2024
ANNUAL REPORT
RHYTHM BIOSCIENCES LIMITED (ASX:RHY)
ACN 619 459 335
RHYTHM’S ColoSTAT®
IS A SIMPLE BLOOD TEST THAT DETECTS THE PROTEIN
BIOMARKERS IN THE BLOOD, THAT ARE INDICATIVE
OF THE PRESENCE OF COLORECTAL CANCER.
2
CONTENTS
Key Milestones.....................................................................................4
Company Overview...........................................................................6
Market Overview................................................................................7
Chairman’s Report.............................................................................8
CEO's Report.......................................................................................9
Directors’ Report............................................................................. 10
Auditor's Independence Declaration.....................................24
Consolidated Statement of Profit or
Loss and Other Comprehensive Income..............................25
Consolidated Statement of Financial Position...................26
Consolidated Statement of Changes in Equity.................. 27
Consolidated Statement of Cash Flows................................28
Notes to the Consolidated Financial Statements .............29
Consolidated Entity Disclosure Statement .........................46
Directors’ Declaration....................................................................47
Independent Auditor’s Report..................................................48
Additional ASX Information........................................................53
Corporate Directory.......................................................................57
3
2003 - 2016
CSIRO Research and Development
January 2018
Development Program Commences
December 2020
Global Manufacturer Appointed
May 2019
ISO Certification
November 2021
CE Mark Granted for ColoSTAT®
May 2023
UKCA Mark Granted and Strategic Partnership with
LINK Medical Solutions
Multiplex Kit Validation
August 2024
Alpha Version of the Multiplex Antibody
Detection Kits received
Market Entry
RHYTHM BIOSCIENCES
MILESTONES
4
Rhythm Biosciences Lists on the ASX
December 2017
Patents Secured in 21 Countries
January 2018 -
November 2020
Clinical Trial Program Commences
February 2019
Clinical Trial Complete (RHY-001)
November 2021
ColoSTAT® Authorised for Sale in New Zealand
November 2022
Pipeline Activities - Other Cancers
RHY001 Study - Submit Publication
January 2024
FUTURE MILESTONES
5
References: 1. https://www.who.int/activities/promoting-cancer-early-diagnosi. 2. https://bmccancer.biomedcentral.com/articles/10.1186/s12885-023-11272-9. 3. https://www.who.int/news-room/
fact-sheets/detail/colorectal-cancer. 4. Gordon NP, Green BB. Factors associated with use and non-use of the Fecal Immunochemical Test (FIT) kit for Colorectal Cancer Screening in Response to a 2012
outreach screening program: a survey study. BMC Public Health. 2015 Jun 11;15:546. 5. https://www.aihw.gov.au/reports/australias-health/cancer-screening-and-treatment. 6. Xi Y, Xu P (2021), Global
colorectal cancer burden in 2020 and projections to 2040, Translational Oncology, 14(10),101174,doi:10.1016/j.tranon.2021.101174 Epub 2021 Jul 6. 7. https://news.cancerresearchuk.org/2023/01/24/early-
onset-cancer-why-are-more-young-adults-being-diagnosed. 8. https://bowelcancernz.org.nz/never-too-young. 9. https://www.aihw.gov.au/getmedia/ea870f59-a9e4-4772-8fa8-e1206b56a552/
cancer-data-in-australia.pdf?v=20240815054943&inline=true. 10. https://www.who.int/news/item/01-02-2024-global-cancer-burden-growing--amidst-mounting-need-for-services. 11. NHS waiting
times trends shows drastic increase in delays to bowel cancer diagnostic testing | Bowel Cancer UK. 12. Why are most colorectal cancers diagnosed outside of screening? A retrospective analysis of data
from the English bowel screening programme - Robert Stephen Kerrison, Andrew Prentice, Sarah Marshall, Christian von Wagner, 2022 (sagepub.com). 13. The diagnostic value of symptoms for colorectal
cancer in primary care: a systematic review | British Journal of General Practice (bjgp.org). 14. Colorectal cancer screening: a global overview of existing programmes | Gut (bmj.com). 15. An Estimate of the
US Rate of Overuse of Screening Colonoscopy: a Systematic Review - PMC (nih.gov). 16. RACGP - New standard provides up-to-date guidance on colonoscopy referral and care. 17. Colonoscopy overuse
in colorectal cancer screening and associated factors in Argentina: a retrospective cohort study | BMC Gastroenterology | Full Text (biomedcentral.com). 18. New study at Coventry's University Hospital
could reduce need for colonoscopies across NHS - The Coventry Observer. 19. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7563245. 20. https://pursuit.unimelb.edu.au/articles/who-needs-a-
colonoscopy-most. 21. https://www.safetyandquality.gov.au/sites/default/files/migrated/2.1-Text-Colonoscopy-hospitalisations-all-ages.pdf.
ABOUT RHYTHM BIOSCIENCES
Rhythm Biosciences is committed to saving lives through early
detection of cancers by developing and providing physicians
simple and accurate diagnostic tools.
The World Health Organisation has reported that 30
– 50% of cancers could be prevented1 with the early
detection and characterisation of disease being an
important part of the solution. As well as more timely
information, there is a need for simple and cost-effective
solutions that can be incorporated in health care systems
in the developed economies as well as in the low and
middle-income economies where most of the estimated
9.6 million annual deaths due to cancer occur.1,2
Rhythm Biosciences’ mission is to discover, develop and
commercialise affordable and simple clinical diagnostic
solutions for a broad range of cancers.
Our most advanced program is focussed on Colorectal
Cancer (CRC), the second leading cause of cancer-
related deaths worldwide.3 In 2020, there were more
than 1.9 million people diagnosed with CRC and over
930,000 lives lost to the disease. By 2040, the burden of
CRC is predicted to increase to 3.2 million new cases and
1.6 million deaths per year. 3
Faecal immunochemical test (FIT) is the prevalent CRC
screening method globally. Unfortunately, the utilisation
of the FIT test is low, due to inconvenience, sample
collection and aversion with the procedure.4 A recent
report from Australian Institute of Health and Welfare
has revealed overall participation for the two-year period
2021-2022 has dropped to 40 per cent from 44 per cent
in 2019-2020.5
Another challenge has been increasing incidence rates,
particularly among younger people.6 In the United
Kingdom (UK), between the 1990s and 2018, cancer
incidence rates in 25 to 49-year-olds increased by 22%
(> twice the 9% increase in over-75s.).7 Around 350 of
the >3,300 diagnosed with CRC each year in NZ, are
under the age of 50.8 For Australia, Incidence rates of
40–49 year olds increased from 22 cases per 100,000
people in 2005 to an estimated 30 cases in 2024.9 The
CRC healthcare burden has led to fewer resources and
increased delays in wait times for colonoscopies. In the
UK there was a 40% increase from 2017 to 2018 in the
average number of patients waiting longer than two
weeks.10,11
Furthermore, the lack of compliance with national
CRC screening programs results in the vast majority
of diagnosed cancers originating from patients who
are under screened and enter the care path through
presentation of symptoms to their primary carer.12-14
This often leads to unnecessary investigation by
colonoscopy15-18 and there is a need for a mechanism,
like an effective, low cost blood-based test, to help
triage or prioritise those individuals awaiting endoscopy
to reduce waiting lists.19 The Australian Commission on
Safety and Quality in Health Care has recommended
states and territories adopt triaging systems to prioritise
colonoscopies for most at risk individuals.20,21
ColoSTAT® Test Kit, Rhythm Bioscience’s first simple
blood-based cancer test, designed for the detection of
colorectal cancer, is a solution for use within the disease
detection pathway. There are a number of potential
opportunities to integrate ColoSTAT® into clinical
practice that are being explored by the company. (A)
colonoscopy to prioritise those who should be examined
first (B) use as an adjunct to FIT testing for vulnerable
patients who are unable to withstand colonoscopy (C)
inherited or familial cancer detection and (D) general
screening alongside the current stool-based methods
as an alternative screening test for individuals unable
to or are unwilling to use currently available screening
modalities.
ColoSTAT® is patented in over 20 countries, and in
response to significant regulatory changes in Europe and
proposed changes in Australia and the U.S. the test is
being updated to meet IVDR (In vitro diagnostic medical
devices regulation) regulatory standard. The updated
development consists of a redesigned multiplex assay
that has the potential to be of materially lower cost,
simpler to use, and a more consistent quality through
increased automation and reduced chance of human
error.
The need to detect other cancers is also real and Rhythm
Biosciences has programs focussed on other cancers
including gastric, lung and breast cancer. The programs
are in the stage of further qualifying protein biomarkers
for their utility as blood-based markers for underlying
disease and represent a significant platform extension
opportunity.
6
COLORECTAL CANCER
EARLY DETECTION IS KEY TO SURVIVAL (STAGES I/II)
MODIFIABLE RISK FACTORS ASSOCIATED WITH CRC9
NON-MODIFIABLE RISK FACTORS ASSOCIATED WITH CRC9
5-YEAR SURVIVAL RATES FOR THOSE DIAGNOSED AT AN EARLY STAGE OF CRC ARE OVER 90%.8
>90%
STAGE I
A diet low in
fibre
Personal history
of certain types
of cancers
(ovarian/uterine)
High red meat
consumption, especially
processed meats
IBD, such as
Crohn's and
Ulcerative Colitis
Physical
inactivity and
obesity
Family history
of CRC
Consumption
of alcohol and
tobacco
Type 2
diabetes
Low blood
level of
Vitamin D
Aged ≥ 50
A previous
diagnosis of
polyps/CRC
STAGE II
STAGE III
STAGE IV
7
A MESSAGE FROM
THE CHAIRMAN
Otto Buttula
Dear Fellow Shareholders
On behalf of the Board, I am pleased
to present Rhythm Biosciences’ 2024
Annual Report. Financial year 2024
was once again very disappointing
in terms of shareholder returns, with
an ongoing and significant decrease
in our Company’s share price. This
follows a tumultuous 2023 calendar
year which included senior executive
changes, the difficult, but correct
decision to withdraw our ColoSTAT®
application from the Therapeutic
Goods Administration (TGA) and
further instability earlier this calendar
year, with minority shareholder
discontent seeking to alter the
composition of the Board.
Pleasingly this is now all behind us
and the comprehensive change
in strategy, announced in late
December 2023 has been front and
foremost in the Company’s plans for
2024 and beyond. This included:
• Appointment of a suitably
qualified CEO to support the
IVDR transition work, with my
own executive status reverting to
non-executive following a brief
handover period. I am pleased to
report that this has been achieved
with Dr David Atkins commencing
in the CEO role as of 13 May 2024
and myself returning to non-
executive as of 31 May 2024. Dr
Atkins is the most experienced
CEO appointment since the
Company’s inception and has had
strong commercial experience in
the Company’s sphere of activity,
particularly overseas. Dr Atkins
will report more upon the progress
made by the Company in his
CEO Letter / Report, which will
summarise current operational and
commercialisation activities.
• Reclassification of previously
produced IVDD ColoSTAT® kits to
Research Use Only (RUO) rather
than for commercial sales.
• The engagement of a US
based Contract Manufacturing
Organisation (CMO) to undertake
all future design and development
work on ColoSTAT®. The Company
has contracted with Quansys
Biosciences in the USA, with
work progressing well, converting
ColoSTAT® to a Multiplex Assay,
meeting higher production
standards capable of meeting
IVDR transition work and better
meeting end customer / user
requirements.
• Implementation of a cost
reduction program, with ongoing
costs reducing materially in line
with the new manufacturing
agreement and a more targeted
and qualified team, given much of
the previous scientific investigative
work has been completed.
Therefore, despite a difficult period
being experienced, the Board and
I believe the major problematic
issues experienced by the Company
are largely behind us. This reset in
the Company’s strategic direction
positions the Company to take
advantage of its potential and to
commercialise upon what is a valuable
intellectual property portfolio.
The Board and I sincerely believe the
experience of Dr Atkins together,
with the quality of the current
personnel within the Company is
of a high calibre and are driven to
succeed commercially. Hence, with
a team now being aligned with the
Company’s strategic goals we believe
we will start to restore shareholder
value over time.
On behalf of the Board, I would like
to thank Dr Atkins, the executive
management team and all our
employees, for their ongoing
personal commitment and diligent
contributions to Rhythm. Our Board
members remain focussed on
continuing to contribute strongly to
the Company’s success. I would also
acknowledge the contribution made
by Dr Rachel David, a Non-Executive
Director of Rhythm, who resigned
from the Board in December 2023.
Finally, and importantly, I would
also like to thank our many loyal
shareholders who continue to support
and believe in the Company.
Rest assured, we continue to be
driven and pursue our goal of assisting
patients diagnose cancers early, with
simple, inexpensive diagnostic tools.
Sincerely
Otto Buttula
Non-Executive Chairman
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
8
CHAIRMAN’S REPORT
A MESSAGE FROM
THE CEO
Dr David Atkins, PhD
Dear Shareholders
It’s a real pleasure and a privilege
to be writing this first letter for our
stakeholders, and I am delighted to be
trusted by our board to lead Rhythm
Biosciences on the journey from start-
up to successful, commercial scale-up
business.
I have had the opportunity to be a
member of several teams engaged in
clinical diagnostic development over
the years and my first impressions are
that our current team sets the standard
of understanding the opportunity
and responsibility that Rhythm has
for making an impact to individuals,
patients and their families around the
globe. Furthermore, the entire team
and board members have made me
feel instantly welcome and for that I
am grateful. I am also grateful to the
previous members of the Rhythm
team who have worked tirelessly for
more than 7 years, and left the current
team a sizeable body of high-quality
foundational work to build on. It is true
that we have had to take a step sideways
in order to go forward and having a rich
history available to us is going to allow
acceleration towards the end goal.
The focus for Rhythm has been
colorectal cancer where we have the
most developed technology. However,
we have a wealth of additional assets in
other cancer types and I look forward to
continue the work with our partners to
broaden out the commercial solutions
that we can ultimately bring to market.
The next 12 months is going to be an
important phase of the company as we
explore the new clinical opportunities
that keeps general cancer screening as
an end-goal but allows us to get there in
several steps. We’re exploring different
regulatory paths around the globe and
building the right commercial networks
to allow us to bring our CSIRO-
originated technology to market as soon
as its ready.
Being an Australian business solving an
important global cancer challenge is a
goal worth striving for and I look forward
to providing a continuous flow of news
over the coming 12 months!
Sincerely
Dr David Atkins, PhD
CEO
9
The Directors of Rhythm Biosciences Limited (Rhythm, the Group, or the Consolidated Entity) present their report for
the financial year ended 30 June 2024.
Directors
The Directors at any time during the year, or since the end of the financial year, were as follows:
Mr Otto Buttula
Dr Trevor Lockett
Mr Louis (Lou) Panaccio
Ms Susan MacLeman
Dr Rachel David (resigned 28 December 2023)
Meetings of Directors
The following table sets out the number of Director meetings of the Company held during the financial year, and the
number of meetings attended by each Director.
Director
Directors’ Meetings
Held
Attended
Mr O Buttula
12
12
Dr T Lockett
12
12
Mr L Panaccio
12
11
Ms S MacLeman
12
12
Dr R David
4
4
‘Held’ represents the number of meetings held during the time the Director held office during the year.
Corporate Governance
Details on the Company’s corporate governance procedures, policies and practices are at www.rhythmbio.com.
Principal Activities
Rhythm Biosciences Limited (ASX: RHY) is an innovative Australian publicly listed medical diagnostics company with
a focus on delivering simple, affordable blood tests for the accurate detection of cancers, providing physicians with
accurate and reliable diagnostic tools. Its ColoSTAT® product, which is nearing the commercialisation phase aims to
provide a simple accurate and early detection test for colorectal cancer.
Corporate Information
Rhythm, a Company limited by shares, is incorporated and domiciled in Australia. Rhythm has prepared a consolidated
financial report incorporating the entities that it controlled during the financial year.
The registered office and operations of the Company are located at Bio21 Institute, 30 Flemington Road, Parkville
Victoria, Australia, 3010.
Results of Operations
The Group incurred a loss after income tax of $6,856,761 for the year ended 30 June 2024 (2023: $8,217,557) which
reflects the research and development activity during the year. Highlights were as follows:
• ColoSTAT® Automation project with Nutripath and Tecan completed;
• Platform expansion – initial outcomes in Breast and Lung Cancer positive;
• 1st Tranche of R&D Tax Incentive received, new secondary submission underway;
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
10
DIRECTORS' REPORT
• Manuscript for ColoSTAT® clinical performance study submitted.
• Internationally Renowned Clinically Advisory Board established, with initial meeting held;
• The current patent review and renewals of ColoSTAT® in preferred markets, will lengthen patent protection by more
than a decade to early 2042;
• Phase 1 for ColoSTAT® update with U.S. based Contract Manufacturing Organisation (CMO) complete;
• Board’s Unanimous Recommendation supported in Extraordinary General Meeting (EGM);
• Maintained ISO 13485:2016 Certification;
• Appointment of Dr David Atkins as new Chief Executive Officer;
• Significant progress made on re-engineering ColoSTAT® assay into a simpler, higher quality multiplex antibody assay;
• Update of clinical strategy to include the indication of triage for patients symptomatic for bowel disease and with
higher-than-average risk of colon cancer; and
• Significant upgrade of quality systems with migration to eQMS and strengthening of team to ensure consistent
quality.
Significant Changes in the State of Affairs
During the year the Company issued:
• 27,454,161 shares at 10 cents each from a rights issue and a subsequent shortfall placement, raising $2,745,416; and
• 1,350,000 shares at 20 cents each from the exercise of options raising $270,000.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Future Developments
The Directors do not foresee any unusual future event that may significantly negatively impact the Group’s operations,
results or state of affairs. Rhythm’s business model of developing diagnostic products for global markets will always
bear some risk given the nature of technological development, competitors entering the market, changes in global
healthcare, reliance on commercial partners and our ability to access capital to sustain operations. We cannot guarantee
that Rhythm’s technology will be widely adopted. Moreover, the global Healthcare industry is an ever-evolving landscape
where changes may impact our business opportunities.
Internal Risks:
Most risks associated with personnel are limited due to the use of external consultants and outsourced agencies. Our
people risks were inherently our largest obstacle in the 2024 financial year which we have overcome with the training
and diversification of knowledge. Cash Flow is identified as a potential risk despite the minimisation with the R&D grant
expected. The management and Board have identified that Cash Flow will not be an impediment to the growth of the
company.
The financial statements as at 30 June 2024 have been prepared on a going concern basis for the following reasons:
• as at 30 June 2024, the consolidated entity had a cash position of $709,496;
• a research and development refund for FY24, based on expenditure incurred, is expected to be received In full by
November 2024. A secured loan obtained for $1,150,000 In August 2024 has provided early access to this forecast
research and development refund. A resubmitted research and development claim for FY23 for overseas activities is
also expected to be lodged in the near term;
• activities are focused on commercialising ColoSTAT® in various geographies;
• the Company has the potential to raise additional capital from investors and debt funding from financiers: The
Directors are confident in the Company's ability to raise additional capital based on the Company's successful track
record in doing so. Management has commenced activities in preparation for additional funding including initial
meetings with third parties;
• the consolidated entity is still in the early stages of operations and is able to scale back activity if required for cashflow
management purposes; and
11
• the forecast cash flows for the consolidated entity indicate that based on current cash on hand and expected inflows
from research and development refunds and additional capital to be raised from investors, the consolidated entity is
expected to maintain a positive cash position for at least the period of 12 months from the date the Directors approve
the annual financial statements.
Whilst the Directors are confident in the consolidated entity's ability to continue as a going concern, in the event that
cash flow forecasts are adversely impacted, and cash inflows described above do not eventuate as planned, there is a
material uncertainty as to whether the consolidated entity will be able to execute alternative funding arrangements.
External Risks:
The major external risks are supply chain of raw materials and global demand. With the current suppliers of raw materials and
the proprietary recipe / algorithm, the raw material supply is adequate to ensure material supply to current and future target
markets. It is anticipated that Rhythm will expand its CMO (Contract Manufacturers) globally.
Dividends
No dividends were paid or declared since the start of the financial year. No recommendation for payment has been made.
Directors and Company Secretaries
Names, qualifications and experience
Name
Otto Buttula
Title
Non-Executive Chairman
Experience and expertise
Mr Buttula has had extensive experience and success in investment research, funds
management, information and biotechnologies and has held directorships in a
number of public companies. Mr Buttula’s executive experience includes co-founder
and CEO and Managing Director of IWL Ltd, an online financial services company
that listed on the ASX in 1999. The company grew from a market capitalisation of $48
million at listing before a takeover in 2007 by Commonwealth Bank of Australia Ltd
for $373 million. Mr Buttula also founded and was Managing Director of Investors
Mutual, prior to which he was a co-founder and director of Lonsdale Securities Ltd.
Following his completion of executive duties, Mr Buttula was Non-Executive
Chairman of platform and stockbroking provider Investorfirst Ltd and led the
acquisition of HUB24 Ltd (ASX: HUB). More recently, he served on the Board as
a non-executive director and Head of Audit and Risk at Imugene Ltd (ASX: IMU)
between 2014 and 2016.
Former directorships
HITIQ Limited (resigned 27 November 2023)
OncoSil Medical Limited (resigned 31 August 2023)
Interests in shares
36,384,575 fully paid ordinary shares
Interests in options
5,425,001 Options/500,000 ESOP Options (expired 31 July 2024)
Name
Dr Trevor Lockett
Title
Non-Executive Director
Experience and expertise
A molecular biologist by trade, Trevor Lockett received his PhD in biochemistry from
the University of Adelaide and postdoctoral experience at the Rockefeller University
in New York. With over 30 years of research experience, predominantly at the CSIRO,
Trevor has led large, multidisciplinary research efforts in the areas of prostate cancer
gene therapy, colorectal cancer prevention and the promotion of gastrointestinal
health. In his role as Theme Leader, Colorectal Cancer and Gut Health, Trevor
oversaw the research efforts leading to the technology that is to become ColoSTAT™.
Interests in shares
1,678,300 fully paid ordinary shares
Interests in options
193,650 Options/125,000 ESOP Options (expired 31 July 2024)
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
12
DIRECTORS' REPORT
Name
Lou Panaccio
Title
Non-Executive Director
Experience and expertise
A chartered accountant with extensive management experience in business and
healthcare services. Lou is currently on the boards of ASX listed companies Sonic
Healthcare Limited and Avita Medical, Inc. Lou is also on the board of Unison
Housing Ltd. Lou has more than twenty years’ experience as a board member of
both public and private, for profit and not for profit companies. Previously, Lou
was the CEO of Melbourne Pathology and Monash IVF, and executive Chairman
of Health Networks Australia.
Other current directorships
Sonic Healthcare Limited
Avita Medical, Inc.
Adherium Limited
Former directorships (last 3 years)
Nil
Interests in shares
1,079,000 fully paid ordinary shares
Interests in options
124,500 Options /37,500 ESOP Options (expired 31 July 2024)
Name
Ms Susan MacLeman
Title
Non-Executive Independent Deputy Chair
Experience and expertise
Susan has more than 30 years’ experience as a pharmaceutical, biotechnology
and medical technology executive having held senior roles in corporate, medical,
commercial and business development at Schering-Plough Corporation (now
Merck), Amgen, Bristol-Myers Squibb and Mesoblast. Susan has also served as
CEO and a Board member of several ASX, AIM and NASDAQ listed companies
in the Healthtech sector. Susan is a Non-Executive Director of Viral Vector
Manufacturing Facility Pty Ltd, HOS Ltd T/A Smartways Logistics, Health
Translation Group Ltd, Planet Innovation Holdings Ltd, ATSE and OMICO
(Australian Genomic Cancer Medicines Ltd). Susan is also a member of the
NSW Innovation and Productivity Council, Fellow of the Australian Academy of
Technology and Engineering (ATSE) and Fellow/Graduate of Australian Institute
of Company Directors (AICD). Susan is also appointed to several academic
and government advisory boards. Susan brings a unique set of experiences in
technology commercialisation, strategic planning, capital markets and fund
raising, M&A and alliance management. Her broad commercial and technical
experience is underpinned by a Bachelor of Pharmacy from the University of
Queensland, a Master of Laws from Deakin University and a Master of Marketing
from Melbourne Business School.
Interests in shares
Nil
Interests in options
200,000 ESOP Options
Name
Dr Rachel David
Title
Former Non-Executive Director (resigned 28 December 2023)
Experience and expertise
Rachel is an experienced senior health and financial services sector executive
who holds a Bachelor of Medicine, Bachelor of Surgery (MBBS), Master of
Business Administration (MBA) and is a graduate of the Australian Institute of
Company Directors. Rachel is currently the Chief Executive Officer (CEO) of
Private Healthcare Australia (PHA). Rachel's career has spanned over 25 years
during which she has delivered significant value by promoting policy change to
address the significant economic problems and market failures in healthcare,
particularly relating to evidence-based practice and access to new technologies.
Prior roles include Senior Director Government Affairs, Policy and Market Access
for Johnson & Johnson, senior roles within McKinsey, CSL and Pfizer (formerly
Wyeth). Further, Dr David has held direct Government roles within the Office of
the Federal Minister for Health and Ageing.
13
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of
all other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company Secretaries
Andrea Steele (appointed 25 February 2022) has a Bachelor of Laws (LLB), a Master of Laws (LLM), a Master of Legal
Practice and a Bachelor of Commerce (Accounting/Finance). Her professional career spans over 23 years and includes
management consultancy, corporate strategy, company secretary and general counsel positions throughout Europe and
Australia. Currently Ms Steele is a Principal Consultant at ENRG Consulting.
James Barrie’s (appointed 1 January 2024) experience includes governance, share registry, employee equity plans,
investor relations, M&A, Treasury operations, capital management initiatives, financial accounting and reporting,
business development, forecasting and budgeting and project management. In 2017 James established Fernville Group
to provide solutions to unlisted and small-cap listed companies (ASX/NSX). Services include Non-Executive Director,
Resident Director (for overseas subsidiary companies), outsourced Company Secretarial and CFO, virtual/hybrid AGMs,
helping companies get "IPO ready" and ongoing business support post-listing. Prior to establishing Fernville, James held
a range of senior executive positions in ASX20, ASX100, microcap, private and start-up organisations across industries
including resources, pharmaceuticals, retail, technology, professional services and not-for-profit.
Paul Smith (appointed 17 October 2022, resigned 15 November 2023).
The Remuneration Report, which forms part of the Directors’ report, sets out information about the remuneration of the
Company’s Directors and its Key Management Personnel for the financial year ended 30 June 2024.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
14
DIRECTORS' REPORT
Directors’ Report – Remuneration Report (Audited)
Names and positions held by Directors and Key Management Personnel at any time during the financial year were:
Name
Position
Date Appointed to Position
Mr Otto Buttula
Non-Executive Chairman
28 October 2019 (Executive Chairman from 1 December
2021 to 31 May 2024)
Dr Trevor Lockett
Non-Executive Director
1 June 2017 (previously Technical Director until 15
December 2023)
Mr Louis (Lou) Panaccio
Non-Executive Director
1 August 2017
Ms Susan MacLeman
Non-Executive Director
31 January 2023
Dr Rachel David
Non-Executive Director
15 December 2021 (resigned 28 December 2023)
Dr David Atkins
Chief Executive Officer
13 May 2024
Mr Paul Smith
CFO & Company Secretary
17 October 2022 (resigned 15 November 2023)
Mr Guy Carisbrooke
Financial Controller
21 September 2023 (Key Management Personnel member
from 16 November 2023)
Directors’ and Key Management Personnel Interests (received and acquired) in Shares and Options
Directors’ and Key Management Personnel’s interests in the ordinary shares and options as at the date of this report are
detailed below:
Name
Position
Number of
Ordinary Shares
Number of
Options
Number of
Loan Funded Shares
Mr Otto Buttula
Non-Executive Chairman
36,384,575
5,425,001
-
Dr Trevor Lockett
Non-Executive Director
1,678,300
193,650
-
Mr Louis (Lou) Panaccio
Non-Executive Director
1,079,000
124,500
-
Ms Susan MacLeman
Non-Executive Director
-
200,000
-
Dr David Atkins
Chief Executive Officer
-
4,000,000
4,000,000
39,141,875
9,943,151
4,000,000
Remuneration Policy
The aim of the Company’s remuneration policy is to align the interests of directors and employees with those of
shareholders. To do this Rhythm sets remuneration levels that attract and retain highly skilled and experienced directors
and employees; and motivates and rewards performance that advances the Company’s strategic goals.
Remuneration Structure
The remuneration of Key Management Personnel and employees is structured in two parts:
• Fixed Remuneration, comprising: base salary, superannuation and other benefits in lieu of salary; and
• Variable Remuneration, may include: a short-term incentive bonus (cash) and a long-term incentive in the form of
options under the ESOP or loan funded shares.
The Company aims to set the level of fixed remuneration at market levels for comparable jobs, in similarly structured and
sized companies in the industry in which the Company operates. No advice from a remuneration consultant was sought
during the financial year.
Short-Term Incentive Plan (STIP)
The short-term incentive plan provides an incentive to employees to achieve an annual cash bonus on the achievement
of corporate goals set at the beginning of each calendar year. These corporate goals are clearly defined, drive shareholder
value and can be objectively measured. The percentage of an employee’s base salary that can be earned through the
Short-Term Incentive Plan (STIP) is set by the Board for management personnel. At the end of the calendar year the
Board assesses the level of achievement of these corporate goals. Payments made pursuant to the STIP are at the
discretion of the Board.
15
Long-Term Incentive Plan (LTIP)
The purpose of the long-term incentive plan is to align the interests of directors, management personnel and employees
with those of the shareholders and provide reward for sustained achievement of the Group’s strategic objectives. Rhythm’s
long-term incentive plan is implemented through the Employee Share Option Plan (ESOP) or loan funded shares.
Options
During the 2024 year, 4,200,000 (2023: 10,950,000) Options were issued to management personnel and employees.
The fair value of employee share options was $132,000 (2023: $5,812,500). $1,067,744 was reversed in the current financial
year (2023: $3,003,935 expensed) for options issued in the current and previous years. In addition, $19,726 was expensed
in the current financial year (2023: $nil) for loan funded shares. The options were issued for nil consideration and granted
in accordance with performance guidelines established by the Board.
The following ESOP Share Options arrangements existed at 30 June 2024:
Number
of Options
Exercise
Price ($)
Grant Date
Vesting Period
Vesting Date
Expiry Date
Holder
Fair Value per Option
at Grant Date
212,500
$1.80
26.7.2021
Various (i)
Various (i)
31.7.2024
Employees
$0.45
1,450,000
$1.80
24.11.2021
Various (i)
Various (i)
31.7.2024
Directors
$1.02
3,000,000
$1.80
31.12.2022
Various (i)
Various (i)
31.12.2025
Employees
$0.53
200,000
$1.80
10.10.2023
Various (i)
Various (i)
30.11.2025
S MacLeman
$0.06
2,000,000
$0.20
13.05.2024
Employment
13.05.2025
13.05.2026
D Atkins
$0.02
1,000,000
$0.30
13.05.2024
Employment
13.05.2025
31.03.2028
D Atkins
$0.04
1,000,000
$0.30
13.05.2024
Employment
13.05.2026
31.03.2028
D Atkins
$0.04
8,862,500
Total ESOP Options
(i) There are various performance and or service vesting conditions related to these options not yet achieved. Refer to Note 17 for details on vesting conditions.
These options include amounts outstanding at 30 June 2024 that lapsed past balance date.
All options granted are in respect of ordinary shares in Rhythm Biosciences Limited and confer a right of one ordinary share for each option held.
For factors that determine the fair value of options granted during the year refer to Note 17 to the financial statements.
Movement in the number of Share Options on issue
2024
2024
2023
2023
Number
of Options
Weighted Average
Exercise Price (cents)
Number
of Options
Weighted Average
Exercise Price (cents)
Opening balance
11,920,000
156.78
14,232,500
97.65
Voluntarily Forfeited / Lapsed
(5,907,500)
170.18
(9,687,500)
180.00
Granted
4,200,000
32.38
10,950,000
180.00
Exercised
(1,350,000)
20.00
(3,575,000)
20.00
Outstanding at year-end
8,862,500
110.04
11,920,000
156.78
Exercisable at year-end
1,640,625
180.00
4,891,250
123.30
Loan Funded Shares
During the 2024 year, Dr Atkins remuneration also includes awarded 'signing on' incentives for 4,000,000 Loan Funded
Shares at $0.10 each (4 year non-recourse loan at 0% interest rate). The fair value of loan funded shares was $200,000.
$19,726 was expensed in the current financial year (2023: $nil). The loan funded shares were issued for nil consideration
and granted in accordance with performance guidelines established by the Board.
The following ESOP Loan Funded Share (LFS) arrangements existed at 30 June 2024:
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
16
DIRECTORS' REPORT
Number
Issue
Price ($)
Grant Date
Vesting Period
Vesting Date
Expiry Date
Holder
Fair Value
per LFS at Grant
Date
2,000,000
$0.10
13.5.2024
Employment
12.5.2025
12.5.2028
Dr Atkins
$0.05
2,000,000
$0.10
13.5.2024
Employment
12.5.2026
12.5.2028
Dr Atkins
$0.05
4,000,000
Total Loan Funded Shares
Non-Executive Director Remuneration
The Board considers the level of remuneration necessary to attract and retain Directors with the skills and experience
required by the Company at its stage of development. Non-executive Directors fees are paid within an aggregate limit
which is approved by the shareholders from time to time. No retirement payments are made to Non-executive Directors.
Non-executive Directors’ fees were set at $52,500 per annum inclusive of superannuation. The Company entered
into an executive services agreement effective 1 July 2022 for Mr Otto Buttula to receive an annual salary of $165,000
(exclusive of superannuation). Effective 31 May 2024, Mr Buttula reverted to the role of Non-Executive Chairman on
an annual salary of $105,000 (exclusive of superannuation). Ms MacLeman receives a salary of $82,500 (inclusive of
superannuation) per annum for her role as Deputy Chairman. 200,000 Options exercisable at $1.80 on or before 30
November 2025 were issued to Ms MacLeman under the ESOP during the 2024 financial year. The Company entered
into a revised consulting services agreement effective 1 July 2022 for Dr Trevor Lockett to receive an annual salary of
$159,500 (inclusive of superannuation). Dr Lockett ceased his executive role on 15 December 2023 and continues as a
Non-Executive Director.
Key Management Personnel Remuneration
Key Terms of the CEO’s employment contract
The Company entered into an executive services agreement effective 13 May 2024 for Dr David Atkins as Chief Executive
Officer (CEO).
Dr Atkins annual remuneration consists of a fixed base remuneration of $350,000 (exclusive of superannuation) per
annum. In addition to his base, he is eligible to participate in:
(i)
up to 30% of that fixed base remuneration as a short-term incentive; and
(ii)
up to 20% of that fixed base remuneration as a long-term incentive - as described below.
Execution Equity Incentive (EEI)
Dr Atkins remuneration also includes awarded 'signing on' incentives:
(i)
4,000,000 Loan Funded Shares at $0.10 (4 year non-recourse loan at 0% interest rate);
(ii)
2,000,000 Options, exercisable at $0.20 (unlisted, expiry of 31 March 2026); and
(iii)
2,000,000 Options, exercisable at $0.30 (unlisted, expiry of 31 March 2026 and 31 March 2028).
Short-term incentive (STI)
Dr Atkins is entitled in addition to his fixed income (FI) to a target short-term incentive with a maximum opportunity
capped at 30% of FI. Payment of any STI will be subject to the financial and non-financial performance of the Group, Dr
Atkins performance against performance targets and priorities set by the Board in consultation with Dr Atkins, the rules
of the short-term incentive plan and relevant market information.
Short-term incentive awards are treated as follows:
(i)
50% will be paid in cash; and
(ii)
50% will be deferred for two years in equity (on the terms of the Company's Omnibus Employee Incentive Plan).
Dividends, if any, will be paid on short-term equity (issued shares) incentives.
Unless the Board determines otherwise, Dr Atkins will forfeit any deferred short-term incentive if his employment ceases
due to death, retirement, hardship, redundancy or other reason determined by the Board from time to time.
17
Long-term incentive (LTI)
Subject to any approval Rhythm considers necessary or appropriate, Dr Atkins will be entitled to participate in the
Rhythm's Omnibus Employee Inventive Plan a long-term incentive scheme in accordance with the rules of the scheme
and any applicable Rhythm policy. Dr Atkins will be entitled to an annual long-term incentive grant up to 20% of his FI.
This is a four-year performance period. The number of equity incentive rights (66.67% Loan Funded Shares and 33.33%
3-year unlisted options) granted will be determined using Rhythm’s share price (face value).
Dividends, if any, will be paid on long-term equity (issued shares) incentives.
If at any time approval of Dr Atkins participation in the Rhythm's Omnibus Employee Inventive Plan is sought but not
obtained, he will be entitled to receive a cash payment equivalent in value to the long-term incentive that would have
been granted had shareholder approval been obtained, subject to the same performance hurdles and timing for vesting
(payment).
Dr Atkins will forfeit any cash long-term incentive if his employment is terminated by his resignation (unless approved by
Rhythm or due to his death or illness), due to his misconduct, or if Rhythm determines that such action is necessary to
protect the financial soundness of Rhythm or where adverse outcomes have arisen that reduce the original assessment
of the performance generating the provision of the benefit.
If Dr Atkins employment is terminated by the provision of notice by Rhythm or by the provision of notice by Dr Atkins with
Rhythm approval or due to his death or illness, at Rhythm’s discretion he will forfeit either all or a pro rata portion of the cash
long-term incentive taking into account his employment period as a portion of the performance period for the incentive.
Clawback Policy
Rhythm retains discretion to clawback some or all of any short or long term incentive awarded to Dr Atkins (if not already paid
or vested) if Rhythm considers such award(s) would be an inappropriate benefit pursuant to the Rhythm Clawback Policy.
Termination
Rhythm may terminate Dr Atkins employment at any time on three months’ notice or payment in lieu of notice. Dr Atkins
may terminate his employment with Rhythm at any time on three months’ notice or, at Rhythm’s election, payment in lieu
of notice. Dr Atkins employment may also be summarily terminated (without notice) by Rhythm in circumstances of his
misconduct or long- term illness.
Restrictive covenant
Dr Atkins will be restrained for up to six months after termination of his employment with Rhythm from being engaged in
competition with Rhythm, and from soliciting Rhythm employees or persuading people who do business with Rhythm to
cease or reduce their business with Rhythm.
Key Terms of the former CFO’s employment contract
The Company entered into an executive services agreement effective 17 October 2022 for Mr Paul Smith as Chief
Financial Officer (CFO) and Company Secretary to receive an annual salary of $265,000 (exclusive of superannuation).
The Company also issued Mr Smith 2,000,000 unlisted Options exercisable at $1.80 on or before 31 December 2025.
Refer to Note 17 for details on Options vesting conditions. Mr Smith was also entitled to receive short-term incentives
dependent upon performance, as assessed against key performance indicators. Mr Smith resigned effective 15
November 2023.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
18
DIRECTORS' REPORT
Details of the remuneration of Directors and Key Management Personnel for the 2024 financial year are provided below:
Short-term Benefits
Long-term Benefits
%
Performance
Based
Cash
salary
and fees
($)
Termination
benefit
($)
Annual
Leave
Provision
($)
Long
Service
Leave
Provision
($)
Post-employment
Superannuation
($)
Equity-based
compensation
Shares
and Options
($)
Total
($)
Executive Directors
O Buttula
160,000
-
-
-
17,600
191,510
369,110
51.9
T Lockett
91,475
-
-
-
10,062
47,878
149,415
32.0
Non-Executive Directors
S MacLeman
74,217
-
-
-
8,164
5,359
87,740
6.1
L Panaccio
47,297
-
-
-
5,203
14,363
66,863
21.5
R David (i)
23,649
-
-
-
2,601
(26,421)
(171)
-
Executives
D Atkins (ii)
49,359
-
3,706
-
5,429
32,877
91,371
36.0
P Smith (iii)
99,545
-
(14,480)
-
10,950
(260,334)
(164,319)
-
G Carisbrooke (iv)
125,135
-
4,272
-
13,765
-
143,172
-
Total
670,677
(6,502)
73,774
5,232
743,181
(i) Resigned 28 December 2023.
(ii) Appointed 13 May 2024.
(iii) Resigned 15 November 2023.
(iv) Employed from 21 September 2023 (Key Management Personnel member from 16 November 2023).
(v) Factors that determine the fair value of equity based compensation are set out in Note 17 to the financial statements.
Details of the remuneration of Directors and Key Management Personnel for the 2023 financial year are provided below:
Short-term Benefits
Long-term Benefits
%
Performance
Based
Cash
salary
and fees
($)
Termination
benefit
($)
Annual
Leave
Provision
($)
Long
Service
Leave
Provision
($)
Post-employment
Superannuation
($)
Equity-based
compensation
Shares
and Options
($)
Total
($)
Executive Directors
O Buttula
165,000
-
-
-
17,325
191,510
373,835
51.2
T Lockett
144,344
-
-
-
15,156
47,878
207,378
23.1
G Gilbert (iv)
284,936
96,688
6,179
(16,443)
35,370
397,500
804,230
49.4
Non-Executive Directors
L Panaccio
47,511
-
-
-
4,989
14,363
66,863
21.5
E Vom (i)
18,854
-
-
-
1,980
-
20,834
-
R David
47,511
-
-
-
4,989
48,546
101,046
48.0
S MacLeman (ii)
19,796
-
-
-
2,079
-
21,875
-
Executives
P Smith (iii)
188,234
-
14,480
-
19,765
525,334
747,813
70.2
Total
916,186
96,688
20,659
(16,443)
101,653
1,225,131
2,343,874
(i) Resigned 29 November 2022.
(ii) Appointed 31 January 2023.
(iii) Appointed 17 October 2022.
(iv) Resigned 21 April 2023. During the year the amount paid for superannuation included 10.5% on a portion of annual leave entitlement taken as a cash payment.
(v) Factors that determine the fair value of equity based compensation are set out in Note 17 to the financial statements.
19
Share-Based Payments
No shares were issued to employees during the current or prior year.
There were 1,350,000 (2023: 3,575,000) ordinary shares issued during the financial year from the exercise of employee
share options.
Dr Atkins remuneration included 4,000,000 Loan Funded Shares at $0.10 (4 year non-recourse loan at 0% interest rate).
Options Holdings
The number of options and loan funded shares over ordinary shares in the Company held during and at the end of the
financial year by each Director and Key Management Personnel, including related parties, are set out below (refer also to
Note 17 for further details):
Balance at
Beginning
of Year
Granted
During Year
Exercised
During Year
Lapsed
Acquired
Balance at
End of Year
Vested and
Exercisable
at End of Year
Unvested at
End of Year
T Lockett
1,377,000
-
(1,125,000)
-
193,650
445,650
320,650
125,000
O Buttula
1,342,500
-
-
-
4,925,001
6,267,501
5,767,501
500,000
S MacLeman
-
200,000
-
-
-
200,000
50,000
150,000
R David
150,000
-
-
(150,000)
-
-
-
-
L Panaccio
85,000
-
-
-
124,500
209,500
172,000
37,500
D Atkins
4,000,000
-
-
-
4,000,000
-
4,000,000
P Smith
2,000,000
-
-
(2,000,000)
-
-
-
Total
4,954,500
4,200,000
(1,125,000)
(2,150,000)
5,243,151
11,122,651
6,310,151
4,812,500
Shareholdings and Loan Funded Shares Holdings
The number of ordinary shares and loan funded shares in the Company held during and at the end of the 2024 financial
year by each Director and Key Management Personnel of the Group, including related parties, are set out below.
Balance at
Beginning
of Year
Share-based
Compensation
Acquired via
Rights Issue
Upon
Appointment/
Resignation
On-market
and Other
Transactions
Balance at
End of Year
Directors
O Buttula
24,111,396
-
12,273,179
-
-
36,384,575
S MacLeman
-
-
-
-
-
-
L Panaccio
830,000
-
249,000
-
-
1,079,000
R David
-
-
-
-
-
-
T Lockett
166,000
-
1,512,300
-
-
1,678,300
D Atkins
-
-
-
-
-
-
D Atkins - Loan Funded Shares
-
4,000,000
-
-
-
4,000,000
P Smith
-
-
-
-
-
-
Total
25,107,396
4,000,000
14,034,479
-
-
43,141,875
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
20
DIRECTORS' REPORT
Additional Information
The earnings of the consolidated entity are summarised below:
Loss after income tax of $6,856,761 for the year ended 30 June 2024 (2023: $8,217,557).
The factors that are considered to affect total shareholders return ('TSR') are summarised below:
2024
2023
2022
2021
2020
Share price at the end of the financial year
$0.06
$0.41
$1.15
$0.89
$0.07
Basic Loss per share (cents per share) for the year
3.00
3.79
4.19
3.57
3.99
Related Party Transactions
During the 2024 and 2023 financial years there were no transactions with related parties other than remuneration.
From time to time the Directors incur and are reimbursed for costs arising in fulfilling their duties, such as travel and
accommodation charges.
This concludes the remuneration report, which has been audited.
Unissued Shares or Interests under Option
The company has issued 13,727,168 listed Options with an exercise price of $0.20 each expiring on 31 March 2026.
The following unlisted Unissued Shares or Interests under Option existed as at the date of this report:
Number of
Options
Exercise
Price ($)
Grant
Date
Vesting
Conditions
Vesting
Date
Expiry
Date
Holder
200,000
$1.80
10.10.2023
Various
Various
30.11.2025
S MacLeman
2,000,000
$0.20
13.05.2024
Employment
13.05.2025
13.05.2026
D Atkins
1,000,000
$0.30
13.05.2024
Employment
13.05.2025
31.03.2028
D Atkins
1,000,000
$0.30
13.05.2024
Employment
13.05.2026
31.03.2028
D Atkins
4,200,000
The following ESOP Loan Funded Share arrangements existed as at the date of this report::
Number
Issue
Price ($)
Grant
Date
Vesting
Conditions
Vesting
Date
Expiry
Date
Holder
2,000,000
$0.10
13.5.2024
Employment
12.5.2025
12.5.2028
Dr Atkins
2,000,000
$0.10
13.5.2024
Employment
12.5.2026
12.5.2028
Dr Atkins
4,000,000
Voting and comments made at the Company’s 2023 Annual General Meeting
At the 2023 Annual General Meeting the 2023 Remuneration Report was voted on by shareholders with 3.58% of votes
against the resolution.
Environmental Issues
Rhythm’s operations are subject to certain environmental regulations under the laws of the Commonwealth and State.
The Directors are not aware of any breaches during the period covered by this report.
21
After Balance Date Events
On 14 August 2024, the Company announced on the ASX it entered into a secured loan facility agreement (Loan) which
will provide early access to $1,150,000 cash of its forecast ~$1,500,000 FY24 R&D Tax Incentive (RDTI Rebate) expected
to be received in full by November 2024.
The Loan is secured by and repayable out of the FY24 RDTI Rebate and attracts a fixed 1.33% per month interest rate. It
matures on 31 December 2024, however, can be extended by agreement between the lender and Rhythm. This Loan is
intended to be used in a bridging period prior to receiving the FY24 RDTI Rebate, along with the amended FY23 RDTI
rebate for overseas activities.
There has been no other matters or circumstances which have arisen since 30 June 2024 that has significantly affected or
may significantly affect:
• the operations, in financial years subsequent to 30 June 2024, of the consolidated entity; or
• the results of those operations; or
• the state of affairs, in financial years subsequent to 30 June 2024, of the consolidated entity.
Proceedings on Behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of those proceedings.
Indemnity and insurance of officers
The Company has paid a premium for Directors’ and Officers’ Liability (Management Liability) Insurance.
Under the Company’s constitution:
i. To the extent permitted by law and subject to the restrictions in sections 199A and 199B of the Corporations Act 2001,
the Company indemnifies every person who is or has been an officer of the Company against any liability (other than
for legal costs) incurred by that person as an officer of the Company.
ii. To the extent permitted by law and subject to the restrictions in sections 199A and 199B of the Corporations Act 2001,
the Company indemnifies every person who is or has been an officer of the Company against reasonable legal costs
incurred in defending an action for a liability incurred by that person as an officer of the Company.
The Company insures its Directors, Company Secretary, and executive officers under a Management Liability Insurance
policy. Under the Company’s Management Liability Insurance Policy, the Company cannot release to any third party or
otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium. Accordingly,
the Company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the
nature of the liability insured against and the premium amount of the relevant policy.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor. During the financial year, the Company has not
paid a premium in respect of a contract to insure the auditor of the Company or any related entity.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under s307C of the Corporations Act 2001 is set out on
page 24.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
22
DIRECTORS' REPORT
Non-Audit Services
BDO Audit Pty Ltd were paid $13,100 (2023: $25,280) for non-audit services during the 2024 financial year. Non-audit
services related to tax compliance services.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor, is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001 for the following reasons:
• ●all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor; and
• ●none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) issued by the Accounting Professional and
Ethical Standards Board, including reviewing, or auditing the auditor's own work, acting in a management or decision-
making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
There are no officers of the company who are former directors of BDO Audit Pty Ltd.
This report is made in accordance with a resolution of the Directors.
Otto Buttula
Non-Executive Chairman
Melbourne, Australia
Dated this 30th day of August 2024
23
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO Australia
Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO
International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms.
Liability limited by a scheme approved under Professional Standards Legislation.
DECLARATION OF INDEPENDENCE BY TONY BATSAKIS TO THE DIRECTORS OF RHYTHM BIOSCIENCES
LIMITED
As lead auditor of Rhythm Biosciences Limited for the year ended 30 June 2024, I declare that, to the
best of my knowledge and belief, there have been:
1.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2.
No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Rhythm Biosciences Limited and the entities it controlled during the
period.
Tony Batsakis
Director
BDO Audit Pty Ltd
Melbourne, 30 August 2024
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
24
AUDITOR'S INDEPENDENCE DECLARATION
The financial statements should be read in conjunction with the accompanying notes.
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Notes
2024 ($)
2023 ($)
Income
Income
3
1,742,426
3,324,112
Expenses
Employment related costs
4
(1,590,179)
(6,298,904)
Office and compliance costs
(1,218,452)
(992,663)
Research and development costs
(2,345,560)
(3,647,711)
Marketing and investor relations
(115,498)
(175,558)
Occupancy costs
(41,362)
(32,052)
Travel and meetings
(38,817)
(198,847)
Depreciation - PPE
10
(74,035)
(64,508)
Depreciation - ROU
(88,654)
(88,898)
Amortisation of intangibles
9
(35,971)
(35,971)
Inventory impairment expense
8
(3,047,516)
-
Finance expense
(3,143)
(6,557)
Loss Before Income Tax
(6,856,761)
(8,217,557)
Income tax expense
5
-
-
Loss After Tax
(6,856,761)
(8,217,557)
Other comprehensive income
-
-
Total Comprehensive Loss for the Year
(6,856,761)
(8,217,557)
Loss Per Share
Basic loss per share (cents per share)
6
(3.00)
(3.79)
Diluted loss per share (cents per share)
6
(3.00)
(3.79)
25
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Consolidated Statement of Financial Position
Notes
2024 ($)
2023 ($)
Current Assets
Cash and cash equivalents
15
709,496
4,124,181
Trade and other receivables
7
37,199
65,513
Other financial assets – term deposit
45,000
45,000
Prepayments
94,973
117,569
Inventories – raw materials
8
-
2,766,682
Total Current Assets
886,668
7,118,945
Non-Current Assets
Intangible assets
9
354,102
390,073
Right-of-use assets
164,779
81,490
Property, plant and equipment
10
113,159
104,913
Total Non-Current Assets
632,040
576,476
Total Assets
1,518,708
7,695,421
Current Liabilities
Trade and other payables
11
459,709
1,522,843
Provisions
12
23,782
158,139
Lease liabilities
78,351
84,606
Total Current Liabilities
561,842
1,765,588
Non-Current Liabilities
Provisions
12
4,229
55,382
Lease liabilities
85,471
-
Total Non-Current Liabilities
89,700
55,382
Total Liabilities
651,542
1,820,970
Net Assets
867,166
5,874,451
Equity
Issued capital
13
34,448,096
31,550,602
Reserves
14
5,093,243
6,141,261
Accumulated losses
(38,674,173)
(31,817,412)
Total Equity
867,166
5,874,451
The financial statements should be read in conjunction with the accompanying notes.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
26
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
The financial statements should be read in conjunction with the accompanying notes.
Consolidated Statement of Changes in Equity
Issued Capital
($)
Reserves
($)
Accumulated
Losses ($)
Total
($)
Balance at 1 July 2022
27,834,579
3,137,326
(23,599,855)
7,372,050
Loss attributable to members
-
-
(8,217,557)
(8,217,557)
Total comprehensive income/(loss) for the year
-
-
(8,217,557)
(8,217,557)
Transactions with owners in their capacity as owners:
Issued capital
3,740,240
-
-
3,740,240
Capital raising costs
(24,217)
-
-
(24,217)
Share-based payments expense (Note 17)
-
3,003,935
-
3,003,935
Total transactions with owners of the Company
3,716,023
3,003,935
-
6,719,958
Balance at 30 June 2023
31,550,602
6,141,261
(31,817,412)
5,874,451
Balance at 1 July 2023
31,550,602
6,141,261
(31,817,412)
5,874,451
Loss attributable to members
-
-
(6,856,761)
(6,856,761)
Total comprehensive income/(loss) for the year
-
-
(6,856,761)
(6,856,761)
Transactions with owners in their capacity as owners:
Issued capital
3,015,416
-
-
3,015,416
Capital raising costs
(117,922)
-
-
(117,922)
Share-based payments expense (Note 17)
-
(1,048,018)
-
(1,048,018)
Total transactions with owners of the Company
2,897,494
(1,048,018)
-
1,849,476
Balance at 30 June 2024
34,448,096
5,093,243
(38,674,173)
867,166
27
Consolidated Statement of Cash Flows
Notes
2024 ($)
2023 ($)
Cash Flow from Operating Activities
Interest received
52,282
228,379
Payments to suppliers and employees
(7,876,454)
(10,275,274)
Interest paid
(3,143)
(6,557)
Government grant
-
15,000
Other income
-
297
Research and development tax refund
1,690,144
3,080,545
Net Cash Used in Operating Activities
15
(6,137,171)
(6,957,610)
Cash Flow from Investing Activities
Purchase of property, plant and equipment
10
(82,281)
(99,122)
Net Cash Used In Investing Activities
(82,281)
(99,122)
Cash Flow from Financing Activities
Proceeds from issues of shares and options
3,015,416
3,740,240
Costs of capital raising
(117,922)
(24,217)
Repayment of lease liabilities
10
(92,727)
(85,534)
Net Cash From/(Used in) Financing Activities
2,804,767
3,630,489
Net Increase/(Decrease) in Cash Held
(3,414,685)
(3,426,243)
Cash and cash equivalents at beginning of financial year
4,124,181
7,550,424
Cash And Cash Equivalents at end of Financial Year
709,496
4,124,181
The financial statements should be read in conjunction with the accompanying notes.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
28
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 1: Material Accounting Policy Information
The consolidated financial statements and notes represent
those of Rhythm Biosciences Limited and Controlled Entities
(the ‘consolidated entity’ or ‘Group’). The separate financial
statements of the parent entity, Rhythm Biosciences
Limited ('the Company'), have not been presented within
this financial report as permitted by amendments made to
the Corporations Act 2001. The financial report covers the
economic entities of Rhythm Biosciences Limited and its
controlled entities as an economic entity for the year ended
30 June 2024. Comparatives are disclosed for the year
ended 30 June 2024.
The financial statements are presented in Australian
dollars, which is the Group’s functional and presentation
currency. The financial statements were authorised
for issue on the date of the approval of the Directors'
declaration by the Directors of the Company.
Statement of Compliance
These financial statements are general purpose financial
statements which have been prepared in accordance
with the Corporations Act 2001, Australian Accounting
Standards and Interpretations, and comply with other
requirements of the law. The financial statements
comprise the consolidated financial statements of the
Group. For the purposes of preparing the consolidated
financial statements, the Company is a for-profit entity.
Compliance with Australian Accounting Standards
ensures that the financial statements and notes of the
Company and the Group comply with International
Financial Reporting Standards (‘IFRS’).
Basis of Preparation
Australian Accounting Standards set out accounting
policies that the AASB has concluded would result
in a financial report containing relevant and reliable
information about transactions, events and conditions to
which they apply. Material accounting policies adopted
in the preparation of this financial report are presented
below. They have been consistently applied unless
otherwise stated.
The financial report has been prepared on an accruals
basis and is based on historical costs.
Going Concern
The consolidated entity incurred an operating loss of
$6,856,761 (2023: $8,217,557) and had cash outflows from
operating activities of $6,137,171 (2023: $6,957,610) for the
year ended 30 June 2024. The consolidated entity is in
start-up phase and does not yet have an income stream.
These conditions indicate a material uncertainty that may
cast significant doubt about the consolidated entity’s
ability to continue as a going concern.
The financial statements have been prepared on a going
concern basis, which contemplates the continuity of
normal business activities and the realisation of assets
and the settlement of liabilities in the normal course of
business for the following reasons:
• as at 30 June 2024, the consolidated entity had a cash
position of $709,496;
• a research and development refund for FY24, based
on expenditure incurred, is expected to be received In
full by November 2024. A secured loan obtained for
$1,150,000 In August 2024 has provided early access
to this forecast research and development refund. A
resubmitted research and development claim for FY23
for overseas activities is also expected to be lodged in
the near term;
• activities are focused on commercialising ColoSTAT® in
various geographies;
• the Company has the potential to raise additional
capital from investors and debt funding from financiers:
The Directors are confident in the Company's ability
to raise additional capital based on the Company's
successful track record in doing so. Management has
commenced activities in preparation for additional
funding including initial meetings with third parties;
• the consolidated entity is still in the early stages of
operations and is able to scale back activity if required
for cashflow management purposes; and
• the forecast cash flows for the consolidated entity
indicate that based on current cash on hand and
expected inflows from research and development
refunds and additional capital to be raised from
investors, the consolidated entity is expected to
maintain a positive cash position for at least the period
of 12 months from the date the Directors approve the
annual financial statements.
Whilst the Directors are confident in the consolidated
entity's ability to continue as a going concern, in the
event that cash flow forecasts are adversely impacted,
and cash inflows described above do not eventuate as
planned, there is a material uncertainty as to whether the
consolidated entity will be able to execute alternative
funding arrangements to enable it to continue as a going
concern beyond the 12 months from the date the Directors
approve the annual financial statements.
Consequently, a material uncertainty exists as to whether
the consolidated entity will continue as a going concern
and it may therefore be required to realise its assets
at amounts different to their carrying amounts in the
29
consolidated statement of financial position, extinguish
liabilities at amounts different to those recorded In the
consolidated statement of financial position and settle
liabilities other than In the ordinary course of business.
Revenue Recognition
Interest income is recognised as it accrues, taking into
account the effective yield on the financial asset.
Government stimulus and research and development tax
refund income is recognised when there is reasonable
assurance that the eligibility conditions are met and that
the grants will be received.
Inventories
Raw materials, work in progress and finished goods are
stated at the lower of cost and net realisable value on
a 'weighted average' basis. Cost comprises of direct
materials and delivery costs, direct labour, import
duties and other taxes. Costs of purchased inventory
are determined after deducting rebates and discounts
received or receivable.
Stock in transit is stated at the lower of cost and net
realisable value. Cost comprises of purchase and delivery
costs, net of rebates and discounts received or receivable.
Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion
and the estimated costs necessary to make the sale.
Right-of-use assets
A right-of-use asset is recognised at the commencement
date of a lease. The right-of-use asset is measured at cost,
which comprises the initial amount of the lease liability,
adjusted for, as applicable, any lease payments made at or
before the commencement date net of any lease incentives
received, any initial direct costs incurred, and, except where
included in the cost of inventories, an estimate of costs
expected to be incurred for dismantling and removing the
underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis
over the unexpired period of the lease or the estimated
useful life of the asset, whichever is the shorter. Where the
consolidated entity expects to obtain ownership of the
leased asset at the end of the lease term, the depreciation
is over its estimated useful life. Right-of use assets are
subject to impairment or adjusted for any remeasurement
of lease liabilities.
At 30 June 2024, the Group leased office premises at
Bio21 Institute, 30 Flemington Road, Parkville, Victoria
with an expiry date of 31 May 2025 and has an option to
renew for a further one year. The lease liability includes the
extension option. The undiscounted payments due less
than one year are $97,699 and between one to two years
are $92,014. Non-cash additions to right-of-use assets in 2024
were $171,943.
Property, Plant and Equipment
Each class of property, plant and equipment is carried at
cost less, where applicable, any accumulated depreciation
and impairment.
Plant & Equipment
The carrying amount of plant and equipment is reviewed
annually by the Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable
amount is assessed on the basis of the expected net cash
flows that will be received from the asset's employment
and subsequent disposal. The expected net cash
flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and
maintenance are charged to the income statement during
the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets, including
building and capitalised lease assets but excluding
freehold land, is depreciated on a straight-line basis over
their useful lives to the Group commencing from the time
the asset is held ready for use. Items of property, plant and
equipment, are depreciated over their estimated useful
lives. The depreciation rates for each class of asset are:
Class of
Non-Current Asset
Depreciation
Rate
Estimated
Useful Lives
Office Equipment
10%
10 years
Computer Equipment
33.3%
3 years
Laboratory Equipment
33.3%
3 years
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each end of reporting period. 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.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
30
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Intangibles
Research and development
Expenditure during the research phase of a project
is recognised as an expense when incurred. Product
development costs are capitalised only when each of the
following specific criteria has been satisfied:
i. Technical feasibility of completing development of the
product and obtaining approval by regulatory authorities.
ii. Ability to secure a commercial partner for the product.
iii. Availability of adequate technical, financial and other
resources to complete development of the product, obtain
regulatory approval and secure a commercial partner.
iv. Reliable measurement of expenditure attributable to
the product during its development.
v. High probability of the product entering a major
diagnostic market.
Capitalised development costs have a finite life and are
amortised on a systematic basis over the period from when
the product becomes available for use and ceases at the
earlier of the date the asset is expected to exit the market
or that the asset is classified as held for sale (or included
in a disposal group that is classified as held for sale) in
accordance with AASB 5.
Other intangible assets
Other intangible assets comprise licences and are stated at
cost less accumulated amortisation and impairment losses.
Employee Entitlements
Short-term and long-term employee benefits
A liability is recognised for benefits accruing to employees
for wages and salaries and annual leave in the year the
related service is rendered. Liabilities recognised in
respect of short-term employee benefits are measured at
their nominal values using the remuneration rate expected
to apply at the time of settlement. Liabilities recognised in
respect of long-term employee benefits are measured as
the present value of the estimated future cash outflows to
be made by the Group in respect of services provided by
employees up to reporting date. Contributions are made
by the Group to employee superannuation funds and are
charged as expenses when incurred
Share-based compensation
Equity-settled and cash-settled share-based
compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or
options over shares including loan funded shares that
meet the criteria of options over shares, including loan
funded shares that meet the criteria of optoins over
shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are
awards of cash for the exchange of services, where the
amount of cash is determined by reference to the share
price.
The cost of equity-settled transactions are measured
at fair value on grant date. Fair value is independently
determined using either the Binomial or Black-Scholes
option pricing or models that takes into account the
exercise price, the term of the option, the impact of
dilution, the share price at grant date and expected price
volatility of the underlying share, the expected dividend
yield and the risk free interest rate for the term of the
option, together with non-vesting conditions that do not
determine whether the consolidated entity receives the
services that entitle the employees to receive payment. No
account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as
an expense with a corresponding increase in equity over
the vesting period. The cumulative charge to profit or
loss is calculated based on the grant date fair value of the
award, the best estimate of the number of awards that are
likely to vest and the expired portion of the vesting period.
The amount recognised in profit or loss for the period is
the cumulative amount calculated at each reporting date
less amounts already recognised in previous periods.
The cost of cash-settled transactions is initially, and at each
reporting date until vested, determined by applying either
the Binomial or Black-Scholes option pricing model, taking
into consideration the terms and conditions on which the
award was granted. The cumulative charge to profit or loss
until settlement of the liability is calculated as follows:
• ●during the vesting period, the liability at each reporting
date is the fair value of the award at that date multiplied
by the expired portion of the vesting period.
• ●from the end of the vesting period until settlement of
the award, the liability is the full fair value of the liability
at the reporting date.
All changes in the liability are recognised in profit or loss.
The ultimate cost of cash-settled transactions is the cash
paid to settle the liability.
Market conditions are taken into consideration in
determining fair value. Therefore, any awards subject to
market conditions are considered to vest irrespective
of whether or not that market condition has been met,
provided all other conditions are satisfied.
31
If equity-settled awards are modified, as a minimum
an expense is recognised as if the modification has
not been made. An additional expense is recognised,
over the remaining vesting period, for any modification
that increases the total fair value of the share-based
compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the
consolidated entity or employee, the failure to satisfy
the condition is treated as a cancellation. If the condition
is not within the control of the consolidated entity or
employee and is not satisfied during the vesting period,
any remaining expense for the award is recognised over
the remaining vesting period, unless the award is forfeited.
Issued Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Financial Instruments
Recognition
Financial instruments are initially measured at fair value on
transaction date, plus or minus transaction costs directly
attributable to the acquisition. Subsequent to initial
recognition these instruments are measured as set out below.
Financial assets
Cash balances are recognised at amortised cost using the
effective interest rate method.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised
cost, comprising original debt less principal payments and
amortisation. Lease liabilities have been recorded adopting
an Incremental borrowing rate of 15% (2023: 4.99%).
Impairment
An 'expected credit loss' ('ECL') model is used to recognise
an allowance. Impairment is measured using a 12-month
ECL method unless the credit risk on a financial instrument
has increased significantly since initial recognition in which
case the lifetime ECL method is adopted.
Critical Accounting Estimates and Judgments
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, obtained both externally and within the Group.
Key Estimates
Share-based payments
Rhythm operates an Employee Share Option Plan
(ESOP). The non-cash expense of issuing these options
is calculated using a Black-Scholes option pricing model.
This model requires the input of a number of variables
including an estimate of future volatility and a risk-free
interest rate. The probability of meeting any vesting
conditions is also required to be estimated. Refer to Note
17 to the financial statements.
Research and Development Tax Refund Income
Research and development tax refund income Is
recognised when there Is reasonable assurance that
the eligibility conditions are met and that the grants
will be received. Significant judgement is required in
determining the income tax refund eligibility. There are
many transactions and calculations undertaken during
the ordinary course of business for which the ultimate
tax determination is uncertain. The amounts recorded
as revenue for the financial years ended 30 June 2024
and 2023 relate to tax refunds received in the same
financial year following tax returns lodged claiming eligible
expenditure Incurred In the previous financial year.
Estimated Useful Lives of Other Intangible Assets
Other intangible assets comprise licences and are stated at
cost less accumulated amortisation. Rhythm determines the
estimated useful lives and related amortisation charges for
its finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some
other event. The amortisation charge will increase where
the useful lives are less than previously estimated lives, or
technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
Provision for Impairment of Inventories
The provision for impairment of inventories assessment
requires a degree of estimation and judgement. The
level of the provision is assessed by taking into account
expected future sales, the ageing of inventories and other
factors that affect inventory obsolescence.
Adoption of New and Revised Accounting Standards
During the current year, the Group has adopted all of
the new and revised Australian Accounting Standards
and Interpretations applicable to its operations which
became mandatory.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
32
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
New Accounting Standards for Application in Future Periods
The Board has not yet assessed the impact of the new, but not yet mandatory, accounting standards issued by Australian
Accounting Standards Board (AASB).
Note 2: Parent Information
2024 ($)
2023 ($)
Statement of Financial Position
Current assets
1,114,815
4,052,048
Non-current assets
403,893
2,346,158
Total Assets
1,518,708
6,398,206
Current liabilities
483,491
468,373
Non-Current Liabilities
168,051
55,382
Total Liabilities
651,542
523,755
Issued Capital
34,448,096
31,550,602
Reserves
5,093,243
6,141,261
Accumulated losses
(38,674,173)
(31,817,412)
Total Equity
867,166
5,874,451
Statement of Comprehensive Income
2024 ($)
2023 ($)
Total loss
(6,856,761)
(8,217,557)
Total Comprehensive Income
(6,856,761)
(8,217,557)
Guarantees
The Parent Company has entered into a Deed of Cross Guarantee with the effect
that the Company guarantees debts in respect of its subsidiary Vision Tech Pty Ltd.
Further details of the Deed of Cross Guarantee and the subsidiary to the deed are
set out in Note 23.
Commitments and Contingent Liabilities
At 30 June 2024, the Parent Company had no capital commitments and no
contingent liabilities (2023: Nil).
Significant Accounting Policies
The accounting policies of the parent entity are consistent with those of the
consolidated entity, as disclosed in Note 1, except for investments in subsidiaries
which are accounted for at cost, less any impairment, in the parent entity.
33
Note 3: Income
2024 ($)
2023 ($)
Interest Income
52,282
228,270
Government Grant Income
-
15,000
Research and Development Tax Refund
1,690,144
3,080,545
Other sundry income
-
297
Total
1,742,426
3,324,112
Note 4: Employment Related Costs
2024 ($)
2023 ($)
Staff salaries and Director fees
2,097,522
2,739,970
Superannuation
238,696
288,258
Share-based payments expense (Refer to Note 17 for options and
shares issued)
(1,048,018)
3,003,935
Other employment related expenses
301,979
266,741
Total
1,590,179
6,298,904
Note 5: Income Tax
2024 ($)
2023 ($)
Prima facie income tax benefit before income tax at 25% (2023: 25%)
1,714,190
2,054,389
Add/(subtract) tax effect:
- Research and development claim
422,536
770,136
- Share based payments expense
262,005
(750,984)
- Other non-deductible expenditure
(14,010)
(11,500)
- Tax losses and temporary differences not brought to account
(2,384,721)
(2,062,041)
Income tax expense
-
-
Tax losses of $5,681,511 (2023: $4,089,419) and temporary differences of $86,857 (2023: $169,811) have not brought to account on the basis that their recovery is
not considered probable at balance date.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
34
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 6: Loss Per Share
2024 ($)
2023 ($)
The following reflects the income and share data used in the
calculations of basic and diluted loss per share:
Loss used in calculating basic and diluted earnings per share
(6,856,761)
(8,217,557)
2024
No. of Shares
2023
No. of Shares
Weighted average number of ordinary shares used in calculating
basic loss per share
228,296,917
216,893,990
Basic and diluted loss per share (cents)
(3.00)
(3.79)
Calculation of diluted loss per share
Potential ordinary shares are considered to be antidilutive, therefore
diluted loss per share is equivalent to the basic loss per share.
Note 7: Trade and Other Receivables
2024 ($)
2023 ($)
GST receivable
37,199
65,513
Note 8: Inventories
2024 ($)
2023 ($)
Raw materials – at cost
-
2,766,682
Reconciliation of movement in net carrying value
Balance at the beginning of the year
2,766,682
-
Additions
225,619
2,766,682
Transfers from prepayments
59,315
-
Impairment (i)
(3,047,516)
-
Disposals
(4,100)
-
Balance at the end of the period
-
2,766,682
(i)Following a strategic review, inventory on hand is to be used for research and development use rather than commercial sales. As a consequence, the
consolidated entity’s ColoSTAT® kits recorded as raw materials inventory were impaired to nil having regard to the expectation that the consolidated entity does
not anticipate any material revenue to be earned in future years from existing ColoSTAT® kits on hand. Future revenue will be dependent on completion of in vitro
diagnostic medical devices regulation standards (‘IVDR’) transition work and then obtaining regulatory approvals for the new IVDR compliant kits.
35
Note 9: Intangible Assets
2024 ($)
2023 ($)
Intellectual Property
Licences at cost (i)
600,000
600,000
Licences accumulated amortisation (i)
(245,898)
(209,927)
354,102
390,073
2024 ($)
2023 ($)
Movement in Carrying Amounts:
Balance at the beginning of the year
390,073
426,044
Amortisation (i)
(35,971)
(35,971)
Balance at the end of the year
354,102
390,073
(i) A licence was granted by the Commonwealth Scientific and Industrial Research Organisation ("CSIRO") on 23 August 2017 and is being amortised over a
period of 17 years based on contract terms. This has been assessed as the expected useful life of the intangible asset.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
36
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 10: Property, Plant and Equipment
2024 ($)
2023 ($)
Computers – at cost
91,718
90,020
Accumulated depreciation
(76,742)
(60,399)
14,976
29,621
Office equipment – at cost
36,063
36,063
Accumulated depreciation
(14,283)
(6,266)
21,780
29,797
Laboratory equipment - at cost
328,845
248,262
Accumulated depreciation
(252,442)
(202,767)
76,403
45,495
Total
113,159
104,913
Movement in Carrying Amounts 2024:
Computer
Equipment ($)
Office
Equipment ($)
Laboratory
Equipment ($)
Total ($)
Balance at the beginning of the year
29,621
29,797
45,495
104,913
Additions
1,698
-
80,583
82,281
Depreciation
(16,343)
(8,017)
(49,675)
(74,035)
Balance at the end of the year
14,976
21,780
76,403
113,159
Movement in Carrying Amounts 2023:
Computer
Equipment ($)
Office
Equipment ($)
Laboratory
Equipment ($)
Total ($)
Balance at the beginning of the year
16,125
10,534
43,640
70,299
Additions
28,973
23,818
46,331
99,122
Depreciation
(15,477)
(4,555)
(44,476)
(64,508)
Balance at the end of the year
29,621
29,797
45,495
104,913
37
Note 11: Trade and Other Payables
2024 ($)
2023 ($)
Trade creditors
211,609
1,333,906
Accruals
248,100
188,937
Balance at the end of the year
459,709
1,522,843
Note 12: Provisions
2024 ($)
2023 ($)
Current
Provision for Annual Leave
23,782
158,139
Non-Current
Provision for Long Service Leave
4,229
55,383
28,011
213,522
Note 13: Issued Capital
2024 (No.)
2023 (No.)
2024 ($)
2023 ($)
Ordinary shares fully paid
Balance at the beginning of the year
219,792,589
214,082,145
31,550,602
27,834,579
Rights issue and placement at 10 cents per share
27,454,161
-
2,745,416
-
Options exercised
1,350,000
5,710,444
270,000
3,740,240
Capital raising costs
-
-
(117,922)
(24,217)
Balance at the end of the year
248,596,750
219,792,589
34,448,096
31,550,602
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in
proportion to the number of and amounts paid on the shares held. Ordinary shares have no par value and the company
does not have a limited amount of authorised capital. 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.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is
calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the
consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest
further into development and commercialisation or in a business seen as value adding relative to the current Company's
share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the
short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The capital risk
management policy remains unchanged from 30 June 2023.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
38
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 14: Reserves
Notes
2024 ($)
2023 ($)
Share Based Payments Reserve
Balance at the beginning of the year
6,141,261
3,137,326
Share-based payments (reversal)/expense
17
(1,048,018)
3,003,935
Balance at the End of the Year
5,093,243
6,141,261
Share based payments reserve is used to record the value of equity benefits provided to Directors, employees and
consultants as part of their remuneration.
.Note 15: Cash Flow Information
Notes
2024 ($)
2023 ($)
a. Cash at the end of the financial year as shown in the cash flow
statement is reconciled to the related items in the balance sheet
as follows:
Cash at bank
709,496
4,124,181
709,496
4,124,181
b. Reconciliation of cash flow from operating activities with loss after
income tax benefit
Loss after income tax
(6,856,761)
(8,217,557)
Non-Cash Items
Depreciation and amortisation
198,660
189,377
Expense/(reversals) recognised in respect of equity-settled share-based
payments
(1,048,018)
3,003,935
Changes In Assets and Liabilities
Decrease/(Increase) in trade and other receivables
28,315
16,902
Decrease/(Increase) in prepayments
22,596
(24,370)
Decrease/(Increase) in inventories
2,766,682
(2,766,682)
(Decrease)/Increase in trade and other payables
(1,063,134)
891,906
(Decrease)/Increase in provision for employee entitlements
(185,511)
(51,121)
Net Cash Used In Operating Activities
(6,137,171)
(6,957,610)
Note 16: Related Party Transactions
Rhythm Biosciences Limited is the parent entity. Refer to Note 22 for details on the subsidiaries.
The names of each person holding the position of director of Rhythm Biosciences Limited during the year were Mr Otto
Buttula, Dr Trevor Lockett, Mr Lou Panaccio, Dr Rachel David (resigned 28 December 2023) and Ms Susan MacLeman.
Company secretaries were Ms Andrea Steele, Mr Paul Smith (resigned 15 November 2023) and Mr James Barrie
(appointed 1 January 2024).
39
During the 2024 financial year the Company granted 4,200,000 options to key management personnel as part of their
remuneration. Vesting conditions related to these options not yet achieved are as follows:
In respect to Ms MacLeman:
• 33.3% upon remaining employed on 30 November 2025.
In respect to Dr Atkins:
• 50% upon remaining employed on 12 May 2025; and
• 50% upon remaining employed on 12 May 2026.
Dr Atkins’ remuneration also included 4,000,000 Loan Funded Shares at $0.10 (4 year non-recourse loan at 0% interest
rate). Vesting conditions related to these Loan Funded Shares not yet achieved are as follows:
• 50% upon remaining employed on 12 May 2025; and
• 50% upon remaining employed on 12 May 2026.
During the 2023 financial year the Company granted 10,950,000 options to key management personnel and other
employees as part of their remuneration. Vesting conditions related to these options not yet achieved are as follows:
• 25% upon the Company achieving first revenue from 2 other countries by December 2024; and
• 25% upon remaining employed on 31 December 2025.
During the 2022 financial year the Company granted 8,195,000 options to consultants, key management personnel and
other employees as part of their remuneration. Vesting conditions related to these options not yet achieved as at 30 June
2024 are as set out below.
In respect to Mr Buttula, Mr Panaccio, Dr Lockett and employees:
• 25% upon remaining employed on 21 July 2024.
Set out below are summaries of Options granted. Options include amounts cancelled subsequent to balance date as
announced on the ASX.
Unvested Options shall lapse upon employment termination without notice (with cause) or cessation.
An expense reversal of $1,048,018 (2023: $3,003,935 expensed) for Options and loan funded shares is included in the
Statement of profit or loss and other comprehensive income which arose as a result of service conditions not being met
and consequently Options lapsing prior to the vesting date. Details are as follows:
Grant Date
Expiry Date Exercise Price
Balance at Start
of the Year
Granted
Lapsed
Exercised
Balance at
End of the Year
Vested
14.9.2020
14.9.2023
$0.20
587,500
-
(362,500)
(225,000)
-
-
18.11.2020
14.9.2023
$0.20
1,125,000
-
-
(1,125,000)
-
-
26.7.2021
31.7.2024
$1.80
807,500
-
(595,000)
-
212,500
53,125
26.7.2021
31.7.2024
$1.80
1,000,000
-
-
-
1,000,000
1,000,000
24.11.2021
31.7.2024
$1.80
1,450,000
-
-
-
1,450,000
787,500
29.11.2022
31.12.2025
$1.80
150,000
-
(150,000)
-
-
-
31.12.2022
31.12.2025
$1.80
7,800,000
-
(4,800,000)
-
3,000,000
750,000
10.10.2023
30.11.2025
$1.80
-
200,000
-
-
200,000
50,000
13.5.2024
31.3.2026
$0.20
-
2,000,000
-
-
2,000,000
-
13.5.2024
31.3.2028
$0.30
-
2,000,000
-
-
2,000,000
-
TOTAL
12,920,000
4,200,000
(5,907,500)
(1,350,000)
9,862,500
2,640,625
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
40
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
The valuation model inputs used to determine the fair value at the grant date, are as follows:
Grant Date
Expiry Date
Share Price at
Grant Date
Exercise Price
Expected
Volatility
Dividend Yield
Risk-free
Interest Rate*
Fair Value at
Grant Date
14.9.2020
14.9.2023
$0.145
$0.20
100%
-
0.24%
$0.0799
18.11.2020
14.9.2023
$0.47
$0.20
100%
-
0.11%
$0.3545
** 26.7.2021
31.7.2024
$0.93
$1.80
100%
-
0.13%
$0.45
24.11.2021
31.7.2024
$1.74
$1.80
100%
-
1.01%
$1.02
29.11.2022
31.12.2025
$1.10
$1.80
100%
-
3.20%
$0.59
31.12.2022
31.12.2025
$1.02
$1.80
100%
-
3.30%
$0.53
10.10.2023
30.11.2025
$0.32
$1.80
100%
-
3.97%
$0.06
13.5.2024
31.3.2026
$0.079
$0.20
100%
-
3.965%
$0.02
13.5.2024
31.3.2026
$0.079
$0.30
100%
-
3.965%
$0.04
*** 13.5.2024
31.3.2028
$0.079
$0.30
100%
-
3.965%
$0.04
* The risk-free interest rate is based on the Australian Government 3-year bond yield (Reserve Bank of Australia website) at the grant date.
** On 26 July 2021 when the share price was $0.93, Directors resolved to issue these Options, subject to receipt of shareholder approval. On 24 November 2021,
when the share price was $1.74, shareholder approval occurred at the Annual General Meeting (AGM). The fair value for accounting purposes is determined
based upon final approval at the date of the AGM.
*** Loan funded shares.
A share option plan has been established by the consolidated entity, whereby the consolidated entity may, at the
discretion of the Board, grant options over ordinary shares in the Company to certain key management personnel of
the consolidated entity. The options are issued for nil consideration and are granted in accordance with performance
guidelines established by the Board. In addition, the Company has also issued loan funded shares pursuant to an
employment agreement with the CEO.
All options granted are in respect of ordinary shares in Rhythm Biosciences Limited and confer a right of one ordinary
share for each option held.
Movement in the number of share options on issue to Directors, employees and third parties
2024
2024
2023
2023
Number of
Options
Weighted Average
Exercise Price (cents)
Number of
Options
Weighted Average
Exercise Price (cents)
Opening balance
12,920,000
158.60
15,232,500
103.06
Granted
4,200,000
32.38
10,950,000
180.00
Forfeited / Lapsed
(5,907,500)
170.18
(9,687,500)
146.75
Exercised
(1,350,000)
20.00
(3,575,000)
20.00
Outstanding at year-end
9,862,500
117.14
12,920,000
158.60
Exercisable at year-end
2,640,625
180.00
5,891,250
133.02
The fair value of issued share-based payments granted during the year pursuant to the ESOP in 2024 was calculated to
be $332,000 (2023: $5,812,500). The total amount in the income statement is a share-based payments expense reversal
of $1,048,018 (2023: $3,003,935 expensed) for Options and Loan Funded Shares in the current and previous years.
41
The value of share options issued has been calculated by using a Black-Scholes option pricing model applying the
following inputs:
S MacLeman
D Atkins
D Atkins
D Atkins
Options granted
200,000
2,000,000
1,000,000
1,000,000
Grant date
10.10.2023
13.5.2024
13.5.2024
13.5.2024
Exercise price
$1.80
$0.20
$0.30
$0.30
Underlying share price
$0.32
$0.079
$0.079
$0.079
Expiry date
30.11.2025
31.3.2026
31.3.2026
31.3.2028
Vesting period
various
12 mths
12 mths
24 mths
Expected share price volatility
100%
100%
100%
100%
Risk free interest rate
3.97%
3.965%
3.965%
3.965%
Fair value per option at grant
date
$0.06
$0.02
$0.04
$0.04
Total fair value at grant date
$12,000
$40,000
$40,000
$40,000
The life of the options is based on the contracted expiry date.
The value of loan funded shares issued has been calculated by using a Black-Scholes option pricing model applying the
following inputs:
D Atkins
D Atkins
Loan funded shares granted
2,000,000
2,000,000
Grant date
13.5.2024
13.5.2024
Issue price
$0.10
$0.10
Underlying share price
$0.079
$0.079
Expiry date
12.5.2028
12.5.2028
Vesting period
12 mths
24 mths
Expected share price volatility
100%
100%
Risk free interest rate
3.965%
3.965%
Fair value per option at grant date
$0.05
$0.05
Total fair value at grant date
$100,000
$100,000
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
42
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 18: Financial Risk Management
The Group’s financial instruments consist mainly of term deposits with banks, other receivables and trade payables.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting
policies to these financial statements, are as follows:
2024 ($)
2023 ($)
Financial Assets
Cash and cash equivalents
709,496
4,124,181
Trade and other receivables
37,199
65,513
Other financial assets – term deposits
45,000
45,000
791,695
4,234,694
Financial Liabilities
Trade and other Payables
459,709
1,522,843
459,709
1,522,843
There are no impaired assets within trade and other receivables; these balances, and the balance of trade and other
payables, are expected to be settled within 1 year.
Financial Assets Pledged as Collateral
No financial assets have been pledged as security for any financial liability.
Financial Risk Management Policies
The Board are responsible for, among other issues, monitoring and managing financial risk exposures of the Group. The
Board monitors the Group’s transactions and reviews the effectiveness of controls relating to credit risk, liquidity risk, and
market risk. Discussions on monitoring and managing financial risk exposures are held regularly by the Board. The Board’s
overall risk management strategy seeks to ensure that the Group meets its financial targets, while minimising potential
adverse effects of cash flow shortfalls.
The Group did not have any derivative instruments at 30 June 2024.
Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments is liquidity risk.
Credit Risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through maintaining procedures ensuring, to the extent possible, that members and
counterparties to transactions are of sound credit worthiness.
Credit risk exposures
Cash reserves form the majority of the Group’s financial assets. At 30 June 2024, cash was deposited with a large
Australian bank in order to limit risk and ensure interest rate competitiveness.
43
Liquidity Risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:
• preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities; and
• only investing surplus cash with major financial institutions.
Market Risk
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of
changes in market interest rates. Exposure to interest rate risk arises on interest earned on cash and cash equivalents and
term deposits.
The consolidated entity's cash and cash equivalents and term deposits were $754,496 as at 30 June 2024 (2023:
$4,169,181). An official increase/decrease in interest rates of 100 (2023: 100) basis points would have an adverse/
favourable effect on loss before tax of $7,545 (2023: $41,692) per annum. The percentage change is based on the
expected volatility of interest rates using market data and analysts' forecasts.
Variable rate instruments were cash held at financial Instruments of $709,496 (2023: $4,124,181). Fixed rate instruments
were term deposits held at financial Institutions of $45,000 (2023: $45,000).
Price risk
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in
market prices. The Group is not exposed to price risk.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in
foreign exchange rates. The Group's exposure to currency risk is minimal at present as the majority of transactions are in
Australian dollars.
Note 19: Segment Reporting
In accordance with Australian Accounting Standard AASB 8 Operating Segments, the Company has determined that it has
one reporting segment, consistent with the manner in which the business is managed. This is the manner in which the chief
operating decision maker receives information for the purpose of resource allocation and assessment of performance.
The Group operates predominantly in one business and geographical segment being the research and development of
biosciences in Victoria, Australia.
Note 20: Key Management Personnel Compensation
The Key Management Personnel compensation included in employee expenses are as follows:
Share-based
payments ($)
Short-term
benefits ($)
Termination
benefits ($)
Post-employment
benefits ($)
Other Long-term
benefits ($)
Total ($)
2024
Total compensation
5,232
664,175
-
73,774
-
743,181
2023
Total compensation
1,225,131
936,845
96,688
101,653
(16,443)
2,343,874
Further details on the above remuneration is disclosed in the Remuneration Report in the Directors’ report.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
44
FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2024
Note 21: Auditor Remuneration
2024 ($)
2023 ($)
Remuneration of the Auditor of the Group for:
Auditing or reviewing the financial report
92,556
65,433
Other services:
- Taxation advice
13,100
25,280
105,656
90,713
Note 22: Controlled Entities
Controlled Entities Consolidated
Country of
Incorporation
Percentage Owned
(%) 2024
Percentage Owned
(%) 2023
Vision Tech Bio Pty Ltd
Australia
100%
100%
IchorDX Inc,
United States
100%
100%
Rhythm Biosciences UK Limited
United Kingdom
100%
100%
* Percentage of voting power in proportion to ownership
Note 23: Deed of Cross Guarantee
A Deed of Cross Guarantee was lodged with the ASIC on 18 April 2023 covering Rhythm Biosciences Limited and Vision
Tech Pty Ltd. The assets and liabilities of the companies within the Deed are as stated in the financial statements as at 30
June 2024.
Note 24: Events Subsequent to Reporting Date
On 14 August 2024, the Company announced on the ASX it entered into a secured loan facility agreement (Loan) which
will provide early access to $1,150,000 cash of its forecast ~$1,500,000 FY24 R&D Tax Incentive (RDTI Rebate) expected
to be received in full by November 2024.
The Loan is secured by and repayable out of the FY24 RDTI Rebate and attracts a fixed 1.33% per month interest rate. It
matures on 31 December 2024, however, can be extended by agreement between the lender and Rhythm. This Loan is
intended to be used in a bridging period prior to receiving the FY24 RDTI Rebate, along with the amended FY23 RDTI
rebate for overseas activities.
There has been no other matters or circumstances which have arisen since 30 June 2024 that has significantly affected or
may significantly affect:
• the operations, in financial years subsequent to 30 June 2024, of the consolidated entity; or
• the results of those operations; or
• the state of affairs, in financial years subsequent to 30 June 2024, of the consolidated entity.
Note 25: Commitments
The Group has inventory purchase commitments of $nil (2023: $265,193) for goods not yet received as at 30 June 2024.
There are no capital commitments for expenditure as at 30 June 2024 (2023: $nil).
Note 26: Contingent Assets and Liabilities
The Group has no contingent assets or liabilities as at 30 June 2024 (2023: $nil).
45
Controlled Entities Consolidated
Country of
Incorporation
Percentage Owned
(%)
Tax
Residency
Vision Tech Bio Pty Ltd
Australia
100%
Australia
IchorDX Inc,
United States
100%
United States
Rhythm Biosciences UK Limited
United Kingdom
100%
United Kingdom
The parent entity is Rhythm Biosciences Ltd incorporated in and with a tax residency in Australia. In addition, all entities are a
Body Corporate.
Basis of Preparation
The Consolidated Entity Disclosure Statement (CEDS) has been prepared in accordance with the Corporations Act 2001.
It includes certain information for each entity that was part of the consolidated entity at the end of the financial year.
Determination of Tax Residency
Section 295(3A) of the Corporations Act 2001 defines tax residency as having the meaning in the Income Tax Assessment
Act 1997. The determination of tax residency involves judgement as there are currently different interpretations that could
be adopted and which could give rise to a different conclusion on residency.
Australian Tax Residency
The consolidated entity has applied current legislation and judicial precedent, including having regard to the tax
Commissioner's public guidance in Tax Ruling TR 2018/5.
Foreign Tax Residency
Where necessary, the consolidated entity has used independent tax advisors in foreign jurisdictions to assist in determining
tax residency and ensure compliance with applicable foreign tax legislation.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
46
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
The Directors declare that:
1. The financial statements and notes, as set out on pages 25 to 45 are in accordance with the Corporations Act 2001,
and:
a. comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
b. give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2024 and of its performance
for the year ended on that date;
2. The attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
3. The consolidated entity disclosure statement on page 46 is true and correct;
4. The Chief Executive Officer and Chief Finance Officer have provided the declarations as required by section 295A of
the Corporations Act 2001 to the Company;
5. In the Directors’ opinion, subject to the matters disclosed in note 1, there are reasonable grounds to believe that the
entity will be able to pay its debts as and when they become due and payable;
6. Remuneration disclosures on pages 15 to 21 comply with section 300A of the Corporations Act 2001; and
7. There are reasonable grounds to believe that the Company and the group entity indentified in Note 23 will be able
to meet any obligations or liabilities to which they are or may become subject to by virture of the Deed of Cross
Guarantee between the Company and group entity persuant to ASIC Corporations (wholly owned Companies)
Instrument 2016/785.
This declaration is made in accordance with a resolution of the Directors pursuant to section 295(5)(a) of the
Corporations Act 2001.
Otto Buttula
Non-Executive Chairman
Melbourne, Australia
Dated this 30th day of August 2024
47
DIRECTORS' DECLARATION
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
BDO Audit Pty Ltd ABN 33 134 022 870 is a member of a national association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of
BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional Standards Legislation.
INDEPENDENT AUDITOR'S REPORT
To the members of Rhythm Biosciences Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Rhythm Biosciences Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2024, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including material accounting policy information, the consolidated entity
disclosure statement and the directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code)
that are relevant to our audit of the financial report in Australia. We have also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 in the financial report which describes the events and/or conditions which
give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s
ability to continue as a going concern and therefore the Group may be unable to realise its assets and
discharge its liabilities in the normal course of business. Our opinion is not modified in respect of this
matter.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
48
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
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 the matter was addressed in our audit
Research and Development Grant Income
Recognition
Other income includes a research and development
(“R&D”) tax refund and Note 1 to the annual financial
report discloses the accounting policy used by the
Group for the recognition and measurement of its R&D
tax refund income.
Recognition of the R&D tax refund income was
considered a key audit matter due to the significance
of the recorded amount and the inherent subjectivity
associated with the calculation performed to
determine the R&D tax refund income amount,
including the assessment of eligibility criteria met in
respect of regulatory requirements applicable to the
R&D tax refund income.
Our procedures included, but were not limited to:
•
Assessing the Group’s accounting policy for
refundable R&D tax offsets for compliance with
Australian Accounting Standards.
•
Assessing the adequacy of procedures and key
internal controls surrounding the recording of
income.
•
Engaging our internal R&D tax specialist team to
evaluate management’s assessment of whether the
R&D expenditure claimed is eligible expenditure
under the criteria of the Income Tax Assessment
Act 1997 and relevant regulatory registrations
obtained for the R&D expenditure activities.
•
Vouching a sample of R&D expenditure items
claimed to underlying internally and externally
sourced documentary evidence, including
reperforming calculations used to determine the
R&D tax refund amount.
•
Vouching the cash proceeds for the R&D tax refund
income to the relevant documentary evidence such
as the lodged income tax return, bank statements
and the relevant income tax assessment notice.
•
Checking the completeness and appropriateness of
the disclosures within the annual financial report.
49
Key audit matter
How the matter was addressed in our audit
Measurement of Share Based Payments and Loan
Funded Shares
A net reversal of share-based payment expenses was
recognised for the financial impact of options that
were granted in prior periods. In addition, share based
payments were expensed during the year relating to
options and loan funded shares issued during the 30
June 2024 financial year to key management
personnel.
Share-based payments are a complex accounting area,
and due to this complexity and judgements used in
determining the fair value of the share-based
payments and the probability of vesting conditions
being achieved, we consider the Group’s calculation of
the share-based payment expense to be a key audit
matter.
Refer to Note 1 and Note 17 of the financial report for
a description of the accounting policy and significant
estimates and judgements applied to the share-based
payment net reversal of expense recorded in the 2024
annual financial statements.
Our procedures included, but were not limited to:
•
Reviewing board minutes and ASX announcements
for the completeness of share-based payments and
loan funded shares issued during the year.
•
Engaging our internal valuation expert to calculate
an appropriate valuation range, including
assessment of inputs used in management’s
valuations, for the new options and loan funded
shares issued during the year. We compared the
valuation range derived to the fair values used by
management to record the share based payment
expenses.
•
Reviewing a sample of underlying agreements
related to the issuance of any new share-based
payments and loan funded shares in addition to
assessing whether there have been any
modifications in the agreements in place from
prior years.
•
Evaluating the reasonableness of key estimates
applied by management in determining the
probability percentages of the various
performance-based vesting conditions.
•
Assessing whether the recognition of the current
year’s share-based payment and loan funded
shares expense and net reversal of expense and
corresponding reserve balance movement were
materially correct based on conditions stipulated
within the underlying agreements.
•
Checking the adequacy of the related disclosures
within the annual financial report.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Directors’ report for the year ended 30 June 2024, but does not include
the financial report and our auditor’s report thereon, which we obtained prior to the date of this
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
50
INDEPENDENT AUDITOR’S REPORT
auditor’s report, and the Chairman’s report, which is expected to be made available to us after that
date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, 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.
When we read the Executive Chairman’s report, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and will request that it is
corrected. If it is not corrected, we will seek to have the matter appropriately brought to the
attention of users for whom our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a)
the financial report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001 and
b)
the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i) the financial report that gives a true and fair view and is free from material misstatement, whether
due to fraud or error; and
ii) the consolidated entity disclosure statement that is true and correct and is free of misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
51
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 15 to 21 of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Rhythm Biosciences Limited, for the year ended 30 June
2024, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit Pty Ltd
Tony Batsakis
Director
Melbourne, 30 August 2024
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
52
INDEPENDENT AUDITOR’S REPORT
Rhythm Biosciences Ltd is quoted on the Australian Securities Exchange (ASX) under the ticker code RHY. The following
information was extracted from the Company’s records as at 15 August 2024 and is required by the ASX Listing Rules.
Rhythm’s securities are not quoted on any other stock exchange.
Twenty Largest Holders of Ordinary Shares
Rank
Shareholder
Number of Fully Paid
Ordinary Shares
Percentage of Total
Issued Capital
1
WEBINVEST PTY LTD
22,479,168
9.04
2
NEWFOUND INVESTMENTS PTY LTD
13,905,407
5.59
3
FERNDALE SECURITIES PTY LTD
10,300,000
4.14
4
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
9,269,796
3.73
5
LOUMEA INVESTMENT PTY LTD
8,052,520
3.24
6
NORTHERN STAR NOMINEES PTY LTD
7,380,000
2.97
7
ROJO NERO CAPITAL PTY LTD
4,213,751
1.70
8
GIOKIR PTY LTD
3,661,470
1.47
9
MR HSIEN MICHAEL SOO
3,305,403
1.33
10
MR MARK ANTHONY ROGERS & MR ARTHUR NICHOLAS VELISS
3,000,000
1.21
11
DC & PC HOLDINGS PTY LTD
2,688,156
1.08
12
COMMONWEALTH SCIENTIFIC & INDUSTRIAL RESEARCH
ORGANISATION
2,500,000
1.01
13
MS NATALIE LOUISE PATTERSON
2,477,083
1.00
14
E & W NOMINEE PTY LTD
2,207,941
0.89
15
MR DANIEL EDDINGTON & MRS JULIE EDDINGTON
2,123,532
0.85
16
MR WEI FENG & MRS JIE LIU
2,050,215
0.82
17
MRS JOAN MARGARET MOLYNEUX & MRS WENDY ANNE HUTCHISON &
MR JOHN EDWARD HUTCHISON
2,000,000
0.80
18
ARDROY SECURITIES PTY LTD
1,857,040
0.75
19
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
1,775,214
0.71
20
MRS LINDA JANE LOCKETT & DR TREVOR JOHN LOCKETT
1,678,300
0.68
Total
106,924,996
43.01
Balance of register
141,671,754
56.99
Grand total
248,596,750
100.00
53
ADDITIONAL ASX INFORMATION
Distribution Schedule
The following is a distribution schedule of the number of holders of fully paid ordinary shares in the Company, within the
bands of holding specified by the ASX Listing Rules:
Range
No. of Shareholders
No. of Ordinary Shares
Percentage of Total
Issued Capital
100,001 and Over
295
199,177,798
80.12
10,001 to 100,000
1,213
40,929,699
16.46
5,001 to 10,000
595
4,720,757
1.90
1,001 to 5,000
1,199
3,260,232
1.31
1 to 1,000
1,028
508,264
0.21
Total
4,330
248,596,750
100.00
2,439 shareholders held less than a marketable parcel of fully paid ordinary shares.
Substantial Shareholdings Register
Shareholder
Number of fully paid ordinary shares
Percentage of Total Issued Capital
Otto Buttula
36,384,575
14.64%
Adrien Wing
18,117,500
7.29%
A substantial holder is a shareholder who either alone or `together with their associates has an interest in 5% or more of
the voting shares of the Company.
Listed Options Over Ordinary Shares
Rhythm Biosciences Ltd Options are quoted on the Australian Securities Exchange (ASX) under the ticker code RHYO.
The Company has issued 13,727,168 listed Options with an exercise price of $0.20 each expiring on 31 March 2026.
The following information was extracted from the Company’s records as at 15 August 2024 and is required by the ASX
Listing Rules. Rhythm’s securities are not quoted on any other stock exchange.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
54
ADDITIONAL ASX INFORMATION
Twenty Largest Holders of Listed Options
Rank
Holder
Number of
Options
Percentage of Total
Issued Capital
1
NEWFOUND INVESTMENTS PTY LTD
2,831,250
20.63
2
WEBINVEST PTY LTD
2,593,751
18.90
3
MR MARK ANTHONY ROGERS & MR ARTHUR NICHOLAS VELISS
500,000
3.64
4
MR BRIAN LEEDMAN & MRS NATASHA LEEDMAN
500,000
3.64
5
JD'S FAMILY LG'S PTY LTD
344,001
2.51
6
MRS SARAH CAMERON
288,120
2.10
7
MR ARTHUR NICHOLAS VELISS & MR MARK ANTHONY ROGERS
255,000
1.86
8
MARBEX PTY LTD
250,001
1.82
9
WARWICK DAVID SMYTH
250,000
1.82
10
LARRAKEYAH PTY LIMITED
250,000
1.82
11
MRS JOAN MARGARET MOLYNEUX & MRS WENDY ANNE
HUTCHISON & MR JOHN EDWARD HUTCHISON
250,000
1.82
12
MR SCOTT CRANK & MS LOLA CRANK
200,001
1.46
13
MRS LINDA JANE LOCKETT & DR TREVOR JOHN LOCKETT
193,650
1.41
14
MR PETER GEOFFREY HENDERSON
160,500
1.17
15
DR SCOTT MAURICE DONNELLAN
156,000
1.14
16
SIGGY2 PTY LTD
139,562
1.02
17
SULLIVAN CAPITAL HOLDINGS PTY LTD
135,000
0.98
18
SODOR INVESTMENTS PTY LTD
125,000
0.91
19
TERCUS PTY LTD
124,500
0.91
20
MR JON DAVID HEWITT & MRS DONNA RAE HEWITT
119,210
0.87
Total
9,665,546
70.41
Balance of register
4,061,622
29.59
Grand total
13,727,168
100.00
55
RHYO
Range
No. of Holders
No. of Options
Percentage of Total
Issued Options
100,001 and Over
26
10,296,114
75.00
10,001 to 100,000
94
2,758,532
20.09
5,001 to 10,000
43
294,697
2.15
1,001 to 5,000
133
330,223
2.41
1 to 1,000
138
47,602
0.35
Total
434
13,727,168
100.00
Rhythm has granted unlisted options which entitles the holder to purchase one ordinary share in the Company at a
predetermined price. No voting rights attach to options. Further details of options outstanding as at 15 August 2024
are provided below:
Share Option Type
Expiry Date
Number of Options
Number of Holders
Exercise Price $
RHYAN
30/11/25
200,000
1
1.80
RHYAP
31/03/26
2,000,000
1
0.20
RHYAQ
31/03/28
2,000,000
1
0.30
Escrow Arrangements
There are no shares subject to mandatory escrow arrangements.
Voting Rights
The voting rights attached to ordinary shares are set out below:
Ordinary shares:
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
There are no other classes of equity securities.
RHYTHM BIOSCIENCES
2024 ANNUAL REPORT
56
ADDITIONAL ASX INFORMATION
Directors
Mr Otto Buttula
Ms Susan MacLeman
Dr Trevor Lockett
Mr Louis (Lou) Panaccio
Company Secretaries
Ms Andrea Steele
Mr James Barrie
Registered and Principal Office is located at
Bio21 Institute
30 Flemington Road
Parkville VIC 3010
Auditor
BDO Audit Pty Ltd
Level 18
727 Collins Street
Melbourne VIC 3000
Legal Advisers
K & L Gates
Level 25
525 Collins Street
Melbourne VIC 3000
Share Registry
Automic Registry Services
477 Collins Street
Melbourne VIC 3000
www.automicgroup.com.au
57
CORPORATE DIRECTORY
Rhythm Biosciences Limited
ACN 619 459 335
Bio21 Institute
30 Flemington Road
Parkville VIC 3010
Phone +61 3 8256 2880
rhythmbio.com
RHYZ025 09/24