ABN 35 094 006 023
Annual Report
2018
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
CONTENTS
Corporate Directory
Directors' Report
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
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2018 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
2 The Esplanade
Perth, Western Australia 6000
SOLICITORS
Fairweather Corporate Lawyers
595 Stirling Highway
Cottesloe, Western Australia 6011
STOCK EXCHANGE
Australian Securities Exchange
Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
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DIRECTORS’ REPORT
Your Directors present their report on the Company and the entities it controlled for the financial year ended 30 June 2018.
Directors
The following persons held office as directors of PharmAust Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Dr Roger Aston
Mr Robert Bishop
Dr Wayne Best
Mr Sam Wright
Executive Chairman
Executive Director
Non-Executive Director
Non-Executive Director
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 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 2018 was a loss, after income tax expense, of $2,521,679 (2017: loss of
$1,343,614).
Financial Position
The net assets of the consolidated entity were $7,138,218 as at 30 June 2018 (2017: $6,915,047).
Dividends
Since the end of the financial year, no dividend has been paid, declared or recommended.
Review of Operations
PITNEY PHARMACEUTICALS PTY LIMITED – 100% OWNED SUBSIDIARY
During the past 12 months the Company’s focus has been primarily directed towards three Research and Development Targets
with its lead product MPL in cancer therapy. These three targets are:
1.
to undertake a “First Line Therapy” clinical trial in canines with naturally occurring cancer to determine the safety and
value of MPL as a cancer therapy, and
2.
to identify a formula that can provide both palatable and high dose MPL tablet for clinical development
3. Using the new formula, finalise Phase I and II Clinical Trial Protocols suitable for testing the anticancer activity of MPL in
canines with cancer
All three of the above goals have been successfully achieved.
Results from the First Line Clinical Trial in Canines with Naturally Occurring Cancer
The first line therapy clinical trial in canines with B-cell lymphoma was successfully completed during the 2017-2018 calendar year.
This trial was undertaken using gelatin encapsulated MPL liquid. The use of MPL liquid meant that only sub-optimal doses could be
tested. However, the trial confirmed MPL’s presumed anticancer activity and has provided PharmAust with full confidence to
explore this potential in more formal clinical studies. The trial showed that:
•
•
•
•
•
•
•
•
for the first time, inhibition of the mTOR signaling pathway is associated with anticancer efficacy in dogs with naturally
occurring cancers,
six out of seven dogs administered gelatin encapsulated MPL liquid achieved stable disease,
six out of seven dogs administered gelatin encapsulated MPL liquid achieved reductions in tumour size,
stable disease and reductions in tumour size were accompanied by a high MPL safety profile,
administration of MPL was associated with reductions in PharmAust’s identified tumour marker,
due to poor palatability and a relatively low permissible dose, it was confirmed that MPL liquid is not an ideal formula for
effectively administering MPL to canines with cancer,
reformulation is required to realise MPL’s full anticancer potential, and
progression to formal Phase I and Phase II clinical trials using reformulated MPL is warranted.
Successful Tablet Reformulation
In May 2018 PharmAust announced that it had successfully reformulated monepantel into a tablet. This tablet will replace MPL
liquid for use in the upcoming formal Phase I and Phase II clinical trials. In collaboration with BRI Pharmaceutical Research and
AVISTA Pharma Solutions, PharmAust showed that a micronised tablet-based formulation was superior to MPL liquid in delivering
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
monepantel at high doses suitable for taking into dose escalation clinical studies in canines. Since this time, and in further
collaboration with BRI Pharmaceutical Research and Catalent Inc., PharmAust has optimised the presentation of the tablet so that
it is now suitable for taking into Phase II clinical trials and coating with taste enhancers.
Finalisation of the Formal Canine Clinical Phase I and II Protocols
PharmAust has completed development of its Phase I and Phase II clinical trial study protocol for the use of MPL as an anticancer
agent in canines with naturally occurring cancers. PharmAust has included the use of the new tablet in the study designs as well
as identified cancer targets of interest, received ethics approvals from relevant authorities and recruited veterinarians willing to
participate in these trials.
Research and Development Targets 2018-2019
During the next 12 months, the Company’s focus will be aimed at:
•
•
•
•
•
•
•
further examining the mechanism of action of MPL upon cancer cells with the newly commenced collaboration with Dr
Doug Fairlie at the Olivier Newton John Cancer Centre,
validating preliminary studies demonstrating activity of MPL upon neurodegenerative diseases such as Parkinson’s
Disease,
conducting scale up manufacture of the tablets formulated for use in canines with cancer to cGMP quality
performing optimization studies specifically for palatability and dosing for humans with cancer,
determining the pharmacokinetic parameters, dietary enhancements and safety of the newly formulated tablet in both
canines and humans in Phase I trials,
undertaking Phase II trials for efficacy in canines with the new tablet and in accordance with the newly signed option
agreement with Elanco, and
identifying Clinical Centers prepared to evaluate the new MPL tablet in humans in Phase I and II trials, as a follow on from
the Phase I clinical trial undertaken at the Royal Adelaide Hospital in 2015.
Preparations for the trials in canines with cancer are now underway with tablet prototype finalisation, preliminary pharmacokinetics
testing in canines, scale-up tablet manufacture and Phase I trial initiation sequentially commencing in Q3/Q4, 2018.
Factors Supporting PharmAust’s Focus on MPL as an Anti-Cancer Drug:
1. Demonstration of activity against naturally occurring B-cell lymphoma in dogs,
2. Demonstration of a very good safety profile in animals tested to date, as well as the human participants in the clinical
trial conducted at the Royal Adelaide Hospital,
3. Demonstration of activity against a key cancer marker in humans and canines,
4.
5.
Extensive preclinical R&D package evaluating MPL in many cancers,
Independent validation of monepantel’s specificity towards malignant cell lines and relatively benign effects upon
non malignant cell lines by the newly commenced collaboration with Dr Doug Fairlie at the Olivia Newton John
Cancer Centre,
6. Publications in peer-review journals describing anti-cancer activity of MPL in preclinical models,
7.
The fact that MPL is already approved for the treatment of parasitic infections in farm animals, which implies that the
drug has received extensive regulatory consideration as it is used in food-chain animals,
The successful reformulation of MPL by BRI/Avista into a prototype tablet formulation,
8.
9. New Option to Licence Agreement entered into with Elanco Inc, a global provider of veterinary products,
10. The provision by Elanco of 5kg of GMP-quality MPL.
Intellectual property
As there is growing evidence that neuro-degenerative diseases can be slowed down by blocking the mTOR pathway, PharmAust
has registered intellectual property on the effects of monepantel on neurodegenerative diseases such as Alzheimer’s and
Parkinson’s diseases. PharmAust plans to more closely assess potential commercial outcomes in these areas in FY19.
EPICHEM PTY LTD - 100% OWNED SUBSIDIARY
Epichem, PharmAust’s wholly owned subsidiary, has continued to make strong progress towards key operational milestones as well
as build the contract sales and income activities.
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 39 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.
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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 wins prestigious WA Exporter of the Year Award
Epichem won its fifth WA Export Award and was awarded the prestigious ‘WA Exporter of the Year’ award at the 29th WA Industry
and Export Awards in October 2017. Epichem also received the coveted Health and Biotechnology Award. Coordinated by the
Department of Jobs, Tourism, Science and Innovation and managed by the Export Council of Australia, the awards recognise and
honour the "best of the best" in Western Australian business.
Coordinated by the Department of Jobs, Tourism, Science and Innovation and managed by the Export Council of Australia, the
awards recognise and honour the "best of the best" in Western Australian business.
Dr Wayne Best, Chairman of Epichem, said “We’re proud to be named ‘WA Exporter of the Year’, which recognises the hard work
and dedication from our outstanding team. Epichem has now won a WA Export Award in each of the five years it has entered and
is in the WA Export Hall of Fame. Epichem has also won a prestigious Australian Export Award in the Small Business category.
We’re particularly pleased with this year’s award as it recognises the strong growth in revenues we’ve achieved following the
decision to expand our laboratory space. Epichem is also finalising a new standards accreditation to offer its services to a wider
range of global customers. Delivery on these outcomes is expected to drive continued revenue growth.”
Epichem gains prestigious international ISO accreditation
On 2 July 2018 PAA announced that Epichem gained accreditation from NATA (The National Association of Testing Authorities,
Australia) to ISO17034:2016. Epichem is one of the first companies in Australia to achieve this internationally regarded standard of
quality assurance for reference material production to support pharmaceutical drug manufacturing. Accreditation by NATA is
highly regarded both locally and internationally and elevates Epichem’s status, global market access and competitiveness in a
growing world market.
Extensions to major customer contracts
On 18 January 2018 PAA announced that Epichem Pty Ltd was awarded a one year extension to its current contract with Drugs
for Neglected Diseases initiative (DNDi). On 7 June 2018 PAA announced that Epichem had received an extension to its contract
with California-based Unity Inc.
Epichem Expands Laboratory to Accelerate Growth
Epichem’s laboratory expansion works are completed and deliver an additional six fumehoods. In conjunction with the expanded
facilities and the additional accreditation, we expect to see accelerating Epichem revenues in FY19.
PHARMAUST LTD – PARENT ENTITY
Annual General Meeting
The Annual General Meeting of the Shareholders of PharmAust Limited was held on 29 November 2017 at Epichem Pty Ltd Suite 5,
3 Brodie Hall Drive, Technology Park, Bentley, Western Australia. All resolutions that were put were unanimously passed on a show
of hands.
Successful Placement to Raise $1.87m
PharmAust was pleased to announce it has received commitments to raise $ 1.873 million through an oversubscribed Placement
to sophisticated investors.
Funds were raised via an oversubscribed placement of 39,000,000 fully paid ordinary shares (the maximum allowed under the
Company’s 25% capacity) at $0.045 per share to sophisticated investors. This represents a discount of 10.9% discount to the 5-Day
VWAP of $0.0505 and a 8.2% discount to the last close (1 December 2017) of $0.049.
In addition, officers of PAA subscribed for an additional 2.611m shares to raise up to $118,000, which received Shareholder approval
at an extraordinary general meeting held on 26 February 2018.
Significant Changes in State of Affairs
A review of events during the reporting period can be found in the review of operations.
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
Subsequent Events
DIRECTORS' REPORT (Cont.)
No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect
the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.
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.
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.
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 10,746,296 Fully Paid Ordinary Shares and 1,791,050 Options.
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 6,579,328 Fully Paid Ordinary Shares & 913,222 Options.
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Nil
Nil
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2018 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 787,432 ordinary shares and 1,564,573 options in PharmAust Limited.
Other Current Directorships
(ASX Listed Companies)
Nanollose Limited
Previous Directorships (last 3
years) ASX Listed Companies
Mr Sam Wright – Non-Executive Director & Company Secretary
Qualifications
Experience
Interests in Shares & Options
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Meetings of Directors
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.
Mr Wright, via his company, holds 4,000,000 ordinary shares and 166,668 options in PharmAust
Limited.
Nil
Buxton Resources Limited (ASX: BUX) and Structural Monitoring Systems plc (ASX: SMN)
The number of meetings of the Company’s directors held during the year ended 30 June 2018, and the number of meetings attended
by each director was:
Directors
Dr Roger Aston
Mr Robert Bishop
Dr Wayne Best
Mr Sam Wright
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Meetings of Directors
Eligible to
Participate
3
3
3
3
Number
Attended
3
3
3
3
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2018 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.
Details of remuneration
Details of the nature and amount of each element of remuneration of each key management personnel of the consolidated entity
are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors and other key
management personnel:
Directors
Roger Aston
Robert Bishop
Sam Wright
Wayne Best
Chief Executive Officer
Executive Director
Non-Executive Director and Company Secretary
Non-Executive Director
Other Key Management Personnel
John Horton
Rebecca McCrackan
Richard Hopkins
Richard Mollard
Martine Keenan
Director – Epichem Pty Ltd
Director – Epichem Pty Ltd
Chief Executive Officer – PharmAust Ltd (resigned 25 May 2018)
Chief Scientific Officer – PharmAust Ltd
Chief Executive Officer – Epichem Pty Ltd (appointed 10 March 2018)
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
2018
Short-term Benefits
Post-employment
Benefits
Share-based
Payments
Salary & Fees
$
Superannuation
$
Options &
Performance Rights
$
Total
$
114,000
260,000
104,000
162,160
12,000
4,500
167,429
182,650
120,773
1,127,512
-
24,700
9,880
15,405
-
428
15,906
17,352
11,473
95,144
-
-
-
34,698
8,789
8,789
401,363
403,214
-
856,853
114,000
284,700
113,880
212,263
20,789
13,717
584,698
603,216
132,246
2,079,509
Directors
Sam Wright
Roger Aston
Robert Bishop
Wayne Best
Other Key
Management
Personnel
John Horton
Rebecca McCrackan
Richard Hopkins*
Richard Mollard
Martine Keenan**
* Resigned 25 May 2018
** Appointed 10 April 2018
2017
Short-term Benefits
Post-employment
Benefits
Share-based
Payments
Salary & Fees
$
Superannuation
$
Options &
Performance Rights
$
Total
$
Directors
Sam Wright
Roger Aston
Robert Bishop
Wayne Best
Other Key
Management
Personnel
John Horton
Rebecca McCrackan
Richard Hopkins*
Richard Mollard**
* Appointed on 7 March 2017
** Appointed on 13 March 2017
103,000
260,000
104,000
150,000
11,000
5,400
59,010
56,200
748,610
-
24,700
9,880
14,250
-
513
5,606
5,339
60,288
-
-
-
-
-
-
52,572
41,232
93,804
103,000
284,700
113,880
164,250
11,000
5,913
117,188
102,771
902,702
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these
agreements are as follows:
Remuneration of 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% 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% 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 Wayne Best (Non-Executive Director – PharmAust Limited) (Managing Director – Epichem Pty Ltd)
Term of the agreement – permanent and no specific term.
Base salary of $9,000 per year plus superannuation of 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 Sam Wright (Non-Executive Director and Company Secretary – PharmAust Limited)
Term of the agreement – permanent and no specific term.
Consultancy fees 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 John Horton (Director – Epichem Pty Ltd)
Term of the agreement – permanent and no specific term.
Consultancy fees of $12,000 per annum.
Remuneration of Rebecca McCrackan (Director – Epichem Pty Ltd)
Term of the agreement – permanent and no specific term.
Director fees of $5,400 per annum plus superannuation of 9.5% of base salary.
Remuneration of Richard Hopkins (Chief Executive Officer – PharmAust Limited) (Resigned 25th May 2018)
Term of the agreement – permanent and no specific term.
Base salary of $182,650 per year plus superannuation of 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 Richard Mollard (Chief Scientific Officer – PharmAust Limited)
Term of the agreement – permanent and no specific term.
Base salary of $182,650 per year plus superannuation of 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 Martine Keenan (Chief Executive Officer – Epichem Pty Ltd)
Term of the agreement – permanent and no specific term.
Base salary of $140,000 per annum plus superannuation of 9.5% of base salary.
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 – $200,000 - bonus of $5,000; or
$200,001 - $350,000 - bonus of $10,000; or
$350,001 - $500,000 - bonus of $20,000; or
$500,001 or more - bonus of $30,000.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to six (6) months base salary
and superannuation.
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2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
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 2018.
Options
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:
Name
Directors
Wayne Best
Other Key Mangement
Personnel
Richard Hopkins*
Richard Hopkins*
Richard Hopkins*
Richard Mollard
Richard Mollard
Richard Mollard
John Horton
Rebecca McCrackan
Number of
options
granted
Grant date
Vesting date
Expiry date
Exercise
price
Fair value per
option at
grant date
1,250,000
26 Feb 2018
26 Feb 2018 31 December 2020
$0.07
$0.02776
1,875,000
3,750,000
4,500,000
1,875,000
3,750,000
4,500,000
250,000
250,000
7 March 2018
31 May 2017
7 March 2018
31 May 2017
31 May 2017
7 March 2018
6 June 2017 13 March 2018
6 June 2017 13 March 2018
6 June 2017 13 March 2018
31 August 2017 31 August 2017
31 August 2017 31 August 2017
31 March 2020
31 March 2020
31 March 2020
31 March 2020
31 March 2020
31 March 2020
30 August 2020
30 August 2020
$0.075
$0.15
$0.23
$0.075
$0.15
$0.23
$0.08
$0.08
$0.04989
$0.03851
$0.03138
$0.04896
$0.03768
$0.03063
$0.03516
$0.03516
*Richard Hopkins resigned on 25 May 2018. His options fully vested as of 7 March 2018. As there is no service condition, the
performance rights are not forfeited upon resignation.
Performance rights
The terms and conditions of each grant of performance rights over ordinary shares affecting remuneration of directors and
other key management personnel in this financial year or future reporting years are as follows:
Name
Class
Richard Hopkins* Class A
Class B
Class C
Richard Mollard
Class A
Class B
Class C
Number of
rights granted
Grant Date
625,000
1,250,000
1,500,000
625,000
1,250,000
1,500,000
31 May 2017
31 May 2017
31 May 2017
06 June 2017
06 June 2017
06 June 2017
Fair value at
grant date
Value of rights
expensed at 30
June 2018
0.08
0.08
0.08
0.079
0.079
0.079
46,187
15,109
1,522
46,201
15,880
1,991
126,890
*Richard Hopkins resigned on 25 May 2018. His performance rights fully vested as of 7 March 2018. As there is no service condition,
the performance rights are not forfeited upon resignation.
The value of the rights expensed as at 30 June 2018 has been determined based on the probability of meeting the specified
performance milestones.
Options and performance rights granted as part of remuneration
All options and performance rights were have been granted and issued. The amount allocated to remuneration is allocated over
the vesting period.
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.
- 12 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Additional information
The earnings of the consolidated entity for the five years to 30 June 2018 are summarised below:
Revenue
EBITDA
EBIT
Loss after income tax
2018
$
2017
$
2016
$
2015
$
3,295,904
(2,374,722)
(2,493,327)
(2,521,679)
3,333,505
(1,161,152)
(1,343,614)
(1,343,614)
2,754,737
(4,076,414)
(3,927,256)
(3,927,256)
2,420,020
(1,844,390)
(1,925,091)
(1,925,091)
2014
$
2,007,086
(1,261,822)
(1,317,853)
(1,317,853)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
Share price at financial year end ($)
Total dividends declared (cents per share)
Basic earnings per share (cents per share)
0.04
-
(1.72)
0.06
-
(1.08)
0.08
-
(0.60)
0.14
-
(0.13)
0.22
-
(0.1)
0.12
-
(0.93)
2018
2017
2016
2015
2014
2012
Additional disclosures relating to key management personnel
Shareholding
The number of shares in the company held during the financial year by each director and other members of key management
personnel of the consolidated entity, including their personally related parties, is set out below:
2018
Directors
Wayne Best
Sam Wright
Roger Aston
Robert Bishop
Other Key Mangement
Personnel
John Horton
Rebecca McCrackan
Richard Hopkins**
Richard Mollard
Martine Keenan***
Balance
1 July 2017
No.
Share
Consolidation
No.
Received as
Compensation
No.
387,432
1,000,000
10,746,296
5,479,328
1,250
-
1,000,000
-
-
18,614,306
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At date of
Appointment
and/or
Resignation
No.
-
-
-
-
-
-
(2,331,111)
-
-
(2,331,111)
Net Change
Other*
No.
Balance
30 June 2018
No.
400,000
1,000,000
-
1,100,000
-
-
1,331,111
-
-
3,831,111
787,432
2,000,000
10,746,296
6,579,328
1,250
-
-
-
-
20,114,306
*The net change other column above includes those shares that have been disposed or acquired by holders during the year.
** Resigned 25 May 2018.
*** Appointed 10 April 2018.
- 13 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
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:
2018
Directors
Sam Wright
Roger Aston
Robert Bishop
Wayne Best
Other Key Mangement
Personnel
John Horton
Richard Mollard
Rebecca McCrackan
Richard Hopkins**
Martine Keenan***
Balance
1 July 2017
Granted as
Compensation
Options
Exercised
No.
No.
No.
At date of
Appointment
and/or
Resignation
Net
Change
Other*
No.
Balance
30 June 2018
Total
Vested
No.
No.
166,668
1,791,050
913,222
314,573
-
10,125,000
-
10,458,334
-
23,768,847
-
-
-
1,250,000
250,000
-
250,000
-
-
1,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(10,458,334)
900,000
(9,558,334)
-
-
-
-
-
-
-
-
-
-
166,668
1,791,050
913,222
1,564,573
166,668
1,791,050
913,222
1,564,573
250,000
10,125,000
250,000
-
900,000
250,000
10,125,000
250,000
-
900,000
15,960,513
15,960,513
*The net change other column above includes those options that have been disposed or acquired by holders during the year.
** Resigned 25 May 2018.
*** Appointed 10 April 2018.
[END OF REMUNERATION REPORT]
- 14 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
DIRECTORS' REPORT (Cont.)
Share Options & Performance Rights
The details of unissued ordinary shares under option at the date of this report are as follows:
Number
Exercise Price
Expiry Date
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
675,000
21,645,412
3,750,000
7,500,000
9,000,000
5,000,000
10,000,000
16 cents
12 cents
7.5 cents
15 cents
23 cents
8 cents
12 cents
3 September 2018
30 November 2019
31 March 2020
31 March 2020
31 March 2020
30 August 2020
31 January 2022
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.
The entity has further unissued ordinary shares through Performance Rights as per the summary below:
•
•
3,375,000 performance rights with a fair value at grant date of 8 cents;
3,375,000 performance rights with a fair value at grant date of 7.9 cents.
The performance rights granted vest upon the individual’s continuing service with the Company and upon
certain performance milestones.
Shares Issued on Exercise of Compensation Options
No options were exercised last financial year, this financial year or up to the date of this report.
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.
Indemnification and Insurance of Auditor
The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company
or any related entity against a liability incurred by the auditor.
During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any
related entity.
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.
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
- 15 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
Non-Audit Services
DIRECTORS' REPORT (Cont.)
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 28 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 28 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.
●
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.
On behalf of the directors
Dr ROGER ASTON
Executive Chairman
28 September 2018
Perth, Western Australia
- 16 -
For personal use only
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of PharmAust Limited for the year ended 30 June 2018, 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: 28 September 2018
DAVID WALL
Partner
For personal use only
INDEPENDENT AUDITOR’S REPORT
To the members of PharmAust Limited
Opinion
We have audited the financial report of PharmAust Limited (Company) and its subsidiaries (Group), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash
flows for the year then ended, and notes to the financial statements, including a summary of significant accounting
policies, and the directors' declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
(i)
Giving a true and fair view of the Group's financial position as at 30 June 2018 and of its financial
performance for the year then ended; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the audit of the financial report section of our
report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's
APES 110 Code of Ethics for Professional Accountants (Code) that are relevant to our audit of the financial report
in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given to
the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
For personal use only Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report of the current period. These matters were addressed in the context of our audit of the financial
report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed this matter
Impairment of intangible non-current asset
Refer to Note 8 in the financial statements
Intangible assets are stated at $3,107,476 as at 30
June 2018 and comprise the intellectual property
rights for the monepantel oncology platform (MPL).
The MPL asset is not yet available for use and
remains subject to annual impairment review by
management
the asset’s
to assess whether
recoverable amount is greater than its carrying
amount.
Management’s assessment involved:
Reviewing the key assumptions for the MPL
value in use calculation model, which was
prepared in the previous financial year, to
determine whether there were any significant
changes during the current financial year; and
Evaluating whether any events have occurred to
indicate the MPL asset’s recoverable amount
may be less than its carrying amount.
Management’s assessment is subject to estimation
uncertainty and requires significant management
judgement. We determined this to be a key audit
matter due the risk that the outcome of the
impairment assessment could vary significantly if
different assumptions are applied.
Our audit procedures, in relation to management’s
impairment assessment of the MPL asset, included:
Assessing whether there are any indicators of
impairment of the MPL asset, including enquiring
with management on the current and planned
commercialisation activities;
Involving our financial modelling specialists to
check the mathematical accuracy of the value in
use model, including the appropriateness of the
discount rate used;
Assessing the reasonableness of management’s
assumptions included in the value in use model
and whether there are any indicators that would
require the re-estimation of the asset’s recoverable
amount; and
Assessing the adequacy of the disclosures in Note
8 to the financial statements.
For personal use only Key audit matter
How our audit addressed this matter
Revenue recognition
Refer to Note 2 in the financial statements
For the year ended 30 June 2018, the Group has
recognised sales revenue of $2,871,345. We
determined revenue recognition be a key audit
matter due to the following:
The balance is significant to the Group and there
are risks associated with management override,
completeness and accuracy of sales and the
timing of revenue recognition for sales occurring
on or around year end; and
Sales generated
the pharmaceutical
from
segment are comprised of revenue streams with
varying contract terms and pricing elements,
which may result in minor errors that could, in
aggregate, have a material impact on the
financial statements.
Our audit procedures in relation to the Group’s revenue
recognition included:
On a sample basis, we agreed the revenue amounts
to various supporting documentation including a
combination of approved contracts, price lists and
proof of delivery documents to assess that the
Australian
revenue
recognition criteria were met for recognised sales;
Accounting
Standards
For a sample of revenue received in advance, we
recalculated and checked the allocation between
revenue and current liabilities;
Reviewing sale transactions occurring near the
reporting date to ensure that revenue had been
recognised in the correct period;
Performing testing on journals to identify any
management override of internal controls related to
revenue recognition; and
Assessing the adequacy of the net sales disclosures
contained in Note 23 Segment Reporting.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the Group's annual report for the year ended 30 June 2018, but does not include the financial report and the
auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial report or our knowledge
obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors 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 gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic
alternative but to do so.
For personal use only Auditor's responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This
description forms part of our auditor's report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the directors' report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of PharmAust Limited, for the year ended 30 June 2018, complies with
section 300A of the Corporations Act 2001.
Responsibilities
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.
D J WALL
Partner
RSM AUSTRALIA PARTNERS
Perth, Western Australia
28 September 2018
For personal use only 2018 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 2018 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 in accordance with sections of 295A of
the Corporations Act 2001 for the financial year ending 30 June 2018.
On behalf of the Board
Dr ROGER ASTON
Executive Chairman
28 September 2018
Perth, Western Australia
- 22 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June 2018
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Depreciation expense
Finance costs
Research and development expenses
Administration expenses
NOTE
2
2
CONSOLIDATED
2018
$
2017
$
2,871,345
424,559
3,295,904
(289,318)
(3,561,963)
(118,605)
(28,352)
(463,875)
(1,355,470)
2,854,176
479,329
3,333,505
(340,617)
(2,522,959)
(123,085)
(59,377)
(329,302)
(1,301,779)
(Loss) before income tax expense
(2,521,679)
(1,343,614)
Income tax expense
3a
-
-
(Loss) after income tax expense
Other comprehensive income
(2,521,679)
(1,343,614)
-
-
Total comprehensive (loss) for the year
(2,521,679)
(1,343,614)
Basic and diluted loss per share (cents per share)
16
(1.72)
(1.08)
The accompanying notes form part of these financial statements.
- 23 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
CONSOLIDATED
NOTE
2018
$
2017
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current 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
8
9
10
11
12
11
12
1,875,431
248,353
58,568
574,015
2,756,367
3,107,476
2,494,154
5,601,630
2,590,330
222,187
44,668
486,773
3,343,958
3,107,476
1,743,829
4,851,305
8,357,997
8,195,263
616,825
424,634
151,708
1,193,167
1,007
25,605
26,612
361,873
206,250
388,104
956,227
281,250
42,739
323,989
1,219,779
1,280,216
7,138,218
6,915,047
13
14
26
49,371,354
2,055,460
(44,288,596)
47,604,668
1,077,296
(41,766,917)
7,138,218
6,915,047
The accompanying notes form part of these financial statements.
- 24 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Issued
Capital
$
Accumulated
Losses
$
Options
Reserve
$
Total Equity
$
44,463,072
(40,423,303) 983,492
5,023,261
-
-
3,141,596
-
47,604,668
(1,343,614)
(1,343,614)
-
-
(41,766,917)
-
-
-
93,804
1,077,296
(1,343,614)
(1,343,614)
3,141,596
93,804
6,915,047
47,604,668
(41,766,917)
1,077,296
6,915,047
-
-
1,766,686
-
49,371,354
(2,521,679)
(2,521,679)
-
-
(44,288,596)
-
-
-
978,164
2,055,460
(2,521,679)
(2,521,679)
1,766,686
978,164
7,138,218
As at 1 July 2016
Loss for the year
Total comprehensive (Ioss) for the year
Shares issued (net)
Share based payment
As at 30 June 2017
As at 1 July 2017
Loss for the year
Total comprehensive (Ioss) for the year
Shares issued (net)
Share based payment
As at 30 June 2018
The accompanying notes form part of these financial statements.
- 25 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
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
2018
$
2017
$
2,845,179
(4,792,183)
387,656
36,903
(28,352)
(1,550,797)
2,726,008
(4,401,626)
453,401
25,928
(59,377)
(1,255,666)
19b
(868,929)
(868,929)
(57,023)
(57,023)
1,766,686
(61,859)
1,704,827
3,141,595
(120,399)
3,021,196
(714,899)
1,708,507
2,590,330
881,823
Cash at the end of the financial year
19a
1,875,431
2,590,330
The accompanying notes form an integral part of these financial statements.
- 26 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
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 1 October 2018 by the Directors of the Company.
(a) Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of PharmAust Limited as at 30
June 2018 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.
- 27 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(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.
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.
- 28 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(c) Plant and Equipment (Cont.)
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
3-20 years
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
Leasehold improvements and plant and equipment under lease are depreciated over the unexpired period of the lease or
the estimated useful life of the assets, whichever is shorter.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
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.
(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.
- 29 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(e) Plant and Equipment (Cont.)
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.
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.
- 30 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(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.
(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)
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
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.
- 31 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
(i)
(j)
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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.
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.
(k)
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.
(l)
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.
Interest revenue is recognised using the effective interest method.
All revenue is stated net of the amount of goods and services tax.
(m) 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.
(n)
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.
- 32 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(o) 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.
(p) Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of PharmAust 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.
(q) 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.
(r)
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 available for use, they are reviewed 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.
(s) 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.
(t) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(u) 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.
- 33 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(v) 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.
(w)
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.
(x) 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.
(y) New, revised or amending accounting standards and interpretations adopted
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.
(z) 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
- 34 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(z) Business Combinations (Cont.)
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.
(aa) 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.
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,
royalty rates and growth rates of the estimated future cash flows.
- 35 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
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 27.5% (2017: 30%)
Tax effect of:
- Other non-allowable items
- Deferred tax asset not brought to account
3b
Deferred tax asset
CONSOLIDATED
2018
$
2017
$
2,871,345
2,854,176
36,903
387,656
424,559
25,928
453,401
479,329
(2,521,679)
(1,343,614)
(693,462)
(369,494)
376,137
317,325
-
220,807
148,687
-
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 27.5% tax rate (not recognised) (2017: 27.5%)
6,603,997
6,305,280
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
1,875,431
2,590,330
- 36 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
5 TRADE AND OTHER RECEIVABLES
5a
CURRENT
Trade receivables
Less: provision for doubtful debts
CONSOLIDATED
2018
$
2017
$
248,353
-
248,353
222,187
-
222,187
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.
5c Past due but not impaired
As of 30 June 2018, trade receivables of $31,202 (2017:$ 372) 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
7,216
31,202
38,418
74,625
372
74,997
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.
37,174
6,269
15,125
58,568
36,794
4,291
3,583
44,668
574,015
574,015
486,773
486,773
6
OTHER CURRENT ASSETS
GST receivables
Bond
Prepayments
7 Inventories
Finished Goods
- 37 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
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
CONSOLIDATED
2018
$
2017
$
5,179,128
-
(2,071,652)
3,107,476
5,179,128
-
(2,071,652)
3,107,476
3,107,476
-
-
3,107,476
3,107,476
-
-
3,107,476
The group has assessed the recoverability of the carrying amount of the Intangible Asset based on a 16 year value in use
calculation using a discounted cash flow model for the intellectual property rights to the monepantel (MPL) oncology
platform. The calculation is based on budgets approved by management, assuming commercialisation through a royalty
revenue stream for both human and animal patents. The key assumptions used in the discounted cash flow model include:
-
-
Royalty rate of 10% (2017: 10%);
Post-tax discount rate of 30% (2017: 30%);
The discount rate of 30% post-tax reflects management’s estimate of the time value of money and the group’s weighted
average cost of capital. As disclosed in Note 1, the directors have made judgements and estimates in respect of
impairment testing of intangible assets.
9.
PLANT AND EQUIPMENT
Cost
Accumulated depreciation
Movements in Carrying Amounts:
Carrying amount at beginning of the year
Additions – Plant and Equipment
Additions – Construction in Progress
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
EFIC Loan Facility 1**
EFIC Loan Facility 2***
NON CURRENT
EFIC Loan Facility 1**
EFIC Loan Facility 2***
CONSOLIDATED
2018
$
2017
$
3,326,377
(832,223)
2,494,154
2,457,561
(713,732)
1,743,829
1,743,829
191,556
677,374
-
(118,605)
2,494,154
1,819,868
57,024
-
(24)
(133,039)
1,743,829
616,825
361,873
281,250
143,384
424,634
-
1,007
1,007
206,250
-
206,250
281,250
-
281,250
Terms and conditions:
** The EFIC Loan liability has a variable interest rate charged at the AFMA Bank Bill Average Bid Rate fix + 5% margin. At 30
June 2018 this rate was 6.86%.
*** The EFIC Loan liability has a variable interest rate charged at the AFMA Bank Bill Average Bid Rate fix + 6.05% margin.
At 30 June 2018 this rate was 7.91%.
- 38 -
For personal use only 2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
11 BORROWINGS (Cont.)
Financing arrangements
Loan Facility 1:
The consolidated entity entered into a loan agreement to gain access to an original 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 2:
The consolidated entity entered into a loan agreement to gain access to an original loan facility of $466,000.
Interests: 3 month AFMA Bank Bill Average Bid Rate fix plus 6.05% margin.
Security: First charge over the new laboratory equipment.
Loan facility 1:
Total facility limit
Amount utilised
Total unused facility at 30 June
Loan facility 2:
Total facility limit
Amount utilised
Total unused facility at 30 June
12
PROVISIONS
CURRENT
Employee entitlements
NON CURRENT
Employee entitlements
281,250
487,500
(281,250)
(487,500)
-
144,391
(144,391)
-
-
-
-
-
151,708
388,104
25,605
42,739
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
52,099
68,091
13
ISSUED CAPITAL
Issued and paid up ordinary shares
49,371,354
47,604,668
13a Movement in fully paid ordinary shares
Ordinary Shares
At 1 July 2017
2018
2017
Number of shares
2018
$
2017
$
157,339,553
92,503,645
47,604,668
44,463,072
Share Issued (net of costs)
41,711,111
64,835,908
1,766,686
3,141,596
At 30 June 2018
199,050,664
157,339,553
49,371,354
47,604,668
- 39 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
13
ISSUED CAPITAL (Cont.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
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 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 2018 and 30 June 2017 are as follows:
NOTE
CONSOLIDATED
2018
$
2017
$
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:
2017
At 1 July
Options Expired
Options issued free attaching
Options - KMP
At 30 June
During the period Options have been granted to KMP but not yet issued.
2018
At 1 July
Options issued - Employees
Options issued – KMP
Options issued – Corporate Advisors
At 30 June
- 40 -
1,042,466
(1,875,431)
(832,965)
7,123,598
6,290,633
849,373
(2,590,330)
(1,740,957)
6,915,047
5,174,090
6.0%
1.8%
2,055,460
1,077,296
Weighted
Average
Exercise Price
$
0.16
-
0.12
0.16
0.14
Weighted
Average
Exercise Price
$
0.14
0.004
0.001
0.02
0.13
No.
675,000
-
21,612,079
20,250,000
42,537,079
No.
42,537,079
3,783,333
1,250,000
10,000,000
57,570,412
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
14
RESERVES (Cont.)
57,570,412 options are exercisable as at 30 June 2018 (2017: 22,287,079).
No options were exercised during the year.
The weighted average remaining contractual life of options outstanding at year-end was 1.84 years (2017: 2.40years).
The weighted average exercise price of outstanding options at the end of the reporting period was $0.13 (2017: $0.14).
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. The following transactions occurred with related parties:
Transactions with related parties:
Other related parties:
Sales – Nanollose Limited [1]
Corporate Services Expense – Straight Lines Consultancy [2]
CONSOLIDATED
2018
$
2017
$
49,322
18,000
-
15,000
[1] Non-Executive Director Wayne Best was appointed Executive Chairman of Nanollose Limited on 10 April 2018.
[2] Non-Executive Director Sam Wright is Managing Director of Straight Lines Consultancy.
16
EARNINGS PER SHARE
Net (loss) attributable to members of the Company
(2,521,679)
(1,343,614)
Weighted average number of ordinary shares outstanding during
the year used in calculating basic earnings per share.
Basic Earnings per Share
16a
No.
No.
146,580,486
124,566,026
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.
- 41 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
17
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
Loans and receivables (excluding GST)
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Specific Financial Risk Exposures and Management
Note
Consolidated
2018
$
2017
$
4
5a
10
11
1,875,431
2,590,330
248,353
222,187
2,123,784
2,812,517
616,825
425,641
361,873
487,500
1,042,466
849,373
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.
- 42 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
17
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
2018
Weighte
d
Average
Interest
Rate
1.05%
7.22%
Floating
Interest
Rate
$
Fixed Interest
Rate
Within 1 Year
$
Fixed
Interest
Rate
Within 1-5
Years
$
Non-Interest
Bearing
$
Total
$
1,875,431
-
1,875,431
-
(425,641)
(425,641)
1,449,790
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
248,353
1,875,431
248,353
248,353
2,123,784
(616,825)
-
(616,825)
(616,825)
(425,641)
(1,042,466)
(368,472)
1,081,318
Financial Assets
Cash and cash equivalents
Trade and other
receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Net Financial
Assets/(Liabilities)
Cash Flow Interest Rate Risk (Cont.)
2017
Weighte
d
Average
Interest
Rate
1.27%
6.86%
Floating
Interest
Rate
$
Fixed Interest
Rate
Within 1 Year
$
Fixed
Interest
Rate
Within 1-5
Years
$
Non-Interest
Bearing
$
Total
$
2,590,330
-
2,590,330
-
(487,500)
(487,500)
2,102,830
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
230,061
2,590,330
230,061
230,061
2,820,391
(361,873)
-
(361,873)
(361,873)
(487,500)
(849,373)
(131,812)
1,971,018
Financial Assets
Cash and cash equivalents
Trade and other
receivables
Total financial assets
Financial liabilities
Trade and other payables
Borrowings
Total financial liabilities
Net Financial
Assets/(Liabilities)
Interest rate sensitivity analysis
At 30 June 2018 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 $38,411 (2017: $ $20,422) 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.
- 43 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
17
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
Contracted maturities
Payables
- within 1 year
Borrowings
- within 1 year
Price risk
The Group is not exposed to price risk.
Foreign exchange risk
CONSOLIDATED
2018
$
2017
$
616,825
361,873
424,634
206,250
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
$
110,335
23,491
2018
EUR
$
-
-
2017
NZD
$
-
-
USD
$
135,268
7,298
EUR
$
1,873
-
GBP
$
-
420
Trade receivables
Trade payables
- 44 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
17
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
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:
2018
Change in profit and equity with a +/-
10% in AUD to
EUR
$
NZD
$
USD
$
2017
Change in profit and equity with a +/-
10% in AUD to
USD
$
EUR
$
GBP
$
-
62
Trade receivables
Trade payables
10,532
2,242
-
-
-
-
12,912
697
179
-
Net fair values
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).
2018
Financial assets held for trading
2017
Financial assets held for trading
18
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
TOTAL
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
$
-
-
-
-
COUNTRY OF
CORPORATION
CLASS OF SHARES
EQUITY HOLDING
2018
%
EQUITY HOLDING
2017
%
Australia
-
Australia
Australia
Ordinary
Ordinary
-
100
100
-
100
100
- 45 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
19
NOTES TO THE STATEMENT OF CASH FLOWS
19a
Reconciliation of Cash
Cash at bank
19b
Reconciliation of net cash used in operating activities to loss after
income tax
CONSOLIDATED
2018
$
2017
$
1,875,431
2,590,330
Loss after income tax
(2,521,679)
(1,343,614)
Loss on disposal of fixed assets
Depreciation
Depreciation capitalised into inventories
Share Based Payment
Movement in assets and liabilities:
Inventory
Receivables
Other assets
Payables
Provisions
-
118,605
4,348
978,164
(87,243)
(24,190)
(20,222)
254,950
(253,530)
24
123,085
9,953
93,804
(164,890)
(128,168)
(12,288)
(35,562)
201,990
Net cash used in operating activities
(1,550,797)
(1,255,666)
19c Non-cash Financing and Investing Activities
There were no non-cash financing and investing activities during the year (2017: $nil).
- 46 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
20
SHARE BASED PAYMENTS
The Company has recognised the following amounts as expenses relating to share based payments for the year.
Share based payments to KMP - Options
Share based payments to KMP – Performance Rights
Share based payments to others – Options
Total
Share based payments to KMP – Options
During the 2018 Options were granted to KMP as follows:
2018
2017
$
$
729,963
126,890
121,310
978,164
72,421
21,383
-
93,804
Name
Richard Mollard
Richard Mollard
Richard Mollard
Grant Date
06-Jun-17
06-Jun-17
06-Jun-17
Expiry Date
31-Mar-20
31-Mar-20
31-Mar-20
Wayne Best
26-Feb-18
31-Dec-20
Richard Hopkins
Richard Hopkins
Richard Hopkins
John Horton
31-May-17
31-Mar-20
31-May-17
31-Mar-20
31-May-17
31-Mar-20
31-Aug-17
30-Aug-20
Rebecca McCrackan
31-Aug-17
30-Aug-20
Exercise Price
$0.08
$0.15
$0.23
$0.07
$0.08
$0.15
$0.23
$0.08
$0.08
Number
Expense
1,875,000
3,750,000
4,500,000
83,938
129,195
126,009
1,250,000
34,698
1,875,000
3,750,000
4,500,000
250,000
250,000
83,520
128,953
126,072
8,789
8,789
729,963
During 2017 Options were granted to KMP but were not yet issued as at the balance date as follows:
Name
Grant Date
Expiry Date
Exercise Price
Number
Expense
Richard Hopkins
31-May-17
31-Mar-20
Richard Hopkins
31-May-17
31-Mar-20
Richard Hopkins
31-May-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
$0.08
$0.15
$0.23
$0.08
$0.15
$0.23
1,875,000
3,750,000
4,500,000
1,875,000
3,750,000
4,500,000
10,022
15,474
15,129
7,869
12,113
11,814
72,421
Share based payments to others – Options
During 2018 Options were granted to other Option holders as follows:
Name
Grant Date
Expiry Date
Exercise Price
Number
Epichem Employees
Consultants
31-Aug-17
16-Mar-18
30-Aug-20
16-Mar-22
$0.08
$0.12
3,250,000
10,000,000
Expense to 30
June 2018
114,260
7,050
121,310
No Options were granted to other Option holders during 2017.
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
20
SHARE BASED PAYMENTS (Cont'd)
The fair values of the Options granted in 2018 were calculated using the Black-Scholes option pricing model applying the following
inputs:
Name
Richard Hopkins
Richard Hopkins
Richard Hopkins
Richard Mollard
Richard Mollard
Richard Mollard
Wayne Best
John Horton
Rebecca McCrackan
Epichem Employees
Options
1,875,000
3,750,000
4,500,000
1,875,000
3,750,000
4,500,000
1,250,000
250,000
250,000
3,250,000
Share Price
at Grant Date
$0.08
$0.08
$0.08
$0.08
$0.08
$0.08
$0.06
$0.06
$0.06
$0.06
Exercise
Price
$0.08
$0.15
$0.23
$0.08
$0.15
$0.23
$0.07
$0.08
$0.08
$0.08
Expected
Volatility
100%
100%
100%
100%
100%
100%
100%
99%
99%
99%
Dividend
Yield
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Risk-free
Interest
Rate
1.90%
Vesting
Date
07-Mar-18
1.90%
07-Mar-18
1.90%
1.90%
1.90%
1.90%
1.90%
1.90%
1.90%
1.90%
07-Mar-18
13-Mar-18
13-Mar-18
13-Mar-18
26-Feb-18
31-Aug-17
31-Aug-17
31-Aug-17
Fair Value
at Grant
Date
$0.05
$0.04
$0.03
$0.05
$0.04
$0.03
$0.03
$0.03
$0.03
$0.03
The 10,000,000 Options granted to consultants in 2018 were valued at the fair value of services provided which was determined
to be $7,050
The fair values of the options granted in 2017 were calculated using the Black-Scholes option pricing model applying the following
input:
Name
Richard Hopkins
Richard Hopkins
Richard Hopkins
Richard Mollard
Richard Mollard
Richard Mollard
Options
1,875,000
3,750,000
4,500,000
1,875,000
3,750,000
4,500,000
Share Price
at Grant Date
$0.08
$0.08
$0.08
$0.08
$0.08
$0.08
Exercise
Price
$0.08
$0.15
$0.23
$0.08
$0.15
$0.23
Expected
Volatility
100%
100%
100%
100%
100%
100%
Dividend
Yield
Risk-free
Interest
Rate
0%
0%
0%
0%
0%
0%
1.90%
1.90%
1.90%
1.90%
1.90%
1.90%
Vesting
Date
07-Mar-18
07-Mar-18
07-Mar-18
13-Mar-18
13-Mar-18
13-Mar-18
Fair Value
at Grant
Date
$0.05
$0.04
$0.03
$0.05
$0.04
$0.03
Share based payments to KMP – Performance Rights
During 2018 Performance Rights were granted to KMP as follows:
Name
Richard Hopkins
Richard Hopkins
Richard Hopkins
Name
Richard Mollard
Richard Mollard
Richard Mollard
Total
Class
Class A
Class B
Class C
Class
Class A
Class B
Class C
No of rights
625,000
1,250,000
1,500,000
Grant Date
31/05/2017
31/05/2017
31/05/2017
No of rights
625,000
1,250,000
1,500,000
Grant Date
06/06/2017
06/06/2017
06/06/2017
Share
Price
0.08
0.08
0.08
Share
Price
0.079
0.079
0.079
Expense to 30
June 2018
46,187
15,109
1,522
62,818
Expense to 30
June 2018
46,201
15,880
1,991
64,072
126,890
The total Performance Rights expense for the period of $126,890 is determined based on the service condition vesting period
based on management’s estimate of the vesting probability at grant date. This is determined with reference to the likelihood of
achieving the specified performance milestones for each class of Performance Rights.
- 48 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
20
SHARE BASED PAYMENTS (Cont'd)
During 2017 Options were granted to KMP, but were not yet issued as at the balance date as follows:
Name
Grant Date
Expiry Date
Exercise Price
Number
Expense
Richard Hopkins
31-May-17
31-Mar-20
Richard Hopkins
31-May-17
31-Mar-20
Richard Hopkins
31-May-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
Richard Mollard
06-Jun-17
31-Mar-20
$0.08
$0.15
$0.23
$0.08
$0.15
$0.23
1,875,000
3,750,000
4,500,000
1,875,000
3,750,000
4,500,000
10,022
15,474
15,129
7,869
12,113
11,814
72,421
The total share based payment expense for the period of $72,421 is determined based on the service condition vesting period.
21
KEY MANAGEMENT PERSONNEL
21a 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 2018 and 30 June 2017.
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
22 COMMITMENTS
CONSOLIDATED
2018
$
2017
$
1,127,512
95,144
856,853
2,079,509
748,610
60,288
93,804
902,702
CONSOLIDATED
2018
$
2017
$
Office lease commitments
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
162,685
650,741
328,534
1,141,960
162,685
650,741
493,478
1,306,904
- Later than 5 years
Minimum lease payments
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
23 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.
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
23
SEGMENT REPORTING(Cont'd)
The consolidated entity operates in three business segments as disclosed below:
i)
Segment Performance
Consolidated
2018
Revenue
External sales
Other external revenue
Inter-segment revenue
Total segment revenue
Inter-segment elimination
Total revenue per statement of
comprehensive income
Results
Segment result from continuing
operations before tax
Consolidated
2017
Revenue
External sales
Other external revenue
Inter-segment revenue
Total segment revenue
Inter-segment elimination
Total revenue per statement of
comprehensive income
Results
Segment result from continuing
operations before tax
Corporate
Pharmaceutical
$
$
Total
$
-
388,720
-
388,720
2,890,057
17,127
93,199
3,000,383
2,890,057
405,847
93,199
3,389,103
(93,199)
3,295,904
(2,535,506)
13,827
(2,521,679)
Corporate
Pharmaceutical
$
$
Total
$
-
358,084
-
2,854,176
121,245
75,720
2,854,176
479,329
75,720
3,409,225
(75,720)
3,333,505
(1,607,977)
264,363
(1,343,614)
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
23 SEGMENT REPORTING (Cont.)
ii) Segment assets and liabilities
Consolidated
2018
Segment assets
Segment assets
Total assets of the consolidated entity:
Segment liabilities
Segment operating liabilities
Total liabilities of the consolidated entity:
Consolidated
2017
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
$
1,849,919
1,849,919
6,508,078
6,508,078
8,357,997
8,357,997
(137,732)
(137,732)
(1,082,047)
(1,219,779)
(1,082,047)
(1,219,779)
Corporate
Pharmaceutical
$
$
Total
$
2,550,925
2,550,925
5,644,338
5,644,338
8,195,263
8,195,263
(382,842)
(382,842)
(897,374)
(1,280,216)
(897,374)
(1,280,216)
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
2018
$
2017
$
1,336,080
462,760
1,497,064
3,295,904
1,448,510
1,060,565
824,430
3,333,505
8,357,997
8,357,997
8,195,263
8,195,263
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 46% of external
revenue (2017: 39%). The next most significant customer accounts for 27% (2017: 14%).
- 52 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
24
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.
25 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
2018
$
2017
$
5,287,267
1,424,861
6,712,128
5,988,274
759,957
6,748,231
137,731
234,063
371,794
382,842
234,063
616,905
49,371,354
2,055,460
(45,086,480)
6,340,334
47,604,668
1,077,296
(42,550,637)
6,131,327
(2,535,506)
-
(2,535,506)
(1,607,976)
-
(1,607,976)
PharmAust Limited is a guarantor of a debt facility for its fully owned subsidiary Epichem 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 those disclosed in Note 24.
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
CONSOLIDATED
2018
$
2017
$
26
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
(41,766,917)
(2,521,679)
(44,288,596)
(40,423,303)
(1,343,614)
(41,766,917)
27
EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any significant events since the end of the reporting period.
28 AUDITOR’S REMUNERATION
Remuneration of RSM Australia Partners as auditor for:
- auditing or reviewing the financial report
- taxation services
67,000
15,500
82,500
67,000
16,945
83,945
29 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 2017.
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 Group will adopt this standard from 1 July 2018 but the impact of its adoption is currently being assessed
by the Group and yet to be finalised.
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For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2018
29
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 Group will adopt this standard from 1 July 2018 and the impact is expected
to be minimal.
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. 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 Group will adopt this
standard from 1 July 2019 but there is no material impact to the Group.
As the entity holds leases as at 30 June 2018 the impact of the new Leases standard is that leased 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 and 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.
- 55 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
Additional information required by the Australian Stock Exchange Limited Listing Rules, and not disclosed elsewhere in this report.
SHAREHOLDINGS
SHAREHOLDER INFORMATION
At the date of this report two shareholders had lodged substantial shareholder notices with the Company.
a) Mr Graham Darcy is a substantial shareholder holding a relevant interest in 11,000,000 shares representing 5.53% of voting
power.
b) Dr Roger Aston is a substantial shareholder holding a relevant interest in 10,746,296 shares representing 5.40% 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 28 September 2018
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.
- 56 -
For personal use only
2018 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
TWENTY LARGEST SHAREHOLDERS (as at 28 September 2018)
- 57 -
For personal use only