RegeneRating mobility
2018 AnnuAl RepoRt
CONTENTS
Corporate directory ................................................................................................................................... 2
Directors’ report ..........................................................................................................................................3
Auditor’s independence declaration ..................................................................................................... 15
Consolidated statement of profit or loss and other comprehensive income .....................................16
Consolidated statement of financial position ........................................................................................ 17
Consolidated statement of changes in equity ...................................................................................... 18
Consolidated statement of cash flows ................................................................................................... 19
Notes to the financial statements ...........................................................................................................20
Directors’ declaration ..............................................................................................................................44
Independent auditor’s report .................................................................................................................. 45
Corporate governance statement.......................................................................................................... 50
ASX additional information ...................................................................................................................... 57
Consolidated Annual Report for the Year Ended 30 June 2018
1
CORPORATE DIRECTORY
Board of Directors
Dr Stewart Washer
Executive Chairman, appointed 7 April 2014
Mr Paul Anderson
Managing Director, appointed 21 March 2006
Mr Matthew Callahan
Non-Executive Director, appointed 30 May 2006
Professor Lars Lidgren
Independent Non-Executive Director, appointed 17 December 2007
Mr Qi Xiao Zhou
Non-Executive Director, appointed 2 November 2012
Company Secretary
Mr Simon Robertson
Registered Office & Principal Place of Business
Building 191, Murdoch University
South Street
Murdoch WA 6150, Australia
Share Register
Automic Registry Services
Level 2, 267 St Georges Terrace
Perth WA 6000, Australia
Auditor
PKF Mack
4th Floor, 35 Havelock Street
West Perth WA 6005, Australia
Solicitors
Gilbert + Tobin
Level 16, Brookfield Place Tower 2
123 St Georges Terrace, Perth WA 6000, Australia
Bankers
Westpac Banking Corporation
Securities Exchange Listing
Australian Securities Exchange
ASX code: OCC
Website
www.orthocell.com.au
Consolidated Annual Report for the Year Ended 30 June 2018
2
DIRECTORS’ REPORT
The directors present their report, together with
the consolidated financial statements, on the
consolidated entity (referred to hereafter as the
'consolidated entity') consisting of Orthocell
Limited (referred to hereafter as the 'Company' or
'parent entity') and the entity it controlled at the
end of, or during, the year ended 30 June 2018.
1. Directors
The following persons were directors of Orthocell
Limited during the financial year and up to the
date of this report, unless otherwise stated:
Dr Stewart Washer
Executive Chairman
Mr Paul Anderson
Managing Director and
CEO
Mr Matthew Callahan Non-Executive Director
Professor Lars Lidgren
Independent Non-
Executive Director
Mr Qi Xiao Zhou
Non-Executive Director
Directors have been in office since the start of the
financial year to the date of this report.
Executive Chairman
Dr Stewart Washer has 25 years of CEO and Board
experience in medical and agrifood biotech
companies. Emerald Clinics Ltd, medical
cannabis clinics, VP Business Development at
AusCann Ltd (ASX:AC8), medical cannabis
manufacturing, Director of Zelda Therapeutics Ltd
(ASX:ZLD) medical cannabis clinical studies and
research, Founding Chairman and current
Director of Cynata Therapeutics Ltd (ASX:CYP)
stem cell therapies and Chairman of Minomic
International Ltd cancer diagnosis and treatment.
Stewart has held a number of Board positions in
the past, including Chairman of Hatchtech Pty Ltd
that was sold in 2015 for A$279m and was a
Director of iCeutica that was sold to a US
Pharma. He was also a Senator with Murdoch
University and was a Director of AusBiotech Ltd.
Current Directorships
Cynata Therapeutics Ltd (ASX: CYP)
Zelda Therapeutics Ltd (ASX:ZLD)
Previous directorships (last 3 years)
iSonea Ltd (ASX:ISN)
Immuron Ltd (ASX: IMC
AusBiotech Ltd
Managing Director
Mr Paul Anderson has over 20 years’ experience in
the medical device and regenerative medicine
fields with expertise in bridging the gap between
research and clinical practice in the
development of emerging medical technologies.
He also has extensive expertise in the
establishment of GMP manufacturing facilities
and scale-up activities for cell therapies and
biological medical devices, and the associated
regulatory filings.
Mr Anderson has a proven track record with over
16 years’ experience in CEO and board roles. His
intimate knowledge of the regenerative medicine
fields compliments his insight and know-how in
taking biological therapies from research to
clinical applications and market introduction.
Previous directorships (last 3 years)
Nil
Non-Executive Directors
Mr Matthew Callahan is a founding director of
Orthocell. He is also the founding CEO of iCeutica,
and a co-inventor of technologies that comprise
the SoluMatrix Fine Particle Technology™ for
improving the bioavailability of pharmaceuticals.
He has more than 20 years legal, licensing and
investment management experience and is a
director of Botanix Pharmaceuticals Ltd (ASX:BOT).
Mr Callahan has worked as investment director for
two venture capital firms investing in life sciences
and other sectors. He was General Manager and
General Counsel with an ASX listed patent
licensing company where he was responsible for
licensing programs that have generated over
$120 million in revenue.
Current directorships
Botanix Pharmaceuticals Limited (ASX:BOT)
Previous directorships (last 3 years)
Nil
Professor Lars Lidgren is an Independent Non-
Executive director of Orthocell who has authored
and co-authored over 250 original publications,
and has more than 150 patents/applications. He
was spokesman for Biomaterials in the Nordic
Orthopaedic Society, Chairman for the Swedish
National Knee Register, Director of the National
Board of Health and Welfare, Musculoskeletal
Consolidated Annual Report for the Year Ended 30 June 2018
3
DIRECTORS’ REPORT
Competence Centre and member of several
editorial boards. Professor Lidgren initiated and
has led the UN ratified Bone and Joint Decade
and founded Scandimed, a global leading
company in bone cements and delivery. Professor
Lidgren is the inventor, founder and board
member of Bone Support, an emerging leader in
bone therapeutics.
Current directorships
GWS (Nasdaq First North: GWS)
Rethinking Care (Nasdaq First North: RTC)
Previous directorships (last 3 years)
Nil
Mr Qi Xiao Zhou has 16 years’ experience within
China as a senior business manager and
executive. Mr Zhou is the founding CEO of
Shenzhen Lightning Digital Technology Co Ltd, a
company focused on the manufacture and
distribution of electronic semiconductor since
2001. Mr Zhou has experience within the public
markets in Hong Kong, China and Taiwan and
brings to the Board a wealth of business
management and development experience. In
particular Mr Zhou has broad connections and
experience in the licensing of technologies into
the Asian region.
Previous directorships (last 3 years)
Nil
Directors’ interests
As at the date of this report, the interests of the
Directors in the shares and options of Orthocell
Limited were:
Dr Stewart Washer
Mr Paul Anderson
Mr Matthew Callahan
Prof Lars Lidgren
Mr Qi Xiao Zhou
Shares
Options/
Warrants
550,411 1,945,842
7,032,555 3,413,692
10,277,882 1,850,000
354,767
354,767
1,008,209
5,996,241
Company Secretary
Simon Robertson has held the role of Company
Secretary since 8 November 2012. Mr Robertson
gained a Bachelor of Business from Curtin
University in Western Australia and Master of
Applied Finance from Macquarie University in
New South Wales. He is a member of the Institute
of Chartered Accountants and the Governance
Institute of Australia. Mr Robertson currently holds
the position of Company Secretary for a number
of publically listed companies and has experience
in corporate finance, accounting and
administration, capital raisings and ASX
compliance and regulatory requirements.
Meetings of Directors
The number of meetings of the Company's Board
of Directors ('the Board') held during the year
ended 30 June 2018, and the number of meetings
attended by each director was:
Dr Stewart Washer
Mr Paul Anderson
Mr Matthew Callahan
Professor Lars Lidgren
Mr Qi Xiao Zhou
Dr Stewart Washer
Mr Matthew Callahan
Professor Lars Lidgren
Full Board
Attended
4
5
5
5
4
Held(1)
5
5
5
5
5
Remuneration Committee
Attended
1
1
1
Held(1)
1
1
1
(1) Held: represents the number of meetings held during the
time the director held office.
2. Principal activities
During the financial year the principal continuing
activities of the consolidated entity consisted of
the development and commercialisation of cell
therapies and related technologies.
3. Review and results of operations
The loss for the consolidated entity after income
tax amounted to $5,757,114 (30 June 2017:
$4,177,416).
Overview
Orthocell Ltd is a regenerative medicine
company dedicated to the development of
novel collagen medical devices and cellular
therapies for the repair and regeneration of
human tendons, bone, nerve and cartilage
defects. Development to date has focused on
two main products:
CelGro® a naturally derived collagen medical
device for soft tissue repair currently approved
for use in Europe (CE Mark) and in clinical trials
for use as an augment to the surgical repair of
Consolidated Annual Report for the Year Ended 30 June 2018
4
DIRECTORS’ REPORT
tendons, bone, peripheral nerves and articular
cartilage; and
Autologous Tenocyte
Implantation (“Ortho-
ATI®”) for chronic, treatment resistant tendon
injuries.
Orthocell’s CelGro® collagen scaffold represents
a paradigm shift in bone and soft tissue
reconstruction with distinct competitive
advantages over existing tissue repair scaffolds,
particularly in the areas of cell compatibility,
mechanical properties (strength and ease of use)
and facilitation of a high quality of tissue repair
making it ideal for use in multiples indications with
significant market potential.
Orthocell’s Ortho-ATI® is a first in class cell therapy
for treatment of chronic tendon injuries. The
unique treatment uses each patient’s own
tendon-derived cells to stimulate tendon
regeneration and is delivered via ultrasound
guided injection under local anaesthetic.
Published data demonstrates that Ortho-ATI® is an
effective, minimally invasive technology,
facilitating the healing of tendons which are
resistant to existing therapies and addressing a
significant unmet clinical need.
Summary of key events
The Company has made significant progress in
the development and commercialisation of its
collagen scaffold platform technology and cell
therapies.
CelGro®
During the 2018 financial year, Orthocell achieved
key development and marketing approval
milestones for CelGro®, including driving market
entry into Europe, accelerating development of
orthopaedic applications and progressing
development of pipeline products.
European market entry
EU regulatory approval (CE Mark) – On 9
November 2017, Orthocell announced receipt
of European regulatory approval (CE Mark) for
CelGro® to be used for a range of dental
bone and soft tissue applications. This marks a
significant milestone for the Company as it
enables commercial rollout in the significant
dental bone and soft tissue regeneration
market, validates the CelGro® platform
technology, and provides a strong foundation
for expansion into target jurisdictions such as
the US, Australia and China.
First product use and sales – Orthocell
achieved first product use and sales of
CelGro® in Europe within 6 months of receiving
market authorisation (CE Mark) for dental bone
and soft tissue repair.
Supplementary marketing clinical data – On 1
May 2018, the Company announced the
completion of a clinical study using CelGro®
for treatment of dental bone defects. Results
demonstrated that CelGro® guides superior
quality bone formation when treating bone
defects and results in up to 26% better quality
newly formed bone when compared to the
market leading comparative product.
Appointment of Key Opinion Leaders (KOL’s) –
Two leading globally recognised experts were
appointed to Orthocell’s Medical and
Scientific Advisory Board (MSAB) in March 2018.
Professor Guiseppe Luongo, a maxillofacial
surgeon, and Dr Massimo Simion, an oral
surgeon, are both based in Europe and will
assist in establishing CelGro® in European and
global markets as the highest quality, best in
class medical device for oral bone and soft
tissue regeneration procedures.
Appointment of exclusive distributors – The
Company appointed Bimar Ortho (“Bimar”)
and Komak Sp (“Komak”) as exclusive
distributors of CelGro® for dental bone and soft
tissue repair in Italy and Poland respectively.
Both Bimar and Komak are leading distributors
with a proven track record in driving market
entry of high quality products. Subsequent to
the 2018 financial year, Orthocell appointed
Carrera Medical as its exclusive UK distributor of
CelGro®. Distributors will work collaboratively
with the Company to execute targeted
promotion activities, expand product sales and
develop the network of product users across
the UK, Italy and Poland.
Development of orthopaedic applications
Orthocell progressed development of its
orthopaedic applications announcing positive
interim clinical study results for tendon and
Consolidated Annual Report for the Year Ended 30 June 2018
5
DIRECTORS’ REPORT
cartilage repair and the appointment of a
globally recognised UK based KOL.
Positive results for cartilage regeneration – On 6
September 2017, Orthocell reported positive
safety and performance results for the first 3
patients treated in a clinical study using
CelGro® for the treatment of full thickness
cartilage defects within the hip joint. This
milestone demonstrates that CelGro® potential
to provide a more effective repair than
currently available treatments for
osteochondral hip defects.
Positive results for tendon regeneration – On 6
June 2018, the Company announced
successful study results demonstrating CelGro®
is safe, tolerable and capable of guiding
tendon healing in the surgical repair of the
rotator cuff tendon within the shoulder. Patients
experienced, at 6 and 12 months post-
treatment, a reduction in pain, an
improvement in function and quality of life with
no tendon re-tears reported following surgical
repair.
Appointment of leading orthopaedic surgeon –
Orthocell appointed Dr Jonathan Bell, a
globally recognised UK orthopaedic surgeon,
to the MSAB on 25 June 2018. This strategic
appointment accelerates Orthocell’s
orthopaedic development of CelGro® in key
markets.
Patent protections secured globally – During
the 2018 financial year, Orthocell strengthened
its global IP portfolio with multiple additional
patents secured for its CelGro® platform
technology. CelGro® patents are now granted
in Europe, the US, China, Canada, Singapore,
Australia and New Zealand.
Development of pipeline products
In January 2018, Orthocell achieved the 50%
patient treatment milestone in a human nerve
regeneration trial to show how CelGro® can be
used to guide and promote nerve regeneration in
damaged peripheral nerves of the hand and
upper limb. An interim review of the clinical trial
data confirmed positive safety and tolerability
results using CelGro® for the repair of damaged
or severed nerves.
In February 2018, Orthocell announced positive
results in a pre-clinical evaluation using CelGro®
collagen rope in ACL reconstruction to replace
the need for an autologous tendon graft. The
study showed that host ligament stem cells from
the ACL stump are capable of ingrowth into the
biomechanically superior CelGro® rope,
representing a key breakthrough in the use of
collagen scaffolds.
Ortho-ATI®
The Company accelerated the clinical
development of its minimally invasive cell therapy
for tendon regeneration, Ortho-ATI®, throughout
the 2018 financial year.
In June 2018, the Company announced updated
positive results from a study of Ortho-ATI® for
tennis elbow in patients who suffered work related
injuries. The study results demonstrated that 88%
of patients who had failed other existing
treatments for tennis elbow were able to return to
work after Ortho-ATI® treatment. The results were
presented at the TOBI regenerative medicine
meeting in Las Vegas, US and the study was
performed in collaboration with Professor Ming
Hao Zheng (University of Western Australia) and
leading orthopaedic surgeons Dr Jeff Hughes and
Dr Alex O’Beirne.
Enrolment of patients began for the Company’s
lead clinical trial of Ortho‐ATI®, undertaken in
collaboration with DePuy Synthes Products, Inc.,
part of the Johnson & Johnson Medical Device
Companies. The objective of the study is to assess
the safety and effectiveness of Ortho‐ATI®
compared to corticosteroid injection in the
treatment of rotator cuff tendinopathy and tear,
and to demonstrate the cost effectiveness of
Ortho-ATI® as a minimally invasive injectable
treatment for resistant tendon injuries of the
elbow.
During the year the Company received numerous
international patents for its world leading tendon
regeneration therapy, Ortho-ATI®. Patents were
granted in Canada and Europe, increasing
Orthocell’s intellectual property (IP) protection of
Ortho-ATI® to include Canada, the USA, EU,
Australia, New Zealand, China, Singapore and
Hong Kong.
Consolidated Annual Report for the Year Ended 30 June 2018
6
DIRECTORS’ REPORT
Corporate
In October 2017, the Company received a
Research and Development (R&D) tax incentive
cash refund of $2,252,168 for the financial year
2016/2017. The R&D refund strengthened the
Company’s balance sheet and increased the
operational runway during a very active clinical
trial program for its collagen platform technology,
CelGro® and cellular therapy for tendon
regeneration, Ortho-ATI®.
During December 2017 and January 2018, the
Company successfully completed a share
placement (“Placement”) and a Share Purchase
Plan (“SPP”). The total amount raised under the
Placement and the SPP of A$2,884,901 and
existing cash reserves will be used to accelerate
the commercialisation of CelGro®, to progress US
regulatory approvals and to advance key studies
of Ortho-ATI® and other R&D pipeline products.
Investor Relations
During the year, the Company presented at
numerous leading national and international
investor and scientific congresses which
supported the international interest in the safety
and effectiveness of Orthocell’s products.
Presentations included:
Biotech Showcase™, San Francisco, US – In
January 2018, Orthocell provided an update to
key industry opinion leaders, potential partners
and investors on its key products. The Biotech
Showcase™ attracts over 3,000 attendees and
over 900 investors from more than 50 countries.
In addition to the conference, Orthocell also
met with leading healthcare companies and
investors over the course of the week.
AOA & APKASS, Sydney, Australia – In May
2018, Clinical Professor Allan Wang, Chief
Investigator and President of the Shoulder
Elbow Society of Australia, presented the
positive interim results from Orthocell’s study
designed to evaluate the performance of
CelGro® collagen medical device for tendon
regeneration. The biannual congress featured
over 100 international and domestic speakers.
TOBI regenerative medicine meeting, Las
Vegas, US – In June 2018, Orthocell presented
at the 9th Annual PRP & Regenerative
Medicine Symposium of The Orthobiologic
Institute (TOBI) an update of positive results
from a study of its tendon cell therapy for tennis
elbow. Results were presented by Dr Jeff
Hughes, treating orthopaedic surgeon, and
Professor Ming Hao Zheng, Chief Scientific
Officer at Orthocell
During March 2018 the Company made two
announcements of initiation of coverage. Randy
Hice, Chief Technical Officer and Member of the
Life Sciences Advisory Board of Cedrus
Investments, released a new research report on
Orthocell. Further, widely respected life sciences
industry analyst, Stuart Roberts of NDF Research,
initiated equity analyst coverage with the release
of a new report on Orthocell.
4. Dividends
No dividends were paid during the current or
previous financial years and no dividends have
been declared subsequent to the financial year
end and up to the date of this report.
5. Significant changes in the state of
affairs
During December 2017 and January 2018 the
Company completed a successful share
placement (“Placement”) and a Share Purchase
Plan (“SPP”). The total amount raised under the
Placement and the SPP of A$2,884,901 and
existing cash reserves will be used to accelerate
CelGro® commercialisation and progress US
regulatory approvals and key studies, advance
the development of Ortho-ATI® and other R&D
pipeline products.
There were no other significant changes in the
state of affairs of the consolidated entity during
the financial year.
6.
Likely developments and expected
results of operations
Having completed its successful capital raise in
January 2018, the Company will continue the
development and commercialisation of CelGro
and Ortho-ATI.
Following the receipt of EU market authorisation
(CE Mark) for CelGro®, Orthocell remains focused
Consolidated Annual Report for the Year Ended 30 June 2018
7
DIRECTORS’ REPORT
on executing its strategic market entry plans into
Europe for dental bone and soft tissue repair. This
incorporates the implementation of product
distribution channels, led by its key opinion
leaders, designed to optimise shareholder value.
The achievement of CE Mark validates CelGro®’s
manufacturing quality and product performance,
in addition to being allowed to be sold within the
EU, and provides a strong foundation for
expansion into other indications (such as tendon
and nerve indications) and regulatory approvals
outside the EU. Over the medium to long term,
Orthocell intends to leverage the CE Mark to
accelerate the introduction of the tendon and
soft tissue indications and achieve US regulatory
approvals, in parallel to ongoing development
and commercialisation of Ortho-ATI® and pipeline
products.
7. Environmental regulation
The consolidated entity is not subject to any
significant environmental regulation under
Australian Commonwealth or State law.
8. Therapeutic Goods Administration
regulation
Orthocell Limited is subject to Australian federal
legislation administered by the Therapeutic Goods
Administration (TGA). Orthocell hold a
manufacturing license (MI-19052008-LI-002420-11)
provided by the TGA for tissue processing, on site
storage and release for supply of autologous
tenocytes and chondrocytes.
9. Remuneration report (audited)
This Remuneration Report outlines the director and
executive remuneration arrangements of the
Company and the consolidated entity in
accordance with the requirements of the
Corporations Act 2001 and its Regulations. For the
purposes of this report Key Management
Personnel (KMP) of the consolidated entity are
defined as those persons having the authority and
responsibility for planning, directing and
controlling the major activities of the Company
and the consolidated entity, directly or indirectly,
including any director (whether executive or
otherwise) of the parent Company.
Remuneration Philosophy
The performance of the Company depends upon
the quality of its directors and executives. To
prosper, the Company must attract, motivate and
retain highly skilled directors and executives.
To this end, the Company embodies the following
principles in its remuneration framework:
• Provide competitive rewards to attract high
calibre executives.
•
Link executive rewards to shareholder value.
• A portion of executive remuneration may be
put ‘at risk’, dependent on meeting pre-
determined performance benchmarks.
• Where appropriate, establish performance
hurdles in relation to variable executive
remuneration.
Due to the early stage of development which the
Company is in, shareholder wealth is directly
affected by the Company share price, the
Company is not in a position to pay dividends. By
remunerating directors and Executives in part by
options, the Company aims to align the interests
of directors and executives with shareholder
wealth, thus providing individual incentive to
perform and thereby improving overall Company
performance and associated value.
Remuneration structure
Non-executive director remuneration
Objective
The Board seeks to set aggregate remuneration at
a level which provides the Company with the
ability to attract and retain directors of the highest
calibre, whilst incurring a cost which is acceptable
to shareholders.
Structure
The maximum aggregate amount of fees that
can be paid to non-executive Directors is subject
to approval by shareholders at General Meetings
and is currently set at $450,000.
The amount of aggregate directors’ fees sought
to be approved by shareholders and the manner
in which it is apportioned amongst directors will
be reviewed annually. The Board may consider
advice from external consultants as well as the
fees paid to non-executive directors of
Consolidated Annual Report for the Year Ended 30 June 2018
8
DIRECTORS’ REPORT
comparable companies when undertaking the
annual review process.
Each non-executive director receives a fee for
being a director of the Company. In addition, if a
director performs extra or special services beyond
their role as a director, the Board may resolve to
provide additional remuneration for such services.
Fees for directors are not linked to the
performance of the consolidated entity however,
to align all directors’ interests with shareholder
interests, directors are encouraged to hold shares
in the Company and may receive options. This
effectively links directors’ performance to the
share price performance and therefore to the
interests of shareholders. For this reason there are
no performance conditions prior to grant, but
instead an incentive to increase the value to all
shareholders.
Executive remuneration
Objective
The Company aims to reward executives (both
directors and Company executives) with a level
and mix of remuneration commensurate with their
position and responsibilities within the Company
so as to:
Attract and retain high quality individuals.
Reward executives for Company
performance.
Align the interest of executives with those of
shareholders.
Link reward with the strategic goals and
performance of the Company.
Ensure total remuneration is competitive by
market standards.
Structure
Executive remuneration consists of both fixed and
variable (at risk) elements.
Fixed Remuneration
Objective
The level of fixed remuneration is set so as to
provide a base level of remuneration which is
both appropriate to the position and is
competitive in the market.
Fixed remuneration is reviewed annually or upon
renewal of fixed term contracts by the Board and
the process consists of a review of Company and
individual performance, relevant comparative
remuneration in the market and internal policies
and practices.
Structure
Executives are given the opportunity to receive
their fixed remuneration in a variety of forms
including cash and fringe benefits. It is intended
that the manner of payment chosen will be
optimal for the recipient without creating undue
cost for the Company.
Variable Remuneration
Objective
The objective of variable remuneration provided is
to reward executives in a manner which aligns this
element of remuneration with the creation of
shareholder wealth.
Structure
Variable remuneration may be delivered in the
form of a cash bonuses, or share options. During
the financial year ended 30 June 2018 the
Company granted options to Executives as
detailed in the tables below.
The remuneration of executives for the years
ended 30 June 2017 and 30 June 2018 are
detailed in the tables below.
Details of remuneration:
Amounts of remuneration
Details of the remuneration of the key
management personnel of the consolidated
entity are set out in the following tables.
The key management personnel of the
consolidated entity consisted of the following
directors of Orthocell Limited:
Dr Stewart Washer
-
Executive Chairman
Mr Paul Anderson
- Managing Director
Mr Matthew Callahan
- Non-Executive Director
Prof Lars Lidgren
-
Independent Non-Executive Director
Mr Qi Xiao Zhou
- Non-Executive Director
Consolidated Annual Report for the Year Ended 30 June 2018
9
DIRECTORS’ REPORT
Key management personnel remuneration details:
Short-term benefits
Cash salary
and fees
$
Bonus(1)
$
Post-
employment
benefits
Super-
annuation
$
Long-term
benefits
Long Service
Leave
$
Share-
based
payments
Total
$
$
Performance
related
%
2018
Non-executive Directors:
Mr M Callahan
Prof L Lidgren
Mr QX Zhou
120,000
45,000
41,100
-
-
-
-
-
3,900
-
-
-
66,353
10,760
10,760
186,353
55,760
55,760
35.6%
19.3%
19.3%
Executive Directors:
Mr P Anderson
Dr S Washer
365,000
150,000
91,250
-
51,657
-
6,657
-
82,493
66,353
597,057
216,353
29.1%
30.7%
Total
721,100
91,250
55,557
6,657
236,719
1,111,283
29.5%
Short-term benefits
Cash salary
and fees
$
Bonus(1)
$
Post-
employment
benefits
Super-
annuation
$
Long-term
benefits
Long Service
Leave
$
Share-
based
payments
Total
$
$
Performance
related
%
2017
Non-executive Directors:
Mr M Callahan
Prof L Lidgren
Mr QX Zhou
120,000
45,000
41,100
-
-
-
-
-
3,900
-
-
-
-
-
-
120,000
45,000
45,000
0.0%
0.0%
0.0%
Executive Directors:
Mr P Anderson
Dr S Washer
350,000
150,000
87,500
-
40,375
-
13,832
-
41,600
-
533,307
150,000
24.2%
0.0%
Total
706,100
87,500
44,275
13,832
41,600
893,307
14.5%
(1) Discretionary bonus as approved by the board.
Share-based compensation
During the year ended 30 June 2018 the following share-based payments of options were made to key
management personnel for nil consideration:
Grant date
7 May 2018
Exercise price
$0.395
Expiry date
8 May 2021
No. issued
6,600,000
Fair value per option
$0.1076
Total fair value
$710,160
The options vest 33% on grant, 33% one year from date of grant, and 34% two years from date of grant.
During the year ended 30 June 2018 $236,719 of the options were recognised as vested.
During the year ended 30 June 2017 the following share-based payments of options were made to key
management personnel for nil consideration:
Grant date
13 Oct 2016
Exercise price
$0.624
Expiry date
12 Oct 2019
No. issued
250,000
Fair value per option
$0.1660
Total fair value
$41,600
Consolidated Annual Report for the Year Ended 30 June 2018
10
DIRECTORS’ REPORT
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the Company held during the financial year by each director and other members
of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Balance
30/06/2017
Additions
Disposals/
Other
Balance
30/06/2018
Ordinary shares:
Mr Paul Anderson
Mr Matthew Callahan(1)
Professor Lars Lidgren
Dr Stewart Washer
Mr Qi Xiao Zhou
6,973,750
10,204,559
964,091
475,261
5,996,241
58,805
73,323
44,118
75,150
-
24,613,902
251,396
-
-
-
-
-
-
7,032,555
10,277,882
1,008,209
550,411
5,996,241
24,865,298
There were no shares issued as part of directors’ remuneration during the financial year.
Mr Callahan is a founder and director of Stone Ridge Ventures Pty Ltd which is the manager of the SRV Tech
(1)
Trust, a venture capital fund. Mr Callahan’s interest in shares is held indirectly through: a) SRV Custodians Pty Ltd as
trustee for the SRV Tech Trust which is the venture capital fund (574,026 shares) in respect of which AustralianSuper
Investments Pty Ltd, as trustee of the AustralianSuper Private Equity Trust is the sole unit holder; and b) SRV Nominees Pty
Ltd as trustee for the SRV Trust which is the carry trust for the SRV Tech Trust (40,154 shares). Mr Callahan is considered to
have a relevant interest in these shares due to his position as a director or shareholder of the respective trustee
companies and holds a beneficial interest in the SRV Trust.
Options / warrants holdings
The number options/warrants over ordinary shares in the Company held during the financial year by each
director and other members of key management personnel of the consolidated entity, including their
personally related parties, is set out below:
Balance
at the start
of year
Options
granted
Options
exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Options
vested &
exercisable
Options / warrants
over ordinary shares:
Mr Paul Anderson
Dr Stewart Washer
Mr Matthew Callahan
Professor Lars Lidgren
Mr Qi Xiao Zhou
3,013,692
1,745,842
1,650,000
204,767
204,767
3,150,000
1,850,000
1,850,000
300,000
300,000
-
-
-
-
-
(2,750,000)
(1,650,000)
(1,650,000)
(150,000)
(150,000)
3,413,692
1,945,842
1,850,000
354,767
354,767
3,413,692
1,945,842
1,850,000
354,767
354,767
(1) During the year 850,000 options were issued to the Company’s Chief Financial Officer Nicole Telford, Mr Anderson’s
spouse. These are included in the above table.
There were no other transactions with key management personnel.
Consolidated Annual Report for the Year Ended 30 June 2018
11
DIRECTORS’ REPORT
Employment Contracts
The Company has entered into employment
agreements with the following key employees
(each an Executive) on the following material
terms and conditions.
Mr Paul Anderson
Position:
Salary:
Short-term
incentive:
Notice
period:
Managing Director
$365,000pa plus superannuation
A bonus of a maximum of 25% of
Base Salary may be payable
each year subject to
achievement of key
performance indicators to be
agreed by the Board
6 months
Under the employment agreement:
either party may terminate the
(i)
employment agreement by providing the amount
of notice set out in the table above. The
Company may terminate the agreement without
notice (and without having to pay the Executive
an amount in lieu of notice) if the Executive
engages in serious or wilful misconduct;
the Executive is entitled to 20 days annual
(ii)
leave and 10 days personal leave per annum,
and to long service leave and other paid and
unpaid leave in accordance with applicable
legislation;
the Executive acknowledges that
(iii)
intellectual property created by the Executive will
be owned by the Company;
the Executive agrees to keep confidential
(iv)
information secret and confidential except to the
extent required by law; and
during the employment and for a period
(v)
of 12 months post-employment (or less if a court
finds 12 months to be invalid), the Executive
agrees not to carry on any business that
competes with the business of the Company,
solicit, employ or engage any director, employee
or contractor of the Company, or entice, provide
services to, or accept services from any customer,
contractor or supplier of the Company to
discontinue their relationship with the Company or
otherwise reduce the amount of business they do
with the Company. This restraint applies in
Australia and New Zealand, or if a court finds this
invalid, across, Australia, or if a court finds this
invalid, across Western Australia.
Consulting arrangements
The Company has entered into the consulting
agreements with the parties set out below under
which directors Mr Matthew Callahan and Dr
Stewart Washer are to provide services to the
Company. The key terms of the consulting
agreements are as follows:
Mr Matthew Callahan / Bocca Consulting Pty Ltd
Consulting fee
$1,500 per day
Consulting services:
Advisory services to the Company on general
matters relating to the Company’s business,
identifying, evaluating and developing new
opportunities, performing duties as a non-
executive director and any other duties as may
be delegated by the Board from time to time.
Dr Stewart Washer / Biologica Ventures Pty Ltd
Consulting fee
$150,000 per annum
Consulting services:
Services to the Company in relation to acting as
Chairman of the Company. The Company and Dr
Washer acknowledge that Dr Washer will be the
Executive Chairman of the Company pursuant to
this consultancy agreement.
The Company can terminate a consulting
agreement on 3 months’ notice. The Company
may terminate the agreement without notice
(and without having to pay the Consultant an
amount in lieu of notice) if the Consultant or the
Key Employee is guilty of gross misconduct, the
Key Employee dies, or becomes permanently
incapacitated or incapacitated for a period of 2
months in any 6 month period, the Consultant or
the Key Employee breaches the agreement and
does not rectify the breach, the Key Employee
ceases to be a Director, the Consultant or the Key
Employee fails to provide the services under the
agreement or breaches the covenants under the
agreement. The Consultant may terminate the
agreement by 6 months’ notice or by notice if the
Company breaches the agreement or fails to
observe any provision and has not adequately
Consolidated Annual Report for the Year Ended 30 June 2018
12
DIRECTORS’ REPORT
responded to the breach or non-observance
within 15 days.
The consultants and the key employees
acknowledges that intellectual property created
by them in providing services under the
agreements will be owned by the Company, and
undertakes not to divulge any confidential
information except so far as may be necessary in
connection with the proper performance of their
obligations to the Company under the
agreement or with the consent of the Company.
Non-Executive Directors letters of appointment
Pursuant to letters of continuing appointment Mr
Callahan, Professor Lars Lidgren and Mr Qi Xiao
Zhou are continuing their appointments to the
Board as a Non-Executive Directors following
listing. Mr Callahan, Professor Lars Lidgren and Mr
Qi Xiao Zhou will each be paid a directors fee of
$45,000 per annum.
Mr Callahan, Professor Lars Lidgren and Mr Qi Xiao
Zhou are also entitled to fees or other amounts as
the Board determines where they perform special
duties or otherwise perform special duties or
otherwise perform services outside the scope of
the ordinary duties of a director. They may also be
reimbursed for all reasonable and properly
documented expenses incurred in performing
their duties.
This concludes the remuneration report, which has
been audited.
10. Directors’ and Officers’ deeds of
indemnity, access and insurance
The Company has entered into a deed of
indemnity, access and insurance with each of its
Directors and the Company Secretary. Under
these deeds, the Company agrees to indemnify
each officer to the extent permitted by law
against any loss which the officer may incur, or be
liable for, arising from or in connection with the
officer acting as an officer of the Company.
Under the deeds, the Company is also required to
enter into an insurance policy for the benefit of
the officer that insures the officer for all liability to
which the officer is exposed in providing services
in the capacity of an officer of the Company for
which insurance may be legally obtained. When
the policy expires, the Company must ensure that
it maintains an insurance policy for the officer
during the officer’s term of appointment that is on
terms no less favourable to the officer (subject to
the ability of the Company to reduce the scope
of the insurance to the extent it considers
reasonable, if it is determined that the cost of
maintaining it is such that it is not in the interests of
the Company to maintain it, or the Company is
unable to obtain the insurance on reasonable
terms).
11. Shares under option
At the date of this report the following options
and warrants are on issue:
Grant date
Expiry date Exercise
19/11/2015
26/02/2016
13/10/2016
13/12/2016
13/12/2016
10/03/2017
19/06/2017
07/05/2018
07/05/2018
19/11/2020
26/02/2019
12/10/2019
13/12/2019
13/12/2020
10/03/2020
19/06/2020
08/05/2021
08/05/2021
price
$0.580
$0.560
$0.624
$0.648
$0.550
$0.594
$0.510
$0.340
$0.395
Number of
options/warrants
12,122,237
1,350,000
650,000
490,000
600,000
40,000
200,000
1,100,000
11,090,000
12. Shares issued on the exercise of
options
There were no shares of the Company issued
during the year ended 30 June 2018 and up to
the date of this report on the exercise of options
granted.
13. Indemnity and insurance of officers
The Company has indemnified the directors and
executives of the Company 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 Company paid a
premium of $20,549 in respect of this policy.
Consolidated Annual Report for the Year Ended 30 June 2018
13
DIRECTORS’ REPORT
14. 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.
15. 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.
16. Matters subsequent to the end of the
financial year
No matter or circumstance has arisen since 30
June 2018 that has significantly affected, or may
significantly affect the consolidated entity's
operations, the results of those operations, or the
consolidated entity's state of affairs in future
financial years.
17. Non-audit services
Details of the amounts paid or payable to the
auditor for non-audit services provided during the
financial year by the auditor are outlined in note
21 to the consolidated financial statements.
The directors are satisfied that the provision of
non-audit services during the financial year, by
the auditor (or by another person or firm on the
auditor's behalf), is compatible with the general
standard of independence for auditors imposed
by the Corporations Act 2001.
The directors are of the opinion that the services
as disclosed in note 21 to the consolidated
financial statements do not compromise the
external auditor's independence requirements of
the Corporations Act 2001 for the following
reasons:
• all non-audit services have been reviewed and
approved to ensure that they do not impact
the integrity and objectivity of the auditor; and
• none of the services undermine the general
principles relating to auditor independence as
set out in APES 110 Code of Ethics for
Professional Accountants issued by the
Accounting Professional and Ethical Standards
Board, including reviewing or auditing the
auditor's own work, acting in a management
or decision-making capacity for the Company,
acting as advocate for the Company or jointly
sharing economic risks and rewards.
18. Officers of the Company who are
former audit partners of PKF Mack
There are no officers of the Company who are
former audit partners of PKF Mack.
19. 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 on the following
page.
20. Auditor
PKF Mack continues in office in accordance with
section 327 of the Corporations Act 2001.
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
Mr Paul Anderson
Managing Director
31 August 2018
Perth
Consolidated Annual Report for the Year Ended 30 June 2018
14
AUDITOR’S INDEPENDENCE DECLARATION
Consolidated Annual Report for the Year Ended 30 June 2018
15
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2018
Revenue
Sales revenue
Cost of goods sold
Gross profit
Other revenue
Expenses
Research & development
Administrative & general
Sales & marketing
Loss before income tax expense
Income tax benefit
Loss after income tax expenses
Other comprehensive income
Note
2018
$
2017
$
3
4
3
4
5
619,179
(469,886)
529,818
(438,137)
149,293
91,681
283,503
546,770
(4,634,646)
(2,021,651)
(1,785,781)
(8,442,078)
(3,914,268)
(1,784,946)
(1,064,651)
(6,763,865)
(8,009,282)
(6,125,414)
2,252,168
1,947,998
(5,757,114)
(4,177,416)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss
(5,757,114)
(4,177,416)
Loss per share
Basic earnings per share
Diluted earnings per share
29
29
$
(0.055)
(0.055)
$
(0.043)
(0.043)
Note: the above statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes
Consolidated Annual Report for the Year Ended 30 June 2018
16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employment benefits
Other
Total current liabilities
Non-current liabilities
Other
Total non-current liabilities
Total liabilities
Net assets
Equity
Issue capital
Reserves
Accumulated losses
Total equity
Note
2018
$
2017
$
6
7
8
9
2,910,233
170,024
53,816
94,897
5,046,257
116,848
88,397
33,887
3,228,970
5,285,389
10
11
341,059
1,659,835
357,813
1,515,694
2,000,894
1,873,507
5,229,864
7,158,896
12
13
14
1,216,323
467,898
748,293
1,074,700
428,074
376,791
2,432,514
1,879,565
15
425,148
566,844
425,148
566,844
2,857,662
2,446,409
2,372,202
4,712,487
16
17
18
25,984,676
1,025,612
(24,638,086)
23,102,888
1,288,976
(19,679,377)
2,372,202
4,712,487
Note: the above statement of financial position should be read in conjunction with the accompanying notes
Consolidated Annual Report for the Year Ended 30 June 2018
17
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Issued
Capital
$
Share-based
payment
reserve
$
Accumulated
losses
Total equity
$
$
Balance at 1 July 2016
19,359,578
1,026,980
(15,501,961)
4,884,597
Loss after income tax expense
Other comprehensive income, net of tax
Total comprehensive income
Transactions with owners in their capacity
as owners:
Contributions of equity
Share equity costs
Issue of options
-
-
-
4,000,000
(256,690)
-
-
-
-
-
-
261,996
(4,177,416)
(4,177,416)
-
-
(4,177,416)
(4,177,416)
-
-
-
4,000,000
(256,690)
261,996
Balance at 30 June 2017
23,102,888
1,288,976
(19,679,377)
4,712,487
Balance at 1 July 2017
23,102,888
1,288,976
(19,679,377)
4,712,487
Loss after income tax expense
Other comprehensive income, net of tax
Total comprehensive income
Transactions with owners in their capacity
as owners:
Contributions of equity
Share equity costs
Expiry of options
Issue of options
-
-
-
2,957,500
(75,712)
-
-
-
-
-
-
-
(5,757,114)
(5,757,114)
-
-
(5,757,114)
(5,757,114)
-
-
2,957,500
(75,712)
(798,405)
798,405
-
535,041
-
535,041
Balance at 30 June 2018
25,984,676
1,025,612
(24,638,086)
2,372,202
Note: the above statement of changes in equity should be read in conjunction with the accompanying notes
Consolidated Annual Report for the Year Ended 30 June 2018
18
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers & employees (inclusive of GST)
Receipts from license fees and royalties
Grants received
R&D tax concession received
Interest received
Note
2018
$
2017
$
561,853
(7,587,697)
-
110,955
2,252,168
18,469
986,095
(6,527,317)
2,097
-
1,947,998
35,747
Net cash used in operating activities
28
(4,644,252)
(3,555,380)
Cash flows from investing activities
Payments for intangible assets
Payments for property, plant & equipment
Net cash used in investing activities
Cash flows from financing activities
Share subscription funds received
Share equity costs
Net cash from financing activities
(286,377)
(87,183)
(255,538)
(107,947)
(373,560)
(363,485)
2,957,500
(75,712)
4,000,000
(216,690)
2,881,788
3,783,310
Net increase in cash and cash equivalents
(2,136,024)
135,555
Cash and cash equivalents at the beginning of the financial year
5,046,257
5,181,812
Cash and cash equivalents at the end of the financial year
2,910,233
5,046,257
Note: the above consolidated statement of cash flows should be read in conjunction with the
accompanying notes
Consolidated Annual Report for the Year Ended 30 June 2018
19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant accounting policies
The principal accounting policies adopted in the preparation of the consolidated financial statements are
set out below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
New, revised or amending Accounting Standards
and Interpretations adopted
The consolidated entity has adopted all of the
new, revised or amending Accounting Standards
and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are
mandatory for the current reporting period.
Any new, revised or amending Accounting
Standards or Interpretations that are not yet
mandatory have not been early adopted.
The adoption of these Accounting Standards and
Interpretations did not have any significant
impact on the financial performance or position
of the consolidated entity.
Basis of preparation
These general purpose consolidated 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 consolidated
financial statements also comply with
International Financial Reporting Standards as
issued by the International Accounting Standards
Board ('IASB').
The financial statements cover Orthocell Limited
as a consolidated entity consisting of Orthocell
Limited and its subsidiary. Orthocell Limited is a
listed public company limited by shares,
incorporated and domiciled in Australia.
A description of the nature of the consolidated
entity’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 30
August 2018. The directors have the power to
amend and reissue the financial statements.
Historical cost convention
The consolidated financial statements have been
prepared under the historical cost convention,
except for, where applicable, the revaluation of
available-for-sale financial assets, financial assets
and liabilities at fair value through profit or loss,
investment properties, certain classes of property,
plant and equipment and derivative financial
instruments.
Critical accounting estimates
The preparation of the consolidated financial
statements requires the use of certain critical
accounting estimates. It also requires
management to exercise its judgement in the
process of applying the consolidated entity's
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas
where assumptions and estimates are significant
to the consolidated financial statements are
disclosed in note 2.
Parent entity information
In accordance with the Corporations Act 2001,
these consolidated financial statements present
the results of the consolidated entity only.
Supplementary information about the parent
entity is disclosed in note 26.
Going Concern
The Group has net assets of $2,372,202 (2017:
$4,712,487) as at 30 June 2018 and incurred a loss
of $5,757,114 (2017: $4,177,416) and net operating
cash outflow of $4,644,252 (2017: $3,555,380) for
the period ended 30 June 2018.
The Group’s ability to continue as a going
concern and meet its debts and future
commitments as and when they fall due is
dependent on the Company’s ability to raise
sufficient working capital to ensure the continued
implementation of the Group’s business strategy.
The financial report has been prepared on a
going concern basis. In arriving at this position the
directors have had regard to the fact that the
Company has, or in the directors’ opinion will
Consolidated Annual Report for the Year Ended 30 June 2018
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
have access to, sufficient cash to fund
administrative and other committed expenditure
for a period of not less than 12 months from the
date of this report. In the event that the Group
does not achieve the above actions, there exists
a material uncertainty as to whether the Group
will be able to continue as a going concern and
realise its assets and extinguish its liabilities in the
normal course of business.
Principles of consolidation
The consolidated financial statements incorporate
the assets and liabilities and results of Orthocell
Limited ('Company' or 'parent entity') and its
subsidiary Ausbiomedical Pty Ltd as at 30 June
2018. Orthocell Limited and its subsidiary together
are referred to in these consolidated financial
statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the
consolidated entity has control. The consolidated
entity controls an entity when the consolidated
entity 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 consolidated
entity. They are de-consolidated from the date
that control ceases.
Intercompany transactions, balances and
unrealised gains on transactions between entities
in the consolidated entity 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 consolidated
entity.
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.
Non-controlling interest in the results and equity of
subsidiaries are shown separately in the statement
of profit or loss and other comprehensive income,
statement of financial position and statement of
changes in equity of the consolidated entity.
Losses incurred by the consolidated entity are
attributed to the non-controlling interest in full,
even if that results in a deficit balance.
Where the consolidated entity 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 consolidated entity 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.
Operating segments
Operating segments are presented using the
'management approach', where the information
presented is on the same basis as the internal
reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments
and assessing their performance.
Foreign currency translation
The consolidated financial statements are
presented in Australian dollars, which is Orthocell
Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into
Australian dollars 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.
Revenue recognition
Revenue is recognised when it is probable that
the economic benefit will flow to the
consolidated entity and the revenue can be
reliably measured. Revenue is measured at the
fair value of the consideration received or
receivable.
Sale of goods
Sale of goods revenue is recognised at the point
of sale, which is where the customer has taken
Consolidated Annual Report for the Year Ended 30 June 2018
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
delivery of the goods, the risks and rewards are
transferred to the customer and there is a valid
sales contract. Amounts disclosed as revenue are
net of sales returns and trade discounts.
Research and development tax incentive
The research and development tax incentives are
recognised at their fair value on receipt when all
conditions have been complied with. The
research and development tax incentives are
recognised as income tax benefits in the
consolidated statements of profit or loss and other
comprehensive income.
Interest
Interest revenue is recognised when it is received
or due to be received.
Other revenue
Other revenue is recognised when it is received or
when the right to receive payment is established.
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 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 apply 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
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
entity's which intend to settle simultaneously.
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 current when it is expected to be
realised or intended to be sold or consumed in
normal operating cycle, it is held primarily for the
purpose of trading, it is expected to be realised
within twelve 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 twelve months after the
reporting period. All other assets are classified as
non-current.
A liability is current when it is expected to be
settled in normal operating cycle, it is held
primarily for the purpose of trading, it is due to be
settled within twelve months after the reporting
period, or there is no unconditional right to defer
the settlement of the liability for at least twelve
months after the reporting period. All other
liabilities are classified as non-current.
Deferred tax assets and liabilities are always
classified as non-current.
Cash and cash equivalents
Consolidated Annual Report for the Year Ended 30 June 2018
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents includes cash on
hand, deposits held at call with financial
institutions, other short-term, highly liquid
investments with original maturities of three
months or less that are readily convertible to
known amounts of cash and which are subject to
an insignificant risk of changes in value.
Trade and other receivables
Trade receivables are initially recognised at fair
value and subsequently measured at amortised
cost using the effective interest method, less any
provision for impairment. Trade receivables are
generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on
an ongoing basis. Debts which are known to be
uncollectable are written off by reducing the
carrying amount directly. A provision for
impairment of trade receivables is raised when
there is objective evidence that the consolidated
entity will not be able to collect all amounts due
according to the original terms of the receivables.
Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy
or financial reorganisation and default or
delinquency in payments (more than 60 days
overdue) are considered indicators that the trade
receivable may be impaired.
The amount of the impairment allowance is the
difference between the asset's carrying amount
and the present value of estimated future cash
flows, discounted at the original effective interest
rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is
immaterial.
Other receivables are recognised at amortised
cost, less any provision for impairment.
Inventories
Inventory relates to work in progress which consists
of the costs of patients’ cells being held in the
laboratory awaiting delivery and implantation into
the patient. Inventory items are stated at the
lower of cost and net realisable value. Inventory
comprises direct materials, direct labour and an
appropriate proportion of variable and fixed
overhead expenditure based on normal
operating capacity.
As indicated in Note 2, when making the decision
whether inventory items should be carried forward
in the statement of financial position, or written
off, management must consider the likelihood of
whether each particular patient will proceed to
implantation. This requires a degree of estimation
and judgement based on historical sales
experience, the ageing of the inventories and
other demographic and market factors.
At present management consider that 2 years is a
reasonable period of time to hold inventory in the
statement of financial position for each patient
unless there is further particular information that
would indicate otherwise. This policy is reviewed
annually.
Net realisable value is the estimated selling price
in the ordinary course of business less the
estimated costs of completion and the estimated
costs necessary to make the sale.
Investments and other financial assets
Investments and other financial assets are initially
measured at fair value. Transaction costs are
included as part of the initial measurement,
except for financial assets at fair value through
profit or loss. They are subsequently measured at
either amortised cost or fair value depending on
their classification. Classification is determined
based on the purpose of the acquisition and
subsequent reclassification to other categories is
restricted.
Financial assets are derecognised when the rights
to receive cash flows from the financial assets
have expired or have been transferred and the
consolidated entity has transferred substantially all
the risks and rewards of ownership.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
are either: i) held for trading, where they are
acquired for the purpose of selling in the short-
term with an intention of making a profit; or ii)
designated as such upon initial recognition, where
they are managed on a fair value basis or to
eliminate or significantly reduce an accounting
mismatch.
Except for effective hedging instruments,
derivatives are also categorised as fair value
through profit or loss. Fair value movements are
recognised in profit or loss.
Consolidated Annual Report for the Year Ended 30 June 2018
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Available-for-sale financial assets
Available-for-sale financial assets are non-
derivative financial assets, principally equity
securities, which are either designated as
available-for-sale or not classified as any other
category. After initial recognition, fair value
movements are recognised in other
comprehensive income through the available-for-
sale reserve in equity. Cumulative gain or loss
previously reported in the available-for-sale
reserve is recognised in profit or loss when the
asset is derecognised or impaired.
Impairment of financial assets
The consolidated entity assesses at the end of
each reporting period whether there is any
objective evidence that a financial asset or group
of financial assets is impaired. Objective evidence
includes significant financial difficulty of the issuer
or obligor, a breach of contract such as default or
delinquency in payments, the lender granting to a
borrower concessions due to economic or legal
reasons that the lender would not otherwise do, it
becomes probable that the borrower will enter
bankruptcy or other financial reorganisation, the
disappearance of an active market for the
financial asset, or observable data indicating that
there is a measurable decrease in estimated
future cash flows.
The amount of the impairment allowance for
financial assets carried at cost is the difference
between the asset's carrying amount and the
present value of estimated future cash flows,
discounted at the current market rate of return for
similar financial assets.
Available-for-sale financial assets are considered
impaired when there has been a significant or
prolonged decline in value below initial cost.
Subsequent increments in value are recognised in
other comprehensive income through the
available-for-sale reserve.
Leases
The determination of whether an arrangement is
or contains a lease is based on the substance of
the arrangement and requires an assessment of
whether the fulfilment of the arrangement is
dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the
asset.
A distinction is made between finance leases,
which effectively transfer from the lessor to the
lessee substantially all the risks and benefits
incidental to ownership of leased assets, and
operating leases, under which the lessor
effectively retains substantially all such risks and
benefits.
Finance leases are capitalised. A lease asset and
liability are established at the fair value of the
leased assets, or if lower, the present value of
minimum lease payments. Lease payments are
allocated between the principal component of
the lease liability and the finance costs, so as to
achieve a constant rate of interest on the
remaining balance of the liability.
Leased assets acquired under a finance lease are
depreciated over the asset's useful life or over the
shorter of the asset's useful life and the lease term
if there is no reasonable certainty that the
consolidated entity will obtain ownership at the
end of the lease term.
Operating lease payments, net of any incentives
received from the lessor, are charged to profit or
loss on a straight-line basis over the term of the
lease.
Property, 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 (excluding land) over their
expected useful lives as follows:
Leasehold improvements
Plant & equipment
Computer software
Furniture & fittings
Straight line
Diminishing value
Straight line
Diminishing value
40 yrs
3-7 yrs
2-3 yrs
10-15 yrs
The residual values, useful lives and depreciation
methods are reviewed, and adjusted if
appropriate, at each reporting date.
Leasehold improvements and plant and
equipment under lease are depreciated over the
unexpired period of the lease or the estimated
useful life of the assets, whichever is shorter.
An item of property, plant and equipment is
derecognised upon disposal or when there is no
Consolidated Annual Report for the Year Ended 30 June 2018
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
future economic benefit to the consolidated
entity. Gains and losses between the carrying
amount and the disposal proceeds are taken to
profit or loss. Any revaluation surplus reserve
relating to the item disposed of is transferred
directly to retained profits.
Intangible assets
Intangible assets acquired as part of a business
combination, other than goodwill, are initially
measured at their fair value at the date of the
acquisition. Intangible assets acquired separately
are initially recognised at cost. Indefinite life
intangible assets are not amortised and are
subsequently measured at cost less any
impairment. Finite life intangible assets are
subsequently measured at cost less amortisation
and any impairment.
The gains or losses recognised in profit or loss
arising from the derecognition of intangible assets
are measured as the difference between net
disposal proceeds and the carrying amount of
the intangible asset. The method and useful lives
of finite life intangible assets are reviewed
annually. Changes in the expected pattern of
consumption or useful life are accounted for
prospectively by changing the amortisation
method or period.
Research and development
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 consolidated entity is able
to use or sell the asset, the consolidated entity has
sufficient resources, and intent to complete the
development and its costs can be measured
reliably. Capitalised development costs are
amortised on a straight-line basis over the period
of their expected benefit, being their finite life of
10 years.
Patents and trademarks
Significant costs associated with patents and
trademarks are deferred and amortised on a
straight-line basis over the period of their
expected benefit, being their finite life of 20 years.
Capitalisation commences on application for the
patents or trademark. Amortisation commences
once the patent or trademark has been granted
over the remaining useful life of the patent. The
useful life is taken as 20 years from the date of
application. Patents and trademarks are sought
globally in various jurisdictions. If a patent or
trademark is unsuccessful the costs are then fully
written off. All patents and trademarks once
granted have an annuity commitment over the
term of their life and these are detailed in note 24.
Impairment of non-financial assets
Goodwill and other intangible assets that have an
indefinite useful life are not subject to amortisation
and are tested annually for impairment or more
frequently if events or changes in circumstances
indicate that they might be impaired. Other non-
financial assets are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair
value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated
future cash flows relating to the asset using a pre-
tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets
that do not have independent cash flows are
grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and
services provided to the consolidated entity prior
to the end of the financial year and which are
unpaid. Due to their short-term nature they are
measured at amortised cost and are not
discounted. The amounts are unsecured and are
usually paid within 30 days of recognition.
Employee benefits
Other long-term employee benefits
The liability for annual leave and long service
leave not expected to be settled within 12 months
of the reporting date is recognised in non-current
liabilities, provided there is an unconditional right
to defer settlement of the liability. The liability is
measured at current value and is not discounted
if the effect of discounting is immaterial.
Consideration is given to expected future wage
and salary levels, experience of employee
departures and periods of service.
Consolidated Annual Report for the Year Ended 30 June 2018
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Short-term employee benefits
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and long service
leave expected to be settled within 12 months of
the reporting date are recognised in current
liabilities in respect of employees' services up to
the reporting date and are measured at the
amounts expected to be paid when the liabilities
are settled.
Defined contribution superannuation expense
Contributions to defined contribution
superannuation plans are expensed in the period
in which they are incurred.
Share-based payments
Equity-settled share-based compensation benefits
are provided to employees.
Equity-settled transactions are awards of shares,
or options over shares, which are provided to
employees in exchange for the rendering of
services.
The costs 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 impact of dilution, the share price at
grant date and expected price volatility of the
underlying share, the expected dividend yield
and the risk free interest rate for the term of the
option, together with non-vesting conditions that
do not determine whether the consolidated entity
receives the services that entitle the employees to
receive payment. No account is taken of any
other vesting conditions.
The costs 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 consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation. If
the condition is not within the control of the
consolidated entity 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, it is treated
as if it has 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.
Fair value measurement
When an asset or liability, financial or non-
financial, is measured at fair value for recognition
or disclosure purposes, the fair value is based on
the price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date and assumes that the
transaction will take place either in the principle
market or in the absence of a principal market in
the most advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their
economic best interest. For non-financial assets,
the fair value measurement is based on its highest
and best use. Valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair
value, are used, maximising the use of relevant
observable inputs and minimising the use of
unobservable inputs.
Consolidated Annual Report for the Year Ended 30 June 2018
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Assets and liabilities measured at fair value are
classified, into three levels, using a fair value
hierarchy that reflects the significance of the
inputs used in making the measurements.
Classifications are reviewed each reporting date
and transfers between levels are determined
based on a reassessment of the lowest level input
that is significant to the fair value measurement.
For recurring and non-recurring fair value
measurements, external valuers may be used
when internal expertise is either not available or
when the valuation is deemed to be significant.
External valuers are selected based on market
knowledge and reputation. Where there is a
significant change in fair value of an asset or
liability from one period to another, an analysis is
undertaken, which includes a verification of the
major inputs applied in the latest valuation and a
comparison, where applicable, with external
sources of data.
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.
Dividends
Dividends are recognised when declared during
the financial year and no longer at the discretion
of the Company.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing
the profit attributable to the shareholders of the
Company, excluding any costs of servicing equity
other than ordinary shares, by the weighted
average number of ordinary shares outstanding
during the financial year, adjusted for 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.
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 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.
Commitments and contingencies are disclosed
net of GST recoverable from, or payable to, the
tax authority.
Consolidated Annual Report for the Year Ended 30 June 2018
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 consolidated entity for the annual reporting period ended 30 June 2018. The consolidated entity has not
assessed of the impact of these new or amended Accounting Standards and Interpretations, except as noted.
AASB No.
Title
AASB 9
Financial Instruments
Application
date *
Issue date
1 Jan 2018
Dec 2014
AASB 2010-7
Amendments arising from Accounting Standards arising from AASB 9 (Dec 2010)
1 Jan 2018
Sep 2012
AASB 2014-1
Amendments to Australian Accounting Standards, Part E - Financial Instruments
Part E - 1 Jan
2018
Jun 2014
AASB 2014-5
Amendments to Australian Accounting Standard Arising From AASB 15
1 Jan 2018
Dec 2014
AASB 2014-7
Amendments to Australian Accounting Standard Arising From AASB 9 (Dec 2014)
1 Jan 2018
Dec 2014
AASB 2014-10
Amendments to Australian Accounting Standard – Sale of Contribution of Assets
Between Investors and its Associates or Joint Venture
1 Jan 2018
Dec 2014
AASB 2015-8
Amendments to Australian Accounting Standards – Effective Date of AASB 15
1 Jan 2018
Oct 2015
AASB 2015-10
Amendments to Australian Accounting Standards – Effective Date of Amendments
to AASB 10 and AASB 128.
1 Jan 2018
Dec 2015
AASB 2016-5
AASB 2016-6
AASB 2016-8
AASB 2017-1
Amendments to Australian Accounting Standards – Classification and
Measurement of Share-based Payment Transactions [AASB 2]
1 Jan 2018
Jul 2016
Amendments to Australian Accounting Standards – Applying AASB 9 Financial
Instruments with AASB 4 Insurance Contracts [AASB 4]
1 Jan 2018
Oct 2016
Amendments to Australian Accounting Standards – Australian Implementation
Guidance for Not-for-Profit Entities
1 Jan 2019
Dec 2016
Amendments to Australian Accounting Standards – Transfers of Investment
Property, Annual Improvements 2014-2016 Cycle and Other Amendments
1 Jan 2018
Feb 2017
AASB 2017-3
Amendments to Australian Accounting Standards – Clarifications to AASB 4
1 Jan 2018
Jul 2017
AASB 2017-4
AASB 2017-5
AASB 2017-6
AASB 2017-7
AASB 2018-1
AASB 2018-2
AASB 15
AASB 16
AASB 17
AASB 1058
AASB 1059
AASB
Interpretation 22
AASB
Interpretation 23
Not yet issued by
the AASB
Amendments to Australian Accounting Standards – Uncertainty over Income Tax
Treatments
1 Jan 2019
Jul 2017
Amendments to Australian Accounting Standards – Effective Date of Amendments
to AASB 10 and AASB 128 and Editorial Corrections
1 Jan 2018
Dec 2017
Amendments to Australian Accounting Standards – Prepayment Features with
Negative Compensation
1 Jan 2019
Oct 2017
Amendments to Australian Accounting Standards – Long-term Interests in
Associates and Joint Ventures
1 Jan 2019
Dec 2017
Amendments to Australian Accounting Standards – Annual Improvements 2015-
2017 Cycle
1 Jan 2019
Feb 2018
Amendments to Australian Accounting Standards – Plan Amendment, Curtailment
or Settlement
1 Jan 2019
Mar 2018
Revenues from Contracts with Customers **
Leases
Insurance Contracts
Income of Not-for-Profit Entities [Appendix D]
Service Concession Arrangements: Grantors
Foreign Currency Transactions and Advance Consideration
1 Jan 2018
Oct 2015
1 Jan 2019
Feb 2016
1 Jan 2021
Jul 2017
1 Jan 2019
Dec 2016
1 Jan 2019
Jul 2017
1 Jan 2018
Feb 2017
Uncertainty over Income Tax Treatments
1 Jan 2019
Jun 2017
Conceptual Framework for Financial Reporting#
1 Jan 2020
Mar 2018
* Annual reporting periods beginning after
** AASB 15 has been assessed and is not expected to have a significant impact on the company.
Consolidated Annual Report for the Year Ended 30 June 2018
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Critical accounting judgements,
estimates and assumptions
The preparation of the consolidated financial
statements requires management to make
judgements, estimates and assumptions that
affect the reported amounts in the consolidated
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, believed
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.
Share-based payment transactions
The consolidated entity 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.
Provision for impairment of receivables
The provision for impairment of receivables
assessment requires a degree of estimation and
judgement. The level of provision is assessed by
taking into account the recent sales experience,
the ageing of receivables, historical collection
rates and specific knowledge of the individual
debtor’s financial position.
Impairment of work in progress
Work in progress comprises patient cells taken via
biopsy and cryopreserved awaiting implantation
at the patients discretion at a future date.
Impairment of work in progress assessment
requires a degree of estimation and judgement.
While the patient cells held can be preserved
indefinitely the company has estimated that if the
patient has not proceeded with implantation
within 2 years from biopsy, resulting in a sale of the
product, the value of the work in progress is
impaired to nil.
Estimation of useful lives of assets
The consolidated entity determines the estimated
useful lives and related depreciation and
amortisation charges for its property, plant and
equipment and finite life intangible assets. The
useful lives could change significantly as a result
of technical innovations or some other event. The
depreciation and amortisation charge will
increase where the useful lives are less than
previously estimated lives, or technically obsolete
or non-strategic assets that have been
abandoned or sold will be written off or written
down. The useful life of patents and trademarks is
based on the period of the life of the patent or
trademark, which is usually 20 years.
Impairment of non-financial assets other than
goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of
non-financial assets other than goodwill and other
indefinite life intangible assets at each reporting
date by evaluating conditions specific to the
consolidated entity and to the particular asset
that may lead to impairment. If an impairment
trigger exists, the recoverable amount of the asset
is determined. This involves value-in-use
calculations, which incorporate a number of key
estimates and assumptions. Other qualitative
measures are also considered in the assessment of
impairment.
Employee benefits provision
As discussed in note 1, the liability for employee
benefits expected to be settled more than 12
months from the reporting date is recognised and
measured at current value and is not discounted
if the effect of discounting is immaterial. In
determining the present value of the liability,
estimates of attrition rates and pay increases
through promotion and inflation have been taken
into account.
Consolidated Annual Report for the Year Ended 30 June 2018
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
Sales revenue
Sale of goods
Other revenue
Interest
Export market development grant
License fee & royalties
Currency gain
Other
Total revenue
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of sales
Depreciation and amortisation
Depreciation – plant & equipment
Amortisation – patents & trademarks
Total Depreciation and amortisation
Rental expense relating to operating leases
Minimum lease payments
Employment expenses
Salaries & wages
Employment benefits
Superannuation expense
Consultants’ fees
Directors’ fees
Payroll & other taxes
Other employment costs
Share-based payments expense
Total employment expenses
Write off assets
Inventories
2018
$
2017
$
619,179
529,818
619,179
529,818
18,469
110,955
141,696
4,118
8,265
35,747
-
143,793
3,321
363,909
283,503
546,770
982,682
1,076,588
469,886
438,137
75,364
117,952
193,316
70,458
77,294
147,752
115,139
115,976
2,741,670
39,824
258,417
570,328
281,100
156,826
2,286
291,955
4,342,406
2,502,317
89,881
248,143
502,500
281,100
146,524
22,595
144,856
3,937,916
45,953
51,932
Consolidated Annual Report for the Year Ended 30 June 2018
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Income tax expense
Income tax expense/(benefit)
Current tax
Deferred tax – origination and reversal of temporary differences
Aggregate income tax expense
2018
$
2017
$
(2,252,168)
-
(1,947,998)
-
(2,252,168)
(1,947,998)
Numerical reconciliation of income tax expense & tax at the statutory rate
Loss before income tax expense from continuing operations
(8,009,282)
(6,125,414)
Tax at the statutory tax rate of 27.5% (2017: 27.5%)
(2,202,552)
(1,684,489)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income:
Non-deductible items
Research and development expenditure
Research and development rebate received
Share-based payments
Income tax benefit not brought to account
25,627
571,020
-
147,136
1,458,769
-
15,581
365,270
(535,700)
39,835
1,799,503
-
Research and development tax benefit received
(2,252,168)
(1,947,998)
The following deferred tax balances have not been recognised:
Deferred tax assets not recognised at 27.5% (2017: 27.5%)
Provisions and accruals
Capital raising costs
Carried forward revenue losses
Deferred tax liabilities not recognised at 27.5% (2017: 27.5%)
Prepayments
146,072
138,182
2,736,486
131,164
209,081
2,773,781
3,020,740
3,114,026
26,097
26,097
-
-
31
The tax benefits of the above deferred tax assets will only be obtained if:
(i)
The company derives future assessable income of a nature and an amount sufficient to enable the
benefits to be utilised;
(ii) The company continues to comply with the conditions for deductibility imposed by law; and
(iii) No changes in income tax legislation adversely affects the company in utilising the benefits.
Consolidated Annual Report for the Year Ended 30 June 2018
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Cash and cash equivalents
Cash at bank
Reconciliation to cash and cash equivalents at the end of the financial year
The above figures are reconciled to cash and cash equivalents at the end
of the financial year as shown in the statement of cash flows as follows:
Balance as above
Cash and cash equivalents
Balance as per statement of cash flows
Note 7. Trade and other receivables
Trade receivables
Other receivables:
Sundry debtors
GST refund due
2018
$
2017
$
2,910,233
5,046,257
2,910,233
5,046,257
2,910,233
5,046,257
2,910,233
5,046,257
110,990
35,711
2,742
56,292
-
81,137
59,034
81,137
170,024
116,848
Impairment of receivables
There has been no impairment of receivables in the year ended 30 June 2018 (30 June 2017: $0).
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to nil as at 30
June 2018 (30 June 2017: $10,940)
The consolidated entity did not consider a credit risk on the aggregate balances after reviewing credit
terms of customers based on recent collection practices.
The ageing of the past due but not impaired receivables are as follows:
0 to 3 months overdue
3 to 6 months overdue
Note 8. Inventories
Consumables – at cost
Work in progress – at cost
-
-
-
10,940
-
10,940
-
53,816
6,752
81,645
53,816
88,397
Consolidated Annual Report for the Year Ended 30 June 2018
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Other
Prepayments
Note 10. Property, plant and equipment
Leasehold improvements – at cost
Less: Accumulated depreciation
Plant and equipment – at cost
Less: Accumulated depreciation
Furniture and fittings – at cost
Less: Accumulated depreciation
2018
$
2017
$
94,897
33,887
94,897
33,887
272,502
(77,258)
195,244
556,028
(420,788)
135,240
43,269
(32,694)
10,575
272,502
(70,456)
202,056
523,896
(383,664)
140,232
41,464
(25,939)
15,525
341,059
357,813
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
years are set out below:
Balance at 30 June 2016
Additions
Disposals
Depreciation
Balance at 30 June 2017
Additions
Disposals
Depreciation
Leasehold
improvements
$
Plant and
equipment
$
Furniture and
fittings
$
Total
$
208,869
-
-
(6,813)
202,056
-
-
(6,812)
65,365
135,394
-
(60,527)
140,232
56,805
-
(61,797)
14,938
3,705
-
(3,118)
15,525
1,805
-
(6,755)
289,172
139,099
-
(70,458)
357,813
58,610
-
(75,364)
Balance at 30 June 2018
195,244
135,240
10,575
341,059
Note 11. Intangibles
Patents and trademarks – at cost
Less: Accumulated amortisation
2018
$
2017
$
1,948,131
(288,296)
1,686,038
(170,344)
1,659,835
1,515,694
Consolidated Annual Report for the Year Ended 30 June 2018
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Intangibles (continued)
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
Balance at 30 June 2016
Additions
Amortisation expense
Balance at 30 June 2017
Additions
Amortisation expense
Balance at 30 June 2018
Note 12. Trade and other payables
Trade payables
Other payables
Note 13. Employee benefits
Annual leave entitlements
Long service leave entitlements
$
1,264,030
328,958
(77,294)
1,515,694
262,093
(117,952)
1,659,835
2018
$
2017
$
1,020,281
196,042
891,021
183,679
1,216,323
1,074,700
273,605
194,293
254,174
173,900
467,898
428,074
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have
completed the required period of service and also those where employees are entitled to pro-rata
payments in certain circumstances. The entire amount is presented as current, since the consolidated entity
does not have an unconditional right to defer settlement. However, based on past experience, the
consolidated entity does not expect all employees to take the full amount of accrued leave or require
payment within the next 12 months.
Consolidated Annual Report for the Year Ended 30 June 2018
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 14. Other current liabilities
Accrued expenses
Revenue received in advance
Note 15. Other non-current liabilities
Revenue received in advance
Note 16. Equity – issued capital
2018
$
2017
$
606,593
141,700
235,091
141,700
748,293
376,791
425,148
566,844
425,148
566,844
2018
Shares
2017
Shares
2018
$
2017
$
Ordinary shares – fully paid
110,177,779
101,479,437
27,621,502
24,664,002
Share equity costs – ordinary shares
-
-
(1,636,826)
(1,561,114)
110,177,779
101,479,437
27,621,502
24,664,002
110,177,779
101,479,437
25,984,676
23,102,888
Movements in ordinary share capital
Details
Balance
Issue of shares
Share issue costs
Balance
Issue of shares
Share issue costs
Issue of shares
Issue of shares
Balance
Date
Shares
Issue price
$
1 Jul 2016
91,479,437
19,359,578
13 Dec 2016
10,000,000
-
$0.40
4,000,000
(256,690)
30 Jun 2017
101,479,437
23,102,888
20 Dec 2017
12 Jan 2018
9 May 2018
4,198,238
-
4,286,578
213,526
$0.34
$0.34
$0.34
1,427,401
(75,712)
1,457,500
72,599
30 Jun 2018
110,177,779
25,984,676
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the
Company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary
Consolidated Annual Report for the Year Ended 30 June 2018
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Equity – issued capital (continued)
shares have no par value and the Company does not have a limited amount of authorised capital. The
Company does not have any externally imposed capital requirements. 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.
Capital Management Policy
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going
concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain
an optimum capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company
was seen as value adding relative to the current company's share price at the time of the investment. The
consolidated entity is not actively pursuing additional investments in the short term as it continues to
integrate and grow its existing businesses in order to maximise synergies.
Note 17. Share-based payment reserve
2018
Options
2017
Options
2018
$
2017
$
Share-based payment reserve
15,520,000
12,762,500
1,025,612
1,288,976
15,520,000
12,762,500
1,025,612
1,288,976
Movements in share-based payment reserve
Details
Date
No of
options
Total
$
Balance at 30 June 2016
10,782,500
1,026,980
Issue of options(1)
Issue of options(2)
Issue of options(3)
Issue of options(4)
Issue of options(5)
Balance at 30 June 2017
Expiry of options
Expiry of options
Issue of options(6)
Issue of options(7)
Balance at 30 June 2018
13 Oct 2016
12 Dec 2016
13 Dec 2016
10 Mar 2017
19 Jun 2017
3 Aug 2017
24 Nov 2017
7 May 2018
7 May 2018
650,000
490,000
600,000
40,000
200,000
1,980,000
108,160
80,164
40,000
5,612
28,060
261,996
12,762,500
1,288,976
(5,912,500)
(3,520,000)
1,100,000
11,090,000
2,757,500
(532,092)
(266,313)
137,280
397,761
(263,364)
15,520,000
1,025,612
Consolidated Annual Report for the Year Ended 30 June 2018
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Share-based payment reserve (continued)
Total value of share-based payments for the year is $535,041 (2017: 261,996). Of this $291,955 (2017:
$221,996) is classified as share-based payments to employees in Note 4 under employment expenses and
the remaining $243,086 is classified in the consultants’ fees in Note 4 under employment expenses (2017:
$40,000 classified as share equity costs in the balance sheet). The share based payments reserve is used to
record the value of share based payments provided to employees, including Key Management Personnel,
as part of their remuneration, as well as consultants as consideration for services in certain circumstances.
For the options granted the valuation model inputs used to determine the fair value at the grant date are as
follows:
(1)
(2)
(3)
(5)
(6)
(7)
Grant date
Expiry date
Share price at grant date
Exercise price
Expected volatility
Dividend yield
Risk-free rate
Fair value at grant date
13/10/16
12/10/19
$0.435
$0.624
72%
0%
1.72%
$0.166
12/12/16
12/12/19
$0.440
$0.648
71%
0%
1.95%
$0.164
10/03/17
10/03/20
$0.420
$0.594
63%
0%
2.11%
$0.140
19/06/17
19/06/20
$0.350
$0.510
73%
0%
1.80%
$0.137
07/05/18
08/05/21
$0.345
$0.340
50%
0%
2.17%
$0.1248
07/05/18
08/05/21
$0.345
$0.395
50%
0%
2.15%
$0.1076
(4) On 13 December 2016 600,000 options were granted as part payment for the provision of services in relation to
a capital raising. The fair value of the service amounts to $240,000 as determined by market expectations. Of
this fair value $200,000 was settled in cash and therefore the options are deemed to have a fair value of
$40,000. The options have an exercise price of $0.55 and an expiry date of 13 December 2020.
The options granted to directors and employees on 7 May 2018 are subject to vesting periods as follows:
Description
Vesting date
Number of options
Fair value
Vesting at grant date
Vesting one year from grant date
Vesting two years from grant date
7 May 2018
7 May 2019
7 May 2020
3,696,667
3,696,666
3,696,667
11,090,000
397,761
397,760
397,760
11,193,281
Set out below are summaries of options granted by the Company:
Grant date
Expiry date
Exercise
price
Opening
balance
Granted
Exercised
Expired/
forfeited
Closing
balance
2018
03/08/2014
24/11/2014
19/11/2015
26/02/2016
13/10/2016
12/12/2016
13/12/2016
10/03/2017
19/06/2017
07/05/2018
07/05/2018
03/08/2017
24/11/2017
19/11/2020
26/02/2019
12/10/2019
12/12/2019
13/12/2019
10/03/2020
19/06/2020
08/05/2021
08/05/2021
$0.50
$0.62
$0.58
$0.56
$0.62
$0.64
$0.55
$0.59
$0.41
$0.34
$0.40
5,912,500
3,520,000
12,122,237
1,350,000
650,000
490,000
600,000
40,000
200,000
-
-
-
-
-
-
-
-
-
-
-
1,100,000
11,090,000
24,884,737
12,190,000
Weighted average exercise price
$0.570
$0.390
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,912,500)
(3,520,000)
-
-
-
-
-
-
-
-
-
-
-
12,122,237
1,350,000
650,000
490,000
600,000
40,000
200,000
1,100,000
11,090,000
(9,432,500) 27,642,237
$0.545
$0.050
Consolidated Annual Report for the Year Ended 30 June 2018
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Share-based payment reserve (continued)
Opening
Granted
Exercised
Grant date Expiry date
Exercise
price
2017
03/08/2014
24/11/2014
19/11/2015
26/02/2016
13/10/2016
12/12/2016
13/12/2016
10/03/2017
19/06/2017
03/08/2017
24/11/2017
19/11/2020
26/02/2019
12/10/2019
12/12/2019
13/12/2019
10/03/2020
19/06/2020
$0.50
$0.62
$0.58
$0.56
$0.62
$0.64
$0.55
$0.59
$0.41
balance
5,912,500
3,520,000
12,122,237
1,350,000
-
-
-
-
-
-
-
-
-
650,000
490,000
600,000
40,000
200,000
22,904,737
1,980,000
Weighted average exercise price
$0.564
$0.582
Expired/
forfeited
Closing
balance
5,912,500
-
-
3,520,000
- 12,122,237
1,350,000
-
650,000
-
490,000
-
600,000
-
40,000
-
200,000
-
- 24,884,737
-
$0.570
-
-
-
-
-
-
-
-
-
-
-
At 30 June 2018 the remaining weighted average contractual life of the options is 1,000 days (2017: 745
days).
Note 18. Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Expired options
Loss after income tax expense for the year
2018
$
2017
$
19,679,377
(798,405)
5,757,114
15,501,961
-
4,177,416
Accumulated losses at the end of the financial year
24,638,086
19,679,377
Note 19. Financial instruments
(a)
Financial risk management
The Company’s principal financial instruments comprise cash.
The main purpose of these financial instruments is to fund expenditure on the Company’s operations. The
Company has various other financial assets and liabilities such as trade receivables and trade payables,
which arise directly from its operations. It is, and has been throughout the period under review, the
Company’s policy that no trading in financial instruments shall be undertaken.
Details of the significant accounting policies and methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which income and expenses are recognised, in respect of each
class of financial asset and financial liability are disclosed in Note 1.
Consolidated Annual Report for the Year Ended 30 June 2018
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 19. Financial instruments (continued)
(b)
Interest rate risk
At reporting date the Company had the following financial assets exposed to interest rate risk:
Cash(1)
(1)
The weighted average interest rate of cash is 0.53% (2017: 0.69%)
(c) Credit risk
2018
$
2017
$
2,910,233
5,046,257
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The consolidated entity’s maximum exposure to credit risk in relation to each class of financial asset is the
carrying amount of those assets as indicated in the Statement of Financial Position.
The consolidated entity has in place policies that aim to ensure that counterparties and cash transactions
are limited to high credit quality financial institutions and that the amount of credit exposure to one
financial institution is limited as far as is considered commercially appropriate.
Since the consolidated entity trades only with recognised third parties, there is no requirement for collateral.
(d)
Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The
group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the company’s reputation.
The following are the contractual maturities of financial liabilities, including estimated interest payments and
excluding the impact of netting agreements:
Less than 6
months
6 – 12
months
1 – 2 years
2 – 5 years
Over 5
years
$
$
$
$
$
Total
contractual
cash flows
$
Total
carrying
amount
$
As at 30 June 2017:
Trade & other payables
As at 30 June 2018:
Trade & other payables
1,126,112
1,626,814
(e) Net fair values
-
-
-
-
-
-
-
-
-
-
1,126,112
1,626,874
The carrying amount of financial assets and financial liabilities recorded in the financial statements
represents their respective net fair values, determined in accordance with the accounting policies disclosed
in Note 1.
(f)
Sensitivity analysis
The following tables summarise the sensitivity of the consolidated entity’s financial assets to interest rate risk.
Had the relevant variables, as illustrated in the tables, moved, with all other variables held constant, post-tax
profit/(loss) and equity would have been affected as shown. The analysis has been performed on the same
basis for 2017 and 2018. None of the Company’s financial liabilities are interest bearing.
Consolidated Annual Report for the Year Ended 30 June 2018
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 19. Financial instruments (continued)
Financial assets
30 June 2017
Cash
30 June 2018
Cash
Carrying
amount
$
Interest rate risk
-1%
Interest rate risk
1%
Net profit
$
Equity
$
Net profit
$
Equity
$
5,046,257
(50,462)
(50,462)
50,462
50,462
2,910,233
(29,102)
(29,102)
29,102
29,102
Note 20. Key management personnel disclosures
Compensation
The aggregate compensation made to directors and other members of key management personnel of the
consolidated entity is set out below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
2018
$
2017
$
812,350
55,557
6,657
236,719
793,600
44,275
13,832
41,600
1,111,283
893,307
Note 21. Remuneration of auditor
During the financial year the following fees were paid or payable for services provided by PKF Mack, the
auditor of the Company, its network firms and unrelated firms:
Audit services – PKF Mack
Audit or review of the consolidated financial statements
Other services – PKF Mack
Preparation of the tax return
Other matters
2018
$
2017
$
32,915
32,400
3,800
450
4,250
3,300
-
3,300
37,165
35,700
Consolidated Annual Report for the Year Ended 30 June 2018
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 22. Contingent liabilities
The consolidated entity has no contingent liabilities for the years ended 30 June 2018 or 30 June 2017.
Note 23. Contingent assets
The consolidated entity has no contingent assets for the year ended 30 June 2018 or 30 June 2017.
Note 24. Commitments
Patent annuity commitments
To maintain patent rights the following commitments will need to be met by
the Company:
Within one year
One to five years
More than five years
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
One to five years
More than five years
Total commitments
2018
$
2017
$
58,350
297,425
623,450
42,716
175,439
346,505
979,225
564,660
105,969
215,706
-
115,157
333,068
-
321,675
448,225
1,300,900
1,012,885
Operating lease commitments includes contracted amounts for various equipment under non-cancellable
operating leases expiring within one to ten years and the current office and laboratory rental lease under
an operating lease.
Note 25. Related party transactions
Parent entity:
Subsidiaries:
Orthocell Limited is the parent entity
Interests in subsidiaries are set out in note 26.
Key management personnel:
Disclosures relating to key management personnel are set out in note
20 and the remuneration report in the Directors' Report.
Loans to/from related parties:
There were no loans to or from related parties at the current and
previous reporting dates
Terms and conditions:
All transactions were made on normal commercial terms and
conditions and at market rates.
Consolidated Annual Report for the Year Ended 30 June 2018
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 26. Parent entity and interest in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-
owned subsidiaries in accordance with the accounting policy described in note 1:
Name of entity
Ausbiomedical Pty Ltd
Country of incorporation
Australia
2018
%
100
2017
%
100
Ausbiomedical Pty Ltd has no assets or liabilities and does not trade in its own right.
As the Company’s only subsidiary, Ausbiomedical Pty Ltd, does not trade or have any assets and liabilities,
the consolidated entity and parent entity disclosures are the same.
Note 27. Events after the reporting period
Subsequent to 30 June 2018 two subsidiaries were incorporated:
Name of entity
Orthocell UK Ltd
Orthocell (HK) Limited
Country of incorporation
United Kingdom
Hong Kong
Date of Incorporation
20 July 2018
7 August 2018
Both subsidiaries are wholly-owned by Orthocell.
No other matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may
significantly affect the consolidated entity's operations, the results of those operations, or the consolidated
entity's state of affairs in future financial years.
Note 28. Reconciliation of loss after income tax to net cash from operating activities
2018
$
2017
$
Loss after income tax expense for the year
(5,757,114)
(4,177,416)
Adjustments for:
Depreciation and amortisation
Share-based payments expensed
Inventory write-off
Change in operating assets and liabilities:
(Increase)/decrease in debtors
(Increase)/decrease in prepayments
(Increase)/decrease in inventories
Increase/(decrease) in creditors
Increase/(decrease) in accruals
Increase/(decrease) in employee entitlements
Increase/(decrease) in unearned income
193,316
535,041
45,953
147,752
221,996
51,932
(78,020)
(61,011)
(11,372)
219,325
371,502
39,824
(141,696)
94,220
24,975
(6,167)
207,264
(68,121)
89,881
(141,696)
(4,644,252)
(3,555,380)
Consolidated Annual Report for the Year Ended 30 June 2018
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 29. Loss per share
2018
$
2017
$
Loss after income tax expense for the year
(5,757,114)
(4,177,416)
Weighted average number of shares used in calculating basic and
diluted loss per share
Shares
Shares
105,726,821
96,958,889
Options are considered to be potential ordinary shares and have only been included in the determination
of diluted loss per share to the extent to which they are dilutive.
At the date of this report the company has 110,177,779 ordinary shares on issue.
Note 30. Operating segments
The consolidated entity has identified its operating segments based on the internal reports that are
reviewed and used by the Chief Operating Decision Maker to make decisions about resources to be
allocated to the segments and assess their performance.
The financial information presented in the statement of profit or loss and other comprehensive income and
statement of financial position is the same as that presented to the chief operating decision makers.
The consolidated entity predominately operates in the regenerative medicine industry in Australia.
Consolidated Annual Report for the Year Ended 30 June 2018
43
DIRECTORS’ DECLARATION
In the directors’ opinion:
•
•
•
•
the attached consolidated financial statements and notes thereto and the remuneration report
contained in the directors’ report comply with the Corporations Act 2001, the Accounting Standards,
the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached consolidated financial statements and notes thereto comply with International
Financial Reporting Standards as issued by the International Accounting Standards Board as
described in note 1 to the consolidated financial statements;
the attached consolidated financial statements and notes thereto give a true and fair view of the
consolidated entity's financial position as at 30 June 2018 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
Mr Paul Anderson
Director
31 August 2018
Perth
Consolidated Annual Report for the Year Ended 30 June 2018
44
INDEPENDENT AUDITOR’S REPORT
Consolidated Annual Report for the Year Ended 30 June 2018
45
INDEPENDENT AUDITOR’S REPORT
Consolidated Annual Report for the Year Ended 30 June 2018
46
INDEPENDENT AUDITOR’S REPORT
Consolidated Annual Report for the Year Ended 30 June 2018
47
INDEPENDENT AUDITOR’S REPORT
Consolidated Annual Report for the Year Ended 30 June 2018
48
INDEPENDENT AUDITOR’S REPORT
Consolidated Annual Report for the Year Ended 30 June 2018
49
CORPORATE GOVERNANCE STATEMENT
General
The Board of Directors of Orthocell Limited (the
“Company”) is responsible for the corporate
governance of the Company. The Board guides
and monitors the business and affairs of the
Company on behalf of the shareholders by whom
they are elected and to whom they are
accountable.
This statement sets out the main corporate
governance practices in place throughout the
financial year in accordance with 3rd edition of
the ASX Principles of Good Corporate
Governance and Best Practice
Recommendations.
Further information about the Company’s
corporate governance practices is set out on the
Company’s website at www.orthocell.com.au.
This Statement was approved by the Board of
Directors and is current as at 12 October 2018.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT
ASX Recommendation 1.1: a listed entity should
establish the functions reserved to the board and
those delegated to senior executives and disclose
those functions.
The Board has adopted a formal charter that
details the respective board and management
functions and responsibilities. A copy of this board
charter is available in the corporate governance
section of the Company's website at
www.orthocell.com.au.
The Company has complied with this
recommendation.
ASX Recommendation 1.2: a listed entity should
undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election as a director and provide
security holders with all material information
relevant to a decision on whether or not to elect
or re-elect a director.
The Company did not elect any new Directors
during the year. Information in relation to Directors
seeking reappointment is set out in the Directors
report and Notice of Annual General Meeting.
The Company has complied with this
recommendation.
ASX Recommendation 1.3: a listed entity should
have a written agreement with each Director and
senior executive setting out the terms of their
appointment.
The Company has in place written agreements
with each Director.
The Company has complied with this
recommendation.
ASX Recommendation 1.4: the company
secretary of a listed company should be
accountable directly to the board, through the
chair, on all matters to do with the proper
functioning of the board.
The Board Charter provides for the Company
Secretary to be accountable directly to the
board through the Chair.
The Company has complied with this
recommendation.
ASX Recommendation 1.5: a listed entity should:
•
•
•
•
have a diversity policy which includes the
requirement for the board to set
measurable objectives for achieving gender
diversity and assess annually the objectives
and the entity’s progress to achieving them;
disclose the policy or a summary of it;
disclose the measurable objectives and
progress towards achieving them; and
disclose the respective proportions of men
and women on the board and at each
level of management and the company as
a whole.
The Company has adopted a Diversity Policy
which is available in the corporate governance
section of the Company's website at
www.orthocell.com.au.
The Board considers that, due to the size, nature
and stage of development of the Company,
setting measurable objectives for the Diversity
Policy at this time is not appropriate. The Board will
consider setting measurable objectives as the
Company increases in size and complexity.
Consolidated Annual Report for the Year Ended 30 June 2018
50
CORPORATE GOVERNANCE STATEMENT
As at 30 June 2018, the Company does not have
any female Board members (2017: nil). The
Company has 1 female (33%) in senior
management positions, (2017: 1, 33%). Of the
balance of the Company’s employees 74% are
female (2017: 76%). 56% (2017: 56%) of the
Company’s employees in total, including
Directors, are female.
The performance of executive Directors, including
the Managing Director, will be reviewed by the
Remuneration Committee. The Remuneration
Committee will conduct a performance
evaluation of the Executive Directors annually to
review performance against KPIs set for the
previous year, and to establish KPIs for the
forthcoming year.
The Company partly complies with this
recommendation.
Performance reviews were undertaken during the
reporting period.
ASX Recommendation 1.6: a listed entity should
disclose the process for evaluating the
performance of the board, its committees and
individual directors and whether a performance
evaluation was carried out during the reporting
period in accordance with that process.
The Chair has the overall responsibility for
evaluating the Board, any committees
established and, when appropriate, individual
directors on an annual basis.
The method and scope of the performance
evaluation will be set by the Chair and which may
include a Board self-assessment checklist to be
completed by each Director. The Chairperson
may also use an independent adviser to assist in
the review if deemed appropriate.
A performance review was undertaken during the
reporting period.
The Company has complied with this
recommendation.
ASX Recommendation 1.7: a listed entity should
have and disclose a process for periodically
evaluating the performance of its senior
executives and disclose in relation to each
reporting period where a performance evaluation
was undertaken in accordance with a process.
The Managing Director reviews the performance
of the senior executives. The Managing Director
conducts a performance evaluation of the senior
executives by meeting individually with each
senior executive on a yearly basis to review
performance against the senior executive’s
responsibilities as outlined in his or her contract
with the Company and against key performance
indicators (KPI’s) set for the senior executive set by
the Managing Director or the Board.
The Company has complied with this
recommendation.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
ASX Recommendation 2.1: The board of a listed
entity should establish a nomination committee:
•
•
•
with at least three members the majority of
which are independent directors
chaired by an independent Director; and
disclose the charter of the committee, the
members of the committee and the number
of times the committee met throughout the
period and member attendance at those
meetings.
Given the present size and complexity of the
Company the Board has not constituted a
Nomination Committee with the full Board
carrying out the role of a Nomination Committee.
The Company has not complied with this
recommendation.
ASX Recommendation 2.2: a listed entity should
have and disclose a board skills matrix setting out
the mix of skills and diversity that the board
currently has or is looking to achieve in its
membership.
The Board has established a skills matrix. On a
collective basis the Board has the following skills:
Strategic expertise - ability to identify and critically
assess strategic opportunities and threats and
develop strategies.
Specific Industry knowledge - Experience in
regenerative medicine or other Biotech or related
sector.
Consolidated Annual Report for the Year Ended 30 June 2018
51
CORPORATE GOVERNANCE STATEMENT
International experience – members of the Board
have an understanding the complexities of
operating in foreign jurisdictions, including a basic
knowledge of the general corporate, fiscal and
labour laws and regulations.
Accounting and finance - members of the Board
have experience in accounting and finance or
the ability to read and comprehend the
company’s accounts, financial material
presented to the board, financial reporting
requirements and an understanding of corporate
finance.
Risk management - Identify and monitor risks to
which the Company is, or has the potential to be
exposed to.
Experience with financial markets - Experience in
working in or raising funds from the equity or
capital markets.
Investor relations - Experience in identifying and
establishing relationships with Shareholders,
potential investors, institutions and equity analysts.
Government relations - Experience in dealing with
relevant Government authorities and regulators.
The Company has complied with this
recommendation.
ASX Recommendation 2.3: a listed entity should
disclose the names of the directors considered by
the board to be independent directors and
provide details in relation to the length of service
of each Director.
During the year ended 30 June 2018 the only
independent Director of the Company was
Professor Lars Lidgren.
Dr Stewart Washer and Mr Paul Anderson are
Executive Directors and are not considered to be
independent Directors as they are employed in
an executive capacity.
Mr Qi Xiao Zhou is a substantial shareholder and
as such is not considered to be an independent
Director.
Mr Matthew Callahan is a founder and director of
a substantial shareholder and as such is not
considered to be an independent director.
The appointment date of Directors is set out in the
Directors Report forming part of the Annual
Financial Statements.
The Company has complied with this
recommendation.
ASX Recommendation 2.4: the majority of the
board of a listed entity should be independent
directors.
The Board does not have a majority of directors
who are independent.
The Board considers that the composition of the
Board is adequate for the Company’s current size
and operations, and includes an appropriate mix
of skills and expertise, relevant to the Company’s
business. These skills include members with
significant experience as directors of public
companies, relevant experience in the
management and growth of businesses together
with extensive experience in the industry in which
Orthocell operates.
The Board will review its composition as the
Company’s circumstances change.
The Company has not complied with this
recommendation.
ASX Recommendation 2.5: The Chair of a listed
entity should be an independent director and, in
particular, should not be the same person as the
CEO of the entity.
The Executive Chair of the Board is Dr Stewart
Washer. The board considers that given its stage
of development it is beneficial that Dr Washer is
an Executive. The Board will consider the
appointment of an independent chair as the
Company increases in size and complexity.
The Managing Director is Paul Anderson.
The Company has not fully complied with this
recommendation.
ASX Recommendation 2.6: a listed entity should
have a program for inducting new directors and
provide appropriate professional development
opportunities.
The Board is responsible for providing new
directors with an induction to the Company and
for the program for providing adequate
Consolidated Annual Report for the Year Ended 30 June 2018
52
CORPORATE GOVERNANCE STATEMENT
professional development opportunities for
directors and management.
No new directors were appointed during the year.
The Company has complied with this
recommendation.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
ASX Recommendation 3.1: a listed entity should
establish a code of conduct and disclose the
code or a summary of the code.
The Company has established a Code of
Conduct as to the practices necessary to
maintain confidence in the Company’s integrity,
the practices necessary to take into account its
legal obligations and the reasonable
expectations of its stakeholders and the
responsibility and accountability of individuals for
reporting and investigating reports of unethical
practices.
A copy of the Company’s code of conduct is
available in the corporate governance section of
the Company's website at www.orthocell.com.au.
The Company has complied with this
recommendation.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL
REPORTING
ASX Recommendation 4.1: The Board of a listed
entity should establish an audit committee:
•
•
•
with at least three members, all of whom
are non-executive directors and a majority
of which are independent directors
chaired by an independent Director; and
disclose the charter of the committee, the
members of the committee and the number
of times the committee met throughout the
period and member attendance at those
meetings.
Given the present size and complexity of the
Company the Board has not constituted an Audit
Committee with the full Board carrying out the
role of an Audit Committee.
The qualifications of the members of the Board
are set out in the Directors report forming part of
the Annual Financial Statements.
The Company has not complied with this
recommendation.
ASX Recommendation 4.2: The Board of a listed
entity should, before it approves the entity’s
financial statements for a financial period, receive
from its CEO and CFO a declaration that, in their
opinion, the financial records of the entity have
been properly maintained and that the financial
statements comply with the appropriate
accounting standards and give a true and fair
view of the financial position and performance of
the entity and that the opinion has been formed
on the basis of a sound system of risk
management and internal control which is
operating effectively.
The Board has received the assurance required by
ASX Recommendation 4.2 in respect of the
financial statements for the half year ended 31
December 2017 and the full year ended 30 June
2018 from the Managing Director and the Chief
Financial Officer. Given the size and nature of the
Company’s operations the Board has not
received the assurance in respect of the quarterly
cash flow statements believing that the provision
of the assurance for the half and full year financial
statements is sufficient.
The Company has not fully complied with this
recommendation.
ASX Recommendation 4.3: a listed entity should
ensure that the external auditor attends its Annual
General Meeting and is available to answer
questions from security holders relevant to the
audit.
The external auditor attends the Annual General
Meeting and is available to answer questions from
shareholders relevant to the audit and financial
statements. The external auditor will also be
allowed a reasonable opportunity to answer
written questions submitted by shareholders to the
auditor as permitted under the Corporations Act.
The Company has complied with this
recommendation.
Consolidated Annual Report for the Year Ended 30 June 2018
53
CORPORATE GOVERNANCE STATEMENT
PRINCIPLE 5: MAKE TIMELY AND BALANCED
DISCLOSURE
ASX Recommendation 5.1: a listed entity should
establish written policies designed to ensure
compliance with ASX Listing Rule disclosure
requirements and to ensure accountability at a
senior executive level for that compliance and
disclose those policies or a summary of those
policies.
The Company has established a continuous
disclosure policy which is designed to guide
compliance with ASX Listing Rule disclosure
requirements and to ensure that all Directors,
senior executives and employees of the
Company understand their responsibilities under
the policy. The Chairman, Managing Director
and Company Secretary act as the Company’s
Disclosure Officers who are responsible for
implementing and administering this policy. The
Disclosure Officers are responsible for all
communication with ASX and for making
decisions on what should be disclosed publicly
under this policy.
In accordance with the Company's continuous
disclosure policy, all information provided to ASX
for release to the market is posted to its website at
www.orthocell.com.au after ASX confirms an
announcement has been made.
A copy of the continuous disclosure policy is
available in the corporate governance section of
the Company's website at www.orthocell.com.au.
The Company has complied with this
recommendation.
PRINCIPLE 6: RESPECT THE RIGHTS OF
SHAREHOLDERS
ASX Recommendation 6.1: a listed entity should
provide information about itself and its
governance to investors via its website.
The Company’s website at www.orthocell.com.au
contains information about the Company’s
operations and technologies, Directors and
management and the Company’s corporate
governance practices, policies and charters. All
ASX announcements made to the market,
including annual and half year financial results are
posted on the website as soon as they have been
released by the ASX. The full text of all notices of
meetings and explanatory material, the
Company’s Annual Report and copies of all
investor presentations are posted on the website.
The Company has complied with this
recommendation.
ASX Recommendation 6.2: a listed entity should
design and implement an investor relations
program to facilitate effective two-way
communication with investors.
The Company’s Managing Director and
Chairman are the Company’s main contact for
investors and potential investors and make
themselves available to discuss the Company’s
activities when requested together with other
Directors as required. In addition to
announcements made in accordance with its
continuous disclosure obligations the Company,
from time to time, prepares and releases general
investor updates about the Company.
Contact with the Company can be made via
email addresses provided on the website.
The Company has complied with this
recommendation.
ASX Recommendation 6.3: a listed entity should
disclose the policies and processes it has in place
to facilitate and encourage participation at
meetings of security holders.
The Company encourages participation of
shareholders at any general meetings and its
Annual General Meeting each year. Shareholders
are encouraged to lodge direct votes or proxies
subject to the adoption of satisfactory
authentication procedures if they are unable to
attend the meeting.
The full text of all notices of meetings and
explanatory material are posted on the
Company’s website at www.orthocell.com.au.
The Company has complied with this
recommendation.
ASX Recommendation 6.4: a listed entity should
give security holders the option to receive
communications from, and send communications
to, the entity and its security register electronically.
Consolidated Annual Report for the Year Ended 30 June 2018
54
CORPORATE GOVERNANCE STATEMENT
Contact with the Company can be made via
email addresses provided on the website.
The Company has complied with this
recommendation.
The Company’s share register provides a facility
whereby investors can provide email addresses to
receive correspondence from the Company
electronically and investors can contact the share
register via telephone, facsimile or email.
The Company has complied with this
recommendation.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
ASX Recommendation 7.1: The Board of a listed
entity should have a committee to oversee risk:
•
•
•
with at least three members, all of whom
are non-executive directors and a majority
of which are independent directors
chaired by an independent Director; and
disclose the charter of the committee, the
members of the committee and the number
of times the committee met throughout the
period and member attendance at those
meetings.
Given the present size and complexity of the
Company the Board has not constituted a Risk
Committee with the full Board responsible for risk
management.
The Company has not complied with this
recommendation.
ASX Recommendation 7.2: The Board or a
committee of the Board, of a listed entity should
review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound and disclose in relation to each reporting
period whether such a review was undertaken.
The Board is responsible for the oversight of the
Company’s risk management and control
framework. Responsibility for control and design of
risk management is delegated to the appropriate
level of management within the Company with
the Managing Director being responsible to the
Board for the risk management and control
framework.
The Board conducted a review during the
reporting period.
ASX Recommendation 7.3: a listed entity should
disclose if it has an internal audit function and if it
does not have an internal audit function that fact
and the processes it employs for evaluating and
continually improving the effectiveness of risk
management and internal control processes.
Given the Company’s current size and level of
operations it does not have an internal audit
function.
The Board is responsible for the oversight of
the Company’s risk management and control
framework. Responsibility for control and
design of risk management is delegated to the
appropriate level of management within the
Company with the Managing Director being
responsible to the Board for the risk management
and control framework.
The Company has complied with this
recommendation.
ASX Recommendation 7.4: a listed entity should
disclose whether it has any material exposure to
economic, environmental and social sustainability
risks and if it does how it manages or intends to
manage those risks.
The Company has exposure to economic risks,
including general economy wide economic risks
and risks associated with the economic cycle.
There will a requirement in the future for the
Company to raise additional funding to pursue its
business objectives. The Company’s ability to
raise capital may be effected by these economic
risks.
The Company has in place risk management
procedures and processes to identify, manage
and minimise its exposure to these economic risks
where appropriate.
The Board currently considers that the Company
does not have any material exposure to
environmental risk.
The Board currently considers that the Company
does not have any material exposure to social
sustainability risk. The Company’s Corporate Code
of Conduct outlines the Company’s commitment
Consolidated Annual Report for the Year Ended 30 June 2018
55
CORPORATE GOVERNANCE STATEMENT
to integrity and fair dealing in its business affairs.
The code sets out the principles covering
appropriate conduct in a variety of contexts and
outlines the minimum standard of behaviour
expected from employees when dealing with
stakeholders.
The Company has complied with this
recommendation.
PRINCIPLE 8: REMUNERATE FAIRLY AND
RESPONSIBLY
ASX Recommendation 8.1: The board of a listed
entity should establish a remuneration
committee:
• with at least three members the majority of
which are independent directors
• chaired by an independent Director; and
• disclose the charter of the committee, the
members of the committee and the number
of times the committee met throughout the
period and member attendance at those
meetings.
The Board has established a Remuneration
Committee and adopted a charter that sets out
the Remuneration Committee’s role and
responsibilities, composition and membership
requirements. Currently, Mr. Matthew Callahan
(chair), Dr Stewart Washer and Dr Lars Lidgren
serve on the Remuneration Committee.
A copy of the committee’s charter is available in
the corporate governance section of the
Company's website at www.orthocell.com.au.
Details of the number of meetings of the
committee and attendance at those meetings is
set out in the Directors Report.
The Company has not fully complied with this
recommendation.
ASX Recommendation 8.2: a listed entity should
separately disclose its policies and practices
regarding the remuneration of non-executive
directors and the remuneration of executive
directors and other senior executives.
The Company remunerates non-executive
Directors at a fixed fee for time, commitment and
responsibilities. In addition non-executive Directors
may be paid fees under consulting arrangements.
Remuneration for non-executive Directors is not
linked to individual performance. From time to
time the Company may, subject to shareholder
approval) grant options to non-executive
Directors. The maximum aggregate amount of
fees (including superannuation payments) that
can be paid to non-executive directors is subject
to approval by shareholders at a General
Meeting.
There are no termination or retirement benefits for
non-executive directors (other than for
superannuation).
Executive remuneration consists of a base salary
and performance incentives.
Short term performance incentives may be paid
in cash and may be subject to the successful
completion of performance hurdles agreed by
the board following recommendations from the
Remuneration Committee.
Long term performance incentives may include
options or other equity based products granted at
the discretion of the Board subject to obtaining
the relevant shareholder approvals. The grant of
equity based products is designed to recognise
and reward efforts as well as to provide additional
incentive to continue those efforts for the benefit
of the Company, and may be subject to the
successful completion of performance hurdles.
The Company has complied with this
recommendation.
ASX Recommendation 8.3: a listed entity which
has an equity based remuneration scheme should
have a policy on whether participants are
permitted to enter into transactions which limit the
economic risk of participating in the scheme and
disclose the policy or a summary of that policy.
A participant in an equity based remuneration
plan operated by the Company must not enter
into a transaction (whether through the use of
derivatives or otherwise) which limit the economic
risk of participating in the equity based
remuneration plan.
The Company has complied with this
recommendation.
Consolidated Annual Report for the Year Ended 30 June 2018
56
ASX ADDITIONAL INFORMATION
Information in this section is as at 11 October 2018.
Securities Exchange
Substantial shareholders
The number of substantial shareholders and their
associates are set out below:
Shareholder
SRV Custodians Pty Ltd
Ming Hao Zheng
Mr Paul Frederick Anderson &
Ms Nicole Jane Telford
Mr Qixiao Zhou
Voting rights
Shares
9,530,382
7,104,238
6,403,335
5,996,241
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.
Distribution of ordinary shares
Ranges
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Shareholders
Holdings
224
1,515
618
970
105
149,336
4,235,272
5,016,057
29,856,189
70,920,925
Totals
3,432
110,177,779
Unmarketable parcels
649
On-market buy back
There is currently no on-market buy-back program for
any of Orthocell Limited’s listed securities.
Restricted securities
Nil
The Company was listed on the Australian Securities
Exchange on 12 August 2014.
Ordinary shares
20 largest shareholders
Shares held
%
SRV Custodians Pty Ltd
Ming Hao Zheng
Mr Paul Frederick Anderson &
Ms Nicole Jane Telford
Mr Qixiao Zhou
Mr Jia Xun Xu
JP Morgan Nominees Australia
Limited
9,530,382
7,104,238
6,403,335
5,996,241
5,168,276
3,969,139
National Nominees Limited
2,489,950
Dr John Clifford Philpott
Veritas Securities Limited
Dr John Clifford Philpott &
Mrs Rebecca Anne Philpott
1,550,000
1,389,809
1,250,000
Enerview Pty Ltd
1,000,000
BT Portfolio Services Limited
1,000,000
Citicorp Nominees Pty Limited
941,481
Murdoch Ventures Pty Ltd
Diamonex Ltd
Argento Pty Ltd
SRV Nominees Pty Ltd
The University of Western
Australia
923,841
768,091
695,758
649,177
646,687
8.65
6.45
5.81
5.44
4.69
3.60
2.26
1.41
1.26
1.13
0.91
0.91
0.85
0.84
0.70
0.63
0.59
0.59
Mr Paul Frederick Anderson &
Ms Nicole Jane Telford
629,204
0.57
Mr Gerard John Hardisty &
Mrs Gabrielle Elizabeth Hardisty
596,401
0.54
Total
52,702,010
47.83
Balance of register
57,475,769
52.17
Grand total
110,177,779
100.00
Consolidated Annual Report for the Year Ended 30 June 2018
57
ASX ADDITIONAL INFORMATION
Unquoted options and warrants
Options issued under the options plans total 15,520,000 and warrants issued total 12,122,237.
Voting rights
Options and warrants
No voting rights.
Ordinary shares
Refer to Note 16.
Distribution of unlisted options and warrants
Exercise price:
Expiry date:
Holding ranges:
1 – 5,000
5,001 – 10,000
10,001 – 100,000
nil
20,000
(2)
160,000
(6)
nil
nil
nil
100.001 & over
1,170,000
(6)
650,000
(3)
Totals
1,350,000
(14)
650,000
(3)
Options
$0.56
26/02/19
Options
held
(Holders)
Options
$0.62
12/10/19
Options
held
(Holders)
Options
$0.64
12/12/19
Options
held
(Holders)
Options
$0.55
13/12/19
Options
held
(Holders)
Options
$0.59
10/03/20
Options
held
(Holders)
Options
$0.41
19/06/20
Options
held
(Holders)
Warrants
$0.58
19/11/20
Warrants
held
(Holders)
Options
$0.34
08/05/21
Options
held
(Holders)
Options
$0.34
08/05/21
Options
held
(Holders)
nil
nil
190,000
(2)
130,000
(2)
490,000
(4)
nil
nil
nil
600,000
(1)
600,000
(1)
nil
nil
40,000
(1)
nil
nil
nil
nil
nil
nil
nil
nil
nil
nil
273,834
(6)
100,000
(1)
490,000
(11)
200,000
(1)
11,848,403
(8)
1,000,000
(3)
10,600,000
(9)
40,000
(1)
200,000
(1)
12,122,237
(14)
1,100,000
(4)
11,090,000
(20)
All unlisted options were issued pursuant to the Company’s employee option acquisition plan or to directors pursuant to
shareholder approval.
Holders of great than 20% of unlisted warrants: Nil
Consolidated Annual Report for the Year Ended 30 June 2018
58