Appendix 4E
Preliminary final Report
Name of Entity
ABN
Year Ended
Previous Corresponding Reporting Period
PharmAust Limited
35 094 006 023
30 June 2016
30 June 2015
Results for Announcement to the Market
$’000
Percentage
increase/(decrease)
over previous
corresponding
period
Revenue from ordinary activities
(Loss) from ordinary activities after tax attributable to
members
Net (loss) for the period attributable to members
Dividends (distributions)
Final Dividend
Interim Dividend
Record date for determining entitlements to the dividends (if any) Not Applicable
It is not proposed to pay Dividends
It is not proposed to pay Dividends
Amount per security
2,754
(3,927)
(3,927)
14%
(104%)
(104%)
Franked amount per security
Dividends
Date the dividend is payable
Record date to determine entitlement to the
dividend
Amount per security
Total dividend
Amount per security of foreign sourced dividend or
distribution
Details of any dividend reinvestment plans in
operation
The last date for receipt of an election notice for
participation in any dividend reinvestment plans
No dividends
No dividends
-c
-c
-c
No dividends
No dividends
Net Tangible Assets per Security
Current Period
Net tangible asset backing per ordinary security
2.07c
Previous
corresponding
period
0.20c
The 30 June 2016 financial report dated 31 August 2016 forms part of and should be read in
conjunction with the Preliminary Final Report (Appendix 4E).
This report is based on financial statements that have been audited. The audit report is included in
the 30 June 2016 Annual Financial Report.
For personal use only
ABN 35 094 006 023
Annual Report
2016
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
CONTENTS
Corporate Directory
Directors' Report
Corporate Governance
Auditor’s Independence Declaration
Independent Auditor’s Report
Directors’ Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Shareholder Information
- 2 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
CORPORATE DIRECTORY
PRINCIPAL PLACE OF BUSINESS
PharmAust Limited
Suite 39,
1 Freshwater Parade
Claremont, Western Australia 6010
Tel +61 (8) 6364 0899 Fax +61 (8) 9467 6111
www.pharmaust.com
ASX CODE: PAA
Epichem Pty Ltd
Suite 5, 3 Brodie-Hall Drive
Bentley WA 6102
REGISTERED OFFICE
Suite 39, 1 Freshwater Parade
Claremont, Western Australia 6010
Tel +61 (8) 6364 0899 Fax +61 (8) 9467 6111
SYDNEY OFFICE
Level 7/139 Macquarie Street
Sydney, NSW 2000
Tel +61 (2) 9251 1142
DIRECTORS
Dr Roger Aston
Mr Robert Bishop
Mr Sam Wright
Dr Wayne Best
COMPANY SECRETARY
Mr Sam Wright
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 2, 45 St George’s Terrace
Perth, Western Australia 6000
AUDITORS
RSM Australia Partners
8 St Georges Terrace
Perth, Western Australia 6000
SOLICITORS
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe, Western Australia 6011
STOCK EXCHANGE
Australian Securities Exchange
Exchange Plaza
2 The Esplanade
Perth, Western Australia 6000
- 3 -
For personal use only
DIRECTORS’ REPORT
Your Directors present their report on the Company and the entities it controlled for the financial year ended 30 June 2016.
Directors
The following persons held office as directors of PharmAust Limited during the financial year and up to the date of this report:
Dr Roger Aston
Robert Bishop
Professor David Morris
Sam Wright
Dr Wayne Best
Executive Chairman
Executive Director
Non-Executive Director (resigned on 27th October 2015)
Non-Executive Director
Non-Executive Director
Directors have been in office since the start of the financial period to the date of this report unless otherwise stated.
Principal Activities
The principal continuing activities constituted by PharmAust Limited and the entities it controlled during the year were to develop its
own drug discovery intellectual property, namely three platforms for the treatment of different types of cancers in humans and
animals, as well as providing highly specialised medicinal and synthetic chemistry services on a contract basis to clients.
Operating Results
The results of the consolidated entity for the year ended 30 June 2016 was a loss, after income tax expense, of $3,927,256 (2015: loss of
$1,925,091).
Financial Position
The net assets of the consolidated entity were $5,023,261 as at 30 June 2016 (2015: $8,839,066).
Review of Operations
PITNEY PHARMACEUTICALS PTY LIMITED – 100% OWNED SUBSIDIARY
MPL PHASE I CLINICAL TRIAL IN HUMANS
During the year, the Company made significant progress with the development of its key anti-cancer product, Monepantel (MPL).
On 23rd July 2015, the Company reported the successful closure of its Phase I (Phase IIa) “first in man” trial where seven patients
were assessed for tumour markers at the Royal Adelaide Hospital. PharmAust received confirmation that the last patient, who was
treated at the higher dose of MPL (25mg/kg), showed meaningful suppression of key cancer marker p70S6K. Importantly, during
the trial, both principal end points were successfully met, namely:
1.
2.
MPL demonstrated a very good safety profile as compared with many other established anticancer drugs, and
MPL showed activity against cancer through the suppression of a key cancer marker.
In the trial, seven patients were treated with MPL for various time periods and measurements were successfully taken for anticancer
activity through marker suppression (p70S6K). Three patients completed the full 28-day treatment period. One patient was not
included in the cancer marker results as they only received a single dose of the drug. One patient received the higher dose of MPL
(25mg/kg).
On 21 October 2015, PharmAust reported that it had received the Phase I Clinical Trial Synopsis from CPR Pharma Services, who
have worked with CMAX-IDT to successfully complete PharmAust’s first-in-man clinical trial of MPL at the Royal Adelaide Hospital.
Outcomes of Clinical Trial
SAFETY
MPL demonstrated a very good safety profile as compared with many other established anticancer drugs. Whilst MPL was well
tolerated in humans, adverse events (AEs) deemed to be related to study medication included nausea, vomiting, diarrhoea, and
decreased appetite. The poor palatability of MPL is believed to be the major contributor to these AEs and responsible for poor
patient compliance in taking the drug during the trial. Although a number of Serious Adverse Events (SAEs) were noted during the
study, they were not related to the study medication. To address the palatability issues of MPL, PharmAust has appointed Juniper
Pharma Services, a subsidiary of Juniper Pharmaceuticals, Inc. (Nasdaq: JNP), to reformulate monepantel (MPL) for its Phase II
studies currently in planning and preparation.
ORAL ABSORPTION
The pharmacokinetics of MPL indicate rapid absorption and peak blood levels (4-6 hours) following oral administration of the drug.
The blood levels of MPL are in line with the levels observed for other anticancer drugs.
x
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
ANTI-CANCER ACTIVITY
MPL showed activity against cancer through the suppression of tumour marker p70S6K which is highly significant when the data
from 7 patients is combined and analysed (at day 3 of treatment p<0.0004 and at day 7 of treatment p<0.002). Furthermore,
evaluation of white blood cells of patients who have received MPL for three consecutive days has shown that the levels of p-4E-
BP1 cancer marker are significantly reduced as compared to its levels at Day 1 before treatment started. Of the 4 subjects with
post-dose RECIST assessment (tumour measurements) at a dose level of 5 mg/kg, 2 were classified as stable disease and 2 were
classified as progressive disease.
Dr Aston said “This is a very strong result for our Phase I trial which will now allow us to proceed as soon as possible to a Phase II
evaluation of MPL. Preliminary discussions with physicians at both the Royal Adelaide Hospital and at Clinical Research Centres in
the UK signal strong interest to evaluate MPL where first line therapy has failed. Following some additional contractual studies, which
we will report upon, we expect to be able to select what chemotherapy is preferred to be used in conjunction with MPL in the next
trial. Furthermore, the Phase I study has confirmed that MPL is absorbed orally in quantities that result in suppression of the cancer
marker p70s6k in peripheral immune cells; this gives us much confidence that the drug is active on markers that have been
correlated with aggressive features of cancer, such as growth, invasion and metastasis.”
MPL PHASE I CLINICAL TRIAL IN CANINES
Following the announcement that MPL significantly suppressed a key cancer marker in two dogs evaluated, and has been safe
and well tolerated by all the dogs treated with the drug so far, the Company decided to move to the next stage of clinical
evaluations which make use of the “synergy” discovery (announced to the market 17th February 2014).
During the year, PharmAust advised that it had completed the treatment of two canine patients with MPL in combination with
Carboplatin, one of the “standard of care” chemotherapy drugs used in both human and veterinary anticancer medicine. Neither
dog suffered any adverse events despite the fact they both had progressive, advanced cancers and few treatment options.
Executive Chairman, Dr Aston stated, “Combining chemotherapy with MPL in a target species with a natural cancer, is an
important step for PharmAust. There is a highly significant synergy between chemotherapy and MPL without enhancement of the
associated side-effects commonly seen with anticancer drugs. As such, the lack of any adverse events in canines is an exciting
outcome. Furthermore, this gives us much confidence in moving forward with Phase II combination therapies in man.”
GenScript to Complete Further Pre-Clinical Validation for Phase II Trial
PharmAust appointed GenScript to investigate the use of MPL/monepantel in conjunction with current “Standard of Care” in
preparation for PharmAust’s investigation of monepantel in Phase II.
Following PharmAust’s demonstration that combinations of chemotherapy and monepantel result in synergy with respect to
anticancer activity, the company will be investigating and validating the various combinations in different cancers in GenScript’s
model systems. This work programme will be as a prelude to PharmAust initiating its Phase II trial.
GenScript is the leading gene, peptide, protein and antibody research partner for fundamental life science research, translational
biomedical research, and pre-clinical pharmaceutical development. Since their establishment in 2002, GenScript has exponentially
grown to become a global leading biotech company that provides life sciences services and products to scientists over 100
countries worldwide. PharmAust will be accessing their in vitro and in vivo pharmacology capability to optimise its treatment
regiments for the Phase II trial.
Juniper Pharma Services to reformulate MPL for Phase II Trials
On 11th January 2016, PharmAust appointed Juniper Pharma Services, a subsidiary of Juniper Pharmaceuticals, Inc. (Nasdaq: JNP),
to reformulate monepantel (MPL) for its Phase II studies currently in planning and preparation.
UK-based Juniper Pharma Services are to manufacture 20,000 capsules of the reformulated MPL solution under Good
Manufacturing Practice (GMP) for forthcoming human trials, ensuring that the Phase II data are admissible to regulators as part of
any subsequent submissions. Juniper has already manufactured two batches of 2000 capsules for canine studies in UK and Australia.
The primary need to reformulate MPL stems from the particularly unpleasant taste of the current MPL formulation, as used at the
Royal Adelaide Hospital during the Phase I study. Despite showing significant activity of MPL on tumour markers such as p70S6K
and p-4E-BP1, compliance by patients in taking the drug for 28 days was poor due to nausea associated with the exceptionally
poor palatability of the drug.
MPL PHASE II CLINICAL TRIAL IN CANINES
In June 2016, PharmAust reported that following the signing of a Materials Transfer Agreement with the University of Cambridge,
Department of Veterinary Sciences, Dr Jane Dobson will oversee and evaluate the role of monepantel (“MPL”) as a treatment for
canine cancers.
The Phase II trial will be undertaken in canines which have failed standard of care and follows on from the Phase I trial undertaken
in Sydney, Australia by Dr Angela Frimberger. The Phase I trial showed excellent safety with suppression of tumour markers and the
Phase II will build on these successful earlier results.
PharmAust has a Research and Option Agreement with Novartis Animal Health and, as such, the outcome of this study will be
important in understanding the commercial potential of MPL in veterinary cancer therapy.
- 5 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Notice of Allowance received from USA Patent Office
On 5th February 2016, PharmAust reported that its key patent “Kinase Inhibitors for the Treatment of Cancer” (14/387,270) has been
examined and allowed for issuance in the USA by the United States Trademark And Patent Office. This patent governs the use of
the Novartis veterinary drug, monepantel, in the treatment of both human and canine cancers. PharmAust has an “Option to
Licence Agreement” with Novartis Animal Health for the use of this intellectual property in the treatment of veterinary cancers.
PharmAust’s Chairman, Dr Roger Aston said: “This is the first of a series of patent applications applied for by the Company which
are proceeding towards allowance in the USA and other territories on the use of aminoacetonitriles in cancer. For small biotech
companies it is vital to have key controlling intellectual property to enable successful commercialisation.”
PharmAust Receives $546K R&D Rebate from ATO
On 1st February 2016, PharmAust announced that the Australian Taxation Office (“ATO”) had recognised the innovation of the
Research and Development being developed by wholly owned subsidiaries, Epichem Pty Ltd and Pitney Pharmaceuticals Pty
Limited.
The Company had previously lodged an application with Innovation Australia following advice from PharmAust’s consultants that
the R&D may qualify for a Research and Development Tax Rebate on its 2015 tax return.
Following approval from the ATO of the Company’s application for a Research and Development rebate, an amount of
$546.034.50 was deemed refundable on PharmAust’s 2015 Tax Return and a cheque for that amount plus interest has subsequently
been received by PharmAust and banked.
EPICHEM PTY LTD - 100% OWNED SUBSIDIARY
Epichem has been delivering synthetic and medicinal chemistry services to the drug discovery and pharmaceutical industries
worldwide since 2003. Epichem offers a range of rare and hard to find pharmaceutical impurities, degradants and metabolites of
active ingredients and excipients, particularly for OTC and generic drugs.
Epichem has been at the forefront of synthesizing new and difficult to obtain standards and many of these are exclusive to Epichem
and not available elsewhere. This range is continually expanding in response to customer requests and developments in the
industry. Epichem is globally competitive with clients in 32 countries and is rapidly expanding its reach.
Epichem also excels in custom synthesis and contract drug discovery, boasting a highly skilled team of scientists, most with a PhD
and industry experience. This valuable investment in people allows Epichem to lead drug discovery programs, perform custom
synthesis, conduct optimisation and method development for scale-up and engage in high-level problem solving.
Epichem has a long history of helping pharmaceutical companies identify trace impurities and has produced a range of
pharmaceutical reference standards to aid the industry in detecting and measuring these impurities, ultimately assisting in the
quality assurance and control of its clients’ medicines.
Epichem's expert team of medicinal chemists is also supporting PharmAust's oncology programmes and has made a number of
novel analogues of MPL. While still at the early pre-clinical research stage, if successful, this research could ultimately lead to a new
drug with improved properties which is wholly owned by PharmAust.
Epichem continued to promote its products and services both within Australia and overseas with staff attending a number of
conferences and tradeshows including AusBiotech in Melbourne and ChemOutsourcing in New Jersey, USA. Most notably,
Epichem was an exhibitor at CPhI WorldWide in Madrid, Spain, which is the world's premier trade show for the pharmaceutical
industry attended by 36,000 delegates. Feedback from CPhI was excellent with a number of new customers and prospects
resulting.
Epichem has a new tag line to better reflect our business offerings: “Our Formula. Your Success”. The Epichem website
(www.epichem.com.au) and other promotional media are currently being refreshed.
Epichem Awarded Two Year Contract Extension from DNDi
Epichem was awarded a two year extension to its current contract with Drugs for Neglected Diseases initiative (DNDi). The contract,
which was due to finish on 31 December 2015, will now see Epichem continue to provide synthetic & medicinal chemistry support
to DNDi's drug discovery projects until 31 December 2017. The extension will generate a further $2.3M in revenues for Epichem
during that period.
Epichem's Managing Director, Dr Wayne Best, said “Everyone in the company is delighted to have been given the opportunity to
continue contributing to the important work undertaken by DNDi.”
DNDi is a not-for-profit product development partnership working to research and develop new treatments for neglected diseases,
in particular human African trypanosomiasis, leishmaniasis, Chagas disease, malaria, paediatric HIV, and specific helminth-related
infections.
- 6 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Epichem’s New Laboratory Completed
During the year, Epichem reported the completion of their new laboratory in WA's Technology Park which became fully operational
at the site on 11 September 2015. The new laboratory is over twice the size of its previous laboratory at Murdoch University and has
provision for additional expansion in the future. The extra capacity of the new facilities will allow Epichem to rapidly grow its business
to our 5-year target of $10 million pa.
Managing Director of Epichem, Dr Wayne Best, stated, “Not only does the new laboratory provide significant extra capacity but
its improved design offers significant improvements in efficiency". Dr Best added that "The timing couldn't be better for the
expansion. With most of Epichem's business being for the export market, the current low Australian Dollar adds significantly to our
competitiveness and profitability.”
Epichem Successful in AusTrade & DNDi Grant
On 16th June 2016, PharmAust announced that the Australian Tropical Medicine Commercialisation Grants Programme, through
the support of Australia’s Trade and Investment Ministry, will provide $250,000 for a project entitled “Novel compounds for the
treatment of Leishmaniasis in humans and animals,” to be led by its subsidiary Epichem in partnership with the Swiss-based Drugs
for Neglected Disease initiative (DNDi).
Leishmaniasis is a potentially fatal parasitic disease spread by various species of sand fly. Already a human health issue in 98
countries, 350 million people are estimated to be at risk of infection, most notably poor populations living in remote areas.
Leishmaniasis is also a significant disease in a number of animals, especially dogs in many parts of Europe and North America.
The grant will see Epichem provide the synthetic and medicinal chemistry component of a research program focused on
developing new treatments for leishmaniasis in collaboration with the DNDi team. Any human drugs resulting from the project will
be for the benefit of DNDi, but Epichem has the right to commercialise treatments for leishmaniasis in animals.
Twelve applications to the ATMCG programme have been successful, four are from Victoria, four are from Queensland, two are
from NSW and two are from WA. Five of the successful applicants are private companies, two are independent research institutes
and five are from Australian universities.
Annual General Meeting
On 27 October 2015, PharmAust held its Annual General Meeting of Shareholders at Epichem Pty Ltd, Suite 5, 3 Brodie-Hall Drive,
Bentley, Western Australia. All resolutions that were put were unanimously passed on a show of hands, including the resolution
authorising a consolidation of the Company's Issued Capital on the following basis:
(a)
(b)
proportion to this ratio in accordance with ASX Listing Rule 7.22.1
every 20 Shares to be consolidated into 1 Share; and
every 20 Options be consolidated into 1 Option and the exercise price of each Option to be amended in inverse
SUBSEQUENT EVENTS
On 10th August 2016, PharmAust announced that it has received further interest from veterinary oncologist Dr Angela Frimberger to
continue evaluation of MPL (monepantel) either as monotherapy or in combination with chemotherapy in dogs that have failed
standard veterinary care. In the only previous studies evaluating MPL in conjunction with chemotherapy (carboplatin), neither of
the two dogs treated suffered any adverse events despite the fact they both had advanced cancers and few treatment options.
PharmAust will provide capsules newly formulated by Juniper Pharma Services for evaluation by Dr Frimberger’s team.
PharmAust’s Executive Chairman Dr Roger Aston said “Combining chemotherapy with MPL in a target species is a critical
component of our development strategy both in canines and humans, as chemotherapy is usually a first line treatment of cancer.
Furthermore, previous studies in rodent models showed highly significant synergy between chemotherapy and MPL without
apparent enhancement of side-effects.”
Principal investigator and dog cancer specialist, Dr Angela Frimberger, based at Veterinary Oncology Consultants Pty Ltd said “So
far we have shown that MPL is safe and has biological activity in dogs; and we have given it with carboplatin in two dogs with late
stage, resistant cancers without any enhancement of side effects. With the newly formulated capsules, we are delighted to now
be able to offer the combination of MPL with other standard chemotherapeutics as well as carboplatin, for dogs with cancer
where standard therapy either is not an option or has not been effective.”
PharmAust will report progress with canine recruitment both in Cambridge and Sydney and possibly other Australian sites as canine
patients are recruited.
On 3rd August 2016, PharmAust announced that following discussions with the University of New South Wales commercialisation
arm, NewSouth Innovations Pty. Ltd. (“NSI”), the parties have agreed to an exchange of Intellectual Property (“IP”), which will result
in PharmAust owning additional rights to MPL and related compounds that were previously held by the University.
In exchange for the assignment to PharmAust of outstanding IP in MPL, NSI will receive IP relating to the Mucin project that it
provided to PharmAust under the “Easy Access Scheme” during 2014/2015 and will have the ability to commercialise this IP. The
Mucin project entails the use of enzymes and other agents in cancers such as Pseudomyxoma Peritonei, a clinical condition caused
by cancerous cells (mucinous adenocarcinoma) that produce abundant mucin and or gelatinous ascites. Importantly if NSI is
successful in partnering the Mucin project, PharmAust will receive an ongoing royalty stream from NSI.
- 7 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
PharmAust’s Chairman, Dr Roger Aston said: “This is an important milestone for PharmAust. With continued progress and investment
in MPL and related compounds and the prospects of both human and veterinary Phase II trials beginning, it is important that
PharmAust can establish an IP position where it is as far as possible free to operate and commercialise its lead aminoacetonitrile
(MPL-related) product(s). At the same time, PharmAust will retain an ongoing interest in the Mucin project through a royalty stream
based on what is received by NSI. This strategy is also in line with PharmAust’s strategy to list on NASDAQ. The use of MPL and related
compounds for cancer therapy remains PharmAust’s prime objective and the company continues to grow its IP base in the area
through R&D as well as through acquisition”
Dividends
Since the end of the financial year, no dividend has been paid, declared or recommended.
Significant Changes in State of Affairs
A review of events during the reporting period can be found in the review of operations.
Future Developments
In the opinion of the Directors disclosure of information regarding likely developments in the Company’s operations and the
expected results of those operations in subsequent financial years could prejudice the Company’s interests. Accordingly, this
information has not been included in this report.
- 8 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Information on Directors
Dr Roger Aston – Executive Chairman
Qualifications
BSc (Hons), Ph.D
Experience
Dr Aston currently serves as Chief Executive Officer of Pitney. Dr Aston served as Chief Executive
Officer of Mayne Pharma Group until 15 February 2012. During his career, he has been closely
involved in start-up companies and major pharmaceutical companies. Aspects of his
experience include FDA and EU product registration, clinical trials, global licensing agreements,
fundraising through private placements, and a network of contacts within the pharmaceutical,
banking and stock broking sectors. Dr Aston is both a scientist and seasoned biotechnology
entrepreneur, with a successful track record in both fields.
Dr Aston holds a B.Sc. (Hons) and Ph.D. degrees from the University of Manchester from 1975 to
1981.
Interests in Shares & Options
Dr Aston holds 5,373,148 Fully Paid Ordinary Shares.
Other Current Directorships
(ASX Listed Companies)
Immuron Limited (ASX:IMC), Oncosil Limited (ASX: OSL), Regeneus Limited (ASX:RGS) and ResApp
Health Limited (ASX:RAP)
Previous Directorships (last 3
years) ASX Listed Companies
IDT Limited (ASX:IDT); and Polynovo Limited (ASX:PNV) (previously Calzada Limited (ASX:CZD))
Mr. Robert C Bishop –Executive Director
Qualifications
Ll.B (Hons), Solicitor (New South Wales and England & Wales), MAICD
Experience
Mr Bishop has 30 years’ experience in corporate finance and equity capital markets. Having
worked extensively in London and Sydney, first as a lawyer at Linklaters & Paines and Allen, Allen
& Hemsley; and then as a stockbroker and investment banker at Ord Minnett, Robert Fleming
and, since 1998, at his Sydney based corporate finance business, First Capital Markets. He has
extensive experience in the areas of stock market flotation's, licensing and compliance work.
Interests in Shares & Options
Mr Bishop, via his company, holds 2,739,664 Fully Paid Ordinary Shares.
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Nil
Nil
Mr. Sam Wright – Non-Executive Director & Company Secretary
Qualifications
Experience
AFin DipAcc ACIS MAICD
Sam Wright is experienced in the administration of ASX listed companies, corporate governance
and corporate finance. He joined the Company as the Financial Controller in September 2006,
was appointed as the Company Secretary in August 2007, and was appointed as a Director in
October 2008.
Mr Wright has twenty years’ experience in the pharmaceutical, biotech and healthcare industry
and is a member of the Australian Institute of Company Directors, the Financial Services Institute
of Australasia, and the Chartered Secretaries of Australia.
Mr Wright is currently Company Secretary of ASX listed companies, Buxton Resources Limited and
Structural Monitoring Systems plc. Mr Wright also has filled the role of Director and Company
Secretary with a number of unlisted companies.
He is the Managing Director of Perth-based corporate advisory firm Straight Lines Consultancy,
specialising in the provision of corporate services to public companies.
Interests in Shares & Options
Mr Wright, via his company, holds 500,000 ordinary shares in PharmAust Limited.
Other Current Directorships
(ASX Listed Companies)
Nil
Previous Directorships (last 3
years) ASX Listed Companies
- 9 -
Buxton Resources Limited (ASX: BUX) and Structural Monitoring Systems plc (ASX: SMN)
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
Dr. Wayne Best – Non-Executive Director
DIRECTORS' REPORT (Cont.)
Qualifications
Experience
BSc (Hons), PhD, DIC, FRACI, GAICD
Wayne has almost 30 years’ experience in synthetic and medicinal chemistry both in academia,
government and industry. Wayne obtained his BSc (Hons) and PhD in Organic Chemistry from The
University of Western Australia. He then spent two years at Imperial College in the UK where he
obtained a DIC, followed by a year at the Australian National University in Canberra.
Wayne then took up a position with ICI Australia's Research Group in Melbourne where he spent
over four years designing and synthesizing a range of biologically active compounds, particularly
agrochemicals. During this time Wayne was seconded for six months to ICI Agrochemicals'
Jealott's Hill Research Station in the UK to work on the rational design of a novel herbicide target.
Following ICI, Wayne returned to Western Australia and spent the ten years preceding Epichem
at the Chemistry Centre (WA) where he was responsible for the formation and running of the
Medicinal & Biological Chemistry Section which undertook collaborative R&D into drug discovery
and contract synthesis for the drug discovery and pharmaceutical industries.
Wayne is a Fellow of the Royal Australian Chemical Institute and has held appointments as an
Adjunct Associate Professor at both Murdoch University and The University of Western Australia.
He is also a Director of Epichem's parent company, PharmAust Ltd, and a Graduate Member of
the Australian Institute of Company Directors.
Interests in Shares & Options
Dr Best holds 193,715 ordinary shares and 250,000 options in PharmAust Limited.
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Nil
Nil
- 10 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
Meetings of Directors
DIRECTORS’ REPORT (Cont.)
The number of meetings of the Company’s directors held during the year ended 30 June 2015, and the number of meetings attended
by each director was:
Directors
Dr Roger Aston
Robert Bishop
Professor David Morris
Sam Wright
Dr Wayne Best
Meetings of Directors
Eligible to
Participate
11
11
1
11
11
Number
Attended
9
10
1
11
11
Indemnification and Insurance of Directors and Officers
During the year, the Company held Directors and Officers Indemnity insurance.
The Company’s Constitution provides that except as may be prohibited by Sections 199A and 199B of the Corporations Act every
Officer, auditor or agent of the Company shall be indemnified out of the property of the Company against any liability incurred by
him in his capacity as Officer, auditor or agent of the Company or any related corporation in respect of any act or omission whatsoever
and howsoever occurring or in defending any proceedings whether civil or criminal.
Share Options
The details of unissued ordinary shares under option at the date of this report are as follows:
Non listed
Number
675,000
Exercise Price
Expiry Date
16 cents
3 September 2018
During the year, no options were exercised. There have been no further options exercised since the end of the financial year to
the date of this report.
Environmental Regulation
The Company is subject to a range of environmental regulation. During the year, the Company met all reporting requirements
under any relevant legislation. There were no incidents which required reporting.
Proceedings on Behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of these proceedings.
Non-audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined in note 29 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or
firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001.
The directors are of the opinion that the services as disclosed in note 29 to the financial statements do not compromise the external
auditor's independence requirements of the Corporations Act 2001 for the following reasons:
●
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of
the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or
auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate
for the company or jointly sharing economic risks and rewards.
●
- 11 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
The remuneration report, which has been audited, outlines the key management personnel (KMP) remuneration arrangements for
the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations.
This report details the nature and amount of remuneration for each director and executive of PharmAust Limited.
Remuneration Policy
The remuneration of directors and executives of PharmAust Limited has been designed to align director and executive objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based
on key performance areas affecting the Company’s financial results. The Board of PharmAust Limited believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Company,
as well as create goal congruence between directors, executives and shareholders.
All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation whilst
some executives receive fringe benefits. The Board reviews executive packages periodically by reference to the Company’s
performance, executive performance and comparable information from industry sectors and other listed companies in similar
industries.
The performance of executives is measured against criteria agreed regularly with each executive and is based on factors including
the forecast growth of profits and shareholders’ value.
The remuneration is designed to attract the highest calibre of executives and reward them for performance that results in long-term
growth in shareholder wealth. The goal of the remuneration structures it to align the remuneration packages of the executives with
the Company’s performance and specifically the Company’s earnings and the consequences of the Company’s performance on
shareholder wealth including dividends, returns of capital and capital appreciation.
The executive directors and executives receive a superannuation guarantee contribution required by the government and do not
receive any other retirement benefits. Individuals, however, have the option to sacrifice part of their salary to increase payments
towards superannuation.
All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Any shares given to directors
and executives will be valued as the difference between the market price of those shares and the amount paid by the director or
executive. Any options granted will be valued by an independent expert using the Black-Scholes, Binomial or any other methodologies
that the independent expert deems appropriate.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The Board (excluding the relevant director) determines payments to the directors and reviews their remuneration
regularly, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum
aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General
Meeting. Fees for non-executive directors are not linked to the performance of the Company.
Service agreements:
Remuneration of Dr Roger Aston (Executive Chairman - PharmAust Limited)
Term of the agreement – permanent and no specific term.
Base salary of $260,000 per year plus superannuation of 9.5% (2015:9.5%) of base salary.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to six (6) months base salary
and superannuation.
Remuneration of Robert Bishop (Executive Director - PharmAust Limited)
Term of the agreement – permanent and no specific term.
Base salary of $104,000 per year plus superannuation of 9.5%(2015:9.5%) of base salary.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to three (3) months base
salary and superannuation.
Remuneration of Professor David Morris (Non-Executive Director – PharmAust Limited) (Resigned on 27 October 2015)
Directors fee of $60,000 per annum plus superannuation of 9.5%(2015:9.5%).
Remuneration of Sam Wright (Non-Executive director and company secretary – PharmAust Limited)
Term of the agreement – permanent and no specific term.
Consultancy fee of $7,500 plus GST per month, payable in arrears.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to six (6) months consultancy
fee.
Remuneration of Colette Sims (Directors – Epichem Pty Ltd)(Resigned on 16 November 2016)
Base salary of $96,900 per year plus superannuation of 9.5% (2015:9.5%) of base salary
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to four (4) weeks base salary
and superannuation.
- 12 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Remuneration of Wayne Best (Non-Executive director – PharmAust Limited, Managing Director – Epichem Pty Ltd)
Base salary of $150,000 per year plus superannuation of 9.5% (2015:9.5%) of base salary
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to six (6) months base salary
and superannuation.
Bonus of up to a maximum of $30,000 in the event of the satisfaction of Bonus milestones for any one financial year that Epichem Pty
Ltd makes an after tax profit of:
-
-
-
-
$100,000 – bonus of $5,000; or
$200,000- bonus of $10,000; or
$350,000- bonus of $20,000; or
$500,000- bonus of $30,000.
Remuneration of John Horton (Director – Epichem Pty Ltd)
Consultancy fee of $10,000 per annum.
Remuneration of Rebecca McCrackan (Director – Epichem Pty Ltd)
Director fee of $4,800 per annum plus superannuation of 9.5% (2015:9.5%) of base salary.
Remuneration of Directors and Specified Executives
Names and positions of key management personnel(KMP) in office at any time during the financial year are:
Person
Dr Roger Aston
Robert Bishop
Professor David Morris
Sam Wright
Dr Wayne Best
Dr John Horton
Dr Colette Sims
Ms Rebecca McCrackan
Position
Executive Chairman
Executive Director
Non-Executive Director (resigned on 27th October 2015)
Non- Executive Director and Company Secretary
Non-Executive Director and Managing Director – Epichem Pty Ltd
Director – Epichem Pty Ltd
Director – Epichem Pty Ltd (Resigned on 16 November 2015)
Director – Epichem Pty Ltd (appointed on 11 April 2016)
Details of the nature and amount of each element of remuneration of each key management personnel for the financial year are
as follows:
2016
Short-term
Post-
employment
Share based
payment
Directors
Dr Roger Aston
Dr Wayne Best
Robert Bishop
Sam Wright
Professor David Morris*
Executives
Dr Colette Sims**
Dr John Horton
Rebecca McCrackan***
Salary
& Fees
$
260,000
150,000
104,000
90,000
25,000
-
10,000
900
639,900
Other
$
Superannuation
$
Options
$
Termination
benefits
$
Total
$
-
-
-
-
-
-
-
-
-
24,700
14,250
9,880
-
2,375
-
-
85
51,290
-
12,910
-
-
-
-
-
-
12,910
-
-
-
-
-
-
-
-
-
284,700
177,160
113,880
90,000
27,375
-
10,000
985
704,100
* Resigned on 27th October 2015
**Resigned on 16 November 2015
***Appointed on 13 April 2016
2015
Short-term
Post-
employment
Share based
payment
Directors
Dr Roger Aston
Dr Wayne Best *
Robert Bishop
Sam Wright
Professor David Morris
Executives
Dr Colette Sims
Dr John Horton
Salary
& Fees
$
260,000
188,000
104,000
90,000
60,000
126,230
10,000
838,230
Other
$
Superannuation
$
Options
$
Termination
benefits
$
Total
$
-
-
-
-
-
-
-
-
24,700
17,385
9,880
-
5,700
11,991
-
69,656
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
284,700
205,385
113,880
90,000
65,700
138,221
10,000
907,886
* Appointed on 24th October 2014.
- 13 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Additional disclosures relating to key management personnel
Option holding
The number options over ordinary shares in the company held during the financial year by each director and other members of
key management personnel of the consolidated entity, including their personally related parties, is set out below:
2016 -
Number
Balance
1 July 2015
Sam Wright
Roger Aston
No.
375,000
528,634
Robert Bishop
1,365,707
David Morris
528,634
Granted
as
Compen-
sation
No.
-
-
-
-
Wayne Best
John Horton
-
-
250,000
-
Options
Exercised
Net
Change
Other*
Balance
30 June
2016
Total
Vested
Total
Exercisable
Total
Unexercisable
No.
No.
No.
No.
No.
No.
-
-
-
-
-
-
(375,000)
(528,634)
(1,365,707)
(528,634)
-
-
-
-
-
-
-
-
-
-
250,000
250,000
-
-
-
-
-
-
-
-
-
Collette Sims
Rebecca
McCrackan
*The net change other column above includes those options that have been disposed or acquired by holders during the
year.
No other key management personnel held options in the Company.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
2016–
Number
Balance
1 July 2015
Share
consolidation
Received as
Compensation
Sam Wright
Roger Aston
Robert Bishop
David Morris
Wayne Best
John Horton
Collette Sims
Rebecca
McCrackan
No.
6,500,000
105,282,951
54,071,824
177,214,206
2,874,290
25,000
-
-
No.
(6,175,000)
(100,018,803)
(51,368,232)
(168,353,496)
(2,730,574)
(23,750)
-
No.
-
-
-
-
-
-
-
-
At date of
appointment
and/or
resignation
No.
-
-
-
-
-
-
-
-
Net Change
Other**
Balance
30 June 2016
No.
175,000
109,000
36,072
(8,860,710)
50,000
-
-
-
No.
500,000
5,373,148
2,739,664
-
193,716
1,250
-
-
**The net change other column above includes those shares that have been disposed or acquired by holders during the year.
Share-based compensation
Issue of shares
There were no shares issued to directors and other KMP as part of compensation during the year ended 30 June 2016.
Option
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
Vesting date and
exercisable date
Expiry date
Exercise price at grant date
Fair value
per option
27 October 2015
27 October 2015
3 September 2018
$0.16
$0.05164
There were no options over ordinary shares vested by directors and other KMP as part of compensation during the year ended 30
June 2016.
Options granted as part of remuneration
Wayne Best was granted 250,000 options during the year ended 30 June 2016 (2015: nil). There were no other options issued as part of
remuneration for the year ended 30 June 2016 and 30 June 2015.
There were options expired during the year as noted above.
- 14 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Other transactions with key management personnel and their related parties
There were no other transactions with key management personnel and their related parties during the year.
Additional information
The earnings of the consolidated entity for the five years to 30 June 2016 are summarised below:
2016
$
2015
$
2014
$
2013
$
2012
$
Sales revenue
EBITDA
EBIT
Loss after income tax
2,754,737
(4,076,414)
(3,927,256)
(3,927,256)
2,420,020
(1,844,390)
(1,925,091)
(1,925,091)
2,007,086
(1,261,822)
(1,317,853)
(1,317,853)
1,720,887
(432,586)
(514,883)
(514,883)
1,625,530
(4,161,980)
(4,260,420)
(4,260,420)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2016
2015
2014
2013
2012
Share price at financial year end ($)*
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
0.08
-
(0.60)
0.14
-
(0.13)
0.22
-
(0.1)
0.16
-
(0.09)
0.12
-
(0.93)
* Historical share price has been adjusted due to share consolidation in October 2015 for 20 to 1 basis.
Voting and comments made at the company's 2015 Annual General Meeting ('AGM')
At the 2015 AGM, 93% of the votes received supported the adoption of the remuneration report for the year ended 30 June
2015. The company did not receive any specific feedback at the AGM regarding its remuneration practices.
[END OF REMUNERATION REPORT]
- 15 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Annual Report Disclosure on Corporate Governance
PharmAust Limited is a drug discovery and development company. The Company has established, and continues to refine and
improve procedures to ensure a culture of good corporate governance exists and is respected across the consolidated entity.
The Company has a written policy designed to ensure compliance with ASX Listing Rules and all other regulatory requirements for
disclosures. Additionally the Company has adopted a policy designed to ensure procedures to implement the policy are suitable
and effective.
The Board wishes to acknowledge that nothing has come to its attention that would lead it to conclude that its current practices
and procedures are not appropriate for an organisation of the size and maturity of the Company. The Corporate Governance
Policy and the Company’s corporate governance practices is set out on the Company’s web site at www.pharmaust.com
Shares Issued on Exercise of Compensation Options
No options were exercised last financial year, this financial year or since.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included within
these financial statements.
Auditor
RSM Australia Partners 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.
Dr ROGER ASTON
Executive Chairman
Signed at Perth, Western Australia this 31st day of August 2016
- 16 -
For personal use only
RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
PHARMAUST LIMITED
Report on the Financial Report
We have audited the accompanying financial report of PharmAust Limited, which comprises the statement of
financial position as at 30 June 2016, statement of comprehensive income, statement of changes in equity and
statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies
and other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that is free from
material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with
International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance
about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001, which has been given to the
directors of PharmAust Limited, would be in the same terms if given to the directors as at the time of this auditor's
report.
Opinion
In our opinion:
(a) the financial report of PharmAust Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its
performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report contained within the directors’ report for the year ended 30 June 2016.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of PharmAust Limited for the year ended 30 June 2016 complies with
section 300A of the Corporations Act 2001.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2016
DAVID WALL
Partner
For personal use only RSM Australia Partners
8 St Georges Terrace Perth WA 6000
GPO Box R1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9111
www.rsm.com.au
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of PharmAust Limited for the year ended 30 June 2016, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(i)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii)
any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA
Dated: 31 August 2016
DAVID WALL
Partner
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING
RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent
accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.
RSM Australia Partners ABN 36 965 185 036
Liability limited by a scheme approved under Professional Standards Legislation
For personal use only 2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS’ DECLARATION
In accordance with a resolution of the Directors of PharmAust Limited, I state that:
1.
In the opinion of the directors:
(a)
the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the financial position of the consolidated entity as at 30 June 2016 and of its
performance, for the year ended on that date; and
complying with Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001;
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable;
(c)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 1;
2. This declaration has been made after receiving the declarations required to be made by the directors in accordance with
sections of 295A of the Corporations Act 2001 for the financial year ending 30 June 2016.
On behalf of the Board
Dr ROGER ASTON
Executive Chairman
Signed at Perth, Western Australia this 31st day of August 2016
- 20 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2016
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Depreciation expense
Finance costs
Impairment of assets
Research and development expenses
Administration expenses
NOTE
2
2
CONSOLIDATED
2016
$
2015
$
2,017,883
736,854
2,754,737
(234,376)
(1,777,447)
(109,232)
(39,927)
(2,071,651)
(702,040)
(1,747,320)
1,869,204
550,816
2,420,020
(207,780)
(2,180,341)
(77,146)
(3,555)
-
(629,147)
(1,247,142)
(Loss) before income tax expense
(3,927,256)
(1,925,091)
Income tax expense
(Loss) after income tax expense
Other comprehensive income
3a
-
-
(3,927,256)
(1,925,091)
-
-
Total comprehensive (loss) for the year
(3,927,256)
(1,925,091)
Basic and diluted loss per share (cents per share)
16
(0.60)
(0.13)
The accompanying notes form part of these financial statements.
- 21 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF FINANCIAL POSITION
As at 30 June 2016
CONSOLIDATED
NOTE
2016
$
2015
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
Financial assets
Inventory
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Intangible assets
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Provisions
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
4
5a
6
7
17
8
9
10
11
12
11
12
881,823
94,019
28,130
4,250
321,882
1,330,104
3,107,476
1,819,868
4,927,344
3,411,767
223,271
89,910
7,200
-
3,732,148
5,179,128
611,009
5,790,137
6,257,449
9,522,285
397,435
157,899
180,054
735,388
450,000
48,799
498,799
459,610
31,596
172,630
663,836
7,899
11,484
19,383
1,234,187
683,219
5,023,261
8,839,066
13
14
27
44,463,072
983,492
(40,423,303)
44,393,484
941,629
(36,496,047)
5,023,261
8,839,066
The accompanying notes form part of these financial statements.
- 22 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2016
Issued
Capital
$
Accumulated
Losses
$
Options
Reserve
$
Total Equity
$
As at 1 July 2014
Loss for the year
Total comprehensive (Ioss) for the year
Shares issued (net)
41,393,484
-
-
3,000,000
(34,570,956)
(1,925,091)
(1,925,091)
-
941,629
-
-
-
7,764,157
(1,925,091)
(1,925,091)
3,000,000
As at 30 June 2015
44,393,484
(36,496,047)
941,629
8,839,066
As at 1 July 2015
Loss for the year
Total comprehensive (Ioss) for the year
Shares issued (net)
Share based payment
As at 30 June 2016
44,393,484
-
-
69,588
-
44,463,072
(36,496,047)
(3,927,256)
(3,927,256)
-
-
(40,423,303)
941,629
-
-
-
41,863
983,492
8,839,066
(3,927,256)
(3,927,256)
69,588
41,863
5,023,261
The accompanying notes form part of these financial statements.
- 23 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF CASH FLOWS
For the year ended 30 June 2016
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Other income
Interest received
Interest and other costs of finance
Net cash used in operating activities
Cash Flows From Investing Activities
Payments for plant and equipment
Net cash used in investing activities
Cash Flows From Financing Activities
Proceeds from share issues (net)
Proceeds/Repayment of borrowing (net)
Net cash provided by financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the financial year
CONSOLIDATED
NOTE
2016
$
2015
$
2,147,135
(4,443,940)
700,030
36,824
(39,927)
(1,599,878)
1,744,177
(4,042,684)
502,122
48,694
(3,555)
(1,751,246)
20b
(1,499,720)
(1,499,720)
(109,732)
(109,732)
1,250
568,404
569,654
3,000,000
(31,578)
2,968,422
(2,529,944)
1,107,444
3,411,767
2,304,323
Cash at the end of the financial year
20a
881,823
3,411,767
The accompanying notes form an integral part of these financial statements.
- 24 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
These consolidated financial statements and notes represent those of PharmAust Limited and its Controlled Entities (the
“consolidated entity” or “group”).
The separate financial statements of the parent entity, PharmAust Limited, have not been presented within this financial report
as permitted by the Corporations Act 2001. Supplementary information about the parent entity is disclosed within this financial
statements.
1
SIGNIFICANT ACCOUNTING POLICIES
The financial statements are general purpose financial statements that have been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes
under Australian Accounting Standards.
Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has
concluded would result in financial statements containing relevant and reliable information about transactions, events and
conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply
with International Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the
preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on
historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets
and financial liabilities.
The financial report was authorised for issue on 31 August 2016 by the Directors of the Company.
Going Concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of normal
business activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the company and consolidated entity incurred a losses of $3,854,422 and $3,927,256
respectively and the consolidated entity had net cash outflows from operating and investing activities of $1,599,878 and
$1,499,720 respectively for the year ended 30 June 2016.
The Directors believe that it is reasonably foreseeable that the company and consolidated entity will continue as going
concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report after
consideration of the following factors:
The Company plans to issue additional shares in the next 12 months under the Corporation Act 2001. This strategy
has proven to be successful in the past; and
The Company has the ability to scale down its operations in order to curtail expenditure, in the event insufficient
cash is available to meet projected expenditure.
- 25 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of PharmAust Limited as at 30
June 2016 and the results of all subsidiaries for the year then ended. PharmAust Limited Limited and its subsidiaries together
are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and
other comprehensive income, statement of financial position and statement of changes in equity of the consolidated entity.
Losses incurred by the consolidated entity are attributed to the non-controlling interest in full, even if that results in a deficit
balance.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
(b) Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when
the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except
for:
● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor
taxable profits; or
● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the
timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for
the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is
probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against
current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority
on either the same taxable entity or different taxable entities which intend to settle simultaneously.
The parent and its wholly-owned Australian subsidiaries have formed an income tax consolidated group under the tax
consolidation regime. The head entity and each subsidiary in the tax consolidated group continue to account for their own
current and deferred tax amounts. The tax consolidated group has applied the 'separate taxpayer within group' approach
in determining the appropriate amount of taxes to allocate to members of the tax consolidated group.
- 26 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(b) Income tax(Cont.)
In addition to its own current and deferred tax amounts, the head entity also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from each subsidiary in the tax
consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the tax consolidated group. The tax funding arrangement ensures that the
intercompany charge equals the current tax liability or benefit of each tax consolidated group member, resulting in neither
a contribution by the head entity to the subsidiaries nor a distribution by the subsidiaries to the head entity.
(c) Plant and Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any
accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated
recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and
impairment losses are recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a
revalued asset.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be
received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to
their present values in determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period
in which they are incurred.
Depreciation
The depreciable amount of all plant and is depreciated on a straight line basis over their useful lives to the consolidated
entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Depreciation Rate
2.5-33%
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
(d) Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks
and benefits incidental to the ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the
end of the lease term.
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line
basis over the term of the lease.
- 27 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(e) Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale
of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at
fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition
less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference
between that initial amount and the maturity amount calculated using the effective interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments
and option pricing models.
The effective interest method is used to allocate interest income or interest expense over the relevant period and is
equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other
premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the
financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net
cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense
item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of Accounting Standards specifically applicable to financial instruments.
(i)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised
in profit or loss through the amortisation process and when the financial asset is derecognised.
(ii)
Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose
of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to
avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is
managed by key management personnel on a fair value basis in accordance with a documented risk
management or investment strategy. Such assets are subsequently measured at fair value with changes in
carrying amount being included in profit or loss.
(iii)
Financial liabilities
Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised
cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial
liability is derecognised.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been
impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence
of impairment as a result of one or more events (a “loss event”) having occurred, which has an impact on the estimated
future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is
considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative
decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of
debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications
that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that
correlate with defaults.
- 28 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(e ) Financial Instruments (cont.)
For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to
reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of
recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the
written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced
directly if no impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the
Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not
been renegotiated so that the loss events that have occurred are duly considered.
Derecognition
Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated
with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled or have expired.
The difference between the carrying amount of the financial liability extinguished or transferred to another party and the
fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
(f)
Foreign Currency Transactions and Balances
The financial statements are presented in Australian dollars, which is the group’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.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
(g) Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information including dividends received from
subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists,
an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the
asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount
over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in
accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant and
Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other
Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable
amount of the cash-generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet
available for use.
(h) Investments in Associates
Investments in associate companies are recognised in the financial statements by applying the equity method of
accounting.
(i) Employee Benefits
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
- 29 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1 SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(i) Employee Benefits (Cont.)
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 corporate bonds with terms to maturity and currency that match, as closely as possible, the
estimated future cash outflows.
Share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. 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.
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 consolidated entity 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 profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
(j) Provisions
Provisions are recognised when the consolidated entity has a present (legal or constructive) obligation as a result of a past
event, it is probable the consolidated entity will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation.
If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The
increase in the provision resulting from the passage of time is recognised as a finance cost.
(k) 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. For the statement of cash flows presentation purposes, cash
and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement
of financial position.
(l)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective
interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective
evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the
trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying
amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows
relating to short-term receivables are not discounted if the effect of discounting is immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment.
(m) Revenue
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of
financing and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The
difference between the amount initially recognised and the amount ultimately received is interest revenue.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks
and rewards of ownership of the goods and the cessation of all involvement in those goods.
- 30 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(m) Revenue (cont.)
Interest revenue is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax.
(n) Goods and services tax (‘GST”) and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
(o) Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable value on a 'first in first
out' basis. Cost comprises of direct materials and delivery costs, direct labour, import duties and other taxes, an appropriate
proportion of variable and fixed overhead expenditure based on normal operating capacity, and, where applicable,
transfers from cash flow hedging reserves in equity. Costs of purchased inventory are determined after deducting rebates
and discounts received or receivable.
Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of
rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
(p) 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.
(q) Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Pinnacle Listed Comprehensive
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.
(r) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial
period of time to prepare for their intended use or sale are added to the cost of those assets, until such time as the assets
are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(s)
Intangibles Assets
Intellectual property rights- three oncology technology platforms
Intellectual property rights are recognised at cost of acquisition less accumulated amortisation and any impairment losses.
For intellectual property rights not yet in use, they are tested for impairment annually or more frequently if events or changes
in circumstances indicate that they might be impaired, and are carried at cost less accumulated impairment losses.
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are
capitalised only when technical feasibility studies identify that the project is expected to deliver future economic benefits
and these benefits can be measured reliably.
Intangible assets have a finite useful life and are amortised on a systematic basis based on the future economic benefits
over the useful life of the project following commercialisation of the assets.
- 31 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
1. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(t) 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.
Assets and liabilities measured at fair value are classified, into three levels, using a fair value hierarchy that reflects the
significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and
transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair
value measurement.
For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not
available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and
reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is
undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where
applicable, with external sources of data.
(u) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(v) 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.
(w) 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 normal
operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting
period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period. All other assets are classified as non-current.
A liability is classified as current when: it is either expected to be settled in 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.
(x) Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted.
The amounts are unsecured and are usually paid within 30 days of recognition.
(y) Borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance
cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in shareholders
equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is not
remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
(z) New, revised or amending accounting standards and interpretations adopted
- 32 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting
period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
(aa) Business Combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments
or other assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued
or liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the
acquiree. For each business combination, the non-controlling interest in the acquiree is measured at either fair value or at
the proportionate share of the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or
loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic conditions, the
consolidated entity's operating or accounting policies and other pertinent conditions in existence at the acquisition-date.
Where the business combination is achieved in stages, the consolidated entity remeasures its previously held equity interest
in the acquiree at the acquisition-date fair value and the difference between the fair value and the previous carrying
amount is recognised in profit or loss.
Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. Subsequent
changes in the fair value of the contingent consideration classified as an asset or liability is recognised in profit or loss.
Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity.
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period
ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
(ab) Critical Accounting Estimates and Judgements
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 consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using 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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible
assets at each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that
may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair
value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions.
Provision for impairment of receivables
The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision
is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and
specific knowledge of the individual debtor financial position.
- 33 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
(ab) Critical Accounting Estimates and Judgements (Cont’d)
Estimation of useful lives of assets
The consolidated entity determines the estimated useful lives and related depreciation and amortisation charges for its
property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of
technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives
are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold
will be written off or written down.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been taken into account.
Other finite life intangible assets not yet in use
The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate impairment,
whether other finite life intangible assets have suffered any impairment, in accordance with the accounting policy stated
in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations.
These calculations require the use of assumptions, including estimated discount rates based on the current cost of capital
and growth rates of the estimated future cash flows.
- 34 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
2
REVENUE
Sales
OTHER INCOME
Interest received
Other revenue
3
INCOME TAX EXPENSE
3a
No income tax is payable as a tax loss has been incurred for income tax purposes.
Loss before income tax
Prima facie tax benefit at 30% (2015:30%)
Tax effect of:
- Other non-allowable items
- Deferred tax asset not brought to account
3b
Deferred tax asset
CONSOLIDATED
2016
$
2015
$
2,017,883
1,869,204
36,824
700,030
736,854
48,694
502,122
550,816
(3,927,256)
(1,925,091)
(1,178,177)
(577,527)
390,707
787,470
-
203,745
373,782
-
The potential deferred tax assets have not been recognised in the statement of financial position because their recovery is
not considered probable.
-
Tax losses at 30% tax rate (not recognised)
6,708,585
6,549,019
PharmAust Limited and its wholly-owned Australian subsidiary have formed an income tax consolidated group under the Tax
Consolidation Regime. PharmAust Limited is responsible for recognising the current and deferred tax assets and liabilities for
the tax consolidated group. The tax consolidated group has entered a tax sharing agreement whereby each company in
the consolidated entity contributes to the income tax payable in proportion to their contribution to the net profit before tax
of the tax consolidated group.
4
CASH AND CASH EQUIVALENTS
Cash at bank
881,823
3,411,767
- 35 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
5 TRADE AND OTHER RECEIVABLES
5a
CURRENT
Trade receivables
Less: provision for doubtful debts
CONSOLIDATED
2016
$
2015
$
94,019
-
94,019
223,271
-
223,271
Trade receivables: Payment terms are 30 days from the date of recognition.
5b Provision for impairment of receivables
Current trade and term receivables are non-interest bearing and generally on 30-day terms. Non-current trade and term
receivables are assessed for recoverability based on the underlying terms of the contract. A provision for impairment is
recognised when there is objective evidence that an individual trade or term receivable is impaired.
Movement in provision:
Balance brought forward
Provision provided for during the year
Bad debts written off
Balance carried forward
5c Past due but not impaired
-
-
-
-
(5,815)
-
5,815
-
As of 30 June 2016, trade receivables of $33,742 (2015:$ 28,398) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is as
follows:
31 to 60 days
61 days and above
13,585
20,157
33,742
24,425
3,973
28,398
Based on the credit history of these other classes, it is expected that these amounts will be received when due. The Group
does not hold any collateral in relation to these receivables.
5d Fair value and credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties
other than those receivables specifically provided for and mentioned within Note 5. The class of assets described as “trade
and other receivables” is considered to be the main source of credit risk related to the Group.
6
OTHER CURRENT ASSETS
GST receivables
Bond
Prepayments
7 FINANCIAL ASSETS
Financial assets held for trading
Shares in listed securities - fair value
7a Movements in Carrying Amounts
Carrying amount at beginning of the year
Movement in fair value
Carrying amount at end of the year
Refer to Note 18 for further information on fair value measurement.
- 36 -
23,840
4,290
-
28,130
64,210
4,291
21,409
89,910
4,250
7,200
7,200
(2,950)
4,250
7,000
200
7,200
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
8. Intangible Assets
Intellectual property rights – at cost
Amortisation
Accumulated impairment losses
Movements in Carrying Amounts:
Balance at the beginning of the year
Addition
Impairment
Balance at the end of the year
9. PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Movements in Carrying Amounts:
Carrying amount at beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at end of the year
10 TRADE AND OTHER PAYABLES
Trade creditors and accruals
Payment terms are 30 days from receipt of goods and/or services rendered.
11
BORROWINGS
CURRENT
Lease liability*
EFIC Loan**
NON CURRENT
Lease liability*
EFIC Loan**
CONSOLIDATED
2016
$
2015
$
3,107,476
-
(2,071,652)
3,107,476
5,179,128
-
(2,071,652)
3,107,476
5,179,128
-
-
5,179,128
5,179,128
-
-
5,179,128
2,400,573
(580,705)
1,819,868
1,236,021
(625,012)
611,009
611,009
1,499,720
(160,487)
(130,374)
1,819,868
578,423
109,732
-
(77,146)
611,009
397,435
459,610
7,899
150,000
157,899
-
450,000
450,000
31,596
-
31,596
7,899
-
7,899
Terms and conditions:
*The finance lease liability is secured. Interest is charged at 11.25%p.a (2015: 11.25%).
** The EFIC Loan liability has a variable interest rate charged at the AFMA Bank Bill Average Bid Rate fix + 5% margin. At 30
June 2016 this rate was 6.99%.
Financing arrangements
The consolidated entity entered into a loan agreement to gain access to a loan facility of $750,000.
Interests: 3 month AFMA Bank Bill Average Bid Rate fix plus 5% margin.
Security: First charge over the new laboratory equipment.
Loan facility:
Total facility limit
Amount utilised
Total unused facility at 30 June
600,000
(600,000)
750,000
-
-
750,000
- 37 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
12
PROVISIONS
CURRENT
Employee entitlements
NON CURRENT
Employee entitlements
CONSOLIDATED
2016
$
2015
$
180,054
172,630
48,799
11,484
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire
amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. However,
based on past experience, the consolidated entity does not expect all employees to take the full amount of accrued leave or
require payment within the next 12 months.
The following amounts reflect leave that is not expected to be taken within the next 12 months:
Employee benefits obligation expected to be settled after 12 months
90,027
86,315
13
ISSUED CAPITAL
Issued and paid up ordinary shares
44,463,072
44,393,484
13a Movement in fully paid ordinary shares
Ordinary Shares
At 1 July
Share Issued
2016
2015
Number of shares
2016
$
2015
$
1,840,006,606
1,440,006,606
44,393,484
41,393,484
562,500
400,000,000
69,588
3,000,000
Share Consolidation (20 to 1 basis)
(1,748,065,461)
-
-
-
At 30 June
92,503,645
1,840,006,606
44,463,072
44,393,484
13b
Terms and Conditions
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at shareholders’ meetings.
In the event of winding up the Company, ordinary shares rank after all other shareholders and creditors and are fully entitled
to any proceeds from liquidation.
Ordinary shares issued as a result of the exercise of options, will rank equally and on the same terms and conditions as all
other shareholders.
13c Share options
At 30 June 2016, there were 675,000 (2015: 139,500,000) unissued ordinary shares under options.
- 38 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
13
ISSUED CAPITAL (Cont.)
13d Capital Management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders
with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing its financial risks and adjusting its capital structure in
response to changes in these risks and in the market. These responses include the management of debt levels, distributions
to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year. The gearing ratios for the year ended 30 June 2016 and 30 June 2015 are as follows:
Total borrowings
10,11
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
14
RESERVES
Options reserve
Movement in options issued as follow:
2016
At 1 July
Options Expired
Options Issued
Option Consolidation (20 to 1 basis)
At 30 June
2015
At 1 July
At 30 June
CONSOLIDATED
2016
$
2015
$
1,005,334
(881,823)
123,511
5,023,262
5,146,773
499,105
(3,411,767)
(2,912,662)
8,839,066
5,926,404
2.4%
-
983,492
941,629
No.
139,500,000
(139,500,000)
8,750,000
(8,075,000)
675,000
Weighted
Average
Exercise Price
$
0.02
-
0.16
-
0.16
No.
139,500,000
139,500,000
Weighted
Average
Exercise Price
$
0.02
0.02
- 39 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
14
RESERVES (Cont.)
All the options are exercisable as at 30 June 2016 and 30 June 2015.
As at the date of exercise, the weighted average share price of options exercised during the year was $0.16
(2015:$0.02).
The weighted average remaining contractual life of options outstanding at year-end was 2.18 years (2015: 0.16 years).
The exercise price of outstanding shares at the end of the reporting period was $0.16 (2015: $0.02).
CONSOLIDATED
2016
$
2015
$
15 RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions which are no more favourable than
those available to other parties. There were no related party transactions other than those transactions identified above and
key management personnel remuneration.
16
EARNINGS PER SHARE
Net (loss) attributable to members of the Company
(3,927,256)
(1,925,091)
Weighted average number of ordinary shares outstanding during
the year used in calculating basic earnings per share.
No.
No.
657,406,828
1,517,091,538
16a
Basic Earnings per Share
Basic earnings per share is determined by dividing the loss after income tax attributable to members of the Company by the
weighted average number of ordinary shares outstanding during the financial period, adjusted for any bonus elements in
ordinary shares issued during the year.
16b
Diluted Earnings per Share
Diluted earnings per share is the same as basic earnings per share as there were no options on issue which would be
potential ordinary shares.
17 Inventories
Finished Goods
321,882
321,882
-
-
- 40 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
18
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term
investments, accounts receivable and payable, loans to and from subsidiaries, borrowings and leases.
The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting
policies to these financial statements, are as follows:
Financial assets
Cash and cash equivalents
Financial assets at fair value through profit or loss:
– held for trading
Loans and receivables (excluding GST)
Total financial assets
Financial liabilities
Financial liabilities at amortised cost:
–
trade and other payables
– borrowings
Total financial liabilities
Specific Financial Risk Exposures and Management
Note
Consolidated
2016
$
2015
$
4
7
5a,6
10
11
881,823
3,411,767
4,250
98,310
7,200
248,971
984,383
3,667,938
397,435
607,899
459,610
39,495
1,005,334
499,105
The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk and foreign exchange
risk. Other minor risks are either summarised below or disclosed at Note 5 in the case of credit risk and Note 13 in the case of
capital risk management. The Board reviews and agrees policies for managing each of these risks.
Cash Flow Interest Rate Risk
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s short-term deposits with a
floating interest rate. These financial assets with variable rates expose the Group to cash flow interest rate risk. All other
financial assets and liabilities in the form of receivables and payables are non-interest bearing. The Group does not engage
in any hedging or derivative transactions to manage interest rate risk.
The following tables set out the carrying amount by maturity of the Group’s exposure to interest rate risk and the effective
weighted average interest rate for each class of these financial instruments.
The Group has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the Group
does not have a formal policy in place to mitigate such risks.
2016
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Net Financial
Assets/(Liabilities)
Weighted
Average
Interest
Rate
1.52%
-
-
-
7.05%
Fixed
Interest
Rate
Within 1-5
Years
$
-
-
-
-
-
-
-
-
Floating
Interest
Rate
$
Fixed Interest
Rate
Within 1 Year
$
881,823
-
-
881,823
-
-
-
-
-
(600,000)
(600,000)
-
(7,899)
(7,899)
281,823
(7,899)
- 41 -
Non-Interest
Bearing
$
-
98,310
4,250
102,560
Total
$
881,823
98,310
4,250
984,383
(397,435)
-
(397,435)
(397,435)
(607,899)
(1,005,334)
(294,875)
(20,951)
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
18
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
Cash Flow Interest Rate Risk (Cont.)
2015
Weighted
Average
Interest
Rate
2.38%
-
-
-
11.25%
Floating
Interest
Rate
$
Fixed Interest
Rate
Within 1 Year
$
897,896
-
-
897,896
2,513,871
-
-
2,513,871
Fixed
Interest
Rate
Within 1-5
Years
$
Non-Interest
Bearing
$
-
-
-
-
-
248,971
7,200
256,171
Total
$
3,411,767
248,971
7,200
3,667,938
-
-
-
-
(31,596)
(31,596)
-
(7,899)
(7,899)
(459,610)
-
(459,610)
(459,610)
(39,495)
(499,105)
897,896
2,482,275
(7,899)
(203,439)
3,168,833
Financial Assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Net Financial
Assets/(Liabilities)
Interest rate sensitivity analysis
At 30 June 2016, if interest rates had changed by 100 basis points during the entire year with all other variables held constant,
profit for the year and equity would have been $2,173 (2015:$ 8,979) lower/higher, mainly as a result of lower/higher interest
income from cash and cash equivalents.
Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are impacted resulting
in a decrease or increase in overall income.
Liquidity risk
The Group manages liquidity risk by maintaining sufficient cash reserves and marketable securities and through the continuous
monitoring of budgeted and actual cash flows.
Contracted maturities
Payables
- within 1 year
Borrowings
- within 1 year
Price risk
The Group is not exposed to price risk.
CONSOLIDATED
20155$
2016
$
397,435
459,610
157,899
31,596
- 42 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
18
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
Foreign exchange risk
The Group is exposed to foreign exchange rate arising from various currency exposures. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Group’s
functional currency.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
USD
$
2016
EUR
$
2015
GBP
$
USD
$
EUR
$
5,680
694
GBP
$
-
-
Trade receivables
Trade payables
8,081
6,157
28,421
716
815
-
121,738
5,964
Foreign currency risk sensitivity analysis
At 30 June, the effect on profit and equity as a result of changes in the value of the Australian Dollar to the foreign
currencies, with all other variables remaining constant is as follows:
2016
Change in profit and equity with a +/-
10% in AUD to
EUR
$
GBP
$
USD
$
2015
Change in profit and equity with a +/-
10% in AUD to
USD
$
EUR
$
GBP
$
-
-
Trade receivables
Trade payables
Net fair values
771
588
2,713
68
78
-
11,620
569
542
66
For assets and other liabilities the net fair value approximates their carrying value. The Group has no financial assets where
the carrying amount exceeds net fair values at reporting date.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement
of comprehensive income and in the notes to the financial statements.
Financial instruments at fair value
The financial instruments recognised at fair value in the statement of financial position have been analysed and classified
using the fair value hierarchy reflecting the significance of the inputs used in making the measurements. The fair value
hierarchy consists of the following levels:
-
- inputs other than quoted prices included with Level 1 that are observable for the asset or liability, either directly (as
quoted prices in active markets for identical assets and liabilities (Level 1);
prices) or indirectly (derived from prices) (Level 2); and
- inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
2016
Financial assets held for trading
2015
Financial assets held for trading
19
INVESTMENT IN CONTROLLED ENTITIES
Parent Entity:
PharmAust Limited
Name of Controlled Entity:
Epichem Pty Ltd
Pitney Pharmaceuticals Pty Ltd
LEVEL 1
LEVEL 2
LEVEL 3
$
$
$
4,250
4,250
7,000
7,000
-
-
-
-
TOTAL
$
4,250
4,250
7,000
7,000
-
-
-
-
COUNTRY OF
CORPORATION
CLASS OF SHARES
EQUITY HOLDING
2016
%
EQUITY HOLDING
2015
%
Australia
-
Australia
Australia
Ordinary
Ordinary
-
100
100
-
100
100
- 43 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
20
NOTES TO THE STATEMENT OF CASH FLOWS
20a
Reconciliation of Cash
Cash at bank
20b
Reconciliation of net cash used in operating activities to loss after
income tax
CONSOLIDATED
2016
$
2015
$
881,823
3,411,767
Loss after income tax
(3,927,256)
(1,925,091)
Write down of intangible assets
Loss on disposal of fixed assets
Depreciation
Depreciation capitalised into inventories
Provision for doubtful debt
Unrealised loss/(gain) on financial assets
Share Based Payment
Movement in assets and liabilities:
Inventory
Receivables
Other assets
Payables
Provisions
2,071,652
160,493
109,232
21,138
-
-
110,201
(321,882)
129,252
64,729
(62,175)
44,738
-
-
77,146
-
(18)
(200)
-
-
(125,025)
(47,397)
229,174
40,165
Net cash used in operating activities
(1,599,878)
(1,751,246)
20c Non-cash Financing and Investing Activities
i. The consolidated entity acquired plant and equipment with an aggregate value of Nil (2015: $nil) by means of finance
leases. These acquisitions are not reflected in the statement of cash flows.
- 44 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
21
SHARE BASED PAYMENTS
Share granted as share based payments are as follows:
Grant Date
4 December 2015
Purpose
Service provided to the
company
2016
2015
Number
500,000
Number
-
The weighted average fair value of those equity instruments was determined by reference to the market price which was
$0.14 (2015: nil).
In 2015, there were no share based payments transaction.
Options granted as share based payments are as follows:
2015
Grant date
Expiry date
Exercise
price
Number
3/9/2015
27/10/2015
3/9/2018
3/9/2018
$0.16
$0.16
425,000
250,000
675,000
* The options are issued as part of the consideration for acquisition of Pitney Pharmaceuticals Pty Ltd.
**The options are issued to Peloton Capital Pty Ltd as part of corporate advisory service provided.
The fair values were calculated using the Black-Scholes option pricing model applying the following input:
Share price
Exercise
Expected
Dividend
Risk-free
Fair value
Options
425,000
250,000
at grant
date
$0.12
$0.10
price
volatility
yield
interest rate
at grant date
$0.16
$0.16
100%
100%
0%
0%
1.85%
1.85%
$0.06817
$0.05164
22
KEY MANAGEMENT PERSONNEL
22a Remuneration of Key Management Personnel
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the consolidated entity’s key management personnel for the year ended 30 June 2015 and 30 June 2015.
The totals of remuneration paid to key management personnel of the consolidated entity during the year are as follows:
Short term employee benefits
Post-employment benefits
Share based payment
- 45 -
CONSOLIDATED
2016
$
2015
$
639,900
51,290
12,910
704,100
838,230
69,656
-
907,886
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
23 COMMITMENTS
23a Corporate advisory fees
- Not later than 12 months
- Between 12 months and 5 years
Minimum payments
23b Office lease commitments
CONSOLIDATED
2016
$
2015
$
43,092
-
43,092
-
-
-
Non-cancellable operating leases contracted for but not recognised in the financial statements:
Payable – minimum lease payments
- Not later than 12 months
- Between 12 months and 5 years
164,500
530,000
536,257
1,230,757
140,450
530,000
651,459
1,321,909
- Later than 5 years
Minimum lease payments
24 SEGMENT REPORTING
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Directors (chief
operating decision makers) in assessing performance and determining the allocation of resources.
Descriptions of segments
i.
ii.
Corporate
The corporate segment covers all the corporate overhead expenses.
Pharmaceutical
The pharmaceutical segment provides products and services in synthetic and medicinal chemistry to the drug
discovery and pharmaceutical industries.
Basis of accounting for purposes of reporting by operating segments
a.
Accounting policies adopted
All amounts reported to the Directors, being the chief decision makers with respect to operating segments, are
determined in accordance with accounting policies that are consistent to those adopted in these financial
statements.
b.
Intersegment transactions
There are intersegment sales and purchase within the consolidated entity.
Intersegment loans payable and receivable are initially recognised at the consideration received/to be received net
of transaction costs.
c.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment that receives majority
economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of
their nature and physical location.
d.
Segment liabilities
Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the
operations of the segment.
- 46 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
24 SEGMENT REPORTING (Cont.)
The consolidated entity operates in three business segments as disclosed below:
i)
Segment Performance
Consolidated
2016
Revenue
External sales
Other external revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Total revenue per statement of
comprehensive income
Results
Segment result from continuing
operations before tax
Consolidated
2015
Revenue
External sales
Other external revenue
Inter-segment sales
Total segment revenue
Inter-segment elimination
Total revenue per statement of
comprehensive income
Results
Segment result from continuing
operations before tax
Corporate
Pharmaceutical
$
$
Total
$
-
540,944
-
540,944
2,017,883
195,909
111,184
2,324,976
2,017,883
736,853
111,184
2,865,920
(111,184)
2,754,736
(3,854,422)
(72,833)
(3,927,255)
Corporate
Pharmaceutical
$
$
Total
$
-
318,872
-
318,872
1,869,204
231,944
46,415
2,147,563
1,869,204
550,816
46,415
2,466,435
(46,415)
2,420,020
(1,917,693)
(7,398)
(1,925,091)
- 47 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
24 SEGMENT REPORTING (Cont.)
ii) Segment assets and liabilities
Consolidated
2016
Segment assets
Segment assets
Total assets of the consolidated entity:
Segment liabilities
Segment operating liabilities
Total liabilities of the consolidated entity:
Consolidated
2015
Segment assets
Segment assets
Total assets of the consolidated entity:
Segment liabilities
Segment operating liabilities
Total liabilities of the consolidated entity:
ii) Revenue by geographical region
Corporate
$
Pharmaceutical
$
Total
$
791,415
791,415
5,466,034
5,466,034
6,257,449
6,257,449
(191,546)
(191,546)
(1,042,641)
(1,234,187)
(1,042,641)
(1,234,187)
Corporate
$
Pharmaceutical
$
Total
$
2,914,168
2,914,168
6,608,117
6,608,117
9,522,285
9,522,285
(330,711)
(330,711)
(352,508)
(352,508)
(683,219)
(683,219)
Revenue by geographical region
Revenue attributable to external customers is disclosed
below, based on the location of the external customer:
Switzerland
Australia
Others
Total revenue
Assets by geographical region
The location of segment assets by geographical location of
the assets is disclosed below:
Australia
Total assets
Major customers
CONSOLIDATED
2016
$
2015
$
1,163,442
1,292,093
299,202
2,754,737
931,538
1,228,137
260,345
2,420,020
6,257,449
6,257,449
9,522,285
9,522,285
The consolidated entity has a number or customers to which it provides both products and services. The consolidated
entity supplies a single external customer within the pharmaceutical segment who accounts for 41% of external
revenue (2015: 72%). The next most significant customer accounts for 11% (2015: 8%).
- 48 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
25
CONTINGENT LIABILITIES
The consolidated entity has the following contingent liabilities at reporting date:
Issue of additional shares
As part of Share Sale Agreement to acquire Pitney Pharmaceuticals Pty Ltd, the consolidated entity will issue additional shares
of 2.5 million (post consolidation of 20 to 1) each to the seller upon meeting the three milestones.
The three milestones are:
Milestone 1 - One of the consolidated entity’s products being granted investigational new drug (IND) status from the US
Food and Drug Administration and the Company receiving an IND number issued by the US Food and Drug Administration
within 5 years of the Settlement Date and provided this is no later than 31 October 2018;
Milestone 2 - Commencement of treatment of the first patient under a Phase II Trial with the product Albendazole within 5
years of the Settlement Date and provided this is no later than 31 October 2018; and
Milestone 3 - Commencement of treatment of the first patient under a Phase II Trial using the product Monepantel within 5
years of the Settlement Date and provided this is no later than 31 October 2018.
Capital raising costs
The consolidated entity signed an agreement with supplier for potential capital raising with the following fees payable upon
certain milestones as noted below.
USD100,000 of consolidated entity’s shares upon successfully raising of USD3 million; and
USD200,000 of consolidated entity’s shares upon successfully raising of USD3 to 10 million.
Other than the above, there were no other material contingent liabilities or contingent assets.
26 PARENT INFORMATION
Statement of Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non -current liabilities
Total liabilities
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Statement of comprehensive income
(Loss) for the year
Other comprehensive income
Total comprehensive loss for the year
Guarantees
2016
$
2015
$
4,226,048
733,616
4,959,664
8,413,567
385,003
8,798,570
221,698
234,063
455,761
337,632
214,063
551,695
44,463,072
983,492
(40,942,661)
4,503,903
44,393,484
941,629
(37,088,238)
8,246,875
(3,854,422)
-
(3,854,422)
(1,917,693)
-
(1,917,693)
PharmAust Limited is a guarantor of a debt facility for its fully owned subsidiary during the year as disclosed in Note 11.
Other Commitments and Contingencies
PharmAust Limited has no commitments to acquire property, plant and equipment and has no contingent liabilities other
than disclosed in Note 25.
- 49 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
CONSOLIDATED
2016
$
2015
$
27
EQUITY- ACCUMULATED LOSSES
Accumulated losses at beginning of the financial year
(Loss)after income tax for the year
Accumulated losses at the end of the financial year
(36,496,047)
(3,927,256)
(40,423,303)
(34,570,956)
(1,925,091)
(36,496,047)
28
EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any significant events since the end of the reporting period.
29 AUDITOR’S REMUNERATION
Remuneration of RSM Australia Partners as auditor for:
- auditing or reviewing the financial report
- taxation services
65,000
16,100
81,100
60,000
27,650
87,650
30 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET MANDATORY OR EARLY ADOPTED
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 30 June 2016.
The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations,
most relevant to the consolidated entity, 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 consolidated entity will adopt this standard from 1 July 2018 but the impact of its adoption is yet to be
assessed by the consolidated entity.
- 50 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2016
30
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET MANDATORY OR EARLY ADOPTED (cont’d)
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 implied) 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 judgments 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 consolidated entity will adopt this standard from 1 July 2018 but the
impact of its adoption is yet to be assessed by the consolidated entity.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured as the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to
profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal
or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for
the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in
finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher
when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in
profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated
into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor
accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will
adopt this standard from 1 July 2019 but the impact of its adoption is yet to be assessed by the consolidated entity.
- 51 -
For personal use only
2016 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
SHAREHOLDER INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing Rules, and not disclosed elsewhere in this report.
SHAREHOLDINGS
At the date of this report two shareholders had lodged substantial shareholder notices with the Company.
a) Prof Morris is a substantial shareholder holding a relevant interest in 6,975,720 shares representing 7.54% of voting power.
b) Dr Aston is a substantial shareholder holding a relevant interest in 5,214,148 shares representing 5.64% of voting power.
CLASS OF SHARES AND VOTING RIGHTS
The voting rights attached to the Fully Paid Ordinary shares of the Company are:
(a)
at a meeting of members or classes of members each member entitled to vote may vote
(b)
in person or by proxy or by attorney; and
on a show of hands every person present who is a member has one vote, and on a poll
every person present in person or by proxy or attorney has one vote for each ordinary share held.
There are no voting rights attached to any Options on issue.
ORDINARY FULLY PAID SHARES as at 29 August 2016
There is no current on-market buy back taking place.
During the reporting period the Company used its cash and assets in a manner consistent with its business objectives.
TWENTY LARGEST SHAREHOLDERS (as at 29 Aug 2016)
Rank
Name
Units
% of Units
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
PROFESSOR DAVID LAWSON MORRIS
DR ROGER ASTON
PERSHING AUSTRALIA NOMINEES PTY LTD
MYALL RESOURCES PTY LTD
ONMELL PTY LTD
ZACHARIAH INVESTMENTS PTY LTD
LONGBOW CROFT CAPITAL PTY LIMITED
OMNIOFFICES PTY LTD
DR PAUL ANTHONY PORTER + DR TI-WAN NG
ABN AMRO CLEARING SYDNEY NOMINEES
MR GRAHAM JAMES DARCY
MR SAMUEL KAH TECK NG
MR ZHONGSHI WU
MR GERALD JAMES VAN BLOMMESTEIN
MR GREGORY PAUL YEATMAN
MR MICHAEL PHILIP EASTERBROOK
GRANDLODGE PTY LTD
MR MARK WAYNE BRADFIELD
DEPOFO PTY LTD
PLANE SAILING TRAILS PTY LTD
6,975,720
5,214,148
4,891,242
4,490,000
2,877,803
2,765,000
2,628,592
2,235,616
1,731,705
1,721,748
1,500,000
1,255,572
1,250,000
1,186,786
1,050,000
1,000,000
955,414
680,000
637,708
630,140
7.54
5.64
5.29
4.85
3.11
2.99
2.84
2.42
1.87
1.86
1.62
1.36
1.35
1.28
1.14
1.08
1.03
0.74
0.69
0.68
Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)
Total Remaining Holders Balance
45,677,194
46,826,451
49.38
50.62
- 52 -
For personal use only