Regis Corporation Annual Report 2014

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FY2014 Annual Report · Regis Corporation

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Consolidated
Financial
Statements
for the year ended
30 June 2014

Regeneus Ltd

ACN 127 035 358

Corporate Directory

REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS

25 Bridge Street
Pymble, NSW 2073, Australia

POSTAL ADDRESS

PO Box 20,
Gordon, NSW 2072,
Australia

BOARD OF DIRECTORS

John Martin (Executive Chairman)
Professor Graham Vesey (CEO)
Assoc Professor Ben Herbert (Non-Executive Director)
Barry Sechos (Non-Executive Director)
Dr Roger Aston (Non-Executive Director)

COMPANY SECRETARY

Sandra McIntosh

WEBSITE

www.regeneus.com.au

LAWYERS

DibbsBarker
Level 8, 123 Pitt Street
Sydney NSW 2000

AUDITORS

Grant Thornton Audit Pty Ltd
Level 17
383 Kent Street
Sydney NSW 2000

PATENT ATTORNEYS

Spruson & Ferguson
Level 35, 31 Market Street
Sydney, NSW 2000

SHARE REGISTRY

Link Market Services Limited
Level 12, 680 George Street

STOCK EXCHANGE LISTING

Australian Stock Exchange
ASX Code: RGS

Consolidated Financial Statements for the year ended 30 June 2014

Contents

Message from the Chairman and the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Auditor’s Independence Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Corporate Governance Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Consolidated Statement of Profit or Loss and Other Comprehensive Income . . . . . . . . . . . 24

Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Notes To The Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

ASX Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Consolidated Financial Statements for the year ended 30 June 2014

Message from the Chairman
and the CEO

MESSAGE FROM THE CHAIRMAN & CEO

IPO and ASX Listing

On behalf of the Board of Directors, it gives us great
pleasure to report on our progress to shareholders over
the 12 months to 30 June 2014. The past year has seen
several important milestones achieved for Regeneus
and good progress in the development of our research
and its commercialisation pathways. We completed
our IPO and listed on the ASX; progressed our adipose
(fat) derived stem cell product developments and
early commercialisation activities; established an
improved research facility to increase the capability
and output of our research and development
activities; and secured exclusive worldwide human
and veterinary commercialisation rights to a novel
therapeutic cancer vaccine developed by the Kolling
Institute of Medical Research in Sydney. We can report
a year of positive momentum and progress to our
shareholders in the fast growing field of regenerative
cell therapies.

Our financial results for the period were in line with
expectations. A more detailed analysis of operations
and financial results is set out in the Directors’ Report.

In September 2013, we listed on the Australian
Securities Exchange (ASX code – RGS) following an
Initial Public Offer which raised $10.5 million in new
equity via the issue of 42 million new shares at an issue
price of $0.25 per share. This valued the company at
$46 million post the IPO. The IPO introduced a number
of new shareholders to the company and we welcome
these new shareholders to our company. In addition to
raising capital to fund the development of activities,
this has raised the profile of Regeneus and what we
are doing, as well as facilitating access to funding to
accelerate our R&D and product development and
commercialisation pathways.

Competitive Positioning and Product
Pipeline Overview

Regeneus is competitively positioned as an emerging
leader in cell-based regenerative medicine with a
diversified and proprietary portfolio of innovative
personalised (autologous) and off-the-shelf
(allogeneic) stem cell and other biological therapies

Product

Indication

Preclinical

Phase 1

Phase 2

Phase 3

Marketed

HiQCell

Osteoarthritis

Exempt Biological*

Neuropathic Pain

Exempt Biological*

Progenza

Osteoarthritis

Secretions Cream

Inflammatory Skin
Conditions

NICNAS

Cancer Vaccine

Oncology

Exempt Biological*

Product

Indication

Preclinical

Clinical

Marketed

CryoShot Canine Osteoarthritis

Trials (AUS/CAN); INAD open (US)

CryoShot Equine

Osteoarthritis

Field Trials (AUS)

Kvax

Oncology

AUS/US available for
commercialisation

N
A
M
U
H

y
r
a
n
i
r
e
e
V

Autologous
Adipose MSC’s

Allogeneic
Adipose MSC’s

Xenogeneic
Adipose MSC’s

Autologous
Tumor Cells

* Exempt biological under

Australian regulations

Autologous cells - means a patients own cells

Allogeneic cells - means cells from a donor

Xenogeneic cells - means cells from a donor of a different species

Consolidated Financial Statements for the year ended 30 June 2014

00 Message from the Chairman

and the CEO

for human and veterinary health markets with a
primary focus on musculoskeletal and oncology
applications.

We have been able to accelerate our product
development pipeline through using personalised stem
cell therapies to treat musculoskeletal conditions for
both humans and animals. Personalised cell therapies
that use a patient’s own stem cells have much lower
regulatory hurdles than off-the-shelf therapies that use
donor cells.

We have been able to use our clinical development
experience in personalised cell therapies to advance
our off-the-shelf cell therapies and we have used
know-how from product developments for the
veterinary applications to accelerate the development
of similar products for human applications.

Our product pipeline is underpinned by 11 patent
families which are owned and controlled by the
company except for intellectual property licensed
from the Kolling Institute of Medical Research in Sydney
relating to the therapeutic cancer vaccine for both
human and veterinary applications.

HUMAN HEALTH

HiQCell – a personalised (autologous) adipose (fat)
derived stem cell therapy for human osteoarthritis and
other musculoskeletal conditions

HiQCell is a simple, same day medical procedure
supervised by a Regeneus licensed treating medical
practitioner (TMP).

Regeneus provides the TMP with optimal in-clinic cell
processing, handling and storage facilities. As the
procedure uses a patient’s own cells, it is an exempt
biological under the Australian Therapeutic Goods
Administration regulatory framework.

HiQCell is focussed on the treatment gap between
symptomatic pain medication and joint replacement.
Osteoarthritis is a leading chronic disease in Australia
(and other developed countries) with no current cure.
It affects approximately 4 million Australians (17% of
the population) and is estimated to grow to around
7 million people by 2050. Currently, more than 80,000
knee and hip replacements are performed annually
in Australia, with numbers continuing to grow as the
population ages.

HiQCell was launched in FY12 through a leading
sports medicine practice in Sydney and expanded to
Melbourne in FY14.

As at 30 June 2014, we had 12 sports medicine and
orthopaedic specialists trained to perform the HiQCell
treatments in Sydney, Melbourne and the Gold Coast
– an increase of 4 over the past 12 months. To date,
more than 530 patients have received HiQCell with
over 1,200 joints being treated.

In June 2014, a HiQCell processing centre was
established at the new East Sydney Private Hospital.
HiQCell was the first ever procedure to be performed
at the hospital. Five HiQCell treating medical
practitioners are now accredited at the hospital.

We have identified Singapore as our first off-shore
location to launch HiQCell for the treatment of arthritic

• Small amount of adipose
tissue is harvested via
liposuction

2 . CELL PROCESSING

• Regeneus isolates

regenerative cells from
adipose tissue at point
of care and creates cell
suspension for injection

• Medical specialist injects

cell suspension into the joint

• Multiple joints can be done

at the same time

• Cells can be stored for

future injections

1 . TISSUE HARVEST

3 . CELL INJECTION

Consolidated Financial Statements for the year ended 30 June 2014

00 Message from the Chairman

and the CEO

joints. Singapore is a hub for high end and innovative
medical treatments in South East Asia. We are on track
to launch our Singapore presence with first treatments
likely in Q4 2014. We are also exploring the market
opportunity for HiQCell in the UK and are currently in
discussions with potential UK medical partners.

Our aim in FY15 is to continue growing treatment
numbers by:

• driving our new direct marketing and social
media initiatives which we launched in
June 2014

•

increasing the activity levels and number of
HiQCell licensed medical specialists in Australia

• promoting the cryostorage option with

HiQCell – as an enhancement to treatment
outcomes, product differentiator and
additional revenue stream

• publication of further positive HiQCell

clinical data and a commitment to further
clinical studies

• HiQCell being made available to treat

neuropathic pain following the publication of
the positive results of treatments in the Journal
of Pain Research in May 2014

• exploring other international markets and

licensing options

Progenza – off-the-shelf (allogeneic) cell therapy
treatment for human osteoarthritis

There is a significant opportunity for an effective
off-the-shelf allogeneic cell therapy for human
osteoarthritis. This is a large potential market. We have
developed a proprietary product composition and
production method for Progenza, leveraging our
CryoShot technology platform and expertise.

We are on track to start our first-in-man trial (safety
study) of Progenza in Q2 2015.

After receiving ethics approval, we have procured
adipose tissue from human donors and are producing
stem cell banks for our clinical trial to assess initial safety
and preliminary efficacy in human volunteers with
knee OA. We have partnered with Cryosite, which has
a TGA registered facility for biologicals handling and
storage, to establish a cell production facility in Sydney.
This is part of a broader R&D exchange between
the companies in relation to tissue handling, cell
extraction and cell manufacturing. This is an important
milestone in taking our human allogeneic product for
osteoarthritis through the regulatory approval process.

The first batch of Progenza has been produced for
a pre-clinical study that is now underway in the US.
We are on track to have Progenza manufactured in
preparation for the human safety trial in Sydney in Q2
2015. Experiments demonstrate that more than 500,000

units of product can be manufactured from one donor.

We have targeted the Japanese market following
announcement in November 2013 of new accelerated
cell therapy approval processes in Japan which
may provide:

•

limited safety and efficacy data for conditional
licence

• data reporting requirements through registry

• 70% government reimbursement

We understand that the Japanese regulations to
support the new laws will be released later this year.
This will provide important detail on the new framework
for cell therapies which has been specifically designed
to fast-track the approval of cell therapies like
Progenza without the need for large and expensive
Phase III trials. As part of our strategy, we are actively
seeking to identify Japanese partners to work with in
launching Progenza in the Japanese market.

Stem Cell Cream for inflammatory skin conditions

There is an increasing understanding in the scientific
community of the importance of the role played
by the secretions of stem cells. Stem cells secrete
bioactive molecules (cytokines and growth factors)
that modulate the immune system to decrease
inflammation, stimulate repair and reduce scarring.
We have developed a proprietary technology to
process, capture and concentrate these cytokines
and have identified that the cell secretions in a
cream formulation have potential in the treatment of
inflammatory skin conditions such as acne, rosacea
and psoriasis.

We are pursuing a commercialisation pathway through
NICNAS (National Industrial Chemicals Notification and
Assessment Scheme), the Federal Government body
responsible for regulating cosmetics.

We have commenced a pre-clinical safety study on
the secretions cream which will be completed by Q4
2014. We also propose to complete additional safety
and efficacy studies as part of NICNAS requirements.

We are optimising the scale-up of the cream
manufacturing process to enable a cost effective
product for early commercialisation.

Human Therapeutic Cancer Vaccine

In July 2014, Regeneus secured the exclusive
worldwide rights for human applications of a new
therapeutic cancer vaccine technology developed
by the KolIing Institute of Medical Research at Royal
North Shore Hospital in Sydney.

The therapeutic cancer vaccine has the potential to
target a wide range of cancers with a single product.
As the vaccine uses the patient’s own tumour cells
and can be prepared under the supervision of the
treating clinician, the local regulatory environment

Consolidated Financial Statements for the year ended 30 June 2014

00 Message from the Chairman

and the CEO

for biological therapies in Australia (and other major
markets) may allow for an accelerated clinical
pathway for the autologous cancer vaccine removing
the need for expensive and time consuming Phase
III trials.

Regeneus will fund a first-in-man trial (safety study)
scheduled to commence in Q1 2015. Leading
oncologists Professor Stephen Clarke and Associate
Professor Nick Pavlakis, from the University of Sydney’s
Northern Clinical School at the Kolling Institute, will be
the investigators on the trial and good progress is being
achieved in preparing for the submission of the ethics
approval.

VETERINARY HEALTH

CryoShot – Allogeneic adipose-derived stem cells to
treat canine and equine osteoarthritis

One in five dogs suffer from osteoarthritis, with no
current cure. The current treatment options are
generally anti-inflammatories, which have a short term
impact and can have side effects. The global market
for animal anti-inflammatories is estimated to be about
$500 million pa.

CryoShot targets a longer term and more effective
pain management market for dogs and horses.

Our opportunity is for CryoShot to be the first registered
allogeneic canine cell therapy for osteoarthritis.

Regeneus has been conducting extensive field trials
in Australia collecting clinical data during product
development. We currently have more than 80 vet
practices in Australia participating in our CryoShot field
trials for canine and equine musculoskeletal conditions;
with more than 2,500 treatments administered to date.
These results have been encouraging with a reduction
in pain and improvement in mobility noted within 10
days, with continued improvement for at least a month
and then that improvement continuing up to
12 months.

While CryoShot remains unregistered we will continue
to focus on Clinical trials rather than significant
revenue growth.

We are preparing a US registration trial for canine
CryoShot and have commenced a supporting pilot
double-blind placebo controlled trial in Australia with
the latest specification of CryoShot. Initial data from
the Australian trial should be available for analysis in
Q4 2014.

In addition, we are well underway with leading
biological manufacturer, Lonza, in the US on GMP
(good manufacturing practice) of CryoShot for the
registration trial.
On an indicative basis, we are targeting the
following dates:

• Sign off on trial design, product characterisation

and manufacture for FDA trial by Q2 2015

• Target animal trial commenced by Q4 2015

• Chemistry and Manufacturing Controls

package completed by Q2 2016 and
approved in Q4 2016

•

Product registered for US market by Q1 2017

We will continue to explore our commercial partnering
opportunities for the sales and marketing of CryoShot.

Kvax – autologous canine cancer vaccine

Kvax is a novel cancer vaccine technology that uses
a dog’s own tumour cells as a source of therapy.
The technology was developed at the Kolling Institute,
Royal North Shore Hospital, Sydney. Approximately
27% of dogs will be diagnosed with cancer and
48% of dogs over the age of 10 will die of tumour-
related illnesses.

Regeneus holds the exclusive worldwide commercial
rights for the veterinary market. We will launch our Kvax
product in Australia in Q3 2014. We have established a
manufacturing capacity for the vaccine at our facility
in Sydney and have commenced a marketing trial in
connection with the launch of the product.

We are actively exploring our commercial partner
options for Kvax in the US market now that we have
US Department of Agriculture (Center for Veterinary
Biologics) regulatory clearance to proceed with
commercialisation. We have appointed Hennessey
Research in the US to manufacture the vaccine. A US
marketing trial for bone cancer has commenced.

In addition, we are exploring the regulatory pathway
for the launch of Kvax in the UK.

POST BALANCE DATE

On 15 August 2014, we raised $3.0m via a placement
to institutional and sophisticated investors and
announced a Share Purchase Plan for shareholders
to raise up to a further $3.0m. These funds together
with cash reserves at 30 June 2014 ($2.5m), an R&D
tax rebate of approximately $3.7m (expected in
late September 2014) and expected sales revenues
provides Regeneus with a sound funding platform to
progress our initiatives outlined above.

THANKS TO THE REGENEUS TEAM

We would like to thank the Board, executive
management and the entire Regeneus team,
including our R&D and commercial partners for
their outstanding efforts, energy and passion in
their work over the past year. Finally thank you to
our shareholders for their continued support of
Regeneus and commitment to the development
of regenerative medicine.

Consolidated Financial Statements for the year ended 30 June 2014

Directors’ Report

Your Directors present their report for Regeneus Ltd and
its controlled entities (the Group) for the financial year
ended 30 June 2014.

1 .1 DIRECTORS

The names of the Directors in office at any time during
or since the end of the year are:

John Martin

– Executive Chairman

Professor Graham Vesey

– CEO and Executive Director

Assoc Professor Ben Herbert
– Non-Executive Director

Barry Sechos

– Non-Executive Director

Dr Roger Aston

– Non-Executive Director

Directors have been in office since the start of the financial
year to the date of this report unless otherwise stated.

Chairman

John Martin has served on the Board of the Company
since early 2009 and was appointed Chairman in 2010.
John has over 20 years of corporate, commercial and
legal experience including roles as CEO and Director
of ASX listed and private emerging technology and
high growth companies and corporate and executive
partner of Allens specialising in M&A, fundraising and
corporate advice. He is a non-executive director of
Channel Group, Ai-Media and Eagle Eye Solutions
(Asia Pacific).

Other Current Directorships

Previous Directorships (last 3 years)

Interests in shares

Interests in options

CEO

–

none

6,689,292

2,680,355

Dr Graham Vesey is a co-founder and founding CEO
of the Company and has served on the Board since
incorporation. Graham is a successful biotechnology
entrepreneur, technology innovator and inventor and
a highly regarded scientist. Graham was a co-founder
and executive Director of the successful biotech start-
up, BTF, which was sold to bioMerieux in 2007. Graham
is an Adjunct Professor at Macquarie University.

Other Current Directorships

Previous Directorships of (last 3 years)

Interests in shares

Interests in options

–

none

– 15,495,352

–

2,142,855

Non-Executive Directors

Assoc Professor Ben Herbert is a co-founder and
founding Director of the Company and has served on
the Board since incorporation. Ben is Assoc.Professor
of Tranlational Regenerative Medicine at University of
Sydney Medical School at the Kolling Institute. Ben is
a regular presenter at conferences and in the media
on regenerative medicine and stem cell technologies.
Ben was the former Director of the Proteomics
Technology Centre of Expertise at the University of
Technology, Sydney, co-founder of Proteome Systems
and a key member of the team that set up Australia’s
first proteomics facility, Australian Proteome Analysis
Facility at Macquarie University in 1995.

Other Current Directorships

Previous Directorships (last 3 years)

Interests in shares

Interests in options

–

none

– 9,009,412

–

nil

Barry Sechos has over 20 years experience as a
Director, business executive and corporate lawyer
with particular experience in investment and asset
management. Barry is executive Director of the
Sherman Group (a strategic investor in the Company)
and sits on the Board of many Sherman Group
companies and investee companies.

Other Current Directorships:

Aberdeen Leaders Fund Ltd

Previous Directorships of (last 3 years):

iCash Payment System Ltd

Interests in shares

Interests in options

–

nil

Dr Roger Aston is one of the most experienced and
commercially astute people in drug commercialisation
in Australia. Roger brings more than 20 years
experience in the pharmaceutical and healthcare
industries in senior roles in the United Kingdom, Asia-
Pacific and Australia. Roger is also a Director or
chairman on a number of Boards carrying out late
stage drug development.

Other Current Directorships:

Pharmaust Ltd
Immuron Ltd
Oncosil Ltd
Clinuvel Ltd

Previous Directorships of (last 3 years):

Interests in shares

Interests in options

Mayne Pharma Health Ltd
IDT Ltd

–

nil

Consolidated Financial Statements for the year ended 30 June 2014

allowing patients to have their regenerative cells
cryogenically stored for future treatments, has created
another source of revenue for Regeneus.

Veterinary Health – revenues, mostly from veterinarians
using Cryoshot in field trials, increased to $233k. This
excludes the substantial amount of product that is
provided at no charge to clinics for research purposes.
The focus continues on generating clinical trial data,
rather than revenue, for the off-the-shelf product.
Cryoshot is made available to veterinarians , on a trial
basis, under the Australian Pesticides and Veterinary
Medicines Authority Permit 7250.

There was no revenue for the period, from the sale of
the new product Kvax.

Licence Fees – technology licence fees for Research
and Development continue to be an important part of
the ongoing relationships Regeneus has with key R&D
partners. In December 2013 a new agreement was
reached with Cryosite Ltd to expand our R&D activities
relating to the manufacture of our off-the-shelf human
stem cell product, for clinical trials.

Expenditure

Research and Development expenses – these have
increased to $5.8m (2013: $4.1m) from both internal
and external costs. To comply with the accounting
standards, all costs are expensed, in accordance
with the Company’s policy on Capitalisation of
Development Costs.

The internal costs are related to employees,
laboratories supplies and equipment expenses. The
new premises include a new expanded laboratory for
research and production purposes.

Selling expenses – there has been significant planned
growth in the sales and support teams for all products.

Occupancy expenses – these continue to increase in
line with the growth of the Group. In February 2014,
the Company moved into premises in Pymble that
comprise new laboratories, warehouse and offices.

Corporate expenses – these include employment,
options, patents, compliance and overheads. There
were also one-off costs relating to the IPO of $208k,
and an asset disposal of $103k.

Income Tax benefit - the Company estimates receiving
a R&D Taxation concession rebate of $3.7m for FY14
(2013: $2.3m).

Company Secretary

Sandra McIntosh is the Company Secretary and HR
Manager. Sandra has been with the Company since
2009, and has 20 years management experience in HR,
Customer Service and Finance.

Principal activities

The principal activities of the Group during the financial
year were the development and commercialisation
of proprietary adipose-derived stem cell technologies
used by physicians and veterinarians to treat
musculoskeletal conditions in humans and animals.

No significant change in the nature of these activities
occurred during the year.

Financial Summary

Operating results

The loss of the Group for the financial year after
providing for income tax amounted to $ 7.5m (2013:
$5.2m) which is in line with expectations. The loss
includes an anticipated R and D Tax Concession
refund of $3.7m (2013: $2.3m)

Review of operations

Income

During the financial year the Group results have seen
an increase in revenue of 18% to $2.09m
(2013: $1.77m).

Revenue comprised the following:

2014
$

2013
$

Operating Activities

Licence fee income

904,000

762,333

Income from sale of goods

998,036

956,612

Interest received

192,607

50,683

Total Revenue

2,094,643

1,769,628

Gross Profit for the year increased 24% to $1,473k (2013:
$1,189k). The increase was the result of the change in
revenue mix between commercial activities (sale of
goods) and license fees as detailed above.

Income from Commercial Activities:

Human Health – HIQCell revenues increased to
$765k (2013: $750k). At the end of the year HiQCell
procedures were being performed primarily by 7
active practitioners in Sydney and Melbourne at 3
medical facilities in Sydney,1 in Melbourne and 1 in the
Gold Coast. The introduction of the cryopreservation,

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report

Cash Flows

The net cash inflows for the period were

Net cash (used in) operating
activities

Net cash (used in) investing
activities

Net cash provided by financing
activities

Net change in cash and cash
equivalents held

2014
$

2013
$

(6,239,251)

(4,617,850)

(1,873,343)

(399,717)

10,209,433

4,900,000

2,096,839

(117,567)

Operating Activities – these reflect the increase in
research activities, clinical trials and the ongoing
growth of the Group.

Investing Activities – these include the fit out of the
new offices and laboratories, and the expansions of
HiQCell clinics.

Financing Activities – the net proceeds from the IPO in
September 2013.

Significant changes in state of affairs

In September 2013, Regeneus raised $10.5m through
an IPO, and became a listed entity on the ASX.

On 24 February 2014, Regeneus South East Asia Pte
Ltd was incorporated in Singapore, as a wholly owned
subsidiary. This company will be the operating arm for
HiQCell procedures to be made available in Singapore
later this year.

Change in accounting policy

During the year the Group changed its accounting
policy with respect to the disclosure of the R&D Tax
Incentive. This government run program helps to offset
some of the costs of R&D. Annually, the Group claims
a refundable tax offset, this incentive is by its nature
similar to a grant. The industry generally recognises
these grants as other income rather than an income
tax benefit. The Group believes that for clarity due
to the nature of this item it is more appropriate to
disclose as other income enhancing the quality of the
information and comparability.

Events subsequent to the end of the reporting date

On 15 August 2014, a private placement of $3m was
made to institutional and professional investors and
the Company announced it would raise up to a
further $3m by way of a Share Purchase Plan in
September 2014.

Likely developments business strategies and prospects

Over FY 15 and FY 16 Regeneus will be focussing on the
following business initiatives and strategies

Human Health

•

launch HiQCell in Signapore with first treatment
in Q4 2014

•

increase HiQCell treatment numbers in Australia

• explore the market opportunity for HiQCell in the UK

• commence our first-in-man trial (safety study) of

Progenza in Q2 2015

•

identify a Japanese partner for clinical
development and launch of Progenza in the
Japanese market

• complete pre-clinical safety study on the

secretions cream and proceed with additional
safety and efficacy studies in Q4 2014 as part of
NICNAS requirements

•

fund a first-in-man trial (safety study) for the
human therapeutic cancer vaccine scheduled
to commence in Q1 2015

Veterinary Health

• continue the clinical trials of CryoShot for canine
and equine osteoarthritis with a double-blind
placebo controlled trial in Australia

• commence GMP manufacture in the US of
CryoShot for the registration trial, targeting
product registered for US market by Q1 2017

•

identify a sales and marketing partner
for CryoShot

•

launch our Kvax product in Australia in Q3 2014.

•

identify a sales and marketing partner
for Kvax

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report
Directors’ meetings

The number of meetings of Directors (including committees of Directors) held during the year and the number of
meetings attended by each Director were as follows:

Directors’ Name

John Martin

Professor Graham Vesey

Assoc Professor Ben Herbert

Barry Sechos

Dr Roger Aston

Board Meetings

Audit and Risk
Committee

Remuneration and
Nominations Committee

Column A is the number of meetings the Director was entitled to attend.

Column B is the number of meetings the Director did attend.

Dividends paid or recommended

No dividends have been paid or declared since the start of the financial year (2013: nil).

1 .2 UNISSUED SHARES UNDER OPTION

Unissued ordinary shares of Regeneus Ltd under option at the date of this report are:

Date of Granting

Expiry Date

Exercise Price of Option ($)

Number under option

2/06/2010

1/07/2010

23/07/2010

1/01/2011

21/02/2011

11/03/2011

25/05/2011

25/07/2011

1/07/2011

1/12/2011

16/09/2013

4/12/2013

30/05/2020

28/06/2020

20/07/2020

29/12/2020

18/02/2021

8/03/2021

22/05/2021

22/07/2021

28/06/2021

28/11/2021

15/09/2018

3/12/2018

0.006

0.136

0.140

0.280

0.250

308,040

2,310,300

770,100

539,070

1,001,674

100,000

60,000

25,000

857,143

1,571,428

4,435,710

3,486,400

All unexercised, vested options expire on the earlier of their expiry date or within a period set out in the plans, from
termination of employment. These options were issued under the Employee Share Option Plan and Option Trust
Share plans, and have been allotted to individuals on condition that they meet the agreed milestones before the
options vest. The options do not entitle the holder to participate in any share issue of the Company.

As part of the IPO, 12,740,252 employee options, that had an exercise price of less than 20 cents, were exercised
prior to the listing on the 19 September 2013. These were financed by a full recourse loan provided by the Company
to the option holders.

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report

1 .3

SHARES ISSUED DURING OR SINCE
THE END OF THE YEAR AS A RESULT
OF EXERCISE

(a) Principles used to determine the nature and
amount of remuneration

The principles of the Group’s executive strategy and
supporting incentive programs and frameworks are:

During, or since the end of the financial year the
Company issued ordinary shares as a result of the
exercise of options as follows

Date Options Granted

Number of
shares issued

Value of shares
issued ($)

1/07/2009

1/01/2010

1/07/2010

1/01/2011

693,090

1,540,200

770,100

2,705

6,075

65,150

66,300

17/05/2010

2,310,300

197,668

1/07/2010

3,758,102

281,766

10/06/2010

13/08/2010

25/08/2010

21/02/2011

1/09/2010

25/05/2011

11/03/2011

1/01/2012

4/12/2013

154,020

231,030

770,100

153,476

292,638

77,010

13,175

19,680

66,100

17,411

24,757

9,600

450,000

121,000

770,100

158,641

528,000

172,867

1 .4 REMUNERATION REPORT (AUDITED)

The Directors of the Group present the Remuneration
Report for non-executive Directors, executive Directors
and other key management personnel prepared in
accordance with the Corporations Act 2001 and the
Corporations Regulations 2001.

The Remuneration Report is set out under the following
main headings:

a - Principles used to determine the nature and
amount of remuneration

b - Details of remuneration

c - Service agreements

d – Share based remuneration

•

to align rewards to business outcomes that
deliver value to shareholders;

to drive a high performance culture by setting
challenging objectives and rewarding high
performing individuals; and

to ensure remuneration is competitive in the
relevant employment market place to support
the attraction, motivation and retention of
executive talent.

Regeneus has structured a remuneration framework
that is market competitive and complementary to the
reward strategy of the Group.

The Board has established a Remuneration and
Nominations Committee which operates in
accordance with its Charter as approved by the Board
and is responsible for making recommendations to
the Board for reviewing and approving compensation
arrangements for the Directors and the executive
team.

The remuneration structure that has been adopted by
the Group consists of the following components:

• fixed remuneration being annual salary; and

• short and long term incentives, being employee

bonuses and options.

The Remuneration and Nominations Committee
assesses the appropriateness of the nature and
amount of remuneration on a periodic basis by
reference to recent employment market conditions
with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality
Board and executive team.

All bonuses, options and incentives are linked to pre-
determined performance criteria.

Short term incentive (STI)

Regeneus performance measures involve the use of
annual performance objectives, metrics, performance
appraisals and continuing emphasis on living the
Company values.

The performance measures are set annually after
consultation with the Directors and executives and
are specifically tailored to the areas where each
executive has a level of control. The measures target
areas the Board believes hold the greatest potential
for expansion and profit and cover financial and non-
financial measures.

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ ReportThe KPI’s for the Executive Team are summarised as follows:

Performance area:

• Financial - operating results ; and

• Non-financial - strategic goals set for each individual business unit.

The Board may, at its discretion, award bonuses for exceptional performance in relation to each person’s pre-
agreed KPIs and extraordinary achievements.

Voting and comments made at the Companies last Annual General Meeting

Regeneus received 18,640,103 ‘For’ votes on its Remuneration Report for the financial year ending 30 June 2013.
The Company received no specific feedback on its Remuneration Report at the Annual General Meeting.

Consequences of performance on shareholder wealth

In considering the Group’s performance and benefits for shareholder wealth, the Board has regard to the following
indices in respect of the current financial year and the previous four (4) financial years:

Item

EPS (cents)

Dividends (cents per share)

Net profit / (loss) ($000)

Share price ($)

2014

2013

2012

2011

2010

(0.05)

(7,523)

$0.40

(0.05)

(5,195)

$0.25*

(0.03)

(0.01)

(3,261)

(1,093)

n/a

(0.01)

(988)

n/a

* $0.25 Share price on listing 19 September 2013

(b) Details of remuneration

Details of the nature and amount of each element of the remuneration of each key management personnel
(‘KMP’) of Regeneus are shown in the table below:

Short term employee benefits

Post-employment
benefits

Long-term
benefits

Termination
benefits

Share-based
payments

Executive
Directors

Cash salary
and fees ($)

Cash bonus
($)

Back pay
of Directors
fees($)

Non-monetary
benefits ($)

Superannuation
($)

Long-term
bonus ($)

Termination
payments ($)

Options ($)

Total ($)

% of
remuneration
that is
performance
based

John Martin

2014

303,160

137,300

2013

277,667

Graham Vesey

Non Executive
Directors

Ben Herbert
Independent
Non-executive
Director

Barry Sechos
Independent
Non-executive
Director

Roger Aston –
Independent
Non-Executive
Director

Marc Wilkins -
Independent
Non Executive
Director

2014

293,722

45,767

210,069

2013

275,000

2014

72,083

45,000

22,068

2013

55,000

45,000

2014

45,000

2013

25,000

2014

55,838

2013

49,239

2014

2013

25,000

2014 Total

769,803

228,067

232,137

2013 Total

706,906

45,000

40,115

25,000

38,398

24,750

3,777

2,167

82,290

51,917

278,030

758,605

1,187

303,854

272,176

860,132

299,750

139,151

100,000

45,000

25,000

59,615

51,406

25,000

550,206

1,862,503

1,187

805,010

55%

61%

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report

The cash bonus and back pay of directors’ fees relate to the successful IPO in September 2013, and directors fees
that had been incurred in 2009, accrued in 2013, paid this year.

The relative proportions of remuneration that are linked to performance and those that are fixed are as follows:

Name -
Executive
Directors

John Martin

Graham Vesey

Fixed
Remuneration

At Risk - STI

At Risk -
Options

45%

39%

18%

30%

37%

31%

Remuneration and other terms of employment for the Executive Directors and other key management personnel
are formalised in a service agreement. The major provisions of the agreements relating to remuneration are set
out below:

Name

Base salary $

Term of
agreement

Notice period

John Martin

290,000

unspecified Three months

Graham Vesey

290,000

unspecified Three months

There are no termination payments provided for in these agreements, other than those required by statute.

Options

Options granted over unissued shares .

All options are for ordinary shares in the Company, and are exercisable on a one for one basis.

The options were provided at no cost to the recipients. All options expire on the earlier of their expiry date or within
the time period set out in the plan, from termination of the individual’s employment.

Details of options over ordinary shares in the Company that were granted as remuneration to each key
management personnel are set out below.

Number
granted

Grant date

Value per
option at
grant date ($)

Number
vested

Number
lapsed

Exercise
price ($)

First exercise
date

Last exercise
date

Graham Vesey

714,285

15/09/2009

0.1561

714,285

Graham Vesey

714,285

15/09/2009

0.1561

714,285

Graham Vesey

714,285

15/09/2009

0.1561

John Martin

714,285

15/09/2009

0.1561

714,285

John Martin

714,285

15/09/2009

0.1561

714,285

John Martin

714,285

15/09/2009

0.1561

Wild Rose Pty Ltd
- John Martin

37,500

15/09/2009

0.1561

37,500

John Martin

500,000

30/06/2007

0.1758

500,000

0.25

0.28

1/07/2013

15/09/2018

30/06/2014

15/09/2018

30/06/2015

15/09/2018

30/06/2013

15/09/2018

30/06/2014

15/09/2018

30/06/2015

15/09/2018

11/09/2013

15/09/2018

31/12/2011

28/06/2021

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ ReportBonuses included in remuneration

Details of the short-term incentive cash bonuses awarded as remuneration to each Key Management Personnel,
the percentage of the available bonus that was paid in the financial year, and the percentage that was forfeited
because the person did not meet the service and performance criteria is set out below. No part of the bonus is
payable in future years.

Executive
Directors

Included in
Remuneration ($)

Percentage
Vested in
Year

Percentage
Forfeited in
Year

John Martin

137,300

Graham Vesey

45,767

100%

Other information

Options held by Key Management Personnel

The number of options to acquire shares in the Company held during the 2014 reporting period by each of the Key
Management Personnel of the Group; including their related parties are set out below.

Personnel

Balance at
Start of Year

Granted as
Remuneration

Exercised

Other
Changes

Balance at End
of Year

Year Ended 30 June 2014

Vested and
Exercisable at
the End of the
Reporting Period

Vested and
Un-Exercisable
at the End of the
Reporting Period

John Martin

4,273,490

2,180,355

3,773,490

Graham Vesey

1,108,944

2,142,855

1,108,944

Totals

5,382,434

4,323,210

4,882,434

2,680,355

2,142,855

4,823,210

1,966,070

1,428,570

3,394,640

Shares held by Key Management Personnel

The number of ordinary shares in the Company during the 2014 reporting period held by each of the Group’s Key
Management Personnel, including their related parties, is set out below:

Year Ended 30 June 2014

Personnel

Balance at Start
of Year

Granted as
Remuneration

Received on
Exercise

Other Changes Held at the End of

Reporting Period

John Martin

Graham Vesey

Ben Herbert

Totals

3,095,802

13,586,408

8,689,412

25,371,622

3,773,490

1,108,944

800,000

320,000

6,869,292

15,495,352

9,009,412

4,882,434

1,120,000

31,374,056

End of audited remuneration report

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report

1 .5

ENVIRONMENTAL LEGISLATION

Regeneus operations are not subject to any particular
or significant environmental regulation under a law
of the Commonwealth or of a State or Territory
in Australia.

1 .6

INDEMNITIES GIVEN TO AUDITORS
AND OFFICERS AND INSURANCE
PREMIUMS PAID

not involve reviewing or auditing the auditor’s
own work, acting in a management or decision-
making capacity for the Company, acting as an
advocate for the Company or jointly sharing risks
and rewards.

Details of the amounts paid to the auditors of the
Company, Grant Thornton Audit Pty Ltd, and its related
practices for audit and non-audit services provided
during the year are set out in Note 25 to the Financial
Statements.

During the year, Regeneus paid a premium to insure
officers of the Group. The officers of the Group
covered by the insurance policy include all Directors.

1 .8

PROCEEDINGS ON BEHALF OF THE
GROUP

No person has applied to the Court under section
237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Company, or to
intervene in any proceedings to which the Company
is a party, for the purpose of taking responsibility
on behalf of the Company for all or part of those
proceedings.

Auditor’s independence declaration

A copy of the auditors independence declaration
as required under section 307C of the Corporations
Act 2001 is set out on page 17 and forms part of this
Directors’ report.

Signed in accordance with a resolution of the Board of
Directors:

John Martin

Executive Chairman

Dated this 22 day of August 2014

The liabilities insured are legal costs that may be
incurred in defending civil or criminal proceedings that
may be brought against the officers in their capacity
as officers of the Group, and any other payments
arising from liabilities incurred by the officers in
connection with such proceedings, other than where
such liabilities arise out of conduct involving a wilful
breach of duty by the officers or the improper use by
the officers of their position or of information to gain
advantage for themselves or someone else to cause
detriment to the Group.

Details of the amount of the premium paid in respect
of the insurance policies is not disclosed as such
disclosure is prohibited under the terms of the contract.

The Group has not otherwise, during or since the end
of the financial year, except to the extent permitted by
law, indemnified or agreed to indemnify any current or
former officer or auditor of the Group against a liability
incurred as such by an officer or auditor.

1 .7 NON-AUDIT SERVICES

During the year, Grant Thornton, the Company’s
auditors, performed certain other services in addition
to their statutory audit duties.

The Board has considered the non-audit services
provided during the year by the auditor and, in
accordance with written advice, is satisfied that the
provision of those non-audit services during the year is
compatible with, and did not compromise, the auditor
independence requirements of the Corporations Act
2001 for the following reasons:

• all non audit services were subject to the

corporate governance procedures adopted
by the Company to ensure they do not impact
upon the impartiality and objectivity of the
auditor: and

•

the non-audit services do not undermine
the general principles relating to auditor
independence as set out in APES 110 Code of
Ethics for Professional Accountants, as they did

Consolidated Financial Statements for the year ended 30 June 2014

01Directors’ Report02 Auditor’s Independence

Declaration

Level 17, 383 Kent Street
Sydney NSW 2000

Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230

T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au

Auditor’s Independence Declaration
To the Directors of Regeneus Ltd

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Regeneus Ltd for the year ended 30 June 2014, I declare that, to the
best of my knowledge and belief, there have been:

no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and

no contraventions of any applicable code of professional conduct in relation to the
audit.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

N J Bradley
Partner – Audit & Assurance

Sydney, 22 August 2014

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the
context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm
is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and
are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its
Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.

Consolidated Financial Statements for the year ended 30 June 2014

03 Corporate Governance Statement

approval of significant acquisitions, expenditures
or divestitures.

• Approval of the annual and half-yearly financial

reports.

• Ensuring the market and shareholders are fully

informed of material developments.

The responsibility for the operation and administration
of the Group is delegated by the Board to the CEO
and the executive management team. The Board
ensures that both the CEO and executive team are
appropriately qualified and experienced to discharge
their responsibilities and, as discussed above, has
in place procedures to monitor and assess their
performance.

To ensure that the responsibilities of the Board are
upheld and executed to the highest level, the Board
has established the following sub-committees:

• Audit and Risk Committee

• Remuneration and Nominations Committee.

Sub-committees are able to focus on a particular
responsibility and provide informed feedback to
the Board. Each of these sub-committees have
established Charters and operating procedures, which
are reviewed on a regular basis. The Board may also
establish other sub-committees from time to time to
deal with issues of special importance.

Senior Executive performance evaluation

The Board reviews the performance of the executive
team from time to time. Performance is measured
against a set of key performance indicators which
have been established with reference to the Group’s
strategy and the individual’s responsibilities.

The Remuneration and Nominations Committee
annually reviews and determines the remuneration
arrangements for the Executive Chairman
and CEO and executive team, submitting their
recommendations to the Board for approval.

The Board is committed to achieving and
demonstrating the highest standards of corporate
governance. As such, the Group has adopted a
corporate governance framework and practices to
ensure they meet the interests of shareholders.

The Group complies with the Australian
Securities Exchange Corporate Governance
Council’s Corporate Governance Principles and
Recommendations 2nd Edition (‘the ASX Principles’).
This statement incorporates the disclosures required
by the ASX Principles under the headings of the eight
core principles. All of these practices, unless otherwise
stated, were in place for the full reporting period.

Further information on the Group’s corporate
governance policies and practices can be found on
Regeneus’ website - www.regeneus.com.au.

3 .1

PRINCIPLE 1: LAY SOLID
FOUNDATIONS FOR MANAGEMENT
AND OVERSIGHT

Functions of the Board and Management

The Board of Directors is responsible for the
corporate governance of the Group and operates in
accordance with the principles set out in its Charter,
which is available in the corporate governance
section under the Investor Centre on the Regeneus
website. To ensure that the Board is well equipped to
discharge its responsibilities it has established guidelines
for the nomination and selection of Directors and
for the operation of the Board. These responsibilities
include:

•

Setting the strategy for the Group, including
operational and financial objectives and
ensuring that there are sufficient resources for
this strategy to be achieved.

• Appointing and, where appropriate, removing

the CEO, approving other key executive
appointments and planning for executive
succession.

• Overseeing and evaluating the performance
of the CEO through a formal performance
appraisal process having regard to the Group’s
business strategies and objectives.

• Monitoring compliance with legal, regulatory

and occupational health and safety
requirements and standards.

• Overseeing the identification of key risks faced
by the Group and the implementation of an
appropriate internal control framework to ensure
those risks are managed to an acceptable level.

• Approving the Group’s budgets, including
operational and capital budgets, and the

Consolidated Financial Statements for the year ended 30 June 2014

03 Corporate Governance Statement

3 .2

PRINCIPLE 2: STRUCTURE THE BOARD
TO ADD VALUE

At the end of this reporting period the Board comprised
of five Directors, two of whom were independent non-
executive Directors.

The names of the members of the Board as at the date
of this report are as follows:

John Martin

– Executive Chairman

Professor Graham Vesey

– CEO and Executive Director

Assoc Professor Ben Herbert

– Non-Executive Director

Barry Sechos

– Non-Executive Director

Dr Roger Aston

– Non-Executive Director

The Board’s composition is determined with regard to
the following criteria:

• A majority of Directors having extensive

experience in the industries that the Group
operates in. With those that do not, having
extensive experience in significant aspects of
financial reporting and risk management in ASX
listed companies.

• Re-election of Directors at least every three

years (except for the Executive Chairman and
CEO).

• The size of the Board is appropriate to facilitate

effective discussion and efficient decision
making.

• There are a sufficient number of Directors

to serve on Board sub-committees without
overburdening the Directors or making it difficult
for the Directors to effectively discharge their
responsibilities.

With regards to Director independence, the Board
has adopted specific principles which state that
an independent Director must not be a member of
management and must comply with the following
criteria:

• Not, within the last three years, have been
employed in an executive capacity by
Regeneus or any other member of the Group.

• Not be a substantial shareholder.

• Not, within the last three years, have been a
professional advisor to the Group either as a
principal, or material consultant, or an employee
materially associated with the service provided.

• Not be a material supplier or customer of the

Group or associated either directly or indirectly
with a material supplier or customer of the
Group.

The Board undertakes an annual review of the extent
to which each non-executive Director is independent,
having regard to the criteria set out in its Charter. As
part of this review, each Director is required to make
an annual declaration stating their compliance with
the independence criteria to the Board. As at the
date of this report, the three non-executive Directors
have submitted their annual declaration to the Board,
and the Board is satisfied that two of the three have
retained their independence throughout the reporting
period.

Individual details of the Directors, including period in
office, Board committee memberships, qualifications,
experience and skills are set out in the information on
Directors section of the Directors’ Report.

Role of the Chairman

The Chairman is responsible for the leadership of the
Board. This includes taking responsibility for ensuring
that the Board functions effectively and that they
comply with the continuous disclosure requirements of
the ASX with regard to communicating the operations
and activities of the Group to shareholders. The
Chairman’s responsibilities include:

• Setting the agenda for Board meetings.

• Managing the conduct, frequency and length
of Board meetings to ensure that all Directors
have had the opportunity to establish a detailed
understanding of the issues affecting the Group.

• Facilitating the Board meetings to ensure

effective communication between the Directors
and that all Directors have contributed to the
decision-making process thereby leading to a
considered decision being made in the best
interest of the Group and its shareholders.

Remuneration and Nominations Committee

The Remuneration and Nominations Committee
oversees the appointment and induction process
for Directors and the selection, appointment and
succession planning process of the Group’s CEO.
A copy of the Committee’s Charter is available on
Regeneus ’s website - www.regeneus.com.au.

Directors are initially appointed to office by the Board
and must stand for re-election at the Group’s next annual
general meeting of shareholders. Directors must then
retire from office and nominate for re-election at least
once every three years with the exception of the CEO.

The Remuneration and Nominations Committee
comprises of Barry Sechos, Dr Roger Aston and John
Martin, being a majority of independent non-executive
Directors.

Consolidated Financial Statements for the year ended 30 June 2014

Corporate Governance Statement

Directors’ Performance Evaluation

The Board undertakes an assessment of its collective
performance, the performance of the Board
committees and the Chairman on an annual basis.

Independent Professional Advice and Access To
Information

Each Director has the right of access to all relevant
information in the Group in addition to access to the
Group’s executives. Each Director also has the right to
seek independent professional advice subject to prior
consultation with, and approval from, the Chairman.
This advice will be provided at the Group’s expense
and will be made available to all members of
the Board.

Insurance

The Group has in place a Directors and Officers liability
insurance policy providing a specified level of cover
for current and former Directors and executive officers
of the Group against liabilities incurred whilst acting in
their respective capacity.

3 .3

PRINCIPLE 3: PROMOTE ETHICAL
AND RESPONSIBLE DECISION
MAKING

Code of Conduct

The Group recognises the importance of establishing
and maintaining high ethical standards and decision
making in conducting its business and is committed
to increasing shareholder value in conjunction
with fulfilling its responsibilities as a good corporate
citizen. All Directors, managers and employees are
expected to act with the utmost integrity, honesty
and objectivity, striving at all times to enhance the
reputation and performance of the Group.

Unethical practices, including fraud, legal and
regulatory breaches, and policy breaches are required
to be reported on a timely basis to management.
Reporting parties are able to do so without fear of
reprisal or retribution as their identity and report are
kept in the strictest confidence.

The Group has established a Code of Conduct a copy
of which is available on the Regeneus website – www.
regeneus.com.au.

Share Trading Policy

The Group has established a share trading policy which
governs the trading in the Group’s shares and applies
to all Directors and employees of the Group.

Under this share trading policy, an executive,
employee or Director must not trade in any securities
of the Group at any time when they are in possession

of unpublished, price sensitive information in relation to
those securities.

Before commencing to trade, an executive or
employee must first obtain the permission of the
Company Secretary to do so, and a Director must
obtain the permission of the Chairman. The trading
windows are 45 days after the release of the half
year results, full year results and the holding of the
Annual General Meeting. Trading of securities outside
the trading windows can only occur in exceptional
circumstances and with the approval of the Chairman
for Directors or Key Management Personnel or the
Company Secretary for employees.

As required by the ASX listing rules, the Group notifies
the ASX of any transaction conducted by Directors in
the securities of the Group.

A copy of this policy is available on the Regeneus
website - www.regeneus.com.au.

Diversity Policy

Diversity includes, but is not limited to, gender, age,
ethnicity and cultural background. The Company is
committed to diversity and recognises the benefits
arising from employee and Board diversity and the
importance of benefiting from all available talent.
This diversity policy outlines the requirements for the
Board to develop measurable objectives for achieving
diversity, and annually assess both the objectives and
the progress in achieving those objectives. The Board
has developed the following objectives for achieving
diversity and aims to achieve these objectives over
the next few years as positions become vacant and
appropriately qualified candidates become available.
A copy of this policy is available on the Regeneus
website - www.regeneus.com.au.

2014

2015-2016

No .

38%

No .

14%

38%

50%

Women on the Board

Women in
Senior Management roles

Women employees
in the Company

3 .4

PRINCIPLE 4: SAFEGUARD INTEGRITY
IN FINANCIAL REPORTING

Audit and Risk Committee

An Audit and Risk Committee has been established by
the Board. The Committee’s role and operations are
documented in a Charter.

The Committee’s Charter provides that the majority

Consolidated Financial Statements for the year ended 30 June 2014

Corporate Governance Statement

of members of the Audit and Risk Committee must be
Independent Non-Executive Directors and that the
Chair cannot be the Chairman of the Board. Members
of the Committee throughout the period and at
the date of this report were Barry Sechos, Dr Roger
Aston and John Martin, the majority of whom are
Independent Non-Executive Directors of the Group.

The purpose of the Committee is to:

• Ensure the integrity of the Group’s internal
and external financial reporting including
compliance with applicable laws and
regulations.

• Ensure that financial information provided to the
Board is of a sufficiently high quality to allow the
Board to make informed decisions.

• Ensure that appropriate and effective internal
systems and controls are in place to manage
the Group’s exposure to risk.

• Oversee the appointment, compensation,

retention and oversight of the external auditor,
and review of any non-audit services provided
by the external auditor.

• Regularly review the performance of the

external auditor regarding quality, costs and
independence.

The Audit and Risk Committee is required under the
Charter to meet quarterly and otherwise as necessary.
The Committee met three times during the year
and Committee members’ attendance records are
disclosed in the Audit and Risk Meeting Minutes.

The Chief Financial Officer and external auditor may
also attend the Committee meetings by invitation.
Other Directors and management are invited to
attend Committee meetings and participate in
discussion relating to specific issues that they have an
interest in.

The Committee is authorised to obtain independent
legal advice at the Group’s expense if it considers it
necessary in fulfilling its duties.

A copy of the Risk and Audit Committee charter is
available on the Regeneus website –
www.regeneus.com.au.

3 .5

PRINCIPLE 5: MAKE TIMELY AND
BALANCED DISCLOSURE

Regeneus has established policies and procedures to
ensure timely and balanced disclosure of all material
matters concerning the Group, and ensure that all
shareholders have access to information on the
Group’s financial performance. This ensures that the
Group is compliant with the information disclosure
requirements under the ASX Listing Rules.

These policies and procedures include a
comprehensive Continuous Disclosure Policy that
includes identification of matters that may have a
material impact on the price of Regeneus securities,
notifying them to the ASX, posting relevant information
on the Group’s website and issuing media releases.

Matters involving potential market sensitive information
must first be reported to the Chairman either directly or
via the Company Secretary. The Chairman will advise
the other Directors if the issue is important enough to
warrant the consideration of the full Board. In all cases
the appropriate action must be determined and
carried out in a timely manner in order for the Group
to comply with the Information Disclosure requirements
of the ASX.

Once the appropriate course of action has been
agreed upon, either the Chairman or Company
Secretary will disclose the information to the relevant
authorities, being the only authorised officers of
the Group who are able to disclose such information.
Board approval is required for market sensitive
information such as financial results, material
transactions or upgrading/downgrading
financial forecasts.

A copy of the Continuous Disclosure Policy is available
on the Regeneus website – www.regeneus.com.au.

3 .6

PRINCIPLE 6: RESPECT THE RIGHTS OF
SHAREHOLDERS

Regeneus has established a Shareholder
Communication Policy which describes the Group’s
approach to promoting effective communication with
shareholders which includes:

• The annual report, including relevant information
about the operations of the Group during the
year, key financial information, changes in
the state of affairs and indications of future
developments. The annual report can be
accessed either through the ASX website or
Regeneus’ website www.regeneus.com.au.

• The half year and full year financial results are
announced to the ASX and are available to
shareholders via the Regeneus and
ASX websites.

• All announcements made to the market and

related information (including new presentations
to shareholders and information provided to
analysts or the media during briefings), are made
available to all shareholders under the investor
information section of Regeneus’s website after
they have been released to the ASX.

• Detailed notices of shareholder meetings
are sent to all shareholders in advance of
the meeting.

Consolidated Financial Statements for the year ended 30 June 2014

03 Corporate Governance Statement

The Board encourages full participation by
shareholders at the Annual General Meeting to ensure
a high level of Director accountability to shareholders
and shareholder identification with the Group’s
strategy and goals. Important issues are presented to
the shareholders as single resolutions. The shareholders
are requested to vote on matters such as the adoption
of the Group’s remuneration report, the granting of
options and shares to Directors and changes to the
Constitution.

The external auditor attends the Annual General
Meeting to answer any questions concerning the audit
of the Group and the contents of the auditor’s report.

3 .7

PRINCIPLE 7: RECOGNISE AND
MANAGE RISK

Risk Management Framework

Regeneus recognises that a robust risk management
framework is essential for corporate stability, protecting
the interests of its stakeholders and for sustaining
its competitive market position and long term
performance.

The following objectives drive the Group’s approach to
risk management:

• Having a culture that is risk aware and

supported by high standards of accountability
at all levels.

• Promoting and achieving an integrated
risk management approach whereby
risk management forms a part of all key
organisational processes.

• Supporting more effective decision-making

through better understanding and consideration
of risk exposures.

•

Increasing shareholder value by protecting and
improving share price and earnings per share
in the short to medium term while building a
sustainable business in the longer term.

• Safeguarding the Group’s assets.

• Enabling the Board to fulfil its governance and

compliance requirements.

• Supporting the sign off for ASX Principles 4 and
7 by the Chief Executive Officer and Chief
Financial Officer.

In achieving effective risk management, Regeneus
recognises the importance of leadership. As such, the
Board and executive management have responsibility
for driving and supporting risk management across the
Group.

Audit and Risk Committee

Under its Charter, the Audit and Risk Committee has
been delegated responsibility by the Board to oversee
the implementation and review of risk management
and related internal compliance and control systems
throughout the Group.

The Committee reviews the appropriateness and
adequacy of internal processes for determining,
assessing and monitoring risk areas including the
assessment of the effectiveness of the Group’s internal
compliance and controls including:

• The existence and adequacy of key policies

and procedures.

• The adequacy of disclosures and processes
for regular reporting of information to the
appropriate parties, including the Board.

The Committee is also responsible for monitoring
the Group’s compliance with applicable laws and
regulations including:

• Ensuring that management is reviewing

developments and changes in applicable
laws and regulations relating to the Group’s
responsibilities.

• Reviewing management’s actions and

responses to ensure that the Group’s practices
are compliant with all new developments.

• Reviewing material actual and suspected

breaches of applicable laws and regulations,
and any breaches of Group policies.

• Reviewing material litigation, legal claims,

contingencies or significant risks relating to the
Group.

• Reviewing Director and executive management

related party transactions.

The Audit and Risk Committee reports to the Board on
the major issues and findings that are presented and
discussed at its meetings.

Corporate reporting

Management has implemented a risk management
and internal control system to manage the Group’s
material business risks reports on whether those risks are
being effectively managed.

The Chief Executive Officer and Chief Financial
Officer, in addition to the executive management
have reported and declared in writing to the Board
as to the effectiveness of the Group’s management
of its material business risks, in accordance with
Recommendation 7.2 of the ASX Corporate
Governance Principles.

The Board has received the relevant declarations
from the Chief Executive Officer and Chief Financial

Consolidated Financial Statements for the year ended 30 June 2014

03 Corporate Governance Statement

Officer in accordance with s295A of the Corporations Act 2001 and the relevant assurances required under
Recommendation 7.3 of the ASX Corporate Governance Principles.

3 .8

PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY

Remuneration and Nominations Committee

As previously stated in Principle 2, the Board has established a Remuneration and Nomination Committee whose
role is documented in a Charter, which is approved by the Board.

The objective of the Committee with respect to its remuneration function is to assist the Board in determining
appropriate remuneration arrangements for the Directors and executive management.

These objectives include:

• Reviewing the adequacy and form of remuneration of Independent Non-Executive Directors.

• Ensuring that the remuneration of the Independent Non-Executive Directors is reflective of the responsibilities

and the risks of being a Director of the Group.

• Reviewing the contractual arrangements of the CEO and the executive management team including their

remuneration.

• Comparing the remuneration of the CEO and executive management to comparable groups within similar
industries to ensure that the remuneration on offer can attract, retain and properly reward performance
which will translate into long term growth in shareholder value.

• Annually review key performance indicators of the CEO and executive team to ensure that they remain

congruent with the Group’s strategies and objectives.

• Reviewing the basis for remuneration of other Executive Directors of the Group for their services as Directors.

• Reviewing incentive performance arrangements when instructed by the Board.

• Reviewing proposed remuneration arrangements for new Director or executive appointments.

The Committee will submit their recommendations to the Board regarding the remuneration arrangements and
performance incentives for the CEO and executive team. The Board will review these recommendations before
providing their approval.

Details of the Group’s remuneration structure and details of senior executives’ remuneration and incentives are
set out in the Remuneration Report contained within the Directors’ Report. The Remuneration Report also contains
details on the structure of Non-Executive Director Remuneration.

3 .9 ASX LISTING RULE DISCLOSURE – EXCEPTION REPORTING

The following table discloses the extent to which Regeneus, as at the 30th June 2014, has not followed the best
practice recommendations set by the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations (2nd Edition). As the Company was listed on the ASX on 19 September 2013, it is now focusing
on putting into place the best practice recommendations.

Principle No

Best Practice
Recommendation

Compliance

Reasons for Non-compliance

2.2

4.2

The chair should be
an independant
director

Currently, the Company
has an Executive
Chairman.

The person has been selected as Chairman to bring specific
skills and industry experience relevant to the Company. Given
the size of the Company and the stage of its development, the
Board considers that this appointment is appropriate until such
time that a better alternative can be identified.

The audit committee
should be structured
so that it consists only
of non-executive
directors

The Company’s Audit
and Risk Committee
currently has three
members, two who are
Non executive Directors.

Given the present size of the Company and the Board, the
Audit and Risk Committee currently has only 2 independent
Non-executive Directors as members. The Board believes no
efficiencies or other benefits could be gained by altering the
structure of the Audit and Compliance Committee.

Consolidated Financial Statements for the year ended 30 June 2014

04 Consolidated Statement of Profit or Loss

and Other Comprehensive Income

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2014

Revenue

Cost of sales

Gross profit

Other income

Research & development expenses

Selling expenses

Occupancy expenses

Corporate expenses

Finance costs

Loss before income tax

Income tax benefit

Loss for the year

Other comprehensive income

Total comprehensive loss for the year

Earnings per share

Basic earnings per share

Earnings per share from continuing operations

Diluted earnings per share

Earnings per share from continuing operations

Note

2014
$

2,094,643

(621,498)

1,473,145

3,867,666

(5,758,409)

(2,253,138)

(627,913)

(3,875,367)

(349,202)

(7,523,218)

1,154

(7,522,064)

(0.05)

2013
$

1,769,628

(580,526)

1,189,102

2,627,885

(4,134,478)

(1,783,534)

(468,592)

(2,296,770)

(328,660)

(5,195,047)

(0.05)

Consolidated Financial Statements for the year ended 30 June 2014

05 Consolidated Statement of

Financial Position

Consolidated Statement of Financial Position as at 30 June 2014

Current assets

Cash and cash equivalents

Other financial assets

Trade and other receivables

Inventories

Current tax assets

Other current assets

Total current assets

Non-current assets

Property, plant and equipment

Intangible assets

Other non current assets

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Provisions

Financial liabilities

Oher current liabilities

Total current liabilities

Non current liabilities

Other non current liabilities

Total non-current liabilities

Total liabilities

Net assets / (Net liabilities)

Equity

Issued capital

Retained earnings / (Accumulated losses)

Reserves

Total equity

Note

21.1

21.2

2014
$

2,507,497

127,754

134,266

205,709

3,730,576

383,472

7,089,274

1,361,529

30,001

1,778,250

3,169,780

10,259,054

921,004

167,751

608,900

1,697,655

253,371

1,951,026

8,308,028

24,908,920

(18,792,423)

2,191,531

8,308,028

2013
$

410,658

122,926

26,576

231,057

2,327,288

251,689

3,370,194

608,563

44,677

653,240

4,023,434

1,842,458

149,801

4,900,000

6,892,259

(2,868,825)

6,651,935

(11,269,205)

1,748,445

(2,868,825)

Consolidated Financial Statements for the year ended 30 June 2014

06 Consolidated Statement of

Changes in Equity

For year ended 30 June 2014

Share
Capital
$’000

Share Option
Reserve
$’000

Retained
Earnings
$’000

Foreign
Currency
Translation
Reserve
$’000

Total
Attributable to
Parent Owners
$’000

Non -
Controlling
Interest
$’000

Total Equity
$’000

6,651,935

1,441,804

(6,145,049)

1,948,690

Balance at
1 July 2012

Reported loss for the year

Reported other
comprehensive income

Employee share-based
payment option expense

Shares issued on exercise
of options

Transfer to share capital for
options exercised

Issue of share capital - net
of transaction costs

Transfer from reserves
to retained earnings for
options forfeited

Balance at
30 June 2013

Balance at
1 July 2013

Reported loss for the year

Reported other
comprehensive income

Employee share-based
payment option expense

Shares issued on exercise
of options

377,532

(5,195,047)

(70,891)

70,891

6,651,935

1,748,445

(11,269,205)

6,651,935

1,748,445

(11,269,205)

(7,523,218)

1,647,792

1,650,438

Transfer to share capital for
options exercised

1,205,860

(1,205,860)

Issue of share capital - net
of transaction costs

15,400,687

Transfer from reserves
to retained earnings for
options forfeited

Balance at
30 June 2014

(5,195,047)

377,532

(2,868,825)

(7,523,218)

1,154

1,647,792

1,650,438

15,400,687

(5,195,047)

377,532

(2,868,825)

(7,523,218)

1,154

1,647,792

1,650,438

15,400,687

24,908,920

2,190,377

(18,792,423)

1,154

8,308,028

Consolidated Financial Statements for the year ended 30 June 2014

07 Consolidated Statement of

Cash Flows

Statement of cash flows for year ended 30 June 2014

Note

2014
$

2013
$

Operating activities

Receipts from customers

Payments to suppliers and employees

Interest received

Other income

R&D tax refund

Finance costs

1,984,467

2,318,031

(10,803,142)

(8,665,253)

127,151

137,090

2,327,288

(12,105)

50,683

1,678,689

Net cash (used in) operating activities

(6,239,251)

(4,617,850)

Investing activities

Investment in short-term deposit

Purchase of property, plant and equipment

Purchase of intangibles

Deposits

(4,828)

(1,174,695)

(1,180)

(692,640)

(122,926)

(262,223)

(14,568)

Net cash (used in) investing activities

(1,873,343)

(399,717)

Financing activities

Proceeds from issue of shares

Proceeds from issue of Convertible Notes

Net cash provided by financing activities

Net change in cash and cash equivalents held

Cash and cash equivalents at beginning of financial year

Cash and cash equivalents at end of financial year

10,209,433

2,096,839

410,658

2,507,497

4,900,000

(117,567)

528,225

410,658

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

NATURE OF OPERATIONS

Regeneus is a Sydney-based ASX listed regenerative medicine company that develops and commercialises
innovative personalised and off-the-shelf adipose (fat) derived stem cell and other biological therapies for human
and veterinary health markets with a focus on musculoskeletal and oncology conditions. Regenerative medicine
is a rapidly growing multi-disciplinary specialty that is focused on the repair or regeneration of cells, tissues and
organs. The primary goal is to enhance the body’s natural ability to replace tissue damaged or destroyed by injury
or disease.

The commercial activities are conducted in business units:

• Human Health

• Veterinary Health

GENERAL INFORMATION AND STATEMENT OF COMPLIANCE

The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards (including Australian Accounting Interpretations), other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001.

Regeneus Ltd is a for-profit entity for the purpose of preparing the financial statements.

The financial statements cover Regeneus Ltd and its controlled entities as a consolidated entity (“The Group”). As at
the 30 June 2014, Regeneus is a Public Group, incorporated and domiciled in Australia.

The address of its registered office and its principal place of business is 25 Bridge St, Pymble, NSW 2073, Australia.

Statement of compliance

Compliance with Australian Accounting Standards ensures that the financial statements and notes of Regeneus
comply with International Financial Reporting Standards (IFRS) as issued by the IASB.

The consolidated financial statements for the year ended 30 June 2014 were approved and authorised for issue by
the Board of Directors on 22 August 2014.

Basis of preparation

The financial statements have been prepared on an accruals basis and are based on historical costs modified by
the revaluation of selected non-current assets and financial instruments for which the fair value basis of accounting
has been applied.

Adoption of new and revised accounting standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by
the Australian Accounting Standards Board that are relevant to its operations and effective for the current annual
reporting period.

Significant effects on current, prior or future periods arising from the first-time application of the standards discussed
above in respect of presentation, recognition and measurement of accounts are described in the following notes;

Changes in accounting policy

During the year, the Group changed its accounting policy with respect to the disclosure of the R&D Tax Incentive
The Group now recognises the R&D Tax Incentive as Other Income in the Consolidated Statement of Profit or Loss
and Other Comprehensive Income. The Group believes the new policy is preferable as it more closely aligns the
accounting for these incentives as income rather than a tax offset and it is now included with other similar income.

Additionally, as it is widely recognised that these grants are other income the change will provide clarity and
enhance the comparability of the reports. The impact of this change in accounting policy, on the consolidated
financial statements, is to reduce the tax benefit to nil and increase the other income in both years being reported.
The impact on each line item of the financial statements is shown in the table on the next page:

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

2014
$

2013
$

Changes to Statement of
Profit or Loss and Other
Comprehensive Income
(extract)

Previous
Amount
$

Adjustments
$

Restated
Amount
$

Previous
Amount
$

Adjustments
$

Restated
Amount
$

Other income

137,090

3,730,576

3,867,666

300,597

2,327,288

2,627,885

Loss before income tax

(11,253,794)

3,730,576

(7,523,218)

(7,522,335)

2,327,288

(5,195,047)

Income tax benefit

3,730,576

(3,730,576)

2,327,288

(2,327,288)

New and revised standards that are effective for these financial statements

A number of new and revised standards are effective for annual periods beginning on or after 1 July
2013. Information on these new standards is presented below.

AASB 10 Consolidated Financial Statements

AASB 10 supersedes AASB 127 Consolidated and Separate Financial Statements (AASB 127) and AASB Interpretation
112 Consolidation - Special Purpose Entities. AASB 10 revises the definition of control and provides extensive new
guidance on its application. These new requirements have the potential to affect which of the Group’s investees
are considered to be subsidiaries and therefore to change the scope of consolidation. The requirements on
consolidation procedures, accounting for changes in non-controlling interests and accounting for loss of control of
a subsidiary are unchanged.

Management has reviewed its control assessments in accordance with AASB 10 and has concluded that there is
no effect on the classification (as subsidiaries or otherwise) of any of the Group’s investees held during the period or
comparative periods covered by these financial statements.

AASB 13 Fair Value Measurement

AASB 13 clarifies the definition of fair value and provides related guidance and enhanced disclosures about fair
value measurements. It does not affect which items are required to be fair-valued. The scope of AASB 13 is broad
and it applies for both financial and non-financial items for which other Australian Accounting Standards require or
permit fair value measurements or disclosures about fair value measurements, except in certain circumstances.

AASB 13 applies prospectively for annual periods beginning on or after 1 January 2013. Its disclosure requirements
need not be applied to comparative information in the first year of application. The Group has however included
as comparative information the AASB 13 disclosures that were required previously by AASB 7 Financial Instruments:
Disclosures.

Amendments to AASB 119 Employee Benefits

The 2011 amendments to AASB 119 made a number of changes to the accounting for employee benefits.
The amendments which impact the Group related to the following:

Under the amendments, employee benefits ‘expected to be settled wholly’ (as opposed to ‘due to be settled’
under the superseded version of AASB 119) within 12 months after the end of the reporting period are short-term
benefits, and are therefore not discounted when calculating leave liabilities. As the Group does not expect all
annual leave for all employees to be used wholly within 12 months of the end of reporting period, annual leave
is included in ‘other long-term benefit’ and discounted when calculating the leave liability. This change has had
no impact on the presentation of annual leave as a current liability in accordance with AASB 101 Presentation of
Financial Statements.

Management have assessed the impact of this change and noted that it is not material to the Group for the year
ended 30 June 2014 and 30 June 2013.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

AASB 9 Financial Instruments

AASB 9 introduces new requirements for the
classification and measurement of financial assets
and liabilities. These requirements improve and simplify
the approach for classification and measurement of
financial assets compared with the requirements of
AASB 139. The main changes are:

(a) Financial assets that are debt instruments will
be classified based on (1) the objective of
the entity’s business model for managing the
financial assets; and (2) the characteristics of the
contractual cash flows.

(b) Allows an irrevocable election on initial

recognition to present gains and losses on
investments in equity instruments that are
not held for trading in other comprehensive
income (instead of in profit or loss). Dividends in
respect of these investments that are a return
on investment can be recognised in profit or
loss and there is no impairment or recycling on
disposal of the instrument.

measured at fair value through profit or loss
at initial recognition if doing so eliminates
or significantly reduces a measurement or
recognition inconsistency that would arise from
measuring assets or liabilities, or recognising the
gains and losses on them, on different bases.

(d) Where the fair value option is used for financial

liabilities the change in fair value is to be
accounted for as follows:

- The change attributable to changes in credit
risk are presented in other comprehensive
income (OCI); and

- The remaining change is presented in profit

or loss.

If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes
in credit risk are also presented in profit or loss.

Accounting Standards issued but not yet
effective and not been adopted early by
the Group

At the date of authorisation of these financial
statements, certain new standards, amendments
and interpretations to existing standards have been
published but are not yet effective, and have not
been adopted early by the Group. Management
anticipates that all of the relevant pronouncements
will be adopted in the Group’s accounting policies for
the first period beginning after the effective date of
the pronouncement. Information on new standards,
amendments and interpretations that are expected
to be relevant to the Group’s financial statements is
provided below. Certain other new standards and
interpretations have been issued but are not
expected to have a material impact on the Group’s
financial statements.

AASB 2014-1 Amendments to Australian Accounting
Standards

Part A of AASB 2014-1 makes amendments to various
Australian Accounting Standards arising from the
issuance by the International Accounting Standards
Board (IASB) of International Financial Reporting
Standards Annual Improvements to IFRSs 2010-2012
Cycle and Annual Improvements to IFRSs 2011-2013
Cycle. Among other improvements, the amendments
arising from Annual Improvements to IFRSs 2010-
2012 Cycle:

(a) clarify that the definition of a ‘related party’
includes a management entity that provides
key management personnel services to the
reporting entity (either directly or through a
group entity); and

(b) amend AASB 8 Operating Segments to

explicitly require the disclosure of judgements
made by management in applying the
aggregation criteria.

Part E of AASB 2014-1 makes amendments to Australian
Accounting Standards to reflect the AASB’s decision
to defer the mandatory application date of AASB
9 Financial Instruments to annual reporting periods
beginning on or after 1 January 2018. Part E also makes
amendments to numerous Australian Accounting
Standards as a consequence of the introduction of
Chapter 6 Hedge Accounting into AASB 9 and to
amend reduced disclosure requirements for AASB
7 Financial Instruments: Disclosures and AASB 101
Presentation of Financial Statements.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

SUMMARY OF ACCOUNTING
POLICIES

Overall Considerations

The significant accounting policies that have been
used in the preparation of these consolidated financial
statements are summarised below.

The consolidated financial statements have been
prepared using the measurement bases specified by
Australian Accounting Standards for each type of
asset, liability, income and expense. The measurement
bases are more fully described in the accounting
policies below.

a . Basis of Consolidation

A controlled entity is any entity that Regeneus has the
power to control the financial and operating policies
of the entity so as to obtain benefits from its activities.
In assessing the power to govern, the existence and
effect of holdings of actual and potential voting rights
are considered.

A list of controlled entities is contained in Note 4 to the
financial statements. All controlled entities have a June
financial year end.

As at reporting date, the assets and liabilities of all
controlled entities have been incorporated into the
consolidated financial statements as well as their results
for the year then ended. All inter-Group balances and
transactions between entities in the Group have been
eliminated on consolidation.

b . Segment Reporting

The Group has two operating segments: Human Health
and Veterinary Health. In identifying its operating
segments, management generally follows the Group’s
service lines, which represent the main products and
services provided by the Group. (see note 5)

There has been a change from prior periods in the
measurement methods used to determine reported
segment profit or loss. Research and Development
is now not considered to be a commercial
operating segment.

Each of these operating segments is managed
separately as each of these service lines require
different technologies and other resources as well as
marketing approaches.

The measurement policies the Group uses for segment
reporting under AASB 8 are the same as those used in
its financial statements, except that expenses related
to share-based payments are not included in arriving
at the operating profit of the operating segments.
In addition, corporate assets which are not directly
attributable to the business activities of any operating
segment are not allocated to a segment.

c . Going concern basis of accounting

Notwithstanding the consolidated entity incurring a net
loss for the year, negative operating cash flows from
operations and accumulated losses, the Directors have
prepared the financial statements on a going concern
basis. As at 30 June 2014 Regeneus had positive net
assets. On 15 August 2014 the Company raised $3m
in additional equity which along with the R&D rebate
ensures available funds for its ongoing operations.

d . Comparative Figures

When required by accounting standards, comparative
figures have been adjusted to conform to changes in
the presentation for the current financial year.

e . Cash and Cash Equivalents

Cash comprises cash on hand and demand
deposits. Cash equivalents are short-term, highly
liquid investments that are readily convertible to
known amounts of cash and which are subject to an
insignificant risk of changes in value.

f .

Income Tax

The income tax expense (revenue) for the year
comprises current income tax expense (income) and
deferred tax expense (income). Current and deferred
income tax expense (income) is charged or credited
directly to other comprehensive income instead of
the profit or loss when the tax relates to items that
are credited or charged directly to other
comprehensive income.

Tax expense recognised in profit or loss comprises the
sum of deferred tax and current tax not recognised in
other comprehensive income or directly in equity.

Current income tax assets and/or liabilities comprise
those obligations to, or claims from, the Australian
Taxation Office (ATO) and other fiscal authorities
relating to the current or prior reporting periods, that
are unpaid at the reporting date. Calculation of
current tax is based on tax rates and tax laws that
have been enacted or substantively enacted by the
end of the reporting period.

Deferred income taxes are calculated using the
liability method on temporary differences between
the carrying amounts of assets and liabilities and their
tax bases. However, deferred tax is not provided
on the initial recognition of goodwill or on the initial
recognition of an asset or liability unless the related
transaction is a business combination or affects tax
or accounting profit. Deferred tax on temporary
differences associated with investments in subsidiaries
and joint ventures is not provided if reversal of these
temporary differences can be controlled by the Group
and it is probable that reversal will not occur in the
foreseeable future.

Deferred tax assets and liabilities are calculated,
without discounting, at tax rates that are expected to

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

apply to their respective period of realisation, provided
they are enacted or substantively enacted by the end
of the reporting period.

Deferred tax assets are recognised to the extent
that it is probable that they will be able to be utilised
against future taxable income, based on the Group’s
forecast of future operating results which is adjusted
for significant non-taxable income and expenses and
specific limits to the use of any unused tax loss or credit.
Deferred tax liabilities are always provided for in full.

Deferred tax assets and liabilities are offset only
when the Group has a right and intention to set off
current tax assets and liabilities from the same
taxation authority.

Changes in deferred tax assets or liabilities are
recognised as a component of tax income or expense
in profit or loss, except where they relate to items that
are recognised in other comprehensive income (such
as the revaluation of land) or directly in equity, in which
case the related deferred tax is also recognised in
other comprehensive income or equity, respectively.

g .

Inventories

Inventories are measured at the lower of cost and net
realisable value. The average cost method has been
used to value inventory. Net realisable value represents
the estimated selling price for inventories less all
estimated costs of completion and costs necessary to
make the sale.

h . Plant and Equipment

Each class of property, plant and equipment is carried
at cost less, where applicable, any accumulated
depreciation and impairment losses.

Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as
appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance
are charged to the statement of profit or loss and other
comprehensive income during the financial period in
which they are incurred.

i . Depreciation

The depreciable amount of fixed assets are
depreciated on either a straight line or reducing
balance basis over their useful lives to the
Consolidated entity commencing from the time
the asset is held ready for use. Leased assets are
depreciated over the shorter of either the unexpired
period of the lease or the estimated useful lives of
the assets.

The depreciation rates used for each class of
depreciable assets are:

Class of Fixed Asset

Depreciation Rate

Office equipment
reducing balance

Laboratory equipment
reducing balance

Office fit out
straight line

Leasehold improvements
straight line

2.5% - 67%

20% - 30%

20%

The assets’ residual values and useful lives are
reviewed, and adjusted if appropriate, at each
reporting period date. An asset’s carrying amount is
written down immediately to its recoverable amount
if the asset’s carrying amount is greater than its
estimated recoverable amount. Gains and losses on
disposals are determined by comparing proceeds
with the carrying amount. These gains or losses are
included in the statement of profit or loss and other
comprehensive income.

j .

Intangibles

Intangible assets include acquired software. Intangible
assets are accounted for using the cost model
whereby capitalised costs are amortised on a reducing
balance basis over their estimated useful lives, as these
assets are considered finite. Amortisation commences
from the date the asset is brought into use. Acquired
computer software licences are capitalised on the
basis of the costs incurred to acquire and install the
specific software. Subsequent expenditure is expensed
as incurred.

Costs associated with maintaining intangibles are
expensed as incurred.

The amortisation rate used for acquired software is 25%
reducing balance.

The company has reviewed its policy not to capitalise
development costs unless they meet the criteria
as set in AASB 118. All not meeting these criteria
are expensed.

Impairment of non-financial assets

At each reporting date, the Group reviews the
carrying amounts of its tangible and intangible assets
to determine whether there is any indication that
the assets may be impaired. If any such indication
exists, or when annual impairment testing for an
asset is required (i.e. Intangible assets with indefinite
useful lives and intangible assets not yet available
for use), the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount
is the higher of its fair value less costs to sell and its
value in use and is determined for an individual asset,
unless the asset does not generate cash inflows that
are largely independent of those from other assets or

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

groups of assets and the asset’s value in use cannot
be estimated to be close to its fair value. In such cases
the asset is tested for impairment as part of the cash
generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds
its recoverable amount, the asset or cash-generating
unit is considered impaired and is written down to its
recoverable amount.

To determine the value-in-use, management estimates
expected future cash flows from each asset or cash-
generating unit and determines a suitable interest
rate in order to calculate the present value of those
cash flows. The data used for impairment testing
procedures are directly linked to the Group’s latest
approved budget, adjusted as necessary to exclude
the effects of future reorganisations and asset
enhancements. Discount factors are determined
individually for each asset or cash-generating unit and
reflect management’s assessment of respective risk
profiles, such as market and asset-specific risks factors.

Impairment losses relating to continuing operations
are recognised in those expense categories consistent
with the function of the impaired asset unless the
asset is carried at revalued amount (in which case the
impairment loss is treated as a revaluation decrease).

l .

Leases

Leases of fixed assets where substantially all the
risks and benefits incidental to the ownership of the
asset, but not the legal ownership, are transferred to
entities in the Group are classified as finance leases.
Finance leases are capitalised by recording an asset
and a liability at the lower of the amounts equal to
the fair value of the leased property or the present
value of the minimum lease payments, including any
guaranteed residual values. Lease payments are
allocated between the reduction of the lease liability
and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis
over the shorter of their estimated useful lives or the
lease term.

Lease payments for operating leases, where
substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which
they are incurred. Lease incentives under operating
leases are recognised as a liability and amortised on a
straight-line basis over the life of the lease term.

m . Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each entity is measured
using the currency of the primary economic
environment in which that entity operates. The
consolidated financial statements are presented in

Australian dollars which is the Consolidated entity’s
functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into
functional currency using the exchange rates
prevailing at the date of the transaction. Foreign
currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange
rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the
exchange rate at the date when fair values were
determined.

Exchange differences arising on the translation of
monetary items are recognised in the statement of
profit or loss and other comprehensive income.

n . Financial instruments

Financial assets and financial liabilities are recognised
when the Group becomes a party to the contractual
provisions of the financial instrument.

Financial assets are de-recognised when the
contractual rights to the cash flows from the financial
asset expire, or when the financial asset and all
substantial risks and rewards are transferred.

A financial liability is de-recognised when it is
extinguished, discharged, cancelled or expires.

Financial assets and financial liabilities are measured
initially at fair value adjusted by transactions costs,
except for financial assets and financial liabilities
carried at fair value through profit or loss, which are
measured initially at fair value.

Financial assets and financial liabilities are measured
subsequently as described below.

Loans and receivables

Loans and receivables are non-derivative financial
assets with fixed or determinable payments that
are not quoted in an active market and are stated
at amortised cost using the effective interest rate
method. The Group’s cash and cash equivalents, trade
and most other receivables fall into this category of
financial instruments.

Individually significant receivables are considered
for impairment when they are past due or when
other objective evidence is received that a specific
counterparty will default. Receivables that are not
considered to be individually impaired are reviewed
for impairment in groups, which are determined by
reference to the industry and region of a counterparty
and other shared credit risk characteristics. The
impairment loss estimate id then based on recent
historical counterplay default rates for each
identified group.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

Financial liabilities

The Group’s financial liabilities include trade and other
payables, and finance lease obligations.

Financial liabilities are measured subsequently at
amortised cost using the effective interest method,
except for financial liabilities held for trading or
designated at fair value through profit or loss, that are
carried subsequently at fair value with gains or losses
recognised in profit or loss.

o . Equity and Reserves

Share capital represents the fair value of shares that
have been issued. Any transaction costs associated
with the issuing of shares are deducted from share
capital, net of any related income tax benefits.

Other components of equity include the following:

• Option reserve - comprises equity-settled share

based remuneration plans for the Groups
employees.

• Retained earnings/(Accumulated losses)

include all current and prior period retained
profits/(losses).

p. Post-employment benefits and short-term
employee benefits

The Group pays fixed contributions into independent
entities in relation to several plans.

The Groups has no legal or constructive obligations
to pay contributions in addition to fixed contributions,
which are recognised as an expense in the period that
the relevant employee services are received.

Short-term employee benefits, including annual leave
entitlement, are current liabilities included in employee
benefits, measured at the undiscounted amount that
the Group expects to pay as a result of the unused
entitlement. All amounts are expected to be settled
within 1 year.

q . Share-based employee remuneration

The Group operates equity-settled share-based
remuneration plans for its employees.

All goods and services received in exchange for the
grant of any share-based payment are measured at
their fair values. Where employees are rewarded using
share-based payments, the fair values of employees’
services are determined indirectly by reference to the
fair value of the equity instruments granted. This fair
value is appraised at the grant date and excludes the
impact of non-market vesting conditions (for example
profitability and sales growth targets and performance
conditions).

All share-based remuneration is ultimately recognised
as an expense in profit or loss with a corresponding

credit to share option reserve. If vesting periods
or other vesting conditions apply, the expense is
allocated over the vesting period, based on the best
available estimate of the number of share options
expected to vest.

Non-market vesting conditions are included in
assumptions about the number of options that are
expected to become exercisable. Estimates are
subsequently revised if there is any indication that
the number of share options expected to vest differs
from previous estimates. Any cumulative adjustment
prior to vesting is recognised in the current period. No
adjustment is made to any expense recognised in
prior periods if share options ultimately exercised are
different to that estimated on vesting.

Upon exercise of share options, the proceeds received
net of any directly attributable transaction costs are
allocated to share capital.

r . Revenue

Revenue is recognised when it is probable that
economic benefits associated with the transaction will
flow to the Consolidated Group. Revenue is measured
at the fair value of the consideration received or
receivable. Licence fee revenue is recognised on
a straight line basis over the period that the licence
covers.

Revenue from the sale of goods is recognised at the
point of delivery as this corresponds to the transfer of
significant risks and rewards of ownership of the goods
and the cessation of all involvement in those goods.

Revenue relating to the provision of services is
recognised when the services are provided.

Interest revenue is recognised using the effective
interest rate method.

All revenue is stated net of the amount of goods and
services tax (GST).

s . Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of
the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Taxation
Office. In these circumstances, the GST is recognised as
part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in
the statement of financial position are shown inclusive
of GST.

Cash flows are presented in the statement of cash
flows on a gross basis, except for the GST component
of investing and financing activities, which are
disclosed as operating cash flows.

t . Research and development

Expenditure during the research phase of a project is
recognised as an expense when incurred. The research

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

and development tax incentive is calculated and accrued at year end. The amount is credited to income tax
expense and the receivable is included in the Consolidated Statement of Financial Position as a current tax asset.

u . Operating expenses

Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin.
Expenditure for warranties is recognised and charged against the associated provision when the related revenue is
recognised.

v. Significant management judgements and estimates in applying accounting policies

The Directors evaluate estimates and judgements incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events
and are based on current trends and economic data.

When preparing the financial statements, management undertakes a number of judgements, estimates and
assumptions about the recognition and measurement of assets, liabilities, income and expenses.

Estimation Uncertainty

Information about estimates and assumptions that have the most significant effect on recognition and
measurement of assets, liabilities, income and expense is provided below. Actual results may be substantially
different.

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the
expected utility of the assets. Uncertainties in these estimates relate to technical obsolence that may change the
utility of certain software and IT equipment.

Inventories

Management estimates the net realisable values of inventories, taking into account the most reliable evidence
available at each reporting date.

CONTROLLED ENTITIES

Set our below are details of the subsidiaries held directly by the Group

Name of the Subsidiary

Country of Incorporation &
Principal Place of Business

Principal Activity

Group Proportion of

Ownership Interests

30-Jun-14

30-Jun-13

Regeneus Animal Health
Pty Ltd

Australia – 25 Bridge St,
Pymble, NSW 2073, Australia

Non trading

Cell Ideas Pty Ltd

Australia – 25 Bridge St,
Pymble, NSW 2073, Australia

Non trading –
owns various IP

100%

Regeneus South East Asia
Pte Ltd – incorporated on
24th February 2014

Singapore - 4 Sussex
Gardens, Singapore,

Singapore operating entity

100%

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

SEGMENT REPORTING

Management currently identifies the Group’s two service lines as its operating segments (see Note 3b). These
operating segments are monitored by the Group’s management committee, and strategic decisions are made on
the basis of adjusted segment operating results.

Segment information for the reporting period is as follows:

Revenue

Cost Of Goods Sold

Segment Gross Profit

Research & development expenses

Selling expenses

Occupancy expenses

Corporate expenses

Segment expenses

Segment operating Loss

Segment assets

Revenue

Cost Of Goods Sold

Segment Gross Profit

Research & development expenses

Selling expenses

Occupancy expenses

Corporate expenses

Segment expenses

Segment operating Loss

Segment assets

Human 2014
$

Veterinary 2014
$

765,215

(539,522)

225,693

(105,777)

(886,473)

(46,780)

(604,123)

(1,643,153)

(1,417,460)

281,014

232,821

(81,976)

150,845

(263,412)

(320,695)

(15,033)

(238,130)

(837,270)

(686,425)

61,802

Human 2013
$

Veterinary 2013
$

749,600

(486,163)

263,437

(149,497)

(699,375)

(48,524)

(379,115)

(1,276,511)

(1,013,074)

171,204

207,012

(94,363)

112,649

(52,569)

(268,079)

(18,332)

(161,024)

(500,004)

(387,355)

3,212

Total 2014
$

998,036

(621,498)

376,538

(369,189)

(1,207,168)

(61,813)

(842,253)

(2,480,423)

(2,103,885)

342,816

Total 2013
$

956,612

(580,526)

376,086

(202,066)

(967,454)

(66,856)

(540,139)

(1,776,515)

(1,400,429)

174,416

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

Revenues

Total reportable segment revenues

Other revenues

Group revenues

Profit or loss

Total reportable segment operating Loss

Other segment revenue

Other Income

Research & development expenses

Selling expenses

Occupancy expenses

Corporate expenses

Finance costs

Group loss before tax

Assets

Total reportable segment assets

Other non segment current assets

Non segment Fixed Assets

Other non segment non current assets

Group Assets

2014
$

998,036

1,096,607

2,094,643

(2,103,885)

1,096,607

3,867,666

(5,389,220)

(1,045,971)

(566,100)

(3,033,113)

(349,202)

(7,523,218)

342,816

6,955,008

1,152,979

1,808,251

10,259,054

2013
$

956,612

813,016

1,769,628

(1,400,429)

813,016

2,627,885

(3,932,412)

(816,079)

(401,737)

(1,756,631)

(328,660)

(5,195,047)

174,416

3,343,618

460,723

44,677

4,023,434

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

REVENUE

CASH AND CASH EQUIVALENTS

2014
$

2013
$

Cash and other cash equivalents include the following
components

Operating activities

Licence fee income

904,000

762,333

Income from sale of goods

998,036

956,612

Interest received

192,607

50,683

2,094,643

1,769,628

Cash on hand

2014
$

2013
$

500

624

Cash at Bank (AUD account)

2,482,160

410,034

Cash at Bank (SGD account)

24,837

Total cash and cash equivalents

2,507,497

410,658

Total revenue

Other income

Grant income

100,841

93,088

OTHER FINANCIAL ASSETS

R&D tax incentive

3,730,576

2,327,288

Other income

36,249

207,509

Total other income

3,867,666

2,627,885

Term deposits

2014
$

2013
$

127,754

122,926

Total other financial assets

127,754

122,926

RESULTS FOR THE YEAR

The results for the year have been arrived at after
charging the following items

TRADE AND OTHER RECEIVABLES

Trade and other receivables consist of the following

a . Expenses

Cost of sales

Rental expense on operating
leases - minimum lease
payments

Amortisation of intangible
assets

2014
$

2013
$

621,498

580,526

247,911

167,012

15,855

14,953

Trade receivables

2014
$

134,266

Total trade and other receivables

134,266

2013
$

26,576

All amounts are short term. The net carrying value
of trade receivables is considered a reasonable
approximation of fair value. All of the Group’s trade
and other receivables have been reviewed for
indicators of impairment of which none were noted.

Depreciation

317,821

180,511

Loss on disposal of assets

103,908

Employment expenses
(excludes share based
payments)

4,632,604

3,263,827

INVENTORIES

Inventories consist of the following

2014
$

2013
$

205,709

231,057

Share based payments

1,647,792

377,530

Write-off of inventories

2,956

22,815

Raw materials and consumables
at cost

b . Finance costs:

Total inventories

205,709

231,057

- Interest expense

342,305

323,291

12 OTHER CURRENT ASSETS

- Bank charges

6,897

5,369

Total finance costs

349,202

328,660

Other current assets

Prepayments

Security deposits

GST receivables

Other receivables

2014
$

2013
$

137,702

150,000

95,770

89,122

63,217

94,018

5,332

Total other current assets

383,472

251,689

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

PLANT AND EQUIPMENT

Details of the Group’s property, plant and equipment and their carrying amount are as follows:

Office
Equipment
$

Lab
Equipment
$

Leasehold
Improvements
$

Equipment in
Clinics
$

Office
Fit Out
$

Total
$

Gross carrying amount

Balance 1 July 2013

Additions

Disposals

Balance 30 June 2014

Depreciation and impairment

175,035

29,141

204,176

376,902

47,275

(8,668)

415,509

Balance 1 July 2013

(79,217)

(147,534)

Disposals

Depreciation

8,199

(37,320)

(89,009)

Balance 30 June 2014

(116,537)

(228,344)

Carrying amount 30 June 2014

87,639

187,165

213,018

(213,018)

(77,481)

105,882

(28,401)

188,716

132,459

(3,323)

317,852

(40,876)

575

(69,001)

(109,302)

953,671

972,265

1,181,140

(225,009)

972,265

1,909,802

(94,090)

(345,108)

114,656

(317,821)

(548,273)

208,550

878,175

1,361,529

Gross carrying amount

Balance 1 July 2012

Additions

Disposals

121,489

53,546

280,264

96,638

213,018

76,677

112,039

Balance 30 June 2013

175,035

376,902

213,018

188,716

Depreciation and impairment

Balance 1 July 2012

(48,279)

(74,727)

(34,879)

(6,712)

Disposals

Depreciation

Balance 30 June 2013

Carrying amount 30 June 2013

(30,938)

(79,217)

95,818

(72,807)

(147,534)

229,368

(42,602)

(77,481)

135,537

(34,164)

(40,876)

147,840

691,448

262,223

953,671

(164,597)

(180,511)

(345,108)

608,563

The Company has an option to acquire the premises fit out, at the end of the finance lease in January 2016 for
$150,000.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

14 OTHER INTANGIBLE ASSETS

TRADE AND OTHER PAYABLES

Details of the Group’s other intangible assets and their
carrying amounts are as follows:

Trade and other payables consist of the following

Acquired
Software
Licenses
$

66,541

1,179

67,720

Total
$

66,541

1,179

67,720

Gross carrying amount

Balance at 1 July 2013

Addition, separately acquired

Balance at 30 June 2014

Amortisation and impairment

Balance at 1 July 2013

(21,864)

Amortisation

(15,855)

Balance at 30 June 2014

(37,719)

Carrying amount 30 June 2014

30,001

Gross carrying amount

Balance at 1 July 2012

Addition, separately acquired

Balance at 30 June 2013

Amortisation and impairment

51,973

14,568

66,541

51,973

14,568

66,541

Balance at 1 July 2012

(6,911)

Amortisation

(14,953)

Balance at 30 June 2013

(21,864)

Carrying amount 30 June 2013

44,677

2014
$

2013
$

Current

Trade payables

434,844

627,841

Amounts payable to related
parties

Accruals

PAYG payable

10,548

76,314

279,983

918,546

93,919

137,511

Superannuation payable

101,710

82,246

Total trade and other payables

921,004

1,842,458

All amounts are short term and the carrying values are
considered to be a reasonable approximation of fair
value.

16 .1 Foreign currency risk

The carrying amount of trade and other payables
denominated in the foreign currencies is:

US Dollar

GBP

Euro

Yen

17 CURRENT TAX ASSET

2014
$

7,325

2,047

20,874

2013
$

36,109

34,247

3,069

2014
$

2013
$

15 OTHER NON CURRENT ASSETS

Current

2014
$

2013
$

Non current

Shareholder Loan

Security deposits

Other non current assets

1,234,755

542,640

855

Total other non current assets

1,778,250

The shareholder loan is a full recourse, interest free,
loan for 4 years, maturing in July 2017.

R&D tax refund receivable

3,730,576

2,327,288

Total current tax asset

3,730,576

2,327,288

PROVISIONS

Current - annual leave

Opening balance 1 July

Benefits accrued

2014
$

2013
$

149,801

17,950

53,131

96,670

Balance as at 30 June

167,751

149,801

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

FINANCIAL LIABILITIES

Current

Convertible notes issued

Total financial liabilities

2014
$

2013
$

4,900,000

The convertible notes were issued with a coupon rate of 10% p.a. and, in accord with the original offer, were
converted to shares as part of the IPO at a 12% discount to the IPO price of $0.25.

20 OTHER LIABILITIES

2014
$

2013
$

Current

Deferred Income

Lease liability

Total other current liabilities

Non current

Lease liability

120,000

488,900

608,900

253,371

Total other non current liabilities

253,371

EQUITY

21 .1 Share Capital

The share capital of Regeneus Ltd consists only of fully paid ordinary shares; the shares do not have a par value.
All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the
shareholders’ meeting of Regeneus Ltd.

2014
Shares

2013
Shares

2014
$

2013
$

102,934,566

6,651,935

Shares Issued and fully paid

Beginning of the year

Options exercised

Convertible notes and interest capitalised

25,560,246

Shares issued

42,630,000

13,268,265

2,856,298

5,623,256

9,777,431

Closing balance at the end of the year

184,393,077

102,934,566

24,908,920

6,651,935

Additional shares were issued during 2014 relating to share-based payments (see Note 22.2) for details on the
Group’s share-based employee remuneration schemes).

As part of the IPO the Company issued 42,000,000 shares on 19 September 2013, corresponding to 22% of total
shares issued. Each share has the same right to receive dividend and the repayment of capital and represents one
vote at the shareholders’ meeting of the Company.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

Foreign Currency
Translation
Reserve
$

Total Reserves
$

1,154

1,441,804

377,532

(70,891)

1,748,445

1,647,792

(1,205,860)

1,154

2,191,531

21 .2 Reserves

The details of reserves are as follows:

Balance at 1 July 2012

Share options expense

Options exercised

Share Option
Reserve
$

1,441,804

377,532

Transfer from reserves to retained earnings for options forfeited

(70,891)

1,748,445

1,647,792

(1,205,860)

2,190,377

Foreign currency translation

Balance at 30 June 2013

Balance at 1 July 2013

Share options expense

Options exercised

Transfer from reserves to retained earnings for options forfeited

Foreign currency translation

Balance at 30 June 2014

EMPLOYEE REMUNERATION

22.1 Employee benefits expense

Expenses recognised for employee benefits are analysed below:

Employee Benefits - Expense

2014
$

2013
$

Wages, salaries and bonuses

4,220,359

3,003,995

Superannuation

412,245

259,832

Share-based payments

1,647,792

377,531

Employee benefits expense

6,280,396

3,641,358

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

22 .2 Share-based employee remuneration

As at 30 June 2014 the Group maintained share-based, option plans, as part of employee remuneration.

Share options and weighted average exercise prices are as follows for the reporting periods presented:

Employee Share Option Plan

Option Share Trust

Share Options

Outstanding at 1 July 2012

Granted

Forfeited

Exercised

Number

20,770,067

(487,060)

Outstanding at 30 June 2013

20,283,007

Granted

Forfeited

Exercised

Outstanding at 30 June 2014

Exercisable at 30 June 2013

Exercisable at 30 June 2014

(12,740,252)

7,542,755

17,714,289

6,465,745

Weighted Avg
Exercise Price
($)

Number

Weighted Avg
Exercise Price
($)

0.14

0 .14

0.12

0 .18

0.13

0.17

8,450,110

(528,000)

7,922,110

4,801,873

0.25

0 .25

0.25

Total Share
Option
Number

20,770,067

(487,060)

20,283,007

8,450,110

(13,268,252)

15,464,865

17,714,289

11,267,618

The fair values of options granted were determined using a variation of the binomial option pricing model. The
weighted average share price at the date of exercise was $0.29

Other details of options currently outstanding

• The range of exercise prices is $0.006 to $0.28.

• The weighted average remaining contractual life is 4 years

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

The following principal assumptions were used in the valuation:

Valuation Assumptions

Grant date

2/06/2010

1/07/2010

23/07/2010

1/01/2011

21/02/2011

Share price at date of grant

Volatility

Option life

Dividend yield

Risk free investment rate

Fair value at grant date

Exercise price at date of grant

$0.006

45%

10 years

5.3%

$0.004

$0.006

$0.136

45%

10 years

5.10%

$0.085

$0.136

45%

10 years

5.10%

$0.085

$0.136

45%

10 years

5.60%

$0.086

$0.136

45%

10 years

5.50%

$0.085

$0.136

Grant date

11/03/2011

25/05/2011

1/07/2011

25/07/2011

1/12/2011

Share price at date of grant

Volatility

Option life

Dividend yield

Risk free investment rate

Fair value at grant date

Exercise price at date of grant

$0.140

45%

10 years

5.60%

$0.220

$0.140

$0.280

45%

10 years

5.30%

$0.160

$0.280

45%

10 years

5.30%

$0.180

$0.280

45%

10 years

5.30%

$0.180

$0.280

45%

10 years

4.50%

$0.170

$0.280

Grant date

16/09/2013

4/12/2013

Share price at date of grant

Volatility

Option life

Dividend yield

Risk free investment rate

Fair value at grant date

Exercise price at date of grant

$0.250

65%

5 years

3.4%

$0.156

$0.250

$0.470

65%

5 years

3.5%

$0.327

$0.250

In total, $1,647,792 (2013: $306,641) of employee remuneration expense (all of which related to equity-settled share-
based payment transactions) has been included in profit or loss and credited to share option reserve.

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

LEASING

23 .1 Operating leases as lessee

In November 2013 the group entered a 5 year 4 month operating lease for its office and production facilities. The
future minimum lease payments are as follows:

Minimum Lease Payments Due

Within 1 year
$

321,816

113,618

1-5 years
$

1,474,990

After 5 years
$

Total
$

1,796,806

113,618

30-Jun-14

30-Jun-13

23 .2 Finance Lease

The Group entered into a 2 year finance lease for the fit out of the new offices and laboratories. As of 30 June 2014,
the net carrying amount of these assets is $878,175. The lease liability is secured by a cash deposit of $480,000.

30-Jun-14

Lease Payments

Finance Charges

Total lease liabilities

30-Jun-13

Lease Payments

Finance Charges

Total lease liabilities

Minimum Lease Payments Due

Within 1 year
$

1-5 years
$

After 5 years
$

Total
$

509,776

(20,876)

488,900

254,888

(1,517)

253,371

764,664

(22,393)

742,271

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

INCOME TAX EXPENSE

The major components of tax expense and the reconciliation of the expected tax expense based on the domestic
effective tax rate of Regeneus Ltd at 30% (2013: 30%) and the reported tax expense in profit or loss are as follows:

The prima facie tax on loss before income tax is reconciled to the income tax as follows:

Prima facie tax receivable on loss before income tax at 30% (2013: 30%)

(3,376,138)

(2,256,700)

2014
$

2013
$

Add:

Tax effect of:

- tax losses not brought to account

- non-deductible expenses

- other non-allowable items

Less:

Tax effect of:

Other allowable items

Income tax benefit

The applicable weighted average effective tax rates are as follows:

AUDITOR’S REMUNERATION

Audit and review of financial statements

- Auditor’s of Regeneus Ltd

- Auditor’s of Regeneus South East Asia Pte Ltd

Remuneration for audit and review of financial statements

Other services

Taxation

Corporate Finance

Other services

Total other service remuneration

Total auditor’s remuneration

3,204,542

2,037,082

295,899

30,146

297,546

1,377

(154,449)

(79,305)

(0%)

2014
$

81,500

4,295

85,795

2,634

20,250

3,187

26,071

2013
$

74,500

17,784

42,000

7,000

66,784

111,866

141,284

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

EARNINGS PER SHARE

Both the basic and diluted earnings per share have been calculated using the loss attributable to shareholders of
the Parent Company as the numerator (i.e. no adjustments to the loss were necessary in 2014 or 2013).

The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the
weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows:

2014
$

2013
$

Earnings per share

Basic earnings per share from continuing operations

(0.05)

The weighted average number of ordinary shares used as the denominator on
calculating the EPS

166,539,157

102,934,566

Diluted earnings per share

Diluted earnings per share from continuing operations

(0.05)

The weighted average number of ordinary shares used as the denominator on
calculating the DEPS

166,539,157

102,934,566

Share options have not been included in the diluted EPS calculation because they are anti-dilutive.

RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

Reconciliation of Cash Flows From Operating Activities

Cash flows from operating activities

Loss for the period

Non cash adjustments for:

• Depreciation

• Amortisation

• Loss on disposal

• Equity settled share based transactions

• Non cash interest on finance leases

• Convertible note interest and interest on shareholder loan

• Unwinding of shareholder loan

• Employee expense in relation to shareholder loan

• Unrealised foreign exchange movement

Net changes in working capital:

• Change in inventories

• Change in trade and other receivables

• Change in other assets

• Change in trade and other payables

• Change in other employee obligations

• Change in tax assets

• Change in accrued liabilities

• Change in provisions

Net cash from operating activities

2014
$

2013
$

(7,523,218)

(5,195,047)

317,821

15,855

103,908

180,511

14,953

1,647,792

377,532

19,079

318,018

(65,455)

131,491

1,154

25,348

(107,690)

17,362

(243,462)

(24,128)

(1,403,288)

512,212

17,950

(88,385)

80,490

16,045

(168,825)

135,873

(648,599)

96,670

580,932

(6,239,251)

(4,617,850)

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

RELATED PARTY TRANSACTIONS

FINANCIAL INSTRUMENTS

During the period the group used consulting services of
companies in which a director has a shareholding.

(a) Capital risk management

2014
$

2013
$

The Group’s financial instruments consist mainly of
deposits with banks, accounts receivable, accounts
payable and financial liabilities.

135,010

171,250

(b) Categories of financial instruments

Channel Group Pty Ltd
- Marketing and consulting
services (John Martin)

Parapet Investments Pty Ltd
-Consulting services
(John Martin)*

Cherbe Pty Ltd
- Technical consulting service
(Assoc Prof. Ben Herbert)

230,972

72,000

Total paid to related parties

135,010

474,222

* Included in Remuneration Report details for John Martin

TRANSACTIONS WITH KEY
MANAGEMENT PERSONNEL

Key management personnel remuneration includes
the
following expenses

Salaries

Bonuses

2014
$

2013
$

769,803

706,906

228,067

45,000

Back pay of directors fees

232,137

1,230,007

751,906

Total short term employee
benefits

Defined contribution pension
plans

Share-based payments

550,206

1,187

Total remuneration

1,862,503

805,010

During the year certain key management personnel
exercised
options with a total exercise price of $446k (2013: $nil)

30 CONTINGENT LIABILITIES

The Group had no contingent liabilities as at 30 June
2014 (30 June 2013 $nil)

31 CAPITAL EXPENDITURE
COMMITMENTS

There were no capital commitments as at the 30
June 2014

The total for each category of financial instrument,
measured in accordance with AASB139 as detailed in
the accounting policies to these financial statement,
are as follows:

Financial Assets

2014
$

2013
$

Trade and other receivables

134,266

26,576

Cash and cash equivalents

2,507,497

410,658

Term Deposit

127,754

122,926

Total financial assets

2,769,517

560,160

Financial Liabilities

2014
$

2013
$

Trade and other payables

921,004

1,842,458

Convertible Notes

4,900,000

Total financial liabilities

921,004

6,742,458

The convertible notes were converted into shares when
Regeneus listed on the ASX on the 19th September
2013.

The Group is exposed to various risks in relation to
financial instruments. The main types of risks are foreign
currency risk, credit risk and liquidity risk.

The Group’s risk management is coordinated in close
operation with the Board of Directors, and focuses on
actively securing the Group’s short to medium term cash
flows by minimising the exposure to financial markets.

The Group does not actively engage in the trading
of financial assets for speculative purposes. The most
significant financial risks to which the Group is exposed
are described below.

(d) Foreign exchange risk

Foreign exchange risk is the risk of an adverse impact
on the Group’s financial performance as a result of
exchange rate volatility.

Foreign exchange risk arises when future commercial
transactions and recognised assets and liabilities are
denominated in a currency that is not the entity’s
functional currency.

82,290

51,917

Consolidated Financial Statements for the year ended 30 June 2014

Notes to the Consolidated
Financial Statements

(f) Credit risk

Credit risk refers to the risk that a counter party will
default on its contractual obligations resulting in a
financial loss to the Group.

Credit risk arises from cash and cash equivalents,
deposits with banks and financial institutions, as well as
credit exposure to customers, including outstanding
receivables and committed transactions.

The Group has adopted a policy of only dealing with
creditworthy counter parties as a means of mitigating
the risk of financial loss from defaults.

(g) Capital management policies and procedures

The Group’s capital management objectives are:

•

to ensure the Group’s ability to continue as a
going concern; and

•

to provide an adequate return to shareholders

The Group monitors capital on the basis of the carrying
amount of equity less cash and cash equivalents as
presented on the face of the statement of financial
position and cash flow hedges recognised in other
comprehensive income.

Management assesses the Group’s capital
requirements in order to maintain an efficient overall
financing structure while avoiding excessive leverage.
The Group manages the capital structure and makes
adjustments to it in the light of changes in economic
conditions and the risk characteristics of the
underlying assets.

The Group is exposed to foreign exchange risk arising
primarily from transactions with foreign suppliers.
Exposure to currency risk arising from foreign currency
transactions is limited to trade payables. The Group
does not frequently transact with foreign suppliers and
the total balance of trade payables denominated in a
foreign currency is not material, therefore the Group’s
exposure is minimal.

Management have assessed the risk of movement
in interest rates, and foreign exchange, and do not
believe the impact would be material to the accounts.

(e) Liquidity Risk Analysis

Liquidity risk is risk that the Group might be unable to
meet its obligations. The Group manages its liquidity
needs by monitoring scheduled debt servicing
payments for long-term financial liabilities as well as
forecast cash inflows and outflows due in day-to-day
business. The data used for analysing these cash flows
is consistent with that used in the contractual maturity
analysis below. Liquidity needs are monitored in a
rolling 365 day projection.

The Group’s objective is to maintain cash and
marketable securities to meet its liquidity requirements
for 180-day periods at a minimum. This objective was
met for the reporting periods.

The Group considers expected cash flows from
financial assets in assessing and managing liquidity risk
in particular its cash resources and trade receivables.

As at June 2014, the Group’s non-derivative financial
liabilities have contractual maturities (including interest
payments where applicable) as summarised below:

2014
$

2013
$

Current within
6 months

Trade and other payables

921,106

1,842,458

Convertible notes

4,900,000

Total financial liabilities

921,106

6,742,458

The convertible notes were converted into shares when
Regeneus listed on the ASX on the 19 September 2013.

Consolidated Financial Statements for the year ended 30 June 2014

08 Notes to the Consolidated

Financial Statements

PARENT ENTITY INFORMATION

Set out below is the supplementary information about
Regeneus Ltd, the parent entity.

2014
$

2013
$

Statement of financial position

Current assets

Total assets

7,063,892

3,370,094

10,323,102

4,023,444

Current liabilities

1,675,629

6,892,269

Total liabilities

Net assets

Issued capital

1,929,010

6,892,269

8,394,092

(2,868,825)

24,908,920

6,651,935

Retained earnings

(18,705,205)

(11,269,205)

Option reserve

Total equity

2,190,377

1,748,445

8,394,092

(2,868,825)

Statement of profit or loss and other comprehensive income

Loss for the year

(7,435,999)

(5,195,047)

Other comprehensive income

Total comprehensive loss

(7,435,999)

(5,195,047)

34 POST REPORTING DATE EVENTS

On the 15 August 2014 the company made a private
placement of 11,538,462 shares at 26 cents each,
which raised new capital of $3,000,000. As part of
the placement, 769,232 shares were subscribed for
by the directors for $200,000 and these are pending
shareholder approval at the AGM. An option with
an exercise price of 40 cents, and an expiry date
of August 2015, was also granted for every 3 shares
subscribed. Regeneus will also be offering a Share
Purchase Plan for all existing shareholders in August
2014.

Consolidated Financial Statements for the year ended 30 June 2014

09 Directors’ Declaration

DIRECTORS’ DECLARATION

In the opinion of the Directors of the Group:

a The consolidated financial statements and notes are in accordance with the Corporations Act 2001,

including

i Giving a true and fair view of its financial position as at 30 June 2014 and of its performance for the

financial year ended on that date; and

ii Complying with Australian Accounting Standards (including the Australian Accounting Interpretations)

and the Corporations Regulations 2001; and

b There are reasonable grounds to believe that the Group will be able to pay its debts as and when they

become due and payable.

2 The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the

chief executive officer and chief financial officer for the financial year ended 30 June 2014.

3 Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting

Standards.

Signed in accordance with a resolution of the Directors:

Executive Chairman

John Martin

Dated this 22 August 2014

Consolidated Financial Statements for the year ended 30 June 2014

10 Independent Auditors Report

Level 17, 383 Kent Street
Sydney NSW 2000

Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230

T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au

Independent Auditor’s Report
To the Members of Regeneus Ltd

Report on the financial report
We have audited the accompanying financial report of Regeneus Ltd (the “Company”),
which comprises the consolidated statement of financial position as at 30 June 2014, the
consolidated statement of profit or loss and other comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended, notes comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the consolidated entity comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.

Directors’ responsibility for the financial report
The Directors of the Company are responsible for the preparation of the financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001. The Directors’ responsibility also includes 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. The Directors also state, in the notes to the financial report, in accordance with
Accounting Standard AASB 101 Presentation of Financial Statements, the financial
statements comply with International Financial Reporting Standards.

Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. Those standards
require us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.

Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current
scheme applies.

Consolidated Financial Statements for the year ended 30 June 2014

10 Independent Auditors Report

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the
Company’s preparation of the financial report that gives a true and fair view in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Directors, as well as evaluating the
overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.

Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.

Auditor’s opinion
In our opinion:

the financial report of Regeneus Ltd is in accordance with the Corporations Act 2001,
including:

giving a true and fair view of the financial position as at 30 June 2014 and of
their performance for the year ended on that date; and

complying with Australian Accounting Standards and the Corporations
Regulations 2001; and

the financial report also complies with International Financial Reporting Standards as
disclosed in the notes to the financial statements.

Report on the remuneration report
We have audited the remuneration report included on pages 12 to 15 of the directors’ report
for the year ended 30 June 2014. 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.

Consolidated Financial Statements for the year ended 30 June 2014

10 Independent Auditors Report

Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Regeneus Ltd for the year ended 30 June 2014,
complies with section 300A of the Corporations Act 2001.

GRANT THORNTON AUDIT PTY LTD
Chartered Accountants

N J Bradley
Partner - Audit & Assurance

Sydney, 22 August 2014

Consolidated Financial Statements for the year ended 30 June 2014

ASX Additional Information

Additional information required by the ASX Limited
Listing Rules and not disclosed elsewhere in this report
is set out below. The information is effective as at 30
June 2014.

SUBSTANTIAL SHAREHOLDERS

The number of substantial shareholders and their
associates are set out below:

Shareholder

Number of Shares

Vesey Investments Pty Ltd

Thomas Georg Mechtersheimer

Dr Marc Ronald Wilkins

Ben Herbert

13,215,026

9,737,451

9,215,529

8,689,412

Voting Rights

Ordinary shares

On a show of hands, every member present at a
meeting in person or by proxy shall have one vote and
upon a poll each share shall have one vote.

Options

No voting rights

Distribution of Equity Security Holders

Holding

Options

1 - 1,000

1,001 - 5,000

5,001 - 10,000

30,357

1,125,519

2,612,025

10,001 - 100,000

25,609,784

1,104,838

100,001 and over

155,015,392

14,360,027

184,393,077

15,464,865

Ordinary Shares

Twenty largest shareholders

Number
Held

% of Issued
Shares

Vesey Investments Pty Ltd

13,215,026

Thomas Georg Mechtersheimer

9,737,451

Dr Marc Ronald Wilkins

Ben Herbert

Hestian Pty Ltd

Parros Pty Ltd

Ubs Wealth Management
Australia Nominees Pty Ltd

Tony Batterham

John Martin

Passion Investment Group Pty
Ltd

Mr Pierre Frederic Malou

George Miklos

9,215,529

8,689,412

7,443,466

5,448,114

4,087,506

3,850,500

3,465,450

3,362,651

3,166,792

3,080,400

Citicorp Nominees Pty Limited

2,880,150

Smc Capital

2,519,726

Sayers Investment (Act) Pty Ltd

1,988,543

Bacau Pty Ltd

Rose Martin

J P Morgan Nominees Australia
Limited

Paul Kelly

Dr Michael Muller

1,981,502

1,863,642

1,669,899

1,583,935

1,571,896

Consolidated Financial Statements for the year ended 30 June 2014

ASX Additional Information

LESS THAN MARKETABLE PARCELS

Number of shareholders

BUY BACK OF SHARES

There is no buy back of shares on offer.

UNISSUED EQUITY SECURITIES

Options issued under the options plans total 15,464,865.

SECURITIES EXCHANGE

The Company was listed on the Australian Securities
Exchange on the 19 September 2013

CASH USAGE

Since listing on the ASX on 19 September 2013, the
Company has used its cash and assets in a form readily
converted to cash that it had at the time of admission
to the official list of ASX in a manner consistent with its
business objectives.

Consolidated Financial Statements for the year ended 30 June 2014

Regeneus Ltd
ABN 13 127 035 358
PO Box 20
Gordon NSW, 2072 Australia
Ph: +61 2 9499 8010
Fx: +61 2 9499 8020

Regeneus is an emerging leader in using the regenerative capacities
of adipose (fat)-derived cells to develop innovative cell therapies for
people and animals.

The Sydney-based company has developed proprietary
technologies for the manufacture of “in-clinic” and
“off-the shelf” cell therapies from adipose tissue.