ABN 35 094 006 023
Annual Report
2021
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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CONTENTS
Corporate Directory
Directors' Report
Auditor’s Independence
Declaration
Independent Auditor’s Report
Directors’ Declaration
Statement of Profit or Loss and
Other Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Shareholder Information
3
4
21
22
25
26
27
28
29
30
56
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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CORPORATE DIRECTORY
DIRECTORS
Dr Roger Aston
Mr Robert Bishop
Mr Sam Wright
Mr Neville Bassett AM
COMPANY SECRETARY
Mr Sam Wright
REGISTERED OFFICE
Suite 116, 1 Kyle Way
Claremont, Western Australia 6010
Tel +61 (8) 9202 6814 Fax +61 (8) 9467 6111
PRINCIPAL PLACE OF BUSINESS
PharmAust Limited
Suite 116,
1 Kyle Way
Claremont, Western Australia 6010
Tel +61 (8) 9202 6814 Fax +61 (8) 9467 6111
www.pharmaust.com
ASX CODE: PAA
Epichem Pty Ltd
Suite 5, 3 Brodie-Hall Drive
Bentley WA 6102
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 11, 172 St George’s Terrace
Perth, Western Australia 6000
AUDITORS
RSM Australia Partners
2 The Esplanade
Perth, Western Australia 6000
SOLICITORS
Fairweather Corporate Lawyers
Suite 2, 589 Stirling Highway
Cottesloe, Western Australia 6011
STOCK EXCHANGE
Australian Securities Exchange
Central Park
152-158 St Georges Terrace
Perth, Western Australia 6000
ASX CODE: PAA
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS’ REPORT
The Directors present their report, together with the financial statements, on the consolidated entity consisting of PharmAust
Limited and the entities it controlled at the end of, or during, the year ended 30 June 2021.
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
Executive Chairman
Mr Robert Bishop
Executive Director
Mr Sam Wright
Non-Executive Director & Company Secretary
Mr Neville Bassett
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, viral and neurological diseases, 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 2021 was a loss, after income tax expense of $1,337,310 (2020: loss
of $1,361,990).
Financial Position
The net assets of the consolidated entity were $8,880,484 as at 30 June 2021 (2020: $8,526,269).
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
PharmAust Limited is focused on developing therapeutics for cancer, neurodegenerative diseases and viral infections in humans
and cancer for pet dogs. PharmAust’s lead molecule for this purpose is monepantel (MPL). MPL is a veterinary drug registered for
use by a major pharmaceutical company as a wormicide in many global jurisdictions. PharmAust discovered independently that
MPL interacts in a previously unrecognized ”off-target” manner with the mTOR (mechanistic Target of Rapamycin) pathway, an
important regulatory pathway in mammalian cells. It is apparent that molecules such as MPL that target the mTOR pathway have
relevant therapeutic value in a wide range of diseases.
PharmAust’s wholly owned subsidiary Pitney Pharmaceuticals Pty Ltd owns a number of granted patents offering protection for
the use of MPL in cancer therapy and providing cover for the use of MPL in neurodegenerative diseases such as Motor Neuron
Disease, Parkinson’s Disease and Alzheimer’s Disease. Pitney has further recently submitted novel patents to cover the use of MPL
in the treatment of COVID-19 and other related viral infections. The fact that MPL is already approved for use in animals in a
number of major jurisdictions (EU/UK, Australia) means that the development process for PharmAust is simpler and cheaper than
it would be if MPL were a new API (Active Pharmaceutical Ingredient).
In line with its strategic objectives, PharmAust signed an agreement with UNSW-NSI, the commercial arm of the University of NSW
to acquire all the rights to MPL. PharmAust is therefore in a strong position to license and co-develop MPL with third parties and
co- development partners. PharmAust further signed an agreement with Nihon Nohyaku, the original MPL developer, to acquire
the rights to a suite of closely related MPL analogues. PharmAust’s additional wholly owned subsidiary Epichem Pty Ltd, a fine
chemicals manufacturer, also independently created through its medicinal chemistry arm an alternative and complementary
MPL analogue suite. The patent rights to MPL combined with the patent rights to the Nihon Nohyaku and Epichem MPL analogue
suites place PharmAust in a strong position to commercialise outcomes of mTOR pathway inhibition by this drug class in cancer,
viral infections such as those that lead to COVID-19, and neurodegeneration.
In order to further the development of its products and add value for shareholders, PharmAust changed the original liquid
monepantel formula to a novel monepantel tablet formula to facilitate administration to both dogs and humans. In the period
2020-2021 financial year, PharmAust successfully completed a number of other key milestones.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
Achievements during the 2020 - 2021 financial year include:
1.
Completion of the first stage-gate and first primary endpoint demonstrating objective anticancer activity
in PharmAust’s Bayesian Phase II trial in pet dogs with treatment naïve cancer (B cell lymphoma). One of
the first six dogs enrolled in this first high dose cohort had a Veterinary College Oncology Group (VCOG)
partial response to monepantel treatment with a greater than 60% reduction in total tumour burden and
with some tumours completely regressing. All six dogs had stable target tumour lesions. Low grade weight
loss was observed in three dogs and one dog with the highest plasma levels had higher weight loss. The
observation of weight loss was sufficient for the principal investigator to call a pause in the trial to
reconcile data and dosing strategy.
2.
Submission of a Veterinary Trial Report and a separate Dosing Reconciliation Report to a Veterinary Major
Pharmaceutical company under an existing Option Agreement. The exercise of the Option Agreement
was declined.
3.
Acceptance by the Australian Pesticides and Veterinary Medicines Agency (APVMA) for the addition of
two more veterinary sites for participation in the B cell lymphoma trial: Veterinary Specialist Services (VSS)
in Underwood, Brisbane with Dr Catherine Chan; and Perth Veterinary Services (PVS) in Osborne Park,
Perth with Dr Jessica Finlay.
4.
Shipment of GMP tablets from Catalent, USA for use at Veterinary Specialist Services (Queensland) and
Perth Veterinary Specialists (Western Australia).
5.
Ethics approval by the New South Wales (NSW) Department of Primary Industry’s (DPI’s) Secretary’s
Animal Ethics and Welfare Committee and the Queensland Department of Agriculture and Fisheries
(DAF) Ethics Committee for two separate and additional dosing changes to the veterinary Bayesian trial
design.
6.
Enrolment of five dogs at a low monepantel dose arm of the Bayesian trial and four dogs at an
intermediary dose arm of the Bayesian trial.
7.
Completion of the first stage-gate and second primary endpoint demonstrating objective clinical benefit
in PharmAust’s Bayesian Phase II trial in pet dogs with treatment naïve cancer. This considers dosing as an
independent variable. Six of 15 dogs attained VCOG stable disease or better, with 11 of 15 dogs having
stable target tumour lesions while on trial. Weight loss was either absent or of minimal concern in 13 of 15
dogs, while two of 15 dogs exhibited a higher degree of weight loss, that were both ultimately deemed
mild.
8.
Ethics approval for inclusion of cytokine profiling to study drug-drug interactions in future combinatorial
cancer veterinary work.
9.
PharmAust’s successful re-accreditation as a Research Establishment for veterinary work by the NSW DPI,
the QLD DAF and the Western Australian Department of Primary Industries and Regional Development
(DPIRD).
10. The treatment of 10 dogs at various licenced sites throughout Australia with monepantel for B cell
lymphoma under compassionate use. This program was restricted to 10 dogs so that tablets could be
conserved for the upcoming Phase III registration trial.
11. The award of $881,085 from FightMND to investigate the effects of monepantel upon individuals living
with motor neuron disease.
12. Completion of the Investigator’s Brochure and Protocol for the FightMND trial, with acceptance by the
Monash Human Research Ethics Committee to undertake the trial. Acceptance by the Therapeutics
Goods Administration (TGA) of Australia, to undertake the trial according to the Clinical Trial Notification
(CTN) scheme. Acceptance for trial registration on Clinicaltrials.gov at the United States National Library
of Medicine at the National Institutes of Health.
13. Completion and demonstration with Professor Marc Pellegrini and the Walter and Eliza Hall Institute (WEHI)
that monepantel and monepantel sulfone show efficiency against SARS-CoV2 infection of Calu-3 human
cells in vitro.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
14. Collaboration with the Contract Research Organisation 360biolabs Pty Ltd and confirmation that
monepantel and monepantel sulfone show efficiency against SARS-CoV2 infection of non-human
primate Vero cells in vitro.
15. Collaboration with Associate Professor Martijn van Hemert and the Leiden University Medical Centre in the
Netherlands and confirmation that monepantel sulfone shows efficiency against SARS-CoV2 infection of
non-human primate Vero cells in vitro.
16. Execution of an Agreement with Dr Cody Allison, a consultant, and WEHI to investigate the effects of
monepantel against Human T leukemia virus-1 (HTLV-1) in vitro. This disease has no cure, can cause serious
respiratory illness and cancer and is endemic to certain Indigenous sub-populations in Australia and
Japan.
17. Successful collaboration with Associate Professor Doug Fairlie and the Olivia Newton John Cancer
Research Institute (ONJCRI) for deconvolution of the monepantel anticancer pathway by RNASeq
analysis.
18. Signing of a new Agreement with the ONJCRI to undertake proteomics and target validation by CRISPR
to confirm involvement of individual molecules identified by pathway deconvolution.
19. The purification at Epichem of 700g of high grade monepantel for PharmAust’s in-house and
collaborative preclinical work.
20. Chemical and physical characterisation of monepantel manufactured to PharmAust’s in-house method
by Epichem. Demonstration of exceptionally high purity. In silico toxicology screening clears minor
impurity constituents (these impurities fall below limits required for reporting to the TGA and FDA, but were
qualified regardless). Demonstration of suitability for PharmAust’s up-and-coming Phase I and II clinical
trials in humans investigating monepantel as an anti-cancer, anti-neurodegenerative and anti-viral
agent.
21. Agreement with Syngene International Ltd for the manufacture of 10 kg of GMP grade monepantel
according to PharmAust’s in-house manufacturing protocol. Receipt of all materials after unforeseen
delay related to COVID-19 associated supply chain delays and commencement of 100g to 10 kg scale-
up feasibility studies.
22. Agreement with Catalent San Diego, USA, to undertake feasibility analysis and GMP production of a
bespoke and modified tablet suitable for the FightMND sponsored trial.
23. Demonstration of high tablet stability in two individual GMP manufactured batches: one batch at 12
months and the other at 18 months to date. Stability testing of longer duration are ongoing.
24. PCT filing of a patent describing the antiviral effects of monepantel upon viruses such as SARS-CoV2, the
causal agent of COVID 19, and describing the therapeutic window of monepantel in various diseases.
25. Appointment of Dr Kim Agnew as Principal Investigator for Phase II Bayesian Clinical Trial after the
departure of Dr Claire Cannon who departed the U-Vet University of Melbourne Practice for work in a
private practice. Dr Kim Agnew brings 25 years of veterinary clinical research experience from working
with veterinary majors such as Boehringer-Ingelheim, Merial and Elanco.
26. Appointment of Dr Cody Allison to assist WEHI with the HTLV-1 anti-virus work. Dr Allison first worked with
PharmAust during the collaboration with WEHI investigating the effects of monepantel upon SARS-CoV2,
the causal agent to COVID-19.
27. CSO Dr Richard Mollard, presented at the “Drug Repurposing Forum” held in Bangalore, India.
28. CSO Dr Richard Mollard, presented at the “Continuing Veterinary Education Symposium” held in Perth,
Australia.
29. CSO Dr Richard Mollard, re-appointed Honorary Fellow at the Faculty of Veterinary and Agricultural
Sciences, at the University of Melbourne.
30. The receipt of $755 598 through the Australian Government R&D Tax Incentive Scheme.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
Research and Development Targets 2021-2022:
1.
To have a global animal healthcare company exercise an Agreement relating to the use of MPL as
a veterinary anti-cancer drug. It should be noted that Elanco patents on MPL begin to expire in
2023-2024, following such expiration the PharmAust patents are expected to have Freedom to
Operate. In the meantime, PharmAust would seek a licence from the expiring licence-holder for any
period of sales prior to expiry of composition of matter.
2.
To undertake a large “First Line Therapy” Phase III clinical trial, with and without standard of care,
mutually agreed upon with a partnering global animal healthcare company, in canines with
naturally occurring cancer to build on the positive outcomes of the Phase II trial recently
conducted.
3.
To complete optimization research on the GMP MPL tablet to create a more tailored human
product. The current tablet is sufficient for human work, but further optimization will permit greater
flexibility for targeting a wider range of human conditions in addition to cancer, such as viral
infections (COVID-19) and neurodegenerative disorders.
4.
To commence evaluation of the effects of MPL upon preclinical models of neurodegenerative
disease to understand mechanisms of neuroprotection.
5.
To continue evaluation of the effects of MPL upon preclinical models of cancer and COVID-19 to
understand mechanisms of anti-cancer and anti-viral activity.
6.
To commence clinical trials evaluating the use of monepantel for the treatment of individuals living
with motor neuron disease. PharmAust has secured a FightMND grant for this purpose and has had
ethics approved for this trial design by the Monash Human Research Ethics Committee. The trial will
be run by Dr Susan Mathers at Calvary Health in Melbourne and Professor Dominic Rowe at
Macquarie in Sydney.
7.
To commence clinical trials evaluating the use of monepantel for the treatment of COVID-19
infections. PharmAust has already commenced discussions with several Centres regarding the same
and has made good progress to date.
Factors Supporting PharmAust’s Focus on MPL as an Anti-Cancer Drug:
1.
The successful reformulation of MPL by BRI/Catalent into a robust and suitable tablet formulation.
2.
Demonstration of MPL activity against naturally occurring B-cell lymphoma in dogs; especially the
demonstration of a > 60% reduction in tumour burden and disappearance of several tumours in one
dog.
3.
Demonstration of activity against a key cancer marker in humans and canines.
4.
Demonstration of and better understanding of the 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.
5.
Extensive preclinical R&D package evaluating MPL in many cancers and in many species.
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.
8.
The provision by Elanco of 25 kg of GMP-quality MP.
9.
The independent capacity to produce GMP-quality MPL and the GMP-quality Pitney-owned MPL
analogues using an alternative method with an alternative company.
10. The provision of the comprehensive regulatory package by Elanco, enabling data cross reference
for successful discussions with regulatory bodies.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
Factors Supporting PharmAust’s Focus on MPL as an Anti-COVID-19 Drug:
1.
Precedent published literature is mixed, but suggestive that, if targeted appropriately, inhibition of mTOR
pathways may act in an anti-viral capacity.
2.
Now with more certainty, PharmAust has demonstrated MPL’s activity against virus amplification during
infection of African Green Monkey kidney cells in vitro.
3.
Now with more certainty, PharmAust has demonstrated MPL’s activity against COVID-19 secondary
infectivity in African Green Monkey kidney cells and human Calu cells in vitro. Antiviral activity has been
confirmed in three independent laboratories.
4.
Demonstration that in vitro, MPL’s anti-viral activity can be attained at blood concentrations that are
readily attainable using the tablet.
5.
MPL’s strong safety profile in the clinic and in animal models including the veterinary cancer studies will
support development through Phase I/II trials for the tablet as a COVID-19 anti-viral therapeutic.
Factors Supporting PharmAust’s Focus on MPL as an Anti-Neurodegenerative Disease Drug:
1.
Precedent published literature implicates mTOR pathways in the control of neurological diseases.
2.
PharmAust has published preclinical research demonstrating that MPL impinges upon molecular
cascades relevant to correct induction of autophagic flux relevant to the clearance of misfolded
neurodegenerative causing proteins.
3.
PharmAust has demonstrated MPL’s capacity to cross the blood brain barrier, making MPL a rare drug
that inhibits mTOR signaling while being able to act directly on the brain following oral administration as a
tablet.
4.
MPL’s strong safety profile in the clinic and in animal models including the veterinary cancer studies will
support development through Phase I/II trials for the tablet.
5.
PharmAust has secured funding and human research ethics clearance to support this trial. Two clinicians
have already been recruited to run this trial in two independent sites.
EPICHEM PTY LTD - 100% OWNED SUBSIDIARY
Epichem, a fully owned subsidiary of PharmAust, is a profitable and award winning medicinal and synthetic chemistry company
with expertise and capability in the field of drug development, discovery and design. Epichem provides specialised products and
technical expertise to a worldwide customer base in the pharmaceutical, mining, agriculture and animal health sectors.
Epichem also manufactures Pharmaceutical Reference Materials and Fine Chemicals and supports the PharmAust Drug
Development Pipeline with Lead Drug Development and Validation, Drug Candidate Pipeline Manufacture and Analysis, Drug
reformulation, GMP synthesis and stability support as well as Drug Inventory dispensing to clinical trial centres.
Epichem continues to support the PharmAust Drug Development Pipeline with Lead drug development and validation, drug
candidate pipeline manufacture and analysis, drug reformulation, GMP synthesis and stability support as well as Drug inventory
dispensing to clinical trial centres.
Epichem continues to pursue opportunities to create its own IP portfolio with the assignment of specific projects to individual
chemists. This will also allow Epichem to maximise the R&D Tax Incentive as well as act as an R&D project incubator for PharmAust.
During the financial year, Epichem entered into a licensing agreement with Illinois-based Thermaquatica Inc to research, develop
and promote a novel, innovative and disruptive waste to fuels technology. The technology is a world-first because of its potential
to turn a wide range of waste and biomass feedstock into valuable fuels, fine chemicals, agricultural growth stimulants and
ethanol.
The Company sees this as a low cost but high potential initiative in a very scalable and disruptive business that may have multiple
uses and customers. Epichem is capitalising on recent Australian policies at national, state and local government levels towards
zero organic waste to landfill.
Epichem received $200,000 from the WasteSorted e-Waste Grant in April 2021 from the Western Australian Government New
Industries Fund.
In December 2020, Epichem was awarded another one year extension to its current contract with Drugs for Neglected Diseases
initiative (DNDi), extending that relationship to 13 years. The contract renewal will see Epichem continue to provide its synthetic
and medicinal chemistry expertise to support DNDi’s drug discovery projects, aimed at developing new treatments for neglected
diseases, until 31st December 2021. The extension is expected to generate up to AUD$1.02M in revenues for Epichem during CY
2021.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
PHARMAUST LTD – PARENT ENTITY
Annual General Meeting
The Annual General Meeting of the Shareholders of PharmAust Limited was held on 5 November 2020 as a virtual meeting. All
resolutions were passed by a poll.
PharmAust receives $750k R&D Tax Incentive Refund
Following approval from the ATO of the Company’s application for a Research and Development rebate, an amount of $755,594
was deemed refundable on PharmAust’s 2020 Tax Return and paid to PharmAust in April 2021.
COVID-19 pandemic impact
The Company was impacted from the COVID-19 pandemic.
Epichem was acknowledged as the only consortium Medicinal Chemistry provider that was able to remain open and continue
to provide services during the COVID-19 Pandemic as many other partners were more seriously impacted and affected.
Recruitment for the Phase II Canine Trial at some clinics was put on hold due to the COVID-19 pandemic and related shutdown
measures at State and federal government levels. Following consultation with the trial manager, PharmAust considered it was in
the best interests of dogs and their owners to reduce the consultation visits and intensity required for the trial in some
circumstances. This meant a pause on recruitment at some centres due to COVID-19.
Due to the impact of COVID-19 on global supply chains, Syngene advised PharmAust that the production of 10kg of GMP-grade
MPL was delayed. Regrettably, the subsequent commencement of human trials in MND, COVID-19 and cancer were therefore
delayed until Q1-Q2 CY 2022.
PharmAust Executive Chairman, Dr Roger Aston, said “These are challenging times for our contractors, our partners, our
employees and for PharmAust shareholders. Despite the significant challenges ahead, PharmAust is well positioned to work with
all parties to address the current challenging environment.”
Significant Changes in State of Affairs
A review of events during the reporting period can be found in the review of operations.
Subsequent Events
On 12 July 2021, PharmAust announced it had executed a Research Services Agreement with the Walter and Eliza Hall Institute to
investigate the effects of MPL upon human T-lymphotrophic virus-1 (HTLV-1) infections in vitro.
On 26 July 2021, PharmAust announced that three independent laboratories (Walter and Eliza Hall Institute of Medical Research
(WEHI)
in
Melbourne, 360biolabs
in
Melbourne
and
Leiden
University
Medical
Center
(LUMC)
in
the
Netherlands) have demonstrated that both MPS and MPLS protect against cell death in-vitro, following infection with SARS-CoV2.
On 3 August 2021, PharmAust confirmed its subsidiary Epichem Pty Ltd, has completed building its benchtop Oxidative
Hydrothermal Dissolution (OHD) Flow Reactor to research, develop and promote a novel, innovative and disruptive waste to fuels
technology.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had no significant impact on the consolidated
entity up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such
as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
No other 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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
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 consolidated entity is subject to a range of environmental regulation. During the year, the consolidated entity met all reporting
requirements under any relevant legislation. There were no incidents which required reporting.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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DIRECTORS' REPORT (Cont.)
Information on Directors
Dr Roger Aston – Executive Chairman
Qualifications
BSc (Hons), Ph.D
Experience
Dr Aston currently serves as Executive Chairman and Chief Executive Officer of PharmAust Ltd.
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 15,044,815 Fully Paid Ordinary Shares.
Contractual rights to shares
Nil
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Immuron Limited (ASX:IMC), Oncosil Limited (ASX: OSL) and ResApp Health Limited (ASX:RAP)
Regeneus Limited (ASX:RGS)
Special responsibilities:
Not applicable
Mr Robert C Bishop – Executive Director
Qualifications
Ll.B (Hons), Solicitor (New South Wales and England & Wales), MAICD
Experience
Mr Bishop has 35 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 9,211,060 Fully Paid Ordinary Shares.
Contractual rights to shares
Nil
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Nil
Nil
Special responsibilities:
Not applicable
Mr Neville Bassett AM – Non-Executive Director
Qualifications
AM, FCA, B.Bus
Experience
Mr Bassett has spent more than 35 years working in accounting, finance and stockbroking. During
that time, he has had considerable involvement in Australian financial markets including
numerous public Company listings and capital raisings, as well as mergers and acquisitions.
In 1991, he became a Director/Councillor of the Royal Flying Doctor Service (RFDS) in WA and he
was Chairman of RFDS Western Operations for eight years until his retirement in 2017. He also
served six years as Western Operations representative on the Board of the Australian Council of
the Royal Flying Doctor Service of Australia. In 2015, Mr Bassett’s decades of unwavering
dedication to community service were recognised when he was awarded a Member of the
Order of Australia (AM) in the Australia Day Honours.
Interests in Shares & Options
Contractual rights to shares
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Mr Bassett holds 7,000 ordinary shares in PharmAust Limited.
Nil
Auris Minerals Limited, Pointerra Limited, and Tennant Minerals NL
Metalsearch Ltd and Yowie Group Limited
Special responsibilities:
Not applicable
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 12 -
DIRECTORS' REPORT (Cont.)
Mr Sam Wright – Non-Executive Director & Company Secretary
Qualifications
AFin DipAcc ACIS MAICD
Experience
Sam Wright has over fifteen years’ experience in the administration of ASX listed companies,
corporate governance and corporate finance. He is a member of the Australian Institute of
Company Directors, the Financial Services Institute of Australasia, and the Chartered Secretaries
of Australia.
Mr Wright joined PharmAust as the Financial Controller in September 2006, was appointed as the
Company Secretary in August 2007, and has been a Director of the Company since October
2008.
Mr Wright is also Company Secretary for ASX listed companies, Buxton Resources Limited,
Structural Monitoring Systems plc and Wide Open Agriculture Limited. Mr Wright has also filled the
role of Director and Company Secretary with a number of unlisted companies.
Mr Wright 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 has extensive experience in relation to public Company responsibilities, including ASX
and ASIC compliance, control and implementation of corporate governance, statutory financial
reporting, and shareholder relations with both retail and institutional investors.
Interests in Shares & Options
Other Current Directorships
(ASX Listed Companies)
Previous Directorships (last 3
years) ASX Listed Companies
Mr Wright, via his Company, holds 3,000,000 ordinary shares in PharmAust Limited.
Structural Monitoring Systems plc (ASX:SMN)
Nil
Special responsibilities:
Not applicable
Meetings of Directors
The number of meetings of the Company’s directors held during the year ended 30 June 2021, and the number of meetings attended
by each director was:
Meetings of Directors
Directors
Eligible to
Participate
Number
Attended
Dr Roger Aston
5
5
Mr Neville Bassett
5
5
Mr Robert Bishop
5
5
Mr Sam Wright
5
5
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 13 -
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.
Voting and comments made at the Company's 2020 Annual General Meeting ('AGM').
At the 2020 AGM, held on 5 November 2020, 89.32% of the votes received supported the adoption of the remuneration report for
the year ended 30 June 2020. The Company did not receive any specific feedback at the AGM regarding its remuneration
practices.
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
Executive Chairman
Robert Bishop
Executive Director
Sam Wright
Non-Executive Director & Company Secretary
Neville Bassett
Non-Executive Director
Other Key Management Personnel
Richard Mollard
Martine Keenan
Chief Scientific Officer – PharmAust Ltd
Chief Executive Officer – Pitney Pharmaceuticals Pty Ltd
Chief Scientific Officer & Executive Director – Epichem Pty Ltd
Colin La Galia
Chief Executive Officer – Epichem Pty Ltd
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 14 -
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
2021
Short-term Benefits
Post-employment
Benefits
Share-based
Payments
Salary & Fees
Cash Bonus
Superannuation
Options &
Performance Rights
Total
$
$
$
$
$
Directors
Roger Aston
260,000
-
24,700
-
284,700
Sam Wright
138,000
-
-
-
138,000
Robert Bishop
128,000
-
12,160
-
140,160
Neville Bassett
30,000
-
-
-
30,000
Other Key
Management
Personnel
Richard Mollard
240,000
-
22,800
137,515
400,315
Martine Keenan
144,500
-
13,727
-
158,227
Colin La Galia
241,275
17,500
21,850
17,500
298,125
1,181,775
17,500
95,237
155,015
1,449,527
2020
Short-term Benefits
Post-employment
Benefits
Share-based
Payments
Salary & Fees
Superannuation
Options &
Performance Rights
Total
$
$
$
$
Directors
Roger Aston
260,000
24,700
-
284,700
Sam Wright
132,200
-
-
132,200
Robert Bishop
122,000
11,590
-
133,590
Neville Bassett
30,000
-
-
30,000
Other Key
Management
Personnel
Wayne Best*
9,000
-
-
9,000
Richard Mollard
240,000
22,800
18,829
281,629
Martine Keenan
175,000
16,482
-
191,482
John Horton
6,000
-
-
6,000
Rebecca McCrackan
5,400
513
-
5,913
Colin La Galia**
173,089
14,482
-
187,571
1,152,689
90,567
18,829
1,262,085
* Resigned on 1/07/2020.
** Appointed on 7/10/2019.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 15 -
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
The proportion of remuneration linked to performance and the fixed proportion
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 $128,000 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 Sam Wright (Non-Executive Director and Company Secretary – PharmAust Limited)
Term of the agreement – permanent and no specific term.
Consultancy fees of $13,000 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 Neville Bassett (Non-Executive Director – PharmAust Limited)
Term of the agreement – permanent and no specific term.
Directors fees of $30,000 per year.
Remuneration of Richard Mollard (Chief Scientific Officer – PharmAust Ltd & Chief Executive Officer – Pitney Pharmaceuticals Pty Ltd)
Term of the agreement – permanent and no specific term.
Base salary of $240,000 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 Martine Keenan (Chief Executive Officer – Epichem Pty Ltd)
Term of the agreement –Non-executive director of Epichem Pty Ltd with a base salary of $1,500 per month for 3 months.
Base salary of $140,000 per annum plus superannuation of 9.5% of base salary for period while CEO of Epichem.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to three (3) months base
salary and superannuation.
Fixed remuneration
At risk – STI
At risk – LTI
2021
2020
2021
2020
2021
2020
Directors
Roger Aston
100%
100%
-
-
-
-
Sam Wright
100%
100%
-
-
-
-
Robert Bishop
100%
100%
-
-
-
-
Neville Bassett
100%
100%
-
-
-
-
Other Key Management Personnel
Richard Mollard
66%
93.4%
34%
6.6%
-
-
Martine Keenan
100%
100%
-
-
-
-
Colin La Galia
88%
100%
12%
-
-
-
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 16 -
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Remuneration of Colin La Galia (Chief Executive Officer – Epichem Pty Ltd)
Commencement date is 7 October 2019. Term of the agreement – permanent and no specific term.
Base salary of $212,500 per annum plus superannuation of 9.5% of base salary.
Car allowance with value of $28,775 p.a.
Bonus set out below depending on the relevant band in the event of the satisfaction of Bonus milestones for any one financial year
that Epichem Pty Ltd makes an after tax profit of:
(a)
$100,000 – $200,000 - bonus of $10,000 plus $10,000 worth of PAA shares; or
(b) $200,001 - $320,000 - bonus of $17,500 plus $17,500 worth of PAA shares; or
(c)
$320,001 - $400,000 - bonus of $25,000 plus $25,000 worth of PAA shares; or
(d) $400,001 - $525,000 - bonus of $30,000 plus $30,000 worth of PAA shares; or
(e)
$525,001 - $650,000 - bonus of $35,000 plus $35,000 worth of PAA shares; or
(f)
$650,001 - $750,000 - bonus of $40,000 plus $40,000 worth of PAA shares; or
(g)
$750,001 - $1,000,000 - bonus of $45,000 plus $45,000 worth of PAA shares; or
(h)
$1,000,001 plus - bonus of $50,000 plus $50,000 worth of PAA shares; or
(i)
for any after tax profit above $1,250,000 – additional bonus of $5,000 plus $5,000 worth of PAA shares in addition to the
amount in (h) above for each additional $250,000 profit figure above $1,250,000.
Payment of termination benefit on termination by the employer, other than for gross misconduct, is equal to three (3) months base
salary and superannuation. Payment of the bonus and grant of shares will be made in the following year after the completion of the
annual audit.
Share-based compensation
Shares
On 12 October 2020, 133,867 fully paid ordinary shares were issued to Colin La Galia as part of compensation during the year
ended 30 June 2021, with a total value of $17,500.
Options
There were no options issued to directors and other KMP as part of compensation during the year ended 30 June2021.
Performance Rights(PR)
On 8 October 2020, 1,000,000 performance rights were granted to Richard Mollard as part of compensation during the year
ended 30 June 2021. The performance rights have vesting conditions attached. These performance rights expire on 31 March
2022.
Performance condition:
Upon the Group entering into a binding licensing agreement with an Australian or overseas pharmaceutical or veterinary
company to commercialise monepantel and/or monepantel sulphone for use in the commercial anti-cancer treatment of
one or more canine or feline cancers on terms approved by the Board.
Number of
Fair value
PR
per PR
Name
granted
Grant date
Expiry date
Exercise price
at grant date
Richard Mollard
1,000,000
8/10/2020
31/3/2022
$nil
$0.12
Options and performance rights granted as part of remuneration
All options and performance rights 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
CONSOLIDATED
2021
$
Transactions with related parties:
The following transactions occurred with related parties:
Payment for services to – Straight Lines Consultancy [1]
18,000
[1] Sam Wright is director of Straight Lines Consultancy.
Balance with related parties:
The following balances occurred with related parties:
Due to Mandevilla Pty Ltd [1]
16,500
[1] Neville Bassett is director of Mandevilla Pty Ltd.
All transactions were made on normal commercial terms and conditions and at market rates.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 17 -
DIRECTORS' REPORT (Cont.)
Remuneration Report (Audited)
Additional information
The earnings of the consolidated entity for the five years to 30 June 2021 are summarised below:
2021
2020
2019
2018
2017
$
$
$
$
$
Revenue
3,671,645
4,123,411
4,364,554
3,295,904
3,333,505
EBITDA (loss)
(960,061)
(968,857)
(1,330,970)
(2,374,722)
(1,161,152)
EBIT (loss)
(1,258,324)
(1,243,494)
(1,503,400)
(2,493,327)
(1,343,614)
Loss after income tax
(1,337,310)
(1,361,990)
(1,551,222)
(2,521,679)
(1,343,614)
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2021
2020
2019
2018
2017
Share price at financial year end ($)
0.09
0.16
0.04
0.04
0.06
Total dividends declared (cents per share)
-
-
-
-
-
Basic earnings per share (cents per share)
(0.42)
(0.46)
(0.71)
(1.72)
(1.08)
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:
2021
Balance
1 July 2020
Exercise of
options
Received as
Compensation
At date of
Appointment
and/or
Resignation
On-market
trade
Balance
30 June 2021
No.
No.
No.
No.
No.
No.
Directors
Roger Aston
15,044,815
-
-
-
-
15,044,815
Robert Bishop
9,211,060
-
-
-
-
9,211,060
Sam Wright
3,000,000
-
-
-
-
3,000,000
Neville Bassett
7,000
-
-
-
-
7,000
Other Key
Management
Personnel
Colin La Galia
-
-
133,867
-
(133,867)
-
Richard Mollard
625,000
-
-
-
-
625,000
Martine Keenan
-
750,000
-
-
(750,000)
-
27,887,875
750,000
133,867
-
(883,867)
27,887,875
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 18 -
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:
2021
Balance
1 July 2020
Granted as
Compensation
Options
Exercised
At date of
Appointment
and/or
Resignation
Net
Change
Other*
Balance
30 June
2021
Total
Vested
No.
No.
No.
No.
No.
No.
Directors
Roger Aston
-
-
-
-
-
-
-
Robert Bishop
-
-
-
-
-
-
-
Sam Wright
-
-
-
-
-
-
-
Neville Bassett
-
-
-
-
-
-
-
Other Key
Management
Personnel
Colin La Galia
-
-
-
-
-
-
-
Richard Mollard
-
-
-
-
-
-
-
Martine Keenan
750,000
-
(750,000)
-
-
-
-
750,000
-
(750,000)
-
-
-
-
*The net change other column above includes those options that have expired during the year.
Performance Rights holding
The number performance rights 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:
2021
Balance
1 July 2020
Granted as
Compensation
Options
Exercised
At date of
Appointment
and/or
Resignation
Net
Change
Other*
Balance
30 June
2021
Total
Vested
No.
No.
No.
No.
No.
No.
Directors
Roger Aston
-
-
-
-
-
-
-
Robert Bishop
-
-
-
-
-
-
-
Sam Wright
-
-
-
-
-
-
-
Neville Bassett
-
-
-
-
-
-
-
Other Key
Management
Personnel
Colin La Galia
-
-
-
-
-
-
-
Richard Mollard
4,000,000
1,000,000
-
-
-
5,000,000
-
Martine Keenan
-
-
-
-
-
-
-
4,000,000
1,000,000
-
-
-
5,000,000
-
*The net change other column above includes those options that have expired during the year.
[This concludes the remuneration report, which has been audited.]
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 19 -
DIRECTORS' REPORT (Cont.)
Shares under option
The details of unissued ordinary shares under option at the date of this report are as follows:
Number
Exercise Price
Expiry Date
Unlisted
250,000
$0.15
30 June 2022
Unlisted
50,000
$0.12
31 January 2022
Shares under Performance Rights
The details of unissued ordinary shares under performance rights at the date of this report are as follows:
Number
Exercise Price
Expiry Date
Unlisted
2,000,000
$nil
30/4/2022
2,000,000
$nil
31/10/2022
Unlisted
1,000,000
$nil
31/3/2022
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 20 -
DIRECTORS' REPORT (Cont.)
Non-Audit Services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are
outlined in Note 27 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 27 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.
Officers of the Company who are former partners of RSM Australia Partners
There are no officers of the Company who are former partners of RSM Australia Partners.
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
18 August 2021
Perth, Western Australia
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of PharmAust Limited for the year ended 30 June 2021, 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
TUTU PHONG
Dated: 18 August 2021
Partner
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 2021, the consolidated statement of profit
or loss and other 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 2021 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.
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
Intangible Assets
Refer to Note 8 in the financial statements
As at 30 June 2021, the Group has intangible asset
relating to the intellectual property rights for the
monepantel oncology platform (MPL) with a carrying
value of $3,107,476.
The asset is not yet available for use and is required
to be tested annually for impairment by comparing
its carrying amount with its recoverable amount.
Management’s assessment determined that the
recoverable amount of this asset exceeded its
carrying value at the reporting date.
Management’s assessment involved:
•
Reviewing the key assumptions for the MPL
value-in-use model 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 included:
•
Assessing whether there are any indicators of
impairment of the MPL asset, including enquiring
with management on the current and planned
commercialisation activities;
•
Assessing the reasonableness of management’s
assumptions used 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 the
financial statements.
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 2021 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.
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: https://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 2021.
In our opinion, the Remuneration Report of PharmAust Limited, for the year ended 30 June 2021, 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.
RSM AUSTRALIA PARTNERS
Perth, WA
TUTU PHONG
Dated: 18 August 2021
Partner
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 25 -
DIRECTORS’ DECLARATION
In the directors' opinion:
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
●
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
●
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as
at 30 June 2021 and of its performance for the financial year ended on that date;
●
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become
due and payable; and
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
Dr ROGER ASTON
Executive Chairman
18 August 2021
Perth, Western Australia
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 26 -
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2021
CONSOLIDATED
NOTE
2021
$
2020
$
Revenue
2
2,140,320
3,195,892
Other income
2
1,531,325
927,519
3,671,645
4,123,411
Raw materials and consumables used
(225,318)
(246,157)
Employee benefits expense
(2,388,269)
(3,099,119)
Depreciation expense
(298,263)
(274,637)
Finance costs
(78,986)
(118,495)
Research and development expenses
(554,144)
(605,351)
Administration expenses
(1,463,975)
(1,141,642)
(5,008,955)
(5,485,401)
(Loss) before income tax expense
(1,337,310)
(1,361,990)
Income tax expense
3a
-
-
(Loss) after income tax expense
(1,337,310)
(1,361,990)
Other comprehensive income
-
-
Total comprehensive (loss) for the year
(1,337,310)
(1,361,990)
Basic and diluted loss per share (cents per share)
16
(0.42)
(0.46)
The accompanying notes form part of these financial statements.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 27 -
STATEMENT OF FINANCIAL POSITION
As at 30 June 2021
CONSOLIDATED
NOTE
2021
$
2020
$
CURRENT ASSETS
Cash and cash equivalents
4
3,020,268
2,880,496
Trade and other receivables
5a
241,949
297,683
Other current assets
6
86,342
34,359
Inventory
7
1,008,071
857,570
TOTAL CURRENT ASSETS
4,356,630
4,070,108
NON-CURRENT ASSETS
Intangible assets
8
3,142,089
3,107,476
Plant and equipment
9
3,454,879
3,568,717
TOTAL NON-CURRENT ASSETS
6,596,968
6,676,193
TOTAL ASSETS
10,953,598
10,746,301
CURRENT LIABILITIES
Trade and other payables
10
559,007
557,002
Borrowings
11
38,206
179,230
Employee benefits
12
205,720
146,672
Lease liabilities
17
108,433
175,407
TOTAL CURRENT LIABILITIES
911,366
1,058,311
NON-CURRENT LIABILITIES
Borrowings
11
-
38,206
Employee benefits
12
30,381
44,507
Lease liabilities
17
1,131,367
1,079,008
TOTAL NON-CURRENT LIABILITIES
1,161,748
1,161,721
TOTAL LIABILITIES
2,073,114
2,220,032
NET ASSETS
8,880,484
8,526,269
EQUITY
Issued capital
13
55,326,441
53,772,433
Reserves
14
2,093,161
1,955,644
Accumulated losses
25
(48,539,118)
(47,201,808)
TOTAL EQUITY
8,880,484
8,526,269
The accompanying notes form part of these financial statements.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 28 -
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2021
Issued
Capital
Accumulated
Losses
Share-Based
Payments
Reserve
Total Equity
$
$
$
$
As at 1 July 2019
51,388,306
(45,839,818)
1,907,392
7,455,880
(Loss) for the year
-
(1,361,990)
-
(1,361,990)
Total comprehensive (loss) for the year
-
(1,361,990)
-
(1,361,990)
Transactions with owners in their capacity
as owners:
Shares issued (net of costs)
2,223,144
-
-
2,223,144
Exercise of options
160,983
-
-
160,983
Share-based payment
-
-
48,252
48,252
As at 30 June 2020
53,772,433
(47,201,808)
1,955,644
8,526,269
As at 1 July 2020
53,772,433
(47,201,808)
1,955,644
8,526,269
(Loss) for the year
-
(1,337,310)
-
(1,337,310)
Total comprehensive (loss) for the year
(1,337,310)
-
(1,337,310)
Transactions with owners in their capacity
as owners:
Shares issued (net of costs)
1,554,008
-
-
1,554,008
Share-based payment
-
-
137,517
137,517
As at 30 June 2021
55,326,441
(48,539,118)
2,093,161
8,880,484
The accompanying notes form part of these financial statements.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 29 -
STATEMENT OF CASH FLOWS
For the year ended 30 June 2021
CONSOLIDATED
NOTE
2021
$
2020
$
Cash Flows from Operating Activities
Receipts from customers
2,191,105
3,133,673
Payments to suppliers and employees
(4,627,296)
(5,332,663)
Other income
1,516,607
927,519
Interest received
14,718
23,378
Interest and other costs of finance
(33,099)
(21,909)
Net cash used in operating activities
19b
(937,965)
(1,270,002)
Cash Flows from Investing Activities
Payments for plant and equipment
(101,718)
(30,229)
Payments for intangible assets
(36,319)
-
Net cash used in investing activities
(138,037)
(30,229)
Cash Flows from Financing Activities
Proceeds from share issues (net)
1,536,508
2,384,127
Repayment of borrowing and leases
(320,734)
(294,025)
Net cash generated from financing activities
1,215,774
2,090,102
Net increase in cash held
139,772
789,871
Cash at the beginning of the financial year
2,880,496
2,090,625
Cash at the end of the financial year
19a
3,020,268
2,880,496
The accompanying notes form an integral part of these financial statements.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 30 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
These consolidated financial statements and notes represent those of PharmAust Limited and its Controlled Entities (the
“consolidated entity” or “Group”).
1
SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
Conceptual Framework for Financial Reporting (Conceptual Framework)
The consolidated entity has adopted the revised Conceptual Framework from 1 July 2020. The Conceptual Framework
contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting
Standards, but it has not had a material impact on the consolidated entity's financial statements.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate
for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value through other
comprehensive income, investment properties, certain classes of property, plant and equipment and derivative financial
instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed within Note 1.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in Note 24.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of PharmAust Limited as at 30
June 2021 and the results of all subsidiaries for the year then ended. PharmAust Limited and its subsidiaries together are
referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the parent has control. The consolidated entity controls an entity when the
parent entity is exposed to, or has rights to, variable returns from its involvement with the subsidiary 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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 31 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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.
PharmAust Limited 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.
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 32 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Plant and Equipment (Cont.)
Depreciation
The depreciable amount of all plant 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
Depreciation rate
Plant and equipment
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 plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits.
Right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life
of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the
end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or
adjusted for any remeasurement of lease liabilities.
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases
with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss
as incurred.
Lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the consolidated entity's incremental borrowing rate. Lease payments
comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a
rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise
of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that
do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset
is fully written down.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 33 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either
amortised cost or fair value depending on their classification. Classification is determined based on both the business model
within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting
mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the
consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable
expectation of recovering part or all of a financial asset, its carrying value is written off.
Financial assets at fair value through profit or loss
Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as
financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they
are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated
as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss.
Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity
intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition.
Impairment of financial assets
The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured
at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends
upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit
risk has increased significantly since initial recognition, based on reasonable and supportable information that is available,
without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value
of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss
allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
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.
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. 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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 34 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
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.
Government grants
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them
with the costs that they are intended to compensate.
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.
Defined contribution superannuation expense
Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.
Share-based payments
Equity-settled 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.
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.
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 allowance for expected credit losses. Trade receivables are generally due for settlement within 30
days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime
expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days
overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 35 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
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.
Revenue recognition
The consolidated entity recognises revenue as follows:
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated
entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the
transaction price which takes into account estimates of variable consideration and the time value of money; allocates the
transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each
distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a
manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are recognised as a refund liability.
Sale of goods
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is
generally at the time of delivery.
Rendering of services
Revenue from a contract to provide services is recognised over time as the services are rendered based on either a fixed
price or an hourly rate.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
All revenue is stated net of the amount of goods and services tax.
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 36 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
2
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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.
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share 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.
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.
Intangible 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.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 37 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
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.
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.
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.
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.
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 38 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
1
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The difference between the acquisition-date fair value of assets acquired, liabilities assumed and any non-controlling
interest in the acquiree and the fair value of the consideration transferred and the fair value of any pre-existing investment
in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing fair value is less than the fair
value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a
gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the identification and
measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration transferred
and the acquirer's previously held equity interest in the acquirer.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional
amounts recognised and also recognises additional assets or liabilities during the measurement period, based on new
information obtained about the facts and circumstances that existed at the acquisition-date. The measurement period
ends on either the earlier of (i) 12 months from the date of the acquisition or (ii) when the acquirer receives all the information
possible to determine fair value.
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 2021.
The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and
Interpretations.
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.
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may
have, on the consolidated entity based on known information. This consideration extends to the nature of the supply chain,
staffing and geographic regions in which the consolidated entity operates. Other than as addressed in specific notes, there
does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties
with respect to events or conditions which may impact the consolidated entity unfavourably as at the reporting date or
subsequently as a result of the Coronavirus (COVID-19) pandemic.
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.
Refer to Note 20 for further information.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 39 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
2
REVENUE
Sales
2,140,320
3,195,892
OTHER INCOME
Interest received
14,718
3,290
Other revenue
1,516,607
924,229
1,531,325
927,519
3,671,645
4,123,411
Timing of revenue recognition
Goods transferred at a point in time
2,140,320
3,195,892
Services transferred over time
-
-
2,140,320
3,195,892
Refer to Note 22 Segment Reporting for further information with respect to disaggregated 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
(1,337,310)
(1,361,990)
Prima facie tax benefit at 27.5% (2020: 27.5%)
(367,760)
(374,547)
Tax effect of:
- Other non-allowable items
(25,849)
219,455
- Tax losses not brought to account
393,609
155,092
-
-
3b
Deferred tax asset
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) (2020: 27.5%)
6,888,804
6,495,195
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
3,020,268
2,880,496
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 40 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
5 TRADE AND OTHER RECEIVABLES
5a
CURRENT
Trade receivables
241,949
297,683
Less: Allowance for expected credit losses
-
-
241,949
297,683
Trade receivables: Payment terms are 30 days from the date of recognition and carried at fair value.
5b Allowance for expected credit losses
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.
The consolidated entity has recognised a loss of $nil (2020: $nil) in profit or loss in respect of the expected credit losses for the year
ended 30 June 2021.
5c Past due but not impaired
As of 30 June 2020, trade receivables of $10,278 (2020: $7,738) 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
3,632
561
61 days and above
6,646
7,177
10,278
7,738
Based on the credit history of these other classes, it is expected that these amounts will be received when due. The Group
does not hold any collateral in relation to these receivables.
5d Fair value and credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties
other than those receivables specifically provided for and mentioned within Note 5. The class of assets described as “trade
and other receivables” is considered to be the main source of credit risk related to the Group.
6
OTHER CURRENT ASSETS
GST
19,576
12,966
Bond
4,225
4,291
Prepayments
62,541
17,102
86,342
34,359
7 Inventories
Finished Goods
944,626
857,570
Raw Materials
10,569
-
Work in Progress
52,876
-
1,008,071
857,570
8 Intangible Assets
Intellectual property
3,107,476
3,107,476
Licensing rights
34,613
-
3,142,089
3,107,476
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 41 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
8a. Intangible Assets – Intellectual Property
Intellectual property rights – at cost
5,179,128
5,179,128
Amortisation
-
-
Accumulated impairment losses
(2,071,652)
(2,071,652)
3,107,476
3,107,476
Movements in Carrying Amounts:
Balance at the beginning of the year
3,107,476
3,107,476
Addition
-
-
Impairment
-
-
Balance at the end of the year
3,107,476
3,107,476
No amortisation has been recognised as these intellectual property rights are not yet at the commercialisation stage.
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% (2020: 10%).
-
Post-tax discount rate of 30% (2020: 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.
Based on the results of the value in use calculation using a discounted cash flow model, there is no impairment required to
be recognised.
8b. Intangible Assets – Licencing
Licencing rights – at cost
36,319
-
Amortisation
(1,706)
-
34,613
-
Movements in Carrying Amounts:
Balance at the beginning of the year
-
-
Addition
36,319
-
Amortisation
(1,706)
-
Balance at the end of the year
34,613
-
9. PLANT AND EQUIPMENT
Plant and Equipment - Cost
3,635,491
3,526,015
Less: Accumulated depreciation
(1,349,686)
(1,179,731)
2,285,805
2,346,284
Right of Use Asset – Cost
1,425,678
1,344,676
Less: Accumulated depreciation
(256,604)
(122,243)
1,169,074
1,222,433
3,454,879
3,568,717
Movements in Carrying Amounts:
Plant and
Equipment
$
Right of Use
Asset
$
Total
$
Balance at 1 July 2019
2,468,449
-
2,468,449
Additions
30,229
1,344,676
1,374,905
Depreciation expense
(152,394)
(122,243)
(274,637)
Balance at 30 June 2020
2,346,284
1,222,433
3,568,717
Additions
103,762
81,001
184,763
Disposals
(338)
-
(338)
Depreciation expense
(163,903)
(134,360)
(298,263)
Balance at 30 June 2021
2,285,805
1,169,074
3,454,879
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 42 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
10 TRADE AND OTHER PAYABLES
Trade creditors and accruals
559,007
557,002
Payment terms are 30 days from receipt of goods and/or services rendered.
11
BORROWINGS
CURRENT
EFIC Loan Facility
38,206
179,230
38,206
179,230
NON CURRENT
EFIC Loan Facility
-
38,206
-
38,206
Terms and conditions:
The EFIC Loan Facility has a variable interest rate charged at the AFMA Bank Bill Average Bid Rate fix + 6.05% margin. At
30 June 2021 this rate was 6.13% (2020:6.195%).
Financing arrangements
Loan Facility 1:
The consolidated entity entered into a loan agreement to gain access to an original loan facility of $466,000.
Security: First charge over the laboratory equipment.
Loan facility 1 (formerly known as Loan Facility 2):
Total facility limit
466,000
466,000
Amount utilised
(466,000)
(466,000)
Total unused facility at 30 June
-
-
12
EMPLOYEE BENEFITS
CURRENT
Employee entitlements
205,720
146,672
NON-CURRENT
Employee entitlements
30,381
44,507
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 expect all employees to take the full amount of accrued leave or require
payment within the next 12 months.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 43 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
13
ISSUED CAPITAL
Issued and paid up ordinary shares
55,326,441
53,772,433
13a Movement in fully paid ordinary shares
2021
2020
2021
2020
Ordinary Shares
Number of shares
$
$
1 July
302,021,053
280,221,192
53,772,433
51,388,306
Shares issued
133,867
19,999,999
17,500
2,400,000
Costs of share issues
-
-
(44,992)
(176,856)
Share issued upon the exercise of options
14,575,000
1,799,862
1,581,500
160,983
30 June
316,729,920
302,021,053
55,326,441
53,772,433
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 Risk Management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current company's share price at the time of the investment. The consolidated entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in
order to maximise synergies.
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the
financial year.
The capital risk management policy remains unchanged from the 30 June 2020 Annual Report.
14
RESERVES
Share-based payments reserve
2,093,161
1,955,644
The share-based payments reserve is used to accumulate the fair value of the issue of options and performance rights.
The movement in the share-based payments reserve was as follows:
Opening balance
1,955,644
1,907,392
Share based payment
137,517
48,252
Ending balance
2,093,161
1,955,644
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 44 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
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:
CONSOLIDATED
2021
$
2020
$
Transactions with related parties:
The following transactions occurred with related parties:
Payment for services to – Straight Lines Consultancy [1]
18,000
18,000
[1] Sam Wright is director of Straight Lines Consultancy.
Balance with related parties:
The following balances occurred with related parties:
Due to Mandevilla Pty Ltd [1]
16,500
-
[1] Neville Bassett is director of Mandevilla Pty Ltd.
16
EARNINGS PER SHARE
Net (loss) attributable to members of the Company
1,337,310
1,361,990
No.
No.
Weighted average number of ordinary shares outstanding during
the year used in calculating basic earnings per share.
315,740,339
296,032,074
16a
Basic Earnings per Share
Basic earnings per share is determined by dividing the loss after income tax attributable to members of the Company by the
weighted average number of ordinary shares outstanding during the financial period, adjusted for any bonus elements in
ordinary shares issued during the year.
16b
Diluted Earnings per Share
Diluted earnings per share is the same as basic earnings, due to the Group incurring a loss for the year ending 30 June
2021.
15
RELATED PARTY TRANSACTIONS
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 45 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
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 9 as detailed in the accounting
policies to these financial statements, are as follows:
Note
Consolidated
2021
$
2020
$
Financial assets
Cash and cash equivalents
4
3,020,268
2,880,496
Loans and receivables (excluding GST)
5a
241,949
297,683
Total financial assets
3,262,217
3,178,179
Financial liabilities
Trade and other payables(excluding GST)
10
559,007
557,002
Borrowings
11
38,206
217,436
Total financial liabilities
597,213
774,438
Specific Financial Risk Exposures and Management
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.
2021
Weighted
Average
Interest
Rate
Floating
Interest
Rate
Fixed Interest
Rate
Within 1 Year
Fixed
Interest
Rate
Within 1-5
Years
Non-Interest
Bearing
Total
$
$
$
$
$
Financial Assets
Cash and cash equivalents
0.08%
3,012,247
8,021
-
-
3,020,268
Trade and other
receivables
241,949
241,949
Total Financial Assets
3,012,247
8,021
-
241,949
3,262,217
Financial liabilities
Trade and other payables
-
-
-
(559,007)
(559,007)
Borrowings
6.13%
(38,206)
-
-
-
(38,206)
Lease labilities
7.5%
-
(108,433)
(1,131,367)
-
(1,239,800)
Total Financial Liabilities
(38,206)
(108,433)
(1,131,367)
(559,007)
(1,837,013)
Net Financial
Assets/(Liabilities)
2,974,041
(100,412)
(1,131,367)
(317,058)
1,425,204
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 46 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
17
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
2020
Weighted
Average
Interest
Rate
Floating
Interest
Rate
Fixed Interest
Rate
Within 1 Year
Fixed
Interest
Rate
Within 1-5
Years
Non-Interest
Bearing
Total
$
$
$
$
$
Financial Assets
Cash and cash equivalents
0.58%
604,964
2,275,532
-
-
2,880,496
Trade and other receivables
-
-
-
297,683
297,683
Total Financial Assets
604,964
2,275,532
-
297,683
3,178,179
Financial liabilities
Trade and other payables
-
-
-
(557,002)
(557,002)
Borrowings
6.2%
(217,436)
-
-
-
(217,436)
Lease liabilities
7.5%
-
(175,407)
(1,079,008)
(1,254,415)
Total Financial Liabilities
(217,436)
(175,407)
(1,079,008)
(557,002)
(2,028,853)
Net Financial
Assets/(Liabilities)
387,528
2,100,125
(1,079,008)
(259,319)
1,149,326
Interest rate sensitivity analysis
At 30 June 2021 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 $30,505 (2020: $3,875) 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.
CONSOLIDATED
2021
$
2020
$
Contracted maturities
Payables
- within 1 year
578,256
557,002
Borrowings
- within 1 year
38,206
179,230
Price risk
The Group is not exposed to price risk.
Foreign exchange risk
The Group is exposed to foreign exchange rate arising from various currency exposures. Foreign exchange risk arises from
future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Group’s
functional currency.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
2021
2020
USD
EUR
SEK
USD
EUR
SEK
$
$
$
$
$
$
Trade receivables
37,748
2,318
-
140,157
556
-
Trade payables
45,818
-
-
26,478
-
925
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 47 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
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:
2021
2020
Change in profit and equity with a +/-
10% in AUD to
Change in profit and equity with a +/-
10% in AUD to
USD
EUR
SEK
USD
EUR
SEK
$
$
$
$
$
$
Trade receivables
3,603
227
-
13,379
53
-
Trade payables
4,374
-
-
2,527
-
88
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 profit or loss and other comprehensive income and in the notes to the financial statements.
18
INTERESTS IN SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following wholly-owned subsidiaries
in accordance with the accounting policy described in Note 1:
EQUITY HOLDING
EQUITY HOLDING
COUNTRY OF
CORPORATION
CLASS OF SHARES
2021
%
2020
%
Name:
Epichem Pty Ltd
Australia
Ordinary
100
100
Pitney Pharmaceuticals Pty Ltd
Australia
Ordinary
100
100
Epichem OHD Pty Ltd*
Australia
Ordinary
100
-
*Newly incorporated entity during the year.
19
NOTES TO THE STATEMENT OF CASH FLOWS
19a
Reconciliation of Cash
CONSOLIDATED
2021
$
2020
$
Cash at bank
3,020,268
2,880,496
19b
Reconciliation of net cash used in operating activities to (loss) after
income tax
(Loss) after income tax
(1,337,310)
(1,361,990)
Depreciation
298,263
274,637
Share based payment expense
155,015
48,252
Interest on lease
45,888
96,586
Movement in assets and liabilities:
Inventory
(150,501)
(245,753)
Receivables
55,734
(38,841)
Other assets
(51,982)
24,150
Payables
2,006
(116,019)
Provisions
44,922
48,976
Net cash used in operating activities
(937,965)
(1,270,002)
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 48 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
19
NOTES TO THE STATEMENT OF CASH FLOWS
19c Non-cash Financing and Investing Activities
During the year, the Group received COVID-19 related rent relief, resulting in waived lease payments totalling $43,887
(2020: $nil).
19d Changes in liabilities arising from financing activities
Bank
Lease
loans
liability
Total
Consolidated
$
$
$
Balance at 1 July 2019
324,614
1,344,676
1,669,290
Net cash used in financing activities
(107,178)
(90,261)
(197,439)
Acquisition of plant and equipment by means of leases
-
-
-
Balance at 30 June 2020
217,436
1,254,415
1,471,851
Net cash from/(used in) financing activities
(179,230)
(75,037)
(254,267)
Impact of COVID-19 rent relief (non-cash)
-
(20,579)
(20,579)
Acquisition of leases
-
81,001
81,001
Balance at 30 June 2021
38,206
1,239,800
1,278,006
20
SHARE-BASED PAYMENTS
The Company has recognised the following amounts as expenses relating to share-based payments for the year.
2021
$
2020
$
Share-based payments to non-KMP – options
-
29,423
Share-based payments to KMP – shares
17,500
-
Share-based payments to KMP – performance rights
137,515
18,829
Total
155,015
48,252
Share-based payments -options
There are no options issued during the year.
During the prior year the following options were issued to non-KMP
Name
Grant Date
Expiry Date
Exercise Price
Number
Expense
$
Advisor-Alto Capital
26-Jul-19
1-Jul-22
$0.065
1,000,000
11,954
Advisor-JP Equity
28-Aug-19
30-Jun-22
$0.15
500,000
17,469
29,423
The fair values of the options granted in prior year were calculated using the Black-Scholes option pricing model applying the
following inputs:
Grant Date
Options
Share Price
at Grant Date
Exercise
Price
Expected
Volatility
Dividend
Yield
Risk-free
Interest
Rate
Expiry
Date
Fair Value
at Grant
Date
26/7/2019
1,000,000
$0.04
$0.065
71%
0%
0.975%
1/7/2022
$0.012
28/8/2019
500,000
$0.10
$0.15
71%
0%
0.955%
30/6/2022
$0.0349
The valuation of these options was recognised as share-based payment expense immediately as options vest immediately.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 49 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20
SHARE-BASED PAYMENTS(CONT.)
Share-based payments -Performance rights
During the current year, 1,000,000 performance rights were issued to KMP. The performance rights have no exercise price and
performance based vesting conditions. These performance rights expire on 31 March 2022. $137,515 has been recognised in
employee benefits expense with respect to 1 million performance rights issued to KMP during the year ended 30 June 2021 as well as
continue amortisation of prior year performance rights issued.
During prior year, 4,000,000 performance rights were issued to KMP. The performance rights have no exercise price and a number of
vesting conditions. 2,000,000 of the performance rights expire 30 April 2022 and 2 000,000 expire 31 October 2022. $18,829 has been
recognised in employee benefits expense with respect to these performance rights.
The fair values of the performance rights granted in current year were as follows:
Performance rights
Share Price
at Grant Date
Exercise
Price
Fair Value
at Grant
Date
1,000,000
$0.12
$nil
$0.12
The fair values of the performance rights granted in prior year were as follows:
Performance rights
Share Price
at Grant Date
Exercise
Price
Fair Value
at Grant
Date
4,000,000
$0.098
$nil
$0.098
Set out below are summaries of options and performance rights:
Options
2021
Balance at
Expired/
Balance at
Exercise
the start of
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
Exercised
other
the year
No.
No.
No.
No.
No.
26/2/2018
31/12/2020
$0.08
5,000,000
-
(4,375,000)
(625,000)
-
16/3/2018
31/1/2022
$0.12
10,000,000
-
(9,950,000)
-
50,000
28/8/2019
30/6/2022
$0.15
500,000
-
(250,000)
-
250,000
15,500,000
-
(14,575,000)
(625,000)
300,000
Weighted average exercise price
$0.11
$0
$0.06
$0.08
$0.15
Options
2020
Balance at
Expired/
Balance at
Exercise
the start of
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
Exercised
other
the year
No.
No.
No.
No.
No.
30/6/2017
30/11/2019
$0.12
21,645,412
-
(799,862)
(20,845,550)
-
6/6/2017
31/3/2020
$0.075
3,750,000
-
(3,750,000)
-
6/6/2017
31/3/2020
$0.15
7,500,000
-
(7,500,000)
-
6/6/2017
31/3/2020
$0.23
9,000,000
-
(9,000,000)
-
26/2/2018
31/12/2020
$0.08
5,000,000
-
-
-
5,000,000
16/3/2018
31/1/2022
$0.12
10,000,000
-
-
-
10,000,000
26/7/2019
1/7/2022
$0.065
-
1,000,000
(1,000,000)
-
-
28/8/2019
30/6/2022
$0.15
-
500,000
-
-
500,000
56,895,412
1,500,000
(1,799,862)
(41,095,550)
15,500,000
Weighted average exercise price
$0.13
$0.09
$0.09
$0.15
$0.11
The weighted average remaining contractual life of options outstanding at the end of the financial year was 0.93 years (2020:
1.25 years).
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 50 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
20
SHARE-BASED PAYMENTS(CONT.)
Performance
rights
2021
Balance at
Expired/
Balance at
Exercise
the start of
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
Exercised
other
the year
No.
No.
No.
No.
No.
26/4/2020
30/4/2022
$nil
2,000,000*
-
-
-
2,000,000
26/4/2020
31/10/2022
$nil
2,000,000**
-
-
-
2,000,000
8/10/2020
31/3/2022
$nil
-
1,000,000***
-
-
1,000,000
4,000,000
1,000,000
-
-
5,000,000
*** Vest upon the entry by the Company into a binding commercial licensing agreement with a global pharma or veterinary
company covering the use of MPL in anti-cancer applications in canine or feline patients.
Performance
rights
2020
Balance at
Expired/
Balance at
Exercise
the start of
forfeited/
the end of
Grant date
Expiry date
price
the year
Granted
Exercised
other
the year
No.
No.
No.
No.
No.
26/4/2020
30/4/2022
$nil
-
2,000,000*
-
-
2,000,000
26/4/2020
31/10/2022
$nil
-
2,000,000**
-
-
2,000,000
-
4,000,000
-
-
4,000,000
* 1 million performance rights vest upon Elanco US Inc exercising its Option under the Option Agreement with PharmAust Limited
dated 12 April 2018 on terms that the boards of directors of PharmAust Limited and Elanco both formally approve and 1 million
vest upon the formal commencement by PharmAust Limited or by an organisation working in collaboration with PharmAust
Limited of a Phase I/II trial in humans of monepantel as an anti-COVID-19 treatment either alone or in combination with other
drugs by one or more approved centres in Australia or the United States or United Kingdom following commencement of all formal
approvals from relevant regulators and entities and the recruitment of the first patient.
** 1 million performance rights vest upon the formal commencement by PharmAust Limited of a Phase II trial in humans of
monepantel as a treatment in neuro-degenerative disease either alone or in combination with other drugs at one or more
approved centres in Australia or the United States or United Kingdom following commencement of all formal approvals from
relevant regulators and entities and the recruitment of the first patient and 1 million vest upon the formal commencement by
PharmAust Limited of a Phase II trial in humans of monepantel as an anti-cancer treatment either alone or in combination with
other drugs either at one or more approved centres in Australia or the United States or United Kingdom following commencement
of all formal approvals from relevant regulators and entities and the recruitment of the first patient.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 51 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
21
KEY MANAGEMENT PERSONNEL
21a Remuneration of Key Management Personnel
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity
is set out below:
CONSOLIDATED
2021
$
2020
$
Short term employee benefits
1,199,275
1,152,689
Post-employment benefits
95,237
90,567
Share based payment
155,015
18,829
1,449,527
1,262,085
22 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.
Corporate
The corporate segment covers all the corporate overhead expenses.
ii.
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 52 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
22
SEGMENT REPORTING(Cont'd)
The consolidated entity operates in two business segments as disclosed below:
i)
Segment Performance
Consolidated
2021
Corporate
Pharmaceutical
Total
$
$
$
Revenue
External sales
-
2,189,824
2,189,824
Other external revenue
606,613
946,521
1,553,134
Total segment revenue
606,613
3,136,345
3,742,958
Inter-segment elimination
(71,313)
Total revenue per statement of
profit or loss and other
comprehensive income
3,671,645
Results
Segment result from continuing
operations before tax
(1,639,487)
302,177
(1,337,310)
Consolidated
2020
Corporate
Pharmaceutical
Total
$
$
$
Revenue
External sales
-
3,221,414
3,221,414
Other external revenue
807,683
228,194
1,035,877
Total segment revenue
807,683
3,449,608
4,257,291
Inter-segment elimination
(133,880)
Total revenue per statement of
profit or loss and other
comprehensive income
4,123,411
Results
Segment result from continuing
operations before tax
(1,575,668)
213,678
(1,361,990)
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 53 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
22 SEGMENT REPORTING (Cont.)
ii) Segment assets and liabilities
Consolidated
Corporate
Pharmaceutical
Total
$
$
$
2021
Segment assets
Segment assets
2,902,715
8,050,883
10,953,598
Total assets of the consolidated entity:
2,902,715
8,050,883
10,953,598
Segment liabilities
Segment operating liabilities
(318,089)
(1,755,025)
(2,073,114)
Total liabilities of the consolidated entity:
(318,089)
(1,755,025)
(2,073,114)
Consolidated
Corporate
Pharmaceutical
Total
$
$
$
2020
Segment assets
Segment assets
2,757,269
7,989,033
10,746,302
Total assets of the consolidated entity:
2,757,269
7,989,033
10,746,302
Segment liabilities
Segment operating liabilities
(257,327)
(1,962,705)
(2,220,032)
Total liabilities of the consolidated entity:
(257,327)
(1,962,705)
(2,220,032)
ii) Revenue by geographical region
CONSOLIDATED
2021
$
2020
$
Revenue by geographical region
Revenue attributable to external customers is disclosed
below, based on the location of the external customer:
Switzerland
1,130,475
1,240,000
Australia
685,014
863,871
USA
114,240
870,978
Others
210,591
221,043
Total revenue (exclude other income)
2,140,320
3,195,892
Assets by geographical region
The location of segment assets by geographical location
of the assets is disclosed below:
Australia
10,953,598
10,746,301
Total assets
10,953,598
10,746,301
Major customers
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 54% of external revenue
(2020: 39%).
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 54 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
23
CONTINGENT LIABILITIES
The consolidated entity has no contingent liabilities as at 30 June 2021.
24 PARENT INFORMATION
Statement of Financial Position
2021
$
2020
$
Assets
Total current assets
4,061,113
4,182,377
Non-current assets
3,438,990
3,438,990
Total assets
7,500,103
7,621,367
Liabilities
Current liabilities
318,089
491,390
Non -current liabilities
-
-
Total liabilities
318,089
491,390
Equity
Issued capital
55,326,441
53,772,433
Reserves
2,093,159
1,955,644
Accumulated losses
(50,237,587)
(48,598,100)
Total equity
7,182,014
7,129,977
Statement of profit or loss and other comprehensive income
Loss for the year
(1,639,487)
(1,575,669)
Other comprehensive income
-
-
Total comprehensive loss for the year
(1,639,487)
(1,575,669)
Guarantees
PharmAust Limited is a guarantor of a debt facility for its fully owned subsidiary Epichem Pty Ltd during the year.
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 23.
CONSOLIDATED
2021
$
2020
$
25
ACCUMULATED LOSSES
Accumulated losses at beginning of the financial year
(47,201,808)
(45,839,818)
(Loss)after income tax for the year
(1,337,310)
(1,361,990)
Accumulated losses at the end of the financial year
(48,539,118)
(47,201,808)
26
EVENTS AFTER THE REPORTING PERIOD
Subsequent to year end the following transactions took place:
On 12 July 2021, PharmAust announced it had executed a Research Services Agreement with the Walter and Eliza Hall Institute to
investigate the effects of MPL upon human T-lymphotrophic virus-1 (HTLV-1) infections in vitro.
On 26 July 2021, PharmAust announced that three independent laboratories (Walter and Eliza Hall Institute of Medical Research
(WEHI)
in
Melbourne, 360biolabs
in
Melbourne
and
Leiden
University
Medical
Center
(LUMC)
in
the
Netherlands) have demonstrated that both MPS and MPLS protect against cell death in-vitro, following infection with SARS-CoV2.
On 3 August 2021, PharmAust confirmed its subsidiary Epichem Pty Ltd, has completed building its benchtop Oxidative
Hydrothermal Dissolution (OHD) Flow Reactor to research, develop and promote a novel, innovative and disruptive waste to fuels
technology.
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has had no significant impact on the consolidated
entity up to 30 June 2021, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such
as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
No other matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly
affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in
future financial years.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 55 -
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2021
CONSOLIDATED
2021
$
2020
$
27 AUDITOR’S REMUNERATION
Remuneration of RSM Australia Partners as auditor for:
- auditing or reviewing the financial report
73,000
73,000
- taxation services
13,500
14,250
86,500
87,250
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
- 56 -
SHAREHOLDER INFORMATION
Additional information required by ASX Limited Listing Rules, and not disclosed elsewhere in this report.
SHAREHOLDINGS
Mr Graham Darcy is a substantial shareholder holding a relevant interest in 22,000,000 shares representing 6.97% of voting power
and has notified the Company in accordance with section 671B of the Corporations Act 2001.
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
in person or by proxy or by attorney; and
(b)
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 21 July 2021)
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.
2021 ANNUAL REPORT AND STATUTORY FINANCIAL STATEMENTS
PharmAust Limited and its Controlled Entities
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SHAREHOLDER INFORMATION (CONT.)
TWENTY LARGEST SHAREHOLDERS (as at 21 July 2021)