More annual reports from OncoSil Medical Limited:
2023 ReportCOLLIER CREATIVE 03 9088 2470 ONC0006 Oncosil AR20_PFO August 19, 2020 7:08 PM Annual Report 2020 COLLIER CREATIVE 03 9088 2470 ONC0006 Oncosil AR20_PFO August 19, 2020 7:08 PM Contents 1 Chairman’s Letter 2 2020 Highlights 3 Message from the CEO 4 An Incredibly Important Focus 5 OncoSil™ Device and Technology Platform 6 PanCO Trial Update 8 Pathway Forward 10 Hammersmith Hospital Case Study 12 Campaign Launch 14 Directors’ Report 27 Auditor’s Independence Declaration 28 Statement of Profi t or Loss and Other Comprehensive Income 29 Statement of Financial Position 30 Statement of Changes in Equity 31 Statement of Cash Flows 32 Notes to the Financial Statements 54 Directors’ Declaration 55 Independent Auditor’s Report 60 Shareholder Information 2020 April British Standards Institute (BSI) grants European CE marking for the OncoSil™ System and designates OncoSil™ a breakthrough device for the treatment of locally advanced pancreatic cancer in combination with chemotherapy 2018 June The number of OncoSil™ device implantations for the PanCO study was achieved which resulted in end of study recruitment 2017 April First study participant patient implanted with the OncoSil™ device as part of the global PanCO study 2013 Enigma Therapeutics Ltd is acquired by Neurodiscovery Ltd. Neurodiscovery Ltd changes its name to OncoSil Medical Ltd and focuses on the development of OncoSil™ 2004 to 2009 Early clinical development phases for the OncoSil™ technology 2020 May OncoSil™ System receives regulatory approval from Singapore’s Health Sciences Agency 2020 March FDA grants Breakthrough Device Designation for the OncoSil™ device for treatment of unresectable pancreatic cancer 2018 March First US study participant implanted with the OncoSil™ device as part of the OncoPaC-1 study 2016 October OncoSil Medical receives IDE approval from the FDA to conduct a clinical study 2012 pSividia Corp grants an exclusive worldwide royalty- bearing license agreement with Enigma Therapeutics Ltd for the development of BrachySil™ 2004 The OncoSil™ technology is developed as BrachSil™ by pSivida Corp Chairman’s Letter “ On behalf of the OncoSil Medical Board, it gives me great pleasure to present our 2019-2020 Annual Report for OncoSil Medical. Dear Fellow Shareholder, Refl ecting on the last 12 months, this has been a milestone year for OncoSil with several signifi cant achievements. In March 2020, OncoSil announced that it had received CE Mark approval and Breakthrough Device Designation for the treatment of locally advanced pancreatic cancer (LAPC) in combination with chemotherapy, from the British Standards Institute (BSI). This marked a milestone achievement for OncoSil and eff ectively allows for the OncoSil™ device to be marketed and sold within the European Union and the United Kingdom. In addition, the CE Mark paves the way for further regulatory approvals in other key markets whereby the CE Mark authority is recognised. It is pleasing that to date, we have received approvals in New Zealand and Singapore; and are awaiting outcomes of registrations fi led in Australia, Hong Kong and Malaysia. The achievement of CE Marking was a result of a lengthy and complex clinical & regulatory development program which involved a substantial amount of work from a broad group of professionals such as trial monitors, biostatisticians, and clinical investigators both within and external to the Company. I would like to take this opportunity to send my sincerest thanks to everyone involved as this would not have been possible without their contribution. In addition to CE Marking, the business continues focusing on driving commercial activities across UK/Europe and ASEAN regions supported by the successful A$19m capital raising which was completed in May of this year. In addition to Europe and Asia, we have also pushed forward in the US with an HDE fi ling submitted for the OncoSil™ device for the treatment of bile duct cancer; and with the breakthrough designation by the FDA in relation to the treatment of LAPC. In light of the COVID-19 pandemic and the varying disruptions it caused, we remain nimble and continue making progress building the necessary infrastructure for commercial sales. This infrastructure includes capabilities such as scaled up manufacturing and global supply chain logistics for our radioactive products. Also important are clinical support activities such as training material as well as a comprehensive post market patient registry enabling the tracking of clinical results on implanted patients. Building out the infrastructure supporting successful commercialisation underpins the building of shareholder value. Finally, on behalf of the Board, I would like to take this opportunity to thank our Chief Executive Offi cer, Daniel Kenny, and the entire OncoSil Medical management team for their outstanding contribution throughout the year. I would also like to thank the Board for their tireless eff orts in 2020. We look forward to the coming year ahead and building on our recent momentum as we continue to make a diff erence through our important mission of transforming the prognosis of pancreatic cancer. Sincerely, Dr Chris Roberts, AO Chairman, OncoSil Medical Limited 1 2020 Highlights 2 CE Marking achieved in April 2020 Marketing of device rolling out across the UK and EU Granted Designated Breakthrough device by FDA in March 2020 OncoSil Annual Report 2020 Message from the CEO “ In 2020, OncoSil Medical made signifi cant progress in commercialising our lead device, OncoSilTM. In 2020, OncoSil Medical made signifi cant progress in commercialising our lead device, OncoSilTM. The progress was marked by several key milestones including the granting of CE Mark, the fi rst regulatory approval of its type for the device. In addition to this, there have been numerous other milestones achieved over the past year that has enabled the Company to drive towards commercialisation of the OncoSil™ device. Europe and Asia Our key priority in 2020 was to continue progressing the CE Mark application towards a positive regulatory outcome. In March 2020, we successfully achieved CE Marking for the treatment of locally advanced pancreatic cancer (LAPC) in combination with chemotherapy from the British Standards Institute (BSI). The approval is a signifi cant step for the Company and means OncoSil is now able to sell and market the OncoSilTM device across the United Kingdom and European Union. While COVID-19 has delayed a full commercial launch due to limited hospital access causing disruptions in training and site initiation, the Company has continued to progress many of the necessary launch preparation activities. As part of our European rollout strategy, the Company appointed former Sirtex Group Chief Commercial Offi cer, Nigel Lange, as its EMEA President. This appointment will help the Company establish its commercial presence in the European market, aided by Nigel’s network of connections and extensive experience in the region. Outside of Europe, we were quick to leverage our CE Marking approvals as we focused our attention on gaining regulatory approvals in jurisdictions that recognise the CE Marking certifi cation. Since April 2020, we have fi led for regulatory approvals in New Zealand, Singapore, Malaysia, Hong Kong and in Australia. As of August 2020, I am happy to report that we have received clearance in New Zealand and Singapore; and are awaiting outcomes on all other applications. United States In October 2019, we announced our intention to explore additional US regulatory pathways for our device outside of LAPC treatment. As a result of these eff orts, the Company has added the treatment of distal cholangiocarcinoma (otherwise known as bile duct cancer) to its near-term priorities. Over the past year, the Company has made signifi cant progress with respect to both pathways. In terms of bile duct cancer, the Company submitted the Humanitarian Device Exemption (HDE) in July 2020. The HDE submission is required as part of the process under the Humanitarian Use Designation (HUD) program, which was granted to the Company in July 2019. In terms of LAPC, the Company is working with the FDA to design clinical trials following its breakthrough device designation in March 2020. The breakthrough designation is signifi cant as it helps to expedite the development and approval of the device and provides further validation of the OncoSilTM device. Financial Position As at 30 June 2020, OncoSil had a cash balance of A$21 million supported by its A$19 million raising comprised of an oversubscribed institutional placement and an underwritten entitlement off er. The funds from the capital raising enables OncoSil to pursue its commercialisation plans across Europe, UK, ASEAN and APAC for LAPC and in US for bile duct cancer. Finally, we understand that the path to commercialisation has not been a straightforward journey for OncoSil shareholders, however I believe we have turned a signifi cant corner in 2020. The Company is entering into a new and exciting phase of growth and we look forward to building on our accomplishments in 2021 as we work towards further commercialising our device, establishing our market presence and ultimately achieving our goal of improving patient outcomes in the area of pancreatic cancer. Sincerely, Daniel Kenny Chief Executive Offi cer, OncoSil Medical Limited 3 An Incredibly Important Focus ABOUT PANCREATIC CANCER Pancreatic cancer occurs when abnormal cells in the pancreas grows out of control, with symptoms varying according to the tumour type and location. Unfortunately, symptoms are often diffi cult to detect in the early stages of the disease, meaning tumours can grow over time without detection. There are an average of 79,000 new cases of pancreatic cancer in the EU each year, 42,000 in the US, and 3,350 in Australia. Treatment options remain limited for patients with the disease, making OncoSil’s goal of delivering targeted and eff ective therapy incredibly important. What’s the need? There is signifi cant unmet patient need in the treatment of pancreatic cancer. Consider the following pancreatic cancer facts: · The fourth highest cause of cancer death1 · Projected to be the second leading cause of cancer related deaths by 2030 in Western countries2 · 277,000 new cases diagnosed annually worldwide3 · 5-year overall survival rate for pancreatic cancer has only increased by 1% (from 5% to 6%) in the past three decades4 · Highest mortality rate of all major cancers5 · 1 in 64 – The average lifetime risk of a person diagnosed with pancreatic cancer6 1 Spadi, R. et al. (2016) Current therapeutic strategies for advanced pancreatic cancer: A review for clinicians. World Journal of Clinical Oncology Vol 7 Issue 1 pp 27-43. 2 Ibid. 3 Chiorean, E. G and Coveler, A.L. (2015) Pancreatic cancer: optimizing treatment options, new, and emerging targeted therapies. Drug Design, Development and Therapy Vol 9 pp 3529-3545. 4 Ibid. 5 Hirshberg Foundation for Pancreatic Cancer Research, Pancreatic Cancer Facts http://pancreatic. org/pancreatic-cancer/pancreatic-cancer-facts/ 6 American Cancer Society, Lifetime risk of pancreatic cancer, https://www.cancer.org/cancer/ pancreatic-cancer/about/key-statistics.html SURVIVAL RATE % Age-Standardised Ten-Year Net Survival, Selected Cancers, Adults (Aged 15-99) England and Wales, 2010-2011 100% 98 89 84 80 78 77 63 63 62 57 50 50 46 35 33 15 13 12 5 1 l a v i v r u S e g a t n e c r e P 0% a m o n a l e M t n a n g i l a M a m o h p m y l n i k g d o H e t a t s o r P e c n e d c n I i s i t s e T i a m e a k u e L r e d d a B l y e n d K i a m o e y M l h c a m o t S y r a v O i n a r B s u g a h p o s e O s a e r c n a P g n u L t s a e r B s u r e t U L H N x i v r e C x n y r a L l e w o B ALL CANCERS 4 OncoSil Annual Report 2020 OncoSil™ Device and Technology Platform OncoSil™ is used in combination with modern chemotherapy and aims to provide local tumour control and may have an impact on reducing cancer symptoms. It may also be able to convert certain patients by shrinking tumours into an operative state to provide a potentially curative option. Dr Paul Ross the PanCO trial Principal Investigator (PI) gave the inaugural virtual presentation at the World GI conference. The presentation was an online video to registered delegates presenting the updated PanCO trial results. The World GI conference is the premier European conference on Gastrointestinal cancer supported by ESMO the European Society for Medical Oncology. OncoSil™ is a single-use brachytherapy device that implants a pre-determined dose of beta radiation directly into cancerous tissue. The beta particles emitted by OncoSil™ travel a short distance in the tissue causing damage to cancer cell DNA, which renders them incapable of further cell division and proliferation. The device is used for the treatment of pancreatic cancer and intended for patients who are unable to undergo surgery to remove their tumours due to either tumour size, or the location in the pancreas. Approximately 20% of patients at diagnosis are able to have an operation to remove their pancreatic tumour, which is currently the most eff ective way to treat pancreatic cancer. OncoSil™ is made with Microparticles that are a combination of silicon and radioactive phosphorus, which are injected as a suspension directly into a pancreatic tumour. Implantation of the device is straightforward and involves the use of an endoscope. Using real time imaging, a needle is guided through the endoscope to the tumour and OncoSil™ is injected directly into the cancer while the patient is sedated. The procedure typically takes less than 30 minutes and most patients are able to leave the hospital the same day. 20% of patients diagnosis are able to have an operation to remove their pancreatic tumour 5 PanCO Trial Update SUMMARY OF CLINICAL DATA Median OS 16.1 months Median PFS 9.3 months Overall Response Rate 31% Disease Control Rate 100% Median tumour volumetric change 38.0% Median CA 19-9 reduction 77.8% LDCR 16 Weeks 90.5% Median LPFS 9.6 months Surgical resection with curative intent 23.8% RO margin rate 80.0% Median FDG-PET TLG change 65.2% Median reduction EORTC-QLC PAN26 Pain scale score at week 12 20 The PanCO Study is currently in long-term follow-up phase with participating sites in Australia, UK and Belgium. A total of 50 subjects were enrolled in the study with 42 subjects successfully implanted with the OncoSil™ device. 6 OncoSil Annual Report 2020 COMPELLING CLINICAL DATA FROM THE PANCO STUDY UNDERPINNED CE MARKING APPROVAL The CE Marking approval was achieved based on the compelling clinical outcomes from the PanCO study. Supporting the approval was a detailed comparative analysis (naïve in-direct treatment comparison) of the PanCO results with “state-of-the-art” treatment for unresectable locally advanced pancreatic cancer. The “state-of-the-art” treatments included a broad range of clinical studies of systemic chemotherapy (CT-only) and induction chemotherapy plus consolidated chemo-radiotherapy (ICT+CCRT) regimens supported in clinical guidelines for the treatment for unresectable LAPC. This comparative analysis confi rms that the OncoSil™ device, when combined with contemporary systemic chemotherapy regimens, demonstrates the following: Excellent Local Disease Control (LDCR) • Local Disease Control Rates at 16 weeks (LDCR16 weeks) of 90.5% in the Per Protocol (PP) population (p=0.0001) that received OncoSil™ plus CT, demonstrate that the PanCO study met its a priori primary performance endpoint and convincingly demonstrates that OncoSil™ plus CT is better than CT alone. Prolonged Overall Survival (OS) • Prolonged median overall survival of 16.1 months in the PP population. (as of May 2019). • Almost double the accepted median OS for patients with unresectable pancreatic cancer. • In the naïve indirect treatment comparison, the PanCO median OS results were signifi cantly longer (p<0.001) than CT-only and ICT + CCRT regimens, representing a clinically relevant 20% reduction in the risk of death compared to CT-only and ICT + CCRT studies. Prolonged Progression Free Survival (PFS) • Progression-free survival (PFS) was also prolonged (9.3 months in the ITT and PP populations), and was signifi cantly greater than ‘state-of-the-art’ CT – only and ICT + CCRT studies (p<0.001). Higher Disease Control Rate • Disease control and overall response rates in the PanCO study – 100% and 31.0% respectively in the PP population – underline the response following OncoSil™ administration and were again signifi cantly greater than the CT – only and ICT + CCRT studies in the naïve indirect treatment comparison. Marked Tumour Volume Reduction • OncoSil™ treatment results in marked tumour volume reduction. Overall, treatment with OncoSil™ resulted in a median maximal volumetric reduction of 52% from baseline. • Median tumour volumetric reduction at 16 weeks was 38% (p<0.0001). • In the PanCO study a number of patients demonstrated substantial tumour volume reductions up to 74% volumetric reduction at Week 8 and up to 90% volumetric reduction at Week 16. Signifi cant CA19-9 tumour marker reduction • There was a signifi cant reduction in CA19-9 tumour marker with a median CA19-9 reduction of -77.8%; (p<0.0001). Superior outcomes to comparators • The naive indirect treatment comparison confi rms that the PanCO study results were consistently and statistically signifi cantly better than the results from CT-only and ICT+CCRT studies, and clearly demonstrates that OncoSil™ plus CT provides clinically relevant benefi ts for patients with unresectable LAPC that are superior to those reported with CT alone. Encouraging rate of Surgical Resection with Curative intent Safety • An encouraging rate of surgical resection with curative • Excellent safety profi le overall, with no evidence of intent in nearly one-in-four PanCO patients (23.8%) were downstaged. This rate is signifi cantly greater than those reported in the CT-only and ICT + CCRT studies (p<0.001) and, notably, the rate of R0 margin status was 80%. • In the systemic literature review analyses the CT-only resection rate was 7.7%, and the CT-only and ICT + CCRT resection rate was 9.9% compared with the PanCO resection rate of 23.8%. • Surgical resection of pancreatic cancer, particularly in patients previously determined to be unresectable, profoundly improves patients’ prognosis from a fi ve-year survival rate of 5% to greater than 20%. signifi cant safety concerns or unexpected/serious toxicities associated with the OncoSil™ device and/or implantation procedure over a prolonged study timeframe. • The OncoSil™ device provides a valuable treatment option in an area of high unmet medical need with an acceptable safety and tolerability profi le. • The clinically relevant benefi ts of OncoSil™ combined with systemic chemotherapy in appropriate patients with unresectable LAPC more than outweigh the identifi ed risks and represent a favourable risk-benefi t profi le. 1 Loehrer PJ et al. J Clin Oncol 2011Nov 1;29 (31) 4105-12 7 Pathway Forward STRATEGIC GROWTH PILLARS EU/UK Commercialisation Strategy · CE Marking Granted (April 2020) · Scalable manufacturing capabilities · Sales force ramp up · Training and initiation across sites · First revenues ASEAN/APAC Strategy US Market Entry Strategic Partnerships · Many jurisdictions recognise CE Marking and do not necessarily require separate clinical trials to gain approval · Registrations have been obtained in Singapore and New Zealand. Filings for Hong Kong, Malaysia and Australia have been submitted for each country · Dual entry pathway · FDA Breakthrough Designation · HDE filing submitted for Bile Duct Cancer indication · US commercial launch · OncoSil continues to explore all attractive opportunities, including potential licensing agreements and strategic partnerships with external parties Sales strategy for EU and UK TARGET ATTRACTIVE HOSPITALS C SELL TO HOSPITALS B D HOSPITAL TRAINING A R E C E I V E C E F E NETWORKING EFFECT TO INCREASE DEMAND BUILD HOSPITAL CLINICAL EVIDENCE M A R K 1 Launch preparation is currently delayed due to the COVID-19 pandemic, with limited hospital access causing disruptions in new site initiation, training, shipping and logistics. 8 A B C D E F Receive CE Mark Sell to Hospitals CE Marking allows OncoSil™ to be marketed to hospitals in the EU and the UK. Target attractive hospitals Strategically target high patient volume pancreatic cancer hospitals with experienced practitioners including nuclear medicine, endoscopy, medical oncology and surgery. Hospital training Training practitioners on appropriate OncoSil™ patient selection and safe product use. New training kit materials have been developed to support the training effort1. Build hospital clinical evidence Build the clinical evidence from increasing the number of patient treatments with OncoSil™. Clinical evidence is published and disseminated through scientific journals to the broader cancer scientific community generating further awareness of OncoSil. Networking effect to increase demand The pancreatic cancer medical community is highly specialised and positive experiences with OncoSil treatments generates encouragement to peers at other hospitals considering starting with OncoSil. OncoSil Annual Report 2020 COLLIER CREATIVE 03 9088 2470 ONC0006 Oncosil AR20_PFO August 19, 2020 7:08 PM FOCUSED ON COMMERCIALISATION It has been a year of significant milestones for OncoSil with several noteworthy achievements as the business continues to make significant progress in commercialising its OncoSilTM device. The progress was marked by several key milestones including the granting of CE Mark and Breakthrough Device Designation for the treatment of locally advanced pancreatic cancer (LAPC) in combination with chemotherapy, from the British Standards Institute (BSI) effectively allowing the OncoSil™ device to be marketed and sold within the European Union and the United Kingdom. The CE Marking milestone paves the way for further regulatory approvals in other key markets whereby the CE Mark authority is recognised. We are excited to report that to date we have received approvals in New Zealand and Singapore off the back of CE Mark; and are awaiting outcomes of registrations filed in Australia, Hong Kong and Malaysia. Outside of Europe and Asia, we continue to make inroads in the US as we explore additional regulatory pathways for our device. As a result of these efforts, the Company has added the treatment of distal cholangiocarcinoma (otherwise known as bile duct cancer) to its near-term priorities and has submitted to the FDA for Humanitarian Device Exemption (HDE) approval. In addition to this, the Company continues to progress its work around LAPC as it leverages its breakthrough designation to expedite work with the FDA to design clinical trials. US – Primary focus on Pancreatic but scope to expand into new indications PANCREATIC CANCER BILE DUCT CANCER MARKET OPPORTUNITY US$508MN P.A1,2 US$80MN P.A3 ROUTE TO US ENTRY THUS FAR August 2016 December 2018 Investigational Device Exemption (IDE) granted by FDA. Humanitarian Use Designation (HUD) granted by FDA. April 2020 July 2019 Breakthrough Device designation granted by FDA, successfully meeting its strict criteria. Successfully agreed with FDA that PanCO data could be used as predicate for dCCA. FORWARD PLAN Now Now Working closely with FDA to optimise the Pre-market approval (PMA) evidence development and clinical trials. The HDE has been submitted to the FDA. If successful the HDE will allow commercial usage of OncoSil in the US for 2021. Notes: 1 GLOBOCAN 2018: Estimated Cancer Incidence Worldwide in 2018 (IARC/WHO) 2 Based on OncoSil list dose pricing of US$25,000 and pancreatic cancer target market of 40% of incidences 3 Based on OncoSil’s target indicative list dose pricing of US$50,000 and the incidence of distal cholangiocarcinoma in the US 9 Hammersmith Hospital Case Study Dr Zarni Win Imperial College NHS Healthcare Trust, London, UK One of our investigators in the international PanCO trial explains how OncoSil™ is off ering new hope for patients with unresectable locally advanced pancreatic cancer (LAPC). ONCOSIL™: TARGETING AN UNMET NEED IN PANCREATIC CANCER ONCOSIL™ BRACHYTHERAPY: A NEW HIGHLY-TARGETED TREATMENT FOR LAPC Patients presenting with LAPC are typically unsuitable for curative surgery due either to the size of the tumour or its location within the pancreas. Current options for these patients are limited to chemotherapy or chemoradiotherapy, but prognosis is poor, and survival is around 12 months. New solutions for patients with this devastating disease are urgently needed. The procedure can take as little as OncoSil™, which is prescribed in combination with chemotherapy, consists of Microparticles of radioactive phosphorous-32 (P-32). The therapeutic benefi t is derived from short-range, high-energy beta radiation. Unlike conventional radiotherapy, OncoSil™ is injected directly into the tumour guided by endoscopic ultrasound. This means the beta particles are localised within the pancreas, minimising side eff ects in surrounding organs and tissue. OncoSil™ is delivered by a multidisciplinary team including oncology, gastroenterology and nuclear medicine. The procedure can take as little as 30 minutes, with patients going home the same day. Imperial College’s Hammersmith Hospital campus was the largest single European site recruiting patients for the PanCO trial. 30mins with patients going home the same day 10 OncoSil Annual Report 2020 CASE STUDY: PROLONGING SURVIVAL WITH TUMOUR DOWNSTAGING An 83-year-old patient with newly-diagnosed unresectable LAPC was enrolled in the PanCO trial. The patient commenced on standard-of-care chemotherapy and was implanted with OncoSil™ as per the trial protocol. A confi rmatory scan (A) demonstrated that the Microparticles were correctly located within the tumour. Scan taken on day of implant Day 7 follow up scan (A) SPECT-CT scan demonstrating localisation of OncoSil™ in the tumour. The patient was monitored with 8-weekly CT scans: response to treatment was excellent and the patient is alive 26 months after diagnosis. A CT scan at 18 months revealed the tumour had shrunk by an astounding 86%, meaning the patient was eligible for curative resection. Endoscopic Ultrasound of pancreatic tumour. In the first image the yellow region of interest is the pancreatic tumour. The second image with the yellow arrow points to the endoscopic needle which has been punctured into the tumour. the third image with the yellow arrow pointing to a white blush is the OncoSil injected into the tumour. The most up-to-date PanCO data were presented at the World Congress on Gastrointestinal Cancer in July 2020. Following treatment, 33% of patients were eligible for potentially curative surgery. In chemotherapy/chemoradiotherapy studies in unresectable LAPC, around 10% of patients are resected. Median overall survival in the PanCO trial was signifi cantly increased to 16 months. Based on the results of all patients that were enrolled into the PanCO trial, OncoSil received its CE Marking in April 2020. OncoSil is most grateful to all of the multidisciplinary team members and of course the patients who took part in the PanCO trial in all centres in the UK, Australia and Belgium. 11 Campaign Launch In the world of medicine the prognosis for patients can be too often too bad. Limited options, too little too late. But now with new science comes new thinking and new reason for optimism. By moving forward, striving to change the status quo, being part of progress, we can revolutionise outcomes. Survival becomes imaginable and months can turn into years. At Oncosil Medical we’re working to defy the odds, delivering new hope for patient and family alike. 12 OncoSil Annual Report 2020 ONCOSIL GLOBAL CAMPAIGN LAUNCH OncoSil Medical has been working with healthcare communication specialists, McCann Health, to develop a global campaign for our breakthrough brachytherapy device, OncoSilTM. Development began with a strategic workshop, gathering insights into the market, our customers and the role of OncoSilTM. This uncovered the brand truth that forms the basis of our campaign. For decades the prognosis in pancreatic cancer has remained almost unchanged. The grim statistics gave patients and doctors little reason to hope. But OncosilTM gives patients and cancer specialists the courage to defy the statistics and transform the prognosis. This idea is crystalised in our launch campaign with the powerful invitation to ‘treat me like I’m going to live.’ It challenges medical specialists to no longer accept the status quo for patients. (Above) our new logo with brand promise tagline. (Below) our new brand manifesto video. New Brand Identity The OncoSil Medical Brand Book establishes a new brand voice and visual language. One that is bold, visually arresting and unmistakably OncoSilTM. Campaign roll out The new visual identity for OncoSilTM was developed for use across the launch campaign. The contemporary look and feel provides cut-through when applied to launch marketing materials. Emphasis has been given to digital touchpoints, focusing on the communication needs of a post-COVID environment. The breakthrough status of OncoSilTM is central to messaging to medical specialists. Launch campaign Striking, black and white portraits refl ect the determination of people with pancreatic cancer to defy the prognosis and challenge the status quo. New presence We are strengthening brand presence with a new website and brand manifesto video, designed to educate and encourage medical cancer specialists to transform the prognosis. Launch materials For the global launch we are developing sales fi eld force and medical cancer specialist materials, outlining the compelling evidence for our breakthrough brachytherapy device. 13 Directors’ Report OncoSil Medical Ltd Directors' report 30 June 2020 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of OncoSil Medical Ltd (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2020. Directors The following persons were directors of OncoSil Medical Ltd during the whole of the financial year and up to the date of this report, unless otherwise stated: Dr Chris Roberts AO - Non-Executive Chairman Mr Daniel Kenny - Chief Executive Officer and Managing Director Dr Roger Aston - Non-Executive Director Dr Martin Cross - Non-Executive Director Mr Michael Bassett - Non-Executive Director Information on directors Name: Title: Qualifications: Experience and expertise: Dr Chris Roberts AO Non-Executive Chairman BE(Hons), MBA, PhD, Hon DSc(Macq), Hon DSc(UNSW), FTSE, FAICD, Hon FIEAust Dr Roberts AO is a highly experienced director and senior executive with over 44 years’ experience in the medical innovation space. He was CEO/President of Cochlear Limited (ASX: COH) from February 2004 to August 2015. He was also Chairman of Sirtex Medical Ltd (ASX: SRX), from March 2000 to December 2002, and was Executive Vice-President of global sleep disorder treatment company ResMed Inc (NYSE: RMD, ASX: RMD) from 1992 to 2004. Dr Roberts AO also sits on the boards of a number of other entities and groups including; Clarity Pharmaceuticals Limited, Innovation Science Australia, Atmo Biosciences Pty Ltd and O’Connell Street Associates. None Member of the Nomination and Remuneration Committee and member of Audit and Risk Committee 12,681,819 ordinary shares (10,000,000 performance dependent loan shares under Employee Share Plan 'ESP') Other current directorships: Former directorships (last 3 years): ResMed Inc. (NYSE:RMD, ASX:RMD) Special responsibilities: Interests in shares: Name: Title: Qualifications: Experience and expertise: Mr Daniel Kenny Chief Executive Officer and Managing Director BSc (UNSW), MAIP, MAICD. Mr Kenny has over 35 years’ experience in the Global Pharmaceutical and Medical Devices Industry. Mr Kenny’s industry career experience extends to US Food and Drug Administration ('FDA') and European Union ('EU') product and device registration, clinical development, marketing and sales, in-licensing and business development. Prior to joining OncoSil Medical Mr Kenny was Chief Commercial Officer with ABIVAX, a leading French biotechnology company specialising in vaccines and antiviral products based in Paris, France. From 2010 to 2013, Mr Kenny was Global Franchise Head Vaccines, Austria. For the period 2008 to 2010 Mr Kenny was Vice President BioScience EMEA for Baxter International based in Zurich Switzerland. Before joining industry Mr Kenny commenced his career in clinical research in the fields of Ophthalmology and HIV/AIDS in the University sector in Sydney. Mr Kenny is Chairman of the External Advisory Committee, School of Chemical Engineering, UNSW. Other current directorships: None Former directorships (last 3 years): None Special responsibilities: Member of the Nomination and Remuneration Committee and member of Audit and Risk Committee 20,352,778 ordinary shares (17,300,000 performance dependent loan shares under ESP) Interests in shares: 14 2 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 Name: Title: Qualifications: Experience and expertise: Other current directorships: Dr Roger Aston Non-Executive Director B.Sc (Hons) and Ph.D. (Manchester) Dr Aston is a scientist and seasoned biotechnology entrepreneur. He has been closely involved in start-up companies and major pharmaceutical companies. Aspects of his experience include FDA and EU product registration, clinical trials, global licensing agreements, fundraising through private placements, and a network of contacts within the pharmaceutical, banking and stock broking sectors. Dr Aston has also held Directorships/Chairmanships with Clinuvel Ltd, HalcyGen Ltd, Regeneus Ltd and Ascent Pharma Ltd, and was a member of the AusIndustry Biological Committee advising the Industry Research and Development Brand. More recently, Dr Aston was Executive Chairman of Mayne Pharma Group from 2009 to 2011 and later, CEO of Mayne Pharma Group. Chairman of: Immuron Limited (ASX: IMC), ResApp Health Limited (ASX: RAP), PharmAust Ltd (ASX: PAA) and its subsidiary Pitney Pharmaceuticals Pty Ltd Former directorships (last 3 years): Regeneus Limited (ASX: RGS) Special responsibilities: Interests in shares: Name: Title: Qualifications: Experience and expertise: Member of the Nomination and Remuneration Committee and Chairman of the Audit and Risk Committee 13,154,416 ordinary shares Dr Martin Cross Non-Executive Director B.SC (Hons) and Ph.D. (Aberdeen) FAICD Dr Cross is a highly regarded pharmaceutical executive with over 35 years’ experience including corporate and industry leadership roles directly influencing healthcare policy and government legislation in Australia and global business management, marketing and sales roles. From 2013 to 2015, Dr Cross was Chairman of Medicines Australia, the country’s peak body representing the research based pharmaceutical industry in Australia. Prior to leading Medicines Australia, from 2010 to 2013 Dr Cross was Chairman of both the Generics Medicine Industry Association and Pharmaceutical Industry Council. During this time, Dr Cross was also Managing Director of Alphapharm in Australia and New Zealand, with responsibility for 750 employees and sales of over US $500m per annum. From 2003 to 2008, Dr Cross was Country Head and Managing Director of Novartis Australia and New Zealand, and Head of Global Marketing and Sales Capabilities from 2001 to 2003, based in Switzerland. Non-Executive Director Cellmid Limited (ASX:CDY) Chairman of the Nomination and Remuneration Committee and member of the Audit and Risk Committee 2,727,273 ordinary shares Other current directorships: Former directorships (last 3 years): None Special responsibilities: Interests in shares: Name: Title: Qualifications: Experience and expertise: Mr Michael Bassett Non-Executive Director B.Econ, member of the Australian Institute of Company Directors. Mr Bassett has over 25 years' experience in capital markets and has held senior management roles at Australia's leading fund management and investment banking firms. His career focus involved analysing, advising and investing in small-cap ASX- listed companies with strong prospects for shareholder value creation. Mr Bassett currently works as SVP Corporate and Strategic Development for ASX listed medical device company ImpediMed Limited. Prior to this he worked for Market Connect, a consultancy business focusing on small-cap ASX lisited companies, Portfolio Manager for the successful Regal Australian Small Companies Fund with a significant focus on Life Science companies and has held senior management positions within Credit Suisse's Institutional Equities business, Deutsche Asset Management and Merrill Lynch. Other current directorships: None Former directorships (last 3 years): None None Special responsibilities: 1,116,000 ordinary shares Interests in shares: 3 15 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary Mr Karl Pechmann was appointed as company secretary on 31 March 2020. Mr Tom Milicevic resigned on 27 September 2019 and Mr Nicholas Falzon, a director at PKF Chartered Accountants, was company secretary from 27 September 2019 to 31 March 2020. Mr Pechmann was CFO and Company Secretary of a regulatory technology company, Kyckr Limited (ASX: KYK). His previous roles include Finance Director with ASX listed biotech company, Immutep Limited (ASX: IMM) and has held senior finance roles at both ASX-listed and multinational organisations. Principal activities The principal activities of the Group during the financial year focused on the development and commercialisation of its lead product candidate, the OncoSil™ localised radiation therapy for the treatment of pancreatic and bile duct cancer. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. Review of operations The loss for the Group after providing for income tax amounted to $4,261,895 (30 June 2019: $8,566,731). OncoSil Medical Ltd is an Australian-based and ASX listed medical device company focused on localised treatments for patients with pancreatic and bile duct cancer. The Group’s lead product, OncoSilTM, is a first in class medical device comprising microparticles containing Phosphorus-32 (P-32), a pure beta-emitter radioisotope, implanted directly into a patient’s pancreatic tumours via an endoscopic ultrasound. This treatment, known as brachytherapy, is intended to deliver more concentrated and localised radiation. Over the past twelve months, the Group’s focus has been to commercialise the OncoSilTM device and advance its global pancreatic clinical study, PanCO. OncoSil Medical made significant progress in commercialising the OncoSilTM device. The progress was marked by several key milestones including the granting of the CE Mark, the first regulatory approval of its type for the device. The Company is also working with the FDA to design clinical trials to follow its breakthrough device designation received in March 2020. In addition to this, there have been numerous other milestones achieved over the past year that has enabled the Company to drive commercialisation efforts globally. Europe During 2020, the Group’s key priority was to continue progressing the CE Mark application towards a positive regulatory outcome. In April 2020, the Group successfully achieved CE Marking for the treatment of locally advanced pancreatic cancer (LAPC) in combination with chemotherapy from the British Standards Institute (BSI). The approval was a significant step for the Group and means OncoSil is now able to sell and market the OncoSilTM device across the United Kingdom and European Union. While COVID-19 has delayed a full commercial launch due to limited hospital access causing disruptions in training and site initiation, the Company has continued to progress many of the necessary launch preparation activities. As part of our European rollout strategy, the Company has made key appointments which include former Sirtex Group Chief Commercial Officer, Nigel Lange, as its EMEA president. These appointments will help the Company establish its presence in the European market, aided by Nigel’s network of connections and extensive experience in the region. Asia Outside of Europe, the Group was quick to leverage the CE Marking approvals, focusing attention on gaining regulatory approvals in jurisdictions that recognise the CE Marking certification. Since April 2020, we have filed for regulatory approvals in New Zealand, Singapore, Malaysia, Hong Kong and Australia, and to date have received regulatory approvals in New Zealand and Singapore. 16 4 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 United States In October 2019, we announced our intention to explore additional US regulatory pathways for our device outside of LAPC treatment. As a result of these efforts, the Company has added the treatment of distal cholangiocarcinoma (otherwise known as bile duct cancer) to its near-term priorities. Over the past year, the Company has made significant progress with respect to both pathways. In terms of bile duct cancer, the Company submitted the Humanitarian Device Exemption (HDE) in July 2020. The HDE submission is required as part of the process under the Humanitarian Use Designation (HUD) program, which was granted to the Company in July 2019. In terms of LAPC, the Company is working with the FDA to design clinical trials following its breakthrough device designation in March 2020. The breakthrough designation is significant as it helps to expedite the development and approval of the device and provides further validation of the OncoSilTM device. Financial Position As at 30 June 2020, OncoSil had a cash balance of A$21 million supported by its A$19 million capital raising comprised of an oversubscribed institutional placement and an underwritten entitlement offer. The funds from the capital raising enables OncoSil to pursue its commercialisation plans across Europe, UK, ASEAN and APAC for LAPC and in US for bile duct cancer. AASB 16 'Leases' had no significant impact on the current period. The current loss before income tax expense was increased by $1,588. This included an increased depreciation expense of $122,684 and increased finance costs of $10,224, offset by a reduction in occupancy expenses (reclassification of lease expenses) of $131,320. As at 30 June 2020, net current assets were reduced by $83,377 (attributable to current lease liabilities) and net assets were reduced by $1,588 (attributable to right-of-use assets and lease liabilities). The impact of the COVID-19 pandemic up to the year ended 30 June 2020 has not been material to the Group. The pandemic has resulted in a delay of full commercial launch which is expected to occur during the financial year ending 30 June 2021. It is not practicable to estimate the potential impact, positive or negative, after the reporting date. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial year. Matters subsequent to the end of the financial year The impact of the COVID-19 pandemic is ongoing and while it has not materially impacted the Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measure imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Likely developments and expected results of operations In April 2020, the Company received the CE Marking approval for the sale of the OncoSil device in the United Kingdom and the European Union. The Company is currently progressing its manufacturing capabilities, supply chain and sales and marketing infrastructure in order to achieve first commercial sales in the United Kingdom and the European Union, as well as seeking to obtain marketing approval in markets which recognise the CE Mark. The CE Marking approval requires the Company to conduct a post marketing surveillance program, or which the nature and costs associated are yet to be determined. The Global Pivotal OncPac-1 Clinical Study will be undertaken, aimed at supporting a Pre Marketing application in the United States in future years. There can be no guarantees that in the future we will achieve these regulatory approvals, or on the basis sought by the Company, and there are no guarantees of the rate of enrolment of the OncPac-1 Clinical Study or the outcome of clinical results. Environmental regulation The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. 5 17 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 Meetings of directors The number of meetings of the Company's Board of Directors ('the Board') and of each Board committee held during the year ended 30 June 2020, and the number of meetings attended by each director were: Full Board Nomination and Remuneration Committee Audit and Risk Committee Attended Held Attended Held Attended Held Dr Chris Roberts AO Mr Daniel Kenny Dr Roger Aston Dr Martin Cross Mr Michael Bassett 10 10 10 10 10 10 10 10 10 10 1 1 1 1 - 1 1 1 1 - 2 2 2 2 - 2 2 2 2 - Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee. Remuneration report (audited) The remuneration report, which has been audited, details the key management personnel ('KMP') remuneration arrangements for the Group, in accordance with the requirements of the Corporations Act 2001 and its Regulations. KMP are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● ● ● ● ● ● Principles used to determine the nature and amount of remuneration Details of remuneration Service agreements Share-based compensation Additional information Additional disclosures relating to KMP Principles used to determine the nature and amount of remuneration The objective of the Group's executive reward framework is to ensure the remuneration package properly reflects each person's duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest quality. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● competitiveness and reasonableness; acceptability to shareholders; performance linkage / alignment of executive compensation; and transparency. The Nomination and Remuneration Committee ('NRC') is responsible for determining and reviewing remuneration arrangements for its directors and executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate and retain high performance and high quality personnel. The NRC has structured an executive remuneration framework that is market competitive and complementary to the reward strategy of the Group. The Board has considered that the reward framework is designed to align to shareholders' interests by: ● ● having economic profit as a core component of plan design; focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value; and attracting and retaining high calibre executives. ● 18 6 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 Additionally, the reward framework should seek to enhance executives' interests by: ● rewarding executives for Group and individual performance against targets set by reference to appropriate benchmarks; aligning the interests of executives with those of shareholders; linking reward with the strategic goals and performance of the Group; and ensuring total remuneration is competitive by market standards. ● ● ● In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors' remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the NRC. The NRC may, from time to time, receive advice from independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line with the market. The chairman's fees are determined independently to the fees of other non-executive directors based on comparative roles in the external market. The chairman is not present at any discussions relating to the determination of his own remuneration. Non-executive directors are also entitled to government statutory superannuation guarantee contribution. They may also be granted shares, aligning their interests with those of the shareholders. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 26 November 2015, where the shareholders approved a maximum annual aggregate director's fees payable to non-executive directors of $500,000. Executive remuneration The Group aims to reward executives based on their position and responsibility, with a level and mix of remuneration which has both fixed and variable components. The executive remuneration and reward framework has four components: ● ● ● ● base pay and non-monetary benefits; short-term performance incentives; share-based payments; and other remuneration such as superannuation and long service leave. The combination of these comprises the executive's total remuneration. Structure Executive directors are contracted to the Group either on a consultancy basis with remuneration and terms stipulated in individual consultancy arrangements or pursuant to an employment contract with remuneration and terms stipulated in individual employment agreements. Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the NRC based on individual and business unit performance, the overall performance of the Group and comparable market remuneration. Executives are given the opportunity to receive their base emolument in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group. The short-term incentives ('STI') program is designed to align the targets of the business units with the performance hurdle of executives. STI payments are granted to executives based on specific annual targets and key performance indicators ('KPI's') being achieved. In particular, all executive directors and other KMP may be entitled to annual bonuses payable upon the achievement of annual corporate or profitability measures. The Group seeks to emphasise payment for results through providing various cash bonus reward schemes, specifically the incorporation of incentive payments based on achievement of approved targets. 7 19 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 The long-term incentives (‘LTI’) include long service leave and share-based payments. Limited recourse loans are awarded to executives in order for the executive to subscribe for ordinary shares in the Company under the OncoSil Employee Share Plan. These performance dependent loan shares will vest upon achieving of long-term KPI's as agreed with the executive, measured over terms varying from three to five years. These KPI's include, but are not limited to, an increase in shareholders’ value, revenue targets or meeting regulatory and clinical measures. The NRC reviewed the long-term equity- linked performance incentives specifically for executives during the year ended 30 June 2020. Group performance and link to remuneration Remuneration for certain individuals is directly linked to the performance of the Group. A portion of cash bonus and incentive payments are dependent on defined earnings per share targets being met. The remaining portion of the cash bonus and incentive payments are at the discretion of the NRC. Refer to the section 'Additional information' below for details of the earnings and total shareholders return for the last five years. Use of remuneration consultants The Group did not engage the use of a remuneration consultant during the financial year ended 30 June 2020. Voting and comments made at the Company's 2019 Annual General Meeting ('AGM') At the 2019 AGM, 92% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Details of remuneration Amounts of remuneration The KMP of the Group consisted of the directors of OncoSil Medical Ltd and the following persons: ● ● Mr Karl Pechmann - Chief Financial Officer and Company Secretary (appointed on 31 March 2020) Mr Tom Milicevic - Chief Financial Officer and Company Secretary (resigned on 27 September 2019) 20 8 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 Details of the remuneration of KMP of the Group are set out in the following tables. Short-term benefits Post- employment benefits Cash salary and fees $ Cash bonus $ Non- Super- monetary annuation $ $ Long-term benefits Long service leave $ Share-based payments Equity- settled options $ Equity- settled shares $ Total $ 2020 Non-Executive Directors: Dr Chris Roberts AO (chairman) * Dr Roger Aston Dr Martin Cross Mr Michael Bassett * 80,000 73,059 73,059 80,000 - - - - - - - - - 6,941 6,941 - Executive Directors: Mr Daniel Kenny 492,404 156,800 - 31,920 Other KMP: Mr Karl Pechmann Mr Tom Milicevic 71,970 169,857 1,040,349 12,500 - 169,300 - - - 8,025 9,278 63,105 - - - - - - - - - - - - (653,063) (21,075) - (573,063) 58,925 80,000 - 80,000 - (954,705) (273,581) - - (233,400) - - (1,862,243) 92,495 (54,265) (589,489) * The remuneration payments to Dr Chris Roberts and Mr Michael Bassett were made to their director-related entities, Robertsplan Pty Ltd and Market Connect Australia Pty Ltd, respectively. During the year 2,139,524 performance dependent loan shares were granted to non-KMP under the Group’s Employee Share Plan. A review of all existing outstanding shares granted to KMP and employees was undertaken to determine the probability of achieving certain non-market based performance conditions. A reduction in the probability of achieving these performance conditions has resulted in a reversal of cumulate share-based payment expenses in the amount of $1,948,279 during the current year for KMP. Share-based payments expenses relating to market-linked performance conditions for KMP was $86,035 during the current year. 9 21 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 2019 Non-Executive Directors: Dr Chris Roberts AO (chairman) * Dr Roger Aston Dr Martin Cross Mr Michael Bassett ** 80,000 73,059 73,059 44,822 Executive Directors: Mr Daniel Kenny 473,939 Other KMP: Mr Tom Milicevic 279,771 1,024,650 Short-term benefits Post- employment benefits Cash salary and fees $ Cash bonus $ Non- Super- monetary annuation $ $ Long-term benefits Long service leave $ Share-based payments Equity- settled options $ Equity- settled shares $ Total $ - - - - - - - - - - - - 6,941 6,941 - - 25,365 - - 24,983 64,230 - - - - - - - - - - - 208,000 6,977 - 288,000 86,977 80,000 - 44,822 - 383,487 882,791 - - 112,455 417,209 710,919 1,799,799 * ** The remuneration payments to Dr Chris Roberts were made to his director-related entity, Robertsplan Pty Ltd. Represents remuneration for the period from date of appointment 10 December 2018 to 30 June 2019. The remuneration payments to Michael Bassett were made to his director-related entity, Market Connect Australia Pty Ltd. The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Dr Chris Roberts AO * Dr Roger Aston * Dr Martin Cross Mr Michael Bassett Executive Directors: Mr Daniel Kenny * Other KMP: Mr Karl Pechmann Mr Tom Milicevic Fixed remuneration 2019 2020 At risk - STI At risk - LTI 2020 2019 2020 2019 100% 100% 100% 100% 28% 92% 100% 100% - - - - 77% 56% 23% 86% - - 72% 14% - - - - - - - - - - - - - - - 72% 8% - - 44% - 28% * During the year, the probability of achieving certain non-market conditions was revised and as a result the relevant share-based payment of the KMP was reversed. Consequently, the proportion of the at risk LTI portion of remuneration in the year ended 30 June 2020 has been reduced to Nil in the above table. 22 10 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 The proportion of the cash bonus paid/payable or forfeited is as follows: Name Executive Directors: Mr Daniel Kenny Other KMP: Mr Karl Pechmann Mr Tom Milicevic Cash bonus paid/payable 2020 2019 Cash bonus forfeited 2019 2020 70% 100% - - - - 30% 100% - - - 100% Service agreements Remuneration and other terms of employment for KMP are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: Term of agreement: Details: Name: Title: Agreement commenced: Term of agreement: Details: Daniel Kenny Chief Executive Officer and Managing Director 5 January 2015 No fixed term Base salary for the year ending 30 June 2020 of $448,000 plus superannuation, to be reviewed annually by the NRC, six months termination notice by either party, cash bonus up to 50% of salary subject to achievement of KPI's as set by the Board. There is a restraint period of six months ending on the date of termination of employment. He is eligible to participate in the long term incentive plan as approved by shareholders. Karl Pechmann Chief Financial Officer and Company Secretary 31 March 2020 No fixed term Base salary for the year ended 30 June 2020 of $250,000 plus superannuation, to be reviewed annually by the NRC, three months termination notice by either party, cash bonus up to 25% of salary subject to achievement of KPIs as set by the Board. There is a restraint period of six months ending on the date of termination of employment. He is eligible to participate in the long term incentive plan as approved by shareholders. KMP have no entitlement to termination payments in the event of removal for misconduct. Share-based compensation Issue of shares There were no shares issued to directors and other KMP as part of compensation during the year ended 30 June 2020 other than those issued under the Employee Share Plan below. Employee Share Plan ('ESP') Certain employees have been issued limited recourse loans to acquire shares in the Company. In accordance with the Accounting Standards, these performance dependent loan shares are accounted for in a similar manner as options. Terms and conditions of share based payment arrangements affecting the remuneration of KMP in the current financial year: Name Number of shares granted Grant date Expiry date Exercise price Fair value per share at grant date Dr Chris Roberts AO 10,000,000 10/05/2016 10/05/2021 $0.22 $0.104 Mr Daniel Kenny 14,000,000 10/05/2016 3,300,000 31/10/2018 10/05/2021 31/10/2021 $0.22 $0.18 $0.104 $0.078 11 23 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 The shares cannot be traded by the holder until their related loan has been settled and the shares released. Other than the above, there were no options over ordinary shares granted to or vested in directors and other KMP as part of compensation during the year ended 30 June 2020. Additional information The earnings of the Group for the five years to 30 June 2020 are summarised below: 2020 $ 2019 $ 2018 $ 2017 $ 2016 $ Revenue/income Loss after income tax 2,958,779 (4,261,895) 3,845,045 (8,566,731) 4,549,584 (8,539,542) 3,755,765 (7,016,079) 4,141,691 (4,768,598) The factors that are considered to affect total shareholders return ('TSR') are summarised below: Share price at financial year end ($) Basic earnings per share (cents per share) 0.12 (0.65) 0.05 (1.36) 0.23 (1.66) 0.10 (1.49) 0.14 (1.23) 2020 2019 2018 2017 2016 Additional disclosures relating to KMP Shareholding The number of shares in the Company held during the financial year by each director and other members of KMP of the Group including their personally related parties (including those held under an Employee Share Plan), is set out below: Balance at Received the start of the year as part of remuneration Additions Disposals/ other * Balance at the end of the year Ordinary shares Dr Chris Roberts AO Mr Daniel Kenny Dr Roger Aston Dr Martin Cross Mr Michael Bassett Mr Karl Pechmann Mr Tom Milicevic ** 11,125,000 23,341,667 12,516,547 1,880,000 1,023,000 - 5,746,667 55,632,881 - - - - - - - - 1,556,819 11,111 1,137,869 847,273 93,000 165,455 - 3,811,527 - 12,681,819 (3,000,000) 20,352,778 (500,000) 13,154,416 - 2,727,273 - 1,116,000 - 165,455 - (5,746,667) (9,246,667) 50,197,741 * ** other represents performance dependent loan shares forfeited under the Employee Share Plan other represents shares held on date of resignation. Loan shares holding The number of performance dependent loan shares over ordinary shares in the Company held during the financial year by each director and other members of KMP of the Group, is set out below: Loan shares over ordinary shares ** Dr Chris Roberts AO Mr Daniel Kenny Dr Roger Aston Mr Tom Milicevic * Balance at the start of the year Granted Exercised Forfeited Balance at the end of the year 10,000,000 20,300,000 500,000 3,650,000 34,450,000 - - - - - - - - - - - 10,000,000 (3,000,000) 17,300,000 - (500,000) (3,650,000) - (7,150,000) 27,300,000 * ** Performance dependent employee loan shares forfeited on resignation. None of the performance dependent loan shares over ordinary shares have vested at the end of the year since the related loans haven’t been repaid. 24 12 OncoSil Annual Report 2020 OncoSil Medical Ltd Directors' report 30 June 2020 Other transactions with KMP and their related parties Payment of Director's fees to Dr Chris Roberts AO, were made to his director-related entity, Robertsplan Pty Ltd during the financial year of $80,000 (2019: $80,000). Payment of Director's fees to Mr Michael Bassett, were made to his director-related entity, Market Connect Australia Pty Ltd during the financial year of $80,000 (2019: $44,822). This concludes the remuneration report, which has been audited. Shares under option There were no unissued ordinary shares of OncoSil Medical Ltd under option outstanding at the date of this report. Shares issued on the exercise of options There were no ordinary shares of OncoSil Medical Ltd issued on the exercise of options during the year ended 30 June 2020 and up to the date of this report. Indemnity and insurance of officers The Company has indemnified the directors and executives for costs incurred, 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. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The Company has 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 the 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 There were no non-audit services provided during the financial year by the auditor. Officers of the Company who are former partners of Crowe Sydney There are no officers of the Company who are former partners of Crowe Sydney. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. Auditor Crowe Sydney continues in office in accordance with section 327 of the Corporations Act 2001. 13 25 Directors’ Report cont. OncoSil Medical Ltd Directors' report 30 June 2020 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 ___________________________ Dr Chris Roberts AO Non-Executive Chairman 19 August 2020 Sydney 26 14 OncoSil Annual Report 2020 Auditor’s Independence Declaration Crowe Sydney ABN 97 895 683 573 Level 15 1 O’Connell Street Sydney NSW 2000 Australia Tel +61 2 9262 2155 Fax +61 2 9262 2190 www.crowe.com.au 19 August 2020 The Board of Directors OncoSil Medical Ltd Suite 402, Level 4 50 Berry Street North Sydney NSW 2060 Dear Board Members OncoSil Medical Ltd In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the Directors of OncoSil Medical Ltd. As lead audit partner for the audit of the financial report of OncoSil Medical Ltd for the financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, that there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours sincerely Crowe Sydney John Haydon Senior Partner The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately owned organisation and/or its subsidiaries. Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a scheme approved under Professional Standards Legislation. © 2020 Findex (Aust) Pty Ltd. 27 Statement of Profit or Loss and Other Comprehensive Income For the year ended 30 June 2020 OncoSil Medical Ltd Statement of profit or loss and other comprehensive income For the year ended 30 June 2020 Revenue Other income Interest revenue calculated using the effective interest method Expenses Employee benefits expense Research and development expenses Occupancy expenses Consulting, finance and legal expenses Share-based payments Other administrative expenses Finance costs Loss before income tax expense Income tax expense Loss after income tax expense for the year attributable to the owners of OncoSil Medical Ltd Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the year, net of tax Total comprehensive income for the year attributable to the owners of OncoSil Medical Ltd Note Consolidated 2020 $ 2019 $ 5 6 6 7 2,853,898 104,881 3,640,933 204,112 (3,539,643) (3,726,272) (77,992) (1,782,490) 2,390,884 (474,076) (11,085) (4,002,787) (5,576,351) (174,292) (1,212,226) (1,133,097) (313,023) - (4,261,895) (8,566,731) - - (4,261,895) (8,566,731) (1,132) (45,934) (1,132) (45,934) (4,263,027) (8,612,665) Cents Cents Basic earnings per share Diluted earnings per share 26 26 (0.65) (0.65) (1.36) (1.36) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 16 28 OncoSil Annual Report 2020 Statement of Financial Position As at 30 June 2020 OncoSil Medical Ltd Statement of financial position As at 30 June 2020 Assets Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Plant and equipment Right-of-use assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings Lease liabilities Employee benefits Total current liabilities Total liabilities Net assets Equity Issued capital Reserves Accumulated losses Total equity Note Consolidated 2020 $ 2019 $ 8 9 10 20,997,985 2,805,747 117,762 7,689,234 3,819,044 97,603 23,921,494 11,605,881 11 56,583 81,789 138,372 62,466 - 62,466 24,059,866 11,668,347 12 13 1,780,592 26,564 83,377 268,025 2,158,558 767,608 - - 225,603 993,211 2,158,558 993,211 21,901,308 10,675,136 14 15 70,137,314 52,257,231 6,020,395 (47,602,490) 3,628,379 (51,864,385) 21,901,308 10,675,136 The above statement of financial position should be read in conjunction with the accompanying notes 17 29 Statement of Changes in Equity For the year ended 30 June 2020 OncoSil Medical Ltd Statement of changes in equity For the year ended 30 June 2020 Consolidated Balance at 1 July 2018 Issued capital $ Reserves $ Accumulated losses $ Total equity $ 52,257,231 4,933,232 (39,035,759) 18,154,704 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Transactions with owners in their capacity as owners: Share-based payments (note 15) - - - - (45,934) (8,566,731) - (8,566,731) (45,934) (45,934) (8,566,731) (8,612,665) - 1,133,097 - 1,133,097 Balance at 30 June 2019 52,257,231 6,020,395 (47,602,490) 10,675,136 Consolidated Balance at 1 July 2019 Issued capital $ Reserves $ Accumulated losses $ Total equity $ 52,257,231 6,020,395 (47,602,490) 10,675,136 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year - - - - (1,132) (4,261,895) - (4,261,895) (1,132) (1,132) (4,261,895) (4,263,027) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 14) Share-based payments (note 15) 17,880,083 - - (2,390,884) - 17,880,083 (2,390,884) - Balance at 30 June 2020 70,137,314 3,628,379 (51,864,385) 21,901,308 The above statement of changes in equity should be read in conjunction with the accompanying notes 18 30 OncoSil Annual Report 2020 Statement of Cash Flows For the year ended 30 June 2020 OncoSil Medical Ltd Statement of cash flows For the year ended 30 June 2020 Cash flows from operating activities Payments to suppliers and employees Interest received Interest and other finance costs paid Research and development tax incentive Government grants Note Consolidated 2020 $ 2019 $ (8,357,796) 104,881 (11,085) 3,718,921 89,000 (11,991,410) 204,112 - 4,286,144 - Net cash used in operating activities 24 (4,456,079) (7,501,154) Cash flows from investing activities Payments for property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from borrowings Share issue transaction costs Repayment of lease liabilities Net cash from financing activities (20,721) (14,828) (20,721) (14,828) 14 14 19,099,733 26,564 (1,219,650) (121,096) 17,785,551 - - - - - Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 13,308,751 (7,515,982) 7,689,234 15,205,216 Cash and cash equivalents at the end of the financial year 8 20,997,985 7,689,234 The above statement of cash flows should be read in conjunction with the accompanying notes 19 31 Notes to the Financial Statements OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 1. General information The financial statements cover OncoSil Medical Ltd as a Group consisting of OncoSil Medical Ltd (the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year (the 'Group'). The financial statements are presented in Australian dollars, which is OncoSil Medical Ltd's functional and presentation currency. OncoSil Medical Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Suite 402, Level 4 50 Berry Street North Sydney NSW 2060 A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 19 August 2020. The directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. The following Accounting Standards and Interpretations are most relevant to the Group: AASB 16 Leases The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. Impact of adoption AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. The impact of adoption on opening accumulated losses as at 1 July 2019 was nil as follows: 32 20 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 2. Significant accounting policies (continued) Operating lease commitments as at 1 July 2019 (AASB 117) Operating lease commitments discount based on the weighted average incremental borrowing rate of 5% (AASB 16) Right-of-use assets (AASB 16) Lease liabilities - current (AASB 16) Lease liabilities - non-current (AASB 16) Reduction in opening accumulated losses as at 1 July 2019 1 July 2019 $ 218,865 (14,392) 204,473 (125,066) (79,407) (204,473) - Practical expedients applied In adopting AASB 16, the Group has used the following practical expedients permitted by the standard: ● accounted for operating leases with a remaining lease term of less than 12 months as at 1 July 2019 as short-term leases; excluded initial direct costs for the measurement of the right-of-use asset at the date of initial application; and used hindsight in determining the lease term where the contract contains options to extend or terminate the lease. ● ● Interpretation 23 Uncertainty over Income Tax The Group has adopted Interpretation 23 from 1 July 2019. The interpretation clarifies how to apply the recognition and measurement requirements of AASB 112 ‘Income Taxes’ in circumstances where uncertain tax treatments exists. The interpretation requires: the Group to determine whether each uncertain tax treatment should be treated separately or together, based on which approach better predicts the resolution of the uncertainty; the Group to consider whether it is probable that a taxation authority will accept an uncertain tax treatment; and if the Group concludes that it is not probable that the taxation authority will accept an uncertain tax treatment, it shall reflect the effect of uncertainty in determining the related taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates, measuring the tax uncertainty based on either the most likely amount or the expected value. In making the assessment it is assumed that a taxation authority will examine amounts it has a right to examine and have full knowledge of all related information when making those examinations. Interpretation 23 was adopted using the modified retrospective approach and as such comparatives have not been restated. There was no impact of adoption on opening retained profits as at 1 July 2019. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 22. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of OncoSil Medical Ltd as at 30 June 2020 and the results of all subsidiaries for the year then ended. OncoSil Medical Ltd and its subsidiaries together are referred to in these financial statements as the 'Group'. 21 33 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 2. Significant accounting policies (continued) Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group 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 to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non- controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Foreign currency translation The financial statements are presented in Australian dollars, which is OncoSil Medical Ltd's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into the entity’s functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. 34 22 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 2. Significant accounting policies (continued) Plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment over their expected useful lives as follows: Office equipment 3-15 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Research and development costs Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources and intent to complete the development and its costs can be measured reliably. Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method. The borrowings the Group has as at 30 June 2020 corresponds to loans for insurance premium funding arrangements. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Employee benefits Short-term employee benefits Liabilities for wages and salaries and other employee benefits expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. Long-term employee benefits Employee benefits not expected to be settled within 12 months of the reporting date are measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. 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. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. 23 35 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 2. Significant accounting policies (continued) Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below. Conceptual Framework for Financial Reporting (Conceptual Framework) The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the Group's financial statements. Note 3. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. COVID-19 Judgement has been exercised in considering the impacts that COVID-19 has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Whilst the impact of COVID-19 has not materially impacted the Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Research and development tax incentive The Group measures the research and development tax incentive ('RDTI') based on the preparation of the income tax return for the year therefore assumptions and judgement are involved to determine whether some costs are appropriated to RDTI. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the Group considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 36 24 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 3. Critical accounting judgements, estimates and assumptions (continued) Lease term The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the Group's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances. Incremental borrowing rate Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment. Note 4. Operating segments Identification of reportable operating segments The Group operates in one segment being the device development for new medical treatments. This is 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. There is no aggregation of operating segments. The information reported to the CODM is on at least a monthly basis. The financial information presented in these financial statements are the same as that presented to the CODM. Note 5. Other income Government grants * Research and development tax incentive Net gain/(loss) on foreign exchange Other income Other income Consolidated 2020 $ 2019 $ 89,000 2,763,475 1,092 331 - 3,626,082 14,851 - 2,853,898 3,640,933 * During the year the Company received payments from the Australian Government amounting to $50,000 and $39,000 as part of its ‘Boosting Cash Flow for Employers’ and 'JobKeeper' schemes, respectively, in response to COVID-19. These non-tax amounts have been recognised as government grants and recognised as income once there is reasonable assurance that the Company will comply with any conditions attached. Accounting policy for revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. 25 37 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 5. Other income (continued) Research and development tax incentive The research and development tax incentive ('RDTI') represents a refundable tax offset that is available on eligible research and development expenditure incurred by the Group. The RDTI is considered to be a form of government assistance and the accounting policy adopted is analogous to accounting for government grants. RDTI are recognised at their fair value where there is a reasonable assurance that the incentive will be received and the Group will comply with all attached conditions. RDTI relating to expenses are recognised as incurred at the point of time in profit or loss. Dividends Dividend revenue is recognised when it is received or when the right to receive payment is established. Other income Other income is recognised when it is received or when the right to receive payment is established. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Note 6. Expenses Consolidated 2020 $ 2019 $ 26,604 122,684 38,617 - 149,288 38,617 3,361,082 178,561 3,804,313 198,474 3,539,643 4,002,787 861 10,224 11,085 - - - - 131,319 163,052 - 131,319 163,052 Loss before income tax includes the following specific expenses: Depreciation Office equipment Buildings right-of-use assets Total depreciation Employee benefits (excluding share-based payments) Employee benefits Defined contribution superannuation expense Total employee benefits expense Finance costs Interest and finance charges paid/payable on borrowings Interest and finance charges paid/payable on lease liabilities Finance costs expensed Leases Minimum lease payments Short-term lease payments 38 26 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 7. Income tax Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 27.5% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Research and development - write back Share-based payments Others Future income tax benefit not brought to account Income tax expense Consolidated 2020 $ 2019 $ (4,261,895) (8,566,731) (1,172,021) (2,355,851) 981,525 (657,493) (33,292) 881,281 1,391,559 311,602 (97,242) 749,932 - - Consolidated 2020 $ 2019 $ Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 27.5% 12,422,257 9,651,356 3,416,121 2,654,123 The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed. Accounting policy for income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. 27 39 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 8. Current assets - cash and cash equivalents Cash at bank * Cash on deposit Consolidated 2020 $ 2019 $ 20,881,585 116,400 7,574,359 114,875 20,997,985 7,689,234 * The significant increase corresponds to the capital raising on 8 May 2020, where the net cash proceeds was approximately $17,800,000. Refer to note 14 for further details. Accounting policy for 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 between three and six months that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Note 9. Current assets - trade and other receivables Other receivables Research and development tax incentive receivable Consolidated 2020 $ 2019 $ 42,272 2,763,475 38,188 3,780,856 2,805,747 3,819,044 Accounting policy for trade and other receivables Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Note 10. Current assets - other assets Prepayments Other deposits Note 11. Non-current assets - right-of-use assets Buildings - right-of-use Less: Accumulated depreciation Consolidated 2020 $ 2019 $ 48,548 69,214 28,389 69,214 117,762 97,603 Consolidated 2020 $ 2019 $ 204,473 (122,684) 81,789 - - - The Group leases buildings for its offices under agreements of between 3 to 5 years with, in some cases, options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. 40 28 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 11. Non-current assets - right-of-use assets (continued) Accounting policy for 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. Note 12. Current liabilities - trade and other payables Trade payables Payroll liabilities Other payables Consolidated 2020 $ 2019 $ 1,355,610 216,583 208,399 363,987 98,784 304,837 1,780,592 767,608 Refer to note 17 for further information on financial instruments. Accounting policy for trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured, non-interest bearing and are usually paid within 60 days of recognition. Note 13. Current liabilities - lease liabilities Lease liability Refer to note 17 for information on the maturity analysis of lease liabilities. Consolidated 2020 $ 2019 $ 83,377 - Accounting policy for lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. 29 41 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 13. Current liabilities - lease liabilities (continued) Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Note 14. Equity - issued capital Consolidated 2020 Shares 2019 Shares 2020 $ 2019 $ Ordinary shares - fully paid 828,600,898 630,708,788 70,137,314 52,257,231 Movements in ordinary share capital Details Date Shares Issue price $ Balance Employee loan shares issued 1 July 2018 31 October 2018 624,158,788 6,550,000 52,257,231 - $0.18 Balance Loan funded employee options repaid Employee loan shares issued Forfeited employee loan shares Placement issue of shares Rights issue Forfeited employee loan shares Transaction costs 30 June 2019 3 December 2019 25 March 2020 27 March 2020 8 May 2020 28 May 2020 30 June 2020 630,708,788 - 2,139,524 (12,300,000) 155,137,076 56,415,510 (3,500,000) - 52,257,231 60,000 $0.00 - $0.10 $0.00 - $0.09 13,962,337 5,077,396 $0.09 $0.00 - $0.00 (1,219,650) Balance 30 June 2020 828,600,898 70,137,314 Ordinary shares Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the company be wound up, in proportions that consider both the number of shares held and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. Capital risk management The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Given the state of the Group's development there are no formal targets set for return of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. The Group is not subject to any financing arrangements covenants or externally imposed capital requirements. The capital risk management policy has not changed during the year. 42 30 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 14. Equity - issued capital (continued) Accounting policy for issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Note 15. Equity - reserves Foreign currency reserve Share-based payments reserve Consolidated 2020 $ 2019 $ (162,394) 3,790,773 (161,262) 6,181,657 3,628,379 6,020,395 Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to: employees and directors as part of their remuneration under an Employee Share Plan; directors on terms determined by the Board and approved by shareholders; and other parties as part of their compensation for services. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Consolidated Balance at 1 July 2018 Foreign currency translation Share-based payments Balance at 30 June 2019 Foreign currency translation Share-based payments Balance at 30 June 2020 Note 16. Equity - dividends Foreign currency $ Share-based payments $ Total $ (115,328) (45,934) - 5,048,560 - 1,133,097 4,933,232 (45,934) 1,133,097 (161,262) (1,132) - 6,181,657 - (2,390,884) 6,020,395 (1,132) (2,390,884) (162,394) 3,790,773 3,628,379 There were no dividends paid, recommended or declared during the current or previous financial year. Note 17. Financial instruments Financial risk management objectives The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate and ageing analysis for credit risk. 31 43 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 17. Financial instruments (continued) Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits. Finance identifies and evaluates financial risks within the Group's operating units. Finance reports to the Board on a monthly basis. Market risk Foreign currency risk The Group is not exposed to significant foreign currency risk. Price risk The Group is not exposed to any significant price risk. Interest rate risk The Group's main interest rate risk arises from cash at bank and short term deposits. The policy is to maintain a mix of fixed and floating rate deposits. The carrying value of the Group's cash and cash equivalents at the reporting date, subject to interest rate risk are detailed in note 8. The effect a 100 (2019: 100) basis point interest rate change is detailed below. The method used to arrive at the possible change in basis points was based on the analysis of the average change of the Reserve Bank of Australia ('RBA') monthly issued cash rate over the past five years. Consolidated - 2020 Basis points change profit before tax Effect on equity Basis points change profit before tax Effect on equity Basis points increase Effect on Basis points decrease Effect on Cash and cash equivalents 100 209,980 152,235 (100) (209,980) (152,235) Consolidated - 2019 Basis points change profit before tax Effect on equity Basis points change profit before tax Effect on equity Basis points increase Effect on Basis points decrease Effect on Cash and cash equivalents 100 76,892 55,747 (100) (76,892) (55,747) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. 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. The Group does not hold any collateral. The credit risk on liquid funds is limited because the counter party is a bank with high credit rating. Liquidity risk Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay debts as and when they become due and payable. The Group manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of finance leases and equity funding. 44 32 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 17. Financial instruments (continued) Remaining contractual maturities The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. Consolidated - 2020 Non-derivatives Non-interest bearing Trade payables Payroll liabilities Other payables Interest-bearing - variable Lease liability Interest-bearing - fixed rate Other loans Total non-derivatives Consolidated - 2019 Non-derivatives Non-interest bearing Trade payables Payroll liabilities Other payables Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - - 1,355,610 216,583 208,399 5.00% 83,377 11.62% 26,564 1,890,533 - - - - - - - - - - - - - - - - - - 1,355,610 216,583 208,399 83,377 26,564 1,890,533 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - - 363,987 98,784 304,837 767,608 - - - - - - - - - - - - 363,987 98,784 304,837 767,608 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 18. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of KMP of the Group is set out below: Short-term employee benefits Post-employment benefits Share-based payments Consolidated 2020 $ 2019 $ 1,209,649 63,105 (1,862,243) 1,024,650 64,230 710,919 (589,489) 1,799,799 33 45 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 19. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by Crowe Sydney, the auditor of the Company: Audit services - Crowe Sydney Audit or review of the financial statements Note 20. Contingent liabilities Consolidated 2020 $ 2019 $ 55,800 53,700 There has been no change in the status of contingent liabilities since 30 June 2019. On 16 April 2013, OncoSil Medical Ltd settled the acquisition of OncoSil Medical (UK) Limited (formerly Enigma Therapeutics Limited "OncoSil UK"). OncoSil UK holds a licence to commercialise OncoSil™ (formerly BrachySil™), a targeted brachytherapy product for the treatment of cancer ('the Product') under a licence agreement from pSiMedica. pSiMedica has granted to OncoSil UK an exclusive world-wide royalty-bearing license for the term of the pSiMedica Transaction (with limited rights to sub-license) under the Licensed Patents solely to make, use, sell, offer to sell and import the Product in the field of therapy in human neoplastic disease (cancer). Key terms of the license agreement have been summarised below: ● ● OncoSil UK is required to make a payment of up to US$100,000 to pSiMedica annually to support existing patents; and OncoSil UK is required to make the following payments for patents and subject to the Product completing positive clinical trials and becoming registered for sale. i) During the term of the licence, 8% of future net sales (future sales which cannot be guaranteed) of the Product or any other product protected by the rights arising from the Assigned Patents (if sold by OncoSil UK or its affiliates) and services performed using the Product or such other products, on a product-by-product and country-by-country basis. Only half of this payment must be made whenever approved generic competitor products derived from the Product maintain at least a 20% world-wide market share of sales, on a country-by-country and product-by-product basis. ii) 20% of any form of consideration, payments, royalties, third party net sales income and other payments received from third party licensing deals and various other agreements with third parties in relation to the Product or any other product protected by the rights arising from the Assigned Patents, for the term of the pSiMedica licence, on a product-by- product and country-by-country basis. iii) Potential milestone payments based only upon the Product being a commercial success, which cannot be guaranteed now or in the future (ranging from US$1,000,000 to US$5,000,000) upon: - OncoSil UK, its affiliates and any of OncoSil UK's third party transferees together potentially achieving US$5,000,000 aggregate net sales of the Product and any other product protected by the rights arising from the Assigned Patents, for (i) an indication and (ii) a second indication; - aggregate net sales of the Product and any other product protected by the rights arising from the Assigned Patents, paid to OncoSil UK, its affiliates and third party transferees in a calendar year of US$20,000,000 or more; and - aggregate net sales of the Product and any other product protected by the rights arising from the Assigned Patents, paid to OncoSil UK, its affiliates and third party transferees in a calendar year of US$100,000,000 or more. Termination of licence agreement Unless terminated early for reasons such as a material breach, or by pSiMedica due to a patent challenge being brought against pSiMedica in certain circumstances (including by OncoSil UK), the term of the licence for the Licensed Patents and OncoSil UK's rights to exploit the product and any other products arising from the Assigned Patents, remain in effect on a country-by-country and product-by-product basis, until the later to occur of: 46 34 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 20. Contingent liabilities (continued) ● ● the date on which the product or any other product protected by the rights arising from the Assigned Patents in such country is no longer covered or protected by a potential claim of the Licensed Patents or the Assigned Patents in such country; and ten years from the date of first commercial sale of a product or any other product protected by the rights arising from the Assigned Patents in such country. In addition, if OncoSil UK reasonably forms the view that it is not capable of commercialising OncoSil™, OncoSil UK shall have the right to terminate the license agreement by giving 60 days prior written notice to pSiMedica. The directors are not aware of any other commitments or contingencies as at 30 June 2020. Note 21. Related party transactions Parent entity OncoSil Medical Ltd is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 23. Key management personnel Disclosures relating to key management personnel are set out in note 18 and the remuneration report included in the directors' report. Transactions with related parties Payment of Director's fees to Dr Chris Roberts AO, were made to his director-related entity, Robertsplan Pty Ltd during the financial year of $80,000 (2019: $80,000). Payment of Director's fees to Mr Michael Bassett, were made to his director-related entity, Market Connect Australia Pty Ltd during the financial year of $80,000 (2019: $44,822). Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions All transactions were made on normal commercial terms and conditions and at market rates. Note 22. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive income Parent 2020 $ 2019 $ (3,829,725) (7,909,445) (3,829,725) (7,909,445) 35 47 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 22. Parent entity information (continued) Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Accumulated losses Total equity Parent 2020 $ 2019 $ 26,316,323 13,552,451 26,454,695 13,614,917 2,152,608 972,307 2,152,608 972,307 70,137,314 52,257,231 6,181,656 (45,796,277) 3,790,773 (49,626,000) 24,302,087 12,642,610 Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019. Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following: ● ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Note 23. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2: Name OncoSil Medical UK Limited OncoSil Medical Germany GmbH OncoSil Medical US Inc. OncoSil Medical NZ Limited Principal place of business / Country of incorporation United Kingdom Germany United States New Zealand Ownership interest 2019 2020 % % 100% 100% 100% 100% 100% 100% 100% 100% 48 36 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 24. Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year Adjustments for: Depreciation and amortisation Share-based payments Foreign exchange differences Change in operating assets and liabilities: Decrease in other operating assets Increase/(decrease) in trade and other payables Increase in employee benefits Net cash used in operating activities Note 25. Changes in liabilities arising from financing activities Consolidated Balance at 1 July 2018 Balance at 30 June 2019 Net cash from/(used in) financing activities Acquisition of buildings - right-of-use by means of leases Balance at 30 June 2020 Note 26. Earnings per share Consolidated 2020 $ 2019 $ (4,261,895) (8,566,731) 149,288 (2,390,884) (1,132) 38,617 1,133,097 (45,934) 993,138 1,012,984 42,422 659,359 (816,440) 96,878 (4,456,079) (7,501,154) Loan for insurance premium $ Lease liability $ Total $ - - - - 26,564 - - (121,096) 204,473 - (94,532) 204,473 26,564 83,377 109,941 Consolidated 2020 $ 2019 $ Loss after income tax attributable to the owners of OncoSil Medical Ltd (4,261,895) (8,566,731) Weighted average number of ordinary shares used in calculating basic earnings per share 656,175,735 628,519,473 Weighted average number of ordinary shares used in calculating diluted earnings per share 656,175,735 628,519,473 Number Number Basic earnings per share Diluted earnings per share Cents Cents (0.65) (0.65) (1.36) (1.36) 55,427,986 ESP have not been included in the diluted earnings per share calculation as they are anti-dilutive. 37 49 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 26. Earnings per share (continued) Accounting policy for earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of OncoSil Medical Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. 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. Note 27. Share-based payments The Group's Employee Share Plan (‘ESP’) is designed as an incentive for senior managers and above. Under the plan, participants are granted performance dependent loan shares which only vest if certain performance standards are met. The issue price is fully financed by a limited recourse loan provided by the Group. Dividends are for the benefit of the employee. Employees are not permitted to deal in the shares until the limited recourse loan has been repaid. Performance dependent loan shares issued under the ESP are accounted for in a similar manner as options. There are no cash settlement alternatives. The following performance dependent loan shares were on issue under the ESP at reporting date and held as security against limited recourse loan arrangements: 2020 Grant date Expiry date price Exercise Balance at the start of the year Granted Expired/ forfeited/ other * Balance at the end of the year Vested 30/10/2013 28/11/2014 28/11/2014 13/01/2016 10/05/2016 12/08/2016 11/12/2017 02/03/2018 02/03/2018 31/10/2018 31/10/2018 25/03/2020 25/03/2020 31/12/2019 31/12/2019 31/12/2019 13/01/2020 10/05/2021 30/06/2021 11/12/2020 02/03/2021 02/03/2021 31/10/2021 31/10/2021 25/03/2025 25/03/2025 5,000,000 $0.15 500,000 $0.18 3,000,000 $0.13 $0.13 8,500,000 $0.22 24,000,000 4,000,000 $0.22 769,231 $0.22 4,230,769 $0.22 1,000,000 $0.22 3,275,000 $0.18 3,275,000 $0.18 - $0.10 - $0.10 57,550,000 - - - - - - - - - - - 1,069,763 1,069,761 2,139,524 - - - - - - - - - - - - - - (5,000,000) (500,000) (3,000,000) (6,000,000) - - - 2,500,000 - 24,000,000 4,000,000 - 769,231 - 4,230,769 - 1,000,000 - 2,625,000 (650,000) 2,625,000 (650,000) 1,069,763 - 1,069,761 - (15,800,000) 43,889,524 Weighted average exercise price $0.19 $0.10 $0.00 $0.14 $0.20 * During the year 15,800,000 performance dependent loan shares were forfeited due to vesting conditions being met. The vesting conditions for the performance dependent loan shares issued during the year on 25 March 2020 are as follows; ● ● The first tranche of 1,069,763 shares will vest automatically if and when OncoSil Total Shareholder Return (TSR) achieves a compound annual growth rate (CAGR) of 10%, provided that the Participant has been continuously employed with the Company at the time the CAGR achieves 10% - 5 year loan. The second tranche of 1,069,761 shares will vest automatically if and when OncoSil Total Shareholder Return (TSR) achieves a compound annual growth rate (CAGR) of 20%, provided that the Participant has been continuously employed with the Company at the time the CAGR achieves 20% - 5 year loan. 50 38 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 27. Share-based payments (continued) The following unvested performance dependent loan shares were on issue under the ESP as at 30 June 2019 and were being held as security against limited recourse loan arrangements: 2019 Grant date Expiry date price Exercise Balance at the start of the year Granted 30/10/2013 28/11/2014 28/11/2014 08/10/2015 13/01/2016 13/01/2016 13/01/2016 10/05/2016 12/08/2016 11/12/2017 02/03/2018 02/03/2018 31/10/2018 31/10/2018 31/12/2019 31/12/2019 31/12/2019 08/10/2018 13/01/2019 13/01/2019 13/01/2020 10/05/2021 30/06/2021 11/12/2020 02/03/2021 02/03/2021 31/10/2021 31/10/2021 5,000,000 $0.15 500,000 $0.18 3,000,000 $0.13 1,538,462 $0.13 769,231 $0.13 5,730,769 $0.13 $0.13 8,500,000 $0.22 24,000,000 4,000,000 $0.22 769,231 $0.22 4,230,769 $0.22 1,000,000 $0.22 - $0.18 - $0.18 59,038,462 - - - - - - - - - - - - 3,275,000 3,275,000 6,550,000 Expired/ forfeited/ other Balance at the end of the year 5,000,000 - 500,000 - 3,000,000 - - - - - - - - 8,500,000 - 24,000,000 4,000,000 - 769,231 - 4,230,769 - 1,000,000 - 3,275,000 - - 3,275,000 - 57,550,000 Vested* - - - (1,538,462) (769,231) (5,730,769) - - - - - - - - (8,038,462) Weighted average exercise price $0.18 $0.18 $0.13 $0.00 $0.19 In relation to 6,550,000 performance dependent loan shares granted on 31 October 2018 the vesting conditions are as follows; ● The first tranche of 3,275,000 shares will vest automatically if and when OncoSil Total Shareholder Return (TSR) has a compound annual growth rate (CAGR) of 15%, provided that the Participant has been continuously employed with the Company at the time the CAGR achieves 15% - 3 year loan. 1,650,000 of these shares were issued to Daniel Kenny (CEO and Managing Director) and 325,000 shares were issued to Tom Milicevic (CFO). The second tranche of 3,275,000 shares will vest automatically if and when TSR has a CAGR of 25%, provided that the Participant has been continuously employed with the Company at the time the CAGR achieves 25% - 3 year loan. 1,650,000 of these shares were issued to Daniel Kenny (CEO and Managing Director) and 325,000 shares were issued to Tom Milicevic (CFO). * * During the year, of the 15,000,000 shares with expiry date 13 January 2019, 6,500,000 shares vested. The expiry date of the remaining 8,500,000 shares was extended until 13 January 2020. During the year 1,538,462 shares with expiry date 8 October 2018 vested. Set out below are the vested and unreleased performance dependent loan shares subject to loan repayment at the end of the financial year: Grant date Expiry date 19/05/2014 28/11/2014 28/11/2014 07/10/2015 07/10/2015 13/01/2016 13/01/2016 13/01/2016 19/05/2017 31/12/2018 31/12/2018 07/10/2018 07/10/2018 13/01/2019 13/01/2019 13/01/2019 2020 2019 Number Number - - - 769,231 769,231 2,000,000 2,000,000 2,500,000 461,539 500,000 3,000,000 769,231 769,231 2,000,000 2,000,000 2,500,000 8,038,462 12,000,001 39 51 Notes to the Financial Statements cont. OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 27. Share-based payments (continued) Share based payments were priced using Black-Scholes option pricing model inputs to determine the fair value at the grant date as follows: Grant date Expiry date Share price Exercise at grant date price Expected volatility Risk-free Fair value interest rate at grant date 25/03/2020 25/03/2020 25/03/2025 25/03/2025 $0.10 $0.10 $0.09 $0.09 175.70% 175.70% 0.77% 0.77% $0.084 $0.084 Terms of limited recourse loan arrangement The loans issued are limited recourse such that on the repayment date the repayment obligation under the loan will be limited to the lesser of: (a) the outstanding balance of the loan; and (b) the market value of the loan shares on that date. In addition, where the participant has elected for the performance dependent loan shares to be provided to the Company in full satisfaction of the loan, the Company must accept the loan shares as full settlement of the repayment obligation under the loan. The total value of loans outstanding under the Employee Share Plan at reporting date was $8,956,464 (2019: $10,994,000). The weighted average remaining contractual life of loan shares outstanding at the end of the financial year was 12 months (2019: 18 months). Accounting policy for share-based payments Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share and the risk free interest rate for the term of the option. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, they are treated as if they had vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. 52 40 OncoSil Annual Report 2020 OncoSil Medical Ltd Notes to the financial statements 30 June 2020 Note 28. Events after the reporting period The impact of the COVID-19 pandemic is ongoing and while it has not materially impacted the Group up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measure imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 41 53 Directors’ Declaration OncoSil Medical Ltd Directors' declaration 30 June 2020 In the directors' opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements; the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Dr Chris Roberts AO Non-Executive Chairman 19 August 2020 Sydney 54 42 OncoSil Annual Report 2020 Independent Auditor’s Report Crowe Sydney ABN 97 895 683 573 Level 15 1 O’Connell Street Sydney NSW 2000 Australia Tel +61 2 9262 2155 Fax +61 2 9262 2190 www.crowe.com.au Independent Auditor’s Report to the Members of OncoSil Medical Ltd Report on the Audit of the Financial Report Opinion We have audited the financial report of OncoSil Medical Ltd (the Company) and its subsidiaries (the Group), which comprises the statement of financial position as at 30 June 2020, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial performance for the year then ended; and (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The title ‘Partner’ conveys that the person is a senior member within their respective division, and is among the group of persons who hold an equity interest (shareholder) in its parent entity, Findex Group Limited. The only professional service offering which is conducted by a partnership is the Crowe Australasia external audit division. All other professional services offered by Findex Group Limited are conducted by a privately owned organisation and/or its subsidiaries. Findex (Aust) Pty Ltd, trading as Crowe Australasia is a member of Crowe Global, a Swiss verein. Each member firm of Crowe Global is a separate and independent legal entity. Findex (Aust) Pty Ltd and its affiliates are not responsible or liable for any acts or omissions of Crowe Global or any other member of Crowe Global. Crowe Global does not render any professional services and does not have an ownership or partnership interest in Findex (Aust) Pty Ltd. Services are provided by Crowe Sydney, an affiliate of Findex (Aust) Pty Ltd. Liability limited by a scheme approved under Professional Standards Legislation. © 2020 Findex (Aust) Pty Ltd. 55 Independent Auditor’s Report cont. Independent Auditor’s Report OncoSil Medical Ltd Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How we addressed the Key Audit Matter Research and Development Tax Incentive Refer to Note 2, Note 3 and Note 5 Under the research and development (R&D) tax incentive scheme, the Group is entitled to receive a 43.5% refundable tax offset of eligible expenditure if its turnover is less than $20 million per annum provided, it is not controlled by the income tax exempt entities. The R&D plan is filed with AusIndustry in the following financial year, and based on this filing, the Group receives the incentive in cash. The Group prepared an estimate of its total R&D expenditure to determine the potential claim under the R&D tax incentive legislation. As at 30 June 2020, the Group had an estimated claim of $2.8 million relating to the year ended 30 June 2020. The R&D tax incentive is a key audit matter due to the size of the balance and because interpretation of the R&D tax legislation is required by the Group to assess the eligibility of the R&D expenditure under the scheme. Share Based Payments Refer to Note 3, Note 15 and Note 27 The Group’s Employee Share Plan (‘ESP’) is granted to senior managers and above as an incentive. Under the plan participants are granted shares which only vest if certain performance standards are met. In the current financial year, the Group granted further shares under the ESP. It had also reviewed its non-market vesting conditions of shares granted in prior years and updated the share-based payment expense to reflect the estimated cumulative share-based payments at year end. As a result, the Group reversed $2.75 million of share-based payment expense recognised in prior years. For the year ended 30 June 2020, a share-based payment credit of $2.4 million was included in its profit and loss. The share-based payment is a key audit matter due to the significance of the amount. We performed the following key procedures: • Agreed the estimate made in previous year to the amount of cash received after lodgement of the R&D tax claim. • Compared the nature of R&D expenditure included in the current year estimate to the prior year estimate. • Tested a sample of R&D expenses for eligibility under the R&D tax incentive scheme. • Compared the amount of eligible expenditures used to calculate the estimate to the expenditure recorded in the general ledger. Inspected copies of relevant documents lodged with AusIndustry and the ATO related to historic claims. • • Reviewed the related financial statement disclosures. We performed the following key procedures: • Assessed the valuation of the shares granted during the year and the current year impact. • Assessed the reasonableness on the likelihood that the non-market vesting conditions will not or have not been met. • Performed re-computation of share-based payment expense that was reversed in the current year. • Reviewed the reconciliation of the share- based payments reserve. • Reviewed the related financial statement disclosures. © 2020 Findex (Aust) Pty Ltd www.crowe.com.au 56 OncoSil Annual Report 2020 Independent Auditor’s Report OncoSil Medical Ltd Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. © 2020 Findex (Aust) Pty Ltd www.crowe.com.au 57 Independent Auditor’s Report cont. Independent Auditor’s Report OncoSil Medical Ltd • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the group financial report. The auditor is responsible for the direction, supervision and performance of the group audit. The auditor remains solely responsible for the audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during the audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the remuneration report included in pages 18 to 25 of the directors’ report for the year ended 30 June 2020. In our opinion, the remuneration report of OncoSil Medical Ltd, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. © 2020 Findex (Aust) Pty Ltd www.crowe.com.au 58 OncoSil Annual Report 2020 Independent Auditor’s Report OncoSil Medical Ltd Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. Crowe Sydney John Haydon Senior Partner 19 August 2020 Sydney © 2020 Findex (Aust) Pty Ltd www.crowe.com.au 59 Shareholder Information OncoSil Medical Ltd Shareholder information 30 June 2020 The shareholder information set out below was applicable as at 18 August 2020. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: CITICORP NOMINEES PTY LIMITED NATIONAL NOMINEES LIMITED WEBINVEST PTY LTD (OLSB UNIT A/C) CS FOURTH NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 11 A/C) MR DANIEL KENNY HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED ROJO NERO CAPITAL PTY LTD CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C) MR GREGORY JOSEPH HARRIS MR ROGER ASTON MR CHRISTOPHER GRAHAM ROBERTS TISIA NOMINEES PTY LTD (HENDERSON FAMILY A/C) MORGAN STANLEY AUSTRALIA SECURITIES (NOMINEE) PTY LIMITED (NO 1 ACCOUNT) NEWECONOMY COM AU NOMINEES PTY LIMITED (900 ACCOUNT) MR MICHAEL WARRENER MR DAVID CHARLES JAMES MS NICOLE WILSON MR PETER YING FEI HUI & MRS MANDY LI PIK SEUNG HUI (NAT EQUITIES SUPERFUND A/C) NEWFOUND INVESTMENTS PTY LTD (NEWFOUND SUPER FUND A/C) BOND STREET CUSTODIANS LIMITED (DEAONE - D42595 A/C) Unquoted equity securities There are no unquoted equity securities. 60 48 Number of holders of ordinary shares 127 456 662 2,366 1,050 4,661 376 Ordinary shares % of total shares issued Number held 60,723,403 38,323,578 24,272,728 24,230,269 20,352,778 18,512,463 18,339,290 17,292,895 13,536,442 13,154,416 11,045,455 9,384,768 9,039,126 8,123,224 6,393,588 6,392,463 6,325,695 6,252,000 6,000,000 5,160,000 7.33 4.63 2.93 2.92 2.46 2.23 2.21 2.09 1.63 1.59 1.33 1.13 1.09 0.98 0.77 0.77 0.76 0.75 0.72 0.62 322,854,581 38.94 OncoSil Annual Report 2020 OncoSil Medical Ltd Shareholder information 30 June 2020 Substantial holders There are no substantial holders in the Company. Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. There are no other classes of equity securities. 49 61 This page has been left intentionally blank. 62 OncoSil Annual Report 2020 www.colliercreative.com.au #ONC0006 COLLIER CREATIVE 03 9088 2470 ONC0006 Oncosil AR20_PFO August 19, 2020 7:08 PM oncosil.com.au
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