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PHARMANET GROUP LIMITED
(Subject to Deed of Company Arrangement)
ABN 98 006 640 553
ANNUAL REPORT
30 JUNE 2015
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PHARMANET GROUP LIMITED
(Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
1
CONTENTS Corporate Directory 1
Deed Administrator’s Report 2
Auditor’s Independence Declaration 10
Financial Report 11
Deed Administrator’s’ Declaration 43
Independent Auditor’s Report 44
CORPORATE DIRECTORY
Directors
Christopher John Quirk
John James Found Registered office Level 1 284 Oxford Street Leederville, Western Australia 6007 Ph: +61 8 9242 2999
Auditor RSM Australia Partners 8 St Georges Terrace Perth, Western Australia 6000
Share Registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross, Western Australia 6153
Securities Exchange Listing Australian Securities Exchange Limited 2 The Esplanade Perth, Western Australia 6000 ASX Code – PNO
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED ADMINISTRATOR’S REPORT
2
The Deed Administrator presents this report for Pharmanet Group Limited (“the Company”) and its subsidiaries (“the
Group”) for the year ended 30 June 2015.
Directors
The names and the particulars of the Directors who held office during or since the end of the half year and until the date of
this report are as below. Directors were in office for this entire period unless otherwise stated. Unless otherwise stated, the
powers of the directors were suspended from 15 April 2015, being the date of the appointment of the voluntary
administrator and remain so during the term of the deed of company arrangement.
Name Status
Christopher John Quirk Non-Executive Director
John James Found Non-Executive Director
The below named directors held office during the financial year up until the date of their resignation:
Name Status Resigned
John Palermo Non-Executive Chairman/Company
Secretary
17 March 2015
Principal activities
On 15 April 2015, the then Board resolved to place the Company into voluntary administration and appointed Mr. Jack
James of Palisade Business Consulting as voluntary administrator of the Company including the following related entities:
- Cambridge Scientific Pty Ltd;
- Thermalife International Pharmaceuticals Pty Ltd; and
- Pharmasolv Laboratories Pty Ltd
Following appointment of the Administrator, the powers of the Company’s officers (including Directors) were suspended
and the Administrator assumed control of the Company’s business, property and affairs.
At a meeting of creditors held on 30 May 2016, it was resolved that the Company enter into a Deed of Company
Arrangement (“DOCA”). The DOCA was executed on 21 June 2016 and Jack James was appointed Deed Administrator.
At a meeting of creditors held on 3 July 2015, it was resolved that Pharmasolv Laboratories Pty Ltd be wound up and Jack James was appointed liquidator.
At a meeting of creditors held on 27 May 2016, it was resolved that Cambridge Scientific Pty Ltd be wound up and Jack James was appointed liquidator.
At a meeting of creditors held on 27 May 2016, it was resolved that Cambridge Scientific Pty Ltd be wound up and Jack James was appointed liquidator.
Incomplete records
The financial report has been prepared by Deed Administrator who was not in office for the periods presented in this
report, nor were they parties involved with the Company and did not have oversight or control over the group’s financial
reporting systems including but not limited to being able to obtain access to complete accounting records of the Company.
In addition, the Deed Administrator has not been able to source books and records of the Company’s subsidiaries. The Deed
Administrator who prepared this financial report were appointed on or after 30 May 2016. Every reasonable effort has
been made by the Deed Administrator to ascertain the true position of the Company as at 30 June 2015.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED ADMINISTRATOR’S REPORT
3
To prepare the financial report, the Deed Administrator has reconstructed the financial records of the Group using data
extracted from the Group’s accounting system for the year. However, there may be information that the Deed
Administrator has not been able to obtain, the impact of which may or may not be material on the accounts.
These financial statements do not contain all the required information or disclosures in relation to transactions undertaken
by the Company as this information is unascertainable due to the administration process and/or the change in directorships
and key management personnel.
Consequently, although the Deed Administrator has prepared this financial report to the best of his knowledge based on
the information made available to him, he is of the opinion that it is not possible to state that this financial report has been
prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001, nor is it possible to state
this financial report gives a true and fair view of the Group’s financial position as at 30 June 2015 and for the year then
ended.
Operating and financial review
The consolidated loss for the year amounted to $1,085,892 (2014: loss $2,158,897).
Dividends paid or recommended
There were no dividends paid or recommended during the financial year ended 30 June 2015 (2014: Nil).
Significant changes in state of affairs
Significant changes in the state of affairs of the Company during the financial year were as follows:
On the 17 March 2015 the board advised of the passing of Mr John Palermo.
On 15 April 2015, the then Board resolved to place the Company into voluntary administration and appointed Mr Jack
James of Palisade Business Consulting as voluntary administrator of the Company including the following related entities:
Cambridge Scientific Pty Ltd;
Thermalife International Pharmaceuticals Pty Ltd; and
Pharmasolv Laboratories Pty Ltd
No other significant changes in the nature of the Company’s activities have occurred during the year.
Significant events after balance date
Pharmanet Group Limited is currently subject to DOCA. The DOCA proposes for the compromise of creditors claims, recapitalisation of the Company and (subject to regulatory approval) re-quotation of its securities on the ASX.
The material terms of the DOCA are as follows:
The DOCA is intended to satisfy creditors debts through the provision of a creditor payment of $120,000 and issue
a total of 15,000,000 shares at a deemed value of $0.02 or a market value equivalent of $300,000 to secured
Creditors Finebase Pty Ltd and Celtic Capital Pty Ltd (creditor payments).
the creditor payment is to be made without any setoff, counterclaim or deduction whatsoever;
the creditor payment will be used in full and final satisfaction of all creditors’ claims (including those of an
administrator); and
the creditor payment will be raised through one or more capital raisings by the Company (which will be subject to
the receipt of shareholder approval)
As announced on the 13 December 2016 the Deed Administrator and the Proponent agreed to extend the Due Date of
the DOCA to 30 May 2017.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED ADMINISTRATOR’S REPORT
4
Information on Directors – Current Directors
John Palermo Chairman/Company Secretary (resigned 17 March 2015)
Qualifications B.Bus, FCA, FCPA, JP
Experience Mr Palermo is a Chartered Accountant with over 30 years’ experience in public
practice. After commencing his career as an auditor, he was the principal in private
practice from 1978 until 2006. His main areas of expertise are corporate services and
company administration with his main focus in mining and exploration,
biotechnology. Mr Palermo has extensive management, corporate and directorial
experience and is also Chairman and Company Secretary of other public companies,
both listed and unlisted.
Interest in Shares and Options Nil
Special Responsibilities None
Directorships held in other listed
entities
Pelican Resources Limited
Consolidated Global Investments Limited
Gladiator Resources Limited (Resigned 30 Nov 2012)
Christopher John Quirk Non-Executive Director
Qualifications MB BS.FACD
Experience Dr Quirk is an Australian Dermotologist who has been a teaching hospital consultant
for over 30 years and has conducted numerous trials for international
pharmaceutical companies such as Roche, Novartis, 3M and Matrix and has served
on advisory boards for Merck, Allergan and Roche, Abbott, Wyeth and Janssen. He
has published 22 papers in international journals and has presented at several
international conferences.
Interest in Shares and Options Nil
Special Responsibilities None
Directorships held in other listed
entities
OBJ Limited
John James Found Non-Executive Director
Qualifications Dip Chem., C.Chem. MRACI
Experience Mr Found’s career as a chemist spans over 30 years from being engaged in the
manufacture of a range of specialty drug products to working in every facet of the
pharmaceutical industry including regulatory affairs and product based research and
development. Mr Found has been instrumental in the formulation and registration of
approximately 300 therapeutic medicines and devices during his career. In 1998, Mr
Found joined the board of Wild Child where he is responsible for handling all
regulatory affairs, quality assurance and product development activities as well as
technical aspects of public relations and promotions.
Interest in Shares and Options Nil
Special Responsibilities None
Directorships held in other listed
entities
None
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED ADMINISTRATOR’S REPORT
5
Meetings of directors
Due to the appointment of the Administrator on 15 April 2015 to the Company and the current Directors not being in control of the Company during this time, no directors meetings have been held during the year.
Share options
At the date of this report, the unissued ordinary shares of Pharmanet Group Limited under option are as follows:
Expiry date Exercise Price Number under option
31 December 2015 $0.005 448,409,848
448,409,848
No option holder has any right under the options to participate in any other share issue of the Company or of any other
entity.
No options were exercised during the year (2014: Nil).
Non-audit services
No fees for non-audit services were paid to the external auditors during the year ended 30 June 2015 (2014: Nil).
Auditor’s independence declaration
The auditor’s independence declaration for the year ended 30 June 2015 can be found on page 10 of the financial report.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED’S ADMINISTRATOR REPORT
6
This remuneration report, which forms part of the Deed Administrators’ Report, sets out information about the
remuneration of Pharmanet Group Limited’s directors and its senior management for the financial year ended 30 June
2015. The Company was in administration from 15 April 2015 and on entering administration the administrators were
responsible for the remuneration policies of the Company.
The Directors who are in office at the date of this report had no involvement in adopting, implementing or complying with
these remuneration policies. These policies may or may not have been in place during the financial period.
If the recapitalisation process is successful, the Directors who are in office at the date of this report will adopt a new
remuneration policy in accordance with the corporate governance framework to be adopted by the Board.
The prescribed details for each person covered by this report are detailed below under the following headings:
- Remuneration policy for directors and senior executives
- Details of remuneration
- Options issued as part of remuneration
- Employment contracts of directors and senior executives
Remuneration policy for directors and senior executives
The remuneration policy of Pharmanet Group was designed to align Director and Senior Management objectives with
shareholder and business objectives by providing a fixed remuneration component and offering specific long-term
incentives based on key performance areas affecting the group’s medium and long-term financial outcomes.
The Board’s policy for determining the nature and amount of remuneration for Board members and Senior Management of
the group was as follows:
- The remuneration policy, setting the terms and conditions for Executives and Directors was developed by the
Board.
- All Executives received a base salary (which was based on factors such as scope of responsibilities, length of
service and experience), superannuation, fringe benefits, options and performance incentives.
- The Board reviewed Executive Directors and Senior Management performance annually by reference to the goals
set at the start of the year
The Board was able to, however, exercise its discretion in relation to approving incentives, bonuses and options. The policy
was designed to attract the highest calibre of Executive Directors and reward them for performance that results in long-
term growth in shareholder wealth.
All remuneration paid to Executive Directors and Senior Management was valued at the cost to the Company and
expensed.
Remuneration of non-executive directors is determined by the Board within the maximum amount approved by the
shareholders from time to time and which currently stands at $250,000 per annum.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED’S ADMINISTRATOR REPORT
7
Details of remuneration
No remuneration was accrued or paid to the directors during the year ended 30 June 2015.
2014
Group Key Management Personnel
Short-term benefits Post- Long-
term benefits
Equity-settled share-based
payments Total
% of remuneration
as options employment
benefits
Salary, fees and leave
Profit share and
bonuses
Non-monetary
Other
Other Equity Options superannuation
Directors: $ $ $ $ $ $ $ $ $ J Palermo 216,425 - - - - - 1,949 2,854 221,228 - C Quirk 25,000 - - - - - 649 - 25,649 - J Found 25,000 - - - - - 649 - 25,649 -
266,425 - - - - - 3,247 2,854 272,526
Options issued as part of remuneration
No options were exercised, since the last report (2014: Nil).
Employment Contracts of Directors and Senior Executives
The previous directors’ contracts ended upon entering administration.
KMP options and rights holdings
The number of options over ordinary shares held by each KMP of the Group during the financial year is as follows:
30 June 2015
Balance at the
start of the year
Granted during
the year
Exercised during
the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable Unvested
J Palermo 72,221,607 - - - 72,221,607 72,221,607 -
C Quirk - - - - - - -
J Found - - - - - - -
Total 72,221,607 - - - 72,221,607 72,221,607 -
30 June 2014
Balance at the
start of the year
Granted during
the year
Exercised during
the year
Other changes
during the year
Balance at the
end of the year
Vested and
exercisable Unvested
J Palermo 74,221,607 - - (2,000,000) 72,221,607 72,221,607 -
C Quirk 1,000,000 - - (1,000,000) - - -
J Found 1,000,000 - - (1,000,000) - - -
Total 76,221,607 - - (4,000,000) 72,221,607 72,221,607 -
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
DEED’S ADMINISTRATOR REPORT
8
KMP shareholdings
The number of ordinary shares in Pharmanet Group Limited held by each KMP of the Group during the financial year was
as follows:
30 June 2015
Balance at the start of
the year
Granted as
Remuneration during
the year
Issued on exercise of
options during the year
Other changes
during the year
Balance at
end of Year
J Palermo 191,236,463 - - - 191,236,463
C Quick 6,492,064 - - - 6,492,064
J Found 3,000,000 - - - 3,000,000
Total 200,728,527 - - - 200,728,527
30 June 2014
Balance at the start of
the year
Granted as
Remuneration during
the year
Issued on exercise of
options during the year
Other changes
during the year
Balance at
end of Year
J Palermo 188,236,463 - 3,000,000 -1 191,236,463
C Quick 5,492,064 - 1,000,000 - 6,492,064
J Found 2,000,000 - 1,000,000 - 3,000,000
Total 195,728,527 - 5,000,000 - 200,728,527
Loans to Key Management Personnel
To the best of the Deed Administrators’ knowledge, they are not aware of any loans to Key Management Personnel during
the financial year.
Other KMP Transactions
To the best of the Deed Administrators’ knowledge, he is not aware of other transactions with Key Management Personnel.
REMUNERATION REPORT (END)
1 During the period John Palermo acquired and disposed of 5,238,097 shares for a net change of nil
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AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Pharmanet Group Limited for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit.
RSM AUSTRALIA PARTNERS
Perth, WA J A KOMNINOS Dated: 15 December 2016 Partner
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
11
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Note 2015 2014
$ $
Revenue 2 107,201 212,319
Other income 2 311,171 399,243
Changes in inventories 41,566 (5,223)
Manufacturing and distribution costs (126,030) (454,711)
Borrowing costs (168,687) (436,393)
Depreciation expense (11,542) (30,630)
Administration fees and administration benefits expenses (144,188) (235,601)
Administrator expense (206,882) -
Analysis and product testing - (14,205)
Auditor’s remuneration (22,711) (47,291)
Company secretarial expenses (25,250) (30,000)
Consultants and consultants benefits expenses (421,706) (503,728)
Directors and employees benefits expense (237,823) (376,932)
Legal expenses (55,508) (110,517)
Patent expenses (6,148) (97,790)
Rent premises (45,284) (61,200)
Travel and accommodation expenses - (12,960)
Other expenses (74,071) (353,278)
Loss before income tax (1,085,892) (2,158,897)
Income tax 3 - -
Loss for the year (1,085,892) (2,158,897)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency translation differences - (209)
Total comprehensive loss for the year (1,085,892) (2,159,106)
Total comprehensive loss attributable to:
Members of the parent entity (1,085,892) (2,133,573)
Non-controlling interest - (25,533)
(1,085,892) (2,159,106)
2015 2014
Basic and diluted losses per share (cents) (0.054) (0.10)
The accompanying notes form part of these financial statements.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
12
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015
Note 2015 2014
$ $
CURRENT ASSETS
Cash and cash equivalents 7 a 39,044 56,849
Trade and other receivables 8 - 108,854
Inventories - 70,870
TOTAL CURRENT ASSETS 39,044 236,573
TOTAL ASSETS 39,044 236,573
CURRENT LIABILITIES
Trade and other payables 9 1,610,429 1,190,352
Borrowings 10 2,924,785 2,456,499
TOTAL CURRENT LIABILITIES 4,535,214 3,646,851
TOTAL LIABILITIES 4,535,214 3,646,851
NET LIABILITIES (4,496,170) (3,410,278)
SHAREHOLDERS’ DEFICIT
Issued capital 11 26,782,036 26,782,036
Reserves 12 1,653,814 1,653,814
Accumulated losses (32,779,242) (31,693,350)
Total parent equity interest (4,343,392) (3,257,500)
Non-controlling interest (152,778) (152,778)
TOTAL SHAREHOLDERS’ DEFICIT (4,496,170) (3,410,278)
The accompanying notes form part of these financial statements.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AS AT 30 JUNE 2015
Issued Capital
Foreign
Currency
Translation
Reserve
Share based
payments
reserve
Accumulated
Losses
Non-
controlling
interest
Total
$ $ $ $ $ $
Balance at 1 July 2013 26,781,895 (7,527) 1,658,303 (29,559,986) (127,245) (1,254,560)
Loss for the year - - - (2,133,364) (25,533) (2,158,897)
Other comprehensive loss - (209) - - - (209)
Total comprehensive loss for the year - (209) - (2,133,364) (25,533) (2,159,106)
Transactions with owners, recognised
directly in equity
Equity issued during the year 141 - - - - 141
Performance rights issued during the
year - - 3,247 - - 3,247
Balance at 30 June 2014 26,782,036 (7,736) 1,661,550 (31,693,350) (152,778) (3,410,278)
Balance at 1 July 2014 26,782,036 (7,736) 1,661,550 (31,693,350) (152,778) (3,410,278)
Loss for the year - - - (1,085,892) - (1,085,892)
Other comprehensive loss - - - - - -
Total comprehensive loss for the year - - - (1,085,892) - (1,085,892)
Balance at 30 June 2015 26,782,036 (7,736) 1,661,550 (32,779,242) (152,778) (4,496,170)
The accompanying notes form part of these financial statements.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2015
Note 2015 2014
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 107,202 633,958
Payments to suppliers and employees (610,680) (1,443,894)
R&D rebate 277,680 -
Interest received - 4,858
Borrowing costs paid - (29,830)
Net cash used in operating activities 7 b (225,798) (834,908)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment 33,491 -
Payments for plant and equipment - (3,454)
Other - (4,720)
Net cash from/ (used in) investing activities 33,491 (8,174)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of equity instruments - 141
Proceeds from borrowings 174,502 518,788
Other - (117)
Net cash from financing activities 174,502 518,812
Net decrease in cash and cash equivalents (17,805) (324,270)
Effects of exchange rate changes on the balance of cash held in foreign
currencies
- (209)
Cash and cash equivalents at the beginning of the financial year 56,849 381,328
Cash and cash equivalents at the end of the financial year 7 a 39,044 56,849
The accompanying notes form part of these financial statements
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
15
These consolidated financial statements cover Pharmanet Group Limited (“the Company”) and its controlled entities as a
consolidated entity (also referred to as “the Group”). Pharmanet Group Limited is a company limited by shares,
incorporated and domiciled in Australia. The Group is a for-profit entity.
The financial report was issued by the Deed Administrators on 15 December 2016.
The following is a summary of the material accounting policies adopted by the consolidated entity in the preparation and
presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
a) Basis of preparation of the financial report
Statement of compliance
These financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards (“AASBs”) (including Australian interpretations) adopted by the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001 where possible (refer to Note 1(b)). These financial statements of
the Group also comply with the International Financial Reporting Standards (“IFRSs”) and interpretations adopted by the
International Accounting Standards Board (“IASB”) where possible (refer to Note 1(b)).
The financial statements have been prepared on an accruals basis and is based on historical costs modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
b) Incomplete records
On 15 April 2015, the then Board resolved to place the Company into voluntary administration and appointed Mr Jack
James of Palisade Business Consulting as voluntary administrator of the Company.
Following appointment of the administrator, the powers of the Company’s officers (including Directors) were suspended
and the administrator assumed control of the Company’s business, property and affairs.
To prepare the financial report, the Deed Administrator has reconstructed the financial records of the Group using data
extracted from the Group’s accounting system for the entire financial year. However, there may be information that the
Deed Administrator have not been able to obtain, the impact of which may or may not be material on the financial
statements.
These financial statements do not contain all the required information or disclosures in relation to transactions undertaken
by the Company as this information is unascertainable due to the administration process and/or the change in directorships
and key management personnel.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
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b) Incomplete records (continued)
Consequently, although the Deed Administrator has prepared this financial report to the best of his knowledge based on
the information made available to him, he is of the opinion that it is not possible to state that this financial report has been
prepared in accordance with Australian Accounting Standards including Australian interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001, nor is it possible to state
this financial report gives a true and fair view of the Group’s financial position as at 30 June 2015 and for the year then
ended.
c) Going concern
The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities
and the realisation of assets and settlement of liabilities in the ordinary course of business.
The Deed Administrator believes it is appropriate to prepare these accounts on a going concern on the basis that the DOCA
will be fully effectuated.
The DOCA proposes for the compromise of creditors’ claims, recapitalisation of the Company and (subject to regulatory
approval) re-quotation of its securities on the ASX.
The material terms of the DOCA are as follows:
the syndicate (or its nominees) will provide $120,000 cash to the creditors’ pool (creditor payment) and issue a total of
15,000,000 shares at a deemed value of $0.02 or a market value equivalent of $300,000 to secured creditors Finebase
Pty Ltd and Celtic Capital Pty Ltd (Secured Creditor Payment), collectively referred to as the creditor payments);
the creditor payment is to be made without any setoff, counterclaim or deduction whatsoever;
the creditor payment will be used in full and final satisfaction of all creditor claims (including those of an
administrator); and
the creditor payment will be raised through one or more capital raisings by the Company (which will be subject to the
receipt of shareholder approval).
The Company expects to recapitalise following completion of the DOCA with sufficient funds to continue as a going
concern. It is proposed that the capital raising will be as follows:
up to 50,000,000 shares at not less than $0.02 to raise $1,000,000; and
up to 50,000,000 options to acquire shares with an exercise price of not less than $0.02 each with an expiry date of 4
years from the date of issue;
The proposed capital structure and reconstruction (including consolidation, share/option issues and share/option prices)
may be varied at the Syndicates sole discretion, but subject to both ASX and shareholder approval.
It is for these reasons that the Deed Administrator considers the Group to be a going concern. Notwithstanding the
material uncertainties of future events inherent in the above, the Deed Administrator considers it is appropriate to prepare
financial information on a going concern basis and hence no adjustments have been made to the financial information
relating to the recoverability and classification of the asset carrying amounts or the amounts and classifications of liabilities
that might be necessary if the entity does not continue as a going concern.
The financial report does not contain any adjustments relating to the recoverability and classification of recorded assets or liabilities that might be necessary should the Group not be able to continue as a going concern.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
17
d) Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June
2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an
investee if and only if the Group has:
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts
and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee,
Rights arising from other contractual arrangements,
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date
the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent
of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and
cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
De-recognises the assets (including goodwill) and liabilities of the subsidiary
De-recognises the carrying amount of any non-controlling interests
De-recognises the cumulative translation differences recorded in equity
Recognises the fair value of the consideration received
Recognises the fair value of any investments retained
Recongnises any surplus or deficit in profit and loss
Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings,
as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities
For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the Deed
Administrator has not been able to obtain financial information of the company’s subsidiaries. The Deed Administrator has
not been able to source books and records of the Company’s subsidiaries which are in the process of being wound up or are
considered dormant.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
18
e) Income Tax
Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable
income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore
measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of the profit or loss
when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have
been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their
measurement also reflects the manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference cannot be
controlled and it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets
and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
19
f) Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a
party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are
delivered within timeframes established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as
at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss
are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below.
Classification and subsequent measurement
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to
determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar
instruments and option pricing models.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the
requirements of accounting standards specifically applicable to financial instruments.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within 12
months after the end of the reporting period. (All other loans and receivables are classified as non-current assets.)
(ii) Financial assets at fair value through profit and loss
Financial assets are classified at fair value through profit or loss when they are held for trading for the purpose of
short term profit taking, where they are derivatives not held for hedging purposes, or designated as such to avoid
an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by Key
Management Personnel on a fair value basis in accordance with a documented risk management or investment
strategy. Realised and unrealised gains and losses arising from changes in fair value are included in profit or loss in
the period in which they arise.
(iii) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Gains or losses are recognised in profit and loss through the amortisation process and when the financial liability is
derecognised.
Derivative instruments
The Group does not trade or hold derivatives.
Financial guarantees
The Group has no material financial guarantees.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets
that can be reliably estimated.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
20
f) Financial Instruments (Continued)
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is transferred to
another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
g) Impairment of non-financial assets
At the end of each reporting period, the Deed Administrator assesses whether there is any indication that an asset may
be impaired. The assessment will include the consideration of external and internal sources of information, including
dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If any such indication exists, an impairment test is carried out on the asset by comparing the asset’s recoverable amount,
being the higher of its fair value less costs to sell and its value in use, to the asset’s carrying amount. Any excess of the
asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it is not possible
to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash
generating unit to which the asset belongs.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
h) Intangible assets
Research and development costs
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
Its intention to complete and its ability to use or sell the asset
How the asset will generate future economic benefits
The availability of resources to complete the asset
The ability to measure reliably the expenditure during development
The ability to use the intangible asset generated
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually.
i) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks with original maturity of three
months or less.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
21
j) Revenue
Revenue is measured at the fair value of the consideration received or receivable. Interest revenue is brought to account
on an accruals basis using the effective interest rate method and, if not received at the end of the reporting period, is
reflected in the statement of financial position as a receivable
k) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Tax Office (ATO).
Receivable and payables are stated inclusive of the amount of GST receivable or payable. The net amount of the GST
recoverable from, or payable to, the ATO is included with other receivables and payables in the statement of financial
position.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.
l) Employee Benefits
Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to the end
of the reporting period. Employee benefits that are expected to be settled within 12 months have been measured at the
amounts expected to be paid when the liability is settled. Employee benefits payable later than 12 months have been
measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the
liability, consideration is given to employee wages increases and the probability that the employee may satisfy any
vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to
maturity that match the expected timing of cash flows attributable to employee benefits.
Equity-settled compensation
The Group operates an employee share ownership plan. Share-based payments to employees are measured at the fair
value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are
measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is
determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or
services are received. The corresponding amount is recorded to the option reserve. The fair value of options is
determined using the Black-Scholes pricing model. The number of shares and options expected to vest is reviewed and
adjusted at the end of each reporting period such that the amount recognised for services received as consideration for
the equity instruments granted is based on the number of equity instruments that eventually vest.
m) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is
probable that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the
reporting period.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
22
n) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation
for the current financial year.
o) Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars
which is the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of
the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary
items measured at fair value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognized in other comprehensive Income; otherwise the
exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars
are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement
of financial position. These differences are recognised in the profit or loss in the period in which the operation is disposed
of.
p) Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of
those assets, until such time as the assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in profit
or loss in the period in which they are incurred.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
23
q) Adoption of new and revised accounting standards
New/revised pronouncement Explanation of amendments Application Date of Standard
Application Date of Company
AASB 9
Financial Instruments
AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially- reformed approach to hedge accounting.
AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early adoption. The own credit changes can be early adopted in isolation without otherwise changing the accounting for financial instruments.
Classification and measurement
AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets
compared with the requirements of AASB 139. There are also some changes made in relation to financial
liabilities.
The main changes are described below.
Financial assets
a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity's
business model for managing the financial assets; (2) the characteristics of the contractual cash
flows.
b) Allows an irrevocable election on initial recognition to present gains and losses on investments in
equity instruments that are not held for trading in other comprehensive income. Dividends in
respect of these investments that are a return on investment can be recognised in profit or loss and
there is no impairment or recycling on disposal of the instrument.
c) Financial assets can be designated and measured at fair value through profit or loss at initial
recognition if doing so eliminates or significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or liabilities, or recognising the gains and
1 January
2018
1 July 2018
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
24
New/revised pronouncement Explanation of amendments Application Date of Standard
Application Date of Company
losses on them, on different bases.
Financial liabilities
Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities designated at fair value through profit or loss (FVPL) using the fair value option.
Where the fair value option is used for financial liabilities, the change in fair value is to be accounted for as follows:
The change attributable to changes in credit risk are presented in other comprehensive income (OCI)
The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be measured at fair value. This change in accounting means that gains or losses attributable to changes in the entity’s own credit risk would be recognised in OCI. These amounts recognised in OCI are not recycled to profit or loss if the liability is ever repurchased at a discount.
Impairment
The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis.
Impact on Pharmanet Group Limited
The company have assessed that there is no expected material impact of the above standard.
AASB 15
Revenue from Contracts with Customers
AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition standards AASB 111 Construction Contracts, AASB 118 Revenue and related interpretations (Interpretation 13 Customer Loyalty Programmes, Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers, Interpretation 131 Revenue – Barter Transactions Involving Advertising Services and Interpretation 1042 Subscriber Acquisition Costs in the Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15 Revenue from Contracts with Customers issued by the International Accounting Standards Board (IASB) and
1 January
2018
1 July 2018
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
25
New/revised pronouncement Explanation of amendments Application Date of Standard
Application Date of Company
developed jointly with the US Financial Accounting Standards Board (FASB).
Impact on Pharmanet Group Limited
The company have assessed that there is no expected material impact of the above standard given that the company
does not yet have any revenue.
AASB 16
Leases The key features of AASB 16 are as follows:
Lessee accounting:
Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months,
unless the underlying assets is of low value.
A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to
other financial liabilities.
Assets and liabilities arising from a lease are initially measured on present value basis. The measurement
includes non-cancellable lease payments (including inflation-linked payments), and also includes payments
to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease,
or not to exercise an option to terminate the lease.
AASB 16 contains disclosure requirements for lessees.
Lessor accounting:
AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a
lessor continues to classify its leases as operating leases or finance leases, and to account for those
two types of leases differently.
AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information
disclosed about a lessor’s risk exposure, particularly to residual value risk.
1 January
2019
1 July 2019
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
26
New/revised pronouncement Explanation of amendments Application Date of Standard
Application Date of Company
AASB 16 supersedes:
(a) AASB 117 Leases
(b) Interpretation 4 Determining whether an Arrangement contains a Lease
(c) SIC-15 Operating Leases-Incentives
SIC-27 Evaluating the Substance of Transaction Involving the Legal Form of a Lease.
AASB 2015-1 AASB 7 Financial Instruments: Disclosures:
Applicability of the amendments to AASB 7 to condensed interim financial statements - clarify that the
additional disclosure required by the amendments to AASB 7 Disclosure–Offsetting Financial Assets and
Financial Liabilities is not specifically required for all interim periods. However, the additional disclosure is
required to be given in condensed interim financial statements that are prepared in accordance with AASB 134
Interim Financial Reporting when its inclusion would be required by the requirements of AASB 134.
AASB 134 Interim Financial Reporting:
Disclosure of information ‘elsewhere in the interim financial report’ - amends AASB 134 to clarify the meaning
of disclosure of information
elsewhere in the interim financial report’ and to require the inclusion of a cross-reference from the interim
financial statements to the location of this information.
1 January 2016
1 July 2016
AASB 2015-2
Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
The Standard makes amendments to AASB 101 Presentation of Financial Statements arising from the IASB’s Disclosure Initiative project. The amendments are designed to further encourage companies to apply professional judgment in determining what information to disclose in the financial statements. For example, the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial
disclosures. The amendments also clarify that companies should use professional judgment in determining where and in what order information is presented in the financial disclosures.
1 January
2016
1 July 2016
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
27
New/revised pronouncement Explanation of amendments Application Date of Standard
Application Date of Company
AASB 2014-9
Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements
AASB 2014-9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First-time Adoption of Australian Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements.
AASB 2014-9 also makes editorial corrections to AASB 127.
1 January
2016
1 July 2016
AASB 2014-4
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to
AASB 116 and AASB 138)
AASB 116 and AASB 138 both establish the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset.
The IASB has clarified that the use of revenue-based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset.
The amendment also clarified that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. This presumption, however, can be rebutted in certain limited circumstances.
1 January
2016
1 July 2016
The Company has decided not to early adopt any of the new and amended pronouncements. The impact of the above standards is yet to be determined unless noted otherwise above.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
28
r) Critical Accounting estimates and judgements
The Deed Administrator evaluates estimates and judgements incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and are
based on current trends and economic data, obtained both externally and within the Group.
Key Estimates and judgements
Impairment - General
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in
which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision
affects both current and future periods.
Consolidation of group’s subsidiaries
For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the Deed
Administrator has not been able to obtain detailed financial information of the company’s subsidiaries.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
29
Note 2015 2014
NOTE 3: INCOME TAX $ $
(a) Income tax expense - -
Current tax - -
Deferred tax - -
(b) The prima facie tax payable on loss from ordinary activities
before income tax is reconciled to the income tax expense as
follows:
Prima facie tax on operating loss at 30% (2014: 30%) (325,767) (647,669)
Add / (Less)
Tax effect of:
Other reconciling items 325,767 144,127
Deferred tax asset not brought to account * 503,542
Income tax attributable to operating loss - -
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Groups
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
Note 2015 2014
NOTE 2: REVENUE AND OTHER INCOME $ $
Revenue from continuing operations
Sales 107,201 204,603
Mark up fees - 109
Total revenue from operating activities 107,201 204,712
Revenue from non-operating activities
Interest – other parties - 1,147
Rental Income - 6,460
Total revenue from non-operating activities - 7,607
107,201 212,319
Other income:
- Research and development tax incentives 277,680 393,061
- Profit on disposal of plant and equipment 33,491 -
- Write off of creditor - 6,182
Total Other Income 311,171 399,243
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
30
NOTE 3: INCOME TAX
Carry forward losses
Potential future income tax benefits attributable to tax losses carried forward have not been brought to account at 30 June 2015, because the Deed Administrator do not believe it is appropriate to regard realisation of the future income tax benefits as probable.
Deferred tax
Disclosure of each type of temporary difference as at 30 June 2015 and the amount of any unrecognised deductible temporary differences or unused tax losses has not been included as the Deed Administrator does not have access to sufficient information to enable this level of disclosure to be made.
NOTE 4: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the Remuneration Report contained in the Deed Administrator’ Report for details of the remuneration paid or
payable to each member of the Group’s key management personnel (KMP) for the year ended 30 June 2015.
The totals of remuneration paid to KMP during the year are as follows:
2015 2014
$ $
Short-term employee benefits * 266,425
Post-employment benefits * -
Equity Settled * 3,247
Other payments * 2,854
Total KMP Compensation * 272,526
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Groups
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
Loans to Key Management Personnel
To the best of the Deed Administrator’ knowledge, they are not aware of any loans to Key Management Personnel during
the financial year.
Other KMP Transactions
To the best of the Deed Administrator’ knowledge, they are not aware of other transactions with Key Management
Personnel.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
31
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Groups
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
NOTE 6: LOSS PER SHARE $ $
Reconciliation of loss to profit or loss: (0.054) (0.10)
Loss used in calculation of basic EPS (1,085,892) (2,158,897)
Weighted average number of ordinary shares outstanding during the year
used in calculation of basic loss per share 2,002,565,241 2,001,288,385
* Diluted loss per share has not been calculated as any option outstanding at 30 June 2015 and 30 June 2014 will be
anti-dilutive.
NOTE 7: CASH AND CASH EQUIVALENTS
Cash at bank 39,044 56,849
Total cash and cash equivalents in the statement of cash flows 7 a 39,044 56,849
NOTE 5: AUDITOR’S REMUNERATION Note
2015
$
2014
$
Remuneration of the auditor of the Group for:
- Auditing or reviewing the financial reports - RSM * 30,000
- other auditors * 17,291
* 47,291
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
32
NOTE 7: CASH AND CASH EQUIVALENTS (continued) Note
2015
$
2014
$
CASH FLOW INFORMATION
Loss after income tax (1,085,892) (2,158,897)
Non-cash flows in loss after income tax
Depreciation expense 11,542 30,630
Borrowing cost 168,685 -
Share based payment expense - 3,247
(Profit)/Loss on disposal of plant and equipment (33,491) 325
Impairment expense 237,823 162,738
Changes in assets and liabilities
- Trade and other receivables 108,854 27,254
- Other assets 70,870 37,429
- Inventories (41,567) 85,546
- Payables 337,378 976,820
Cash flow used in operations 7 b (225,798) (834,908)
Credit Standby Facilities
The Group has no credit standby facilities.
Non-Cash investing and financing activities
There were nil non-cash investing and financing activities for the year.
NOTE 8: TRADE AND OTHER RECEIVABLES Note
2015
$
2014
$
CURRENT
Trade receivables (a) 127,162 7,393
GST receivable - 85,202
Other receivables (b) - 16,259
Allowance for impairment (c) (127,162) -
- 108,854
(a) Trade receivables are on normal commercial arrangement and are paid 60 days after volume verification by the
purchaser.
(b) Other receivables are non-interest bearing and have payment terms between 30 and 60 days.
(c) An allowance has been made for all balances in trade and other receivables.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
33
NOTE 9: TRADE AND OTHER PAYABLES Note 2015
$
2014
$
CURRENT
Trade payables 1,388,653 997,525
Sundry payables and accrued expenses 221,776 192,827
1,610,429 1,190,352
(a) Convertible notes issued:
Issue Date Amount* Interest Rate Convertible On or Before1
1 April 2004 200,000 12% per annum 15 June 2014
31 March 2008 200,000 12% per annum 30 April 2014
1 June 2008 410,000 12% per annum 1 June 2013
31 December 2008 250,000 12% per annum 31 December 2013
5 February 2010 300,000 12% per annum 5 February 2014
27 September 2013 250,000 10% per annum 27 September 2014
1,610,000
* On the 15 April 2015, the Directors placed the Company in voluntary administration. As detailed in Note 1 (c) upon effectuation of the DOCA, the claims of all secured and unsecured liabilities will be extinguished.
1 The convertible notes issued were not converted within the term of the notice.
NOTE 10 : BORROWINGS 2015
$
2014
$
CURRENT
Loans - secured 230,000 225,000
Loans – unsecured 175,000 -
Convertible notes – secured 10 a 250,000 250,000
Convertible notes – unsecured 10 a 1,360,000 1,360,000
Interest on borrowings 909,785 621,499
2,924,785 2,456,499
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
34
NOTE 11: ISSUED CAPITAL 2015
$
2014
$
(a) Share Capital
2,002,565,241 (2014: 2,002,565,241) fully paid ordinary shares 26,782,036 26,782,036
26,782,036 26,782,036
(b) Movements in fully paid Ordinary Capital
Date Number $
Balance at beginning of the reporting period 1 July 2013 1,997,540,088 26,781,895
Exercise of options 2 July 2013 2,066 26
Exercise of options 12 August 2013 4,618 23
Exercise of options 15 August 2013 18,469 92
Exercise of performance rights 1 October 2013 5,000,000 -
Balance at end of the reporting period 30 June 2014 2,002,565,241 26,782,036
Balance at beginning of the reporting period 1 July 2014 2,002,565,241 26,782,036
Balance at end of the reporting period 30 June 2015 2,002,565,241 26,782,036
Ordinary shareholders are entitled to participate in dividends and the proceeds on winding up of the company in proportion
to the number of and amounts paid on the shares held. Every ordinary shareholder present at a meeting in person or by
proxy is entitled to one vote on a show of hands or by poll. Shares have no par value.
Capital Management
The Directors’ objectives when managing capital are to ensure that the Group can fund its operations and continue as a
going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. The
Group is not subject to any externally imposed capital requirements.
NOTE 12: RESERVES
a) Option reserve
The option reserve records items recognised as expenses on valuation of employee share options and proceeds
from issue of options as part of a capital raising.
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
35
NOTE 12: RESERVES (Continued)
Date
Details
Number of
Number of Options
Exercise Fair Value
of Options /
Expiry
Performance Rights
Listed Unlisted Price Performance
Rights Issued
Date
$ $
1 July 2013 Opening Balance
5,000,000 758,356,388 4,000,000 1,658,303
2 July 2013 Exercise of options - (2,066) - 0.0125 - 30 June 2013
2 July 2013 Listed options expired - (309,921,387) - 0.0125 - 30 June 2013
12 August 2013
Exercise of options - (4,618) - 0.005 -
31 December 2015
15 August 2013
Exercise of options - (18,469) - 0.005 -
31 December 2015
1 October 2013
Exercise of performance rights
(5,000,000)
- - - -
7 December 2014
1 October
2013
Add: value of performance rights carried forward from 30 June 2013
-
-
-
-
3,247
7 December 2014
31 December 2013
Unlisted options expired
- - (4,000,000) 0.015 - 31 December 2013
30 June 2015 Closing Balance - 448,409,848 - 1,661,550
There were no movements in reserves during 30 June 2015.
b) Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of a foreign
controlled subsidiary.
NOTE 13: OPERATING SEGMENTS
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of
Directors (the chief operating decision makers) in assessing performance and in determining the allocation of resources.
The operation and assets of the Group operate in one business segment, being the research, development, manufacture
and distribution of pharmaceutical products.
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Group’s operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have access to sufficient information to enable this level of disclosure to be made.
NOTE 14: FINANCIAL INSTRUMENTS
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
36
Financial Risk Management Policies
The financial risk management polices below were adopted by the Deed Administrator of the Company who was in office
prior to the company entering administration. The directors resolved on 15 April 2015 that the Group should be placed into
voluntary administration and the Group’s operations were suspended under the Administrator. As detailed in Note 1 (b),
the Deed Administrator does not have access to sufficient information to enable this level of disclosure to be made.
Therefore, there is no current financial risk management policy.
Specific Financial Risk Exposures and Management
The main risk the Group is exposed to through its financial instruments are interest rate risk and credit risk.
(a) Interest Rate Risk
The consolidated entity's exposure to interest rate risk that a financial instrument's value will fluctuate as a result of
changes in the market, interest rates and the effective weighted average interest rates on those financial assets, is set out
below:
Floating
Interest
Rate
Non-interest
bearing
2015 Total Floating
Interest
Rate
Non-interest
bearing
Fixed Interest 2014 Total
$ $ $ $ $ $ $
Financial assets
- Within one year
Cash and cash equivalents 39,044 - 39,044 56,638 211 - 56,849
Other receivables - - - - 108,854 - 108,854
Total financial assets 39,044 - 39,044 56,638 109,065 - 165,703
Weighted average interest rate * 3.06%
Financial Liabilities
- Within one year
Trade and other Payables - 2,436,027 2,436,027 - 539,837 650,515 1,190,352
Interest on borrowings - 84,187 84,187 - 334,900 286,599 621,499
Loan from other entities - 405,000 405,000 - - 225,000 -
Convertible notes - 1,610,000 1,610,000 - - 1,610,000 1,610,000
Total financial liabilities - 4,535,214 4,535,214 - 874,737 2,772,114 3,646,851
Net financial assets/(liabilities) 39,044 (4,535,214) (4,496,170) 56,638 (765,672) (2,772,114) (3,481,148)
* The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Group’s
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
NOTE 14: FINANCIAL INSTRUMENTS (continued)
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
37
(b) Credit risk
The maximum exposure to credit risk, excluding the value of any collateral or other security at the balance date, to
recognised financial assets is the carrying amount, net of any provision for doubtful debts, as disclosed in the Balance Sheet
and Notes to the Financial Statements.
The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under financial
instruments entered into by it. The credit risk on liquid funds is limited because the counterparties are banks with high
credit-ratings assigned by international credit-rating agencies.
(c) Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves by continuously monitoring actual
and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on
which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
2015
Carrying Amount
$
Contractual Cash Flows
$
1 year
or less
$
Between 1 and 2 years
$
Between 2 and 5 years
$
Over 5
Years
$
Trade and other payables 2,436,027 2,436,027 2,436,027 - - -
Interest on borrowings 84,187 84,187 84,187 - - -
Loan from other entities 405,000 405,000 405,000 - - -
Convertible notes 1,610,000 1,610,000 1,610,000 - - -
2014
Trade and other payables 1,190,352 1,190,352 1,190,352 - - -
Interest on borrowings 621,499 621,499 621,499 - - -
Loan from other entities 225,000 225,000 225,000 - - -
Convertible notes 1,610,000 1,610,000 1,610,000 - - -
NOTE 14: FINANCIAL INSTRUMENTS (Continued)
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
38
(d) Net fair Value of financial assets and liabilities
Fair value estimation
Methods and assumptions used in determining net fair value:
For assets and other liabilities, the net fair value approximates the carrying values. No financial assets and financial
liabilities are readily traded on organised markets in standardised form.
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Group’s operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have access to sufficient information to enable this level of disclosure to be made.
(e) Financial arrangements
The company had no other financial arrangements in place at 30 June 2015 based on the information available to the
current board.
NOTE 15: RELATED PARTY TRANSACTIONS
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Group’s
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
The aggregate amount of payments for the above mentioned services provided in the ordinary course of business were as
follows:
2015 2014
$ $
Directors and consultancy fees * 266,425
Equity based payments * 3,247
Other benefits * 2,854
Secretarial fees * 30,000
Interest charged on outstanding invoices * 28,271
Total
*
330,797
Receivable from and payable to related parties The following balances are outstanding at the reporting date in relation to transactions with related parties (Note 10).
Current Payables relating to:
John Palermo and director related entities * 394,929
John Found and directors related entities * 20,000
Chris Quirk and directors related entities * 20,625
Total *
435,554
NOTE 15: RELATED PARTY TRANSACTIONS (continued)
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
39
Other related party liabilities Note Principal Interest Charged Total
Year 2014 $ $ $
Finebase Holdings Pty Ltd (John Palermo)
Loan 9 150,000 3,609 153,609
Convertible Note 9 125,000 9,845 134,845
275,000
13,454
288,454
NOTE 16: SHARE BASED PAYMENT
The performance rights share based payments expense balance for the year ended recognised in the statement of
comprehensive income was nil (2014: $3,247).
The number and weighted average exercise prices of share options is as follows:
Weighted Average Exercise Price
Number of Options
2014 2014
Outstanding at 1 July $0.011 762,356,388
Expired during the year $0.014 (313,921,387)
Forfeited during the year -- --
Exercised during the year $0.007 (25,153)
Issued during the year -- --
Granted during the year -- --
Outstanding at 30 June $0.011 448,409,848
Vested and exercisable at 30 June $0.011 448,409,848
The options outstanding at 30 June 2014 have an exercise price of $0.005 and a weighted average remaining contractual life of 1.5 years. The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Group’s operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have access to sufficient information to enable this level of disclosure to be made.
NOTE 17: PARENT ENTITY DISCLOSURES
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
40
(a) Financial Position of Pharmanet Group Limited
Note 2015 2014
$ $
ASSETS
Current assets 107,043 85,658
Non-current assets - 1
Total assets 107,043 85,659
LIABILITIES
Current liabilities 3,990,852 3,251,451
Total liabilities 3,990,852 3,251,451
SHAREHOLDERS’ DEFICIT
Issued capital 26,782,036 26,782,036
Reserves 1,661,550 1,661,550
Accumulated Losses (32,327,395) (31,609,378)
SHAREHOLDERS’ DEFICIT (3,883,809) (3,165,792)
(b) Financial Performance of Pharmanet Group Limited
Loss for the year (718,017) (1,794,668)
Other comprehensive income - -
Total comprehensive loss (718,017) (1,794,668)
(c) Guarantees entered into by Pharmanet Group Limited for the debts of its subsidiary
There are no known guarantees entered into by Pharmanet Group Limited for the debts of its subsidiary as at 30 June
2015 (2014: Nil).
(d) Contingent liabilities of Pharmanet Group Limited
There were no known contingent liabilities as at 30 June 2015 (2014: Nil).
(e) Commitments by Pharmanet Group Limited
There were no known commitments as at 30 June 2015 (2014: Nil).
NOTE 18: CONTROLLED ENTITIES CONSOLIDATED
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
41
Pharmanet Group Limited
Controlled entity Country of Incorporation Percentage Owned
2015 2014
Thermalife International Pharmaceuticals Pty Ltd Australia 100% 100%
Peptophen Research and Development Pty Ltd Australia 100% 100%
Pharmasolv Laboratories Pty Ltd Australia 100% 100%
Pharmaceutical Products Group Pty Ltd Australia 100% 100%
Cambridge Scientific Pty Ltd Australia 100% 100%
Veterinary Technologies Pty Ltd Australia 100% 100%
Molecular Pharmacology (USA) Ltd United States 100% 100%
For the purposes of preparing the financial statements for the year ended 30 June 2015, as detailed in Note 1(b), the Deed
Administrator has not been able to obtain financial information of the company’s subsidiaries.
NOTE 19: OPERATING LEASE COMMITMENTS 2015
$
2014
$
Operating lease commitments:
Not longer than 1 year * 54,048
Longer than 1 year and not longer than 5 years * 216,192
Longer than 5 years * -
- 270,240
The directors resolved on 15 April 2015 that the Group should be placed into voluntary administration and the Groups
operations were suspended under the Administrator. As detailed in Note 1 (b), the Deed Administrator does not have
access to sufficient information to enable this level of disclosure to be made.
NOTE 20: CONTINGENT LIABILITIES
The Group has no known contingent liabilities as at 30 June 2015.
NOTE 21: EVENTS SUBSEQUENT TO REPORTING DATE
Pharmanet Group Limited is currently subject to (DOCA).
The DOCA proposes for the compromise of creditors’ claims, recapitalisation of the Company and (subject to regulatory
approval) re-quotation of its securities on the ASX.
The material terms of the DOCA are as follows:
The DOCA is intended to satisfy creditors debts through the provision of a creditor payment of $120,000 and issue
a total of 15,000,000 shares at a deemed value of $0.02 or a market value equivalent of $300,000 to secured
Creditors Finebase Pty Ltd and Celtic Capital Pty Ltd (creditor payments).
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PHARMANET GROUP LIMITED (Subject to Deed of Company Arrangement)
ABN 98 006 640 553 ANNUAL REPORT 30 JUNE 2015
CONSOLIDATED NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
42
NOTE 21: EVENTS SUBSEQUENT TO REPORTING DATE
the creditor payment is to be made without any setoff, counterclaim or deduction whatsoever;
the creditor payment will be used in full and final satisfaction of all creditors’ claims (including those of an
administrator); and
the creditor payment will be raised through one or more capital raisings by the Company (which will be subject to
the receipt of shareholder approval).
As announced on the 13 December 2016 the Deed Administrator and the Proponent agreed to extend the Due Date of the
DOCA to 30 May 2017.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF
PHARMANET GROUP LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Report on the Financial Report We were engaged to audit the accompanying financial report of Pharmanet Group Limited (subject to a Deed of Company Arrangement), which comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on conducting the audit in accordance with Australian Auditing Standards. Because of the matter described in the Basis for Disclaimer of opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Pharmanet Group Limited (subject to a Deed of Company Arrangement), would be in the same terms if given to the directors as at the time of this auditor's report. F
or p
erso
nal u
se o
nly
Basis for Disclaimer of Opinion Pharmanet Group Limited (subject to a Deed of Company Arrangement) and its Australian controlled entities, were placed into voluntary administration on 15 April 2015. We were unable to obtain sufficient appropriate evidence to verify the amounts disclosed in the consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date. As a result, we were unable to determine whether any adjustments to these amounts were necessary. Disclaimer of Opinion Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we were unable to, and do not express an opinion as to whether: (a) the financial report of Pharmanet Group Limited (subject to a Deed of Company Arrangement) is in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of the consolidated entity’s performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Emphasis of Matter We draw attention to Note 1 in the financial report. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and, therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business. Report on the Remuneration Report We were engaged to audit the Remuneration Report included within the directors’ report for the year ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Basis for Disclaimer of Opinion Pharmanet Group Limited (subject to a Deed of Company Arrangement) and its Australian controlled entities, were placed into voluntary administration on 15 April 2015. We were unable to obtain sufficient appropriate evidence to verify the amounts disclosed in the Remuneration Report for the year ended 30 June 2015. As a result, we were unable to determine whether any adjustments to these amounts were necessary.
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Disclaimer of Opinion Because of the significance of the matter described in the Basis for Disclaimer of Opinion paragraph, we were unable to, and do not express an opinion as to whether, the Remuneration Report of Pharmanet Group Limited (subject to a Deed of Company Arrangement) for the year ended 30 June 2015 complies with section 300A of the Corporations Act 2001. RSM AUSTRALIA PARTNERS Perth, WA J A KOMNINOS Dated: 16 December 2016 Partner
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