Appendix 4E
Preliminary final Report
+ See chapter 19 for defined terms
30/06/2024 Appendix 4E
Page 1
Rules 4.3A
Appendix 4E
Preliminary final report
Name of entity
ORTHOCELL LIMITED
ABN or equivalent company
reference
Financial year ended (‘current period’)
57 118 897 135
30 June 2024
For announcement to the market
Current year
reported amount
$
Change
up/(down) from
previous year
%
Revenues from product sales
3,011,375
up 55.3%
Other revenues from continuing operations
3,752,677
up 16.0%
Total revenues from continuing operations
6,764,052
up 30.8%
Loss from ordinary activities after tax attributable
to members
7,180,959
up 14.9%
Net loss for the period attributable to members
7,180,959
up 14.9%
Dividends (distributions)
Amount per
security
Franked
amount per
security
Interim dividend
Nil
- ¢
Final dividend
Nil
- ¢
Previous corresponding period
Nil
- ¢
+Record date for determining entitlements to the dividend,
(in the case of a trust, distribution)
N/A
Net Tangible Assets per share
30 June 2024
30 June 2023
Net tangible asset backing per ordinary security
(cents per share)
1.77
2.54
For personal use only
Appendix 4E
Preliminary final Report
+ See chapter 19 for defined terms
30/06/2024 Appendix 4E
Page 2
The above results should be read in conjunction with the notes
and commentary contained in this report.
Compliance statement
1
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.
2
This report, and the +accounts upon which the report is based (if separate), use the
same accounting policies.
3
This report does give a true and fair view of the matters disclosed.
4
This report is based on +accounts to which one of the following applies.
(Tick one)
The +accounts have been
audited.
The +accounts have been
subject to review.
The +accounts are in the
process of being audited
or subject to review.
The +accounts have not yet
been audited or reviewed.
Sign here:
Paul Anderson
(Managing Director)
Date:
30 August 2024
Print name:
Paul Anderson
For personal use only
Regenerating
Mobility
2024 Annual Report
For personal use only
CONTENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
1
Corporate directory ..................................................................................................................................... 2
Directors’ report ............................................................................................................................................ 3
Auditor’s independence declaration ...................................................................................................... 20
Consolidated statement of profit or loss & other comprehensive income ......................................... 21
Consolidated statement of financial position ......................................................................................... 22
Consolidated statement of changes in equity ....................................................................................... 23
Consolidated statement of cash flows .................................................................................................... 24
Notes to the financial statements ............................................................................................................ 25
Consolidated entity disclosure statement ............................................................................................... 53
Directors’ declaration ................................................................................................................................ 54
Independent auditor’s report ................................................................................................................... 55
Corporate governance statement .......................................................................................................... 61
ASX additional information ........................................................................................................................ 62
For personal use only
CORPORATE DIRECTORY
Consolidated Financial Statements for the Year Ended 30 June 2024
2
Board of Directors
John Van Der Wielen
Independent Non-Executive Chair
Mr Paul Anderson
Managing Director & Chief Executive Officer
Mr Kim Beazley
Independent Non-Executive Director
Dr Ravi I Thadhani
Independent Non-Executive Director
Professor Fiona Wood
Independent Non-Executive Director
Company Secretary
Mr Peter Gordon Webse
Registered Office & Principal Place of Business
Building 191, Murdoch University, 90 South Street, Murdoch WA 6150, Australia
Share Register
Automic Registry Services
Level 5, 191 St Georges Terrace, Perth WA 6000, Australia
Auditor
PKF Perth
Dynons Plaza, Level 8, 905 Hay Street, Perth WA 6000, 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
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
3
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 entities it controlled at the
end of, or during, the year ended 30 June 2024.
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:
-
Mr John Van Der Wielen, Independent Non-
Executive Chairman
-
Mr Paul Anderson, Managing Director & CEO
-
Dr Ravi Thadhani, Independent Non-Executive
Director
-
Ms Fiona Wood, Independent Non-Executive
Director (appointed 1 November 2023)
-
Mr Kim Beazley, Independent Non-Executive
Director (appointed 15 January 2024)
-
Dr Stewart Washer, Executive Director
(resigned 22 December 2023)
-
Mr Matthew Callahan, Non-Executive Director
(resigned 15 January 2024)
-
Professor Lars Lidgren, Independent Non-
Executive Director (resigned 30 September
2023)
-
Mr Qi Xiao Zhou, Non-Executive Director
(resigned 1 November 2023)
-
Ms Leslie Wise, Executive Director (resigned 22
September 2023)
Independent Non-Executive Chair
Mr John Van Der Wielen has over 30 years’ in
wealth management, private banking,
investments, and insurance, which includes
executive positions in global financial services
groups. These positions allowed Mr Van Der
Wielen to work in London, Luxemburg, Malaysia,
Sydney and Perth, for major brands such as
Crown Resorts, Blackstone, HBF Health Ltd, Lloyds
Banking Group, Lombard Assurance and ANZ
Bank.
Mr Van Der Wielen currently holds the role of
Chair, Crown Perth and is a Non-Executive
Director on the Blackstone owned Crown Resorts
Australia Ltd. Prior to this Mr Van Der Wielen was
the CEO of HBF Health Ltd for over five years. HBF
has revenue of 2 billion dollars and in a recent
independent consumer survey was named
Australia’s most trusted brand in private health
insurance.
Mr Van Der Wielen also serves on the Board of the
Royal Flying Doctor Service WA, was appointed
by the Western Australian Government to be the
inaugural Chair of the Government’s Future
Health Research and Innovation Fund (FHRI) and
Senior Advisor Australia, for Appian Capital
Advisory UK.
Mr Van Der Wielen holds an MBA from the
University of Western Australia, has studied at
London Business School and Oxford University, and
is a Fellow of the Australian Institute of Company
Directors.
Current Directorships
Nil
Previous Directorships (last 3 years)
Kyckr Limited (ASX: KWK)
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
17 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
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
4
Non-Executive Directors
Dr Ravi Thadhani is an Independent Non-
Executive director of Orthocell who has co-
authored more than 300 scientific publications,
including articles in medical journals. Dr Thadhani
has more than 30 years as a general and
specialised physician, researcher, medical
administrator and commercialisation adviser and
has extensive experience in patient care,
advancing novel research programs, US
regulatory pathways and commercialisation of
devices and therapeutics. Dr Thadhani has served
on multiple US FDA advisory committees in the
musculoskeletal, cardiovascular and renal sectors
and has acted as expert advisor to multiple
global pharmaceutical companies including
Sandoz, Shore, Novartis, Celgene, Bayer and
Reata on clinical trial design, execution and data
monitoring. He has also secured significant
research funding from global US healthcare
companies including Amgen, Abbott, Serono,
Kaneka and Genzyme.
Current / previous directorships (last 3 years)
Nil
Professor Fiona Wood has over 30 years’
experience as a plastic and reconstructive
surgeon. Professor Wood was named Western
Australian Citizen of the Year in 2003 and 2004,
Australian of the Year in 2005 and Member of the
Order of Australia (AM) in 2003 for her contribution
to Medicine in the field of burns. Her revolutionary
“spray-on skin” treatment of serious burns,
invented with colleague Marie Stoner, uses a
patient’s own skin cells to help restore damaged
skin and significantly reduce permanent scarring.
This treatment was instrumental in saving many
lives in the aftermath of the Bali bombing in 2002.
Professor Wood played a pivotal role in bringing
this life-saving Western Australian invention to the
world through the establishment of Avita Medical
Inc (NASDAQ: RCEL, ASX: AVH), which has
expanded RECELL’s approval for clinical use to
over 30 countries including the US.
Professor Wood is currently a Consultant Plastic
Surgeon at Fiona Stanley Hospital and Perth
Children’s Hospital, and the Winthrop Professor of
Surgery at the University of Western Australia.
Professor Wood is co-founder of the Wood
Foundation, which continues her research into the
treatment of burns and is a Board member of the
Royal Flying Doctor Service, amongst others.
Current / Previous directorships (last 3 years)
Avita Medical Inc (NASDAQ: RCEL, ASX: AVH)
Mr Kim Beazley is an Independent Non-Executive
director of Orthocell. The Honourable Kim Beazley
AC was the 33rd Governor of Western Australia
(2018-2022). Prior to this, Mr Beazley dedicated
almost three decades to a career in Federal
Parliament, representing the WA seats of Brand
and Swan.
A notable former Australian politician and
diplomat, Kim Beazley held key ministerial roles
including Defence and Finance, and served as
Deputy Prime Minister and Leader of the
Opposition. His extensive parliamentary
experience included committees on Intelligence,
Foreign Affairs, Defence, and Trade.
In 2009, Mr Beazley was awarded the Companion
of the Order of Australia for service to the
Parliament of Australia through contributions to
the development of government policies in
relation to defence and international relations,
and as an advocate for Indigenous people, and
to the community.
Serving as the Australian Ambassador to the
United States from 2010 to 2016, Mr Beazley brings
a wealth of experience in matters of strategic
engagement and advocacy in the US. Currently,
he is involved in various roles across business,
technology, and defence, including as Chair of
the Perth US Asia Centre Board and Senior
Distinguished Fellow at the Australian Strategic
Policy Institute.
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:
Shares
Options
John Van Der Wielen
325,000
4,000,000
Mr Paul Anderson
6,903,805
5,700,000
Mr Kim Beazley
-
2,000,000
Dr Ravi Thadhani
-
3,000,000
Prof Fiona Wood
16,167
2,000,000
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
5
Company Secretary
Mr Webse has over 30 years of company
secretarial experience. He is a Director of
Governance Corporate Pty Ltd, a company
specialising in providing company secretarial,
corporate governance, and corporate advisory
services. Mr Webse attended Edith Cowan
University of Western Australia where he obtained
his degree in Accounting and Finance. He acts as
Company Secretary for a number of ASX listed
biotech and technology companies. He is a
Fellow of the Governance Institute of Australia
(FGIA) and a Fellow of the Chartered
Governance Institute (GCI). He is also a Fellow of
the CPA Australia (FCPA).
Meetings of Directors
The number of meetings of the Company's Board
of Directors ('the Board') held during the year
ended 30 June 2024, and the number of meetings
attended by each director was:
Full Board
Attended
Held (1)
John Van Der Wielen
7
7
Mr Paul Anderson
7
7
Mr Kim Beazley
3
3
Dr Ravi Thadhani
7
7
Professor Fiona Wood
4
4
Mr Matthew Callahan
4
4
Dr Stewart Washer
4
4
Ms Leslie Wise
0
2
Professor Lars Lidgren
2
2
Mr Qi Xiao Zhou
3
3
Remuneration Committee
Attended
Held (1)
Mr Matthew Callahan
1
1
Professor Lars Lidgren
1
1
Dr Stewart Washer
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
biological medical devices and cell therapies.
3. Review and results of operations
The loss for the consolidated entity after income
tax amounted to $7,180,959 (2023: $6,248,181).
Key Milestones
Orthocell Ltd is a regenerative medicine
company focused on improving patients’ quality
of life by developing and manufacturing collagen
medical devices and cell therapies that restore
mobility, function and performance.
During the 2024 financial year Orthocell reported
increasing total revenue of $6.76 million, up
30.48% from the previous year (FY23) of $5.17
million. Along with growing revenues, the
Company achieved the following key milestones:
•
completed the Board renewal program;
•
strengthened the Company’s financial
position;
•
solidified a long-term partnership with
University of Western Australia;
•
accelerated global market expansion of its
medical devices; and
•
progressed its pivotal nerve repair study to
support US regulatory approval of Remplir™.
Strengthening Corporate Governance
Since the new chair, John Van Der Wielen, joined
the board, the company has focussed on a
program of improved governance and board
renewal. Two new high profile Independent
Directors have joined the Company (NEDs):
Professor Fiona Wood AM (appointed Nov 2023)
and the Hon Kim Beazley AC (appointed Jan
2024).
The Board is now majority independent, with four
Non-Executive Directors (John Van Der Wielen, Dr
Ravi Thadhani, Professor Fiona Wood AM and the
Hon Kim Beazley AC) and one Executive Director
(Mr Paul Anderson).
Solidifying long term partnership with University of
Western Australia
Orthocell entered into a Royalty Agreement with
the University of Western Australia to exchange all
royalty entitlements for shares in Orthocell.
The Company issued UWA 1.7 million fully paid
ordinary shares at a deemed issue price of $0.35
per share under its existing Listing Rule 7.1
placement capacity. As a result of the issue, UWA
will hold 2.35 million shares (1.18%) in OCC on an
undiluted basis.
Accelerated market expansion of medical
devices Striate+™ and Remplir™
Orthocell’s first product from the medical device
platform, Striate+, for dental bone generation, is
approved in US, EU/UK, AUS/NZ and CAN. The
second product, Remplir for peripheral nerve
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
6
repair, is approved in AUS & NZ. During the year,
the Company accelerated global market
expansion plans for both devices with seven
regulatory applications, either in progress or
planned, in large and attractive new markets.
Strengthened financial position with $20.6 million
cash at bank
Orthocell strengthened its financial position and
share register, receiving a $3.05 million R&D tax
incentive refund for the 2023 financial year and
completing a $3.5 million strategic placement to
prominent investors including Mr Chris Ellison, Mr
Rod Jones, Mr Michael Malone, the McCusker
Family and the Merchant Biotech Fund. The
Company remains very well-funded for its global
expansion strategy and beyond its major US
product registration for Remplir, expected in Q1
CY25.
Collagen Medical Devices
Orthocell manufactures its collagen medical
devices using a proprietary SMRT™ manufacturing
process. The purified collagen scaffold provides
the ideal environment for cellular attachment and
proliferation. The devices are completely
absorbed by the body, integrating and resorbing
into the tissue as it heals with no immunogenic
reactions. Consequently, this medical device has
a wide and growing range of uses in
orthopaedics and other surgical specialities.
Guided bone and tissue
regeneration
Striate+™ is a unique
collagen barrier membrane used in dental guided
bone and tissue regeneration procedures. Striate+
has been shown in clinical use to support
transition from a two-stage to a single-stage
dental implant procedure, by facilitating rapid
bone regeneration to support the dental implant.
The resulting reduction in the procedure time and
recovery periods by several months is of
significant interest to patients and clinicians.
In July 2022, the Company executed a global
exclusive licence and distribution agreement for
Striate+ with BioHorizons Implant Systems Inc,
(BioHorizons), one of the largest global dental
implant companies. This transaction has been
transformative for the Company, validating the
business model, establishing the manufacturing
business and funding the development of the
second collagen medical device, Remplir, into
the US market.
BioHorizons update – Striate continues to impress
with momentum building
Sales to BioHorizons has continued to build
momentum in existing markets (USA, EU/UK and
AUS) during the 2024 financial year. This traction
has resulted from BioHorizon’s comprehensive
marketing and medical education programs, and
the outstanding 98.6% success rate observed in
the Striate+ post-market clinical study.
BioHorizons has been actively promoting and
selling Striate+ to dental surgeons in the US for just
over eighteen months, launching the device in
November 2022. Feedback regarding the
products performance from BioHorizons sales
team has been excellent, with uptake driven by
the surgeons’ preference for a high-quality dental
membrane that is easier to use and facilitates
better patient outcomes.
BioHorizons Camlog, a wholly owned subsidiary of
BioHorizons and headquartered in Basel,
Switzerland, launched Striate+ in the EU in
October 2023. BioHorizons Camlog have started
to gain sales traction in initial markets with the
Company completing substantial shipments of
Striate+ during the year to meet the initial
demand of key customers. Striate+ is available for
sale in Belgium, France, Ireland, Italy, Netherlands,
Portugal, Spain and UK.
Striate+’s high quality performance is driving
BioHorizons’ pursuit of other large, attractive
markets where they have established accounts
and/or distribution networks. Orthocell are
currently working with BioHorizons to expand
regulatory approvals of Striate+ in multiple new
markets. In particular, regulatory approval for
Striate+ in Canda was achieved in early July 2024,
with approvals in Brazil and Singapore anticipated
within 6-12 months. Further applications in other
markets are under review.
Orthocell and BioHorizons are targeting large
addressable markets with ~5.5M dental
membranes estimated to be used in dental
guided bone and tissue regeneration and implant
procedures per annum in existing (US, EU/UK,
Australia and Canada) and planned markets
(Brazil and Singapore).
Redefining nerve repair
Remplir is a collagen nerve
wrap used in the repair of
peripheral nerve injuries.
Remplir provides
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
7
compression-free protection to the nerve,
generating an ideal microenvironment to aid
nerve healing. Remplir is proving to be an
important step forward in the improvement of
nerve repair surgery. Its ease of use, consistent
and predictable high-quality outcomes will
empower surgeons to improve the lives of people
navigating these complex injuries. The Company
appointed Device Technologies (DVT) as the
exclusive distributor of Remplir across Australia
and New Zealand in September 2022 and has
been working with DVT to establish key accounts
with leading plastic, reconstructive and
orthopaedic specialists in Australia and New
Zealand.
Device Technologies update – Remplir accounts
expanding and momentum building. Sales to DVT
has continued to build momentum in AUS and NZ
during the 2024 financial year. This traction has
been driven by DVT’s comprehensive medical
education programs and supported by
outstanding 85% success rates from the Remplir
nerve repair study published in peer-reviewed
Journal of Reconstructive Microsurgery Open.
DVT officially launched Remplir in Australia in
November 2022, with a focus on supplying existing
orthopaedic and plastic reconstructive KOL
accounts. The ramp up of product sold in the ~18
months since market launch is gaining traction
with 120+ orthopaedic and plastic surgeons now
using Remplir in peripheral nerve repair surgeries,
from facial nerves to upper and lower limb nerves,
across Australia and New Zealand. Feedback
from the clinicians and DVT salesforce continues
to be very encouraging, with adoption driven by
Remplir’s unique qualities that enable less suturing,
creation of the optimal healing microenvironment
and facilitation of free gliding within the repair site
during the critical healing period.
The DVT team is executing a comprehensive
customer engagement program designed to
continue momentum in product adoption and to
grow the establishment of new orthopaedic and
plastic reconstructive accounts. During the year,
Orthocell assisted DVT with a series of targeted
Remplir education and training events, including
surgeon engagement roadshows, congress
attendance and other scientific meetings across
Australia and New Zealand.
Nerve repair study for US regulatory approval
Orthocell reported successful completion of all
nerve repair surgeries in the first stage of the
Remplir US market authorisation study. Completion
of the first stage enables the Company to
progress with the final stage of the study and
provides further confidence that the safety and
effectiveness outcomes will be consistent with the
pilot study. Top-line results from this study are
expected in Q4 CY24, and Orthocell remains on
schedule to submit its US 510(K) market
authorisation application in Q4 CY24 and
progression into sales soon thereafter.
Remplir global expansion
Orthocell’s global expansion strategy for Remplir
continues to build, with the Company on track to
receive regulatory clearance from the US FDA in
1Q CY25. Regulatory approval for Remplir in
Singapore is expected in 2H CY24, following an
application to the Health Services Authority (HSA)
in Singapore in January 2024. Approval in
Singapore is considered the gateway to other
ASEAN markets (e.g. Thailand, Malaysia, Vietnam,
Indonesia and Philippines). Orthocell has a further
three applications planned in Canada, Thailand
and EU/UK within the next 6-12 months.
Orthocell is targeting large addressable markets
with ~1.6M peripheral nerve repairs estimated
across existing (Australia) and planned markets
(Singapore, USA, Canada, Thailand & EU/UK).
Cellular Therapies
The Company’s cell therapies aim to treat
diseased or damaged tissue by local implantation
or injection of healthy cells where tissue repair is
needed. The use of a patient’s own cells
(autologous) to repair tissue damage reduces the
risk of rejection or transmission of infectious
diseases. Orthocell is licensed by the TGA to
manufacture autologous chondrocytes
(OrthoACI) and tenocytes (OrthoATI) for cartilage
and tendon repair. They are currently available
for use in Australia: OrthoACI has regulatory
approval and OrthoATI is available under Special
Access provisions from the TGA. The Company
intends to engage a strategic partner to
accelerate US market access for its leading
cellular therapies.
First to market cell therapy
for chronic tendon injury
OrthoATITM is a world-leading
cell therapy developed to
treat chronic degenerative tendon injuries
(tendinopathy / tendonitis). OrthoATI can be used
to treat tendinopathy in multiple anatomic
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
8
locations, such as the shoulder, elbow, ankle,
knee and hip. OrthoATI is at the forefront of a
large and growing market opportunity. In rotator
cuff tendinopathy alone, OrthoATI could be used
to treat over 480,000 patients equating to an
>US$4.8bn p.a. market opportunity.
During the year, Orthocell announced results from
its randomised clinical study comparing OrthoATI
to surgery for the treatment of severe, chronic,
treatment-resistant lateral epicondylitis (‘LE
Study’). The data confirmed that the study met its
primary endpoint, demonstrating that OrthoATI is
as effective as surgery in the treatment of lateral
epicondylitis. OrthoATI patients experienced
almost complete resolution of pain by 1-month
post-treatment compared to 6 months after
treatment in the surgery group. Notably,
participants in the OrthoATI group demonstrated
a statistically significant improvement of return of
function in half the time than the surgery group.
With two successful randomised controlled studies
(in lateral epicondylitis and rotator cuff
tendinopathy) now completed, Orthocell is well
positioned to engage partners to accelerate US
market access. Orthocell has already completed
several steps in this process. The technology
transfer to a specialist contract manufacturing
facility, so that OrthoATI can be manufactured in
accordance with US GMP standards, is complete.
Orthocell is also well advanced in preparation of
an IND application with the US FDA for OrthoATI’s
US clinical development plan, as well as an
application for Regenerative Medicine Advanced
Therapy (RMAT) Designation to accelerate
regulatory processes for a Biological Licence
Application (BLA).
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
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
Orthocell remains focused on maintaining
consistent supply of high-quality products to its
distribution partners. Cash reserves will be used to
progress regulatory approvals and
commercialisation of RemplirTM into the USA and
other key markets following a successful launch of
the product in Australia and growing global
demand from industry leading clinicians and
potential partners for superior regenerative
medicine medical devices. In addition, the
Company will advance the development and
commercialisation of Collagen Medical Device
platform products for tendon and ligament repair
and OrthoATITM, support continued business
development and marketing initiatives and for
general working capital purposes.
7. Material Risks
There is a small number of material risks that, either
individually or in combination, may materially and
adversely affect the future operating and
financial performance and prospects of Orthocell
and the value of its shares. Some of these risks
may be mitigated by Orthocell’s internal controls
and processes but some are outside the control of
Orthocell, its directors and management. The
material risks identified by management are
described below:
(a)
Clinical development risk
The nature of medical device and cellular
therapy development is inherently risky, with many
product candidates failing to be successfully
developed into marketable products. The
Company is currently undertaking clinical trials
with certain of its products and plans to undertake
trials with additional products in its pipeline.
Clinical trials have many associated risks which
may impact the Company’s commercial
potential and therefore its future prospects and
profitability. Clinical trials may fail to recruit
patients, be terminated for safety reasons, or fail
to be completed within acceptable timeframes
as a result of delay. Clinical trials may reveal
product candidates to be unsafe, poorly
tolerated or non-effective. Any of these outcomes
will likely have a significant adverse effect on the
Company, the value of its securities and the future
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
9
commercial development of its product
candidates. Clinical trials might also potentially
expose the Company to product liability claims in
the event its products in development have
unexpected effects on clinical subjects.
Mitigation measures employed by the Company
include: ensuring that clinical trials are strongly
supported by preclinical safety and efficacy
data; careful clinical trial design to minimise the
chances of potentially spurious outcomes; use of
independent data and safety monitoring boards;
engagement of leading contract research
organisations to manage the trials and drive
recruitment; engagement of well-qualified clinical
sites experienced in clinical trial execution and in
the relevant therapeutic areas.
(b)
Regulatory risks
The research, development, manufacture,
marketing and sale of products developed by the
Company are subject to extensive regulation by
multiple government authorities and institutional
bodies in Australia and overseas. Medical Device
and Cellular Therapy products must undergo a
comprehensive and highly regulated
development, trial and review process before
receiving approval for marketing. The process
includes a requirement for approval to conduct
clinical trials, and the provision of data relating to
the quality, safety and efficacy of the products for
their proposed use. There is no guarantee that
regulatory approvals to conduct clinical trials
and/or to manufacture and market the
Company’s products will be granted.
If a product is approved, it may also be submitted
for cost reimbursement approval to relevant
agencies. The availability and timing of that
reimbursement approval may have an impact
upon the uptake and profitability of products in
some jurisdictions. If the Company is unable to
secure necessary approvals from regulatory
agencies and institutional bodies to undertake its
planned trials, market its products and obtain cost
reimbursements for its products its future prospects
and profitability is likely to be materially and
adversely affected.
Mitigation measures employed by the Company
include: engagement of suitably qualified and
experienced persons with expertise in the
regulation of Medical Device and Cellular
Therapies; regular review of evolving regulatory
requirements and analysis of the Company’s
activities and plans against regulatory
expectations in key jurisdictions; and ensuring that
the expectations and uncertainties related to
regulatory approvals, and the timing of such
approvals, are included in business plans.
(c)
Risks associated with partnership model
The Company is pursuing a license partnership
model, which typically involves entering into
commercial arrangements with other companies
by which Orthocell licenses its technology to the
partner in one or more indications and/or
geographies and the partner assumes
responsibility for progressing, and paying for, the
clinical trials and eventual commercialisation in
that indication. This strategy involves the risk that
the Company will lose control of the
commercialisation and or development timetable
of its current or future products, in that field of use,
to its commercial partner, which may give rise to
an unanticipated delay in any commercial
returns. Further, the Company may be unable to
enter into arrangements with suitable commercial
partners in respect of other relevant indications. If
either of these outcomes occurred, the
Company’s business and operations may be
adversely affected.
Mitigation measures employed by the Company
include: performing rigorous due diligence on
potential partners; ensuring that the commercial
terms negotiated are fair, ensuring the Company
is able to license other products from the platform
technologies and utilising expert legal advice to
ensure that appropriate warranties and
commitments are included in contracts, and that
the contracts reflect the agreed commercial
position.
(d)
Manufacturing risk
The Company’s products are manufactured using
a unique, novel and highly specialised
manufacturing process. The Company relies on
supply relationships with third party organisations
for raw materials and other consumables. An
inability of these third-party organisations to
continue to supply the Company in a timely,
economical and/or consistent manner could
adversely impact on the progress of the
Company’s development programs and
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
10
potentially on the financial performance of the
Company.
Mitigation measures employed by the Company
include: performing rigorous due diligence on
suppliers; engaging suppliers with strong track
records and sufficient capability to meet the
Company’s foreseeable needs; and employing a
senior manager responsible for managing and
monitoring the performance of third parties
including suppliers.
(e)
Market Risks
The Company is subject to a number of financial
risks which arise as a result of its activities. Market
risk comprises three types of risk: currency risk,
interest rate risk and other price risk.
Currency risk- During the normal course of business
the Company enters into contracts with overseas
customers or suppliers or consultants that are
denominated in foreign currency. As a result of
these transactions there is exposure to fluctuations
in foreign exchange rates. The principle currency
risk faced by the business is the exchange rate
between the Australian dollar and the US dollar.
The Company holds cash denominated in US
dollars and Australian dollars and may have
material future expenditure in each of these
currencies. Where possible, the Company
matches foreign currency income and foreign
currency expenditure as a natural hedge, holding
foreign currency cash to facilitate this natural
hedge. When foreign currency expenditure
exceeds foreign currency revenue and foreign
currency cash, the Company may consider
purchasing foreign currency to meet anticipated
requirements under spot and forward contracts.
Interest rate risk - The Company is exposed to
changes in market interest rates as the Company
holds cash and cash equivalents. The Company
mitigates this risk through a series of term deposits
structured to provide some certainty of financial
returns.
Liquidity risk - The Company’s financial liabilities,
comprising trade and other payables and
derivatives, are generally repayable within 1 – 3
months. The maturity and availability of financial
assets, comprising cash and cash equivalents and
trade and other receivables, are monitored and
managed to ensure financial liabilities can be
repaid when due.
Capital management - The Company monitors
capital including share capital, retained earnings
and reserves and the cash and cash equivalents
presented in the consolidated statement of
financial position. The Company has no debt. The
key objective of the Company when managing its
capital is to safeguard its ability to continue as a
going concern, so that the Company can sustain
the commercialisation and the future
development of the research and development
activities being performed by the Company.
8. Environmental regulation
The consolidated entity is not subject to any
significant environmental regulation under
Australian Commonwealth or State law.
9. 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.
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.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
11
To this end, the Company embodies the following
principles in its remuneration framework:
•
Provide competitive rewards to attract high
calibre executives.
•
Link executive rewards to shareholder value.
•
A portion of executive remuneration may be
put ‘at risk’, dependent on meeting pre-
determined performance benchmarks.
•
Where appropriate, establish performance
hurdles in relation to variable executive
remuneration.
Due to the early stage of development which the
Company is in, shareholder wealth is directly
affected by the Company share price, the
Company is not in a position to pay dividends. By
remunerating directors and Executives in part by
options and/or performance rights, 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 value 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.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
12
Structure
Executives are given the opportunity to receive
their fixed remuneration in a variety of forms
including cash and fringe benefits. It is intended
that the manner of payment chosen will be
optimal for the recipient without creating undue
cost for the Company.
Variable Remuneration
Objective
The objective of variable remuneration provided is
to reward executives in a manner which aligns this
element of remuneration with the creation of
shareholder wealth.
Structure
Variable remuneration may be delivered in the
form of a cash bonuses, share options or
performance rights. During the financial year
ended 30 June 2024 the Company granted nil
share based payments to Executives.
The remuneration of executives for the years
ended 30 June 2023 and 30 June 2024 are
detailed in the tables below.
Details 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:
Mr Paul Anderson
-
Managing Director
John Van Der Wielen
-
Independent Non-Executive Chair
Dr Ravi Thadhani
-
Independent Non-Executive Director
Prof Fiona Wood (appointed 1 Nov 2023)
-
Independent Non-Executive Director
Mr Kim Beazley (appointed 15 Jan 2024)
-
Independent Non-Executive Director
Dr Stewart Washer (resigned 22 Dec 2023)
-
Executive Director
Ms Leslie Wise (resigned 22 Sep 2023)
-
Executive Director
Prof Lars Lidgren (resigned 30 Sep 2023)
-
Independent Non-Executive Director
Mr Matthew Callahan (resigned 15 Jan 2024)
-
Non-Executive Director
Mr Qi Xiao Zhou (resigned 1 Nov 2023)
-
Non-Executive Director
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
13
Key management personnel remuneration details:
Short-term benefits
Post-
employment
benefits
Equity-
based
payments
Base salary
and fees
Bonus
Leave
(5)
Super-
annuation
(non-cash)
(1)
Total
Performance
related
$
$
$
$
$
$
%
2023
Non-executive Directors:
Mr M Callahan
120,000
-
-
-
-
120,000
0%
Prof L Lidgren
45,000
-
-
-
-
45,000
0%
Dr R Thadhani3)
46,779
-
-
-
586,634
633,413
92.6%
Mr J Van Der Wielen(4)
12,500
-
-
-
645,621
658,121
98.1%
Mr QX Zhou
40,724
-
-
4,276
-
45,000
0%
Executive Directors:
Mr P Anderson
420,000
155,000
14,953
61,021
-
650,974
23.8%
Dr S Washer
143,750
-
-
-
-
143,750
0%
Ms L Wise(2)
73,063
-
-
-
-
73,063
0%
Total
901,816
155,000
14,953
65,297
1,232,255
2,369,321
58.5%
Short-term benefits
Post-
employment
benefits
Equity-
based
payments
Base salary
and fees
Bonus
Leave
(5)
Super-
annuation
(non-cash)
(1)
Total
Performance
related
$
$
$
$
$
$
%
2024
Non-executive Directors:
Mr J Van Der Wielen(4)
150,000
-
-
-
-
150,000
0%
Mr Kim Beazley
34,375
-
-
-
416,580
450,955
92.4%
Dr R Thadhani3)
113,863
-
-
-
-
113,863
0%
Prof Fiona Wood
50,000
398,657
448,657
88.9%
Prof L Lidgren
11,250
-
-
-
84,717
95,967
88.3%
Mr M Callahan
140,000
-
-
-
-
140,000
0%
Mr QX Zhou
13,512
-
-
1,486
-
14,998
0%
Executive Directors:
Mr P Anderson
440,000
110,000
11,624
59,950
-
621,574
17.7%
Dr S Washer
75,000
-
-
-
-
75,000
0%
Ms L Wise(2)
12,511
-
-
-
-
12,511
0%
Total
1,040,511
110,000
11,624
61,436
899,954
2,123,525
47.6%
(1) Equity-based payments relate to unlisted options issued. This is a non-cash component with a fair value based on an
independent valuation as detailed below. The options convey the right to the key management personnel to purchase
shares at the relevant exercise price in accordance with the terms and conditions of the options.
(2) The remuneration contract for Ms Leslie Wise, based in the United States, is based on US $50,000 per annum.
(3) The remuneration contract for Mr Ravi Thadhani, based in the United States, is based on US $75,000 per annum. Mr Thadhani’s
fees for the year ended 30 June 2023 represent remuneration for the period 8 March 2023 to 30 June 2023.
(4) The remuneration for Mr John Van Der Wielen for the year ended 30 June 2023 is for the period 1 June 2023 to 30 June 2023.
(5) Other benefits include the net movements in the annual leave and long service leave provisions in accordance with AASB
119 Employee Benefits. Movements in these provisions occur when leave is earned, taken or paid out, or there is a change in
salary rate or superannuation rate. The value may be negative, for example when an employee has taken more leave than
has been accrued during the year.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
14
Share-based compensation
Fair value of options and performance rights granted
The fair value at grant date is determined by independent valuation using a Black-Scholes option pricing
model that considers the exercise price, the term of the option or performance right, 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 or performance right.
On 7 November 2023 following shareholder approval at the Annual General Meeting (AGM) on 31 October
2023 the following share-based payments of options were made to key management personnel for nil
consideration:
Issue date
Exercise
price
Share price at
grant date
Expiry date
No.
issued
Fair value per
option
Total fair
value
7 Nov 2023
$0.36
$0.36
7 Nov 2027
500,000
$0.1694
$84,718
There were no share-based payments of options, performance rights or shares made to key management
personnel during the year ended 30 June 2023.
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
30/06/2023
Additions
Disposals
Other
Balance
30/06/2024
Ordinary shares:
Mr Paul Anderson
6,903,805
-
-
-
6,903,805
John Van Der Wielen
-
325,000
-
-
325,000
Professor Fiona Wood
-
16,167
-
-
16,167
Mr Matthew Callahan (1)
1,229,622
-
-
(134,211)
1,095,411
Professor Lars Lidgren
1,281,060
-
-
-
1,281,060
Dr Stewart Washer
1,127,647
-
-
-
1,127,647
Mr Qi Xiao Zhou
6,197,117
-
-
-
6,197,117
(1) Mr Callahan is a founder and director of Stone Ridge Ventures Pty Ltd which is the manager of both the SRV Tech Trust and SRV
Nominees Pty Ltd (the trustee for the SRV Trust which is the carry trust for the SRV Tech Trust). Mr Callahan is considered to have a
relevant interest in the 65,798 shares held by SRV Nominees Pty Ltd at 30 June 2024 (2023: 200,000) due to his position as a director
or shareholder of the respective trustee companies and holds a beneficial interest in the SRV Trust.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
15
Options holdings
The number options 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
30/06/2023
Options
granted
Options
exercised
Expired/
forfeited/
other
Balance
30/06/2024
Options
vested &
exercisable
Mr Paul Anderson
5,200,000
500,000
-
-
5,700,000
5,700,000
Mr John Van Der Wielen
4,000,000
-
-
-
4,000,000
4,000,000
Dr Ravi Thadhani
3,000,000
-
-
-
3,000,000
3,000,000
Professor Fiona Wood
-
2,000,000
-
-
2,000,000
2,000,000
Mr Kim Beazley
-
2,000,000
-
-
2,000,000
2,000,000
Mr Matthew Callahan
2,000,000
-
-
-
2,000,000
2,000,000
Professor Lars Lidgren
500,000
500,000
-
-
1,000,000
1,000,000
Dr Stewart Washer
2,000,000
-
-
-
2,000,000
2,000,000
Ms Leslie Wise
2,000,000
-
-
-
2,000,000
2,000,000
Mr Qi Xiao Zhou
400,000
-
-
-
400,000
400,000
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:
Managing Director
Salary:
$440,000 pa plus superannuation
Short-term
incentive:
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:
(i)
either party may terminate the
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,
(ii)
the Executive is entitled to 20 days annual
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.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
16
Consulting arrangements
The Company has entered into the consulting
agreements with the parties set out below under
which directors Mr John Van Der Wielen, Dr Ravi
Thadhani, Professor Fiona Wood, Mr Kim Beazley
(and previously Mr Matthew Callahan, Dr Stewart
Washer, and Leslie Wise) are/were to provide
services to the Company. The key terms of the
consulting agreements are as follows:
Mr Matthew Callahan / Thylacine LLC
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. This
agreement was terminated on 15 January 2024.
Dr Stewart Washer / Biologica Ventures Pty Ltd
Consulting fee
$75,000 per annum
Consulting services:
Services to the Company in relation to acting as
an Executive Director of the Company. The
Company and Dr Washer acknowledge that Dr
Washer will be an Executive Director of the
Company pursuant to this consultancy
agreement. This agreement was terminated on 22
December 2023.
Ms Leslie Wise / Evidence Matters, Inc
Consulting fee
US$50,000 per annum
Consulting services:
Services to the Company in relation to acting as
an Executive Director of the Company. The
Company and Ms Wise acknowledge that Ms
Wise will be an Executive Director of the
Company pursuant to this consultancy
agreement. This agreement was terminated on 22
September 2023.
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
acknowledge 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
It is not customary for non-executive directors to
have notice periods. The appointment of any of
the non-executive directors may be terminated if
the director gives notice of resignation and the
appointment may be terminated immediately if
the director becomes disqualified or prohibited by
law from being or acting as a director or from
being involved in the management of a
company.
Pursuant to letters of continuing appointment Mr
Callahan, Professor Lars Lidgren and Mr Qi Xiao
Zhou continued their appointments to the Board
as Non-Executive Directors following listing up to
the date of their resignations. Mr Callahan,
Professor Lars Lidgren and Mr Qi Xiao Zhou were
paid a director’s fee of $45,000 per annum pro
rata.
Professor Fiona Wood was appointed as an
Independent Non-Executive Director of the
Company on 1 November 2023 pursuant to a
letter of appointment and will be paid a directors
fee of $75,000 per annum.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
17
Mr Kim Beazley was appointed as an
Independent Non-Executive Director of the
Company on 15 January 2024 pursuant to a letter
of appointment and will be paid a directors fee of
$75,000 per annum.
Dr Ravi Thadhani was appointed as an
Independent Non-Executive Director of the
Company on 8 March 2023 pursuant to a letter of
appointment and will be paid a directors fee of
US$75,000 per annum.
Mr John Van Der Wielen was appointed Non-
Executive Chair on 1 June 2023 pursuant to a
letter of appointment and will be paid a directors
fee of $150,000 per annum.
Mr Callahan, Professor Lars Lidgren and Mr Qi Xiao
Zhou were 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.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
18
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.
11. Shares under option
At the date of this report the following options are
on issue:
Options
Issue
date
Expiry
date
Exercise
price
Number of
options
OCCOPT17
10/06/20
11/06/25
$0.410
2,000,000
OCCOPT19
15/10/20
14/10/24
$0.583
16,730,000
OCCOPT22
16/09/21
16/09/24
$0.570
100,000
OCCOPT23
25/10/21
26/10/24
$0.500
755,000
OCCOPT24
25/10/21
26/10/25
$0.580
150,000
OCCOPT25
4/04/22
4/04/26
$0.606
150,000
OCCOPT26
12/05/22
11/05/26
$0.515
1,050,000
OCCOPT27
13/07/22
13/07/25
$0.403
2,200,000
OCCOPT28
8/03/23
8/03/28
$0.400
3,000,000
OCCOPT29
4/04/23
19/04/27
$0.036
3,830,000
OCCOPT30
25/05/23
26/05/26
$0.600
1,000,000
OCCOPT31
25/05/23
26/05/27
$0.800
1,000,000
OCCOPT32
29/05/23
29/05/28
$0.400
4,000,000
OCCOPT33
7/11/23
7/11/27
$0.360
1,000,000
OCCOPT34
20/11/23
20/11/28
$0.400
2,000,000
OCCOPT35
15/01/24
17/01/29
$0.400
2,000,000
OCCOPT36
11/06/24
11/06/27
$0.373
100,000
OCCOPT37
11/06/24
11/06/27
$0.367
700,000
At the date of this report the following
performance rights are on issue:
Performance
rights
Issue
date
Expiry
date
Exercise
price
Number
of rights
OCCPR1
19/01/23
19/01/26
$0.00
500,000
OCCPR2
08/08/24
31/05/27
$0.00
250,000
12. Shares issued on the exercise of
options
During the year ended 30 June 2024 and up to
the date of this report there were nil shares (2023:
75,158) of the Company issued on the exercise of
nil options granted (2023: 1,480,000).
During the year ended 30 June 2024 and up to
the date of this report there were 500,000 shares
(2023: nil) of the Company issued on the exercise
of 500,000 performance rights granted (2023: nil).
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
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.
For personal use only
DIRECTORS’ REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
19
16. Matters subsequent to the end of the
financial year
Subsequent to 30 June 2024 250,000 shares valued
at $96,250 and 250,000 performance rights valued
at $91,250 were issued pursuant to the Employee
Awards Plan.
No other matter or circumstance has arisen since
30 June 2024 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
23 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 23 to the consolidated
financial statements do not compromise the
external auditor's independence requirements of
the Corporations Act 2001 for the following
reasons:
• all non-audit services have been reviewed and
approved to ensure that they do not impact
the integrity and objectivity of the auditor; and
• none of the services undermine the general
principles relating to auditor independence as
set out in APES 110 Code of Ethics for
Professional Accountants issued by the
Accounting Professional and Ethical Standards
Board, including reviewing or auditing the
auditor's own work, acting in a management
or decision-making capacity for the Company,
acting as advocate for the Company or jointly
sharing economic risks and rewards.
18. Officers of the Company who are
former audit partners of PKF 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 2024
Perth
For personal use only
AUDITOR’S INDEPENDENCE DECLARATION
Consolidated Financial Statements for the Year Ended 30 June 2024
20
For personal use only
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
& OTHER COMPREHENSIVE INCOME
Consolidated Financial Statements for the Year Ended 30 June 2024
21
For the year ended 30 June 2024
Note
2024
2023
$
$
Revenue from continuing operations
Revenue from sale of goods
3
3,011,375
1,939,069
Cost of goods sold
4
(1,626,953)
(1,026,155)
Gross profit
1,384,422
912,914
Revenue from contracts
3, 16
2,304,000
2,304,000
Other revenue
3
1,448,677
929,991
Expenses
Research & development
(8,674,058)
(7,598,144)
Administrative & corporate
(3,610,474)
(4,250,094)
Sales, marketing & business development
(3,085,009)
(1,709,228)
4
(15,369,541)
(13,557,466)
Loss before income tax expense
(10,232,442)
(9,410,561)
Income tax benefit
5
3,051,483
3,162,380
Loss after income tax expenses
(7,180,959)
(6,248,181)
Other comprehensive income
Other comprehensive income for the year, net of tax
-
-
Total comprehensive loss
(7,180,959)
(6,248,181)
Loss per share
Basic earnings per share
31
(0.036)
(0.032)
Diluted earnings per share
31
(0.036)
(0.032)
Note: the above consolidated statement of profit or loss and other comprehensive income should be
read in conjunction with the accompanying notes
For personal use only
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Consolidated Financial Statements for the Year Ended 30 June 2024
22
As at 30 June 2024
Note
2024
2023
$
$
Assets
Current assets
Cash and cash equivalents
6
20,614,440
24,817,962
Trade and other receivables
7
1,151,990
843,268
Inventories
8
1,176,638
1,034,129
Other
9
64,187
171,015
Total current assets
23,007,255
26,866,374
Non-current assets
Property, plant and equipment
10
1,897,149
1,121,200
Right-of-use assets
11
664,606
484,857
Intangibles
12
1,046,200
1,133,052
Total non-current assets
3,607,955
2,739,109
Total assets
26,615,210
29,605,483
Liabilities
Current liabilities
Trade and other payables
13
1,469,534
877,047
Lease liabilities
14
148,968
180,629
Employment benefits
15
653,987
599,851
Contract liabilities
16
2,304,000
2,304,000
Other
17
729,392
568,741
Total current liabilities
5,305,881
4,530,268
Non-current liabilities
Lease liabilities
14
540,725
381,676
Employment benefits
15
164,802
169,358
Contract Liabilities
16
16,071,228
18,375,228
Total non-current liabilities
16,776,755
18,926,262
Total liabilities
22,082,636
23,456,530
Net assets
4,532,574
6,148,953
Equity
Issue capital
18
62,219,668
57,897,993
Reserves
19
7,939,296
7,335,298
Accumulated losses
20
(65,626,390)
(59,084,338)
Total equity
4,532,574
6,148,953
Note: the above consolidated statement of financial position should be read in conjunction with the
accompanying notes
For personal use only
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Consolidated Financial Statements for the Year Ended 30 June 2024
23
For the year ended 30 June 2024
Issued
Capital
Share-based
payment
reserve
Accumulated
losses
Total equity
$
$
$
$
Balance at 1 July 2022
57,476,080
5,913,911
(53,485,357)
9,904,634
Loss after income tax expense
-
-
(6,248,181)
(6,248,181)
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 shares
42,000
-
-
42,000
Issue of options
2,450,500
-
2,450,500
Options exercised (reversal of reserve)
379,913
(379,913)
-
-
Expiry of options
-
(649,200)
649,200
-
Balance at 30 June 2023
57,897,993
7,335,298
(59,084,338)
6,148,953
Balance at 1 July 2023
57,897,993
7,335,298
(59,084,338)
6,148,953
Loss after income tax expense
-
-
(7,180,959)
(7,180,959)
Other comprehensive income, net of tax
-
-
-
-
Total comprehensive income
-
-
-
-
Transactions with owners in their capacity
as owners:
Contributions of equity
4,231,750
-
-
4,231,750
Share equity costs
(122,575)
-
-
(122,575)
Issue of options
-
1,090,404
-
1,090,404
Issue of performance rights
-
365,001
-
365,001
Exercise of performance rights
212,500
(212,500)
-
-
Expiry of options
-
(638,907)
638,907
-
Balance at 30 June 2024
62,219,668
7,939,296
(65,626,390)
4,532,574
Note: the above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes
For personal use only
CONSOLIDATED STATEMENT OF CASH FLOWS
Consolidated Financial Statements for the Year Ended 30 June 2024
24
For the year ended 30 June 2024
Note
2024
2023
$
$
Cash flows from operating activities
Receipts from customers (inclusive of GST)
3,414,318
1,872,148
Payments to suppliers & employees (inclusive of GST)
(13,782,647)
(12,494,427)
R&D tax concession received
3,051,483
3,162,380
Contract revenue received
-
21,461,686
Interest received
813,795
590,793
Interest paid
(2,075)
-
Net cash used in operating activities
30
(6,505,126)
14,592,580
Cash flows from investing activities
Payments for property, plant & equipment
(926,888)
(613,446)
Payments for intangible assets
(15,130)
(18,117)
Net cash used in investing activities
(942,018)
(631,563)
Cash flows from financing activities
Subscription funds
3,591,251
-
Equity costs
(122,575)
-
Lease payments
(225,054)
(164,607)
Net cash from financing activities
3,243,622
(164,607)
Net increase/(decrease) in cash and cash equivalents
(4,203,522)
13,796,410
Cash and cash equivalents at the beginning of the financial year
24,817,962
11,021,552
Cash and cash equivalents at the end of the financial year
6
20,614,440
24,817,962
Note: the above consolidated statement of cash flows should be read in conjunction with the
accompanying notes
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
25
Note 1. Material 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.
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.
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.
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:
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 28.
Going Concern
The consolidated entity has net assets of
$4,532,574 (2023: $6,148,953) as at 30 June 2024
and incurred a loss of $7,180,959 (2023:
$6,248,181) and net operating cash
inflow/(outflow) of $(6,505,126) (2023:
($14,592,580)) for the year ended 30 June 2024.
Whilst the consolidated entity has incurred a loss
of $7,180,959, the consolidated entity has
$20,614,440 cash on hand at the reporting date.
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.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
26
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 (US) LLC as at 30 June 2024.
Orthocell Limited and its subsidiaries together are
referred to in these consolidated financial
statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the
consolidated entity has control. The consolidated
entity controls an entity when the consolidated
entity is exposed to, or has rights to, variable
returns from its involvement with the entity and
has the ability to affect those returns through its
power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date
on which control is transferred to the consolidated
entity. They are de-consolidated from the date
that control ceases.
Intercompany transactions, balances and
unrealised gains on transactions between entities
in the consolidated entity are eliminated.
Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment
of the asset transferred.
Accounting policies of subsidiaries have been
changed where necessary to ensure consistency
with the policies adopted by the consolidated
entity.
The acquisition of subsidiaries is accounted for
using the acquisition method of accounting. A
change in ownership interest, without the loss of
control, is accounted for as an equity transaction,
where the difference between the consideration
transferred and the book value of the share of the
non-controlling interest acquired is recognised
directly in equity attributable to the parent.
Non-controlling interest in the results and equity of
subsidiaries are shown separately in the statement
of profit or loss and other comprehensive income,
statement of financial position and statement of
changes in equity of the consolidated entity.
Losses incurred by the consolidated entity are
attributed to the non-controlling interest in full,
even if that results in a deficit balance.
Where the consolidated entity loses control over a
subsidiary, it derecognises the assets including
goodwill, liabilities and non-controlling interest in
the subsidiary together with any cumulative
translation differences recognised in equity.
The consolidated entity recognises the fair value
of the consideration received and the fair value
of any investment retained together with any gain
or loss in profit or loss.
Operating segments
Operating segments are presented using the
'management approach', where the information
presented is on the same basis as the internal
reports provided to the Chief Operating Decision
Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments
and assessing their performance.
Foreign currency translation
The consolidated financial statements are
presented in Australian dollars, which is Orthocell
Limited's functional and presentation currency,
except where stated otherwise.
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
The consolidated entity recognises revenue as
follows:
Revenue from contracts with customers
Revenue is recognised in accordance with
AASB15 “Revenue from Contracts with
Customers” at the fair value of the consideration
received or receivable. Amounts disclosed as
revenue are net of returns, trade allowances,
rebates and amounts collected on behalf of third
parties. For each contract with a customer, the
consolidated entity: identifies the contract with a
customer; identifies the performance obligations
in the contract; determines the transaction price
which takes into account estimates of variable
consideration and the time value of money;
allocates the transaction price to the separate
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
27
performance obligations and recognises revenue,
using the cost method, when or as performance
obligations are satisfied in a manner that depicts
the transfer to the customer of the goods or
services promised.
Revenue from contracts licence fees
The consolidated entity derives revenue from
contracts with customers. The revenue is
recognised over time under the terms and
conditions of the contract when the customer
obtains control of the promised goods and
therefore the benefits of unimpeded access.
Sale of goods
The consolidated entity derives revenue from the
sale of cell therapy products and biological
scaffold products. 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. Revenue derived from the sale of
products under contract 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.
Other revenue
Other revenue is recognised when it is received or
when the right to receive payment is established.
Income tax
The income tax expense or benefit for the period
is the tax payable on that period's taxable
income based on the applicable income tax rate
for each jurisdiction, adjusted by changes in
deferred tax assets and liabilities attributable to
temporary differences, unused tax losses and the
adjustment recognised for prior periods, where
applicable.
Deferred tax assets and liabilities are recognised
for temporary differences at the tax rates
expected to apply when the assets are recovered
or liabilities are settled, based on those tax rates
that are enacted or substantively enacted,
except for:
• When the deferred income tax asset or liability
arises from the initial recognition of goodwill or
an asset or liability in a transaction that is not a
business combination and that, at the time of
the transaction, affects neither the accounting
nor taxable profits; or
• When the taxable temporary difference is
associated with interests in subsidiaries,
associates or joint ventures, and the timing of
the reversal can be controlled, and it is
probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only
if it is probable that future taxable amounts will be
available to utilise those temporary differences
and losses.
The carrying amount of recognised and
unrecognised deferred tax assets are reviewed
each reporting date. Deferred tax assets
recognised are reduced to the extent that it is no
longer probable that future taxable profits will be
available for the carrying amount to be
recovered. Previously unrecognised deferred tax
assets are recognised to the extent that it is
probable that there are future taxable profits
available to recover the asset.
Deferred tax assets and liabilities are offset only
where there is a legally enforceable right to offset
current tax assets against current tax liabilities and
deferred tax assets against deferred tax liabilities;
and they relate to the same taxable authority on
either the same taxable entity or different taxable
entity's which intend to settle simultaneously.
Current and non-current classification
Assets and liabilities are presented in the
statement of financial position based on current
and non-current classification.
An asset is current when it is expected to be
realised or intended to be sold or consumed in
normal operating cycle, it is held primarily for the
purpose of trading, it is expected to be realised
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
28
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 include 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
expected credit losses. 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
Raw materials, work in progress and finished
goods are stated at the lower of cost and net
realisable value on a 'first in first out' basis. Cost
comprises of direct materials and delivery costs,
direct labour, import duties and other taxes, an
appropriate proportion of variable and fixed
overhead expenditure based on normal
operating capacity. Costs of purchased inventory
are determined after deducting rebates and
discounts received or receivable.
Inventory relating to work in progress is comprised
of cell therapies (OrthoACITM and OrthoATITM) and
scaffold batches still in production phase.
Cell therapies work in progress 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
financial asset unless, an accounting mismatch is
being avoided.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
29
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, its 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 attributable to a
default event that is possible within the next 12
months. Where a financial asset has become
credit impaired or where 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.
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
Straight line
40 yrs
Plant & equipment
Diminishing value
3-7 yrs
Computer software
Diminishing value
2-3 yrs
Furniture & fittings
Diminishing value
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.
Right-of-use assets
A right-of-use asset is recognised at the
commencement date of a lease. The right-of-use
asset is measured at cost, which comprises the
initial amount of the lease liability, adjusted for, as
applicable, any lease payments made at or
before the commencement date net of any lease
incentives received, any initial direct costs
incurred, and, except where included in the cost
of inventories, an estimate of costs expected to
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
30
be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-
line basis over the unexpired period of the lease or
the estimated useful life of the asset, whichever is
the shorter. Where the consolidated entity
expects to obtain ownership of the leased asset
at the end of the lease term, the depreciation is
over its estimated useful life. Right-of use assets
are subject to impairment or adjusted for any re-
measurement of lease liabilities.
The consolidated entity has elected not to
recognise a right-of-use asset and corresponding
lease liability for short-term leases with terms of 12
months or less and leases of low-value assets.
Lease payments on these assets are expensed to
profit or loss as incurred.
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 registration 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
10 years for Trademarks and 20 years for Patents.
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 10 years for Trademarks and
20 years for Patents from the date of application.
Costs associated with maintaining intangibles are
expensed as incurred. 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 26.
Impairment of non-financial assets
Goodwill and other intangible assets that have an
indefinite useful life are not subject to amortisation
and are tested annually for impairment or more
frequently if events or changes in circumstances
indicate that they might be impaired. Other non-
financial assets are reviewed for impairment
whenever events or changes in circumstances
indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount
exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair
value less costs of disposal and value-in-use. The
value-in-use is the present value of the estimated
future cash flows relating to the asset using a pre-
tax discount rate specific to the asset or cash-
generating unit to which the asset belongs. Assets
that do not have independent cash flows are
grouped together to form a cash-generating unit.
Trade and other payables
These amounts represent liabilities for goods and
services provided to the consolidated entity prior
to the end of the financial year and which are
unpaid. Due to their short-term nature, they are
measured at amortised cost and are not
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
31
discounted. The amounts are unsecured and are
usually paid within 30 days of recognition.
Contract liabilities
The company recognizes contract liabilities for
consideration received in respective of unsatisfied
performance obligations or where revenue is
constrained and reports these amounts as
contract liabilities (deferred revenue) in the
statement of financial position. Similarly, if the
company satisfies a performance obligation
before it receives the consideration, the company
recognize either a contract asset or a receivable
in its statement of financial position, depending
on where the something other than the passage
of time is required before the consideration is due.
Amounts received prior to satisfying the revenue
recognition criteria are recorded as deferred
revenue. Amounts expected to be recognised as
revenue within the 12 months following the
balance sheet date are classified within current
liabilities. Amounts not expected to be recognised
as revenue within the 12 months following the
balance sheet date are classified within non-
current liabilities.
Lease liabilities
A lease liability is recognised at the
commencement date of a lease. The lease
liability is initially recognised at the present value
of the lease payments to be made over the term
of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be
readily determined, the consolidated entity's
incremental borrowing rate. Lease payments
comprise of fixed payments less any lease
incentives receivable, variable lease payments
that depend on an index or a rate, amounts
expected to be paid under residual value
guarantees, exercise price of a purchase option
when the exercise of the option is reasonably
certain to occur, and any anticipated termination
penalties. The variable lease payments that do
not depend on an index or a rate are expensed in
the period in which they are incurred.
Lease liabilities are measured at amortised cost
using the effective interest method. The carrying
amounts are remeasured if there is a change in
the following: future lease payments arising from a
change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase
option and termination penalties. When a lease
liability is remeasured, an adjustment is made to
the corresponding right-of use asset, or to profit or
loss if the carrying amount of the right-of-use asset
is fully written down.
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,
options over shares or performance rights 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
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
32
receives the services that entitle the employees to
receive payment. No account is taken of any
other vesting conditions.
The costs of equity-settled transactions are
recognised as an expense with a corresponding
increase in equity over the vesting period. The
cumulative charge to profit or loss is calculated
based on the grant date fair value of the award,
the best estimate of the number of awards that
are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or
loss for the period is the cumulative amount
calculated at each reporting date less amounts
already recognised in previous periods.
Market conditions are taken into consideration in
determining fair value. Therefore, any awards
subject to market conditions are considered to
vest irrespective of whether or not that market
condition has been met provided all other
conditions are satisfied.
If equity-settled awards are modified, as a
minimum an expense is recognised as if the
modification has not been made. An additional
expense is recognised, over the remaining vesting
period, for any modification that increases the
total fair value of the share-based compensation
benefit as at the date of modification.
If the non-vesting condition is within the control of
the consolidated entity or employee, the failure to
satisfy the condition is treated as a cancellation. If
the condition is not within the control of the
consolidated entity or employee and is not
satisfied during the vesting period, any remaining
expense for the award is recognised over the
remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated
as if it has vested on the date of cancellation,
and any remaining expense is recognised
immediately. If a new replacement award is
substituted for the cancelled award, the
cancelled and new award is treated as if they
were a modification.
Fair value measurement
When an asset or liability, financial or non-
financial, is measured at fair value for recognition
or disclosure purposes, the fair value is based on
the price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date and assumes that the
transaction will take place either in the principle
market or in the absence of a principal market in
the most advantageous market.
Fair value is measured using the assumptions that
market participants would use when pricing the
asset or liability, assuming they act in their
economic best interest. For non-financial assets,
the fair value measurement is based on its highest
and best use. Valuation techniques that are
appropriate in the circumstances and for which
sufficient data are available to measure fair
value, are used, maximising the use of relevant
observable inputs and minimising the use of
unobservable inputs.
Assets and liabilities measured at fair value are
classified, into three levels, using a fair value
hierarchy that reflects the significance of the
inputs used in making the measurements.
Classifications are reviewed each reporting date
and transfers between levels are determined
based on a reassessment of the lowest level input
that is significant to the fair value measurement.
For recurring and non-recurring fair value
measurements, external valuers may be used
when internal expertise is either not available or
when the valuation is deemed to be significant.
External valuers are selected based on market
knowledge and reputation. Where there is a
significant change in fair value of an asset or
liability from one period to another, an analysis is
undertaken, which includes a verification of the
major inputs applied in the latest valuation and a
comparison, where applicable, with external
sources of data.
Issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when declared during
the financial year and no longer at the discretion
of the Company.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
33
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.
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.
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 2024. The consolidated entity has not assessed the impact of these new or amended
Accounting Standards and Interpretations, except as noted.
AASB No.
Title
Application
date *
Issue
date
AASB 2014-10
Amendments to Australian Accounting Standards – Sale or Contributions of Assets
between an Investor and its Associate or Joint Venture
1 Jan 2025
Dec 2014
AASB 2020-1
Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current
1 Jan 2023
Mar 2020
AASB 2021-2
Amendments to Australian Accounting Standards – Disclosure of Accounting Policies
and Definition of Accounting Estimates
1 Jan 2023
Mar 2021
AASB 2021-5
Amendments of Australian Accounting Standards – Deferred Tax related to Assets
and Liabilities arising from a Single Transaction
1 Jan 2023
Jul 2021
AASB 2021-6
Amendments to Australian Accounting Standards – Disclosure of Accounting
Policies: Tier 2 and Other Australian Accounting Standards
1 Jan 2023
Dec 2021
AASB 2021-7c
Amendments to Australian Accounting Standards – Effective Date of Amendments
to AASB 10 and AASB 128 and Editorial Corrections [deferred AASB 10 and AASB 128
amendments in AASB 2014-10 apply]
1 Jan 2025
Dec 2021
* Annual reporting periods beginning after
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
34
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,
directors and consultants 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 expected credit losses
The provision for expected credit losses 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 patient’s 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.
Lease term
The lease term is a significant component in the
measurement of both the right-of-use asset and
lease liability. Judgement is exercised in
determining whether there is reasonable certainty
that an option to extend the lease or purchase
the underlying asset will be exercised, or an
option to terminate the lease will not be
exercised, when ascertaining the periods to be
included in the lease term. In determining the
lease term, all facts and circumstances that
create an economical incentive to exercise an
extension option, or not to exercise a termination
option, are considered at the lease
commencement date. Factors considered may
include the importance of the asset to the
consolidated entity's operations; comparison of
terms and conditions to prevailing market rates;
incurrence of significant penalties; existence of
significant leasehold improvements; and the costs
and disruption to replace the asset. The
consolidated entity reassesses whether it is
reasonably certain to exercise an extension
option, or not exercise a termination option, if
there is a significant event or significant change in
circumstances.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
35
Incremental borrowing rate
Where the interest rate implicit in a lease cannot
be readily determined, an incremental borrowing
rate is estimated to discount future lease
payments to measure the present value of the
lease liability at the lease commencement date.
Such a rate is based on what the consolidated
entity estimates it would have to pay a third party
to borrow the funds necessary to obtain an asset
of a similar value to the right-of-use asset, with
similar terms, security and economic environment.
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.
Revenue from contracts with customers
When recognising revenue from upfront payments
from contracts with customers, the key
performance obligation of the consolidated entity
is considered to be over the term of the contract,
as this is deemed to be the time that the customer
obtains control of the promised goods and
therefore the benefits of unimpeded access.
When recognising revenue in relation to the sale
of goods to customers under contracts, the key
performance obligation of the consolidated entity
is considered to be the point of delivery of the
goods to the customer, as this is deemed to be
the time that the customer obtains control of the
promised goods and therefore the benefits of
unimpeded access.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
36
Note 3. Revenue
2024
2023
$
$
Sales revenue
Sale of goods
3,011,375
1,939,069
Revenue from contracts with customers
Revenue from contracts recognised over time
2,304,000
2,304,000
Other revenue
Interest
1,031,681
850,793
Foreign currency gain
-
18,710
Other
416,996
60,488
1,448,677
929,991
Total revenue
6,764,052
5,173,060
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Cost of sales
Cost of sales
1,626,953
1,026,155
Interest expense leases
60,525
30,572
Depreciation and amortisation
Depreciation – plant & equipment
246,219
239,959
Depreciation – right-of-use assets
162,761
199,204
Amortisation – patents & trademarks
108,097
114,958
Total depreciation and amortisation
517,077
554,121
Rental expense relating to operating leases
Short-term lease payments
2,940
2,908
Total rental expense relating to operating leases
2,940
2,908
Employment expenses
Salaries & wages
5,121,657
4,399,959
Employment benefits
49,581
64,414
Superannuation expense
559,250
456,587
Directors’ fees
484,885
397,916
Payroll & other taxes
357,118
280,385
Other employment costs
23,704
2,979
Share-based payments expense
1,390,173
1,942,713
Total employment expenses
7,986,368
7,544,953
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
37
Note 4. Expenses (continued)
2024
2023
$
$
Write off assets
Inventories
22,517
20,123
Note 5. Income tax expense
Income tax expense/(benefit)
Current tax
(3,051,483)
(3,162,380)
Deferred tax – origination and reversal of temporary differences
-
-
Aggregate income tax expense
(3,051,483)
(3,162,380)
Numerical reconciliation of income tax expense & tax at the statutory rate
Loss before income tax expense from continuing operations
(10,232,442)
(9,410,561)
Tax at the statutory tax rate of 25% (2023: 25%)
(2,558,111)
(2,352,640)
Tax effect amounts which are not deductible/(taxable) in
calculating taxable income:
Non-deductible items
409,294
493,471
Contract Liabilities assessable in advance
-
-
Benefit of tax losses not previously brought to account
-
-
Income tax benefit not brought to account
2,148,817
1,859,170
-
-
Research and development tax benefit received
(3,051,483)
(3,162,380)
The following deferred tax balances have not been recognised:
Deferred tax assets not recognised at 25% (2023: 25%)
Provisions and accruals
387,045
334,487
Capital raising costs
24,515
33,000
Other
-
-
Carried forward revenue losses
5,202,256
4,348,883
5,613,816
4,716,371
Deferred tax liabilities not recognised at 25% (2023: 25%)
Contract liabilities
1,702,381
2,278,380
Prepayments
121,899
107,754
1,824,280
2,386,134
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.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
38
Note 6. Cash and cash equivalents
2024
2023
$
$
Cash at bank
3,114,440
6,817,962
Term deposits
17,500,000
18,000,000
20,614,440
24,817,962
All term deposits held which are at call and subject to an insignificant change in value when called, are
classified as cash and cash equivalents.
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 financial position as follows:
Balance as above
Cash and cash equivalents
20,614,440
24,817,962
Balance as per statement of financial position
20,614,440
24,817,962
Note 7. Trade and other receivables
Trade receivables:
545,387
473,878
Other receivables:
Interest on cash term deposits
477,885
260,000
Sundry debtors
25,000
-
GST refund due
103,718
109,390
606,603
369,390
1,151,990
843,268
Impairment of receivables
There have been no expected credit losses of trade receivables in the year ended 30 June 2024 (2023: $0).
Past due but not impaired
Customers with balances past due but without provision for expected credit losses amount to $45,086 as at
30 June 2024 (2023: $113,156)
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
17,988
83,281
3 to 6 months overdue
8,558
29,875
Over 6 months overdue
18,540
-
45,086
113,156
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
39
Note 8. Inventories
2024
2023
$
$
Consumables, at cost
435,343
302,101
Work in progress, at cost
268,854
444,137
Finished goods, at cost
472,441
287,891
1,176,638
1,034,129
Note 9. Other
Prepayments
9,710
171,015
Accrued revenue
54,477
-
64,187
171,015
Note 10. Property, plant and equipment
Leasehold improvements – at cost
1,590,691
882,940
Less: Accumulated depreciation
(154,303)
(126,704)
1,436,388
756,236
Plant and equipment – at cost
1,186,577
1,174,535
Less: Accumulated depreciation
(861,261)
(826,018)
325,316
348,517
Furniture and fittings – at cost
211,697
67,503
Less: Accumulated depreciation
(76,252)
(51,056)
135,445
16,447
1,897,149
1,121,200
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
years are set out below:
Leasehold
improvements
Plant and
equipment
Furniture &
fittings
Total
$
$
$
$
Balance at 30 June 2022
520,280
369,227
16,305
905,812
Additions
256,326
194,359
4,662
455,347
Depreciation
(20,370)
(215,069)
(4,520)
(239,959)
Balance at 30 June 2023
756,236
348,517
16,447
1,121,200
Additions
709,880
168,094
144,094
1,022,168
Depreciation
(29,728)
(191,295)
(25,196)
(246,219)
Balance at 30 June 2024
1,436,388
325,316
135,445
1,897,149
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
40
Note 11. Right-of-use assets
2024
2023
$
$
Land and buildings – right-of-use
827,367
808,095
Less: Accumulated depreciation
(162,761)
(323,238)
664,606
484,857
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
years are set out below:
Opening balance
484,857
496,136
Additions
-
187,925
Adjustments/(disposals)
322,510
-
Depreciation
(162,761)
(199,204)
Closing balance
664,606
484,857
The right-of-use asset is based on a lease entered into with a commencement date of 30 June 2020.
Additions to the right-of-use assets during the year were nil (2023: $187,925, relating to additional space
added to the lease agreement). Adjustments to the right-of-use assets during the year were $322,510
relating to lease remeasurement following signing of new lease (2023: nil).
The consolidated entity leases land and buildings for its offices and clean room facility under an agreement
of five years with an option to extend. On renewal, the terms of the lease are renegotiated. The
consolidated entity leases office equipment under agreements of up to five years. These leases are either
short-term or low-value, so have been expensed as incurred and not capitalised as right-of-use assets.
Note 12. Intangibles
Patents and trademarks – at cost
2,259,351
2,238,106
Less: Accumulated amortisation
(1,213,151)
(1,105,054)
1,046,200
1,133,052
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial
year are set out below:
Opening balance
1,133,052
1,229,893
Additions
21,245
18,117
Amortisation expense
(108,097)
(114,958)
Closing balance
1,046,200
1,133,052
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
41
Note 13. Trade and other payables
2024
2023
$
$
Trade payables
1,353,596
875,763
Other payables
115,938
1,284
1,469,534
877,047
Note 14. Lease liabilities
Current lease liabilities
148,968
180,629
Non-current lease liabilities
540,725
381,676
Note 15. Employee benefits
Current:
Annual leave entitlements
379,539
380,749
Long service leave entitlements
274,446
219,102
653,987
599,851
Non-current:
Long service leave entitlements
164,802
169,358
164,802
169,358
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 where employees are entitled to pro-rata payments in
certain circumstances. Employee benefit amounts are presented predominantly as current, as 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 16. Contract liabilities
Current:
Deferred revenue from contacts with customers recognised over time
2,304,000
2,304,000
2,304,000
2,304,000
Non-current:
Deferred revenue from contacts with customers recognised over time
16,071,228
18,375,228
16,071,228
18,375,228
Total contract liabilities
18,375,228
20,679,228
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
42
Note 16. Contract liabilities (continued)
Reconciliation:
Reconciliation of the written down values at the beginning and end of the current and previous financial
year are set out below:
2024
2023
$
$
Opening balance
20,679,228
22,983,228
Transfer to revenue – performance obligations satisfied
(2,304,000)
(2,340,000)
18,375,228
20,679,228
Unsatisfied performance obligations
The aggregate amount of the transaction price allocated to the performance obligations that are
unsatisfied at the end of the reporting period was $18,375,228 as at 30 June 2024 (2023: 20,679,228) and is
expected to be recognised as revenue in future periods as follows:
Within 1 year
2,304,000
2,304,000
1 to 2 years
2,304,000
2,304,000
2 to 5 years
6,912,000
6,912,000
Over 5 years
6,855,228
9,159,228
18,375,228
20,679,228
On 22 June 2022 the Company entered into a global exclusive patent and trademark license agreement
and an exclusive distribution and supply agreement with BioHorizons Implant Systems Inc (BioHorizons) in
relation to Orthocell’s Striate+, a resorbable collagen membrane, manufactured by Orthocell, used for
dental guided bone and tissue regeneration procedures. In consideration for the license granted,
BioHorizons paid Orthocell AU $23,225,432 (US $16,000,000). Under the agreements Orthocell will supply
BioHorizons with Striate+TM products at agreed transfer prices and grant exclusive distribution rights of those
products globally. BioHorizons will market and distribute Striate+TM alongside its innovative and evidence-
based dental implants and tissue regeneration products.
The contract liability relates to that portion of the upfront payment of AU $23,225,432 (US $16,000,000) for
which there are future performance obligations to be satisfied. Under the terms of the contract BioHorizons
have an exclusive license to use Orthocell’s Trademarks and Patents in connection with the marketing and
sale of products (in the Field of Use, dental). The license terminates when the last patent expires (in
approximately 10 years). The Company’s performance obligation is the maintenance of the Trademarks
and Patents so that BioHorizons may receive and consume the benefits of having access to the Trademarks
and Patents to promote and distribute the manufactured Striate products for the term of the license. There
is no financing component within the contract and there is no requirement to obtain financing as the
consolidated entity has sufficient working capital to meet its obligations under the contract and the
consolidated entity has access to capital exclusive of the contract.
Note 17. Other current liabilities
Accrued expenses
729,392
568,741
729,392
568,741
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
43
Note 18. Equity – issued capital
2024
Shares
2023
Shares
2024
$
2023
$
Ordinary shares – fully paid
209,326,818
197,303,071
65,421,974
60,977,724
209,326,818
197,303,071
65,421,974
60,977,724
Share equity costs – ordinary shares
-
-
(3,202,306)
(3,079,731)
209,326,818
197,303,071
62,219,668
57,897,933
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance at 30 June 2022
197,127,913
57,476,080
Issue of shares on exercise of options
17 Aug 2022
75,158
$0.198
379,912
Issue of shares
19 Apr 2023
100,000
$0.420
42,000
175,158
421,912
Balance at 30 June 2023
197,303,071
57,897,993
Issue of shares
30 Oct 2023
1,714,286
$0.350
600,000
Issue of shares
15 Nov 2023
250,000
$0.365
91,250
Issue of shares
28 Feb 2024
9,459,461
$0.370
3,500,000
Share equity costs
28 Feb 2024
-
-
(122,575)
Issue of shares
11 Mar 2024
100,000
$0.405
40,500
Issue of shares
11 Mar 2024
500,000
$0.405
212,500
12,023,747
4,321,675
Balance at 30 June 2024
209,326,818
62,219,668
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.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the value 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 to maximise synergies.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
44
Note 19. Share-based payment reserve
2024
Options/rights
2023
Options/rights
2024
$
2023
$
Share-based payment reserve
42,265,000
38,465,000
7,939,296
7,335,298
42,265,000
38,465,000
7,939,296
7,335,298
Movements in share-based payment reserve
Details
Class
Date
No of options/
rights
$
Balance at 30 June 2022
26,805,000
5,913,911
Issue of options
OCCOPT19
13/07/2022
50,000
10,150
Issue of options
OCCOPT27
13/07/2022
2,200,000
349,140
Value of options exercised
OCCOPT14
17/08/2022
(1,480,000)
(379,912)
Expiry of options
OCCOPT14
17/08/2022
(140,000)
(35,938)
Expiry of options
OCCOPT15
20/11/2022
(1,650,000)
(560,076)
Expiry of options
OCCOPT16
20/11/2022
(150,000)
(53,187)
Issue of options
OCCOPT28
08/03/2023
3,000,000
586,634
Issue of options
OCCOPT29
08/03/2023
3,830,000
700,308
Issue of options
OCCOPT30
25/05/2023
1,000,000
80,187
Issue of options
OCCOPT31
25/05/2023
1,000,000
78,460
Issue of options
OCCOPT32
25/05/2023
11,660,000
1,421,387
Balance at 30 June 2023
38,465,000
7,335,298
Expiry of options
OCCOPT18
08/10/2023
(200,000)
(40,302)
Issue of options
OCCOPT33
07/11/2023
1,000,000
169,435
Issue of options
OCCOPT34
20/11/2023
2,000,000
398,657
Issue of options
OCCOPT35
18/01/2024
2,000,000
416,580
Expiry of options
OCCOPT20
05/02/2024
(450,000)
(125,643)
Expiry of options
OCCOPT21
04/06/2024
(1,850,000)
(472,962)
Issue of options
OCCOPT36
11/06/2024
100,000
13,043
Issue of options
OCCOPT37
11/06/2024
700,000
92,689
Issue of performance rights
OCCPR1
19/01/2023
1,000,000
365,001
Performance rights exercised
OCCPR1
11/03/2024
(500,000)
(212,500)
4,300,000
603,998
Balance at 30 June 2024
42,765,000
7,939,296
Total value of share-based payments for the year that has been recognised through the reserve is
$1,495,905 (2023: $2,450,500). Of this $1,390,173 (2023: $1,942,713) is classified as share-based payments to
employees and directors in Note 4 under employment expenses and the remaining $105,732 (2023:
$507,787) 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.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
45
Note 19. Share-based payment reserve (continued)
Set out below are summaries of options granted by the Company:
Grant
date
Expiry
date
Equity
code
Exercise
price
Opening
balance
Granted
Exercised
Expired/
forfeited
Closing
balance
2023
14/08/19
14/08/22
OCCOPT14
$0.413
1,620,000
-
(1,480,000)
(140,000)
-
20/11/19
20/11/22
OCCOPT15
$0.617
1,650,000
-
-
(1,650,000)
-
20/11/19
20/11/22
OCCOPT16
$0.537
150,000
-
-
(150,000)
-
11/06/20
11/06/25
OCCOPT17
$0.410
2,000,000
-
-
-
2,000,000
08/10/20
08/10/23
OCCOPT18
$0.400
200,000
-
-
-
200,000
15/10/20
14/10/24
OCCOPT19
$0.583
16,680,000
50,000
-
-
16,730,000
06/02/21
05/02/24
OCCOPT20
$0.517
450,000
-
-
-
450,000
05/06/21
04/06/24
OCCOPT21
$0.536
1,850,000
-
-
-
1,850,000
16/09/21
16/09/24
OCCOPT22
$0.570
100,000
-
-
-
100,000
26/10/21
26/10/24
OCCOPT23
$0.500
755,000
-
-
-
755,000
26/10/21
26/10/25
OCCOPT24
$0.480
150,000
-
-
-
150,000
04/04/22
04/04/26
OCCOPT25
$0.606
150,000
-
-
-
150,000
12/05/22
12/05/26
OCCOPT26
$0.515
1,050,000
-
-
-
1,050,000
12/07/25
13/07/25
OCCOPT27
$0.403
-
2,200,000
-
-
2,200,000
08/03/23
08/03/28
OCCOPT28
$0.400
-
3,000,000
-
-
3,000,000
04/04/23
19/04/27
OCCOPT29
$0.360
-
3,830,000
-
-
3,830,000
25/05/23
26/05/26
OCCOPT30
$0.600
-
1,000,000
-
-
1,000,000
25/05/23
26/05/27
OCCOPT31
$0.800
-
1,000,000
-
-
1,000,000
25/05/23
26/05/28
OCCOPT32
$0.400
-
4,000,000
-
-
4,000,000
26,805,000
15,080,000
(1,480,000)
(1,940,000)
38,465,000
Weighted average exercise price
$0.550
$0.431
$0.413
$0.596
$0.506
Grant
date
Expiry
date
Equity
code
Exercise
price
Opening
balance
Granted
Exercised
Expired/
forfeited
Closing
balance
2024
11/06/20
11/06/25
OCCOPT17
$0.410
2,000,000
-
-
-
2,000,000
08/10/20
08/10/23
OCCOPT18
$0.400
200,000
-
-
(200,000)
-
15/10/20
14/10/24
OCCOPT19
$0.583
16,730,000
-
-
-
16,730,000
06/02/21
05/02/24
OCCOPT20
$0.517
450,000
-
-
(450,000)
-
05/06/21
04/06/24
OCCOPT21
$0.536
1,850,000
-
-
(1,850,000)
-
16/09/21
16/09/24
OCCOPT22
$0.570
100,000
-
-
-
100,000
26/10/21
26/10/24
OCCOPT23
$0.500
755,000
-
-
-
755,000
26/10/21
26/10/25
OCCOPT24
$0.480
150,000
-
-
-
150,000
04/04/22
04/04/26
OCCOPT25
$0.606
150,000
-
-
-
150,000
12/05/22
12/05/26
OCCOPT26
$0.515
1,050,000
-
-
-
1,050,000
12/07/25
13/07/25
OCCOPT27
$0.403
2,200,000
-
-
-
2,200,000
08/03/23
08/03/28
OCCOPT28
$0.400
3,000,000
-
-
-
3,000,000
04/04/23
19/04/27
OCCOPT29
$0.360
3,830,000
-
-
-
3,830,000
25/05/23
26/05/26
OCCOPT30
$0.600
1,000,000
-
-
-
1,000,000
25/05/23
26/05/27
OCCOPT31
$0.800
1,000,000
-
-
-
1,000,000
25/05/23
26/05/28
OCCOPT32
$0.400
4,000,000
-
-
-
4,000,000
31/10/23
07/11/27
OCCOPT33
$0.360
-
1,000,000
-
-
1,000,000
02/11/23
20/11/28
OCCOPT34
$0.400
-
2,000,000
-
-
2,000,000
17/11/24
17/11/29
OCCOPT35
$0.400
-
2,000,000
-
-
2,000,000
11/06/24
11/06/27
OCCOPT36
$0.373
-
100,000
-
-
100,000
11/06/24
11/06/27
OCCOPT37
$0.367
-
700,000
-
-
700,000
38,465,000
5,800,000
-
(2,500,000)
41,765,000
Weighted average exercise price
$0.506
$0.389
$0.000
$0.522
$0.489
At 30 June 2024 the remaining weighted average contractual life of the options is 1,030 days (2023: 875
days).
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
46
Note 19. Share-based payment reserve (continued)
Set out below is a summary of performance rights granted by the Company during the year:
Grant
date
Expiry
date
Equity
code
Exercise
price
Opening
balance
Granted
Exercised
Expired/
forfeited
Closing
balance
19/01/23
19/01/26
OCCPR1
$0.000
-
1,000,000
(500,000)
-
500 000
-
1,000,000
(500,000)
-
500,000
The costs of equity-settled transactions are measured at fair value. Fair value is independently determined
using the Black-Scholes option pricing model. For the options and performance rights granted the valuation
model inputs used to determine the fair value at the grant date are as follows:
Equity class
Grant
date
Expiry
date
Share price
at grant date
Exercise
price
Expected
volatility
Dividend
yield
Risk-free
rate
Fair value at
grant date
Options:
OCCOPT17
10/06/20
11/06/25
$0.355
$0.410
80%
0%
0.41%
$0.2150
OCCOPT18
08/10/20
08/10/23
$0.410
$0.400
75%
0%
0.14%
$0.2015
OCCOPT19
15/10/20
14/10/24
$0.405
$0.583
80%
0%
0.42%
$0.2030
OCCOPT20
05/02/21
05/02/24
$0.555
$0.517
75%
0%
0.10%
$0.2792
OCCOPT21
02/06/21
04/06/24
$0530
$0.536
75%
0%
0.09%
$0.2557
OCCOPT22
16/09/21
16/09/24
$0.560
$0.570
70%
0%
0.08%
$0.2529
OCCOPT23
26/10/21
26/10/24
$0.540
$0.500
70%
0%
0.67%
$0.2590
OCCOPT24
26/10/21
26/10/24
$0.485
$0.580
70%
0%
0.14%
$0.2522
OCCOPT25
04/04/22
04/04/26
$0.405
$0.606
65%
0%
2.49%
$0.1645
OCCOPT26
12/05/22
12/05/26
$0.340
$0.515
65%
0%
2.95%
$0.1386
OCCOPT27
13/07/22
13/07/25
$0.370
$0.403
65%
0%
2.96%
$0.1587
OCCOPT28
08/03/23
08/03/28
$0.390
$0.400
55%
0%
3.46%
$0.1955
OCCOPT29
04/04/23
19/04/27
$0.385
$0.360
55%
0%
3.02%
$0.1828
OCCOPT30
25/05/23
26/05/26
$0.345
$0.600
55%
0%
3.35%
$0.0802
OCCOPT31
25/05/23
26/05/27
$0.345
$0.800
55%
0%
3.38%
$0.0785
OCCOPT32
25/05/23
26/05/28
$0.345
$0.400
55%
0%
3.38%
$0.1614
OCCOPT33
07/11/23
07/11/27
$0.360
$0.360
55%
0%
4.43%
$0.1694
OCCOPT34
01/11/23
20/11/28
$0.385
$0.400
55%
0%
3.01%
$0.1993
OCCOPT35
15/01/24
17/11/29
$0.405
$0.400
55%
0%
3.66%
$0.2083
OCCOPT36
11/06/24
11/06/27
$0.360
$0.373
50%
0%
3.89%
$0.1304
OCCOPT37
11/06/24
11/06/27
$0.360
$0.367
50%
0%
3.89%
$0.1324
Performance rights:
OCCPR1
19/01/23
19/01/26
$0.000
$0.425
50%
0%
2.90%
$0.4250
At 30 June 2024 all options were fully vested and none of the outstanding performance rights were vested.
Performance rights granted to employees are subject to two-year vesting periods from grant date and
subject to achievement of performance milestones over the two-year vesting period to the satisfaction of
the Chief Executive Officer and the board of directors.
Note 20. Equity – accumulated losses
2024
2023
$
$
Accumulated losses at the beginning of the financial year
59,084,338
53,485,357
Expired/forfeited options
(638,907)
(649,200)
Loss after income tax expense for the year
7,180,959
6,248,181
Accumulated losses at the end of the financial year
65,626,390
59,084,338
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
47
Note 21. 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,
and has been throughout the period under review, the Company’s policy that no trading in financial
instruments shall be undertaken. Details of the significant accounting policies & methods adopted,
including the criteria for recognition, the basis of measurement and the basis on which income & 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:
2024
2023
$
$
Cash(1)
20,614,440
24,817,962
(1)
The weighted average interest rate of cash is 4.51% (2023: 4.35%)
(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
Total carrying
amount
$
$
$
$
$
$
$
As at 30 June 2023:
Trade & other payables
877,047
-
-
-
-
-
877,047
Lease liabilities
89,489
91,139
187,352
194,325
-
-
562,305
966,536
91,139
187,352
194,325
-
-
1,439,352
As at 30 June 2024:
Trade & other payables
1,469,534
-
-
-
-
-
1,469,534
Lease liabilities
73,016
75,952
161,188
379,537
-
-
689,693
1,542,550
75,952
161,188
379,537
-
-
2,159,227
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
48
Note 21. Financial instruments (continued)
(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 2023 and 2024. None of the Company’s financial liabilities are interest bearing.
Financial assets
Carrying
Interest rate risk (-1%)
Interest rate risk (1%)
amount
Net profit
Equity
Net profit
Equity
$
$
$
$
$
30 June 2023
Cash
24,817,962
(248,180)
(248,180)
248,180
248,180
30 June 2024
Cash
20,614,440
(206,144)
(206,144)
206,144
206,144
Note 22. 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:
2024
2023
$
$
Short-term employee benefits
1,208,927
1,056,816
Post-employment benefits
61,436
65,297
Long-term benefits
11,624
14,953
Share-based payments
899,954
1,232,255
2,181,941
2,369,321
Note 23. 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
53,500
60,450
Audit or review of the consolidated financial statements
Other services – PKF Perth
Preparation of the tax return
7,113
5,700
Other matters
10,425
40,800
17,538
46,500
71,038
106,950
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
49
Note 24. Contingent liabilities
On 22 June 2022 the Company entered into a global exclusive patent and trademark license agreement
and an exclusive distribution and supply agreement with BioHorizons Implant Systems Inc (BioHorizons) in
relation to Orthocell’s Striate+, a resorbable collagen membrane, manufactured by Orthocell, used for
dental guided bone and tissue regeneration procedures. In consideration for the license granted,
BioHorizons paid Orthocell AU $23,225,432 (US $16,000,000). Under the agreements Orthocell will supply
BioHorizons with Striate+TM products at agreed transfer prices and grant exclusive distribution rights of those
products globally. BioHorizons will market and distribute Striate+TM alongside its innovative and evidence-
based dental implants and tissue regeneration products. There is no financing component within the
contract and there is no requirement to obtain financing as the consolidated entity has sufficient working
capital to meet its obligations under the contract and the consolidated entity has access to capital
exclusive of the contract.
To ensure continuous supply and access to the IP, the parties have entered into an escrow arrangement
and an IP security agreement. The escrow arrangement allows for the release of know-how to BioHorizons if
there is a default by Orthocell under the Distribution Agreement (generally which is not rectified within 60
days of notice by BioHorizons). The IP security agreement allows the Licence Agreement to be registered
with local IP offices (including IP Australia and the U.S. Patent and Trademark Office).
Either party may terminate the Licence Agreement for material breach if such breach is not cured within 90
days after written notice from the other party. Either party may terminate the Distribution Agreement for
material breach if such breach is not cured within 60 days after written notice from the other party.
The Distribution Agreement contains two separate regimes for change of control:
1)
“Sale Default” which is effectively a change in 50% of voting power or acquisition of at least 50% of
ordinary shares of Orthocell, or a sale by Orthocell to an unrelated party (other than BioHorizons,
Henry Schein Inc. or any of their Affiliates) of all or substantially all of the assets of Orthocell or of the
business required by Orthocell to perform its obligations under the Distribution Agreement, in each
case during the first three years of the Distribution Agreement. If this occurs, BioHorizons has a 20-day
period following announcement of the proposed transaction (or otherwise becoming aware of the
proposed transaction, in the case that Orthocell is no longer listed on the ASX) that would trigger a
change of control during which it can claim a refund of the full licence fee (payable two weeks after
completion of the relevant transaction), and the Agreements will automatically terminate. This will be
BioHorizons’ sole remedy.
2)
“Supply Default” which is effectively a change in 50% of voting power or acquisition of at least 50% of
ordinary shares of Orthocell in favour of a competitor of BioHorizons, or a sale by Orthocell to a
competitor of BioHorizons of all or substantially all of the assets of Orthocell or of the business required
by Orthocell to perform its obligations under the Distribution Agreement, or a change in
manufacturing facilities, in each case during the first seven years of the Distribution Agreement, which
results in a failure to supply Striate+™ products by Orthocell that were ordered by BioHorizons before
the change of control event. If this occurs, BioHorizons can pursue two of the following three
remedies: (i) release of know-how from escrow; (ii) a partial refund of license payments based on the
number of anniversaries since the commencement of the Distribution Agreement; or (iii) 12 months’
worth of extra supply of Striate+™ products. This doesn’t preclude BioHorizons from pursuing other
contractual remedies, usual for an agreement of this type, that may be available.
The consolidated entity has no other contingent liabilities for the year ended 30 June 2024.
Note 25. Contingent assets
The consolidated entity has no contingent assets for the year ended 30 June 2024 or 30 June 2023.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
50
Note 26. Commitments
2024
2023
$
$
Patent annuity commitments
To maintain patent rights the following commitments will need to be met by
the Company:
Within one year
87,346
89,986
One to five years
334,651
356,612
More than five years
330,811
395,328
752,808
841,926
Lease commitments – operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
2,940
2,940
One to five years
6,125
9,065
More than five years
-
-
9,065
12,005
Capital commitments
Committed at the reporting date but not recognised as liabilities:
Property, plant & equipment
-
435,839
-
435,839
Total commitments
761,873
1,289,770
Operating lease commitments includes contracted amounts for various equipment under non-cancellable
operating leases expiring within one to ten years.
Note 27. Related party transactions
Parent entity:
Orthocell Limited is the parent entity
Subsidiaries:
Interests in subsidiaries are set out in note 28.
Key management personnel:
Disclosures relating to key management personnel are set out in note
22 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.
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
51
Note 28. 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:
2024
2023
%
%
Name of entity
Country of incorporation
Ausbiomedical Pty Ltd
Australia
100
100
Orthocell UK Ltd
United Kingdom
100
100
Orthocell (US) LLC
United States of America
100
100
As the subsidiaries do not trade or have any assets and liabilities, the consolidated entity and parent entity
disclosures are the same.
Note 29. Events after the reporting period
Subsequent to 30 June 2024 250,000 shares valued at $96,250 and 250,000 performance rights valued at
$91,250 were issued pursuant to the Employee Awards Plan.
No other matters or circumstances have arisen since 30 June 2024 that have 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 30. Reconciliation of loss after income tax to net cash from operating activities
2024
2023
$
$
Loss after income tax expense for the year
(7,180,959)
(6,248,181)
Adjustments for:
Depreciation and amortisation
517,077
554,121
Share-based payments expensed
2,095,905
2,492,500
Lease interest
60,525
30,573
Inventory write-off
22,517
20,123
Revaluation of right-of-use asset
(77,448)
-
Change in operating assets and liabilities:
(Increase)/decrease in debtors
(269,512)
20,950,592
(Increase)/decrease in prepayments
161,305
(89,276)
(Increase)/decrease in inventories
(165,026)
(440,682)
(Increase)/decrease in accrued revenue
(54,478)
-
Increase/(decrease) in creditors
478,737
(678,999)
Increase/(decrease) in accruals
160,650
241,395
Increase/(decrease) in contract liabilities
(2,304,000)
(2,304,000)
Increase/(decrease) in employee entitlements
49,581
64,414
(6,505,126)
14,592,580
For personal use only
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements for the Year Ended 30 June 2024
52
Note 31. Loss per share
2024
2023
$
$
Loss after income tax expense for the year
(7,180,959)
(6,248,181)
Shares
Shares
Weighted average number of shares used in calculating basic and
diluted loss per share
202,008,340
197,213,393
Loss per share
Basic earnings per share
(0.036)
(0.032)
Diluted earnings per share
(0.036)
(0.032)
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.
Note 32. 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. Reports provided to the chief operating decision
makers reference the consolidated entity operating in one segment, being the development of innovative
biological products to address unmet clinical needs in human health in the regenerative medicine industry.
For personal use only
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
Consolidated Financial Statements for the Year Ended 30 June 2024
53
Entity name
Entity type
Country of
incorporation
Ownership
interest %
Tax residency &
foreign jurisdiction
Ausbiomedical Pty Ltd
Body corporate
Australia
100%
Australia
Orthocell UK Ltd
Body corporate
United Kingdom
100%
United Kingdom
Orthocell US LLC
Body corporate
United States of
America
100%
United States of
America
For personal use only
DIRECTORS DECLARATION
Consolidated Financial Statements for the Year Ended 30 June 2024
54
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 2024 and of its performance for the financial
year ended on that date,
•
There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable, and
•
The information disclosed in the attached consolidated entity disclosure statement is true and
correct.
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 2024
Perth
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
55
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
56
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
57
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
58
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
59
For personal use only
INDEPENDENT AUDITOR’S REPORT
Consolidated Financial Statements for the Year Ended 30 June 2024
60
For personal use only
CORPORATE GOVERNANCE STATEMENT
Consolidated Financial Statements for the Year Ended 30 June 2024
61
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.
The Company’s Corporate Governance Statement is
set out on the Company’s website at
www.orthocell.com.au.
For personal use only
ASX ADDITIONAL INFORMATION
Consolidated Financial Statements for the Year Ended 30 June 2024
62
Additional information required by the ASX Limited
Listing Rules and not disclosed elsewhere in this
report is set out below. The information is effective 19
August 2024.
Substantial shareholders
There are no substantial shareholders at the date of this
report.
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
Shareholders
Holdings
1 – 1,000
364
220,881
1,001 – 5,000
1,788
4,861,335
5,001 – 10,000
814
6,648,574
10,001 – 100,000
1,723
61,402,185
100,001 and over
317
136,443,818
Totals
5,006
209,576,818
Unmarketable parcels
609
513,429
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.
Ordinary shares
20 largest shareholders
Shares held
%
Ming Hao Zheng & Fan Ying
6,805,886
3.25
Mr Paul Frederick Anderson
& Ms Nicole Jane Telford
6,233,335
2.97
Mr Qixiao Zhou
5,996,241
2.86
Mr Jia Xun Xu
5,014,107
2.39
HSBC Custody Nominees
(Australia) Limited
4,420,632
2.11
Mr Patrick John McHale
4,300,000
2.05
Wenola Pty Ltd
3,609,058
1.72
Sankofa Strategic Equity
Fund Limited
2,462,000
1.17
Citicorp Nominees Pty Ltd
2,448,297
1.17
The University of Western
Australia
2,360,973
1.13
Dr John Clifford Philpott &
Mrs Rebecca Anne Philpott
2,048,677
0.98
Sandini Pty Ltd
1,784,911
0.85
Miss Kate Imogen Leaver
1,698,762
0.81
Dr John Clifford Philpott
1,560,216
0.74
Mr Tony Athas & Mrs Angela
Athas
1,430,000
0.68
Mr Vance Clark Moore
1,360,000
0.65
Carjay Investments Pty Ltd
1,351,352
0.64
Mr Bryan F Short
1,300,000
0.62
Dr Russell Kay Hancock
1,200,000
0.57
Aris Nominees Pty Ltd
1,042,816
0.50
Total
58,427,263
27.88
Balance of register
151,149,555
72.12
Grand total
209,576,818
100.00
For personal use only
ASX ADDITIONAL INFORMATION
Consolidated Financial Statements for the Year Ended 30 June 2024
63
Unquoted options and performance rights
Options issued under the options plans total 41,765,000.
Performance rights under the Employee Awards Plan total 750,000.
Voting rights
Options and performance rights - No voting rights.
Distribution of unlisted options and performance rights
Security
Exercise
price
Expiry date
Holding
range
1 – 5,000
Holding
range
5,001 –
10,000
Holding range
10,001 –
100,000
Holding range
100,001 and
over
Totals
No options
(Holders)
No options
(Holders)
No options
(Holders)
No options
(Holders)
No options
(Holders)
OCCOPT17
$0.41
11/06/25
nil
nil
nil
2,000,000
(1)
2,000,000
(1)
OCCOPT19
$0.583
14/10/24
nil
nil
760,000
(19)
15,970,000
(13)
16,730,000
(32)
OCCOPT22
$0.57
16/09/24
nil
nil
100,000
(1)
nil
100,000
(1)
OCCOPT23
$0.50
26/10/24
nil
nil
300,000
(3)
455,000
(3)
755,000
(6)
OCCOPT24
$0.58
26/10/24
nil
nil
nil
150,000
(1)
150,000
(1)
OCCOPT25
$0.606
4/04/26
nil
nil
150,000
(2)
nil
150,000
(2)
OCCOPT26
$0.515
11/05/26
nil
nil
50,000
(1)
1,000,000
(1)
1,050,000
(2)
OCCOPT27
$0.403
13/07/25
nil
nil
900,000
(10)
1,300,000
(4)
2,200,000
(14)
OCCOPT28
$0.400
8/03/28
nil
nil
nil
3,000,000
(1)
3,000,000
(1)
OCCOPT29
$0.360
19/04/27
nil
nil
790,000
(16)
3,040,000
(10)
3,830,000
(26)
OCCOPT30
$0.600
26/05/26
nil
nil
nil
1,000,000
(1)
1,000,000
(1)
OCCOPT31
$0.800
26/05/27
nil
nil
nil
1,000,000
(1)
1,000,000
(1)
OCCOPT32
$0.400
26/05/28
nil
nil
nil
4,000,000
(1)
4,000,000
(1)
OCCOPT33
$0.360
7/11/27
nil
nil
nil
1,000,000
(2)
1,000,000
(2)
OCCOPT34
$0.400
20/11/28
nil
nil
nil
2,000,000
(1)
2,000,000
(1)
OCCOPT35
$0.400
17/01/29
nil
nil
nil
2,000,000
(1)
2,000,000
(1)
For personal use only
ASX ADDITIONAL INFORMATION
Consolidated Financial Statements for the Year Ended 30 June 2024
64
Distribution of unlisted options and performance rights (continued)
Security
Exercise
price
Expiry date
Holding
range
1 – 5,000
Holding
range
5,001 –
10,000
Holding range
10,001 –
100,000
Holding range
100,001 and
over
Totals
No options
(Holders)
No options
(Holders)
No options
(Holders)
No options
(Holders)
No options
(Holders)
OCCOPT36
$0.373
11/06/27
nil
nil
100,000
(1)
nil
100,000
(1)
OCCOPT37
$0.367
11/06/27
nil
nil
nil
700,000
(1)
700,000
(1)
OCCPR1
nil
19/01/26
nil
nil
nil
500,000
(1)
500,000
(1)
OCCPR2
nil
31/05/27
nil
nil
nil
250,000
(1)
250,000
(1)
All unlisted options and performance rights were issued pursuant to the Company’s employee option acquisition plan or
to directors pursuant to shareholder approval.
For personal use only