EX-99.1 2 d251069dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Prima BioMed Ltd

Preliminary final report

 

APPENDIX 4E

PRELIMINARY FINAL REPORT

 

1. Company details

 

Name of entity:    Prima BioMed Ltd
ABN:    90 009 237 889
Reporting period:    Year ended 30 June 2016
Previous corresponding period:    Year ended 30 June 2015

 

 

 

2. Results for announcement to the market

 

Revenue from ordinary activities

   Up      100   to    $ 175,052   

Other income

   Down      11.4   to    $ 1,853,869   

Loss from ordinary activities after tax attributable to the owners of Prima BioMed Ltd

   Up      92.9   to    $ (62,015,184

Loss for the period attributable to the owners of Prima BioMed Ltd

   Up      92.9   to    $ (62,015,184

Dividends

There were no dividends paid or declared during the current financial period

Comments

The loss of the consolidated entity after providing for income tax and non-controlling interest amounted to $62,015,184 (30 June 2015: $32,151,696)

Explanation of the above information:

The loss after tax for FY16 was A$62,015,184 compared to A$32,151,696 in FY15. The increase was attributable to non-cash financing costs, including a share-based payment to a strategic investor (Ridgeback Capital Investments) and non-cash changes in the fair value of the financial liability. Removing the impact of those two non-cash items results in a loss after tax for FY16 of A$13,939,476. This loss is 0.91% higher when compared to the adjusted previous period loss of A$13,813,681 after removing non-cash financing costs of A$18,338,015.

For other details of the current year results, refer to the Directors’ Report - Review of Operations.

 

 

3. NTA backing

 

Net tangible asset backing per ordinary security    Reporting period    Previous corresponding period
   0.70 cents    0.12 cents

 

 


Prima BioMed Ltd

Preliminary final report

 

 

4. Dividends

Current period

There were no dividends paid or declared during the current financial period

Previous corresponding period

There were no dividends paid or declared during the previous financial period.

 

 

5. Audit

This report is based on financial statements which have been audited.

 

 

6. Attachments

Details of attachments (if any):

The annual report for the year ended 30 June 2016 is attached.

 

 

7. Signed

 

LOGO

   Date: Wednesday, 31th August 2016

 

Company Secretary

  

 

 


LOGO

ABN 90 009 237 889

Annual Report

2016


TABLE OF CONTENTS

 

CORPORATE DIRECTORY

     1   

CHAIRMAN’S LETTER

     2   

REVIEW OF OPERATIONS

     3   

DIRECTORS’ REPORT

     6   

AUDITOR’S INDEPENDENCE DECLARATION

     21   

FINANCIAL STATEMENTS

     23   

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

     24   

CONSOLIDATED BALANCE SHEET

     25   

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

     26   

CONSOLIDATED STATEMENT OF CASH FLOWS

     27   

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

     28   

DIRECTORS’ DECLARATION

     68   

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF PRIMA BIOMED LTD

     69   

SHAREHOLDER INFORMATION

     71   


CORPORATE DIRECTORY

 

Directors   Ms Lucy Turnbull, AO   (Non – Executive Chairman)
  Mr Marc Voigt   (Executive Director & Chief Executive Officer)
  Mr Albert Wong   (Non – Executive Deputy Chairman)
  Dr Russell Howard   (Non – Executive Director)
  Mr Pete Meyers   (Non – Executive Director)
Company Secretary   Ms Deanne Miller  
Registered office &   Level 12  
principal place of business   95 Pitt Street  
  Sydney NSW 2000  
Share Registry   Boardroom Pty Ltd  
  Grosvenor Place  
  Level 12, 225 George Street  
  Sydney, NSW 2000  
Auditor   PricewaterhouseCoopers  
  201 Sussex Street  
  Sydney, NSW 2000  
Solicitors   K&L Gates  
  Level 31, 1 O’Connell Street  
  Sydney NSW 2000  
  Australia  
Banker   National Australia Bank Ltd  
  Kew Branch  
  Melbourne, Victoria 3000  
Stock exchange listings   Prima BioMed Ltd shares are listed on the:
  Australian Securities Exchange (ASX code: PRR), and
  NASDAQ (NASDAQ code: PBMD)
Website address   www.primabiomed.com.au  

 

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CHAIRMAN’S LETTER

Dear Fellow Shareholder,

On behalf of the Prima BioMed Board I am pleased to present the Annual Report for 2015/2016. The past 12 months has been a busy time for Prima, the highlight being progression of our lead product IMP321 in two active clinical trials. At the same time our partnerships in other programs continue to make good progress.

At present, AIPAC, our Phase IIb chemo-immunotherapy study of IMP321-plus-paclitaxel in metastatic breast cancer, is recruiting well with its second cohort of patients. Just before the end of the financial year we announced initial safety data from the first cohort, which confirmed the safety and tolerability of IMP321, with no drug related serious adverse events. This significantly de-risks the remainder of the trial. We anticipate that the results of the first safety run in data from both cohorts will be presented in the fourth calendar quarter of 2016.

TACTI-mel, our Australian melanoma trial with IMP321 has six clinical centers approved, with all of them now active. The study will recruit up to 24 patients, with the interim data of the first cohort (of up to 8 patients) expected before the end of this calendar year.

Financially, the company remains in a good position following the successful Share Purchase Plan early in the financial year as well as two smaller share placements to sophisticated investors in Europe and Australia. We also continue to benefit from significant R&D tax grants in both Europe and Australia, where our clinical trials are being conducted, and from milestone payments from our pharmaceutical partners.

Due to effective management of cash reserves, a rigorous focus on costs and the divestment from our CVac program in February 2015, the Company’s cash reach has been extended into the fourth quarter of calendar year 2017. This is a significant improvement on the outlook provided in last year’s Annual Report and our most recent Investor Update.

Partnering CVac to New York-listed SYDYS Corp was considered the best available solution to secure a viable pathway for CVac’s ongoing development and prospects for commercialization. Importantly, this requires no further funding commitment from Prima while providing considerable potential upside should its commercialisation be achieved, which is dependent on SYDYS Corp raising sufficient capital to continue its development.

Prima’s two global pharmaceutical partners, Novartis and GlaxoSmithKline, continue to develop their LAG-3 related products in the clinic. As further clinical development continues, further milestone payments become more likely.

I would like to thank shareholders for their support over the past year and look forward to updating you on further progress in the year ahead in relation to our LAG-3 programs.

Yours sincerely,

 

LOGO

 

Lucy Turnbull, AO

Chairman,

Prima BioMed Ltd

31 August 2016

 

Page | 2


REVIEW OF OPERATIONS

On behalf of the Directors and Management of Prima BioMed, I am pleased to report on our operations for the past financial year.

Operational and financial review

Fiscal year 2016 saw many important and positive events for Prima, most significantly, the initiation of two clinical trials in the LAG-3 field, with early safety data confirmed for our Phase IIb chemo-immunotherapy trial in metastatic breast cancer and progress in our partnered programs.

Our two clinical studies, namely a Phase IIb chemo-immunotherapy trial in metastatic breast cancer (AIPAC) and a Phase I study in combination with an immune checkpoint inhibitor (TACTI-mel), continue to progress well. Data from the first cohort of patients from AIPAC confirmed the safety and tolerability of our lead compound, IMP321.

In July and August 2015, we completed a successful capital raising which was essential for initiating our two clinical trials for IMP321. The Share Purchase Plan (“SPP”), which was heavily oversubscribed, was increased from A$5m to A$10m. The decision to terminate our US$37.4m investment facility with Bergen Global Opportunity Fund, by mutual consent, was followed by two smaller placements with institutional investors. The aggregate amount of these two placements in October and November 2015 was A$3.55m.

Shareholders ratified the issue of further securities to Ridgeback Capital Investments L.P. at the Extraordinary General Meeting held on 31 July 2015. In accordance with the approval by shareholders, the Company issued ordinary shares, a convertible note and warrants. Assuming that Ridgeback Capital Investments L.P. exercises all warrants and convertible notes, an additional 1,067,462,626 ordinary shares may be issued in future reporting periods. The total proceeds from the issuance of the above securities amounted to A$13,960,794.

These capital raising initiatives, coupled with collaboration cash inflows, have solidified our capital position with projected cash reach for a minimum of twelve months from the date of this report. We believe that careful, focussed and output-oriented cash management is critical.

Financial performance

Grant income for FY16 was A$887,083 (FY15 A$1,167,190) relate to grants received from Australian Research and Development Rebates, France’s Crédit d’Impôt Recherche, and Saxony Development Bank (“Sächsische Aufbaubank”) from Germany. The reduction in grant income for the year is in line with a reduction in Research & Development expenditure compared to the prior year. It is expected that grant income will increase in FY17 in line with an increase in Research and Development expenditure as the Company progresses its clinical trials in IMP321.

The total corporate administrative expense for FY16 was A$6,982,629 (FY15: A$5,723,106). This increase in administrative expenses is primarily attributable to an increase in employee share-based payment expenses during the year of A$1,976,417 (FY15: A$738,799) with other expenses remaining consistent with the prior year. The R&D expenses in FY16 have been dominated by the two IMP321 related clinical trials, AIPAC and TACTI-mel, mostly related to contracts with our clinical research organisations. Despite initiation of these two new trials, R&D expenses (of A$7,059,528) decreased compared to the previous year (FY15: A$8,952,447). This is principally due to cessation of the costly CVac clinical trials and careful management of our cash resources.

During the year there was an expense of A$542,075 (FY15: A$Nil) in relation to changes in fair value of a comparability milestone. This relates to an amount paid into a retention account on the acquisition of Immutep which was measured through fair value through profit and loss subsequent to the acquisition in accordance with applicable accounting standards. Refer to note 21 for further information.

The net change in fair value of convertible note liability of A$607,637 (FY15: A$Nil) was attributable to the liability component of the convertible note being measured at fair value as required by AASB 2. Refer to note 15 for further information.

The loss after tax for FY16 was A$62,015,184 compared to A$32,151,696 in FY15. The increase was attributable to non-cash financing costs, including a share-based payment to a strategic investor (Ridgeback Capital Investments) and non-cash changes in the fair value of the financial liability. Removing the impact of those two non-cash items results in a loss after tax for FY16 of A$13,939,476. This loss is 0.91% higher when compared to the adjusted previous period loss of A$13,813,681 after removing non-cash financing costs of A$18,338,015.

 

 

Page | 3


With careful financial management Prima remains in a very solid financial position with a cash balance of A$20,879,548 as at 30 June 2016. We anticipate being able to prolong our cash reach to at least the fourth quarter of calendar year 2017. This extended cash reach does not include potential milestone payments from existing partnerships, which, if received, would extend our cash reach even further.

Strategic development and risks

Our main focus for FY16 was our LAG-3 programs. We have made significant progress in maintaining our position as the global leader in developing LAG-3 related product candidates.

We believe the prominence of LAG-3 as an attractive scientific and clinical target has been increasing in the pharmaceutical and biotech industry. In addition to IMP321, there are several clinical and pre-clinical programs underway, including those of our partners Novartis and GlaxoSmithKline. New clinical trials have been initiated in the past 12 months so that more patients have the chance to benefit from LAG-3 related treatments. Given this strong industry interest, we believe that LAG-3 may follow the success of PD-1 and CTLA-4 related products.

In the past few months we have commenced two new clinical trials, AIPAC and TACTI-mel. AIPAC is the acronym for Prima’s multicentre, Phase IIb, randomised, double-blind, placebo-controlled study in hormone receptor-positive metastatic breast carcinoma patients receiving IMP321 (LAG-3 Ig fusion protein) or placebo, as an adjunctive to a standard chemotherapy treatment regimen of paclitaxel. The primary purpose of the AIPAC trial is to determine the clinical benefit of IMP321 in terms of Progression-Free Survival as the primary clinical endpoint in this patient population. The first results have been reported in June 2016 with the product being safe and well tolerated. This clinical trial is focussed on Europe with the study currently active in Belgium, the Netherlands and Hungary. The initial results of all 15 patients from the safety run-in phase of AIPAC are expected to be presented in the fourth quarter of calandar year 2016.

‘TACTI-mel’ (Two ACTive Immunotherapeutics in melanoma) is a multicentre, open label, Phase I study in which patients with unresectable or metastatic melanoma will be dosed with IMP321 in combination with an approved checkpoint inhibitor. The study will evaluate safety as the primary endpoint and anti-tumour activity and the immune response to the combination as secondary endpoints. The focus of this clinical trial is Australia.

The Company’s intellectual property position has been further strengthened by patent grants which included a Japanese patent related to IMP321 granted in May 2016.

In February 2016, CVac, our main product in previous years, was licensed to Sydys Corporation, Inc. Sydys is an Over-The-Counter (OTC) publicly traded company based in New York that has been repurposed as a clinical stage biotechnology company in order develop the licensed CVac assets.

In this spin out transaction Prima received a 9.9% equity stake in Sydys as consideration for the assets being transferred. Given the significant capital requirements for conducting clinical trials, no upfront payment was paid; however, should CVac be successfully commercialized, if Sydys is able to secure sufficient funding for the commercialisation, Prima could receive development, regulatory and commercial milestone payments upon the achievement of set commercial sales targets, in addition to low single digit royalties on sales. This transaction allows Prima to fully concentrate on its highly prospective LAG-3 related programs.

A biotech company like Prima BioMed is exposed to a number of risks: There can be no guarantee that our manufacturing, research, regulatory and clinical development is successful or can be carried out in the anticipated timelines or that our intellectual property position will be strengthened or not harmed or that our existing partnerships or potential new ones will be successful. In addition the Company will require additional financing in the future and in fact as the Company has a history of operating losses and may not achieve or maintain profitability in the future, future cash needs are not unlikely.

Business Development

Our commercial partners, Novartis and GlaxoSmithKline, continue to progress the development of the licensed LAG-3 products in the clinic. The blocking antibody (Checkpoint inhibitor) which was licensed to Novartis (IMP701 or LAG525) entered clinical development in August 2015 in a Phase I/II clinical study

 

Page | 4


resulting in a milestone payment. Prima is eligible to receive further potential development-based milestone payments and royalties on sales following commercialisation of these products. Novartis have now added a third arm to their trial of a LAG-3 antagonist called LAG-525. The study is testing LAG-525 alone and in combination with a PD-1 inhibitor and has recently commenced a third trial arm in Japanese patients. The number of patients expected to be recruited has increased with final results expected in 2018. IMP731 or GSK2831781, which is licensed to GlaxoSmithKline, continued clinical development in a Phase I study carried out in the United Kingdom and Germany. We encourage our shareholders to follow the development of these products at clinicaltrials.gov.

In FY16 we also concluded a new material transfer agreement with Yamaguchi University, Japan, where IMP321 is being tested in clinical research as an adjuvant to a peptide vaccine for the treatment of hepatocellular carcinoma.

Business development continues to be a key strategic focus for Prima and we have significantly increased our efforts over the past year. The pipeline chart below illustrates our current stage of development in terms of our different product candidates:

 

LOGO

Outlook

We believe we have made significant progress in the last year in clinical and business development. Safety and immune monitoring data from our two ongoing clinical studies is expected to be available in the fourth quarter of this calendar year. We anticipate this data will further de-risk our IMP321 programs as we ramp up recruitment for AIPAC.

Meanwhile our pharma partners are very focused on the development of their drug candidates and continue to generate interest in LAG-3 around the world. Potential future milestone payments from these programs also underpin our solid financial position, which in turn allows us to focus on further R&D into new potential LAG-3 product candidates.

I would like to thank our whole team for their ongoing commitment and, of course, our shareholders for their continuing support. A special thank you also to the patients, their families and the physicians supporting our exciting clinical studies.

Sincerely,

 

LOGO

Marc Voigt

Executive Director & Chief Executive Officer (CEO)

Prima BioMed Ltd

31 August 2016

 

Page | 5


DIRECTORS’ REPORT

The directors present their report on the consolidated entity (referred to hereafter as the ‘consolidated entity’ or ‘group’) consisting of Prima BioMed Ltd (referred to hereafter as the ‘Company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the year ended 30 June 2016.

Directors

The following persons were directors of Prima BioMed Ltd during the whole of the financial year and up to the date of this report, unless otherwise stated:

Ms Lucy Turnbull, AO

Mr Albert Wong

Dr Russell Howard

Mr Pete Meyers

Mr Marc Voigt

Principal activities

During the financial year the principal continuing activities of the consolidated entity consisted of research, development and commercialisation of licensed medical biotechnology.

Dividends

There were no dividends paid or declared during the current or previous financial year.

Review of operations

The loss for the consolidated entity after providing for income tax amounted to $62,015,184 (30 June 2015: $32,151,696). Refer to the Review of Operations on page 3 for further detail.

Significant changes in the state of affairs

It was announced in May 2016 that Sydys Corporation will license the Company’s CVac immune-oncology program and oversee its future development.

Apart from the above there were no significant changes in the state of affairs of the consolidated entity during the financial year.

Matters subsequent to the end of the financial year

No matters or circumstances have arisen since 30 June 2016 that has significantly affected, or may significantly affect:

 

(a) the Group’s operations in future financial years, or

 

(b) the results of those operations in future financial years, or

 

(c) the Group’s state of affairs in future financial years.

Likely developments and expected results of operations

Information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Environmental regulation

The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

 

Page | 6


DIRECTORS’ REPORT CONTINUED

 

Information on directors

 

Ms Lucy Turnbull, AO    -    Non-Executive Chairman
Qualifications    -    LLB University of Sydney, MBA AGSM
Experience and expertise    -    Lucy Hughes Turnbull AO is an urbanist, businesswoman and philanthropist with longstanding interest in cities and their planning and technological and social innovation. She chaired ASX listed WebCentral Ltd from 2004-06 when it was acquired by ASX listed Melbourne IT Limited. She was a director of Melbourne IT from 2006-2010 and was a director of Sealink Travel Group Ltd in 2015. She is Chief Commissioner of the Greater Sydney Commission and chairs the Committee for Sydney. She was previously Deputy Chair of the COAG Reform Council’s Cities Expert Panel advising on its Metropolitan Strategic Planning Report. She was the first female Lord Mayor of the City of Sydney from 2003-4 and before that was Deputy Mayor from 1999-2003. She was a board member of the Cancer Institute of NSW and the Australian Technology Park, Redfern. In 2012 she was awarded an Honorary Doctorate of Business by the University of NSW for her contribution to business, philanthropy and local government. In 2011 she became an Officer of the Order of Australia for distinguished service to the community, local government and business.
Date of appointment    -    7 October 2010
Other current directorships    -    None

Former directorships

(in the last 3 years)

   -    Sealink Travel Group Ltd
Special responsibilities    -    Chairman of the Remuneration Committee from 13 February 2014 and member of the Audit and Risk Committee
Mr Albert Wong    -    Non-Executive Director and Deputy Chairman
Qualifications    -    Bachelor of Commerce (UNSW), F Fin, MSDIA, FAICD
Experience and expertise    -    Originally from Hong Kong, Mr Wong has been involved in the investment banking and stockbroking industry for some 35 years. He has and continues to serve on various boards including Founding Chairman of Kyckr Limited and is an adviser to China’s Nanshan Group and is an alternate director representing their interests on the Virgin Australia board. Albert’s philanthropic activities include serving on the boards of UNSW Foundation, The Children’s Medical Research Institute and President and Honorary Life Governor of the Physics Foundation at the University of Sydney.
Date of appointment    -    28 April 2010
Other current directorships    -    None

Former directorships

(in the last 3 years)

   -    Winmar Resources Ltd and Kimberley Diamonds Ltd
Special responsibilities    -    Member of the Audit and Risk Committee and Remuneration Committee

 

Page | 7


DIRECTORS’ REPORT CONTINUED

 

Dr Russell Howard    -    Non-Executive Director
Qualifications    -    PhD
Experience and expertise    -    Dr. Russell Howard is an Australian scientist, executive manager and entrepreneur. He was a pioneer in molecular parasitology and commercialization of “DNA Shuffling”. He is an inventor of 9 patents and has over 150 scientific publications. After his PhD in biochemistry from the University of Melbourne, he held positions at several research laboratories, including the National Institutes of Health in the USA where he gained tenure. In industry, Dr. Howard worked at Schering-Plough’s DNAX Research Institute in Palo Alto, CA; was the President and Scientific Director of Affymax, Inc. and co-founder and CEO of Maxygen, Inc. after its spin-out from GlaxoWellcome. As Maxygen’s CEO, Dr. Howard led its IPO on NASDAQ and a secondary offering, raising US$ 260 million. Maxygen developed and partnered dozens of technology applications and products. After leaving Maxygen in 2008, he started the Cleantech company Oakbio, Inc. and remains involved in several innovative companies in the USA and Australia. He is currently Executive Chairman of NeuClone Pty Ltd and Head of Commercial Strategy for Genomics at Genome.One, both in Sydney.
Date of appointment    -    8 May 2013
Other current directorships    -    None

Former directorships

(in the last 3 years)

   -    Circadian Technologies Ltd
Special responsibilities    -    Member of Remuneration Committee
Mr Pete Meyers    -    Non-Executive Director
Qualifications    -    BS, MBA
Experience and expertise    -    Mr. Meyers is currently the Chief Financial Officer of Motif Bio plc. Previously, Mr Meyers was the Chief Financial Officer of TetraLogic Pharmaceuticals Corporation. Prior to these roles, Mr. Meyers was an accomplished health care investment banker, holding a positions of increasing responsibility at Dillon, Read & Co., Credit Suisse First Boston LLC and, most recently, as Co-Head of Global Health Care Investment Banking at Deutsche Bank Securities Inc. In New York. Mr. Meyers earned a Bachelor of Science degree in finance from Boston College and a Master of Business Administration degree from Columbia Business School. Mr Meyers is currently also the Chairman and President of the Thomas M Brennan Memorial Foundation, Inc.
Date of appointment    -    12 February 2014
Other current directorships    -    None

Former directorships

(in the last 3 years)

   -    None
Special responsibilities    -    Chairman of the Audit & Risk Committee from 21 February 2014
Mr Marc Voigt    -    Executive Director & Chief Executive Officer (CEO)
Qualifications    -    MBA
Experience and expertise    -    Marc has more than 18 years of experience in the financial and biotech industry, having joined the Prima team in 2011 as the General Manager, European Operations based in Berlin, Germany. In May 2012, he became Prima’s Chief Business Officer and in November 2012 its Chief Financial Officer, as well as continuing to focus on its European operations. Having started his career at the Allianz Group working in pension insurances and funds, he moved to net.IPO AG, a publicly-listed boutique investment bank in Frankfurt where he was focused on IPOs and venture capital investments. Marc then worked for a number of years as an investment manager for a midsize venture capital fund based in Berlin, specialising in healthcare. He also gained considerable operational experience while serving in different management roles with Revotar Biopharmaceuticals, Caprotec Bioanalytics and Medical Enzymes AG respectfully, where he handled several successful licensing transactions and financing rounds.
Date of appointment    -    9 July 2014
Other current directorships    -    None

Former directorships

(in the last 3 years)

   -    None
Special responsibilities    -    None

 

Page | 8


DIRECTORS’ REPORT CONTINUED

 

‘Other current directorships’ quoted above are current directorships for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

‘Former directorships (in the last 3 years)’ quoted above are directorships held in the last 3 years for listed entities only and excludes directorships in all other types of entities, unless otherwise stated.

Meetings of directors

The number of meetings of the Company’s Board of Directors and of each board committee held during the year ended 30 June 2016, and the number of meetings attended by each director were:

 

     Full Board      Remuneration
Committee
     Audit and Risk
Committee
 
     Attended      Held      Attended      Held      Attended      Held  

Ms Lucy Turnbull, AO

     4         4         1         1         4         4   

Mr Albert Wong

     4         4         1         1         4         4   

Mr Marc Voigt

     4         4         —           —           —           —     

Dr Russell Howard

     4         4         1         1         —           —     

Mr Pete Meyers

     4         4         —           —           4         4   

Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.

Management directory

Ms Deanne Miller,

General Counsel & Company Secretary

Ms Miller has broad commercial experience having held legal, investment banking, regulatory compliance and tax advisory positions, including, Legal Counsel at RBC Investor Services, Associate Director at Westpac Group, Legal & Compliance Manager at Macquarie Group, Regulatory Compliance Analyst at the Australian Securities and Investment Commission, and Tax Advisor at KPMG. She joined Prima as General Counsel and Company Secretary in October 2012. She has a Combined Bachelor of Laws (Honours) and Bachelor of Commerce, Accounting and Finance (double major) from the University of Sydney. She is admitted as a solicitor in NSW and member of the Law Society of NSW.

Dr Frédéric Triebel,

Chief Scientific Officer & Chief Medical Officer

Frédéric Triebel, MD Ph.D., was the scientific founder of Immutep S.A. (2001) and served as the Scientific and Medical Director at Immutep from 2004. Before starting Immutep, he was Professor in Immunology at Paris University. While working at Institut Gustave Roussy (IGR), a large cancer centre in Paris, he discovered the LAG-3 gene in 1990 and continued working on this research program since then, identifying the functions and medical usefulness of this molecule. He headed a research group at IGR while also being involved in the biological follow-up of cancer patients treated in Phase I/II immunotherapy trials. He was Director of an INSERM Unit from 1991 to 1996.

First trained as a clinical haematologist, Prof. Triebel holds a Ph.D. in immunology (Paris University) and successfully developed several research programs in immunogenetics and immunotherapy, leading to 144 publications and 16 patents.

 

Page | 9


DIRECTORS’ REPORT CONTINUED

 

REMUNERATION REPORT

The Directors are pleased to present the 2016 remuneration report which sets out remuneration information for Prima BioMed Ltd’s Non-Executive Directors, Executive Directors, and key management personnel.

Directors and key management personnel disclosed in this report

 

Name

  

Position

Ms Lucy Turnbull, AO    Non – Executive Chairman
Mr Albert Wong    Non – Executive Deputy Chairman
Dr Russell Howard    Non – Executive Director
Mr Pete Meyers    Non – Executive Director
Mr Marc Voigt    Executive Director & Chief Executive Officer
Key management personnel   
Ms Deanne Miller    General Counsel & Company Secretary
Dr Frédéric Triebel    Chief Scientific Officer & Chief Medical Officer

The remuneration report is set out under the following main headings:

A Principles used to determine the nature and amount of remuneration

B Details of remuneration

C Service agreements

D Share-based compensation

A. Principles used to determine the nature and amount of remuneration

Remuneration Policy

Remuneration of all Executive and Non-Executive Directors and Officers of the Company is determined by the Remuneration Committee.

Remuneration governance

The remuneration committee is a committee of the board. It is primarily responsible for making recommendations to the board on:

 

    Non-Executive Director fees

 

    remuneration levels of executive directors and other key management personnel

 

    the over-arching executive remuneration framework and operation of the incentive plan, and

 

    key performance indicators (KPI) and performance hurdles for the executive team.

Their objective is to ensure that remuneration policies and structures are fair and competitive and aligned with the long-term interests of the Company.

The Corporate Governance Statement provides further information on the role of this committee.

Non-Executive Directors’ fees

Non-executive directors’ fees are determined within an aggregate directors’ fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $500,000 per annum and was approved by shareholders at the annual general meeting on 26 November 2010.

The remuneration paid to each director is inclusive of committee fees. No retirement benefits are payable other than statutory superannuation, if applicable.

The 3rd edition of the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council (Council) specifies that it is generally acceptable for non-executive directors to receive securities as part of their remuneration to align their interest with the interests of other security holder, however non-executive directors should not receive performance-based remuneration as it may lead to bias in their decision making and compromise their objectivity. Accordingly, as a means of attracting and retaining talented individuals, given the fiscal constraints of a development stage company, the Board has chosen to grant equity in the form of performance rights which vest based only on meeting continuous service conditions. Non-Executive Directors do not receive performance based bonuses and prior shareholder approval is required to participate in any issue of equity.

 

Page | 10


DIRECTORS’ REPORT CONTINUED

 

A. Principles used to determine the nature and amount of remuneration (continued)

Executive remuneration policy and framework

In determining executive remuneration, the board aims to ensure that remuneration practices are:

 

    competitive and reasonable, enabling the Company to attract and retain key talent from both the domestic and international market places,

 

    aligned to the Company’s strategic and business objectives and the creation of shareholder value, transparent, and

 

    acceptable to shareholders.

The executive remuneration framework has three components:

 

    base pay and benefits, including superannuation, social security payments and health insurance

 

    short-term performance incentives, and

 

    long-term incentives through participation in employee option plans and the grant of performance rights.

Executive remuneration mix

In accordance with the Company’s objective to ensure that executive remuneration is aligned to Company performance, a portion of the executives’ target pay is “at risk”.

Base pay and benefits

Executives receive their base pay and benefits structured as a total employment cost (TEC) package which may be delivered as a combination of cash and prescribed non-financial benefits at the executives’ discretion. Non-financial benefits include health insurance. Executives are offered a competitive base pay that comprises the fixed component of pay and rewards.

Independent remuneration information is obtained from sources such as independent salary surveys to ensure base pay is set to reflect the market for a comparable role. Base pay for executives is reviewed annually to ensure the executive’s pay is competitive with the market.

In order to obtain the experience required to achieve the Company’s goals, it has been necessary to recruit management from the international marketplace. Accordingly, executive pay is also viewed in light of the market from which our executives are recruited in order to be competitive with the relevant market.

An executive’s pay is also reviewed on promotion. There is no guaranteed base pay increases included in any executives’ contracts. Superannuation benefits are paid on behalf of Australian based executives.

At this stage of the Company’s development, shareholder return is enhanced by the achievement of milestones in the development of the Company’s products. The Company’s Remuneration Policy is not directly based on its financial performance, rather on industry practice, given the Company operates in the biotechnology sector and the Company’s primary focus is research activities with a long term objective of developing and commercialising the research & development results. At senior management level, performance pay is partly determined by achieving successful capital raising milestones to support its clinical programs and the achievement of clinical milestones in a manner that aligns the executive’s performance pay with value creation for shareholders.

The Company envisages its earnings will remain negative whilst the Company continues in the research and development phase. Shareholder wealth reflects this speculative and volatile market sector.

Short-term incentives

Executives have the opportunity to earn an annual short-term incentive (STI) depending on their accountabilities and impact on the organisation. STIs may be awarded at the end of a performance review cycle for meeting group and individual milestone achievements that align to the Company’s strategic and business objectives at the discretion of the board.

The remuneration committee is responsible for determining the amount of STI to be awarded. To assist in this assessment, the committee receives reports on performance from management. The committee has the discretion to adjust short-term incentives downwards in light of unexpected or unintended circumstances.

In the current pre-commercialisation stage of the Company’s development, it is the Board’s preference to issue non-cash STIs except in unusual circumstances.

 

Page | 11


DIRECTORS’ REPORT CONTINUED

 

A. Principles used to determine the nature and amount of remuneration (continued)

Non-cash STIs are granted under the Executive Incentive Plan (EIP) which was approved by shareholders at the 2015 Annual General Meeting. In light of our increasing operations globally the Board reviewed the Company’s incentive arrangements to ensure that it continued to retain and motivate key executives in a manner that is aligned with members’ interests. As a result of that review, this ‘umbrella’ EIP was adopted to allow eligible executives to apply for the grant of performance rights and/or options. Equity incentives granted in accordance with the EIP Rules are designed to provide meaningful remuneration opportunities and will reflect the importance of retaining a world-class management team. The Company endeavours to achieve simplicity and transparency in remuneration design, whilst also balancing competitive market practices in the United States, France, Germany, and Australia.

Long-term incentives

Long-term incentives (LTI) are also provided to certain employees via the EIP which replaces the Global Employee Share Option Plan (GESOP) and the Employee Share Option Plan (ESOP). The LTI is intended to:

 

    reward high performance and to encourage a high performance culture

 

    align the interest of executives and senior management with those of the company and shareholders

 

    provide the company with the means to complete for talented staff by offering remuneration that includes an equity-based component, like many of its competitors.

 

    Assist with the attraction and retention of key personnel.

Executives and senior managers eligible to participate in the LTI are considered by the Board to be in roles that have the opportunity to significantly influence long-term shareholder value.

The Company may issue eligible participants with performance rights which entitle the holder to subscribe for or be transferred one fully paid ordinary share of the Company for no consideration. Equity-settled performance rights carry no dividend or voting rights.

The following vesting profile is in place for the LTI:

 

Tranche

  

Performance measurement period

   Vesting date    % vested  
1    1 September 2014 to 1 October 2017    2 October 2017      —     
2    1 September 2014 to 30 September 2018    2 October 2018      —     

The performance rights are issued to executive directors and employees for no consideration and are subject to the continuing employment and lapse upon resignation, redundancy or termination, or failure to achieve the specified performance vesting condition. The performance rights will immediately vest and become exercisable if in the Board’s opinion a vesting event occurs (as defined in the plan rules) such as a takeover bid or winding up of the Company. If the performance rights vest and are exercised, the employee receives ordinary shares in the Company for no consideration.

The performance vesting condition for performance rights issued is relative to the Total Shareholder Return (TSR). For Tranche 1, up to 75% of the Performance Rights granted will vest if the Company achieves a Compound Annual Growth Rate (CAGR) in Total Shareholder Return (TSR) of 20% p.a. over the period from grant date to 30 September 2017. For Tranche 2, up to 25% of the performance rights granted will vest if the Company achieves a compound annual growth rate in the Total Shareholder Return (TSR) over the period from grant date to 31 August 2018. Any performance rights which fail to meet Tranche 1 outperformance hurdles will not lapse but may still vest (retested) if the performance condition for Tranche 2 is met.

Certain employees hold options which were granted under the previous GESOP or ESOP plans. The GESOP was approved by shareholders at the 2011 annual general meeting and was designed to provide long-term incentives for executives to deliver long-term shareholder returns.

Under GESOP, participants were granted options which vested after 12 months if the employees were still employed by the group at the end of the vesting period. Participation in the plan is at the board’s discretion and no individual had a contractual right to participate in the plan or to receive any guaranteed benefits.

 

Page | 12


DIRECTORS’ REPORT CONTINUED

 

A. Principles used to determine the nature and amount of remuneration (continued)

The establishment of the ESOP Plan was approved by shareholders on 30 April 2010. The Company has ceased to issue options under the ESOP. The ESOP was designed to provide long-term incentives for employees excluding directors to deliver long-term shareholder returns. Participation in the plan was at the board’s discretion and no individual had a contractual right to participate in the plan or to receive any guaranteed benefits. Options under the ESOP vested on grant date.

Voting and comments made at the Company’s 2015 Annual General Meeting

The Company received a 82.72% “yes” vote on its remuneration report for the 2015 financial year. The Company addressed specific feedback at the AGM or throughout the year on its remuneration practices.

B. Details of remuneration

Amounts of remuneration

Details of the remuneration of the directors and key management personnel (defined as those who have the authority and responsibility for planning, directing and controlling the major activities of the consolidated entity) are set out in the following tables.

 

30-Jun-16    Short-term Benefits     

Post
Employment

Benefits

    

Long-term

Benefits

            Share-based
Payments
    

Total

 
     Cash salary
and fees
     Cash
bonus
     Non
Monetary
     Super-
annuation
     Long service
leave
     Termi-
nation
benefits
     Performance
Rights
    Options
Issued
        
     $      $      $      $      $      $      $     $      $  

Ms L Turnbull, AO

     137,520         —           —           13,064         —           —           —          —           150,584   

Mr A Wong

     84,040         —           —           7,984         —           —           —          —           92,024   

Dr R Howard

     90,000         —           —           —           —           —           —          —           90,000   

Mr Pete Meyers1

     —           —           95,547         —           —           —           —          —           95,547   

Mr M Voigt

     347,520         90,616         —           —           —           —           925,347 2      —           1,363,483   

Other Key Management Personnel

  

             

Dr F Triebel

     229,387         —           —           —           —           —           382,964 2      —           612,351   

Ms D Miller

     175,510         50,000         —           21,423         5,817         —           516,332 2      —           769,082   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
     1,063,977         140,616         95,547         42,471         5,817         —           1,824,643        —           3,173,071   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

1 Mr Pete Meyers was issued 7,720,588 performance rights in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 14 November 2014.

The first tranche of his performance rights vested to him i.e. 1,715,686 converted to ordinary shares immediately after the shareholder approval was received. (Being for service from date of appointment to 30 September 2014). The second tranche of 2,573,529 performance rights vested on 1 October 2015. (Being for service from 1 October 2014 to 30 September 2015); The third tranche of 2,573,529 performance rights is due to vest on 1 October 2016. (Being for service from 1 October 2015 to 30 September 2016); The final 857,844 vest on 1 October 2017. (Being for service from 1 October 2016 to 31 January 2017).

 

2  The majority of the Performance Rights vested as follows:

 

    1/3 vested on 5 August, 2015 to Mr M Voigt and Ms D Miller and on 31 January 2016 for Dr F Triebel.

 

    1/3 vested on 5 August, 2016 to Mr M Voigt and Ms D Miller and Dr F Triebel.

 

    1/3 to vest on 5 August, 2017 to Mr M Voigt and Ms D Miller and Dr F Triebel.

Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s employment contract.

For vesting details of the other Performance Rights please refer to Section D on Share-based compensation below.

 

Page | 13


DIRECTORS’ REPORT CONTINUED

 

B. Details of remuneration (continued)

 

 

30-Jun-15    Short-term Benefits     

Post

Employment

Benefits

    

Long-

term

Benefits

    

Termi-
nation
benefits

    

Share-based

Payments

     Total  
     Cash salary
and fees
     Cash
bonus
     Non
Monetary
     Super-
annuation
     Long
service
leave
        Performance
Rights
     Options
Issued
        
     $      $      $      $      $      $      $      $      $  

Ms L Turnbull, AO

     137,520         —           —           13,064         —           —           —           —           150,584   

Mr A Wong

     84,040         —           —           7,984         —           —           —           —           92,024   

Dr R Howard

     90,000         —           —           —           —           —           —           —           90,000   

Mr Pete Meyers2

     —           —           134,439         —           —           —           —           —           134,439   

Mr M Voigt1

     285,666         60,180         —           —           —           —           213,085         5,999         564,930   

Other Key Management Personnel

  

              

Dr S Gargosky

     356,153         —           —           —           —           —           119,295         5,939         481,387   

Dr F Triebel3

     130,213         —           —           —           —           —           —           —           130,213   

Ms D Miller

     181,666         50,000         —           22,008         6,231         —           119,295         3,389         382,589   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     1,265,258         110,180         134,439         43,056         6,231         —           451,675         15,327         2,026,166   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

1 Mr Marc Voigt replaced Mr Matthew Lehman as Executive Director and Chief Executive Officer on 9 July 2014.
2 Mr Pete Meyers was issued 7,720,588 performance rights in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 14 November 2014.

The first tranche of his performance rights vested to him i.e. 1,715,686 converted to ordinary shares immediately after the shareholder approval was received. (Being for service from date of appointment to 30 September 2014). The second tranche of 2,573,529 performance rights vested on 1 October 2015. (Being for service from 1 October 2014 to 30 September 2015); The third tranche of 2,573,529 performance rights is due to vest on 1 October 2016. (Being for service from 1 October 2015 to 30 September 2016); The final 857,844 vest on 1 October 2017. (Being for service from 1 October 2016 to 31 January 2017).

 

3 Dr Frederic Triebel joined the company as Chief Scientific Officer and Chief Medical Officer on 12 December 2014.

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

 

Name    Fixed remuneration     At risk – STI     At risk – LTI  
     2016     2015     2016     2015     2016     2015  

Non-Executive directors

  

Ms L Turnbull, AO

     100     100     —          —          —          —     

Mr A Wong

     100     100     —          —          —          —     

Dr R Howard

     100     100     —          —          —          —     

Mr Pete Meyers

     100     100     —          —          —          —     

Executive directors

            

Mr M Voigt

     26     50     9     32     65     18

Other Key Management Personnel

            

Dr F Triebel

     38     100     2     —          60     —     

Ms D Miller

     26     55     10     35     64     10

 

Page | 14


DIRECTORS’ REPORT CONTINUED

 

C. Service agreements

Remuneration and other terms of employment for key management personnel are formalised in service agreements. The service agreements specify the components of remuneration, benefits and notice periods. Participating in the STI and LTI plans is subject to the Board’s discretion. Compensation paid to key management personnel is determined by remuneration committee on an annual basis with reference to market salary surveys. Determination of compensation for Non-Executive Directors is detailed on page 13, 14, 16 and 17 on the directors’ report. Details of the current terms of these agreements are below. Unless stated otherwise, all salaries quoted below are as at 30 June 2016.

 

Mr Marc Voigt    -    Executive Director & CEO
Agreement commenced:    -    9 July 2014
Details    -   

The initial term is for a period of 3 years. Each party is to provide at least 6 months’ notice of its intention to extend the term of the contract.

The contract can be terminated by either party upon at least 3 months’ notice if notice is provided within the first 6 months’ of the commencement date. Thereafter it can be terminated by either party upon 6 months’ notice.

Prima may make payments in lieu of the period of notice, or for any unexpired part of that notice period.

Base salary including superannuation    -      EUR 215,000

Ms Deanne Miller

   -    General Counsel & Company Secretary
Agreement commenced:    -    17 October 2012
Details    -   

The agreement can be terminated with 3 months notice.

The termination terms are payment of base salary in lieu of notice period.

Base salary including superannuation    -    AUD 219,000

Dr Frédéric Triebel

   -    Chief Scientific Officer & Chief Medical Officer
Agreement commenced:    -    12 December 2014
Details    -   

Each of the parties may terminate the employment contract and the present Amendment, subject to compliance with the law and the Collective Bargaining Agreement (“CBA”) and notably to a 3-month notice period as set forth in the CBA.

The party which fails to comply with the notice period provisions shall be liable to pay the other an indemnity equal to the salary for the remainder of the notice period.

Base salary including superannuation    -    EUR 170,000

Key management personnel have no entitlement to termination payments in the event of removal for misconduct or gross negligence.

D. Share-based compensation

Issue of shares

There were no shares issued to directors and key management personnel as part of compensation during the year ended 30 June 2016. During the year 26,977,412 performance rights and options were exercised and converted into ordinary shares.

Options

There are no options which were granted in prior years which affected remuneration in this financial year or future reporting years.

Options granted under the plan carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share.

 

Page | 15


DIRECTORS’ REPORT CONTINUED

 

Options (continued)

 

Shares provided on exercise of remuneration options

No ordinary shares in the Company have been issued as a result of the exercise of remuneration options by a director.

Details of bonuses and share-based compensation

For each cash bonus and grant of performance rights and options included in the tables on pages 16 and 17, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the vesting criteria is set out below.

Performance rights

The terms and conditions of each grant of performance rights affecting remuneration of key management personnel in this financial year or future reporting years are as follows:

 

Grant date *    Type of performance right
granted
    

Vesting date and

exercisable date

     Number of
performance
rights
    

Value

per right at
grant date

$

    

%

Vested and
exercised 30

June 2016

 

19 Sep 14(a)

     STI         1 Oct 15         2,450,980         0.042         100   

19 Sep 14(b)

     LTI – Tranche 1         2 Oct 17         2,757,353         0.044         —     

19 Sep 14(b)

     LTI – Tranche 2         1 Oct 18         919,118         0.044         —     

14 Nov 14(a)

     STI         1 Oct 15         4,068,627         0.037         100   

14 Nov 14(b)

     LTI – Tranche 1         2 Oct 17         9,191,177         0.038         —     

14 Nov 14(b)

     LTI – Tranche 2         1 Oct 18         3,063,725         0.040         —     

14 Nov 14(c)

     Fixed short-term benefits         1 Oct 15         2,573,529         0.037         100   

14 Nov 14(c)

     Fixed short-term benefits         1 Oct 16         2,573,529         0.037         —     

14 Nov 14(c)

     Fixed short-term benefits         1 Oct 17         857,844         0.037         —     

5 Aug 15(d)

     LTI         5 Aug 15         10,666,666         0.047         100   

5 Aug 15(d)

     LTI         31 Jan 16         3,333,333         0.047         100   

5 Aug 15(d)

     LTI         5 Aug 16         14,000,000         0.047         —     

5 Aug 15(d)

     LTI         5 Aug 17         14,000,001         0.047         —     

7 Mar 16(e)

     STI         5 Aug 17         1,486,326         0.041         —     

 

(a) Performance hurdles based on individual KPIs have been set for performance rights granted.

 

(b) Performance hurdle representing 100% of the total number of performance rights granted – Compound Annual Growth Rate (CAGR) in the share price over the measurement period of at least 20%.

 

(c) No performance hurdles have been set with respect to these performance rights granted.

 

(d) No performance hurdles have been set with respect to these performance rights granted.

 

(e) Performance hurdles based on individual KPIs have been set for performance rights granted.

 

* In addition to the performance hurdles set, the participant must be employed by the company on the vesting date.

Performance rights granted under the plan carry no dividend or voting rights.

When exercisable, each performance right is convertible into one ordinary share.

Details of performance rights over ordinary shares in the Company provided as remuneration to each director and each of the key management personnel are set out below. The table further shows the percentages of the options granted under the Employee Option Plan that vested and/or were forfeited during the year.

 

Page | 16


DIRECTORS’ REPORT CONTINUED

 

Details of bonuses and share-based compensation

For each cash bonus and grant of performance rights and options included in the tables on page 16, the percentage of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the vesting criteria is set out below.

 

Name

   Cash bonus      Share-based compensation benefits (options & performance rights)  
     Paid
%
     For-feited
%
     Year
granted
    No Granted     

Value of
options/
rights at
grant
date

$

     Vested
%
     Number of
options/
rights
vested
during the
year
    

For-

feited
%

    

Financial years in

which rights and

options may vest

 

Mr P Meyers

     —           —           2014     7,720,588         285,662         55.56         2,573,529         —           2015, 2016, 2017 & 2018   

Mr M Voigt

     100         —          

 

2015

2016

** 

*** 

   

 

16,323,529

20,000,000

  

  

    

 

623,051

940,000

  

  

    

 

24.92

33.33

  

  

    

 

4,068,627

6,666,666

  

  

    

 

—  

—  

  

  

    

 

2016, 2018 & 2019

2016, 2017 & 2018

  

  

Mr F Triebel

     —           —           2016 ****      11,486,326         470,000         29.02         3,333,333         —           2016, 2017 & 2018   

Ms D Miller

     100         —          

 

2015

2016

** 

*** 

   

 

6,127,451

12,000,000

  

  

    

 

265,375

564,000

  

  

    

 

40

33.33

  

  

    

 

2,450,980

4,000,000

  

  

    

 

—  

—  

  

  

    

 

2016, 2018 & 2019

2016, 2017 & 2018

  

  

 

* 7,720,588 performance rights in lieu of cash for his services as a non-executive director, in accordance with shareholder approval received at the AGM on 14 November 2014.

The first tranche of his performance rights vested to him i.e. 1,715,686 converted to ordinary shares immediately after the shareholder approval was received. (Being for service from date of appointment to 30 September 2014). The second tranche of 2,573,529 performance rights vested on 1 October 2015. (Being for service from 1 October 2014 to 30 September 2015); The third tranche of 2,573,529 performance rights is due to vest on 1 October 2016. (Being for service from 1 October 2015 to 30 September 2016); The final 857,844 vest on 1 October 2017. (Being for service from 1 October 2016 to 31 January 2017).

 

** Performance rights were granted under the EIP. Short term incentive performance rights vest on 1 October 2015. Long term incentive performance rights vest in two tranches as follows:

 

    75% to vest on 2 October, 2017

 

    25% to vest on 1 October, 2018

Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s employment contract.

 

*** Performance rights were granted under the EIP. Long term incentive performance rights vest in three tranches as follows:

 

    1/3 vested on 5 August, 2015

 

    1/3 vested on 5 August, 2016

 

    1/3 to vest on 5 August, 2017

Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s employment contract.

 

**** Performance rights were granted under the EIP. 1,486,326 short term incentive performance rights vest on 5 August 2017 subject to meeting pre-determined KPIs. 10,000,000 long term incentive performance rights vest in three tranches as follows:

 

    1/3 vested on 31 January, 2016

 

    1/3 tvested on 5 August, 2016

 

    1/3 to vest on 5 August, 2017

Vesting is contingent upon the employee being continuously employed in good standing through the vesting period. The performance rights are subject to accelerated vesting according to agreed terms in each person’s employment contract.

Equity instruments held by key management personnel

The tables on the following page show the number of:

 

(i) Options over ordinary shares in the company

 

(ii) Performance rights over ordinary shares in the company

 

(iii) Shares in the company

That were held during the financial year by key management personnel of the group, including their close family members and entities related to them.

There were no shares granted during the reporting period as compensation.

 

(i) Options holdings

 

2016    Balance at
start of the
year
     Granted      Exercised      Other
Changes1
    Balance at
end of the
year
     Vested and
exercisable
     Unvested  

Options over ordinary shares

              

Ms Lucy Turnbull, AO

     4,439,894         —           —           —          4,439,894         4,439,894         —     

Mr Albert Wong

     —           —           —           —          —           —           —     

Dr Russell Howard

     —           —           —           —          —           —           —     

Mr Pete Meyers

     —           —           —           —          —           —           —     

Mr Marc Voigt

     1,171,754         —           —           (450,000     721,754         721,754         —     

Ms Deanne Miller

     121,212         —           —           —          121,212         121,212         —     

Dr Frédéric Triebel2

     24,000,600         —           —           —          24,000,600         24,000,600         —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     29,733,460         —           —           (450,000     29,283,460         29,283,460         —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

 

1  The above options during the year ended 30 June 2016 lapsed.
2  This amount represents warrants which were issued to Dr Frédéric Triebel upon the acquisition of Immutep.

 

Page | 17


DIRECTORS’ REPORT CONTINUED

 

(ii) Performance Rights holdings

 

2016    Balance at
start of the
year
     Granted      Exercised     Other
Changes*
     Balance at
end of the
year
     Vested
and
exercisable
     Unvested  

Options over ordinary shares

             

Ms Lucy Turnbull, AO

     —           —           —          —           —           —           —     

Mr Albert Wong

     —           —           —          —           —           —           —     

Dr Russell Howard

     —           —           —          —           —           —           —     

Mr Pete Meyers

     6,004,902         —           (2,573,529     —           3,431,373         —           3,431,373   

Mr Marc Voigt

     16,323,529         20,000,000         (10,735,293     —           25,588,236         —           25,588,236   

Ms Deanne Miller

     6,127,451         12,000,000         (6,450,980     —           11,676,471         —           11,676,471   

Dr Frédéric Triebel

     —           11,486,326         (3,333,333     —           8,152,993         —           8,152,993   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 
     28,455,882         43,486,326         (23,093,135     —           48,849,073         —           48,849,073   
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

 

 

(iii) Ordinary Share holdings

 

2016    Balance at start
of the year
    Received during the
year on exercise of
performance rights
     Received during the
year on the exercise
of options
     Other changes
during the year
    Balance at end
of the year
 

Ordinary shares

            

Ms Lucy Turnbull, AO

     20,059,576        —           —           300,000        20,359,576   

Mr Albert Wong

     3,537,500        —           —           300,000        3,837,500   

Dr Russell Howard

     —          —           —           —          —     

Mr Pete Meyers

     1,715,686        2,573,529         —           —          4,289,215   

Mr Marc Voigt

    

 

870,000

150

  

   
 
10,735,293
—  
  
  
    

 

—  

—  

  

  

    

 

—  

—  

  

  

   

 

11,605,293

150

  

Ms Deanne Miller

     20,924        6,450,980         —           (1,520,924     4,950,980   

Dr Frédéric Triebel

     9,311,383        3,333,333         —           —          12,644,716   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total ordinary shares

     35,515,219        23,093,135         —           (920,924     57,687,430   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total ADR

     150        —           —           —          150   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

* American Depository Receipts (ADR) traded on the NASDAQ

Shares under option

Unissued ordinary shares of Prima BioMed Ltd under option at the date of this report are as follows:

 

Date options granted    Expiration Date      Exercise Price      Number      Listed/Unlisted
Options
 

19 June 2013*

     19 June 2017       $ 0.200         77,378,693         Listed   

23 December 2013

     30 June 2018       $ 0.0774         1,515,752         Unlisted   

24 January 2015

     30 June 2018       $ 0.0774         165,116         Unlisted   

12 December 2014

     12 December 2018       $ 0.05019         147,628,500         Unlisted   

5 August 2015

     4 August 2020       $ 0.0237         371,445,231         Unlisted   

30 October 2015

     30 October 2020       $ 0.057         793,103         Unlisted   

7 March 2016

     7 March 2021       $ 0.040         1,026,272         Unlisted   

5 August 2015

     4 August 2025       $ 0.025         8,475,995         Unlisted   
           608,428,662      

No option holder has any right under the options to participate in any other share issue of the Company or any other entity.

 

* Included in these options were options purchased by the directors and the five most highly remunerated employees during the year.

 

Page | 18


DIRECTORS’ REPORT CONTINUED

 

Corporate Governance Statement

The Board is committed to achieving and demonstrating the highest standards of corporate governance. The Board continues to refine and improve the governance framework and practices in place to ensure they meet the interests of shareholders.

The Company complies with the Australian Securities Exchange (ASX) Corporate Governance Council’s Corporate Governance Principles and Recommendations – 3RD edition (the Principles). A copy of the company’s Corporate Governance Statement is available at the company’s website at the following address http://primabiomed.com.au/about_us/corporate_governance.php.

Indemnity and insurance of officers

During the financial year, the Company paid a premium to insure the directors and officers of the Company and its controlled entities.

The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings.

This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company.

Indemnity and insurance of auditor

The Company has not during or since 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.

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 part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the Company and/or the group are important.

The board of directors has considered the position and, in accordance with advice received from the audit committee, is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

 

    all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the auditor

 

    none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants.

 

Page | 19


DIRECTORS’ REPORT CONTINUED

 

During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related practices and non-related audit firms:

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

PricewaterhouseCoopers Australia

  

Other audit and assurance services in relation to regulatory filings overseas

     209,741         —     

Other services

     

Network firm of PricewaterhouseCoopers Australia

     

Due Diligence services

     —           66,986   
  

 

 

    

 

 

 

Total remuneration for non-audit services

     209,741         66,986   
  

 

 

    

 

 

 

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21.

Auditor

PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors.

On behalf of the directors

 

LOGO

Lucy Turnbull, AO

Chairman

Sydney

31 August 2016

 

Page | 20


LOGO

Auditor’s Independence Declaration

As lead auditor for the audit of Prima BioMed Ltd for the year ended 30 June 2016, 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 Prima BioMed Ltd and the entities it controlled during the period.

 

LOGO   
Rod Dring    Sydney
Partner    31 August 2016
PricewaterhouseCoopers   

PricewaterhouseCoopers, ABN 52 780 433 757

Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171

T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

 

Page | 21


Contents

 

Financial statements

     23   

Consolidated statement of comprehensive income

     24   

Consolidated balance sheet

     25   

Consolidated statement of changes in equity

     26   

Consolidated statement of cash flows

     27   

Notes to the consolidated financial statements

     28   

Directors’ declaration

     68   

Independent auditor’s report to the members of Prima BioMed Ltd.

     69   

General information

These financial statements are the consolidated financial statements of the consolidated entity consisting of Prima BioMed Ltd and its subsidiaries. The financial statements are presented in the Australian currency.

Prima BioMed Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 12

95 Pitt Street

Sydney NSW 2000

 

Page | 22


FINANCIAL STATEMENTS

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities on pages 3 to 5 and in the directors’ report on pages 6 to 20, both of which are not part of these financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 31 August 2016. The directors have the power to amend and reissue the financial report.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information are available on our website: www.primabiomed.com.au

 

Page | 23


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2016

 

     Note    Consolidated  
        30 June 2016     30 June 2015  
        $     $  

Revenue

       

License revenue

        175,052        —     

Other income

       

Miscellaneous income

        702,743        168,322   

Grant income

        887,083        1,167,190   

Net gain on foreign exchange

        —          538,248   

Interest income

        264,043        219,107   
     

 

 

   

 

 

 

Total revenue and other income

        2,028,921        2,092,867   
     

 

 

   

 

 

 

Expenses

       

Research & development and intellectual property

   5      (7,059,528     (8,952,447

Corporate administrative expenses

   5      (6,982,629     (5,723,106

Depreciation and amortisation expense

   5      (1,993,093     (1,341,202

Share Based Payment to strategic investor

   15      (47,468,071     —     

Net loss on foreign exchange

   5      (563,890     —     

Finance cost

   5      (8,199     (18,364,804

Changes in fair value of comparability milestone

   5      (542,075     —     

Net change in fair value of convertible note liability

   15      (607,637     —     

Loss on disposal of assets

   5      —          (5,160
     

 

 

   

 

 

 

Loss before income tax expense

        (63,196,201     (32,293,852
     

 

 

   

 

 

 

Income tax benefit

   6      1,181,017        142,156   
     

 

 

   

 

 

 

Loss after income tax expense for the year

        (62,015,184     (32,151,696
     

 

 

   

 

 

 

Other Comprehensive Income/(Loss)

       

Items that may be reclassified to profit or loss

       

Exchange differences on the translation of foreign operations

        306,997        (56,907

Other comprehensive income/(loss) for the year, net of tax

        306,997        (56,907
     

 

 

   

 

 

 

Total comprehensive loss for the year

        (61,708,187     (32,208,603
     

 

 

   

 

 

 

Loss for the year is attributable to

       

Owners of Prima BioMed Ltd

        (62,015,184     (32,151,696
     

 

 

   

 

 

 
        (62,015,184     (32,151,696
     

 

 

   

 

 

 

Total comprehensive loss for the year is attributable to

       

Owners of Prima BioMed Ltd

        (61,708,187     (32,208,603
     

 

 

   

 

 

 
        (61,708,187     (32,208,603
     

 

 

   

 

 

 
          Cents     Cents  

Basic loss per share

   30      (2.77     (2.02

Diluted loss per share

   30      (2.77     (2.02

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes

 

 

Page | 24


CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2016

 

     Note    Consolidated  
        30 June 2016     30 June 2015  
        $     $  

ASSETS

       

Current assets

       

Cash and cash equivalents

   7      20,879,548        6,759,615   

Current receivables

   8      168,300        315,453   

Other current assets

   9      623,020        948,003   
     

 

 

   

 

 

 

Total current assets

        21,670,868        8,023,071   
     

 

 

   

 

 

 

Non-current assets

       

Plant and equipment

   10      31,500        297,957   

Intangibles

   11      20,851,699        22,662,417   
     

 

 

   

 

 

 

Total non-current assets

        20,883,199        22,960,374   
     

 

 

   

 

 

 

TOTAL ASSETS

        42,554,067        30,983,445   
     

 

 

   

 

 

 

Current liabilities

       

Trade and other payables

   13      1,422,798        2,770,049   

Borrowings

   14      —          1,508,473   

Current tax payable

        21,549        20,837   

Employee benefits

   16      27,694        80,304   
     

 

 

   

 

 

 

Total current liabilities

        1,472,041        4,379,663   
     

 

 

   

 

 

 

Non-current liabilities

       

Convertible note liability

   15      5,027,168        —     

Employee benefits

   17      43,151        35,706   

Deferred tax liability

   12      694,194        1,878,333   
     

 

 

   

 

 

 

Total non-current liabilities

        5,764,513        1,914,039   
     

 

 

   

 

 

 

TOTAL LIABILITIES

        7,236,554        6,293,702   
     

 

 

   

 

 

 

NET ASSETS

        35,317,513        24,689,743   
     

 

 

   

 

 

 

EQUITY

       

Contributed equity

   18      194,530,932        179,878,436   

Reserves

   19      63,258,187        5,267,729   

Accumulated losses

        (222,471,606     (160,456,422
     

 

 

   

 

 

 

Equity attributable to the owners of Prima BioMed Ltd

        35,317,513        24,689,743   
     

 

 

   

 

 

 

TOTAL EQUITY

        35,317,513        24,689,743   
     

 

 

   

 

 

 

The above consolidated balance sheet should be read in conjunction with the accompanying notes

 

Page | 25


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2016

 

Consolidated    Contributed
equity
     Reserves     Accumulated
losses
    Total equity  
     $      $     $     $  

Balance at 1 July 2014

     149,014,372         1,882,674        (128,304,726     22,592,320   
  

 

 

    

 

 

   

 

 

   

 

 

 

Other comprehensive loss for the year, net of tax

     —           (56,907     —          (56,907

Loss after income tax expense for the year

     —           —          (32,151,696     (32,151,696
  

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the year

     —           (56,907     (32,151,696     (32,208,603
  

 

 

    

 

 

   

 

 

   

 

 

 

Transactions with owners in their capacity as owners:

         

Contributions of equity, net of transaction costs

     30,800,584         2,201,037        —          33,001,621   

Share based payment

     —           565,606        —          565,606   

Employee share based payment

     —           738,799        —          738,799   

Exercise of vested performance rights

     63,480         (63,480     —          —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 30 June 2015

     179,878,436         5,267,729        (160,456,422     24,689,743   
  

 

 

    

 

 

   

 

 

   

 

 

 

Other comprehensive gain for the year, net of tax

     —           306,997        —          306,997   

Loss after income tax expense for the year

     —           —          (62,015,184     (62,015,184
  

 

 

    

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the year

     —           306,997        (62,015,184     (61,708,187
  

 

 

    

 

 

   

 

 

   

 

 

 

Transactions with owners in their capacity as owners:

         

Contributions of equity, net of transaction costs

     13,477,930         —          —          13,477,930   

Issue of convertible notes

     —           9,331,297        —          9,331,297   

Share based payment

     —           82,242        —          82,242   

Share based payment to strategic investor

     —           47,468,071        —          47,468,071   

Employee share based payment

     —           1,976,417        —          1,976,417   

Exercise of vested performance rights

     1,174,566         (1,174,566     —          —     
  

 

 

    

 

 

   

 

 

   

 

 

 

Balance at 30 June 2016

     194,530,932         63,258,187        (222,471,606     35,317,513   
  

 

 

    

 

 

   

 

 

   

 

 

 

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes

 

Page | 26


CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2016

 

     Note    Consolidated  
        30 June 2016     30 June 2015  
        $     $  

Cash flows related to operating activities

       

Payments to suppliers and employees (inclusive of goods and services tax)

        (13,336,202     (15,276,020

Miscellaneous income

        702,743        168,322   

License revenue

        175,052        —     

License fee received

        —          5,774,784   

Interest received

        264,043        380,650   

Tax paid

        (2,410     (1,908

Grant income

        887,083        1,167,190   
     

 

 

   

 

 

 

Net cash (outflow) from operating activities

        (11,309,691     (7,786,982
     

 

 

   

 

 

 

Cash flows related to investing activities

       

Funds from held-to-maturity investments

        —          9,000,000   

Proceeds from disposal of plant and equipment

        129,705        —     

Payments for plant and equipment

        (27,130     (48,499

Payment for acquisition of subsidiary, net of cash acquired

        —          (20,912,912
     

 

 

   

 

 

 

Net cash (outflow) from investing activities

        102,575        (11,961,411
     

 

 

   

 

 

 

Cash flows related to financing activities

       

Proceeds from issue of shares and options*

   18      13,761,075        7,744,648   

Proceeds from issue of convertible notes

   15      13,750,828        —     

Proceeds from borrowings

        —          3,925,405   

Repayment of borrowings*

        (1,508,473     (237,308

Share issue transaction costs

        (283,146     (164,316
     

 

 

   

 

 

 

Net cash inflows from financing activities

        25,720,284        11,268,429   
     

 

 

   

 

 

 

Net (decrease) in cash and cash equivalents

        14,513,168        (8,479,964

Effect of exchange rate on cash and cash equivalent

        (393,235     1,039,537   

Cash and cash equivalents at the beginning of the year

        6,759,615        14,200,042   
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the year

   7      20,879,548        6,759,615   
     

 

 

   

 

 

 

 

* During the prior year convertible notes in the amount of $2,853,883 were converted into equity. No impact has been recorded on the cashflow statement for this conversion.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes

 

Page | 27


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of the Company and its subsidiaries.

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. Prima BioMed Ltd is a for-profit entity for the purpose of preparing the financial statement.

(i) Compliance with IFRS

The consolidated financial statements of the Prima BioMed Ltd group also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

(ii) New and amended standards adopted by the group

None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2015 affected any of the amounts recognised in the current period or any prior periods.

(iii) Historical cost convention

The financial statements have been prepared under the historical cost convention, except for, where applicable, financial assets and liabilities (including derivative financial instruments) at fair value through profit or loss.

(iv) Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.

(b) Principles of consolidation

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker (CODM), who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is the Prima BioMed Ltd’s functional and presentation currency.

 

Page | 28


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(d) Foreign currency translation (continued)

 

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that relate to borrowings are presented in the income statement, within finance costs. All other foreign exchange gains and losses are presented separately in the income statement on a net basis.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.

(iii) Group companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

    assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet

 

    income and expenses for each income statement and statement of comprehensive income are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

    all resulting exchange differences are recognised in other comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

(e) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the group’s activities as described below. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(i) License revenue

License revenue is recognized on receipt or where there is reasonable assurance that the license revenue will be received.

Other income

(i) Interest income

Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

 

Page | 29


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(e) Revenue recognition (continued)

 

(ii) Grant income

Grants from the governments, including Australian Research and Development Rebates, France’s Crédit d’Impôt Recherche, and Saxony Development Bank (“Sächsische Aufbaubank”) from Germany, are recognised at their fair value when there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Government grants relating to operating costs are recognised in the Statements of Comprehensive Income as grant income.

(iii) Miscellaneous income

 

  a. Research collaboration income

The group receives income from undertaking research collaborations with are recognised when the services have been provided.

 

  b. Research material sales

The group receives income from the sale of materials supplied to other researchers in order to conduct further studies on LAG-3 technologies. Income is recognised at the point at which the ownership of material is transferred to third parties.

(f) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill.

Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.

Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Prima BioMed Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

 

Page | 30


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(g) Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, liabilities incurred to the former owners of the acquired business and the equity interests issued by the group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration agreement, and the fair value of any pre-existing equity interest in the subsidiary.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The group recognises and non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.

Acquisition-related costs are expensed as incurred.

The excess of the consideration transferred and the amount of any non-controlling interests in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is required as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit and loss as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised in profit and loss.

(h) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds it recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(i) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

 

Page | 31


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(j) Current receivables

Current receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Amount receivable in relation to Goods and Services Tax (GST) and Value Added Tax (VAT) are due from the local taxation authorities and recorded based on the amount of GST and VAT paid on purchases. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Collectability of current receivables is reviewed on an ongoing basis. Receivables which are known to be uncollectible are written off by reducing the carrying amount. An allowance account is used when there is objective evidence that the group will not be able to collect all amounts due.

(k) Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired, as well as through the amortisation process.

Impairment of financial assets

The group assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows.

The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised had the impairment not been made and is reversed to profit or loss.

(l) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation on other assets is calculated using the straight-line method to allocate their cost, net of their residual values, over their estimated useful lives as follows:

 

    Computers – 3 years

 

    Plant and equipment – 3-5 years

 

    Furniture – 3-5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each 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 (note 1(h)).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.

 

Page | 32


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(m) Intangible assets

(i) Intellectual property

Costs incurred in acquiring intellectual property are capitalised and amortised on a straight line basis over a period not exceeding the life of the patents, which averages 14 years. Where a patent has not been formally granted, the company estimates the life of the granted patent in accordance with the provisional application.

Costs include only those costs directly attributable to the acquisition of the intellectual property. 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 (note 1(h)).

(ii) Research and development

Research expenditure on internal projects is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure that could be recognised comprises all directly attributable costs, including costs of materials, services, direct labour and an appropriate proportion of overheads. Other expenditures that do not meet these criteria are recognised as an expense as incurred.

As the Company has not met the requirement under the standard to recognise costs in relation to development, these amounts have been expensed.

Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight line basis over its useful life.

(iii) Goodwill

Goodwill is measured as described in (note 1(g)). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

(n) Trade and other payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid.

The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(o) Compound instruments

Convertible notes, including the attached options and warrants, issued to Ridgeback Capital Investments are accounted for as share based payments when the fair value of the instruments are higher than the consideration received, representing intangible benefits received from the strategic investor. The difference between the fair value and consideration received at issuance of the convertible notes and attached options and warrants is recognised immediately in profit and loss as a share-based payment charge.

If options or warrants contain a settlement choice between cash or shares, this settlement choice constitutes a compound feature of the convertible notes, which triggers the separation of debt and equity components to be accounted for separately. The liability component is measured at fair value at initial recognition and subsequent changes in fair value are recognised in profit and loss. The difference between the fair value of the convertible notes and the liability component at inception is accounted as an equity element and not remeasured subsequently.

(p) Finance costs

Finance costs are expensed in the period in which they are incurred.

 

Page | 33


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(q) Employee benefits

(i) Short-term obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.

(ii) Other long-term employee benefit obligations

The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. They are therefore recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Retirement benefit obligations

The group does not maintain a group superannuation plan. The group makes fixed percentage contributions for all Australian resident employees to complying third party superannuation funds. The group has no statutory obligation and does not make contributions on behalf of its resident employees in the USA and Germany. The group’s legal or constructive obligation is limited to these contributions. Contributions to complying third party superannuation funds are recognised as an expense as they become payable.

(iv) Share-based payments

Share-based compensation benefits are provided to employees via the Executive Incentive Plan (EIP) and Global Employee Shares Option Plan (GESOP). Information relating to these schemes is set out in note 31.

The fair value of performance rights and options granted under the EIP and GESOP are recognised as an employee benefits expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

(v) Termination benefits

Termination benefits are payable when employment is terminated before the normal employment contract expiry date. The group recognises termination benefits when it is demonstrably committed to terminating the employment of current employees.

(vi) Bonus plan

The group recognises a liability and an expense for bonuses. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(r) Contributed equity

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.

 

Page | 34


(s) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

 

    the profit or loss attributable to owners of the Company

 

    by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year. Bonus elements have been included in the calculation of the weighted average number of ordinary shares and has been retrospectively applied to the prior financial year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

 

    the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and

 

    the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

(t) Goods and Services Tax and other similar taxes (‘GST’)

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

(u) New Accounting Standards and Interpretations adopted and not yet early adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2016 reporting periods and have not been early adopted by the company. The company’s assessment of the impact of these new standards and interpretations is set out below:

 

  (i) AASB 15 Revenue from Contracts with Customers - The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers revenue arising from the sale of goods and the rendering of services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits either a full retrospective or a modified retrospective approach for the adoption. It applies to annual reporting periods commencing on or after 1 January 2018. Management has yet to fully assess the impact of the new standard on the financial statements when applied to future periods.

 

  (ii) AASB 9 Financial Instruments - AASB 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. It applies to annual reporting periods commencing on or after 1 January 2018. Management has yet to fully assess the impact of the new standard on the financial statements when applied to future periods.

 

  (iii) AASB 16 Leases - The AASB 16 has issued a new standard for the accounting of leases. The new standard will predominantly affect lessees, with almost all leases brought onto the balance sheet. It applies to annual reporting periods commencing on or after 1 January 2019. Management has yet to fully assess the impact of the new standard on the financial statements when applied to future periods.

There are no other standards and interpretations that are not yet effective and that are expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

 

Page | 35


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(v) Parent entity financial information

The financial information for the parent entity, Prima BioMed Ltd, disclosed in note 32 has been prepared on the same basis as the consolidated financial statements, except as set out below.

(i) Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries are accounted for at cost in the financial statements of Prima BioMed Ltd.

(ii) Tax consolidation legislation

Prima BioMed Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Prima Biomed Ltd, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand alone taxpayer in its own right.

The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate for any current tax payable assumed and are compensated by the head entity for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to the head entity under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’ financial statements.

The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts to assist with its obligations to pay tax instalments. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts receivable from or payable to other entities in the group. Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

(iii) Share-based payments

The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

NOTE 2 FINANCIAL RISK MANAGEMENT

The group’s activities expose it to a variety of financial risks: market risk (including currency risk), credit risk and liquidity risk. The group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. The group may use derivative financial instruments such as foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for hedging purposes, i.e. not as trading or other speculative instruments. The group hedges its foreign exchange risk exposure arising from future commercial transactions and recognised assets and liabilities using forward contracts or natural hedging. The group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis and cash flow forecasting in the case of foreign exchange and aging analysis for credit risk.

Risk management is carried out by senior management under policies approved by the board of directors. Management identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. The board provides the principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a) Market risk

Foreign exchange risk

The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar and Euro.

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.

 

Page | 36


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(a) Market risk (continued)

 

Management has set up a policy to manage the Company’s exchange risk within the group companies. The group hedges its foreign exchange risk exposure arising from future commercial transactions and recognised assets and liabilities using forward contracts or natural hedging.

The group considers using forward exchange contracts to cover anticipated cash flow in USD and Euro periodically, as derivatives held for trading and measured through the income statement. This policy is reviewed regularly by directors from time to time. There were no outstanding foreign exchange contracts outstanding as at 30 June 2016 and 30 June 2015.

The group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollar, was as follows:

 

     30 June 2016      30 June 2015  
     USD      EUR      USD      EUR  

Cash in bank

     1,428,959         7,261,477         839,185         1,813,642   

Trade and other receivables

     27,205         29,539         126,958         34,592   

Trade and other payables

     (10,993      (256,364      (221,097      (201,561

Borrowings

     —           —           (822,930      (300,000

Sensitivity

Based on the financial assets and liabilities held at 30 June 2016, had the Australian dollar weakened/ strengthened by 10% against the US dollar with all other variables held constant, the group’s post-tax loss for the year would have been $194,610 higher/$194,610 lower (2015 – $10,141 higher/$10,141 lower). Any impact on the equity will result in changes in retained earnings.

Based on the financial instruments held at 30 June 2016, had the Australian dollar weakened/ strengthened by 10% against the Euro with all other variables held constant, the group’s post-tax loss for the year would have been $1,050,105 higher/$1,050,105 lower (2015 – $196,137 higher/$196,137 lower), mainly as a result of foreign exchange gains/losses on translation of Euro denominated financial instruments.

The group’s exposure to other foreign exchange movements is not material.

(b) Credit risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks. For banks, only independently rated parties with a minimum rating of ‘A’ according to Standard & Poor’s are accepted.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings:

 

     30 June 2016      30 June 2015  
     $      $  

Cash at bank and short-term bank deposits

     

AA-

     20,879,548         6,759,615   

(c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash to meet obligations when due. At the end of the reporting period the group held deposits at call of $20,879,548 (2015 – $6,759,615) that are expected to readily generate cash inflows for managing liquidity risk.

Management monitors rolling forecasts of the group’s liquidity reserve cash and cash equivalents (note 7) on the basis of expected cash flows. In addition, the group’s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these.

As outlined in Note 3, the Company’s monitoring of its cash requirements extends to the consideration of potential capital raising strategies and an active involvement with its institutional and retail investor base.

 

Page | 37


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(c) Liquidity risk (continued)

 

Maturities of financial liabilities

The tables below analyse the group’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

(a) all non-derivative financial liabilities, and

(b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

 

Contractual maturities of financial liabilities    Less than 6
months
     > 5 years      Total contractual
cash flows
     Carrying
Amount (assets)
/ liabilities
 
At 30 June 2016    $      $      $      $  

Non-Derivatives

           

Trade and other payables

     1,422,798         —           1,422,798         1,422,798   

Convertible note liability (refer note 15)

     —           17,876,076         17,876,076         5,027,168   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,422,798         17,876,076         19,298,874         6,449,966   
  

 

 

    

 

 

    

 

 

    

 

 

 
Contractual maturities of financial liabilities    Less than 6
months
     > 5 years      Total contractual
cash flows
    

Carrying

Amount (assets)
/ liabilities

 
At 30 June 2015    $      $      $      $  

Non-Derivatives

           

Trade and other payables

     2,770,049         —           2,770,049         2,770,049   

Borrowings

     1,508,473         —           1,508,473         1,508,473   
  

 

 

    

 

 

    

 

 

    

 

 

 
     4,278,522         —           4,278,522         4,278,522   
  

 

 

    

 

 

    

 

 

    

 

 

 

(d) Fair value measurements

The following table presents the group’s financial assets and financial liabilities measured and recognised at fair value at 30 June 2016 and 30 June 2015 on a recurring basis:

 

At 30 June 2016    Level 1      Level 2      Level 3      Total  
     $      $      $      $  

Liabilities

           

Convertible note liabilitity

     —           —           5,027,168         5,027,168   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     —           —           5,027,168         5,027,168   
  

 

 

    

 

 

    

 

 

    

 

 

 
At 30 June 2015    Level 1      Level 2      Level 3      Total  
     $      $      $      $  

Assets

           

Comparability milestone at fair value

     —           —           542,075         542,075   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     —           —           542,075         542,075   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page | 38


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(d) Fair value measurements (continued)

 

(i) Valuation techniques used to determine fair values

Level 1: The fair value of financial instruments trade in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted (unadjusted) market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

Level 2: The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.

Specific valuation techniques used to value financial instruments include:

 

    The use of quoted market prices or dealer quotes for similar instruments.

 

    The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves

 

    The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

 

    The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

(ii) Fair value measurements using significant unobservable inputs (level 3)

The following table presents the changes in level 3 instruments for the year ended 30 June 2016:

 

     Comparability
milestone
    Convertible
note liability
    Total  
     $     $     $  

Opening balance 1 July 2015

     542,075        —          542,075   

Other increases/(decreases)

     —          (4,419,531     (4,419,531

Changes in fair value

     —          (607,637     (607,637

(Losses)/gains recognised as an expense

     (542,075     —          (542,075
  

 

 

   

 

 

   

 

 

 

Closing balance 30 June 2016

     —          (5,027,168     (5,027,168
  

 

 

   

 

 

   

 

 

 

(iii) Valuation inputs and relationships to fair value

The following table summarises the quantitative information about the significant inputs used in level 3 fair value measurements:

 

Description   

Fair value at 30

June 2016

$

     Unobservable inputs    Range of inputs  

Convertible note

     5,027,168      

Face value

Interest rate of note

Risk adjusted interest rate

    

 

 

13,750,828

3

15

  

(iv) Valuation process

The convertible note was valued using a Black Scholes model. Prima used valuation specialists to perform these valuations based on the inputs above.

 

Page | 39


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 3 CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Income taxes

The group has recognised deferred tax assets of $2.42m which related to carried forward tax losses in the Immutep subsidiary acquired in the prior year. On acquisition, the group has recognised significant amortising IP intangibles for which there will be no corresponding tax deduction, giving rise to a future taxable temporary difference and required the recognition of a deferred tax liability as part of the business combination accounting. The entity had previously unrecognised tax losses which management is satisfied will continue to be available to be utilised by the subsidiary after the acquisition. As such, the group has recognised a deferred tax asset to the extent of the deferred tax liability recognised on acquisition. The group has concluded that the deferred assets will be recoverable to the extent of the deferred tax liability recognised at each year.

All other remaining deferred tax assets relating to carried forward tax losses and taxable temporary differences have not been recognised since the group is currently in a loss making position and unable to generate taxable income to utilise the carried forward tax losses and taxable temporary differences. The utilisation of the tax losses also depends on the ability of the entity to satisfy certain tests at the time the losses are recouped. The group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. There are certain transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The group estimates its tax liabilities based on the group’s understanding of the tax law. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Research and development

The consolidated entity has expensed all internal research and development expenditure incurred during the year as the costs relate to the initial expenditure for research and development of biopharmaceutical products and the generation of future economic benefits is not considered probable given the current stage of development. It was considered appropriate to expense the research and development costs as they did not meet the criteria to be capitalised under AASB 138 Intangible Assets.

Going concern

The Group has experienced significant recurring operating losses and negative cash flows from operating activities since its inception. As at 30 June 2016, the Group holds cash and cash equivalents of $20,879,548 (2015: $6,759,615). In line with the Company’s financial risk management, the directors have carefully assessed the financial and operating implications of the above matters, including the expected cash outflows of ongoing research and development activities of the Company over the next 12 months. Based on this consideration, the directors are of the view that the Group will be able to pay its debts as and when they fall due for at least 12 months following the date of these financial statements and that it is appropriate for the financial statements to be prepared on a going concern basis.

 

Page | 40


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 3. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (continued)

 

Going concern (continued)

Monitoring and addressing the ongoing cash requirements of the Group is a key focus of the directors. This involves consideration of alternative future capital raising initiatives and an active engagement with potential retail and institutional investors alike.

Amortisation of intellectual property

Costs incurred in acquiring intellectual property are capitalised and amortised on a straight line basis over a period not exceeding the life of the patents, which averages 15 years. Where a patent has not been formally granted, the company estimates the life of the granted patent in accordance with the provisional application.

Costs include only those costs directly attributable to the acquisition of the intellectual property. 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 (note 1(h)).

NOTE 4. SEGMENT REPORTING

Identification of reportable operating segments

Operating segments are reported in a manner consistent with internal reports which are reviewed and used by Management and the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)). The Group operates in one operating segment, being Cancer Immunotherapy.

Operating segment information

 

30 June 2016    Cancer
Immunotherapy
     Unallocated      Consolidated  
     $      $      $  

Revenue

        

License revenue

     175,052         —           175,052   

Other Income

        

Miscellaneous income

     702,743         —           702,743   

Grant income

     887,083         —           887,083   

Interest income

     —           264,043         264,043   
  

 

 

    

 

 

    

 

 

 

Total revenue and other income

     1,764,878         264,043         2,028,921   
  

 

 

    

 

 

    

 

 

 

Result

        

Segment result

     (63,460,244      —           (63,460,244
  

 

 

    

 

 

    

 

 

 

Profit/(loss) before income tax expense

     (63,460,244      264,043         (63,196,201
  

 

 

    

 

 

    

 

 

 

Income tax benefit

           1,181,017   
  

 

 

    

 

 

    

 

 

 

Loss after income tax expense

           (62,015,184
  

 

 

    

 

 

    

 

 

 

Total segment assets

     42,554,067         —           42,554,067   
  

 

 

    

 

 

    

 

 

 

Total segment liabilities

     7,236,554         —           7,236,554   
  

 

 

    

 

 

    

 

 

 

 

Page | 41


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 4. SEGMENT REPORTING (CONTINUED)

 

30 June 2015    Cancer
Immunotherapy
     Unallocated      Consolidated  
     $      $      $  

Revenue

        

License revenue

     —           —           —     

Other Income

        

Miscellaneous income

     168,322         —           168,322   

Grant income

     1,167,190         —           1,167,190   

Net gain on foreign exchange

     —           538,248         538,248   

Interest income

     —           219,107         219,107   
  

 

 

    

 

 

    

 

 

 

Total revenue and other income

     1,335,512         757,355         2,092,867   
  

 

 

    

 

 

    

 

 

 

Result

        

Segment result

     (33,051,207      —           (33,051,207

Profit/(loss) before income tax expense

     (33,051,207      757,355         (32,293,852

Income tax benefit

           142,156   
  

 

 

    

 

 

    

 

 

 

Loss after income tax expense

           (32,151,696
  

 

 

    

 

 

    

 

 

 

Total segment assets

     30,983,445         —           30,983,445   
  

 

 

    

 

 

    

 

 

 

Total segment liabilities

     6,293,702         —           6,293,702   
  

 

 

    

 

 

    

 

 

 

 

Page | 42


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 5. EXPENSES

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Loss before income tax includes the following specific expenses:

     

Research & development and intellectual property

     

Research and development

     6,382,377         8,515,150   

Intellectual property management

     677,151         437,297   
  

 

 

    

 

 

 

Total research & development and intellectual property

     7,059,528         8,952,447   
  

 

 

    

 

 

 

Corporate administrative expenses

     

Auditor’s remuneration

     441,741         292,807   

Directors fee and employee expenses

     3,714,522         2,508,533   

Administrative expenses

     2,826,366         2,921,766   
  

 

 

    

 

 

 

Total corporate administrative expenses

     6,982,629         5,723,106   
  

 

 

    

 

 

 

Depreciation

     

Plant and equipment

     168,924         308,719   

Computer

     10,676         14,523   

Furniture and fittings

     2,776         2,532   
  

 

 

    

 

 

 

Total depreciation

     182,376         325,774   
  

 

 

    

 

 

 

Amortisation

     

Patents

     61,881         55,002   

Intellectual Property

     1,748,836         960,426   
  

 

 

    

 

 

 

Total amortisation

     1,810,717         1,015,428   
  

 

 

    

 

 

 

Total depreciation and amortisation

     1,993,093         1,341,202   
  

 

 

    

 

 

 

(Gain)/loss on disposal of assets

     

Plant and equipment

     (18,493      5,160   

Finance expenses

     

Interest expense

     8,199         26,789   

Other finance expenses – note 18

     —           18,338,015   
  

 

 

    

 

 

 

Total finance expenses

     8,199         18,364,804   
  

 

 

    

 

 

 

Share Based Payment to strategic investor

     47,468,071         —     
  

 

 

    

 

 

 

Net loss on foreign exchange

     563,890         —     
  

 

 

    

 

 

 

Changes in fair value of comparability milestone

     542,075         —     
  

 

 

    

 

 

 

 

Page | 43


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 6. INCOME TAX EXPENSES

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Current tax

  

Current tax on profits for the year

     3,121         1,908   
  

 

 

    

 

 

 

Total current tax expense

     3,121         1,908   
  

 

 

    

 

 

 

Deferred income tax

     

Increase in deferred tax assets (note 12)

     (921,463      —     

Decrease in deferred tax liabilities (note 12)

     (262,675      (144,064
  

 

 

    

 

 

 

Total deferred tax benefit

     (1,184,138      (144,064
  

 

 

    

 

 

 

Income tax benefit

     (1,181,017      (142,156
  

 

 

    

 

 

 

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Numerical reconciliation of income tax expense to prima facie tax payable

     

Loss before income tax expense

     (63,196,201      (32,293,852

Tax at the Australian tax rate of 30%

     (18,958,860      (9,688,156

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

     

Non-deductible share based payments

     14,858,019         226,653   

Non-deductible financing costs

     —           5,501,405   

Other non-deductible expenses

     598,016         306,360   

Non-assessable income

     (266,125      (233,261

Capital listing fee

     (90,305      (188,530

Difference in overseas tax rates*

     1,184,138         184,251   
  

 

 

    

 

 

 
     (2,675,117      (3,891,278

Net adjustment to deferred tax assets and liabilities for tax losses and temporary differences not recognised

     1,494,100         3,749,122   
  

 

 

    

 

 

 

Income tax (benefit)/expense**

     (1,181,017      (142,156
  

 

 

    

 

 

 

 

*  Difference in overseas tax rate is as a result of reduced corporate income tax rate of 15% applicable to the Immutep subsidiary
**  Income tax expense/(benefit) relates to tax payable in the United States and movement in deferred tax assets and liabilities for the French subsidiary.
     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Deferred tax assets not recognised

  

Deferred tax assets not recognised comprises temporary differences attributable to:

     

Carried forward tax losses benefit

     32,044,352         31,262,135   

Temporary differences

     438,284         (196,493
  

 

 

    

 

 

 

Total deferred tax assets not recognised

     32,482,636         31,065,642   
  

 

 

    

 

 

 

 

Page | 44


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 6. INCOME TAX EXPENSES (CONTINUED)

 

The above potential tax benefit, which includes tax losses and temporary differences has not been recognised in the consolidated balance sheet as the recovery of this benefit is not probable. There is no expiration date for the tax losses carried forward. The estimated amount of cumulative tax losses at 30 June 2016 was $106,814,506 (2015 - $104,207,118). Utilisation of these tax losses is dependent on the parent entity satisfying certain tests at the time the losses are recouped.

NOTE 7. CURRENT ASSETS – CASH AND CASH EQUIVALENTS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Cash on hand

     114         1,296   

Cash at bank

     20,619,806         6,508,319   

Cash on deposit

     259,628         250,000   
  

 

 

    

 

 

 
     20,879,548         6,759,615   
  

 

 

    

 

 

 

The above cash and cash equivalent are held in AUD, USD, and Euro. The interest rates on these deposits range from 0% to 2.05% in 2016 (2015 – 0% to 2.3%).

NOTE 8. CURRENT RECEIVABLES

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

GST receivable

     73,640         150,143   

Other receivables

     94,660         165,310   
  

 

 

    

 

 

 
     168,300         315,453   
  

 

 

    

 

 

 

Due to the short term nature of these receivables, the carrying value is assumed to be their fair value and at 30 June 2016. No receivables were impaired or past due.

NOTE 9. OTHER CURRENT ASSETS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Prepayments*

     591,926         380,749   

Security deposit

     30,890         21,224   

Accrued interest

     204         3,955   

Comparability milestone

     —           542,075   
  

 

 

    

 

 

 
     623,020         948,003   
  

 

 

    

 

 

 

 

* Prepayments are in relation to the deposits paid to organisations involved in the clinical trials.

 

Page | 45


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 10. NON-CURRENT ASSETS – PLANT AND EQUIPMENT

 

     Plant and
Equipment
     Computers      Furniture and
fittings
     Total  
     $      $      $      $  

At 1 July 2014

           

Cost or fair value

     1,248,948         62,789         12,765         1,324,502   

Accumulated depreciation

     (701,967      (39,603      (5,668      (747,238
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     546,981         23,186         7,097         577,264   
  

 

 

    

 

 

    

 

 

    

 

 

 

Year ended 30 June 2015

           

Opening net book amount

     546,981         23,186         7,097         577,264   

Exchange differences

     (681      1,128         (22      425   

Additions

     44,627         4,201         —           48,828   

Disposal

     (178      (5,332      —           (5,510

Acquisition of subsidiary

     787         1,937         —           2,724   

Depreciation charge

     (308,719      (14,523      (2,532      (325,774
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing net book amount

     282,817         10,597         4,543         297,957   
  

 

 

    

 

 

    

 

 

    

 

 

 

At 30 June 2015

           

Cost or fair value

     605,648         28,016         7,172         640,836   

Accumulated depreciation

     (322,831      (17,419      (2,629      (342,879
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     282,817         10,597         4,543         297,957   
  

 

 

    

 

 

    

 

 

    

 

 

 

Year ended 30 June 2016

           

Opening net book amount

     282,817         10,597         4,543         297,957   

Exchange differences

     10,518         391         168         11,077   

Additions

     12,969         13,447         714         27,130   

Disposal

     (122,289      —           —           (122,289

Depreciation charge

     (168,924      (10,676      (2,775      (182,375
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing net book amount

     15,091         13,759         2,650         31,500   
  

 

 

    

 

 

    

 

 

    

 

 

 

At 30 June 2016

           

Cost or fair value

     511,195         41,971         8,064         561,230   

Accumulated depreciation

     (496,104      (28,212      (5,414      (529,730
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     15,091         13,759         2,650         31,500   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Page | 46


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 11. NON-CURRENT ASSETS – INTANGIBLES

 

     Patents      Intellectual
Property
     Goodwill      Total  
     $      $      $      $  

At 1 July 2014

           

Cost

     1,915,671         —           —           1,915,671   

Accumulated amortisation

     (1,798,788      —           —           (1,798,788
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     116,883         —           —           116,883   
  

 

 

    

 

 

    

 

 

    

 

 

 

Year ended 30 June 2015

           

Opening net book amount

     116,883         —           —           116,883   

Acquisition of Immutep S.A

     —           23,451,000         109,962         23,560,962   

Amortisation charge

     (55,002      (960,426      —           (1,015,428
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing net book amount

     61,881         22,490,574         109,962         22,662,417   
  

 

 

    

 

 

    

 

 

    

 

 

 

At 30 June 2015

           

Cost or fair value

     1,915,671         23,451,000         109,962         25,476,633   

Accumulated amortisation

     (1,853,790      (960,426      —           (2,814,216
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     61,881         22,490,574         109,962         22,662,417   
  

 

 

    

 

 

    

 

 

    

 

 

 

Year ended 30 June 2016

           

Opening net book amount

     61,881         22,490,574         109,962         22,662,417   

Amortisation charge

     (61,881      (1,748,837      —           (1,810,718
  

 

 

    

 

 

    

 

 

    

 

 

 

Closing net book amount

     —           20,741,737         109,962         20,851,699   
  

 

 

    

 

 

    

 

 

    

 

 

 

At 30 June 2016

           

Cost or fair value

     1,915,671         23,451,000         109,962         25,476,633   

Accumulated amortisation

     (1,915,671      (2,709,263      —           (4,624,934
  

 

 

    

 

 

    

 

 

    

 

 

 

Net book amount

     —           20,741,737         109,962         20,851,699   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(i) Amortisation methods and useful lives

The group amortises intangible assets with a limited useful life using the straight-line method over the following periods:

 

    Patents, trademark and licenses – 13 – 21 years

 

    Intellectual property assets – 14 years

 

Page | 47


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 12. DEFERRED TAX BALANCES

(i) Deferred tax assets

The balance comprises temporary differences attributable to:

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Tax losses

     2,417,066         1,495,603   

Total deferred tax assets

     2,417,066         1,495,603   
  

 

 

    

 

 

 

Set-off of deferred tax liabilities pursuant to set-off provisions

     (2,417,066      (1,495,603
  

 

 

    

 

 

 

Net deferred tax assets

     —           —     
  

 

 

    

 

 

 

(ii) Expected recovery of Deferred Tax Assets

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Deferred tax assets expected to be recovered within 12 months

     262,325         262,325   

Deferred tax assets expected to be recovered after more than 12 months

     2,154,741         1,233,278   
  

 

 

    

 

 

 
     2,417,066         1,495,603   
  

 

 

    

 

 

 

(iii) Deferred tax liabilities

The balance comprises temporary differences attributable to:

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Intangible assets

     3,111,260         3,373,936   

Total deferred tax liabilities

     3,111,260         3,373,936   

Set-off of deferred tax liabilities pursuant to set-off provisions

     (2,417,066      (1,495,603
  

 

 

    

 

 

 

Net deferred tax liabilities

     694,194         1,878,333   
  

 

 

    

 

 

 

Deferred tax liabilities expected to be settled within 12 months

     262,325         232,625   

Deferred tax liabilities expected to be settled after more than 12 months

     431,869         1,616,008   
  

 

 

    

 

 

 
     694,194         1,878,333   
  

 

 

    

 

 

 

(iv) Movements in deferred tax balances

 

     Tax losses      Intangible
Assets
     Total  
Movements    $      $      $  

At 30 June 2015

     1,495,603         (3,373,936      (1,878,333

(Charged)/credited

        

- to profit or loss

     921,463         262,676         1,184,139   

- to other comprehensive income

     —           —           —     

- directly to equity

     —           —           —     
  

 

 

    

 

 

    

 

 

 

At 30 June 2016

     2,417,066         (3,111,260      (694,194
  

 

 

    

 

 

    

 

 

 

 

Page | 48


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 13. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Trade payables

     561,263         2,201,864   

Other payables and accruals

     861,535         568,185   
  

 

 

    

 

 

 
     1,422,798         2,770,049   
  

 

 

    

 

 

 

NOTE 14. CURRENT LIABILITIES – BORROWINGS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Amounts payable to related parties

     —           1,071,523   

Other borrowings

     —           436,950   
  

 

 

    

 

 

 
     —           1,508,473   
  

 

 

    

 

 

 

In the prior year, Dr Frédéric Triebel provided an unsecured loan to the company of $1,071,523. Interest is charged on this loan at the rate of 10% per annum and was repaid in full in August 2015.

Other borrowings relate to an interest-free loan advanced by France’s innovation agency, ANVAR, which was repaid in full in July 2015.

NOTE 15. NON CURRENT LIABILITIES – CONVERTIBLE NOTE

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Convertible note at fair value

     5,027,168         —     
  

 

 

    

 

 

 
     5,027,168         —     
  

 

 

    

 

 

 

On 11 May 2015, the Company entered into a subscription agreement with Ridgeback Capital Investments (Ridgeback) to invest in Convertible Notes and Warrants of the Company for cash consideration totalling $13,750,828, which was subject to shareholder approval at an Extraordinary General Meeting. Shareholder approval was received on 31 July 2015.

The 13,750,828 Convertible Notes issued have a face value of $1.00 per note which are exercisable at a price of $0.02 per share, mature on 4 August 2025 and accrue interest at a rate of 3% per annum which may also be converted into shares. Conversions may occur during the period (i) at least 3 months after the Issue Date and (ii) at least 15 business days prior to the maturity date into 50 ordinary shares of the Company per note (subject to customary adjustments for rights or bonus issues, off market buybacks, issues at less than current market price, share purchase plan, dividend reinvestment plan at a discount, return of capital or dividend or other adjustment). If a change of control event, delisting event or event of default has occurred, Ridgeback may elect to convert the notes into shares or repayment of principal and interest. The Convertible Notes rank at least equal with all present and future unsubordinated and unsecured debt obligations of the Company and contain customary negative pledges regarding financial indebtedness, dividend payments, related party transaction and others.

8,475,995 Warrants were granted to Ridgeback which are exercisable at a price of $0.025 per share on or before 4 August 2025. 371,445,231 Warrants were granted to Ridgeback which are exercisable at a price of $0.0237 per share on or before 4 August 2020. All warrants may be settled on a gross or net basis and the number of warrants or exercise price may be adjusted for a pro rata issue of shares, a bonus issue or capital reorganisation. The Warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant.

 

Page | 49


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 15. NON CURRENT LIABILITIES - CONVERTIBLE NOTE (CONTINUED)

 

In addition to the above cash financing from Ridgeback, it was disclosed at the Extraordinary General Meeting explanatory memorandum that Ridgeback also provides the company with additional benefits, including:

 

    Introductions to other well respected investment institutions which will help in future financing

 

    The ability to attract other top level executives and researchers to the company and the board

 

    Potential introductions for additional in-licensing opportunities; and

 

    Increased visibility to other biotechnology and pharmaceutical companies and potential partners and collaborators on Prima’s internal assets

As a result of the above, the additional benefits provided to Prima determine that the financing transaction, including the issue of warrants, is to be accounted for as a Share-Based Payment and are expensed on the grant date in accordance with AASB 2. The value of the share-based payment to the strategic investor has been calculated by determining the fair value of the convertible note and warrants at the time of EGM approval and deducting the net cash proceeds from Ridgeback.

 

     30 June 2016  
     $  

Fair value of Convertible Note

     45,851,305   

Fair value of Warrants

     15,367,594   

Less cash received

     (13,750,828
  

 

 

 

Share based payment to strategic investor

     47,468,071   
  

 

 

 

(i) Fair value of convertible notes

The initial fair value of the convertible notes has been estimated by an external valuer using a combination of the Black-Scholes methodology for the conversion option component of the notes and a discounted cashflow valuation for the debt component of the note. Key terms of the note are included above. The following assumptions which were based on market conditions that existed at the grant date:

 

Assumption    Convertible notes     Rationale

Historic volatility

     85.0   Based on the Company’s historical volatility data

Share price

   $ 0.051      Closing market share price on 31 July 2015

Risk free interest rate

     2.734   Based on Australian Government securities yields which match the term of the convertible note

Risk adjusted interest rate

     15.0   An estimate of the expected interest rate of a similar non-convertible note issued by the company

Dividend yield

     0.0   Based on the Company’s nil dividend history

Risk free rate

     2.734   Based on 10 year Australian Government securities yield

The fair value of the convertible note is allocated between a financial liability for the traditional note component of the convertible note and into equity which represents the conversion feature. The traditional note component of the convertible note was initially recorded at fair value of $4.4m, based on the present value of the contractual cash flows of the note discounted at 15%. After initial recognition, the liability component of the convertible note has been measured at fair value as required by AASB 2. The remaining value of the convertible note was allocated to the conversion feature and recognised as equity.

 

     Note -
Liability
     Conversion feature -
Equity
 

Fair value at issuance

     4,419,531         41,431,774   

Fair value movements

     607,637         —     
  

 

 

    

 

 

 

Balance at 30 June 2016

     5,027,168         41,431,774   
  

 

 

    

 

 

 

 

Page | 50


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 15. NON CURRENT LIABILITIES - CONVERTIBLE NOTE (CONTINUED)

 

(ii) Fair value of warrants

The fair value of each warrant granted is not traded in an active market and instead has been estimated by an external valuer using the Black-Scholes pricing model based on the following assumptions. Key terms of the warrants were included above. The following assumptions were based on market conditions that existed at the grant date:

 

Assumption    5 year warrants     10 year warrants     Rationale

Historic volatility

     85.0     85.0   Based on 3 year historical volatility data for the Company

Exercise price

   $ 0.0237      $ 0.0250      As per subscription agreement

Share price

   $ 0.0510      $ 0.0510      Closing share price on valuation date from external market source

Risk-free interest rate

     2.177     2.886   Based on Australian Government securities yields which match the term of the warrant

Dividend yield

     0.0     0.0   Based on the Company’s nil dividend history

Fair Value

   $ 0.0457      $ 0.0403      Determined using Black-Scholes models with the inputs above

NOTE 16. CURRENT LIABILITIES – EMPLOYEE BENEFITS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  
  

 

 

    

 

 

 

Annual leave

     27,694         80,304   
  

 

 

    

 

 

 

The current provision for employee benefits is in relation to accrued annual leave and covers all unconditional entitlements where employees have completed the required period of service. The entire amount of the provision is presented as current, since the group does not have an unconditional right to defer settlement for any of these obligations.

NOTE 17. NON-CURRENT LIABILITIES – EMPLOYEE BENEFITS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  
  

 

 

    

 

 

 

Long service leave

     43,151         35,706   
  

 

 

    

 

 

 

NOTE 18. EQUITY – CONTRIBUTED

 

           Consolidated  
           30 June 2016      30 June 2015  
           $      $  

Fully paid ordinary shares

     18 (a)      184,868,978         170,216,482   

Options over ordinary shares – listed

       9,661,954         9,661,954   
    

 

 

    

 

 

 
       194,530,932         179,878,436   
    

 

 

    

 

 

 

 

Page | 51


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 18. EQUITY – CONTRIBUTED (CONTINUED)

 

(a) Ordinary shares

 

           30 June 2016     30 June 2015  
     Note     No.      $     No.      $  

At the beginning of reporting period

       1,751,494,601         170,216,482        1,228,709,341         139,352,418   

Shares issued during year

     18 (b)      283,158,931         13,761,075        284,274,073         7,365,369   

Exercise of options and warrants (Shares issued during the year)

     18 (b)      26,977,412         1,174,567        72,413,924         3,731,339   

Exercise of convertible note (Shares issued during the year)

     18 (b)      —           —          166,097,263         19,931,672   

Transaction costs relating to share issues

       —           (283,146     —           (164,316
    

 

 

    

 

 

   

 

 

    

 

 

 

At reporting date

       2,061,630,944         184,868,978        1,751,494,601         170,216,482   
    

 

 

    

 

 

   

 

 

    

 

 

 

(b) Shares issued

 

2016 Details    Number     

Issue

Price

     Total  
            $      $  

Shares issued under Share Purchase Plan

     200,000,000         0.05         10,000,000   

Ridgeback shares issued

     12,136,750         0.02         209,966   

Share placement

     31,022,181         0.05         1,551,109   

Share placement

     40,000,000         0.05         2,000,000   

Performance rights exercised

     26,977,409         0.04         1,174,566   

Options exercised

     3         0.20         1   
  

 

 

       

 

 

 
     310,136,343            14,935,642   
  

 

 

       

 

 

 
2015 Details    Number      Issue
Price
     Total  
            $      $  

Bergen commencement fee

     11,792,588         0.04         483,496   

Bergen collateral shares

     17,800,000         0.02         338,200   

Bergen first tranche

     13,163,514         0.04         526,541   

Performance right exercised

     1,715,686         0.04         63,480   

Bergen second tranche

     15,214,606         0.03         517,297   

Consideration buyer shares to Immutep stakeholders

     86,120,815         0.03         2,593,959   

Bergen third tranche

     15,323,414         0.03         505,674   

Bergen fourth tranche

     22,936,950         0.02         527,550   

Ridgeback share issued

     28,000,000         0.02         560,000   

Ridgeback first placement

     72,206,500         0.02         1,249,172   

Bergen options exercised

     19,800,000         0.05         1,084,050   

Conversion of Warrants – Immutep

     52,371,500         0.05         2,628,525   

Employee option exercised

     242,424         0.08         18,764   

Exercise of convertible note

     166,097,263         0.12         19,931,672   
  

 

 

       

 

 

 
     522,785,260            31,028,380   
  

 

 

       

 

 

 

 

Page | 52


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 18. EQUITY – CONTRIBUTED (CONTINUED)

 

(b) Shares issued (continued)

In October 2014, Prima entered into an investment agreement with the Bergen Global Opportunity Fund, LP (Bergen). Under the agreement, Bergen subscribed to a 36-month interest-free convertible security in the amount of $2,833,000, expiring on 2 October 2017. In addition, Bergen could invest in the range of $438k (US$360k) and $1.8m (US$1.5m) per month in monthly tranches, dependent on meeting certain conditions. Bergen was also issued 19,800,000 options and was issued with 17,800,000 shares as security over the investment agreement.

The investment agreement with Bergen concluded in May 2015 and was formally terminated in August 2015. Upon the conclusion of the investment agreement, Bergen exercised their options, and convertible note as detailed above.

Finance costs relating to the Bergen investment agreement was $18,338,015 for the year ended 30 June 2015. The finance costs incurred relate to the following terms of the Bergen agreement:

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Commencement fee

     —           483,496   

Change in fair value of tranche funding

     —           211,124   

Share based payment expense related to collateral shares

     —           151,264   

Share based payment expense related to options

     —           414,342   

Discount to fair value on exercise of convertible notes to ordinary shares1

     —           17,077,789   
  

 

 

    

 

 

 
     —           18,338,015   
  

 

 

    

 

 

 

1) The convertible note issued to Bergen was recorded on issuance date as a financial liability and then re-measured at fair value through the profit and loss in accordance with AASB 139. Under the Agreement the conversion price was calculated based on the average of any five daily VWAP’s per share during twenty consecutive actual trading days immediately prior to the selected conversion date, at the discretion of Bergen. The conversion price was calculated at $0.0190 per share and the calculated number of shares issued to Bergen was 166,097,263. The market price on the day that the shares were issued to Bergen was $0.12 per share resulting in a fair value re-measurement loss of $17,077,789 being recorded.

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.

The fully paid 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.

Options

Information relating to the Company’s Global Employee Share Option Plan, including details of options issued, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in note 31.

 

Page | 53


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

Unlisted options

 

Expiration Date    Exercise Price      Number  

30 June 2018

   $ 0.0774         1,680,868   

12 December 2018

   $ 0.05019         147,628,500   

4 August 2020

   $ 0.0237         371,445,231   

30 October 2020

   $ 0.057         793,103   

7 March 2021

   $ 0.040         1,026,272   

4 August 2025

   $ 0.025         8,475,995   
     

 

 

 

Total

        531,049,969   
     

 

 

 

Share buy-back

There is no current on-market share buy-back.

Capital risk management

The consolidated entity’s objectives when managing capital are to safeguard its ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

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 in a business or company was seen as value adding relative to the current parent entity’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.

 

Page | 54


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 19. EQUITY – RESERVES AND RETAINED EARNINGS

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

(a) Reserves

  

Options issued reserve

     19,116,205         3,748,611   

Conversion feature of convertible note reserve

     41,431,774         —     

Foreign currency translation reserve

     38,945         (268,052

Share-based payments reserve

     2,671,263         1,787,170   
  

 

 

    

 

 

 
     63,258,187         5,267,729   
  

 

 

    

 

 

 

Movements in options issued reserve were as follows:

  

Opening balance

     3,748,611         1,547,574   

Options issued during the year*

     15,367,594         2,201,037   
  

 

 

    

 

 

 

Ending balance

     19,116,205         3,748,611   
  

 

 

    

 

 

 

Movements in conversion feature of convertible note reserve

  

Opening balance

     —           —     

Conversion feature of convertible note*

     41,431,774         —     
  

 

 

    

 

 

 

Ending balance

     41,431,774         —     
  

 

 

    

 

 

 

Movements in foreign currency translation reserve were as follows:

  

Opening balance

     (268,052      (211,145

Currency translation differences arising during the year

     306,997         (56,907
  

 

 

    

 

 

 

Ending balance

     38,945         (268,052
  

 

 

    

 

 

 

Movements in share-based payments reserve were as follows:

  

Opening balance

     1,787,170         546,245   

Employee options and performance rights issued during the year

     1,976,417         738,799   

Exercise of vested performance rights

     (1,174,566      (63,480

Share-based payments

     82,242         565,606   
  

 

 

    

 

 

 

Ending balance

     2,671,263         1,787,170   
  

 

 

    

 

 

 

 

* Current year movements relate to the fair value of convertible notes and warrants issued to Ridgeback accounted for in accordance with AASB 2. Refer to note 15 for further information.

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

(b) Accumulated losses

  

Movements in accumulated losses were as follows:

  

Opening balance

     (160,456,422      (128,304,726

Net loss for the year

     (62,015,184      (32,151,696
  

 

 

    

 

 

 

Ending balance

     (222,471,606      (160,456,422
  

 

 

    

 

 

 

 

Page | 55


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

(c) Nature and purpose of reserves

(i) Options issued reserve

On 4 August 2015 warrants were granted to Ridgeback Capital Investments. 8,475,995 Warrants were granted which are exercisable at a price of $0.025 per share on or before 4 August 2025. 371,445,231 Warrants were granted which are exercisable at a price of $0.0237 per share on or before 4 August 2020. All warrants may be settled on a gross or net basis and the number of warrants or exercise price may be adjusted for a pro rata issue of shares, a bonus issue or capital reorganisation. The Warrants do not confer any rights to dividends or a right to participate in a new issue without exercising the warrant. For further information, refer to note 15.

In October 2014, the Company issued 19,800,000 options with an exercise price of $0.05475 in relation to the Bergen investment agreement. In December 2014, the Company issued 200,000,000 warrants at an exercise price of $0.05019 to the vendors of Immutep S.A. The options expire on 2 October 2017 and 12 December 2018. Each option and warrant is exercisable for one ordinary share in the capital of the Company. As at 30 June 2016, all options held by Bergen were execised, and 52,371,500 warrants were exercised by the vendors of Immutep S.A. The options held are exercisable at any time before its expiry date.

(ii) Conversion feature of convertible note reserve

This amount relates to the conversion feature of the convertible note issued to Ridgeback Capital Investments which has been measured at fair value as required by AASB 2. For further information, refer to note 15.

(iii) Foreign currency translation reserve

Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive income as described in note 1(d) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

(iv) Share-based payments reserve

The share-based payments reserve is used to recognise the grant date fair value of options and performance rights issued to employees and other parties but not exercised. For a reconciliation of movements in the share-based payment reserves refer to note 31.

NOTE 20. EQUITY - DIVIDENDS

There were no dividends paid or declared during the current or previous financial year.

NOTE 21. BUSINESS COMBINATION

(a) Summary of prior year’s acquisition

Acquisition of Immutep S.A.

On 12 December 2014, the Group acquired 100% of the issued share capital of Immutep S.A., a French biopharmaceutical company in the field of Immuno-Oncology, for consideration of $26,275,569. The acquisition has significantly increased the portfolio of Immuno-Oncology technologies for further clinical development. There have been no changes to the provisionally determined fair values of assets and liabilities recognised as a result of the acquisition in the previous financial year.

(b) Net cash outflow for prior years’ acquisition

 

     30 June 2016      30 June 2015  
     $      $  

Outflow of cash to acquire subsidiary, net of cash acquired

     

Cash consideration*

     —           21,458,107   

Less: Balance acquired cash

     —           (545,195
  

 

 

    

 

 

 
     —           20,912,912   
  

 

 

    

 

 

 

 

* The total cash paid during the year ended 30 June 2015 in relation to the acquisition of Immutep S.A. was $21,458,107.

 

Page | 56


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 21. BUSINESS COMBINATION (continued)

 

(c) Comparability milestone

As part of the acquisition of Immutep S.A in the previous financial year, an amount of $1,084,149 was paid into a retention account and it was determined that there was a 50% likelihood that a comparability study was required. The fair value of the amount refundable on acquisition was $542,075 and as such the cash paid in relation to the purchase consideration was reduced by this amount. As the refundable consideration was contingent on an uncertain future event, it was recognised as a financial asset at fair value in accordance with AASB 3 on acquisition. During the year, the comparability study was not required, and was subsequently measured at fair value through profit or loss in accordance with AASB 3. Accordingly the $542,075 was recognised as an expense for the year ended 30 June 2016.

NOTE 22. KEY MANAGEMENT PERSONNEL DISCLOSURES

(a) Directors and key management personnel compensation

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Short-term employee benefits

     1,300,140         1,509,877   

Long-term employee benefits

     5,817         6,231   

Post-employment benefits

     42,471         43,056   

Share-based payments

     1,824,643         467,002   
  

 

 

    

 

 

 
     3,173,071         2,026,166   
  

 

 

    

 

 

 

Further remuneration disclosures are set out in the Director’s Report on pages 10 to 18.

(b) Equity instrument disclosures relating to key management personnel

(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report on pages 10 to 18.

(ii) Shareholding

The numbers of shares in the Company held during the financial year by each director of and other key management personnel of the group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.

 

2016    Balance at start
of the year
    Received during the
year on the exercise of
performance rights
     Received during
the year on the
exercise of options
     Other changes
during the year
    Balance at
end of the
year
 

Ordinary shares

            

Ms Lucy Turnbull, AO

     20,059,576        —           —           300,000        20,359,576   

Mr Albert Wong

     3,537,500        —           —           300,000        3,837,500   

Dr Russell Howard

     —          —           —           —          —     

Mr Pete Meyers

     1,715,686        2,573,529         —           —          4,289,215   

Mr Marc Voigt

    

 

870,000

150

  

    10,735,293         —           —         

 

11,605,293

150

  

Ms Deanne Miller

     20,924        6,450,980         —           (1,520,924     4,950,980   

Dr Frédéric Triebel

     9,311,383        3,333,333         —           —          12,644,716   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total ordinary shares

     35,515,219        23,093,135         —           (920,924     57,687,430   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

Total ADR

     150        —           —           —          150   
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

 

 

* American Depository Receipts (ADR) traded on the NASDAQ

 

Page | 57


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 22. KEY MANAGEMENT PERSONNEL DISCLOSURES (CONTINUED)

 

(iii) Option holdings

The number of options over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

 

30 June 2016    Balance at start
of the year
     Granted      Exercised      Other
Changes
    Balance at
end of the
year
     Vested and
exercisable
     Unvested  

Options over ordinary shares

              

Ms Lucy Turnbull, AO

     4,439,894         —           —           —          4,439,894         4,439,894         —     

Mr Albert Wong

     —           —           —           —          —           —           —     

Dr Russell Howard

     —           —           —           —          —           —           —     

Mr Pete Meyers

     —           —           —           —          —           —           —     

Mr Marc Voigt

     1,171,754         —           —           (450,000     721,754         721,754         —     

Ms Deanne Miller

     121,212         —           —           —          121,212         121,212         —     

Dr Frédéric Triebel

     24,000,600         —           —           —          24,000,600         24,000,600         —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 
     29,733,460         —           —           (450,000     29,283,460         29,283,460         —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

(iv) Performance right holdings

The number of performance rights over ordinary shares in the parent entity held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below:

 

30 June 2016    Balance at start
of the year
     Granted      Exercised     Other
Changes
     Balance at
end of the
year
     Vested
and
exercisable
     Unvested  

Performance rights

                   

Ms Lucy Turnbull, AO

     —           —           —          —           —           —           —     

Mr Albert Wong

     —           —           —          —           —           —           —     

Dr Russell Howard

     —           —           —          —           —           —           —     

Mr Pete Meyers

     6,004,902         —           (2,573,529     —           3,431,373         —           3,431,373   

Mr Marc Voigt

     16,323,529         19,999,999         (10,735,293     —           25,588,235         —           25,588,235   

Ms Deanne Miller

     6,127,451         12,000,000         (6,450,980     —           11,676,471         —           11,676,471   

Dr Frédéric Triebel

     —           11,486,326         (3,333,333     —           8,152,993         —           8,152,993   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 
     28,455,882         43,486,325         (23,093,135     —           48,849,072         —           48,849,072   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

NOTE 23. REMUNERATION OF AUDITORS

During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and non-related audit firms.

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

PricewaterhouseCoopers Australia

     

Audit or review of the financial report

     232,000         286,000   

Other audit and assurance services in relation to regulatory filings overseas

     209,741         —     
  

 

 

    

 

 

 

Total remuneration of PricewaterhouseCoopers Australia

     441,741         286,000   
  

 

 

    

 

 

 

Other services

     

Network firm of PricewaterhouseCoopers Australia

     

Due Diligence services

     —           66,986   
  

 

 

    

 

 

 

 

Page | 58


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 24. CONTINGENT LIABILITIES

There were no other material contingent liabilities in existence at 30 June 2016 and 30 June 2015.

NOTE 25. COMMITMENTS FOR EXPENDITURE

There were no material capital or leasing commitments at 30 June 2016 and 30 June 2015.

NOTE 26. RELATED PARTY TRANSACTIONS

Parent entity

Prima BioMed Ltd is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 27.

Key management personnel

Disclosures relating to key management personnel are included in the remuneration report and note 22.

Receivable from and payable to related parties

There were no trade receivables from or trade payables due to related parties at the reporting date.

Loans to/from related parties

There were no loans to or from related parties at the reporting date.

NOTE 27. SUBSIDIARIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1:

 

     Country of
incorporation
   Class of
Shares
   Equity holding  
               30 June 2016      30 June 2015  
               %      %  

Prima BioMed USA Inc

   USA    Ordinary      100         100   

PRR Middle East FZLLC

   UAE    Ordinary      100         100   

Prima BioMed GmBH

   Germany    Ordinary      100         100   

Prima BioMed Australia Pty Ltd

   Australia    Ordinary      100         100   

Prima BioMed IP Pty Ltd

   Australia    Ordinary      100         100   

Immutep S.A.

   France    Ordinary      100         100   

NOTE 28. EVENTS OCCURRING AFTER THE REPORTING DATE

No matter or circumstance has arisen since 30 June 2016 that has significantly affected, or may significantly affect the consolidated entity’s operations, the results of those operations or the consolidated entity’s state of affairs in future financial years.

 

Page | 59


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED

 

NOTE 29. RECONCILIATION OF LOSS AFTER INCOME TAX TO NET CASH USED IN OPERATING ACTIVITIES

 

     Consolidated  
     30 June 2016      30 June 2015  
     $      $  

Loss after income tax expense for the year

     (62,015,184      (32,151,696

Adjustments for:

     

Depreciation and amortisation

     1,993,093         1,341,202   

Share based payments

     2,058,659         738,799   

Changes in fair value of comparability milestone

     542,075         —     

Non-cash share based payment to strategic investor

     47,468,071         —     

Unrealised (gain)/loss on exchange through the profit and loss

     844,864         (1,039,537

Non-cash finance expenses

     —           18,338,015   

Net change in fair value of convertible note liability

     607,637         —     

(Gain)/loss on disposal of fixed assets

     (18,493      5,160   

Change in operating assets and liabilities:

     

(Increase)/Decrease in current receivables

     (394,922      5,958,640   

Decrease in other operating assets

     324,983         350,970   

(Decrease) in trade and other payables

     (1,491,882      (1,187,960

(Decrease) in employee benefits

     (45,165      (357

Increase in income tax payable

     712