights were to vest over three years with 1/3 vesting after 1 year, 1/3 after 2 years and 1/3
after 3 years from the grant date. However, due to employment ceasing on 20 April 2022 the
performance rights in year 2 and 3 will not vest.
The movement for the year ended 31 December 2021, in the number of rights and options over
ordinary shares in Next Science Limited held, directly, indirectly or beneficially, by each KMP,
including their related parties was as follows:
KMP
Executive Director
BALANCE AS
AT 1 JAN
2021 No.
GRANTED
No.
EXERCISED
No.
LAPSED
No.
BALANCE AS
AT 31 DEC
2021 No.
VESTED
DURING
THE YEAR
VESTED AND
EXERCISABLE
No.
UN-VESTED
No.
Judith Mitchell
2,340,000
– (1,560,000)
(780,000)
Non-Executive Directors
George Savvides
Bruce Hancox
Daniel Spira
Mark Compton
Aileen Stockburger
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
Rights
Dustin Haines
650,000
520,000
–
–
–
–
1,300,000
– (1,040,000)
520,000
520,000
–
650,000
650,000
–
–
–
–
–
–
–
–
340,602
–
–
–
–
(650,000)
–
–
(650,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
520,000
520,000
520,000
260,000
260,000
260,000
520,000
520,000
520,000
520,000
520,000
520,000
–
650,000
–
–
340,602
–
–
–
–
650,000
–
–
–
–
–
–
–
–
–
–
–
–
N/A
340,602
32
#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
8 . D I R E C T O R S ’ R E P O R T
Options and rights over equity instruments (cont.)
Analysis of movements in options and performance rights
The movement for the year ended 31 December 2020, by number options over ordinary shares
The value of rights or options over ordinary shares in the Company granted and exercised by
in Next Science Limited held, directly, indirectly or beneficially, by each KMP, including their
each KMP during the reporting period is detailed below.
related parties was as follows:
KMP
BALANCE AS
AT 1 JAN
2020 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
–
GRANTED No.
EXERCISED No.
LAPSED No.
BALANCE AS
AT 31 DEC
2020 No.
VESTED AND
EXERCISABLE
No.
UN-VESTED
No.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,340,000
1,560,000
780,000
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
650,000
–
–
520,000
520,000
–
–
–
–
Exercise of options granted as compensation
During the reporting period, there were 3,250,000 shares issued upon the exercise of
options previously granted as compensation, to KMP:
USD
NUMBER OF SHARES
AMOUNT PAID $/SHARE
VALUE OF OPTIONS
EXERCISED $ (I)
VALUE OF SHARES
RECEIVED UPON
EXERCISE OF OPTIONS $
Judith Mitchell
Daniel Spira
Jacqueline Butler
1,560,000
1,040,000
650,000
0.42
0.42
0.42
913,941
703,870
439,918
1,569,141
1,140,670
712,918
i. The value of the options exercised during the year is calculated as the market price of shares of the Company as
at the close of trading on the date the options were exercised less the price paid to exercise the option.
ii. There are no amounts unpaid on the shares issued as a result of the exercise of the options in the 2021 financial
year. There were no other share options held by KMP granted, exercised or lapsed during the reporting period
other than as disclosed above.
KMP
Judith Mitchell
Daniel Spira
Jacqueline Butler
Dustin Haines
GRANTED IN YEAR $ (I)
VALUE OF RIGHTS OR
OPTIONS EXERCISED IN YEAR $ (II)
–
–
–
315,000
913,941
703,870
439,918
-
i. The value of rights granted during the financial year is the fair value of the rights calculated at grant
date. The total value of the rights granted is included in the table above. This amount is allocated to
remuneration over the vesting period.
ii. The value of options exercised during the year is calculated as the market price of shares of the Company
as at the close of trading on the date the options were exercised less the price paid to exercise the
options.
Details of equity incentives affecting current and future remuneration
KMP
INSTRUMENT
NUMBER
GRANT DATE % VESTED IN YEAR
FINANCIAL YEARS
IN WHICH GRANT
VESTS
Non-Executive Directors
Mark Compton
Bruce Hancox
Aileen Stockburger
Daniel Spira
Other KMP
Jon Swanson
Dustin Haines
Dustin Haines
Dustin Haines
Options
Options
Options
Options
Options
Rights
Rights
Rights
520,000
520,000
520,000
260,000
650,000
113,534
–
–
17-Dec-2018
17-Dec-2018
17-Dec-2018
17-Dec-2018
17-Dec-2018
22-Feb-2021
22-Feb-2021
22-Feb-2021
100%
100%
100%
100%
100%
–%
–%
–%
2021
2021
2021
2021
2020
2022
2023
2024
33
34
#NextScienceHeals2021 // ANNUAL REPORT 8 . D I R E C T O R S ’ R E P O R T
KMP Remuneration
8 . D I R E C T O R S ’ R E P O R T
KMP Remuneration (cont.)
The table below details the remuneration of the KMP based on the remuneration policies
The table below details the remuneration of KMP for the year ended 31 December 2020.
discussed in this report for the year ended 31 December 2021.
Year ended 31 December 2021
Year ended 31 December 2020
KMP
(USD)
CASH
SALARY
AND FEES (i)
OTHER
CASH
SERVICE
(ii)
LONG
SERVICE
LEAVE
SUPER-
ANNUATION
SHARE-BASED PAYMENTS
TOTAL
PERFORMANCE
RELATED (V)
KMP
(USD)
CASH
SALARY
AND FEES(i)
OTHER
CASH
SERVICE
(ii)(iii)
LONG
SERVICE
LEAVE
SUPER-
ANNUATION
SHARE-BASED PAYMENTS
TOTAL
PERFORMANCE
RELATED (VI)
Options
(iii)
Rights
(iv)
Options
(iv)
Shares in lieu
of fees (v)
$
%
$
$
%
$
Executive Director
Judith Mitchell
283,239
Non-Executive Directors
Mark Compton
144,570
Bruce Hancox
Daniel Spira
Aileen Stockburger
George Savvides
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
68,388
73,385
83,860
66,493
350,000
254,155
198,231
320,235
$
–
–
–
–
–
–
6,516
651
$
$
$
3,696
17,051
(101,211)
–
–
–
–
–
–
–
–
6,663
1,667
–
–
–
–
71,729
71,729
35,865
71,729
(132,471)
–
–
–
–
–
3,126
16,990
106
–
–
$
–
–
–
–
–
–
–
–
–
202,775
216,299
146,780
110,917
155,589
(65,978)
356,516
254,806
218,347
–
–
–
–
–
–
–
–
–
–
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
63,098
51,302
62,183
48,810
350,000
250,000
171,124
$
–
–
–
–
–
–
–
–
–
$
$
$
3,038
14,676
960
–
–
–
–
–
–
–
10,771
5,994
1,421
–
–
–
–
1,985
14,751
69,878
55,902
27,951
55,902
55,902
–
115,338
–
–
$
–
–
–
280,280
242,609
124,994
15,547
96,221
–
118,085
13,992
118,704
–
–
–
–
350,000
365,338
187,860
194,129
–
–
–
–
–
–
–
–
–
–
96,250
416,591
Dustin Haines
173,250
20,879
–
–
1,842,556
7,273
6,822
42,371
17,370
96,250
2,012,642
1,593,333
20,879
5,023
47,613
381,833
29,539
2,078,220
i. On 5 May 2021, George Savvides, AM retired as Chair and Mark Compton assumed the role of Chair.
i. Dustin Haines was appointed Chief Commercial Officer and commenced employment on 10 June 2020. Mr Haines’
ii.
Other cash service includes motor vehicle allowance and/or other minor benefits. For the year ended 31
December 2021 threshold Group performance targets were not met and hence no amounts were awarded to
KMP under the STI Plan.
iii. 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.
Certain tranches of previous options awarded did not vest and lapsed during the year as vesting conditions
were not met. In accordance with Australian Accounting Standards previous expenses related to the lapsed
portion of options were reversed in the current year.
iv. The fair value of the right is calculated at the date of grant using the 60 day volume weighted average price of
Next Science shares in the period immediately prior to the offer date. The rights disclosed is the portion of the
fair value of the rights recognised as an expense in the reporting period.
v. Disclosed above are the relative proportions of each individual’s remuneration that are related to performance;
the remaining proportion being fixed remuneration.
employment will end on 20 April 2022.
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.
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 Director fees. The Company received a waiver from the ASX that in respect of ASX Listing Rule
10.11 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.
35
36
#NextScienceHeals2021 // ANNUAL REPORT
8 . D I R E C T O R S ’ R E P O R T
8 . 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:
KMP Equity Holdings (cont.)
Year ended 31 December 2020
Year ended 31 December 2021
KMP
Executive Director
Judith Mitchell
Non-Executive Directors
Mark Compton
Bruce Hancox
Daniel Spira
Aileen Stockburger
George Savvides
Other KMP
Matthew Myntti
Jon Swanson
Jacqueline Butler
Dustin Haines
BALANCE AS AT
1 JAN 2021 No.
RECEIVED ON EXERCISE
OF OPTIONS No.
OTHER CHANGES DURING
THE YEAR No.*
BALANCE AS AT
31 DEC 2021 No.
5,000,000
1,560,000
137,438
530,000
49,266
44,837
649,876
20,657,000
70,000
–
–
–
–
1,040,000**
–
–
–
–
650,000**
–
–
–
–
(365,829)
–
(180,000)
6,560,000
137,438
530,000
723,437
44,837
469,876
(7,302,011)***
13,354,989
(20,000)
(239,804)
–
50,000
410,196
–
* Other changes represent shares that were purchased, sold or transferred to another party during the year.
** In respect of these options, in order to facilitate the exercise of these options the Company provided a short term
loan to the option holder which was repaid within 15 days.
*** As announced to ASX on 6 September 2021
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 was 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 director fees for
the first 12 months after the Company’s admission to the official list of the ASX. The shares issued were fully paid ordinary
shares in the capital of the Company on the same terms and conditions as the Company’s existing shares and were issued
at the Offer Price of A$1 for the first quarter after admission. For later quarters, the shares were issued at the 10 day Volume
Weighted Average Price (VWAP) of the Company’s shares for the first 10 trading days of the relevant quarter.
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:
Mark Compton AM
Chair
Dated at Sydney this 23rd day of February 2022
37
38
#NextScienceHeals2021 // ANNUAL REPORT
9 . 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 2021 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
23 February 2022
LEAD AUDITOR’S
INDEPENDENCE
DECLARATION
39
40
#NextScienceHeals
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.
#NextScienceHeals2021 // ANNUAL REPORT 1 0 . 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 2021
1 1 . 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 2021
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
Loss before income tax
Income tax expense
Loss for the year
5
5
7
9
10
11
2021
$
2020
$
8,947,591
3,440,975
(2,007,469)
(524,134)
6,940,122
2,916,841
147,112
356,574
(7,394,871)
(5,670,684)
(5,046,875)
(6,434,414)
(4,105,918)
(3,343,044)
(15,633)
(13,352)
(9,476,063)
(12,188,079)
142,900
(16,476)
126,424
297,254
(21,179)
276,075
(9,349,639)
(11,912,004)
–
–
(9,349,639)
(11,912,004)
Other comprehensive income, net of income tax
Foreign currency translation differences for foreign operations
(547,407)
396,838
Total comprehensive loss for the year
(9,897,046)
(11,515,166)
Earnings per share
From continuing operations
Basic earnings
Diluted earnings
31
31
Cents
(4.75)
(4.75)
Cents
(6.36)
(6.36)
The accompanying notes form part of these financial statements.
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
Performance rights reserve
Accumulated losses
Total equity
NOTES
12
13
14
15
15
13
16
17
18
19
20
21
22
20
21
22
23
23
23
23
23
2021
$
7,000,869
887,211
1,500,522
367,129
476,049
2020
$
8,100,416
3,388,045
1,071,979
7,238,986
452,458
10,231,780
20,251,884
36,656
683,562
2,532,491
232,456
3,485,165
36,656
788,133
2,334,936
227,265
3,386,990
13,716,945
23,638,874
1,172,996
91,177
166,235
109,611
1,064,365
1,909,554
170,946
81,231
1,540,019
3,226,096
1,283,334
1,374,510
109,802
17,295
1,410,431
2,950,450
115,889
9,385
1,499,784
4,725,880
10,766,495
18,912,994
102,921,007
101,281,467
(42,596,715)
(42,596,715)
(1,349,143)
(801,736)
2,140,298
96,250
(50,445,202)
2,125,541
–
(41,095,563)
10,766,495
18,912,994
41
42
The accompanying notes form part of these financial statements.
#NextScienceHeals2021 // ANNUAL REPORT 1 2 . 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 2021
1 2 . 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 2021
2021 IN USD
SHARE
CAPITAL
COMMON
CONTROL
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE OPTION
RESERVE
PERFORMANCE
RIGHTS
RESERVE
ACCUMULATED
LOSSES
TOTAL
EQUITY
2020 IN USD
SHARE CAPITAL
COMMON
CONTROL
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
SHARE OPTION
RESERVE
ACCUMULATED
LOSSES
TOTAL EQUITY
$
$
$
$
$
$
$
$
$
$
$
$
101,281,467 (42,596,715)
(801,736)
2,125,541
90,693,590
(42,596,715)
(1,198,574)
1,648,704
(29,183,559)
19,363,446
Balance at
1 January 2021
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
payments
Foreign exchange
impact
Issue of ordinary
shares
Total transactions
with owners
Balance at 31
December 2021
–
–
–
–
–
–
1,645,770
1,639,540
Capital raising costs
(6,230)
–
–
–
–
–
–
–
–
–
–
(547,407)
(547,407)
(547,407)
–
–
–
–
–
–
–
–
(41,095,563)
18,912,994
(9,349,639)
(9,349,639)
–
(547,407)
–
(547,407)
–
(9,349,639)
(9,897,046)
–
–
–
–
–
17,370
96,250
(2,613)
–
–
–
–
–
14,757
96,250
–
–
–
–
–
113,620
(2,613)
1,645,770
(6,230)
1,750,547
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
396,838
396,838
–
(11,912,004)
(11,515,166)
–
–
–
–
–
–
482,973
(6,136)
–
–
–
–
–
–
–
–
–
–
482,973
(6,136)
11,175,615
(199,999)
(387,739)
11,064,714
102,921,007 (42,596,715)
(1,349,143)
2,140,298
96,250
(50,445,202)
10,766,495
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.
The accompanying notes form part of these financial statements.
43
44
#NextScienceHeals2021 // 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 A S H F L O W S
For the Year Ended 31 December 2021
1 4 . 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 2021
IN USD
Operating Activities
Receipts from customers
Payments to suppliers and employees
Payments for research and development
Interest received
COVID 19 government assistance and other income
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 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)
Less bank term deposits classified as other current assets
Cash and cash equivalents at end of the year
The accompanying notes form part of these financial statements.
NOTES
12
16
17
23
23
15
12
2021
$
2020
$
9,512,635
2,950,430
(16,268,131)
(12,210,609)
(1,672,278)
(3,119,907)
16,515
146,905
117,735
355,707
(8,264,354)
(11,906,644)
(140,492)
(576,266)
(716,758)
(213,244)
(473,555)
(686,799)
–
10,831,275
1,645,770
(6,230)
(212,759)
1,426,781
(7,554,331)
15,339,402
(417,073)
489,125
(387,740)
(222,609)
10,710,051
(1,883,392)
16,910,605
312,189
7,367,998
15,339,402
(367,129)
7,000,869
(7,238,986)
8,100,416
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 2021 and comparative
information for the year ended 31
December 2020.
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
Financial Reporting Standards (“IFRS”)
adopted by the International Accounting
Standards Board (“IASB”).
The financial statements were approved
by the Board of Directors and authorised
for issue on 23 February 2022.
b. Basis of measurement
The financial statements have been
prepared on a historical cost basis unless
otherwise stated.
c. Functional and presentation currency
The financial statements are presented
in United States Dollars, which is 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. This
involves value in use 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.
Value in use for the cash-generating units
(‘CGU’) was determined by discounting
the future cashflows to be generated
from the CGUs and is based on the
following key assumptions:
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
d. Use of judgements and estimates
and settlement of liabilities in the
a. Parent entity information
statements from the date on which
(cont.)
‧ Cashflows were projected based on
forecast operating results over a 5
year period plus a terminal value.
‧ Average annual revenue growth
rates and approved budgets were
used for revenue projections.
‧ Discount rate of 12% based on the
weighted average cost of capital.
‧ Changes in key assumptions
would impact recoverable amount
calculations
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
the useful lives are less than previously
estimated lives, or technically obsolete
or non strategic assets that have been
abandoned or sold will be written off
or written down and the incremental
borrowing rate is estimated.
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 2021, the Group incurred
a loss of $9,349,639 and had net
cash outflows from operations of
$8,264,354. As at 31 December 2021,
the Group had net current asset and
net asset positions of $8,691,761 and
$10,766,495 respectively.
The Group continues the commercialisation
of its product range through distribution/
royalty agreements with its partners.
Alongside this, the Group directly
commercialises its product range by
marketing its products and investing in
sales capability and infrastructure as well as
developing further products. The Group’s
commercialisation strategy means that the
Group will continue to use its cash reserves
and in order to continue to execute its
strategy the Group announced on 23
February 2022 that it was undertaking a
capital raising by way of placement and a
share purchase plan.
After considering the above, the
Directors have concluded that the
Group will be able to fulfil all obligations
as and when they fall due for the
Recovery of deferred tax assets
foreseeable future, being at least twelve
Deferred tax assets for tax losses are
only recognised if the Group considers
it is probable that future taxable
months from the date of signing this
financial report.
amounts will be available to utilise
3. Significant Accounting Policies
those tax losses against.
e. Going concern
The financial report has been prepared
on a going concern basis, which
assumes continuity of normal business
activities and the realisation of assets
The Group has consistently applied
the following accounting policies to all
periods in these financial statements.
In accordance with the Corporations
control commences until the date on which
Act 2001, these financial statements
control ceases.
present the results of the Group only.
Supplementary information about the
parent entity is disclosed in note 24.
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 the identifiable net assets
acquired. Any goodwill that arises is tested
annually for impairment. Any gain on a
bargain purchase is recognised in profit
or loss immediately. Transaction costs are
expensed as incurred, except if related to
the issue of debt or equity securities.
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 control reserve.
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 affect those
returns through its power over the entity.
The financial statements of subsidiaries
are included in the consolidated financial
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.
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.
c. Foreign currency
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.
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
c. Foreign currency (cont.)
i. Foreign currency transactions
(cont.)
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,
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.
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 some of
Next Science’s customers at the point
when the Group fulfils its obligation
to deliver, and goods are available at
the customer’s premises. For these
customers, the performance obligation
(including the license) transfers at
the point in time when each good
is delivered. Therefore, revenue is
recognised at the point in time when
the product is delivered. For other
customers, title and control pass when
the product is delivered to the courier,
with revenue being recognised at this
Foreign currency differences are
point in time.
recognised in equity and accumulated in
the translation reserve.
d. Revenue from contracts
with customers
iii. Measurement of transaction price
Consideration of the contract can
comprise a fixed element (upfront
payment plus minimum annual purchase
amounts) and variable elements
Revenue from contracts with customers
(milestone payments).
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
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
as income in equal amounts over the
expected useful life of the related asset.
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 be
transitioned back to Next Science in the
first half of 2021.
As a result of the non renewal of the
3M contract, a change has been made
to the time frame for recognition of the
performance obligation in relation to
the milestone payments received from
3M. The milestone payments would
previously have been recognised as
revenue over the period until the end of
the 3M contract on 31 December 2021.
The milestone payments have now been
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.
The ‘effective interest rate’ is the rate
that exactly discounts estimated future
cash payments or receipts through the
expected life of the financial instruments
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
credit impaired subsequent to initial
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,
recognised as revenue over a shorter time
then the calculation of interest income
period ending 1H 2021, as the transition
of BLASTX® back to Next Science was
completed during 1H 2021.
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
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
and liabilities that are not eliminated
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.
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For the Year Ended 31 December 2021
1 4 . 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 2021
f. Finance income and finance costs
(cont.)
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
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.
g. Income tax
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.
i. Current tax
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.
Deferred tax assets are recognised
for unused tax losses, tax credits and
deductible temporary differences, to
the extent that it is probable that future
taxable profits will be available against
which they can be utilised. Deferred tax
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.
Unrecognised deferred tax assets are
reassessed at each reporting date and
recognised to the extent that it has
become probable that future taxable
profits will be available against which they
can be used.
Current tax comprises the expected tax
Deferred tax is measured at the tax
payable or receivable on the taxable
income or loss for the year and any
rates that are expected to be applied to
temporary differences when they reverse,
adjustment to tax payable or receivable
using tax rates enacted or substantively
in respect of previous years. It is
enacted at the reporting date.
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.
ii. Deferred tax
Deferred tax is recognised in respect
of temporary differences between
the carrying amounts of assets
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
j. Trade and other receivables
Assets and liabilities are presented in the
Trade receivables are initially recognised
statement of financial position based on
at fair value and subsequently measured
current and non current classification.
at amortised cost using the effective
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
interest method, less any allowance for
expected credit losses. Trade receivables
are generally due for settlement between
30 and 60 days.
primarily for the purpose of trading; it is
The Group has applied the simplified
expected to be realised within 12 months
approach to measuring expected credit
after the reporting period; or the asset is
losses, which uses a lifetime expected
cash or cash equivalent unless restricted
loss allowance. To measure the expected
from being exchanged or used to settle
credit losses, trade receivables have been
a liability for at least 12 months after the
grouped based on days overdue.
reporting period. All other assets are
classified as non current.
Other receivables are recognised at
amortised cost, less any allowance for
A liability is classified as current when:
expected credit losses.
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
k. Inventories
Inventories are measured at the lower
of cost and net realisable value. The
unconditional right to defer the settlement
cost of inventories is based on the
of the liability for at least 12 months after
first in, first out principle.
the reporting period. All other liabilities
are classified as non current.
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.
l. Property, plant and equipment
i. Recognition and measurement
Items of property, plant and equipment
are measured at cost less accumulated
depreciation and accumulated
impairment losses. Cost includes
expenditure that is directly attributable to
the acquisition of the asset. If significant
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.
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For the Year Ended 31 December 2021
1 4 . 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 2021
m. Right-of-use assets
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, any initial direct costs
incurred, and, except where included in the
cost 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 asset at the end of the
lease term, the 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
i. Recognition and measurement
Research and development expenditure
Expenditure on research activities is
recognised in profit or loss as incurred.
i. Recognition and measurement
(cont.)
An item of property, plant and equipment
is derecognised upon disposal or when
there is no future economic benefit to
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.
ii. Subsequent expenditure
Subsequent expenditure is capitalised
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
obtain ownership by the end of the lease
term. Land is not depreciated.
The estimated useful lives of property,
plant and equipment are as follows:
FIXED ASSET CLASS
USEFUL LIFE
Leasehold improvements
5-15 years
Plant and equipment
Furniture and fittings
5 years
5 years
Depreciation methods, useful lives
and residual values are reviewed
at each reporting date and adjusted
if appropriate.
Development expenditure is capitalised
specific asset to which it relates. All
only if development costs can be
other expenditure, including expenditure
measured reliably, the product or process
on internally generated goodwill and
is technically and commercially feasible,
brands, is recognised in profit or loss
future economic benefits are probable, and
as incurred.
the Group intends to and has sufficient
resources to complete development and
iii. Amortisation
to use or sell the asset. Otherwise it is
Amortisation is calculated based on
recognised in profit or loss as incurred.
the cost of intangible assets less
Subsequent to initial recognition,
their estimated residual values using
development expenditure is measured at
the straight line method over their
cost less accumulated amortisation and
estimated useful lives, and is generally
any accumulated impairment losses.
recognised in profit or loss.
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.
Computer software
The estimated useful lives of intangible
assets are as follows:
Development Expenditure
8 years
Computer Software
2-3years
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,
Computer software comprises computer
have finite useful lives.
application system software and
licenses. Costs incurred in developing
products or systems and costs incurred
o. Trade and other payables
in acquiring software and licenses
These amounts represent liabilities
that will contribute to future period
for goods and services provided to the
financial benefits through revenue
Group prior to the end of the financial
generation and/or cost reduction are
year and which are unpaid. Due to their
capitalised to computer software. Costs
short term nature they are measured at
capitalised include external direct costs
amortised cost and are not discounted.
of materials and services, direct payroll
The amounts are unsecured and are
and payroll related costs.
usually paid within 30 days
of recognition.
ii. Subsequent expenditure
Subsequent expenditure is capitalised
only when it increases the future
economic benefits embodied in the
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
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
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
measured at the undiscounted amounts
increase in equity, on a straight line monthly
expected to be paid when the obligation
basis over the vesting period in which the
is settled.
ii. Long-term employee benefits
performance and/or service conditions are
fulfilled after which the employee becomes
unconditionally entitled to them. The
Long term employee benefits include
cumulative expense recognised for share
consolidated statement of profit or loss.
employees’ long service leave and annual
based payments at each reporting date
unconditional right to consideration
For short term leases (lease term of
(whichever is earlier) before the Group
12 months or less) and leases of low
has transferred the goods or services
value assets, the Group has opted
to the customer.
q. Leases
to recognise a lease expense on a
straight line basis. This expense is
presented within other expenses in the
consolidated statement of profit or loss.
i. Definition of a new lease
The determination of whether a contract
r. Provisions
contains a lease is on the basis of whether
the customer has the right to control the
use of an 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
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.
measuring these lease liabilities, the Group
s. Employee benefits
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.
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
leave entitlements not expected to be
until the vesting date reflects the extent to
settled within 12 months of the end of the
which the vesting period has ended and
financial year in which employees render the
the Group’s best estimate of the number
related service. Other long term employee
of equity instruments that will ultimately
benefits are measured at the present value
vest. The expense or credit for a period
of the expected future payments to be made
represents the movement in cumulative
to employees. Expected future payments
incorporate anticipated future wage and
expense recognised as at the beginning and
end of the period. No expense is recognised
salary levels, duration of service and
for awards that do not ultimately vest,
employee departures and are discounted
except for equity settled transactions for
at rates determined by reference to market
which vesting are conditional upon a market
yields at the end of the reporting period
or non vesting condition. These are treated
on corporate bonds that have maturity
as vesting irrespective of whether or not the
dates that approximate the terms of the
market or non vesting condition is satisfied,
obligations. Any remeasurements for
provided that all other performance and/or
changes in assumptions of obligations for
service conditions are satisfied.
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
t. Financial instruments
i. Recognition and initial measurement
The Group initially recognises trade
receivables issued on the date that they are
originated. All other financial assets and
financial liabilities are recognised initially on
the trade date.
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
The fair value of performance rights and
subsequently measured at amortised
options granted is recognised as an
cost using the effective interest method.
employee expense with a corresponding
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
i. Classification and subsequent
measurement (cont.)
Financial assets (cont.)
The amortised cost is reduced by
impairment losses. Interest income,
foreign exchange gains and losses and
impairment are recognised in profit or
loss. Any gain or loss on derecognition is
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
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.
Financial liabilities
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
Financial liabilities are classified as
a legally enforceable right to set off the
measured at amortised cost or FVTPL. A
amounts and it intends either to settle
The Group considers a financial asset to
fair value of a liability reflects its non
be in default when the borrower is unlikely
performance risk.
to pay its obligations to the Group in full or
the financial asset is more than 130 days
past due.
A number of the Group’s accounting
policies and disclosures require the
measurement of fair values, for both
ECLs are a probability weighted estimate
financial and non financial assets and
of credit losses and are measured as
liabilities. When one is available, the
the present value of all cash shortfalls
Group measures the fair value using
discounted at the effective interest rate.
the quoted price in an active market.
Loss allowances for financial assets
A market is regarded as ‘active’ if
measured at amortised cost are deducted
transactions for the asset or liability take
from the gross carrying amount.
place with sufficient frequency and volume
An impairment loss in respect of a financial
asset measured at amortised cost is
to provide pricing information on an
ongoing basis.
calculated as the difference between
If there is no quoted price in an active
its carrying amount and the present
market, then the Group uses valuation
value of the estimated future cash flows
techniques that maximise the use of
discounted at the asset’s original effective
relevant observable inputs and minimise
financial liability is classified as at FVTPL
them on a net basis or to realise the asset
interest rate. Losses are recognised in
the use of unobservable inputs.
if it is classified as held for trading, it is a
and settle the liability simultaneously.
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 effective interest method. Interest
expense and foreign exchange gains and
losses are recognised in profit or loss.
Any gain or loss on derecognition is also
recognised in profit or loss.
iii. Derecognition
Financial assets
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
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 chosen valuation technique
incorporates all of the factors that market
participants would take into account in
pricing a transaction.
x. 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 responsible for allocating resources
and assessing performance of the
operating segments.
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. 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 market to which
the Group has access at that date. The
57
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
4. Standards issued but not yet effective
A number of new standards are effective for annual periods beginning after 1 January
2022 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. Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
(Amendments to AASB 2014 10)
ii. Annual Improvements 2018 2020 Cycle (Amendments to AASB 1, 3, 9, 116, 137, 141)
(Amendments to AASB 2020 3)
iii. AASB 2021 3 Amendments to Australian Accounting Standards - Covid 19 - Related Rent
Concessions beyond 30 June 2021
y. Earnings per share
i. Basic earnings per share
Cash flows are presented on a gross
basis. The GST components of cash
flows arising from investing or financing
Basic earnings per share is calculated
activities which are recoverable from, or
by dividing the profit or loss attributable
payable to the tax authority, are presented
to the owners of the Company excluding
as operating cash flows.
Commitments and contingencies are
disclosed net of the amount of GST
recoverable from, or payable to, the
tax authority.
any costs of servicing equity other than
ordinary shares, by the weighted average’
number of ordinary shares outstanding
during the financial year, adjusted for
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.
z. Goods and Services Tax (‘GST’) and
other similar taxes
Revenues, expenses and assets
are recognised net of the amount of
associated GST, unless the GST incurred
is not recoverable from the 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.
59
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
5. Revenue and Other Income
In USD
Revenue from contracts with customers
2021
$
8,947,591
2020
$
3,440,975
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
2021
$
8,854,153
93,438
8,947,591
2020
$
3,353,331
87,644
3,440,975
2021
$
1,205,596
2,279,570
3,485,166
2020
$
1,486,004
1,900,986
3,386,990
Major customers
Revenues from two major customers of the Group represented 78% (2020: 91%) of the Group’s total revenue.
OTHER INCOME
In USD
Government assistance – COVID-19
Other income
2021
$
130,656
16,456
147,112
2020
$
318,077
38,497
356,574
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.
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
2021
$
23,811
567,984
198,477
2021
$
8,057
7,576
–
15,633
2021
$
7,338,288
43,564
113,620
7,495,472
2021
$
16,515
–
126,385
142,900
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
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
11. Income Tax Expense (cont.)
Australian entities
Movement in deferred tax assets and liabilities using the Company’s domestic Australian
tax rate of 26%
In USD
2021 cost
Intangibles
Employee benefits
Accrued expenses
Deferred revenue
OPENING
BALANCE
RECOGNISED IN
PROFIT OR LOSS
CLOSING
BALANCE
$
$
$
(520,105)
(34,938)
(555,043)
23,803
9,255
6,492
35,756
30,295
45,011
903,118
(545,745)
357,373
Unused tax losses carried forward
6,149,970
1,011,263
7,161,233
Other items
(39,484)
(8,002)
(47,486)
Deferred tax assets not recognised
(6,526,557)
(464,826)
(6,991,383)
Deferred tax assets/(liabilities)
–
–
–
2020 cost
Intangibles
Employee benefits
Accrued expenses
Deferred revenue
(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)
–
–
–
10. Finance Costs
In USD
Interest expense on lease liabilities
2021
$
16,476
16,476
2020
$
21,179
21,179
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
2021
2020
$
–
–
–
$
–
–
–
Reconciliation of income tax to accounting profit:
Loss before income tax
Prima facie tax benefit on profit from ordinary activities
before income tax at 26% (2020: 27.5%)
(9,349,639)
(11,912,004)
(2,430,906)
(3,275,801)
Tax effect of:
Permanent differences
Effect of tax rate in foreign jurisdictions
Tax losses not brought to account
Prior period over/(under) provision
Total income tax expense
(23,777)
(319,306)
2,968,169
(194,180)
–
The unused tax losses as at 31 December were as follows:
Australia unused tax losses (in AUD)
USD unused tax losses (in USD)
2021
$
43,126,968
27,889,973
242,329
(251,448)
3,284,920
–
–
2020
$
30,652,663
21,503,856
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.
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
11. Income Tax Expense (cont.)
US entities
Movement in deferred tax assets and liabilities using the US tax rate of 21%
In USD
2021 cost
Intangibles
Employee benefits
Accrued expenses
OPENING
BALANCE
RECOGNISED IN
PROFIT OR LOSS
CLOSING
BALANCE
$
$
$
(117,566)
1,075
34,046
1,106
104,118
(20,836)
(83,520)
2,181
83,282
Unused tax losses carried forward
5,698,521
158,373
5,856,894
Other items
(40,289)
874
(39,415)
Deferred tax assets not recognised
(5,645,859)
(173,563)
(5,819,422)
Deferred tax assets/(liabilities)
–
–
–
2020 cost
Intangibles
Employee benefits
Accrued expenses
(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)
–
–
–
12. Cash and Cash Equivalents
In USD
Cash at bank
2021
$
7,000,869
7,000,869
2020
$
8,100,416
8,100,416
Reconciliation of cash flows from operating activities
In USD
Loss for the year
Adjustments for:
Depreciation and amortisation
Interest income (Note 9)
Share based payments (Note 8)
Unrealised foreign currency translation (gain)/loss
Directors fees paid as shares (Note 23)
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)
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
2021
$
2020
$
(9,349,639)
(11,912,004)
790,272
–
113,620
(101,651)
–
16,476
8,057
7,576
–
701,600
(1,266)
482,973
(72,143)
30,520
21,179
2,796
7,606
2,951
(8,515,289)
(10,735,788)
2,498,905
(389,361)
(56,049)
109,884
(2,891)
(1,909,553)
250,935
(2,097,048)
(629,516)
28,300
(28,011)
(24,730)
1,580,149
(1,170,856)
Net cash from operating activities
(8,264,354)
(11,906,644)
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
13. Trade and Other Receivables
16. Property, Plant and Equipment
In USD
Current
Trade receivables
Loan to shareholders
Non-Current
Security deposit
2021
$
865,831
21,380
887,211
36,656
36,656
2020
$
3,338,383
49,662
3,388,045
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 expected credit loss to be insignificant.
Information about the Group’s exposure to credit and market risks, and impairment losses for trade
receivables is included in Note 32 (c).
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
2021
$
987,457
573,472
1,560,929
(60,407)
1,500,522
2021
$
476,049
367,129
843,178
2020
$
631,644
539,923
1,171,567
(99,588)
1,071,979
2020
$
452,458
7,238,986
7,691,444
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
2021
$
1,158,763
(680,804)
477,959
250,905
(170,445)
80,460
199,754
(74,611)
125,143
683,562
2020
$
1,120,117
(572,261)
547,856
236,866
(135,140)
101,726
201,121
(62,570)
138,551
788,133
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 2021
Additions
Disposals
PLANT AND
EQUIPMENT
FURNITURE
AND FITTINGS
LEASEHOLD
IMPROVEMENTS
$
$
$
547,856
123,112
(7,847)
101,726
138,551
17,380
(210)
–
–
TOTAL
$
788,133
140,492
(8,057)
Depreciation expense
(185,164)
(38,436)
(13,411)
(237,011)
Foreign exchange movements
2
–
3
5
Balance at the end of the year
477,959
80,460
125,143
683,562
Balance at 1 January 2020
542,251
111,422
158,914
812,587
Additions
Disposals
Depreciation expense
Impairment loss
Foreign exchange movements
174,056
(1,144)
(167,307)
–
–
39,188
(1,652)
(44,281)
(2,951)
–
–
–
213,244
(2,796)
(20,381)
(231,969)
–
18
(2,951)
18
Balance at the end of the year
547,856
101,726
138,551
788,133
67
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
17. Intangible Assets
18. Right-of-use Assets
The Group holds leases for properties with lease terms ranging from 3 to 4.6 years.
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
2021
$
1,507,814
(461,218)
1,046,596
1,972,054
(486,796)
1,485,258
121,701
(121,064)
637
2,532,491
In USD
$
$
$
PATENTS AND
TRADEMARKS
RESEARCH AND
DEVELOPMENT
COMPUTER
SOFTWARE
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
TOTAL
$
Balance at 1 January 2021
962,110
1,371,189
1,637
2,334,936
Additions
Impairment loss
219,317
356,949
–
(7,576)
–
–
576,266
(7,576)
Amortisation expense
(134,831)
(235,304)
(1,000)
(371,135)
Foreign exchange movements
–
–
–
–
Closing value at 31 December 2021
1,046,596
1,485,258
637
2,532,491
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)
(294,515)
–
(844)
(844)
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
2021
$
668,314
(435,858)
232,456
182,127
16,476
89,146
287,749
2020
$
587,668
(360,403)
227,265
175,116
21,179
89,390
285,685
The total cash outflow in relation to lease payments amounted to USD $212,759 (2020: USD $222,609).
Movement
In USD
Balance at 1 January 2021
Additions
Depreciation expense
Foreign exchange movements
Closing value at 31 December 2021
Balance at 1 January 2020
Depreciation expense
Foreign exchange movements
PROPERTY
$
227,265
186,161
(182,127)
1,157
232,456
402,291
(175,116)
90
Closing value at 31 December 2020
227,265
19. Trade and Other Payables
In USD
Current
Trade payables
Closing value at 31 December 2020
962,110
1,371,189
1,637
2,334,936
Other payables and accrued expenses
69
70
All amounts are short-term and the carrying values are considered to be a reasonable approximation of fair value.
2021
$
515,579
657,417
1,172,996
2020
$
571,460
492,905
1,064,365
#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
20. Contract Liabilities
22. Employee Benefits
In USD
Current
Contract liabilities
Non-Current
Contract liabilities
2021
$
2020
$
91,177
1,909,554
In USD
Current
Liability for annual leave
Non-Current
2021
$
2020
$
109,611
81,231
1,283,334
1,374,510
Liability for long service leave
17,295
9,385
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.
21. 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
2021
$
2020
$
166,235
170,946
109,802
276,037
166,235
109,802
–
276,037
115,889
286,835
170,946
115,889
–
286,835
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
23. Capital and Reserves
a. Share capital
23. Capital and Reserves (cont.)
In number of shares
In USD
FULLY PAID
PARTLY PAID
TOTAL
FULLY PAID
PARTLY PAID
TOTAL
$
$
$
Balance as at 1 January 2020
180,060,358
650,000
180,710,358
Balance at 1 January 2020
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)
Balance as at 31 December 2020
Shares issued in March 2021 on conversion
of employee share options (ix)
Shares issued in April 2021 on conversion
of employee share options (x)
Shares issued in May 2021 on conversion
of employee share options (xi)
162,500
650,000
23,820
325,000
325,000
6,666,666
4,236,898
84,500
1,666,667
194,201,409
84,500
3,250,000
438,000
Balance as at 31 December 2021
197,973,909
–
162,500
(650,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
23,820
325,000
325,000
6,666,666
4,236,898
84,500
1,666,667
194,201,409
84,500
3,250,000
438,000
197,973,909
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
Balance at 31 December 2020
Shares issued in March 2021 (on conversion
of employee share options) (ix)
Shares issued in April 2021 (on conversion
of employee share options) (x)
Shares issued in May 2021 (on conversion
of employee share options) (xi)
Capital raising costs
Balance at 31 December 2021
50,377
–
50,377
199,999
(199,999)
30,520
100,750
136,500
5,627,879
3,550,085
26,195
1,453,310
(387,739)
101,281,467
35,490
1,365,000
245,280
(6,230)
102,921,007
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,520
100,750
136,500
5,627,879
3,550,085
26,195
1,453,310
(387,739)
101,281,467
35,490
1,365,000
245,280
(6,230)
102,921,007
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
23. Capital and Reserves (cont.)
23. 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.
b. Reserves
In USD
2021
$
2020
$
Foreign currency translation reserve
(1,349,143)
(801,736)
Common control reserve
(42,596,715)
(42,596,715)
Share option reserve
2,140,298
2,125,541
Performance rights reserve
96,250
–
(41,709,310)
(41,272,910)
v. On 24 September 2020, Next Science raised A$7,999,999 via a Placement at A$1.20 per share.
Foreign currency translation reserve
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
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.
by shareholders at a general meeting held on 18 November 2020.
Common control reserve
ix. On 18 March 2021, 84,500 round 3 Equity Incentive Plan (ECP) employee share options
converted to 84,500 ordinary shares at a price of AUD$0.54.
x.
(x) Between 13 April 2021 and 15 April 2021, 3,250,000 round 3 Equity Incentive Plan (ECP)
employee share options converted to 3,250,000 ordinary shares at a price of AUD$0.55
xi. (xi) On 3 May 2021, 438,000 round 4 Equity Incentive Plan (ECP) employee share options
converted to 438,000 ordinary shares at a price of AUD$0.72.
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.
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.
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
24. Parent Entity Information
24. Parent Entity Information (cont.)
As at, and throughout, the financial year to 31 December 2021 the parent entity of the
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
Group was Next Science Limited.
The parent entity had no guarantees as at 31 December 2021 and 31 December 2020.
Statement of profit or loss and other comprehensive income
Contingent liabilities
PARENT 2021
PARENT 2020
The parent entity had no contingent liabilities as at 31 December 2021 and 31 December 2020.
In USD
Loss after income tax
Other comprehensive income / (loss)
Total comprehensive loss
$
(10,733,399)
(478,466)
(11,211,865)
$
(6,081,965)
598,176
(5,483,789)
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
Performance rights reserve
Accumulated losses
Total equity
PARENT 2021
PARENT 2020
$
$
4,033,709
13,308,038
17,341,747
(451,638)
–
(451,638)
16,890,108
102,921,005
(27,257,549)
(997,204)
2,140,298
96,250
(60,012,691)
16,890,108
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
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31
December 2021 and 31 December 2020.
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.
25. Group Entities
Set out below is the Group structure listing all subsidiaries as at 31 December 2021.
NEXT SCIENCE LIMITED
(Australian Parent Entity)
NEXT SCIENCE TECHNOLOGIES PTY LTD
(FORMERLY 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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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
26. Related Parties
a. Key management personnel compensation
27. Share-based Employee Incentive Arrangements
Equity Incentive Plan (equity settled)
Key management personnel (“KMP”) are defined as those persons having authority and
Prior to listing on the ASX, the Group established an Equity Incentive Plan (ECP) and an
responsibility for planning, directing and controlling the activities of the Group, directly and
Employee Share Option Plan (ESOP). The purpose of the Plans is to attract and retain the
indirectly, and include the Directors, executive and non executive, as well as certain other
types of employees, consultants and directors who will contribute to the Company’s long
senior executives. The totals of remuneration of the KMP of the Company included within
term success; provide incentives that align the interests of Employees, Consultants and
employee expenses are as follows:
In USD
Short-term employee benefits
Other long-term employee benefits
Post-employment benefits
Share-based payment benefits
Total
Short-term employee benefits
2021
$
1,849,829
6,822
42,371
113,620
2,012,642
2020
$
1,614,212
5,023
47,613
411,372
2,078,220
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
KMPs of the Company hold 11.02% (2020: 13.9%) of the issued capital of the Company
as at 31 December 2021.
Directors with those of the shareholders of the Company; and promote the success of the
Company’s business. As at 31 December 2021, there are 2,890,000 options over ordinary
shares on issue (2020: 8,092,500 options), representing 1.46% (2020: 4.17%) 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 2021
VESTED AS AT
31 DEC 2021
–
–
–
–
–
–
78,000
78,000
–
–
(734,500)
–
(1,560,000)
(780,000)
(1,040,000)
–
–
–
–
–
–
–
–
–
(650,000)
1,820,000
1,820,000
(438,000)
–
992,000
992,000
(3,772,500)
(1,430,000)
2,890,000
2,890,000
GRANT DATE
AND VESTING
CONDITIONS (I)
EXPIRY DATE
NO OF
OPTIONS AS AT
31 DEC 2020
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
1,430,000
Totals
8,092,500
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
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
27. Share-based Employee Incentive Arrangements (cont.)
29. Events Occurring After the Reporting Date
ii. The weighted average share price for the options exercised during the year was USD $0.44 (2020: USD $0.35).
As at 31 December 2021, 2,890,000 options have vested (2020: 4,842,500).
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.
The fair value of the performance rights granted to Dustin Haines is deemed to represent
the value of Dustin Haines’s services received over the vesting period. These values were
calculated applying the following inputs to performance rights issued:
Grant date
Weighted average fair value per performance right
Number of performance rights issued
Remaining life of the performance rights
PERFORMANCE RIGHTS
22-Feb-21
USD $0.9248
340,602
3 years
28. Contingent Liabilities and Capital Commitments
In August 2021, Irrimax Corporation, a competitor of Next Science in the wound irrigation
sector, filed a complaint and subsequently served on its complaint in the United States District
Court for the Northern District of Georgia alleging common law unfair competition and false
advertising regarding XPERIENCE™. Next Science denies the allegations and is vigorously
defending the complaint.
The Group has no capital commitments as at 31 December 2021 (2020: nil).
As detailed above, in January 2022, Next Science and Zimmer reached agreement in respect
of a new US distribution agreement in relation to the supply of a white labelled version of
XPERIENCE™ under Zimmer’s own labelling (excluding the US plastic reconstructive surgery
market which is covered by TELA Bio, Inc’s distribution agreement detailed below), and
Zimmer withdrew its District Court proceedings.
In conjunction with agreeing the new XPERIENCE™ distribution agreement, Next Science
and Zimmer also agreed a refreshed distribution arrangement for Bactisure. The revised
Bactisure arrangements include a revised agreement term. The agreement term will end on 31
December 2026 with Zimmer having the option to extend the agreement for an additional five
year period by providing 6 months’ prior notice.
The Group announced on 23 February 2022 that it was undertaking a capital raising by way of
a placement and a share purchase plan.
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, other than those matters detailed above, of a material
and unusual nature likely, in the opinion of the directors of the Company, 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.
30. 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
2021
$
82,466
82,466
11,602
10,494
22,096
104,562
2020
$
80,372
80,372
2,432
19,230
21,662
102,034
81
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
31. 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)
2021
$
(9,349,639)
(4.75)
2020
$
(11,912,004)
(6.36)
Weighted average number of shares
196,882,812
187,185,169
32. 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.
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 assistance from the Audit and Risk Committee
32. Financial Risk Management (cont.)
· monitor the need for, and if considered necessary, require, an internal or external audit of critical
areas of risk;
· oversee the establishment of procedures for the receipt, handling and investigation of
whistleblower disclosures;
· oversee the establishment of, and monitor, assurance mechanisms for monitoring:
- the Group’s culture and compliance with the Group’s Values; and
- compliance with the Group’s corporate governance policies and procedures, contractual
obligations and the laws applicable to the Group and its operations;
· oversee the Group’s annual insurance program, having regard to the Group’s business and the
insurable risks within its business;
· assess the adequacy of controls, including disaster recovery and business continuity plans, for
preserving and re establishing financial and operational information in the event of a disaster; and
·
review and make recommendations to the Board in relation to public disclosures made by the
Group regarding material business risks.
The Board considers the Group’s risk management framework to be appropriate for the size and
level of operations of the Group.
c. Credit risk
Cash and cash equivalents
(as detailed below). The Group’s risk management framework has been established to identify and
The Group held cash and cash equivalents of USD $7,000,869 and USD $367,129 in term deposits
analyse the material risks faced by the Group, to set appropriate risk limits and controls and to
at 31 December 2021 (2020: USD $8,100,416 in cash and USD $7,238,986 in term deposits).
monitor risks and adherence to the risk appetite set by the Board. The Group’s risk management
The cash and cash equivalents are held with credit worthy bank and financial counterparties. The
framework is reviewed at least annually by the Audit and Risk Committee and the consideration of
expected credit loss of each of these banks and counterparties are considered to be extremely low;
changes in the Group’s risk profile and mitigating actions and controls is a standing item at Audit
accordingly any expected credit losses are deemed to be insignificant.
and Risk Committee meetings.
Audit and Risk Committee
The Audit and Risk Committee responsibilities in relation to risk management are to:
· oversee the establishment, and maintenance by management, of processes to ensure that
there is an adequate and effective system to identify and manage material business risks;
· monitor the Group’s Risk Register to confirm that key risks have been identified and
adequate controls are in place to mitigate risks so far as reasonably practicable;
receive reports from management on new and emerging sources of risk and the proposed
risk controls to mitigate those risks;
receive reports from management and the external auditor on any material incident involving
fraud or a breakdown of the Group’s risk controls and the lessons learned;
review, at least annually, the Group’s risk management framework to confirm that it continues to
be sound and that the Group is operating with due regard to the risk appetite set by the Board;
·
·
·
83
Trade receivables and contract assets
Credit risk on trade receivables is the risk of financial loss if a customer fails to meet its c
ontractual obligations.
The carrying amounts of financial assets represents the maximum credit exposure.
Maximum exposure to credit risk for trade receivables by type of counterparty was as follows:
In USD
Distribution & Licensing Partners
Hospitals & Surgery Centres
Other
2021
$
593,644
272,187
–
865,831
2020
$
3,295,464
42,919
–
3,338,383
As at 31 December 2021, Zimmer Surgical Inc (worldwide) accounted for over 67% of the trade
receivables (2020: Zimmer Surgical Inc accounted for over 75% of the trade receivables).
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#NextScienceHeals2021 // ANNUAL REPORT
1 4 . 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 2021
1 4 . 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 2021
32. Financial Risk Management (cont.)
c. Credit risk (cont.)
i. Risk management
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of
each customer. However, management also considers the factors that may influence the credit
risk of its customer base, including the default risk associated with the industry and country in
which customers operate. Details of concentration of revenue are included in Note 5.
The Audit and Risk Committee has established a credit policy under which each new customer
is analysed individually for creditworthiness before the Group’s standard payment and delivery
terms and conditions are offered. The Group’s review of new customers includes customer due
diligence and credit agency information (Dun & Bradstreet Corporation), if available. Sale limits
are established for each customer and reviewed periodically. Any sales exceeding those limits
require approval according to an approval matrix.
The maximum exposure to credit risk at the reporting date to recognised financial assets is
the carrying amount, net of any provisions for impairment of those assets, as disclosed in the
statement of financial position and notes to the financial statements.
In monitoring customer credit risk, customers are grouped according to their credit
characteristics, including whether they are an individual hospital or surgery centre or whether
they are a distribution partner with which Next Science has a licensing or distribution
agreement. Further consideration is given to their geographic location and trading history with
the Group and existence of any previous financial difficulties.
ii. Impaired trade receivables
Generally, trade receivables are written off when there is no reasonable expectation of
recovery. Indications of this include significant financial difficulties of the debtor, the failure of
a debtor to engage in a repayment plan, no active enforcement activity and a failure to make
contractual payments for an extensive period of time.
Impairment losses are recognised in the profit or loss statement within selling and distribution
expenses. Subsequent recoveries of amounts previously written off are credited against
selling and general expenses.
As at 31 December 2021, trade receivables with a nominal value of $Nil (2020: Nil) were
considered impaired and fully provided for.
iii. Past due not impaired
As at 31 December 2021, trade receivables of $67,247 (2020: $105,505) were past due but
not impaired. These relate to customers for whom there is no recent history of default.
32. Financial Risk Management (cont.)
The aging analysis of trade receivables is as follows:
In USD
0 - 30 days
31 - 60 days
61 - 90 days
91 - 120 days
More than 120 days
Total
d. Liquidity risk
2021
$
781,855
62,302
21,006
668
–
2020
$
3,009,686
162,775
165,922
–
–
865,831
3,338,383
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.
In USD
At 31 December 2021
Trade and other payables
Lease liabilities
Total
At 31 December 2020
Trade and other payables
Lease liabilities
Total
LESS THAN
6 MONTHS
6-12 MONTHS
BETWEEN 1
AND 5 YEARS
TOTAL
CONTRACTED
AMOUNTS
$
1,172,996
91,540
1,264,536
1,064,365
74,762
1,139,127
$
–
$
$
–
1,172,996
74,695
74,695
109,802
276,037
109,802
1,449,033
–
96,183
96,183
–
1,064,365
115,889
286,834
115,889
1,351,199
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.
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#NextScienceHeals2021 // ANNUAL REPORT 1 4 . 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 2021
1 4 . 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 2021
32. Financial Risk Management (cont.)
In USD
2021
Australian Dollars
2020
Australian Dollars
% CHANGE
PROFIT
BEFORE TAX
STRENGTHEN
PROFIT
BEFORE TAX
WEAKEN
EQUITY
STRENGTHEN
$
$
$
$
10%
(370,591)
370,591
(370,591)
EQUITY
WEAKEN
$
370,591
10%
(714,428)
714,428
(714,428)
714,428
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.
32. Financial Risk Management (cont.)
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 $42,906
(2020: $122,864). 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.
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
2021
$
4,006,776
(300,868)
3,705,908
2020
$
7,282,214
(137,932)
7,144,282
A reasonably possible strengthening (weakening) of the Unites States Dollar against all other
currencies at 31 December 2021 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.
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1 5 . 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 41 to
88 and the Remuneration Report on pages 26 to 38 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 2021 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 Group will be able to pay its
debts as and when they become due and payable.
3. 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 2021.
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:
Mark Compton, AM
Chair
Dated: 23rd February 2022
INDEPENDENT
AUDITOR’S REPORT
#NextScienceHeals
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#NextScienceHeals2021 // ANNUAL REPORT 1 6 . 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
1 6 . 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 2021 and of
its financial performance for the
year ended on that date; and
•
complying with Australian
Accounting Standards and the
Corporations Regulations 2001.
Basis for opinion
The Financial Report comprises:
• Consolidated statement of financial position as at 31
December 2021
• 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.
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 these requirements.
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.
72
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 8,947,591
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;
• Group has manual processes
and controls which may
increase the risk of error 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 checked the terms and conditions of the customer
contract for consistency to the Group’s policy for
timing and measurement of revenue recognition;
o 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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#NextScienceHeals2021 // ANNUAL REPORT
1 6 . 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
1 6 . 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 Renumeration Report. The Our Purpose Page, Chairman’s Letter, Managing Director’s
Report, 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
express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Renumeration 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.
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 2021,
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 9
26
to 20 of the Directors’ report for the year ended 31 December
38
2021.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
KPMG
Tony Nimac
Partner
Sydney
Tony Nimac
Partner
Sydney
23 February 2022
23 February 2022
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94
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#NextScienceHeals
INVESTOR
INFORMATION
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#NextScienceHeals2021 // ANNUAL REPORT 1 7 . I N V E S T O R I N F O R M AT I O N
As at 11 March 2022
1 7 . I N V E S T O R I N F O R M AT I O N
As at 11 March 2022
Number of securityholders
Substantial holders
At the specified date, there were 5,066 holders of ordinary shares (quoted and unquoted)
Substantial holders as disclosed in substantial holding notices given to the Company were
and 7 holders of options (unquoted) over ordinary shares. These were the only classes of
as follows:
equity securities on issue.
Shareholding Distribution
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
1,368
1,732
813
1,042
111
5,066
NUMBER OF
SHARES
754,318
5,003,501
6,482,727
29,177,608
163,413,956
204,832,110
% OF ISSUED
CAPITAL
0.37
2.44
3.16
14.24
79.78
100
Twenty largest holders of quoted ordinary shares
NAME
AUCKLAND TRUST COMPANY LTD
WALKER GROUP HOLDINGS PTY LIMITED
DR MATTHEW FRANCO MYNTTI
UBS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
JUDITH MITCHELL
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
SANDHURST TRUSTEES LTD
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