Appendix 4E
Preliminary final Report
Rules 4.3A
Appendix 4E
Final report
Name of entity
ORTHOCELL LIMITED
ABN or equivalent company
reference
57 118 897 135
For announcement to the market
Financial year ended (‘current period’)
30 June 2019
Current year
reported
amount
$
Change
up/(down) from
previous year
$
Change
up/(down) from
previous year
%
Revenues from product sales
945,657
326,478
Other revenues from continuing operations
293,714
10,211
Total revenues from continuing operations
1,239,371
336,689
Loss from ordinary activities after tax attributable
to members
(5,852,214)
95,100
53%
4%
37%
2%
Net loss for the period attributable to members
(5,852,214)
95,100
2%
Dividends (distributions)
Interim dividend
Final dividend
Previous corresponding period
Amount per
security
Franked
amount per
security
Nil
Nil
Nil
- ¢
- ¢
- ¢
+Record date for determining entitlements to the dividend,
(in the case of a trust, distribution)
N/A
The above results should be read in conjunction with the notes
and commentary contained in this report.
+ See chapter 19 for defined terms
30/06/2016
Page 1
Appendix 4E
Appendix 4E
Final Report
Annual meeting
Final report only)
The annual meeting will be held as follows:
Place
Date
Time
Building 191 Murdoch University
Corner of Campus Drive & Discovery Way
Murdoch WA 6150
On or before 30 November 2019
To be advised
Approximate date the +annual report will be
available
On or before 30 October 2019
Compliance statement
1
2
3
4
This report has been prepared in accordance with AASB Standards, other AASB
authoritative pronouncements and Urgent Issues Group Consensus Views or other
standards acceptable to ASX.
This report, and the +accounts upon which the report is based (if separate), use the
same accounting policies.
This report does give a true and fair view of the matters disclosed.
This report is based on +accounts to which one of the following applies.
(Tick one)
The +accounts have been
audited.
The +accounts are in the
process of being audited
or subject to review.
The +accounts have been
subject to review.
The +accounts have not yet
been audited or reviewed.
Sign here:
Date: 30 August 2019
(Managing Director)
Print name: Paul Anderson
+ See chapter 19 for defined terms
30/06/2016
Page 2
Appendix 4E
RegeneRating mobility
2019 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 ................................................................................................................................... 46
Independent auditor’s report ...................................................................................................................... 47
Corporate governance statement ............................................................................................................. 52
ASX additional information .......................................................................................................................... 58
Consolidated Financial Statements for the Year Ended 30 June 2019
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, resigned 23 August 2019
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 Perth
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 Financial Statements for the Year Ended 30 June 2019
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 2019.
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 &
CEO
Mr Matthew Callahan Non-Executive Director
Resigned 23 August 2019
Professor Lars Lidgren
Independent Non-
Executive Director
Mr Qi Xiao Zhou
Non-Executive Director
Executive Chairman
Dr Stewart Washer has 25 years of CEO and Board
experience in medical and agrifood biotech
companies. He is Chairman of Emerald Clinics Ltd,
medical cannabis clinics, Director of Zelda
Therapeutics Ltd (ASX:ZLD) medical cannabis
clinical studies, Founding Chairman and current
Director of Cynata Therapeutics Ltd (ASX:CYP)
stem cell therapies.
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)
Botanix Pharmaceuticals Limited (ASX:BOT)
Previous directorships (last 3 years)
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.
Current / Previous directorships (last 3 years)
Nil
Non-Executive Directors
Mr Matthew Callahan was 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.
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 and was a director of
Botanix Pharmaceuticals Ltd (ASX:BOT).
Current directorships
Nil
Previous directorships (last 3 years)
Botanix Pharmaceuticals Limited (ASX:BOT)
Professor Lars Lidgren is an Independent Non-
Executive director of Orthocell who has authored
and co-authored over 450 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
Competence Centre and member of several
editorial boards. Professor Lidgren initiated and
has led the UN ratified Bone and Joint Decade
Consolidated Financial Statements for the Year Ended 30 June 2019
3
DIRECTORS’ REPORT
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 over 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.
Current / 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
Prof Lars Lidgren
Mr Qi Xiao Zhou
Shares
Options/
Warrants
967,835 1,945,842
7,032,555 3,413,692
354,767
1,133,435
354,767
6,103,492
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 2019, 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
5
6
5
6
5
Held(1)
6
6
6
6
6
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 $5,852,214 (30 June 2018:
$5,757,114).
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:
1. CelGro® is a naturally derived collagen
medical device for tissue repair currently
approved for use in Europe (CE Mark). It is
designed for use in multiple indications as an
augment to the surgical repair of tendons,
bone, peripheral nerves and articular cartilage.
Clinical trials are in progress to further validate
Consolidated Financial Statements for the Year Ended 30 June 2019
4
DIRECTORS’ REPORT
the indication for use. CelGro® represents a
paradigm shift in bone and soft tissue
reconstruction and has distinct competitive
advantages over existing tissue repair devices,
particularly in the areas of cell compatibility,
mechanical properties (strength and ease of
use) and facilitating high quality tissue repair
making.
2. 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.
Ortho-ATI® addresses a significant unmet
clinical need in the healing of tendons which
are resistant to existing therapies.
Summary of key events
CelGro®
Soft tissue reconstruction
platform medical device
During the 2019 financial
year Orthocell achieved
key milestones in
executing its partnering
strategy for CelGro® as a
dental bone repair
product, clinical development milestones in nerve
repair and development objectives of key
pipeline products.
CelGro® Dental Bone Regeneration -
Path to Partnering
Further Marketing data
The Company completed a Marketing
Study to further position CelGro® as the best-in-
class collagen membrane for dental bone and
soft tissue repair. The study showed that dental
implant surgery with CelGro® had a significant
positive impact on patients’ lives. All patients
successfully generated new bone to stabilise their
implants and complete treatment in
approximately four months – almost half the time
of the usual two-stage (eight months) dental
implant treatment.
Clinician advocacy program
Orthocell continued to roll out its clinician
advocacy program designed to grow awareness
of CelGro®’s distinct competitive advantages,
expand the network of referring clinicians and
increase product use. Events included:
In October 2018 Orthocell presented its
successful CelGro® bone repair study results
27th European Association for Osseointegration
Annual Scientific Meeting. ASX Release: CelGro®
bone repair study results
In March 2019, the Company attended the
biennial International Dental Show (IDS), held in
Cologne, Germany. IDS is the leading global
trade fair for the dental community
showcasing innovations and new products with
the major international dental companies and
global Key Opinion Leaders in attendance.
In April 2019, the Company completed a
European tour with Dr Brent Allan (principle
investigator of the CelGro study). Dr Allan
presented the dental implant marketing study
data to leading dental clinicians and surgeons
in Italy, Spain and the UK.
CelGro® used in centres of excellence
The Company appointed Carrera Medical, as its
exclusive distributor of CelGro® for dental bone
and soft tissue repair across the UK. Working
together, Carrera and the Company secured
approval for use of CelGro® in the highly
regarded Birmingham Dental Hospital. This
represents the first step in growing Orthocell’s
public hospital customer base.
Expanding target market regulatory approvals
In late 2018, Orthocell completed a Pre-
Submission Meeting with the US Food and Drug
Administration (FDA), to discuss Orthocell’s
application for regulatory clearance using the
510(k) pathway to get approval to sell CelGro® in
the US. Orthocell continued to progress the
regulatory studies required for 510(k) clearance
and remains on track to receive FDA approval in
2020.
Orthocell submitted an application to the
Therapeutic Goods Administration (TGA) for
CelGro®’s inclusion on the Australian Registry of
Therapeutic Goods (ARTG), a pre-requisite for its
introduction into the substantial Australian
commercial market. Orthocell’s application to the
TGA follows its recent approval in Europe (CE
Mark). With European approval in place,
Orthocell is well-positioned to also secure
approval in Australia.
Consolidated Financial Statements for the Year Ended 30 June 2019
5
DIRECTORS’ REPORT
Engaging Partners - The Company continues to
progress discussions with potential global partners.
With EU approval achieved and brand
ambassadors actively representing the product,
Orthocell is well placed to execute on its
commercial partnering strategy in the near term.
CelGro® Nerve Regeneration -
First patients complete nerve
regeneration trial
Orthocell announced clinical results
from the first patients to successfully completed
participation in the CelGro® nerve regeneration
clinical trial. A review of patients 24 months after
nerve regeneration treatment with CelGro®
(involving the repair of 8 peripheral nerves)
indicates that CelGro® successfully guides and
supports nerve regeneration in severely damaged
nerves of the hand and upper limb. The patients
experienced 83% improvement in muscle power
and have returned to work, sport and activities of
daily living after their CelGro® nerve regeneration
treatment.
CelGro® Pipeline – development of orthopaedic
applications
Orthocell progressed development of its
orthopaedic applications announcing a
breakthrough bone fracture repair pre-clinical
study using CelGro® dosed with bone growth
factors presented at European Orthopaedic
Research Society meeting in Ireland. This study
indicated CelGro® when dosed with bone active
factors can accelerate and augment the repair
of bone fractures. Accelerated repair of critical
bone defects represents an area of significant
clinical interest to the orthopaedic community.
This study also further validates the versatility of
CelGro® and the potential to extend Orthocell’s
orthopaedic product range.
CelGro® Patent protection secured globally
During the 2019 financial year, the Company was
granted divisional patents in Europe, Japan, Hong
Kong and Mexico for its CelGro® collagen
medical device platform. The patents cover the
method of manufacture of novel bio-scaffolds
and method of combining cells and scaffolds as
an aid in the surgical repair of soft tissue injuries
and protects the CelGro® product platform.
CelGro® patents have been previously granted in
the US, Europe, China, Canada, Singapore,
Australia and New Zealand.
Ortho-ATI®
Cell therapy to regenerate
damaged tendon tissue
Ortho-ATI®: progressing
our collaboration with
Johnson & Johnson
The company remains
on track to complete
recruitment for its randomised controlled clinical
trial of Ortho-ATI® versus corticosteroid injection
by 3Q CY2019.
The objective of this study is to assess the safety
and effectiveness of Ortho‐ATI® compared to
corticosteroid injection in the treatment of rotator
cuff tendinopathy and tear. The trial is being
undertaken in collaboration with DePuy Synthes
Products, Inc., part of the Johnson & Johnson
Medical Device Companies.
Ortho-ATI® shows 82% success rate
As part of Orthocell’s commitment to its
continuous delivery of high quality regenerative
medicine products, the Company administers an
Annual Quality Study to capture patient
feedback following treatment of chronic tendon
injuries with Orthocell’s Ortho-ATI® stem cell
therapy. The 2018 study indicated 82% of patients
were ‘satisfied’ to ‘extremely satisfied’ with how
Ortho-ATI® relieved symptoms (i.e. chronic pain)
and improved ability to perform everyday
activities at home and at work.
Chronic tendon pain is a highly prevalent
condition. For example, tennis elbow (elbow pain)
affects 1-3% of the general population. Ortho-ATI®
is at the forefront of a large and growing market
opportunity where the addressable market is
estimated to be >US$7.7bn and growing.
Corporate
In October 2018, the Company received a
Research and Development (R&D) tax incentive
cash refund of $2,528,160 for the financial year
2017/2018.
Orthocell completed a placement of 26,500,000
ordinary shares at $0.40 per share to raise $10.6
million before costs. Demand for the placement
was well in excess of funds sought with support
from existing shareholders, new institutions and
Consolidated Financial Statements for the Year Ended 30 June 2019
6
DIRECTORS’ REPORT
other sophisticated investors. The funds raised, in
combination with cash reserves, will be used to
accelerate commercialisation of CelGro® for
dental bone, tendon and nerve repair into key
markets; progress key regulatory approvals in the
US and other target jurisdictions; and support
continued business development and marketing
initiatives.
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
The total amount raised under share placements
of A$13,825,192 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 raises in
December 2018 and June 2019, the Company will
continue the development and
commercialisation of CelGro® and Ortho-ATI.
Orthocell remains focused on executing its
partnering strategy for CelGro® in dental bone
and soft tissue repair designed to optimise
shareholder value. This includes rolling out the
clinician advocacy program and undertaking
targeted education, promotion and advertising
programs led by Orthocell’s key opinion leaders.
Orthocell intends to leverage the CE Mark to
achieve AUS and US regulatory approvals and
accelerate the introduction of the tendon and
nerve indications, in parallel to the
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
7
DIRECTORS’ REPORT
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
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
8
DIRECTORS’ REPORT
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 2019 the
Company granted options to Executives as
detailed in the tables below.
The remuneration of executives for the years
ended 30 June 2018 and 30 June 2019 are
detailed in the tables below.
Key management personnel remuneration details:
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
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
Total
2019
365,000
150,000
91,250
-
51,657
-
6,657
-
82,493
66,353
597,057
216,353
29.1%
30.7%
721,100
91,250
55,557
6,657
236,719
1,111,283
29.5%
Non-executive Directors:
Mr M Callahan
Prof L Lidgren
Mr QX Zhou
60,000
22,500
23,975
-
-
-
-
-
2,278
-
-
-
126,353
33,260
29,510
186,353
55,760
55,763
67.8%
59.6%
52.9%
Executive Directors:
Mr P Anderson
Dr S Washer
365,000
75,000
91,250
-
43,344
-
188
-
82,493
141,353
582,275
216,353
29.8%
65.3%
Total
546,475
91,250
45,622
188
412,969
1,096,504
46.0%
(1) Discretionary bonus as approved by the board.
Consolidated Financial Statements for the Year Ended 30 June 2019
9
DIRECTORS’ REPORT
Share-based compensation
During the previous 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 2019 $236,719 (2018: $236,719) of these options were recognised as vested.
There were no other share-based payments of options made to key management personnel during the
year ended 30 June 2019.
During the year ended 30 June 2019 the following share-based payments of shares were made to key
management personnel in lieu of fees as approved at a meeting of shareholders held 20 May 2019:
Mr Matthew Callahan
Professor Lars Lidgren
Mr Qi Xiao Zhou
Dr Stewart Washer
Value
of shares
50,000
18,750
15,000
62,500
Number
of shares(1)
312,887
117,331
91,576
391,108
(1) Number of shares calculated based on the VWAP of all shares traded during the month that the fee relates to
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
30/06/2018
Additions
Disposals/
Other
Balance
30/06/2019
Ordinary shares:
Mr Paul Anderson
Mr Matthew Callahan(1)
Professor Lars Lidgren
Dr Stewart Washer
Mr Qi Xiao Zhou
7,032,555
10,277,882
1,008,209
550,411
5,996,241
-
312,887
117,331
391,108
91,576
-
(1,960,382)
-
-
-
7,032,555
8,630,387
1,125,540
941,519
6,087,817
24,865,298
912,902
(1,960,382)
23,817,818
Mr Callahan is a founder and director of Stone Ridge Ventures Pty Ltd which is the manager of the SRV Tech Trust, a venture
(1)
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 (7,570,000 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 (649,177 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.
Consolidated Financial Statements for the Year Ended 30 June 2019
10
DIRECTORS’ REPORT
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(1)
Dr Stewart Washer
Mr Matthew Callahan
Professor Lars Lidgren
Mr Qi Xiao Zhou
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
2,363,692
1,329,175
1,233,333
254,767
254,767
(1) During the year ended 30 June 2018 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.
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:
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
Notice
period:
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;
(iii)
the Executive acknowledges that
intellectual property created by the Executive will
be owned by the Company;
(iv)
the Executive agrees to keep confidential
information secret and confidential except to the
extent required by law; and
(v)
during the employment and for a period
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
11
DIRECTORS’ REPORT
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
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
12
DIRECTORS’ REPORT
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
13/10/2016
13/12/2016
13/12/2016
10/03/2017
19/06/2017
07/05/2018
07/05/2018
31/12/2018
13/06/2019
28/06/2019
14/08/2019
19/11/2020
12/10/2019
13/12/2019
13/12/2020
10/03/2020
19/06/2020
08/05/2021
08/05/2021
31/12/2021
13/06/2022
28/06/2022
14/08/2022
price
$0.580
$0.624
$0.648
$0.550
$0.594
$0.510
$0.340
$0.395
$0.250
$0.413
$0.545
$0.413
Number of
options/warrants
12,122,237
650,000
490,000
600,000
40,000
200,000
1,600,000
11,000,000
8,843,308
1,000,000
2,000,000
1,660,000
12. Shares issued on the exercise of
options
There were no shares of the Company issued
during the year ended 30 June 2019 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 $24,761 in respect of this policy.
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
13
DIRECTORS’ REPORT
16. Matters subsequent to the end of the
financial year
18. Officers of the Company who are
former audit partners of PKF Perth
There are no officers of the Company who are
former audit partners of PKF Perth.
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 Perth 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
30 August 2019
Perth
No matter or circumstance has arisen since 30
June 2019 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.
Consolidated Financial Statements for the Year Ended 30 June 2019
14
AUDITOR’S INDEPENDENCE DECLARATION
Consolidated Financial Statements for the Year Ended 30 June 2019
15
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2019
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
2019
$
2018
$
3
4
3
4
5
945,657
(732,335)
619,179
(469,886)
213,322
149,293
293,714
283,503
(5,585,155)
(2,018,363)
(1,283,892)
(8,887,410)
(4,634,646)
(2,021,651)
(1,785,781)
(8,442,078)
(8,380,374)
(8,009,282)
2,528,160
2,252,168
(5,852,214)
(5,757,114)
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss
(5,852,214)
(5,757,114)
Loss per share
Basic earnings per share
Diluted earnings per share
29
29
$
(0.049)
(0.049)
$
(0.055)
(0.055)
Note: the above statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2019
16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2019
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
2019
$
2018
$
6
7
8
9
11,236,299
196,169
54,631
40,958
2,910,233
170,024
53,816
94,897
11,528,057
3,228,970
10
11
287,191
1,782,442
341,059
1,659,835
2,069,633
2,000,894
13,597,690
5,229,864
12
13
14
15
1,784,085
442,387
646,756
1,216,323
467,898
748,293
2,873,228
2,432,514
-
-
425,148
425,148
2,873,228
2,857,662
10,724,462
2,372,202
16
17
18
39,026,963
1,955,279
(30,257,780)
25,984,676
1,025,612
(24,638,086)
10,724,462
2,372,202
Note: the above statement of financial position should be read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2019
17
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2019
Issued
Capital
$
Share-based
payment
reserve
$
Accumulated
losses
Total equity
$
$
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
Balance at 1 July 2018
25,984,676
1,025,612
(24,638,086)
2,372,202
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
Expiry of options
Options vesting
-
-
-
13,825,192
(782,905)
-
-
-
-
-
-
-
-
766,936
(5,852,214)
(5,852,214)
-
-
-
-
-
-
-
13,825,192
(782,905)
766,936
(232,520)
232,520
-
395,251
-
395,251
Balance at 30 June 2019
39,026,963
1,955,279
(30,257,780)
10,724,462
Note: the above statement of changes in equity should be read in conjunction with the accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2019
18
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2019
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers & employees (inclusive of GST)
Grants received
R&D tax concession received
Interest received
Interest paid
Note
2019
$
2018
$
1,000,780
(7,685,819)
-
2,528,160
10,815
(34,402)
561,853
(7,587,697)
110,955
2,252,168
18,469
-
Net cash used in operating activities
28
(4,180,466)
(4,644,252)
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
Subscription funds received on issue of shares
Subscription funds received on exercise of options
Share equity costs
Net cash from financing activities
(354,584)
(14,155)
(286,377)
(87,183)
(368,739)
(373,560)
12,400,641
1,140,175
(665,545)
2,957,500
-
(75,712)
12,875,271
2,881,788
Net increase/(decrease) in cash and cash equivalents
8,326,066
(2,136,024)
Cash and cash equivalents at the beginning of the financial year
2,910,233
5,046,257
Cash and cash equivalents at the end of the financial year
11,236,299
2,910,233
Note: the above consolidated statement of cash flows should be read in conjunction with the
accompanying notes
Consolidated Financial Statements for the Year Ended 30 June 2019
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.
The following Accounting Standards and
Interpretations are most relevant to the
consolidated entity:
AASB 9 Financial Instruments
The consolidated entity has adopted AASB 9 from
1 July 2018. The standard introduced new
classification and measurement models for
financial assets. A financial asset shall be
measured at amortised cost if it is held within a
business model whose objective is to hold assets in
order to collect contractual cash flows which
arise on specified dates and that are solely
principal and interest. A debt investment shall be
measured at fair value through other
comprehensive income if it is held within a
business model whose objective is to both hold
assets in order to collect contractual cash flows
which arise on specified dates that are solely
principal and interest as well as selling the asset
on the basis of its fair value. All other financial
assets are classified and measured at fair value
through profit or loss unless the entity makes an
irrevocable election on initial recognition to
present gains and losses on equity instruments
(that are not held-for-trading or contingent
consideration recognised in a business
combination) in other comprehensive income
('OCI'). Despite these requirements, a financial
asset may be irrevocably designated as
measured at fair value through profit or loss to
reduce the effect of, or eliminate, an accounting
mismatch. For financial liabilities designated at fair
value through profit or loss, the standard requires
the portion of the change in fair value that relates
to the entity's own credit risk to be presented in
OCI (unless it would create an accounting
mismatch). New simpler hedge accounting
requirements are intended to more closely align
the accounting treatment with the risk
management activities of the entity. New
impairment requirements use an 'expected credit
loss' ('ECL') model to recognise an allowance.
Impairment is measured using a 12-month ECL
method unless the credit risk on a financial
instrument has increased significantly since initial
recognition in which case the lifetime ECL method
is adopted. For receivables, a simplified approach
to measuring expected credit losses using a
lifetime expected loss allowance is available.
There is no impact on the consolidated entity’s
primary statements from the adoption of AASB 9
but has resulted in a change to the accounting
policies.
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15
from 1 July 2018. The standard provides a single
comprehensive model for revenue recognition.
The core principle of the standard is that an entity
shall recognise revenue to depict the transfer of
promised goods or services to customers at an
amount that reflects the consideration to which
the entity expects to be entitled in exchange for
those goods or services. The standard introduced
a new contract-based revenue recognition
model with a measurement approach that is
based on an allocation of the transaction price.
This is described further in the accounting policies
below. Credit risk is presented separately as an
expense rather than adjusted against revenue.
Contracts with customers are presented in an
entity's statement of financial position as a
contract liability, a contract asset, or a
receivable, depending on the relationship
between the entity's performance and the
Consolidated Financial Statements for the Year Ended 30 June 2019
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
customer's payment. Customer acquisition costs
and costs to fulfil a contract can, subject to
certain criteria, be capitalised as an asset and
amortised over the contract period. The adoption
of AASB 15 does not have any material impact on
the accounting of revenue in the consolidated
entity but has resulted in a change to the
description of accounting policies.
AASB 16 leases
This standard is applicable to annual reporting
periods beginning on or after 1 January 2019. The
standard replaces AASB 117 ‘Leases’ and for
lessees will eliminate the classifications of
operating leases and finance leases. Subject to
exceptions, a ‘right-of-use’ asset will be
capitalised in the statement of financial position,
measured at the present value of the
unavoidable future lease payments to be made
over the lease term. The exceptions relate to
short-term leases of 12 months or less and leases
of low-value assets (such as personal computers
and small office furniture) where an accounting
policy choice exists whereby either a right-of-use
asset is recognised or lease payments are
expenses to profit and loss as incurred. A liability
corresponding to the capitalised lease will also be
recognised, adjusted for lease payments, lease
incentives received, initial direct costs incurred
and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease
expense recognition will be replaced with a
depreciation charge for the leased asset
(included in operating costs) and an interest
expense on the recognised lease liability
(included in finance costs). In the earlier periods
of the lease, the expenses associated with the
lease under AASB 16 will be higher when
compared to lease expenses under AASB 117.
However EBITDA (Earnings Before Interest, Tax
Depreciation and Amortisation) results will be
improved as the operating expense is replaced
by interest expense and depreciation in profit or
loss under AASB 16. For classification within the
statement of cash flows, the lease payments will
be separated into both a principal (financing
activities) and interest (either operating or
financing activities) component. For lessor
accounting, the standard does not substantially
change how a lessor accounts for leases. The
adoption of AASB 16 does not have any material
impact on the accounting of leases in 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 subsidiaries. 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 28
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 consolidated entity has net assets of
$10,724,462 (2018: $2,372,202) as at 30 June 2019
and incurred a loss of $5,852,214 (2018:
$5,757,114) and net operating cash outflow of
$4,180,466 (2018: $4,644,252) for the year ended
30 June 2019.
The consolidated entity’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 consolidated entity’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
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
consolidated entity does not achieve the above
actions, there exists a material uncertainty as to
whether the consolidated entity 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
subsidiaries Ausbiomedical Pty Ltd, Orthocell UK
Ltd and Orthocell (HK) Limited as at 30 June 2019.
Orthocell Limited and its subsidiaries together are
referred to in these consolidated financial
statements as the 'consolidated entity'.
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
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
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
Consolidated Financial Statements for the Year Ended 30 June 2019
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments
and assessing their performance.
Other revenue
Other revenue is recognised when it is received or
when the right to receive payment is established.
Foreign currency translation
Income tax
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
In accordance with the adoption of AASB 15
noted above, the terminology in relation to
revenue recognition has been changed as
follows:
“Sale of goods” are derived from the sale of cell
therapy products and biological scaffold
products where control transfers to our customers
and our performance obligations are satisfied at
the time of delivery to or receipt of the products
by the customer. The revenue derived from cell
therapy products is recognised at the time when
the patient’s cells have been processed and are
ready to be delivered to the patient. The revenue
derived from biological scaffold products is
recognised at the time of delivery to the
customer.
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.
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
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.
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. Such assets are subsequently
measured at either amortised cost or fair value
depending on their classification. Classification is
determined based on both the business model
within which such assets are held and the
contractual cash flow characteristics of the
Consolidated Financial Statements for the Year Ended 30 June 2019
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
financial asset unless, an accounting mismatch is
being avoided.
Financial assets are derecognised when the rights
to receive cash flows have expired or have been
transferred and the consolidated entity has
transferred substantially all the risks and rewards of
ownership. When there is no reasonable
expectation of recovering part or all of a financial
asset, it's carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost
or at fair value through other comprehensive
income are classified as financial assets at fair
value through profit or loss. Typically, such
financial assets will be 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 a derivative; or (ii) designated as such
upon initial recognition where permitted. Fair
value movements are recognised in profit or loss.
Financial assets at fair value through other
comprehensive income
Financial assets at fair value through other
comprehensive income include equity
investments which the consolidated entity intends
to hold for the foreseeable future and has
irrevocably elected to classify them as such upon
initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss
allowance for expected credit losses on financial
assets which are either measured at amortised
cost or fair value through other comprehensive
income. The measurement of the loss allowance
depends upon the consolidated entity's
assessment at the end of each reporting period
as to whether the financial instrument's credit risk
has increased significantly since initial recognition,
based on reasonable and supportable
information that is available, without undue cost
or effort to obtain.
Where there has not been a significant increase in
exposure to credit risk since initial recognition, a
12-month expected credit loss allowance is
estimated. This represents a portion of the asset's
lifetime expected credit losses that is attributable
to a default event that is possible within the next
12 months. Where a financial asset has become
credit impaired or where it is determined that
credit risk has increased significantly, the loss
allowance is based on the asset's lifetime
expected credit losses. The amount of expected
credit loss recognised is measured on the basis of
the probability weighted present value of
anticipated cash shortfalls over the life of the
instrument discounted at the original effective
interest rate.
For financial assets measured at fair value through
other comprehensive income, the loss allowance
is recognised within other comprehensive income.
In all other cases, the loss allowance is recognised
in profit or loss.
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
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 &
technical feasibility, the consolidated entity is able
to use or sell the asset, has sufficient resources, &
intent to complete the development & 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
Consolidated Financial Statements for the Year Ended 30 June 2019
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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.
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
Consolidated Financial Statements for the Year Ended 30 June 2019
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
cancelled and new award is treated as if they
were a modification.
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Fair value measurement
Dividends
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.
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
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 Financial Statements for the Year Ended 30 June 2019
28
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 2017-4
AASB 2017-6
AASB 2017-7
AASB 2018-1
Amendments to Australian Accounting Standards –
Uncertainty over Income Tax Treatments
Amendments to Australian Accounting Standards –
Prepayment Features with Negative Compensation
Application
date *
Issue date
1 Jan 2019
Jul 2017
1 Jan 2019
Dec 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
AASB 2018-2
Amendments to Australian Accounting Standards – Plan
Amendment, Curtailment or Settlement
1 Jan 2019 Mar 2018
AASB 2018-6
AASB 2018-7
AASB 2019-1
Amendments to Australian Accounting Standards –
Definition of a Business
Amendments to Australian Accounting Standards –
Definition of Material
Amendments to Australian Accounting Standards –
References to the Conceptual Framework
AASB 16
Leases
1 Jan 2020
Dec 2018
1 Jan 2020
Dec 2018
1 Jan 2020 May 2019
1 Jan 2019
Feb 2016
AASB
Interpretation 23
Uncertainty over Income Tax Treatments
1 Jan 2019
Jun 2017
* Annual reporting periods beginning after
Consolidated Financial Statements for the Year Ended 30 June 2019
29
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 Financial Statements for the Year Ended 30 June 2019
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
Sales revenue
Sale of goods
Other revenue
Interest
Export market development grant
License fee & royalties
Profit on termination of license agreement
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
2019
$
2018
$
945,657
619,179
945,657
619,179
10,815
-
141,696
125,152
-
16,051
18,469
110,955
141,696
-
4,118
8,265
293,714
283,503
1,239,371
982,682
732,335
469,886
65,444
153,277
218,721
75,364
117,952
193,316
110,352
115,139
2,779,909
(25,511)
267,044
479,078
282,725
169,133
7,507
131,440
4,091,325
2,741,670
39,824
258,417
570,328
281,100
156,826
2,286
291,955
4,342,406
33,122
45,953
Consolidated Financial Statements for the Year Ended 30 June 2019
31
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
2019
$
2018
$
(2,528,160)
-
(2,252,168)
-
(2,528,160)
(2,252,168)
Numerical reconciliation of income tax expense & tax at the statutory rate
Loss before income tax expense from continuing operations
(8,371,192)
(8,009,282)
Tax at the statutory tax rate of 27.5% (2018: 27.5%)
(2,302,078)
(2,202,552)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income:
Non-deductible items
Research and development expenditure
Share-based payments
Income tax benefit not brought to account
66,366
785,420
100,089
1.350,203
-
25,627
571,020
147,136
1,458,769
-
Research and development tax benefit received
(2,528,160)
(2,252,168)
The following deferred tax balances have not been recognised:
Deferred tax assets not recognised at 27.5% (2018: 27.5%)
Provisions and accruals
Capital raising costs
Carried forward revenue losses
Deferred tax liabilities not recognised at 27.5% (2018: 27.5%)
Prepayments
121,656
203,163
3,199,905
146,072
138,182
2,736,486
3,524,724
3,020,740
11,263
26,097
11,263
26,097
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 Financial Statements for the Year Ended 30 June 2019
32
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
2019
$
2018
$
11,236,299
2,910,233
11,236,299
2,910,233
11,236,299
2,910,233
11,236,299
2,910,233
75,135
110,990
1,069
119,965
2,742
56,292
121,034
59,034
196,169
170,024
Impairment of receivables
There has been no impairment of receivables in the year ended 30 June 2019 (30 June 2018: $0).
Past due but not impaired
Customers with balances past due but without provision for impairment of receivables amount to $17,104 as
at 30 June 2019 (30 June 2018: nil)
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
Consolidated Financial Statements for the Year Ended 30 June 2019
8,900
8,204
17,104
-
-
-
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Inventories
Consumables – at cost
Work in progress – at cost
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
2019
$
2018
$
5,455
49,176
-
53,816
54,631
53,816
40,958
94,897
40,958
94,897
272,502
(84,071)
188,431
566,210
(474,236)
91,974
44,664
(37,878)
6,786
272,502
(77,258)
195,244
556,028
(420,788)
135,240
43,269
(32,694)
10,575
287,191
341,059
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 2017
Additions
Disposals
Depreciation
Balance at 30 June 2018
Additions
Disposals
Depreciation
Leasehold
improvements
$
Plant and
equipment
$
Furniture and
fittings
$
Total
$
202,056
-
-
(6,812)
195,244
-
-
(6,813)
140,232
56,805
-
(61,797)
135,240
10,182
-
(53,448)
15,525
1,805
-
(6,755)
10,575
1,394
-
(5,183)
357,813
58,610
-
(75,364)
341,059
11,576
-
(65,444)
Balance at 30 June 2019
188,431
91,974
6,786
287,191
Consolidated Financial Statements for the Year Ended 30 June 2019
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Intangibles
Patents and trademarks – at cost
Less: Accumulated amortisation
Reconciliations
2019
$
2018
$
2,224,015
(441,573)
1,948,131
(288,296)
1,782,442
1,659,835
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 2017
Additions
Amortisation expense
Balance at 30 June 2018
Additions
Amortisation expense
Balance at 30 June 2019
Note 12. Trade and other payables
Trade payables
Other payables
$
1,515,694
262,093
(117,952)
1,659,835
275,884
(153,277)
1,782,442
2019
$
2018
$
1,648,779
135,306
1,020,281
196,042
1,784,085
1,216,323
Consolidated Financial Statements for the Year Ended 30 June 2019
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Employee benefits
Annual leave entitlements
Long service leave entitlements
2019
$
2018
$
251,210
191,177
273,605
194,293
442,387
467,898
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.
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
646,756
-
606,593
141,700
646,756
748,293
-
-
425,148
425,148
2019
Shares
2018
Shares
2019
$
2018
$
Ordinary shares – fully paid
153,366,810
110,177,779
41,446,694
27,621,502
Share equity costs – ordinary shares
-
-
(2,419,731)
(1,636,826)
153,366,810
110,177,779
41,446,694
27,621,502
153,366,810
110,177,779
39,026,963
25,984,676
Consolidated Financial Statements for the Year Ended 30 June 2019
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Equity – issued capital (continued)
Movements in ordinary share capital
Details
Balance
Issue of shares
Share issue costs
Issue of shares
Issue of shares
Balance
Issue of shares
Issue of shares
Share issue costs
Issue of shares
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares in lieu of fees
Issue of shares in lieu of fees
Issue of shares in lieu of fees
Issue of shares in lieu of fees
Issue of shares on exercise of options
Issue of shares
Share issue costs
Issue of shares in lieu of fees
Issue of shares on exercise of options
Issue of shares on exercise of options
Issue of shares
Date
Shares
Issue price
$
1 Jul 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
30 Jun 2018
110,177,779
18 Dec 2018
31 Dec 2018
5 Apr 2019
15 May 2019
17 May 2019
20 May 2019
21 May 2019
21 May 2019
21 May 2019
21 May 2019
31 May 2019
5 Jun 2019
5 Jun 2019
5 Jun 2019
28 Jun 2019
28 Jun 2019
9,709,656
882,353
-
75,000
1,219,898
1,086,640
835,901
214,607
241,543
391,116
413,333
650,972
26,500,000
100,733
467,290
300,000
100,000
$0.17
$0.17
$0.135
$0.250
$0.250
$0.250
$0.1456
$0.1449
$0.1321
$0.1250
$0.250
$0.400
$0.513
$0.250
$0.250
$0.530
1,427,401
(75,712)
1,457,500
72,599
25,984,676
1,650,641
150,000
(252,905)
10,125
304,974
271,660
208,975
31,250
35,000
51,667
51,667
162,743
10,600,000
(530,000)
51,667
116,823
75,000
53,000
Balance
30 Jun 2019
153,366,810
39,026,963
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
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
37
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Equity – issued capital (continued)
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
2019
Options
2018
Options
2019
$
2018
$
Share-based payment reserve
21,180,000
15,520,000
1,955,279
1,025,612
21,180,000
15,520,000
1,955,279
1,025,612
Movements in share-based payment reserve
Details
Balance at 30 June 2017
Expiry of options
Expiry of options
Issue of options(1)
Issue of options(2)
Balance at 30 June 2018
Issue of options(3)
Issue of options(4)
Expiry of options
Value of options vested(2)
Value of options expired/forfeited(2)
Issue of options(5)
Issue of options(6)
Date
No of
options
Total
$
3 Aug 2017
24 Nov 2017
7 May 2018
7 May 2018
3 Oct 2018
18 Dec 2018
26 Feb 2019
7 May 2019
17 May 2019
12 Jun 2019
28 Jun 2019
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
500,000
3,600,000
(1,350,000)
-
(90,000)
1,000,000
2,000,000
5,660,000
62,400
117,360
(228,575)
395,251
(3,945)
74,517
512,660
929,667
Balance at 30 June 2019
21,180,000
1,955,279
Total value of share-based payments for the year is $1,162,188 (2018: $535,041). Of this $363,961 (2018:
$291,955) is classified as share-based payments to employees in Note 4 under employment expenses,
$117,360 (2018: nil) is classified as share equity cost and the remaining $680,867 (2018: $243,086) is classified
in consultants’ fees. 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.
Consolidated Financial Statements for the Year Ended 30 June 2019
38
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Share-based payment reserve (continued)
For the options granted the valuation model inputs used to determine the fair value at the grant date are as
follows:
Grant date
Expiry date
Share price at grant date
Exercise price
Expected volatility
Dividend yield
Risk-free rate
Fair value at grant date
(1)
07/05/18
08/05/21
$0.345
$0.340
50%
0%
2.17%
$0.1248
(2)
07/05/18
08/05/21
$0.345
$0.395
50%
0%
2.15%
$0.1076
(3)
07/05/18
08/05/21
$0.345
$0.340
50%
0%
2.17%
$0.1248
(4)
18/12/18
31/12/21
$0.160
$0.250
48%
0%
1.93%
$0.0326
(5)
13/06/19
13/06/22
$0.425
$0.413
80%
0%
0.99%
$0.2236
(6)
28/06/19
28/06/22
$0.510
$0.545
80%
0%
0.96%
$0.2563
(2) 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
(5) The options granted to employees on 12 June 2019 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
12 Jun 2019
12 Jun 2020
12 Jun 2021
(1), (3), (4) and (6) are fully vested.
333,333
333,333
333,334
1,000,000
74,517
74,516
74,517
223,550
Set out below are summaries of options granted by the Company:
Grant date
Expiry date
Exercise
price
Opening
balance
Granted
Exercised
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
Weighted average exercise price
$0.571
$0.390
24,884,737
12,190,000
-
-
-
-
-
-
-
-
-
-
-
-
-
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
1,100,000
11,090,000
(9,432,500) 27,642,237
$0.545
$0.496
Consolidated Financial Statements for the Year Ended 30 June 2019
39
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 17. Share-based payment reserve (continued)
Grant
date
Expiry date Exercise
2019
19/11/2015 19/11/2020
26/02/2016 26/02/2019
13/10/2016 12/10/2019
12/12/2016 12/12/2019
13/12/2016 13/12/2019
10/03/2017 10/03/2020
19/06/2017 19/06/2020
07/05/2018 08/05/2021
07/05/2018 08/05/2021
18/10/2018 31/12/2021
13/06/2019 13/06/2022
28/06/2019 28/06/2022
price
$0.58
$0.56
$0.62
$0.64
$0.55
$0.59
$0.41
$0.345
$0.400
$0.250
$0.413
$0.545
Opening
balance
12,122,237
1,350,000
650,000
490,000
600,000
40,000
200,000
1,100,000
11,090,000
-
-
-
Granted
Exercised
Expired/
forfeited
Closing
balance
-
-
-
-
-
-
-
500,000
-
14,192,009
1,000,000
2,000,000
-
-
-
-
-
-
-
-
-
(4,560,701)
-
-
(1,350,000)
-
-
-
-
-
-
- 12,122,237
-
650,000
490,000
600,000
40,000
200,000
1,600,000
(90,000) 11,000,000
9,631,308
1,000,000
2,000,000
-
-
-
Weighted average exercise price
$0.496
$0.295
$0.250
$0.550
$0.432
27,642,237
17,692,009
(4,560,701)
(1,440,000) 39,333,545
At 30 June 2019 the remaining weighted average contractual life of the options is 699 days (2018: 907 days).
Note 18. Equity – accumulated losses
Accumulated losses at the beginning of the financial year
Expired/forfeited options
Loss after income tax expense for the year
2019
$
2018
$
24,638,086
(232,520)
5,852,214
19,679,377
(798,405)
5,757,114
Accumulated losses at the end of the financial year
30,257,780
24,638,086
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 & liabilities such as trade receivables & trade payables, which arise directly from its operations. It is, &
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 & 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 & financial liability are disclosed in Note 1.
(b)
Interest rate risk
At reporting date the Company had the following financial assets exposed to interest rate risk:
Cash(1)
11,236,299
2,910,233
(1)
The weighted average interest rate of cash is 0.44% (2018: 0.53%)
Consolidated Financial Statements for the Year Ended 30 June 2019
40
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 19. Financial instruments (continued)
(c) Credit risk
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
$
1,626,814
1,784,085
-
-
-
-
-
-
-
-
-
-
Total carrying
amount
$
1,626,874
1,784,085
As at 30 June 2018:
Trade & other payables
As at 30 June 2019:
Trade & other payables
(e) Net fair values
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 2019 and 2018. None of the Company’s financial liabilities are interest bearing.
Financial assets
30 June 2018
Cash
30 June 2019
Cash
Carrying
amount
$
Interest rate risk
-1%
Interest rate risk
1%
Net profit
$
Equity
$
Net profit
$
Equity
$
2,910,233
(29,102)
(29,102)
29,102
29,102
11,236,299
(112,362)
(112,362)
112,362
112,362
Consolidated Financial Statements for the Year Ended 30 June 2019
41
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2019
$
2018
$
637,725
45,622
188
412,969
812,350
55,557
6,657
236,719
1,096,504
1,111,283
Note 21. Remuneration of auditor
During the financial year the following fees were paid or payable for services provided by PKF Perth, the
auditor of the Company, its network firms and unrelated firms:
Audit services – PKF Perth
Audit or review of the consolidated financial statements
Other services – PKF Perth
Preparation of the tax return
Other matters
2019
$
2018
$
31,105
32,915
3,380
2,450
5,830
3,800
450
4,250
36,935
37,165
Note 22. Contingent liabilities
The consolidated entity has no contingent liabilities for the years ended 30 June 2019 or 30 June 2018.
Note 23. Contingent assets
The consolidated entity has no contingent assets for the year ended 30 June 2019 or 30 June 2018.
Consolidated Financial Statements for the Year Ended 30 June 2019
42
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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
2019
$
2018
$
66,000
328,776
539,846
58,350
297,425
623,450
934,622
979,225
2,553
5,745
-
105,969
215,706
-
8,298
321,675
942,920
1,300,900
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 Financial Statements for the Year Ended 30 June 2019
43
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
Orthocell UK Ltd(1)
Orthocell (HK) Limited(1)
Country of incorporation
Australia
United Kingdom
Hong Kong
2019
%
100
100
100
2018
%
100
-
-
(1) These companies were incorporated in the current year ending 30 June 2019.
As the subsidiaries do 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
No other matter or circumstance has arisen since 30 June 2019 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
2019
$
2018
$
Loss after income tax expense for the year
(5,852,214)
(5,757,114)
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
218,721
1,329,202
33,122
193,316
535,041
45,953
39,527
53,940
(33,937)
644,105
(259,838)
(86,246)
(266,848)
(78,020)
(61,011)
(11,372)
219,325
371,502
39,824
(141,696)
(4,180,466)
(4,644,252)
Consolidated Financial Statements for the Year Ended 30 June 2019
44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 29. Loss per share
2019
$
2018
$
Loss after income tax expense for the year
(5,852,214)
(5,757,114)
Weighted average number of shares used in calculating basic and
diluted loss per share
Shares
Shares
118,369,947
105,726,821
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 154,305,938 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 Financial Statements for the Year Ended 30 June 2019
45
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 2019 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
30 August 2019
Perth
Consolidated Financial Statements for the Year Ended 30 June 2019
46
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2019
47
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2019
48
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2019
49
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2019
50
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2019
51
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 28 August 2019.
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.
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.
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.
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.
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.
As at 30 June 2019, the Company does not have
any female Board members (2018: nil). The
Company has 1 female (33%) in senior management
positions, (2018: 1, 33%). Of the balance of the
Company’s employees 76% are female (2018: 74%).
59% (2018: 56%) of the Company’s employees in
total, including Directors, are female.
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
52
CORPORATE GOVERNANCE STATEMENT
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.
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 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.
Performance reviews were undertaken during the
reporting period.
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.
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.
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.
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 2019 Professor Lars
Lidgren was considered to be an independent
Director of the Company.
Consolidated Financial Statements for the Year Ended 30 June 2019
53
CORPORATE GOVERNANCE STATEMENT
Mr Qi Xiao Zhou was a substantial shareholder of the
Company until 28 December 2018 from which time
he has been considered an independent Director.
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 Matthew Callahan is a founder and director of a
substantial shareholder and as such is not
considered to be an independent director during
the year ended 30 June 2019. Mr Callahan ceased
to be a director on 23 August 2019.
The appointment date of Directors is set out in the
Directors Report forming part of the Annual Financial
Statements.
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.
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.
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 professional
development opportunities for directors and
management.
No new directors were appointed during the year.
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.
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.
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,
Consolidated Financial Statements for the Year Ended 30 June 2019
54
CORPORATE GOVERNANCE STATEMENT
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
2018 and the full year ended 30 June 2019 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.
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.
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.
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.
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.
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
Consolidated Financial Statements for the Year Ended 30 June 2019
55
CORPORATE GOVERNANCE STATEMENT
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.
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.
Contact with the Company can be made via email
addresses provided on the website.
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.
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.
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.
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 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
Consolidated Financial Statements for the Year Ended 30 June 2019
56
CORPORATE GOVERNANCE STATEMENT
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.
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.
minimum standard of behaviour expected from
employees when dealing with stakeholders.
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 Professor 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.
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.
Consolidated Financial Statements for the Year Ended 30 June 2019
57
ASX ADDITIONAL INFORMATION
Additional information required by the ASX Limited
Listing Rules and not disclosed elsewhere in this report is
set out below. The information is effective 28 August
2019.
Ordinary shares
20 largest shareholders
Shares held
%
J P Morgan Nominees
Australia Pty Limited
7,916,922
5.13
Substantial shareholders
Ming Hao Zheng & Fan Ying
7,524,701
The number of substantial shareholders and their
associates are set out below:
Mr Paul Frederick Anderson &
Ms Nicole Jane Telford
4.88
4.15
3.89
3.35
1.90
1.60
1.34
1.02
0.93
0.86
0.75
0.65
0.61
0.60
0.58
0.51
0.50
0.42
6,403,335
5,996,241
5,168,276
Mr Qixiao Zhou
Mr Jia Xun Xu
National Nominees Limited
2,934,595
Citicorp Nominees Pty Limited
2,465,675
HSBC Custody Nominees
(Australia) Limited
2,060,000
Dr John Clifford Philpott
1,572,059
Sarisan Consultants Pty Ltd
1,440,019
HSBC Custody Nominees
(Australia) Limited
1,322,758
Jamber Investments Pty Ltd
1,150,000
BT Portfolio Services Limited
1,000,004
Mr Anthony Koroman & Mrs
Deley Sangmo Bhutia
Murdoch Ventures Pty Ltd
Mr Scott Anthony Walden
946,223
923,841
900,000
Diamonex Ltd
SRV Nominees Pty Ltd
768,091
649,177
Total
53,247,564
34.51
Balance of register
101,058,374
65.49
Grand total
154,305,938
100.00
Shareholders
Holdings
Dr John Clifford Philpott & Mrs
Rebecca Anne Philpott
1,322,059
0.86
Totals
5,239
154,305,938
Unmarketable parcels
544
477,034
BNP Paribas Nominees Pty Ltd
783,588
Shareholders
Shares held
%
Ming Hao Zheng and
Ying Fan
7,743,515
5.06
Voting rights
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
347
2,079
972
1,662
179
253,893
5,870,483
8,125,744
53,476,254
86,579,564
On-market buy back
There is currently no on-market buy-back program for
any of Orthocell Limited’s listed securities.
Restricted securities
Nil
Securities Exchange
The Company was listed on the Australian Securities
Exchange on 12 August 2014.
Consolidated Financial Statements for the Year Ended 30 June 2019
58
ASX ADDITIONAL INFORMATION
Unquoted options and warrants
Options issued under the options plans total 28,083,308 and warrants issued total 12,122,237.
Voting rights
Options and warrants
No voting rights.
Distribution of unlisted options and warrants
Exercise price:
Expiry date:
Holding ranges:
1 – 5,000
5,001 –
10,000
10,001 –
100,000
100.001
& over
Totals
Options
$0.62
12/10/19
Options
$0.64
12/12/19
Options
$0.55
13/12/19
Options
$0.59
10/03/20
Options
$0.51
19/06/20
Options
$0.34
8/05/21
Options
$0.40
8/05/21
Options
$0.25
31/12/21
Options
$0.41
13/06/22
Options
$0.55
28/06/22
Options
$0.41
14/08/22
Warrants
$0.58
19/11/20
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Options held
(Holders)
Warrants held
(Holders)
nil
nil
nil
650,000
(3)
650,000
(3)
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
40,000
(1)
nil
nil
nil
200,000
(1)
200,000
(1)
nil
nil
nil
nil
nil
8,500
(1)
100,000
(1)
400,000
(9)
1,640,309
(26)
nil
nil
nil
nil
nil
nil
nil
nil
nil
900,000
(9)
640,000
(12)
273,834
(6)
1,500,000
(4)
10,600,000
(9)
7,194,499
(17)
1,000,000
(1)
1,100,000
(3)
1,020,000
(5)
11,848,403
(8)
1,600,000
(5)
11,000,000
(18)
8,843,308
(44)
1,000,000
(1)
2,000,000
(12)
1,660,000
(17)
12,122,237
(14)
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 are listed below:
Warrant holder
Warrants held
%
Empery Asset Master Ltd
2,993,478
24.7
Consolidated Financial Statements for the Year Ended 30 June 2019
59