Proteomics International Annual Report 2023

Plain-text annual report

P I L L Proteomics International L A B O R AT O R I E S LT D Annual Report 2023 2 0 2 3ACN 169 979 971 ASX: PIQ Proteomics International I D E N T I T Y Proteomics International is a medical technology company specialising in predictive diagnostics and advanced analytical services using proteomics - the industrial scale study of the structure and function of proteins. M I S S I O N To improve the quality of lives by the creation and application of innovative tools that enable the improved treatment of disease. V I S I O N To help create a world where disease is detected early and cured simply. P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd Contents FROM THE CHAIR KEY ACHIEVEMENTS WINDOW ON THE SCIENCE – Diagnosing Endometriosis TECHNOLOGY SNAPSHOT I – PromarkerD and Drug Therapies for Diabetic Kidney Disease TECHNOLOGY SNAPSHOT II – Next Generation Diagnostics - OxiDx P/L DIRECTORS’ REPORT REVIEW OF OPERATIONS ENVIRONMENTAL, SOCIAL AND GOVERNANCE BOARD OF DIRECTORS AND OPERATIONAL TEAM MATERIAL BUSINESS RISKS REMUNERATION REPORT AUDITOR’S INDEPENDENCE DECLARATION FINANCIAL STATEMENTS Consolidated Statements of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flow Notes to the Consolidated Financial Statements DIRECTORS’ DECLARATION INDEPENDENT AUDITOR’S REPORT SHAREHOLDER INFORMATION GLOSSARY 2 3 4 6 8 10 11 25 27 30 32 44 45 75 76 80 83 1 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L From the Chair Dear Shareholder, I am pleased to present Proteomics International’s annual report on behalf of the Board, featuring key activities and achievements for the year ended 30 June 2023. It has been a pivotal year for the Company, with the signing of a landmark deal to bring our PromarkerD test for diabetic kidney disease to patients in the United States. This signiﬁcant agreement marks Proteomics International’s transition from a research and development company to full commercialisation. Other key milestones in the rollout of PromarkerD include the granting of a CPT PLA reimbursement code in the United States, publication of a Medtech Innovation Brieﬁng in the United Kingdom, and research further demonstrating the clinical utility of the test. At the same time, Proteomics International is continuing to harness our PromarkerTM technology to develop new diagnostic tests in areas of unmet medical need. Particularly exciting is the Company’s novel test for endometriosis, which this year was shown to correctly identify up to 90 per cent of patients with moderate or severe endometriosis, compared to symptomatic controls. The Company’s work in oesophageal cancer is also showing great promise, with a prototype diagnostic test for oesophageal adenocarcinoma detecting up to 90 per cent of people with the condition. We believe successfully validated blood tests for either endometriosis or oesophageal cancer will garner signiﬁcant interest, both commercially and in the clinic. I continue to be impressed by the drive, commitment and professionalism of the Proteomics International team as they seek to improve the lives of patients around the world and create value for our shareholders. I would like to recognise my fellow directors on the Board, Managing Director Dr Richard Lipscombe, the entire Proteomics International team and our advisors for their dedication to the success of the Company. Finally, I would like to thank you, our valued shareholders, for your continued support and investment. Yours sincerely, Neville Gardiner Chair, Proteomics International Key Achievements PromarkerD • Exclusive licence agreement to take PromarkerD to the US market Proteomics International and Sonic Healthcare USA signed a deal to bring the PromarkerD predictive test for diabetic kidney disease to the United States • Drug Treatment lowers PromarkerD diabetic kidney disease risk prediction scores Research published in international peer-reviewed Journal of Clinical Medicine (See Technology Snapshot) • Reimbursement code approved and becomes effective for PromarkerD in the United States CPT PLA code is key to PromarkerD being covered by both Medicare and private health insurers in the US • First sales commenced PromarkerD ﬁrst sales were achieved in Central America • UK's National Institute for Health and Care Excellence (NICE) published Medtech Innovation Brieﬁng on PromarkerD Advice for clinicians reported that PromarkerD is effective at predicting renal function decline in people with type 2 diabetes • Clinical utility study showed PromarkerD test offers improved treatment options for doctors in the ﬁght against diabetic kidney disease Results published in peer-reviewed journal PLOS ONE • Clinical Advisory Board expanded to support PromarkerD USA and global rollout New members are highly respected healthcare professionals and key opinion leaders (KOLs) specialising in primary care diabetes education and management • Intellectual property portfolio expands Patent family and Trademark covers 72% of the world’s population living with diabetes Diagnostics pipeline • Precision diagnostics facility received $2 million funding boost Expansion of the Company’s capabilities as part of the WA Proteomics Facility to accelerate the development of precision diagnostic tests ENDOMETRIOSIS • Potential breakthrough blood test able to detect people with endometriosis Results showing prototype test correctly identiﬁes up to 90 per cent of patients with the disease presented at world conferences on fertility and endometriosis (See Window on the Science) OESOPHAGEAL ADENOCARCINOMA • New PromarkerTM test for oesophageal cancer demonstrated strong diagnostic performance Prototype diagnostic blood test for oesophageal adenocarcinoma detected up to 90 per cent of people with the frequently-fatal condition OXIDATIVE STRESS • OxiDx Pty Ltd launched to maximise oxidative stress technology Independent spin-off business to commercialise technology for measuring oxidative stress Analytical services • Renewal of ISO 13485 certiﬁcation and ISO 17025 accreditation World’s best practice laboratory standards to beneﬁt launch of PromarkerD, analytical services and pipeline of novel diagnostics Corporate • $8m raised in heavily oversubscribed placement Successful placement supported by Australian institutions, and sophisticated and professional investors 2 3 P I L L Window on the science Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Diagnosing Endometriosis Endometriosis is a common and painful disease affecting up to 1 in 9 women and girls. It occurs when tissue similar to the lining of the uterus (endometrium) grows in other parts of the body where it does not belong. Symptoms of the disease can vary from abnormally painful period cramps to infertility. Diagnosis currently takes an average of 6.5 years, sometimes involving repeated testing and misdiagnosis. This leaves many patients unable to receive adequate management and treatment. Source: Endometriosis Australia, 2023 What does endometriosis look like? Endometriosis does not progress in a predictable or sequential manner. The most used scaling system for the disease’s severity assigns points to characteristics of the disease, ranking severity from Stage I/Minimal (1-5 points) to Stage IV/Severe (40+ points). NO ENDO MINIMAL ENDO Stage I (1-5 pts) MILD ENDO Stage II (6-15 pts) MODERATE ENDO Stage III (16-40 pts) SEVERE ENDO Stage IV (>40 pts) i.e. A healthy body with no implants, a few non- endometriotic lesions s 0 A few superﬁcial implants More superﬁcial and deeper implants Many deep implants and adhesions. Small cysts on one or both ovaries Many deep implants. Large cysts on one or both ovaries s 15 s 40 Source: American Society for Reproductive Medicine Endometriosis Stages and Common Myths Myth 1. Endometriosis stages correlate to pain levels Patients can experience severe pain and disturbances in their quality of life with minimal endometriosis, while some patients with severe endometriosis may be asymptomatic. Myth 2. Endometriosis can only be widespread in the later stages Even minimal endometriosis can be widespread. Myth 3. Endometriosis stages are a linear progression Unlike most staged diseases, endometriosis does not necessarily advance through stages in a predictable manner. Current diagnosis is not precise The current gold standard tool used for diagnosing endometriosis is an invasive surgical procedure called a laparoscopy. Under anaesthetic, an experienced gynaecological surgeon inserts a thin telescope into a small ‘keyhole’ incision in the abdomen. Lesions vary in appearance and many lesions found on the membrane that lines the pelvic cavity (peritoneum) may not be endometriosis. Other causes of pelvic cavity lesions can include chronic inﬂammation, immune reactions to previous sutures, and epithelial inclusions (misplaced gut cells that form benign cysts). These can often resemble the opaque, white patches found in minimal and mild endometriosis during a laparoscopy. If the doctor identiﬁes a lesion suspected to be endometriosis, a small tissue sample may be taken and sent for histopathology to conﬁrm the presence of the disease. In this case a trained pathologist will examine the cells under a microscope and use their judgement to determine if the lesion is composed of cells originating from the endometrium. Since the laparoscopy and pathology both rely only on the doctor’s experience and opinion there is a chance that the condition may be misdiagnosed. - a novel blood test for endometriosis PromarkerEndo The need for a non-invasive, sensitive, and simple diagnostic test for the early screening of endometriosis is clear. This would allow patients prompt access to management and treatment options. Proteomics International has developed PromarkerEndo, a novel potential world-ﬁrst blood test for endometriosis. This test measures biomarkers - protein ﬁngerprints’ in the blood - associated with the disease to evaluate the severity of endometriosis in patients. The prototype test identiﬁed up to 90% of patients with the disease. Source: World Endometriosis Conference (May 2023) Laparoscopy relies on doctors’ eyes both to accurately identify lesions and then determine whether the cells originated in the endometrium Like any surgery, laparoscopy has its risks – for example organ perforations and infections Expensive and invasive: As a highly specialised procedure, laparoscopies can incur high surgery and specialist consultation fees on top of time taken off work 4 5 P I L L Technology Snapshot I Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L PromarkerD and Drug Therapies for Diabetic Kidney Disease Diabetic Kidney Disease (DKD) is a serious complication of diabetes causing irreversible loss of kidney function. Diabetes currently affects 1 in 10 adults globally which is estimated to increase within the next 20 years to 1 in 81. Of these adults with diabetes, 1 in 3 currently have DKD2. New treatment option to slow DKD – SGLT2-inhibitor lowers PromarkerD risk scores In May 2023, Proteomics International published a feature article in the internationally renowned Journal of Clinical Medicine showing the beneﬁts of early therapeutic intervention on diabetes patients at risk of DKD. The study was conducted in collaboration with Janssen Research and Development (part of Johnson & Johnson) and assessed the effect of the SGLT2-inhibitor canaglifozin (Invokana®) versus placebo on PromarkerD risk scores. One-in-three adults with diabetes currently have DKD - often called a ‘silent killer’, DKD can cause irreversible loss of 80% of kidney function prior to the onset of symptoms. DKD leads to renal failure requiring dialysis or kidney transplant. This makes early and accurate diagnosis critical. Decrease in PromarkerD Risk Score in High-Risk Patients Taking Canagliﬂozin +4.5% Placebo Canagliﬂozin Baseline -5.6% The study asked the question: Do “at-risk” diabetes patients identiﬁed by PromarkerD continue to decline, stabilise or recover? m o r f e r o c S k s i R D r e k r a m o r P n i e g n a h C 6 ) % ( e n i l e s a B 0 -6 Comparison of average PromarkerD score changes over three years in 'high-risk' patients taking a placebo versus the SGLT2-inhibitor canagliﬂozin. Patients on canagliﬂozin had a signiﬁcant reduction in PromarkerD scores compared to the placebo group3. • Over 2,000 patients were analysed retrospectively from the • • completed CANVAS clinical trial (ClinicalTrial.gov registration number NCT01032629). The results showed a signiﬁcant decrease in PromarkerD risk scores among type-2 diabetes patients receiving canagliﬂozin, compared to those on a placebo over a three-year period. The biggest beneﬁt was observed in patients identiﬁed as high- risk by the PromarkerD test, with average reductions of 5.6% (P<0.001) in PromarkerD scores for those on canagliﬂozin, while high-risk patients on placebo had increased risk scores after the three years - an overall improvement of >10%. The publication demonstrates early use of an SGLT2-inhibitor can mitigate the decline in kidney function in patients classiﬁed as high-risk of disease. 1 IDF Diabetes Atlas 10th Edition, 2021 2 Centers for Disease Control and Prevention 2019 3 Peters et. al, Journal of Clinical Medicine, 2023 6 PromarkerD: Using precision diagnostics to predict DKD Current clinical measures for diagnosing DKD can only detect the disease once it is already present. With existing testing regimes a patient’s kidneys will have already sustained irreversible damage by the time the disease is identiﬁed. PromarkerD is a protein biomarker-based blood test that predicts the onset of DKD in type-2 diabetes patients up to four years in advance. Clinical studies have shown that PromarkerD predicted over 86% of disease-free patients that went on to develop DKD within four years of testing4 . PROACTIVELY CHANGING RENAL HEALTHCARE A simple blood test for predicting diabetic kidney disease With an accurate prognostic test for DKD, alongside an effective early treatment option, physicians now have the tools to improve the quality of life for their diabetes patients and in the process save healthcare systems billions of dollars. Sample PromarkerD Test Report: The cloud-based PromarkerD algorithm categorises patients into ‘risk proﬁles’ (low, moderate or high) based on their four-year prognostic risk of developing DKD. This risk-score helps physicians to administer appropriate early interventions to slow or stop the onset of kidney disease. Blockbuster drugs for DKD Sodium glucose cotransporter protein 2 (SGLT-2) inhibitors, commonly referred to as ‘gliﬂozins’, are FDA-approved blockbuster medicines used for glycaemic control in diabetes. The drugs are also indicated for treating cardiovascular disease in diabetes patients, and more recently their approval has been extended to treating DKD. These medications are made by some of the world’s largest pharmaceutical companies amassing global sales exceeding $11 billion in 20225. The wide use of SGLT2-inhibitors makes them an ideal therapeutic intervention for high-risk patients identiﬁed by PromarkerD. Sales of gliﬂozin drugs Canagliﬂozin (Invokana) developed by Mitsubishi Tanabe licensed by Janssen Dapagliﬂozin (Farxiga/Forxiga) by Astrazeneca/ Bristol-Myers Squibb Empagliﬂozin (Jardiance) by Boehringer Ingelheim/ Eli Lily * FDA approval † EMA approval 2013: treat type 2 diabetes * † $ 0.5 billion 2012: treat type 2 diabetes † 2014: treat type 2 diabetes * 2014: treat type 2 diabetes * † 2016: treat cardiovascular disease * 2018: treat cardiovascular disease * † 2019: treat DKD * 2020: treat DKD † $ 4.4 billion 2020: treat cardiovascular disease * † 2021: treat CKD and DKD * † 2021: treat cardiovascular disease † $ 6.1 billion Reported 2022 global sales in USD 4 Peters et. al, Journal of Diabetes and its Complications, 2019 5 Company reported global sales in USD 7 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Technology Snapshot II Next Generation Diagnostics Introducing OxiDx Pty Ltd Spin-off company from Proteomics International OxiDx Pty Ltd was launched in August 2022 as a spin-out from Proteomics International and the University of Western Australia. OxiDx is a medical technology company and operates as an independent entity to maximise the commercialisation of the patented ‘2-tag’ oxidative stress technology. Oxidative Stress Oxidative stress occurs when the body’s antioxidant defences are overwhelmed by an excess of toxic oxidants, often referred to as free radicals. Oxidative stress is implicated in over 70 health conditions1 with levels often reﬂective of a person’s health condition. OxiDx’s unique platform technology and in-ﬁeld blood collection offers a comprehensive solution for monitoring oxidative stress levels, anywhere, anytime to provide valuable insights across multiple industries OxiDx Applications OxiDx’s sentinel platform technology measures systemic oxidative stress providing a broad application across multiple markets. OxiDx is focusing on utility as a: • Athletic monitoring tool for competition preparedness in: - Professional Sports – performance, recovery and injury risk management - Thoroughbred Racing Industry - injury risk management and competitive advantage in biological readouts of muscle inﬂammation and race-preparedness • Monitoring tool for health and wellbeing in: - Precision Medicine as a direct-to-consumer tool for self-assessment - Primary Industries - risk management to monitor conditions, handling and transport conditions, pathogen invasion e.g., live export and stock production • Complementary diagnostic (CDx) test for treatment efﬁcacy and personalised dosing in a range of indications: - Clinical research such as clinical trials - potential utility in multiple health conditions Patented Intellectual Property OxiDx uses next generation diagnostics technology, moving beyond measuring protein concentrations to detect subtle changes in protein structures – ‘decorations’ that sit on the surface of a protein and known as post-translational modiﬁcations. The technology is protected by granted patents in the USA and Australia, with a new family of patents pending in major jurisdictions (See page 22). ✓ Highly sensitive patented technology ✓ Streamlined rapid laboratory analysis allows results to be returned to customers within 24 hr ✓ Fingerstick blood collection permits sampling by anyone, anytime, anywhere ✓ No cold-chain logistics or special mailing requirements ✓ Results feedback to inform management strategy – simple decision tool ✓ Cost-effective for sequential sampling and large cohort collection By monitoring on a routine basis (e.g. daily or weekly) OxiDx is used to optimise training and recovery routines to ensure athletes and thoroughbred horses are ready to perform at their best in competition. Muscle injuries are the most frequent cause of incapacity in sports, accounting for up to of all sports injuries. 55% $1.4billion In 2019 was spent treating potentially avoidable sports injuries in Australia 85% of Thoroughbreds suffer at least one injury during the ﬁrst 2–3-years of their racing career Muscle injury is difﬁcult to objectively identify in horses. A blood-based tool would help trainers identify deeper muscle injury which often goes unnoticed and can lead to devastating injuries for the horse Football teams in the English Premier League lose an average of AUD $87million per season due to injuries and injury- related reductions in performance Source: Appraising the Welfare of Thoroughbred Racehorses in Training in Queensland, Australia: The Incidence, Risk Factors and Outcomes for Horses after Retirement from Racing Source: Estimation of injury costs: ﬁnancial damage of English Premier League teams' underachievement due to injuries. Doi:10.1136/ bmjsem-2019-000675 Source: Australian Institute of Health and Welfare (2022): Economics of sports injury 1 doi: 10.1373/clinchem.2005.061408 8 9 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L Directors’ Report The Directors present their report on Proteomics International Laboratories Ltd (ASX:PIQ; Proteomics International or the Company) and the consolidated entity (referred to hereafter as the Group) for the year ended 30 June 2023. DIRECTORS The Directors of the Company in ofﬁce during the ﬁnancial year and until the date of this report are as follows: Mr Neville Gardiner Dr Richard Lipscombe Dr Robyn Elliott Mr Paul House Mr Roger Moore (Non-Executive Chairman) (Managing Director) (Non-Executive Director) (Non-Executive Director) (Non-Executive Director) (Appointed 16 November 2021) (Appointed 9 June 2014) (Appointed 16 November 2021) (Appointed 22 November 2017) (Appointed 14 October 2016) OPERATING RESULT To be read in conjunction with the attached Consolidated Financial Report (see page 45). The operating result for the year was: Loss before income tax Loss for the year Comprising Revenue and Other income Expenses Change 25% 25% CONSOLIDATED 2023 $6,234,310 $6,234,310 (3%) 14% $3,320,862 $9,555,172 2022 $4,972,960 $4,972,960 $3,436,458 $8,409,418 The Group's ﬁnancial report for the year ended 30 June 2023 includes: • Revenue from ordinary activities encapsulates income from analytical services and Grant Income including the R&D incentive, totalled $3.32 million. • Operational Expenditure Increased to $9.55 million, and focused on the commercialisation and production of the PromarkerD test and expansion of the PromarkerTM diagnostics pipeline. • The loss from ordinary activities increased 25% to $6.23 million, which reﬂects normal operational costs and non-cash items. • The net cash outﬂow from operating activities was $5.69 million, an increase of 61%. • At 30 June 2023, the Company had cash reserves of $6 million, and trade and other receivables of $0.1 million. • On the back of the Company’s research and development focus, it anticipates an R&D Tax Incentive cash rebate of $1.8 million, to be received in the December quarter of 2023. DIVIDENDS No dividend was paid during the year and the Board has not recommended the payment of a dividend. ISSUED CAPITAL 120,978,992 fully paid ordinary shares (ASX: PIQ) and 2,450,000 unlisted options were on issue as at 30 June 2023. ANNUAL GENERAL MEETING Proteomics International advises that its 2023 annual general meeting (AGM) is scheduled to be held on 23 November 2023. The Company encourages shareholders to attend the AGM and receive an update on the strategy and initiatives of the Group. 10 Review of Operations A growth cycle driven by the Company’s strengths Principal activities Proteomics International is a pioneering medical technology company operating at the forefront of predictive diagnostics and bio-analytical services. The Company specialises in the area of proteomics— the industrial scale study of the structure and function of proteins. Proteomics International's business model is centred on the commercialisation of the Company's pioneering test for diabetic kidney disease, PromarkerD. The Company offsets the cash burn from R&D and product development through provision of specialist analytical services, whilst using its proprietary Promarker™ technology platform to create a pipeline of novel diagnostic tests. International is a wholly-owned Proteomics subsidiary and trading name of Proteomics International Laboratories Ltd (PILL; ASX: PIQ), and operates from state-of-the-art facilities located on the QEII Medical Campus, Perth, Western Australia. 1. PromarkerD 2. Diagnostics Targeting the global diabetes epidemic, PromarkerD is a predictive diagnostic test for diabetic kidney disease, a progressive disorder found in one in three adults with diabetes. The prevalence of kidney disease is rising rapidly and many patients progress to need dialysis or a kidney transplant. In peer- reviewed clinical studies, PromarkerD correctly predicted 86% of otherwise healthy people with diabetes who went on to develop chronic kidney disease within four years1. Proteomics International's diagnostics development is made possible by the Company’s proprietary biomarker discovery platform called PromarkerTM, which searches for protein ‘ﬁngerprints’ in a sample. This disruptive technology can identify proteins that distinguish between people who have a disease and people who do not, using only a simple blood test. It is a powerful alternative to genetic testing. The technology is so versatile it can be used to identify ‘ﬁngerprints’ from any biological source, from wheat seeds to a blood sample. The global biomarkers market is expected to exceed USD 181 billion by 20302. 3. Analytical Services Specialist contract research focusing on biosimilars quality control and pharmacokinetic testing for clinical trials. Australia is a global leader in clinical trials due to its efﬁcient regulatory framework and high-quality trial sites, and all samples from each trial require specialist analytical testing. Signiﬁcantly, the fastest growing class of drugs entering clinical trials is biologics and biosimilars. The global clinical trials market is projected to exceed USD 78 billion by 20303, whilst the market size of the global biosimilar market was valued at USD 29.4 billion in 2023, and is projected to reach USD 66.9 billion by 20284. The global proteomics market was valued at USD 23.7 billion in 2021, and is expected to reach USD 98.1 billion by 20315. 1 For further information see the PromarkerD web portal: www.PromarkerD.com 2 Grand View Research 2023: Biomarkers Market Size 3 Grand View Research 2022: Clinical Trials Market Size 4 Markets and Markets 2023: Biosimilars Market by Drug Class 5 Allied Market Research 2022: Proteomics Market by Component 11 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L PromarkerD The 2022-23 ﬁnancial year has been pivotal for PromarkerD, with a deal to bring the test to the United States marking Proteomics International’s transition from research and development to full commercialisation. Other key achievements during the year include the approval of a CPT PLA reim- bursement code in the United States, publication of a Medtech Innovation Brieﬁng in the United Kingdom and further demonstrations of the test’s clinical utility. Problem & Solution Source: International Diabetes Federation (IDF) Atlas 9th Edition 2021. US Renal Data System 2020 About PromarkerD Diabetic kidney disease (DKD) is a serious complication arising from diabetes that, if unchecked, can lead to dialysis or kidney transplant. PromarkerD is a prognostic test that can predict future kidney function decline in patients with type 2 diabetes and no existing DKD. The patented PromarkerD test system uses a simple blood test to detect a unique ‘ﬁngerprint’ of the early onset of the disease. In published clinical studies, PromarkerD correctly predicted which otherwise healthy patients with diabetes went on to develop diabetic kidney disease within four years. Further information is available through the PromarkerD web portal: www.PromarkerD.com PromarkerD - Licensing and distribution Proteomics International achieved a pivotal milestone in its global commercialisation strategy for PromarkerD with a deal to bring the test to patients in the United States. Over 7,000 Employees Over 300 Sales reps Over 400 pathologists Services over 20 million patients Marketing, Sample collection, Reporting CLIA Certified Laboratories Exclusive licence agreement with Sonic Healthcare USA to take PromarkerD to the US market In May 2023, Proteomics International achieved a landmark milestone with the signing of an exclusive licence agreement with Sonic Healthcare USA to commercialise the PromarkerD test for diabetic kidney disease in the United States. Under the agreement, Sonic Healthcare USA will offer PromarkerD to physicians and healthcare systems through its client engagement teams across the US. The agreement followed months of diligent work by both companies towards the rollout of PromarkerD in the US. The licence with Sonic Healthcare USA is for ﬁve years, extendable by mutual agreement, and exclusive to the United States (excluding Puerto Rico). The deal came after Proteomics International and Sonic Healthcare USA signed a binding and exclusive letter of intent in August 2022, documenting the preliminary terms and expectations for how the two companies would work together to bring the PromarkerD test to patients in the US. A number of key milestones were achieved under the letter of intent, including optimisation of the test for a high-throughput environment. PromarkerD became a featured test on the Sonic Reference Laboratory (USA) test menu in October 2022, and a CPT PLA reimbursement code approved in January 2023. In the United States, an estimated 32 million people, or 11 per cent of the population, live with diabetes. Distribution agreement for PromarkerD in Britain extended In February 2023, Proteomics International extended its distribution agreement with medical diagnostics company Apacor Limited to bring PromarkerD to patients in the United Kingdom. Proteomics International began working with Apacor in 2021. Since then, several key milestones have been achieved, including PromarkerD being registered with the UK Medicines & Healthcare products Regulatory Agency, and the publication of National Institute for Health and Care Excellence (NICE) advice on PromarkerD. Based on this success, Proteomics International and Apacor wished to extend the relationship and agreed to an additional ﬁve-year term. Both parties are now working towards the inclusion of PromarkerD in the NICE Guidelines and engaging with the NHS Supply Chain Tender process as part of the commercial rollout of the test in the UK. The updated distribution agreement provides Apacor Limited with the exclusive right to sell the immunoassay version of the PromarkerD test in England, Scotland and Wales until 31 January 2028. PromarkerD ﬁrst sales, partnering in Europe and rest-of-world markets First sales for the PromarkerD test were achieved in Central America through licence partner Omics Global Solutions. Proteomics International also remains in discussions with potential laboratory partners in Europe and elsewhere to provide PromarkerD to more patients with diabetes worldwide. The EU remains a key market for PromarkerD, with the test having already completed CE Mark registration, and Proteomics International continues to evaluate strategies for early adoption of PromarkerD in Europe. 12 13 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L PromarkerD - Manufacturing PromarkerD - Regulatory and reimbursement The groundwork has been laid for large-scale global distribution of PromarkerD. Scale-up of Northern Hemisphere production continues The manufacture and scale-up of production and validation batches of the PromarkerD immunoassay kit is continuing through the Company's ISO 13485 certiﬁed manufacturer in Europe. This follows the successful tech-transfer and pilot batch production in 2022. MTPConnect funded manufacturing project concludes successfully In May 2022 Proteomics International announced it was one of a select group of companies chosen to receive funding in Round Four of the BioMedTech Horizons (BMTH) program, an initiative of the Medical Research Future Fund (MRFF) delivered by MTPConnect, aiming to accelerate the development of innovative health technologies. The project saw Proteomics International obtain a renewal of its ISO 13485 certiﬁcation, submit a request to the TGA for inclusion of PromarkerD in the Australian Register of Therapeutic Goods (ARTG) to enable the sale and clinical use of the test in Australia, and supported the manufacture of the PromarkerD assay. The project concluded successfully during the year and achieved its main purpose of de-risking the supply chains for key reagents such as antibodies and providing a solid platform for scaling up future manufacture in Australia. Proteomics International is pursuing regulatory approval in multiple jurisdictions as part of its global commercialisation strategy. CPT PLA reimbursement code approved and became effective in the United States In January 2023, Proteomics International achieved a major milestone in the commercialisation of PromarkerD with the approval of a new dedicated CPT® Proprietary Laboratory Analyses (PLA) code for the test in the United States. The CPT PLA code—issued by the American Medical Association—is key to PromarkerD reimbursement being covered by both Medicare and private health insurers in the US, and hugely important for enabling affordable access and broad adoption of the test. The new code for PromarkerD (0385U) was granted to Sonic Reference Laboratory as the clinical laboratory and Proteomics International as the manufacturer. It became effective from 1 April 2023, which means service providers (laboratories) are now able to report the PromarkerD test using the code. A critical part of the rollout of PromarkerD is engagement with payers which is ongoing, with the Centers for Medicare & Medicaid Services (CMS) recently listing the code in its CY24 Clinical Laboratory Fee Schedule (CLFS) Annual Laboratory Meeting Code List. This is an essential step towards establishing a payment rate for PromarkerD. Application for PromarkerD listing on Australian Medicare Beneﬁts Schedule to be resubmitted In March 2023, the Company's initial application to have PromarkerD listed on the Australian Medicare Beneﬁts Schedule (MBS) was denied, which is common for the majority of ﬁrst-time submissions to the MBS and Pharmaceutical Beneﬁt Scheme (PBS). The Medical Services Advisory Committee (MSAC) that reviews applications noted the potential wide uptake of the test and long-term savings to the Australian health system, whilst also seeking further evidence on how the use of the test would change clinical practice. The MSAC decision came after key bodies in the Company's target markets of the USA and UK moved towards endorsing the test. Proteomics International is conﬁdent it can provide the necessary information to address the committee's concerns and intends to resubmit its application. MSAC's decision on reimbursement is not linked to the separate application for regulatory approval of the PromarkerD immunoassay kit by the Australian Therapeutic Goods Administration (TGA) which is still ongoing. US Reimbursement Pathway Unique CPT Proprietary Laboratory Analysis (PLA) code approved Centers for Medicare and Medicaid Services (CMS) posts updated code list PLA code (0385U) for PromarkerD effective American Clinical Lab Association engaged by SHUSA to consider crosswalk or gapfill pricing CMS Clinical Lab Fee Schedule (CLFS) Annual Meeting to consider pricing CMS proposed pricing determinations published for comment CMS final pricing published ✓ Jan 2023 ✓ Apr 2023 t ✓ May 2023 t ✓ Jun 2023 Sept 2023 Jan 2024 14 15 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L PromarkerD Presentations & Publications PromarkerD Clinical Utility Evaluation of the Clinical Utility of the PromarkerD In-vitro Test in Predicting Diabetic Kidney Disease and Rapid Renal Decline Through a Conjoint Analysis. Authors: Fusfeld, Murphy, Yoon, Kam, Peters, Tan, Shanik, Turchin. Published in PLOS ONE, August 2022. Canagliﬂozin Attenuates PromarkerD Diabetic Kidney Disease Risk Prediction Scores. Authors: Peters, Bringans, O’Neill, Lumbantobing, Lui, Davis, Hansen and Lipscombe. Published in Journal of Clinical Medicine, May 2023 PromarkerD Technology Platform Proteomics International: Manufacturing the Next Generation In-vitro Diagnostic Device to Predict Diabetic Kidney Disease. Presenter: Dr RJ Lipscombe, BioMedTech Horizons (BMTH) WA Showcase, September 2022 Applying Precision Medicine to Develop a Prognostic Test for Diabetic Kidney Disease. Presenter: Dr SD Bringans, ANZSN 2022 Renal Scientist Workshop, October 2022 Immunoafﬁnity Mass Spectrometry Diagnostic Tests for Multi-Biomarker Assays. Authors: Bringans, Casey, Ito, Lumbantobing, O’Neill, Lipscombe. Book Chapter in Serum/Plasma Proteomics: Methods and Protocols. Springer US, New York, NY, 2023 PromarkerD - Clinical PromarkerD - Clinical The strong evidence base underpinning PromarkerD continues to grow. lowers PromarkerD SGLT2-inhibitor canagliﬂozin diabetic kidney disease risk prediction scores In May 2023, Proteomics International announced research showing a signiﬁcant reduction in the PromarkerD risk scores of patients with type 2 diabetes after taking the diabetes medicine canagliﬂozin. The results were published as a feature article in the international peer- reviewed Journal of Clinical Medicine. The study was conducted as part of a long-running collaboration between Proteomics International and Janssen Research & Development, the pharmaceutical arm of Johnson & Johnson. The research found the average PromarkerD risk score of patients taking canagliﬂozin dropped during the trial, while the average risk score of patients taking a placebo rose. The effect was greatest in participants who were identiﬁed by PromarkerD to be at high-risk of a decline in kidney function at the start of the study (see Technology Snapshot). Clinical utility study demonstrated PromarkerD test offers improved treatment options for doctors in the ﬁght against diabetic kidney disease A study demonstrating the clinical utility of the PromarkerD test in predicting diabetic kidney disease was published in the scientiﬁc journal PLOS ONE in August 2022. The publication provided important peer-reviewed validation of initial results that were previously presented at major industry conferences. The specialist conjoint analysis survey of 400 primary care physicians and endocrinologists showed that doctors ranked PromarkerD results as more important than current standard-of-care tests eGFR (estimated glomerular ﬁltration rate) and ACR (urinary albumin - creatinine ratio), and found PromarkerD risk scores would signiﬁcantly impact physician decision-making. In the study, 98% of physicians were likely to order the PromarkerD test for their type 2 diabetes patients, with only 2% indicating they would not order the test. PromarkerD - Market PromarkerD - Clinical Proteomics International is driving the global uptake of PromarkerD through engagement with key professional bodies and clinical experts in diabetes and nephrology. UK's National Institute for Health and Care Excellence (NICE) published Medtech Innovation Brieﬁng on PromarkerD In December 2022, the National Institute for Health and Care Excellence (NICE), an independent organisation established by the UK Government to provide guidance and advice on medical treatments, published a Medtech Innovation Brieﬁng on PromarkerD. Medtech Innovation Brieﬁngs are commissioned by the National Health Service (NHS) in the UK. Known as NICE advice, they are designed to increase awareness of new technologies for planning and commissioning new innovation in the UK healthcare industry. The brieﬁng, aimed at clinicians, managers and procurement professionals in the UK, reported that PromarkerD is effective at predicting renal function decline in people with type 2 diabetes. There is a rigorous selection process for inclusion in the NICE advice process, taking into account the potential beneﬁts of a technology, its regulatory status, clinical evidence and more. There were only 28 Medtech Innovation Brieﬁngs published in 2022. The NICE advice supports the reimbursement process and broader adoption of PromarkerD in the UK, and its publication enables Proteomics International to pursue inclusion of PromarkerD in the NICE Guidelines and to engage with the NHS Supply Chain Tender process. Clinical Advisory Board expanded to support PromarkerD USA and global rollout International appointed In April 2023, Proteomics additional key opinion leaders (KOLs) to its world class PromarkerD Clinical Advisory Board. The new board respected healthcare members in primary care diabetes professionals specialising education and management in the United States. These KOLs will be able to provide tailored advice from the 'voice of the customer' (patients and clinicians) perspective on the rollout of PromarkerD. comprise highly 16 17 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L PromarkerD - Intellectual Property Diagnostics The Company's PromarkerD intellectual property portfolio covers 72% of the world’s population living with diabetes. Deep pipeline of novel precision health and predictive diagnostic tests continues to expand. PromarkerD patent granted in Hong Kong In November 2022, patent protection for PromarkerD was expanded to Hong Kong, where 11.6% of the population—or 686,000 adults—have diabetes. Hong Kong is also an important gateway market, with potential for the test to be introduced there prior to entering the much larger China market. The Hong Kong patent complements those already granted in the USA, Europe, Australia, Brazil, Canada, China, Indonesia, Russia, Singapore, India and Japan. European PromarkerD patents expanded beyond diabetes In July 2022, European patent protection for Proteomics International’s PromarkerD predictive test was expanded to include diagnosing all individuals who are prediabetic and asymptomatic for kidney disease. Globally 537 million adults have diabetes, and an additional 541 million (10.6% of the world's adult population) have prediabetes, an at-risk category for kidney disease. Further clinical studies are needed to demonstrate that PromarkerD can be used to diagnose kidney disease beyond those with diabetes. Promarker™ pipeline advances Proteomics International has a deep pipeline of novel precision health and predictive diagnostic tests in development. This R&D is enabled by the Company’s proprietary biomarker discovery platform called Promarker, which searches for protein ‘ﬁngerprints’ in a sample. This disruptive technology can identify proteins that distinguish between people who have a disease and people who do not, using only a simple blood test. It is a powerful alternative to genetic testing. The technology is so versatile it can be used to identify ﬁngerprints from any biological source, from wheat seeds to human serum. Proteomics International believes its Promarker™ platform has broad applicability and the potential to produce multiple new diagnostic tests to address signiﬁcant unmet medical and commercial needs. PromarkerD ‐ Intellectual Property PromarkerD - Intellectual Property Proteomics International owns three families of patents for PromarkerD in key markets 1) Diabetic Kidney Disease Title: "Biomarkers associated with pre-diabetes, diabetes and diabetes related conditions" Derived from International Patent Application PCT/AU2011/001212 All patents valid until September 2031 Patent Title Patent No. AU2011305050 BR112013006764 CA2811654 CN103299192 Status Country/Region Country/Region Patent No. Patent Title Status Australia Granted Granted Brazil Granted Canada China Granted Europe1 Hong Kong India Indonesia Japan Russia Singapore USA EP3151012 HK1256827 IN390245 IDP000059245 JP6271250 RU2596486 Method of assessing diabetic nephropathy using CD5 antigen-like Biomarkers Associated with Diabetic Nephropathy SG188527 US9146243 Granted/Validated Granted Granted Granted Granted Granted Granted Granted 1Validated in France, Germany, Italy, Turkey, Spain, United Kingdom 2) Pre-Diabetes and Diabetes Divisional Derived from International Patent Application PCT/AU2011/001212 Patent valid until September 2031 Country/Region Patent No. Patent Title Status Country/Region Status Europe2 Patent Title Biomarkers associated with pre-diabetes, diabetes and diabetes related conditions Patent No. EP3343226 Granted/Validated 2Validated in France, Germany, Italy, Turkey, Spain, United Kingdom 3) Kidney Disease Country/Region Patent No. Patent Title Status Country/Region Status Granted Australia Granted USA Granted USA Patent Title Biomarkers associated with kidney disease (Valid until September 2031) Method of assessing a subject for abnormal kidney function (Valid until 30 September 2031) Method for identifying an agent for treating abnormal kidney function (Valid until 30 Septmeber 2031) Patent No. AU2015202230 US9733259 US10191067 US3 Europe3 US7842463 EP1941274 Method of diagnosing early stage renal impairment (Patent valid until 30 September 2027) Granted/ Licensed Method for predicting the progression of chronic kidney disease by measuring apolipoprotein a-iv (Patent valid until 8 September 2026) Granted/ Licensed 3Licensed exclusively to Proteomics International from the University of Innsbruck Trademark - PromarkerDTM Class 44 - Medical diagnostic services (No 1776917) Class 5 - Diagnostic apparatus for medical purposes including diagnostic kits (No 1806616) Country/ Region Status Country/Region Status Registered Australia, China, Dominican Republic, European Union, Israel, Japan, South Korea, Mexico, New Zealand, Russia, Singapore, USA 18 19 P I L L Diagnostics Endometriosis (see Window on the Science) Status update: Clinical validation study and diagnostic model completed; accessing additional samples for independent validation. Proteomics into Research International’s potential world-ﬁrst blood test for endometriosis showed a strong diagnostic performance of the test. The Company’s preferred prototype correctly identiﬁed up to 90 per cent of patients when comparing moderate or severe endometriosis to symptomatic controls (no endometriosis) in a study of 901 participants. The endometriosis study was conducted in collaboration with the Royal Women’s Hospital and the University of Melbourne. Proteomics International’s results also suggest the current gold standard for diagnosis - an invasive surgical procedure - may be misdiagnosing some patients, particularly in the early stages of endometriosis. Research ﬁndings related to the test were presented at several conferences during the year, including: • Fertility Society of Australia and New Zealand Annual Conference (FSANZ 2022) in Sydney, July 2022 • 70th Annual Meeting of the International Society for Reproductive Investigation (SRI) in Brisbane, March 2023 • 15th World Congress on Endometriosis in Edinburgh, May 2023 Proteomics International is now targeting conﬁrming the clinical performance and clinical utility of the test in independent patient cohorts, and accelerating pathways to commercialisation of the biomarker panel as a new diagnostic screening test for endometriosis. Oesophageal cancer Status update: Clinical validation study completed; statistical modelling ongoing; accessing additional samples for independent validation. into the Company’s Research test for prototype diagnostic adenocarcinoma oesophageal diagnostic showed performance, with test the detecting up to 90% of people with the frequently fatal condition. The results were presented at the 18th World Congress for Esophageal Diseases in Tokyo, Japan, 26-28 September 2022. strong Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Oesophageal adenocarcinoma is the most common form of oesophageal cancer and is an area of signiﬁcant unmet medical need, with current screening requiring a specialist endoscopy procedure that costs US$2,750 per patient in the United States. The results represent an exciting milestone in the development of a potential new, accurate, and easy to use blood test for oesophageal adenocarcinoma. To enhance the accuracy and clinical utility of its test the Company is currently undertaking additional data analysis. Oxidative stress (2-tag) (see Technology Snapshot II) Status update: Proof-of-concept completed; validation studies commencing. Proteomics International announced the spin-off of an independent business to commercialise technology for measuring oxidative stress testing technology developed in collaboration with The University of Western Australia. The new incorporated joint venture - OxiDx Pty Ltd - is focussing on developing innovative medical diagnostic products using the patented ‘2-tag’ measure for oxidative stress. Oxidative stress has been implicated in many chronic diseases, and the ‘2-tag’ method could be part of the next generation of medical diagnostic tests. The technology has several target applications, including chronic fatigue, muscular dystrophy, high-performance athletes and the horse racing industry. Asthma and COPD Status update: Proof-of-concept study completed; patent application ﬁled; clinical validation ongoing. Proteomics International completed a proof-of-concept study that identiﬁed multiple novel protein biomarkers for obstructive airway disease. These biomarkers, once validated, have the potential to deliver a new diagnostic test for asthma and chronic obstructive pulmonary disease (COPD). An in initial proof-of-concept study, performed collaboration with the Busselton Population Medical Research Institute, analysed plasma samples from 75 individuals with a range of symptoms including airway obstruction, atopy, bronchial hyper-responsiveness and healthy controls. A patent application on methods for diagnosing airway disease has been ﬁled. Potential biomarkers from this study are now being validated in a larger clinical cohort. The results of this validation will reﬁne the panel of biomarkers into a potential new blood test for diagnosing obstructive airway disease. Diagnostics Plant dieback Status update: Discovery phase successfully completed; validation phase ongoing. Proteomics International has an ongoing collaboration with the Centre for Crop and Disease Management (Curtin University) to target the plant pathogen Phytophthora cinnamomi, which is responsible for plant dieback that affects a wide variety of native plant species and premium crops such as avocados and macadamias. The estimated cost to the Australian economy is $160 million per year for damage to natural vegetation alone. Initial investigations focused on proteomic analysis (determining the protein maps) of the life stages of the organism and how it infects its host. These maps provided a blueprint of what proteins were present throughout the life cycle of the organism. Biomarkers for identifying plant dieback have been discovered, with current experiments determining their detection level in ‘real life’ samples of infected plant root. This opens the way for developing a simple ﬁeld diagnostic test for the presence of Dieback. Giardia (causing gastroenteritis) Status update: Project suspended. Giardia is a leading cause of infectious gastroenteritis worldwide and one of the most common parasitic human diseases. Proteomics International has identiﬁed strain speciﬁc Giardia targets however further work is required to develop an assay for clinical use. The project is currently on hold pending a review of its commercial and technical viability. extended Proteomics International Diabetic retinopathy Status update: Discovery study complete. Proof-of-concept underway. Following the success of the diabetic kidney disease its project, collaboration agreement with The University of Western Australia to seek early markers for diabetic retinopathy, the major cause of blindness in the US. This collaboration is applying the Promarker™ platform to look for prognostic markers in the blood that can identify patients at risk of retinopathy, especially sight-threatening retinopathy. The program is again utilising the Fremantle Diabetes Study which provided the rich sample repository that led to PromarkerD. Discovery experiments have yielded potential biomarkers for the early diagnosis of retinopathy. The next stage is to verify these biomarkers in a larger cohort set. Diabetes complications - DKD in type-1 diabetes & diabetic neuropathy Status update: Discovery studies commencing. Proteomics International previously announced it has become an industry partner to the Australian Centre for Accelerating Diabetes Innovations (ACADI). The Centre combines diabetes expertise from across Australia and aims at improving the lives of people living with diabetes. Following ﬁnalisation of contract terms and project plans Proteomics International has added a new R&D program to investigate predictive markers for diabetic neuropathy. The Company will also explore the applicability of PromarkerD to patients with type 1 diabetes (in addition to its current use in type 2 diabetes). Precision diagnostics facility received $2 million funding boost In October 2022, Proteomics International, The University of Western Australia (UWA) and Bioplatforms Australia announced a $2 million expansion of the WA Proteomics Facility to accelerate the development of precision diagnostic tests. The WA Proteomics Facility is a Public Private Partnership between the three organisations. It is jointly managed by Proteomics International and UWA, and combines their respective expertise to explore biological protein markers that affect medicine, agriculture, and the environment. Over three years, the partners will co-invest $2 million to increase capacity and throughput at the cutting-edge facility with new equipment for automated sample handling and analytical quantitation, coupled with the development of advanced data processing tools. Under the management agreement, Bioplatforms Australia (through the Commonwealth Government National Collaborative Research Infrastructure Strategy (NCRIS)) contributes $1.7m to the facility for capital and operational purposes, with half the funds going to Proteomics International to expand its laboratory capacity. Proteomics International and UWA have invested a further $150,000 in cash. The laboratory has expanded with the purchase of high-end equipment to speed the development and analysis of biomarkers within the joint WA Proteomics facility. 20 21 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L Diagnostics Endometriosis ‐ Intellectual Property Endometriosis - Intellectual Property Title: "Endometriosis biomarkers" Derived from International Patent Application PCT/AU2021/050227 If granted, patent projected to be valid until March 2041 Country/Region Application/Patent No. Status Country/Region Status Pending Australia Pending Brazil Pending Canada Pending China Pending Europe Pending India Pending Japan Pending Singapore Pending US Pending Indonesia Pending Republic of Korea Pending Mexico EP4121776 202217049212 JP2023520132 11202252510K US2023089507 P00202211148 KR20220154725 MX/a/2022/011397 Application/ Patent No. AU2021237128 BR112022018339 CA3169082 CN115349091 Airway Disease ‐ Intellectual Property Airway Disease - Intellectual Property Title: "Airway disease biomarkers" Country/Region Application/Patent No. Status Country/Region Status Pending Provisional Application/ Patent No. 2023900328 Oxidative Stress (“Two Tag”) ‐ Intellectual Property Oxidative Stress ("Two-Tag") - Intellectual Property Proteomics International owns two families of patents for Two-Tag in key markets with others pending 1) Title: "Methods for determining the redox status of proteins" Derived from International Patent Application PCT/AU2006/001757 All patents valid until November 2026 Country/Region Patent No. Status Country/Region Status Granted Australia Granted USA Patent No. AU2006317506 US8043824 2) Title: "Methods for measuring relative oxidation levels of a protein" Derived from International Patent Application PCT/AU2019/050267 If granted, all patents projected to be valid until March 2039 Country/Region Application/Patent No. Status Country/Region Status Pending Australia Pending Canada Pending China Pending Europe Pending India Pending Indonesia Pending Japan Pending Singapore Pending USA Application/ Patent No. AU2019240758 CA3094249 CN112020650 EP3775927 IN202017044154 P00202007798 JP2021518907 SQ11202008979Q US2021041449 Oesophageal Cancer ‐ Intellectual Property Oesophageal Cancer - Intellectual Property Title: "Glycoprotein biomarkers for esophageal adenocarcinoma and Barett's esophagus and uses thereof" Oesophageal Cancer - Intellectual Property Derived from International Patent Application PCT/AU2015/050723 Title: "Glycoprotein biomarkers for esophageal adenocarcinoma and Barett's esophagus and uses thereof" All patents valid until November 2035 Derived from International Patent Application PCT/AU2015/050723 All patents valid until November 2035 Country/Region Application/Patent No. Status Country/Region Status Australia4 Country/Region Canada4 Australia4 China4 Canada4 Europe4,5 China4 Hong Kong4 Europe4,5 United States4 Hong Kong4 United States4 4Licensed exclusively to Proteomics International from Queensland Institute of Medical Research 5Validated in France, Germany, Spain, Turkey and United Kingdom 4Licensed exclusively to Proteomics International from Queensland Institute of Medical Research 5Validated in France, Germany, Spain, Turkey and United Kingdom AU2015349613 Application/ Patent No. CA2967869 AU2015349613 CN107430126 CA2967869 EP3221701 CN107430126 HK1244877 EP3221701 US2022018843 HK1244877 Application/ Patent No. US2022018843 Granted Status Pending Granted Granted Pending Granted/ Validated Granted Granted Granted/ Validated Pending Granted Pending Presentations and publications Endometriosis Biomarkers for Endometriosis. Authors: Garrett, Andronis, Bringans, Casey, Chen, Ismail, Ito, Killeen, Laming, Lipscombe, Peters, Raju, Wong, Rogers, Holdsworth-Carson. Fertility Society of Australia and New Zealand Annual Conference (FSANZ 2022), Sydney, July 2022 Biomarkers for Endometriosis. Presenter: D Ismail, Perth Protein Group Annual General Meeting, Perth, September 2022 A Novel Plasma Protein Biomarker Test for Diagnosing Endometriosis. Presenter: Dr KE Peters, 70th Annual Meeting of the International Society for Reproductive Investigation (SRI), Brisbane, March 2023 A Novel Plasma Protein Biomarker Test for Diagnosing Endometriosis. Authors: Peters, Schoeman, Andronis, Bringans, Casey, Chen, Ismail, Ito, Raju, Tan, Lipscombe, Rogers, Holdsworth- Carson, 15th World Congress on Endometriosis, Edinburgh, Scotland, May 2023 Oesophageal cancer Establishing a Mass Spectrometry Based Diagnostic Test for Oesophageal Cancer. Authors: Duong, Bringans, Chen, Fernadez, Casey, Laming, Di Prinzio, Hill, Lipscombe. 18th World Congress for Esophageal Diseases in Tokyo, Japan, September 2022 Development of a Lectin Bead-based Diagnostic Test for Oesophageal Cancer. Presenter: Dr SD Bringans, 28th Annual Lorne Proteomics Symposium, February 2023 Semi-Automated Lectin Magnetic Bead Array (LeMBA) for Translational Serum Glycoprotein Biomarker Discovery and Validation. Authors: Dutt, Duong, Bringans, Richards, Lipscombe, Hill. Book Chapter in Serum/Plasma Proteomics: Methods and Protocols. Springer US, New York, NY, 2023 Analytical Services The Company continues to offer a range of specialised analytical services to clients across the biotechnology industry. ISO 13485 certiﬁcation and ISO 17025 accreditation renewed The National Association of Testing Authorities (NATA) approved the continuation of Proteomics International’s ISO 17025 accreditation, a global standard that ensures a laboratory is technically competent and produces accurate, valid and reliable results. Proteomics International proudly received the world’s ﬁrst ISO 17025 accreditation for proteomics services in 2009. The British Standards Institution (BSI) also renewed Proteomics International’s ISO 13485 certiﬁcation, which ensures safety and quality management in the design, development, manufacture and sale of medical devices. Both renewals will beneﬁt the global product launch of PromarkerD, and underpin the Company’s analytical services and pipeline of innovative diagnostic tests under development. Proteomics International Revenue 3,000,000 2,000,000 1,000,000 2016 2017 2018 2019 2020 2021 2022 2023 Analytical Services $ 816,845 925,537 1,176,457 1,468,076 1,423,070 1,310,824 1,489,323 730,340 Grants and other Income $ 45,955 144,484 130,343 128,833 454,389 386,770 235,232 741,690 Research & Development $ Tax Incentive 572,269 790,751 844,123 1,139,403 1,138,815 1,290,899 1,711,903 1,848,832 World’s most accredited protein testing laboratory Proteomics International was the ﬁrst laboratory in the world to receive ISO/IEC accreditation for proteomics services in 2009 (Accreditation number: 16838). In 2021, Proteomics International received ISO 13485 certiﬁcation for the design and development of PromarkerD (Certiﬁcation number: MD734669). Proteomics International now holds multiple levels of internationally recognised accreditation: • • • ISO 17025: 2015 – Chemical Testing ISO 17025: 2015 – R&D ISO 13485: 2016 Medical devices — Quality management systems — Requirements for regulatory purposes Accreditation recognises Proteomics International's ability to consistently achieve technically valid, traceable and reproducible results. In 2021, Proteomics International added ISO 13485 certiﬁcation to its list of accreditations. The signiﬁcance of this milestone shows the Company’s strong commitment and vision to be a major player in innovative in-vitro diagnostic products with strong focus on commercialisation and quality of these products. Accreditation means that clients and regulatory authorities can have conﬁdence in company products and helps to identify the Company as a reliable service provider. 22 23 P I L L Company Operations Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Environmental, Social and Governance by supported CORPORATE ACTIVITY Proteomics International raised $8 million (before costs) through the issue of 9.41 million shares in the Company. The Placement was at an issue price of $0.85 per share, a discount of 11.1% to the 5-day VWAP. It was heavily Australian-based oversubscribed, institutions, and sophisticated and professional investors. Funds from the Placement (after costs) are being used to strengthen production and build inventory of the PromarkerD predictive test for diabetic kidney disease, support US sales and marketing for PromarkerD, develop the PromarkerTM diagnostics pipeline and for general working capital. During the year, Directors, employees and advisors exercised options raising an additional $3.5 million dollars (before costs). DRUG DISCOVERY Proteomics International has had a long-standing interest in innovative drug discovery, with the Company's ﬁrst substantial external funding received to develop a novel therapeutic pipeline in 2008. This pipeline became the basis for the Promarker™ technology platform. The drug discovery program is on hold whilst the company focuses its resources on the commercialisation of PromarkerD, diagnostics, and the provision of analytical services. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors, there were no signiﬁcant changes in the state of affairs of the Group that occurred during the ﬁnancial year not otherwise disclosed in this report and the ﬁnancial statements. EVENTS SINCE THE END OF THE FINANCIAL YEAR On 10 July 2023, 105,729 fully paid ordinary shares were issued upon the exercise of unquoted performance rights. the rights were The performance Performance Rights Plan as per of the incentive structures for employees and key management personnel. issued under On 14 August 2023, 1,250,000 shares were issued upon the exercise of advisory options at $0.50 per option, raising $625,000 before costs. No other matters or circumstances have arisen since the end of the ﬁnancial year that have signiﬁcantly affected, or may signiﬁcantly affect the consolidated entity's operations, or the consolidated entity's state of affairs in future years. LIKELY DEVELOPMENTS Proteomics International will continue to pursue the commercialisation of its lead diagnostic test PromarkerD in global markets. Potential licence partners are global and regional diagnostic companies, diagnostic service providers, and drug developers. In jurisdictions where licences have already been granted, the focus will be on increasing the adoption of the test by engaging with Key Opinion Leaders and the broader network of clinical service providers. As for any novel test, market penetration cannot be predicted accurately, hence for each licence it is not possible to quantify the ﬁnancial impact on Proteomics International in any given timeframe. Nonetheless, PromarkerD has the potential to spare millions of people from the cost of dialysis, saving each healthcare system billions of dollars. Consequently, the Company believes that ultimately the ﬁnancial impact of each licence will be signiﬁcant. The development pipeline for new diagnostic tests will progress using the Promarker™ technology platform, with the intention of creating new intellectual property that can be licensed in future years. These R&D and commercialisation activities will continue to be supported by the analytical services operations. Dr Bill Parker Memorial Industrial Scholarship In 2017, the Company launched the Dr Bill Parker Memorial Industrial Scholarship, in memory of its cofounder, to high achieving WA students who wish to take a gap year to gain experience in the Biotechnology & Life Science Industry before undertaking a science degree in the Eastern States. The inaugural scholarship recipient, Imogen Sorby, graduated from the University of New South Wales in 2023, and is now working in Europe. Proteomics International is currently training one scholar in residence. Two scholarship students are completing university studies in Victoria and New South Wales. The program is ongoing and Proteomics International looks forward to supporting the 2023 class of budding life scientists. Australian Centre for Accelerating Diabetes Innovations (ACADI) In January 2022 Proteomics International became an industry partner in the Australian Centre for Accelerating Diabetes Innovations (ACADI), which was awarded $10 million over four years from the Australian Government’s Medical Research Future Fund. The centre combines diabetes expertise from across Australia and aims at improving the lives of people living with diabetes, including addressing diabetic kidney disease. SOCIAL Proteomics International’s mission is to improve the quality of lives by the creation and application of innovative tools that enable the improved treatment of disease. In addition to the social impact of the Company’s core operations, Proteomics International strives to foster the development of scientiﬁc knowledge and invest in its people. STRATEGIC COLLABORATIONS Proteomics International continues to work closely with the biotechnology and life science community across the Australia. Strategic development of scientiﬁc knowledge and help Proteomics International realise its scientiﬁc and business objectives. collaborations promote Highlights of the Company’s collaborations include: Harry Perkins Institute of Medical Research (Perkins) The Perkins is the premier adult medical research institute in Western Australia. Proteomics is headquartered there and has held close ties with the Perkins since 2006. International Bioplatforms Australia (BPA) BPA is a federal body instigated as part of the National Collaborative Research Infrastructure Scheme (NCRIS) to facilitate a national capability in the 'omics sciences (genomics, and bioinformatics). Proteomics International manages the Western Australian node of Proteomics Australia in a Public Private Partnership with BPA and The University of Western Australia. metabolomics proteomics, Australian Research Council Training Centre for Personalised Therapeutics Technologies This national $3.1 million Industrial Transformation Training Centre (ITTC) sees Proteomics International work with university-based researchers to provide industry training through the application of the Promarker™ technology to Complementary Diagnostics. The centre is hosted by the University of Western Australia, Monash University and the University of Melbourne. 24 25 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Environmental, Social and Governance Board of Directors and Operational Team HUMAN CAPITAL ENVIRONMENTAL Environmental regulations The Company is subject to environmental regulation and other licences in connection with its research and development activities utilising the facilities at the Harry Perkins Institute of Medical Research. The Company complies with all relevant federal, state and local environmental regulations. The Board is not aware of any breach of applicable environmental regulations by the Company. Greenhouse gas and energy data reporting The Company has assessed the reporting requirements of both the Energy Efﬁciency Opportunities Act 2006 and the National Greenhouse and Energy Reporting Act 2007 and the Group is not currently subject to any reporting obligations. GOVERNANCE The Board of Directors is responsible for the operational and ﬁnancial performance of the Company, including its corporate governance. The Company believes that the adoption of good corporate governance adds value to investor conﬁdence. stakeholders and enhances Proteomics governance statement is available on the Company’s website, in a section titled ‘Corporate Governance’. International’s corporate Proteomics International believes that its staff are a key component of the Company’s continued success. The Company enjoys a diverse and gender balanced workforce. Gender Diversity FEMALE 56% FEMALE 20% FEMALE 50% Staff Board Senior Management 44% MALE 80% MALE 50% MALE BOARD OF DIRECTORS Neville Gardiner – Non-Executive Chairman (Independent) Richard Lipscombe – Managing Director Robyn Elliott - Non-Executive Director (Independent) Paul House - Non-Executive Director (Independent) Roger Moore - Non-Executive Director (Independent) INFORMATION ON DIRECTORS Director Experience Mr Neville Gardiner BBus (Accounting and Business Law) Dr Richard Lipscombe MA (Oxford), PhD (London) Dr Robyn Elliott BSc (Hons) Chemistry, PhD Inorganic Chemistry Mr Paul House GAICD, BCom (UWA) Mr Roger Moore R (Denmark), BPharm (U. Syd) Neville was recently a Partner of Deloitte in its Mergers & Acquisitions Advisory team. He is a seasoned ﬁnance professional with over 30 years’ experience advising Boards of public and private companies on mergers and acquisitions, project development, equity and debt capital markets, transaction structuring, capital allocation and complex commercial problem solving. Prior to Deloitte Neville was Co-Founder and Managing Director of Torridon Partners, an independent corporate advisory ﬁrm. Torridon Partners was acquired by Deloitte in 2016. He has held leadership positions at Macquarie Bank, Bank of America Merrill Lynch and Arthur Andersen, and has broad industry sector exposure including healthtech, ﬁn-tech, mining and mining services, infrastructure, energy, and fabrication and construction. Neville joined the Board in November 2021. Richard, a co-founder of the Company, is a highly practised business manager and protein chemist expert in analysing biomolecules using proteomics techniques. He has extensive expertise in chemistry, immunology, mass spectrometry, peptide synthesis, high performance computing and robotics. Richard has international experience in both science and business gained over a 30-year period in Australia, USA and the UK, including work in hospital and academic laboratories and commercial organisations. He completed his chemistry degree (MA) at Oxford University and his PhD in immunology at London University. After managing the Protein Analysis Facility at the University of Western Australia, he co-founded Proteomics International Pty Ltd in 2001. Richard is well published in peer review journals, and holder of several patents. Robyn is Global Head, Strategic Portfolio Management within the Global Network Strategy team of CSL Behring, a subsidiary of CSL Limited (ASX:CSL). Her role is responsible for governance and business value delivery oversight for a multi billion dollar global capital expansion portfolio. She is also a non-executive director of PolyNovo Limited (ASX:PNV). Robyn’s 9 years at CSL Behring have included Senior Director roles for Strategic Program Management, Strategic Expansion Projects and Quality, including supporting the global network strategy team determining the ten- year expansion plan for the CSL Behring global business. Prior to CSL Behring she was Managing Director at IDT Australia Ltd (ASX:IDT) and commenced her career at DBL Faulding. Robyn has a proven track record in product development, clinical trials, regulatory affairs, audits, quality management, project management and operational strategy. Robyn joined the Board in November 2021. Paul has over 30 years’ experience with multi-national corporations and is currently CEO of Imdex (ASX:IMD). He previously served eight years as the Managing Director of SGS India, where he was responsible for a workforce of 4,500 personnel and 38 laboratories; SGS is the world’s leading Testing, Inspection and Certiﬁcation (TIC) company. Mr House has previously held CFO and COO roles and has a track record for delivery of business performance targets, revenue growth, margin improvement, market share and productivity, across multiple services, markets and borders. A Fellow of the Australian Institute of Management and a Graduate Member of Australian Institute of Company Directors, Paul joined the Board in November 2017. Roger has 40 years’ experience in the international pharmaceutical industry, including almost 30 years as President of Novo Nordisk Japan (Novo Nordisk is the world’s largest manufacturer of diabetes therapeutics including Insulin and a global leader in diabetes care). Roger established Novo’s organisation in Japan as the ﬁrst employee in 1977, and worked for the company until his retirement as Chairman at the end of 2007. In 2000 Roger was appointed Senior Vice President, responsible for Novo Nordisk’s business in Japan, Australia, New Zealand and the Paciﬁc , and also a member of the Senior Management Board of Novo Nordisk A/S. In 2007, Roger was awarded the Knight’s Cross of the Order of the Dannebrog (R) by Queen Margrethe II of Denmark. Roger joined the Board in October 2016. Special Responsibilities Chairman Particulars of Director’s interest in securities of the Company Shares 117,647 Options 500,000 Managing Director 19,048,705 - Nil - 250,000 Nil 1,036,511 - Nil 975,824 - 26 27 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L CURRENT AND FORMER DIRECTORSHIPS Directors’ Name Current Directorships Former Directorships (last 3 years) OPERATIONAL TEAM Proteomics International has established and maintained a highly qualiﬁed, multilingual team with well-balanced commercial and scientiﬁc expertise. The senior management group comprises: Neville Gardiner Galena Mining Ltd (since 20 October 2021) Richard Lipscombe Roger Moore Paul House Robyn Elliott Nil Nil Nil PolyNovo Ltd (since 28 October 2019) Nil Nil Nil Nil Nil COMPANY SECRETARY Ms Karen Logan BCom, Grad Dip AppCorpGov, FCG, FGIA, GAICD Karen Logan is a Chartered Secretary with over 20 years’ experience in assisting small to medium capitalised ASX-listed and unlisted companies with compliance, governance, ﬁnancial reporting, capital raising, merger and acquisition, and IPO matters. She is presently the principal of a consulting ﬁrm and secretary of a number of ASX-listed companies, providing corporate and accounting services to those clients. MEETINGS OF DIRECTORS The numbers of meetings of the Company’s Board of Directors held during the year ended 30 June 2021, and the numbers of meetings attended by each Director were: Directors Mr Neville Gardiner Dr Richard Lipscombe Mr Ian Roger Moore Mr Paul House Dr Robyn Elliott Full Meetings of Directors A B 10 10 10 10 9 10 10 10 10 10 A = Number of meetings attended B = Number of meetings held during the time the Director held ofﬁce The Board meets regularly on an informal basis in addition to the above meetings. Directors have determined that the Company is not of sufﬁcient size to merit the establishing of separate sub-committees and all decisions are made by the full Board. Chief Financial Ofﬁcer Ms Jacqueline Gray Jacqueline has more than 25 years experience as a chartered accountant and executive, in both Perth & London, driving the implementation of strategy, meaningful business reporting and a sound governance framework. She has served as the Chief Financial Ofﬁcer for a range of ASX-listed and privately-owned businesses, managing revenues in excess of $100 million. Jacqueline joined Proteomics International from digital marketing and ecommerce agency RooLife Group, having previously held senior leadership positions at Velpic, City Farmers, Morrison, Sungrid and the West Australian Community Foundation. She has also worked for global companies including the Economist Group, BBC Worldwide, HealthCare of Australia and Arthur Andersen. Chief Commercialisation Ofﬁcer Mr Vik Malik Vik has 25 years experience in the life sciences and healthcare industries as a commercialisation expert and business strategy advisor for several multinational, growth-stage and startup medical device and diagnostics companies. He has been involved in the launch of numerous disruptive medical technologies, cutting-edge biotherapies, innovative business process outsourcing services to penetrate new and emerging markets. Most recently, Vik served as interim Chief Executive Ofﬁcer and board director for surgical software startup ClaraSim Systems (via Stanford University, USA), and has previously held senior leadership positions with IQVIA (IMS Health + Quintiles), BioFuse Medical, Deloitte Consulting – Healthcare & Life Sciences, and Ascension Orthopedics, as well as sales, marketing and business development roles at TissueLink Surgical, Serono Laboratories and Wyeth Pharmaceuticals. Head of Business Development Mr Chuck Morrison Chuck has over 36 years experience in life sciences, biotechnology, and diagnostic industries. Chuck has an degree in chemistry and an MBA from Boston University. He has held several management positions while at NEN Life Sciences and DuPont before focusing his activities on Business Development at PerkinElmer. Chuck has successfully executed many licensing deals and several global acquisitions while in this role. Chuck is based in Massachusetts, USA and started working with the Company in 2014. Head of Clinical Studies Dr Kirsten Peters Kirsten has over 15 years of experience in clinical and genetic epidemiology. Kirsten leads the clinical studies and biostatistics team at Proteomics International, responsible for the development and validation of PromarkerD and diagnostics in the Promarker™ pipeline. She has been with the company for over 7 years and has been a Consultant at the University of Western Australia for 15 years. Kirsten has extensive experience in data analysis and has co- authored over 40 peer-reviewed journal articles. Head of Logistics Dr Pearl Tan Pearl is responsible for coordinating and ensuring the commercial delivery of PromarkerD and the Promarker™ pipeline. Pearl has extensive experience research commercialisation. Her previous roles include Chief Operating Ofﬁcer of Proteomics International, Business Manager (PromarkerD), and leading the commercialisation of the patented 2- tag technology (used in OxiDx P/L). Pearl has a background in research and completed her PhD in Biochemistry and Molecular Biology at The University of Western Australia. She has been with Proteomics International since 2013. in management and Head of Research Dr Scott Bringans Scott has over 20 years of experience in protein chemistry and mass spectrometry. Scott leads all research areas within Proteomics International including the company’s proprietary biomarker discovery and development program (Promarker™) and PromarkerD, the company’s predictive test for diabetic nephropathy. Alongside these are the development of novel methodology to add to Proteomics International’s technology platform and continually expanding the fee-for-service and quality testing portfolio. Scott has been with the Company for over 17 years. Business Manager - Analytical Services Ms Sreeja Sony Sreeja brings 14 years of Sales & Business the medical Development experience technology and pharmaceutical sectors. She has handled operations, logistics, technical support and purchasing activities in her previous roles. Sreeja has substantial experience selling life sciences services, consumables and instruments to a wide range of clients across the biopharma space. in Sreeja joined Proteomics International in 2016 and was recently appointed to Business Manager of the company’s Analytical Services business. US Sales Director Mr Michael LeFauve Mike brings over 25 years of Sales Leadership experience in the medical device and diagnostic arena, from innovative start-ups to best-in-class market leaders. He has extensive experience managing national sales teams, both with direct employee based teams and external distribution partners for the USA market, along with a product launch portfolio ranging from breakthrough innovations to well established medical technologies. Mike recently served as Vice President of Sales at Ethos Laboratories with additional oversight of marketing, sales operations and corporate sales training. Prior to Ethos Labs, he held senior management roles at Theragen and DJO Global. Mike resides in Charlotte, North Carolina, USA. 28 29 P I L L Material Business Risks The Group has identiﬁed the below speciﬁc risks that could impact upon its future prospects. Commercialisation Risk The Company is relying on its ability and that of its partners to develop and commercialise its products and services in order to create revenue. Any products or services developed by the Company will require extensive clinical testing, regulatory approval, manufacturing and signiﬁcant marketing efforts before they can be sold and generate revenue. The Company’s efforts to generate revenue may not succeed for a number of reasons including issues or delays in the development, testing, regulatory approval, manufacturing, supply chain or marketing of these products or services. In addition, developing direct sales, distribution and marketing capabilities will require the devotion of signiﬁcant resources and require the Company to ensure compliance with all legal and sales, marketing, manufacturing and distribution. requirements regulatory for A failure to successfully develop and commercialise these products and services could lead to a loss of opportunities and adversely impact on the Company’s operating results and ﬁnancial position. In addition, for those countries where the Company may commercialise its products or services through distributors or other third parties, the Company will rely heavily on the ability of its partners to effectively market and sell its products and services. Further, even if the Company does achieve market commercialisation of any of its products and services, it may not be able it or otherwise achieve commercialisation to a degree that would support the ongoing viability of its operations. sustain to Research and Development Risk The research and development process typically takes from 10 to 15 years from discovery to commercial product launch. This process is conducted in various stages in order to test, along with other features, the effectiveness and safety of a product. There can be no assurance that any of these products and services will be proven safe or effective. Accordingly, there is a risk at each stage of development that the Company will not achieve the goals of safety and/or effectiveness and that the Company will have to abandon a product. Intellectual Property The following are considered to be risks to the Company’s intellectual property: (i) General The patent protection that the Company may obtain varies from product to product and country to country and may not be sufﬁcient, including maintaining product exclusivity. Patent rights are also limited in time and do not always provide effective protection for products and services: competitors may successfully avoid patents through design innovation, the Company may not hold sufﬁcient evidence of infringement to bring suit, or the infringement claim may not result in a decision that the rights are valid, enforceable or infringed. Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Legislation or regulatory actions subsequent to the ﬁling date of a patent application may affect what an applicant is entitled to claim in a pending application and may also affect whether a granted patent can be enforced in certain circumstances. Laws relating to biotechnology remain the subject of ongoing political controversy in some countries. The risk of changed laws affecting patent rights is generally considered greater for the biotechnology ﬁeld than in other longer established ﬁelds. (ii) Entitlement to Priority In order for material disclosed in a patent application to be entitled to the priority date of a corresponding earlier ﬁled application (e.g. a provisional application), there must be adequate support or disclosure of such material in the provisional application. Subject matter in a patent application that is not so disclosed in the earlier application is not entitled to the claim to priority, which may affect patentability of the subject invention, or the validity of any patent that may be granted. (iii) Securing a Patent The claims in a pending application cannot be considered predictive of claims in a granted patent. Examination in certain jurisdictions such as the USA and the European Patent Ofﬁce are often more stringent than other countries and all pending claims may be subject to amendment during the pendency of an application. Thus, during pendency of any patent application, an applicant cannot reliably predict whether any claims will ultimately be granted or what the scope of any granted claims will be. Furthermore, whilst the scope of claims granted in one country may assist, it cannot be relied upon for predicting the scope of claims granted in another country. All patent searches are dependent on the accuracy and scope of the databases used for the search and, in particular, the manner in which information in the databases is indexed for searching purposes. Patent applications may have been ﬁled by third parties based on an earlier priority date and the existence of such applications may not be known for up to about 18 months after they were ﬁled. Such earlier-ﬁled applications may constitute prior art that adversely affects patentability or claim scope of a patent matter listed herein. Given the timing of and the approach taken to the examination of patent applications, if any prior art in this 18-month period does exist, it is unlikely that it will be located in searches conducted by ofﬁcial Patent Ofﬁces. Delays may occur during pendency, due to unpredictable events that the application cannot control. The net effect of such delays may be to decrease the time from the date of patent grant to the end of the patent term and thus adversely affect the effective lifetime of enforceability of the patent. Patents and pending applications can be subject to opposition or other revocation proceedings, that vary from country to country, and which cannot be predicted in advance. Reliance on Key Personnel The Company’s ability to operate successfully and manage its potential future growth depends signiﬁcantly upon its ability to attract, retain and motivate highly-skilled and qualiﬁed research, technical, clinical, regulatory, sales, marketing, managerial and ﬁnancial personnel. The competition for qualiﬁed employees in the life science industry is intense and there are a limited number of persons with the necessary skills and experience. The Company’s performance is substantially dependent on Dr Lipscombe and the other members of its senior management and key technical staff to continue to develop and manage the Company’s operations. The loss of or the inability to recruit and retain high-calibre staff could have a material adverse effect on the Company. The Company also relies on the technical and management abilities of certain key Directors and employees, consultants and scientiﬁc advisers. The loss of any of these Directors, employees, consultants or scientiﬁc advisers could have an adverse effect on the business and its prospects. Regulatory Risk The introduction of new legislation or amendments to existing legislation by governments, developments in existing common law, or the respective interpretation of the legal requirements in any of the legal jurisdictions that govern the Company’s operations or contractual obligations, could impact adversely on the assets, operations and, ultimately, the ﬁnancial performance of the Company and its shares. In addition, there is a risk that legal action may be taken against the Company in relation to commercial matters. Funding Risk While the Company believes it will have sufﬁcient funds to meet its operational requirements for the next 12 months, the Company may in the future seek to exploit opportunities of a kind that will require it to raise additional capital from equity or debt sources, joint ventures, collaborations with other life science companies, licensing arrangements, production sharing arrangements or other means. The Company’s capital requirements depend on numerous factors and, having regard to the development stage, and the nature of its products and services, the Company is currently unable to precisely predict if, and what amount of, additional funds may be required. Factors, which may inﬂuence the Company’s possible need for further capital, include such matters as: • the costs and timing of seeking and obtaining regulatory approvals; the costs of ﬁling, prosecuting, defending and enforcing any patent claims and other intellectual property rights; the effects of competing product, clinical, technological and market developments; and the terms, timing and consideration, if any, of collaborative arrangements or licensing of products and services; • • • There can be no assurance that additional ﬁnance will be available when needed or, if available, the terms of the ﬁnancing might not be favourable to the Company and might involve substantial dilution to Shareholders. If the Company is unable to obtain additional ﬁnancing as needed, it may be required to reduce the scope of its operations and scale back development and research programmes as the case may be. Insurance Risk The Company may not be able to maintain insurance for service liability on reasonable terms in the future and, in addition, the Company’s insurance may not be sufﬁcient to cover large claims, or the insurer could disclaim coverage on claims. If the Company fails to meet its clients’ expectations, the Company’s reputation could suffer and it could be liable for damages. The Company gives no assurance that all such risks will be adequately managed through its insurance policies to ensure that catastrophic loss does not have an adverse effect on its performance. Exchange Rate Risk The Company is exposed to movements in foreign exchange rates. The Company does not hedge against movements in the exchange rate. However, signiﬁcant changes in currencies may impact on the Company’s margins and earnings adversely. Cybersecurity Risk The Company is aware of the cybersecurity risk and data privacy risk inherent in its operations. The Company mitigates these risks using security measures and insurance as appropriate. Resource Risk The Company’s ability to deliver service and research and development pipelines in a timely manner are dependent on its equipment and resources operating accurately and efﬁciently. The Company manages resource risk with regular scheduled maintenance, backup arrangements, quality processes, and regular communication. Dependence on Key Relationships The Company currently has strategic business relationships with other organisations that it relies upon for key parts of its business, such as obtaining the use of the mass spectrometers, chromatography systems and other equipment and services important to the Company’s activities. The loss or impairment of any of these relationships could have a material adverse effect on the Company’s results of operations, ﬁnancial condition and prospects, at least until alternative arrangements can be implemented. In some instances, however, alternative arrangements may not be available or may be less ﬁnancially advantageous than the current arrangements. 30 31 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L Remuneration Report REMUNERATION REPORT (Audited) The Remuneration Report is set out under the following main headings: A B C D E F G H Principles Used to Determine the Nature and Amount of Remuneration Remuneration Governance Details of Remuneration Directors' Agreements Share-Based Compensation Additional Information Additional disclosure relating to key management personnel Transactions with the key management personnel The information provided in this Remuneration Report has been audited as required by Section 308(3C) of the Corporations Act 2001. 'The Directors and other Key Management Personnel of the Group during or since the end of the financial year were: • Mr Neville Gardiner Non-Executive Chairman (independent) • Dr Richard Lipscombe Managing Director • Mr Ian Roger Moore Non-Executive Director (independent) • Mr Paul House Non-Executive Director (independent) • • Dr Robyn Elliott Jacqueline Gray Non-Executive Director (independent) Chief Financial Officer REMUNERATION REPORT (continued) A. Principles Used to Determine the Nature and Amount of Remuneration The objective of the Company's remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered and set to attract the most qualified and experienced candidates. Remuneration levels are competitively set to attract the most qualified and experienced directors in the context of prevailing market conditions. The Directors recognise that in the early stages of the Company's development and in a period where the Company is making losses the objectives are to align the interests of the Board with shareholders and to attract, motivate and retain high performing individuals. The Board believes that this can be achieved through the following framework: • • The remuneration has a mix of components through the salary and share options; and The remuneration has been set in consultation with key management personnel (other than the relevant director whose remuneration is being discussed) taking into account the size of the Company and its current position in the market. The Company has not obtained independent advice on the remuneration policies and practices of the key management personnel or sought the assistance of an external consultant on the current market for similar roles, level of responsibility and performance of the Board. The Board may consider this in the future should the need arise. Non-Executive Directors Remuneration Fees and payments to the Non-Executive Directors reflect the demands which are made on and the responsibilities of the Directors. The Non-Executive Directors' fees and payments are expected to be reviewed annually by the Board. The Non-Executive Chairman's fees are determined based on competitive roles in the external market. The Chairman is not present at any discussions relating to the determination of his own remuneration. The Non-Executive Directors' fees and payments have been set based on the experience of the Director in the Company's field of operations, and level of activity required to be undertaken by the Director in the management of the Company. The Chairman received a fixed fee for his services as a Director. The Company's Non-Executive Directors' remuneration package contains the following key elements: • primary benefits - monthly Director's fees; and • options - issued following shareholder approval at the 2018 and 2022 Annual General Meetings. The Non-Executive Directors' fees are determined within an aggregate Directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $500,000 per annum and was approved by shareholders prior to listing on the ASX. No retirement benefits are provided other than compulsory superannuation. Non-Executive Remuneration Mix The following table sets out the non-executives' remuneration mix for the year ended 30 June 2023: Fixed $ 297,504 "At Risk" $ - Total $ 297,504 32 33 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L REMUNERATION REPORT (continued) A. Principles Used to Determine the Nature and Amount of Remuneration (continued) Executive Remuneration The Executive Director and Other Key Management Personnel are included in the Executive Remuneration. Executive Remuneration has been set based on the experience of each person in the Company's field of operations, and level of activity required to be undertaken by each person in the management of the Company. The Company's Executive Remuneration package contains the following key elements: • primary benefits - salary via an agreement; and • options - issued via an agreement. • performance rights - issued via an agreement. (iii) Executive Remuneration Mix The following table sets out the Key Management Personnels' remuneration mix for the year ended 30 June 2023: Fixed $ 730,272 "At Risk" $ 17,026 Total $ 747,298 The shareholders approved the Director Fee Plan at the 2019 Annual General Meeting, where (subject to shareholder approval) director fees can be settled by the issue of shares. CONSOLIDATED ENTITY PERFORMANCE AND LINK TO REMUNERATION The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ("the Board") ensures that executive reward satisfies the following key criteria for good reward governance practices: • • • • Competitiveness and reasonableness Acceptability to shareholders Performance linkage / alignment of executive compensation Transparency Share price at financial year end ($A) Total dividends declared (cents per share) Basic loss per share (cents per share) 2019 $ 0.35 - ( 0.03) 2020 $ 0.42 - ( 0.02) 2021 $ 0.93 - ( 0.03) 2022 $ 0.93 - ( 0.05) 2023 $ 0.86 - ( 0.05) USE OF REMUNERATION CONSULTANTS The Company has not engaged a remuneration consultant during the year. VOTING AND COMMENTS MADE AT THE COMPANY'S ANNUAL GENERAL MEETING At the 2022 Annual General Meeting, more than 75% of votes cast were in favour of adoption of the Company’s remuneration report for the 2022 financial year. The Company did not receive any comments at the Annual General Meeting on its remuneration report. 34 REMUNERATION REPORT (continued) B. Remuneration Governance The Board is primarily responsible for making decisions and recommendations on: • the over-arching executive remuneration framework; • the operation of the incentive plans which apply to the executive director and non-executives including the performance hurdles; • the remuneration levels of executives; and • Non-Executive Director fees. C. Details of Remuneration Details of the remuneration of the Directors and Other Key Management Personnel of the Company is set out below: 2023 Non-Executive Directors Ian Roger Moore Paul House Neville Gardiner Dr Robyn Elliott Executive Director Dr Richard Lipscombe Other Key Management Personnel Jacqueline Gray TOTAL 2022 Non-Executive Directors Terry Sweet (ii) Ian Roger Moore Paul House Neville Gardiner (iii) Dr Robyn Elliott (iii) Executive Director Dr Richard Lipscombe Other Key Management Personnel Vikesh Malik (iv) Jacqueline Gray (v) Cash Salary and Fees Post-Employment Benefits Other Leave Benefits Share Based Benefits Share Based Benefits Directors Fees Salary Bonus Superannuation Leave Benefits Equity-settled options Equity-settled rights $ $ $ $ $ $ Total $ Performance Related % 45,000 45,000 75,000 45,000 - - - - - - - - - 4,725 7,875 4,725 - 350,000 50,000 42,000 - - - - - - - - 46,786 23,393 - - - - - - 45,000 49,725 129,661 73,118 0% 0% 0% 0% 442,000 13% - 210,000 210,958 560,958 25,000 75,000 24,776 84,101 1,218 1,218 20,290 90,469 23,056 305,298 23,056 1,044,802 15% 10% $ $ $ $ $ $ $ % 24,167 43,750 43,750 46,875 28,125 - - - - - - 265,383 - - 207,692 180,630 - - - - - - - - - 2,417 - 4,375 4,687 2,813 - - - - - - - - 124,392 62,197 30,000 34,617 - - - - - - - 26,584 43,750 48,125 175,954 93,135 330,000 15,000 19,559 78,851 17,308 14,956 66,881 68,228 39,540 84,851 33,504 393,079 288,189 294,357 118,355 1,398,816 TOTAL 186,667 653,705 (i) (ii) (iIi) (iv) (v) For the financial year ended 30 June 2023, the role of Chief Financial Officer met the criteria under the definition of Key Management Personnel as defined in AASB 124 and section 308(3C) of the Corporations Act 2001 . Terry Sweet retired as a Director on 25 November 2021. Appointed as Directors on 16 November 2021. Appointed on 1 June 2021. Appointed on 12 July 2021. 0% 0% 0% 0% 0% 0% 17% 6% 6% 35 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L REMUNERATION REPORT (continued) REMUNERATION REPORT (continued) D. Directors' and Other Key Management Personnel Agreements D. Directors' and Other Key Management Personnel Agreements (continued) On appointment, the Non-Executive Directors' sign a letter of appointment with the Company which outlines the Board's policies and terms regarding their appointment including the remuneration relevant to the office of Director. The major provisions relating to remuneration are set out below. On appointment, the Executive Director and Key Management Personnel sign a letter of appointment with the Company which outlines the Board's policies and terms regarding their appointment including the remuneration relevant to the office of Director. Remuneration and other terms of employment for the Executive Director and Other Key Management Personnel are formalised in services agreements. The major provisions relating to remuneration are set out below. Neville Gardiner (Non-Executive Chairman) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Termination of agreement Terms No fixed term - subject to periodic re-election at the AGM $75,000 Statutory rate N/A None specified Ian Roger Moore (Non-Executive Director) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Termination of agreement Terms No fixed term - subject to periodic re-election at the AGM $45,000 Statutory rate N/A None specified Paul House (Non-Executive Director) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Termination of agreement Terms No fixed term - subject to periodic re-election at the AGM $45,000 Statutory rate N/A None specified Dr Robyn Elliott (Non-Executive Director) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Termination of agreement Terms No fixed term - subject to periodic re-election at the AGM $45,000 Statutory rate N/A None specified Dr Richard Lipscombe (Managing Director) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Leave entitlements Termination of agreement Terms No fixed term $350,000 Statutory rate At the absolute discretion of the Board 30 days annual leave and no long-service leave 1 month (incapacitated / ill / unsound mind), 1 month (serious or persistent breaches), immediate (conviction / major criminal offence) Jacqueline Gray (Chief Financial Officer) Particulars Term of the agreement Base remuneration Superannuation Bonus payable Leave entitlements Termination of agreement Terms No fixed term $210,957 Statutory rate At the absolute discretion of the Board 20 days annual leave 3 months notice 36 37 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L REMUNERATION REPORT (continued) E. Share-based Compensation The following options were exercised during the year: Director Terry Sweet (i) (ii) Ian Roger Moore (i) Paul House (i) Total Number of Options 200,000 100,000 100,000 400,000 Grant Date Expiry Date Exercise Price Fair Value at Exerxcise Date (i) 22-Nov-18 22-Nov-18 22-Nov-18 22-Nov-22 22-Nov-22 22-Nov-22 $ 0.67 0.67 0.67 $ 45,325 22,662 22,663 90,650 (i) The options were issued as a reward and incentive and vested immediately. The value at the exercise date of options that were granted as part of remuneration and were exercised during the year has been determined as the intrinsic value of the options at that date. No amounts are unpaid on any shares issued on the exercise of options. (ii) Terry Sweet retired as a Director on 25 November 2021. The following Director C and Director D options were issued following receipt of shareholder approval on 24 November 2022: Director Number of Options Service Commencement Date Expiry Date Exercise Price Fair Value at Grant Date Neville Gardiner Dr Robyn Elliott Director C option (i) Director D option (ii) Total Director C option (i) Director D option (ii) Total 250,000 250,000 500,000 125,000 125,000 250,000 15-Nov-21 15-Nov-21 23-Nov-25 23-Nov-26 15-Nov-21 15-Nov-21 23-Nov-25 23-Nov-26 $ 1.32 1.76 1.32 1.76 $ 84,097 87,081 171,178 42,049 43,540 85,589 (i) (ii) Director C options has an exercise price that is at a 50% premium to the volume-weighted average market price (VWAP) for shares for the twenty (20) trading days immediately prior to the date of the issue and will expire three (3) years from date of issue. Director D options has an exercise price that is at a 100% premium to the volume-weighted average market price (VWAP) for shares for the twenty (20) trading days immediately prior to the date of the issue and will expire four (4) years from date of issue. REMUNERATION REPORT (continued) E. Share-based Compensation (continued) Fair Value of Director C and Director D Options These previously unissued Director C and Director D options were offered on 15 November 2021 to newly appointment Non- Executive Directors Neville Gardiner and Dr Robyn Elliot as a reward and incentive, were subject to shareholder approval, and were provisionally valued at 30 June 2022. The issue of these Director and C and D options was approved by the shareholders at the AGM held on 24 November 2022, and they have been vested and revalued at the issue date as follows: Particulars Number of options Valuation date Expiry date Underlying share price used Exercise price Risk-free rate Volatility Dividend yield Valuation per Option Director C 375,000 24 November 2022 23 November 2025 $0.850 $1.320 3.24% 75% nil $0.3364 Director D 375,000 24 November 2022 23 November 2026 $0.850 $1.76 3.29% 75% nil $0.3483 The revised value placed on these Director C options is $126,146 and the amount allocated to the share based payment expenses in the statement of profit or loss and other comprehensive income in the period ended 30 June 2023 is $33,843. The revised value placed on these Director D options is $130,622 and the amount allocated to the share based payment expenses in the statement of profit or loss and other comprehensive income in the period ended 30 June 2023 is $36,335. The Company has used the Black Scholes Model to value the Director C and Director D options. Fair Value of Employee Incentive Options - Chief Financial Officer (CFO) These options were issued on 20 July 2021 pursuant to the terms of an Employee Incentive Options Plan and are issued in tranches of 50,000 options with differing vesting dates. The assessed fair value at grant date was determined using a Black-Scholes Model with the following key inputs: Particulars Number of CFO options Valuation date Expiry date Vesting date Underlying share price used Exercise price Risk-free rate Volatility Dividend yield Valuation per Option Tranche 1 50,000 20 July 2021 12 July 2024 12 July 2022 $1.015 $1.16 0.13% 75% nil $0.4558 Tranche 2 50,000 20 July 2021 12 July 2024 12 July 2023 $1.015 $1.16 0.13% 75% nil $0.4558 Tranche 3 50,000 20 July 2021 12 July 2024 12 July 2024 $1.015 $1.16 0.13% 75% nil $0.4558 These CFO options will expire on 12 July 2024 (the expiry date) and, once vested, may be exercised at any time prior to the expiry date. Options not exercised shall lapse on the expiry date. Options will immediately lapse if employment ceases prior to the vesting date. The total determined value for these CFO options is $68,372 and the amount allocated to the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $20,290. 38 39 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L REMUNERATION REPORT (continued) E. Share-based Compensation (continued) Performance Rights - Chief Financial Officer Chief Financial Officer (CFO) 61,574 73,095 23,056 33,504 2023 Rights 2022 Rights 2023 $ 2022 $ Class of performance rights Number issued to Chief Financial Officer (CFO) Tranche 1 performance rights issued Performance rights exercised Tranche 2 performance rights issued Milestone C performance rights issued 11,521 ( 11,521) 11,574 50,000 61,574 Tranche 1 performance rights are subject to continuous service under the Employment Contract, and were issued on 20 July 2021 vested on 1 July 2022 and exercised on 22 August 2022. Tranche 2 performance rights are subject to continuous service under the Employment Contract, and were issued on 20 July 2021 and will vest on 1 July 2023. These rights were exercised subsequent to balance date. Refer to note 24. Milestone C performance rights are subject to the Company achieving an annual net profit target set by the Board and independently verified by the Company's auditors, and were issued on 20 July 2021 and will lapse after 3 full financial years of the commencement of the Employment Contract. Each performance right automatically converts into one ordinary share on vesting at an exercise price of nil. The CFO (referred to as executive) does not receive any dividends and are not entitled to vote in relation to the performance rights during the vesting period. If an executive ceases to be employed by the Company within this period, the performance rights issued to that executive will be forfeited. The fair value of these performance rights at grant date was estimated by taking the market price of the Company's shares on that date less the present value of expected dividends that will not be received by the executives on their rights during the vesting period. The fair value is estimated at $74,191 and the amount allocated to the share based payment expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $23,056 (30 June 2022: $33,504). REMUNERATION REPORT (continued) F. Additional disclosure relating to key management personnel Shareholding The number of shares in the Company held during the year by each Director and other members of Key Management Personnel of the consolidated entity, including their personally related parties, is set out below: Directors and Key Management Personnel Balance at the start of the year Received as part of remuneration Shares Received on exercise of options and performance rights Other changes during the year (i) Balance at the end of the year 2023 Dr Richard Lipscombe Ian Roger Moore Paul House Neville Gardiner Robyn Elliot Jacqueline Gray 19,048,704 817,000 818,864 - - - - - - - - - - 100,000 100,000 - - 11,521 - 58,824 117,647 117,647 - 41,000 19,048,704 975,824 1,036,511 117,647 - 52,521 (i) Reflects sales and purchases of shares in the market by key management personnel and/ or their related parties. Option holding The number of options in the Company held during the year by each Director and other members of the Key Management Personnel of the consolidated entity, including their personally related parties, is set out below: Directors and Key Management Personnel Balance at the start of the year Received as part of remuneration Shares Received on exercise of options Balance at the end of the year (vested) Balance at the end of the year (unvested) 2023 Terry Sweet Dr Richard Lipscombe Ian Roger Moore Paul House Neville Gardiner (i) Dr Robyn Elliott (i) Jacqueline Gray 200,000 - 100,000 100,000 500,000 250,000 150,000 - - - - - - - ( 200,000) - ( 100,000) ( 100,000) - - - - - - - - - 50,000 - - - - 500,000 250,000 100,000 (i) Director C and Director D options were granted on 15 November 2021 to Non-Executive Directors Neville Gardiner and Dr Robyn Elliot as an effective and efficient method of supplementing Non-Executive Director's fees. The issue of these Director C and Director D options was approved by the shareholders at the AGM on 24 November 2022, and have been revalued at the issue date of 24 November 2022. 40 41 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L REMUNERATION REPORT (continued) F. Additional disclosure relating to key management personnel Rights holding The number of rights in the Company held during the year by each Director and other members of the Key Management Personnel of the consolidated entity, including their personally related parties, is set out below: Directors and Key Management Personnel Balance at the start of the year Received as part of remuneration Shares Received on exercise of performance rights Balance at the end of the year (vested) Balance at the end of the year (unvested) 2023 Jacqueline Gray CFO 73,095 - ( 11,521) - 61,574 G. Transactions with Key Management Personnel The Company entered into the following transactions with key management personnel during the year: (i) Loans from directors There were no loans entered into with key management personnel during the year. (ii) Consultancy services There were no consultancy services provided by key management personnel during the year ended 30 June 2023. THIS IS THE END OF THE AUDITED REMUNERATION REPORT SHARES UNDER OPTION Unissued ordinary shares of the Company under option at the date of this report are as follows: Date options granted Expiry date Exercise price Number under option 20/07/2021 20/07/2021 24/11/2022 24/22/2022 1/06/2024 12/07/2024 23/11/2025 23/11/2026 $1.44 $1.16 $1.32 $1.76 300,000 150,000 375,000 375,000 1,200,000 The options are exercisable at any time before the expiry date. The number of options that were converted into shares during the year ended 30 June 2023 was 5,790,279 (30 June 2022: 500,000). The number of options that lapsed during the year ended 30 June 2023 was 500,000 (30 June 2022: nil). INSURANCE OF OFFICERS During the year ended 30 June 2023, the Company paid a premium in respect of a contract insuring the Directors and Officers of the Company and any subsidiary against a liability incurred as a Director or Officer to the extent permitted by the Corporations Act 2001. Due to a confidentiality clause in the policy, the amount of the premium has not been disclosed. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company, and any other payments arising from liabilities incurred by the officers in connection with such proceedings, other than where such liabilities arise out of conduct involving a willful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purposes of taking responsibility on behalf of the Company for all or part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001 . NON-AUDIT SERVICES The Company may decide to employ the auditor on assignments additional to their statutory audit duties, where the auditors' expertise and experience with the Company are important. Non-audit services provided by BDO Corporate Tax (WA) Pty Ltd during the year ended 30 June 2023 were in respect to consulting and amounted to $11,680 (30 June 2022: $16,310). AUDITOR BDO Audit (WA) Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001 . AUDITOR'S INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is attached on page 44. This report is made in accordance with a resolution of the Directors. Neville Gardiner Chairman Perth, Western Australia Dated 22 August 2023 42 43 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Auditor’s Independence Declaration Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au Level 9, Mia Yellagonga Tower 2 5 Spring Street Perth, WA 6000 PO Box 700 West Perth WA 6872 Australia DECLARATION OF INDEPENDENCE BY ASHLEIGH WOODLEY TO THE DIRECTORS OF PROTEOMICS INTERNATIONAL LABORATORIES LIMITED As lead auditor of Proteomics International Laboratories Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Proteomics International Laboratories Limited and the entities it controlled during the period. Ashleigh Woodley Director BDO Audit (WA) Pty Ltd Perth 22 August 2023 Financial Statements BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. 44 45 P I L L Financial Statements Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2023 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2023 Revenue from continuing operations: - Services - Research grants and other income Other income - Interest income - Research and development tax incentive - Profit on sale of plant & equipment Total revenue from continuing operations Employment and labour expenses Share based payments expense Depreciation expense Intellectual property maintenance expenses Interest expense Interest expense - lease liabilities Laboratory supplies Professional fees Travel and marketing expenses Laboratory access fees Loss (gain) in foreign currency translation Other expenses Total Expenditure Notes 5 2(a) 2(a) 2(b) 2(c) 1(g), 12(d) 2(b) Consolidated Entity 2023 $ Consolidated Entity 2022 $ 730,340 593,328 136,505 1,848,832 11,857 3,320,862 4,784,670 324,374 529,529 268,532 - - 1,903,797 720,716 313,185 173,120 8,536 528,713 9,555,172 1,489,323 229,794 5,438 1,711,903 - 3,436,458 3,847,285 511,693 416,861 151,809 446 2,247 1,806,924 945,477 120,149 99,209 ( 760) 508,078 8,409,418 (Loss) before income tax ( 6,234,310) ( 4,972,960) Income tax (expense) / benefit 3(a) - - (Loss) after income tax from continuing operations ( 6,234,310) ( 4,972,960) Total comprehensive (loss) for the year attributable to: Equity holders of Proteomics International Laboratories Ltd Non-controlling interests Basic (loss) per share for the year attributable to the members of Proteomics International Laboratories Ltd Diluted (loss) per share 23 ( 6,176,573) ( 57,737) ( 6,234,310) ( 0.05) N/A ( 4,972,960) - ( 4,972,960) ( 0.05) N/A CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Other assets Right-of-use assets Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Deferred income Lease liabilities Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Deferred income Lease liabilities Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated (losses) Parent Entity Interest Non-controlling Interest TOTAL EQUITY Consolidated Entity 2023 $ Consolidated Entity 2022 $ Notes 4 6 7 8 9 5 10 5 10 11 13 14 6,027,315 145,730 2,153,812 8,326,857 1,620,852 59,563 67,095 1,012 1,748,522 10,075,379 580,041 368,756 30,541 123,468 1,102,806 582,494 33,547 33,276 649,317 1,752,123 2,111,514 440,125 1,810,513 4,362,152 973,391 59,563 - 1,012 1,033,966 5,396,118 1,345,708 355,977 - - 1,701,685 133,920 - 166,671 300,591 2,002,276 8,323,256 3,393,842 30,180,264 1,828,310 ( 23,627,581) 8,380,993 ( 57,737) 8,323,256 19,340,914 1,682,998 ( 17,630,070) 3,393,842 - 3,393,842 The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 46 47 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2023 CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2023 CONSOLIDATED ENTITY 30 JUNE 2023 Issued Capital Ordinary Reserves (Accumulated Losses) Non-controlling interest Total Equity Notes $ $ $ $ $ Balance at 1 July 2022 19,340,914 1,682,998 ( 17,630,070) (Loss) for the year attributable to members of the parent entity (Loss) attributable to non-controlling interest Other comprehensive income/(loss) for the year Total comprehensive (loss) for the year - - - - - - - - ( 6,176,573) - ( 6,176,573) - - 3,393,842 ( 6,176,573) ( 57,737) - ( 57,737) ( 57,737) - ( 6,234,310) Transactions with Equity Holders in their capacity as Equity Holders Equity issued net of share issue costs Conversion of options Share based payments expense 11 11 1(g), 12(d) 7,334,924 3,504,426 - 10,839,350 - ( 179,062) 324,374 145,312 - 179,062 - - - - - - 7,334,924 3,504,426 324,374 11,163,724 Balance as at 30 June 2023 30,180,264 1,828,310 ( 23,627,581) ( 57,737) 8,323,256 CONSOLIDATED ENTITY 30 JUNE 2022 Balance at 1 July 2021 19,095,227 1,171,305 ( 12,657,110) 7,609,422 Notes Issued Capital Ordinary $ Reserves $ (Accumulated Losses) $ Total Equity $ (Loss) for the year Other comprehensive income for the year Total comprehensive (loss) for the year Transactions with Equity Holders in their capacity as Equity Holders Equity issues net of share issue costs Share based payments expense - - - - - - ( 4,972,960) - ( 4,972,960) ( 4,972,960) - ( 4,972,960) 11 1(g), 12(d) 245,687 - - 511,693 245,687 511,693 - - - 245,687 511,693 757,380 Balance as at 30 June 2022 19,340,914 1,682,998 ( 17,630,070) 3,393,842 Cash flows from operating activities Receipts from customers, grants and other income Payments to suppliers and employees Interest paid Interest received Research and development tax incentive Net cash (outflow) from operating activities Cash flows from investing activities Proceeds from sale of plant and equipment Payment for plant and equipment Net cash (outflow) from investing activities Cash flows from financing activities Proceeds from the issue of shares (net of costs) Proceeds from the conversion of options Loans to employees Repayment of lease liabilities Net cash inflow from financing activities Cash and cash equivalents at 1 July Net increase in cash and cash equivalents Cash and cash equivalents at 30 June Consolidated Entity 2023 $ Consolidated Entity 2022 $ Notes 2,041,098 ( 9,555,415) - 109,504 1,711,902 1,691,901 ( 6,474,765) ( 2,693) 5,438 1,240,156 4 ( 5,692,911) ( 3,539,963) 52,779 ( 1,217,910) ( 1,165,131) - ( 129,458) ( 129,458) 7,345,753 3,493,597 ( 62,500) ( 3,007) 10,773,843 - 245,147 - ( 69,046) 176,101 2,111,514 3,915,801 6,027,315 5,604,834 ( 3,493,320) 2,111,514 4 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes. 48 49 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (c) Estimates and judgements The financial report Proteomics International Laboratories Ltd and its subsidiaries (the Company) for the financial year ended 30 June 2023 was authorised for issue in accordance with a resolution of the Directors on the 22nd of August 2023. The Company is a public company limited by shares, incorporated and domiciled in Australia, and whose shares are traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Company are described in the Director’s report above. (a) Basis of preparation The principle accounting policies adopted for the preparation of financial statements are set out below. These accounting policies have been applied consistently to all periods presented unless otherwise stated. (i) Statement of compliance These general purpose financial statements have been prepared in accordance with the requirements of the Corporations Act 2001 , Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act 2001 . The Company is a for profit entity for the purpose of preparing the financial statements. The financial statements of the Company also comply with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). (ii) Basis of measurement The financial statements have been prepared on an accruals basis and are based on historical cost other than investments which are recorded at fair value. The financial statements are presented in Australian dollars and all values are rounded to the nearest dollar unless otherwise stated. (iii) Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. (b) Segment Information The preparation of the financial statements requires the use of accounting estimates and judgements which, by definition, will seldom equal the actual results. This note provides an overview of the areas that involve a degree of judgement or complexity in preparing the financial information. Facts and circumstances may come to light after the event which may have significantly varied the assessment used, and which may result in a materially different value being recorded at the time of preparing these financial statements. (i) (ii) (iii) (iv) (v) Deferred taxes Deferred tax assets have not been brought to account as it is not considered probable that the Company will make taxable profits over the next 12 months. The Company will make a further assessment at the next reporting period. Impairment of assets The Company assesses the impairment of assets at each reporting date by evaluating conditions specific to the asset that may lead to impairment. The assessment of impairment is based on the best estimate of future cash flows available at the time of preparing the report. However, facts and circumstances may come to light in later periods which may change this assessment if these facts had been known at the time. Recoverability of Research & Development tax incentive The Company has registered its research and development activities with the Department of Industry, Innovation and Science. Therefore, the Company is entitled to claim a tax incentive each year based on eligible research and development costs it incurs and, based on successful claims in previous years, the Company expects that it will receive the amount calculated. Lease extensions The Company entered into a facility licence agreement with the Harry Perkins Institute on 1 July 2019 for a period of 3 years. This facility licence agreement ended on 1 July 2022. At the date of this report, a renewal of the facility licence agreement has been agreed, with the terms and fees to be determined. Share Based Payments Equity settled share based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair value excludes the effect of non-market based vesting conditions. Details regarding the determination of the fair value of equity settled share based transactions are set out in the Share Based Payments note. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of the number of equity instruments expected to vest as a result of the effect of non-market based vesting conditions. AASB 8 - Operating Segments, requires a management approach under which segment information is presented on the same basis as that used for internal reporting purposes. This is consistent to the approach used for the comparative period. (d) Principles of consolidation Operating segments are reported in a uniform manner which is internally provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors (the Board). An operating segment is a component of the organisation that engages in business activity from which it may earn revenues or incur expenditure, including those that relate to transactions with other organisation components. Each operating segment’s results are reviewed regularly by the Board when making decisions about resources to be allocated to the segments and assess its performance, and for which discrete financial information is available. The Board monitors the operations of the Company as one single segment. The actual to budget items and a detailed profit or loss are reported to the Board to assess the Company's performance. The Board has determined that strategic decision making is facilitated by evaluation of the operations of the legal parent and subsidiaries, which represent the operational performance of the Company’s revenues and the research and development activities as well as the finance, treasury, compliance and funding elements. Subsidiaries: Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are deconsolidated from the date that control ceases. Intercompany Transactions: Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Company. 50 51 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 (e) Revenue recognition and other income Revenue is recognised when or as the Company transfers control of goods or services to a customer, at the amount to which the Company expects to be entitled. The following is a description of the principal activities from which the Company generates its revenue and other income: (i) (ii) Research grant and equivalent/other income including the Research & Development Tax Incentive Grants and other income are recognised at their fair value where it is probable that the grant and other income will be received. The Company is eligible to claim, and receive, a tax credit for its qualifying research and development activities (Research & Development tax incentive). The Research & Development tax credit received by the Company in the year ended 30 June 2023 amounted to $1,711,902. Revenue from contracts with customers - Commercialisation of PromarkerD Revenue from commercialisation of PromarkerD is measured based on the consideration specified in a contract with a customer. The Company recognises revenue when it transfers control over a product or service to a customer. (iii) Revenue from contracts with customers - Sales of Analytical and Other Services Revenue from the provisions of analytical and other services is recognised in the accounting period in which the services are rendered. If services rendered by the Company exceed the payment received, a contract asset is recognised. If the payment received exceeds the services rendered, a contract liability is recognised. In some circumstances, analytical and other services are bundled together with provision of sales of services and products. The sale of products is a separate performance obligation and transaction price is allocated to the products and services on a relative stand-alone selling price basis. (f) Employee Benefits NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 (h) Foreign currency translation and transactions Both the functional and presentation currency of the Company is in Australian dollars. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. (i) Income tax The income tax expense or benefit for the year is the tax payable on that year's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: (i) (ii) When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Liabilities for wages and salaries (including non-monetary benefits and accumulating sick leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service) are recognised in respect of employees’ services up to the end of the reporting period, and are measured at the amounts expected to be paid when the liabilities are settled. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities, and they relate to the same taxable authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously. The liabilities are presented as current liabilities in the statement of financial position, described as other payables, and comprise provision for annual leave and provision for long service leave. The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service, are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period 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 end of the reporting period of government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Re- measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in the statement of profit or loss and other comprehensive income. Contributions to superannuation funds are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (g) Share based payments Share-based payments compensation benefits are provided to employees, Directors and consultants via the issues of shares, performance rights and/or options. The fair value of the shares, performance rights and options granted as compensation benefits are recognised as a share based payments expense in the statement of profit or loss and other comprehensive income with a corresponding increase in equity in the statement of financial position. Share-based payments compensation benefits are provided to consultants for capital raising via the issues of shares and/or options. The fair value of the shares and options granted in relation to capital raisings are recognised as a transaction cost and offset against equity in the statement of financial position. (j) Joint Arrangements The Company entered into a collaborative joint arrangement with the University of Western Australia during the year ended 30 June 2020 for the expansion and operation of the Western Australian Proteomics Facility. The collaboration arrangement is not structured through a separate entity. Both parties to the arrangement will operate independently with each party maintaining independent rights to the assets of the collaboration, and liabilities resulting from activities under the arrangement will be several, and not joint or joint and several. The arrangement has therefore been classified as a joint operation and the Company recognises its direct right to the jointly held assets liabilities, revenues and expenses in accordance with AASB 11 - Joint Arrangements. (k) Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; (i) (ii) it is held primarily for the purpose of trading; (iii) it is expected to be realised within twelve months after the reporting period; or (iv) the asset is cash or cash equivalent, unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current. A liability is current when: it is expected to be settled in normal operating cycle; (i) (ii) it is held primarily for the purpose of trading; (iii) it is due to be settled within twelve months after the reporting period; or (iv) there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current. 52 53 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 (l) Cash and cash equivalents (o) Leases 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 cashflows presentation purposes, cash and cash equivalents also includes bank overdrafts, which are shown within borrowings in current liabilities on the statement of financial position. (m) Trade and other receivables Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade receivables are usually due for settlement within 60 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are then recognised at fair value. The Company holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest rate method. The Company applies the AASB 9 simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the days past due. The contract assets relate to unbilled work in progress and have substantially the same risk characteristics as the trade receivables for the same types of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets. (n) Property, plant and equipment The Company's accounting policy for plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges on foreign currency purchases of property, plant and equipment. Subsequent costs are included in the carrying amount of an asset 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 Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. Depreciation is calculated on a diminishing value basis or on a straight line basis, as appropriate, to write off the net cost of each item of plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-10 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 finance lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter. AASB 16 Leases AASB 16 has been adopted from 1 July 2019. The standard replaces AASB 117 "Leases" and for leases eliminates the classifications of operating leases and Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in depreciation expense) and For classification within the statement of cash flows, the interest portion is included in interest paid and the principal portion of the lease payments are separately disclosed as repayment of lease liabilities. 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 incentives received. 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. Right-of-use assets are adjusted for any remeasurement of lease liabilities. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the net present value of the lease payments Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the lease term or future lease payments arising from a change in an index or rate used. When a lease liability is remeasured, an adjustment is made to the corresponding right-of-use asset. (p) Trade and other payables These amounts represent liabilities for goods and services provided to the Company 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 60 days of recognition. (q) Provisions Provisions are recognised when the Company has a present (legal or constructive) obligation as a result of a past event, it is probable the Company 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. (r) Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either in the principle market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed each reporting date and transfers between levels are determined based on a reassessment of the lowest level input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. (s) 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. 54 55 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 (t) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of Proteomics International Laboratories Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. (u) 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 either other receivables or in 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. 2. LOSS FOR THE YEAR Notes Loss for the full year included the following: (a) Research & Development Tax incentive (i) Grants received Other income (b) Other expenses (income) Unrealised loss (gain) in foreign currency translation Realised loss (gain) in foreign currency translation Loss (gain) on sale of plant and equipment (c) Employee and labour expenses Salaries and wages Other personnel costs Superannuation (Decrease) increase in leave liabilities P I L L Consolidated Entity 2023 $ Consolidated Entity 2022 $ 1,848,832 413,515 179,813 1,711,903 100,000 129,794 430 8,106 ( 11,857) ( 59) ( 760) - 3,809,863 555,355 427,364 ( 7,912) 4,784,670 3,000,272 473,351 297,461 76,201 3,847,285 Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Share based payments expense 1(g), 12(d) 324,374 511,693 5,109,044 4,358,978 (v) New Accounting Standards not yet Mandatory Certain new/amended accounting standards and interpretations have been issued but are not mandatory for financial years ended 30 June 2023 and have not been earlier adopted in preparing the financial statements. The Group's assessment of the impact of these new standards is that they are not expected to have a material impact on the Group in the current or future reporting periods. (i) Research & Development Tax incentive The Company undertakes a substantial amount of research in its daily activities. The Company has registered its activities and is able to claim a tax incentive (rebate) each year based on eligible research and development costs incurred during a financial year. The estimated amount of the incentive (rebate) is included as an income item in the consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2023, and the corresponding receivable included in the consolidated statement of financial position. The receipt of the tax incentive will occur in the year ended 30 June 2024. 3. INCOME TAX EXPENSE / (BENEFIT) (a) Income tax expense / (benefit) Current tax / (over provision in prior year) Deferred tax (b) Numerical reconciliation of income tax to prima facie tax (Loss) from continuing operations Tax at the Australia tax rate 25% Tax effect of the amounts that are not deductible / (taxable) in calculating taxable income: - Share based payments - Research and development tax incentive - Expected cedit losses Expected credit losses - Reduction in loss for tax credit Consolidated Entity 2023 $ Consolidated Entity 2022 $ - - - - ( 6,234,310) ( 4,972,960) ( 1,558,578) ( 1,243,240) 81,094 ( 462,208) 28,494 1,911,198 - 127,923 ( 427,976) 76,170 1,467,123 - 56 57 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 3. INCOME TAX EXPENSE / (BENEFIT) (continued) (c) Tax losses Unused tax losses for which no deferred tax assets have been recognised Australian losses Potential tax benefit at 25% Notes Consolidated Entity 2023 $ Consolidated Entity 2022 $ 8,805,801 2,201,450 5,411,199 1,352,800 The tax benefits of the above deferred tax assets will only be obtained if: (i) (ii) (iii) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised; the Company continues to comply with the conditions for deductibility imposed by law; and no changes in income tax legislation adversely affects the Company in utilising the benefits. (d) Unrecognised temporary differences Provisions Accruals Tax losses 4. RECONCILIATION OF CASH Cash at bank Deposits at call Reconciliation of loss after income tax to net cash flows from operating activities Loss for the year Non-cash items: Profit on sale of assets Depreciation Unrealised foreign currency loss (gain) Share based payments expense Financing Activities: Share issue from employee loans Operating Activities: (Increase) / decrease in trade and other debtors (Increase) / decrease in other assets Increase / (decrease) in trade and other creditors Increase / (decrease) in provisions 1(g), 12(d) Refer to Note 15 for further information on risk exposure. ( 18,525) ( 30,596) 8,805,801 8,756,680 9,270 116,723 5,411,199 5,537,192 236,859 5,790,456 6,027,315 1,111,514 1,000,000 2,111,514 ( 6,234,310) ( 4,972,960) ( 11,858) 529,529 430 324,374 416,861 ( 59) 511,693 62,500 - 294,395 ( 231,922) ( 416,123) ( 9,926) ( 5,692,911) ( 139,077) ( 438,148) 1,005,526 76,201 ( 3,539,963) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 5. REVENUE The Company has disaggregated revenue into various categories which is intended to: • • Depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors, and Enable users to understand the relationship with revenue information in the statement of profit or loss and other comprehensive income. Product Type Licensing Income Analytical Services Timing of Transfer of Goods and Services Point in time Over Time Primary Geographic Markets Australia and NZ USA (and Territories) Europe India SE Asia Deferred Revenue (i) (ii) Current Non-Current Consolidated Consolidated Entity 2023 $ 14,881 715,459 730,340 - 730,340 730,340 591,049 90,867 12,556 35,750 118 730,340 Entity 2022 $ - 1,489,323 1,489,323 - 1,489,323 1,489,323 1,217,411 155,224 108,469 6,183 2,036 1,489,323 368,756 582,494 951,250 355,997 133,920 489,917 (i) Deferred revenue in 2023 primarily relates to funds received under the collaboration agreement with University of Western Australia. Refer Note 1(j) (ii) Deferred revenue in 2022 primarily relates to funding secured to support the manufacture of the PromarkerD test in Australia. 6. TRADE AND OTHER RECEIVABLES Trade receivables less: Expected credit losses (c) Other receivables - GST Receivable 129,838 ( 34,617) 50,509 145,730 438,102 - 2,023 440,125 (a) Classification of trade and other receivables: Trade receivables are amounts due from customers for services performed in the ordinary course of business. The trade receivables are generally due for settlement within 60 days and therefore are classified as current. (b) Fair value of trade and other receivables: Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value. (c) The Company has adopted the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. The expected credit loss is calculated to be $34,617 as at 30 June 2023 (nil as at 30 June 2022). (d) Refer to Note 15 for further information on risk exposure. 58 59 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 7. OTHER ASSETS Current: Research and development tax incentive (i) Patent Fee - Advances Loans to employees Accrued Income Prepayments (ii) (i) refer to Note 2(a) (ii) comprises prepaid insurance, subscriptions and equipment maintenance agreement. 8. PROPERTY, PLANT AND EQUIPMENT Plant and Equipment at cost (i) Accumulated depreciation Closing Net Book Value Reconciliation: Opening net book value Additions Disposals Depreciation charge Closing Net Book Value (i) includes capitalised leased assets. 9. TRADE AND OTHER PAYABLES Current: Trade payables Other payables Employee Benefits Consolidated Entity Consolidated Entity 2023 $ 1,848,832 32,212 62,500 90,984 119,284 2,153,812 2022 $ 1,711,903 7,860 - 7,000 83,750 1,810,513 3,741,625 ( 2,120,773) 1,620,852 2,576,492 ( 1,603,101) 973,391 973,391 1,217,910 ( 40,920) ( 529,529) 1,620,852 1,196,876 129,463 - ( 352,948) 973,391 154,305 225,593 200,143 580,041 517,047 631,630 197,031 1,345,708 (a) Classification of trade and other payables: Trade payable are unsecured and are usually paid within 60 days of recognition and therefore are classified as current. (b) Fair value of trade and other payables: The carrying amount of trade and other payables are assumed to be the same as their fair value, due to their short-term nature. (c) Refer to Note 15 for further information on risk exposure. 10. PROVISIONS Current: Employee benefits - long service leave Non-current Employee benefits - long service leave 123,468 - 33,276 166,671 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 11. ISSUED CAPITAL Ordinary Shares Total consolidated issue capital Movement in share capital - 30 June 2023 Date Details 01/07/2022 Opening balance 11/07/2022 Exercise of performance rights (i) 19/08/2022 Issue of shares (ii) 22/08/2022 Exercise of performance rights (iii) 22/11/2022 Exercise of options (iv) 24/11/2022 Issue of shares (v) 11/01/2023 Exercise of options (vi) 19/01/2023 Exercise of options (vi) 19/01/2023 Exercise of options (vii) 27/01/2023 Exercise of options (vi) 27/01/2023 Exercise of options (viii) 27/01/2023 Exercise of options (ix) 07/02/2023 Exercise of options (vi) 14/02/2023 Exercise of options (vi) 17/03/2023 Exercise of options (vi) 27/03/2023 Exercise of options (vi) 01/05/2023 Exercise of options (vii) Less: Transaction costs 30/06/2023 Closing balance 2023 No. 2022 No. 2023 $ 2022 $ 120,978,992 105,705,875 30,180,264 19,340,914 No. of Shares 30-Jun-23 105,705,875 47,778 9,117,647 23,295 400,000 294,118 50,000 50,000 175,000 150,000 1,100,000 1,100,000 50,000 300,000 98,112 2,092,167 225,000 - 120,978,992 Amount $ 19,340,914 7,750,000 - - 268,000 250,000 25,000 25,000 87,500 75,000 825,000 825,000 25,000 150,000 49,056 1,046,084 112,500 ( 673,790) 30,180,264 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Unquoted Class A performance rights to employees. Issued to Australian-based institutions, and sophisticated and professional investors. Unquoted performance rights to key management personnel. Director B options exercised by Terry Sweet, Ian Roger Moore and Paul House. Issued to Director Neville Gardiner, Ian Roger Moore and Paul House following receipt of shareholder approval on 24 November 2022. Corporate Advisors Alto Capital, Adelaide Equity Partners and related parties exercised 2,790,279 Corporate Advisors Alto Capital, Adelaide Equity Partners and their related parties exercised 2,790,279 options. Employees exercised 400,000 unquoted employee options pursuant to an Employee Incentive Option Plan. Consultant Candor Advisory and related parties exercised 1,100,000 options. Consultant Candour Advisory and their related parties exercised 1,100,000 options. Consultant Euroz Hartleys Securities Limited exercised 1,100,000 options. ti 60 61 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 12. OPTIONS (continued) Movement in options issued As at 1 July Exercise of options during the period Exercise of options during the period Exercise of options during the period Exercise of options during the period Exercise of options during the period Options lapsed during the period Issued during the period Issued during the period Issued during the period Issued during the period As at 30 June 2023 2022 Average exercise price $0.66 $0.67 $0.50 $0.50 $0.75 $0.75 $1.75 $1.44 $1.16 $1.32 $1.76 $0.97 Number of Options 7,990,279 ( 400,000) ( 2,790,279) ( 400,000) ( 1,100,000) ( 1,100,000) ( 500,000) - - 375,000 375,000 2,450,000 Average exercise price $0.62 $0.50 $0.50 - - - - $1.44 $1.16 - - $0.66 Number of Options 8,040,279 ( 400,000) ( 100,000) - - - - 300,000 150,000 - - 7,990,279 Issued options outstanding at the end of the year have the following expiry date and exercise price: Grant Date Expiry Date Exercise Price No. Options 18/08/2020 (i) 20/07/2021 (ii) 20/07/2021 (iii) 24/11/2022 (iv) 24/11/2022 (iv) 18/08/2023 1/06/2024 12/07/2024 23/11/2025 23/11/2026 $0.50 $1.44 $1.16 $1.32 $1.76 1,250,000 300,000 150,000 375,000 375,000 (i) (ii) (iii) (iv) Unlisted - issued to consultant for services provided. Unlisted - issued to Chief Commercialisation Officer under Employee Incentive Options Plan. Unlisted - issued to Chief Financial Officer under Employee Incentive Options Plan. Unlisted - Director C options issued to Directors - Neville Gardiner and Dr Robyn Elliot for nil consideration and issued as a reward and incentive following receipt of shareholder approval on 24 November 2022. P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 11. ISSUED CAPITAL (continued) Movement in share capital - 30 June 2022 Details Date 1/07/2021 2/08/2021 4/11/2021 11/02/2022 30/06/2022 Opening balance Exercise of options (i) Exercise of options (ii) Exercise of options (i) Less: Transaction costs Closing balance No. of Shares 30-Jun-22 Amount $ 105,205,875 50,000 400,000 50,000 - 105,705,875 19,095,227 25,000 200,000 25,000 ( 4,313) 19,340,914 (i) (ii) Corporate Advisors Alto Capital and Adelaide Equity Partners exercised 100,000 options. Director A options exercised by Terry Sweet, Ian Roger Moore and Paul House. Ordinary shares Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held. Upon a poll every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, for each share held. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. 12. OPTIONS (a) Options - Issued Options exercisable at $0.67 each (i) Options exercisable at $0.50 each (ii) Options exercisable at $0.50 each (iii) Options exercisable at $0.50 each (iv) Options exercisable at $0.75 each (v) Options exercisable at $0.75 each (vi) Options exercisable at $1.75 each (vii) Options exercisable at $1.44 each (viii) Options exercisable at $1.16 each (ix) Options exercisable at $1.32 each (x) Options exercisable at $1.76 each (x) Total issued options 2023 No. of Options 2022 No. of Options - - - 1,250,000 - - - 300,000 150,000 375,000 375,000 2,450,000 400,000 2,790,279 400,000 1,250,000 1,100,000 1,100,000 500,000 300,000 150,000 - - 7,990,279 (i) (ii) Unlisted - Director B options issued to Directors - Terry Sweet, Ian Roger Moore and Paul House for nil consideration and issued as a reward and incentive. Unlisted - issued to corporate advisors - Alto Capital and Adelaide Equity Partners for services provided. (iii) Unlisted - employee options issued to employees nil consideration under an Employee Incentive Option Plan. (iv) (v) Unlisted - issued to consultants for services provided. Unlisted - issued to consultant - Euroz Hartleys Securities Limited for services provided. (vi) Unlisted - issued to consultant - Candour Advisory Pty Ltd for services provided. (vii) (viii) (ix) (x) Unlisted - issued to consultant - Euroz Hartleys Securities Limited for services provided. Unlisted - issued to employee under Employee Incentive Options Plan. Unlisted - issued to key management personnel (CFO) under Employee Incentive Options Plan. Unlisted - Director C and Director D options issued to Directors - Neville Gardiner and Dr Robyn Elliot for nil consideration and issued as a reward and incentive following receipt of shareholder approval on 24 November 2022. 62 63 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 12. OPTIONS (continued) 12. OPTIONS (continued) (a) Fair Value of Director C and Director D Options These Director C and Director D options were offered on 15 November 2021 to newly appointed Non-Executive Directors Neville Gardiner and Dr Robyn Elliot as a reward and incentive and previously valued at 30 June 2022. The issue of these Director C and Director D options was approved by the shareholders at the AGM held on 24 November 2022, and these have been revalued at the issue date as follows: Particulars Number of options Valuation date Expiry date Underlying share price used Exercise price Risk-free rate Volatility Dividend yield Valuation per Option Director C 375,000 24 November 2022 23 November 2025 $0.85 $1.32 3.24% 75% nil $0.3364 Director D 375,000 24 November 2022 23 November 2026 $0.85 $1.76 3.29% 75% nil $0.3483 The revised value placed on the Director C options is $126,146 and the amount allocated to the share based payments expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $33,843 The revised value placed on the Director D options is $130,622 and the amount allocated to the share based payments expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $36,335. The Company has used the Black Scholes Model to revalue the Director C and Director D options. (b) Fair Value of Employee Incentive Options - Chief Financial Officer (CFO) These options were issued on 20 July 2021 pursuant to the terms of an Employee Incentive Options Plan and are issued in tranches of 50,000 options with differing vesting dates. The assessed fair value at grant date was determined using a Black-Scholes Model with the following key inputs: Particulars Number of CFO options Valuation date Expiry date Vesting date Underlying share price used Exercise price Risk-free rate Volatility Dividend yield Valuation per Option Tranche 1 50,000 20 July 2021 12 July 2024 12 July 2022 $1.015 $1.16 0.13% 75% nil $0.4558 Tranche 2 50,000 20 July 2021 12 July 2024 12 July 2023 $1.015 $1.16 0.13% 75% nil $0.4558 Tranche 3 50,000 20 July 2021 12 July 2024 12 July 2024 $1.015 $1.16 0.13% 75% nil $0.4558 These CFO options will expire on 12 July 2024 (the expiry date) and, once vested, may be exercised at any time prior to the expiry date. Options not so exercised shall lapse on the expiry date. Options will immediately lapse if employment ceases prior to the vesting date. The total determined value for these CFO options is $68,372 and the amount allocated to the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $20,290 (30 June 2022: is $39,541). (c) Fair Value of Employee Incentive Options - Chief Commercialisation Officer (CCO) These options were issued on 20 July 2021 pursuant to the terms of an Employee Incentive Options Plan and are issued in tranches of 100,000 options with differing vesting dates. The assessed fair value at grant date was determined using a Black-Scholes Model with the following key inputs: Particulars Number of options Valuation date Expiry date Vesting date Underlying share price used Exercise price Risk-free rate Volatility Dividend yield Valuation per Option Tranche 1 100,000 20 July 2021 1 June 2024 1 June 2022 $1.015 $1.44 0.13% 75% nil $0.3905 Tranche 2 100,000 20 July 2021 1 June 2024 1 June 2023 $1.015 $1.44 0.13% 75% nil $0.3905 Tranche 3 100,000 20 July 2021 1 June 2024 1 June 2024 $1.015 $1.44 0.13% 75% nil $0.3905 These Employee Incentive Options will expire on 1 June 2024 (the expiry date) and, once vested, may be exercised at any time prior to the expiry date. Options not so exercised shall lapse on the expiry date. The total determined value for these options is $117,142 and the amount allocated to the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $35,276 (30 June 2022: $68,228). Options not exercised shall lapse on the expiry date. Options will immediately lapse if employment ceases prior to the vesting date (d) Share based payments expense Share based payments expense comprising: Director C and Director D options - refer note 12(a) CFO options - refer note 12(b) Employee options 12(c) CFO performance rights - refer note 13(a) Performance rights to employees - refer note 13(b) 13. RESERVES Share based payments reserve comprising: (a) Unlisted options (i) Director A & B Director C & D CFO Employees (ii) Payments to consultants (b) Unlisted performance rights CFO Employees Consolidated Entity Consolidated Entity 2023 $ 2022 $ 70,178 20,290 35,276 23,056 175,574 324,374 - 256,767 59,831 312,081 783,666 56,560 359,405 1,828,310 186,589 39,541 68,228 33,504 183,831 511,693 179,062 186,589 39,541 276,805 783,666 33,504 183,831 1,682,998 (i) Refer to Note 12 for further information. (ii) Includes Employee Incentive Options issued to Chief Commercialisation Officer. Refer to note 12(c). 64 65 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 13. RESERVES (continued) (a) Performance Rights issued to CFO (i) Chief Financial Officer (CFO) Class of performance rights Tranche 1 performance rights issued Tranche 2 performance rights issued Milestone C performance rights (b) Performance Rights issued to Employees (i) Class A, B & C performance rights FY23 Class A, B & C performance rights Tranche 1 & 2 and Milestone performance rights (ii) Class of performance rights Class A performance rights Class B performance rights Class C performance rights FY23 Class A performance rights FY23 Class B performance rights FY23 Class C performance rights Tranche 1 performance rights (ii) Tranche 2 performance rights (ii) Milestone A performance rights (ii) Milestone B performance rights (ii) Milestone C performance rights (ii) (i) Refer to the following page for explanation of terms and conditions of these rights issued. (ii) Includes performance rights issued to Chief Commercialisation Officer. 2023 Rights 2022 Rights 61,574 73,095 2023 $ 56,560 2022 $ 33,504 Number Issued Number Exercised Number Lapsed Number Remaining 11,521 11,574 50,000 73,095 ( 11,521) - - ( 11,521) - - - - - 11,574 50,000 61,574 2023 Rights 65,876 134,253 211,774 411,903 2022 Rights 143,334 - 223,548 366,882 2023 $ 133,663 63,987 161,755 359,405 2022 $ 98,980 - 84,851 183,831 Number Issued Number Exercised Number Lapsed Number Remaining 47,778 47,778 47,778 143,334 55,898 55,898 55,898 167,694 11,774 11,774 50,000 50,000 100,000 223,548 ( 47,778) - - ( 47,778) - - - - ( 11,774) - - - - ( 11,774) - 12,800 16,880 29,680 8,495 12,473 12,473 33,441 - - - - - - - 34,978 30,898 65,876 47,403 43,425 43,425 134,253 - 11,774 50,000 50,000 100,000 211,774 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 13. RESERVES (continued) Each performance right automatically converts into one ordinary share on vesting at an exercise price of nil. Tranche 1 performance rights are subject to continuous service under the Employment Contract, and were issued on 20 July 2021 to the CCO and CFO and were exercised on 22 August 2022. Tranche 2 performance rights are subject to continuous service under the Employment Contract, and were issued on 20 July 2021 to the CCO and CFO and will vest on 1 July 2023. 23,348 tranche 2 performance rights were exercised subsequent to 30 June 2023. Refer to Note 24 Milestone A performance rights are subject to the receipt by the Company of payment for a specified number of PromarkerD patient tests billed in the USA, and were issued on 20 July 2021 to the CCO and will lapse within 3 years of the commencement of the Employment Contract. Milestone B performance rights are subject to the receipt by the Company of payment for a specified number of PromarkerD patient tests billed for any country (excluding the USA), and were issued on 20 July 2021 to the CCO and will lapse within 3 years of the commencement of the Employment Contract. Milestone C performance rights are subject to the Company achieving an annual net profit target set by the Board and independently verified by the Company's auditors, and were issued on 20 July 2021 to the CCO and CFO and will lapse after 3 full financial years of the commencement of the Employment Contract. CFO (referred to as an executive) does not receive any dividends and are not entitled to vote in relation to the performance rights during the vesting period. If an executive ceases to be employed by the Company within this period, the performance rights issued to that executive will be forfeited. The fair value of tranche 2 and milestone performance rights at grant date was estimated by taking the market price of the Company's shares on that date less the present value of expected dividends that will not be received by the executive on their rights during the vesting period. The fair value of the CFO tranche 2 and milestone C performance rights is $62,498 and the amount allocated to the share based payment expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $23,056. The fair value of all other tranche 2 and milestone performance rights is $214,950 and the amount allocated to the share based payment expense in the statement of profit or loss and other comprehensive income fore the year ended 30 June 2023 is $76,904. FY22 Class A performance rights are subject to continuous service under employment contracts, and were issued on 13 December 2021 were exercised on 11 July 2022. FY22 Class B performance rights are subject to continuous service under employment contracts, and were issued on 13 December 2021 and will vest on 30 June 2023. During the year ended 30 June 2023, 12,800 Class B performance rights lapsed due to the conditions becoming incapable of being satisfied. 34,978 FY22 Class B performance rights were exercised subsequent to 30 June 2023. Refer to note 24. FY22 Class C performance rights are subject to continuous service under employment contracts, and were issued on 13 December 2021 and will vest on 30 June 2024. During the year ended 30 June 2023, 16,880 Class C performance rights lapsed due to the conditions becoming incapable of being satisfied. The fair value of these Class A, B and C performance rights is $140,519 and the amount allocated to the share based payment expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $34,683. FY23 Class A performance rights are subject to continuous service under employment contracts, and were issued on 22 November 2022 and will vest on 30 June 2023. During the year ended 30 June 2023, 8,495 FY23 Class A performance rights lapsed due to the conditions becoming incapable of being satisfied. FY23 Class A performance rights were exercised subsequent to balance date. Refer to note 24. FY23 Class B performance rights are subject to continuous service under employment contracts, and were issued on 22 November 2022 and will vest on 30 June 2024. During the year ended 30 June 2023, 12,473 FY23 Class B performance rights lapsed due to the conditions becoming incapable of being satisfied. 47,403 FY23 Class A performance rights were exercised subsequent to 30 June 2023. Refer to note 24. FY23 Class C performance rights are subject to continuous service under employment contracts, and were issued on 22 November 2022 and will vest on 30 June 2025. During the year ended 30 June 2023, 12,473 FY23 Class C performance rights lapsed due to the conditions becoming incapable of being satisfied. The fair value of these FY23 performance rights is $132,883 and the amount allocated to the share based payment expense in the statement of profit or loss and other comprehensive income for the year ended 30 June 2023 is $63,987. 66 67 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 14. ACCUMULATED LOSSES Opening balance Loss for the year attributed to ordinary shareholders Accumulated losses attributed to ordinary shareholders Loss for the year attributed to non-controlling interests Closing balance 15. FINANCIAL RISK MANAGEMENT Consolidated Entity 2023 $ Consolidated Entity 2022 $ ( 17,630,070) ( 6,176,573) ( 23,627,581) ( 57,737) ( 12,657,110) ( 4,972,960) ( 17,630,070) - ( 23,685,318) ( 17,630,070) The activities of the Company expose it to a variety of financial risks (including interest rate risk, credit risk and liquidity risk). The Company's overall risk management program focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. However, the Company uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk and aging analysis for credit risk. At present the Company is not exposed to price risk. Risk management is carried out by the Board of Directors with assistance from suitably qualified external advisors where necessary. The Board provides written principles for overall risk management and further policies will evolve commensurate with the evolution and growth of the Company. The Company holds the following financial instruments: Financial assets Cash and cash equivalents Trade and other receivables (a) Research & Development tax incentive (b) Financial liabilities Trade and other payables (c) Borrowings and lease liabilities Consolidated Entity 2023 $ Consolidated Entity 2022 $ 6,027,315 145,730 1,848,832 8,021,877 2,111,514 440,125 1,711,903 4,263,542 ( 1,331,148) ( 64,088) ( 1,395,236) ( 1,638,574) - ( 1,638,574) (a) excludes GST receivables and prepayments. (b) the receipt of the Research & Development tax incentive will occur in the year ending 30 June 2024. (c) excludes GST payable and employee benefits. The main purpose of the financial instruments is to fund the Company's operations. It is, and has been throughout the period under review, the Company's policy that no trading in financial instruments for the purpose of limiting exposure to operational risk shall be undertaken. The main risk is cash flow (interest rate risk, liquidity risk and credit risk). The Board reviews and agrees policies for managing each of these risks and they are summarised below: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 15. FINANCIAL RISK MANAGEMENT (continued) (a) Market Risk (i) Cash flow and interest rate risk The Company's only interest rate risk arises from cash and cash equivalents held. Term deposits and current accounts held with variable interest rates expose the Company to cash flow interest rate risk. The Company does not consider this to be material. The following sets out the Company's exposure to interest rate risk, including the effective weighted average interest rate by maturity periods. Details Note Weighted Average Interest Rate Total $ 30 June 2023 Consolidated Financial assets Cash and cash equivalents 30 June 2022 Consolidated Financial assets Cash and cash equivalents 2.26% 8,021,877 0.26% 4,263,542 All other financial instruments have either a zero coupon rate or a fixed interest rate. Sensitivity At 30 June 2023, if interest rates had increased by 0.25% or decreased by 0.25% from the year end rates with all other variables held constant, post-tax loss for the year would have been $15,068 lower / ($15,068) higher, mainly as a result of higher / lower interest income from cash and cash equivalents (2022 changes of 0.25% / 0.25%: $4,426 lower/ ($4,426) higher). (ii) Foreign currency risk The Company is exposed to movements in foreign exchange due to the number of clients that the Company currently works with overseas. The Company does not currently hedge its exposure to foreign currency sales and therefore the impact on the financial statements at year end for foreign currency movements is below: Exposure Trade receivables 30 June 2023 30 June 2022 USD - JPY - USD 6,563 JPY - Sensitivity The sensitivity of the profit or loss to changes in exchange rates arising in mainly USD/AUD denominated financial instruments and the impact of the other components of equity is listed below: USD/AUD exchange rate - increase 5% USD/AUD exchange rate - decrease 15% Impact on post tax profits 2023 2022 $ $ Impact on equity 2023 $ 2022 $ - - ( 433) 1,601 - - ( 433) ( 1,601) 68 69 Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 15. FINANCIAL RISK MANAGEMENT (continued) (b) Credit risk Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to retail customers, including outstanding receivables and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. Otherwise, if there is no independent rating, the board assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The compliance with credit limits by customers is regularly monitored by the managing director. Sales to retail customers are required to be settled in cash (in part, in advance) or using major financial institutional payment processes, to mitigate credit risk. Financial assets Cash and cash equivalents Trade and Other Receivables Research and development tax incentive The Company's financier has an AA Moody's rating. (c) Liquidity Risk Consolidated Entity 2023 $ Consolidated Entity 2022 $ 6,027,315 145,730 1,848,832 8,021,877 2,111,514 440,125 1,711,903 4,263,542 Prudent liquidity risk management implies maintaining sufficient cash balances and access to equity funding. The Directors monitor the cash-burn rate of the Company on an ongoing basis against budget. As at reporting date the Company had sufficient cash reserves to meet its requirements. The Company has no access to credit standby facilities or arrangements for further funding or additional capacity in its borrowing arrangements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 15. FINANCIAL RISK MANAGEMENT (continued) Contractual maturities of financial liabilities As at 30 June 2023 Less than 6 Months $ 6 - 12 Months $ Between 1 and 2 years $ Between 2 and 5 years $ Contractual Cash Flows $ Carrying Amount $ Non-derivatives Non-interest bearing Trade payables Other payables Interest bearing Lease Liability Total non-derivative Contractual maturities of financial liabilities As at 30 June 2022 Non-derivatives Non-interest bearing Trade payables Other payables Interest bearing Lease Liability Total non-derivative (d) Fair Value Estimation 154,305 594,349 18,036 766,690 - - - - - 582,494 154,305 1,176,843 154,305 1,176,843 36,072 36,072 12,987 12,987 - 582,494 67,095 1,398,243 64,088 1,395,236 Less than 6 Months $ 6 - 12 Months $ Between 1 and 2 years $ Between 2 and 5 years $ Contractual Cash Flows $ Carrying Amount $ 517,047 1,121,527 - 1,638,574 - - - - - - - - - - - - 517,047 1,121,527 517,047 1,121,527 - - 1,638,574 1,638,574 The financial liabilities the Company had at reporting date were trade payables incurred in the normal course of the business. These were non-interest bearing and were due within the normal 30-60 days terms of creditor payments. The carrying value less impairment provision of receivables and trade payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial assets and liabilities must be estimated for recognition and measurement and for disclosure purposes. Maturities of financial liabilities The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. (e) Capital management When managing capital, the Board's objective is to ensure the Company continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. The Board also aims to maintain a capital structure that ensures the lowest cost of capital available to the Company. The Board is constantly adjusting the capital structure to take advantage of favourable costs of capital or high return on assets. As the market is constantly changing, the board may issue new shares, sell assets to reduce debt or consider payment of dividends to shareholders. The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position. The Company has no formal financing and gearing policy or criteria having regard to the early status of its development and low level of activity. There were no changes in the Company's approach to the capital management during the year ended 30 June 2023. The Company is not subject to any externally imposed capital requirements. 70 71 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 16. CONSOLIDATED ENTITIES 20. DIVIDENDS Name of entity Legal Parent Proteomics International Laboratories Ltd Accounting Parent Proteomics International Pty Ltd Other consolidated entities Proteomics International USA Inc Proteomics International (IP) Pty Ltd OxiDX Pty Ltd OxiDx Operations Pty Ltd Two-Tag Holdings Pty Ltd 17. REMUNERATION OF AUDITORS (a) Audit services - BDO Audit (WA) Pty Ltd (b) Non-audit services - BDO Corporate Tax (WA) Pty Ltd (i) (i) Consulting services have been provided by BDO. 18. COMMITMENTS Class of share Country of Incorporation 2023 % 2022 % Equity Holding Ordinary Australia - - Australia 100 100 USA Australia Australia Australia Australia 100 100 66 66 66 - - 66 66 66 Consolidated Consolidated Entity 2023 $ Entity 2022 $ 55,616 50,799 11,680 16,310 The Company pays fees to access strategic locations to use laboratories and specialised equipment to undertake its operations. This facility licence agreement terminated on 1 July 2022, and, as at the date of this report, a new facility licence is yet to be agreed with the terms and fees to be determined. 19. RELATED PARTIES (a) Directors and Key Management Personnel remuneration Short-term employee benefits Post-employment benefits The following comprise the key management personnel of the Company: (i) Managing Director (ii) Chief Financial Officer (b) Transactions with Key Management Personnel 960,701 84,101 1,319,965 78,851 1,044,802 1,398,816 There were no consultancy services provided by key management personnel during the year ended 30 June 2023. No loans were provided by Key Management Personnel during the year ended 30 June 2023. The directors have not paid or declared a dividend during the financial years ended 30 June 2023 and 30 June 2022. 21. CONTINGENT LIABILITIES The Company is not aware of any material contingent liabilities for the years ended 30 June 2023 and 30 June 2022. 22. SEGMENT REPORTING The Board monitors the operations of the Company as one single segment. The actual to budget items and a detailed profit or loss are reported to the board to assess the performance of the Company. The Board has determined that strategic decision making is facilitated by evaluation of the operations of the legal parent and subsidiary which represent the operational performance of the Company’s revenues and the research and development activities as well as the finance, treasury, compliance and funding elements of the Company. 23. LOSS PER SHARE (Loss) attributable to ordinary shareholders Weighted average number of ordinary shares* Loss per share Consolidated Entity 2023 $ Consolidated Entity 2022 $ ( 6,176,573) ( 4,972,960) 116,453,692 105,531,217 ( $0.05) ( $0.05) *Includes the effect of the transactions (under continuation accounting) for the purpose of the comparative earnings per share calculation. 24. EVENTS OCCURRING AFTER THE REPORTING PERIOD On 10 July 2023, 105,729 fully paid ordinary shares were issued upon the exercise of unquoted performance rights. The performance rights were issued under the Performance Rights Plan as per of the incentive structures for employees and key management personnel. On 14 August 2023, 1,250,000 shares were issued upon the exercise of advisory options, raising $625,000 before costs. No other matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly affect the consolidated entity's operations, or the consolidated entity's state of affairs in future years. 72 73 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 30 June 2023 Directors’ Declaration 25. PARENT ENTITY INFORMATION The Directors of the Company declare that: The following information relates to the legal parent entity, Proteomics International Laboratories Ltd, as at 30 June 2023. The information presented here has been prepared using consistent accounting policies as presented in Note 1. 2023 $ 5,895,164 5,895,164 99,684 - 99,684 14,197,741 1,828,310 ( 10,230,571) 5,795,480 ( 1,621,167) - ( 1,621,167) 2022 $ 1,170,154 1,170,154 148,095 - 148,095 7,948,465 1,682,998 ( 8,609,404) 1,022,059 ( 4,854,735) - ( 4,854,735) Current assets Total Assets Current liabilities Non-current liabilities Total Liabilities Equity Share Capital Reserve Accumulated Losses Total Equity (Loss) for the year Other comprehensive income / (loss) for the year Total comprehensive (loss) for the year Contingent liabilities of the parent entity The Company is not aware of any material contingent liabilities for the year ended 30 June 2023. Commitments of the parent entity Other than as described at note 18, the Company does not have any other on-going commitments. 26. INTERESTS IN OTHER ENTITIES The Company does not currently have any interests in other entities. 27. DEED OF CROSS GUARANTEE The Company has not currently entered into a deed of cross guarantee. 28. ASSETS PLEDGED AS SECURITY The Company has no assets that have been pledged as security. 1. The financial statements, comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flow, consolidated statements of changes in equity, accompanying notes, are in accordance with the Corporations Act 2001 and: (a) (b) comply with Accounting Standard, the Corporations Regulations 2001, other mandatory professional reporting requirements; and give a true and fair view of the financial position as at 30 June 2023 and the performance for the year ended on that date of the consolidated entity; and (c) comply with International Financial Reporting Standards as disclosed in Note 1. 2. 3. In the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The remuneration disclosures included in the Directors' Report (as part of the Remuneration Report) for the year ended 30 June 2023 comply with Section 300A of the Corporations Act 2001 . 4. The Directors have been given the declarations by the Managing Director required by Section 295A of the Corporations Act 2001 . This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by: Neville Gardiner Chairman Perth, Western Australia Dated: 22 August 2023 74 75 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Independent Auditor’s Report Independent Auditor’s Report To the members of Proteomics International Laboratories Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Proteomics International Laboratories Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, 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 report, 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 2023 and of its financial performance for the year ended on that date; 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 Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the 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. BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation. Recognition of Research and Development tax incentive (R&D Tax Rebate) Key audit matter How the matter was addressed in our audit The Group receives a 43.5% refundable Our audit procedures in respect of this area included but were not tax offset of eligible expenditure under limited to the following: the Research and Development (R&D) Tax Incentive scheme if its turnover is less than $20 million per annum, provided income tax-exempt entities do not control it. Note 14 of the financial report discloses the “Research and development (“R&D”) tax incentive” and note 1(h) discloses the accounting policy used by the Group for its recognition of the R&D tax refund. We have considered this a key audit matter due to the amounts involved being material; and the inherent subjectivity associated with the calculation of the R&D Tax Rebate. • Verify that the cost of eligible R&D activities which were considered as part of the claim calculations are adequately supported including agreeing to trial balance. • Review the accounting for receivable and income in accordance with the requirements of Australian Accounting Standards. • Comparing the estimates made in the prior year to the amount of cash received after lodgement of the R&D tax claim. • Obtaining FY23 R&D rebate calculations performed by management and performing the following audit procedures: - - - Reviewing the expenditure methodology employed by management and rebate calculations prepared by the Group’s external expert; Testing the mathematical accuracy of the accrual; and Considering the nature of the expenses against the eligibility criteria of the R&D tax incentive. • Assessing the adequacy of disclosures in the notes to the financial statements. 76 77 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Independent Auditor’s Report Independent Auditor’s Report Other information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2023 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 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 has 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 (http://www.auasb.gov.au/Home.aspx) at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.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 in pages 32-42 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Proteomics International Laboratories Limited, for the year ended 30 June 2023, 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. BDO Audit (WA) Pty Ltd Ashleigh Woodley Director Perth, 22 August 2023 78 79 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd Shareholder Information !"#$%&'()*('"+,-%#%"'($'($#(./(0,1,'#(2324( ! "#$%&#'!(&)*+&*),! ! -,+*)%&%,(! ! "#$$%!&'()!*+)(,'+%!-.'+/-! 67&$*%//!8&9(*,-!/:/+;(-'<$/!'9!=0>44!/';.!',)!/:&(+(,?!*,!0!@#,/!1A14! 67&$*%//!8&9(*,-!/:/+;(-'<$/!'9!=0>0B!/';.!',)!/:&(+(,?!*,!01!@#$%!1A14! D/+E*+7',;/!+(?.9-!-#31!/';.!',)!/:&(+(,?!*,!14!K*G/75B!/';.!',)!/:&(+(,?!*,!14!K*G/7! 1>! 3>! 4>! C>! B>! 5>! W>! V>! 0A>! ! TJJYHZ6O!Q8SIPKbH!DL_!SLI! 00>! ! TOH!SPHR!"S8RK! 01>! ! 03>! ! UKD!DROPURH!K8TH!DL_!SLI!]IODa! 04>! ! TO!Z8KORI!"S8RK! 0C>! ! T88O6!^!H8L8TP!PK\6HLT6KLH!DL_!SLI!]O8b6O!T88O6!"RTPS_!R`Ja! 0B>! ! 05>! ! U"T!HYD6ORKKYRLP8K!"YKI!DL_!SLI! 0W>! ! U8KI!HLO66L!JYHL8IPRKH!SPTPL6I!]SRT0!d!IAWA45!R`Ja! 0V>! ! JRKI8YO!RI\PH8O_!DL_!SLI! 1A>! ! eYPKLRS!DL_!SLI!]QROZ6K!"RTPS_!R`Ja! @!D!T8Ob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f#(9%!-/;#+(9%!! ! !"##$%&'()%*+)(,'+$%-.'+/-% 8#79,! ! d! 02AAA! d! C2AAA! d! 0A2AAA! d! 0AA2AAA! d! 8G/+! ! ! 0! 02AA0! C2AA0! 0A2AA0! 0AA2AA0! L*9'$! ! ! :2'4,)(! ;7%&(! ! 355! CB3! 3B5! W54! 0VA! 1350! ! 0WW24AV! 02B5021B5! 32AB12034! 1W25A32WAW! WW25AV20A3! 01123342510! 5! ! A>0BX! 0>35X! 1>CAX! 13>4BX! 51>C0X! 0AA>AAX! ! -*0(&%#'!(3#),32'4,)(! ! L./!,'7/-!*E!-#<-9',9('$!-.'+/.*$)/+-!',)!9./!,#7*2&,4!(,+*)%&%,(! ! Y,f#*9/)!-/;#+(9(/-!*,!(--#/!M/+/N! % 0&1(*,-% ! "'#((! 67&$*%//!8&9(*,-! 67&$*%//!8&9(*,-! I(+/;9*+!J!8&9(*,-! I(+/;9*+!I!8&9(*,-! ?@$%)A!! 6#&,! 0!@#,/!1A14! 01!@#$%!1A14! 14!K*G/744! 0>0B! 0>31! 0>5B! .*/0,)!2!L./!67&$*%//!8&9(*,-!M/+/!(--#/)!#,)/+!9./!D+*9/*7(;-! 67&$*%//!P,;/,9(G/!8&9(*,!D$',>!! ! 2/+3*+4',5/%+(6.1-% ! "'#((! D/+E*+7',;/!+(?.9-! D/+E*+7',;/!+(?.9-! D/+E*+7',;/!+(?.9-! D/+E*+7',;/!+(?.9-! ! ?@$%)A!! 6#&,! 0!@#,/!1A14! 30!@#$%!1A14! 30!@#$%!1A1C! 3A!H/&9/7! ! 80 81 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L ! E2&%79!8%93&(! ! L./!G*9(,?!+(?.9-!'99';.(,?!9*!*+)(,'+%!-.'+/-!'+/N! ! 8,!'!-.*M!*E!.',)-!/G/+%!.*$)/+!*E!*+)(,'+%!-.'+/-!&+/-/,9!'9!'!7//9(,?!(,!&/+-*,!*+!<%!&+*:%2!(-!/,9(9$/)!9*!*,/!G*9/2!',)!#&*,!'! &*$$!/';.!-.'+/!(-!/,9(9$/)!9*!*,/!G*9/>! ! 8&9(*,-!',)!&/+E*+7',;/!+(?.9-!)*!,*9!;'++%!',%!G*9(,?!+(?.9->! ! ! D7FG#)=,&!H*A!H#+=! ! L./+/!(-!,*!;#++/,9!*,d7'+g/9!<#%d<';g>! Glossary Biologics Medicinal protein products manufactured in or extracted from biological sources, e.g. immunotherapies for cancer. Biomarker A measurable indicator of a state or condition, usually relating to early phase of diseases; a biological signature. Biosimilars Protein-based molecules that are biological medical products made to mimic an original “Biologic“ drug. Complementary diagnostic A complementary diagnostic is a test that aids in the beneﬁt-risk (CDx) decision making about the use of the therapeutic product for a given patient, where the difference in beneﬁt-risk is clinically meaningful. Diabetes A group of metabolic diseases associated with high blood sugar levels. Diabetic kidney disease A progressive disease of the kidneys caused by diabetes and leading to (nephropathy) the malfunction of the kidneys and ultimately renal failure. eGFR The estimated Glomerular Filtration rate (eGFR) is a blood test used for the diagnosis of chronic kidney disease. End stage renal disease Kidney failure or ESRD is the ﬁnal stage of kidney disease. Kidney failure (ESRD) means the use of dialysis or transplantation is required for survival. Diabetes is the most common cause of ESRD. Immunoassay A procedure for detecting or measuring speciﬁc proteins or other substances through the use of antibodies. ISO 13485 certiﬁcation A certiﬁcation granted to organisations involved in the manufacturing of medical devices that follow the internationally agreed standards of a quality management system. Key Opinion Leader Individuals or organisations with a respected social status, allowing their opinions to have sway in making important decisions. Mass Spectrometry The measurement of the mass to charge ratio of a molecule such as a peptide in order to determine its chemical structure. Odds Ratio (OR) A measure of association between two events. It can be used to determine whether a particular exposure is a risk factor for a particular outcome. In clinical research it gives direct information to doctors about which treatment approach has the best odds of beneﬁting the patient. Oesophageal cancer A cancer of the tube that runs from the throat to the stomach. Oxidative Stress An imbalance between reactive oxygen species and your body’s ability to eliminate them or repair the resulting damage. Probability (P) The P value, or calculated probability, that an observation is true. Most authors refer to statistically signiﬁcant as P < 0.05 and statistically highly signiﬁcant as P < 0.001 (less than one in a thousand chance of being wrong). Prognostic A term for predicting the likely or expected development of a disease. Proteomics The large-scale study of protein structure and function. Recombinant antibodies Antibodies developed using synthetic genes. 82 83 P I L L Proteomics International Laboratories Ltd Proteomics International Laboratories Ltd P I L L Why are proteins important? Genomes are static - the genes we are born with are the genes we die with, but the protein make up in our bodies differs from cell to cell and changes considerably over time. Cells use the instructions in our genes to make proteins. Proteins are the operational molecules of life and carry out the functions of living organisms. The caterpillar and the butterﬂy have exactly the same genome. The proteins that their cells make are why they are different. Looking at the differences in protein composition can tell us about the state of life, and health, of any organism. Proteomics is the study of proteins on an industrial scale. 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