More annual reports from Recce Pharmaceuticals:
2023 ReportPeers and competitors of Recce Pharmaceuticals:
Nuvo Pharmaceuticals, Inc.Annual
Report
2023
ASX: RCE, FSE: R9Q
Contents
1 Business Highlights
2 Letter from the Chairman
5 Letter from the CEO
8 Overview of Clinical Activities
9
Intravenous Programs
10
Topical Programs
11
Pre-Clinical
12 Conference Engagement
13 Board of Directors and Key Management Personnel
15 Financial Report
74 Corporate Directory
Recce Pharmaceuticals Ltd (ASX: RCE,
FSE: R9Q) is developing a new class of
Synthetic Anti-Infectives designed to
address the urgent global health problems
of antibiotic-resistant superbugs.
Recce’s anti-infective pipeline includes
three patented, broad-spectrum, synthetic
polymer anti-infectives: RECCE® 327 as
an intravenous and topical therapy that
is being developed for the treatment of
serious and potentially life-threatening
infections due to Gram-positive and
Gram-negative bacteria including their
superbug forms; RECCE® 435 as an oral
therapy for bacterial infections; and
RECCE® 529 for viral infections. Through
their multi-layered mechanisms of action,
Recce’s anti-infectives have the potential
to overcome the hypercellular mutations
of bacteria – the challenge of all existing
antibiotics to date.
The US Food and Drug Administration
has awarded RECCE® 327 Qualified
Infectious Disease Product designation
under the Generating Antibiotic Initiatives
Now (GAIN) Act – labelling it for Fast
Track Designation, plus 10 years of market
exclusivity post approval. Further to
this designation, RECCE® 327 has been
included on The Pew Charitable Trusts
Global New Antibiotics in Development
Pipeline as the world’s only synthetic
polymer and sepsis drug candidate in
development. RECCE® 327 is not yet
market approved for use in humans with
further clinical testing required to fully
evaluate its safety and efficacy.
Recce wholly owns its automated
manufacturing, which is supporting
present clinical trials. Recce’s anti-infective
pipeline seeks to exploit the unique
capabilities of its technologies targeting
synergistic, unmet medical needs.
Business Highlights
Below are listed the main corporate developments for the
FY23 period between July 2022 and June 2023.
Commercial and Operational
Regulatory
Recce delivered Opening R&D Address at World
RECCE® Trademark registered in Hong Kong
Anti-Microbial Resistance Congress 2022
and Israel
Western Australian Government Sponsorship received
New Family 4 patent granted for RECCE®
for BIO Korea 2023
Anti-Infectives in Australia
Alistair McKeough appointed to Board of Directors
Dr John Prendergast appointed as Executive Chairman
Total of A$4.31m received from R&D Rebate Payments
Anti-Infective Research Unit established at Murdoch
Children’s Research Institute
Pre-Clinical and Clinical
RECCE® 327 (R327) shown to significantly reduce
SARS-CoV-2 in hamsters
Positive safety data from 7th cohort of Phase I clinical
trial evaluating RECCE® 327 intravenous formulation
in healthy male volunteers
Diabetic Foot Infections (DFI)
– Ethics Approval received to start Phase I/II DFI study
– Outpatient nurses appointed for DFI Phase II study
Urinary Tract Infection (UTI)/Urosepsis
– Human Research Ethics Approval (HREC) received
to start Phase I/II Rapid Infusion UTI/Urosepsis trial
– CMAX Research Facility selected for Phase I/II Rapid
Infusion UTI/Urosepsis trial
– Site expansion and additional HREC approval received
for Phase I/II Rapid Infusion UTI/Urosepsis trial
– (Post FY23) First cohort dosed in RECCE® 327
Phase I/II Rapid Infusion UTI/Urosepsis clinical trial
1
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Letter from the
Chairman
Dear Fellow Shareholders,
I am pleased to provide our annual report
and operating review for FY23 from which
we continue to lay solid foundations that will
support long-term sustainable growth for
shareholders.
This year marks seven years
since Recce’s listing on the
Australian Securities Exchange,
an occasion that gave me cause
to reflect upon the Company’s
remarkable journey so far.
This year marks seven years since Recce’s
listing on the Australian Securities Exchange,
an occasion that gave me cause to reflect upon
the Company’s remarkable journey so far.
Thanks to the dedication of our team, Recce
is forging a path that recognises it as a global
leader in the field of anti-infectives. Recce is
leading the way towards new and transformative
therapeutics for treating severe infections.
Dr John Prendergast
Executive Chairman
I
R
E
C
C
E
P
H
A
R
M
A
C
E
U
T
C
A
L
S
A
N
N
U
A
L
R
E
P
O
R
T
2
0
2
3
2
Foundations for growth in place
While the Company's first years were focused on
pre-clinical activities, establishing manufacturing
capabilities and growing our clinical expertise,
this reporting period was a robust year for
Recce. We successfully completed a number
of important milestones, including the delivery
of comprehensive first safety data for our lead
compound, R327, in healthy volunteers, that
lays the foundation for the potential of R327
to become a first-line treatment for unmet
medical needs.
As the clinical safety data builds, and as the
potential to use R327 in a broader set of
indications and formulations grows, Recce has
worked tirelessly to prepare for the next round
of studies that will aim to accelerate R327's
development and bring this innovative therapy
to market. These upcoming studies include a
trial to determine the optimal intravenous dose
levels for the treatment of sepsis, urosepsis and
urinary tract infections, which have critical
unmet medical needs.
At the same time, our topical treatment
programs for burns and diabetic foot ulcer
infections continue to progress and are
attracting strong interest from industry-leading
clinicians and potential commercial partners
in Australia and overseas.
Several important pre-clinical programs
demonstrating the activity of our lead compound
against several World Health Organisation
priority pathogens, including Streptococcus
pneumoniae and Mycobacterium abscessus,
are all steadily advancing towards first-in-
human studies.
Financial and reputational strength to
transform Recce over the coming years
I am pleased to report that as a result of our
operational achievements and the favourable
Australian tax incentive on Research &
Development activities, Recce is well placed
to fund its progress towards the achievement
of a number of key clinical milestones over
the coming quarters.
Thanks to its increasing international activities,
Recce is building momentum and garnering
broader attention as a leader in the field of
anti-infectives, resulting in opening new doors
with potential partners, be it pharmaceutical
companies or international and domestic
organisations. Highlighting this awareness
is the Company’s recent invitation to present
the opening R&D address at the prestigious
World Anti-Microbial Resistance Congress 2023.
We are also delighted to have been invited
by the US Defense Department to hold a
presentation on infectious diseases at the
2023 Military Health System Research
Symposium in August 2023.
A bright future
In the coming 12 months, we expect to expand
our clinical therapeutic programs with a number
of new Phase II studies. We expect to see
our manufacturing capability expanded and
our production facility in Sydney capable of
supplying our ongoing clinical trials.
Our pipeline of programs and growing in-house
capabilities ensure Recce maintains its leadership
position in the global anti-infective space – a
sector that has garnered increasing interest from
international investment and pharmaceutical
industries.
Recce has a clear vision for the future and the
team is focused on delivering on our priorities
to bring innovative anti-infectives to market,
delivering value to all our stakeholders and
shareholders.
Governance priorities
Another foundation for growth and the many
opportunities before us is our focus on best-
practice governance, which is always a major
focus of the Board.
The composition of the Board is always a priority.
We aim to have the right skills and expertise
to navigate our industry and the broader
environment.
In line with the planned expansion of our clinical
programs, the Board of Directors has been
refreshed with new appointments throughout
3
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 the year as part of the Company’s ongoing
succession planning to ensure the skills and
experience is commensurate with Recce’s
growth and future focus.
The coming years present great opportunities for
our business to tackle one of the world’s biggest
healthcare challenges: the unprecedented threat
of antimicrobial resistance.
I am pleased to have welcomed Alistair
McKeough as Non-Executive Director. He brings
a wealth of legal expertise to complement the
diverse skills and experience of our Board. We
also welcomed Maggie Niewidok as our new
Company secretary.
Our mission at Recce is to impact this global
issue. I, along with James Graham, our Managing
Director and CEO, and the entire Recce team
look forward to pursuing this challenge with you.
Again, thank you for your most welcome
continued support.
Looking ahead
On behalf of the board, I would like to thank
James Graham, our CEO, the management team
and all our clinical and commercial partners,
for their personal commitment, dedication, and
contributions to the success of Recce this year.
Most assuredly, I would also like to thank our
shareholders for their ongoing support which
has been an important contribution to our
success.
John Prendergast
Chair
4
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Letter from the
CEO
Dear Shareholders,
FY23 has been another significant year for
Recce, a transformational one. We completed
our first in-human safety and tolerability study
with excellent results and progressed to a Phase
I/II Rapid Infusion UTI/Urosepsis clinical trial.
Recce’s progress and success
this year is a direct reflection of
the focus and dedication of our
growing team combined with
the significant medical potential
of our new generation anti-
infectives.
As we work towards initiating our Phase II study
for R327 in UTI/Urosepsis and studies for our
new gel formulation of R327 in diabetic foot
ulcer and burn wound infections, we aim to have
data from a number of these programs in
FY 2024.
Our clinical progress confirms the robustness
of the safety profile of R327, the world’s first
new class of anti-infective with a novel and
differentiated Mechanism of Action in over 30
years. These very promising safety data are also
5
James Graham
Managing Director and Chief Executive Officer
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Recce’s clinical programs are
advancing towards a market
actively seeking new antibiotic
and anti-infective solutions.
Market awareness and demand
is evolving rapidly.
a major achievement and a sound foundation
for the many studies to now follow.
Recce’s progress and success this year is a direct
reflection of the focus and dedication of our
growing team combined with the significant
medical potential of our new generation of
anti-infectives.
On a personal note, I am constantly inspired by
the conversations we have with patients with
drug-resistant infections and clinicians tasked
with treating these unmet medical needs;
witnessing the incredible potential for real-life
impact that our drug can have on those who
need it most.
Aside from the usual challenges of leading an
early-stage biotech, Recce has achieved all this
despite a global pandemic, geopolitical unrest
and instability in financial markets.
Our long-term opportunity for growth
The challenge for an opportunity-rich business
like Recce, seeking to commercialise high
value clinical assets with multiple therapeutic
applications globally, is to remain focused while
simultaneously building the broad foundations
for expansion into addressing major unmet
medical needs.
I believe we have delivered the right balance of
focus on near-term priorities and commitment
to long-term opportunities while maintaining
a lean and efficient organisation.
We continued to collaborate with a number of
highly qualified medical investigators in Australia
and expanded our network around the world,
most notably in the US with strong interest from
US Key Opinion Leaders, the US military as well
as industrial partners based in the US.
Culture and values
Our ability to help improve the lives of people
facing the threat of antibiotic-resistant infections
is increasing every day, through our clinical trials
and special access programs.
This is where our people and our shareholders
can be incredibly proud. Recce’s progress
does not happen without a talented group
of committed people.
While our teams connect virtually and in person
across different offices and time zones, they
remain motivated and dedicated. Recce is
building a unique culture that will form a solid
foundation as we strive to address the global
health threat posed by antibiotic-resistant
superbugs.
Recce has demonstrated it can effectively
advance several clinical programs while
simultaneously building the necessary
commercial and clinical relationships to
support our future success.
6
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 An opportune time
Outlook
In closing, I would like to thank the Recce team,
our shareholders, clinical partners and the many
who make it possible to deliver our strategy and
support our goal of bringing effective new anti-
infective treatments to millions of people with
life-threatening infections and to protect the
health of communities everywhere.
Recce is one of just a small group of global
companies solely dedicated to the development
and commercialisation of new antibiotic
solutions. The depth of our innovative pipeline
differentiates us and strengthens our position
in this dynamic and promising field of medical
innovation.
It is an exciting time to be a part of Recce as we
actively deliver on our clinical and operational
objectives.
James Graham
Managing Director and Chief Executive Officer
In the coming year we will focus on completing
the next phase of our clinical program while
building on the achievements of the previous
12 months.
Recce’s clinical programs are advancing
towards a market actively seeking new antibiotic
and anti-infective solutions. Market awareness
and demand is evolving rapidly.
Evidence of this came with the US House of
Representatives and Senate moving to revive
the PASTEUR Act in an effort to revitalise
antibiotic development in the US. PASTEUR,
which stands for Pioneering Antimicrobial
Subscriptions To End Upsurging Resistance,
has strong bipartisan support because of its
balanced approach to the development of
urgently needed new antibiotics and antifungals.
Every 15 minutes, a person in the United States
dies from an infection resistant to treatment with
existing antimicrobial drugs. Sepsis is the United
States’ most expensive condition in aggregate
to treat in the hospital, costing the healthcare
system US$57bn annually in inpatient costs.
Sepsis has even become the leading cause of
deaths in US hospitals and Recce is a potential
solution for this, with extremely promising
pre-clinical and clinical results for R327 in
that indication.
While pharmaceutical companies have mostly
stayed away from anti-infectives for the last
20 years, the strong medical need is driving
a resurgence of interest with a steady increase
in the number of large pharmaceutical
companies becoming more active in the
sector via acquisitions, partnerships and
collaborations over the past 12 months.
7
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Overview of Clinical Activities
The Company has focused its efforts on progressing its clinical trials and
pre-clinical programs. Commercial, clinical and operational goals and
objectives were met, with key highlights being the conclusion of the Phase I
Intravenous clinical trial of R327 and the initiation of new clinical trials for
multiple routes of administration, including intravenous and topical.
Asset and
Route of Administration
Indications
Discovery
Pre-clinical
Phase I
Phase II
Phase III
Market
R327 Intravenous
Serious/life threatening bacterial
infections including sepsis
Urinary tract infections
including urosepsis
Multidose, early stage, rapid
infusions sepsis efficacy study
Wound infections including
infected burns
Diabetic Foot Ulcer Infections
R327 Topical
Pre-Clinical Programs
Various routes of administration
Mycobacterium abscessus
Bacterial Sinusitis
Additional TBA
Financially, the Company has been able to remain
well-funded while delivering on multiple clinical
objectives. Supported by the Australian Government’s
Research and Development Tax Incentive, the
Company remains well placed to continue its
clinical progress into the next financial year.
Supporting clinical trials, the Anti-Infective Research
Unit that was established at Murdoch Children’s
Research Institute has continued to advance potential
pre-clinical indications by conducting high-quality
research at a world-leading medical R&D organisation.
8
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Human Clinical Trials
R327 Intravenous (I.V.) formulation
Study 001 – Phase I I.V. Clinical Trial
Conducted at Adelaide's CMAX clinical trial facility,
the Company’s first-in-human Phase I clinical trial is
an ascending dose, randomised, placebo-controlled,
parallel, double-blind, single-dose study (Trial ID
ACTRN12621001313820).
Dosing has been completed, with a total of 80
healthy subjects intravenously dosed (60 with R327
and 20 with placebo) to evaluate the safety and
pharmacokinetics of R327. The Company completed
dosing of 8 Cohorts with a dose ceiling of 6,000mg,
a 120-fold increase on Cohort One (50mg dose).
No serious adverse events were observed in
subjects dosed with R327.
Post FY23 (19 July, 2023) the Company announced
that independent examiners confirmed that the Phase
I clinical trial data review was complete and all primary
study end-points were achieved.
Study 003 – Phase I/II Rapid Infusion
UTI/Urosepsis I.V. Clinical Trial
Following the completion of Phase I I.V. Clinical Trial
(Study 001), Australia’s HREC (Human Research
Ethics Committees) approved R327 to be evaluated
at faster infusion rates in both male and female
healthy subjects. Testing R327 in female subjects is of
utmost importance since women have a much higher
likelihood than men of developing UTI that could lead
to urosepsis. Post FY23 (10 July, 2023) the first cohort,
which included first female subject, was already
dosed successfully with 2,500mg of R327.
The Phase I/II trial is assessing R327 as an intravenous
dose at faster infusion rates across three cohorts
as a broad spectrum anti-infective to assess R327’s
potential as a treatment option in UTI/Urosepsis
across the patient infectious disease journey
(underlying infection>septic state) positioning
it for therapy in this area of unmet medical need.
On dosing days, plasma and urine will be collected
up to 24 hours post-dose to evaluate R327's
antibacterial properties.
UTI/Urosepsis Overview
UTI/Urosepsis Overview
About half of women
and more than one in
10 men will get a
urinary tract infection
(UTI) in their lifetime.
Where Urinary Tract
Infection's can spread
Kidney
Ureter
Bladder
Urethra
Urosepsis
Although UTI is often uncomplicated
and easy to treat, sometimes bacteria can
infect your bloodstream. This condition
is called urosepsis, and it can be deadly.
Previous years have demonstrated the
likelihood of antibiotics killing most
UTIs is rapidly dropping.
What is Urosepsis?
Urosepsis is sepsis caused by infections
of the urinary tract. Urosepsis in adults
comprises approximately 20-30% of
all sepsis cases.
Urinaty Tract Infection
is an infection in any part of the urinary
system. The most common UTI is
cystitis, which is an infection of the
bladder. Other UTIs involve the urethra
or kidneys.
404.6
MILLION
individuals had UTIs
in 2019 worldwide
75%
of the UTI cases
are caused by
Escherichia coli
80%
are resistant to at
least two antibiotics
92%
of bacteria that cause
UTIs are resistant to at
least one common
antibiotic
9
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Topical Programs
Study 101 – Phase I/II Topical Diabetic
Foot Infection Clinical Trial
Currently conducting the largest Diabetic Foot
Infection (DFI) Clinical Trial ongoing in Australia, the
Company has built out its topical broad-spectrum
bacterial infection treatment programs through a new
Phase I/II clinical trial for DFI at a leading Australian
teaching hospital.
The trial received Human Research Ethics Committee
approval to begin and will enrol up to 32 patients.
It will be conducted at Sydney South West’s Limb
Preservation and Wound Research Unit, located at
the Ingham Institute of Medical Research. This unit
was selected for its innovative and ground-breaking
focus on wounds of the limbs and limb loss, an under-
researched area in Australian healthcare.
The Company is exploring R327 as a preventative
treatment for DFI, an ever-increasing problem in the
Western World and which leads to 25% of Diabetic
Foot Ulcer cases in the U.S. requiring amputation
at some point. Moreover, the total medical costs
for treating diabetic foot diseases in the U.S. are
estimated at US $9-13 billion every year.
DFI section
Diabetic Foot Infections
are a common complication
of diabetes that is not being
managed through methods
such as diet, exercise, and
insulin treatment. Ulcers
Diabetic Foot Infections are
are formed as a result of
a common complication of
skin tissue breaking down
diabetes that is not being
and exposing the layers
managed through methods
underneath.
such as diet, exercise, and
insulin treatment. Ulcers
are formed as a result of
skin tissue breaking down
and exposing the layers
underneath.
Diabetic foot infection is
one of the common, costly,
and severe complications of
diabletes.
NEW SOUTH WALES
The trial has expanded its clinical trial sites to multiple
states, including CMAX Clinical Research (South
Australia) and Scientia Clinical Research (New South
Wales), allowing the study to be expedited and to
broaden the patient population across multiple
world class facilities.
SOUTH AUSTRALIA
Administering the drug at faster rates, especially
within a GP setting or an Acute patient setting, is
important as this allows the infection to be treated
more rapidly. The 2021 Surviving Sepsis Campaign
(SCC) guidelines strongly recommend that the
administration of intravenous broad-spectrum
antibiotics should be initiated as soon as possible,
preferably within an hour of sepsis recognition.
DFI Overview
60%
of the patients with
diabetes undergo
nontraumatic foot
amputations
85%
of the diabetes-
related amputations
precede foot
ulceration
28%
is the 3-year
cumulative
mortality rate
for DFU patients
10
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Pre-Clinical Programs
The Company has established an Anti-Infective
Research Unit (AIR Unit) located within the Murdoch
Children’s Research Institute, one of the top three
children’s research institutes worldwide, to accelerate
pre-clinical activities. Based in Melbourne, one of
the world’s most innovative cities for world-leading
medical research and development, the dedicated
research within Recce’s AIR Unit will streamline
ongoing pre-clinical programs and explore new
research development opportunities.
Targeted at discovering pre-clinical indications
with in-human clinical trial potential, the AIR Unit
will focus on advancing pre-clinical indications such
as M. abscessus and Bacterial Sinusitis. The unit is
equipped with fit-for-purpose laboratory space and
a dedicated Murdoch Children’s team with access to
a large bank of infectious disease strains and other
expertise.
Outpatient Nurses Appointed and Patient
Population Increased
The Phase I/II clinical trial of R327 is supported
by in-home nurses trained in R327 DFI treatment
protocols, broadening treatable DFI trial patient
population.
Services provided by Ascott nurses will be
adhering to national and international clinical
trial regulatory requirements
– Collecting vital signs, conducting basic
wound assessment and cleaning
– Administering R327 as a topical agent
– Performing concomitant medicant and
adverse event monitoring and recording
Study 102 – Phase I/II Topical Burn Wound
Infection Clinical Trial
The Phase I/II Topical Burn Wound Infection Clinical
Trial has produced patient examples with multiple
bacterial species in and surrounding wound. Growth
swabs were taken and revealed to include pathogens
from the ESKAPE group of bacteria.
Following treatment with R327, favourable
signs were observed including:
Healthy skin growth
Reduced swelling
Reduced infection
Indication of tissue
penetration to the side
of underlying infection
Recce is working to expand the number of domestic
and international clinical sites involved in this trial
with expected progress in FY 2024.
Murdoch Children’s Research Institute. Photo taken by John Gollings.
11
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Conference Engagement
Key Events with Investors,
Key Opinion Leaders, and
Global Conferences
The Company has increased its
presence at global conferences
and interactions with Key Opinion
Leaders in order to increase
investment opportunities and
engagement within the sepsis and
antimicrobial resistance community.
Attendance at global investor and
industry events has allowed the
Company to expand its business
development programs, and network
with potential partners.
Recce also intensified its institutional
investor access throughout the
year, in particular the APAC Region,
Europe and the United States, aimed
at building long-term and broader
relationships.
See below the conferences the Company
participated in throughout the financial year:
2022
Jan 2022
JP Morgan LifeSci Advisors Corporate Access Event
San Francisco, USA
Jul 2022
ASM Annual Scientific Conference
Sydney, AUS
Sep 2022
World AMR Congress
Washington DC, USA
Sepsis Alliance Summit
Virtual
Sepsis Awareness Month
Virtual
Oct 2022
ESCMID/ASM Conference on Drug Development –
Research Abstract and Poster Presentation
Dublin, Ireland
2023
Feb 2023
High Net Worth Investor Event
Zurich, Switzerland
Mar 2023
High Net Worth Investor Event
Geneva, Switzerland
Wholesale Investor Emergence Sydney
Sydney, AUS
Wholesale Investor Emergence London
London, UK
Apr 2023
Sepsis Alliance AMR Conference
Virtual
May 2023
BIO Korea 2023
Seoul, South Korea
June 2023
BIO International Convention
Boston, USA
ASM Microbe
Houston, USA
12
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Board of Directors and
Key Management Personnel
Dr John Prendergast
Executive Chairman
BSc (Hons), MSc (UNSW),
PhD (UNSW), CSS (HU)
Based in the US, Dr Prendergast is the current Chairman and
Co-founder of Palatin Technologies, Inc. (NYSE: PTN) and
Lead Director of Nighthawk Biosciences (NYSE: HHWK). With
extensive experience in the international commercialisation
of pharmaceutical technologies, Dr Prendergast has been
responsible for the approval of three new drug applications.
James Graham
Managing Director and
Chief Executive Officer
BCom (Entrepreneurship), GAICD
Mr Graham is the Chief Executive Officer of Recce
Pharmaceuticals. He was formerly Executive Director and has
extensive experience in marketing, business development
and commercialisation of early-stage technologies with
global potential. Mr Graham has served on Recce’s Board of
Directors for six years and has invested in almost every capital
raise to date with a focus on expanding Recce’s commercial
opportunities and clinical initiatives.
Michele Dilizia
Executive Director and
Chief Scientific Officer
BSc (Med Sci), Grad Dip Bus (Mkting),
BA (Journ), GAICD, MASM
Ms Dilizia is a co-inventor and qualified medical scientist
with a specialisation in medical microbiology and regulatory
affairs. She successfully co-led the research and development
of Recce’s suite of anti-infective compounds, resulting in a
portfolio of granted patents across the globe, including a
Qualified Infectious Disease Product designation with the
U.S. Food and Drug Administration (FDA).
Dr Justin Ward
Executive Director and
Principal Quality Chemist
BSc (Chem), PhD (Chem),
MRACI, CChem, MPharm
Dr Ward is a qualified Chemist and Pharmacist with over
20 years of pharmaceutical and biotech industry experience
in quality control, quality assurance, product research and
development with leading pharmaceutical companies,
including Pfizer. Dr Ward previously held a technical role
with Pfizer, involving providing data for regulatory
submissions to the FDA and TGA.
Dr Alan Dunton
Non-Executive Director
BSc (BioChem) Hons, M.D. (NYU)
Based in the US, Dr Dunton is Director of Palatin
Technologies. He has over three decades of senior
pharmaceutical experience including as President and
MD of Janssen Research Foundation (Johnson & Johnson).
Dr Dunton has advanced approximately 20 blockbuster drugs
through regulatory review and commercialisation at Fortune
500 companies including Roche.
13
See below the conferences the Company
participated in throughout the financial year:
2022
Jan 2022
JP Morgan LifeSci Advisors Corporate Access Event
San Francisco, USA
Jul 2022
ASM Annual Scientific Conference
Sydney, AUS
Sep 2022
World AMR Congress
Washington DC, USA
Sepsis Alliance Summit
Virtual
Virtual
Sepsis Awareness Month
Oct 2022
ESCMID/ASM Conference on Drug Development –
Research Abstract and Poster Presentation
Dublin, Ireland
2023
Feb 2023
High Net Worth Investor Event
Zurich, Switzerland
Mar 2023
High Net Worth Investor Event
Geneva, Switzerland
Wholesale Investor Emergence Sydney
Wholesale Investor Emergence London
Apr 2023
Sepsis Alliance AMR Conference
May 2023
BIO Korea 2023
Seoul, South Korea
June 2023
BIO International Convention
Sydney, AUS
London, UK
Virtual
Boston, USA
ASM Microbe
Houston, USA
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Alistair McKeough
Non-Executive Director
(Prandium Capital)
Mr McKeough is an experienced executive and solicitor.
Before being appointed as a non-executive director in
2022, Alistair served as Recce’s company secretary and
he has been involved with the company since 2017. Alistair
has extensive experience in a variety of private and listed
corporations across many sectors, including professional
services, technology, financial services, charities, health,
biotech, childcare and education. Recent roles include
Managing Director of a legal practice specialising in equity
capital markets and advice to listed companies and as part
of the senior leadership team at share registry, Automic
Group.
Arthur Kollaras
Principal Engineer & Head
of Manufacturing
BSc, BEng (Chem), PhilEng (Enviro),
MIEAust, MISPE
Mr Kollaras is highly qualified in chemical engineering
and microbiology. He has significant experience taking
a new technology concept from pilot plant to full-scale
international production under FDA standards.
Justin Reynolds
Chief Financial Officer
(Pitcher Partners)
Mr Reynolds is a Partner at Pitcher Partners Sydney.
His experience with multinational companies has led him
to developing expertise as an Outsourced Financial
Controller.
Maggie Niewidok
Company Secretary
(Kardos Scanlan)
Ms Niewidok is an admitted lawyer with the firm Kardos
Scanlan Corporate Lawyers. She is an experienced
corporate lawyer and is the Company Secretary to various
ASX-Listed and unlisted companies, across a range of
industries.
Daniel Astudillo
Head of Marketing
BCom (Marketing), BA (Spanish), MBA
Mr Astudillo has over seven years of expertise in
pharmaceuticals and clinical trials sector. He specialises
in crafting impactful digital marketing campaigns and
effectively engaging key investors in the healthcare sector.
Thomas Jarrett
Operations Manager
BSc (Bioengineering)
With a background in bioengineering, Mr Jarrett is an
experienced pilot plant operations manager overseeing
all manufacturing activities, including quality assurance
programs and strategic process improvements.
14
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Financial Report
Recce Pharmaceuticals Ltd
(Formerly Recce Ltd) and Controlled
Entities ABN 73 124 849 065 Consolidated
Financial Report for the year ended
30 June 2023
16 Directors’ Report
28 Auditor's Independence Declaration
29 Corporate Governance Statement
42 Consolidated Statement of Profit or Loss and
Other Comprehensive Income
43 Consolidated Statement of Financial Position
44 Consolidated Statement of Changes In Equity
45 Consolidated Statement of Cash Flows
46 Notes to the Consolidated Financial Statements
67 Directors’ Declaration
68 Independent Auditor’s Report
72 ASX Additional Information
15
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Directors’ Report
For the year ended 30 June 2023
Your Directors present their report on Recce
Pharmaceuticals Ltd (the ‘Company’) and controlled
entities (the ‘Group’) for the year ended 30 June 2023.
Directors
The following persons held office as Directors of
the Company during the year and up to the date
of this report:
Dr John Prendergast
Executive Chairman (effective 5 September 2022)
Mr James Graham
Managing Director & Chief Executive Officer
Ms Michele Dilizia
Executive Director and Chief Scientific Officer
Dr Justin Ward
Executive Director and Principal Quality Chemist
Dr Alan Dunton
Non-Executive Director & Chief Medical Advisor
Mr Alistair McKeough
Non-Executive Director (effective 1 September 2022)
Directors have been in office since the start of the
financial year to the date of this report unless otherwise
stated.
Information on Directors
Dr John Prendergast
Chairman (Executive)
Qualifications
BSc (Hons), M.Sc. and Ph.D., C.S.S. (Admin & Mgmt)
Experience
Dr Prendergast is currently Non-Executive Chairman
and Co-Founder of Palatin Technologies developing
targeted therapeutics for the treatment of diseases with
significant unmet medical need and Lead Director of
Nighthawk Biosciences, Inc., a publicly traded, clinical
stage immunomodulatory company.
He was previously a member of the board of the life
science companies, Avigen, AVAX Technologies and
MediciNova Inc and also as a member of the Advisory
Board for the Institute for the Biotechnology of Infectious
Diseases (IBID) at the University of Technology Sydney,
now called the ithree Institute.
Prior to that he was a Managing Director of The Castle
Group Ltd., a New York medical venture capital firm.
Dr Prendergast held Post-Doctoral Fellowships in the
Department of Biochemistry and Molecular Biology,
Harvard University and at the Center for Research on
Blood Diseases in Paris with Professor Jean Dausset
(Nobel Prize, 1980).
During his career, Dr Prendergast has been responsible
for the approval of three (3) New Drug Applications.
Dr Prendergast received his M.Sc. and Ph.D. from the
University of New South Wales, Sydney, Australia and a
C.S.S. in administration and management from Harvard
University.
Interest in Shares and Options
250,000 Ordinary Shares
2,175,000 Unlisted Options
Special Responsibilities
Member of the Audit & Risk Management Committee
Member of the Nomination & Remuneration Committee
Directorships held in other listed entities during
the last three years
Palatin Technologies, Inc. (NYSE: PTN)
Heat Biologics, Inc. (NASDAQ: HTBX)
16
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Mr James Graham
Ms Michele Dilizia
Director (Executive) and Chief Executive Officer
Director (Executive) and Chief Scientific Officer
Qualifications
BCom (Entrepreneurship), GAICD
Experience
Mr Graham is Chief Executive Officer and Executive
Director of the Company.
Mr Graham has a background in marketing, business
development and commercialisation of early stage
technology with global potential.
Mr Graham continues to work closely with the growth
and direction of Company, routinely investing alongside
shareholders in capital rounds to date.
Qualifications
BSc (Med Sci), Grad Dip Bus (Mkting), BA (Journ),
GAICD, MASM
Experience
Ms Dilizia is a Qualified Medical Scientist with
specialisation in medical microbiology. Previously, she
had a successful executive career in public relations and
marketing for a leading retail chain.
Ms Dilizia was a market research consultant, which
included marketing development of health-care and
pharmaceutical products.
Interest in Shares and Options
Direct ownership
2,250,000 Unlisted Options
Indirect ownership
6,531,932 Ordinary Shares
Special Responsibilities
Interest in Shares and Options
3,543,485 Ordinary Shares
1,500,000 Unlisted Options
Special Responsibilities
Nil
Directorships held in other listed entities during
the last three years
Member of the Audit and Risk Management Committee
Nil
Directorships held in other listed entities during
the last three years
Nil
17
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Dr Justin Ward
Director (Executive)
Qualifications
BSc (Chem), PhD (Chem), MRACI, Chartered Chemist,
MPharm
Experience
Dr Ward is qualified chemist with specialisation in
pharmaceutical quality management and product
development.
Before Recce Pharmaceuticals, he held a technical
speciality and special project leadership role with
Pfizer Pharmaceuticals, involving providing data for
the regulatory submissions to the FDA and TGA.
After Pfizer, he was the Laboratory Manager for Solbec,
involving, again as presently, drug specifications and
pharmaceutical trials for the ASX-Listed company.
Most recently, he was Quality Manager at Phebra and
responsible for product quality and release of all drugs
of the company with the TGA.
Interest in Shares and Options
Direct ownership
158,966 Ordinary Shares
600,000 Unlisted Options
Special Responsibilities
Nil
Directorships held in other listed entities during
the last three years
Nil
Dr Alan Dunton
Director (Non-Executive) and Chief Medical Advisor
Qualifications
M.D. New York University School of Medicine
B.S. Biochemistry. (Magna cum laude) State University
School of New York at Buffalo
Experience
Dr Dunton has held leadership positions at various
biotechnology and pharmaceutical companies
including serving as president and chief executive
officer at Panacos Pharmaceuticals, Inc., Metaphore
Pharmaceuticals, Inc., and chief operating officer at
Emisphere Technologies, Inc.
Dr Dunton served in several positions at Johnson and
Johnson including president and managing director at the
Janssen Research Foundation where he was responsible
for leading over 2,000 professionals worldwide and
prior to this as vice president of global clinical research
and development at the R.W. Johnson Pharmaceutical
Research Institute. During his career, Dr Dunton has been
responsible for the approval of approximately 20 New
Drug Applications; an amalgamation of prescription and
OTC products.
Dr Dunton earned his medical degree from New York
University School of Medicine following his bachelor’s
degree in biochemistry from the State University of New
York at Buffalo. Dr Dunton then completed his fellowship
in clinical pharmacology at New York Hospital/Cornell
University Medical Center and, in 1987, was awarded The
Nellie Westerman Prize from the American Federation for
Clinical Research (AFCR) for his work in medical ethics.
Interest in Shares and Options
Direct ownership
60,000 Ordinary Shares
1,125,000 Unlisted Options
Indirect ownership
10,000 Ordinary Shares
Special Responsibilities
Chairman of the Nomination & Remuneration Committee
Member of the Audit & Risk Management Committee
Directorships held in other listed entities during
the last three years
Palatin Technologies, Inc. (NYSE: PTN)
Oragenics, Inc. (NYSE: OGEN)
CorMedix, Inc. (NYSE: GRMD)
Regeneus Ltd (ASX: RGS)
18
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Directors’ Report ContinuedFor the year ended 30 June 2023 Mr Alistair McKeough
Director (Non-Executive)
Qualifications
BA, LLB, LLM
Experience
Mr McKeough is an experienced executive and solicitor.
Before being appointed as a non-executive director on
1 September 2022, Alistair served as Recce’s company
secretary and he has been involved with the company
since 2017.
Alistair has extensive experience in a variety of private
and listed corporations across many sectors, including
professional services, technology, financial services,
charities, health, biotech, child care and education. He
recently stepped down as Managing Director of a legal
practice specialising in equity capital markets and advice
to listed companies and as part of the senior leadership
team at share registry, Automic Group.
Interest in Shares and Options
Indirect ownership
25,000 Ordinary Shares
1,125,000 Unlisted Options
Special Responsibilities
Chairman of the Audit & Risk Management Committee
Member of the Nomination & Remuneration Committee
Directorships held in other listed entities during
the last three years
Nil
Chief Financial Officer
Justin Reynolds
Experience
Justin Reynolds is a Partner at Pitcher Partners Sydney.
Mr Reynolds’ experience with multinational companies
has led to him developing particular expertise as an
Outsourced Financial Officer. He and his team provide
their clients with the peace of mind that comes from high
quality, technically expert outsourced accounting.
Mr Reynolds’ has a broad range of experience having
dealt with a variety of different sized organisations from
small family business to multinational companies and high
net worth individuals.
Company Secretary
Maggie Niewidok
Maggie is an admitted lawyer and employee of Kardos
Scanlan Corporate Lawyers. Maggie is an experienced
corporate lawyer and is the Company Secretary to
various ASX listed and unlisted companies, across a
range of industries.
Principal Activity
The Group is pioneering the development and
commercialisation of a drug discovery and development
business commercialising new Classes of synthetic
anti-infectives with broad spectrum activity designed
to address the urgent global health threat of antibiotic
resistant superbugs and emerging viral pathogens.
Its patented lead candidate, RECCE® 327 has been
developed for the treatment of blood infections and
sepsis derived from E. coli and S. aureus bacteria –
including their superbug forms.
Review of Operations
On 11 July 2022, the Company announced the
appointment of Dr Philip Sutton as Vice President of
Translational Sciences.
On 5 August 2022, the Company settled its legal dispute
in relation to the Class C and Class D Performance shares
issued to former directors/KMP with the cash payment of
$1,417,527 as full and final settlement of all matters in the
dispute. This amount was recognised as a provision at
30 June 2022.
On 22 August 2022, the Company announced Phase I
intravenous (IV) clinical trial of RECCE® 327 Cohort 7 at
6,000mg (120-fold increase on Cohort One 50mg dose)
over 1 hour I.V. infusion, with no serious adverse events
among 10 healthy male subjects.
On 1 September 2022, the Company announced the
appointment of Alistair McKeough as Non-Executive
Director and Maggie Niewidok as Company Secretary.
On 5 September 2022, the Company announced the
appointment of Dr John Prendergast as Executive
Chairman.
19
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 On 27 September 2022, the Company provided an
updated timeline on its clinical programs with several
significant data read-outs in 2022 and 2023.
On 18 October 2022, the Company provided an update
on the findings in SARS-CoV-2 studies undertaken by an
independent, third party contract research organisation.
On 9 December 2022, the Company announced it had
received Human Research Ethics Committee approval to
start its Phase I/II clinical trial assessing R327 as a spray-
on, broad-spectrum antibiotic therapy for mild skin and
soft tissue diabetic foot infections.
On 15 December 2022, the Company announced the
commencement of an Anti-Infective Research Unit
through the execution of a research collaboration
agreement with Murdoch Children’s Research Institute,
securing a dedicated Murdoch Children's research team
of infectious disease experts, fit-forpurpose laboratory
space, access to a library of clinical isolates and drug-
resistant pathogens.
On 10 January 2023, the Company announced the
Australian Patent Office issued notification of intent to
grant Recce’s Patent Family 3 ‘Anti-Virus Agent and
Method for Treatment of Viral Infection’.
On 25 January 2023, the Company announced an
advance payment of $1,908,039 from Radium Capital
(Radium) for Recce's future Research and Development
(R&D) tax incentive.
On 2 February 2023, the Company announced it had
been issued a trademark for RECCE® from the Trade
Marks Registry Intellectual Property Department in
Hong Kong.
On 20 February 2023, the Company announced it had
selected South Australia’s CMAX Clinical Research as
the independent trial facility to conduct a Phase I/II
intravenous (IV) clinical trial of its lead pipeline candidate
RECCE® 327 (R327) in healthy male and female subjects.
On 4 March 2023, the Company announced further
non-dilutive funds from Radium for A$973,144 of Recce’s
future Research and Development (R&D) tax incentive.
On 11 April 2023, the Company announced the Australian
Patent Office issued notification of intent to grant the
first of Recce’s new Patent Family 4 for RECCE’s anti-
infectives ‘Process for Preparation of Biologically Active
Copolymer’, expiry 2041.
On 12 April 2023, the Company announced it had been
issued Trade Mark Registration for RECCE® from the
Israeli Patent Office, Trademarks Department.
On 17 April 2023, the Company announced it had
received Human Research Ethics Committee (HREC)
approval to start its Phase I/II intravenous (IV) clinical
trial of its lead pipeline compound RECCE® 327 (R327)
in healthy male and female subjects.
On 8 May 2023, the Company announced it had received
sponsorship from the West Australian Government to
attend BIO Korea 2023.
On 29 May 2023, the Company announced it had
awarded and on-boarded outpatient nurses from
leading healthcare provider Ascott (an IQVIA Company)
broadening the Company’s Diabetic Foot Infection (DFI)
trial patient population.
On 29 June 2023, the Company announced it had
received approval from the Human Research Ethics
Committee (HREC) to expand its Faster Infusion, Phase
I/II Urinary Tract Infections (UTI) intravenous clinical
trial of its lead product, RECCE® 327 (R327), to Scientia
Clinical Research.
The operating loss has increased to $13,077,422 (2022:
loss of $10,986,277) as a result of increased expenditure
in consulting and research and development costs. The
annual loss was after a R&D tax incentive of $4,311,202
(2022: $3,084,955).
The loss per share has increased during the year to
7.52 cents (2022: 6.31 cents).
The Group’s focus is on progressing RECCE® 327's
multiple ongoing human clinical trials, in parallel to the
suite of pre-clinical programs.
Dividends Paid or Recommended
No dividends have been paid or declared for payment
during the year and at the date of this report.
Options
During the financial year, the Company issued 1,125,000
(2022: 435,000) options to acquire ordinary shares in
the Company at exercise prices and dates as disclosed
in Note 19 to the consolidated financial statements.
607,400 options were exercised for $102,043 during the
financial year (2022: 1,156,565 options were exercised for
$287,408).
Significant Changes in State of Affairs
No significant changes in the Group's state of affairs
occurred during the year.
Environmental Issues
The Group’s operations are not subject to significant
environmental regulations under the law of the
Commonwealth or of a State or Territory. The policy is
to comply with or exceed its environmental obligations
in each jurisdiction in which it operates. No known
environmental breaches have occurred.
Future Developments, Prospects and
Business Strategies
The Group continues its strategy of having its antibiotic
drug tested for safety, efficacy and chemistry to enable
the Group to lodge its application for Investigational New
Drug (IND) status with the Food and Drug Administration
(FDA) in the USA.
20
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Directors’ Report ContinuedFor the year ended 30 June 2023 The current economic model for developing new
antibiotics has failed. There are virtually no practical
economic incentives and most regulatory authorities have
not prioritised these. Accordingly, there are significant
opportunities for the Company in developing a new
class of Synthetic Anti-Infectives designed to address
the urgent global health problems of antibiotic-resistant
superbugs and emerging viral pathogens.
There are many risks associated with this:
(a) Research and development – May not be successful
or commercially exploitable
(b) Changes in laws and regulations – The introduction of
new legislation or amendments to existing legislation
may adversely impact the Company’s operations
(c) Competition – The pharmaceutical industry is
intensely competitive and the Company may be
beaten to market by one or more of its competitors
(d) Intellectual property – May not be capable of being
legally protected
(e) Risk of delay and continuity of operations – Any
disruption or delay to any key inputs could impact
adversely on the Company
(f) Research and Development Grant – There is no
guarantee the program will continue. The eligibility
criteria may change or an audit may require
repayment in certain circumstances
(g) Key personnel – Key personnel may leave and be
difficult to replace or may leave to work with a
competitor
(h) Product liability and uninsured risks – The Company
is exposed to potential product liability risks which
are inherent in the research and development,
manufacturing and marketing and use of its
technology or products developed.
Events Subsequent to Reporting Period
On 12 July 2023, the Company announced the receipt
of an advance payment of $801,604 from Radium
Capital against the R&D refund due from the Australian
Taxation Office.
On 28 July 2023, the Company announced the receipt
of $98,428 as a Canadian Government R&D rebate.
Going Concern
The Directors believe that the Group is in a position to
meet all its commitments as and when they fall due. Refer
to Note 3 to the consolidated financial statements for
further details.
Insurance of Officers
During the financial year, the Company paid a premium
for an insurance policy insuring all Directors and Officers
against liabilities for costs and expenses incurred by
them in defending any legal proceedings arising out of
their conduct while acting in their capacity as Director
or Officer of the Company, other than conduct involving
a wilful breach of duty in relation to the Company. In
accordance with common commercial practice, the
insurance policy prohibits disclosure of the nature of the
liability insured against the amount of the premium.
Proceedings on Behalf of Group
No person has applied for leave of Court to bring
proceedings on behalf of the Group or intervened in
any proceedings to which the Group is a party for the
purpose of taking responsibility on behalf of the Group
for all or any part of those proceedings.
The Group was not a party to any other such proceedings
during the year.
Remuneration Report (Audited)
The remuneration report details the Key Management
Personnel (KMP) remuneration arrangements for the
Group, in accordance with the requirements of the
Corporations Act 2001 and its Regulations.
KMP are those persons having authority and responsibility
for planning, directing and controlling the activities of the
entity, directly or indirectly, including all Directors.
For the purposes of this Remuneration Report, KMP
includes the following Directors and Senior Executives
who were engaged by the Company at any time during
the year ended 30 June 2023:
(i) Directors
Dr John Prendergast Executive Chairman
On 11 September 2023, the Company announced it would
raise $8m less costs via a placement and a further $3m
via a pro-rata non-renounceable entitlement offer.
Dr Alan Dunton
Non-Executive Director &
Chief Medical Advisor
Mr Alistair McKeough Non-Executive Director
On 18 September 2023, the Company confirmed the
issue of 18,181,819 new shares in respect of the placement.
On 29 September 2023, the Company announced that
it had raised $2,715,272 via the pro-rata non-renounceable
entitlement offer and as a result of this, the Company
will issue 6,171,048 new shares.
Mr James Graham
Ms Michele Dilizia
Dr Justin Ward
Managing Director &
Chief Executive Officer
Executive Director &
Chief Scientific Officer
Executive Director &
Principal Quality Chemist
Other than the above, no matters or circumstances
have arisen since the end of the financial year, which
significantly affected, or may significantly affect, the
operations of the Group, the results of those operations,
or state of affairs of the Group in future financial years.
(ii) Key Management Personnel
Mr Arthur Kollaras
Principal Engineer & Head
of Manufacturing
21
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 The total remuneration of executives and other senior
managers consists of the following:
(a) Salary – Executive Directors and senior managers
receive a sum payable fortnightly in cash;
(b) Long-term incentives – Executive Directors may
participate in share option/performance right
schemes with the prior approval of shareholders.
Other senior managers may also participate in
employee share option/performance right schemes,
with any option/performance right scheme, with
any option/performance rights issues generally
being made in accordance with thresholds set in
plans approved by shareholders. The Board however,
considers it appropriate to retain the flexibility to
issue options/performance rights to executives
outside of approved employee option/performance
right plans in exceptional circumstances; and
(c) Other benefits – Executive Directors and senior
managers are eligible to participate in superannuation
schemes and other appropriate additional benefits.
Cash bonuses are not subject to any specific
performance terms and conditions.
Non-Executive Remuneration
Shareholders approve the maximum aggregate
remuneration for Non-Executive Directors. The full Board
recommends the actual payments to Directors and the
Board is responsible for ratifying any recommendations,
if appropriate. The maximum approved aggregate
remuneration approved for Non-Executive Directors is
currently $180,000.
It is recognised that Non-Executive Directors’
remuneration is ideally structured to exclude equity based
remuneration. However, whilst the Group remains small,
and the full Board, including the Non-Executive Directors
are included in the operations of the Group more closely
than may be the case with larger companies, the Non-
Executive Directors are entitled to participate in equity
based remuneration schemes subject to shareholders
approval.
The Directors’ believe that as at this stage, there is
no relationship between the remuneration policy and
performance.
All Directors are entitled to have their indemnity
insurance paid by the Group.
The Remuneration Report covers the following matters:
(A) Principles used to determine the nature and amount
of remuneration;
(B) Executive service agreements;
(C) Details of remuneration;
(D) Share-based remuneration;
(E) Other transactions with Key Management Personnel;
and
(F) Other information.
(A) Principles Used to Determine the Nature
and Amount of Remuneration
In determining competitive remuneration rates, the Board
seeks independent advice on local and international
trends among comparative companies and industry
generally. It examines terms and conditions for employee
incentive schemes, benefit plans and share plans.
Independent advice may also be obtained to confirm that
executive remuneration is in line with market practice
and is reasonable in the context of Australian executive
reward practices.
Executive Remuneration
The Group’s Remuneration Policy for Executive and
Non-Executive Directors is designed to promote superior
performance and long-term commitment to the Group.
Executives receive a base remuneration which is market
related, and may be entitled to performance based
remuneration at the ultimate discretion of the Board.
Overall remuneration policies are subject to the discretion
of the Board and can be changed to reflect competitive
market and business conditions where it is in the interests
of the Group and shareholders to do so.
Executive remuneration and other terms of employment
are normally reviewed annually by the Board having
regard to performance, relevant comparative information
and expert advice.
The Group’s reward policy reflects its obligation to align
executive’s remuneration with shareholders’ interests and
to retain appropriately qualified executive talent for the
benefit of the Group. The principles underpinning the
Group’s remuneration policy are that:
– Reward reflects the competitive global market in
which we operate;
– Rewards to executives are linked to creating value
for shareholders;
– Remuneration arrangements are equitable and facilitate
the development of senior management across the
consolidated entity; and
– Where appropriate senior managers may receive a
component of their remuneration in equity securities
to align their interests with those of the shareholders.
22
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Directors’ Report ContinuedFor the year ended 30 June 2023 (B) Service Agreements
Name
Base Salary
Dr John Prendergast¹
–
Ms Michele Dilizia
Mr James Graham
Mr Justin Ward²
Mr Arthur Kollaras³
Dr Alan Dunton⁴
Mr Alistair McKeough⁵
$350,000 pa
$450,000 pa
$280,000 pa
–
–
–
Performance-
Based Incentives
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
No fixed term
Notice Period
3 months
3 months
3 months
4 weeks
4 weeks
4 weeks
4 weeks
1 Entered into a consultancy agreement with the Company effective 26 February 2023. Remunerated monthly consulting
and services fee of US $20,833.33 totalling US$250,000 per annum.
2 Entered into an employment agreement with the Company effective 10 March 2023. Total remuneration excluding super
is $280,000 plus superannuation.
3 Entered into a consultancy agreement with the Company effective 1 October 2021. Remunerated at the rate of $400
per hour.
4 Remunerated monthly consulting fees of US$468.75 per hour plus monthly director fees of $6,250.
5 Entered into a consultancy agreement with the Company effective 1 September 2022. Remunerated monthly consulting
fees of $6,770.83.
(C) Details of Remuneration
Director and other KMP Remuneration
Details of the nature and amount of each element of the remuneration of each KMP are shown in the table below:
Short-term
benefits,
cash salary and
fees
$
Accrued
Long
Service
Leave
$
Superannuation
(post-
employment
benefit)
$
Termination
payments
$
Share-
based
payments
$
Bonus
$
Percentage
Performance
Related
%
Total
$
Name
Directors
M Dilizia
367,650
64,191
J Graham
550,849
69,455
J Prendergast
369,848
–
J Ward
A Dunton
A McKeough1
Executives
A Kollaras
249,620
30,928
72,500
66,937
288,800
–
–
–
1,966,204
164,574
1 Appointed 1 September 2022.
27,500
19,423
–
26,210
–
–
30,324
103,457
–
–
–
–
–
–
–
–
80,000
135,000
–
–
–
–
–
–
–
539,341
774,727
– 369,848
– 306,758
–
72,500
325,217
392,154
–
319,124
215,000
325,217 2,774,452
14.8
17.4
–
–
–
–
23
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Short-term
benefits,
cash salary and
fees
$
Accrued
Long
Service
Leave
$
Superannuation
(post-
employment
benefit)
$
Termination
payments
$
Bonus
$
Share-
based
payments
$
Percentage
Performance
Related
%
Total
$
29,900
46,340
–
17,607
–
12,515
106,362
–
–
–
–
–
–
69,000
135,000
–
–
–
–
– 368,942
– 548,202
–
–
–
120,000
207,971
60,000
18.7
24.6
–
–
–
117,925 298,786
39.5
– 204,000
117,925 1,603,901
Year ended 30 June 2022
Name
Directors
M Dilizia
230,000
40,042
J Graham
328,403
38,459
J Prendergast
120,000
–
J Ward
A Dunton
Executives
A Kollaras
176,066
14,298
60,000
168,347
–
–
1,082,815
92,800
(D) Share-Based Remuneration
Year ended 30 June 2023
(i) Issue of ordinary shares
There were no ordinary shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2023.
(ii) Issue of options
The following options were issued on 15 November 2022 as part of remuneration under a share-based payment.
Name
Executives
A McKeough
Options Issued
No.
$
1,125,000
1,125,000
325,217
325,217
The terms and conditions of each grant of options affecting remuneration in the current reporting period are as follows:
– exercise price: $1.56
– grant date 15 November 2022
– grant date share price: $0.69
– value per option at grant date $0.28908
– grant date 15 November 2022
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options: 3.44%;
– expected volatility derived from the share volatility of compatible listed companies over five years, to align with the
term of the options: 70%; and
– expected life of the Share Option: five years.
(iii) Issue of performance shares
There were no performance shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2023.
24
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Directors’ Report ContinuedFor the year ended 30 June 2023
Year ended 30 June 2022
(i) Issue of ordinary shares
There were no ordinary shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2022.
(ii) Issue of options
The following options were issued on 11 February 2022 as part of remuneration under a share-based payment.
Name
Executives
A McKeough
Options issued
No.
$
200,000
200,000
117,925
117,925
The terms and conditions of each grant of options affecting remuneration in the current reporting period are as follows:
– exercise price: $1.56
– grant date 11 February 2022
– grant date share price: $1.15
– value per option at grant date $0.58963
– issue date 11 February 2022
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options: 1.92%;
– expected volatility derived from the share volatility of compatible listed companies over five years, to align with
the term of the options: 68.94%; and
– expected life of the Share Option: five years.
(iii) Issue of performance shares
There were no performance shares issued to Directors or KMP as part of their compensation during the year ended
30 June 2022.
1,356,249 Class C and 1,356,249 Class D performance shares were converted to ordinary shares during the year. These
related to ex-employees and the performance shares were fully expensed during the 30 June 2016 financial year.
Equity Instrument Disclosures Relating to KMP
(a) Ordinary Shares
The movement of the numbers of shares in the Company for the year ended 30 June 2023 held by the Directors of
the Company and other KMP of the Group, including their personally related parties, are set out below:
Name
Directors
M Dilizia
J Graham
J Prendergast
J Ward
A Dunton
A McKeough
Executives
A Kollaras
Balance at
1 July 2022
Net Change
Other
Share-based
Payment
Balance at
30 June 2023
3,543,485
6,031,932
250,000
158,966
60,000
25,000
67,155
10,136,538
–
500,000
–
–
10,000
–
–
510,000
–
–
–
–
–
–
–
–
3,543,485
6,531,932
250,000
158,966
70,000
25,000
67,155
10,646,538
25
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 (b) Performance Shares
There are no performance shares outstanding as at 30 June 2023.
(c) Options
The movement of the numbers of options in the Company for the year ended 30 June 2023 held by the Directors of
the Company and other KMP of the Group, including their personally related parties, are set out below:
Name
Directors
J Graham
M Dilizia
A Dunton
J Prendergast
J Ward
A McKeough
Executives
A Kollaras
Balance at
1 July 2022
Share-based
payments
Balance at
30 June 2023
2,250,000
1,500,000
1,125,000
2,175,000
600,000
–
–
–
–
–
–
1,125,000
2,250,000
1,500,000
1,125,000
2,175,000
600,000
1,125,000
600,000
–
600,000
8,250,000
1,125,000
9,375,000
(E) Other Transactions with KMP
During the financial year, consulting fees for technical services totalling $1,029,537 (2022: $727,348) were paid to an
entity associated with Mr A Dunton. Additionally consulting fees for professional services totalling $105,000 (2022:
$Nil) were paid to an entity associated with Mr A McKeough. All payments were made on normal commercial terms
and conditions. There were no other related party transactions during the financial year other than loans to key
management personnel (refer below).
(F) Other Information
Loans to key management personnel
An amount of $104,388 (2022: $388,734) was advanced to Mr James Graham as an unsecured loan. The amount
outstanding at reporting date including accrued interest was $112,836 (2022: $400,234). The loan is interest bearing
at the rate of 5% per annum. Interest accrued on the loan amounted to $8,448 (2022: $11,500). The loan is repayable
within 12 months of reporting date.
At year end, expense advances repayable by Mr James Graham totalled $Nil (2022: $Nil).
There were no other loans, payables, receivables or other transactions at the end of the financial year with Directors
and other KMP and their related parties of the Company or the Group.
Two strikes Rule in Respect to the Adoption of the Remuneration Report
The Corporations Act 2001 includes a ‘two strikes’ rule with regard to the adoption of Remuneration Reports. The
‘two strikes’ rule provides that if 25% or more of the votes cast on the resolution to adopt the Remuneration Report at
two consecutive Annual General Meetings are against the resolution, the Company must at the later Annual General
Meeting put a resolution to the shareholders proposing to convene another shareholder meeting to consider the spill
of the Board (‘Spill Resolution’).
Under the Corporations Act 2001, the Company must have a minimum of three Directors at all times. The Corporations
Act 2001, provides guidance in circumstances where either or both of the Directors are not re-elected by way of
ordinary resolution, then they will be taken to have been appointed as Directors by resolutions passed at the Spill
Meeting so that the Company maintains the required three Directors.
For the purposes of determining the length of time in office for future retirements by rotation, each Director who is
re-elected at the Spill Meeting is considered to have been in office from the time of their previous rotation.
26
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Directors’ Report ContinuedFor the year ended 30 June 2023
At the Annual General Meeting held in November 2022, the Company received a ‘For’ vote of 94.2% on its
Remuneration Report for the 2022 financial year (2021: 98.28%). The group did not receive any specific remuneration
related feedback from shareholders at either meeting.
No remuneration consultants were engaged during the year.
End of remuneration report.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, the amounts
in the Directors' Report have been rounded to the nearest dollar, unless otherwise stated.
This report is made in accordance with a resolution of the Board of Directors.
Dr John Prendergast
Executive Chairman
29 September 2023
27
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 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 NIEL SMITH TO THE DIRECTORS OF RECCE PHARMACEUTICALS
LIMITED
As lead auditor of Recce Pharmaceuticals 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 Recce Pharmaceuticals Limited and the entities it controlled during the
period.
Neil Smith
Director
BDO Audit (WA) Pty Ltd
Perth
29 September 2023
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.
28
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Corporate Governance Statement
This corporate governance statement sets out Recce
Pharmaceuticals Ltd’s (Company) current compliance
with the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations (Fourth
Edition) (ASX Principles and Recommendations). The
ASX Principles and Recommendations are not mandatory.
However, this corporate governance statement discloses
the extent to which the Company has followed the
ASX Principles and Recommendations. This corporate
governance statement is current as at 29 September
2023 and has been approved by the board of the
Company (Board).
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1: Lay solid foundations for management and oversight
1.1 A listed entity should have and disclose a
YES
board charter setting out:
The Board is responsible for the corporate
governance of the Company.
(a) the respective roles and responsibilities of its
YES
board and management; and
(b) those matters expressly reserved to the board
YES
and those delegated to management.
1.2 A listed entity should:
(a) undertake appropriate checks before
YES
appointing a director or senior executive, or
putting someone forward for election as a
director; and
The Board has adopted a Board Charter which
outlines the manner in which its powers and
responsibilities will be exercised, discharged or
delegated, having regard to principles of good
corporate governance and applicable laws.
A copy of the Board Charter is available on the
Company’s website at the following URL: https://
www.recce.com.au/index.php/company/corporate-
governance.
(a) The Nomination and Remuneration Committee
is responsible for recommendations to the
Board for the selection and appointment
of members of the Board. The Company’s
Nomination and Remuneration Committee
Charter requires the Nomination and
Remuneration Committee to undertake
appropriate checks before the Board appoints
a person or puts forward a candidate to
security holders for election as a director.
(b) provide security holders with all material
information in its possession relevant to a
decision on whether or not to elect or re-elect
a director.
YES
(b) All material information relevant to the decision
on whether or not to elect any potential
directors, including information relating to their
qualifications, experience and proposed roles
within the Board are provided to shareholders
in the Company’s notices of meetings.
1.3 A listed entity should have a written
YES
agreement with each director and senior
executive setting out the terms of their
appointment.
1.4 The company secretary of a listed entity
YES
should be accountable directly to the board,
through the chair, on all matters to do with the
proper functioning of the board.
The Company Secretary position is directly
accountable to the Board through the Chairperson
on all matters relevant to the proper functioning
of the Board. The Company Secretary is accessible
to all Directors.
The Company Secretary position is directly
accountable to the Board through the Chairperson
on all matters relevant to the proper functioning
of the Board. The Company Secretary is accessible
to all Directors.
29
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1.5 A listed entity should:
(a) Have and disclose a diversity policy which
NO
(a) The Company has adopted a Diversity Policy
includes requirements for the board or a
relevant committee of the board to set
measurable objectives for achieving gender
diversity and to assess annually both the
objectives and the entity’s progress in
achieving them;
which complies with the guidelines prescribed
by the ASX Corporate Governance Council. The
Diversity Policy is available on the Company’s
website at https://www.recce.com.au/index.
php/company/corporate-governance.
(b) through its board or a committee of the
NO
(b) The Diversity Policy:
(i) provides a framework for the Company
to set and achieve measurable objectives
for achieving diversity;
(ii) provides for the monitoring and evaluation
of the scope and currency of the Diversity
Policy. The Company is responsible for
implementing, monitoring and reporting
on the measurable objectives.
A copy of the Diversity Policy is available
on the Company’s website at: https://
www.recce.com.au/index.php/company/
corporate-governance.
(c) As of 30 June 2023, the respective proportions
of men and women on the Board, in Senior
Executive positions and across the whole
organisation are set out below:
(i) 5 Directors of the Company’s Board were
male and 1 female;
(ii) 57% of the Company’s Senior Executives
were male and 43% were female; and
(iii) 44% of the Group’s entire workforce
(including Board members) were female
and 56% were male.
Senior Executives are defined as the Executive
Directors and those with a direct report into
the CEO.
board set measurable objectives for achieving
gender diversity in the composition of its
board, senior executives and workforce
generally; and
(c) disclose in relation to each reporting period:
NO
(1) the measurable objectives set for that
period to achieve gender diversity;
(2) the entity’s progress towards achieving
those objectives; and
(3) either:
A. the respective proportions of men
and women on the board, in senior
executive positions and across the
whole workforce (including how the
entity has defined ‘senior executive’
for these purposes); or
B.
if the entity is a ‘relevant employer’
under the Workplace Gender Equality
Act, the entity’s most recent ‘Gender
Equality Indicators’, as defined in and
published under that Act.
If the entity was in the S&P/ASX 300 Index at
the commencement of the reporting period,
the measurable objective for achieving gender
diversity in the composition of its board
should be to have not less than 30% of its
directors of each gender within a specified
period.
30
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued
ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
1.6 A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
YES
(a) The Nomination and Remuneration Committee
is responsible for evaluating the performance
of the Board and individual Directors on an
annual basis. The process for this is set out in
the Company’s Nomination and Remuneration
Committee Charter which is available on the
Company’s website at: https://www.recce.com.
au/index.php/company/corporate-governance.
(b) disclose, for each reporting period, whether a
performance evaluation has been undertaken
in the reporting period in accordance with that
process during or in respect of that period.
YES
(b) An informal evaluation of the performance of
the board, its committees and its individual
Directors was conducted in relation to the
reporting period.
1.7 A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of its senior
executives at least once every reporting
period; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation has
been undertaken in the reporting period in
accordance with that process during or in
respect of that period.
YES
(a) The Nomination and Remuneration Committee
is responsible for evaluating the performance
of Senior Executives on an annual basis in
accordance with the Company’s Nomination
and Remuneration Committee Charter which
is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
YES
(b) An evaluation of the Company’s Senior
Executives was conducted in relation to the
reporting period.
31
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2: Structure the Board to be effective and add value
2.1 The board of a listed entity should:
(a) have a nomination committee which:
YES
(1) has at least three members, a majority
of whom are independent directors;
and
The Company has established a Nomination and
Remuneration Committee with Dr Alan Dunton, an
independent Director, as Chair of the Committee.
The Committee has three members, who are:
(2) is chaired by an independent director,
(a) Dr Alan Dunton – Independent Non-executive
and disclose:
Director;
(3) the charter of the committee;
(b) Dr John Prendergast – Executive Director; and
(4) the members of the committee; and
(c) Alistair McKeough – Independent Non-
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a nomination committee,
N/A
disclose that fact and the processes it employs
to address board succession issues and to
ensure that the board has the appropriate
balance of skills, knowledge, experience,
independence and diversity to enable it
to discharge its duties and responsibilities
effectively.
2.2 A listed entity should have and disclose a
YES
board skills matrix setting out the mix of skills
and diversity that the Board currently has or is
looking to achieve in its membership.
executive Director.
The Committee met 4 times during the FY23
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Dr Alan Dunton – 4;
(b) Dr John Prendergast – 4 ; and
(c) Alistair McKeough – 3.
A copy of the Nomination and Remuneration
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
The Board strives to ensure that it is comprised
of Directors with a blend of skills, experience and
attributes appropriate for the Company and its
business. The Company has a board skills matrix,
setting out the mix of skills and diversity of the
current Directors of the Company. A copy of the
Board Skills Matrix is available on the Company
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
32
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2.3 A listed entity should disclose:
(a) the names of the directors considered by
the board to be independent directors;
YES
(a) Dr Alan Dunton and Alistair McKeough, are
the only Directors of the Company considered
independent.
(b) if a director has an interest, position,
YES
(b) Dr Alan Dunton and Alistair McKeough,
association or relationship of the type
described in Box 2.3 but the board is of the
opinion that it does not compromise the
independence of the director, the nature of the
interest, position, association or relationship in
question and an explanation of why the board
is of that opinion; and
are the only two Directors of the Company
considered independent and do not have an
interest, position, association or relationship
of the type described in Box 2.3 of the ASX
Principles and Recommendations. The Board
assesses the independence of new Directors
upon appointment and reviews Director
independence as appropriate.
(c) the length of service of each director.
YES
(c) The date of appointment of each Director is
2.4 A majority of the board of a listed entity
NO
should be independent directors.
as follows:
• Dr John Prendergast – appointed on 23-04-
2018;
• James Graham – appointed on 23-06-2015;
• Michele Dilizia – appointed on 26-06-2015;
• Dr Justin Ward – appointed on 08-07-2019;
• Dr Alan Dunton – appointed on 14-07-2020;
and
• Alistair McKeough – appointed on 01-09-2022.
The Board Charter requires that where practical
the majority of the Board will be independent.
The Board currently comprises a total of six Directors,
of whom two are considered to be independent,
being Dr Alan Dunton and Alistair McKeough.
The Board does not currently consider an
independent majority of the Board to be
appropriate given:
(a) the magnitude of the Company’s operations;
and
(b) the relevant skills and experience of Ms Dilizia,
Dr Dunton, Mr Graham, Mr McKeough, Dr
Prendergast and Dr Ward mean that the Board
is appropriately skilled at this stage, to further
the progress and development of the Company.
2.5 The chair of the board of a listed entity should
NO
be an independent director and, in particular,
should not be the same person as the CEO of
the entity.
The Company’s Executive Chairman,
Dr Prendergast, does not satisfy the ASX
Principles and Recommendations definition
of an independent director. Mr James Graham
is the CEO of the Company.
33
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
2.6 A listed entity should have a program for
YES
inducting new directors and for periodically
reviewing whether there is a need for
existing directors to undertake professional
development to maintain the skills and
knowledge needed to perform their role as
directors effectively.
The Nomination and Remuneration Committee
is responsible to the Board for reviewing and
recommending to the Board induction and
professional development programs and
procedures for Directors to ensure that they can
effectively discharge their responsibilities.
As a result, the Company has in place a program
for the induction of new Directors which is tailored
to each new Director depending on their personal
requirements, background skills, qualifications
and experience and includes the provision of a
formal letter of appointment and an induction
pack containing sufficient information to allow
the new Director to gain an understanding of the
business of the Company, and the roles, duties and
responsibilities of Directors and the Executive Team.
All Directors are encouraged to undergo continual
professional development and, subject to prior
approval by the Chairman, all Directors have
access to numerous resources and professional
development training to address any skills gaps
3: Instill a culture of acting lawfully, ethically and responsibly
3.1 A listed entity should articulate and disclose
YES
The Company values are:
its values.
3.2 A listed entity should:
(a) have and disclose a code of conduct for its
directors, senior executives and employees;
and
YES
(a) Integrity;
(b) Inclusivity;
(c) Innovation;
(d) Respect; and
(e) Accountability.
The Company values are published on the
Company’s website at: https://www.recce.com.au/
index.php/company/corporate-governance.
(a) The Board is committed to the establishment
and maintenance of appropriate ethical
standards in order to instil confidence in
both clients and the community in the way
the Company conducts its business. These
standards are encapsulated in the Code of
Conduct which outlines how the Company
expects each person who represents it to
behave and conduct business. The Company
has a Code of Conduct which applies to all
Directors, senior executives and employees
and is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or a committee of the
YES
(b) The Company ensures that the Board is
board is informed of any material breaches of
that code.
informed of any material breaches under the
Code of Conduct Policy.
34
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
3.3 A listed entity should:
(a) have and disclose a whistleblower policy; and
YES
(a) The Company has adopted a Whistleblower
Protection Policy which establishes a system
for the reporting, investigation and rectification
of wrongdoing. A copy of the Whistleblower
Policy is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or a committee of the
YES
(b) Through ongoing reporting, whilst preserving
board is informed of any material incidents
reported under that policy.
confidentiality, the Board is provided
periodic reports on any disclosures under the
Whistleblower Policy.
3.4 A listed entity should:
(a) have and disclose an anti-bribery and
YES
corruption policy; and
(a) The Company has adopted an Anti-bribery
and Corruption Policy which sets out the
Company’s policy in relation to bribery,
corruption and related improper conduct and
establishes a process for the reporting of such
conduct. The Anti-bribery and Corruption
Policy is available on the Company’s website at:
https://www.recce.com.au/index.php/company/
corporate-governance.
(b) ensure that the board or committee of the
YES
(b) Through on-going reporting, the Company
board is informed of any material breaches
of that policy.
ensures that the Board is informed of any
material breaches under the Anti-bribery and
Corruption Policy.
35
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 4: Safeguard the integrity of corporate reports
ASX PRINCIPLES AND RECOMMENDATIONS
4.1 The board of a listed entity should:
COMPLY
(Yes/No)
EXPLANATION
(a) have an audit committee which:
NO
(1) has at least three members, all of whom
are non-executive directors and a majority
of whom are independent directors; and
(2) is chaired by an independent director, who
is not the chair of the board, and disclose:
(3) the charter of the committee;
(4) the relevant qualifications and experience
of the members of the committee; and
(5) in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have an audit committee,
N/A
disclose that fact and the processes it employs
that independently verify and safeguard
the integrity of its corporate reporting,
including the processes for the appointment
and removal of the external auditor and the
rotation of the audit engagement partner.
4.2 The board of a listed entity should, before
YES
it approves the entity’s financial statements
for a financial period, receive from its
CEO and CFO a declaration that, in their
opinion, the financial records of the entity
have been properly maintained and that
the financial statements comply with the
appropriate accounting standards and give
a true and fair view of the financial position
and performance of the entity and that the
opinion has been formed on the basis of
a sound system of risk management and
internal control which is operating effectively.
The Company has established an Audit and Risk
Management Committee with Alistair McKeough,
an independent Director, as Chair of the
Committee. The Committee has three members,
who are:
(a) Alistair McKeough – Independent Non-
executive Director;
(b) Dr Alan Dunton – Independent Non-executive
Director; and
(c) Dr John Prendergast – Executive Director.
The Committee met 5 times during the FY23
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Mr Alistair McKeough – 4;
(b) Dr Alan Dunton – 5;
(c) Dr John Prendergast – 5.
A copy of the Audit and Risk Management
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
Prior to the execution of the financial statements
of the Company, the Company’s Executive
Director and CFO provided the Board with
written assurances that the declaration provided
in accordance with section 295A of the
Corporations Act is founded on a sound system
of risk management and internal controls which
is operating effectively in all material aspects in
relation to the Company’s financial reporting risks.
36
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued ASX PRINCIPLES AND RECOMMENDATIONS
4.3 A listed entity should disclose its process to
verify the integrity of any periodic corporate
report it releases to the market that is not
audited or reviewed by an external auditor.
COMPLY
(Yes/No)
YES
5: Make timely and balanced disclosure
5.1 A listed entity should have and disclose
YES
a written policy for complying with its
continuous disclosure obligations under
listing rule 3.1.
EXPLANATION
The Board ensures that any periodic corporate
report the Company releases to the market that
has not been subject to audit or review by an
external auditor discloses the process taken to
verify the integrity of its content.
The Company releases Half Year Financial Reports
which are reviewed by external auditor, BDO, and
Full Year Financial Reports which are audited by
external auditor BDO.
The Company is committed to providing clear,
concise and effective disclosure in its corporate
reports. The Company’s goal is that periodic
corporate reports will be accurate, balanced and
provide investors with appropriate information
to make informed investment decisions. The
Company’s process for verifying unaudited periodic
corporate reports is as follows:
• reports are prepared by or under the supervision
of subject matter experts;
• material statements in the reports are reviewed
for accuracy and material requirements and
appropriately interrogated;
• other than administrative announcements all the
announcements must be approved by the Board.
This process is intended to ensure that all
applicable laws, regulations and company policies
have been complied with and that the source of
the information is able to be verified and that
appropriate approvals have been obtained before a
report is released to the market.
The Company is committed to providing timely,
complete and accurate disclosure of information
to allow a fair and well-informed market in its
securities and compliance with the continuous
disclosure requirements imposed by law, including
the Corporations Act and the ASX Listing Rules.
A copy of the Company’s Continuous Disclosure
Policy is available at: https://www.recce.com.au/
index.php/company/corporate-governance.
5.2 A listed entity should ensure that its board
receives copies of all material market
announcements promptly after they have
been made.
YES
The Company ensure that the Board receives
copies of all material market announcements
promptly after they have been made.
5.3 A listed entity that gives a new and
YES
substantive investor or analyst presentation
should release a copy of the presentation
materials on the ASX Market Announcements
Platform ahead of the presentation.
The Company ensure that ahead of any new and
substantive investor or analyst presentations, a
copy of the presentations materials are released
to ASX Announcement Platform.
37
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
6: Respect the rights of security holders
6.1 A listed entity should provide information
YES
about itself and its governance to investors
via its website.
6.2 A listed entity should have an investor
YES
relations program that facilitates effective
two-way communication with investors.
The Company provides information about itself and
its governance to its investors on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
The Company will regularly update the website and
contents therein as deemed necessary.
The Company has adopted a Shareholder
Communications Strategy which aims to promote
and facilitate effective two-way communication
with its investors. The Strategy outlines a range
of ways in which information is communicated to
shareholders.
A copy of the Company’s Shareholder
Communications Strategy policy is available on the
Company’s website at: https://www.recce.com.au/
index.php/company/corporate-governance.
6.3 A listed entity should disclose how it facilitates
YES
and encourages participation at meetings of
security holders.
The Company encourages shareholder participate
at the Company’s general meetings through various
means including:
(a) having the opportunity to ask questions of
Directors at all general meetings;
(b) ensuring that the auditor is present at AGMs
to take shareholder questions on any issue
relevant to their capacity as auditor;
(c) ensuring that Directors are available to answer
shareholder questions submitted by telephone,
email and other means (where appropriate);
and
(d) providing Shareholders with the option of
appointing a proxy to vote on their behalf.
Traditionally, the key forum for two-way
communication between the Company and its
shareholders is its AGM.
All resolutions at a meeting of security holders are
decided by a poll rather than a show of hands.
Shareholders can register with the Company to
receive email notifications when an announcement
is made by the Company to the ASX.
Shareholders can also elect to receive electronic
communications via the Company’s registry,
Automic Registry Services.
6.4 A listed entity should ensure that all
YES
substantive resolutions at a meeting of
security holders are decided by a poll rather
than by a show of hands.
6.5 A listed entity should give security holders the
YES
option to receive communications from, and
send communications to, the entity and its
security registry electronically.
38
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
7: Recognise and manage risk
7.1 The Board of a listed entity should:
(a) have a committee or committees to oversee risk,
YES
each of which:
(1) has at least three members, a majority of
whom are independent directors; and
(2) is chaired by an independent director,
and disclose:
(3) the charter of the committee;
(4) the members of the committee; and
(5) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a risk committee or
N/A
committees that satisfy (a) above, disclose that
fact and the processes it employs for overseeing
the entity’s risk management framework.
The Company has established an Audit and Risk
Management Committee with Mr Alistair McKeough,
an independent Director, as Chair of the Committee.
The Committee has three members, who are:
(a) Alistair McKeough – Independent Non-executive
Director;
(b) Dr Alan Dunton – Independent Non-executive
Director; and
(c) Dr John Prendergast – Executive Chairman.
The Committee met 5 times during the FY23
financial reporting period and the attendance of
each member at those meetings is as follows:
(a) Mr Alistair McKeough – 4;
(b) Dr Alan Dunton – 5;
(c) Dr John Prendergast – 5.
A copy of the Audit and Risk Management
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
7.2 The board or a committee of the board should:
(a) review the entity’s risk management framework
at least annually to satisfy itself that it continues
to be sound and that the entity is operating with
due regard to the risk appetite set by the board;
and
YES
The Audit and Risk Management Committee Charter
sets out a requirement for the Audit and Risk
Management Committee to review the Company’s
risk management framework on an annual basis.
The Company monitors, evaluates and seeks to
improve its risk management and internal control
processes in line with the processes set out in its
Risk Management Policy, a copy of which is available
on the Company’s website at: https://www.recce.
com.au/index.php/company/corporate-governance.
In addition, the Company has a number of other
policies that directly or indirectly serve to reduce
and/or manage risk, including:
(i) Continuous Disclosure Policy;
(ii) Code of Conduct; and
(iii) Trading Policy.
39
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
ASX PRINCIPLES AND RECOMMENDATIONS
(b) disclose in relation to each reporting period,
whether such a review has taken place.
COMPLY
(Yes/No)
YES
EXPLANATION
The Audit and Risk Management Committee
completed such a review during the current reporting
period. Having conducted such reviews throughout
the reporting period the Audit and Risk Management
Committee resolved that the Company’s risk
management framework continues to be sound.
7.3 A listed entity should disclose:
(a) if it has an internal audit function, how
YES
N/A
the function is structured and what role it
performs; or
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating
and continually improving the effectiveness of
its governance, risk management and internal
control processes.
YES
7.4 A listed entity should disclose whether it has
YES
any material exposure to environmental or
social risks and, if it does, how it manages or
intends to manage those risks.
8: Remunerate fairly and responsibly
8.1 The Board of a listed entity should:
The Audit and Risk Management Committee
Charter provides for the Audit and Risk
Management Committee to monitor the need for
an internal audit function. At this stage, due to the
current size and nature of the existing Board and
the magnitude of the Company’s operations the
Company does not have an internal audit function.
The Company has adopted a Risk Management
Policy which the Company follows. The Board of
the Company and the Audit and Risk Management
Committee will periodically review the Company’s
operations to evaluate the effectiveness of risk
management and internal control processes of
the Company. In addition, the Audit and Risk
Management Committee will directly monitor the
potential exposures facing the Company through
ongoing reporting by the CFO.
For each reporting period the Company’s external
auditor also conducts a control review to consider
and report on the risks facing the Company and
the controls the Company has in place to mitigate
those risks
All material risks to economic, environmental and
social sustainability risks will be announced to the
market, in accordance with the requirements of the
ASX Listing Rules and otherwise within the Annual
Report.
(a) (1) have a remuneration committee which:
has at least three members, a majority
of whom are independent directors; and
YES
The Company has established a Nomination and
Remuneration Committee with Dr Alan Dunton, an
independent Director, as Chair of the Committee.
(2) is chaired by an independent director,
The Committee has three members, who are:
and disclose:
(a) Dr Alan Dunton – Independent Non-executive
(3) the charter of the committee;
Director;
(4) the members of the committee; and
(b) Alistair McKeough – Independent Non-
executive Director; and
40
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Corporate Governance Statement Continued ASX PRINCIPLES AND RECOMMENDATIONS
COMPLY
(Yes/No)
EXPLANATION
(5) as at the end of each reporting period,
the number of times the committee
met throughout the period and
the individual attendances of the
members at those meetings; or
(c) Dr John Prendergast – Executive Chairman.
The Committee met 4 times during the FY23
financial reporting period and the attendance of
each member at those meetings is as follows:
(b) if it does not have a remuneration
N/A
committee, disclose that fact and the
processes it employs for setting the level and
composition of remuneration for directors
and senior executives and ensuring that such
remuneration is appropriate and not excessive.
8.2 A listed entity should separately disclose
YES
its policies and practices regarding the
remuneration of non-executive directors and
the remuneration of executive directors and
other senior executives.
8.3 A listed entity which has an equity-based
remuneration scheme should:
(a) have a policy on whether participants are
YES
permitted to enter into transactions (whether
through the use of derivatives or otherwise)
which limit the economic risk of participating
in the scheme; and
(b) disclose that policy or a summary of it.
YES
(a) Dr Alan Dunton – 4;
(b) Dr John Prendergast – 4; and
(c) Mr Alistair McKeough – 3.
A copy of the Nomination and Remuneration
Committee Charter is available on the Company’s
website at: https://www.recce.com.au/index.php/
company/corporate-governance.
The structure and details of Directors’ remuneration
is disclosed in the 2023 Annual Report.
The Company’s Nomination and Remuneration
Committee is responsible for the review and
recommendation to the Board of any equity-based
remuneration schemes offered to Directors and
employees of the Company. Further, in accordance
with the Nomination and Remuneration Committee
Charter, the Nomination and Remuneration
Committee is also responsible for recommending,
on a case by case basis, for scheme participants to
enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic
risk of participating in the Scheme.
The Company’s policy in this regard is set out
in the Company’s Nomination and Remuneration
Committee Charter, a copy of which is available on
the Company’s website at: https://www.recce.com.
au/index.php/company/corporate-governance.
41
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Consolidated Statement of
Profit or Loss and Other Comprehensive Income
For the year ended 30 June 2023
OTHER INCOME
EXPENSES
Laboratory expenses
Employee benefits expenses
Share-based payments expense
Depreciation and amortisation expenses
Travel expenses
Patent related costs
Rental outgoings expenses
Finance costs
Other expenses
Amortisation: Leases
Interest expense: Leases
Advertising and marketing
Note
5
6
23
13
6
6
14
2023
$
2022
$
4,431,406
3,175,953
(7,167,133)
(3,610,301)
(325,217)
(47,039)
(962,910)
(162,684)
(176,994)
(172,623)
(6,223,502)
(2,031,393)
(256,487)
(48,499)
(484,281)
(61,994)
(85,127)
(2,416)
(3,585,001)
(3,825,574)
(170,116)
(10,642)
(1,118,168)
(17,508,828)
(139,173)
(9,510)
(994,274)
(14,162,230)
LOSS BEFORE INCOME TAX
(13,077,422)
(10,986,277)
Income tax expense
LOSS FOR THE YEAR
8
–
–
(13,077,422)
(10,986,277)
Other comprehensive income for the year
–
–
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(13,077,422)
(10,986,277)
LOSS PER SHARE ATTRIBUTABLE TO THE OWNERS OF RECCE PHARMACEUTICALS:
Basic loss per share for the year
Diluted loss per share for the year
9
9
(7.52)
(7.52)
(6.31)
(6.31)
Cents
Cents
The above consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
42
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Consolidated Statement of
Financial Position
As at 30 June 2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right of use asset
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions for employee benefits
Other provisions
Lease Liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions for employee benefits
Lease Liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2023
$
2022
$
10
11
12
13
14
15
16
17
18
16
18
19
20
1,561,579
90,667
295,213
1,947,459
362,837
245,573
608,410
11,581,934
182,474
420,334
12,184,742
371,243
67,537
438,780
2,555,869
12,623,522
4,319,719
299,201
83,054
147,878
752,013
202,548
1,417,527
74,762
4,849,852
2,446,850
192,133
102,688
294,821
115,312
–
115,312
5,144,673
2,562,162
(2,588,804)
10,061,358
44,111,963
8,834,557
43,968,321
8,550,939
(55,535,324)
(42,457,902)
(2,588,804)
10,061,358
The above consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
43
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2023
BALANCE AT 1 JULY 2021
43,297,310
8,678,057
(31,471,625)
20,503,742
Share
Capital
$
Reserves
$
Accumulated
Losses
$
Total
$
COMPREHENSIVE INCOME:
Loss for the year
Other comprehensive loss
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS:
Options issued to KMPs and employees
Conversion of option into ordinary shares
Transfer from reserve to share capital
–
–
–
–
–
–
(10,986,277)
(10,986,277)
–
–
(10,986,277)
(10,986,277)
–
256,487
287,406
383,605
671,011
–
(383,605)
(127,118)
–
–
–
–
256,487
287,406
–
543,894
BALANCE AT 30 JUNE 2022
43,968,321
8,550,939
(42,457,902)
10,061,358
BALANCE AT 1 JULY 2022
43,968,321
8,550,939
(42,457,902)
10,061,358
COMPREHENSIVE INCOME:
Loss for the year
Other comprehensive loss
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS:
Options issued to KMPs and employees
Conversion of options into ordinary shares
Transfer from reserve to share capital
–
–
–
–
102,043
41,599
143,642
–
–
–
(13,077,422)
(13,077,422)
–
–
(13,077,422)
(13,077,422)
325,217
–
(41,599)
283,618
–
–
–
–
325,217
102,043
–
427,260
BALANCE AT 30 JUNE 2023
44,111,963
8,834,557
(55,535,324)
(2,588,804)
The above consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
44
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Consolidated Statement of
Cash Flows
For the year ended 30 June 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from Australian Taxation Office
Payments to suppliers and employees
Interest received
Other income
Other (legal dispute settlement)
Note
2023
$
2022
$
4,311,202
(15,694,642)
59,583
54,014
(1,417,527)
3,084,955
(12,174,716)
79,498
–
–
NET CASH USED IN OPERATING ACTIVITIES
21
(12,687,370)
(9,010,263)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to directors
Repayment of lease liabilities
Proceeds from exercise of options
Proceeds from borrowings
NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES
24
(38,633)
(38,633)
(40,345)
(40,345)
(104,388)
(170,116)
102,043
2,878,107
2,705,647
(388,734)
(139,173)
287,408
–
(240,499)
Net (decrease)/increase in cash and cash equivalents held
(10,020,355)
(9,291,106)
Cash and cash equivalent at the beginning of the year
11,581,934
20,873,040
CASH AND CASH EQUIVALENTS AT END OF THE YEAR
10
1,561,579
11,581,934
The above consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
45
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
1: Corporate Information
The consolidated financial statements of Recce
Pharmaceuticals Ltd (‘the Company’) and together
with its controlled entities (‘the Group’) for the year
ended 30 June 2023.
The Company is a company limited by shares
incorporated in Australia whose shares are publicly
traded on the Australian Securities Exchange (ASX: RCE)
and the Frankfurt Stock Exchange (FSE: R9Q).
2: Significant Accounting Policies
(a) New or amended Accounting Standards and
Interpretations adopted
The Company has adopted all of the new or amended
Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (AASB) that
are mandatory for the current reporting period.
Any new or amended Accounting Standards or
Interpretations that are not yet mandatory have not
been early adopted.
(b) Basis of Preparation of the Financial Report
The consolidated financial statements are general
purpose financial statements which have been prepared
in accordance with Australian Accounting Standards,
other authoritative pronouncements of the Australian
Accounting Standards Board and the Corporations
Act 2001.
The financial statements comprise the consolidated
financial statements of the Group. For the purposes of
preparing the consolidated financial statements, the
Company is a for profit entity.
Accounting Standards include Australian Accounting
Standards. Compliance with Australian Accounting
Standards ensures that the consolidated financial
statements and notes of the Company and the Group
comply with International Financial Reporting Standards
(IFRS).
The consolidated financial statements have been
prepared in accordance with the significant accounting
policies disclosed below as adopted by the Group. Such
accounting policies are consistent with the previous year
unless stated otherwise.
The consolidated financial statements have been
prepared on an accrual basis and are based on historical
costs, except for the Consolidated Statement of Cash
Flows.
Historical cost is generally based on the fair values of the
consideration given in exchange for goods and services.
All amounts are presented in Australian dollars, unless
otherwise stated.
(c) Basis of Consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights
to, variable returns from its involvement with the entity
and has the ability to affect those returns through its
power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from
the date that control ceases.
Intercompany transactions, balances and unrealised
gains on transactions between the Group are eliminated.
Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the
transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency
with the policies adopted by the Group.
(d) Foreign Currency Translation
The individual financial statements of each Group entity
are presented in the currency of the primary economic
environment in which the entity operates (its functional
currency). For the purpose of the consolidated financial
statements, the results and financial position of the
Group are expressed in Australian dollars, which is the
functional currency of the Company and the presentation
currency for the consolidated financial statements.
Foreign currency transactions are translated into the
functional currency using 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 end of the reporting year.
Foreign exchange gains and losses resulting from settling
foreign currency transactions, as well as from restating
foreign currency denominated monetary assets and
liabilities, are recognised in profit or loss.
Foreign exchange gains and losses are presented in
profit or loss on a net basis within other income or other
expenses, unless they relate to borrowings, in which case
they are presented as part of finance costs.
Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the
date when fair value was measured.
The functional currency of the subsidiaries is United
States Dollars and British Pounds. At the end of the
reporting year, the assets and liabilities of these overseas
subsidiaries are translated into the presentation currency
of Recce Pharmaceuticals Ltd at the closing rate at the
end of the reporting year and income and expenses are
translated at the weighted average exchange rates for the
year. All resulting exchange differences are recognised in
other comprehensive income as a separate component of
equity (foreign currency translation reserve). On disposal
of a foreign entity, the cumulative exchange differences
recognised in foreign currency translation reserves
relating to that particular foreign operation is recognised
in profit or loss.
46
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 (e) Revenue Recognition
Interest Income
Revenue is recognised as interest accrues using the
effective interest method. The effective interest method
uses the effective interest rate which is the rate that
exactly discounts the estimated future cash receipts over
the expected life of the financial asset.
Research and Development (R&D) Tax Incentive
R&D tax incentives from the government (both Australian
and overseas) are recognised when received or when the
right to receive payment is established.
(f) Income Tax
The income tax expense for the year is the tax payable
on the current year's taxable income based on the
national income tax rate for each jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable
to temporary differences between the tax base of assets
and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for all
temporary differences, between carrying amounts of
assets and liabilities for financial reporting purposes
and their respective tax bases, at the tax rates expected
to apply when the assets are recovered or liabilities
settled, based on those tax rates which are enacted or
substantively enacted for each jurisdiction. Exceptions
are made for certain temporary differences arising on
initial recognition of an asset or a liability if they arose
in a transaction, other than a business combination,
that at the time of the transaction did not affect either
accounting profit or taxable profit.
Deferred tax assets are only recognised for deductible
temporary differences and unused tax losses if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses. Deferred
tax assets and liabilities are not recognised for temporary
differences between the carrying amount and tax bases
of investments in subsidiaries, associates and joint
ventures where the parent entity is able to control the
timing of the reversal of the temporary differences and
it is probable that the differences will not reverse in the
foreseeable future.
Current and deferred tax balances relating to amounts
recognised directly in other comprehensive income
and equity are also recognised directly in other
comprehensive income and equity, respectively.
The Company and its wholly-owned subsidiaries have
implemented the tax consolidation legislation for the
whole of the financial year. The Company is the head
entity in the tax consolidated group. These entities are
taxed as a single entity and deferred tax assets and
liabilities have been offset in these consolidated financial
statements.
(g) Impairment of Non-Financial Assets
At the end of each reporting year the Group assesses
whether there is any indication that individual assets are
impaired. Where impairment indicators exist, recoverable
amount is determined and impairment losses are
recognised in profit or loss where the asset's carrying
value exceeds its recoverable amount. Recoverable
amount is the higher of an asset's fair value less costs of
disposal and value in use. For the purpose of assessing
value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time
value of money and the risks specific to the asset.
(h) Cash and Cash Equivalents
For the purposes of the Statement of Cash Flows, cash
and cash equivalents includes cash on hand and at bank,
deposits held at call with financial institutions, other short
term, highly liquid investments with 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 and bank overdrafts.
(i) Fair Values
Fair values may be used for financial asset and liability
measurement as well as for sundry disclosures.
Fair value is 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. It is based on the presumption that
the transaction takes place either in the principal market
for the asset or liability or, in the absence of a principal
market, in the most advantageous market. The principal
or most advantageous market must be accessible to, or
by, the Group.
Fair value is measured using the assumptions that market
participants would use when pricing the asset or liability,
assuming that market participants act in their best
economic interest.
The fair value measurement of a non-financial asset takes
into account the market participant's ability to generate
economic benefits by using the asset at its highest and
best use or by selling it to another market participant
that would use the asset at its highest and best use. In
measuring fair value, the group uses valuation techniques
that maximise the use of observable inputs and minimise
the use of unobservable inputs.
(j) Trade and Other Receivables
The Group makes use of a simplified approach in
accounting for trade and other receivables as well as
contract assets and records the loss allowance at the
amount equal to the expected lifetime credit losses. In
using this practical expedient, the Group uses its historical
experience, external indicators and forward looking
information to calculate the expected credit losses using
a provision matrix.
47
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 The Group has determined that the application of AASB
9 – Financial Instrument' s impairment requirements does
not have a material impact on receivables.
(k) Plant and Equipment
All plant and equipment is stated at historical cost,
including costs directly attributable to bringing the
asset to the location and condition necessary for it to
be capable of operating in the manner intended by
management, less depreciation and any impairments.
All plant and equipment is stated at historical cost,
including costs directly attributable to bringing the
asset to the location and condition necessary for it to
be capable of operating in the manner intended by
management, less depreciation and any impairments.
Depreciation on other assets is calculated on a reducing
balance basis over the estimated useful life, or in the case
of leasehold improvements and certain leased plant and
equipment, the shorter lease term, as follows:
– Certain laboratory machinery
and equipment
– Office improvements
10 – 15 years
3 – 8 years
Each class of plant and equipment is stated at historical
cost, including costs directly attributable to bringing
the asset to the location and condition necessary for it
to be capable of operating in the manner intended by
management, less depreciation and any impairments.
Depreciation
(n) Borrowings
All loans and borrowings are initially recognised at fair
value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference
between the proceeds (net of transaction costs) and the
redemption amount is recognised in profit or loss over
the year of the loans and borrowings using the effective
interest method.
Borrowings are derecognised from the statement of
financial position when the obligation specified in the
contract has been discharged, cancelled or expires. The
difference between the carrying amount of the borrowing
derecognised and the consideration paid is recognised in
profit or loss as other income or finance costs.
All borrowings are classified as current liabilities unless
the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the end of the
reporting year.
(o) Other Liabilities
Other liabilities comprises non-current amounts due to
related parties that do not bear interest and are repayable
within 365 days of the end of the reporting year. As these
are non-interest bearing, fair value at initial recognition
requires an adjustment to discount these loans using a
market-rate of interest for a similar instrument with a
similar credit rating (Group's incremental borrowing rate).
The discount is credited to profit or loss immediately and
amortised using the effective interest method.
Depreciation is calculated on a diminishing value basis
over the estimated useful life as follows:
(p) Employee Benefit Provisions
Short-term employee benefit obligations
Class of Fixed Asset
Depreciation Rate
– Laboratory machinery
and equipment
8% – 40%
– Office furniture and equipment
5% – 33%
– Computer equipment
– Library and website costs
33% – 67%
20% – 40%
The assets’ residual values and useful lives are reviewed
and adjusted, if appropriate, at the end of each reporting
year.
Gains and losses on disposals are calculated as the
difference between the net disposal proceeds and the
assets' carrying amount and are included in profit or loss
in the year that the item is derecognised.
(l) Research Expenditure
Research costs are expensed as incurred.
(m) Trade and Other Payables
Trade and other payables represent liabilities for goods
and services provided to the Group prior to the year end
and which are unpaid. These amounts are unsecured and
have 30-60 day payment terms. They are recognised
initially at fair value and subsequently measured at
amortised cost using the effective interest method.
Liabilities for wages and salaries, including non-monetary
benefits, annual leave and accumulating sick leave
expected to be settled wholly within 12 months after the
end of the reporting year are recognised in other liabilities
in respect of employees' services rendered up to the
end of the reporting year and are measured at amounts
expected to be paid when the liabilities are settled.
Liabilities for non-accumulating sick leave are recognised
when leave is taken and measured at the actual rates paid
or payable.
Other long-term employee benefits obligations
Liabilities for long service leave and annual leave are not
expected to be settled wholly within 12 months after the
end of the reporting year. They are recognised as part of
the provision for employee benefits and measured as the
present value of expected future payments to be made
in respect of services provided by employees to the end
of the reporting year. Consideration is given to expected
future salaries and wages levels, experience of employee
departures and years of service. Expected future
payments are discounted using Australian corporate
bond rates at the end of the reporting year with terms to
maturity and currency that match, as closely as possible,
the estimated future cash outflows.
48
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 Regardless of when settlement is expected to occur,
liabilities for long service leave and annual leave
are presented as current liabilities in the statement
of financial position if the entity does not have an
unconditional right to defer settlement for at least
12 months after the end of the reporting year.
(q) Provisions
Provisions are recognised when the group has a present
obligation as a result of a past event, the future sacrifice
of economic benefits is probable, and the amount of the
provision can be reliably estimated.
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at reporting date, taking into account the risks
and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the
present value of those cash flows.
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and the
amount of the receivable can be measured reliably.
(r) Contributed Equity
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares
are shown as a deduction from the equity proceeds, net
of any income tax benefit. Costs directly attributable
to the issue of new shares or options associated with
the acquisition of a business are included as part of the
purchase consideration.
(s) Share-Based Payments
Equity-settled and cash-settled share-based
compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares, that are provided to employees in
exchange for the rendering of services. Cash-settled
transactions are awards of cash for the exchange of
services, where the amount of cash is determined by
reference to the share price.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes
option pricing model that takes into account the exercise
price, the term of the option, the impact of dilution, the
share price at grant date and expected price volatility of
the underlying share, the expected dividend yield and the
risk free interest rate for the term of the option, together
with non-vesting conditions that do not determine
whether the consolidated entity receives the services that
entitle the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions are recognised
as an expense with a corresponding increase in equity
over the vesting period. The cumulative charge to profit
or loss is calculated based on the grant date fair value
of the award, the best estimate of the number of awards
that are likely to vest and the expired portion of the
vesting period. The amount recognised in profit or loss
for the period is the cumulative amount calculated at
each reporting date less amounts already recognised in
previous periods.
All changes in the liability are recognised in profit or loss.
The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in
determining fair value. Therefore any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition
is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised
over the remaining vesting period, unless the award is
forfeited.
If equity-settled awards are cancelled, it is treated as
if it has vested on the date of cancellation, and any
remaining expense is recognised immediately. If a new
replacement award is substituted for the cancelled award,
the cancelled and new award is treated as if they were a
modification.
(t) Earnings/(Loss) Per Share
Basic earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing
the profit/(loss) attributable to owners of the Company,
adjusted for the after-tax effect of preference dividends
on preference shares classified as equity, by the weighted
average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary
shares during the year.
Diluted earnings/(loss) per share
Earnings/(loss) used to calculate diluted earnings/(loss)
per share are calculated by adjusting the basic earnings/
(loss) by the after-tax effect of dividends and interest
associated with dilutive potential ordinary shares. The
weighted average number of shares used is adjusted for
the weighted average number of ordinary shares that
would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares.
49
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 (u) Goods and Services Tax (GST)
Revenues and expenses are recognised net of GST
except where GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of the expense item.
Receivables and payables are stated with the amount of
GST included. The net amount of GST recoverable from,
or payable to, the taxation authority is included as part
of receivables or payables in the statement of financial
position.
Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority
are classified as operating cash flows.
Commitments and contingencies are disclosed net
of the amount of GST recoverable from, or payable to,
the taxation authority.
(v) Accounting Standards Issued But Not Yet Effective
The AASB has issued a number of new and amended
Accounting Standards and Interpretations that have
mandatory application dates for future reporting years,
some of which are relevant to the Group. The Group has
decided not to early adopt any of the new and amended
pronouncements.
(w) Rounding of Amounts to Nearest Dollar
In accordance with ASIC Corporations (Rounding
of Financial/Directors' Reports) Instrument 2016/191,
the amounts in the consolidated financial statements
have been rounded to the nearest dollar.
(x) Critical Accounting Judgements and Key Sources
of Estimation Uncertainty
The preparation of the consolidated financial statements
requires management to make judgements, estimates
and assumptions that affect the reported amounts in
the consolidated financial statements. Management
continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements,
estimates and assumptions on historical experience and
on other various factors, including expectations of future
events, management believes to be reasonable under
the circumstances. The resulting accounting judgements
and estimates will seldom equal the related actual results.
The judgements, estimates and assumptions that have
a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities (refer to
the respective notes) within the next financial year are
discussed below.
Share-based payment transactions
The Company measures the cost of equity-settled
transactions with employees by reference to the fair value
of the equity instruments at the date at which they are
granted. The fair value is determined by using either the
Trinomial or Black-Scholes model taking into account
the terms and conditions upon which the instruments
were granted. The accounting estimates and assumptions
relating to equity-settled share-based payments would
have no impact on the carrying amounts of assets and
liabilities within the next annual reporting year but may
impact profit or loss and equity.
3: Going Concern
For the year ended 30 June 2023 the Group recorded a
loss of $13,077,422 (2022: $10,986,277) and had net cash
outflows from operating activities of $12,687,370 (2022:
$9,010,263). As at 30 June 2023, the Company had a
deficiency of total assets to total liabilities of $2,588,804
and a deficiency in working capital of
$2,902,393. The ability of the Group to continue as a
going concern and being able to continue to fund its
operating activities is dependent on securing additional
funding through a share placement to new or existing
investors and financial support through short-term loans,
together with continuous receipt of the R&D tax rebate.
These conditions indicate a material uncertainty that
may cast significant doubt about the Group's ability to
continue as a going concern and, therefore, that it may be
unable to realise its assets and discharge its liabilities in
the normal course of business.
The Directors believe there will be sufficient funds to
meet the Company’s working capital requirements. Based
on the success of current progress in the Group, it is
considered that re-financing through equity funds would
be well supported. Additional funds will be raised via share
placements and/or other financing options as required.
The financial statements have been prepared on the basis
that the Group is a going concern, which contemplates
the continuity of normal business activity, realisation of
assets and settlement of liabilities in the normal course of
business for the following reasons:
– As disclosed in Note 27, subsequent to year end, the
Company has raised $8 million before costs via a
placement and a further $2,715,272 via a pro-rata non-
renounceable entitlement offer;
– The Company believes it can raise additional funding
through debt or equity as required in the next twelve
months from the date of this financial report;
– The Company has a recent proven history of
successfully raising capital;
– Cash spending can be reduced or slowed below its
current rate if required; and
– The Company continually receiving its Australian R&D
tax rebates for R&D expenditure incurred in Australia
and overseas.
Should the Group not be able to continue as a going
concern, it may be required to realise its assets and
discharge its liabilities other than in the ordinary course
of business, and at amounts that differ from those stated
in the financial statements. The financial report does not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or liabilities that
might be necessary should the Group not continue as a
going concern.
50
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 4: Segment Reporting
(a) Reportable segments
The Directors have considered the requirements of AASB 8 Operating Segments and the internal reports that are
reviewed by the chief operating decision maker (the Board of Directors) in allocating resources and have concluded
that at this time there are no separate identifiable segments as the Group operates in only one business segment being
research and development of pharmaceutical drugs. However, the Group operates in three geographic segment being
Australia, UK and USA.
(b) Segment results
The following is an analysis of the Group’s results by reportable segments:
Australia
USA
UK
Central Administration
Segment revenue and other
income for the year
Segment loss after tax
for the year
2023
$
2022
$
2023
$
2022
$
4,340,868
2,835,787
(4,532,459)
(4,521,529)
58,470
32,068
–
317,158
23,008
(61,051)
(33,483)
(505,694)
(36,685)
–
(8,450,429)
(5,922,368)
4,431,406
3,175,953
(13,077,422)
(10,986,277)
The accounting policies of the reportable segments are the same as the Group’s accounting policies described in
Note 2. Segment loss represents the loss after tax incurred by each segment. This is the measure reported to the Board
of Directors for the purposes of resource allocation and assessment of segment performance.
(c) Segment assets and liabilities
Australia
Central Administration
There are no assets or liabilities in other countries.
(d) Segment net assets/(liabilities)
Australia
Central Administration
Segment assets
at end of the financial year
Segment liabilities
at end of the financial year
2023
$
314,837
2,241,033
2,555,869
2022
$
332,270
12,291,251
12,623,522
2023
$
374,716
4,769,957
5,144,673
2022
$
–
2,562,162
2,562,162
2023
$
2022
$
(59,879)
332,270
(2,528,924)
9,729,088
(2,588,804)
10,061,358
51
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
5: Revenue and Other Income
Other Income:
Research and Development (R&D) tax incentive
Interest income
Other income
Total other income
6: Expenses
Employee Benefits Expenses:
Salaries and wages
Superannuation expenses
Long service leave expenses
Payroll taxes
Total employee benefit expenses
Finance Costs:
Interest from short-term borrowings
Bank fees and charges
Total finance costs
Other Expenses:
Audit and review fees
Communication expenses
Computer maintenance and consumables
Consulting fees (Note 24)
Insurance expenses
Legal expenses
Legal dispute settlement (Note 17)
Listing and regulatory fees
Overseas listing and regulatory fees
Printing and stationery expenses
Roadshows and conferences
Sundry expenses
Total other expenses
Note
2023
$
2022
$
4,311,202
66,190
54,014
4,431,406
3,084,955
90,998
–
3,175,953
3,176,995
241,149
76,820
115,337
3,610,301
167,395
5,228
172,623
59,880
7,487
83,660
1,775,074
88,538
189,203
83,054
80,373
65,551
50,083
221,137
880,961
3,585,001
1,777,787
170,718
30,098
52,790
2,031,393
644
1,772
2,416
52,499
3,277
45,451
818,791
73,529
336,833
1,417,527
89,796
59,693
59,187
278,998
589,993
3,825,574
52
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
7: Auditor's Remuneration
During the year, the following fees were paid or payable for services to BDO Audit (WA) Pty Ltd (BDO) and its related
practices (also referred to hereafter as BDO, network firms of BDO and non BDO firms):
Audit services
– BDO for audit and review of the consolidated financial statements
59,880
52,499
2023
$
2022
$
Non-audit services
– BDO
8: Income Tax Expense
Loss before income tax
–
–
(13,077,422)
(10,986,277)
The prima facie tax on loss from ordinary activities before
income tax is reconciled to income tax as follows:
– Prima facie tax payable on loss from ordinary activities before
income tax at 30% (2022: 30%)
(3,923,227)
(3,295,883)
Add:
Non-allowable items:
– Share-based payments expense
– Expenses subject to R&D tax incentive
– Other non-allowable items
Less:
– Non assessable income
– Tax losses and deferred tax not recognised
97,565
2,622,292
55,033
(1,294,816)
2,443,153
76,946
2,666,723
115,198
(926,230)
1,363,246
Income tax attributable to the Group
–
–
Deferred tax attributable to the Group
Tax losses carried forward
Accruals and provisions
Blackhole expenses
Patents
6,445,746
183,666
294,573
–
3,379,191
99,848
382,663
–
6,923,985
3,861,702
Tax losses carried forward at 30 June 2023 total approximately $21,485,819 (2022 $13,039,568). The Group's ability to
use losses in the future is subject to the companies in the Group satisfying the Continuity of Ownership Test or failing
that, the Similar Business Test.
53
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
2023
$
2022
$
9: Loss Per Share
The following reflects the loss and share data used in the
calculations of basic and diluted losses per share:
Loss attributable to the members of the Company
(13,077,422)
(10,986,277)
Weighted average number of shares
Loss per share (cents per share):
173,978,170
173,978,170
174,133,576
174,133,576
Basic loss for the year attributable to the members of the Company
Diluted loss for the year attributable to the members of the Company
(7.52)
(7.52)
(6.31)
(6.31)
10: Cash and Cash Equivalents
Cash at bank
Cash on hand
1,561,579
–
1,561,579
11,581,494
440
11,581,934
Cash at bank and on hand bear floating interest rates between 0.75% and 3.75% depending on the amount on deposit.
Refer to Note 22 for additional risk exposure analysis.
11: Trade and Other Receivables
CURRENT
Sundry debtors
Net GST receivable
Refer to Note 22 for additional risk exposure analysis.
85
90,582
90,667
67,530
114,944
182,474
54
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
12: Other Current Assets
Prepayments
Rental deposits
Director loans
13: Plant And Equipment
Laboratory machinery and equipment
– at cost
– accumulated depreciation
Office furniture and equipment
– at cost
– accumulated depreciation
Computer equipment
– at cost
– accumulated depreciation
Office improvements
– at cost
– accumulated depreciation
Library
– at cost
– accumulated depreciation/amortisation
Website Development
– at cost
– accumulated depreciation/amortisation
Total plant and equipment
Note
24
2023
$
2022
$
135,377
47,000
112,836
295,213
559,825
(285,801)
274,024
66,461
(45,034)
21,427
73,504
(46,950)
26,554
78,646
(38,680)
39,966
4,379
(3,533)
846
2,797
(2,777)
20
362,837
–
20,100
400,234
420,334
542,153
(253,104)
289,049
64,232
(40,610)
23,622
54,772
(39,456)
15,316
78,646
(36,481)
42,165
4,379
(3,321)
1,058
2,797
(2,764)
33
371,243
55
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Reconciliations
Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current
and previous financial year are set out below:
Laboratory
machinery and
equipment
$
Office
furniture and
equipment
$
Computer
equipment
Office
improvements
$
$
Library and
website
costs
$
2023
Beginning of the year
Additions
Depreciation
End of the year
2022
Beginning of the year
Additions
Depreciation
End of the year
289,049
17,672
(32,697)
274,024
311,740
11,691
(34,382)
289,049
23,622
2,229
(4,424)
21,427
16,800
14,735
(7,913)
23,622
15,316
18,732
(7,494)
26,554
4,966
13,919
(3,569)
15,316
42,165
–
(2,199)
39,966
44,514
–
(2,349)
42,165
1,091
–
(225)
866
1,377
–
(286)
1,091
14: Right of Use Assets
Land and buildings – right-of-use
Less: Current year amortisation
2023
$
415,689
(170,116)
245,573
Total
$
371,243
38,633
(47,039)
362,837
379,397
40,345
(48,499)
371,243
2022
$
206,710
(139,173)
67,537
The Company leases land and buildings for its offices under agreements of between one to five years. On renewal, the
terms of the leases are renegotiated.
15: Trade and Other Payables
CURRENT
Unsecured liabilities
Trade payables
Employee related payables
Sundry creditors
Secured liabilities
R&D advances – Radium Capital
948,887
111,153
211,418
1,271,458
3,048,261
3,048,261
4,319,719
481,429
173,277
97,307
752,013
–
–
752,013
The above advances are secured against the R&D refunds due from the Australian Taxation Office (ATO). The advances
attract interest at rates of between 14 and 15 percent per annum and are repayable as soon as the ATO refund is
received.
56
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
16: Provisions for Employee Benefits
CURRENT
Unsecured liabilities
Annual leave
NON-CURRENT
Long service leave
17: Other Provisions
CURRENT
Provision for legal settlement
2023
$
2022
$
299,201
299,201
202,548
202,548
192,133
115,312
83,054
1,417,527
In 2022 an unfavourable judgement was handed down with respect to the non-issue of ordinary shares to holders
of 1,356,249 Class C Performance Shares and 1,356,249 Class D Performance Shares, despite the employee's tenure
having ended many years prior to the performance hurdles being achieved. After taking appropriate legal advice,
the directors appealed the decision. The appeal was subsequently lost resulting in a payment of $1,417,527 during the
current financial year. An additional $83,054 was paid subsequent to year end to cover the plaintiff's legal costs with
the matter now settled.
18: Lease Liabilities
CURRENT
Lease liability
NON-CURRENT
Lease liability
147,878
74,762
102,688
–
57
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
19: Share Capital
Movements in ordinary shares on issue:
Opening balance
Shares issued during the year:
– conversion of performance shares¹
– new shares issued on options exercised
– Transfer from reserves to share capital
Total²
2023
2022
No.
$
No.
$
177,646,910
43,968,321
173,777,847 43,297,309
–
–
2,712,498
383,605
607,400
607,400
102,043
1,156,565
287,407
102,043
3,869,063
671,012
–
–
41,599
41,599
–
–
–
–
178,254,310
44,111,963 177,646,910 43,968,321
1 Settlement of a dispute in relation to 1,356,249 of the Company's Class C Performance Shares and 1,356,249 Class D Performance
Shares resulted in the issue of 2,712,498 ordinary fully paid shares.
2 At 30 June 2023, 178,254,310 ordinary shares on issue were quoted on the ASX.
Options from shares issued
The following options remain outstanding at each respective reporting date:
Particulars
Issue Date
Exercise Date
Exercise Price
cents
Expiry Date
2023
No.
2022
No.
Options
Options
Options
Options
Options
Options
15-Feb-19
15-Feb-23
19-Dec-19
19-Feb-23
30-Sep-20
30-Sep-23
22-Feb-21
22-Feb-26
11-Feb-22
11-Feb-27
16.80
31.20
156.00
156.00
156.00
15-Feb-23
–
19-Dec-23
603,435
607,400
603,435
30-Sep-23
3,750,000
3,750,000
22-Feb-26
8,415,000
8,415,000
11-Feb-27
435,000
435,000
15-Nov-22
15-Nov-27
156.00
15-Nov-27
1,125,000
–
14,328,435
13,810,835
58
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
20: Reserves
Options reserve
(a) Options reserve
Note
20(a)
2023
$
2022
$
8,834,557
8,834,557
8,550,939
8,550,939
The options reserve is used to recognise the fair vale of options issued.
Movements of options reserve
At beginning of year
Options issued to KMPs and employees¹
Conversion of options into ordinary shares
At end of year
1 Refer to Note 23.
21: Cash Flow Information
Reconciliation of loss after income tax to net cash flow from operating activities:
Loss for the year
Adjustments and non-cash items:
– Depreciation and amortisation
– Share-based payments expense
– Accounting for lease assets and liabilities
Change in operating assets and liabilities
– Decrease/(Increase) in trade and other receivables
– Decrease/(Increase) in other current assets
– Increase in trade and other payables
– (Decrease)/Increase in provisions for employee benefits
– Increase/(Decrease) in other provisions
Net cash outflow from operating activities
Reconciliation of liabilities arising from financial activities:
8,550,939
325,217
(41,599)
8,834,557
8,454,275
256,487
(159,823)
8,550,939
(13,077,422)
(10,986,277)
47,039
325,217
170,116
91,807
233,884
766,042
173,474
(1,417,527)
48,499
256,487
139,173
63,010
43,810
112,610
(105,102)
1,417,527
(12,687,370)
(9,010,263)
Liabilities arising from financial activities are liabilities for which cash flows are, or will be, classified as ‘cash flows from
financial activities’ in the statement of cash flows. Changes in the carrying amounts of such liabilities, which comprise
the Radium loan and lease labilities are summarised below:
Carrying amount at 1 July 2021
Net cash flow during the year
New lease arrangements
Carrying amount at 30 June 2022
Net cash flow during the year
New lease arrangements
Carrying amount at 30 June 2023
*Net of accrued interest of $170,154
Radium Loan
Lease Liabilities
–
–
–
–
2,878,107
–
2,878,107*
126,949
(139,173)
86,986
74,762
(170,116)
345,920
250,566
59
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Non-cash transactions
During the financial year, the Group entered into the following non-cash financing transactions (which are not included
in the statement of the cash flows):
(a) The Group entered into new leases of commercial premises during the financial year resulting in the recognition
of additional lease assets of $208,979 and corresponding lease liabilities of $208,979 (2022: $59,868).
22: Financial Risk Management
The Group's activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest
rate risk), credit risk and liquidity risk. The Group'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 Group. The
Group uses different methods to measure and manage different types of risks to which it is exposed. These include
monitoring levels of exposure to interest rate and foreign exchange risk and assessments of markets forecasts for
interest rate and foreign exchange prices. Liquidity risk is monitored through the development of future cash flow
forecasts.
Risk management is carried out by Management and overseen by the Board of Directors.
The main risks arising for the Group are foreign exchange risk, interest rate risk, credit risk and liquidity risk. The
carrying values of the Group's financial instruments are as follows:
Financial Assets
At amortised cost
Director loan
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
At amortised cost
Trade payables and sundry creditors
R&D Advance
(a) Market Risk
(i) Foreign exchange risk
2023
$
2022
$
112,836
1,561,579
90,667
1,765,082
400,234
11,581,934
182,474
12,164,642
1,160,305
3,048,261
4,208,566
578,736
–
578,736
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the US dollar.
Foreign exchange risk arises from future commercial transactions denominated in a currency that is not the
Group's functional currency. Over the next 12 months the Group will enter into contracts with various research
organisations in the USA, Canada and Netherlands to perform numerous laboratory tests as well as use the services
of expert consultants in the USA, Canada and The Netherlands that will result in approximately USD $4.5 million and
CDN$250,000 in expenditure.
60
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
(ii) Interest Rate Risk
The Group is exposed to interest rate risk due to variable interest being earned on its interest-bearing bank accounts
and loans. The Group is also exposed to interest on its R&D advances. At the end of the reporting year, the Group had
the following interest-bearing financial instruments:
2023
2022
Weighted
average
1.33%
5.00%
14.34%
Balance
$
1,561,579
112,836
3,048,261
Weighted
average
0.60%
5.00%
0.00%
Balance
$
11,581,494
400,234
–
Cash and cash equivalents
Director loan
Radium Capital loan
(b) Credit Risk
Credit risk is the risk of financial loss to the Group if a counter party to a financial instrument fails to meet its
contractual obligations. During the year credit risk has principally arisen from the financial assets of the Group, which
comprises cash and cash equivalents and trade and other receivables. The Group's exposure to credit risk arises from
potential default of the counter party, with the maximum exposure equal to the carrying amount of the instruments.
The carrying amount of financial assets included in the Consolidated Statement of Financial Position represents the
Group's maximum exposure to credit risk in relation to those assets. The Group does not held any credit derivatives to
offset its credit exposure. The Group trades only with recognised and credit worthy third parties. Receivable balances
are monitored on an ongoing basis with the result that the Group does not have a significant exposure to bad debts.
The Group has no significant concentrations of credit risk within the Group except for the following:
Cash held with BankWest Bank
Cash held with National Australian Bank
Cash held with ME Bank
Cash held with American Express
Rating
AA-
AA-
BBB
N/A
2023
$
697,860
2
1,012,874
(149,157)
1,561,579
2022
$
1,948,305
2
9,651,138
(17,951)
11,581,494
The Group's primary banker is BankWest. The Board considers the use of this financial institution, which has a rating of
AA- from Standards and Poors, to be sufficient in the management of credit risk with regards to these funds.
(c) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due and to close out market positions.
The Directors and Management monitor the cash outflow of the Group on an on-going basis against budget and the
maturity profiles of financial assets and liabilities to manage its liquidity risk.
The financial liabilities the Group had at reporting date were trade payables, employee related payables, sundry
creditors, loan payables, R&D advance and lease liability incurred in the normal course of the business. Trade payables
were non-interest bearing and were deducted within the normal 30-60 day term of creditor payments.
61
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
The table below reflects the respective undiscounted cash flows for financial liabilities existing at end of reporting year:
Contractual maturities of
financial liabilities
<6
months
>6-12
months
>12 months
30 June 2023
Trade payables
Employee related payables
Sundry creditors
Lease liability
$
948,887
111,153
211,418
153,658
1,425,116
Total
contractual
cash flows
$
Carrying
amount
$
948,887
948,887
111,153
211,418
111,153
211,418
$
–
–
–
$
–
–
–
93,658
93,658
10,219
10,219
257,535
250,566
1,528,993
1,522,024
In addition to the above, there are advances from Radium Capital of $3,048,261. The advances attract interest at rates
of between 14 and 15 percent per annum and are repayable as soon as the ATO refund is received.
30 June 2022
Trade payables
Employee related payables
Sundry creditors
Lease liability
481,429
173,277
97,307
44,728
796,741
–
–
–
31,178
31,178
–
–
–
–
–
481,429
173,277
97,307
75,906
827,919
481,429
173,277
97,307
74,762
826,775
At 30 June 2023, the Group had sufficient cash to meet the financial liabilities as and when they are due and payables.
(d) Fair Value Hierarchy
Fair value of assets and liabilities approximaties carrying value given their short term nature.
62
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
23: Share-Based Payments
Share-based payments expense recognised during the financial year:
Issue of 44,444 shares to Arthur Kollaras
Issue of 107,733 shares to Spark Plus
Issue of 100,000 options to Daniel Astudillo¹
Issue of 75,000 options to Thomas Jarrett¹
Issue of 200,000 options to Arthur Kollaras¹
Issue of 30,000 options to Wendy Potts¹
Issue of 30,000 options to Julia Stanford¹
Issue of 1,125,000 options to Alistair McKeough²
Total share-based payments recognised through P&L
2023
$
2022
$
–
–
–
–
–
–
–
325,217
325,217
–
–
58,963
44,222
117,925
17,689
17,689
–
256,487
Fair value of share options granted to executive and employees
1 The fair value of the 435,000 Share Options was calculated using the Black-Scholes model. The assumptions used
in calculating the fair value of Share Options, were:
– exercise price: $1.56
– grant date 11 February 2022
– grant date share price: $1.15
– value per option at grant date $0.58963
– issue date 11 February 2022
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options:
expected volatility derived from the share volatility of comparable listed companies over five years, to align with
– the term of the options: 68.94%; and
– expected life of the Share Option: five years.
Fair value of share options granted to Alistair McKeough
2 The fair value of the 1,125,000 Share Options was calculated using the Black-Scholes model. The assumptions used
in calculating the fair value of Share Options, were:
– exercise price: $1.56
– grant date 15 November 2022
– grant date share price: $0.69
– value per option at grant date $0.28908
– grant date 15 November 2022
– dividend yield: 0.0%;
– risk-free rate based on the Australian Treasury bond rate for five years, to align with the term of the options:
expected volatility derived from the share volatility of compatible listed companies over five years, to align with
– the term of the options: 70%; and
– expected life of the Share Option: five years.
The value brought to account as share-based payment expenses in the year ended 30 June 2023 was $325,217
(2022: $256,487) relating to the fair value of options granted to the employees was expensed to the profit or loss.
63
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
24: Related Party Transactions
Parent entity
The ultimate parent entity within the Group is Recce Pharmaceuticals Ltd.
Subsidiaries
Interests in subsidiaries are disclosed in Note 26.
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Bonus
Termination payments
Share-based payments
2023
$
1,966,204
268,031
215,000
–
325,217
2,774,452
2022
$
1,082,815
199,161
204,000
–
117,925
1,603,901
The following transactions occurred with related parties:
Superannuation contributions
Contributions to superannuation funds on behalf of employees
103,457
106,362
Loans to key management personnel
An amount of $104,388 (2022: $388,734) was advanced to Mr James Graham as an unsecured loan. The amount
outstanding at reporting date including accrued interest was $112,836 (2022: $400,234). The loan is interest bearing
at the rate of 5% per annum. Interest accrued on the loan amounted to $8,448 (2022: $11,500). The loan is repayable
within 12 months of reporting date.
At year end, expense advances repayable by Mr James Graham totalled $Nil (2022: $Nil).
Other transactions with key management personnel
During the financial year, consulting fees for technical services totalling $1,029,537 (2022: $727,348) were paid to an
entity associated with Mr A Dunton. Additionally consulting fees for professional services totalling $105,000 (2022:
$Nil) were paid to an entity associated with Mr A McKeough. All payments were made on normal commercial terms
and conditions. There were no other related party transactions during the financial year.
64
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023
25: Parent Entity Information
The following information relates to the parent entity, Recce Pharmaceuticals Ltd, as at 30 June 2023. The information
presented hereto has been prepared using accounting policies consistent with those presented in Note 2.
(a) Summarised statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Share capital
Reserves
Accumulated losses
Net Assets/(Liabilities)
2023
$
1,947,459
608,410
2,555,868
4,849,852
294,821
5,144,673
44,111,963
8,834,557
2022
$
12,184,742
438,780
12,623,522
2,446,850
115,312
2,562,162
43,968,321
8,550,939
(55,535,324)
(42,457,902)
(2,588,804)
10,061,358
(b) Summarised consolidated statement of profit or loss and other comprehensive income
Loss for the year
Total comprehensive loss for the year
26: Interest in Subsidiaries
Country of Incorporation
Parent entity
Recce Pharmaceuticals Ltd
Australia
Subsidiaries
Recce (USA) LLP
Recce (UK) Limited
United States
United Kingdom
(13,077,422)
(13,077,422)
(10,986,277)
(10,986,277)
Percentage Owned
2023
%
–
100
100
2022
%
–
100
100
65
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
27: Events Subsequent to Reporting Period
On 12 July 2023, the Company announced the receipt of an advance payment of $801,604 from Radium Capital against
the R&D refund due from the Australian Taxation Office.
On 28 July 2023, the Company announced the receipt of $98,428 as a Canadian Government R&D rebate.
On 11 September 2023, the Company announced it would raise $8m less costs via a placement and a further $3m via
a pro-rata non-renounceable entitlement offer.
On 18 September 2023, the Company confirmed the issue of 18,181,819 new shares in respect of the placement.
On 29 September 2023, the Company announced that it had raised $2,715,272 via the pro-rata non-renounceable
entitlement offer and as a result of this, the Company will issue 6,171,048 new shares.
Other than the above, no matters or circumstances have arisen since the end of the financial year, which significantly
affected, or may significantly affect, the operations of the Group, the results of those operations, or state of affairs
of the Group in future financial years.
28: Contingent Liabilities
There were no contingent liabilities as at 30 June 2023.
In the prior year, there was a dispute in relation to the non-conversion of Performance Shares to Ordinary Shares. Refer
to Note 17.
66
RECCE PHARMACEUTICALS ANNUAL REPORT 2023Notes to the Consolidated Financial StatementsFor the year ended 30 June 2023 Directors’ Declaration
The Directors of the Company declare that:
1. The consolidated financial statements comprising the consolidated statement of profit or loss and other
comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity,
consolidated statement of cash flows and accompanying notes, as set out on pages 42 to 66, are in accordance
with the Corporations Act 2001, including:
a. complying with Accounting Standards and the Corporations Regulations 2001; and other mandatory reporting
requirements; and
b. give a true and fair view of the financial position as at 30 June 2023 and of the performance for the year ended
on that date of the Group;
2. The Executive Chairman and Chief Financial Officer have each declared that:
a. the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
b. The financial statements and notes for the financial year comply with the Accounting Standards; and
c. The financial statements and notes for the financial year give a true and fair view;
3. In the Directors’ opinion there are reasonable grounds to believe that the Group will be able to pay its debts
as and when they become due and payable (refer to Note 3).
This declaration is made in accordance with a resolution of the Board of Directors.
John Prendergast
Executive Chairman
29 September 2023
67
RECCE PHARMACEUTICALS ANNUAL REPORT 2023 Independent Auditor’s Report
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
INDEPENDENT AUDITOR'S REPORT
To the members of Recce Pharmaceuticals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Recce Pharmaceuticals 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)
(ii)
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
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.
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.
68
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Material uncertainty related to going concern
We draw attention to Note 3 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the group’s
ability to continue as a going concern and therefore the group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
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. In addition to the matter described in the Material Uncertainty
related to going concern section, we have determined the matters described below to be the key audit
matters to be communicated in our report.
Accounting for share-based payments
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 23 to the Financial Report,
Our procedures included, but were not limited to the
during the financial year ended 30 June 2023, the
following:
Company agreed to issue options to key
management personnel, which have been
accounted for as share-based payments.
•
Reviewing the relevant agreements to obtain an
understanding of the contractual nature and terms
and conditions of the share-based payment
Refer to Note 2 to the Financial Report for a
arrangements;
description of the accounting policy and significant
estimates and judgments applied to these
arrangements.
Share-based payments are a complex accounting
area and due to the complex and judgmental
estimates used in determining the fair value of the
share-based payments, we consider the accounting
for share-based payments to be a key audit
matter.
•
•
•
•
•
•
Holding discussions with management to understand
the share-based payment transactions in place;
Reviewing management’s determination of the fair
value of the share-based payments granted,
considering the appropriateness of the valuation
methodology used;
Testing key fair value inputs, using internal specialists
where required;
Assessing the reasonableness of the share-based
payment in equity;
Assessing the allocation of the share-based payment
expense over the relevant vesting period; and
Assessing the adequacy of the related disclosures in
Note 2 and Note 23 to the Financial Report.
69
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Independent Auditor’s Report Continued
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Group’s annual report for the year ended 30 June 2023, but does not
include the financial report and our 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
identified above 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.
70
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 21 to 27 of the directors’ report for the
year ended 30 June 2023.
In our opinion, the Remuneration Report of Recce Pharmaceuticals 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
Neil Smith
Director
Perth
29 September 2023
71
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
ASX Additional Information
Shareholder Information as at 18 September 2023
Additional information required by the Australian Securities Exchange listing rules and not shown elsewhere in this
report is as follows:
(a) Distribution of equity securities (as at 18 September 2023)
The number of shareholders, option holders and performance right holders by size of holding are:
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Holding
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Number of Shares
% Issued Share Capital
1,033
1,397
679
1,178
207
4,494
656,134
3,988,856
5,538,793
39,585,818
147,063,093
196,832,694
0.33
2.03
2.81
20.11
74.71
100.00
Option Holders
Number of Options
% Issued Share Capital
–
–
–
2
14
16
–
–
–
200,000
13,731,870
13,931,870
–
–
–
1.44
98.56
100.00
Performance Right Holders
Number of Shares
% Issued Share Capital
–
–
–
3
7
10
–
–
–
168,750
8,585,673
8,754,423
–
–
–
1.93
98.07
100.00
72
RECCE PHARMACEUTICALS ANNUAL REPORT 2023
(b) Twenty largest shareholders (as at 18 September 2023)
The names of the twenty largest holders of quoted shares are:
Name
Number of Shares
1 Graham Melrose And Olga Melrose
2 HSBC Custody Nominees (Australia) Limited
3 M Rogers and A Veliss
4 Mr James Graham
5 Acuity Capital Investment Management Pty Ltd
Continue reading text version or see original annual report in PDF format above