2 0 1 6 A N N U A L R E P O R T
Company Profile
Patrys Group is a biopharmaceutical drug development company
with operations in Australia and the United States of America.
Patrys’ expertise and assets target antibody therapeutics in the field
of oncology with both IgM antibodies and IgG antibody fragments
under development.
Patrys has successfully out-licensed a clinical candidate, PAT-SC1 for
the Chinese oncology market and has conducted two clinical trials
with another lead candidate from its IgM platform, PAT-SM6. Patrys
has recently in-licensed from Yale University a suite of novel, nucleus-
penetrating antibodies (Deoxymabs 3E10 and 5C6) which it will
progress through development. Patrys will continue to advance lead
candidates from both its technology platforms towards the market.
Patrys Limited is an ASX listed company (ASX:PAB) with its corporate
headquarters in Melbourne, Australia.
For further information on Patrys, visit www.patrys.com
2016 Annual Report
Operations
n Head Office in Melbourne, Australia
n Patrys Limited trades on the Australian Securities Exchange (ASX:PAB)
Milestones
2H 2015
n Licensing of Chinese rights for PAT-SC1
n Finalisation of strategic review of assets and capabilities
1H 2016
n Acquisition of novel nucleus-penetrating antibody assets developed at Yale University
(Deoxymabs 3E10 and 5C6)
n Publication regarding Deoxymab 3E10 in Nature Reviews Rheumatology
n Publication of positive response of multiple myeloma patient with PAT-SM6 and other
agents in Clinical Cancer Research
2016 Annual Report
1
Patrys ’ Assets
n PAT-SC1 is an immunoglobulin M (IgM) type antibody which targets an isoform of the membrane-
bound protein CD55 (DAF). This isoform has been shown to be significantly over-expressed on the
membrane of gastric cancer tissues (74%), while no expression was detected on healthy cells and
tissues. In September 2015 Patrys signed an exclusive development and commercialisation license
agreement for all oncology indications in China for PAT-SC1 with the Chinese company Hefei Co-
source Biomedical Co.
n PAT-SM6 is a fully human monoclonal antibody (mAb) of the IgM type which targets a variant of
human GRP78 and human apolipoprotein B100 (apoB100) found in low-density lipoprotein (LDL) and
very low-density lipoprotein (VLDL). It has been successfully utilised in both melanoma and multiple
myeloma clinical trials. Further clinical trials for this product candidate have been deferred due to
manufacturing issues.
n PAT-LM1 is a fully human IgM mAb that targets a variant of the human NONO protein (also named
nmt55 and p54nrb), a multi-functional nuclear protein. PAT-LM1 has shown promise in a range of
preclinical disease models.
n Deoxymab 3E10 is a lupus autoantibody that penetrates live cell nuclei by binding to DNA or its
precursors outside of cells and then following it into cell nuclei through a nucleoside transporter.
Once in the nucleus 3E10 interferes with DNA repair processes. To prepare 3E10 for clinical
development, it will be modified to remove any components that could carry a risk of causing lupus-
like side effects. In addition, 3E10 will be optimised to enhance its binding to DNA and increase its
effect on DNA repair-deficient cancer cells. 3E10 is currently in preclinical development.
n Deoxymab 5C6 is another lupus autoantibody that penetrates live cell nuclei, is highly toxic to
cancer cells with DNA repair deficiencies and has potential to be used in cancer therapy. 5C6 is
currently in preclinical development.
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2016 Annual Report
Pipeline
Product
(Target)
PAT-SC1
(CD55)
PAT-SM6
(GRP78)
PAT-LM1
(NONO)
Deoxymab
3E10
(DNA)
Deoxymab
5C6
(DNA)
Discovery
Preclinical
Phase I
Phase 2a
Gastric Cancer
Chinese rights
out-licensed
Multiple Myeloma
Trial Deferred
Solid Tumours
Licensing
candidate
Licensed from
Yale University
Licensed from
Yale University
Committed to the development and commercialisation of
novel antibody technologies for the treatment of cancer
2016 Annual Report
3
Letter from Chairman and CEO
Dear Shareholders,
Welcome to Patrys’ 2016 Annual Report.
Patrys remains, as it always has been, a company devoted to the development and commercialisation
of novel antibody technologies for the treatment of cancer. Novel therapies are desperately needed to
help fight a range of different cancers, and despite some exciting developments over the past decade
the need is just as great now as it was when the company was listed in 2007.
The past year has been one of consolidation and rebuilding for Patrys and its shareholders. This has
meant an unavoidable period of low news flow, but the company is now well positioned to build on its
assets and looks forward to sharing these developments with its shareholders over the coming year.
With the deferment of the planned phase 1b/2a combination clinical trial of PAT-SM6 in patients with
relapsed and refractory multiple myeloma due to previously described manufacturing issues, the
company sought to acquire and progress complementary technologies that would leverage its core
capabilities, networks and alliances. After a rigorous screening process that evaluated development
costs and timelines, potential value creation, intellectual property position and commercial potential
the company successfully completed the acquisition of Nucleus Therapeutics, a private company with
a license to novel nucleus-penetrating antibody technology (“Deoxymabs”) from Yale University in the
USA in March 2016.
Deoxymabs
Deoxymab 3E10 is a lupus derived autoantibody. Unlike normal antibodies that the body produces
which bind to foreign cells (eg pathogens) or aberrant cells (eg cancer cells) and trigger an immune
response, autoantibodies bind to normal cells. Of particular interest with 3E10 is that whilst most
antibodies bind to markers on the surface of cells, 3E10 penetrates cells’ nuclei and binds directly to
DNA. Having bound to the DNA, 3E10 inhibits DNA repair and damages DNA. Normal cells repair
DNA damage utilising intact DNA repair processes, however 3E10 can kill cells that have mutations
or deficiencies in DNA repair mechanisms as found in various cancer cells. As well as showing single
agent therapeutic potential 3E10 has been shown to significantly enhance the efficacy of both chemo-
and radiotherapies.
Patrys believes that 3E10 and its sister antibody 5C6 may have application across a wide range of
malignancies such as gliomas, melanomas, prostate, breast, pancreatic and ovarian cancers.
Significant progress has been made with the 3E10 program since it was acquired, and the company
has a fully-costed development plan to progress this asset towards the clinic within the next two years.
IgM assets
The company, in conjunction with its partners is addressing the fundamental issues that arose with the
manufacturing of PAT-SM6 antibody, and is seeking to progress the development of PAT-SM6 and its
other IgM assets on a risk sharing basis. Cost effective solutions that leverage new technologies and
learnings from other companies working in the field of IgM antibodies will be critical to advance
these programs.
4
2016 Annual Report
During the financial year, Patrys completed the out-licensing of its asset PAT-SC1 to Hefei Co-source
Biomedical Co., an integrated Chinese drug development company. The license agreement covers
the exclusive development and commercialisation rights for all oncology indications in China for
PAT-SC1. Patrys received an up-front licensing fee, and may, pending the achievement of prescribed
milestones, receive multiple milestone payments and royalties on eventual product sales.
Patrys’ IgM IP portfolio continues to progress, with three patents granted in the past 12 months. As
has previously been noted, Patrys’ CAR-T development program performed in collaboration with
a European company was completed and a decision was made that further development was not
warranted. A research collaboration with Macquarie University is ongoing, and will conclude in 2017.
Looking ahead
The Patrys team is focused on progressing its new Deoxymab assets and cost-effectively developing
its existing IgM assets. With tight financial control and a clear path forward management and the
Board believe that the company is well situated to build value from its existing base of capital and
assets and looks forward to sharing this journey with its shareholders over the coming year.
John Read
Chairman
Dr James Campbell
Managing Director and CEO
Despite recent advances, novel therapies are desperately
needed to help fight a range of different cancers
2016 Annual Report
5
The Board of Directors
John Read, BSc (Hons), MBA, FAICD
Chairman
Mr. Read is an experienced Chairman and Director in public, private and government organisations. Through his
extensive career in venture capital, private equity and commercialisation he has gained a depth of experience in
the formation and growth of emerging companies with an emphasis on commercial entities that provide broad
societal benefits. He is currently the Chairman of CVC Limited (ASX: CVC) and Eildon Capital Limited and was
the Chairman of Pro-Pac Packaging Limited (ASX:PPG) from 2005 to 2010, The Environmental Group Limited
(ASX:EGL) from 2001 to 2012 and The Central Coast Water Corporation from 2011 to 2014.
James Campbell, PhD, MBA
Managing Director & Chief Executive Officer
Dr. Campbell has more than 20 years of international biotechnology research, management and leadership
experience and has been involved in the creation and/or transformation of several Australian and international
biotechnology companies. Dr. Campbell was previously the CFO and COO of ChemGenex Pharmaceuticals
Limited (ASX:CXS) where, as a member of the executive team he helped transform a research-based company
with a market capitalization of $10M to a company with completed clinical trials and regulatory dossiers
submitted to the FDA and EMA. In 2011 ChemGenex was sold to Teva for $230M. Since 2011 Dr. Campbell
has assisted private biotechnology companies in Australia, New Zealand and the USA with capital raising
and partnering negotiations. Dr. Campbell is a Non-Executive Director of Prescient Therapeutics Limited
(ASX:PRX), Invion Limited (ASX:IVX) and Medibio Limited (ASX:MEB). Dr Campbell also sits on a number of
academic and government biotechnology advisory panels.
Michael Stork, BBA
Non-Executive Director
Mr. Stork is the Managing Director of F.J. Stork Holdings Ltd., the parent entity for PNK Holdings Ltd, an
original investor in Patrys. Mr. Stork was until 2004 Chairman of the Board for Dspfactory Ltd, a leading edge
developer of digital signal processing (DSP) technology for various applications including hearing aids,
headsets and personal digital audio players. Mr. Stork has also played key roles in the management team and
the Board of Directors for Unitron Industries Ltd., a hearing aid manufacturing Company that was voted one
of the 50 Best Managed Private Companies in Canada for 2000. Unitron was sold to Phonak Holdings AG, a
publicly traded Swiss Company, in 2002.
Suzy Jones
Non-Executive Director
Ms. Jones is Founder and Managing Partner of DNA Ink LLC, a life sciences advisory and business
development firm with clients in the United States, Germany, Israel and France. DNA Ink provides corporate
strategic guidance to its clients leading to transactions that support corporate growth including licensing,
M&A and fundraising transactions. Prior to starting her own firm, Ms. Jones spent 20 years at Genentech
where she served in many roles including Interim Head of Partnering, Head of Business Development, Senior
Project Manager and Research Associate. She managed several products during this time including Rituxan,
the first monoclonal antibody launched to treat cancer. Ms. Jones has very extensive networks within the
pharmaceutical and biotech companies and VC community in North America. Ms. Jones is a Non-Executive
Director of Calithera Biosciences, Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical company focused
on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor
immunology targets for the treatment of cancer.
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2016 Annual Report
New assets licensed from Yale University
About Anti-DNA Autoantibodies
Under normal circumstances, the immune system uses antibodies to seek out and destroy invading organisms or
abnormal cells such as cancer cells. To safely perform this role, it is critical that antibodies are able to distinguish
between normal host cells and dangerous invading or malignant cells. To this end the immune system has evolved
an elegant set of checks and balances to ensure that antibodies that might react to normal cells are eliminated
before being released into the circulation. However, occasionally errant processing results in the production
and release of antibodies that incorrectly recognize normal cells as being dangerous, and these antibodies then
launch an assault on the host’s normal cells damaging a wide range of normal tissues. These abnormal antibodies
are referred to as autoantibodies, and the diseases that result are known as autoimmune diseases.
The disease systemic lupus erythematosus (SLE) is one of the most severe autoimmune diseases. A distinguishing
feature of SLE is the production of autoantibodies that specifically bind to DNA (known as anti-DNA
autoantibodies). These anti-DNA autoantibodies have long been considered something of a mystery, because
the vast majority of DNA is housed within cells in the nucleus where antibodies were considered unable to
gain access. For many years it was believed that these anti-DNA autoantibodies could only bind to the small
amounts of free DNA that is present outside of cells (so-called extracellular DNA, or exDNA). However, in recent
years a large body of evidence has accumulated that demonstrates that a select group of lupus anti-DNA
autoantibodies can penetrate into the nucleus of living cells where they can bind to their target DNA.
This discovery raised the possibility that such autoantibodies could be used in molecular therapy techniques,
in particular for the treatment of cancer. Among the many antibodies that have been considered, two stand
out as having significant potential for use against cancer. These antibodies are referred to as Deoxymabs (3E10
and 5C6).
Yale University
in New Haven,
Connecticut
2016 Annual Report
7
About Deoxymab 3E10
3E10 is a lupus autoantibody that penetrates live cell nuclei by binding to DNA or its precursors outside
of cells and then following it into cell nuclei through a nucleoside transporter. Once in the nucleus 3E10
interferes with DNA repair processes, but the degree of inhibition of DNA repair caused by 3E10 is modest
and is not enough to kill normal cells that have robust mechanisms to manage insults to DNA. On the other
hand, many cancer cells are exquisitely sensitive to DNA damage because their DNA repair machinery is
already impaired. When these cancer cells encounter 3E10, they accumulate more DNA damage than they
can tolerate and ultimately die. 3E10 is therefore selectively toxic to cancer cells that have deficiencies in
DNA repair, which includes a wide range of malignancies such as gliomas, melanomas, prostate, breast, and
ovarian cancers and many others. When combined with DNA-damaging agents such as chemotherapy or
radiation, 3E10 has an even greater effect on these cancer cells.
Deoxymab 3E10 is particularly well suited for use in cancer therapy because it preferentially localizes to
tumors but not normal tissues. As tumors grow and go through cycles of proliferation they are constantly
releasing exDNA, and this results in accumulation of a “swarm” of exDNA in the tumor vicinity. 3E10 is
specifically attracted to DNA, and moreover is dependent on the presence of exDNA in order to penetrate
cell nuclei. The swarm of exDNA in the tumor vicinity therefore not only attracts 3E10 to the tumor, but then
also facilitates nuclear penetration by 3E10 into the tumor cell nuclei where it then inhibits DNA repair and
kills the tumor cells and sensitizes them to DNA-damaging agents.
To prepare 3E10 for clinical trial testing, it will be modified to remove any components that could carry a
risk of causing lupus-like side effects. In addition, 3E10 will be optimised to enhance its binding to DNA and
increase its effect on DNA repair-deficient cancer cells.
Since acquiring the rights to develop and commercialise 3E10 Patrys has completed detailed in silico
biology to optimise 3E10, and has entered into a sponsored research agreement with Yale University
to complete lead candidate selection and pre-clinical testing. Patrys anticipates that lead candidate
selection will be completed by the end of 2016, and is preparing for a suite of pre-clinical tests to be
performed in H1, 2017.
3E10 Fragment
A single-chain variable fragment (scFv) is not actually a fragment of an antibody, but instead is a fusion
protein of the variable regions of the heavy (VH) and light chains (VL) of antibody or immunoglobulin,
connected with a short linker peptide of ten to about 25 amino acids. The linker is usually flexible and can
either connect to either end of the fragments. This protein retains the specificity of the original antibody,
despite removal of the constant regions and the introduction of the linker.
Patrys is in the process of constructing both di- and tri-scFv based on the parental 3E10. These molecules
will be referred to as 3E10 Fragments.
About Deoxymab 5C6
5C6 is another lupus autoantibody that, like 3E10, penetrates live cell nuclei, is highly toxic to cancer cells
with DNA repair deficiencies and has potential to be used in cancer therapy.
8
2016 Annual Report
Mode of action of 3E10
3
3E10 binds to nuclear DNA
and inhibits DNA repair
2
3E10 translocates
into the nucleus
1
3E10 binds to extracellular DNA and
then is transported across the plasma
membrane via the ENT2 Salvage Pathway
2016 Annual Report
9
Image by www.christianchang.com
IgM Platform Update
Natural Human Antibodies to Cancer : The IgM Story
All humans generate abnormal or precancerous cells on a regular basis. However, only a small percentage
of the general population develops cancer as in healthy humans the immune system constantly generates
potent antibodies that seek out and kill abnormal or precancerous cells before large tumours are formed. In
contrast, the elderly, who often suffer from compromised immunity, have a significantly higher rate of cancer
compared to the rest of the population.
Over 99% of the anti-cancer antibodies generated by the human immune system are of the IgM subclass,
and after millions of years of selective pressure and evolution, these IgM antibodies possess certain unique
anti-cancer attributes including, but not exclusively:
n High avidity - IgM antibodies can bind to multiple copies of given targets on a cancer cell surface,
leading to cross-linking and more effective cell killing.
n Broad applications - IgM molecules typically target a variety of conserved proteins and carbohydrates on
cancer cells.
n Safety - Because these antibodies are generated by the human immune system, they are not likely to
trigger negative immune responses.
n Enhanced tumour cytotoxicity - IgMs have been shown to be superior mediators of complement
dependent cytotoxicity, an important effector function when fighting diseases such as cancer.
The combination of effectiveness/potency, safety, and new mechanisms for killing cancer provides a very
promising profile for the therapeutic use of natural human antibodies for cancer.
Patrys’ Natural Human Antibodies
Patrys’ proprietary technologies cover antibody capture, screening, target discovery and large scale
production.
Over 45 peer reviewed articles have been published covering IgM discovery and development technologies
and the associated antibodies and targets.
A brief description of Patrys’ technologies is set out below:
Antibody Capture and Screening
The first step in Patrys’ approach involves the isolation from human donors of individual B-cells that produce
antibodies that attack cancer tissues but ignore normal tissues. Antibodies are then selected for further
development based on their anti-cancer potential as determined through an extensive array of in vitro and
in vivo experiments.
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2016 Annual Report
Target Discovery
Patrys’ approach identifies lead anticancer antibodies based on their ability to preferentially bind to
cancerous cells rather than healthy tissue, then using these lead antibodies seeks to identify the target(s) on
cancer cells against which the antibodies are directed.
Patrys natural human antibody platform allows it to identify candidates that have the potential to treat a
number of diseases. Patrys has previously conducted clinical trials in both melanoma and relapsed multiple
myeloma for its lead IgM candidate PAT-SM6. The company has a strong intellectual property position which
underpins this technology platform, encompassing 34 patents across 7 patent families. In the reporting
period, three patents were granted including two in the United States and one in Europe. For the PAT-
SM6 LDL family the claims are directed towards methods of reducing LDL levels by administering PAT-SM6
antibody. In the case of the PAT-LM1 family the composition of matter claims are directed towards PAT-LM1
epitopes as well and method of treatment claims related to the use of the epitope to generate an immune
response. Lastly, the PAT-LM1 target/variants/metastasis family includes granted use claims directed towards
the use of PAT-LM1 for treating metastasis.
Manufacturing
Patrys has worked with internationally recognised partners to manufacture batches of its therapeutic
antibodies over the past seven years. These processes are highly complex, with multiple potential risk
points. As has been noted in several disclosures to the ASX over the past 18 months Patrys’ manufacturing
run of PAT-SM6 produced antibody which could not be used in the proposed combination clinical trial.
The company is working with its manufacturers and partners to identify a cost effective resolution to these
manufacturing challenges.
Patrys is harnessing the
body’s own defence systems
to combat cancer
2016 Annual Report
11
Scientific Publications on Deoxymabs 3E10 & 5C6
2016
Chen Z, Patel JM, Noble PW, Garcia C, Hong Z, Hansen JE, Zhou J. A lupus anti-DNA autoantibody mediates
autocatalytic, targeted delivery of nanoparticles to tumors. Oncotarget. 2016, Aug 2 (Epub ahead of print)
Noble PW, Bernatsky S, Clarke AE, Isenberg DA, Ramsey-Goldman R, Hansen JE. DNA-damaging autoantibodies and
cancer: the lupus butterfly theory. Nature Reviews Rheumatology. 2016, 12(7): 429-34.
2015
Noble PW, Chan G, Young MR, Weisbart RH, Hansen JE. Optimizing a lupus autoantibody for targeted cancer therapy.
Cancer Res. 2015, 75(11): 2285-91.
Weisbart RH, Chan G, Jordaan G, Noble PW, Liu Y, Glazer PM, Nishimura RN, Hansen JE. DNA-dependent targeting
of cell nuclei by a lupus autoantibody. Sci Rep. 2015, 5: 12022.
2014
Noble PW, Young MR, Weisbart RH, Hansen JE. A nucleolytic lupus autoantibody is toxic to BRCA2-deficient cancer
cells. Sci Rep. 2014, 4: 5958.
2012
Hansen JE, Chan G, Liu Y, Hegan DC, Dalal S, Dray E, Kwon Y, Xu Y, Xu X, Peterson-Roth E, Geiger E, Liu Y, Gera
J, Sweasy JB, Sung P, Rockwell S, Nishimura RN, Weisbart RH, Glazer PM. Targeting cancer with a lupus
autoantibody. Sci Transl Med. 2012, 4(157): 157ra142.
2007
Hansen JE, Tse CM, Chan G, Heinze ER, Nishimura RN, Weisbart RH. Intranuclear protein transduction through a
nucleoside salvage pathway. J Biol Chem. 2007, 282(29): 20790-3.
Scientific Publications on IgMs
2016
Rasche L, Menoret E, Dubljevic V, Menu E, Vanderkerken K, Lapa C, Steinbrunn T, Chatterjee M, Knop S, Düll
J, Greenwood DL, Hensel F, Rosenwald A, Einsele H, Brändlein S. A GRP78-Directed Monoclonal Antibody
Recaptures Response in Refractory Multiple Myeloma with Extramedullary Involvement. Clin Cancer Res. 2016,
22(7): 4341-9.
2015
Rasche L, Duell J, Castro IC, Dubljevic V, Chatterjee M, Knop S, Hensel F, Rosenwald A, Einsele H, Topp MS, and
Brändlein S. GRP78-directed Immunotherapy in relapsed or refractory multiple myeloma- results from a Phase 1
Trial with monoclonal IgM antibody PAT-SM6. Haematologica. 2015, 100(3): 377-84.
2014
Loos A, Gruber C, Altmann F, Mehofer U, Hensel F, Grandits M, Oostenbrink C, Stadlmayr G, Furtmuller PG,
Steinkellner H, Expression and glycoengineering of functionally active heteromultimeric IgM in plants. PNAS. 2014,
111(17):6263-8.
Hensel F, Timmermann W, Von Rahden B, Brändlein S, Rosenwald A, Illert B. Ten year follow up of a prospective trial
for the targeted therapy of gastric cancer with the human monoclonal antibody PAT-SC1. Oncology Reports. 2014,
31(3): 1059-66.
2013
Hensel F, Eckstein M, Rosenwald A, Brändlein S. Early development of PAT-SM6 for the treatment of melanoma.
Melanoma Research. 2013, 23(4): 264-75.
Rosenes Z, Mok Y-F, Yang S, Griffin MD. W., Mulhern TD, Hatters DM, Hensel F, Howlett GJ. Simultaneous Binding of
the Anti-Cancer IgM Monoclonal Antibody PAT-SM6 to Low Density Lipoproteins and GRP78. PLoS One. 2013,
8(4):1-8.
Rasche L, Düll J, Morgner C, Chatterjee M, Hensel F, Rosenwald A, Einsele H, Topp MS, Brändlein S. The Natural
Human IgM Antibody PAT-SM6 Induces Apoptosis in Primary Human Multiple Myeloma Cells by Targeting Heat
Shock Protein GRP78. PLoS One. 2013, 8(5):1-11
12
2016 Annual Report
Contents
Review of Operations
Directors’ Report
Auditor’s Independence Declaration
14
17
29
Statement of Profit or Loss and other Comprehensive Income
30
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
31
32
34
35
65
Independent Auditor’s Reprot to the Members of Patrys Limited 66
Shareholder Information
68
The company’s 2016 Corporate Governance Statement is available at
www.patrys.net.au/about-us/patrys-corporate-governance
2016 Annual Report
13
Patrys Limited
Review of Operations
30 June 2016
Review of operations
(cid:3)
Overview
Patrys remains, as it always has been, a company devoted to the development and commercialisation of novel antibody
technologies for the treatment of cancer. Novel therapies are desperately needed to help fight a range of different cancers,
and despite some exciting developments over the past decade the need is just as great now as it was when the company
was listed in 2007.
The year under review has been a period of consolidation and rebuilding for Patrys and its shareholders. This has meant an
unavoidable period of low news flow, but the company is now well positioned to build on its assets and looks forward to
sharing these developments over the coming year.
With the deferment of the planned phase 1b/2a combination clinical trial of PAT-SM6 in patients with relapsed and refractory
multiple myeloma due to previously described manufacturing issues, the company sought to acquire and progress
complementary technologies that would leverage its core capabilities, networks and alliances. After a rigorous screening
process that evaluated development costs and timelines, potential value creation, intellectual property position and
commercial potential the company successfully completed the acquisition of Nucleus Therapeutics, a private company with
a license to novel nucleus-penetrating antibody technology (“DeoxyMab”) from Yale University in the USA in March 2016.
DeoxyMab
DeoxyMab is the name assigned by Patrys to 3E10, a lupus derived autoantibody. Unlike normal antibodies that the body
produces which bind to foreign cells (eg pathogens) or aberrant cells (eg cancer cells) and trigger an immune response,
autoantibodies bind to normal cells. Of particular interest with DeoxyMab is that whilst most antibodies bind to markers on
the surface of cells, DeoxyMab penetrates cells’ nuclei and binds directly to DNA. Having bound to the DNA, DeoxyMab
inhibits DNA repair and damages DNA. Normal cells repair DNA damage utilising intact DNA repair processes, however
DeoxyMab can kill cells that have mutations or deficiencies in DNA repair mechanisms as found in various cancer cells. As
well as showing single agent therapeutic potential, DeoxyMab has been shown to significantly enhance the efficacy of both
chemo- and radiotherapies.
Patrys believes that DeoxyMab may have application across a wide range of malignancies such as gliomas, melanomas,
prostate, breast, pancreatic and ovarian cancers.
Significant progress has been made with the DeoxyMab program since it was acquired, and the company has a fully-costed
development plan to progress this asset towards the clinic within the next two years.
IgM assets
The company, in conjunction with its partners, is addressing the fundamental issues that arose with the manufacturing of
PAT-SM6 antibody, and is seeking to progress the development of PAT-SM6 and its other IgM assets on a risk sharing
basis. Cost effective solutions that leverage new technologies and learnings from other companies working in the field of
IgM antibodies will be critical to advance these programs.
During the financial year, Patrys completed the out-licensing of its asset PAT-SC1 to Hefei Co-source Biomedical, an
integrated Chinese drug development company. The license agreement covers the exclusive development and
commercialisation rights for all oncology indications in China for PAT-SC1. Patrys received an up-front licensing fee, and
may, pending the achievement of prescribed milestones, receive multiple milestone payments and royalties on eventual
product sales.
As has previously been disclosed, Patrys’ CAR-T development program performed in collaboration with a European
company was completed and a decision was made that further development was not warranted. A research collaboration
with Macquarie University is ongoing, and will conclude in 2017.
Looking ahead
The Patrys team is focused on progressing its new DeoxyMab asset and cost-effectively developing its existing IgM assets.
With tight financial control and a clear path forward Management and the Board believe that the company is well situated to
build value from its existing base of capital and assets and looks forward to sharing this journey with its shareholders over
the coming year.
2016 Annual Report
14
2016 Annual Report
14
2016 Annual Report
15
Patrys Limited
Review of Operations
30 June 2016
Review of operations
(cid:3)
Overview
was listed in 2007.
Patrys remains, as it always has been, a company devoted to the development and commercialisation of novel antibody
technologies for the treatment of cancer. Novel therapies are desperately needed to help fight a range of different cancers,
and despite some exciting developments over the past decade the need is just as great now as it was when the company
The year under review has been a period of consolidation and rebuilding for Patrys and its shareholders. This has meant an
unavoidable period of low news flow, but the company is now well positioned to build on its assets and looks forward to
sharing these developments over the coming year.
With the deferment of the planned phase 1b/2a combination clinical trial of PAT-SM6 in patients with relapsed and refractory
multiple myeloma due to previously described manufacturing issues, the company sought to acquire and progress
complementary technologies that would leverage its core capabilities, networks and alliances. After a rigorous screening
process that evaluated development costs and timelines, potential value creation, intellectual property position and
commercial potential the company successfully completed the acquisition of Nucleus Therapeutics, a private company with
a license to novel nucleus-penetrating antibody technology (“DeoxyMab”) from Yale University in the USA in March 2016.
DeoxyMab
DeoxyMab is the name assigned by Patrys to 3E10, a lupus derived autoantibody. Unlike normal antibodies that the body
produces which bind to foreign cells (eg pathogens) or aberrant cells (eg cancer cells) and trigger an immune response,
autoantibodies bind to normal cells. Of particular interest with DeoxyMab is that whilst most antibodies bind to markers on
the surface of cells, DeoxyMab penetrates cells’ nuclei and binds directly to DNA. Having bound to the DNA, DeoxyMab
inhibits DNA repair and damages DNA. Normal cells repair DNA damage utilising intact DNA repair processes, however
DeoxyMab can kill cells that have mutations or deficiencies in DNA repair mechanisms as found in various cancer cells. As
well as showing single agent therapeutic potential, DeoxyMab has been shown to significantly enhance the efficacy of both
chemo- and radiotherapies.
Patrys believes that DeoxyMab may have application across a wide range of malignancies such as gliomas, melanomas,
prostate, breast, pancreatic and ovarian cancers.
development plan to progress this asset towards the clinic within the next two years.
IgM assets
The company, in conjunction with its partners, is addressing the fundamental issues that arose with the manufacturing of
basis. Cost effective solutions that leverage new technologies and learnings from other companies working in the field of
IgM antibodies will be critical to advance these programs.
During the financial year, Patrys completed the out-licensing of its asset PAT-SC1 to Hefei Co-source Biomedical, an
integrated Chinese drug development company. The license agreement covers the exclusive development and
commercialisation rights for all oncology indications in China for PAT-SC1. Patrys received an up-front licensing fee, and
may, pending the achievement of prescribed milestones, receive multiple milestone payments and royalties on eventual
As has previously been disclosed, Patrys’ CAR-T development program performed in collaboration with a European
company was completed and a decision was made that further development was not warranted. A research collaboration
with Macquarie University is ongoing, and will conclude in 2017.
The Patrys team is focused on progressing its new DeoxyMab asset and cost-effectively developing its existing IgM assets.
With tight financial control and a clear path forward Management and the Board believe that the company is well situated to
build value from its existing base of capital and assets and looks forward to sharing this journey with its shareholders over
product sales.
Looking ahead
the coming year.
2016 Annual Report
14
Patrys Limited
Review of Operations
30 June 2016
Statement of Financial Position
Cash and term deposits held of $3,215,039 (2015: $4,646,527) at reporting date. These funds will allow the Group to explore
alternative strategies over the coming months.
The Group's policy is to hold its cash and cash equivalent deposits in "A" rated or better deposits.
The Group's strategy is to outsource product development expenses including manufacturing, regulatory and clinical trial
expenses, to specialist, best of breed partner organisations. As a consequence the Group has not incurred any major capital
expenditure for the period and does not intend to incur substantial commitments for capital expenditure in the immediate
future.
Operating results
The Group produced a loss from ordinary activities before income tax of $1,080,784 (2015: $8,463,492). The net loss after
tax was $1,080,784 (2015: $8,470,382).
Consolidated revenue including other income during the period was $867,653 (2015: $2,224,481). This revenue included
interest of $76,869 (2015: $129,526), a R&D Tax Incentive of $502,485 (2015: $819,956), licensing income of $274,970 (2015:
$ Nil) and a foreign currency gain of $48,572 (2015: $378,772)
(cid:3)
Total consolidated operating expenses for the period were $1,997,009 (2015: $11,066,745).
Research and development costs of $1,042,256 (2015: $4,674,564) have been expensed in the year in which they were
incurred. The decrease in research and development costs over the previous year is primarily due to the delays encountered
as a result of the manufacturing issues experienced by the Group during the previous financial year, and the Group completing
a corporate restructure.
Management and administration costs contributed a further $954,753 (2015: $1,033,566) to expenses from continuing
operations. The decrease compared to the prior year is mainly due to the Group initiating certain cost saving strategies as
part of the Corporate restructure, which included Melanie Leydin being appointed as Company Secretary to replace the retired
Roger McPherson as Chief Operating Officer and Company Secretary, and the Group closing its German facility towards the
end of 2015.
Significant progress has been made with the DeoxyMab program since it was acquired, and the company has a fully-costed
Basic and diluted net loss per share decreased to (0.15) (2015: 1.22) due to a decrease in the loss for the 2016 financial year.
Statement of Cash Flows
The Group's cash outflow from operations over the period was $1,531,357 (2015: $4,114,778).
PAT-SM6 antibody, and is seeking to progress the development of PAT-SM6 and its other IgM assets on a risk sharing
The decrease is due to the decreased investment in the PAT-SM6 clinical program, specifically the manufacturing of material.
Patrys has converted funds at favourable exchange rates into US dollars and Euro to minimise the impact that any fluctuations
in the exchange rate may have on internal and third party contract operations in the U.S and Europe.
(cid:3)
Strategic review
During the financial year, the Company completed a review of its existing programs and assets and evaluated more than 40
projects and companies as potential acquisitions. Assets were evaluated against a range of parameters including potential for
shareholder value creation, scientific novelty, intellectual property position, commercial potential, regulatory path and
manufacturing path.
During the period, a target asset was selected as having the most attractive risk/return potential for Patrys shareholders, and
due diligence and commercial negotiations commenced.
On 29 March 2016, Patrys announced its acquisition of Nucleus Therapeutics Pty Ltd with a license to novel nucleus-
penetrating antibody technology from Yale University in the USA for a potential total value of $720,000 in a tranched, all scrip
deal.
2016 Annual Report
14
2016 Annual Report
2016 Annual Report
15
15
Patrys Limited
Review of Operations
30 June 2016
Business development
During the financial year, Patrys completed the out-licensing agreement for PAT-SC1 with the integrated Chinese drug
development company, Hefei Co-source Biomedical, and received the first of multiple potential milestone payments
associated with the transaction. Subsequent payments under this agreement are subject to the attainment of prescribed
milestones.
The license agreement covers the exclusive development and commercialisation rights for all oncology indications in China
for PAT-SC1. Specific financial details of the agreement are confidential, but are on par for similar transactions of this type in
this territory, including potential back-loaded payments, sharing of revenue and double digit royalties on end sales.
(cid:3)
Pre-clinical development of IgM assets
Patrys has had a substantial portfolio of pre-clinical programs over recent years, and several of these were completed in 2015.
The CAR-T program performed by a European development company was completed and a decision was made that further
development was not warranted. Similarly, the research collaboration with Monash University has been concluded.
A research collaboration with Macquarie University is ongoing, and will conclude in 2017.
(cid:3)
Corporate restructuring
After completing a review of its corporate structure and overheads the Company closed its German facility in November
2015. Also during the period, Mr Roger McPherson retired as Chief Operating Officer and Company Secretary, and was
replaced by Ms Melanie Leydin.
-ENDS-
2016 Annual Report
16
2016 Annual Report
16
2016 Annual Report
17
Patrys Limited
Review of Operations
30 June 2016
Business development
During the financial year, Patrys completed the out-licensing agreement for PAT-SC1 with the integrated Chinese drug
development company, Hefei Co-source Biomedical, and received the first of multiple potential milestone payments
associated with the transaction. Subsequent payments under this agreement are subject to the attainment of prescribed
milestones.
The license agreement covers the exclusive development and commercialisation rights for all oncology indications in China
for PAT-SC1. Specific financial details of the agreement are confidential, but are on par for similar transactions of this type in
this territory, including potential back-loaded payments, sharing of revenue and double digit royalties on end sales.
Pre-clinical development of IgM assets
Patrys has had a substantial portfolio of pre-clinical programs over recent years, and several of these were completed in 2015.
The CAR-T program performed by a European development company was completed and a decision was made that further
development was not warranted. Similarly, the research collaboration with Monash University has been concluded.
A research collaboration with Macquarie University is ongoing, and will conclude in 2017.
Corporate restructuring
After completing a review of its corporate structure and overheads the Company closed its German facility in November
2015. Also during the period, Mr Roger McPherson retired as Chief Operating Officer and Company Secretary, and was
replaced by Ms Melanie Leydin.
(cid:3)
(cid:3)
-ENDS-
Patrys Limited
Directors’ Report
30 June 2016
The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'Group') consisting of Patrys 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 2016.
Directors
The following persons were Directors of Patrys Limited during the whole of the financial year and up to the date of this report,
unless otherwise stated:
Mr John Read (Non-Executive Chairman)
Mr. Michael Stork (Non-Executive Director and Deputy Chairman)
Ms. Suzy Jones (Non-Executive Director)
Mr. James Campbell (Managing Director & CEO)
Principal activities
During the financial year the principal continuing activities of the Group consisted of:
●
Commercialisation of the Group's proprietary technologies to develop natural human antibody-based therapeutic
products for the treatment of cancer.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Significant changes in the state of affairs
On 29 March 2016, Patrys acquired 100% of the capital of Nucleus Therapeutics Limited. In consideration, Patrys will issue
to Nucleus Shareholders in three tranches fully paid ordinary Patrys Shares to a maximum value of $720,000. An exclusive
worldwide licence to commercialise intellectual property will be acquired by Nucleus and Yale University (Yale being a
shareholder of Nucleus). The consideration to be paid to all Shareholders for the Nucleus Shares will be issued in three
tranches. One tranche of 50,033,425 shares valued at 0.0072 per share was issued upon settlement to a value of $360,000;
the second tranche is to be issued upon the granting of a US patent to the value of $180,000 and the third tranche will be
issued upon dosing of the first patient in a Phase 1 trial to the value of $180,000.
There were no other significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of the financial year
Subsequent to the 2016 financial year, the company reached an agreement regarding amounts due from a contracting party.
This settlement of $334,342 was received in August 2016.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
The consolidated entity will continue to pursue its objective of development of antibodies as therapies for a range of different
cancers. Patrys has a pipeline of anti-cancer antibodies for both internal development and as partnering opportunities.
The consolidated entity's focus for the coming periods will be on advancing its PAT-SM6 natural human IgM antibody which
has been shown to have potent anti-cancer properties in a large number of pre-clinical studies.
Environmental regulation
The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.
2016 Annual Report
16
2016 Annual Report
16
2016 Annual Report
2016 Annual Report
17
17
Patrys Limited
Directors’ Report (continued)
30 June 2016
Information on Directors
Name:
Title:
Qualifications:
Experience and expertise:
John Read
Non-Executive Chairman
BSc (Hons), MBA, FAICD
Mr. Read is an experienced Chairman and Director in public, private and government
organisations. Through his extensive career in venture capital, private equity and
commercialisation he has gained a depth of experience in the formation and growth of
emerging companies with an emphasis on commercial entities that provide broad
societal benefits. He is currently the Chairman of CVC Limited (ASX: CVC) and Eildon
Capital Limited and was the Chairman of Pro-Pac Packaging Limited (ASX: PPG) from
2005 to 2010, The Environmental Group Limited (ASX:EGL) from 2001 to 2012 and
The Central Coast Water Corporation from 2011 to 2014.
CVC Ltd (since 1989).
Other current Directorships:
Former Directorships (last 3 years): Nil
Interests in shares:
6,510,838 fully paid ordinary shares
150,052 loan share plan fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Other current Directorships:
James Campbell
Managing Director and Chief Executive Officer
Ph.D, MBA
Dr. Campbell has more than 20 years of international biotechnology research,
management and leadership experience and has been involved in the creation and/or
transformation of several Australian and international biotechnology companies. Dr.
Campbell was previously the CFO and COO of ChemGenex Pharmaceuticals Limited
(ASX:CXS) where, as a member of the executive team he helped transform a research-
based company with a market capitalization of $10M to a company with completed
clinical trials and regulatory dossiers submitted to the FDA and EMA. In 2011
ChemGenex was sold to Teva for $230M. Since 2011 Dr. Campbell has assisted
private biotechnology companies in New Zealand and the USA with capital raising and
partnering negotiations. Dr. Campbell is a Non-Executive Director of Prescient
Therapeutics Limited (ASX:PRX), Invion Limited (ASX:IVX) and Medibio Limited
(ASX:MEB). Dr Campbell also sits on a number of academic and government
biotechnology advisory panels.
Non-Executive Director of Invion Limited (ASX: IVX), Medibio Limited (ASX: MEB) and
Prescient Therapeutics Limited (ASX: PTX).
Former Directorships (last 3 years): Nil
Interests in shares:
25,000 fully paid ordinary shares
Name:
Title:
Qualifications:
Experience and expertise:
Michael Stork
Non-Executive Director and Deputy Chairman
BBA
Mr. Stork is the Managing Director of F.J. Stork Holdings Ltd., the parent entity for PNK
Holdings Ltd, an original investor in Patrys. Mr. Stork was until 2004 Chairman of the
Board for Dspfactory Ltd, a leading edge developer of digital signal processing (DSP)
technology for various applications including hearing aids, headsets and personal
digital audio players. Mr. Stork has also played key roles in the management team and
the Board of Directors for Unitron Industries Ltd., a hearing aid manufacturing Company
that was voted one of the 50 Best Managed Private Companies in Canada for 2000.
Unitron was sold to Phonak Holdings AG, a publicly traded Swiss Company, in 2002.
None.
Other current Directorships:
Former Directorships (last 3 years): None.
Interests in shares:
95,731,764 fully paid ordinary shares (These shares are held by Stork Holdings 2010
Ltd. The shares are held by a related trust which Michael Stork in his own right does
not control).
2016 Annual Report
18
2016 Annual Report
18
2016 Annual Report
19
3,000,000 fully paid ordinary shares.
Other current Directorships:
Former Directorships (last 3 years): None.
Interests in shares:
Patrys Limited
Directors’ Report (continued)
30 June 2016
Name:
Title:
Experience and expertise:
Suzy Jones
Non-Executive Director
Ms. Jones is Founder and Managing Partner of DNA Ink LLC, a life sciences advisory
and business development firm with clients in the United States, Germany, Israel and
France. DNA Ink provides corporate strategic guidance to its clients leading to
transactions that support corporate growth including licensing, M&A and fundraising
transactions. Prior to starting her own firm, Ms. Jones spent 20 years at Genentech
where she served in many roles including Interim Head of Partnering, Head of Business
Development, Senior Project Manager and Research Associate. She managed several
products during this time including Rituxan, the first monoclonal antibody launched to
treat cancer. Ms. Jones has very extensive networks within the pharmaceutical and
biotech companies and VC community in North America. Ms. Jones is a Non-Executive
Director of Calithera Biosciences, Inc. (Nasdaq:CALA), a clinical-stage pharmaceutical
company focused on discovering and developing novel small molecule drugs directed
against tumor metabolism and tumor immunology targets for the treatment of cancer.
Nil.
Patrys Limited
Directors’ Report (continued)
30 June 2016
Information on Directors
Name:
Title:
Qualifications:
John Read
Non-Executive Chairman
BSc (Hons), MBA, FAICD
Experience and expertise:
Mr. Read is an experienced Chairman and Director in public, private and government
organisations. Through his extensive career in venture capital, private equity and
commercialisation he has gained a depth of experience in the formation and growth of
emerging companies with an emphasis on commercial entities that provide broad
societal benefits. He is currently the Chairman of CVC Limited (ASX: CVC) and Eildon
Capital Limited and was the Chairman of Pro-Pac Packaging Limited (ASX: PPG) from
2005 to 2010, The Environmental Group Limited (ASX:EGL) from 2001 to 2012 and
The Central Coast Water Corporation from 2011 to 2014.
Other current Directorships:
CVC Ltd (since 1989).
Former Directorships (last 3 years): Nil
Interests in shares:
6,510,838 fully paid ordinary shares
150,052 loan share plan fully paid ordinary shares
Name:
Title:
Qualifications:
Managing Director and Chief Executive Officer
James Campbell
Ph.D, MBA
Experience and expertise:
Dr. Campbell has more than 20 years of international biotechnology research,
management and leadership experience and has been involved in the creation and/or
transformation of several Australian and international biotechnology companies. Dr.
Campbell was previously the CFO and COO of ChemGenex Pharmaceuticals Limited
(ASX:CXS) where, as a member of the executive team he helped transform a research-
based company with a market capitalization of $10M to a company with completed
clinical trials and regulatory dossiers submitted to the FDA and EMA. In 2011
ChemGenex was sold to Teva for $230M. Since 2011 Dr. Campbell has assisted
private biotechnology companies in New Zealand and the USA with capital raising and
partnering negotiations. Dr. Campbell is a Non-Executive Director of Prescient
Therapeutics Limited (ASX:PRX), Invion Limited (ASX:IVX) and Medibio Limited
(ASX:MEB). Dr Campbell also sits on a number of academic and government
biotechnology advisory panels.
Other current Directorships:
Non-Executive Director of Invion Limited (ASX: IVX), Medibio Limited (ASX: MEB) and
Former Directorships (last 3 years): Nil
Interests in shares:
25,000 fully paid ordinary shares
Prescient Therapeutics Limited (ASX: PTX).
Name:
Title:
Qualifications:
Michael Stork
BBA
Non-Executive Director and Deputy Chairman
Experience and expertise:
Mr. Stork is the Managing Director of F.J. Stork Holdings Ltd., the parent entity for PNK
Holdings Ltd, an original investor in Patrys. Mr. Stork was until 2004 Chairman of the
Board for Dspfactory Ltd, a leading edge developer of digital signal processing (DSP)
technology for various applications including hearing aids, headsets and personal
digital audio players. Mr. Stork has also played key roles in the management team and
the Board of Directors for Unitron Industries Ltd., a hearing aid manufacturing Company
that was voted one of the 50 Best Managed Private Companies in Canada for 2000.
Unitron was sold to Phonak Holdings AG, a publicly traded Swiss Company, in 2002.
Other current Directorships:
None.
Former Directorships (last 3 years): None.
Interests in shares:
95,731,764 fully paid ordinary shares (These shares are held by Stork Holdings 2010
Ltd. The shares are held by a related trust which Michael Stork in his own right does
'Other current Directorships' quoted above are current Directorships for listed entities only and excludes Directorships of all
other types of entities, unless otherwise stated.
'Former Directorships (last 3 years)' quoted above are Directorships held in the last 3 years for listed entities only and
excludes Directorships of all other types of entities, unless otherwise stated.
Company secretary
Roger McPherson was the Former Chief Operating Officer (Incorporating Chief Financial Officer and Company Secretary).
He resigned from the role on 1 October 2015.
Melanie Leydin was appointed Company Secretary on 1 October 2015. Melanie Leydin holds a Bachelor of Business
majoring in Accounting and Corporate Law. She is a member of the Institute of Chartered Accountants and is a Registered
Company Auditor. She graduated from Swinburne University in 1997, became a Chartered Accountant in 1999 and since
February 2000 has been the principal of chartered accounting firm, Leydin Freyer. The practice provides outsourced
company secretarial and accounting services to public and private companies specialising in the Resources, technology,
bioscience and biotechnology sector. Melanie has over 23 years’ experience in the accounting profession and has extensive
experience in relation to public company responsibilities, including ASX and ASIC compliance, control and implementation
of corporate governance, statutory financial reporting, reorganisation of companies and shareholder relations.
Meetings of Directors
The number of meetings of the Company's Board of Directors ('the Board') held during the year ended 30 June 2016, and
the number of meetings attended by each Director were:
Full Board
Nomination and
Remuneration Committee
Audit and Risk Committee
Attended
Held
Attended
Held
Attended
Held
John Read
Suzy Jones
James Campbell*
Michael Stork
8
7
8
8
8
8
8
8
-
-
-
-
-
-
-
-
2
2
-
2
2
2
2
2
not control).
Held: represents the number of meetings held during the time the Director held office.
*
James Campbell was not a member of the Nomination & Remuneration Committee or the Audit & Risk Committee but
was invited to attend these meetings.
2016 Annual Report
18
2016 Annual Report
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2016 Annual Report
2016 Annual Report
19
19
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (audited)
The remuneration report details the Key Management Personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all Directors. The Key Management Personnel are as follows:
John Read (Non-Executive Chairman)
James Campbell (Managing Director and Chief Executive Officer)
Michael Stork (Non-Executive Director and Deputy Chairman)
Suzy Jones (Non-Executive Director)
Melanie Leydin (Company Secretary) (appointed 1 October 2015)
Roger McPherson (Former Chief Operating Officer) (resigned 1 October 2015)
For more information on Key Management Personnel, please refer to Note 21.
The remuneration report is set out under the following main headings:
●
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to Key Management Personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's Executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns Executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that Executive reward satisfies the following key criteria for good reward
governance practices:
●
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of Executive compensation
transparency
capital Management
The Board is responsible for determining and reviewing compensation arrangements for the Directors themselves, the Non-
Executive Chairman and the Senior Management team. The Board has established a Nomination and Remuneration
Committee, comprising of three Directors, the majority of which are Non-Executive Directors. This Committee is primarily
responsible for making recommendations to the Board on:
- The over-arching Executive remuneration framework
- The operation of the incentive plans, including key performance indicators and performance hurdles
- Remuneration levels of Executive Directors and other Key Management Personnel; and
- Non-Executive Director fees
The objective of the Committee is to ensure that remuneration policies and structures are fair and competi tive and aligned
with the long term interests of the Company. The Corporate Governance Statement provides further information on the role
of this committee.
2016 Annual Report
20
2016 Annual Report
20
2016 Annual Report
21
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (audited)
The remuneration report details the Key Management Personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all Directors. The Key Management Personnel are as follows:
John Read (Non-Executive Chairman)
James Campbell (Managing Director and Chief Executive Officer)
Michael Stork (Non-Executive Director and Deputy Chairman)
Suzy Jones (Non-Executive Director)
Melanie Leydin (Company Secretary) (appointed 1 October 2015)
Roger McPherson (Former Chief Operating Officer) (resigned 1 October 2015)
For more information on Key Management Personnel, please refer to Note 21.
The remuneration report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional information
Additional disclosures relating to Key Management Personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's Executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns Executive reward with the achievement of strategic objectives
and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of
reward. The Board of Directors ('the Board') ensures that Executive reward satisfies the following key criteria for good reward
governance practices:
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of Executive compensation
transparency
capital Management
The Board is responsible for determining and reviewing compensation arrangements for the Directors themselves, the Non-
Executive Chairman and the Senior Management team. The Board has established a Nomination and Remuneration
responsible for making recommendations to the Board on:
- The over-arching Executive remuneration framework
- The operation of the incentive plans, including key performance indicators and performance hurdles
- Remuneration levels of Executive Directors and other Key Management Personnel; and
- Non-Executive Director fees
The objective of the Committee is to ensure that remuneration policies and structures are fair and competi tive and aligned
with the long term interests of the Company. The Corporate Governance Statement provides further information on the role
of this committee.
●
●
●
●
●
●
●
●
●
●
●
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
The Company has structured an Executive remuneration framework that is market competitive and complimentary to the
reward strategy of the organisation.
The Company’s remuneration framework seeks alignment with shareholders’ interests and is in particular aligned to the rapid
commercialisation of the Company’s intellectual property and in achieving its milestones in a highly ethical and professional
manner.
The Executive remuneration framework provides a mix of fixed and variable pay and performance incentive rewards.
Presently, the Company’s policy in relation to performance incentive rewards is to issue only equity (and not cash bonuses)
to Executives. The Company does not have a policy or practice of cancelling or clawing-back performance-based
remuneration of its Executives.
In accordance with best practice corporate governance, the structure of Non-Executive Director and Executive Director
remuneration is separate.
Non-Executive Directors remuneration
Directors’ fees are determined by reference to industry standards and were last reviewed effective 1 September 2012.
Components of the remuneration package include a cash element together with medium term equity instruments.
Directors’ fees are currently set at $95,000 for the Chairman and $60,000 per Non-Executive Director (note Ms. Jones
receives US$60,000) and reflect the demands which are made on and the responsibilities of the Directors. However, one
Non-Executive Director, Mr. Michael Stork, does not receive monetary Director fees and received no remuneration of any
kind during the year.
ASX listing rules require the aggregate Non-Executive Directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held on 27 November 2009, where the
shareholders approved a maximum annual aggregate remuneration of $250,000.
Executive remuneration
The Group aims to reward Executives based on their position and responsibility, with a level and mix of remuneration which
has both fixed and variable components.
The Executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
Committee, comprising of three Directors, the majority of which are Non-Executive Directors. This Committee is primarily
The combination of these comprises the Executive's total remuneration.
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed by the Nomination
and Remuneration Committee based on individual and business unit performance, the overall performance of the Group and
comparable market remunerations. No Nomination and Remuneration Committee meeting was held in the 2016 financial
year.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the Group and provides additional value to the Executive.
Incentives are payable to Executives based upon the attainment of agreed corporate and individual milestones and are
reviewed and approved by the Board of Directors. The Board of Directors have determined that given the current economic
climate, no cash incentives will be paid for the year ended 30 June 2016 (2015: Nil).
Executives and Directors are issued with equity instruments as LTIs (long term incentives) in a manner that aligns this
element of remuneration with the creation of shareholder wealth. LTI grants are made to Executives and Directors who are
able to influence the generation of shareholder wealth and thus have a direct impact on the creation of shareholder wealth.
The Board of Directors did not issue any equity instruments to Executives or Directors during the year ended 30 June 2016.
2016 Annual Report
20
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20
2016 Annual Report
2016 Annual Report
21
21
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
Consolidated entity performance and link to remuneration
Equity instruments may be issued to new employees, and upon performance review based on the performance of the
individual and the Company both in absolute terms and relative to competitors in the biotechnology sector. Equity instruments
that are issued for performance are subject to performance targets set and approved by the Nomination and Remuneration
Committee.
The Company’s remuneration policy seeks to reward staff members for their contribution to achieving significant operational,
strategic, partnering, preclinical, clinical and regulatory milestones. These milestones build sustainable and long term
shareholder value.
The Nomination and Remuneration Committee is of the opinion that continued improved results will be attributed in part to
the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder
wealth if maintained over the coming years.
Voting and comments made at the company's 11 November 2015 Annual General Meeting ('AGM')
At the 11 November 2015 AGM, 99.64% of the votes received supported the adoption of the remuneration report for the year
ended 2016. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Details of remuneration
Amounts of remuneration
2016
Non-Executive Directors:
Suzy Jones*
John Read
Executive Directors:
James Campbell**
Other Key Management
Personnel:
Melanie Leydin***
Roger McPherson***
Short-term
benefits
Short-term
benefits
Post-
employment
benefits
Long-term
benefits
Termination
Payments
Cash salary
and fees
$
Annual
Leave
$
Super-
annuation
$
Long service
leave
$
Cash
and fees
$
Total
$
81,484
95,000
217,761
-
-
-
-
-
2,240
-
-
-
-
-
-
81,484
95,000
220,001
60,000
66,539
520,784
-
33,061
33,061
-
4,054
6,294
-
32,693
32,693
-
70,593
70,593
60,000
206,940
663,425
1. Ms Jones was paid $60,000 USD at an average exchange rate of $0.7363 USD to 1 AUD.
2. Dr Campbell's hours increased to full time as of 1 March 2016.
*
**
*** 3. Roger McPherson resigned, and Melanie Leydin was appointed on 1 October 2015.
2016 Annual Report
22
2016 Annual Report
22
2016 Annual Report
23
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
Consolidated entity performance and link to remuneration
Equity instruments may be issued to new employees, and upon performance review based on the performance of the
individual and the Company both in absolute terms and relative to competitors in the biotechnology sector. Equity instruments
that are issued for performance are subject to performance targets set and approved by the Nomination and Remuneration
The Company’s remuneration policy seeks to reward staff members for their contribution to achieving significant operational,
strategic, partnering, preclinical, clinical and regulatory milestones. These milestones build sustainable and long term
Committee.
shareholder value.
The Nomination and Remuneration Committee is of the opinion that continued improved results will be attributed in part to
the adoption of performance based compensation and is satisfied that this improvement will continue to increase shareholder
wealth if maintained over the coming years.
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
2015
Non-Executive Directors:
John Read
Suzy Jones*
Executive Directors:
James Campbell**
Marie Roskrow***
Voting and comments made at the company's 11 November 2015 Annual General Meeting ('AGM')
At the 11 November 2015 AGM, 99.64% of the votes received supported the adoption of the remuneration report for the year
ended 2016. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
Other Key Management Personnel:
Roger McPherson
Short-term
benefits
Post-
employment
benefits
Share-based
payments
Cash salary
and fees
$
Super-
annuation
$
Equity-
settled
$
Total
$
95,000
72,016
-
-
44,880
289,330
12,210
-
-
-
-
-
95,000
72,016
57,090
289,330
247,371
748,597
35,000
47,210
1,296
1,296
283,667
797,103
Details of remuneration
Amounts of remuneration
2016
Non-Executive Directors:
Suzy Jones*
John Read
Executive Directors:
James Campbell**
Other Key Management
Personnel:
Melanie Leydin***
Roger McPherson***
Short-term
Short-term
employment
Long-term
Termination
benefits
benefits
benefits
benefits
Payments
Cash salary
and fees
$
Annual
Leave
$
Super-
Long service
Cash
annuation
$
leave
$
and fees
$
Total
$
81,484
95,000
-
-
217,761
2,240
-
-
-
-
-
-
-
-
-
81,484
95,000
220,001
60,000
66,539
520,784
-
33,061
33,061
-
4,054
6,294
-
32,693
32,693
-
70,593
70,593
60,000
206,940
663,425
*
**
1. Ms Jones was paid $60,000 USD at an average exchange rate of $0.7363 USD to 1 AUD.
2. Dr Campbell's hours increased to full time as of 1 March 2016.
*** 3. Roger McPherson resigned, and Melanie Leydin was appointed on 1 October 2015.
Post-
*** Dr Roskrow retired on 29 October 2014.
*
**
Ms Jones was paid $60,000 USD at an average exchange rate of $0.8331 USD to 1 AUD.
Dr Campbell was appointed as a Non-Executive Director on 12 November 2014 and as Managing Director on 13 April
2015
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
John Read
Suzy Jones
Executive Directors:
James Campbell
Other Key Management
Personnel:
Roger McPherson
Melanie Leydin
Fixed remuneration
2015
2016
At risk - STI
At risk - LTI
2016
2015
2016
2015
100%
100%
100%
100%
-
-
100%
100%
-
100%
100%
99%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1%
-
Service agreements
Remuneration and other terms of employment for Key Management Personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
James Campbell
Managing Director and Chief Executive Officer
12 November 2014 as Non-Executive Director and 13 April 2015 as Managing Director
No fixed term for an ongoing term subject to termination by the Company with 6 months'
notice and termination by the employee with 6 months' notice of the employee to the
Company.
Dr Campbell will be entitled to an annual salary (inclusive of superannuation) of
$300,000. The Remuneration Package is inclusive of any fringe benefits tax for which
the Company is liable in respect of the Employee’s total remuneration and any
superannuation contributions. The employee's performance will be reviewed annually
or more frequently if required. It is noted that Dr Campbell worked part time until 1
March 2016 and therefore did not receive the full $300,000.
2016 Annual Report
22
2016 Annual Report
22
2016 Annual Report
2016 Annual Report
23
23
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
John Read
Non-Executive Chairman
29 May 2007. A new agreement became effective 1 December 2009
No fixed term.
$95,000 per annum to be reviewed independently and annually by the Board of
Directors.
Suzy Jones
Non-Executive Director
15 December 2011
No fixed term.
$US60,000 (AU$81,484) per annum to be reviewed independently and annually by the
Board of Directors.
Melanie Leydin
Company Secretary
1 October 2015
No fixed term, with 1 months' notice.
$8,000 per month for Company Secretarial and Accounting Services
Key Management Personnel have no entitlement to termination payments in the event of removal for misconduct.
Share-based compensation
Issue of shares
There were no shares issued to Directors and other Key Management Personnel as part of compensation during the year
ended 30 June 2016.
Options
Values of options over ordinary shares granted, exercised and lapsed for Directors and other Key Management Personnel
as part of compensation during the year ended 30 June 2016 are set out below:
Name
John Read
Michael Stork
Value of
options
granted
during the
Value of
options
exercised
during the
Value of
options
lapsed
during the
year
$
year
$
year
$
Remuneration
consisting of
options
for the
year
%
-
-
-
-
6,529
3,264
-
-
Details of options over ordinary shares granted, vested and lapsed for Directors and other Key Management Personnel as
part of compensation during the year ended 30 June 2016 are set out below:
Name
Grant date
Vesting date
Number of
options
granted
Value of
options
granted
$
Value of
options
vested
$
Number of
options
lapsed
Value of
options
lapsed
$
28 Nov 2008
John Read
Michael Stork 28 Nov 2008
25 May 2011
25 May 2011
-
-
-
-
-
-
120,000
60,000
6,529
3,264
2016 Annual Report
24
2016 Annual Report
24
2016 Annual Report
25
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
Name:
Title:
Agreement commenced:
Term of agreement:
Details:
John Read
Non-Executive Chairman
No fixed term.
Directors.
Suzy Jones
Non-Executive Director
15 December 2011
No fixed term.
Board of Directors.
Melanie Leydin
Company Secretary
1 October 2015
29 May 2007. A new agreement became effective 1 December 2009
$95,000 per annum to be reviewed independently and annually by the Board of
$US60,000 (AU$81,484) per annum to be reviewed independently and annually by the
No fixed term, with 1 months' notice.
$8,000 per month for Company Secretarial and Accounting Services
Key Management Personnel have no entitlement to termination payments in the event of removal for misconduct.
There were no shares issued to Directors and other Key Management Personnel as part of compensation during the year
Share-based compensation
Issue of shares
ended 30 June 2016.
Options
Name
John Read
Michael Stork
Patrys Limited
Directors’ Report (continued)
30 June 2016
Remuneration Report (continued)
Additional information
The earnings of the Group for the five years to 30 June 2016 are summarised below:
2016
$
2015
$
2014
$
2013
$
2012
$
Revenue and other income
Net profit/(loss) before tax
Net profit/(loss) after tax
867,653
(1,080,784)
(1,080,784)
2,224,481
(8,463,492)
(8,470,382)
759,683
(7,280,929)
(7,289,090)
1,175,624
(3,522,634)
(3,529,095)
1,071,733
(5,098,322)
(5,108,891)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year start ($)
Share price at financial year end ($)
Basic earnings per share (cents per share)
0.01
0.01
(0.15)
0.03
0.01
(1.22)
0.02
0.03
(1.21)
0.02
0.02
(0.72)
0.08
0.02
(1.69)
2016
2015
2014
2013
2012
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 Group, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Ordinary shares
John Read
Michael Stork
James Campbell
Suzy Jones
Roger McPherson*
6,660,890
95,731,764
25,000
3,000,000
4,481,654
109,899,308
-
-
-
-
-
-
Balance at
the end of
the year
Other
-
-
-
-
-
-
-
6,660,890
- 95,731,764
25,000
-
3,000,000
-
(4,481,654)
-
(4,481,654) 105,417,654
Values of options over ordinary shares granted, exercised and lapsed for Directors and other Key Management Personnel
as part of compensation during the year ended 30 June 2016 are set out below:
*
Mr Roger McPherson resigned on 1 October 2015 therefore no longer requiring disclosure.
during the
during the
during the
year
$
year
$
year
$
options
for the
year
%
Details of options over ordinary shares granted, vested and lapsed for Directors and other Key Management Personnel as
part of compensation during the year ended 30 June 2016 are set out below:
Name
Grant date
Vesting date
Number of
options
granted
Value of
options
granted
$
Value of
Number of
options
vested
$
options
lapsed
Value of
options
lapsed
$
John Read
28 Nov 2008
25 May 2011
Michael Stork 28 Nov 2008
25 May 2011
-
-
-
-
120,000
60,000
6,529
3,264
-
-
-
-
Value of
options
granted
Value of
options
exercised
Value of
Remuneration
consisting of
options
lapsed
Option holding
The number of options over ordinary shares in the Company held during the financial year by each Director and other
members of Key Management Personnel of the Group, including their personally related parties, is set out below:
-
-
6,529
3,264
-
-
Options over ordinary shares
John Read
Mike Stork
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
120,000
60,000
180,000
-
-
-
-
-
-
(120,000)
(60,000)
(180,000)
-
-
-
This concludes the remuneration report, which has been audited.
2016 Annual Report
24
2016 Annual Report
24
2016 Annual Report
2016 Annual Report
25
25
Patrys Limited
Directors’ Report (continued)
30 June 2016
Shares under option
Unissued ordinary shares of Patrys Limited under option at the date of this report are as follows:
Grant date
1 July 2008
2 December 2009
2 December 2009
1 July 2010
1 July 2010
1 July 2010
8 December 2011
8 December 2011
8 December 2011
21 August 2012
21 August 2012
21 August 2012
20 May 2014
20 May 2014
20 May 2014
Expiry date
1 July 2016
27 November 2016
27 November 2017
1 July 2016
1 July 2017
1 July 2018
8 December 2017
8 December 2018
8 December 2019
21 August 2018
21 August 2019
21 August 2010
20 May 2020
20 May 2021
20 May 2022
Exercise
price
Number
under option
$0.330
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.050
$0.050
$0.050
22,500
5,952
5,952
3,600
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
172,204
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Patrys Limited issued on the exercise of options during the year ended 30 June 2016 and
up to the date of this report.
Share-based compensation to Directors and Key Management Personnel
General overview
The Company issues equity to Directors, Patrys (including subsidiary Patrys GmbH) employees and key consultants under
either the Loan Share Plan (LSP) or the Executive Share Option Plan (ESOP). Under the plans, participants are issued with
equity to foster an ownership culture within the Group to motivate Directors, employees and consultants to achieve
performance targets of the Company and the Group. Participation in the plans is at the Board’s discretion and no individual
has a contractual right to participate in the plan or to receive any guaranteed benefits.
The Company introduced the LSP in December 2009 following approval of the plan at the 2009 Annual General Meeting.
Only Australian residents are eligible to participate in the plan. The plan allows non-recourse, interest free loans to be
provided to eligible participants to acquire shares under the plan. If and when an issue is made it is treated as an in substance
grant of options and expensed over the vesting period because of the limited recourse nature of the loans. Generally shares
issued under the plan will vest over a three year period. The shares are acquired in the name of the participant and each
participant authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used
to repay the loan. In all other respects the shares issued under the LSP carry the same rights as other ordinary shares on
issue. If the participant leaves the Company, any shares that have not vested will be brought back by the Company and
cancelled along with the loan. In respect of shares that have vested the loan balance must generally be paid in full within six
months of termination or the shares will be sold and the proceeds applied to settle the loan balance. The issue price of the
shares in the Company held under LSP is not included in equity until the loan has been repaid.
2016 Annual Report
26
2016 Annual Report
26
2016 Annual Report
27
Unissued ordinary shares of Patrys Limited under option at the date of this report are as follows:
Patrys Limited
Directors’ Report (continued)
30 June 2016
Shares under option
Grant date
1 July 2008
2 December 2009
2 December 2009
1 July 2010
1 July 2010
1 July 2010
8 December 2011
8 December 2011
8 December 2011
21 August 2012
21 August 2012
21 August 2012
20 May 2014
20 May 2014
20 May 2014
Expiry date
1 July 2016
27 November 2016
27 November 2017
1 July 2016
1 July 2017
1 July 2018
8 December 2017
8 December 2018
8 December 2019
21 August 2018
21 August 2019
21 August 2010
20 May 2020
20 May 2021
20 May 2022
Patrys Limited
Directors’ Report (continued)
30 June 2016
Exercise
Number
price
under option
$0.330
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.050
$0.050
$0.050
22,500
5,952
5,952
3,600
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
Options are granted under the ESOP. Following the introduction of the LSP issues under the ESOP are generally only made
to non-Australian residents. Under the ESOP each option granted converts into one ordinary share of Patrys Limited. Options
are granted under the plan for no consideration and carry no dividend or voting rights. Options may be exercised at any time
from the date of vesting to the date of their expiry.
If a participant ceases to be appointed as a Director or employed by any member of the group (other than due to his/her
death) then options that have vested at the date of cessation will generally lapse if not exercised within six months of the
cessation date. In the case of death of the participant then the exercise period is generally extended to twelve months. All
unvested options will generally lapse on cessation.
In accordance with the rules of both the LSP and ESOP the Board has the ability to vary the terms in respect of issues in
circumstances it considers appropriate. The valuations of shares issued under the LSP and options issued under the ESOP
are determined by using an industry standard option pricing model taking into account the terms and conditions upon which
the instruments were issued.
Participants in equity based plans are not permitted to enter into transactions which limit the economic risk of participating in
the plan save in relation to the LSP. As noted above the LSP allows participants access to a limited recourse loan to fund
the acquisition of any shares issued under the LSP.
The terms and conditions of each issue of equity affecting remuneration of Directors and Key Management Personnel in this
or future reporting periods (not including as a result of the repricing – refer below) are as follows:
172,204
Equity issued to Directors and Key Management Personnel
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the
Company or of any other body corporate.
Shares issued on the exercise of options
up to the date of this report.
There were no ordinary shares of Patrys Limited issued on the exercise of options during the year ended 30 June 2016 and
Share-based compensation to Directors and Key Management Personnel
General overview
The Company issues equity to Directors, Patrys (including subsidiary Patrys GmbH) employees and key consultants under
either the Loan Share Plan (LSP) or the Executive Share Option Plan (ESOP). Under the plans, participants are issued with
equity to foster an ownership culture within the Group to motivate Directors, employees and consultants to achieve
performance targets of the Company and the Group. Participation in the plans is at the Board’s discretion and no individual
has a contractual right to participate in the plan or to receive any guaranteed benefits.
The Company introduced the LSP in December 2009 following approval of the plan at the 2009 Annual General Meeting.
Only Australian residents are eligible to participate in the plan. The plan allows non-recourse, interest free loans to be
provided to eligible participants to acquire shares under the plan. If and when an issue is made it is treated as an in substance
grant of options and expensed over the vesting period because of the limited recourse nature of the loans. Generally shares
issued under the plan will vest over a three year period. The shares are acquired in the name of the participant and each
participant authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used
to repay the loan. In all other respects the shares issued under the LSP carry the same rights as other ordinary shares on
issue. If the participant leaves the Company, any shares that have not vested will be brought back by the Company and
cancelled along with the loan. In respect of shares that have vested the loan balance must generally be paid in full within six
months of termination or the shares will be sold and the proceeds applied to settle the loan balance. The issue price of the
shares in the Company held under LSP is not included in equity until the loan has been repaid.
Details of equity issued in the Company provided as remuneration to each Director of Patrys Limited and each of the Key
Management Personnel of the Company are set out below. When vested, prior to the Director or Key Management Personnel
being able to deal with each share, the loan advanced to acquire the share under the LSP must be repaid. In the case of the
options, the exercise price must be paid prior to each being converted into one ordinary share of Patrys Limited. Details are
also provided for the number of equity instruments that have vested during the 2016 financial year.
The assessed fair value at the date of issue of the equity instruments is allocated over the period from issue date to vesting
date, and this amount is included in the remuneration tables above. Fair values at issue date are determined using the
binomial option pricing model that takes into account the exercise price (or amount of loan), the term of the option (or loan),
the share price at issue date and expected price volatility of the Patrys shares, the expected dividend yield and the risk-free
interest rate for the term of the option (or loan).
Further information on the shares and options issued under the LSP and ESOP, including factors and assumptions used in
determining fair value is set out in Note 31 to the financial statements.
Following the implementation of the LSP, Australian residents participate in the LSP and not the ESOP. Details of shares
and options that have been issued and vested in this or the previous year are outlined in the table below. The tables only
include transactions whilst a member of the Key Management Personnel.
There are no performance criteria that need to be met in relation to the shares issued above. Participants need to be
appointed as a Director or employed by a Group company at the vesting date. Unvested shares are brought back by the
Company at the cessation of appointment or employment at the issue price.
Indemnity and insurance of officers
The Company has indemnified the Directors and Executives of the Company for costs incurred, in their capacity as a Director
or Executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the Directors and Executives of the
Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
2016 Annual Report
26
2016 Annual Report
26
2016 Annual Report
2016 Annual Report
27
27
Patrys Limited
Directors’ Report (continued)
30 June 2016
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
or any related entity.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO East Coast Partnership) for audit and non-audit services provided
during the year are set out in Note 22.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit & Risk
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001 for the following reasons:
●
All non-audit services have been reviewed by the Audit & Risk Committee to ensure they do not impact the impartiality
and objectivity of the auditor.
None of the services undermine the general principles relating to auditor independence as set out in Professional
Statement APES 110, including reviewing or auditing the auditor’s own work, acting in a Management or a decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
●
Officers of the company who are former partners of BDO East Coast Partnership
There are no officers of the company who are former partners of BDO East Coast Partnership.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this Directors’ Report.
Auditor
BDO East Coast Partnership 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. John Read
Chairman
30 August 2016
2016 Annual Report
28
2016 Annual Report
28
2016 Annual Report
29
Patrys Limited
Auditor's independence declaration
Patrys Limited
Directors’ Report (continued)
30 June 2016
or any related entity.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf
of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility
on behalf of the Company for all or part of those proceedings.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO East Coast Partnership) for audit and non-audit services provided
during the year are set out in Note 22.
The Board of Directors has considered the position and, in accordance with the advice received from the Audit & Risk
Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001 for the following reasons:
All non-audit services have been reviewed by the Audit & Risk Committee to ensure they do not impact the impartiality
●
●
and objectivity of the auditor.
None of the services undermine the general principles relating to auditor independence as set out in Professional
Statement APES 110, including reviewing or auditing the auditor’s own work, acting in a Management or a decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
Officers of the company who are former partners of BDO East Coast Partnership
There are no officers of the company who are former partners of BDO East Coast Partnership.
Auditor's independence declaration
immediately after this Directors’ Report.
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
Auditor
BDO East Coast Partnership 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. John Read
Chairman
30 August 2016
2016 Annual Report
28
2016 Annual Report
28
2016 Annual Report
2016 Annual Report
29
29
Patrys Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
Revenue
Other income
Expenses
Research & Development Expenses
Administration & Management Expenses
Impairment of intangible assets
Loss before income tax expense
Consolidated
Note
2016
$
2015
$
5
6
867,653
2,224,481
48,572
378,772
(1,042,256)
(954,753)
-
(4,674,564)
(1,033,566)
(5,358,615)
(1,080,784)
(8,463,492)
Income tax expense
8
-
(6,890)
Loss after income tax expense for the year attributable to the Owners of
Patrys Limited
(1,080,784)
(8,470,382)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the Owners of Patrys
Limited
25,408
2,532
25,408
2,532
(1,055,376)
(8,467,850)
Cents
Cents
Basic earnings per share
Diluted earnings per share
30
30
(0.15)
(0.15)
(1.22)
(1.22)
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
accompanying notes
2016 Annual Report
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2016 Annual Report
30
2016 Annual Report
31
Patrys Limited
Statement of Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2016
Patrys Limited
Statement of Financial Position
As at 30 June 2016
Revenue
Other income
Expenses
Research & Development Expenses
Administration & Management Expenses
Impairment of intangible assets
Loss before income tax expense
Income tax expense
Patrys Limited
Consolidated
Note
2016
$
2015
$
5
6
48,572
378,772
(1,042,256)
(954,753)
-
(4,674,564)
(1,033,566)
(5,358,615)
(1,080,784)
(8,463,492)
8
-
(6,890)
(1,080,784)
(8,470,382)
867,653
2,224,481
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other
Total current assets
Non-current assets
Property, plant and equipment
Intangibles
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Non-current liabilities
Employee benefits
Total non-current liabilities
Loss after income tax expense for the year attributable to the Owners of
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the Owners of Patrys
Limited
25,408
2,532
25,408
2,532
(1,055,376)
(8,467,850)
Basic earnings per share
Diluted earnings per share
Cents
Cents
Total liabilities
30
30
(0.15)
(0.15)
(1.22)
(1.22)
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Consolidated
Note
2016
$
2015
$
9
10
11
12
13
14
15
16
3,215,039
259,307
69,762
3,544,108
4,646,527
13,325
33,937
4,693,789
5,870
708,750
714,620
78,834
-
78,834
4,258,728
4,772,623
543,708
51,338
595,046
668,905
77,418
746,323
25,213
25,213
55,960
55,960
620,259
802,283
3,638,469
3,970,340
17
18
60,035,971 59,675,971
397,124
(56,102,755)
505,645
(56,903,147)
3,638,469
3,970,340
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the
The above Statement of Financial Position should be read in conjunction with the accompanying notes
2016 Annual Report
30
30
2016 Annual Report
2016 Annual Report
31
31
accompanying notes
2016 Annual Report
Patrys Limited
Statement of Changes in Equity
For the year ended 30 June 2016
Foreign
currency
translation
reserve
$
Share
based
payment
reserves
$
Share
Loan Plan
Reserve
$
Issued
capital
$
Accumulated
losses
$
Total equity
$
Consolidated
Balance at 1 July 2014
59,675,971
(46,463)
228,252
287,074
(47,710,565)
12,434,269
Loss after income tax
expense for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Transactions with
owners in their capacity
as owners:
Share-based payments
(note 31)
Reallocation of value of
expired and cancelled
equity
Balance at 30 June
2015
-
-
-
-
-
-
2,532
2,532
-
-
-
-
-
-
-
-
(8,470,382)
(8,470,382)
-
2,532
(8,470,382)
(8,467,850)
886
3,035
-
3,921
(62,130)
(16,062)
78,192
-
59,675,971
(43,931)
167,008
274,047
(56,102,755)
3,970,340
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
2016 Annual Report
32
2016 Annual Report
32
2016 Annual Report
33
Patrys Limited
Statement of Changes in Equity
For the year ended 30 June 2016
Patrys Limited
Statement of Changes in Equity
For the year ended 30 June 2016
Foreign
currency
translation
reserve
$
Share
based
payment
reserves
$
Issued
capital
$
Share
Loan Plan
Accumulated
Reserve
losses
Total equity
$
$
$
Balance at 1 July 2014
59,675,971
(46,463)
228,252
287,074
(47,710,565)
12,434,269
Foreign
currency
translation
reserve
$
Share
based
payment
reserves
$
Share Loan
Plan
Reserve
$
Issued
capital
$
Accumulated
losses
$
Total equity
$
Consolidated
Balance at 1 July 2015
59,675,971
(43,931)
167,008
274,047
(56,102,755)
3,970,340
Loss after income tax
expense for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Reallocation of value of
expired and cancelled
equity
Transactions with
owners in their capacity
as owners:
Share-based payments
(note 31)
Issue of shares in
consideration for
Nucleus
Equity Settled
Transactions
Balance at 30 June
2016
-
-
-
-
-
360,000
-
-
25,408
25,408
-
-
-
-
-
-
(1,080,784)
(1,080,784)
-
25,408
(1,080,784)
(1,055,376)
-
(159,573)
(120,819)
280,392
-
-
-
-
1,923
1,582
-
360,000
-
-
-
-
-
3,505
360,000
360,000
60,035,971
(18,523)
369,358
154,810
(56,903,147)
3,638,469
Consolidated
Loss after income tax
expense for the year
Other comprehensive
income for the year, net
of tax
Total comprehensive
income for the year
Transactions with
owners in their capacity
as owners:
Share-based payments
(note 31)
Reallocation of value of
expired and cancelled
equity
2015
-
-
-
-
-
-
2,532
2,532
-
-
-
-
-
-
-
-
(8,470,382)
(8,470,382)
-
2,532
(8,470,382)
(8,467,850)
886
3,035
-
3,921
(62,130)
(16,062)
78,192
-
Balance at 30 June
59,675,971
(43,931)
167,008
274,047
(56,102,755)
3,970,340
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
The above statement of changes in equity should be read in conjunction with the accompanying notes
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2016 Annual Report
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33
Patrys Limited
Statement of Cash Flows
For the year ended 30 June 2016
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
R&D tax incentive
Government grants
Insurance recoveries
Licensing income
Income taxes paid
Consolidated
Note
2016
$
2015
$
(2,134,947)
67,741
-
260,879
-
-
274,970
-
(6,373,274)
165,524
167
819,956
2,500
1,272,332
-
(1,983)
Net cash used in operating activities
29
(1,531,357)
(4,114,778)
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash from/(used in) investing activities
Cash flows from financing activities
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(4,900)
-
68,973
(1,824)
(138,628)
2,775
64,073
(137,677)
-
-
(1,467,284)
4,646,527
35,796
(4,252,455)
8,643,507
255,475
Cash and cash equivalents at the end of the financial year
9
3,215,039
4,646,527
The above Statement of Cash Flows should be read in conjunction with the accompanying notes
2016 Annual Report
34
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34
2016 Annual Report
35
Patrys Limited
Statement of Cash Flows
For the year ended 30 June 2016
Patrys Limited
Notes to the Financial Statements
30 June 2016
Consolidated
Note 1. General information
Net cash used in operating activities
29
(1,531,357)
(4,114,778)
Cash flows from operating activities
Payments to suppliers and employees (inclusive of GST)
Interest received
Other revenue
R&D tax incentive
Government grants
Insurance recoveries
Licensing income
Income taxes paid
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of property, plant and equipment
Net cash from/(used in) investing activities
Cash flows from financing activities
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Note
2016
$
2015
$
(2,134,947)
(6,373,274)
67,741
165,524
260,879
274,970
-
-
-
-
167
819,956
2,500
1,272,332
-
(1,983)
(4,900)
-
68,973
(1,824)
(138,628)
2,775
64,073
(137,677)
-
-
(1,467,284)
4,646,527
35,796
(4,252,455)
8,643,507
255,475
Cash and cash equivalents at the end of the financial year
9
3,215,039
4,646,527
The financial statements cover Patrys Limited as a Group consisting of Patrys Limited and the entities it controlled at the end
of, or during, the year. The financial statements are presented in Australian dollars, which is Patrys Limited's functional and
presentation currency.
Patrys Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and
principal place of business are:
Registered office
Principal place of business
Level 4
100 Albert Road
South Melbourne, VIC 3205
Level 6, Equitable House
Suite 614
343 Little Collins Street
Melbourne VIC 3000
A description of the nature of the Group's operations and its principal activities are included in the Directors’ Report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 29 August 2016. The
Directors have the power to amend and reissue the financial statements.
Note 2. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New, revised or amending Accounting Standards and Interpretations adopted
The Group 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. We have considered the impact of these and they are not material.
Going concern
The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business
activity and the realisation of assets and the settlement of liabilities in the normal course of business for the following reasons:
●
●
●
●
●
At 30 June 2016, the Group had net current assets of $3,544,108 (30 June 2015: $4,693,789);
The Board of Directors has the ability to downscale its operations and discontinue programs should the need arise,
whilst meeting minimum expenditure commitments;
Cash flow forecasts prepared by the Board indicated that the company currently has sufficient cash reserves and
working capital to fund its planned activities for a period beyond 12 months from the date of signing of financial report;
Directors have a number of external funding alternatives available such as out-licensing arrangements or raising
additional equity funds; and
The Company has a history of successfully undertaking capital raisings during the last 8 years.
Based on the above, the Directors believe the consolidated entity will continue as a going concern and that it is appropriate
to adopt that basis of accounting in the preparation of the financial report.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
The above Statement of Cash Flows should be read in conjunction with the accompanying notes
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35
35
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
Historical cost convention
The 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 financial statements requires the use of certain critical accounting estimates. It also requires
Management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 25.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Patrys Limited ('Company'
or 'parent entity') as at 30 June 2016 and the results of all subsidiaries for the year then ended. Patrys Limited and its
subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable
to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
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 financial statements are presented in Australian dollars, which is Patrys Limited's functional and presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
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37
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Historical cost convention
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
The 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 financial statements requires the use of certain critical accounting estimates. It also requires
Management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed in note 3.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 25.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Patrys Limited ('Company'
or 'parent entity') as at 30 June 2016 and the results of all subsidiaries for the year then ended. Patrys Limited and its
subsidiaries together are referred to in these financial statements as the 'Group'.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
The 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
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
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.
The financial statements are presented in Australian dollars, which is Patrys Limited's functional and presentation currency.
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
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
the Group.
to the parent.
profit or loss.
Operating segments
Foreign currency translation
Foreign currency transactions
profit or loss.
Foreign operations
Revenue recognition
Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received or receivable.
Licence revenue
Licence revenue is recognised in accordance with the underlying agreement. Upfront milestone payments are brought to
account as revenues at the time of execution of the agreement and subsequent milestones when the relevant milestone has
been achieved.
Interest
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
All the revenue is stated net of the amount of goods and services tax (GST).
R&D tax incentive
Income from the R&D Tax Incentive is recognised on an accruals basis when AusIndustry accept the claim.
Grant income
Grant income is recognised on a receipts basis.
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 the changes in deferred tax assets and liabilities attributable to temporary
differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
●
When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
●
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax
assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for t he
carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable
that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on
either the same taxable entity or different taxable entities which intend to settle simultaneously.
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37
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
Current and non-current classification
Assets and liabilities are presented in the Statement of Financial Position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liabili ty
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Deferred tax assets and liabilities are always classified as non-current.
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
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:
Plant and equipment
3-7 years
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
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation
surplus reserve relating to the item disposed of is transferred directly to retained profits.
Intangible assets
Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at
the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible
assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are
subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising
from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying
amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in
the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or
period.
Intellectual property
Intellectual property is amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5-
20 years.
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39
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
Current and non-current classification
Assets and liabilities are presented in the Statement of Financial Position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's
normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the
reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liabili ty
for at least 12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held
primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no
unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities
are classified as non-current.
Cash and cash equivalents
Deferred tax assets and liabilities are always classified as non-current.
which are subject to an insignificant risk of changes in value.
Trade and other receivables
Other receivables are recognised at amortised cost, less any provision for impairment.
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:
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 Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
Employee benefits
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
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 are
measured as the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Plant and equipment
3-7 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
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.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation
surplus reserve relating to the item disposed of is transferred directly to retained profits.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
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
Intellectual property is amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5-
period.
Intellectual property
20 years.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using
either the Binomial or 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 Group receives the services that entitle the employees to receive payment. No account is taken of any other
vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profi t
or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous
periods.
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39
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at th e
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, 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 principal
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 interests. 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.
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.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the Owners of Patrys Limited, 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.
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Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 2. Significant accounting policies (continued)
Note 2. Significant accounting policies (continued)
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
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.
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at th e
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the Statement of
Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
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
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
●
●
reporting date.
settle the liability.
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a
cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, 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 principal
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 interests. 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
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
inputs.
Issued capital
Ordinary shares are classified as equity.
from the proceeds.
Earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the Owners of Patrys Limited, 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 Group for the annual reporting period ended 30 June 2016. The Group's assessment of
the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out
below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial
recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income
('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity' s own
credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting
requirements are intended to more closely align the accounting treatment with the risk Management activities of the entity.
New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be
measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since
initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The
Group will adopt this standard from 1 January 2018 but the impact of its adoption is yet to be assessed by the Group.
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single
standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or impli ed)
to be identified, together with the separate performance obligations within the contract; determine the transaction price,
adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance
obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no
distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be
presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be
satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the
service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied
over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised
as the performance obligation is satisfied. Contracts with customers will be presented in an entity's Statement of Financial
Position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's
performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to
understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and
any assets recognised from the costs to obtain or fulfil a contract with a customer. The Group will adopt this standard from 1
January 2018 but the impact of its adoption is yet to be assessed by the Group.
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41
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires Management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, Management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or 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.
Estimation of useful lives of assets
The Group 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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group 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 Group 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 fair value less costs of disposal
or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Note 4. Operating segments
Identification of reportable operating segments
A segment is a component of the consolidated entity that engages in business activities to provide products or services within
a particular economic environment. The consolidated entity operates in one business segment, being the conduct of research
and development activities in the biopharmaceutical sector. The Board of Directors assess the operating performance of the
group based on Management reports that are prepared on this basis. The group has established activities in more than one
geographical area, however these activities support the research and development conducted by the consolidated entity and
are considered immaterial for the purposes of segment reporting. The group invests excess funds in short term deposits but
this is not regarded as being a separate segment.
Note 5. Revenue
Licensing income
R&D tax incentive
Interest income
Other income
Realised Foreign currency gain
Insurance recoveries
Government grants
Revenue
Consolidated
2016
$
2015
$
274,970
502,485
76,869
10,485
2,844
-
-
-
819,956
129,526
167
-
1,272,332
2,500
867,653
2,224,481
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43
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 3. Critical accounting judgements, estimates and assumptions
Note 6. Other income
The preparation of the financial statements requires Management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and
assumptions on historical experience and on other various factors, including expectations of future events, Management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
Net foreign exchange gain - unrealised
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
Note 7. Expenses
discussed below.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or 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.
Estimation of useful lives of assets
The Group 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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The Group 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 Group 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 fair value less costs of disposal
or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Note 4. Operating segments
Identification of reportable operating segments
A segment is a component of the consolidated entity that engages in business activities to provide products or services within
a particular economic environment. The consolidated entity operates in one business segment, being the conduct of research
and development activities in the biopharmaceutical sector. The Board of Directors assess the operating performance of the
group based on Management reports that are prepared on this basis. The group has established activities in more than one
geographical area, however these activities support the research and development conducted by the consolidated entity and
are considered immaterial for the purposes of segment reporting. The group invests excess funds in short term deposits but
this is not regarded as being a separate segment.
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Amortisation/Impairment
License and registered patents
Total depreciation and amortisation
Operating expenses
Research and development expenses
Operating lease expenses
Loss on disposal of non-current assets
Bad debts
Bad debt
Employee salary and benefit expense
Defined contribution superannuation expense
Salary and employee benefit expenses
Total employment expenses
Share based payments expense
Note 5. Revenue
Licensing income
R&D tax incentive
Interest income
Other income
Realised Foreign currency gain
Insurance recoveries
Government grants
Revenue
Consolidated
2016
$
2015
$
274,970
502,485
76,869
10,485
2,844
-
819,956
129,526
167
-
-
-
1,272,332
2,500
867,653
2,224,481
Consolidated
2016
$
2015
$
48,572
378,772
Consolidated
2016
$
2015
$
8,891
110,159
11,250
5,852,032
20,141
5,962,191
1,042,256
46,292
-
4,674,564
71,356
60,232
8,238
-
68,800
895,156
89,819
1,241,616
963,956
1,331,435
3,505
3,921
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43
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 8. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Effect of revenue that is not assessable in determining taxable loss
Effect of expenses that are not deductible in determining taxable loss
Effect of different tax rates of subsidiaries operating in other jurisdictions
Deferred tax assets not brought to account
Income tax expense
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Tax losses - revenue
Deductible temporary differences
Total deferred tax assets not recognised
These deferred tax assets (not recognised) will only be obtained if:
Consolidated
2016
$
2015
$
(1,080,784)
(8,463,492)
(324,235)
(2,539,048)
(150,745)
155,690
-
319,290
(245,986)
520
(736)
2,792,140
-
6,890
Consolidated
2016
$
2015
$
14,854,005 14,548,135
-
202,726
15,056,731 14,548,135
(i) the entities derive future assessable income of a nature and of an amount sufficient to enable the benefits from the
deduction for losses to be realised;
(ii) the entities continue to comply with the conditions for deductibility imposed by the law; and no changes in tax legislation
adversely affect the entities in realising the relevant benefits from deduction for the losses; and
(iii) no changes in tax legislation adversely affect the entities in realising the relevant benefits from deduction for the l osses.
Note 9. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
The Group's exposure to interest rate and foreign currency risk is discussed in Note 20.
Consolidated
2016
$
2015
$
1,215,039
2,000,000
16,136
4,630,391
3,215,039
4,646,527
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44
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44
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45
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 8. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 30%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Effect of revenue that is not assessable in determining taxable loss
Effect of expenses that are not deductible in determining taxable loss
Effect of different tax rates of subsidiaries operating in other jurisdictions
Deferred tax assets not brought to account
Income tax expense
Deferred tax assets not recognised comprises temporary differences attributable to:
Deferred tax assets not recognised
Tax losses - revenue
Deductible temporary differences
Total deferred tax assets not recognised
These deferred tax assets (not recognised) will only be obtained if:
(i) the entities derive future assessable income of a nature and of an amount sufficient to enable the benefits from the
deduction for losses to be realised;
(ii) the entities continue to comply with the conditions for deductibility imposed by the law; and no changes in tax legislation
adversely affect the entities in realising the relevant benefits from deduction for the losses; and
(iii) no changes in tax legislation adversely affect the entities in realising the relevant benefits from deduction for the l osses.
Note 9. Current assets - cash and cash equivalents
Consolidated
2016
$
2015
$
(1,080,784)
(8,463,492)
(324,235)
(2,539,048)
(150,745)
155,690
(245,986)
520
(736)
319,290
2,792,140
-
-
6,890
Consolidated
2016
$
2015
$
14,854,005 14,548,135
202,726
-
15,056,731 14,548,135
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 10. Current assets - trade and other receivables
Research & Development incentive receivable
Interest receivable
Other receivables
Note 11. Current assets - other
Prepayments
Security deposits
Note 12. Non-current assets - property, plant and equipment
Plant and equipment - at cost
Less: Accumulated depreciation
Consolidated
2016
$
2015
$
224,510
17,096
17,701
-
-
13,325
259,307
13,325
Consolidated
2016
$
2015
$
60,634
9,128
24,830
9,107
69,762
33,937
Consolidated
2016
$
2015
$
27,371
(21,501)
445,523
(366,689)
5,870
78,834
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Cash at bank
Cash on deposit
The Group's exposure to interest rate and foreign currency risk is discussed in Note 20.
Consolidated
2016
$
2015
$
1,215,039
2,000,000
16,136
4,630,391
3,215,039
4,646,527
Consolidated
Balance at 1 July 2014
Additions
Disposals
Exchange differences
Depreciation expense
Balance at 30 June 2015
Additions
Disposals
Depreciation expense
Balance at 30 June 2016
Plant and
equipment
$
251,115
1,824
(2,775)
(939)
(170,391)
78,834
4,900
(68,973)
(8,891)
Total
$
251,115
1,824
(2,775)
(939)
(170,391)
78,834
4,900
(68,973)
(8,891)
5,870
5,870
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45
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 13. Non-current assets - intangibles
Intellectual property - at cost
Less: Accumulated amortisation
Less: Impairment
Consolidated
2016
$
2015
$
720,000 11,350,613
(5,991,998)
(11,250)
(5,358,615)
-
708,750
-
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Consolidated
Balance at 1 July 2014
Additions - acquisitions
Impairment of assets
Amortisation expense
Balance at 30 June 2015
Additions - Acquisition of Nucleus intellectual property
Amortisation expense
Balance at 30 June 2016
Intellectual
property
$
Total
$
5,735,622
116,410
(5,358,615)
(493,417)
5,735,622
116,410
(5,358,615)
(493,417)
-
720,000
(11,250)
-
720,000
(11,250)
708,750
708,750
Amortisation and impairment expense is included in the line item ‘Research and Development’ in the Statement of Profit or
Loss and Other Comprehensive Income.
Intangible assets comprise licences, intellectual property, trademarks and registered patents and have a finite useful life.
Amortisation has been historically calculated using straight line method over the estimated useful life, which ranges from 5
to 20 years.
Intellectual property which includes platform technology and product related intellectual property is reviewed on a regular
basis and where a decision has been made not to pursue a product, the remaining value recorded as an asset is impaired.
At balance date, the Directors also review the intellectual property portfolio to determine whether there are any indicators of
impairment related to intellectual property.
During the financial year the Group acquired Nucleus intellectual property. The acquisition provides Patrys with licence
rights to a portfolio of novel anti-DNA antibodies that penetrate cell nuclei. This novel pre-clinical oncology asset and
platform has multiple potential applications to treat a range of cancers.
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46
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47
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 13. Non-current assets - intangibles
Intellectual property - at cost
Less: Accumulated amortisation
Less: Impairment
Reconciliations
below:
Consolidated
Balance at 1 July 2014
Additions - acquisitions
Impairment of assets
Amortisation expense
Balance at 30 June 2015
Amortisation expense
Balance at 30 June 2016
to 20 years.
Additions - Acquisition of Nucleus intellectual property
Consolidated
2016
$
2015
$
720,000 11,350,613
(11,250)
-
(5,991,998)
(5,358,615)
708,750
-
Intellectual
property
$
Total
$
5,735,622
116,410
5,735,622
116,410
(5,358,615)
(5,358,615)
(493,417)
(493,417)
-
720,000
(11,250)
-
720,000
(11,250)
708,750
708,750
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 13. Non-current assets - intangibles (continued)
During the previous financial year the Group experienced a delay with the manufacturing of its lead product PAT-SM6 which
is believed to be caused by a change in the formatting of one of the components used in the manufacturing process. In order
to continue with the manufacturing of the product and ultimately conduct a clinical trial there is a need to undertake further
process redevelopment. The Group had a number of options open to it which it was investigating. These included:
- undertake the process redevelopment work and then go on to manufacture sufficient material to conduct a clinical trial with
PATSM6;
- seek to out-licence the product once the redevelopment process is completed but prior to actually manufacturing product
for a further clinical trial;
- seek to out-licence the product now without having a robust manufacturing process in place (similar to what has occurred
with PATSC1); or
- seek to outsource the process redevelopment work to a third party that will bear the costs and risks of this program for a
share in the future upside.
Once the product has been successfully manufactured the Group could then seek to conduct a further clinical trial itself.
These are a few of the alternatives that were being explored. The funding requirements of the Group will vary depending on
which avenue is undertaken. While the Directors believe that there is significant value in the intellectual property which the
Group will be able to realise in future periods, in accordance with AASB 136 Impairment of Assets, given the uncertainty that
is present at this point in regard to process redevelopment and a definitive commercialisation strategy, they determined that
the Group should undertake a conservative approach and decided to fully impair these assets in the prior financial year.
Note 14. Current liabilities - trade and other payables
Amortisation and impairment expense is included in the line item ‘Research and Development’ in the Statement of Profit or
Loss and Other Comprehensive Income.
Trade payables
Other creditors and accruals
Intangible assets comprise licences, intellectual property, trademarks and registered patents and have a finite useful life.
Amortisation has been historically calculated using straight line method over the estimated useful life, which ranges from 5
Refer to note 20 for further information on financial instruments.
Intellectual property which includes platform technology and product related intellectual property is reviewed on a regular
basis and where a decision has been made not to pursue a product, the remaining value recorded as an asset is impaired.
At balance date, the Directors also review the intellectual property portfolio to determine whether there are any indicators of
impairment related to intellectual property.
Note 15. Current liabilities - employee benefits
During the financial year the Group acquired Nucleus intellectual property. The acquisition provides Patrys with licence
rights to a portfolio of novel anti-DNA antibodies that penetrate cell nuclei. This novel pre-clinical oncology asset and
Annual leave
platform has multiple potential applications to treat a range of cancers.
Note 16. Non-current liabilities - employee benefits
Long service leave
Consolidated
2016
$
2015
$
35,489
508,219
157,064
511,841
543,708
668,905
Consolidated
2016
$
2015
$
51,338
77,418
Consolidated
2016
$
2015
$
25,213
55,960
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47
47
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 17. Equity - issued capital
Consolidated
2016
Shares
2015
Shares
2016
$
2015
$
Ordinary shares - fully paid
745,253,370 696,585,986 60,035,971 59,675,971
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Shares brought back pursuant to the LSP
1 July 2014
19 May 2015
697,060,986
(475,000)
59,675,971
-
$0.000
Balance
Tranche 1 consideration shares issued to
shareholders of Nucleus Therapeutics Pty Ltd
Expiration of shares from Share Loan Plan
30 June 2015
696,585,986
59,675,971
30 March 2016
30 June 2016
50,033,425
(1,366,041)
$0.007
$0.000
360,000
-
Balance
30 June 2016
745,253,370
60,035,971
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.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk Management
The Group's 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.
Capital is regarded as total equity, as recognised in the Consolidated Statement of Financial Position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group 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 Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk Management policy remains unchanged from the 30 June 2015 Annual Report.
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48
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48
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49
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 17. Equity - issued capital
Consolidated
2016
Shares
2015
Shares
2016
$
2015
$
Ordinary shares - fully paid
745,253,370 696,585,986 60,035,971 59,675,971
Movements in ordinary share capital
Date
Shares
Issue price
$
Shares brought back pursuant to the LSP
1 July 2014
19 May 2015
697,060,986
59,675,971
(475,000)
$0.000
Tranche 1 consideration shares issued to
shareholders of Nucleus Therapeutics Pty Ltd
Expiration of shares from Share Loan Plan
30 June 2015
696,585,986
59,675,971
30 March 2016
30 June 2016
50,033,425
(1,366,041)
$0.007
$0.000
360,000
-
-
30 June 2016
745,253,370
60,035,971
Details
Balance
Balance
Balance
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.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Share buy-back
There is no current on-market share buy-back.
Capital risk Management
of capital.
The Group'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
Capital is regarded as total equity, as recognised in the Consolidated Statement of Financial Position, plus net debt. Net debt
is calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce debt.
The Group 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 Group is not actively pursuing additional
investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies.
The capital risk Management policy remains unchanged from the 30 June 2015 Annual Report.
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 18. Equity - reserves
Foreign currency reserve
Share based payment reserve
Share loan plan reserve
Consolidated
2016
$
2015
$
(18,523)
369,358
154,810
(43,931)
167,008
274,047
505,645
397,124
Foreign currency reserve
Exchange differences relating to translation from functional currencies of the Group’s foreign controlled entities into Australian
Dollars are bought to account by entries made directly to the foreign currency translation reserve.
Share loan plan reserve
The equity settled employee benefits reserves arise on issue of equity under the Loan Share Plan or the Executive Share
Option Plan to Executives and senior employees. Amounts are transferred out of the reserves and into issued capital when
the loans are repaid or the options are exercised. Amounts are transferred to accumulated losses when the shares or options
are cancelled. Further information about share based payments to Directors and Key Management Personnel is made at
Note 21 of the financial statements.
Share based payment reserve
The equity settled share based payment reserves arise on issue of options under the Employee Share Based Payment plan
to Executives and senior employees and the Share Based Payment Reserve for the issue of Tranche 2 and Tranche 3 shares
for the acquisition of Nucleus Intellectual Property. Amounts are transferred out of the reserves and into issued capital when
the options are converted to shares and when the Nucleus shares are issued. Amounts are transferred to accumulated losses
when the shares or options are cancelled. Further information about share based payments to Directors and Key
Management Personnel is made at Note 21 of the financial statements.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Share loan
plan reserve
$
Share based
payment
reserve
$
Foreign
currency
translation
reserve
$
Total
$
Balance at 1 July 2014
Foreign currency translation
Value of options issued under the Employee Share Option
Plan (recognised over vesting period)
Value of shares recognised over vesting period
Re-allocation of value of expired options during the period
Re-allocation of value of cancelled shares during the period
287,074
-
167,563
-
(46,463)
2,532
408,174
2,532
-
6,129
-
(19,156)
506
-
(1,061)
-
-
-
-
-
506
6,129
(1,061)
(19,156)
Balance at 30 June 2015
Foreign currency translation
Value of options issued under the Employee Share Option
Plan (recognised over vesting period)
Value of shares recognised over vesting period
Re-allocation of value of expired options during the period
Re-allocation of value of cancelled shares during the period
Value of Shares to be issued in consideration for Nucleus
Intellectual Property Tranche 2 and Tranche 3
274,047
-
167,008
-
(43,931)
25,408
397,124
25,408
-
1,582
-
(120,819)
1,923
-
(159,573)
-
-
360,000
-
-
-
-
-
1,923
1,582
(159,573)
(120,819)
360,000
Balance at 30 June 2016
154,810
369,358
(18,523)
505,645
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48
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49
49
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 19. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 20. Financial instruments
Financial risk Management objectives
The Group’s treasury function monitors and manages the financial risks relating to the operations of the Group through
internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including
currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. There have been no changes to these
risks since the previous financial year.
The Board of Directors ensures that the Group maintains a competent Management structure capable of defining, analysing,
measuring and reporting on the effective control of risk inherent in the Group’s underlying financial activities and the
instruments used to manage risk. Key financial risks including interest rate risk and foreign currency risk are reviewed by
Management on a regular basis and are communicated to the Board so that it can evaluate and impose its oversight
responsibility. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes. The Company and the Group have a policy regarding foreign exchange risk Management. This and
other financial risks are managed prudently by the Chief Executive Officer and the Audit & Risk Committee which meets at
least three times a year.
Capital risk Management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
The Group’s overall strategy remains unchanged from 2007.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 17, and 18, respectively. None of
the Group’s entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand the Group’s assets.
Market risk
Foreign currency risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency rates. The Group’s exposure to
foreign currency is predominately in US dollars and Euros. The Group has maintained cash in US dollars and Euros to cover
a portion of its anticipated US dollar and Euro expenditures. Prior to the closure of Patrys UK Limited the Group also had an
exposure to Pounds Sterling. The Group is currently holding sufficient Pounds Sterling to cover future costs for research and
development which is denominated in Pound Sterling.
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuation
arise. Exchange rate exposures are managed within approved policy parameters. The Group manages the currency risk by
monitoring the trend of the US dollar, Pound Sterling and Euro. The Group maintains US dollar, Pound Sterling and Euro
bank accounts to cover a portion of its anticipated expenditures in the respective foreign currencies.
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50
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50
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51
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 19. Equity - dividends
Note 20. Financial instruments
Financial risk Management objectives
The Group’s treasury function monitors and manages the financial risks relating to the operations of the Group through
internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including
currency risk, fair value interest rate risk and price risk), credit risk and liquidity risk. There have been no changes to these
risks since the previous financial year.
The Board of Directors ensures that the Group maintains a competent Management structure capable of defining, analysing,
measuring and reporting on the effective control of risk inherent in the Group’s underlying financial activities and the
instruments used to manage risk. Key financial risks including interest rate risk and foreign currency risk are reviewed by
Management on a regular basis and are communicated to the Board so that it can evaluate and impose its oversight
responsibility. The Group does not enter into or trade financial instruments, including derivative financial instruments, for
speculative purposes. The Company and the Group have a policy regarding foreign exchange risk Management. This and
other financial risks are managed prudently by the Chief Executive Officer and the Audit & Risk Committee which meets at
least three times a year.
Capital risk Management
The Group’s overall strategy remains unchanged from 2007.
The capital structure of the Group consists of cash and cash equivalents and equity attributable to equity holders of the
parent, comprising issued capital, reserves and retained earnings as disclosed in Notes 17, and 18, respectively. None of
the Group’s entities are subject to externally imposed capital requirements.
Operating cash flows are used to maintain and expand the Group’s assets.
Market risk
Foreign currency risk
The Group’s activities expose it primarily to the financial risks of changes in foreign currency rates. The Group’s exposure to
foreign currency is predominately in US dollars and Euros. The Group has maintained cash in US dollars and Euros to cover
a portion of its anticipated US dollar and Euro expenditures. Prior to the closure of Patrys UK Limited the Group also had an
exposure to Pounds Sterling. The Group is currently holding sufficient Pounds Sterling to cover future costs for research and
development which is denominated in Pound Sterling.
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuation
arise. Exchange rate exposures are managed within approved policy parameters. The Group manages the currency risk by
monitoring the trend of the US dollar, Pound Sterling and Euro. The Group maintains US dollar, Pound Sterling and Euro
bank accounts to cover a portion of its anticipated expenditures in the respective foreign currencies.
There were no dividends paid, recommended or declared during the current or previous financial year.
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 20. Financial instruments (continued)
Consolidated
US dollars
Euros
Pound Sterling
AUD strengthened
Consolidated - 2016
% change
Effect on
profit before
tax
Assets
Liabilities
2016
$
2015
$
2016
$
2015
$
842,460
97,746
90,543
765,855
279,105
2,300
255,949
74,638
90,106
195,657
158,365
410
1,030,749
1,047,260
420,693
354,432
AUD weakened
Effect on
Effect on
equity
% change
profit before
tax
Effect on
equity
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance.
Euros
US Dollars
Pound Sterling
10%
10%
10%
(8,886)
(76,587)
(8,231)
(8,886)
(76,857)
(8,231)
(10%)
(10%)
(10%)
10,861
93,607
10,606
10,861
93,607
10,606
(93,704)
(93,974)
115,074
115,074
Consolidated - 2015
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
Euros
US Dollar
GBP
10%
10%
10%
(25,373)
(69,623)
(209)
(25,373)
(69,623)
(209)
(10%)
(10%)
(10%)
31,012
85,095
256
31,012
85,095
256
(95,205)
(95,205)
116,363
116,363
Price risk
Price risk is the risk that future cashflows derived from financial instruments will be changed as a result of a market price
movement, other than foreign currency rates and interest rates. The Group is not exposed to any material commodity price
risks.
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Group’s short term deposits held and deposits at call.
The interest income earned from these balances can vary due to interest rate changes.
The sensitivity analysis has been determined based on the exposure to interest rates for both derivative and non-derivative
instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held
constant throughout the reporting period. A 10 percent increase or decrease in the interest rate is used and represents
Management’s assessment of the possible change in interest rates and historically is within a range of rate movements.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the Statement of Financial
Position date. At 30 June 2016, if interest rates had moved, as illustrated in the table below, with all other variables held
constant, pre-tax result and equity would have been affected as follows:
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50
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51
51
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 20. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate deposits outstanding:
Consolidated
2016
2015
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
Cash and cash equivalents
1.75%
3,215,039
1.50%
4,646,527
Net exposure to cash flow interest rate risk
3,215,039
4,646,527
Below is a sensitivity analysis of interest rates at a rate of 50 basis points on cash and cash equivalents for the 2016 financial
year (2015: 50 basis points). The impact would not be material on bank balances held at 30 June 2016. The percentage
change is based on expected volatility of interest rates using market data and analysis forecasts.
Consolidated - 2016
Basis points
change
profit before
tax
Effect on
equity
Basis points
change
profit before
tax
Effect on
equity
Basis points increase
Effect on
Basis points decrease
Effect on
Cash and cash equivalents
50
16,075
16,075
50
(16,075)
(16,075)
Consolidated - 2015
Basis points
change
profit before
tax
Effect on
equity
Basis points
change
profit before
tax
Effect on
equity
Basis points increase
Effect on
Basis points decrease
Effect on
Cash and cash equivalents
50
23,233
23,233
50
(23,233)
(23,233)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial l oss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial loss from defaults.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
not significant. There are no significant concentrations of credit risk within the Group and financial instruments are spread
amongst a number of financial institutions to minimise the risk of default of counterparties.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to pay its debts as and when they fall due. The Group has no borrowings
at reporting date and the Directors ensure that the cash on hand is sufficient to meet the commitments of the Group at all
times during the research and development phase.
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash and where necessary
unutilised borrowing facilities are maintained.
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52
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52
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53
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 20. Financial instruments (continued)
Note 20. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate deposits outstanding:
2016
2015
Weighted
average
Weighted
average
interest rate
Balance
interest rate
Balance
%
$
%
$
Consolidated
Cash and cash equivalents
1.75%
3,215,039
1.50%
4,646,527
Net exposure to cash flow interest rate risk
3,215,039
4,646,527
Below is a sensitivity analysis of interest rates at a rate of 50 basis points on cash and cash equivalents for the 2016 financial
year (2015: 50 basis points). The impact would not be material on bank balances held at 30 June 2016. The percentage
change is based on expected volatility of interest rates using market data and analysis forecasts.
Consolidated - 2016
change
tax
equity
change
tax
equity
Basis points
profit before
Effect on
Basis points
profit before
Effect on
Basis points increase
Effect on
Basis points decrease
Effect on
Cash and cash equivalents
50
16,075
16,075
50
(16,075)
(16,075)
Consolidated - 2015
change
tax
equity
change
tax
equity
Basis points increase
Effect on
Basis points decrease
Effect on
Basis points
profit before
Effect on
Basis points
profit before
Effect on
Cash and cash equivalents
50
23,233
23,233
50
(23,233)
(23,233)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial l oss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate as a means of mitigating the risk of financial loss from defaults.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is
not significant. There are no significant concentrations of credit risk within the Group and financial instruments are spread
amongst a number of financial institutions to minimise the risk of default of counterparties.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to pay its debts as and when they fall due. The Group has no borrowings
at reporting date and the Directors ensure that the cash on hand is sufficient to meet the commitments of the Group at all
times during the research and development phase.
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the Statement of Financial Position.
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Consolidated - 2015
Non-derivatives
Non-interest bearing
Trade payables
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
543,708
543,708
-
-
-
-
-
-
543,708
543,708
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
668,905
668,905
-
-
-
-
-
-
668,905
668,905
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Note 21. Key Management Personnel disclosures
Directors
The following persons were Directors of Patrys Limited during the financial year:
Mr. John Read
Mr Michael Stork
Dr. James Campbell
Ms. Suzy Jones
Other Key Management Personnel of Patrys for the year were as follows:
The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash and where necessary
unutilised borrowing facilities are maintained.
Mr Roger McPherson (Former Chief Operating Officer)
Ms Melanie Leydin (Company Secretary)
(resigned 1 October 2015)
(appointed 1 October 2015)
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52
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52
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53
53
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 21. Key Management Personnel disclosures (continued)
Compensation
The aggregate compensation made to Directors and other members of Key Management Personnel of the Group is set out
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Note 22. Remuneration of auditors
Consolidated
2016
$
2015
$
553,845
6,294
32,693
70,593
748,597
47,210
1,296
-
663,425
797,103
During the financial year the following fees were paid or payable for services provided by , the auditor of the Company, and
its network firms:
Audit services -
Audit or review of the financial statements
Other services -
Advice on taxation and other matters and review and lodgement of corporate tax returns
Audit services - network firms
Audit or review of the financial statements
Other services - network firms
Advice on taxation and other matters and review and lodgement of corporate tax returns
Consolidated
2016
$
2015
$
54,465
50,185
5,500
5,613
59,965
55,798
-
1,074
953
953
5,276
6,350
Note 23. Commitments
Patrys has entered into several agreements whereby Patrys is obliged to make royalty payments on future sales and make
future cash milestone payments if certain events occur. These agreements include:
- Vollmers Acquisition Agreement: milestone payments and royalty payments;
- OncoMab Acquisition Agreement: royalty payments;
- Würzburg Cooperation Agreements: royalty payments; and
- Confirmation Assignment Agreement: Patrys, University of Würzburg and Acceptys, Inc.: royalty payments.
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Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 21. Key Management Personnel disclosures (continued)
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 23. Commitments (continued)
The aggregate compensation made to Directors and other members of Key Management Personnel of the Group is set out
Vollmers Acquisition Agreement
Patrys is committed to making certain milestone payments if certain hurdles are achieved as follows:
Compensation
below:
Short-term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Note 22. Remuneration of auditors
its network firms:
Audit services -
Audit or review of the financial statements
Other services -
Audit services - network firms
Audit or review of the financial statements
Other services - network firms
During the financial year the following fees were paid or payable for services provided by , the auditor of the Company, and
Advice on taxation and other matters and review and lodgement of corporate tax returns
5,500
5,613
Advice on taxation and other matters and review and lodgement of corporate tax returns
Note 23. Commitments
Patrys has entered into several agreements whereby Patrys is obliged to make royalty payments on future sales and make
future cash milestone payments if certain events occur. These agreements include:
- Vollmers Acquisition Agreement: milestone payments and royalty payments;
- OncoMab Acquisition Agreement: royalty payments;
- Würzburg Cooperation Agreements: royalty payments; and
- Confirmation Assignment Agreement: Patrys, University of Würzburg and Acceptys, Inc.: royalty payments.
Consolidated
2016
$
2015
$
553,845
6,294
32,693
70,593
748,597
47,210
1,296
-
663,425
797,103
Consolidated
2016
$
2015
$
54,465
50,185
-
1,074
953
953
5,276
6,350
- milestone payments for products derived from the Vollmers Hybridomas and Residual Hybridomas, payable only once for
each product, in the amount of $250,000 upon attaining the first Phase II clinical trials and a payment upon attaining
regulatory approval in any of the following markets: US, Japan, UK, France, Germany, Italy or Spain;
- milestone payments for products derived from the PAT-SM6 LDL Rights in the amount of $250,000 upon attaining Phase
II clinical trials, $400,000 for attaining Phase III clinical trials and a payment for regulatory approval in a major market; and
- certain later stage milestone payments (at regulatory approval) and royalties on sales of products derived from the assigned
assets are also payable in amounts and at rates that are typical in the industry for transactions of this nature and for such
products.
OncoMab Acquisition Agreement
Patrys must pay to OncoMab certain royalties on sales of products derived from the assigned assets in amounts and at rates
that are typical in the industry for transactions of this nature and for such products.
University of Wurzberg Cooperation Agreement
The University, with the cooperation and sponsorship of the Company, undertakes research in accordance with an agreed
research and development plan. The University has assigned all of its intellectual property rights, title and interest in the new
intellectual property (New IPR) created under the research project to the Company. Patrys must pay to the University certain
royalties on sales of products derived from the New IPR in amounts and at rates that are typical in the industry for transactions
of this nature and for such products.
Confirmation Assignment Agreement
The University of Würzburg assigned to Patrys all of its rights, title and interest in a library of hybridomas in consideration for
payment of a lump sum of US$75,000 and royalties payable on the sale of products that derive from the New IPR. These
payments and royalty rates are typical in the industry for transactions of such nature.
Capital expenditure commitments
There was no capital expenditure contracted for at reporting date but not provided for in the accounts.
59,965
55,798
Licence agreement
Patrys has entered into a number of licence agreements in respect of technologies and assets as outlined below:
Patrys - Crucell 2007 Research Licence Agreement
In May of 2007, Patrys entered into contracts with DSM Biologics Company and Crucell Holland B.V., covering the evaluation
of Crucell’s PER.C6® human antibody production technologies for potential use for Patrys’ products. The contract was at
the risk of DSM and Crucell in that no payments would be due from Patrys short of a successful result. In August of 2008,
DSM and Crucell reported significantly positive results from this work (which was completed at a DSM/Crucell joint venture
laboratory at DSM/Crucell cost). As part of these arrangements the Company entered into a research licence with Crucell in
respect of the application of these technologies in 3 Patrys products. Under this agreement Patrys is committed to make an
annual licence fee payment of €50,000. If Patrys wishes to commercialise any of the products developed under the research
licence agreement it has the right to enter into a commercial license with Crucell which would incur annual payments and
royalties payable on the sale of products that derive from the licensed PER.C6® cell line. These payments and royalty rates
are typical in the industry for transactions of such nature.
Patrys - Crucell 2009 Research Licence Agreement
In July of 2009, Patrys entered into a research licence agreement with Crucell Holland B.V., covering the use of Crucell’s
PER.C6® human antibody production technologies for potential use for 5 Patrys’ products. Patrys is committed to make an
annual license fee of €50,000. If Patrys wishes to commercialise any of the products developed under the research licence
agreement it has the right to enter into a commercial license with Crucell which would incur annual payments and royalties
payable on the sale of products that derive from the licensed PER.C6® cell line. These payments and royalty rates are typical
in the industry for transactions of such nature.
Patrys - Debiovision - Option License and Assignment Agreement
In August of 2009, Patrys acquired the rights to product SC-1 (renamed PAT-SC1) from Debiovision Inc. Once developed,
Patrys royalties will be payable to Debiovision on the sale of products that derive from PAT-SC1. These royalty rates are
typical in the industry for transactions of this nature.
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55
55
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 24. Related party transactions
Parent entity
Patrys Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 26.
Key Management Personnel
Disclosures relating to Key Management Personnel are set out in note 21 and the remuneration report included in the
Directors’ Report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2016
$
2015
$
Current payables:
Trade payables to Director related entity of Mr. John Read for Directors' fees for his
services*
23,750
23,750
*This amount was paid to Mr. Read subsequent to the financial year.
Loans to/from related parties
The parent entity has signed a Services Agreement with Patrys GmbH (a wholly owned subsidiary) to reimburse the
subsidiary its expenses plus 5%. The amount expensed for the period to 30 June 2016 was $166,574 (2015: $626,948). An
inter-Company loan balance at 30 June 2016 of ($442,020) (2015: ($282,440)) was settled during the year ending 30 June
2016. This loan is non-interest bearing and unsecured.
During the year the Company closed down its operations in Germany and all activities are now centralised from the
Australian entity (the Parent).
The parent entity has signed a Services Agreement with Patrys UK Limited (a wholly owned subsidiary) to reimburse the
subsidiary its expenses. Patrys UK Limited ceased activity at 28 February 2015 and was subsequently de-registered in the
2016 financial year. The amount expensed for the year ending 30 June 2016 was $Nil (2015: $256,967). The inter-Company
loan balance was settled during the previous financial year.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 25. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of Profit or Loss and Other Comprehensive Income
Loss after income tax
Total comprehensive income
2016 Annual Report
56
2016 Annual Report
Parent
2016
$
2015
$
(1,329,048)
(8,485,613)
(1,329,048)
(8,485,613)
56
2016 Annual Report
57
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 24. Related party transactions
Parent entity
Patrys Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 26.
Key Management Personnel
Directors’ Report.
Transactions with related parties
Disclosures relating to Key Management Personnel are set out in note 21 and the remuneration report included in the
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Consolidated
2016
$
2015
$
Current payables:
services*
Trade payables to Director related entity of Mr. John Read for Directors' fees for his
*This amount was paid to Mr. Read subsequent to the financial year.
Loans to/from related parties
The parent entity has signed a Services Agreement with Patrys GmbH (a wholly owned subsidiary) to reimburse the
subsidiary its expenses plus 5%. The amount expensed for the period to 30 June 2016 was $166,574 (2015: $626,948). An
inter-Company loan balance at 30 June 2016 of ($442,020) (2015: ($282,440)) was settled during the year ending 30 June
2016. This loan is non-interest bearing and unsecured.
During the year the Company closed down its operations in Germany and all activities are now centralised from the
Australian entity (the Parent).
The parent entity has signed a Services Agreement with Patrys UK Limited (a wholly owned subsidiary) to reimburse the
subsidiary its expenses. Patrys UK Limited ceased activity at 28 February 2015 and was subsequently de-registered in the
2016 financial year. The amount expensed for the year ending 30 June 2016 was $Nil (2015: $256,967). The inter-Company
loan balance was settled during the previous financial year.
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 25. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of Profit or Loss and Other Comprehensive Income
Loss after income tax
Total comprehensive income
Parent
2016
$
2015
$
(1,329,048)
(8,485,613)
(1,329,048)
(8,485,613)
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 25. Parent entity information (continued)
Statement of Financial Position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share options reserve
Share loan plan reserve
Accumulated losses
Total equity
Parent
2016
$
2015
$
3,099,450
4,320,497
3,814,069
4,556,377
594,703
715,952
619,916
771,912
60,035,971 59,866,983
(24,004)
274,047
(56,332,561)
369,358
154,810
(57,365,986)
3,194,153
3,784,465
23,750
23,750
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2016.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2016.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 30 June 2016.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the
following:
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Note 26. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance
with the accounting policy described in note 2:
Name
Patrys Limited (Parent)
Patrys GmbH
Patrys UK Limited*
Nucleus Therapeutics
Principal place of business /
Country of incorporation
Australia
Germany
UK
Australia
Ownership interest
2015
2016
%
%
-
-
100.00%
-
100.00%
100.00%
100.00%
-
*
Patrys UK Limited was deregistered during the financial year.
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56
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57
57
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 27. Events after the reporting period
Subsequent to the 2016 financial year, the company reached an agreement regarding amounts due from a contracting party.
This settlement of $334,342 was received in August 2016.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Note 28. Leases
Finance leases
The Group does not currently have any finance leases in place.
Operating leases
Lease arrangements
Patrys’ office space at 343 Little Collins Street, Melbourne, Australia, is on a month to month lease. The Group closed its
Würzburg, Germany (Patrys GmbH) office during the financial year.
Non-cancellable operating lease commitments
Not longer than 1 year
Note 29. Reconciliation of loss after income tax to net cash used in operating activities
Consolidated
2016
$
2015
$
-
1,345
Consolidated
2016
$
2015
$
Loss after income tax expense for the year
(1,080,784)
(8,470,382)
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of non-current assets
Share-based payments
Unrealised foreign exchange losses/(gains)
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
Decrease in trade and other payables
Decrease in other provisions
Net cash used in operating activities
20,141
(10,485)
3,505
-
5,962,191
60,232
3,921
(292,610)
(245,982)
(35,825)
(125,100)
(56,827)
60,862
75,330
(1,452,698)
(61,624)
(1,531,357)
(4,114,778)
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59
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 27. Events after the reporting period
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 30. Earnings per share
Subsequent to the 2016 financial year, the company reached an agreement regarding amounts due from a contracting party.
This settlement of $334,342 was received in August 2016.
No other matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the
Consolidated
2016
$
2015
$
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Loss after income tax attributable to the Owners of Patrys Limited
(1,080,784)
(8,470,382)
The Group does not currently have any finance leases in place.
Weighted average number of ordinary shares used in calculating diluted earnings per share 709,672,151 696,585,986
Weighted average number of ordinary shares used in calculating basic earnings per share
709,672,151 696,585,986
Number
Number
Patrys’ office space at 343 Little Collins Street, Melbourne, Australia, is on a month to month lease. The Group closed its
Würzburg, Germany (Patrys GmbH) office during the financial year.
Basic earnings per share
Diluted earnings per share
Fully paid ordinary shares
Cents
Cents
(0.15)
(0.15)
(1.22)
(1.22)
Note 28. Leases
Finance leases
Operating leases
Lease arrangements
Fully paid ordinary shares carry the right to participate in dividends and the proceeds on winding up of the Company in
equal proportion to the number of shares held. At shareholder meetings each ordinary share is entitled to one vote when a
poll is called, otherwise each shareholder has one vote on a show of hands. Fully paid ordinary shares are included as
ordinary shares in the determination of basic earnings per share.
Loan Share Plan
The Company introduced the Loan Share Plan (“LSP”) in December 2009 following approval of the plan at the 2009
Annual General Meeting. Only Australian residents are eligible to participate in the plan. The plan allows non-recourse,
interest free loans to be provided to eligible participants to acquire shares under the plan. When an issue is made it will be
treated as an in-substance grant of options and expensed over the vesting period because of the limited recourse nature of
the loans. Shares offered under the Loan Share Plan may be subject to Vesting Conditions, Forfeiture Conditions and
Disposal Restrictions (collectively referred to as “Conditions”) as determined by the Board and specified in the Offer
documents sent to participants. The Board had discretion to waive or deem Conditions to have been satisfied.
Shares under the LSP cannot be dealt with (including traded on the ASX) unless they are not subject to any Conditions
and there is no outstanding Loan on the shares.
Note 31. Share-based payments
Employee equity
The Company issues equity to Patrys (including subsidiaries Patrys GmbH and Patrys UK Limited) Directors, employees
and key consultants under either the Loan Share Plan (LSP) or the Executive Share Option Plan (ESOP). Under the plans,
participants are issued with equity to foster an ownership culture within the Company to motivate them to achieve
performance targets of the Group. Participation in the plans is at the Board’s discretion and no individual has a contractual
right to participate in the plans or to receive any guaranteed benefits.
The Company introduced the LSP in December 2009, following approval of the plan at the 2009 Annual General Meeting.
Only Australian residents are eligible to participate in the plan. The plan allows non-recourse, interest free loans to be
provided to eligible participants to acquire shares under the plan. When an issue is made it is treated as an in-substance
grant of options and expensed over the vesting period because of the limited recourse nature of the loans. Generally shares
issued under the plan vest over a three year period. The shares are acquired in the name of the participant and each
participant authorises and appoints the Company Secretary to act on their behalf. Any dividends paid on the shares are used
to repay the loan. If the participant leaves the Company, any shares that have not vested are bought back by the Company
and cancelled along with the loan. In respect of shares that have vested, generally, the loan balance must be paid in full
within six months of termination of appointment or the shares are sold and the proceeds applied to settle the loan balance.
The issue price of the shares in the Company held under the LSP is not included in equity until the loan has been repaid.
Non-cancellable operating lease commitments
Not longer than 1 year
Note 29. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(1,080,784)
(8,470,382)
Adjustments for:
Depreciation and amortisation
Net loss/(gain) on disposal of non-current assets
Share-based payments
Unrealised foreign exchange losses/(gains)
Change in operating assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
Decrease in trade and other payables
Decrease in other provisions
Net cash used in operating activities
Consolidated
2016
$
2015
$
-
1,345
Consolidated
2016
$
2015
$
20,141
(10,485)
3,505
5,962,191
60,232
3,921
-
(292,610)
(245,982)
(35,825)
(125,100)
(56,827)
60,862
75,330
(1,452,698)
(61,624)
(1,531,357)
(4,114,778)
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58
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59
59
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 31. Share-based payments (continued)
Options are granted under the ESOP. Following the introduction of the LSP issues under the ESOP are generally only made
to non-Australian residents. Under the ESOP each option granted converts into one ordinary share of Patrys Limited. Options
are granted under the plan for no consideration and carry no dividend or voting rights. Options may be exercised at any time
from the date of vesting to the date of their expiry. The options are typically issued in two or three equal tranches which vest
over a three year period, each tranche having an expiry date of five years after vesting date. The exercise period in relation
to an option, means the period in which the option may be exercised, and is specified by the Board. If a participant ceases
to be appointed as a Director or employed by any member of the group (other than due to his/her death) then, generally,
options that have vested at the date of cessation of appointment/employment will lapse if not exercised within six months of
the cessation date. In the case of death of the participant then the exercise period is extended to twelve months. All unvested
options will generally lapse on cessation.
The valuations of shares issued under the LSP and options issued under the ESOP are determined by using an industry
standard option pricing model taking into account the terms and conditions upon which the instruments were issued.
The Board aims to ensure that the aggregate number of shares or options which may be issued pursuant to the LSP and
ESOP shall not at any time exceed 5% of the total number of issued shares of the Company. All issues of shares or options
under the plans are subject to approval by the Nomination & Remuneration Committee. In accordance with the rules of both
the LSP and ESOP the Board has the ability to vary the terms in respect of issues in circumstances it considers appropriate.
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61
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 31. Share-based payments (continued)
Note 31. Share-based payments (continued)
to non-Australian residents. Under the ESOP each option granted converts into one ordinary share of Patrys Limited. Options
The following share-based payment arrangements were in existence during the current and/or prior reporting period:
Options are granted under the ESOP. Following the introduction of the LSP issues under the ESOP are generally only made
are granted under the plan for no consideration and carry no dividend or voting rights. Options may be exercised at any time
from the date of vesting to the date of their expiry. The options are typically issued in two or three equal tranches which vest
over a three year period, each tranche having an expiry date of five years after vesting date. The exercise period in relation
Set out below are the summaries of shares issued under the Share Loan Plan:
year
Balance at
end of year
Issued during
The year
Loans repaid
during the
Loans cancelled
during the year
to an option, means the period in which the option may be exercised, and is specified by the Board. If a participant ceases
to be appointed as a Director or employed by any member of the group (other than due to his/her death) then, generally,
2016:
options that have vested at the date of cessation of appointment/employment will lapse if not exercised within six months of
the cessation date. In the case of death of the participant then the exercise period is extended to twelve months. All unvested
Loan Share Plan - Series
Issue price $
Balance at
start of year
options will generally lapse on cessation.
The valuations of shares issued under the LSP and options issued under the ESOP are determined by using an industry
standard option pricing model taking into account the terms and conditions upon which the instruments were issued.
The Board aims to ensure that the aggregate number of shares or options which may be issued pursuant to the LSP and
ESOP shall not at any time exceed 5% of the total number of issued shares of the Company. All issues of shares or options
under the plans are subject to approval by the Nomination & Remuneration Committee. In accordance with the rules of both
the LSP and ESOP the Board has the ability to vary the terms in respect of issues in circumstances it considers appropriate.
Director LSP Tranche 1
Director LSP Tranche 2
Director LSP Tranche 3
Employee LSP Tranche 1
Employee LSP Tranche 2
Employee LSP Tranche 3
Employee LSP Tranche 4
Employee LSP Tranche 5
Employee LSP Tranche 6
Director LSP Tranche 4
Director LSP Tranche 5
Director LSP Tranche 6
Employee LSP Tranche 9
Employee LSP Tranche 10
Employee LSP Tranche 11
Employee LSP Tranche 12
Employee LSP Tranche 13
Employee LSP Tranche 14
Employee LSP Tranche 15
Employee LSP Tranche 16
Employee LSP Tranche 17
Employee LSP Tranche 18
Employee LSP Tranche 19
0.144
0.144
0.144
0.144
0.144
0.144
0.106
0.106
0.106
0.083
0.083
0.083
0.039
0.039
0.039
0.022
0.022
0.022
0.038
0.038
0.05
0.05
0.05
209,651
209,650
209,650
307,351
307,351
307,351
180,436
180,436
180,436
176,591
176,591
176,591
255,002
254,999
254,999
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
4,527,085
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(209,651)
(25,009)
(25,009)
(307,351)
(134,624)
(134,624)
-
-
-
(176,591)
(176,591)
(176,591)
-
-
-
-
-
-
-
-
-
-
-
(1,366,041)
-
184,641
184,641
-
172,727
172,727
180,436
180,436
180,436
-
-
-
255,002
254,999
254,999
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
3,161,044
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61
Issue
price $
Balance at
start of year
Issued during
The year
Loans repaid
during the
year
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 31. Share-based payments (continued)
2015:
Loan Share Plan - Series
Employees LSP Tranche 1
Employees LSP Tranche 2
Employees LSP Tranche 3
Directors LSP Tranche 1
Directors LSP Tranche 2
Directors LSP Tranche 3
Employees LSP Tranche 4
Employees LSP Tranche 5
Employees LSP Tranche 6
Employees LSP Tranche 7
Employees LSP Tranche 8
Directors LSP Tranche 4
Directors LSP Tranche 5
Directors LSP Tranche 6
Employees LSP Tranche 9
Employees LSP Tranche 10
Employees LSP Tranche 11
Directors LSP Tranche 7
Directors LSP Tranche 8
Directors LSP Tranche 9
Employees LSP Tranche 12
Employees LSP Tranche 13
Employees LSP Tranche 14
Employees LSP Tranche 15
Employees LSP Tranche 16
Employees LSP Tranche 17
Employees LSP Tranche 18
Employees LSP Tranche 19
0.144
0.144
0.144
0.144
0.144
0.144
0.106
0.106
0.106
0.100
0.100
0.083
0.083
0.083
0.039
0.039
0.039
0.100
0.100
0.083
0.022
0.022
0.022
0.038
0.038
0.05
0.05
0.05
307,351
307,351
307,351
209,651
209,650
209,650
180,436
180,436
180,436
75,000
75,000
176,591
176,591
176,591
255,002
254,999
254,999
108,334
108,333
108,333
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
5,002,085
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Loans cancelled
during the year
Balance at end of
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75,000)
(75,000)
-
-
-
-
-
-
(108,334)
(108,333)
(108,333)
-
-
-
-
-
-
-
-
(475,000)
307,351
307,351
307,351
209,651
209,650
209,650
180,436
180,436
180,436
-
-
176,591
176,591
176,591
255,002
254,999
254,999
-
-
-
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
4,527,085
2016 Annual Report
62
2016 Annual Report
62
2016 Annual Report
63
Patrys Limited
30 June 2016
Notes to the Financial Statements
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 31. Share-based payments (continued)
Note 31. Share-based payments (continued)
2015:
Set out below are summaries of options granted under the plan:
Loan Share Plan - Series
price $
start of year
The year
year
during the year
year
Exercise
307,351
Grant date
Expiry date
price
Issue
Balance at
Issued during
during the
Loans cancelled
Balance at end of
Loans repaid
2016
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
Employees LSP Tranche 1
Employees LSP Tranche 2
Employees LSP Tranche 3
Directors LSP Tranche 1
Directors LSP Tranche 2
Directors LSP Tranche 3
Employees LSP Tranche 4
Employees LSP Tranche 5
Employees LSP Tranche 6
Employees LSP Tranche 7
Employees LSP Tranche 8
Directors LSP Tranche 4
Directors LSP Tranche 5
Directors LSP Tranche 6
Employees LSP Tranche 9
Employees LSP Tranche 10
Employees LSP Tranche 11
Directors LSP Tranche 7
Directors LSP Tranche 8
Directors LSP Tranche 9
Employees LSP Tranche 12
Employees LSP Tranche 13
Employees LSP Tranche 14
Employees LSP Tranche 15
Employees LSP Tranche 16
Employees LSP Tranche 17
Employees LSP Tranche 18
Employees LSP Tranche 19
0.144
0.144
0.144
0.144
0.144
0.144
0.106
0.106
0.106
0.100
0.100
0.083
0.083
0.083
0.039
0.039
0.039
0.100
0.100
0.083
0.022
0.022
0.022
0.038
0.038
0.05
0.05
0.05
307,351
307,351
307,351
209,651
209,650
209,650
180,436
180,436
180,436
75,000
75,000
176,591
176,591
176,591
255,002
254,999
254,999
108,334
108,333
108,333
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(75,000)
(75,000)
(108,334)
(108,333)
(108,333)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
307,351
307,351
209,651
209,650
209,650
180,436
180,436
180,436
176,591
176,591
176,591
255,002
254,999
254,999
-
-
-
-
-
255,000
255,000
255,000
37,500
37,500
100,000
100,000
100,000
5,002,085
(475,000)
4,527,085
01/07/2008
01/07/2008
28/11/2008
02/12/2009
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
01/07/2015
01/07/2016
25/05/2016
27/11/2015
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
$0.330
$0.330
$0.260
$0.140
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.050
$0.050
$0.050
162,500
162,499
240,000
165,584
165,585
165,585
100,601
100,602
100,602
90,668
90,666
90,666
76,667
76,667
76,666
125,000
125,000
125,000
2,240,558
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(162,500)
(139,999)
(240,000)
(165,584)
(159,633)
(159,633)
(97,001)
(97,002)
(97,002)
(83,334)
(83,333)
(83,333)
(66,667)
(66,667)
(66,666)
(100,000)
(100,000)
(100,000)
(2,068,354)
-
22,500
-
-
5,952
5,952
3,600
3,600
3,600
7,334
7,333
7,333
10,000
10,000
10,000
25,000
25,000
25,000
172,204
2016 Annual Report
62
2016 Annual Report
62
2016 Annual Report
2016 Annual Report
63
63
Patrys Limited
Notes to the Financial Statements
30 June 2016
Note 31. Share-based payments (continued)
2015
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
01/07/2008
01/07/2008
01/07/2008
19/11/2008
28/11/2008
28/11/2008
02/12/2009
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
02/11/2012
02/11/2012
02/11/2012
20/05/2014
20/05/2014
20/05/2014
01/07/2014
01/07/2015
01/07/2016
20/10/2014
25/05/2015
25/05/2016
27/11/2015
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
02/11/2018
02/11/2019
02/11/2020
20/05/2020
20/05/2021
20/05/2022
$0.330
$0.330
$0.330
$0.170
$0.260
$0.260
$0.140
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.030
$0.030
$0.030
$0.050
$0.050
$0.050
162,501
162,500
162,499
125,000
480,000
240,000
165,584
165,585
165,585
100,601
100,602
100,602
90,668
90,666
90,666
76,667
76,667
76,666
125,000
125,000
125,000
150,000
150,000
150,000
3,458,059
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(162,501)
-
-
(125,000)
(480,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
(125,000)
(125,000)
(125,000)
(25,000)
(25,000)
(25,000)
(1,217,501)
-
162,500
162,499
-
-
240,000
165,584
165,585
165,585
100,601
100,602
100,602
90,668
90,666
90,666
76,667
76,667
76,666
-
-
-
125,000
125,000
125,000
2,240,558
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.4172 years
(2015: 2.4230 years).
For the options granted during the prior years, the valuation model inputs used to determine the fair value at the grant date,
are as follows:
Grant date
Expiry date
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
01/07/2008
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
01/07/2016
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
$0.300
$0.140
$0.140
$0.100
$0.100
$0.100
$0.040
$0.040
$0.040
$0.020
$0.020
$0.020
$0.030
$0.030
$0.030
$0.330
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.050
$0.050
$0.050
60.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.50%
7.40%
7.44%
7.00%
7.05%
7.11%
5.55%
5.45%
5.45%
4.95%
5.10%
5.10%
4.70%
4.79%
4.90%
$0.202
$0.101
$0.106
$0.069
$0.073
$0.077
$0.029
$0.031
$0.032
$0.017
$0.020
$0.017
$0.021
$0.022
$0.024
2016 Annual Report
64
2016 Annual Report
64
2016 Annual Report
65
Patrys Limited
30 June 2016
Notes to the Financial Statements
Note 31. Share-based payments (continued)
Patrys Limited
Directors' Declaration
30 June 2016
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2016 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Mr. John Read
Chairman
30 August 2016
Grant date
Expiry date
price
the year
Granted
Exercised
Balance at
Exercise
the start of
Expired/
Balance at
forfeited/
other
the end of
the year
2015
01/07/2008
01/07/2008
01/07/2008
19/11/2008
28/11/2008
28/11/2008
02/12/2009
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
02/11/2012
02/11/2012
02/11/2012
20/05/2014
20/05/2014
20/05/2014
01/07/2014
01/07/2015
01/07/2016
20/10/2014
25/05/2015
25/05/2016
27/11/2015
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
02/11/2018
02/11/2019
02/11/2020
20/05/2020
20/05/2021
20/05/2022
(2015: 2.4230 years).
are as follows:
01/07/2008
02/12/2009
02/12/2009
01/07/2010
01/07/2010
01/07/2010
08/12/2011
08/12/2011
08/12/2011
21/08/2012
21/08/2012
21/08/2012
20/05/2014
20/05/2014
20/05/2014
01/07/2016
27/11/2016
27/11/2017
01/07/2016
01/07/2017
01/07/2018
08/12/2017
08/12/2018
08/12/2019
21/08/2018
21/08/2019
21/08/2020
20/05/2020
20/05/2021
20/05/2022
$0.330
$0.330
$0.330
$0.170
$0.260
$0.260
$0.140
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.030
$0.030
$0.030
$0.050
$0.050
$0.050
$0.300
$0.140
$0.140
$0.100
$0.100
$0.100
$0.040
$0.040
$0.040
$0.020
$0.020
$0.020
$0.030
$0.030
$0.030
162,501
162,500
162,499
125,000
480,000
240,000
165,584
165,585
165,585
100,601
100,602
100,602
90,668
90,666
90,666
76,667
76,667
76,666
125,000
125,000
125,000
150,000
150,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(162,501)
(125,000)
(480,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(125,000)
(125,000)
(125,000)
(25,000)
(25,000)
(25,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
162,500
162,499
-
-
-
240,000
165,584
165,585
165,585
100,601
100,602
100,602
90,668
90,666
90,666
76,667
76,667
76,666
-
-
-
125,000
125,000
125,000
$0.330
$0.140
$0.140
$0.100
$0.100
$0.100
$0.030
$0.030
$0.030
$0.020
$0.020
$0.020
$0.050
$0.050
$0.050
60.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
75.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8.50%
7.40%
7.44%
7.00%
7.05%
7.11%
5.55%
5.45%
5.45%
4.95%
5.10%
5.10%
4.70%
4.79%
4.90%
$0.202
$0.101
$0.106
$0.069
$0.073
$0.077
$0.029
$0.031
$0.032
$0.017
$0.020
$0.017
$0.021
$0.022
$0.024
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.4172 years
3,458,059
(1,217,501)
2,240,558
For the options granted during the prior years, the valuation model inputs used to determine the fair value at the grant date,
Grant date
Expiry date
at grant date
price
volatility
yield
interest rate at grant date
Share price Exercise
Expected
Dividend
Risk-free
Fair value
2016 Annual Report
64
2016 Annual Report
64
2016 Annual Report
2016 Annual Report
65
65
Patrys Limited
Independent Auditor’s Report to the members of Patrys Limited
2016 Annual Report
66
2016 Annual Report
66
2016 Annual Report
67
Patrys Limited
Independent Auditor’s Report to the members of Patrys Limited
Patrys Limited
Independent Auditor’s Report to the members of Patrys Limited
2016 Annual Report
66
2016 Annual Report
66
2016 Annual Report
2016 Annual Report
67
67
Patrys Limited
Shareholder Information
30 June 2016
The shareholder information set out below was applicable as at 22 August 2016.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Stork Holdings 2010 Ltd
Dr Dax Marcus Calder
HSBC Custody Nominees (Australia) Limited
Mr Mladen Marusic
Oncomab Gmbh
Mr Peter Robert Kahn
Mr Andrew John Fleck
Capita Trustees Limited
Mr Xiaoke Xie
Marginata Pty Ltd
Yale University
Mr Steven James Streicher
J P Morgan Nominees Australia Limited
Mr Paul Anthony Henry
Penz Investment Inc
Staffwear Pty Ltd
Mr Robbert Pierre Van Kampen
Towns Corporation Pty Ltd
Lamro Pty Ltd
Transalley Pty Ltd
Unquoted equity securities
Options over ordinary shares issued
Number
of holders
of ordinary
shares
61
70
118
684
621
1,554
835
Ordinary shares
% of total
Number held
95,731,764
70,009,015
25,427,691
22,514,889
20,250,000
16,000,000
15,000,000
13,999,999
11,550,000
10,000,000
9,506,351
7,500,000
7,404,787
7,000,000
6,500,000
6,026,226
6,000,000
5,500,000
5,000,000
5,000,000
shares
issued
12.85
9.39
3.41
3.02
2.72
2.15
2.01
1.88
1.55
1.34
1.28
1.01
0.99
0.94
0.87
0.81
0.81
0.74
0.67
0.67
365,920,722
49.10
Number
on issue
Number
of holders
172,204
16
2016 Annual Report
68
2016 Annual Report
68
2016 Annual Report
69
Patrys Limited
Shareholder Information
30 June 2016
The shareholder information set out below was applicable as at 22 August 2016.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Patrys Limited
Shareholder Information
30 June 2016
Substantial holders
Substantial holders in the Company are set out below:
Number
of holders
of ordinary
shares
Stork Holdings 2010 Ltd
Dr Dax Marcus Calder
Ordinary shares
% of total
Number held
shares
issued
95,731,764
70,009,015
12.85
9.39
Voting rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Stork Holdings 2010 Ltd
Dr Dax Marcus Calder
Mr Mladen Marusic
Oncomab Gmbh
HSBC Custody Nominees (Australia) Limited
Mr Peter Robert Kahn
Mr Andrew John Fleck
Capita Trustees Limited
Mr Xiaoke Xie
Marginata Pty Ltd
Yale University
Mr Steven James Streicher
J P Morgan Nominees Australia Limited
Mr Paul Anthony Henry
Penz Investment Inc
Staffwear Pty Ltd
Mr Robbert Pierre Van Kampen
Towns Corporation Pty Ltd
Lamro Pty Ltd
Transalley Pty Ltd
Unquoted equity securities
Options over ordinary shares issued
61
70
118
684
621
1,554
835
12.85
9.39
3.41
3.02
2.72
2.15
2.01
1.88
1.55
1.34
1.28
1.01
0.99
0.94
0.87
0.81
0.81
0.74
0.67
0.67
Ordinary shares
% of total
shares
issued
Number held
95,731,764
70,009,015
25,427,691
22,514,889
20,250,000
16,000,000
15,000,000
13,999,999
11,550,000
10,000,000
9,506,351
7,500,000
7,404,787
7,000,000
6,500,000
6,026,226
6,000,000
5,500,000
5,000,000
5,000,000
365,920,722
49.10
Number
Number
on issue
of holders
172,204
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2016 Annual Report
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2016 Annual Report
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2016 Annual Report
2016 Annual Report
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Corporate Directory
Directors
Mr. John Read (Non-Executive Chairman)
Dr. James Campbell (Managing Director & CEO)
Mr. Michael Stork (Non-Executive Director and
Deputy Chairman)
Ms. Suzy Jones (Non-Executive Director)
Company secretary
Melanie Leydin
Registered office
Level 4, 100 Albert Road
South Melbourne VIC 3205
Phone: +61 3 9692 7222
Principal place of business
Level 6, Equitable House
Suite 614
343 Little Collins Street
Melbourne VIC 3000
Share register
Computershare Investor Services Pty Limited
452 Johnston Street
Abbotsford VIC 3067
Phone: 1300 555 159 (within Australia)
Phone: +61 3 9415 4062
Auditor
BDO East Coast Partnership
Level 14, 140 William Street
Melbourne VIC 3000
GPO Box 5099 Melbourne VIC 3001
Australia
Stock exchange listing
Patrys Limited shares are listed on the Australian
Securities Exchange (ASX code: PAB)
Website
www.patrys.com
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2016 Annual Report