Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
FarmaForce Limited A.C.N. 167 748 843
FarmaForce Limited ACN 167 748 843
Appendix 4E and Full Year
Financial Results For the Year
Ended 30 June 2016
FarmaForce Limited A.C.N. 167 748 843
ASXAppendix4EProvided below are the results for announcement to the market in accordance with Australian SecuritiesExchange(‘ASX’)ListingRule4.3AandAppendix4EforFarmaForceLimited(‘FarmaForceorthe‘Company’)fortheyearended30June2016andthepreviouscorrespondingperiod30June2015.
RESULTSFORANNOUNCEMENTTOTHEMARKET
Consolidatedresults
30June2016$000
30June2015$000
MovementUp/down Movement%
Revenue 1,951 353 up 453%
NetProfit(loss)fromordinaryactivitiesaftertaxattributabletomembers
(3,799) (2,051) down 85%
Netprofit(loss)fortheperiodattributabletomembers
(3,799) (2,051) down 85%
ForcommentaryontheresultsincludingchangesinstateofaffairsandlikelydevelopmentsoftheCompany,seecommentssetoutintheDirectors’report(refertopage6)andtheOperatingandFinancialReviewsection(refertopage15)oftheAnnualFinancialReport.
Dividends
Nodividends have beenpaid or declared since the endof the previous financial year, nor do the directorsrecommendthedeclarationofadividend.
Dividends(distributions) Frankedamountpersecurity Amountpersecurity
Interimdividend Nil Nil
Finaldividend Nil Nil
OTHERINFORMATION
Statementofcomprehensiveincome
For a statement of comprehensive income together with notes to the statement, refer to page 15 of theAnnualFinancialReportfordetails.
Statementoffinancialposition
For a statement of financial position togetherwith notes to the statement, refer to page 16 of theAnnualFinancialReportfordetails.
Statementofcashflows
Forastatementofcashflowstogetherwithnotestothestatement,refertopage18oftheAnnualFinancialReportfordetails.
Statementofchangesinequity
Forastatementofchangesinequity,refertopage17oftheAnnualFinancialReportfordetails.
FarmaForce Limited A.C.N. 167 748 843
Nettangibleassets
Nettangibleassetspersecuritywiththecomparativefigureforthepreviouscorrespondingperiod:
Currentperiod: 1.44cents
Previouscorrespondingperiod: n/a
Controlgainedoverentitieshavingmaterialeffect
FarmaForceLimitedhasneithergainedcontrolnorlostcontroloveranentityduringtheperiodwhichhashadamaterialeffect.
Detailsofassociates
FordetailsoftheCompany’sassociates,refertopage32oftheAnnualFinancialReport.
OtherSignificantinformation
ApartfromtheinformationcontainedintheattachedAnnualFinancialReportandelsewhereinthisAppendix4E, there isnoother significant informationneededbyan investor tomakean informedassessmentof theCompany’sfinancialperformanceandfinancialpositionasatthereportingdate.
AuditedAccounts
TheaccountshavebeenauditedbyFortunityAssuranceandarenotsubjecttodisputeorqualification.
1
Annual Report2016
FARMAFORCE LIMITED ACN 167 748 843
FarmaForce Limited A.C.N. 167 748 843
FarmaForce Limited 2016 Annual Report Contents For the Year Ended 30 June 2016 Page
Chairman’sReport.............................................................................................................1
Directors’BusinessReview................................................................................................2
CorporateGovernanceStatement.....................................................................................5
Directors'Report...............................................................................................................6
Auditor’sIndependenceDeclaration...............................................................................14
StatementofProfitorLossandOtherComprehensiveIncome........................................15
StatementofFinancialPosition.......................................................................................16
StatementofChangesinEquity.......................................................................................17
StatementofCashflows..................................................................................................18
NotestotheFinancialStatements...................................................................................19
Directors’Declaration.....................................................................................................35
IndependentAuditReporttothemembersofFarmaForceLimited.................................36
ASXAdditionalInformation.............................................................................................38
FarmaForce Limited A.C.N. 167 748 843
Page 1
Chairman’sReport
Onbehalfoftheboardofdirectors,wearepleasedtopresenttheoperationalandfinancialreviewforFarmaForceLimitedfortheyearending30June2016.
AfterlistingontheASXonthe27October2015,FarmaForcehassuccessfullylaidthegroundworkrequiredtoimplementthecompany’sstrategy.ThisapproachseestheCompanybecomingafullyintegratedstrategicsalessolutionpartnertobothmulti-nationalandlocalpharmaceuticalcompaniesintheAustralianmarket.Indoingsotheorganisationhasachievedthefollowingobjectives:
- Establishmentofsalesteamstoserviceourexistingclientcontracts
- ObtainedISOAccreditation
- Positioningtheorganisationfororganicgrowthopportunities
- Recruitmentandretentionofkeypeopleinordertoeffectivelytranslateourvisionintorealityand
- Earningareputationasahighqualityserviceprovidertothepharmaceuticalindustryinashortspaceoftime.
TheIPOraised$5.077Mincapitalandwiththefundsinvestedininfrastructuretofurtherbuildthecompany,itstechnologyandimplementthebusinessstrategy.Thisprovidedanoverallstrengtheningofworkingcapitaltofundfuturegrowthopportunities.
Revenueforthe12monthstoJune2016was$1.951Mup453percentfrom$0.353Mforthecomparativeperiodlastyear.Thisincreasefromtheprioryearisaresultofthecontinuedimplementationofourbusinessdevelopmentstrategies.Thepre-taxlossfortheperiodwas$3.799Magainstapre-taxlossof$2.051Minthepriorcorrespondingperiod,andcashflowfromoperatingactivitiesbeing($3.588M)and($1.912M)respectively.Theexpenditureinthecurrentyearrepresentsessentialexpendituretomeetthebusinessobjectivesasstatedintheprospectus.
Netassetsasof30June2016were$1.840Mcomparedto($1.666M)at30June2015andcashbalanceswere$1.541Mcomparedwith$1.206Matthesametimelastyear.
Ourleadershipteam,ledbyanaspirationalandcommittedgroupofexecutivemanagementandboardmembers,iscommittedtobuildingtheFarmaForcebusinessandconsistentlyaddingvaluetoourclients,shareholdersandemployees.
GeorgeElias
Chairman
Date:29thAugust2016
FarmaForce Limited A.C.N. 167 748 843
Page 2
Directors’BusinessReview
TheFarmaForcestorybeganinearly2014withasingleobjective;tobecomethenumberonepartnerofchoicetothepharmaceuticalindustryforoutsourcedsalessolutions.Toachievethis,wehadtoensurewecoulddeliverexcellenceandinnovativesolutionsforthedurationofthebusinesspartnershipwitheachclient.
Therefore,whenwedevelopedourbusinessstrategy,itwascriticalthatourvaluepropositionshouldnotbeaboutprovidingcheaperlabourtothepharmaceuticalindustry,butratheraboutdeliveringamorevaluable,costeffectiveandlongtermstrategicsolution.It’sessentialtothelongtermsuccessofFarmaForcethatweforgecapability-driven,strategicpartnershipsratherthansimply“spillover”,capacitydriven,shorttermtransactions.
Wewereconfidentthen,aswearenow,thattheFarmaForcevaluepropositionwouldresonatewiththeindustryexecutives,asitdid.
Pharmaindustrychallenges
Duringthelastfewyears,thepharmaceuticalindustryhasundergonesignificanttransformationandcontinuestobeinastateoffluxeventoday.Thisisduetomanypatentprotectedpharmaceuticalslosingtheirsalesexclusivityperiodresultinginfierce,pricedriven,competitionwiththegenericmanufacturers.Thishastranslatedtosignificantrevenueandprofitabilitylossfortheinnovativepharmaindustry.
TheFarmaForcesolution
FarmaForceoffersacredibleandviablesolutiontoaddressthischallengeonaconsultativebasiswithFarmaForceactingasacomplementtotheinternalteam.Importantly,thesesalescanbeachievedonbehalfofourclients,withouttheclientneedingtoincreaseinternalresourcingand/orinfrastructure.
PostFarmaForcelistingontheASXinOctoberlastyear,theteamembarkedonimplementationofthecompany’sstrategytobecomeanintegratedstrategicpartnertoboththeinternationalandlocalpharmaceuticalcompaniesintheAustralianmarketplace.
FarmaForcebusinessdevelopmentprocess
TheFarmaForcebusinessdevelopmentstrategyisdeliberateandisbuiltonthebeliefofinsightbasedbusinessdevelopmentpractice.OurBusinessDevelopmentManagersleadtheprocesswithinformedideasthatwillmakecustomersawareofunknownneeds.Todothis,weaskourselves-isthecustomerfacinganemergingneed?Oraretheyinastateoforganisationalflux?Regardlessofwhetherit’sduetoexternalpressures,regulatoryreforms,financialconditionsorinternalpressures–thecustomerisre-examiningthestatusquo,theyarelookingforinsightsandarereceptivetocreativeanddisruptiveideasbeingbroughttothetable.TheFarmaForcebusinessdevelopmentteamengagescustomersatanearlystage;weseekoutaverydifferentsetofstakeholders,preferringscepticalchangeagentsoverfriendlyinformants.Wewillthenworkwiththesechangeagents,educatingthemonhowtobuy,ratherthangrillthemabouttheircompany’spurchasingprocess.Weleadwithwell-informedinsightsleadingthecustomertoaninnovativesolutionasopposedtosellingaquickfix.
InmostofourpartnershipswerealisetheinitialprojectisusuallyapilotprojectwheretheclientneedstobuildtrustandconfidenceintheFarmaForceteam.Thebusinessdevelopmentcyclewithinthepharmaceuticalindustryisquiteprotracted;itisnotunusualforapotentialdealtotakeuptoninemonthstoconvertintoacontractenablingtheinfielddeploymentoftheFarmaForceteam.Hence,potentialbusinessdealsthatmaycurrentlybeunderdiscussionwillpotentiallyconvertintocontractsinthenextninetotwelvemonths.Whenconsideringinvoicingcycletimeframe,another90daysareaccrued.Soactually,todays’potentialbusinessdealsmaytranslateintorevenuein12to15months.Typically,thisexplainstheapparentdisparitybetweenOPEXandrevenue.
FarmaForce Limited A.C.N. 167 748 843
Page 3
FarmaForceSalesForceEffectiveness(SFE)
FarmaForcehasbeenveryconfidentaboutbothitsabilityandcapabilitytodeliveronitsvaluepropositionandhasthereforevoluntarilyengagedathirdpartydataprovider,IMShealth,tomonitorvariousSalesForceEffectiveness(SFE)metricsonamonthlybasis.
Indicatively,seetheresultsbelowwhichhavebeenconsistentacrosstheyear.
• July2016FarmaForceranking–#12OverallRepPerformance(Allothercompaniesinthelistof20aremultinationalpharmaceuticalcompanies)
• July2016FarmaForceranking–#1OverallRepPerformancecomparedtotheothercontractsalesorganisations
FarmaForcelearninganddevelopment
Weacknowledgethatasacompanywecannotbebetterthanourpeople,sowemaintainaconsistentandsystematicfocusonlearninganddevelopment.Whetherit’sanewmedication,biologicorsyntheticchemistry,a medical device or a patient service, we will ensure that we know everything about the product, thetherapeuticareaandthecompetition,priortoattemptingtopromoteittohealthcarepractitioners.
Everynewsalesteamwecreateandeverynewmemberthat joinsusmust learnthiscurriculum.Everynewproductthatcomestolifeinourbusiness,isalearninganddevelopmentopportunity.
FarmaForcemedicalaffairsbusinessunit
At FarmaForce we have the aptitude and experience which goes beyond mere sales and what is formallyrequired of us from our clients, we routinely exceed our client’s expectations. As members of MedicinesAustralia,weensurethatthehigheststandardsofcomplianceandmedicalgovernancearemet.Wehaveanin-house medical team and proactively deal with challenges such as pharmacovigilance, medical writing,medicaleducationtorepsorcomplianceapprovalofpromotionalmaterialforour clients. Wealsohavetheabilitytomanageanythingelsethatmaycomeourwayintheroutineconductofourbusiness.
FarmaForceHumanCapitalBusinessUnit
Whenitcomestoourpeoplewedon’tbelieveinvirtualsolutions.Wehavea“real”humancapitalbusiness unitwithrealpeople,bringingrealworldpharmaexperiencetoourenterprise.Ourin-houseteamofhumancapital specialistsensure thatourhumancapitalstrategyandpolicies,areat leastonparwithourpharmapartners, with an emphasis on staff recruitment, retention, training, learning and development, talentmanagementandcareeradvancement.
FarmaForceInnovativeBusinessandRevenueModel
AtFarmaForcewehavetransitionedbeyondtraditionaloutsourcingsolutionsandourbusinessmodelforgestruestrategicpartnershipswithourclients.
The novel way we structure our deals with business partners, the definition of the desired outcome andexpectations frompartnership iswhat translates into saleseffectivenessandcreatesbilateral value. It’s theresultthatcounts,notjusttheeffort.Henceourrevenuemodeltranscendsthetypicalfeeforservicemodel.
FarmaForceNovelandInnovativeBusinessTools
This freedom to operate outside the typical constraints throughour servicemodel allows us to create anddeploy innovativemarketing, promotional and educational tools that result in higher returnon investment,whilstsimultaneouslymaintainingcompliancewiththeMedicinesAustraliacodeofconduct.
FarmaForce Limited A.C.N. 167 748 843
Page 4
FarmaForceStatistics
Forthetwelve-monthperiod leadingtoQ32016, theFarmaForceheadcounthas increased45percent,ourclientbaseincreasedby250percentandwearenowworkingacrossseventherapeuticareas.Weprimarilywork across three channels; primary care, specialty and pharmacy.Market research thatwe commissionedfroman independent agency benchmarking the FarmaForce reputation has shown;awareness is good,ourhandpickedhighcalibreteamhasatrackrecordofsuccesswithintheindustry,wearefocusedonqualityandaddvaluebyofferingadditionalservicessupportingtheeffectivenessofsalesteams,weareafreshnewfaceinthemarketandclientswantFarmaForcetosucceed.
At FarmaForcewe make a significant financial and resource investment into quantifying the processes thatmakeadifferencetooureffectivenessandperformance.
FarmaForcehasnowearneditsplacewithintheAustralianmarketplaceandisconsideredavaluedbusinesspartnerby industryparticipantsandmore importantly, ithasbuilt theability toattractand retainexcellenttalentinourpeople.ThequalityofpotentialclientsandthedealflowprospectshaveneverbeenbetterandFarmaForceisideallypositionedtocapitaliseonthis.
DrGeorgeSyrmalis
Director–forandonbehalfoftheBoard
Date:29thAugust,2016
FarmaForce Limited A.C.N. 167 748 843
Page 5
CorporateGovernanceStatement30June2016
FarmaForceLimitedandtheboardarecommittedtoachievinganddemonstratingthehigheststandardofcorporategovernance.FarmaForceLimitedhasrevieweditscorporategovernancepracticesagainsttheCorporateGovernancePrinciplesandRecommendations(3rdedition)publishedbytheASXCorporateGovernanceCouncil
The2016corporategovernancestatementisdatedasat30thJune2016andreflectsthecorporategovernancepracticesinplacethroughoutthe2016financialyear.The2016corporategovernancestatementwasapprovedbytheboardon29thAugust2016.AdescriptionoftheCompany’scurrentcorporategovernancepracticesissetoutintheGroup’scorporategovernancestatementwhichcanbeviewedathttp://farmaforce.com.au/why-invest-2/
FarmaForce Limited A.C.N. 167 748 843
Page 6
Directors'Report30June2016
ThedirectorspresenttheirreportonFarmaForceLimitedforthefinancialyearended30June2016.
1. Generalinformation
Informationondirectors
Thenames,qualifications,experienceandspecialresponsibilitiesofeachpersonwhohasbeenadirectorduringtheyearandtothedateofthisreportare:
DanielMorato GeneralManager(ExecutiveDirector)until23/11/15
Qualifications BachelorofPharmacy
Experience Boardmembersince7/04/2015until23/11/15.PriortojoiningtheCompany,Danielenjoyedacareerinthepharmacyindustrythatspannedovertwentyyears.Muchofthistimewasspentasapharmacyproprietorandadvisor.EstablishingandmanagingnumerouspharmaciesduringhiscareerhasgivenDanielanin-depthunderstandingofthemarketchallengesanddriversfacingthepharmacyindustry,medicalservicesindustryandpharmaceuticalindustryasawhole.
Danielhasalsoadvisedanumberofpharmaceuticalorganisationsonthemanagementofchangingmarketconditions.
Hehasconsultedoneffectivemarketpenetrationfornewproducts,advisedonmanagingcompetitionandformingdefencestrategies,againstgenericproducts.
Interestinsharesand 500,000OrdinarySharesand500,000LoyaltyOptionsasatdateofoptions ceasingtobedirector
Specialresponsibilities GeneralManageruntil23/11/15
GeorgeElias Director(Independentnon-executive)
Qualifications BachelorofCommerce(UniversityofNewSouthWales),DiplomaofFinancialPlanning(Dip.FP),MemberCPAAustralia,ASICRG146Compliant(Securities),CertifiedFinancialPlanner®memberoftheFinancialPlanningAssociationofAustralia.
Experience Boardmembersince2/04/2015.Georgehasover30years’experienceinprovidingaccountingandbusinessadvisoryservices.Duringthisperiod,hehasbeeninvolvedinprovidingtaxationandbusinessadvicetosmallandmediumsizedenterprises,includingbusinessstructuring,cash-flowforecasting,taxationandsuperannuationstructuresupportandadvice.
GeorgeiscurrentlytheprincipalatEliasFinancialServicesandhasbeenprovidingfinancialandaccountingadviceasprincipalsinceJuly1991.Hisbusinessandfinancialacumen,coupledwithhisexperienceindealingwithavarietyofchallengesindifferentbusinessenvironmentsgiveshimthenecessaryskillstochairtheBoardandprovidestrategicleadershiptofaceanychallengesthatmayarise.
Interestinsharesand 125,000OrdinarySharesand125,000LoyaltyOptionsoptions
Specialresponsibilities ChairmanoftheBoard,MemberoftheRemunerationandNominationCommitteeandAuditandRiskCommittee
FarmaForce Limited A.C.N. 167 748 843
Page 7
Directors'Report(continued)30June2016
StamatiaTolias Director(Independentnon-executive)
Qualifications BachelorofScience(Nursing),MastersDegree(MentalHealth),MemberNursesAssociation(Greece).
Experience Boardmembersince2/04/2015.StamatiacurrentlyresidesinAthens,Greece.SheisaqualifiednurseandhasstudiedataMasterslevelinthefieldofmentalhealth.Stamatiacurrentlyworksasaresearchnurseinamentalhealthorganisationwhereshehasbeenemployedforthepastyearandahalf.SheiscurrentlyundertakingstudiesforherPhDatTheNationalKapodistrianUniversityofAthensandisexpectedtofurtherdevelopexpertiseinQualityUseofMedicines(QUM)principles.AlthoughStamatiahasnoexperienceinmanagingcompanies,itiscontemplatedthattheCompanywillbeabletobenefitfromherunderstandingofinternationalstandardsofQUMprinciples.
Furthermore,herunderstandingofthepracticeofthedeliveryofpharmacologicaltherapycombinedwiththequalityuseofmedicineprinciplescreatesauniqueopportunitytodrivetheCompany'sstrategiesandsequentialserviceoffering.
Interestinsharesand NILoptions
Specialresponsibilities MemberoftheRemunerationandNominationCommitteeandAuditandRiskCommittee
ConTsigounis Director(Non-executive)
Qualifications MemberoftheAustralianInstituteofCompanyDirectors
Experience Boardmembersince28/01/2014,resigned2/04/2015andreappointedon22/06/2015.ConisacurrentExecutiveDirectorandHeadofInvestorrelationsatiQnovateLtd.
Conhasover20yearsofexperienceinbusinessandinvestorrelations,specificallyinthewholesaleandretailsectors.AsamemberoftheBoardofiQnovateLtdsinceitsinception,Conhasbeenresponsibleforexecutingthatcompany'sinvestorrelationsandcapitalraisingstrategy.HisexperienceinShareholderrelationshipmanagementgiveshimthenecessaryskillsettoassisttheCompanyattainitscorporateobjectives.
Interestinsharesand NILoptions
Specialresponsibilities MemberoftheRemunerationandNominationCommitteeandAuditandRiskCommittee
Otherdirectorshipsin iQnovateLtdlistedentitiesheldinthepreviousthreeyears
FarmaForce Limited A.C.N. 167 748 843
Page 8
Directors'Report(continued)30June2016
DrGeorgeSyrmalis Director(Non-executive)
Qualifications TrainedinNuclearMedicine-radiationimmunology
Experience Boardmemberfrom28/01/2014to2/04/2015,DrSyrmaliswasreappointedtotheCompanyboardon24/11/15.DrSyrmalisfoundedandledasCEOandChairmanofTheBionuclearGroupSA,(1995-2005)incorporatingAntisomaSA,BionuclearInstituteofDiagnosisandTherapySA,BionuclearResearchandDevelopmentSAandVitalcheckSA.
Interestinsharesand 10,000ordinarysharesOptions Otherdirectorshipsin ChairmanandExecutiveDirectorofiQnovateLtd,ExecutiveDirectorlistedentitiesheldin ofiQXLimitedthepreviousthreeyears
Directorshavebeeninofficesincethestartofthefinancialyeartothedateofthisreportunlessotherwisestated.
PrincipalActivitiesTheprincipalactivityofFarmaForceLimitedduringthefinancialyearwastheprovisionofservicesasacontractsalesorganisation.
NosignificantchangesinthenatureoftheCompany'sactivityoccurredduringthefinancialyear.
2. Operatingresultsandreviewofoperationsfortheyear
Operatingresults
ThelossoftheCompanyafterprovidingforincometaxamountedto$3,799,018comparedtoalossof$2,051,222in2015.
Dividendspaidorrecommended
Therewerenodividendspaidordeclaredduringthecurrentorpreviousfinancialyear.
FarmaForce Limited A.C.N. 167 748 843
Page 9
Directors'Report(continued)30June2016
3. Otheritems
Significantchangesinstateofaffairs
TheCompanysuccessfullylistedontheASXon27thOctober2015viaanIPOwhichraised$5.077m.
Meetingsofdirectors
Duringthefinancialyear,6meetingsofdirectors(includingcommitteesofdirectors)wereheld.Attendancesbyeachdirectorduringtheyearwereasfollows:
Directors'Meetings
Numbereligibletoattend
Numberattended
GeorgeElias 6 6
DanielMorato 5 5
StamatiaToliasConTsigounisGeorgeSyrmalis
661
561
FarmaForce Limited A.C.N. 167 748 843
Page 10
Directors'Report(continued)30June2016
Committeemembership
As at the date of this report, the Company had an audit and risk management committee and aremunerationandnominationcommittee.
Membersactingonthecommitteesoftheboardduringtheyearwere:
Auditandriskmanagementcommittee Remunerationandnominationcommittee
GeorgeElias GeorgeElias
StamatiaTolias StamatiaTolias
SpiroKevinSakiris ConTsigounis
Eventsafterreportingdate
NomattersorcircumstanceshavearisensincetheendofthefinancialyearwhichsignificantlyaffectedormaysignificantlyaffecttheoperationsoftheCompany,theresultsofthoseoperationsorthestateofaffairsoftheCompanyinfuturefinancialyears.
Dividends
Nodividendshavebeenpaidordeclaredsincetheendofthepreviousfinancialyear,nordothedirectorsrecommendthedeclarationofadividend.
LikelyDevelopmentsandExpectedResults
LikelydevelopmentsintheoperationsoftheGroupandtheexpectedresultsofthoseoperationsinfuturefinancialyearshavenotbeenincludedinthisreportastheinclusionofsuchinformationislikelytoresultinunreasonableprejudicetotheGroup.
Environmentalissues
TheCompany'soperationsarenotregulatedbyanysignificantenvironmentalregulationsunderalawoftheCommonwealthorofastateorterritoryofAustralia.
Indemnificationandinsuranceofofficersandauditors
Duringorsincetheendofthefinancialyear,thecompanyhasenteredintoagreementstoindemnifyDirectors,andpaid$16,456.45ininsurancepremiumsforDirectors&Officersinsurancewhichincludescoverforthisindemnification.
Thecompanyhasnot,duringorsincetheendofthefinancialyear,indemnifiedoragreedtoindemnifytheauditorofthecompanyoranyrelatedentityagainstaliabilityincurredbytheauditor.
Duringthefinancialyear,thecompanyhasnotpaidapremiuminrespectofacontracttoinsuretheauditorofthecompanyoranyrelatedentity.
Auditor’sindependencedeclaration
Theleadauditor’sindependencedeclarationinaccordancewithsection307CoftheCorporationsAct2001,fortheyearended30June2016hasbeenreceivedandcanbefoundonpage14ofthefinancialreport.
FarmaForce Limited A.C.N. 167 748 843
Page 11
Directors'Report(continued)30June2016
4. RemunerationReport
RemunerationPolicy
TheConstitutionoftheCompanyprovidesthatthenon-executiveDirectorsareentitledtoremunerationasdeterminedbytheCompany ingeneralmeetingstobeapportionedamongtheminsuchmannerasthe Directors agree and, in default of agreement, equally. The aggregatemaximum remuneration fornon-executiveDirectorscurrentlydeterminedbytheCompanyis$300,000perannumatthedateofthisreport.
DirectorswhoalsochairtheAuditCommitteeshallbeentitledtofurtherdirector’sfeeofanadditional$5,000. In addition, non-executive Directors will be entitled to be reimbursed for properly incurredexpensesincludingtimecostsattendingtothebusinessofthecompany.
Ifanon-executiveDirectorperformsextraservices,whichintheopinionoftheDirectorsareoutsidethescopeoftheordinarydutiesoftheDirector,thecompanymayremuneratethatDirectorbypaymentofafixedsumdeterminedbytheDirectorsinadditiontoorinsteadoftheremunerationreferredtoabove.However, nopayment canbemade if theeffectwouldbe toexceed themaximumaggregateamountpayable tonon-executiveDirectors.Anon-executiveDirector isentitled tobepaid travellingandotherexpenses properly incurred by them in attending Director’s or general meetings of the Company orotherwiseinconnectionwiththebusinessoftheCompany.
TheremunerationpolicyofFarmaForceLimitedhasbeendesignedtoalignKeyManagementPersonnel(KMP)objectiveswithshareholderandbusinessobjectivesbyprovidingafixedremunerationcomponentand offering specific long-term incentives based on key performance areas affecting the consolidatedgroup’s financial results. The Board of FarmaForce Limited believes the remuneration policy to beappropriateandeffectiveinitsabilitytoattractandretainthehigh-qualityKMPtorunandmanagethegroup,aswellascreategoalcongruencebetweenDirectors,executivesandshareholders.
TheperformanceofKMPismeasuredagainstcriteriaagreedbiannuallywitheachexecutive.Allbonusesand incentivesmustbe linked topredeterminedperformancecriteria.Thepolicy isdesigned toattractthehighestcalibreofexecutivesandrewardthemforperformanceresultsleadingtolong-termgrowthinshareholderwealth.
AllremunerationpaidtoKMPisvaluedatthecosttothecompanyandexpensed.
Performance-basedRemuneration
TheKeyPerformanceIndicators(KPIs)aresetannually,withacertainlevelofconsultationwithKMP.Themeasuresarespecificallytailoredtotheareaeachindividualisinvolvedinandhasalevelofcontrolover.The KPIs target areas the Company believes hold greater potential for group expansion and profit,coveringfinancialandnon-financialaswellasshorttermandlong-termgoals.ThelevelsetforeachKPIisbasedonbudgetedfiguresfortheCompanyandrespectiveindustrystandards.
PerformanceinrelationtotheKPIsisassessedannually,withbonusesbeingawardeddependingonthenumberanddeemeddifficultyoftheKPIsachieved.Followingtheassessment,theKPIsarereviewed,andtheirefficiency isassessed inrelationtotheGroup’sgoalsandshareholderwealth,beforetheKPIsaresetforthefollowingyear.
IndeterminingwhetherornotaKPIhasbeenachieved,FarmaForceLimitedbasestheassessmentwhereappropriate on audited figures, however, in circumstances where the KPI involves comparison of theCompanyoradivisionwithin theCompany to themarket, independent reportsmaybeobtained fromorganisationssuchasStandard&Poors.Theuseofsuchfiguresreducesanyriskofcontentionrelatingtopaymenteligibility.TheBoarddoesnotbelievethatperformanceconditionsshouldincludeacomparisonwithfactorsexternaltotheCompanyatthistime.
FarmaForce Limited A.C.N. 167 748 843
Page 12
Directors'Report(continued)30June2016
ServiceAgreements
On appointment to the Board, all non-executive directors enter into a service agreement with theCompany in the formof a letter of appointment. The letter summarises theBoardpolicies and terms,includingremuneration,relevanttotheofficeofdirector.
The remunerationandother termsofemployment forexecutiveDirectorsandother seniorexecutivesaresetoutinformalserviceagreementsassummarisedbelow.
In cases of resignation, no separationpayment ismade to the executive, except for amountsdue andpayableuptothedateofceasingemployment,includingaccruedleaveentitlements.
Remunerationdetailsfortheyearended30June2016
Thefollowingtableofbenefitsandpaymentdetails,inrespecttothefinancialyear,thecomponentsofremunerationforeachmemberofthekeymanagementpersonneloftheGroup.
Tableofbenefitsandpayments post
shortterm employment
cashsalaryfees
bonus carallowance
directorfee
pensionandsuperannuation
2016 $ $ $ $ $ $
Directors
GeorgeElias 29,669 - - - 2,818 32,487StamatiaTolia 32,487 - - - - 32,487DanielMorato* 76,847 - - - 7,300 84,147
139,003 - - - 10,118 149,121
*DanielMoratoresignedfromthecompanyon23November2015
post
shortterm employment
cashsalary
feesbonus car
allowancedirectorfee
pensionandsuperannuation
2015 $ $ $ $ $ $
Directors GeorgeElias - - - - - -StamatiaTolia - - - - - -DanielMorato* 168,000 - - - 15,960 183,960
168,000 - - - 15,960 183,960
FarmaForce Limited A.C.N. 167 748 843
Page 13
Directors'Report(continued)30June2016
5. Remunerationreport(continued)
Securitiesreceivedthatarenotperformancerelated
Nomembersofkeymanagementpersonnelareentitledtoreceivesecuritieswhicharenotperformance-basedaspartoftheirremunerationpackage.
KMP related party transactions
TheGroupundertookthefollowingtransactionswith:
• Anentityoverwhichthekeymanagementpersonorfamilymemberhas,directlyor indirectly,control,jointcontrolorsignificantinfluence,duringthereportingperiod.
This is disclosed as under the related party disclosure note as per note 18 to the annual financialstatements.
Thisdirector'sreport,incorporatingtheremunerationreport,issignedinaccordancewitharesolutionoftheBoardofDirectors.
Director:
GeorgeElias
Datedthis29thdayofAugust2016
FarmaForce Limited A.C.N. 167 748 843
Page 14
Auditor’sIndependenceDeclaration
Auditor’sIndependenceDeclarationunderSection307CoftheCorporationsAct
2001totheDirectorsofFarmaForceLimited AsleadauditorfortheauditofFarmaForceLimitedforthefinancialyearended30June,2016,Ideclarethat,tothebestofmyknowledgeandbelief,therehavebeen:i. nocontraventionsoftheauditorindependencerequirementsassetoutinthe CorporationsAct2001
inrelationtotheaudit;andii. nocontraventionsofanyapplicablecodeofprofessionalconductinrelationtotheaudit.FORTUNITYASSURANCE
TRDavidsonPartnerDated:31August,2016
FarmaForce Limited A.C.N. 167 748 843
The accompanying notes form part of these financial statements. Page 15
StatementofProfitorLossandOtherComprehensiveIncomeFortheYearEnded30June2016 2016 2015 Note $ $ Revenue 3 1,950,840 352,683Otherincome 41,145 27CostofGoodssold (2,670,861) (595,144)Employeebenefitsexpense 4 (1,008,639) (490,548)Depreciationandamortisationexpense 4 (38,538) (19,584)Officesharingcosts (691,820) (627,705)IPOandlistingcosts (82,754) -Otherexpenses (1,296,452) (483,390)Financecosts 4 (1,939) (187,561) Lossbeforeincometax (3,799,018) (2,051,222)Incometaxbenefit - Lossfortheyear (3,799,018) (2,051,222) Othercomprehensiveincome,netofincometax Othercomprehensiveincomefortheyear - -Totalcomprehensiveincome (3,799,018) (2,051,222) Earningspershare Basicearningspershare(cents) 13 (4.34) n/aDilutedearningspershare(cents) 13 (4.34) n/a
FarmaForce Limited A.C.N. 167 748 843
The accompanying notes form part of these financial statements. Page 16
StatementofFinancialPositionAsat30June2016
2016
2015 Note $ $ASSETS CURRENTASSETS Cashandcashequivalents 6 1,541,546 1,206,008Tradeandotherreceivables 7 368,606 294,145TOTALCURRENTASSETS 1,910,152 1,500,153 NON-CURRENTASSETS TradeandOtherreceivables 7 380 -Property,plantandequipment 8 240,259 153,179DeferredTaxAssets - -InvestmentinAssociate 17 269,000 -TOTALNON-CURRENTASSETS 509,639 153,179TOTALASSETS 2,419,791 1,653,332
LIABILITIES CURRENTLIABILITIES Tradeandotherpayables 9 579,665 265,817Borrowings 10 - 2,903,961Otherliabilities 11 - 149,579TOTALCURRENTLIABILITIES 579,665 3,319,357
NON-CURRENTLIABILITIES DeferredTaxLiabilities - -TOTALNON-CURRENTLIABILITIES - -TOTALLIABILITIES 579,665 3,319,357NETASSETS/(DEFICIENCY) 1,840,126 (1,666,025) EQUITY Issuedcapital 12 8,068,859 1ConvertibleNotes - 854,463Capitalraisingcosts - (90,774)Accumulatedlosses (6,228,733) (2,429,715)TOTALEQUITY 1,840,126 (1,666,025)
FarmaForce Limited A.C.N. 167 748 843
The accompanying notes form part of these financial statements. Page 17
StatementofChangesinEquityFortheYearEnded30June2016
Sharescapital
Accumulatedlosses Total
2016
$ $ $Balanceat1July2015 763,690 (2,429,715) (1,666,025)Lossfortheyear - (3,799,018) (3,799,018)Totalcomprehensiveincomefortheyear - (3,799,018) (3,799,018) Shareissuedduringtheyear 5,459,545 - 5,459,545Convertiblenotes 2,903,961 - 2,903,961Capitalraisingcosts (1,058,337) - (1,058,337) Balanceat30June2016 8,068,859 (6,228,733) 1,840,126
Sharescapital
Accumulatedlosses Total
2015
$ $ $Balanceat1July2014 134,488 (378,493) (244,005)Lossfortheyear - (2,051,222) (2,051,222)Totalcomprehensiveincomefortheyear - (2,051,222) (2,051,222) Convertiblenotes 719,976 - 719,976Capitalraisingcosts (74,633) - (74,633)IPOlistingcosts (16,141) - (16,141)Balanceat30June2015
763,690 (2,429,715) (1,666,025)
FarmaForce Limited A.C.N. 167 748 843
The accompanying notes form part of these financial statements. Page 18
StatementofCashflowsFortheYearEnded30June2016 2016 2015 Note $ $CASHFLOWSFROMOPERATINGACTIVITIES: Receiptsfromcustomers 1,921,504 295,891Paymentstosuppliersandemployees (5,549,008) (2,208,012)Interestpaid (1,939) (160)Interestreceived 41,145 -Netcash(usedin)operatingactivities 19 (3,588,298) (1,912,281) CASHFLOWSFROMINVESTINGACTIVITIES: Proceedsfromsaleofplantandequipment - 594Purchaseofproperty,plantandequipment (125,618) (77,422)Investmentinassociates (269,000) -Netcash(usedin)investingactivities (394,618) (76,828) CASHFLOWSFROMFINANCINGACTIVITIES: Proceedsfromissueofshares 5,459,545 -Proceedsfromtheissueofconvertiblenotes - 3,385,500Capitalraisingcosts–convertiblenotes (1,058,337) (364,109)IPOlistingcosts (82,754) (16,141)Netcashprovidedbyfinancingactivities 4,318,454 3,005,250 Netincreaseincashandcashequivalentsheld 335,538 1,016,141CashandCashequivalentsatbeginningofyear 1,206,008 189,867CashandCashequivalentsatendoffinancialyear 6 1,541,546 1,206,008
FarmaForce Limited A.C.N. 167 748 843
Page 19
NotestotheFinancialStatementsFortheYearEnded30June2016
The financial report covers FarmaForce Limited as an Individual entity. FarmaForce Limited is a for-profitCompany,incorporatedanddomiciledinAustralia.
ThefunctionalandpresentationcurrencyofFarmaForceLimitedisAustraliandollars.
1. BasisofPreparation
The financial statements are general purpose financial statements that have been prepared inaccordancewiththeCorporationsAct2001,AustralianAccountingStandardsandInterpretationsoftheAustralianAccountingStandardsBoardandInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.
The financial statements have been prepared on an accruals basis and are based on historical costsmodified,where applicable, by themeasurement at fair valueof selectednon-current assets, financialassetsand financial liabilities.Thecompany isa for-profitentity for financial reportingpurposesunderAustralianAccountingStandards.
Significant accounting policies adopted in the preparation of these financial statements are presentedbelowandareconsistentwithpriorreportingperiodsunlessotherwisestated.
2. SummaryofSignificantAccountingPolicies
(a) IncomeTax
Thetaxexpenserecognisedinthestatementofprofitorlossandothercomprehensiveincomecomprisesofcurrentincometaxexpenseplusdeferredtaxexpense.
Currenttaxistheamountofincometaxespayable/(recoverable)inrespectofthetaxableprofit(loss)fortheyearandismeasuredattheamountexpectedtobepaidto(recoveredfrom)thetaxationauthorities,usingthetaxratesandlawsthathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod. Current tax liabilities (assets) aremeasured at the amounts expected to bepaid to (recoveredfrom)therelevanttaxationauthority.
Deferredtaxisnotprovidedforthefollowing
• Theinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationandatthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit(taxloss).
• Taxabletemporarydifferencesarisingontheinitialrecognitionofgoodwill.
• Temporarydifferencesrelatedtoinvestmentinsubsidiaries,associatesandjointlycontrolledentitiestotheextentthattheGroupisabletocontrolthetimingofthereversalofthetemporarydifferencesanditisprobablethattheywillnotreverseintheforeseeablefuture.
Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxrates(andtaxlaws)thathavebeenenactedorsubstantivelyenactedbytheendofthereportingperiod.
Deferredtaxassetsarerecognisedforalldeductibletemporarydifferencesandunusedtaxlossestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferencesandlossescanbeutilised.
Currenttaxassetsandliabilitiesareoffsetwherethereisalegallyenforceablerighttosetofftherecognisedamountsandthereisanintentioneithertosettleonanetbasisortorealisetheassetandsettletheliabilitysimultaneously.
FarmaForce Limited A.C.N. 167 748 843
Page 20
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
2. SummaryofSignificantAccountingPolicies(continued)
Deferredtaxassetsandliabilitiesareoffsetwherethereisalegalrighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandthedeferredtaxassetsandthedeferredtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentitieswhichintendeithertosettlecurrenttaxliabilitiesandassetsonanetbasis,ortorealisetheassetsandsettletheliabilitiessimultaneouslyineachfutureperiodinwhichsignificantamountsofdeferredtaxliabilitiesorassetsareexpectedtobesettledorrecovered.
Currentanddeferredtaxisrecognisedasincomeoranexpenseandincludedinprofitorlossfortheperiodexceptwherethetaxarisesfromatransactionwhichisrecognisedothercomprehensiveincomeorequityrespectively.
(b) Leases
Leasepaymentforoperatinglease,wheresubstantiallyalloftherisksandbenefitsremainwiththelessor,arechargedasexpensesonastraightlinebasisoverlifeoftheleaseterm.
Leaseincentivesunderoperatingleasesarerecognisedasaliabilityandamortisedonastraightlinebasisoverthelifeoftheleaseterm.
(c) Revenueandotherincome
Revenueisrecognisedwhentheamountoftherevenuecanbemeasuredreliably.Itisprobablethateconomicbenefitsassociatedwiththetransactionwillflowtothecompanyandspecificcriteriarelatingtothetypeoftherevenueasnotedbelow,hasbeensatisfied.
Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivableandispresentednetofreturns,discountsandrebates.
Allrevenueisstatednetoftheamountofgoodsandservicestax(GST).
Otherincome
Otherincomeisrecognisedonanaccrualsbasiswhenthecompanyisentitledtodoit.
(d) GoodsandServicesTax(GST)
Revenue,expensesandassetsarerecognisednetoftheamountofgoodsandservicestax(GST),exceptwheretheamountofGSTincurredisnotrecoverablefromtheAustralianTaxationOffice(ATO).
ReceivablesandpayablearestatedinclusiveofGST.
ThenetamountofGSTrecoverablefrom,orpayableto,theATOisincludedasapartofreceivablesorpayablesinthestatementofthefinancialposition.
CashflowsinthestatementofcashflowsareincludedonagrossbasisandtheGSTcomponentofcashflowsarisingfrominvestingandfinancingactivitieswhichisrecoverablefrom,orpayableto,thetaxationauthorityisclassifiedasoperatingcashflows.
FarmaForce Limited A.C.N. 167 748 843
Page 21
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
2. SummaryofSignificantAccountingPolicies(continued)(e) Property,PlantandEquipment
Eachclassofproperty,plantandequipmentiscarriedatcostorfairvalueless,whereapplicable,anyaccumulateddepreciationandimpairmentoflosses.
Wherethecostmodelisused,theassetsiscarriedatitscostlessanyaccumulateddepreciationandanyimpairmentlosses.Costsincludepurchaseprice,otherdirectlyattributablecostsandtheinitialestimateofthecostsofdismantlingandrestoringtheassets,whereapplicable.
PlantandEquipment
Plantandequipmentaremeasuredusingthecostmodel.
Depreciation
Property,plantandequipment,excludingfreeholdland,isdepreciatedonastraightbasisovertheassetsusefullifetothecompany,commencingwhentheassetsisreadyforuse.
Leasedassetsandleaseholdimprovementsareamortisedovertheshorterofeithertheunexpiredperiodoftheleaseortheirestimatedusefullife.
Thedepreciationratesusedforeachclassofdepreciableassetareshownbelow:
Fixedassetclass Depreciationrate
PlantandEquipment 10%to33%
Furniture,FixturesandFittings 5%to33%
Leaseholdimprovements 10%
Attheendofeachannualreportingperiod,thedepreciationmethod,usefullifeandresidualvalueofeachassetisreviewed.Anyrevisionsareaccountedforprospectivelyasachangeinestimate.
(f) FinancialInstruments
Financialinstrumentsarerecognisedinitiallyusingtradedateaccounting,i.e.onthedatethatthecompanybecomespartytothecontractualprovisionsoftheinstrument.
Ontheinitialrecognition,allfinancialinstrumentsaremeasuredatfairvalueplustransactioncosts(exceptforinstrumentsmeasuredatfairvaluethroughprofitandlosswheretransactioncostsareexpensedasincurred).
FinancialAssets
Financialassetsaredividedintothefollowingcategorieswhicharedescribedindetailbelow:
• loansandreceivables;
• financialassetsatfairvaluethroughprofitorloss;
• availableforsalefinancialassets;and
• held-to-maturityinvestments.
Financialassetsareassignedtothedifferentcategoriesoninitialrecognition,dependingonthecharacteristicsoftheinstrumentanditspurpose.Afinancialinstrument’scategoryisrelevantto
thewayitismeasuredandwhetheranyresultingincomeandexpensesarerecognisedinprofitorlossorinothercomprehensiveincome.
Allincomeandexpensesrelatingtofinancialassetsarerecognisedinthestatementofprofitorlossandothercomprehensiveincomeinthe‘financeincome’or‘financecosts’lineitemrespectively.
FarmaForce Limited A.C.N. 167 748 843
Page 22
NotestotheFinancialStatements(continued)For the Year Ended 30 June 2016
2. SummaryofSignificantAccountingPolicies(continued)Loansandreceivables
Loansandreceivablesarenon-derivativefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Theyariseprincipallythroughtheprovisionofgoodsandservicestocustomersbutalsoincorporateothertypesofcontractualmonetaryassets.
Afterinitialrecognitionthesearemeasuredatamortisedcostusingtheeffectiveinterestmethod,lessprovisionforimpairment.Anychangeintheirvaluerecognisedinprofitorloss.
TheCompany’stradeandmostotherreceivablesfallintothiscategoryoffinancialinstruments.
Discountingisomittedwheretheeffectofdiscountingisconsideredimmaterial.
Significantreceivablesareconsideredforimpairmentonanindividualassetbasiswhentheyarepastdueatthereportingdateorwhenobjectiveevidenceisreceivedthataspecificcounterpartywilldefault.
Theamountoftheimpairmentisthedifferencebetweenthenetcarryingamountandthepresentvalueofthefutureexpectedcashflowsassociatedwiththeimpairedreceivable.
Insomecircumstances,theCompanyrenegotiatesrepaymenttermswithcustomerswhichmayleadtochangesinthetimingofthepayments,theCompanydoesnotnecessarilyconsiderthebalancetobeimpaired,howeverassessmentismadeonacase-by-casebasis.
Financialassetsatfairvaluethroughprofitorloss
Financialassetsatfairvaluethroughprofitorlossincludefinancialassets:
• acquiredprincipallyforthepurposeofsellinginthenearfuture
• designatedbytheentitytobecarriedatfairvaluethroughprofitorlossuponinitialrecognitionor
• whicharederivativesnotqualifyingforhedgeaccounting.
TheCompanyhassomederivativeswhicharedesignatedasfinancialassetsatfairvaluethroughprofitorloss.
Assetsincludedwithinthiscategoryarecarriedinthestatementoffinancialpositionatfairvaluewithchangesinfairvaluerecognisedinfinanceincomeorexpensesinprofitorloss.
Anygainorlossarisingfromderivativefinancialinstrumentsisbasedonchangesinfairvalue,whichisdeterminedbydirectreferencetoactivemarkettransactionsorusingavaluationtechniquewherenoactivemarketexists.
Held-to-maturityinvestments
Held-to-maturityinvestmentsarenon-derivativefinancialassetswithfixedordeterminablepaymentsandfixedmaturity.Investmentsareclassifiedasheld-to-maturityifitistheintentionoftheCompany'smanagementtoholdthemuntilmaturity.
Held-to-maturityinvestmentsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestmethod,withrevenuerecognisedonaneffectiveyieldbasis.Inaddition,ifthereisobjectiveevidencethattheinvestmenthasbeenimpaired,thefinancialassetismeasuredatthepresentvalueofestimatedcashflows.Anychangestothecarryingamountoftheinvestmentarerecognisedinprofitorloss.
Available-for-salefinancialassets
Available-for-salefinancialassetsarenon-derivativefinancialassetsthatdonotqualifyforinclusioninanyoftheothercategoriesoffinancialassetsorwhichhavebeendesignatedinthiscategory.
Allavailable-for-salefinancialassetsaremeasuredatfairvalue,withsubsequentchangesinvaluerecognisedinothercomprehensiveincome.
Gainsandlossesarisingfromfinancialinstrumentsclassifiedasavailable-for-saleareonlyrecognisedinprofitorlosswhentheyaresoldorwhentheinvestmentisimpaired.
FarmaForce Limited A.C.N. 167 748 843
Page 23
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
2. SummaryofSignificantAccountingPolicies(continued)Inthecaseofimpairmentorsale,anygainorlosspreviouslyrecognisedinequityistransferredtotheprofitorloss.
Lossesrecognisedinpriorperiodconsolidatedstatementofprofitorlossandothercomprehensiveincomestatementsresultingfromtheimpairmentofdebtsecuritiesarereversedthroughthestatementofprofitorlossandothercomprehensiveincome,ifthesubsequentincreasecanbeobjectivelyrelatedtoaneventoccurringaftertheimpairmentlosswasrecognisedinprofitorloss.
Financialliabilities
Financialliabilitiesareclassifiedaseitherfinancialliabilities'atfairvaluethroughprofitorloss'orotherfinancialliabilitiesdependingonthepurposeforwhichtheliabilitywasacquired.AlthoughtheCompanyusesderivativefinancialinstrumentsineconomichedgesofcurrencyandinterestraterisk,itdoesnothedgeaccountforthesetransactions.
TheCompany'sfinancialliabilitiesincludeborrowings,tradeandotherpayables(includingfinanceleaseliabilities),whicharemeasuredatamortisedcostusingtheeffectiveinterestratemethod.
Impairmentoffinancialassets
AttheendofthereportingperiodtheCompanyassesseswhetherthereisanyobjectiveevidencethatafinancialassetorgroupoffinancialassetsisimpaired.
Financialassetsatamortisedcost
Ifthereisobjectiveevidencethatanimpairmentlossonfinancialassetscarriedatamortisedcosthasbeenincurred,theamountofthelossismeasuredasthedifferencebetweentheasset'scarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedatthefinancialassetsoriginaleffectiveinterestrate.
Impairmentonloansandreceivablesisreducedthroughtheuseofanallowanceaccounts,allotherimpairmentlossesonfinancialassetsatamortisedcostaretakendirectlytotheasset.
Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstotherexpensesinprofitorloss.
Available-for-salefinancialassets
Asignificantorprolongeddeclineinvalueofanavailable–for-saleassetbelowitscostisobjectiveevidenceofimpairment,inthiscase,thecumulativelossthathasbeenrecognisedinothercomprehensiveincomeisreclassifiedfromequitytoprofitorlossasareclassificationadjustment.Anysubsequentincreaseinthevalueoftheassetistakendirectlytoothercomprehensiveincome.
(g) Impairmentofnon-financialassets
AttheendofeachreportingperiodtheCompanydetermineswhetherthereisanevidenceofanimpairmentindicatorfornon-financialassets.
Wherethisindicatorexistsandregardlessforgoodwill,indefinitelifeintangibleassetsandintangibleassetsnotyetavailableforuse,therecoverableamountoftheassetisestimated.
Whereassetsdonotoperateindependentlyofotherassets,therecoverableamountoftherelevantcash-generatingunit(CGU)isestimated.
TherecoverableamountofanassetorCGUisthehigherofthefairvaluelesscostsofdisposalandthevalueinuse.Valueinuseisthepresentvalueofthefuturecashflowsexpectedtobederivedfromanassetorcash-generatingunit.
Wheretherecoverableamountislessthanthecarryingamount,animpairmentlossisrecognisedinprofitorloss.
Reversalindicatorsareconsideredinsubsequentperiodsforallassetswhichhavesufferedanimpairmentloss,exceptforgoodwill.
FarmaForce Limited A.C.N. 167 748 843
Page 24
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
2. SummaryofSignificantAccountingPolicies(continued)(h) Cashandcashequivalents
Cashandcashequivalentscomprisescashonhand,demanddepositsandshort-terminvestmentswhicharereadilyconvertibletoknownamountsofcashandwhicharesubjecttoaninsignificantriskofchangeinvalue.
Bankoverdraftsalsofrompartofcashequivalentsforthepurposeofthestatementofcashflowsandarepresentedwithincurrentliabilitiesonthestatementoffinancialposition.
(i) Employeebenefits
ProvisionismadefortheCompany’sliabilityforemployeebenefitsarisingfromservicesrenderedbyemployeestotheendofthereportingperiod.Employeebenefitsthatareexpectedtobewhollysettledwithinoneyearhavebeenmeasuredattheamountsexpectedtobepaidwhentheliabilityissettled,plusrelatedon-costs.
Employeebenefitsexpectedtobesettledmorethantwelvemonthsaftertheendofthereportingperiodhavebeenmeasuredatthepresentvalueoftheestimatedfuturecashoutflowstobemadeforthosebenefits.Indeterminingtheliability,considerationisgiventoemployeewageincreasesandtheprobabilitythattheemployeemaysatisfyvestingrequirements.Cashflowsarediscountedusingmarketyieldsonnationalgovernmentbondswithtermstomaturitythatmatchtheexpectedtimingofcashflows.Changesinthemeasurementoftheliabilityarerecognisedinprofitorloss.
EmployeebenefitsarepresentedascurrentliabilitiesinthestatementoffinancialpositioniftheCompanydoesnothaveanunconditionalrighttodefersettlementoftheliabilityforatleast12monthsafterthereportingdateregardlessoftheclassificationoftheliabilityformeasurementpurposesunderAASB119.
(j) Adoptionofnewandrevisedaccountingstandards
Theconsolidatedentityhasadoptedallofthenew,revisedoramendingAccountingStandardsandinterpretationsissuedbytheAustralianAccountingStandardsBoard('AASB')thataremandatoryforthecurrentreportingperiod.
Anynew,revisedoramendingAccountingStandardsorInterpretationsthatarenotyetmandatoryhavenotbeenearlyadopted.
AnysignificantimpactontheaccountingpoliciesoftheconsolidatedentityfromtheadoptionoftheseAccountingStandardsandInterpretationsaredisclosedbelow.TheadoptionoftheseAccountingStandardsandInterpretationsdidnothaveanysignificantimpactonthefinancialperformanceorpositionofthecompany.
AASB15RevenuefromContractswithCustomers
Thisstandardanditsconsequentialamendmentstootherstandardsareapplicabletoannualreportingperiodsbeginningonorafter1January2017.Thecoreprincipleisthatanentityrecognisesrevenuetodepictthetransferofpromisedgoodsorservicestocustomersinanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices,basedontheperformanceobligationsassociatedwiththeprovisionofthosegoodsorservices.Forgoods,theperformanceobligationissatisfiedwhenthecustomerobtainscontrolofthegoods.Forservices,theperformanceobligationissatisfiedwhentheservicehasbeenprovided.
AlthoughthedirectorsanticipatethattheadoptionofAASB15mayhaveanimpactontheCompany’sfinancialstatements,itisimpracticableatthisstagetoprovideareasonableestimateofsuchimpact.
FarmaForce Limited A.C.N. 167 748 843
Page 25
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
3. RevenueandOtherIncome
Revenuefromcontinuingoperations2016$
2015$
Salesrevenue -provisionofcontractrevenue 1,914,476 502,921-sharedservicesrevenue 36,364 --incomeinvoicedforservicesnotyetcompletedatyearend - (150,238)
NetRevenueInvoiced1,950,840 352,683
OtherIncome -Netgainondisposalofproperty,plantandequipment - 27-Financeincome-Otherinterestreceived 41,145 -
4. ResultfortheYear
Theresultfortheyearwasderivedaftercharging/(crediting)thefollowingitems:
2016$
2015$
FinanceCosts Financialliabilitiesmeasuredatamortisedcost: -Otherinterestexpense 1,939 160
-interestonconvertiblenotes - 187,401Totalfinancecosts 1,939 187,561 Theresultfortheyearincludesthefollowingspecificexpenses:
Otherexpenses: Employeebenefitsexpense 1,008,639 490,548
Depreciationexpense 38,538 19,584
5. Incometaxexpense
2016$
2015$
(a)Reconciliationofincometaxbenefittoaccountingprofit: (3,799,018) (2,051,222)Profit 30% 30%Taxbenefit (1,139,706) (753,666)Addtaxeffectof:
Expenditurenotallowableforincometaxpurposes 22,092 -Fixedassettimingdifferences 58,466 -Recognitionofprioryeartaxlosses (804,773) -Adjustmenttodeferredtaxliability 19,022 -Deferredtaxassetsnotbroughttoaccount 1,844,899 753,666
FarmaForce Limited A.C.N. 167 748 843
Page 26
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
6. Cashandcashequivalents
2016$
2015$
Cashatbankandonhand
1,541,546 1,206,008
7. TradeandotherreceivablesCURRENT 2016
$2015$
Tradereceivables 216,415 209,332Prepayments 99,550 47,674Relatedpartyreceivables 29,383 -Otherreceivables 23,258 37,139Totalcurrenttradeandotherreceivables 368,606 294,145 NON-CURRENT Deposit 380 - Aginganalysisoftradereceivables: Neitherpastdue,norimpaired: Current 81,238 176,198Pastdue,butnotimpaired 1-30daysoverstandardterms 11,258 33,13461+daysoverstandardterms 123,919 -Nettradereceivables 216,415 209,332
FarmaForce Limited A.C.N. 167 748 843
Page 27
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
8. Property,plantandequipment
PLANTANDEQUIPMENT
2016$
2015$
Plantandequipment Atcost
105,262 85,407Accumulateddepreciation
(33,658) (10,643)
Totalplantandequipment
71,604 74,764Furniture,fixturesandfittings
Atcost
35,316 13,588Accumulateddepreciation
(4,844) (1,844)
Totalfurniture,fixturesandfittings
30,472 11,744LeaseholdImprovements
Atcost
158,011 73,977Accumulateddepreciation
(19,828) (7,306)
Totalleaseholdimprovements
138,183 66,671Totalplantandequipment
240,259 153,179
Totalproperty,plantandequipment
240,259 153,179
(a) Movementsincarryingamountsofproperty,plantandequipment
Movementinthecarryingamountforeachclassofproperty,plantandequipmentbetweenthebeginningandtheendofthecurrentfinancialyear:
PlantandEquipment
Furniture,Fixturesand
Fittings Improvement TotalYearended30June2016 $ $ $ $Balanceatthebeginningofyear 74,764 11,744 66,671 153,179Additions 19,855 21,728 84,034 125,617Depreciationexpense (23,015) (3,000) (12,522) (38,537)Balanceattheendoftheyear 71,604 30,472 138,183 240,259
Yearended30June2015 Balanceatthebeginningofyear 17,785 8,981 69,145 95,911Additions 67,579 4,568 5,275 77,422Disposals-writtendownvalue (109) - (460) (569)Depreciationexpense (10,491) (1,805) (7,289) (19,585)Balanceattheendoftheyear 74,764 11,744 66,671 153,179
FarmaForce Limited A.C.N. 167 748 843
Page 28
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
9. Tradeandotherpayables
2016$
2015$
CURRENT Unsecuredliabilities
Tradepayables 151,918 22,318Employeebenefits 75,344 45,508Relatedpartypayables 46,897 7,333Sundrypayablesandaccruedexpenses 192,419 -Otherpayables 113,087 190,658
579,665 265,817
10. Borrowings
2016$
2015$
CURRENT Unsecuredliabilities:Convertiblenotes
- 2,903,961
Duringtheyearended30June2016,theCompanysuccessfullylistedontheAustralianStockExchange.Atthisdate,theoutstandingconvertiblenoteswereconvertedtoordinarysharesintheCompany.
11. Otherliabilities
2016$
2015$
CURRENT AmountsInvoicedforservicesnotyetcompletedatyearend - 149,579
12. IssuedCapital
2016 2015
$ $
(2015:1)Ordinaryshares $8,068,859 $1
Movementsinordinarysharecapital No. $Openingbalance1July2014 1 1
Closingbalanceat30June2015 1 1
Sharesissuedduringtheyear: Conversionofnotespreviouslyclassifiedasequity - 763,689Conversionofnotespreviouslyclassifiedasaliability 19,302,500 2,903,961Issuesofshares 108,198,479 5,459,545Less:Transactioncostsarisingonsharesissued - (1,058,337)
127,500,980 $8,068,859
FarmaForce Limited A.C.N. 167 748 843
Page 29
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
TheholdersofordinarysharesareentitledtoparticipateindividendsandtheproceedsonwindingupoftheCompany.OnashowofhandsatmeetingsoftheCompany,eachholderofordinaryshareshasonevoteinpersonorbyproxy,anduponapolleachshareisentitledtoonevote.
TheCompanydoesnothaveauthorisedcapitalorparvalueinrespectofitsshares.
Loyaltyoptions
The Company has 19,302,500 Loyalty options on issue exercise-able at 20c each between 24 to 36monthsafter thedateofadmissionof theCompany’s shares to theOfficial Listof theASX.Theoptionholdersmustbeholdingtheunderlyingshares,beingoneshareforoneoption,tobeabletoexercisetheoption.
13. EarningsperShare
2016$
2015$
(a)Reconciliationofearningstoprofitorlossfromcontinuingoperations
Profitfromcontinuingoperations (3,799,018) (2,051,222)
(b)Earningsusedtocalculateoverallearningspershare
Earningsusedtocalculateoverallearningspershare (3,799,018) (2,051,222)
No. No.
(c)Weightedaveragenumberofordinarysharesoutstandingduringtheyearused in calculating basic EPS Weighted average number of ordinarysharesoutstandingduringtheyearusedincalculatingbasicEPS 87,439,197 1
FarmaForce Limited A.C.N. 167 748 843
Page 30
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
14. FinancialRiskManagement TheCompanyisexposedtoavarietyoffinancialrisksthroughitsuseoffinancialinstruments.
TheCompany’soverallriskmanagementplanseekstominimisepotentialadverseeffectsduetotheunpredictabilityoffinancialmarkets.TheCompanydoesnotspeculateinfinancialassets.
ThemostsignificantfinancialriskstowhichtheCompanyisexposedtoaredescribedbelow:
Specificrisks
• Marketrisk–currencyriskandpricerisk
• Creditrisk
• Liquidityrisk
FinancialInstrumentsused
TheprincipalcategoriesoffinancialinstrumentusedbytheCompanyare:
• Tradereceivables
• Cashatbank
• Tradeandotherpayables
Thetotalsforeachcategoryoffinancialinstruments,measuredinaccordancewithAASB139:FinancialInstruments:RecognitionandMeasurementasdetailedintheaccountingpoliciestothesefinancialstatements,areasfollows:
2016 2015
$ $
Financialassets Cashandcashequivalents 1,541,546 1,206,008Tradeandotherreceivables 269,056 246,471
Totalfinancialassets 1,810,602 1,452,479
Financialliabilities Financialliabilitiesatamortisedcost: -tradeandotherpayables 311,902 220,309-borrowings - 2,903,961
Totalfinancialliabilities 311,902 3,124,270
Objectives,policiesandprocesses
RiskmanagementiscarriedoutbytheCompany’sBoardofDirectors.TheFinanceCommitteehasprimaryresponsibilityforthedevelopmentofrelevantpoliciesandprocedurestomitigatetheriskexposureoftheCompany.ThesepoliciesandproceduresarethenapprovedandtabledbytheBoardofDirectors.
ReportsarepresentedateachBoardmeetingregardingtheimplementationofthesepoliciesandanyriskexposurewhichtheRiskManagementCommitteebelievestheBoardshouldbeawareof.
SpecificinformationregardingthemitigationofeachfinancialrisktowhichtheCompanyisexposedisprovidedbelow.
FarmaForce Limited A.C.N. 167 748 843
Page 31
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
14.FinancialRiskManagement(continued) Liquidityrisk
LiquidityriskarisesfromtheCompany’smanagementofworkingcapitalandthefinancechargesandprincipalrepaymentsonitsdebtinstruments.ItistheriskthattheCompanywillencounterdifficultyinmeetingitsfinancialobligationsastheyfalldue.
TheCompany’spolicyistoensurethatitwillalwayshavesufficientcashtoallowittomeetitsliabilitiesasandwhentheyfalldue.TheCompanymaintainscashtomeetitsliquidityrequirementsforupto30daysperiod.
Atthereportingdate,thesereportsindicatethatthecompanyexpectedtohavesufficientliquidresourcestomeetsitsobligationsunderallreasonablyexpectedcircumstancesandwillnotneedtodrawdownanyofthefinancingfacilities.
Within1Year Total 2016
$2015$
2016$
2015$
Financialliabilitiesdueforpayment
Tradeandotherpayables 311,902 220,309 311,902 220,309
Borrowings - 2,903,961 - 2,903,961
Totalfinancialliabilitiesdueforpayment 311,902 3,124,270 311,902 3,124,270
Financialassets–cashflowsrealisable
Cashandcashequivalents 1,541,546 1,206,008 1,541,546 1,206,008
Tradeandotherreceivables 269,056 246,471 269,056 246,471
Totalfinancialassets–cashflowsrealisable 1,810,602 1,452,479 1,810,602 1,452,479
Creditrisk
Creditriskreferstotheriskthatacounterpartywilldefaultonitscontractualobligationsresultinginafinanciallosstothecompany.
Creditriskarisesfromcashandcashequivalents,derivativefinancialinstrumentsanddepositswithbanksandfinancialinstitutions,aswellascreditexposuretowholesaleandretailcustomers,includingoutstandingreceivablesandcommittedtransactions.
Thecompanyhasadoptedapolicyofonlydealingwithcreditworthycounterpartiesasameansofmitigatingtheriskoffinanciallossfromdefaults.
TheBoardreceivesmonthlyreportssummarisingtheturnover,tradereceivablesbalanceandagingprofileofeachofthekeycustomersindividuallyandtheCompany’sothercustomersanalysedbyindustrysectoraswellasalistofcustomerscurrentlytransactingonaprepaymentbasisorwhohavebalancesinexcessoftheircreditlimits.
FarmaForce Limited A.C.N. 167 748 843
Page 32
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
14.FinancialRiskManagement(continued)Managementconsidersthatallthefinancialassetsthatarenotimpairedforeachofthereportingdatesunderreviewareofgoodscreditquality,includingthosethatarepastdue.
Thecreditriskofliquidfundsandothershorttermfinancialassetsisconsiderednegligible,sincethecounterpartiesarereputablebankswithhighqualityexternalcreditratings.
TheCompanyhasnosignificantconcentrationofcreditriskwithrespecttoanysinglecounterpartyorgroupofcounterparties.Theclassofassetsdescribeas‘tradeandotherreceivables’isconsideredtobethemainsourceofcreditriskrelatedtothecompany.
Sensitivityanalysis
Therearecurrentlynointerestbearingloansatvariableinterestrates.
15. RemunerationofAuditors
2016 2015
$ $
- auditingorreviewingthefinancialstatements 15,000 4,000
16. Contingencies IntheopinionoftheDirectors,theCompanydidnothaveanycontingenciesat30June2016(30June2015:None).
17. InvestmentinAssociate
Principalplaceofbusiness/CountryofIncorporation
PercentageOwned(%)*
PercentageOwned(%)*
2016 2015
NewFrontierHoldingsLLC1 USA 20 -
1TheCompanyacquired20%interestinNewFrontierHoldings.Atthereportingdate,thefairvalueofthenetassetsoftheinvesteewas$1,413,338andpaid-upcapital$1,413,338.00.
$Considerationpaid 269,000Shareofnetassetsacquired 269,000
FarmaForce Limited A.C.N. 167 748 843
Page 33
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
18. RelatedParties(a) TheCompany’smainrelatedpartiesareasfollows:
(i) Entitiesexercisingcontroloverthecompany:
Theultimateparententity,whichexercisescontroloverthecompany,isiQnovateLtdwhichisincorporatedinAustraliaandowns70.59%ofFarmaForceLimited.
InrelationtoiQnovateLtd,Dr.GeorgeSyrmalisisCEO,Chairman,ExecutiveDirectorandasubstantialshareholderandMr.ConTsigounisisExecutiveDirectorandasubstantialshareholderofiQnovateLtd.
(ii) Keymanagementpersonnel:
Anyperson(s)havingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheentitydirectlyorindirectly,includinganydirector(whetherexecutiveorotherwise)ofthatentityareconsideredkeymanagementpersonnel.
Keymanagementpersonnelremunerationincludedwithinemployeeexpensesfortheyearisshownbelow:
2016 2015
$ $
Short-termemployeebenefits 139,003 168,000Post-employmentbenefits 10,118 15,960
149,121 183,960
(b) Transactionwithrelatedparties
Transactionsbetweenrelatedpartiesareonnormalcommercialtermsandconditionsnomorefavourablethanthoseavailabletootherpartiesunlessotherwisestated.
Thefollowingtransactionsoccurredwithrelatedparties:
BalanceOutstanding
Revenue-officesharing
costs
Expenditure-officesharing
costs
Companysecretarial
feeConsultingfee Othertransactionand
administrativecosts*Owedbythecompany
Owedtoothercompany
2016 $ $ $ $ $ $ $
Parent 18,182 573,232 - - 229,324* - -Relatedparties 18,182 118,588 36,000 30,811 975,693* 5,342 28,707
2015
Parent 627,705 - - - - 940 -
Associates - 40,000 18,000 350,958 - 6,392 17,600
*TransactionsdescribedasOthertransactionscompriseof:Recruitmentfees(parent) $229,324Underwritingfees(relatedparties) $150,000Capitalraisingfees(relatedparties) $825,693
FarmaForce Limited A.C.N. 167 748 843
Page 34
NotestotheFinancialStatements(continued)FortheYearEnded30June2016
19. CashFlowInformation(a) Reconciliationofresultfortheyeartocashflowsfromoperatingactivities
Reconciliationofnetincometonetcashprovidedbyoperatingactivities:
2016 2015
$ $
Lossfortheyear (3,799,018) (2,051,222)Cashflowsexcludedfromprofitattributabletooperatingactivities
IPOlistingcost 82,754 -Non-cashflowsinprofit:
-depreciation 38,538 19,584-netgainondisposalofproperty,plantandequipment - (27)-interestonconvertiblenotes - 187,401
Changesinassetsandliabilities,netoftheeffectsofpurchaseanddisposalofsubsidiaries:
-(increase)/decreaseintradeandotherreceivables (74,841) (265,467)-(increase)indeferredtaxassets -
-(decrease)indeferredtaxliabilities -
-increase/(decrease)inincomeinadvance (149,579) 149,579-increase/(decrease)intradeandotherpayables 313,848 47,871
Netcashusedinoperatingoperations (3,588,298) (1,912,281)
20. SegmentreportingTheCompanyhasidentifieditsoperatingsegmentbasedoninternalreportingthatisreviewedandusedbytheCOOinassessingtheperformanceofthesegment.
The operating segment is identified by management based on the nature of services provided. TheservicesprovidedbyFarmaForceare contract saleswith thebusiness representinga strategicpositionthatservesauniquesegmentofthemarketinAustralia.
AllrevenuesdisclosedintheFinancialStatementsarefromexternalcustomersincurrentyearandprioryear.
21. EventsOccurringAftertheReportingDateNomattersorcircumstanceshavearisensincetheendofthefinancialyearwhichsignificantlyaffectedormaysignificantlyaffecttheoperationsoftheCompany,theresultsofthoseoperations,orthestateofaffairsoftheCompanyinfuturefinancialyears.
22. CompanyDetailsTheregisteredofficeofandprincipalplaceofbusinessofthecompanyis:
FarmaForceLimited
Level3,222ClarenceStreet
SYDNEYNSW2000
FarmaForce Limited A.C.N. 167 748 843
Page 35
Directors’DeclarationThedirectorsoftheCompanydeclarethat:
1. the financial statements and notes for the year ended 30 June 2016 are in accordance with theCorporationsAct2001and:
a. comply with Accounting Standards, which, as stated in accounting policy note 2 to the financialstatements, constitutes explicit and unreserved compliance with International Financial ReportingStandards(IFRS);and
b. giveatrueandfairviewofthefinancialpositionandperformanceoftheCompany.
2. Inthedirector’sopinion,therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayablewiththecontinuingsupportofcreditors.
ThisdeclarationismadeinaccordancewitharesolutionoftheBoardofDirectors.
Director:
GeorgeElias
Datedthis29thdayofAugust2016
FarmaForce Limited A.C.N. 167 748 843
Page 36
IndependentAuditReporttothemembersofFarmaForceLimited ACN167748843
ReportontheFinancialReport
WehaveauditedtheaccompanyingfinancialreportofFarmaForceLimited,whichcomprisestheconsolidatedstatementoffinancialpositionasat30June2016,theconsolidatedstatementofcomprehensiveincome,consolidatedstatementofchangesinequityandconsolidatedstatementofcashflowsfortheyearendedthatdate,asummaryofsignificantaccountingpolicies,otherexplanatorynotesandthedirectors'declarationofthecompanyandtheentitiesitcontrolledattheyear’sendorfromtimetotimeduringthefinancialyear.
Directors'ResponsibilityfortheFinancialReport
ThedirectorsofthecompanyareresponsibleforthepreparationandfairpresentationofthefinancialreportinaccordancewithAustralianAccountingStandards(includingtheAustralianAccountingInterpretations),andtheCorporationsAct2001.Thisresponsibilityincludes:designing,implementingandmaintaininginternalcontrolrelevanttothepreparationandfairpresentationofthefinancialreportthatisfreefrommaterialmisstatement,whetherduetofraudorerror.InNote1,thedirectorsalsostate,inaccordancewithAccountingStandardAASB101:PresentationofFinancialStatements,thatthefinancialstatementscomplywithInternationalFinancialReportingStandards(IFRS).
Auditor'sResponsibility
Ourresponsibilityistoexpressanopiniononthefinancialreportbasedonouraudit.WeconductedourauditinaccordancewithAustralianAuditingStandards.TheseAuditingStandardsrequirethatwecomplywithrelevantethicalrequirementsrelatingtoauditengagementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialreportisfreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialreport.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialreport,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttothecompany'spreparationandfairpresentationofthefinancialreportinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationofthefinancialreport.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Independence
Inconductingouraudit,wehavecompliedwiththeindependencerequirementsoftheCorporationsAct2001.WeconfirmthattheindependencedeclarationrequiredbytheCorporationsAct2001,providedtotheDirectorsofIqnovateLimitedwouldbeinthesametermsifprovidedtotheDirectorsasatthedateofthisauditor'sreport.
FarmaForce Limited A.C.N. 167 748 843
Page 37
INDEPENDENTAUDITOR'SREPORTTOTHEMEMBERSOFFARMAFORCELIMITED
ACN167748843
Auditor'sOpinion
Inouropinion:
(a) thefinancialreportofFarmaForceLimitedisinaccordancewiththeCorporationsAct2001,including:
(i) givingatrueandfairviewoftheconsolidatedentity’sfinancialpositionasat30June2016andofitsperformancefortheyearendedonthatdate;and
(ii) complyingwithAustralianAccountingStandards(includingtheAustralianAccountingInterpretations)andtheCorporationsRegulations2001.
(b) thefinancialreportalsocomplieswithInternationalFinancialReportingStandardsasdisclosedinNote1.
ReportontheRemunerationReport
WehaveauditedtheremunerationReportincludedinthedirectors’reportfortheyearended30June2016.ThedirectorsofthecompanyareresponsibleforthepreparationandpresentationoftheRemunerationReportinaccordancewithsection300AoftheCorporationsAct2001.OurresponsibilityistoexpressanopinionontheRemunerationReportbasedonourauditconductedinaccordancewithAustralianAuditingStandards.
Auditor’sOpinion
InouropiniontheRemunerationReportofFarmaForceLimitedfortheyearended30June2016,complieswithsection300AoftheCorporationsAct2001.
FORTUNITYASSURANCE
TRDavidson
Partner
Dated:31August,2016
FarmaForce Limited A.C.N. 167 748 843
Page 38
ASXAdditionalInformation
AdditionalinformationrequiredbytheAustralianStockExchangeLtdandnotshownelsewhereinthisreportisasfollows.Theinformationiscurrentasat28July2016:
a) DistributionofequitysecuritiesOrdinarysharecapital
127,500,980fullypaidordinarysharesareheldby460individualshareholders.
Allissuedordinarysharescarryonevotepershareandcarrytherightstodividends.
Thenumberofshareholders,bysizeofholding,ineachclassare:
Fullypaidordinaryshares
1–1,000 1
1,001–5,000 11
5,001–10,000 152
10,001–100,000 207
100,001andover 89
460
b) SubstantialShareholders
FullyPaid
Shareholder Number Percentage
iQnovateLtd 90,000,000 70.59%
FarmaForce Limited A.C.N. 167 748 843
Page 39
ASXAdditionalInformation(continued)
c) Twentylargestholdersofquotedequitysecurities FullyPaid
OrdinaryShareholders Number Percentage
iQnovateLtd 90,000,000 70.59
PriorityOneGroupPtyLtd 2,775,000 2.18
BASIMFinancePtyLtd 1,500,000 1.18
iQ3CorpLtd 1,275,009 1.00
ColinJ.OdamsPtyLtd 1,000,000 0.78
AchellesNomineesPtyLtd 930,000 0.73
MrYaochangWang 844,333 0.66
FranzeHoldingsPtyLtd 833,333 0.65
JenniferEllenStapleton 750,000 0.59
AsgardCapitalManagementLtd 667,000 0.52
MrJamesSimos&MrsChristinaSimos 535,890 0.42
PharmlouPtyLtd 500,000 0.39
BartlemPtyLtd 500,000 0.39
SiJiaCorpPtyLtd 500,000 0.39
WadePeterBurns&RebeccaLouiseBurns 500,000 0.39
DanielMorato&SallyMorato 500,000 0.39
LienPtyLtd 495,000 0.38
KarantziasInvestmentsPtyLtd 451,000 0.35
MrMin-ChungYu 407,500 0.32
MrZhenyuHe 375,000 0.29
Total 105,339,065 82.62
d) Consistencywithbusinessobjectives
InaccordancewithASXListingRule4.10.19theCompanystatesthatithasusedthecashandassetsinaformreadilyconvertibletocashthatithadatthetimeofadmissioninawayconsistentwithitsbusinessobjectives.TheCompanybelieves ithasuseditscashinaconsistentmannertowhichwasdisclosedundertheProspectusdated10August2015.
e) RestrictedSecuritiesEscrowedSharesAsatthedateofthisreport,91,575,010oftheCompany’sordinarysharesareclassifiedasrestrictedandaresubjecttorestrictionsonsaleandotherdealingsforaperiodof24monthsfromthedateofofficialquotation.The24monthperiodwillexpireon27October2017.LoyaltyOptionsAsatthedateofthisreport,theCompanyhas19,302,500Loyaltyoptionsonissueexercisableat20ceachbetween24to36monthsafterthedateofadmissionoftheCompany’ssharestotheOfficialListoftheASX.Outoftheseoptions,900,000aresubjecttorestrictionsonsaleandotherdealingsforaperiodof24monthsfromofficialquotationoftheCompany’ssharesontheASX.
Level 3 222 Clarence St, Sydney NSW Australia 2000
Tel: +61 2 8239 5400 Fax: +61 2 8362 9547 [email protected] farmaforce.com.au