Annual Report 2017
The Annual General
Meeting of Regeneus Ltd
will be held in the offices of
Grant Thornton, Level 17,
383 Kent Street Sydney
on Thursday 2 November
2017 at 1.00 pm.
Who we are
Regeneus Ltd (ASX: RGS) is an ASX-listed clinical-stage
regenerative medicine company developing a portfolio of
cell-based therapies to address significant unmet medical
needs in the human and animal health markets. Our initial
focus is on osteoarthritis (OA) and other musculoskeletal
disorders, cancer and dermatology.
Our product pipeline is underpinned by proprietary stem
cell and immuno-oncology technologies that seek to take
advantage of the body’s capability for healing and repair
and address the underlying causes of disease.
More information about Regeneus Ltd can be found at
regeneus.com.au
2 •
Contents
Directors’ report
Auditor’s independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
Independent auditor’s report
ASX additional information
3 •
11
21
23
24
25
26
27
47
48
50
Highlights for FY17
Successful Progenza STEP trial
results for osteoarthritis
• Primary endpoint of safety and tolerability met
• Significant, rapid and sustained reduction in knee
pain in both Progenza cohorts
• Significant improvement in cartilage volume
compared to placebo
• Positive signs of disease modification consistent
with preclinical results
• Positive clinical data and AGC collaboration
supports Progenza licensing opportunities for OA
and other indications in Japan and ROW
Progress on ACTIVATE cancer
vaccine trial
• Recruitment across all 3 dose cohorts
• Positive safety profile across all dose cohorts
• Ongoing banking of tumours
• Commenced preclinical study for RGSH4K in
combination with PD-1
4 •
Collaboration with Asahi Glass Co., Ltd.
(AGC) on Progenza for Japan
• Collaboration with AGC of Japan, a leading manufacturer of
biopharmaceuticals, for exclusive manufacture of Progenza
stem cell technology for Japan
• RGS to receive US$16.5m in payments – US$5.5m paid
upfront; US$1m paid on successful completion of STEP trial
for OA; and 2 further payments of US$5m each payable on
development milestones
• AGC acquires 50% of RGS Japan Inc., which has exclusive
rights for the clinical development and commercialisation of
Progenza for all indications in Japan
Key patents granted
• Patent allowed in Japan covering Progenza technology
– allogeneic stem cells and secretions for the treatment
of osteoarthritis and other inflammatory conditions in
humans and animals
• Patent allowed in EU, USA and China covering Sygenus
stem cell secretions technology for the topical treatment
of acne
• 56 patents or patent applications across 14 patent families
Progress on animal health trials
• Ongoing recruitment for CryoShot pre-pivotal
trial for OA at University of Pennsylvania
• Completed a successful Kvax study for
treatment of canine osteosarcoma with VCA in
USA showing Kvax is well tolerated and confers
increased progression free interval and survival
• Ongoing recruitment for Kvax cancer vaccine
trial for B cell lymphoma at Sydney Small
Animal Specialist Hospital
Financial highlights
• Licence fee revenues up 715% to $9.9m
(FY16: $1.2m) driven by A$8.9m (US$6.5m)
received from AGC
• Profit of $3.3m up from prior year (FY16: $3.6m loss)
• R&D tax incentive of $2.6m in line with prior year
(FY16: $2.7m)
• Quarterly cash used in operations
(excluding R&D incentive) maintained at $1.7m
(FY16: $1.5m per quarter)
• 30 June cash available $4.1m (FY16: $0.5m)
Letter from
the Chairman
and the CEO
Strategic collaboration with AGC in Japan
On 29 December 2016, we were delighted
to announce a strategic collaboration
and licensing agreement with AGC of
Japan, a leading global manufacturer of
biopharmaceuticals. Under the collaboration,
AGC has exclusive rights to manufacture
Progenza for all clinical applications in Japan
and is responsible for the GMP manufacture
of Progenza for a planned phase 2 trial in
Japan. AGC has acquired a 50% interest in
Regeneus Japan Inc., a vehicle that has the
exclusive rights for the clinical development
and commercialisation of Progenza in Japan.
AGC will work closely with Regeneus to
help secure the best clinical and
commercialisation partners.
Under the agreement, Regeneus is entitled to
receive US$16.5m from AGC. US$5.5m was
paid upfront in January this year and a further
US$1m was paid in June for the successful
completion of the STEP trial. There are 2
further development milestones totalling
US$10m. We look forward to meeting the next
milestone in this financial year.
About AGC Group (TYO: 5201)
ASAHI GLASS CO., LTD. (AGC),
Headquarters: Tokyo, President &
CEO: Takuya Shimamura
AGC is a world-leading glass
solution provider and supplier of
flat, automotive and display glass,
chemicals, biopharmaceuticals,
ceramics and other high-tech
materials and components. With
more than a century of technical
innovation, and cutting-edge products
AGC Group employs over 50,000
people worldwide and generates
annual sales of approximately
1.3 trillion Japanese Yen through
businesses in about 30 countries.
Dear Shareholders,
On behalf of the Board of Directors, we are
pleased to report on the progress we have made
during the financial year ending 30 June 2017.
During the period, we achieved significant
licensing, clinical, intellectual property and
commercial milestones that position the
company to unlock significant value in the
business over the next 12 months.
Progenza – unlocking
significant value in our stem
cell technology platform
About Progenza
PROGENZA is the company’s lead cell therapy
technology platform being developed for
the treatment of osteoarthritis and other
musculoskeletal disorders. It also has the
potential to be used for other inflammatory
conditions that have limited treatment options.
Progenza is made from expanded allogeneic
mesenchymal stem cells (MSCs) from human
adipose (fat) tissue and contains the bioactive
secretions of the cells. Progenza cells work
by secreting cytokines, growth factors and
exosomes to reduce inflammation and
pain and promote healing and repair in the
damaged or diseased tissue. It is a scalable
technology that has the demonstrated
capability to produce millions of doses of cells
from a single donor.
5 •
Consolidated Financial Statements for the Year Ended 30 June 2017
About Osteoarthritis
OSTEOARTHRITIS continues to be
an unmet medical need and is a
significant global concern due to
wear and tear on joints for ageing
populations. Worldwide, osteoarthritis
is estimated to be the fourth leading
cause of disability. There is no cure
for the debilitating disease and
non-steroidal anti-inflammatory
medication is the most common
treatment for the pain symptoms
although they can have adverse
effects with over use. Stem cell
products, such as Progenza, may
address the treatment gap for
patients who have persistent joint
pain and are seeking to delay or avoid
total knee replacement.
Positive results from Phase 1 STEP trial
for Progenza for osteoarthritis
We were pleased to announce on 22 May
positive results from the Phase 1 safety
trial of Progenza in patients with knee
osteoarthritis (OA), meeting the primary
endpoint of safety and tolerability. The study
showed that a single injection into the knee of
either dose of Progenza (3.9 million cells or 6.7
million cells) in patients appeared safe and
was well tolerated. We were also pleased to
confirm that Progenza showed durable and
clinically meaningful pain relief in patients with
knee OA. No serious adverse events occurred
and a single injection of Progenza was well
tolerated. No trends or findings of concern
were identified from the data collected from
patients’ blood tests, physical examinations,
ECG’s, or other safety measurements,
indicating Progenza is safe and well tolerated.
Secondary endpoints were assessed to
explore the efficacy of Progenza. We were
pleased to find that patients treated with
either dose of Progenza showed a statistically
significant within group reduction in pain.
On the contrary, the placebo group showed
no statistically significant reduction in pain
during the study. Examination of knee joint
structure by MRI showed a statistically
significant improvement in lateral tibial
cartilage volume for patients treated with
3.9 million cells compared to a worsening in
placebo patients.
This builds on previously reported Regeneus
preclinical findings in an OA model in rabbits
which showed that Progenza treated joints
showed no deterioration from the time of
Leading Sydney-based sports medicine specialist, Dr Donald Kuah, the
Principal Investigator on the trial said “This study confirms a benign
safety profile for Progenza when given as an intra-articular injection.
Progenza significantly reduced pain, and in the majority of patients,
Progenza alleviated pain to clinically meaningful levels, defined as 30% or
more reduction from baseline. The same pain reduction was not seen in
the placebo group. The beneficial effect of Progenza on the knee structure
reinforces Progenza preclinical findings and may offer the potential for
disease modification.”
Progenza-treated patients showed rapid and sustained pain reduction
Progenza 3.9m treated patients showed significant stabilisation in cartilage loss vs. placebo
0
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-1.5
-2
-2.5
-3
Baseline
Day 28
Month 3
Month 6
Month 9
Month 12
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*
Placebo
Progenza combined
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6 •
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p = 0.022
Average annual cartilage degradation
in untreated OA patients
Consolidated Financial Statements for the Year Ended 30 June 2017
Letter from the Chairman and the CEO
Letter from the Chairman and the CEO
Sygenus – cell secretions
technology
Sygenus is the new name for the Group’s
cell secretions technology platform that
utilises the molecules (including cytokines,
growth factors and exosomes) that are
secreted by MSCs and work to reduce pain
and inflammation and encourage accelerated
healing and repair. These allogeneic MSC
secretions are being further developed to
be used topically for the application to treat
inflammatory skin conditions such as acne
and the reduction of pain and accelerated
healing for wounds. Inflammatory skin
conditions and wound healing are promising
and near-term areas for topical regenerative
medicine products.
injection, in contrast to the vehicle control
group, which continued to deteriorate.
Japanese patent to grant for Progenza
On 24 May, the Japanese Patent Office
issued a decision to grant a key patent for
the composition, manufacture and use
of Progenza for the treatment of a wide
range of inflammatory conditions including
osteoarthritis. The Japanese Patent,
Application Number 201-531048 entitled
“Therapeutics using cells and cell secretions”
provides commercial rights in Japan through
to 2032. Corresponding grants have been
granted in Australia and New Zealand and are
being pursued for grant in other key territories
including the USA and Europe. We now have
56 patents or patent applications across 14
patent families which provides a substantial
competitive advantage for the company’s
product pipeline.
Advancing clinical partnering of Progenza
The combination of positive STEP trial results,
our new manufacturing and development
collaboration with AGC in Japan and the
Progenza patent in Japan, puts us in a strong
position to advance our clinical licensing
discussions for Progenza in Japan and
other key markets. Japan continues to be
one of the best markets for licensing and
development of regenerative medicines.
These market conditions have been driven
by Japan’s accelerated regulatory approval
process specifically designed for regenerative
medicine products like Progenza. These laws
allow for the conditional marketing approval
of regenerative medicine products that
demonstrate safety and probable efficacy
without the pre-requirement of an expensive
phase 3 trial.
We are in continuing discussions with
potential partners for the clinical development
and commercialisation of Progenza in Japan
and we also continue to engage with parties
interested in licensing Progenza for territories
other than Japan.
RGSH4K - human cancer vaccine
The ACTIVATE trial is a single centre, open
label, Phase 1 dose escalating trial to evaluate
the safety, tolerability and preliminary efficacy
of RGSH4K.
We have recruited patients into all 3 dose
levels without any unexpected safety
concerns. We anticipate the trial being fully
recruited by the end of this financial year.
This technology uses a patient’s tumour to
harness the body’s own immune system
to fight cancer cells. As part of the trial, the
company has established a tumour bank
to enable the banking of both previously
collected and new tumours. These tumours
are used as source material for the
manufacture of the cancer vaccine.
In another positive regulatory development,
in December 2016, the US President
signed into law the 21st Century Cures
Act. This Act includes specific provisions
intended to accelerate the US Food and
Drug Administration’s approval pathway for
regenerative medicines. This means that
the US joins Europe and Japan with specific
regulatory frameworks to address and
accelerate the development and access for
regenerative medicines for serious unmet
medical needs.
Progenza – chronic pain research
Chronic pain is a symptom of osteoarthritis
and Progenza has shown promising results
in the STEP trial for the significant and rapid
reduction of knee pain for osteoarthritis
sufferers.
To achieve further insight into Progenza
and its potential to reduce chronic pain
unrelated to osteoarthritis, Regeneus, through
a research consortium with Macquarie
University and the University of Adelaide
has received an Australian Research Council
Linkage Grant to undertake pre-clinical
research into the use of Progenza to relieve
chronic pain. The 3 year research project
commenced in March this year and will seek
to develop a better understanding of
chronic pain.
7 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Human health development pipeline
Program
Progenza
RGSH4K
Sygenus
Technology
platform
Pre-clinical
Phase 1
Phase 2
Phase 3
Filing
Approval
Allogeneic adipose
MSCs & secretions
Osteoarthritis
Immunotherapy
for oncology
Solid Tumours
Allogeneic adipose
MSC secretions
Derm / Wound
These secretions are included with MSCs in
our Progenza product and have demonstrated
no safety concerns in our Progenza preclinical
and clinical testing.
We are now conducting preclinical studies
of the secretions to test for its pain
modulation and wound healing effects. We
are also conducting studies on the effects of
secretions in a gel format on acne.
We continue our discussions with parties
for the development and commercialisation
opportunities for topical applications, in both
the therapeutic and cosmetic markets.
Patents granted for acne
During the year, patents were allowed in US,
Europe and China covering the use of the
company’s stem cell secretions technology
Sygenus for the topical treatment of acne.
The patent granted in China provides
commercial rights in China through to 2032.
This was the first Regeneus patent to be
granted in China. The granted patent is
specific for the topical treatment of acne,
however, Regeneus has additional patent
applications that cover the use of Sygenus for
other skin conditions.
CryoShot - allogeneic stem
cells for canine osteoarthritis
CryoShot is the company’s cell therapy
technology for the treatment of canine
and equine OA and other musculoskeletal
disorders. CryoShot is made from expanded
allogeneic MSCs from canine or equine
adipose tissue. CryoShot works by reducing
inflammation and promoting healing and
repair in the damaged or diseased tissue. It is a
scalable technology that has the demonstrated
capability to produce commercial quantities of
doses of cells from
a single donor.
Pre-pivotal canine OA trial
We continue to recruit for our pre-pivotal
trial assessing CryoShot as a treatment for
canine OA. This placebo-controlled trial of 80
dogs is being undertaken at the University of
Pennsylvania School of Veterinary Medicine.
All trial participants are followed for 90
days. The results of the trial will be used to
finalise the design of a pivotal US Food and
Drug Administration (FDA) trial with good
manufacturing practice (GMP) grade product.
Recruitment for the trial is scheduled for
completion by the end of FY18.
Letter from the Chairman and the CEO
The results showed that Kvax administered
after limb amputation is well tolerated and
appears to confer increased progression free
interval and survival compared to historically
reported dogs with osteosarcoma treated
with limb amputation only.
Lymphoma trial with SASH
A dog trial of Kvax in combination with
chemotherapy for the treatment of canine
lymphoma. The trial is being conducted at
Small Animal Specialist Hospital (SASH) in
Sydney and is currently recruiting cases.
There have been no significant safety
concerns to date.
Financial highlights for FY17
Our financial results for FY17 reflect the
strength of our strategic initiatives. The
significant licensing activities with AGC and
the ongoing financial discipline in managing
the expenses enabled a positive financial
result. Highlights for the period include:
• Licence fee revenues up 715% to $9.9m
(FY16: $1.2m) driven by AGC licence fees
of US$6.5m (A$8.9m)
Collaboration with animal pharmaceutical
company
In November 2015, we entered into a
collaboration and licence agreement with a
major animal pharmaceutical company for
the development and commercialisation of
CryoShot. Upon completion of the pre-pivotal
trial, our partner has an option to exclusively
licence the CryoShot technology. Under
the terms of the licence, we will receive an
upfront licence fee and be entitled to other
developmental milestone payments to
be agreed at the time. The partner will be
responsible for funding the pivotal trial and
GMP manufacture of CryoShot and have
exclusive global rights for sales and marketing
for canine applications. We will receive a
royalty on all CryoShot sales.
Kvax - canine cancer vaccine
Osteosarcoma trial with VCA
During the year the company completed a
small osteosarcoma trial conducted by Dr.
Phil Bergman at VCA in the USA. The purpose
of the trial was to test the safety, tolerability
and preliminary efficacy of Kvax with an
aggressive cancer like osteosarcoma.
Animal health development pipeline
Program
CryoShot Canine
CryoShot Equine
Kvax
Technology
platform
Manufacturing
& process
development
Safety &
efficacy
studies
Pivotal
trial
Market
approval
Allogeneic
adipose MSCs
Allogeneic
adipose MSCs
Immunotherapy
for oncology
Osteoarthritis
Osteoarthritis
Naturally occurring advanced cancers (conditional approval)
8 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Letter from the Chairman and the CEO
Thanks
We would like to thank our fellow directors
and the team at Regeneus for their
outstanding efforts and contribution to the
business over the last financial year.
Finally, we would like to thank our
shareholders for your continued support and
patience as we develop the business and add
value through the development and partnering
of our regenerative medicine products.
Dr. Roger Aston
Chairman
John Martin
Chief Executive Officer
• Full year profit of $3.3m up significantly
from prior year loss (FY16 $3.6m loss)
• R&D tax incentive of $2.6m (FY16: $2.7m)
• Quarterly cash used in operations
(excluding R&D incentive and AGC net
receipt) maintained at $1.7m (FY16: $1.5m
per quarter)
• Cash at year end $4.1m (FY16: $0.5m)
A more detailed financial review of operations
is set out in the Directors’ Report.
Looking forward
FY18 will be an important year in the
development of the company with a
number of key commercial, clinical and R&D
milestones in sight including:
• Advance discussions to secure clinical and
commercialisation partners for Progenza in
Japan and other jurisdictions
• Complete and report on ACTIVATE Phase 1
cancer vaccine trial
• Complete and report on activities
undertaken with Sygenus topical secretions
technology
• Complete and report on CryoShot canine
pre-pivotal trial
We look forward to meeting and capitalising
on these milestones and other developments
to continue to unlock value in the company’s
assets.
9 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Directors’
report
Your Directors present their report for
Regeneus Ltd and its controlled entities
(the Group) for the financial year ended 30
June 2017.
Directors
The names of the Directors in office at any
time during or since the end of the year are:
Dr. Roger Aston
Non-executive Chairman
John Martin
CEO and Executive Director
Professor Graham Vesey
CSO and Executive Director
Barry Sechos
Non-executive Director
Dr. Glen Richards
Non-executive Director
Chairman
Dr. Roger Aston has served on the Board
since 2013 and was appointed Chairman
in November 2014. He 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 Medical Ltd
ResApp Health Ltd
Previous directorships of (last 3 years)
PolyNovo Ltd (Formerly Calzada Ltd)
Directors have been in office since the start
of the financial year to the date of this report
unless otherwise stated.
Interests in shares
51,179
Interests in options
Nil
CEO - Executive Director
John Martin has served on the Board since
early 2009 and was appointed CEO in
November 2014. John has over 20 years of
experience as a business executive, director
and corporate lawyer including roles as
CEO and Director of ASX-listed and private
emerging technology companies including
BTF and Proteome Systems. John was a
corporate and executive partner of Allens
specialising in M&A, fundraising and life
sciences.
Other current directorships
None
Previous directorships (last 3 years)
None
Interests in shares
7,253,908
Interests in options
2,680,355
11 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Directors’ report
Company Secretary
Sandra McIntosh is the Company Secretary
and Investor Relations Manager. Sandra has
been with the Company since 2009, and has
20 years management experience in HR,
customer service and finance.
CSO - Executive Director
Professor Graham Vesey is a co-founder and
founding CEO of the Company and has served
on the Board since incorporation. He was
appointed Chief Scientific Officer in November
2014. 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 company,
BTF, which was sold to bioMerieux in 2007.
Graham is an Adjunct Professor at Macquarie
University.
Other current directorships
None
Previous directorships of (last 3 years)
None
Interests in shares
15,879,968
Interests in options
2,142,855
Non-executive Directors
Barry Sechos has served on the Board since
2012 and 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
(an early-stage 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)
None
Interests in shares
200,000
Interests in options
Nil
Dr. Glen Richards joined the Board in April
2015. Glen practised companion animal
medicine and surgery in Brisbane, Townsville
and London before establishing Greencross
Vets in 1994. As Managing Director of
Greencross Ltd (ASX:GXL) he created
Australia’s largest veterinary healthcare group
with over 120 veterinary practices and 200
pet specialty stores. He resigned as MD in
December 2014 and continues as a Non-
executive Director.
Other current directorships
Greencross Ltd
1300Smiles Ltd
Previous directorships (last 3 years)
None
Interests in shares
2,333,333
Interests in options
Nil
12 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Directors’ report
Financial review
Operating results
The Group produced a profit after income tax for the year of $3.27 million, a significant
improvement from prior year loss of $3.57 million.
The improvement was primarily driven by the licence fee received from AGC and it highlights the
financial benefit that the licensing strategy delivers.
Licence fee income
Licence fee income exceeded $9.9 million including the AGC Japanese manufacturing licence
fees of $8.9 million (US$6.5 million). An increase of 715%. Other licence fee income for the use of
the Group’s technology locally declined slightly.
The revenue from other operational activities declined as the move to a licensing business from
marginally profitable early stage commercial activities was completed.
Revenue from operating activities
Operating activities
Licence fee income
Income from sale of goods
Interest received
Total revenue
2017
$‘000
9,940
54
75
10,069
2016
$‘000
1,219
517
142
1,878
Principal activities
Regeneus is an ASX-listed clinical-stage regenerative medicine company, using stem cell and
immuno-oncology technologies to develop a portfolio of cell-based therapies to address significant
unmet medical needs in the human and animal health markets with a focus on osteoarthritis and
other musculoskeletal disorders, oncology and dermatology diseases.
The Company is focused on unlocking value in its clinical-stage human and animal pipeline
products through generating positive clinical data, technology development, partnering and
licensing.
Operating and financial review
Review of operations
During the year, Regeneus achieved significant milestones positioning the Group for future
growth including:
AGC licensing of Progenza
• AGC licence – exclusive rights to manufacture Progenza for all clinical applications in Japan
and is responsible for the manufacture of GMP Progenza for the phase 2 trial in Japan
Progenza human clinical STEP trial success
• Progenza STEP trial – allogeneic stem cells for human osteoarthritis met both primary clinical
endpoints of safety and tolerability with positive signs of disease modification and achieving
other secondary endpoints
Ongoing clinical trials
• RGSH4K ACTIVATE trial – autologous cancer vaccine progresses well with patients safely
dosed in all 3 dose cohorts and the tumour bank holding a significant number of tumours
• CryoShot pre-pivotal trial – allogeneic off-the-shelf stem cells for canine osteoarthritis at
University of Pennsylvania is ongoing
• Kvax trials – autologous canine cancer vaccine trial of lymphoma trial at Small Animal
Specialist Hospital in Sydney is ongoing
Partnering and technology development
• Continuing discussions with potential partners for the clinical development and
commercialisation of Progenza in Japan
• Patent for Progenza in Japan
• Patent of Sygenus for acne in China
A more detailed review of operational highlights is set out in the Letter from the Chairman
and the CEO.
13 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Directors’ report
2017
$‘000
3,587
(227)
246
3,606
2016
$‘000
(2,253)
(231)
-
(2,484)
Research and development expenses
Research and development activities include staff and other costs associated with product
research, preliminary manufacture and the conduct of clinical trials for the company’s products for
humans and animals. Expenditure for the year was $4.4 million, similar to FY16 $4.3 million.
Cash flows The net cash inflows for the period were:
In line with the Group’s policy and to comply with the accounting standards, all costs associated
with research and development are fully expensed in the period in which they are incurred. The
Directors do not consider the Group can demonstrate all the requirements of the accounting
standards to capitalise development expenditure.
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities
Net cash provided by (used in) financing activities
Selling expenses
The selling and marketing expenses reflect the costs incurred in supporting general marketing
activities of the corporation.
Occupancy costs
Occupancy costs of $420k are the direct lease costs of the Pymble corporate office and the
associated utility costs.
Corporate expenses
The corporate expense increase of 6.7% was due primarily to increased activities associated with
protection of the Group’s intellectual property portfolio including patent.
Other expenses
The expenses identified as other expenses are individually significant items of expenditure
associated with the Japanese licence arrangements. These costs include withholding tax, legal
fees and other professional fees.
Expenses
Research and development
Selling
Occupancy
Corporate
Finance costs
Expenses from operations
Other expenses
Share of loss on investment
Total expenses
14 •
2017
$‘000
4,456
238
420
2,912
16
8,042
1,300
9
9,351
2016
$‘000
4,309
375
473
2,730
20
7,907
-
-
7,907
Movement
$‘000
(147)
137
53
(182)
4
(135)
(1,300)
(9)
(1,444)
Net change in cash and cash equivalents held
Operating activities
Cash provided by operating activities of $3.6 million was a material improvement of $5.8
million from the prior year. This improvement was a direct reflection of the significant licence
fees received from AGC of $8.9 million (US$6.5 million) offset partially by the cash impact of
withholding tax expense and fees associated with the licence arrangements.
Excluding the benefit of the R&D incentive and the net Japanese licence fees, the cash outflow
from operations was $6.8 million compared to FY16 $5.7 million. There were minor increases
across most expense categories and a decline in other revenue that contributed to this increase
in cash used. This outcome was in line with the strategic focus on research and development and
licensing activities in Japan.
Investing activities
This is predominantly investment in capital equipment supporting the business.
Financing activities
The cash provided by financing activities is the early repayment of 16% of the shareholder loan.
Significant changes in state of affairs
During the year the Group entered a strategic collaboration with AGC licencing exclusive rights
to manufacture Progenza for all clinical applications in Japan. As disclosed in the Operating
and financial review this arrangement provided a significant benefit to the Group’s financial
position. There were no other significant changes in the state of affairs of the Group during the
reporting period.
Changes in accounting policy
There were no changes in accounting policy during the reporting period.
Consolidated Financial Statements for the Year Ended 30 June 2017
Events subsequent to the reporting period
In the period since 30 June 2017 to the signing of the financial report, the Board of Directors
reviewed the maturity of the shareholder loan facility, relating to the funding of employee
options exercised as part of the IPO in 2013. The Directors considered that it was in all
shareholders’ interest if the loan was extended 9 months to 15 June, 2018.
The Directors will seek approval of this decision at the Annual General Meeting.
Apart from the above, there are no other matters or circumstances that have arisen since the
end of the year that have significantly affected or may significantly affect either the entity’s
operations in future financial years, the results of those operations in future financial years or
the entity’s state of affairs in future financial years.
Likely developments, business strategies and prospects
FY18 will provide critical foundations for the long-term success of Regeneus.
The following activities and business initiatives will be core elements of the strategic
deliverables required for that success:
• Advance discussions to secure clinical and commercialisation partners for Progenza
in Japan and other jurisdictions
• Complete and report on ACTIVATE Phase 1 cancer vaccine trial
• Complete and report on activities undertaken with Sygenus topical secretions technology
• Complete and report on CryoShot canine pre-pivotal trial
Corporate Governance Statement
The Board is committed to achieving and demonstrating the highest standards of corporate
governance. As such, Regeneus Ltd and its controlled entities (the Group) have adopted the
third edition of the Corporate Governance Principles and Recommendations which was released
by the ASX Corporate Governance Council on 27 March 2014 and became effective for financial
years beginning on or after 1 July 2014.
The Group’s corporate governance statement for the financial year ending 30 June 2017 is
dated as at 30 June 2017 and was approved by the Board on 17 August 2017. The corporate
governance statement is available on Regeneus’ website at:
regeneus.com.au/about/corporate-governance
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’ report
Directors’ meetings
Directors’ name
Board meetings
Audit and risk
committee
Remuneration and
nominations charter
Directors’ name
Roger Aston
John Martin
Graham Vesey
Barry Sechos
Glen Richards
A
6
6
6
6
6
B
6
6
6
6
6
A
2
2
-
2
-
B
-
2
-
2
-
A
1
1
-
1
-
B
1
1
-
1
-
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 (2016: nil).
Unissued shares under option
Unissued ordinary shares of Regeneus Ltd under option at the date of this report are:
Unissued shares under option
Date of granting
Expiry date
01/07/2010
01/01/2011
21/02/2011
01/07/2011
16/09/2013
04/12/2013
21/10/2014
26/08/2020
29/12/2020
18/02/2021
28/06/2021
15/09/2018
03/12/2018
20/10/2019
During 2017, no unlisted options were issued, (2016: nil).
Exercise price
of option
$
0.136
0.136
0.136
0.280
0.250
0.250
0.160
Number
under
option
770,100
462,060
1,001,674
500,000
4,323,210
1,665,000
900,000
15 •
Consolidated Financial Statements for the Year Ended 30 June 2017
All unexercised, vested options expire on the earlier of their expiry date or within a period set
out in the plans. 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.
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.
Shares issued during or since the end of the year as a result
of exercise of options
During or since the end of the year, no shares were issued by the Company as a result of
the exercise of options (2016: nil).
Remuneration report (audited)
The Directors of the Group present the Remuneration Report for Executive Directors,
Non-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
e. Bonuses
f. Other information
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 to:
• Align rewards to business outcomes that deliver value to shareholders
• Drive a high performance culture by setting challenging objectives and rewarding high
performing individuals
• 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
Directors’ report
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
• 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 predetermined performance criteria.
Short term incentive (STI)
Regeneus performance measures involve the use of annual performance objectives, metrics,
and performance appraisals.
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. The KPIs for the Executive team are summarised as follows:
Performance area:
• Financial - operating results
• Non-financial - strategic goals set for each individual
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 Company’s last Annual General Meeting
Regeneus received 76% ‘For’ votes on its Remuneration Report for the financial year ending
30 June 2016 (2015: 86%). 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:
16 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Consequences of performance on shareholder wealth
Item
EPS (cents)
Dividends (per share)
Net profit (loss) ($000)
Share price ($)
2017
0.016
$0
3,271
$0.12
* $0.25 share price on listing 19 September 2014
2016
2015
(0.017)
(0.032)
$0
$0
(3,574)
$0.14
Directors’ report
2014
(0.05)
$0
2013
(0.05)
$0
b. Details of remuneration
Details of the nature and amount of each element of key management personnel remuneration
are shown in the following table:
Details of remuneration
(6,607)
(7,523)
(5,195)
$0.15
$0.40
$0.25
*
Short
term
Post
employment
Long
term
Executive
Directors
John
Martin
Graham
Vesey
Non-executive
Directors
Roger
Aston
Barry
Sechos
Glen
Richards
Total
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Cash
salary
and fees
$
304,679
304,679
200,000
200,000
75,000
71,204
45,000
45,000
45,000
45,000
669,679
665,883
Super-
annuation
$
Other
benefits
$
Total
$
Performance
related
28,944
28,944
19,000
19,000
8,131
11,637
11,200
19,611
341,754
345,260
230,200
238,611
-
3,796
-
-
-
-
-
-
-
-
-
-
75,000
75,000
45,000
45,000
45,000
45,000
47,944
51,740
19,331
31,248
736,954
748,871
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Other long term benefits include the movement in the annual leave provision and long service
leave provision in accordance with AASB 119 Employee Benefits. Where the provision is reduced
due to leave taken exceeding leave accrued the movement is negative.
17 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Directors’ report
The relative proportions of remuneration that are linked to performance and those that are fixed
are as follows:
c. Service agreements
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:
Details of remuneration
Name
John Martin
Graham Vesey
Roger Aston
Barry Sechos
Glen Richards
Fixed remuneration
At risk – STI
At risk – options
Service agreements
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
-
Name
John Martin
Graham Vesey
Roger Aston
Barry Sechos
Glen Richards
Base salary
$
304,679
200,000
75,000
45,000
45,000
Term of agreement
Notice period
Unspecified
Unspecified
Unspecified
Unspecified
Unspecified
3 months
3 months
Nil
Nil
Nil
There are no termination payments provided for in these agreements, other than those required by
statute.
Share-based remuneration
Name
Number granted
Grant date
Value per option
at grant date
$
Number vested
Exercise price
$
First exercise date
Last exercise date
Graham Vesey
Graham Vesey
Graham Vesey
John Martin
John Martin
John Martin
Wild Rose Pty Ltd - John Martin
John Martin
714,285
714,285
714,285
714,285
714,285
714,285
37,500
500,000
16/09/2013
16/09/2013
16/09/2013
16/09/2013
16/09/2013
16/09/2013
16/09/2013
01/07/2011
0.1561
0.1561
0.1561
0.1561
0.1561
0.1561
0.1561
0.1758
714,285
714,285
714,285
714,285
714,285
714,285
37,500
500,000
0.25
0.25
0.25
0.25
0.25
0.25
0.25
0.28
01/07/2013
30/06/2014
30/06/2015
30/06/2013
30/06/2014
30/06/2015
11/09/2013
31/12/2011
15/09/2018
15/09/2018
15/09/2018
15/09/2018
15/09/2018
15/09/2018
15/09/2018
28/06/2021
18 •
Consolidated Financial Statements for the Year Ended 30 June 2017
d. Share-based remuneration
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 above.
e. Bonuses 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.
Bonuses included in remuneration
Name
John Martin
Graham Vesey
Roger Aston
Barry Sechos
Glen Richards
Included in
remuneration
$
-
-
-
-
-
Directors’ report
f. Other information
Options held by key management personnel
The number of options to acquire shares in the Company held during the 2017 reporting period
by each of the key management personnel of the Group, including their related parties are set out
below. No options were forfeited during the year (2016: nil).
Options held by key management personnel
Name
John Martin
Graham Vesey
Roger Aston
Barry Sechos
Glen Richards
Balance
at
1 July 2016
2,680,355
2,142,855
-
-
-
Other
changes
Balance at
end of year
Vested and
exercisable
at 30 June
2017
Vested,
un-exercisable
at 30 June
2017
-
-
-
-
-
-
2,680,355
2,142,855
2,680,355
2,142,855
-
-
-
-
-
-
4,823,210
4,823,210
-
-
-
-
-
-
Percentage vested
in year
Percentage forfeited
in year
Totals
4,823,210
-
-
-
-
-
-
-
-
-
-
Shares held by key management personnel
The number of ordinary shares in the Company during the 2017 reporting period held by each of
the Group’s key management personnel, including their related parties, are set out below:
Shares held by key management personnel
Name
John Martin
Graham Vesey
Roger Aston
Barry Sechos
Glen Richards
Totals
Held at
1 July 2016
Granted as
remuneration
Purchased
Held at
30 June 2017
7,253,908
15,879,968
51,179
-
2,333,333
25,518,388
-
-
-
-
-
-
-
-
-
200,000
7,253,908
15,879,968
51,179
200,000
-
2,333,333
200,000
25,718,388
End of audited remuneration report.
19 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Signed in accordance with a resolution of the Board of Directors:
Directors’ report
John Martin
CEO and Executive Director
Dated this day 22 August 2017
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.
Indemnities given to auditors and officers and insurance
premiums paid
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.
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.
Non-audit services
From time to time, Grant Thornton, the Group’s auditors, perform certain other services in
addition to their statutory audit duties. The Board considers any non-audit services provided
during the year by the auditor and satisfies itself that the provision of these non audit services
during the year is compatible with, and does not compromise, the auditor independence
requirements of the Corporations Act 2001.
Details of the amounts paid to the auditors of the Group, 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.
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 Group, or to intervene in any proceedings to which the
Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of
those proceedings.
Auditor’s independence declaration
A copy of the Auditor’s independence declaration as required under section 307C of the
Corporations Act 2001 is set out on page 21 and forms part of this Directors’ Report.
20 •
Consolidated Financial Statements for the Year Ended 30 June 2017
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 2017, I declare that, to the best of my
knowledge and belief, there have been:
a
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b
no contraventions of any applicable code of professional conduct in relation to the audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
Louise M Worsley
Partner - Audit & Assurance
Sydney, 22 August 2017
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.
21 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Consolidated
statement of
profit or loss
and other
comprehensive
income
For the year ended 30 June
Revenue
Cost of sales
Gross profit
Other income
Research and development expenses
Selling expenses
Occupancy expenses
Corporate expenses
Finance costs
Other expenses
Share of loss on investments accounted for using equity method
Profit/(loss) before income tax
Income tax (expense) / benefit
Profit/(loss) for the year attributable to owners of the parent
Other comprehensive (expense) /income
Note
6
6
7
8
16
24
2017
$
10,068,580
(55,062)
10,013,518
2,608,222
(4,456,201)
(238,184)
(420,296)
(2,911,525)
(16,220)
(1,299,615)
(9,107)
3,270,592
-
2016
$
1,877,759
(291,743)
1,586,016
2,746,943
(4,309,379)
(374,611)
(472,600)
(2,730,343)
(19,899)
-
-
(3,573,873)
-
3,270,592
(3,573,873)
-
-
Total comprehensive profit/(loss) for the year attributable to owners of the parent
3,270,592
(3,573,873)
Earnings per share
Basic earnings per share
Earnings per share from continuing operations
Diluted earnings per share
Earnings per share from continuing operations
26
26
0.016
0.016
(0.017)
(0.0.17)
23 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Consolidated
statement
of financial
position
As at 30 June
Current Assets
Cash and cash equivalents
Trade and other receivables
Inventories
R&D incentive receivable
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Note
2017
$
2016
$
9
10
11
12
13
14
15
16
17
18
19
20
19
21.1
21.2
4,135,136
87,877
21,948
2,608,222
1,407,741
8,260,924
610,127
5,759
78,000
210,000
903,886
9,164,810
743,209
115,484
17,502
876,195
188,707
188,707
1,064,902
8,099,908
31,076,819
(24,629,684)
1,652,773
8,099,908
528,670
21,774
30,076
2,732,110
190,054
3,502,684
801,562
11,254
-
1,619,307
2,432,123
5,934,807
906,312
99,273
-
1,005,585
144,482
144,482
1,150,067
4,784,740
31,076,819
(27,916,645)
1,624,566
4,784,740
24 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Consolidated
statement
of changes
in equity
For the year ended
30 June
Balance at 1 July 2015
Reported loss for the year
Reported other comprehensive income/(expense)
Employee share-based payment option expense
Transfer from reserves to retained earnings for options forfeited
Balance at 30 June 2016
Balance at 1 July 2016
Reported profit for the year
Reported other comprehensive income (expense)
Employee share-based payment option expense
Transfer from reserves to retained earnings for options forfeited
Share
capital
$
Share
option
reserve
$
Accumulated
loses
$
Total
attributable
to parent
owners
$
Total
equity
$
31,076,819
2,491,128
(25,295,813)
8,272,134
8,272,134
-
-
-
-
-
-
86,479
(3,573,873)
(3,573,873)
(3,573,873)
-
-
-
-
86,479
86,479
(953,041)
953,041
-
-
31,076,819
1,624,566
(27,916,645)
4,784,740
4,784,740
31,076,819
1,624,566
(27,916,645)
4,784,740
4,784,740
-
-
-
-
-
-
44,576
(16,369)
3,270,592
3,270,592
3,270,592
-
-
-
-
44,576
44,576
16,369
-
-
Balance at 30 June 2017
31,076,819
1,652,773
(24,629,684)
8,099,908
8,099,908
25 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Consolidated
statement of
cash flows
For the year ended 30 June
Note
2017
$
2016
$
8
27
Operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other material expenses
R&D incentive refund
Finance costs
Net cash provided by / (used in) operating activities
Investing activities
Payments for investments
Purchase of property, plant and equipment
Receipts from sale of property, plant and equipment
Net cash (used in) by investing activities
Financing activities
Proceeds from related party loan
Repayment of related party loan
Receipts from shareholder loan
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
9
10,140,776
(7,978,201)
8,340
(1,299,615)
2,732,110
(16,220)
3,587,190
(87,107)
(149,949)
9,600
(227,456)
1,250,000
(1,250,000)
246,732
246,732
3,606,466
528,670
4,135,136
1,931,268
(7,637,200)
55,021
-
3,417,566
(19,899)
(2,253,244)
-
(249,670)
18,772
(230,898)
-
-
-
-
(2,484,142)
3,012,812
528,670
Note: This statement should be read in conjunction with the notes to the financial statements.
26 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the
consolidated
financial
statements
1. Nature of operations
Regeneus is a Sydney-based ASX listed
clinical-stage regenerative medicine
company that develops innovative cell-based
therapies for human and animal health
markets, with a focus on osteoarthritis and
musculoskeletal disorders as well as oncology
and dermatology diseases. The portfolio of
therapeutic products is being developed using
the Company’s proprietary stem cell and
immuno-oncology technology platforms.
Regenerative medicine is a rapidly growing
multidisciplinary 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.
Where commercial opportunities are
identified, the Group seeks to license
appropriate parties.
2. 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 is a for-profit entity for the purpose
of preparing the financial statements.
The financial statements cover Regeneus
and its controlled entities as a consolidated
entity (The Group). As at the 30 June 2017,
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 2017 were approved and
authorised for issue by the Board of Directors
on 22 August 2017.
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.
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 2016. Information on these new
standards is presented below:
AASB 2014-3 Amendments to
Australian Accounting Standards –
Accounting for Acquisitions of Interests
in Joint Operations
The amendments to AASB 11 Joint
Arrangements state that an acquirer of an
interest in a joint operation in which the
activity of the joint operation constitutes a
‘business’, as defined in AASB 3 Business
Combinations, should:
• apply all of the principles on business
combinations accounting in AASB 3 and
other Australian Accounting Standards
except principles that conflict with the
guidance of AASB 11. This requirement
also applies to the acquisition of additional
interests in an existing joint operation
that results in the acquirer retaining joint
control of the joint operation (note that
this requirement applies to the additional
interest only, i.e. the existing interest is not
re-measured) and to the formation of a
joint operation when an existing business
is contributed to the joint operation by one
of the parties that participate in the joint
operation; and
• provide disclosures for business
combinations as required by AASB 3 and
other Australian Accounting Standards.
AASB 2014-3 is applicable to annual reporting
periods beginning on or after 1 January 2016.
The adoption of these amendments has not
had a material impact on the Group.
AASB 2014--9 Amendments to Australian
Accounting Standards – Equity Method in
Separate Financial Statements
The amendments introduce the equity
method of accounting as one of the options
to account for an entity’s investments in
subsidiaries, joint ventures and associates in
the entity’s separate financial statements.
AASB 2014-9 is applicable to annual reporting
periods beginning on or after 1 January 2016.
The adoption of these amendments has not
had a material impact on the Group.
27 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
AASB 2015-2 Amendments to Australian
Accounting Standards – Disclosure
Initiative: Amendments AASB 101
The Standard makes amendments to AASB
101 Presentation of Financial Statements
arising from the IASB’s Disclosure Initiative
project.
The amendments:
• clarify the materiality requirements in
AASB 101, including an emphasis on the
potentially detrimental effect of obscuring
useful information with immaterial
information
• clarify that AASB 101’s specified line items
in the statement(s) of profit or loss and
other comprehensive income and the
statement of financial position can be
disaggregated
• add requirements for how an entity should
present subtotals in the statement(s) of
profit and loss and other comprehensive
income and the statement of financial
position
• clarify that entities have flexibility as to the
order in which they present the notes, but
also emphasise that understandability and
comparability should be considered by an
entity when deciding that order
• remove potentially unhelpful guidance
in AASB 101 for identifying a significant
accounting policy
AASB 2015-2 is applicable to annual reporting
periods beginning on or after 1 January 2016.
The adoption of these amendments has not
had a material impact on the Group.
Accounting standards issued but not
yet effective and not 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 9 Financial Instruments
(December 2014)
The standard introduces new requirements
for the classification and measurement of
financial assets and liabilities and includes a
forward-looking expected loss’ impairment
model and a substantially changed approach
to hedge accounting. 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:
a. The objective of the Group’s business
model for managing the financial assets
b. 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.
c) Introduces a ‘fair value through other
comprehensive income’ measurement
category for particular simple debt
instruments.
d) Financial assets can be designated and
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.
e) 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)
• 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. Otherwise,
the following requirements have been carried
forward unchanged from AASB 139 into
AASB 9:
• Classification and measurement of financial
liabilities
• De-recognition requirements for financial
assets and liabilities
AASB 9 requirements regarding hedge
accounting represent a substantial overhaul
of hedge accounting that will enable entities
to better reflect their risk management
activities in the financial statements.
Furthermore, AASB 9 introduces a new
impairment model based on expected credit
losses. This model makes use of more
forward-looking information and applies to
all financial instruments that are subject to
impairment accounting.
The Group is yet to undertake a detailed
assessment of the impact of AASB 9.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
AASB 15 Revenue from Contracts with
Customers
AASB 15:
• Replaces AASB 118 Revenue, AASB 111
Construction Contracts and some revenue-
related Interpretations
• Establishes a new revenue recognition
model
• Changes the basis for deciding whether
revenue is to be recognised over time or at
a point in time
• Provides new and more detailed guidance
on specific topics (e.g., multiple element
arrangements, variable pricing, rights of
return, warranties and licensing)
• Expands and improves disclosures about
revenue
28 •
Consolidated Financial Statements for the Year Ended 30 June 2017
The Group is yet to undertake a detailed
assessment of the impact of AASB 15.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
AASB 16 Leases
AASB 16:
• Replaces AASB 117 Leases and some
lease-related interpretations
• Requires all leases to be accounted for
‘on-balance sheet’ be lessees, other than
short-term and low value asset leases
• Provides new guidance on the application
of the definition of lease and on sale and
lease back accounting
• Largely retains the existing lessor
accounting requirements in AASB 117
• Requires new and different disclosures
about leases.
The Group is yet to undertake a detailed
assessment of the impact of AASB 16.
However, based on the Group’s preliminary
assessment, the likely impact on the first
time adoption of the Standard for the 30 June
2020 includes:
• There will be a significant increase in lease
assets and financial liabilities recognised on
the balance sheet
• The reported equity will reduce as the
carrying amount of lease assets will reduce
more quickly than the carrying amount of
lease liabilities
• EBIT in the statement of profit or loss and
other comprehensive income will be higher
as the implicit interest in lease payments
for former off balance sheet leases will be
presented as part of finance costs rather
than being included in operating expenses
• Operating cash outflows will be lower
and financing cash flows will be higher in
the statement of cash flows as principal
repayments on all lease liabilities will now
be included in financing activities rather
than operating activities. Interest can also
be included within financing activities.
AASB 2014-5 Amendments to Australian
Accounting Standards arising from AASB 15
AASB 2014-5 incorporates the consequential
amendments arising from the issuance of
AASB 15.
The Group is yet to undertake a detailed
assessment of the impact of AASB 15.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
AASB 2014-7 Amendments to Australian
Accounting Standards arising from AASB 9
(December 2014)
AASB 2014-7 incorporates the consequential
amendments arising from the issuance of
AASB 9.
The Group is yet to undertake a detailed
assessment of the impact of AASB 9.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
Notes to the consolidated financial statements
AASB 2014-10 Amendments to Australian
Accounting Standards – Sale or Contribution
of Assets between and Investor and its
Associate or Joint Venture
The amendments address a current
inconsistency between AASB10 Consolidated
Financial Statements and AASB 128
Investments in Associates and Joint
Ventures.
The amendments clarify that, on a sale or
contribution of assets to a joint venture or
associate or on a loss of control when joint
control or significant influence is retained
in a transaction involving an associate or a
joint venture, any gain or loss recognised will
depend on whether the assets or subsidiary
constitute a business, as defined in AASB 3
Business Combinations. Full gain or loss is
recognised when the assets or subsidiary
constitute a business, whereas gain or loss
attributable to other investors’ interests is
recognised when the assets or subsidiary do
not constitute a business. This amendment
effectively introduces an exception to the
general requirement in AASB 10 to recognise
full gain or loss on the loss of control over a
subsidiary. The exception only applies to the
loss of control over a subsidiary that does not
contain a business, if the loss of control is the
result of a transaction involving an associate
or a joint venture that is accounted for using
the equity method.
Corresponding amendments have also been
made to AASB 128.
AASB 2015-8 Amendments to Australian
Accounting Standards – Effective Date of
AASB 15
AASB AASB 2015-8 amends the mandatory
application date of AASB 15 Revenue from
Contracts with Customers so that AASB
15 is required to be applied for annual
reporting periods beginning on or after 1
January 2018 instead of 1 January 2017. It
also defers the consequential amendments
that were originally set out in AASB 2014-
5 Amendments to Australian Accounting
Standards arising from AASB 15.
The Group is yet to undertake a detailed
assessment of the impact of AASB 15.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
AASB 2016-2 Amendments to Australian
Accounting Standards - Disclosure Initiative:
Amendments to AASB 107
AASB 2016-2 amends AASB 107 Statement
of Cash Flows to require entities preparing
financial statements in accordance with Tier 1
reporting requirements to provide disclosures
that enable users of financial statements to
evaluate changes in liabilities arising from
financing activities, including both changes
arising from cash flows and non-cash
changes.
When these amendments are first adopted for
the year ending 30 June 2019, there will be no
material impact on the financial statements
When these amendments are first adopted for
the year ending 30 June 2018, there will be no
material impact on the financial statements.
29 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
AASB 2016-3 Amendments to Australian
Accounting Standards – Clarifications to
AASB 15
The amendments clarify the application of
AASB 15 in three specific areas to reduce
the extent of diversity in practice that might
otherwise result from differing views on how
to implement the requirements of the new
standard. They will help companies:
1. Identify performance obligations (by clarifying
how to apply the concept of ‘distinct’);
2. Determine whether a company is a principal
or an agent in a transaction (by clarifying
how to apply the control principle);
3. Determine whether a licence transfers
to a customer at a point in time or over time
(by clarifying when a company’s activities
significantly affect the intellectual property
to which the customer has rights).
The amendments also create two additional
practical expedients available for use when
implementing AASB 15:
1. For contracts that have been modified
before the beginning of the earliest
period presented, the amendments
allow companies to use hindsight when
identifying the performance obligations,
determining the transaction price, and
allocating the transaction price to the
satisfied and unsatisfied performance
obligations.
2. Companies applying the full retrospective
method are permitted to ignore contracts
already complete at the beginning of the
earliest period presented.
The Group is yet to undertake a detailed
assessment of the impact of AASB 15.
However, based on the Group’s preliminary
assessment, the Standard is not expected to
have a material impact on the transactions
and balances recognised in the financial
statements when it is first adopted for the
year ending 30 June 2019.
Interpretation 22 Foreign Currency
Transactions and Advance Consideration
Interpretation 22 looks at what exchange rate
to use for translation when payments are
made or received in advance of the related
asset, expense or income.
Although AASB 121 The Effects of Changes
in Foreign Exchange Rates sets out
requirements about which exchange rate
to use when recording a foreign currency
transaction on initial recognition in an entity’s
functional currency, the IFRS Interpretations
Committee had observed diversity in
practice in circumstances in which an entity
recognises a non-monetary liability arising
from advance consideration. The diversity
resulted from the fact that some entities were
recognising revenue using the spot exchange
rate at the date of the receipt of the advance
consideration while others were using the
spot exchange rate at the date that revenue
was recognised.
Interpretation 22 addresses this issue by
clarifying that the date of the transaction for
the purpose of determining the exchange
rate to use on initial recognition of the related
asset, expense or income (or part of it) is the
date on which an entity initially recognises
the nonmonetary asset or non-monetary
liability arising from the payment or receipt of
advance consideration. If there are multiple
payments or receipts in advance, the entity
shall determine a date of the transaction
for each payment or receipt of advance
consideration.
When this interpretation is adopted for the
year ending 30 June 2019, there will be no
material impact on the financial statements.
3. 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 the Australian Accounting
Standards for each type of asset, liability,
income and expense. The measurement
bases are more fully described in the following
accounting policies.
a. Basis of consolidation
Controlled entities
The Group financial statements consolidate
those of the Parent Company and all of its
subsidiaries as of 30 June 2017. The parent
controls a subsidiary if it is exposed, or has
rights, to variable returns from its involvement
with the subsidiary and has the ability to
affect those returns through its power over the
subsidiary. All subsidiaries have a reporting
date of 30 June.
All transactions and balances between Group
companies are eliminated on consolidation,
including unrealized gains and losses on
transactions between Group companies.
Where unrealised losses on intra-group asset
sales are reversed on consolidation, the
underlying asset is also tested for impairment
from a group perspective.
Amounts reported in the financial statements
of subsidiaries have been adjusted where
necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive
income of subsidiaries acquired or disposed
of during the year are recognised from the
effective date of acquisition, or up to the
effective date of disposal, as applicable.
Non-controlling interests, presented as part of
equity, represent the portion of a subsidiary’s
profit or loss and net assets that is not held
by the Group. The Group attributes total
comprehensive income or loss of subsidiaries
between the owners of the parent and the
non-controlling interests based on their
respective ownership interests.
Investments in associates and joint
arrangements
Associates are those entities over which the
Group is able to exert significant influence but
which are not subsidiaries.
A joint venture is an arrangement that the
Group controls jointly with one or more other
investors, and over which the Group has rights
to a share of the arrangement’s net assets
rather than direct rights to underlying assets
and obligations for underlying liabilities.
A joint arrangement in which the Group
has direct rights to underlying assets and
obligations for underlying liabilities is classified
as a joint operation.
Investments in all joint ventures are
accounted for using the equity method.
Interests in joint operations are accounted for
by recognising the Group’s assets (including
its share of any assets held jointly), its
30 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
liabilities (including its share of any liabilities
incurred jointly), its revenue (including
its share of the revenue from the sale of
the output by the joint operation), and its
expenses (including its share of any expenses
incurred jointly). These are incorporated in the
financial statements under the appropriate
headings.
Any goodwill or fair value adjustment
attributable to the Group’s share in the
associate or joint venture is not recognised
separately and is included in the amount
recognised as investment.
The carrying amount of the investment in
associates and joint ventures is increased or
decreased to recognize the Group’s share of
the profit or loss and other comprehensive
income of the associate and joint venture,
adjusted where necessary to ensure
consistency with the accounting policies of
the Group.
Unrealised gains and losses on transactions
between the Group and its associates and
joint ventures are eliminated to the extent
of the Group’s interest in those entities.
Where unrealised losses are eliminated, the
underlying asset is also tested for impairment.
If an entity’s share of losses of an associate
or a joint venture equals or exceeds its
interest in the associate or joint venture, the
entity discontinues recognising its share of
further losses. The interest in an associate
or a joint venture is the carrying amount
of the investment in the associate or joint
venture determined using the equity method
together with any long-term interests that,
in substance, form part of the entity’s net
investment in the associate or joint venture.
For example, an item for which settlement
is neither planned nor likely to occur in
the foreseeable future is, in substance, an
extension of the entity’s investment in that
associate or joint venture. Such items may
include preference shares and long-term
receivables or loans, but do not include trade
receivables, trade payables or any long-term
receivables for which adequate collateral
exists, such as secured loans. Losses
recognised using the equity method in excess
of the entity’s investment in ordinary shares
are applied to the other components of the
entity’s interest in an associate or a joint
venture in the reverse order of their seniority
(ie priority in liquidation).
After the entity’s interest is reduced to zero,
additional losses are provided for, and a
liability is recognised, only to the extent that
the entity has incurred legal or constructive
obligations or made payments on behalf of
the associate or joint venture. If the associate
or joint venture subsequently reports profits,
the entity resumes recognising its share of
those profits only after its share of the profits
equals the share of losses not recognised.
b. Segment reporting
Operating segments are presented using
the ‘management approach’, where the
information presented is on the same basis
as the internal reports provided to the Chief
Operating Decision Makers’ (CODM). The
CODM is responsible for the allocation
of resources to operating segments and
assessing their performance.
The Group’s operating segment is based
on the internal reports that are reviewed
and used by the Board of Directors (being
the CODM) in assessing performance and
determining the allocation of resources.
Reports provided to the CODM reference
the Group operating in one segment, being
the development of innovative cell-based
therapies to address significant unmet
medical needs in human and veterinary
health. Initial focus is osteoarthritis and other
musculoskeletal disease as well as oncology
and dermatology. The information reported to
the CODM, on a monthly basis, is profit or loss
before tax, assets and liabilities and cash flow.
c. Going concern basis of accounting
The Group achieved, for the year ended
30 June 2017, a profit after income tax of
$3,270,592 (2016: $3,573,873 loss), had net
cash inflows from operating activities of
$3,587,190 (2016: $2,253,244 outflow) and as
at 30 June 2017 has accumulated losses of
$24,629,684 (2016: $27,916,645).
Having granted to AGC an initial
manufacturing licence in 2017 and after
due consideration of additional commercial
licensing opportunities the Directors have
prepared the financial statements on a
going concern basis which contemplates
continuity of normal activities and realisation
of assets and settlement of liabilities in the
normal course of business. As at 30 June
2017 Regeneus had positive net assets of
$8,099,908 (2016: $4,784,740).
The Directors are expecting, by the end of
FY18, that the Group will enter into a clinical
development and commercialisation licence
with a Japanese partner. This arrangement
is expected to provide upfront funding and
future payments contributing to the Group’s
funding requirements for the next 18 months.
The Directors continue to review other
available strategies to maintain the Group
in a positive cash flow position including
further product licensing, funding of R&D or
raising additional capital, including issuance
of securities.
Should the above transactions or
assumptions not materialise, there is material
uncertainty whether the consolidated entity
will continue as a going concern and therefore
whether it will realise its assets and extinguish
its liabilities in the normal course of business
and at the amounts stated in these financial
statements.
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.
31 •
Consolidated Financial Statements for the Year Ended 30 June 2017
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
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.
Notes to the consolidated financial statements
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 generally used for each
class of depreciable assets are:
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.
Depreciation
rate (%)
The amortisation rate used for acquired
software is 25% straight line.
Class of
fixed asset
Office equipment
straight line
Laboratory equipment
straight line
Office fit-out
straight line
Leasehold
improvements
straight line
25%-50%
20%-30%
Life of lease
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 Group has reviewed its policy not
to capitalise development costs unless
they meet the criteria as set in AASB 138.
All development costs not meeting the
recognition criteria of AASB 138 are expensed.
k. 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 groups of assets and the
asset’s value in use cannot be estimated to be
32 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
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.
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 counter-party 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 counter-party and other shared credit
risk characteristics. The impairment loss
estimate is then based on recent historical
counterparty default rates for each
identified group.
Financial liabilities
The Group’s financial liabilities include trade
and other payables.
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
Group’s employees
• Retained earnings/(Accumulated losses)
include all current and prior period retained
profits/(losses)
33 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
p. Employee benefits
Short-term employee benefits
Short-term employee benefits are benefits,
other than termination benefits, that are
expected to be settled wholly within twelve
(12) months after the end of the period in
which the employees render the related
service. Examples of such benefits include
wages and salaries, non-monetary benefits
and accumulating sick leave. Short-term
employee benefits are measured at the
undiscounted amounts expected to be paid
when the liabilities are settled.
Other long-term employee benefits
The Group’s liabilities for annual leave and
long service leave are included in other long
term benefits as they are not expected to be
settled wholly within twelve (12) months after
the end of the period in which the employees
render the related service. They are measured
at the present value of the expected future
payments to be made to employees. The
expected future payments incorporate
anticipated future wage and salary levels,
experience of employee departures and
periods of service, and are discounted at rates
determined by reference to market yields at
the end of the reporting period on high quality
corporate bonds that have maturity dates
that approximate the timing of the estimated
future cash outflows. Any re-measurements
arising from experience adjustments and
changes in assumptions are recognised
in profit or loss in the periods in which the
changes occur.
The Group presents employee benefit
obligations as current liabilities in the
statement of financial position if the Group
does not have an unconditional right to defer
settlement for at least twelve (12) months
after the reporting period, irrespective of
when the actual settlement is expected to
take place.
Defined contribution plans
The Group pays fixed contributions into
independent entities in relation to several
state plans and insurance for individual
employees. The Group has no legal or
constructive obligations to pay contributions
in addition to its fixed contributions, which are
recognised as an expense in the period that
relevant employee services are received.
q. Provisions, contingent liabilities and
contingent assets
Provisions for product warranties, legal
disputes, make good obligations, onerous
contracts or other claims are recognised
when the Group has a present legal or
constructive obligation as a result of a
past event, it is probable that an outflow of
economic resources will be required from the
Group and amounts can be estimated reliably.
Timing or amount of the outflow may still be
uncertain.
Provisions are measured at the estimated
expenditure required to settle the present
obligation, based on the most reliable
evidence available at the reporting date,
including the risks and uncertainties
associated with the present obligation. Where
there are a number of similar obligations, the
likelihood that an outflow will be required in
settlement is determined by considering the
class of obligations as a whole. Provisions are
discounted to their present values, where the
time value of money is material.
Any reimbursement that the Group can be
virtually certain to collect from a third party
with respect to the obligation is recognised as
a separate asset. However, this asset may not
exceed the amount of the related provision.
No liability is recognised if an outflow of
economic resources as a result of present
obligation is not probable. Such situations are
disclosed as contingent liabilities, unless the
outflow of resources is remote in which case
no liability is recognised.
r. Share-based employee remuneration
The Group operates equity settled share-
based remuneration plans for its employees.
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.
s. 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 income is recognised on a
straight-line basis over the period that the
licence covers. Licence fee income – Japan
is recognised based on the achievement of
contracted milestones.
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).
t. 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
34 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
probability that any of the payments received
to date may be subject to repayment or claw
back provisions.
statement of financial position are shown
inclusive of GST.
the recognition and measurement of assets,
liabilities, income and expenses.
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.
u. Research and development
Expenditure during the research phase of a
project is recognised as an expense when
incurred. The research and development
incentive is calculated and accrued at year
end and is recognised in accordance with
‘AASB 120 Accounting for Government
Grants’. The amount is credited to other
income and the receivable is included in the
Consolidated Statement of Financial Position
as a current R&D incentive receivable.
v. 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.
w. Significant management judgments and
estimates in applying accounting policies
The Directors evaluate estimates and
judgments 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
judgments, estimates and assumptions about
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 over the page. 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 obsolescence 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.
Share options and performance rights
Share options were valued using a variation
of the binomial option pricing model.
Historical volatility has been the basis for
determining expected share price volatility as
it is assumed that this is indicative of future
movements. For purposes of the valuation
the assumed life of the options was based
on the historical exercise patterns, which
may not eventuate in the future. No special
features inherent to the options granted were
incorporated into measurement of fair value.
Research and development claim
The Group’s research and development
activities are eligible expenditure under
the Australian Government tax incentive.
Management has assessed these activities
and expenditures to determine which are
likely to be eligible under the incentive scheme.
At each period end, management estimates
the refundable R&D incentive available to the
Group based on current information. This
estimate is also reviewed by external tax
advisors. For the years ended 30 June 2017
and 2016, the Group has recognised income of
$2.6 million and $2.7 million respectively. Refer
notes 6 and 12.
Uncertainties in the estimate relate to
expenditure that can be claimed under
the scheme including in some cases the
claimable percentages applied to certain
expenditure.
Joint venture assessment
In respect of Regeneus Japan Inc.
management has determined that the Group
does not have control in accordance with the
criteria outlined in AASB 10. Management
has made an assessment that the joint
arrangement represents a joint venture rather
than a joint operation in accordance with the
requirements of AASB 11 and has therefore
accounted for the investment using the equity
method.
Revenue recognition
Management has determined that the Group
has met the revenue criteria outline in AASB
118 in respect of the milestone payments
received during the year under the AGC
Manufacturing Licence Agreement. As part
of this assessment management has made
judgements relating to the probability of
obtaining future milestone payments and the
35 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
4. Controlled entities
Set out below are details of the subsidiaries held directly by the Group.
6. Revenue
Name of the
subsidiary
Regeneus Animal
Health Pty Ltd
Cell Ideas Pty Ltd
Country of
incorporation &
principal place of
business
Australia –
25 Bridge Street,
Pymble NSW 2073
Australia –
25 Bridge Street,
Pymble NSW 2073
Principal
activity
Group proportion of
ownership interests
30 June
2017
30 June
2016
Operating activities
Licence fee income
Licence fee income - Japan
Income from sale of goods
Non-trading
100% 100%
Interest received
Non-trading –
owns various IP
100% 100%
Total revenue
Other income
R&D incentive
Gain on sale of property, plant and equipment
Total other income
2017
$
2016
$
1,028,514
8,912,000
53,550
74,516
1,218,896
-
516,566
142,297
10,068,580
1,877,759
2,608,222
2,732,110
-
14,833
2,608,222
2,746,943
5. Segment reporting
Identification of reportable income segments
7. Results for the year
The results for the year have been arrived at after charging the following items:
The Group’s operating segment is based on the internal reports that are reviewed and used by the
Board of Directors (being the Chief Operating Decision Makers (CODM)) in assessing performance
and in determining the allocation of resources.
Following an assessment of the information provided to the CODM, it has been concluded that the
Group operates in only one segment, being the development of innovative cell-based therapies to
address significant unmet medical needs in human and veterinary health.
The segment result is as shown in the statement of profit or loss and other comprehensive income.
Refer to statement of financial position for assets and liabilities.
Revenue of $8,912,000 (2016: nil) is derived from a single external customer. This revenue is
attributable to the current operating segment.
a. Expense
Cost of sales
Rental expense on operating leases – minimum lease payment
Amortisation of intangible assets
Depreciation
Loss on disposal of assets
2017
$
55,062
329,301
5,495
320,693
11,091
2016
$
291,743
343,251
14,856
335,903
148
Employment expenses (excludes share-based payment)
2,605,482
2,578,156
Superannuation expense
Share-based payments
b. Finance costs
Interest expense
Bank charges
Total finance costs
240,772
44,576
320,693
12,802
3,418
16,220
246,472
86,479
335,903
14,597
5,302
19,899
36 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
12. R&D incentive receivable
The results for the year have been arrived at after charging the following items:
2017
$
2016
$
8. Other expenses
Individually significant items of expenditure
Withholding tax on Licence Fees
Legal, consulting and other professional fees
Exchange loss on US$ account
Total other expenses
9. Cash and cash equivalents
Cash and cash equivalents include the following components:
Cash on hand
Cash at bank (AUD account)
Cash at bank (USD account)
Total cash and cash equivalents
10. Trade and other receivables
Trade and other receivables consists of the following:
Trade receivables
Other receivables
Total trade and other receivables
-
-
-
-
Current
R&D incentive receivable
Total R&D incentive receivable
13. Other current assets
Other current assets
Prepayments
Security deposits
GST receivable
Other assets
Shareholder loan
Total other current assets
445,640
502,664
351,311
1,299,615
2017
$
38
35,817
4,099,281
4,135,136
2017
$
770
87,107
87,877
2016
$
38
459,141
69,391
528,570
2016
$
21,774
-
21,774
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.
11. Inventories
Inventories consist of the following:
Raw materials and consumables at cost
Less: Provisions
Total inventories
37 •
2017
$
46,132
(24,184)
21,948
2016
$
76,076
(46,000)
30,076
The shareholder loan is a full recourse, interest-free loan for 4 years, maturing September 2017
(refer note 35 - Subsequent events for further details on the Shareholder loan).
The Group’s management consider that the shareholder loans are not impaired or past due for each
of the 30 June reporting dates under review and are of good credit quality.
Included within the shareholder loan are balances owing by the Directors as follows:
John Martin
Graham Vesey
2017
$
295,925
150,552
2016
$
295.925
150,552
Consolidated Financial Statements for the Year Ended 30 June 2017
2017
$
2016
$
2,608,222
2,732,110
2,608,222
2,732,110
2017
$
70,330
38,743
69,217
700
1,228,751
1,407,741
2016
$
32,799
52,804
74,377
30,074
-
190,054
Notes to the consolidated financial statements
14. Plant and equipment
Details of the Group’s property, plant and equipment and their carrying amounts are as follows:
15. Intangible assets
Details of the Group’s intangible assets and their carrying amounts are as follows:
Office
equipment
$
Lab
equipment
$
Clinical
equipment
$
Office
fit-out
$
Total
$
Acquired software
licenses
$
Gross carrying amount
Gross carrying amount
Balance 1 July 2016
111,064
399,196
102,917
1,168,665
1,781,842
Balance at 1 July 2016
Additions
Disposals
Balance 30 June 2017
Depreciation and impairment
(53,003)
119,613
61,552
88,397
-
-
(50,801)
-
-
149,949
(103,804)
Balance at 30 June 2017
Amortisation and impairment
487,593
52,116 1,168,665
1,827,987
Balance at 1 July 2016
Balance 1 July 2016
(90,607)
(296,393)
(75,755)
(517,525)
(980,280)
Disposals
Depreciation
50,192
-
32,921
-
83,113
(16,229)
(50,548)
(6,986)
(246,930)
(320,693)
Balance 30 June 2017
(56,644)
(346,941)
(49,820)
(764,455)
(1,217,860)
Carrying amount 30 June 2017
62,969
140,652
2,296
404,210
610,127
Gross carrying amount
Balance 1 July 2015
108,051
352,879
106,142
972,265
1,539,337
Additions
Disposals
3,995
(982)
49,275
(2,958)
-
196,400
249,670
Amortisation
(3,225)
-
(7,165)
Amortisation
Balance at 30 June 2017
Carrying amount 30 June 2017
Gross carrying amount
Balance at 1 July 2015
Balance at 30 June 2016
Amortisation and impairment
Balance at 1 July 2015
Balance at 30 June 2016
Carrying amount 30 June 2016
Balance 30 June 2016
111,064
399,196
102,917 1,168,665
1,781,842
Depreciation and impairment
Balance 1 July 2015
(71,010)
(239,658)
(54,658)
(282,270)
(647,454)
Disposals
Depreciation
102
1,700
1,275
-
3,077
(19,699)
(58,435)
(22,514)
(235,255)
(335,903)
Balance 30 June 2016
(90,607)
(296,393)
(75,755)
(517,525)
(980,280)
Carrying amount 30 June 2016
20,457
102,803
27,162
651,140
801,562
The Company exercised an option to acquire the fit-out premises at the end of the finance lease in
January 2016 for $150,000.
82,561
82,561
(71,307)
(5,495)
(76,802)
5,759
82,561
82,561
(56,451)
(14,856)
(71,307)
11,254
Total
$
82,561
82,561
(71,307)
(5,495)
(76,802)
5,759
82,561
82,561
(56,451)
(14,856)
(71,307)
11,254
38 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
16. Investments accounted for using the equity method
The Group has one material joint venture – Regeneus Japan Inc. The investment is accounted
for using the equity method in accordance with AASB 128. Summarised financial information for
Regeneus Japan Inc. is set out below:
17. Other non-current assets
Total assets (a)
Total liabilities
Net assets
(a) Includes cash and cash equivalents
Revenue
Expenses
Total comprehensive loss for the year
Share of comprehensive loss for the year
2017
$
156,000
-
156,000
156,000
-
(18,214)
(18,214)
(9,107)
A reconciliation of the above summarised financial information to the carrying amount of the
investment in Regeneus Japan Inc. is set out below:
Total net assets of Regeneus Japan Inc
Proportion of ownership interests held by the Group
Carrying amount of the investment in Regeneus Inc.
156,000
50%
78,000
2016
$
-
-
-
-
-
-
-
-
-
-
-
The joint venture has no commitments or contingent liabilities as at 30 June 2017 (2016: nil)
Non-current
Shareholder loan
Security deposits
Total other non-current assets
18. Trade and other payables
Trade and other payables consists of the following:
Current
Trade payables
Accruals
PAYG Payable
Total trade and other payables
2017
$
2016
$
-
-
1,409,307
210,000
210,000
210,000
1,619,307
2017
$
350,317
331,184
61,708
743,209
2016
$
-
539,430
188,100
178,782
906,312
All amounts are short term and the carrying values are considered to be a reasonable approximation
of fair value.
18.1 Foreign currency risk
The carrying amount of trade and other payables denominated in the foreign currencies is:
US dollar
2017
$
17,436
2016
$
59,875
39 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
19. Provisions
21. Equity
Current: Annual leave
Opening balance 1 July
Benefits accrued /(expensed)
Balance as at 30 June
Total current provisions
Non-current: Long service leave
Opening balance 1 July
Benefits accrued
Balance as at 30 June
Non-current: Make good
Opening balance 1 July
Provision accrued
Balance as at 30 June
2017
$
99,273
16,211
115,484
115,484
94,182
42,525
136,707
50,300
1,700
52,000
2016
$
109,868
(10,595)
99,273
99,273
47,588
46,594
94,182
50,300
50,300
Total non-current provisions
188,707
144,482
The provision for the estimated cost for the make good of the operating lease and relates to the
expected future cost and is based on management’s best estimate of the cost to restore the leased
premises to their agreed pre-fitout state at the expiration of the lease agreement.
20. Other liabilities
Current
Deferred income
Total other current liabilities
2017
$
17,502
17,502
2016
$
-
-
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.
2017
shares
2016
shares
2017
$
2016
$
Shares issued and fully paid
Beginning of the year
208,885,143
208,885,143
31,076,819
31,076,819
Shares issued
Closing balance at the
end of the year
-
-
-
-
208,885,143
208,885,143
31,076,819
31,076,819
During 2017, no shares or options were issued. (2016: nil).
21.2 Reserves
The details of reserves are as follows:
Balance at 30 June 2015
Share options expense
Options exercised
Transfer from reserves to retained earnings for
options forfeited
Balance at 30 June 2016
Share options expense
Options exercised
Transfer from reserves to retained earnings for
options forfeited
Balance at 30 June 2017
Share option
reserve
$
Total
reserves
$
2,491,128
2,491,128
86,479
86,479
-
-
(953,041)
(953,041)
1,624,566
1,624,566
44,576
44,576
-
-
(16,369)
(16,369)
1,652,773
1,652,773
40 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
22. Employee remuneration
22.1 Share-based employee remuneration
As at 30 June 2017 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.
Share options
Employee share
option plan
Option share
trust
Total share
options
Number
Weight
avg
exercise
price
$
Number
Weight
avg
exercise
price
$
Number
Weight
avg
exercise
price
$
Outstanding at 1 July 2015
7,242,755
0.17
8,322,110
0.24
15,564,865
0.21
The following principal assumptions were used in the valuation:
Valuation assumptions
Grant date
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
1 Jul 2010
1 Jan 2011
21 Feb 2011
1 Jul 2011
$0.136
45%
$0.136
45%
$0.136
45%
$0.280
45%
10 years
10 years
10 years
10 years
0%
5.10%
$0.085
$0.136
0%
5.60%
$0.086
$0.136
0%
5.60%
$0.085
$0.136
0%
5.30%
$0.180
$0.280
Granted
Forfeited
Exercised
-
-
-
-
-
-
(4,508,921)
0.18
(1,383,900)
0.25
(5,892,821)
0.20
Grant date
16 Sep 2013
4 Dec 2013
21 Nov 2014
-
-
-
-
-
-
Share price at date of grant
Outstanding at 30 June 2016
2,733,834
0.16
6,938,210
0.24
9,672,044
0.22
Granted
Forfeited
Exercised
-
-
-
-
-
-
-
-
-
-
(50,000)
0.25
(50,000)
0.25
-
-
-
-
Outstanding at 30 June 2017
2,733,834
0.16
6,888,210
0.24
9,622,044
0.22
Exercisable at 30 June 2016
2,733,834
Exercisable at 30 June 2017
2,733,834
0.16
0.16
6,138,210
6,538,210
0.25
0.24
8,872,044
9,272,044
0.22
0.22
Other details of options currently outstanding:
• The range of exercise prices is $0.136 to $0.28
• The weighted average remaining contractual life is 3 years
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
0%
3.40%
$0.156
$0.250
$0.470
65%
5 years
0%
3.50%
$0.327
$0.250
$0.160
244%
5 years
0%
2.80%
$0.179
$0.160
In total, $44,576 (2016: $86,479), 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.
Volatility has been determined based on the historic share price volatility as it is assumed that this
is indicative of future movements.
Option life is based on the nominated expiry date of the option and historical exercise patterns,
which may not eventuate.
41 •
Consolidated Financial Statements for the Year Ended 30 June 2017
23. 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 lease payments are secured by a cash deposit of $210,000. The future minimum
lease payments are as follows:
Minimum lease payments due
Within 1 year
$
1-5 years
$
After 5 years
$
277,798
263,596
225,165
502,963
-
-
Total
$
502,963
766,559
30 June 2017
30 June 2016
Notes to the consolidated financial statements
24. 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% (2016: 30%) and the reported tax
expense in profit or loss are as follows:
The prima facie tax on profit / (loss) before income tax is
reconciled to the income tax as follows:
Prima facie tax receivable on profit / (loss) before income tax
at 30% (2016: 30%)
981,178
(1,072,161)
2017
$
2016
$
Less:
Tax effect of:
- Research and development incentive
- Tax losses applied / (not brought to account)
(782,467)
(819,633)
(1,736,323)
15,201
Add:
Tax effect of:
- Non-deductible expenses
- Timing differences
Income tax benefit
The applicable weighted average effective tax rates are
as follows
Deferred Tax Losses not recognised
Tax losses not recognised
Capital losses not recognised
Other deferred tax assets not recognised
Total
Potential tax benefit of 30%
1,438,929
1,834,006
98,683
42,587
-
0%
2017
$
-
0%
2016
$
876,033
833,534
1,433,723
3,143,290
942,987
6,663,778
833,529
1,104,779
8,602,086
2,580,626
42 •
Consolidated Financial Statements for the Year Ended 30 June 2017
25. Auditor’s remuneration
27. Reconciliation of cash flows from operating activities
Notes to the consolidated financial statements
Audit and review of financial statements
- Auditors of Regeneus Ltd
Remuneration for audit and review of financial statements
Other services
Other services
Total other services remuneration
Total auditor’s remuneration
2017
$
91,500
91,500
-
-
2016
$
87,750
87,750
-
-
91,500
87,750
26. 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 profit or loss
were necessary in 2017 or 2016).
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:
Earnings per share
Basic earnings per share from continuing operations
0.016
(0.017)
2017
$
2016
$
The weighted average number of ordinary shares
used as the denominator on calculating the EPS
Diluted earnings per share
Cash flows from operating activities
Profit / (Loss) for the period
Non cash adjustments for:
• Depreciation
• Amortisation
• Loss on disposal of plant and equipment
• Profit on disposal of plant and equipment
• Equity settled share-based transactions
• Interest - unwinding of shareholder loan
• Share of loss of on investments accounted for using the
equity method
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 other liabilities
• Change in provisions
2017
$
2016
$
3,270,592
(3,573,873)
320,693
5,495
11,091
-
44,576
(66,176)
9,107
8,128
21,004
(76,043)
(46,029)
(117,074)
123,888
17,502
60,436
335,903
14,856
148
(14,833)
86,479
(87,276)
-
68,899
44,798
343,259
18,085
107,126
685,456
(368,570)
86,299
208,885,143
208,885,143
Net cash inflow / (outflow) from operating activities
3,587,190
(2,253,244)
Diluted earnings per share from continuing operations
0.016
(0.017)
The weighted average number of ordinary shares
used as the denominator on calculating the DEPS
208,885,143
208,885,143
Share options have not been included in the diluted EPS calculation because they are
anti-dilutive.
43 •
Consolidated Financial Statements for the Year Ended 30 June 2017
28. Related party transactions and loans
During the period the Group entered into an R&D funding arrangement with Sherman Group Pty
Ltd, a related party. The facility forward funded, via a loan, up to 80% of the Federal Government’s
R&D tax incentive claim. Sherman Group charged interest at the market rate for this type of
funding. The loan was fully repaid in September 2016.
Related party transactions
Sherman Group Pty Ltd
Loan received
Loan repaid
Interest charged
Net paid to related parties
Related party loan receivable
John Martin
Graham Vesey
Total related party loans
2017
$
2016
$
1,250,000
(1,250,000)
(10,575)
(10,575)
2017
$
295,925
150,552
446,477
-
-
-
-
2016
$
295,925
150,552
446,477
These loans relate to the shareholder loan, the terms of which are disclosed in Notes 13 and 17.
Notes to the consolidated financial statements
29. Transactions with key management personnel
Key management personnel remuneration includes the following expenses:
Related party loan receivable
Salaries
Bonuses
Total short-term employee benefits
Defined contribution pension plans
Other long-term benefits
Share-based payments
Total remuneration
2017
$
2016
$
669,679
665,883
-
-
669,679
665,883
47,944
19,331
-
51,740
31,248
-
736,954
748,871
During the year, no options were exercised.
Disclosures relating to key management personnel are set out in this note and the remuneration
report in the Directors’ report.
30. Contingent liabilities
The Group had no contingent liabilities as at 30 June 2017 (30 June 2016: $nil).
31. Capital expenditure commitments
There were no capital commitments as at the 30 June 2017 (30 June 2016: $nil).
44 •
Consolidated Financial Statements for the Year Ended 30 June 2017
32. Financial instruments
a. Capital risk management
The Group’s financial instruments consist mainly of deposits with banks, accounts receivable,
deposits, shareholder loans, accounts payable and financial liabilities.
b. Categories of financial instruments
The total for each category of financial instrument, measured in accordance with AASB 139 as
detailed in the accounting policies to these financial statement, are as follows:
Financial assets
Trade and other receivables
Cash and cash equivalents
Shareholder loan
Total financial assets
Financial liabilities
Trade and other payables
Total financial liabilities
2017
$
770
4,135,136
1,228,751
5,364,657
2017
$
681,501
681,501
2016
$
21,774
528,670
1,409,307
1,959,751
2016
$
727,530
727,530
c. Financial risk management objective
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.
Notes to the consolidated financial statements
The Group is exposed to foreign exchange risk arising primarily from transactions with foreign
suppliers and the effect of foreign exchange rate volatility on a US denominated bank account,
balance at 30 June 2017 US$3,141,693 (30 June 2016: $52,000). Other exposure to currency risk
arises from foreign currency transactions and 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.
The following table illustrates the sensitivity of profit in regards to the Group’s financial assets
and financial liabilities and the $USD / $AUD exchange rate ’all other things being equal’. It
assumes a +/- 10% change of the $AUD / $USD exchange rate for the year ended at 30 June
2017 (2016: 10%) This percentage has been determined based on the average market volatility
in exchange rates in the previous twelve (12) months. The sensitivity analysis is based on the
Group’s foreign currency financial instruments held at each reporting date.
Movements in the $AUD / $USD would have had the following impact:
Profit / (loss) Impact of exchange rate sensitivity
2017
$
2016
$
If the $AUD had strengthened against the $USD by 10% (2016: 10%)
(372,662)
(6,308)
If the $AUD had weakened against the $USD by 10% (2016: 10%)
455,476
7,710
Exposure to foreign exchange rates vary during the year depending on the volume of overseas
transactions. Nonetheless the analysis above is considered to be representative of the Group’s
exposure to currency risk.
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 forecast cash inflows and outflows due in day-to-day business.
The data used for analysing these cash flows 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 deposits 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.
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.
As at 30 June 2017 the Group’s non-derivative financial liabilities have contractual maturities
(including interest payments where applicable) as summarised below:
45 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Financial liabilities
2017
$
2016
$
Current within 6 months
Current within 6 months
Trade and other payables
Total financial liabilities
681,501
681,501
727,530
727,530
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,
shareholder loans, 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.
The Group’s maximum exposure to credit risk is limited to the carrying amount of financial assets
recognised at the reporting date.
Notes to the consolidated financial statements
33. Fair value measurement
Fair value hierarchy
The Group’s assets and liabilities measured or disclosed at fair value are valued using a three
level hierarchy, based on the lowest level of input that is significant to the entire fair value
measurement, being:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurements date
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly
Level 3: Unobservable inputs for the asset or liability
All assets and liabilities are considered to be Level 1 and their carrying values are considered to
approximate fair value. There were no transfers between levels during the financial year.
34. Parent entity information
Set out below is the supplementary information about Regeneus Ltd, the parent entity.
There are no significant concentrations of credit risk within the Group.
Statement of financial position
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
• 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.
Management assesses the Group’s capital requirements in order to maintain an efficient overall
financing structure while avoiding excessive leakage. 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.
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Option reserve
Total equity
Statement of profit or loss and other comprehensive income
Profit / (Loss) for the year
Other comprehensive income
Total comprehensive profit or (loss)
2017
$
2016
$
8,260,824
9,164,710
876,195
1,064,902
8,099,808
3,502,584
5,934,707
1,005,585
1,150,067
4,784,640
31,076,819
31,076,819
(24,629,784)
(27,916,745)
1,652,773
1,624,566
8,099,808
4,784,640
3,270,592
(3,573,873)
-
-
3,270,592
(3,573,873)
46 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Notes to the consolidated financial statements
35. Subsequent events
In the period since 30 June 2017 to the signing of the financial report, the Board of Directors
reviewed the maturity of the shareholder loan facility, relating to the funding of employee options
exercised as part of the IPO in 2013. The Directors considered that it was in all shareholders
interest if the loan repayment was extended 9 months to 15 June 2018. The Directors will seek
approval of this decision at the Annual General Meeting.
Apart from the above, there are no other matters or circumstances that have arisen since the end
of the year that have significantly affected or may significantly affect either the entity’s operations
in future financial years, the results of those operations in future financial years or the entity’s
state of affairs in future financial years.
Directors’ declaration
1. 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 2017 and of its
performance for the financial year ended on that date; and
ii. complying with 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 the chief financial officer for the financial year ended
30 June 2017.
3. Note 2 confirms that the consolidated financial statements also comply with International
Financial Reporting Standards.
Signed in accordance with a resolution of the Board of Directors:
CEO and Executive Director
John Martin
Dated the 22nd day of August 2017.
47 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Auditor's
report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 3(c) in the financial statements, which indicates that the Group reported
a net profit of $3,270,592 during the year ended 30 June 2017, and as of that date, the Group has
accumulated losses of $24,629,684. As stated in Note 3(c), these events or conditions, along with
other matters as set forth in Note 3(c), indicate that a material uncertainty exists that may cast
doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
In addition to the matter described in the Material Uncertainty Related to Going Concern section,
we have determined the matters described below to be the key audit matters to be communicated
in our report.
Key audit matter
How our audit addressed the key audit matter
Accounting for the Asahi Glass contract (note 6 and
note 16)
On 28 December 2016 the Group entered into an
agreement with Asahi Glass Co (AGC), a Japanese
entity, for the exclusive manufacture of the Progenza
stem cell technology for the Japanese market. The
agreement entered into with Asahi Glass resulted in
revenue of $8.9 million being recognised by the
Group during the year. A vehicle (JV) was also
created upon entering into the agreement with AGC
in order to conduct the clinical development and
licensing of Progenza in Japan.
A significant contract requires consideration of the
key elements in order to determine appropriate
accounting treatment. The key elements of focus
arising from this contract include revenue recognition,
accounting treatment of the JV and consideration of
any other elements within the contract that may have
an impact on the Group.
Our procedures included, amongst others:
reading and understanding the contracts entered
into with AGC including the JV Agreement;
verifying cash received to bank statements and
contracts;
verifying that milestones in the AGC agreement
had been achieved and evaluating the
appropriateness of the revenue recognition against
requirements of AASB 118 Revenues.
reviewing and comparing to contracts
management's key judgements related to the
treatment of the Japanese entity as a joint venture;
verifying the initial investment in the joint venture to
bank statements; and
reviewing the appropriateness of the related
disclosures within the financial statements.
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 audit of the financial report
Opinion
We have audited the financial report of Regeneus Ltd (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2017, 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, and notes
to the consolidated financial statements, including a summary of significant accounting policies,
and the directors’ declaration.
In our opinion, the accompanying financial report of the Group, is in accordance with the
Corporations Act 2001, including:
a Giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its
performance for the year ended on that date; and
b Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report. We are independent of the Group in accordance with the
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have
also fulfilled our other ethical responsibilities in accordance with the Code.
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.
48 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Auditor's report
Key audit matter
Recognition of R&D incentive (note 6)
The Group receives a 43.5% refundable tax offset
(2016: 45%) of eligible expenditure under the
research and development (“R&D”) incentive scheme
if turnover is less than $20 million per annum. An
R&D plan is filed with AusIndustry in the following
financial year and, based on this filing, the Group
receives the incentive in cash. Management, with the
assistance of a management expert, performed a
detailed review of the Group’s total R&D expenditure
to estimate the refundable tax offset receivable under
the R&D incentive legislation. The receivable
recorded at year-end represents an estimated claim
for the period 1 July 2016 to 30 June 2017.
This area is a key audit matter due to the inherent
subjectivity that is involved in the Group making
judgements in relation to the estimation and
recognition of the R&D incentive income and
receivable.
How our audit addressed the key audit matter
Our procedures included, amongst others:
comparing the methodology and nature of the
expenditure included in the current year estimate of
the R&D incentive calculation to the prior period
claim;
utilising an internal R&D expert to assess the
methodology used, consistency with ATO guidance
of amounts and review the work performed by
management’s expert;
evaluating the qualification and expertise of
management’s expert in order to assess their
professional competence and capabilities as they
relate to the work undertaken;
comparing the eligible expenditure used in the
estimate to the expenditure recorded in the general
ledger;
assessing management’s prior year estimates to
actual results to support the reliability of the R&D
incentive receivable;
inspecting copies of relevant correspondence with
AusIndustry and the ATO related to the claims
history; and
reviewing relevant disclosures in the financial
statements.
Information Other than the Financial Report and Auditor’s Report Thereon
The Directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2017, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of the financial report that gives
a true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the Directors determine is necessary to enable the
preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of this financial report.
Further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 16 to 19 of the directors’ report for
the year ended 30 June 2017.
In our opinion, the Remuneration Report of Regeneus Ltd, for the year ended 30 June 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
L M Worsley
Partner - Audit & Assurance
the going concern basis of accounting unless the Directors either intend to liquidate the Group or
Sydney, 22 August2017
to cease operations, or have no realistic alternative but to do so.
49 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Additional
shareholder
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
19 August 2017.
Corporate governance
statement
In accordance with the ASX principles and
recommendations, Regeneus Ltd’s corporate
governance statement can be reviewed on the
Company website at:
regeneus.com.au/about/corporate-governance
Buy back of shares
There is no buy back of shares on offer.
Substantial shareholders
The number of substantial shareholders and
their associates are set out below:
Shareholder
Number of shares
Vesey Investments
14,399,642
Voting rights
Ordinary shares
Buy back of shares
There is no buy back of shares on offer.
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.
Unissued equity securities
Options issued under the options plans total
9,622,044.
Options
No voting rights.
Distribution of equity security holders
Holding
100,001 and over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Unmarketable parcels
Shares
172,274,950
33,302,121
2,383,642
909,841
14,589
208,885,143
616,971
Options
9,622,044
-
-
-
-
9,622,044
50 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Ordinary shares
Twenty largest shareholders
HSBC Custody Nominees
Vesey Investments Pty Ltd
Dr Marc Ronald Wilkins
Thomas Georg Mechtersheimer
Dr Benjamin Ross Herbert
BNP Paribas Nominees Pty Ltd
John Martin
Pierre Frederic Malou
SMC Capital Pty Ltd
Parros Pty Ltd
MLB Holdings Pty Ltd
Sayers Investment (ACT) Pty Ltd
George Miklos
KBRoss Pty Ltd
Bacau Pty Ltd
Rose Martin
Mrs Ciara Yvonne Kelly and Mr Paul Dominic Kelly
J P Morgan Nominees Australia Limited
Dr Michael Muller
Duncan Thomson & Donna Thomson
Total
Balance of register
Grand total
Number
held
14,852,446
14,399,642
7,985,161
6,540,623
5,687,897
4,370,615
3,759,682
2,820,542
2,716,726
2,222,623
2,200,000
2,100,000
2,086,096
2,000,000
1,940,732
1,863,642
1,774,512
1,714,705
1,571,896
1,534,183
% of issued
shares
7.11
6.89
3.82
3.13
2.72
2.09
1.80
1.35
1.30
1.06
1.05
1.01
1.00
0.96
0.93
0.89
0.85
0.82
0.75
0.73
84,141,723
124,743,420
208,885,143
40.28
59.72
100.00
Additional shareholder information
Securities exchange
The Company was listed on the Australian Securities Exchange on 19 September 2013.
Electronic communications
Regeneus encourages shareholders to receive information electronically.
Shareholders who currently receive information by post can log in at
www.linkmarketservices.com.au to provide their email address and elect to receive electronic
communications. Electronic communications allows Regeneus to communicate with shareholders
faster and reduce its use of paper.
Cash usage
Since listing on the ASX on 19 September 2013, the Group 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.
Annual General Meeting 2017
The Regeneus AGM will be held at the premises of:
Grant Thornton Audit Pty Ltd
Level 17, 383 Kent Street
Sydney NSW 2000
At 1.00pm on Thursday 2 November 2017
The external auditors will be present at the AGM to answer questions relevant to the
external audit.
51 •
Consolidated Financial Statements for the Year Ended 30 June 2017
Registered Office and Principal Place of Business
25 Bridge Street
Pymble, NSW 2073
Board of Directors
Dr. Roger Aston (Non-executive Chairman)
John Martin (Executive Director)
Professor Graham Vesey (Executive Director)
Barry Sechos (Non-executive Director)
Dr. Glen Richards (Non-executive Director)
Company Secretary
Sandra McIntosh
Website
regeneus.com.au
Lawyers
Dibbs Barker
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
Sydney, NSW 2000
Stock Exchange Listing
Australian Stock Exchange
ASX Code: RGS